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Yanukovych: eastern and western headaches

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MOSCOW. (Andrei Yermolayev for RIA Novosti)

The agreement on national unity (the fifth universal in Ukrainian history since 1917), signed by the leaders of parliamentary factions and President Viktor Yushchenko on the eve of the formation of the government in August 2006, became a symbol of political reconciliation and recognition of the results of the elections, which had been won by the Yanukovych-led Party of Regions.

Although the party is generally perceived as "pro-Russian", it used to be consistently "post-Soviet" - a kind of restoration force in Ukrainian style - with bronze miners, labor discipline in politics and idols with janitor-to-general-secretary biographies.

Ukraine's post-Soviet eastern project is good for elections (just like the Orange one), but bad for practical policy. Having taken revenge on Our Ukraine and the Tymoshenko bloc, and formed the coalition and government, the Party of Regions is compelled to tackle the problems of Ukraine's integration. This is a formidable task. The party has to prevent the parade of regions against the center, consolidate the confidence of different parts of the country in its position, formulate an effective foreign policy doctrine and refrain from supporting corporate interests, which is typical for the eastern elites.

Meanwhile, there are more than 300 multimillionaires in the Ukrainian parliament. They are members of different factions in accordance with the purchased mandates. The deputies representing big business, that is, export-oriented industries, which are the backbone of the budget, have formed new centers of influence. The industrial and financial groups, who prefer to stay away from public politics, have their lobby in parliament as well.

Ukrainian capitalists - Akhmetov, Klyuyev, Taruta, Firtash, Kolomoisky, Poroshenko, Martynenko, Boiko and Zhevago, to name but a few, have become a real ruling force in the country.

Unlike the oligarchs in the last years of Kuchma's term, they openly advocate their business strategies, take an active part in government policy, and make their own public initiatives. This part of the Ukrainian establishment feels best in a positive economic atmosphere. Therefore, the agreement on unity as a pact of the elites, based on the ideology of stable development, is the most adequate response to the requirements of oligopoly. This may explain the stubborn pushing of the broad coalition idea, which has room for everyone, except, possibly, the ambitious Tymoshenko bloc.

The dominant export-oriented groups also need a most favored status in trade with Russia and access to international stock and credit markets.

As distinct from the contradictory middle class, these advocates of macro integration have formed the political and economic basis for the policy of the fifth agreement. It is more complicated to translate it into ideology and practical steps. Yanukovych's first messages in Sochi during the EurAsEC summit and at the international economic forum in Polish Krynica were predictable. In Russia the Ukrainian prime minister spoke about strategic partnership and a special relationship, and suggested returning to the project of single economic space. In Poland he quietly omitted the eastern vector, laying emphasis on pro-European choice and the need to promote EuroAtlantic cooperation instead of straightforward membership.

Formally, Yanukovych does not seem to stray away from the Ukrainian tradition with its eastern-western dualism and a balancing game. But there are some nuances. Although the Sochi meeting was presented as the "first success", in reality it was a cold shower. Old talk about single economic space did not produce the desired effect. Russia made it clear that it is serious about its new Eurasian policy (EurAsEC-CSTO+SCO, or Eurasian matryoshka doll), and is going to pursue it in the long term.

Mikhail Fradkov's invitation to join sounded ironical. Therefore Krynica and the subsequent visit to Brussels were a good excuse for announcing adjustments in foreign policy. It won't be multi-vector anymore. The idea of European pragmatism, even bordering on geopolitical egotism, sounded as the new government's credo. Ukraine will not be asking anyone for anything. It will work to get what it wants. European markets and the WTO, free trade with the EU and protection of the spheres of influence in Europe and Asia (including mutual investments in Russian and Asian economies) are the first features of European pragmatism, Ukrainian style.

This line reflects on domestic policy. In the next three to five years (a new period of transition) Ukraine is planning to carry out infrastructure reforms and prepare its market for internationalization. There are several directions to this policy - utilities, transport and communications, and land reform. The continuation of political reform is only viewed in the following context: developed parliamentary structure, up to and including the election of the president by parliament, and consolidation of local self-government, which is closely integrated with regional business structures. Clearly, centralized nomenclature capitalism is not a risk for Ukraine.

During the transition Ukraine will secure economic stability by reforming its energy industry and searching for access to new pipelines, based on the resources of domestic gas traders, long-term agreements with Moscow on the joint use of gas transportation networks in exchange for guarantees of gas supplies and balanced prices. In relation to former CIS partners, Ukraine will lay special emphasis on the bilateral format. As for European integration, paradoxically as it might seem, the inherent conservative attitudes of the eastern elites from the Party of Regions may hit the mark. Growing pessimism, slowing European integration and revision of the federal EU concept have come in very handy. Ukraine has got a chance to catch the train.

Ukraine is passing through a kind of Rubicon in its development. Power belongs to those who have to move from the Eurasian to European division of labor in the next 15 years. This task requires integration of its Orange and eastern projects. The coalition led by the Party of Regions and the Yanukovych government opens up the second 15 year long period.

Andrei Yermolayev is the director of the Ukrainian Sofia Center for Social Studies and a member of the RIA Novosti Expert Council.

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