Political Rivalries Threaten Ukraine's Reforms

KIEV, Ukraine -- Six months after Ukraine's Orange Revolution, growing rivalries among its leaders are threatening planned political and economic reforms.

Allies of Viktor Yushchenko, the mild-mannered president, and Yulia Tymoshenko, the firebrand prime minister, are splitting into competing camps. Mr Yushchenko himself has tried to stay above the fray and assert his authority over both factions. But he is struggling to hold together a disparate alliance that united to overthrow former president Leonid Kuchma but is now starting to come apart.

Yulia Tymoshenko (L) and Viktor Yushchenko
Mr Yushchenko said this week: "I'm happy to have the dialogue [with my colleagues]. But if somebody questions a decision after it is made, there might be a problem. I will not allow that."

The Orange Revolution's supporters are worried the conflicts could increase over the next few months as the competing factions prepare for parliamentary elections next March.

One group is formed of politicians close to Mr Yushchenko and led by Petro Poroshenko, the National Security Council secretary. Ms Tymoshenko leads the other group, which includes Viktor Pynzenyk, the finance minister.

Mr Poroshenko, a businessman with interests in confectionery, banking and media, favours pro-business policies. On the vital question of a review of questionable privatisations carried out by Mr Kuchma, Mr Poroshenko supports examining only a limited list of deals for fear of upsetting business and delaying new investment.

Ms Tymoshenko, a populist who enjoys strong support among poorer Ukrainians, has argued for a wider assault on the assets of business people linked to Mr Kuchma. She also wants to end tax-minimisation schemes such as transfer pricing, used aggressively by Ukraine businesses.

Asked about her conflicts with Mr Poroshenko, Ms Tymoshenko declined to name names but broadly explained the rivalry within Mr Yushchenko's team as an argument between those she saw as dedicated public servants and those who "came to increase their capital and re-divide property, not for the sake of creating a competitive economy, but for their own benefit".

Mr Poroshenko said he was glad there were many businessmen in Mr Yushchenko's administration because they had proved their effectiveness.

All his own shares were placed in an independent trust and he denied that he looked out for his companies' welfare.

Mr Poroshenko and Ms Tymoshenko insist they share Mr Yushchenko's vision of modernising Ukraine, joining the World Trade Organisation and pursuing membership of the European Union. All three leaders also boast of increasing social spending in this year's budget and there is broad agreement on the principle of the privatisation review.

Mr Poroshenko and Ms Tymoshenko have often publicly disagreed and, when Mr Yushchenko has intervened, he has usually come down on Mr Poroshenko's side - for example, in arguments over the extent of the privatisation review (where Mr Yushchenko supports limited action) and the capping of petrol prices.

Mr Poroshenko, Ms Tymoshenko and Mr Yushchenko all say they would try to form a joint bloc for next year's parliamentary elections. The vote is important because it will be preceded by reforms that would transfer many of the president's considerable powers to the prime minister and make the prime minister answerable to parliament.

Mr Kuchma secured these reforms last December in return for agreeing electoral law changes that paved the way for the re-run of the disputed presidential election that brought Mr Yushchenko to power. Mr Yushchenko would now like to cancel the reforms but parliament has refused.

Mr Yushchenko is considering over-riding parliament by holding a referendum. The courts will soon rule whether that is possible.

Source: Financial Times