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Op-ed

Leonid Kuchma Built a Prosperous Ukraine

by Anders Aslund, Peterson Institute for International Economics

Op-ed in the Moscow Times
August 28, 2008

© Moscow Times


On August 9, Leonid Kuchma turned 70 years old. For 10 years, from 1994 until 2004, he was the president of Ukraine. He arrived as the savior of his nation, but the Orange Revolution ended his second term. His legacy is rich but multifaceted.

After Russia's attack on Georgia, Ukraine may be the next target. Moreover, the country is deeply divided politically. Against this backdrop, the merits of Kuchma become even more apparent.

Kuchma allowed democracy and all its freedoms to be secured. No one doubts any longer that Ukraine will stay independent and economic dynamism will continue.

Recently, I saw Kuchma again at the Yalta European Strategy, the annual conference that his son-in-law, Victor Pinchuk, organizes every year to promote Ukraine's integration with Europe. This year, he had former British Prime Minister Tony Blair as the keynote speaker. Last year, it was former US President Bill Clinton.

Kuchma looks good, much healthier than when he was in office. I asked him to characterize himself. True to his personality, he answered with one word: "pragmatist." Indeed, he may be called a dead-pan realist. He saw people exactly for what they were—neither worse nor better. His great realism helped him to act rationally, but people regretted that he did not embellish them.

In his extensive writing, Kuchma has summarized his wisdom: "I know the history of Ukraine, and I know the character of its people—both the strong and the weak sides. Ukrainians in general know themselves very well. We praise ourselves less than we curse ourselves. And what do we curse ourselves for most? For the fact that there are three bosses for every two Ukrainians. You know the old saying: In a struggle for power, people are ready to destroy one another and everything around them."

"What was your greatest deed?" I asked.

"I saved the integrity of our country," Kuchma responded. When he was elected president in the country's free elections in July 1994, Crimea was toying with separatism. Through complex negotiations with many small steps, Kuchma peacefully exhausted this disorganized attempt at secession.

"What else are you most proud of?"

Kuchma stated the obvious: "The construction of a market economy in Ukraine and the fact that we achieved financial stabilization."

The year before he came to power, Ukraine recorded hyperinflation of 10,200 percent. The Soviet-style command economy had ceased to function, and no new economic system had been established. Economic chaos prevailed, and output was in near free fall. Ukraine had no international reserves, only unregulated debts. At the time of Kuchma's election, the CIA issued a National Intelligence Estimate titled, "Ukraine: A Nation at Risk," which postulated that Ukraine might not survive as a state.

Kuchma asked the International Monetary Fund to help him sort out state finances and did what it took to save his country. Without hesitation, he carried out the necessary market economic reforms and privatized most of the economy. By 1996, he had defeated inflation and introduced Ukraine's national currency, the hryvna. In 2000, when Viktor Yushchenko was prime minister, economic growth finally took off. Since then, it has averaged 7.5 percent a year—no mean feat.

In 1996, Ukraine adopted its constitution, which finally brought some order to the chaotic government proceedings. As the former manager of the largest Soviet rocket plant in Dnepropetrovsk, Kuchma has always been perfectly organized.

Kuchma's domestic successes brought international recognition. Kuchma not only got along well with Clinton, he worked well with Boris Yeltsin, and they agreed on the intricate division of the Soviet Black Sea Fleet.

Like so many other great leaders, Kuchma was at his height during his first two years and seemed to do it all, but he remained in power for 10 years, overstaying his welcome. History has shown that it is difficult for strongmen to understand when it is time to go, and the temptations to abuse power are great, not least to interfere with the media.

His darkest period was from 1997 to 1999, when his prime ministers were Pavel Lazarenko and Valery Pustovoitenko. Lazarenko looked upon government as his business, being the most blatantly corrupt top politician in Ukraine. Pustovoitenko was the country's quintessential bureaucrat, and this in a country in which corruption and bureaucracy were the greatest flaws.

What was the worst chapter of his political career? Kuchma responded with one phrase—"the Gongadze affair." In November 2000, socialist leader Oleksandr Moroz presented audiotapes in the parliament that had been made by one of Kuchma's bodyguards. In the recordings, a voice resembling Kuchma is heard complaining vehemently about the muckraking journalist Heorhiy Gongadze, who had since been found dead.

Although a Kiev court in March convicted three former Ukrainian police officers in the Gongadze murder case, law enforcement officials were never able to identify those who ordered the killing. Nonetheless, Kuchma's previously high popularity plummeted, never to recover. The opposition against Kuchma built up for four years and led to the Orange Revolution in November and December 2004, but it ended with the peaceful and democratic election of Yushchenko as president.

During the next year, Kuchma kept out of the public limelight, but he did not leave the country and stayed in his old house on the outskirts of Kiev. Last year, he published a book about his view of Ukraine, "After Maidan," referring to the Ukrainian word for Independence Square, where the Orange Revolution took place. After the book was published, Kuchma appeared in public again.

As the luster of the Orange Revolution dims, Kuchma looks ever better. After all, he allowed democracy and all its freedoms to be secured. No one doubts any longer that Ukraine will stay independent and economic dynamism will continue.

For the last three years, Ukraine has adopted very little legislation, apart from the legislation needed to enter the World Trade Organization this year. If Yushchenko does not change his policies, his term will have been one in which no government could accomplish anything. Naturally, this leaves a black mark on the Orange Revolution.

Since Tymoshenko became prime minister, Yushchenko has vetoed nearly all her decisions, notably all decisions on privatization. Inflation rose to 31 percent in May because the Central Bank insists on an inadequate exchange rate policy with a dollar peg and therefore maintains high, negative real interest rates.

Whatever you say about Kuchma, he was a man who could make decisions and get things done. His second term, from 1999 to 2004, was Ukraine's most productive in terms of both legislation and economic growth. He managed to rule Ukraine, which is a difficult art. Whatever happened under his rule, he created a functioning democracy. One reflection of Ukraine's democratic strength is that both Kuchma and his predecessor, Leonid Kravchuk, remain public personalities. Kuchma's 70th birthday is an opportunity to celebrate his contributions. Few people have done so much for their country.