Ukraine’s Ugly Elections

Oct. 26 (Bloomberg) -- An ex-convict turned president and an ex-prime minister turned convict. A former striker for AC Milan and a world heavyweight boxing champion. The vote playing out this weekend in Ukraine has no shortage of colorful characters.

The parliamentary elections also promise no dramatic turnovers. Instead, they may well accelerate a dangerous consolidation of executive power. And the response of the European Union and the U.S. will do much to determine whether Ukraine moves down the path of democracy or sinks deeper into a morass of corruption and soft authoritarianism.

The Party of Regions, led by President Viktor Yanukovych (whose troubled youth did, in fact, land him in jail twice), is expected to win about a quarter of the vote. Next, with about 16 percent, is likely to be the UDAR (an acronym that also means “punch”) party led by the boxing champ Vitali Klitschko. Poised for third place is an opposition coalition that includes the Fatherland Party of jailed ex-prime minister Yulia Tymoshenko. The other two parties projected to clear the 5 percent threshold for representation are the Communists (who have partnered with Yanukovych) and the right-wing Svoboda party.

Changing Rules

Several thousand observers from the EU, the Organization for Security and Cooperation in Europe and other international groups will watch the polls. But much mischief has already occurred, including bribery, assault, advertising buyouts and media suppression. Complicating this year’s contest is a change in electoral rules orchestrated by Yanukovych that turns half the parliament’s seats into “single-mandate” constituencies, which can be easily swayed or bought. There has also been an eruption of nominally independent small parties, whose purpose seems to be to splinter the opposition. Over the last two years, moreover, the president has rolled back reforms that limited executive power, a process that some fear may be further institutionalized by this election.

It’s an ugly contrast to the 2010 vote that ushered Yanukovych into office, after he beat Tymoshenko in elections widely deemed free and fair. Unfortunately, Yanukovych walked away from promises to reform the economy and curb corruption. Instead, he embarked on a trumped-up prosecution of Tymoshenko and several of her Cabinet ministers; she and Yuri Lutsenko, the former interior minister, are now in jail.

Those cases, as well as a crackdown on press freedoms and dissent, led Freedom House in January 2011 to downgrade Ukraine to the status of “partly free.” Such abuses also prompted the EU to suspend progress on an Association Agreement that has the potential to transform Ukraine’s economy.

Simultaneously, Yanukovych has presided over a worsening decline in Ukraine’s economy, which grew 5.2 percent last year, but may have entered a recession last quarter. The current-account deficit almost doubled to $8.6 billion through August. The Ukrainian Equities Index is down 47 percent this year, a steeper decline than for any other benchmark, data compiled by Bloomberg show. In addition to jeopardizing its trade agreement with the EU, Ukraine is also embroiled in a dispute with Russia over natural-gas supplies.

Most disturbingly, corruption under Yanukovych has become what Freedom House dubbed the “greatest threat” to Ukraine’s democracy and sovereignty. The former Soviet Republic’s rank in Transparency International’s Corruption Perceptions Index has slipped from 134 to 152, on par with Tajikistan. The concentration of wealth around Yanukovych, his family and their associates -- what some Ukrainians call the “familyization” of their economy -- has turned one of the president’s sons, trained as a dentist, into one of the country’s richest men.

Brazen Behavior

This increasingly brazen behavior has disquieted even Ukraine’s oligarchs. Some have sponsored political parties or candidates to protect their interests. And an increasingly vibrant civil society, with monitoring groups such as Opora and Chesno, is also stepping into the breach.

The EU can keep the pressure on by setting a high bar for certifying the elections as fair and refusing to move on its Association Agreement until Tymoshenko and her former colleague are released without prejudice. While U.S. Secretary of State Hillary Clinton joined her EU counterpart, Catherine Ashton, in calling for Ukraine to address such issues, the U.S. has seemingly been more focused on Ukraine’s strategic attributes than Yanukovych’s democratic failings. Instead of granting Yanukovych grip and grins, as he did at the United Nations last month, President Barack Obama would be wise to follow the lead of those in Congress who seek to remind autocrats that bad behavior has consequences, including possible restrictions such as a ban on travel to the U.S.

In addition, both the U.S. and the EU can ensure that the International Monetary Fund does not extend a frozen $15.4 billion loan to Ukraine unless it enacts some promised economic reforms. Measures such as bringing natural-gas prices more in line with the market have the added benefit of reducing opportunities for corruption; instead of using broad subsidies, Ukraine’s government can ease the burden of higher prices on the poor with targeted payments.

In 2015, Ukraine will elect its next president. Over the next two years, the nation’s friends should ensure that that vote, unlike this one, reflects the untrammeled will of its people.

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