Ukraine’s Elections: Eyes on the opposition

With the final tallies in Ukraine's 28th October election coming to an end, it seems the ruling Party of Regions is set to be victorious, ready to take on another five-year term. But as allegations of massive fraud keep coming in and the international community continues to hesitate about the most appropriate response, it is the opposition – at least for a brief moment – that has the upper hand.

In some ways the vote on October 28th made almost everybody happy: although UDAR, led by world-famous boxing champion Vitali Klitschko, fell somewhat short of the optimistic expectations of the final weeks, the new arrival appears to have anchored a strong position with 14 per cent support in the party-list system. United Opposition also put in a decent performance, coming in a solid second with 102 seats expected in parliament. And arguably the election's biggest surprise, the far-right Svoboda, made its first ever entry into parliament.

The current government also has reasons to be content. The Party of Regions and its traditional ally the Communist Party of Ukraine received 219 votes together, just short of the 226 vote majority in the 450 seat parliament. However, with 44 nominally independent candidates elected in single mandate districts, this shortfall should be easily overcome, putting the reins of power securely back into the hands of the Party of Regions – or at least if the opposition parties allows it.

The opposition gambles, Europe waits

Representing over one third of parliament the opposition could, in theory, render the new legislative body illegitimate by refusing to take the seats and attempt to force a snap election. Such a solution has been advocated by former Defence Minister Anatoliy Hrytsenko, and has found some support among the opposition party leaders during a rally in front of the Central Election Commission on Monday.

At present, this seems to be more of a negotiation tactic than a strategic decision (a re-vote is already scheduled in five districts, with seven more being in play) aimed at swaying the Central Elections Commission to revise the counting in a handful of contested districts. But few analysts expect the opposition leaders to wager their hard-earned mandates over an uncertain outcome.

It seems unlikely a general re-vote would alter the results significantly, although some of United Opposition's votes could shift to Svoboda – the big winner of the election which surprised everybody by not just passing the five per cent threshold needed to enter parliament for the first time, but actually topping the 10 per cent mark. Now that the party is seen as a viable candidate, many of those who voted for United Opposition for fear of not having their votes count, could feel encouraged to go with Svoboda.

But while drastic measures still seem to be off the table, the potential fallout could be huge. Not least because it would force the hand of the European Union, which had previously made further cooperation with Ukraine conditional on free and fair elections, and has so far been extremely cautious in its statements.

Despite the growing number of alleged cases of fraud and a report by the Organization of Security and Cooperation in Europe (OSCE) that blasted the elections, noting that “democratic progress appears to have reversed in Ukraine,” it appears the door to further cooperation with the EU is not entirely closed.

While deploring the numerous shortcomings a statement by European Parliament President Martin Schultz, for instance, emphasised the need to maintain critical relations and keep working together. Others have advocated for a policy of more engagement, not less, as fears of instability, Belarus-style isolation or pushing Ukraine into a Russia-led Customs Union run high.

The likely presence of Svoboda in any opposition coalition is a further source of unease. The idea of working with a party whose nationalist agenda is seen as both anti-Semitic and not particularly enthusiastic about implementing EU legislation is cause for concern in Brussels.

But while the current state of affairs has left room to acknowledge flaws, express concerns, and move forward with cooperation – the annual EU-Ukraine Summit, not scheduled in 2012, is now set to take place in early 2013 – none of this will be possible if the opposition makes a convincing case for the vote having been rigged and/or decides not to take the seats.

The economy on the ropes

The weeks and months before the elections saw life in Ukraine become increasingly mechanical as business and organisations simply went through the motions, putting off any significant decisions until after they saw the results. Part of it was uncertainty on a personal level – many business leaders needed to know who they would have to deal with in their regions, whose support they could count on, and which palms they would have to grease.

But worries about where the country was heading also played an immense role. Arguably the most striking example concerns the expectations that the national currency, the hryvnia, would devaluate. Held at a quasi-fixed rate to the US dollar since its 40 per cent crash in 2009, the hyrvnia's strength is a constant headache for many Ukrainians. Moreover, with many still counting their salaries in dollars, it has a political significance which encourages political parties of all colours to keep the currency overvalued despite the negative consequences for exports and current account deficits.

Expecting the currently unsustainable rates to drop after the elections, most Ukrainians pulled any but the smallest deposits out of the banking system, causing annual rates to surge past 25 per cent and creating a lending crisis that has choked off economic growth. Already negative in the third quarter of 2012, growth is not expected to come back into the black until mid-2013. Add to this a global slowdown, which has caused steel output (a key export commodity) to drop 15 per cent in October compared to last year, and you have a perfect economic storm in the making.

This puts the Party of Regions into an even more precarious position. Rapid action is necessary to prevent a deep recession, repay considerable debt redemptions and fix the country's fiscal imbalances. The easiest way out is to renew cooperation with the International Monetary Fund, which has been on hold since early 2011 when the government refused to increase energy prices, particularly the de facto subsidised gas prices paid by households which are blowing a hole in the budget.

But raising gas prices in the middle of a crisis will hit the poor and elderly – the backbone of the Party of Regions' electoral base – the hardest, suggesting that this option is unlikely. Other sources of financing are looking increasingly scarce, although making a deal with Russia looks all the more appealing, despite the fact that the loss of sovereignty this would inevitably entail would hardly make it a popular decision.

All this presents interesting possibilities for the opposition, if it plays its cards right. For any strategy to succeed, however, it would require organisation and discipline on behalf of opposition leaders, traits they are not renowned for. Confused messages are already being sent out – from glum acceptance of the results to a frenzied hunger strike started by jailed former prime minister, Yulia Tymoshenko – which could easily squander the political capital amassed. The opposition has more power in its hands than perhaps it knows, but must use it wisely.

Jakub Parusinski is an editor at the English-language weekly Kyiv Post.