Ukraine. The year began in a critical economic situation,
where before the New Year the government was forced to
request increased credit from the International Monetary
Fund (IMF) to meet its loan commitments and at the same time
have the means to pay out pensions and public salaries.
COUNTRYAAH, the January presidential campaign had a bitter tone, with
Prime Minister Yulia Tymoshenko and former Prime Minister
Viktor Yanukovych as main candidates directing fierce
attacks against each other. The incumbent President Viktor
Yushchenko was without a chance. His pursuit of Ukrainian
NATO membership did not support public opinion, and his
failure in relations with the Russian Federation was viewed
Yanukovych won the first round by 35.3 percent against
Tymoshenko's 25 percent of the vote. Viktor Yushchenko was
only fifth with 5.5 percent. The second round between the
first two candidates was a victory for Yanukovych with 48.9
percent against 45.5 for Tymoshenko.
But Prime Minister Tymoshenko refused to admit defeat.
She claimed that electoral fraud was occurring and that her
electoral commissioners were stopped in polling stations in
eastern Ukraine, where Yanukovych has her strongest support.
However, the OSCE election observers approved the election.
Yanukovych urged Tymoshenko to resign as prime minister,
but she also refused. Tymoshenko demanded that the election
result be annulled.
The outside world, however, acknowledged Yanukovych's
victory. He explained that he wanted to improve Ukraine's
relationship with the Russian Federation and avoid new gas
conflicts that hit Europe. His Russian-speaking electorate
in eastern Ukraine welcomed his desire to raise the status
of the Russian language and give it the same position as the
Tymoshenko eventually resumed its appeal of the election
results, and Yanukovych was sworn in as president. He then
declared that Ukraine would be an east-west bridge with good
relations with the Russian Federation but also with the EU
and the US.
Yanukovych's regional party requested a vote of no
confidence in Parliament against the government of
Tymoshenko, which was cast by 243 votes out of 450.
Tymoshenko was forced to resign, and one of Yanukovych's
allies, former Finance Minister Mykola Azarov, was appointed
new prime minister. He took office in March in the
leadership of a coalition with the Region Party, the
Communist Party and the Lytvyn Bloc.
The new government's urgent task was to reduce the
state's budget spending, so that the IMF would pay out the
loans withheld since last year when Ukraine did not meet the
loan terms. The cost of the Russian gas was a major item,
and the new President Yanukovych was able to negotiate the
price down by 30 percent with his good relationship with
Moscow. In exchange, the Russian Federation was promised to
keep its Black Sea fleet in Sevastopol on the Crimean
Peninsula in Ukraine until 2042. The opposition raged
against the agreement on the naval base and called
Yanukovych's traitors. There were dramatic scenes in
Parliament, with smoke bombs, egg throwing and fights, when
the settlement was approved there.
The government saw the agreement as inevitable to save
the country's economy, and in July, after extended
negotiations, Ukraine received approval from the IMF for US
$ 15.2 billion in two-and-a-half-year support loans. But
before the first disbursement came, Ukraine was forced to
take credit from the Russian Federation in order to cope
with emergency expenses.
The Prosecutor's Office stated during the year that the
kidnapping and murder of the regime-critical journalist
Georgij Gongadze in 2000 took place on the orders of the
then Interior Minister Yurij Kravchenko. A police chief had
previously acknowledged that he had committed the murder. In
August, another investigative journalist disappeared in
Kharkiv, Ukraine. The sitting interior minister explained
that the journalist was probably murdered by someone in the
police or judiciary.
The presidential office recovered much of the power
transferred to Parliament in 2004, a transfer which, in
October's Constitutional Court ruling, had violated the
Constitution. This strengthened the position of new
President Viktor Yanukovych. According to opposition leader
Tymoshenko, the court's decision was tantamount to the
introduction of dictatorship.
The new government also felt the protests of the people.
The proposal to raise taxes to reduce the budget deficit was
met by thousands of protesters in the capital Kiev in
November. Market vendors, in turn, demonstrated new tax
rules that forced even small business owners to make a
comprehensive declaration. The police hit hard on the
protesters, but President Yanukovych vetoed the proposal and
called for amendments.
While there were protests at home, Ukraine received
praise from the IMF for its cuts, and at the end of the year
a preliminary yes came to new loan payments. During the
summer, Ukraine had been hit by severe drought, which halved
the economically important grain exports during the year.
But the economy had turned after the GDP race last year. It
was estimated that GDP could grow by 5 percent in 2010.
Prosecutors opened an investigation in December against
former Prime Minister Yulia Tymoshenko, who was charged with
misuse of state funds following the sale of emission
allowances. The income should have gone to pension payments
instead of environmental measures. The investigation was
followed by charges against Tymoshenko, who said the new
regime witch-hunted the opposition, as several of her allies
were accused of crimes. The action against Tymoshenko led to
a physical fight in Parliament, when several members were