Unfinished revolutions: The post‐Soviet crisis of governance in Ukraine

Fröhlich, Christian Article — Published Version Unfinished revolutions: The post‐Soviet crisis of governance in Ukraine Global Policy Provided in Cooperation with: John Wiley & Sons Suggested Citation: Fröhlich, Christian (2023) : Unfinished revolutions: The post‐Soviet crisis of governance in Ukraine, Global Policy, ISSN 1758-5899, Wiley, Hoboken, NJ, Vol. 14, pp. 77-89, https://doi.org/10.1111/1758-5899.13280 This Version is available at: https://hdl.handle.net/10419/288224 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may be saved and copied for your personal and scholarly purposes. You are not to copy documents for public or commercial purposes, to exhibit the documents publicly, to make them publicly available on the internet, or to distribute or otherwise use the documents in public. If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated licence. http://creativecommons.org/licenses/by-nc-nd/4.0/ Global Policy. 2023;14(Suppl. 4):77–89. | 77 wileyonlinelibrary.com/journal/gpol Beginning in the late 1980s, the Soviet Union dissolved in the wake of nationalist movements in its constituent republics. In Ukraine, this process was fuelled by an October 1990 studentled protest wave known as the Revolution on Granite, which demanded the country's disentanglement from the Soviet Union. Ukrainian leadership then declared the country sovereign and proclaimed independence in 1991. The move was approved in a referendum by an overwhelming majority of the population and made the former chair of the Supreme Soviet of the Ukrainian Soviet Socialist Republic, Leonid Kravchuk, Ukraine's first president. Kravchuk took a proEuropean, proNATO stance and pursued disposal of the country's nuclear weapons. Ukraine's subsequent transition from communism to capitalism has been characterised by political cleavages and intense conflicts about the direction of institutional and economic development. At the same time, Ukraine suffered from a ‘crisis of political representation’ that has prevented successful postSoviet nationbuilding, at least until Russia invaded in 2022 (Ishchenko & Zhuravlev, 2021). Despite earlier tendencies towards semiauthoritarianism and paternalistic social welfare distribution, the country has since the Orange Revolution in 2004 made some moves towards democratisation and liberalisation. However, it has struggled with a declining population, high levels of corruption and low public investment. Political cleavages have remained stark, in particular, the divide between proWestern, liberal attitudes, on one hand, and proRussian, conservative attitudes, on the other. This division has long historical roots and is roughly represented geographically in a split between the western and (south- ) eastern parts of the country, with the latter bordering Russia and the former Poland and, thus, the European Union. When measuring governance in Ukraine, none of the three dimensions of the Berggruen Governance Index (BGI)1 improves sustainably between 2000 and 2014/2015 despite shortlived positive trends (see Figure1). However, since 2014, democratic accountability and since 2015, state capacity show clear improvement (between 8 and 10 points). Having experienced three revolutions within the first 25 years of its independence – the Revolution on Granite of 1990, the SPECIAL ISSUE ARTICLE Unfinished revolutions: The postSoviet crisis of governance in Ukraine ChristianFröhlich Received: 21 August 2023 | Accepted: 22 August 2023 DOI: 10.1111/1758-5899.13280 This is an open access article under the terms of the Creative Commons Attribution-NonCommercial-NoDerivs License, which permits use and distribution in any medium, provided the original work is properly cited, the use is non-commercial and no modifications or adaptations are made. © 2023 UCLA Luskin School. Global Policy published by Durham University and John Wiley & Sons Ltd. Freie Universität Berlin, Berlin, Germany Correspondence Christian Fröhlich, Strassmannstr. 38, 10249 Berlin, Germany. Email: [email protected] Funding information Berggruen Institute Abstract None of the three revolutions in Ukraine's modern history as an independent state has been able to both solve the problem of political representation and undertake the task of building sustainable democratic institutions. Ukraine's scores from the Berggruen Governance Index (BGI) between 2000 and 2019 show the ups and downs of state capacity and democratic accountability and illustrate not only how the revolutions remain unfinished but also how the country seems to be unable to consistently advance state formation. Ukraine has yet to find a stable developmental path. Accordingly, BGI scores show that Ukrainian politics and society continue to have difficulty advancing towards a corridor of good governance, where state capacity and accountability reinforce each other and enhance public goods provision. Instead, Ukraine is alternating between authoritarian and democratic development patterns. However, the Russian invasion that began on 24 February 2022 has contributed to uniting and consolidating Ukrainian society and politics and could considerably push the nationbuilding process forward. 78 | FRÖHLICH Orange Revolution in 2004, and the EuroMaidan (or Revolution of Dignity) in 2014 – Ukraine has yet to find a stable developmental path. Accordingly, BGI scores show that Ukrainian politics and society continue to have difficulty advancing towards a corridor of good governance (Acemoglu & Robinson,2019), where state capacity and accountability reinforce each other and enhance public goods provision. Instead, Ukraine is alternating between authoritarian and democratic development patterns. However, the Russian invasion that began on 24 February 2022 has contributed to uniting and consolidating Ukrainian society and politics and could considerably push the nationbuilding process forward. BGI scores before 2004 show signs of Ukrainian leaders overestimating their state's capacity while undervaluing the role of democratic accountability for public goods delivery and good governance, thus, being tempted by the autocratic fallacy that democratic accountability was unnecessary (Anheier et al.,2022: 37). Formally, being a democracy since 1990, the state had not succeeded in building up sustainable democratic institutions in the first decade of independence. Thus, at the beginning of the new millennium, state capacity (BGI 30 in 2000) and democratic accountability (BGI 54 in 2000) were only weakly developed. However, public goods provision (BGI 75 in 2000) was above the global average. This situation of weak checks and balances and a constrained civil society was not sustainable and led to the Orange Revolution in 2004, after which state capacity (BGI 40 in 2007) and accountability (BGI 70 in 2007) began to improve. However, the societal upheaval also did not solve the problem of political representation, with the new democratic regime still leaving most Ukrainians disconnected from the policy and public spheres (Ishchenko & Zhuravlev,2021). Partly, this points towards the trap of the democratic fallacy,2 when the newly appointed, democratic leaders rely too much on the democratic image of the state and do not succeed in improving its capacity to function. Thus, BGI scores for public goods provision still show no signs of change after 2004 despite improvements in the other BGI dimensions, indicating the inability of state– society relations to have a sustainable impact on the country's development path. FIGURE 1 Development of Ukraine's BGI scores, 2000– 2019. Source: Berggruen Governance Index 2022. | 79 UKRAINE: UNFINISHED REVOLUTIONS As a result of these unresolved problems, but also a severe hit from the global financial crisis, Ukraine witnessed another regime change in 2010. Ukraine returned to a more illiberal and Russialeaning government under Viktor Yanukovych's tenure, which coincides with BGI scores of state capacity (BGI 31 in 2014) and accountability (BGI 55 in 2014) dropping again to their low pre2004 plateaus. BGI scores for public goods provision still do not considerably improve during that period, which again partly reflects the autocratic fallacy argument. The continued lack of representation led to the next revolution, namely the EuroMaidan, in 2014, which again failed to bring sustainable change in quality of life. While returning to a democratic, proWestern stance, the new regime under Petro Poroshenko and currently Volodymyr Zelenskyy was also not able to solve the persistent problems of administrative cooptation and corruption. What is more, the annexation of the Crimean Peninsula by Russia in 2014 and the war in the eastern territories of the Donbas put severe constraints on budgetary and political capabilities for improving governance. Post2014, BGI scores for all three dimensions seem to indicate that Ukraine could escape the democratic fallacy in the future. The regime's increasingly democratic stance (BGI for democratic accountability improves 8 points between 2014 und 2019) coincides with a 10point improvement for state capacity. However, this aligned growth has not yet linked with an improvement of public goods provision. Despite better conditions, there remain several obstacles on Ukraine's paths into the ‘narrow corridor’ of good governance. 1 | STATE CAPACITY Similar to other newly independent postSoviet countries, Ukraine's population suffered deeply from the transition to a market economy during the 1990s, with GDP per capita3 decreasing by more than half, from US$1597.5 in 1989 to US$635.8 in 1999. The economy that was based on a traditionally large agrarian sector on the one side and heavy industry in the eastern parts of the country, particular in the Donbas, on the other side, was hit by particularly heavy turmoil in its first decade of independence. Continuous political conflicts FIGURE 2 State capacity in Ukraine compared to Russia, 2000– 2019. Source: Berggruen Governance Index 2022. 80 | FRÖHLICH and power struggles, hyperinflation and corruption led to economic decline. This disarray also blocked the development of functional administrative institutions that could implement necessary reforms (Sutela, 2012). What is more, the political instability and weak administrative systems allowed former Soviet elites to hold on to power and exploit state assets. The privatisation of largescale industries and other state property created a new and powerful business class, the oligarchs that held and still hold political power with exceptional access to administrative rents (Dabrowski,2017). Thus, Ukrainian crony capitalism hampered the development of state capacity, a pattern not too dissimilar from other postSoviet countries such as Russia4 or Belarus (see Figure2). At the beginning of the new millennium, Ukraine's state capacity was already at a low level due to political instability, the oligarchs' cooptation of state administration and widespread corruption. Despite considerable economic upheaval between 2000 and 2008, capability to transfer the income into productive state policy remained on a low level compared to Russia due to dysfunctional tax policy, a high level of endemic corruption and tax evasion. Following the Orange Revolution in 2004 Ukraine's BGI score for state capacity shows initial signs of improvement, when the score rose from 34 in 2004 to 40 in 2009, only to fall again to its prerevolution position (33) by 2010. This indicates the effect of an ‘unfinished’ revolution, when political, economic and administrative reform projects were started, but the government of revolutionary President Viktor Yushchenko was unable to sustainably implement them. The rise of Viktor Yanukovych, a proRussian candidate, in 2010 did not reverse the trend, but also did not improve the situation, which played a role in the public upheaval against his regime during the EuroMaidan protests of 2014. However, the subsequent violent conflict with Russia, which saw the Russian annexation of Crimea and a separatist war in the Donbas, coincides with a slight upward trend of the BGI score for state capacity up to 2019. This indicates that persistent crisis tends to have a consolidating effect on public management, a circumstance that arguably links the Ukrainian case to warcentred approaches to state formation which see internal and external warfare as contributors to the making and consolidation of nation states.5 As seen in Figure3, the BGI subindices for state capacity show a quite uneven development between 2000 and 2019. At the beginning of the 2000s, fiscal capacity improves considerably from 25 in 2000 to 42 in 2003 only to fluctuate around that rather low level through the rest of the observation period. In a context of economic instability combined with political and financial crises, in contrast to Russia, Ukraine has experienced strongly fluctuating inflation that was high (28%) in 2000, rose to 25% in 2009 with the global financial crisis, and exploded to 48% in 2015 following FIGURE 3 State capacity in Ukraine, by subindices, 2000– 2019. Source: Berggruen Governance Index 2022. | 81 UKRAINE: UNFINISHED REVOLUTIONS Russia's annexation of Crimea and armed conflict in the east (see Figure4).6 Still, the economic outlook at the beginning of the 2000s was relatively positive because until 2007 real GDP growth averaged about 7.5%, one of the highest growth rates among transition economies. Furthermore, high prices for steel on global markets brought in significant income, which accounted for 40% of Ukraine's exports and 15% of GDP at the time. However, this, together with cheap energy prices, resulted in fiscal policy decisions to sharply expand mainly public sector wages, which boosted consumption but strained state finances. Ukraine was hit hard by the 2008 global financial crisis, as steel prices dropped by 80%, while Russia, Ukraine's main energy supplier, raised prices for oil and gas, putting the tax administration under severe pressure (IMF,2011, pp. 6– 8). What followed was a threefold crisis in 2008– 2009, when global demand for steel fell, the domestic economy shrank drastically and the banking system failed, causing a severe funding and fiscal crisis in 2009, with interest payments dropping and central bank reserves dissipating (IMF,2010, p. 4). This was when the Ukraine's government turned to the IMF for support. Despite a gradual recovery from 2009 onwards, needed institutional reforms and policy changes remained largely on hold due to sharp political divisions and conflicts within the government. Constant political conflicts within the government and between the parties in the parliament contributed to a low BGI score for the subindex of coordination capacity between 2000 and 2019, which stays well below the global average of 54. Cronyism and oligarchs' capture of public administration considerably weakened the bureaucracy's functioning, while social and infrastructural spending decisions were made based mainly on the particularistic interests of those in power. Incidentally, BGI scores for coordination capacity showed signs of improvement in the first few years following the Orange Revolution in 2004, only to turn downwards again, indicating the good intent but also the failure of that revolution to sustainably change the country's governance. However, following the EuroMaidan in 2014, decentralisation reforms strengthened local governments and their fiscal sustainability,7 which has put coordination capacity back on an upward path. BGI scores for the delivery capacity subindex show a similar dynamic as for coordination capacity: with the regime change due to the Orange Revolution in 2004, delivery capacity increases but declines again in the FIGURE 4 Inflation in Ukraine and Russia, 2000– 2019. Source: https://data.world bank.org/indic ator/SP.DYN.LE00.IN?end=2019&locat ions=UARU&start =1980&view=chart. 82 | FRÖHLICH years before the next revolution in 2014, after which it started increasing again. On the one hand, this coincides with a drastic drop of real GDP due to the 2008– 2009 global financial crisis, which severely limited government spending.8 On the other hand, it reflects the country's difficulties in solving its endemic corruption problem and dysfunctions in the judicial system. Indeed, unchecked corruption within both the administration and government was one of the main grievances of the EuroMaidan protests. Moreover, the deadly crackdown on the protesters at that time highlighted the flaws in the judicial and law enforcement systems. Though the postMaidan government under Petro Poroshenko enacted reforms to combat corruption, they remained only partially implemented. Still, improvements have been made in the judicial sector when a new Supreme Court began its work in 2018 (Freedom House,2019). What is more, improved BGI scores for delivery capacity since 2014 coincide with Ukraine's efforts to establish a legal framework to fight corruption and corresponding entities, including an anticorruption tribunal.9 Consequently, the score of the Corruption Perceptions Index (CPI)10 for Ukraine improved between 2014 (26 on a 100point scale) to 2018 (32). The measures included the creation of new national anticorruption agencies, public procurement reform, requirement of edeclarations for public officials, political party finance reform, energy tariff reform, and reform of the management of stateowned enterprises. However, Transparency International and others have warned that the anticorruption infrastructure is not robust enough, with the responsible bodies lacking stability and authority, as well as sufficient human and financial resources.11 2 | DEMOCRATIC ACCOUNTABILITY Ukraine's 1996 constitution established a semipresidential republic, but the country has failed so far to establish a stable and transparent democratic regime. Despite the two consecutive social revolutions in 2004 and 2014, Freedom House's Nations in Transit scores put the country consistently in the category of FIGURE 5 Democratic accountability in Ukraine compared to Russia, 2000– 2019. Source: Berggruen Governance Index 2022. | 83 UKRAINE: UNFINISHED REVOLUTIONS ‘transitional or hybrid regime’ (Freedom House,2022b). Also, the state of political rights and civil liberties is far from satisfying. The Freedom in the World score, also published by Freedom House(2022a), has assigned Ukraine only a ‘partly free’ label since it began to be covered in the 2017 report. While Russia's accountability score drifts down over the first 20 years of the new millennium, Ukraine's shows clear improvement after the Orange Revolution in 2004 and until 2009, reaching a peak score of 70 in 2007 (Figure5). The 2004 public protests put a new prodemocratic government under President Viktor Yushchenko into power and paved the way for a broad institutional reform programme. However, proRussian incumbent Viktor Yanukovych, who lost power as prime minister in 2004, was elected president in 2010. Under his government, democratic accountability fell again almost to the level of 2000 (55 in 2014). The events of the EuroMaidan protests in 2014 swept him out of office for the second time, but the new President Petro Poroshenko and his government were not able to improve accountability to any considerable extent. Only the arrival into office by President Volodymyr Zelenskyy and his parliamentary allies in 2019 coincided with a swing of the BGI index back in the upward direction (63 in 2019). Despite an overall improvement of 9 points between 2000 and 2019, ups and downs along the developmental paths of all three subindices for democratic accountability demonstrate the impact of institutional shortcomings (see Figure6). The below global average scores for the BGI subindex for institutional accountability (47 in 2000, 46 in 2012) reflect the rather weak state of institutional oversight and control over the government. In particular, the Yanukovych government tightened control of the executive over courts and severely limited the competencies of the Supreme Court to mere symbolic functions. Moreover, political trials sought to prosecute leaders of the opposition at that time (Nekoliak,2020). BGI scores for electoral accountability show an ultimately positive trend (from 61 in 2000 to 70 in 2019), with most of the postSoviet elections being conducted in a transparent and free manner, complying with international standards. However, electoral accountability is FIGURE 6 Democratic accountability in Ukraine, by subindices, 2000– 2019. Source: Berggruen Governance Index 2022. 84 | FRÖHLICH not at as high a level as some of the bestperforming postSoviet democratic regimes (e.g., BGI subindex scores for Estonia already at 90 in 2000 and then at 93 by 2019). One of the main reasons is that the Ukrainian political party system has been quite unstable, not unlike other postcommunist countries (such as Latvia, Poland, or Russia), with many parties vanishing and being newly founded, a situation that gave and still gives oligarchs and business groups plenty of influence and lobbying power. In addition, businesses often ‘sponsor’ members of parliament, making the electoral and legislative process even more vulnerable to corruption and the influence of lobbying groups (Dabrowski,2017). Some elections have been criticised by international observers because of the use of administrative resources to favour the incumbent candidate, registering of ‘technical’ candidates in order to divert voter attention from opposition candidates, and illegal stuffing of ballot boxes (OSCE,2004). Electoral fraud during the 2004 presidential elections sparked the Orange Revolution (Kuzio,2005), while the 2012 parliamentary elections were internationally deemed rigged (OSCE PA,2012). A similarly contradictory picture appears in the trends of the BGI subindex score for societal accountability. The score climbs above the global average after the Orange Revolution in 2004, but falls in the wake of Viktor Yanukovych's government between 2010 and 2014 and then stagnates, though still at a higher level than in 2000.12 Ukrainian society of the postSoviet era is no stranger to social mobilisation and mass upheaval against authority. For example, student protests in Kyiv against the communist leadership in 1990 (Revolution on Granite), miners' strikes in eastern Ukraine in 1993, the Orange Revolution in 2004, and, eventually, the EuroMaidan in 2014, all drove chief executives out of power (Way,2014). The initial success of the two revolutions in 2004 and 2014 was due in large part to Ukrainian civil society. During the first decade of the new millennium, civil society organisations (CSOs) were mostly ignored by the state. At a time when only 15% of CSOs' budgets came from staterelated sources, international donors had a crucial impact. State– civil society relations improved following the Orange Revolution, but in particular, under the Yanukovych regime from 2010 became paradoxical. On FIGURE 7 Public goods provision in Ukraine compared to Russia, 2000– 2019. Source: Berggruen Governance Index 2022.