The likely future policies of the new Ukrainian parliament

Based on preliminary results, six political parties – Poroshenko bloc, People’s Front (Yatsenyuk), Samopomich, Radical Party (Lyashko), Opposition Bloc, and Batkivschyna – will be represented in the new parliament. As was discussed elsewhere ([1], [2], [3], [4]), the (official) party programs (submitted to the Central Election Commission) are very vague and replete with populism and unrealistic promises.

Nevertheless, if we focus on the substance and ignore the loud words, parties do take specific positions on some key issues regarding foreign and domestic policy, institutional reforms, and redistribution. Their positions together with the current poll results about the future composition of the parliament allow for predictions about the future policies of the new Ukrainian parliament.

Joining EU and NATO is explicitly supported by Batkivschina. Poroshenko bloc supports joining EU only, while Opposition Bloc supports the neutral status of Ukraine. Samopomich suggests that Ukraine cancel its status of neutrality. Radical Party (Lyashko) stays silent. People’s Front (Yatsenyuk) mentions “Euro-Atlantic integration” and “Ukraine as a European country”, although the meanings are not clear. This is remarkable given that the second Maidan Revolution started as a pro-EU movement. In any case, the unwillingness of all key players to announce their commitment to join EU or NATO suggests that the new parliament will not have a strong push to join NATO or EU. Nevertheless, there could be some groundwork laid for a future push.

Russian Language, Investigation of the murders on Maidan in Kyiv and in Odesa (and elsewhere), and Demilitarization are each mentioned in the platforms of Opposition Bloc, but nowhere else. This is troubling because it suggests that the majority of the parliament may fail to recognize the importance of reconciling the different groups of the Ukrainian public.  It is also suggestive of the continuation of regional politics and thus a lower chance at relieving tensions. Finally, since the majority of the parties do not take a clear position on the issues of language or independent and unbiased investigation of the events of the crisis, these issues can be hijacked in the future by forces interested in polarization and discontent.

Lustration is opposed by Opposition Bloc, and supported by all other parties. Thus, the parliament will be very supportive of removing from power the individuals associated with the previous regime. It remains to be seen whether lustration becomes a mechanism of repression.

Concerns about (the population of) Donbas and Crimea appear in the programs of Batkivschina, Opposition Bloc, Poroshenko Bloc, and People’s Front (Yatsenyuk). Hence, progress in helping people in these regions or people who fled from these regions is likely.

No party supports trading land as a market commodity. Therefore, none of the parties is truly committed to the free market ideology and the murky deals with de facto trading land will continue through informal institutions. This populist silence could be very damaging economically because it’s hard to imagine massive investment in agribusiness when land is not freely traded—and hence cannot be used as collateral. In addition, shadow land markets can provide a fertile ground for corruption. Since the pressure to get more revenue from agribusiness is likely to rise, the new Parliament may set up a surrogate for land markets.

Since the Radical Party (Lyashko) is the sole party that demands for nationalization of some industries and punishing certain oligarchs by confiscating their assets, such demands are unlikely to be systemically placed on the new Parliament’s agenda. Nevertheless, isolated attempts at redistribution of the major assets from the losers to the winners are not out of the question, in the spirit of Ukrainian politics.

State control of the economy vs De-regulation. Many parties mention deregulation in some form. Thus, a consensus for deregulation in the new Parliament is likely, but it will be opposed by vested interests benefiting from barriers to entry or extortion opportunities that arise from regulation.

Most parties suggest measures to support domestic producers, including coalmines that cost the state budget at least US$1 billion per year. Thus, we are unlikely to see the new Parliament embracing free trade and it may take some time before details of the Association agreement with the EU are fulfilled.

All parties but People’s Front promise to reduce taxes to stimulate private business and encourage tax compliance. The most popular target for a tax cut is the payroll tax, a very significant source of revenue for the government. How such tax cuts can be implemented when the fiscal deficits have been so large is not clear. If the new Parliament indeed pushes for such tax cuts, it will have to slash public spending as well. Most parties stay silent about cutting welfare programs, expenditures on education and healthcare and, if anything, promise to spend more (e.g., on the army). None addressed the problem of large budget deficits. As a result, simplification of tax administration combined with closure of tax loopholes is more likely than deep tax cuts.

Decentralization is almost uniformly supported, but the parties differ on the details about whether the local executive should be elected directly by the public or appointed by locally elected councils. Even with decentralization, the President and the Prime Minister may have incentives to reestablish control over local administrations by retaining veto rights over local executives or by influencing their budgets. A simple and transparent formula of splitting the budget between the national and the local administrations could address the latter and thus advance decentralization de facto and not only on paper.

Transparency of property rights and prosecution of state officials if they cannot explain their assets, open party lists, judicial reform, and party finance reform have support among most of the parties. With the help of the civil society activists and the international agencies and donors, the parliament can make significant progress in this area.

Removing immunity from the members of the parliament has been largely ignored and only mentioned by Samopomich and Batkivschina. Although there is a renewed interest in this issue in the post-election media, such policy is unlikely to progress without substantive pressure from the public. Batkivchina also insists on a jury court system and passing the law on impeachment of the President. Poroshenko bloc suggests re-election of local councils that “have lost trust of people”. These might be good measures, as they will continue to provide incentives for healthy political competition. However, given the Proshenko party’s performance in the election, it might reconsider whether it wants to accelerate local elections.

People’s Front (Yatsenyuk) and Opposition Bloc acknowledge the importance of energy independence. This is a common ground for cooperation among these parties, although it is likely that the parties’ views over the preferred path toward energy independence are quite different. The issue of energy independence is fundamental to the sovereignty of Ukraine and the parliament will be forced to focus on it. Hence, reforms of Naftogaz and legislation encouraging accountability, diversification of sources of energy, and introduction of energy saving technologies might be possible.

Many parties mention military (and police) reform, and so some action in that direction is very likely.

Batkivchina is the only party that mentions the conflict of interest for state officials who own businesses. The silence of the other parties is intriguing, especially given the promises by the President of Ukraine to sell his assets after he enters the office.

Only Poroshenko bloc and Samopomich mention intentions to reform civil service, but do not provide specifics or suggest downsizing of bureaucracy. This lack of focus on the “mechanics” of the state can backfire at the stage when a well-meant legislation is going to be implemented by inefficient/corrupt/incompetent government officials who are in the office now. Similarly, no party discusses trimming excessive state expenditures. Naturally, no party wants to bring up unpopular issues in their programs prior to elections, even if dealing with these issues is inevitable.

In general, the new parliament is likely to be sympathetic to reforms in certain areas, such as a judicial reform, a political party reform, improving transparency of property rights, continuation of lustration, some anti-corruption legislation, decentralization of power, deregulation, and energy reform. Surprisingly, once the populist language is stripped down, the majority of parties that are about to enter the parliament agree on the needed institutional reforms. If these reforms are successful, they can put Ukraine on the path of becoming a more democratic and less corrupt country. Nevertheless, those with vested interests within and outside the state will continue to oppose such reforms and thus the people of Ukraine continue to face an uphill battle. The success of the reforms will hinge on the pressure applied by the political activists within the country and by Western politicians and supporting international agencies.

Foreign policy will continue to be highly complicated, as the programs show only a general, weak intention to move Ukraine closer to the EU and NATO. Similarly, judging by the party platforms regional reconciliation is unlikely, and thus foreign powers and the reactionary elements within Ukraine will continue to have plenty of opportunities to stir up trouble when needed. This will severely limit the country’s capacity to conduct reforms threatening the entities with vested interests.

Yet, another word of caution is necessary. While the apparent underlying ideology of most parties is rather liberal and market-oriented, many of them advocate protection or promotion of specific industries (so called, growth points). This is against the spirit of the free market approach and is indicative of the post-Soviet training in economics. The most striking example is that even after 20+ years of the Soviet Union’s collapse, Ukraine is not ready to talk about introducing free markets for land.