No country today has a more sullied reputation than Ukraine's. After 10 years of independence, this former Soviet republic is rated among the world's most corrupt nations by Transparency International, and it leads the pack in copyright piracy. To make matters worse, a lurid scandal now unfolding in the top echelons of Ukraine's government may utterly destabilize the country. Recently disclosed evidence appears to connect President Leonid Kuchma and his closest aides to the surveillance of parliamentarians, the suborning of judges, interference in criminal investigations, massive graft, falsification of election results, and the harassment of journalists -- including the September 2000 disappearance and murder of on-line reporter Heorhiy Gongadze.

The crisis -- which features a headless corpse, secret audio tapes, and alleged intrigues by Ukrainian and foreign intelligence and security services -- has led to widespread protests within Ukraine. And it has already caused Kuchma to shy away from the West and move toward Russia's more accepting embrace. This shift, if it continues, could have dire geopolitical consequences. Ukraine's drive for independence helped precipitate the dissolution of the Soviet Union in 1991, and Kiev's autonomy remains crucial to preventing the re-emergence of Moscow as a major regional security threat. As Ukraine stands at the crossroads between democracy and repression, it is past time for the outside world to take notice and get involved.


In December 1991, many observers hoped that newly independent Ukraine would gradually establish an open society based on the rule of law. Motivated by the strategic importance of this country of 50 million people and worried that it might become a Russian puppet, the U.S. government provided $2.8 billion in aid to encourage democratic reform. These funds were supplemented by additional billions from western Europe and substantial loans from the International Monetary Fund and the World Bank.

Post-Soviet Ukraine's first president, Leonid Kravchuk (a onetime ideological secretary of Ukraine's Communist Party), and his successor, Kuchma (once the boss of the Soviet Union's main missile factory), often proclaimed their desire to integrate Ukraine into Europe. Despite their high-sounding rhetoric, however, initial reforms were halting, and throughout the 1990s Ukraine endured severe stagnation. The economy slowed sharply while poverty levels soared. Corruption ran rampant from the top of the state to the bottom, civic and political institutions remained weak, and most media remained under the control of the state or the oligarchs linked to it.

The rudiments of democracy and a market economy did manage to take root, however, and by 1999 Ukraine had begun to right itself. A fragile center-right parliamentary majority emerged, composed of free-market liberals, conservative nationalists, and parties with ties to oligarchic clans and big business. This coalition successfully pushed for major economic reforms, including the stepped-up privatization of state-owned industries. President Kuchma drew praise from the West for dismantling Ukraine's Soviet-era nuclear arsenal, for preventing strife between the country's ethnic Ukrainian majority and its Russian minority, and for appointing as his prime minister a highly regarded reformer, former Central Bank Director Viktor Yushchenko.

Privatization seemed to be gaining momentum as Ukraine's economy took off. In January 2001, GDP was up by more than 9.1 percent from the year before and industrial production had increased 19.5 percent. At the same time, the government projected an inflation rate of just 13.5 percent for the year, far lower than the hyperinflation rates that had devastated the country only a few years earlier. And wage and pension arrears were eliminated for most Ukrainian workers and retirees. All this was achieved even as the country, which imports most of its energy, was coping with skyrocketing oil and gas prices.

Now, however, Ukraine's dramatic success has come to a crashing halt, and the country is in the throes of a major political and institutional crisis. Trouble began with the September 16, 2000, disappearance of Gongadze -- an investigative journalist who lacked a major print or television outlet but used the Internet to report on the financial machinations of the country's corrupt oligarchs. Two months after he vanished, a headless and badly decomposed body was found in the town of Tarascha, near Kiev. Gongadze's friends were told of the find, and a preliminary autopsy by a local investigator suggested the body was his. Within hours of his friends' arrival on the scene, however, the body was surreptitiously removed from the morgue. Several days later, the corpse resurfaced in Kiev. The prosecutor-general's office declared that the body had been dead for much longer than two months, and government investigators added that it was too badly decomposed to be identified. Officials also announced that Gongadze had been seen outside the country and they issued a missing person alert through Interpol.

The disappearance of a relatively unknown journalist might have been written off as a minor matter, despite the fact that Gongadze's family and colleagues launched a publicity campaign and several lawsuits to press for a complete investigation. But the scandal assumed major proportions on November 28, when the leader of the Socialist Party revealed to a stunned parliament audio tapes of conversations among Kuchma, his chief of staff, the head of state security, and the interior minister suggesting their complicity in the journalist's disappearance.

These conversations were laced with obscenities, crude humor, and antisemitism. They revealed a president obsessed with muzzling Gongadze and other critics. At one point, a voice resembling Kuchma's spoke approvingly of deporting Gongadze to Georgia and suggested kidnapping him and handing him over to the Chechens. "Grab him, strip him, leave him without his pants, let him sit there," the voice urged the interior minister.

The same person complained about numerous publications critical of the administration and listened to detailed reports from the security services about efforts to harass and intimidate media critics. At one point, the then interior minister described an elite unit engaged in dirty tricks and the harassment of media and political opponents. "This unit, their methods, they're without morals, they don't have any principles," he boasted. "My group is beginning to stifle [Gongadze]. And with your permission I will also talk with [the head of the tax service]" -- apparently a request for permission to harass Gongadze through tax inspections. The interior minister also bragged about an act of arson against a distributor of antipresidential newspapers.

The tapes, which appear to have been recorded last summer, have been corroborated by real events. The opposition newspapers discussed in the recordings did indeed have their print runs confiscated by authorities, and various editors, journalists, and distributors were harassed as planned.

Kuchma initially remained silent about the tapes, while his aides declared them fabrications. Ukraine's prosecutor-general claimed that the president could never have been recorded in the first place, since his security system was ironclad. Meanwhile, the authorities continued to stonewall on the identity of the headless body. But in February 2001, they relented when DNA tests conducted in Russia showed a more than 99.9 percent match with Gongadze. The source of the tapes, meanwhile, was revealed to be Major Mykola Melnychenko, a 34-year-old officer assigned to Kuchma's security detail. Melnychenko, a decorated and highly trusted official, claimed he had used a digital recorder to record some 1,000 hours of the president's conversations over a year and a half. Public opprobrium mounted as more of the tapes' contents began to filter into Ukraine through U.S.-funded Radio Liberty and Ukrainian coverage of stories from Western newspapers.

The tapes released so far include conversations in which a regional governor seemed to offer Kuchma's family a 25 percent share in a factory soon to be privatized. The tapes also document the president and his security and law enforcement ministers making plans to intimidate judges, shut down the Ukrainian services of Radio Liberty and the BBC, and interfere in criminal investigations. In another conversation, the head of the state tax administration told Kuchma how he was covering up the multimillion-dollar tax fraud of a friendly oligarch. And in other discussions, local officials were explicitly ordered to deliver votes for Kuchma in the 1999 presidential election.

Because the tapes are digital recordings, their authenticity remains unproven. Western technical experts caution that some of the conversations could have been altered. But the sheer volume of the data suggests that the recordings are authentic. Moreover, Kuchma now admits that the voice and the crude conversational style are his, although he claims that the tapes have been doctored to include incriminating details. One deputy has been told by the president's representative to parliament that Kuchma routinely taped meetings as a means of record-keeping. It may therefore turn out that Major Melnychenko, now hiding somewhere in western Europe, simply copied the tapes from the presidential archives. This would explain the dismissal in February of state security chief Leonid Derkach, whose responsibilities are said to have included setting up the recording system. Whatever the origin of the tapes, the defensive behavior of the president's inner circle has only reinforced public belief that the recordings are authentic.


Recent polls suggest that Kuchma is losing the battle for the hearts and minds of his citizens. As of February, fewer than one in eight Ukrainians believed the president's claim that the tapes were fabricated, whereas one in four thought them to be authentic. By a five-to-one margin, the public said it had absolutely no trust in Kuchma, while 95 percent said they were dissatisfied with the country's state of affairs.

Antigovernment demonstrations that began this winter, organized by a broad coalition of political parties, have drawn up to 20,000 protesters and have captured the imagination of a new generation of student activists. The ranks of demonstrators are expected to swell further, moreover, when Gongadze's funeral is finally held.

Several demonstrations have been marred by significant violence, which organizers credibly blame on incitement by plain-clothed security operatives infiltrating the opposition. Protests outside Kiev have been disrupted. Leaders of the nascent "Ukraine Without Kuchma" movement, the broad-based "Forum for National Salvation," and other opposition groups have been openly followed by security agents, and anti-Kuchma parliamentarians have been kept under surveillance by unmarked cars -- despite the fact that Ukrainian law prohibits the shadowing of legislators.

The behavior of the president and his circle has created the impression that they are engaged in a wide-ranging cover-up, fueling public anger and cynicism. In December, Kuchma again blocked a bill that would have given parliament broad investigative powers and the resources to support them. Despite compelling evidence that Prosecutor-General Mykhaylo Potebenko has obstructed justice, the president has rejected calls to remove him from office. Although Kuchma dismissed Interior Minister Yuri Kravchenko in late March, the president has not set up an independent investigation into Kravchenko's alleged crimes. Meanwhile, a forensic scientist examining the DNA evidence in the Gongadze case has been intimidated by Ukrainian interior ministry police, and a physician who was assisting an independent DNA analysis of the Tarascha corpse has received death threats and is now seeking asylum in the United Kingdom.

The tapes have reinforced what many Ukrainian reformers and foreign governments long believed: that Kuchma sits atop a deeply corrupt, criminal power structure. For years, the United States and other Western governments unsuccessfully pressed Kuchma to sever his links with corrupt oligarchs. Indeed, when he visited the United States in November 1999, Washington refused to issue visas to Oleksander Volkov, a close ally of the president, and Ihor Bakai, then head of Naftohaz Ukrainy, a major oil and gas concern. Now Kuchma's callous indifference to alleged corruption in his inner circle reinforces the belief that he is corrupt himself.

The sensational revelations are not likely to end anytime soon. In addition to the tapes, parliamentarians are said to possess documents relating to Kuchma's own financial accounts and transactions, which are being readied for release at an appropriate moment. According to proceedings in a San Francisco court, Pavlo Lazarenko, Kuchma's erstwhile prime minister, allegedly has bank accounts in the West valued at more than $100 million. In June 1999, Petro Kirichenko, a former aide to Lazarenko, was arrested for allegedly helping his erstwhile boss launder public funds. Kirichenko was picked up in California -- where his boss had bought a $7 million home from the comedian Eddie Murphy -- and is reportedly cooperating with U.S. prosecutors in the Lazarenko investigation.

Rather than feeding public apathy and indifference, the scandal has galvanized Ukraine's pro-reform forces, now organized around an energetic student-led movement called "For Truth." Although civic action and parliamentary opposition will not necessarily achieve Kuchma's ouster, public outrage is contributing to the emergence of a potentially crucial new factor in Ukraine's political life: a broad coalition committed to honest government.

The scandal is also contributing to parliamentary and public support for diminishing the vast and unregulated power of the Ukrainian presidency. As in nearly all the former Soviet republics, Ukraine's political system is dominated by an extraordinarily powerful president. The president appoints the prime minister, subject to parliamentary approval, and can install other ministers at will. The president also appoints regional governors -- giving the executive powerful influence in local affairs -- and a third of the judges in the nation's higher courts. Furthermore, the president can issue significant economic regulations, has extensive power to dissolve parliament and call referendums, and can be removed from office only for treason or other high crimes, and then only by an 80 percent vote in parliament.

If the crisis has a silver lining, therefore, it is the push it has given to efforts to correct Ukraine's deeply flawed constitutional arrangements, particularly the power imbalance among the three branches of government. At the heart of these efforts is a proposal to reconstitute Ukraine as a parliamentary republic. Draft amendments to the constitution that would redirect power from the president to parliament have already been endorsed by 228 out of 450 deputies, including leaders of the pro-reform Fatherland Party, the moderate nationalist Ukrainian People's Movement, the Socialists, and the Communists. If that total could rise to 300 votes (two-thirds of parliament), it would set in motion a nationwide referendum on ratification.


For the first nine years following independence, Ukrainian foreign policy was directed westward, at eventual integration into European political and economic institutions. Last October, however, the first signs of an eastward shift appeared. The pro-Western foreign minister, Borys Tarasyuk, was sacked and replaced with Anatoly Zlenko, regarded as more acceptable to Russia. Simultaneously, Kuchma began to articulate the need for a more balanced approach to Kiev's external relations and for an improvement in ties with Moscow. Now the current scandal is reinforcing and hastening the tilt to the East. Western governments, media, and public opinion are not likely to tolerate close cooperation with a repressive and corrupt regime. And Western investors will shy away from a country with so much political uncertainty.

As European and American criticism mounts, Kuchma has been drawn toward Russia, a trend reinforced by economic logic and Ukraine's heavy dependence on Russian energy. At a February summit between Kuchma and Russian President Vladimir Putin, the new closeness in their relationship was very much in evidence. Meeting in Kuchma's former home base of Dnipropetrovsk -- not in Kiev, for fear of mass protests -- the two leaders agreed to deeper economic and technological cooperation, largely through joint aerospace, military, and industrial production. Putin and Kuchma also agreed to reconnect Ukraine to Russia's energy grid, a step likely to increase Ukraine's already marked dependence on Russia. The agreements, which must be ratified by parliament, include several protocols that have not been made public. But Ukrainian analysts suspect that these provisions move the two countries even closer together.

This reintegration has been bolstered by a surge in Russian capital investment in Ukraine. In the last year, Russian companies have gone on a shopping spree, picking up Ukrainian enterprises in privatization auctions as the West, wary of Ukraine's instability, holds back. Russian operations have acquired oil refineries, aluminum plants, dairies, banks, and Ukrainian broadcast media. These investments have brought much-needed capital to Ukraine and may not be harmful in the short term. But some analysts -- including Oleh Soskin, a former economic adviser to Kuchma who now heads a pro-reform think tank -- worry that Russian investment will threaten Ukrainian sovereignty if it is not balanced by other investments from the West. This is especially so, Soskin argues, because Putin has demonstrated a strong capacity to marshal Russian business to support his political agenda.

It should be remembered, however, that Ukraine is not as pro-Russian as Belarus. Any moves toward full-scale repression, the surrender of sovereignty, or the opening of Ukraine's economy to a Russian takeover would likely be resisted by large segments of the Ukrainian public, its business leaders, and regional officials. Moreover, the country's recent boom has energized a broad range of economic actors who understand that Ukraine's prosperity depends on access to Western as well as Eastern markets. Ukrainian businesspeople also understand that the additional foreign loans needed to maintain the stability of the Ukrainian currency can come only from Western sources. Thus even some of Ukraine's powerful oligarchs are unlikely to favor the country's isolation from the West and may come to regard political repression as counterproductive.


What, then, is the likely outcome of Ukraine's current crisis? Kuchma is certain to cling to his powers tenaciously. But the president will not be able to sweep the growing scandal aside. In the end, he will probably lose some of his authority permanently and may even be forced from office. This erosion of Kuchma's power could result from internal repression that leads to Ukraine's international isolation. If the president cracks down too hard on civic groups, the media, and opposition political parties, he will become a pariah in the West and thus increasingly dependent on his security chiefs and Russian patronage.

Another possible outcome is the formation of a pro-Kuchma coalition in parliament. The legislature is currently split into three nearly equal blocs: one that is reform-oriented and openly hostile to the president, another dominated by the oligarchs who support him (at least for the moment), and a third made up of the Communist Party and extreme anti-Western leftists. If the oligarchs and communists manage to come together and form a government, Kuchma's rule would be assured. But reform would lapse and Kuchma would become dependent on an unstable coalition that would require constant concessions. Alternatively, an alliance of reformers, oligarchs, and the business elite is also possible. This would restore the pre-crisis parliamentary status quo. Anti-Kuchma reformers, however, would demand serious concessions before they would join such a bloc. Their conditions would include a diminution of presidential powers and the replacement of corrupt ministers, the prosecutor-general, and the tax chief.

Two other outcomes are possible as well. All of the major political players could join together in a push for constitutional reform, restructuring the balance of political power in Ukraine by taking authority away from the president and vesting it in a prime minister answerable to parliament. Alternatively, massive public protests, spurred perhaps by the upcoming funeral of Gongadze or the visit of Pope John Paul II in June, could unleash a democratic revolution against Ukraine's entrenched interests.

Of these five possible futures for Ukraine, the first two -- widespread repression or the formation of a coalition between oligarchs and communists -- would have the worst impact on Western interests and values. The other three scenarios might allow for continued economic progress together with ongoing democratic reform. But since neither a popular uprising nor a stable restoration of the pre-crisis parliamentary coalition is particularly likely, Western policy should focus on more plausible prospects. This means trying to foster long-term constitutional reform and political compromise that preserves the pro-reform program of Prime Minister Yushchenko and leads to a durable system of checks and balances.


Last February, after a month on the ropes and with Ukraine approaching chaos, Kuchma went on the political offensive. He let loose the militia and security services, who brutally beat some protesters and started criminal proceedings against others. But despite these heavy-handed gestures, Kuchma simultaneously began making concessions to his reformist prime minister. And one of Kuchma's staunchest allies -- Sergei Tyhypko, a former deputy prime minister allied with one of the oligarchic clans -- joined suit. Tyhypko issued what amounted to a call for compromise, saying, "We have to start with the acknowledgment that there is a problem and we need to launch a discourse. We need a dialogue. This dialogue has to begin with the leaders, with the parties, with the leaders of parliamentary factions. We need to shed extreme positions."

How should the United States, the European Union, and international donors respond to this complex and fluid situation? President George W. Bush, Secretary of State Colin Powell, and various European leaders have all warned of the dire consequences that await Ukraine's leaders should they pursue a path of repression. This strong tone toward Kiev should be maintained. Some in the West may be tempted to do little more than talk tough, believing the problems in Ukraine to be so deep-rooted and intractable as to be beyond resolution. Giving up would be a mistake, however. Despite recent events, the situation on the ground is actually far from bleak. The billions of dollars of foreign aid sent during the 1990s have not been squandered, and Ukraine today has significant pro-reform and pro-democracy forces, along with a new entrepreneurial class free from the corrupt oligarchic system. These factors, as well as the growing disaffection of some of Kuchma's backers among the oligarchs, have left the president vulnerable and susceptible to pressure.

To nurture the forces of reform, Western policy must remain actively engaged in Ukraine through both diplomacy and democracy assistance. Economic aid to the Ukrainian government should be made conditional on respect for human rights and the rule of law, even as assistance to independent civic groups and the media is significantly expanded. Aid programs should serve a variety of objectives. These must include institutional and constitutional measures to reduce presidential power, enhance the authority of investigative bodies (including parliament), ensure judicial independence, and promote a system of checks and balances. If a balance of power within the government is not restored, the current pattern of state scandals is likely to be repeated under future presidents.

Western aid should also aim to combat corruption by promoting transparency and by helping media and civic groups monitor abuses of power. This aid should be coupled with international efforts to track and expose corrupt Ukrainian officials, revealing the real estate, business, and financial holdings of government officials and comparing those holdings with the officials' publicly stated incomes.

Ukraine also needs technical assistance for its police and tax authorities. This aid must be linked to the services' strict depoliticization, however. Technical-assistance programs involving the Ukrainian interior ministry and the prosecutor-general's office should be suspended until officials linked to the obstruction of justice in the Gongadze inquiry and the tape case are removed from office.

Western policy should also funnel aid to exchange programs and educational initiatives that enhance links between Ukraine's future leaders and their counterparts in Europe and in the United States. Such programs should be expanded, and Ukraine should be encouraged to work with new democracies in central Europe.

Finally, Western aid to civic groups, anticorruption activists, human rights organizations, and other Ukrainian policy centers should be dramatically expanded. The able U.S. ambassador in Kiev, Carlos Pascual, announced in mid-March a new initiative to help the Ukrainian media. But the $750,000 allocated for this purpose is significantly less than is needed. A low-interest loan and grant program for assisting independent print and broadcast media should be established, modeled in part on the successful Enterprise Fund programs that operates in central and northern Europe. Radio Liberty, which now reaches an audience of some 3.5 million listeners, has emerged as a major source for independent information as the state-controlled media have become more propagandistic. Radio Liberty's Ukrainian service should therefore be given new short-term resources to expand its reach and reporting.

In addition to these practical measures, a paradigm shift is also necessary for Western policy toward Ukraine. President Kuchma can no longer be regarded as the crucial personal guarantor of reform or of a pro-Western orientation. Indeed, Western leaders should recognize the possibility that Kuchma has become an obstacle to such aims. This is not to say, however, that Kuchma's resignation now would inevitably improve Ukraine's chances for reform. Other influential security and oligarchic forces are jockeying for control. Their accession to power could solidify the current patterns of corruption, anti-democratic practices, and drift toward Russia. Western efforts must therefore revolve around bolstering democratic civic and political forces and helping Ukrainians build more effective democratic institutions.

Although Kuchma's image has been badly tarnished and his stature diminished, he has not yet crossed the line into outright political repression. Until he does so or until incontrovertible evidence proves his involvement in criminal actions, he should not be ostracized. Instead, the West should press him to allow open and impartial investigations of alleged misconduct, to start discussing possible compromises with his domestic critics, and to cede more power to Prime Minister Yushchenko's reform government. Kuchma and his allies should be warned, however, of the punishing economic and diplomatic isolation that will result if they resort to repression.

The current crisis has shown that, after a decade of independence, most Ukrainians seem to have absorbed the norms of more established democracies: witness their appalled reaction to the alleged misconduct and corruption of their highest officials. Many Ukrainians have proven ready to mobilize in defense of democracy and the rule of law.

There remains a good chance, therefore, that the current scandal and political crisis will end auspiciously, with the kind of changes that will lead the country toward healthy and durable political and economic development. These changes are far from guaranteed. But should they occur, it will mean that the death of Heorhiy Gongadze -- tragic though it was -- was not entirely in vain.

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  • Adrian Karatnycky is President of Freedom House, a nongovernmental organization with offices in seven eastern and central European countries, including Ukraine. He is also co-editor of Nations in Transit, an annual survey of political and economic change in the postcommunist states of Europe and Eurasia.
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