2005

A YEAR AFTER THE ORANGE REVOLUTION: REFORMIST SPIRIT LOST

It is year after the new Ukrainian leadership took the power in a result of the orange revolution. However outcomes of year 2005 are in somewhat gloomy. Unlike many other analysts who see the main bad results of the year among split in the power or, for example, unsolved gas payments, we argue that the most important - and one of the worst possible – outcome is lack of true reformist spirit in the new Ukrainian power. This statement is well supported with analysis of how the power intends to spend a large sum of money that it earned from privatisation of Ukraine's largest metallurgy plant. Any suggestions of the power that this money are needed to pay the state budget deficits of years 2005 and 2006 are lies. The truth is there is the budget surplus in 2005 and more than enough means to compensate even now increased deficit in 2006. After some transfer to the Pension Fund, what is perhaps correct from the election point of view, there anyway should remain around UAH 18bn. More transparency in natural gas trade could also add UAH 0,6-0,8 bn. Together with apparent additional revenues from privatisation and tax discipline, Ukraine could get over UAH 20bn (or $4bn), what is enough to pay for two or three reforms. Alas, it seems there is no reformist spirit in the new Ukrainian power anymore - so money, which can be used for implementation of reforms, will be used for everyday needs in the best case. Meanwhile worsening investment climate, what is especially well seen in low FDI inflows, decrease of investments in a half of regions and in some economy branches, proves - Ukraine urgently needs reforming. Unfortunately, the new power lost not only money, but also time for reform. Formally the constitutional reform will start working from January 2006, in fact a half a year later, but in any case convenient period for reforming, which was whole year 2005, is lost. According to amendments to Constitution, the executive power will be controlled by parliamentary majority. Recently published election lists of main parties proves that the future majority will hardly be too reformist. Question "Who and when will reform Ukraine?" remains unanswered since the new power does looks eager to do so.