Bet­ter late than never:

What should Petro Poroshenko do to have any chance of a se­cond term?

The Ukrainian Week - - CONTENTS - Oles Olek­sienko

Does Petro Poroshenko have a chance for a se­cond term?

The fur­ther their term moved past the mid­point of the Con­sti­tu­tion­ally al­lot­ted pres­i­den­tial term, the more ev­ery one of Ukraine’s pres­i­dents wor­ried about how to pre­serve and, even more, to ex­tend, their po­si­tion be­yond the next elec­tion. Most of them clearly did not ex­ert enough of the right kind of ef­fort in time to lay the ground­work for this im­me­di­ately af­ter be­ing elected to the post. In­stead, their at­ten­tion was gob­bled up by the ef­fort to con­cen­trate power and by the time the next elec­tion loomed, their po­lit­i­cal prospects be­came com­pletely de­pen­dent on tech­ni­cal moves and the ap­pli­ca­tion of ad­min­is­tra­tive lever­age.

To­day’s Head of State is no ex­cep­tion—de­spite the fact that he came to power with a strong man­date just as the coun­try reached a turn­ing point af­ter the Euromaidan and gained fur­ther sup­port with a ma­jor­ity in the Verkhovna Rada in his first year in of­fice. In short, he had ev­ery op­por­tu­nity to carry out the rad­i­cal trans­for­ma­tions the coun­try needed, if not for or­di­nary Ukraini­ans, than at least in his own long-term in­ter­ests.

Ev­ery gov­ern­ment needs the right kind of sup­port from the so­ci­ety it gov­erns. One way to gar­ner it is to re­shape its so­cial struc­ture. This means mea­sures that would es­tab­lish a sub­stan­tial sub­stra­tum of vot­ers who have gained po­si­tions that they do not want to lose and there­fore link their fu­ture to the preser­va­tion of those in power and to main­tain­ing the poli­cies of the cur­rent lead­er­ship.

In most coun­tries, this has typ­i­cally hap­pened at times of his­tor­i­cal turn­ing points and rev­o­lu­tion­ary trans­for­ma­tions, when changes be­came long-term or even ir­re­versible. The new lead­er­ship de­pended on the new so­cial groups that linked their own prospects and well-be­ing with them.

The ques­tion is whether the cur­rent pres­i­dent will use this op­por­tu­nity or not. Of course, there are cer­tain cir­cles that are in­ter­ested in pre­serv­ing the cur­rent ad­min­is­tra­tion, but it’s hard to say that they have the num­bers and so­cial in­flu­ence to en­sure the prospects for the cur­rent pow­ers-that-be to re­main in of­fice.

In fact, Petro Poroshenko has not man­aged to es­tab­lish real so­cial sup­port for his ad­min­is­tra­tion in his three years in of­fice. In June 2014, right af­ter he was elected, The Ukrainian Week noted, in an ar­ti­cle en­ti­tled “The heavy mace,” that when a rel­a­tively ob­scure in­di­vid­ual in whom a wide cir­cle of vot­ers has in­vested idio­syn­cratic and gen­er­ally un­re­al­is­tic ex­pec­ta­tions be­gins to be more spe­cific, the broad elec­toral base that brought him to power in the first round of vot­ing was likely to dis­si­pate quickly. Yet, at­tempts to pre­serve the oli­garchic sys­tem un­der which Poroshenko him­self has been used to work­ing over the last 10 years will have a neg­a­tive im­pact both on the coun­try’s prospects for devel­op­ment and on the prospects of the pres­i­dent him­self to stay in power.

Poroshenko re­ally needed to have put some tar­geted ef­fort into es­tab­lish­ing a new so­cial sup­port sys­tem for a post-rev­o­lu­tion­ary gov­ern­ment, but in­stead he seems to have bet on find­ing sup­port in the tra­di­tional pro-gov­ern­ment so­cial strata: the bu­reau­cracy, en­force­ment agen­cies, and that el­e­ment of busi­ness that has to sup­port what­ever ad­min­is­tra­tion hap­pens to be in power. Of course, this op­tion is a lot sim­pler, but it’s also quite pre­dictably un­re­li­able. Yes, th­ese three groups are his­tor­i­cally pro-gov­ern­ment by their very na­ture and it’s much eas­ier to just keep re­ly­ing on them. Caveat emp­tor. First of all, they are never ori­ented on any spe­cific in­di­vid­ual or party, but on the gov­ern­ment as a con­tin­uum. Se­condly, their sup­port

is ob­vi­ously too nar­row to en­sure a win in the next round of elec­tions.

On the other hand, re­ly­ing on tra­di­tional ap­proaches to gain­ing power for a se­cond term, such as ad­min­is­tra­tive lever­age or pick­ing up some cheap pop­u­lar­ity by buy­ing off vot­ers with so­cial ben­e­fits, is also a fairly hope­less op­tion to­day. The so­cial groups that are ori­ented to­wards this kind of ben­e­fit ex­pect quite a bit more and will fol­low much more bom­bas­tic pop­ulists. Here the cur­rent pres­i­dent has no chance a pri­ori of com­pet­ing in pop­ulism with the op­po­si­tion, which can prom­ise what it wants with­out wor­ry­ing about where the money will come from. On the con­trary, all the lat­est po­lit­i­cally-mo­ti­vated in­creases in so­cial ben­e­fits are only likely to in­crease ap­petites for more and fos­ter pop­ulists.

In his own elec­tion plat­form, Poroshenko demon­stra­tively dis­tanced him­self from so­cial pop­ulism, not­ing: “All the party plat­forms that you have read un­til now promised manna from heaven, but it never fell.” He went on to as­sure peo­ple that he would “spend money as soon as it ap­peared, in or­der to build a new econ­omy.”

It turns out he needed to have gone far­ther. From the be­gin­ning of his term, he need to fo­cus on es­tab­lish­ing the con­di­tions in Ukraine that would as quickly as pos­si­ble en­cour­age the ma­jor­ity of Ukraini­ans to be ac­tive par­tic­i­pants and take re­spon­si­bil­ity for their own lives—and that would have also es­tab­lished the con­di­tions for dy­namic eco­nomic growth. Opin­ion polls at the time showed that most vot­ers ex­pected this and were pre­pared to suf­fer the dif­fi­cul­ties of the “tran­si­tion pe­riod.” In­deed, 71% of those who voted for Poroshenko were pre­pared, to one ex­tent or another, to “put up with hard times to­day if this leads to a bet­ter stan­dard of liv­ing to­mor­row.”

That time should have been used to launch a full range of in­stru­ments that would en­sure the dy­namic growth of the mid­dle class, which tends to have a mar­ket men­tal­ity and of­ten even some fam­ily busi­ness as­sets. The em­ploy­ment mar­ket and the coun­try’s econ­omy, to­gether with the pres­ence of ex­cep­tional sur­plus cash “un­der mat­tresses” among a sig­nif­i­cant pro­por­tion of Ukraini­ans pro­vided ex­cel­lent con­di­tions to launch en­trepreneurial ini­tia­tives from the bot­tom up. All it needed was the right en­vi­ron­ment and guar­an­tees of some kind.

The deep chasm in which Ukraine has found it­self of­fers all the nec­es­sary con­di­tions for gov­ern­ment pol­icy to max­i­mally fos­ter com­mer­cial ac­tiv­ity, to sup­port do­mes­tic man­u­fac­tur­ers on for­eign mar­kets and to pro­tect com­pe­ti­tion on the do­mes­tic one, and to see the na­tional “pie” ex­pand dy­nam­i­cally, rather than the wretched slices that peo­ple are still try­ing to carve up to­day.

This means that a com­pet­i­tive, level play­ing field needs to be main­tained and the mo­nop­o­list par­a­sites nib­bling away at the al­ready weak­ened econ­omy need to be stopped, since their main source of wealth is lob­by­ing rather than run­ning pro­duc­tive busi­nesses.

Equally im­por­tant is to en­sure that the tax bur­den is fairly dis­trib­uted, that ev­ery­one pays their fair share and not just those who don’t have the means to lobby all kinds of breaks at the po­lit­i­cal level, di­rect and in­di­rect. At the same time, this bur­den should be re­duced to a rea­son­able level. What’s more, the cor­rup­tion tax needs to be elim­i­nated as it se­ri­ously in­creases the of­fi­cial tax bur­den.

For all this to hap­pen, Petro Poroshenko needed to take on the role of the cat­alyzer and co­or­di­na­tor of state pol­icy im­me­di­ately af­ter be­ing elected, aim­ing his ef­forts at re­viv­ing the econ­omy across as broad a spec­trum of the pop­u­la­tion as pos­si­ble, and to sup­port and pro­tect it against out­side in­ter­fer­ence. He also needed to un­der­take a thor­ough trans­for­ma­tion of law en­force­ment and over­sight agen­cies into in­stru­ment for guar­an­tee­ing law­ful­ness and se­cu­rity rather than be­ing a tool for pres­sur­ing and ter­ror­iz­ing busi­ness. This would have pro­vided a ba­sis for the proper devel­op­ment of com­pet­i­tive SMEs.

Next, what was needed was real, rather than merely cos­metic, rad­i­cal re­form to re­vive the ju­di­ciary to es­tab­lish the in­vi­o­la­bil­ity of pri­vate own­er­ship, to pro­tect busi­ness ini­tia­tives from raiders, and to en­sure that all mar­ket play­ers ful­filled their right­ful obli­ga­tions.

In the last three years or so, no real steps have been taken in this di­rec­tion. Yet this re­mains the only path, not just to the suc­cess­ful devel­op­ment of Ukraine it­self, but to main­tain the po­lit­i­cal prospects of the cur­rent pres­i­dent. Re­al­is­ti­cally, does Poroshenko have enough time in the next two years to take then nec­es­sary steps be­fore he has to run for of­fice again?

On one hand, there is less than one third of the pres­i­dent’s term left. On the other, there still looks to be time to pro­pose to Ukrainian vot­ers a pro­gram of changes like this and to at least show de­ci­sive­ness in im­ple­ment­ing them. More than likely, this would make it pos­si­ble for a ma­jor­ity of ac­tive Ukraini­ans to fo­cus on a re­form plat­form—a num­ber that is po­ten­tially grow­ing ev­ery year. Ac­cord­ing to a poll from the NAS In­sti­tute of So­ci­ol­ogy car­ried out in July 2017, it looks like the share of Ukraini­ans who are


ready to suf­fer some wors­en­ing in their liv­ing stan­dard for the sake of se­ri­ous re­forms had grown to 39%, up from 33% in 2016, while the share of those who aren’t pre­pared to suf­fer for the sake of real change has shrunk sig­nif­i­cantly, fall­ing from 60% in 2016 to 50% in 2017.

How­ever, Pres­i­dent Poroshenko needs to com­pletely ig­nore the old bu­reau­cratic and law en­force­ment guard, with its pen­chant for cor­rupt in­come and piracy to­wards the real busi­ness class. In­stead, he needs to un­der­take a real clean­ing out of th­ese Augean sta­bles and make such agen­cies work in the in­ter­est of nor­mal, com­pet­i­tive busi­ness.

And even if th­ese steps do not re­sult in the full de­sired ef­fect be­cause of the short­ness of time be­fore the 2019 elec­tions, a de­ci­sive and con­sis­tent ad­min­is­tra­tion could prove suf­fi­ciently ef­fec­tive to gain the sup­port of the eco­nom­i­cally ac­tive share of Ukrainian so­ci­ety. Af­ter all, this is the only re­main­ing so­cial sup­port that the cur­rent pres­i­dent is likely to be able to draw on dur­ing the next elec­tion cam­paign—if he plays his cards right.

Once again, though, it has to be shown through deeds and not words, that he is pre­pared to do that which he should have been do­ing, go­ing on four years now—even if un­der pres­sure from a loom­ing elec­tion. If the ac­tive, pa­tri­otic vot­ers among Ukraini­ans can be per­suaded that the cur­rent ad­min­is­tra­tion has fi­nally cho­sen the right course of ac­tion and it mov­ing in that di­rec­tion, this will be far more ap­peal­ing than the tri­umph of pop­ulists, whose re­turn to power would be fraught with poorly fore­cast, but clearly very neg­a­tive, con­se­quences.

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