Ze First Year: How Zelenskyy’s presidency changed Ukraine

Collage: Euromaidan Press 

Ukraine

On this day a year ago, Volodymyr Zelenskyy was inaugurated as the president of Ukraine and officially turned from a comedian to a politician. Back then, some perceived him as an angel and some as a demon; no one remained indifferent. Luckily, after the Euromaidan Revolution, Ukraine matured enough to not have one person pulling all the strings. Still, with Zelenskyy coming to power, the country started changing immediately, or “in turbo mode,” as is commonly said in Ukraine. What were these changes about and where have they led Ukraine? Euromaidan Press journalists analyzed the policy in four areas – domestic politics, economy, policy towards occupied Crimea and Donbas and relationships with Russia, and foreign policy.

One thing that hasn’t changed over this year, however, is Zelenskyy’s popularity: according to polls, he would defeat the former president Petro Poroshenko in a hypothetical second round.

“Paradoxically, with a decrease in trust in the president, his electoral rating did not fall but increased. Now Zelenskyy would receive, according to our latest data, somewhere around 14-15% more votes than in the first round of elections a year ago. An electoral rating is a relative, not an absolute assessment because you need to choose one of a number of people. And yes, since there are no alternatives to the current president, he is still chosen by many,” Volodymyr Paniotto, the head of Kyiv International Institute of Sociology told nv.ua in mid-April 2020.

The lack of alternatives in Ukraine goes not only for the president. One of Zelenskyy’s key problems is a shortage of staff, which goes in line with chaotic steps instead of strategic policy. Zelenskyy’s first year saw three governments already — one remaining from Poroshenko’s era and two consisting of “new faces.” Honcharuk’s government was dismissed after 6 months of work and the current one led by Shmyhal is only 2 months old. This reshuffle illustrates a lack of professional HR and economic policy that led to falling economic indicators already before the coronavirus pandemic.

Superficial changes in domestic politics and setting preconditions for a revanche

Zelenskyy dismissed the government led by Honcharuk (on the left) only after six months of work. Photo: pravda.com.ua

The very first moments of Zelenskyy’s presidency entailed dramatic domestic policy changes. However, they later revealed themselves as superficial, while the cores of the problems remained.

Holding a mono-majority. Zelenskyy’s turbo mode was set already in summer 2019 by holding early Parliamentary elections just about three months earlier than regular ones. The Constitutional Court’s decision on early elections again undermined trust in Ukraine’s judiciary, as many legal experts considered them unconstitutional. However, they helped harvest votes for his Servant of the People’s Party and form a so-called mono-majority in Parliament.

Losing a mono-majority. A year later, the unity which was observed within the mono-majority after the elections is lost. A part of MPs refuses to make decisions that contradict the pro-democratic path of Ukraine, even having a whistleblower MP Geo Leros who dared to uncover corruption in Zelenskyy’s inner circle. Still, a part of the Servant of the People’s MPs remains loyal to their patron oligarch Ihor Kolomoiskyi. Their stance was clearly visible recently when the crucial so-called anti-Kolomoiskyi law allowing Ukraine to receive a much-needed IMF loan was on the agenda. These MPs tried to prevent the bill from passing by filibustering it.

Preserving the oligarchs. In general, not only Kolomoiskyi, but other oligarchs remained the key influencers in Ukraine’s parliament, intervening in its work through loyal MPs. During the year, Zelenskyy did not take decisive steps to get rid of their influence.

Old problems with key reforms. The first months of the work of the new Parliament were intense, bringing some long-awaited changes. Among them was the relaunch of the key judicial reform. Soon after, the reform got stuck, and the need to restart it yet again was recognized by Zelenskyy himself. Though, the president has not shown an understanding of what has to actually be done. The requests of the experts of the field to replace corrupted bodies of judicial self-government, as well as the principle according to which they are formed, remained ignored. The public prosecutor’s office reform eventually also did not bring systematic changes and the latest appointment of Iryna Venediktova as Prosecutor General replacing Ruslan Riaboshapka is believed to be rather politically motivated.

Conditions for a revanche of pro-Russian forces. The lack of judicial and law enforcement reforms from the times of Poroshenko until today, together with Zelenskyy ignoring fundamental conceptual issues for Ukraine, like language or cultural policy, has led to a creeping revanche of “old guard” political elites displaced by the Euromaidan revolution in 2014. The only obstacle they face is the opposition of civil society formed during the times of Euromaidan.

Crucial changes and negative trends in the economy

One of the major fears connected to Zelenskyy’s election, that Privatbank would be returned to its former owner, oligarch Ihor Kolomoyskyi, did not materialize. Here Zelenskyy (center) is pictured meeting Kolomoiskyi (first on the right from center) in the President’s Office. Photo: president.gov.ua

In terms of economics, one of the most intriguing questions regarding Zelenskyy’s policy was the future of Privatbank, the bank which belonged to oligarch Ihor Kolomoiskyi and was nationalized in 2016. Fears of the bank being returned to its former owner emerged due to Zelenskyy being associated with the oligarch. The inner crisis a year later and the world crisis caused by the COVID-19 pandemic forced the parliament to adopt the so-called anti-Kolomoiskyi bill reducing his chances of returning the bank to zero. The breakthrough land market reform, as well as the anti-Kolomoiskyi law, were passed in view of agreements with the IMF.

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Digitalization is a promise from Zelenskyy’s campaign regarding economics which indeed started being implemented.

The government created the app Diya (Action) that contains digitized personal IDs and driving licenses. The digital versions of documents have the same validity as paper ones. This year, the government is working on registering businesses online, registering newborns, e-residency, and other most popular services. The ambitious goal is to make all 100% of public services available online by 2024, which will save loads of time and transaction costs.

Opening the land market was a historic step in economics which yet has to go through the evaluation of time. The law opens the Ukrainian land market in 2021, but only for Ukrainian citizens. Initially, the limit is 100 hectares of land purchased per person. From 2024, the limit will increase to 10,000 hectares per person. Critics argue that 10,000 ha may allow local agricultural monopolies.

5-7-9% program. Zelenskyy presented the program as one of the greatest economic achievements that allows small businesses to take cheap loans in UAH while the market price for loans is about 20%. However, the impact of this program should not be exaggerated despite its brilliant PR-campaign. Only those businesses that already work for at least one year can take a loan. Also, the loan requires a huge pledge.

Generally negative trends. However, the positive examples are overshadowed by the generally negative macroeconomic trends that started before the crisis caused by the COVID-19 lockdown. The Ukrainian industry, which accounts for 25% of GDP, accelerated its decline from October 2019. And while an industrial decline is a worldwide trend, Ukrainian industrial production experiences fell an unprecedented 3-7% compared to the relevant months of the previous year. Thus, 2019 became the first year when industrial production fell by 0.5% in total, while it was slowly growing in 2016, 2017, and 2018.

The slowest GDP growth since 2016 has been observed in the last quarter of 2019.

The recent economic crisis caused by COVID-19 has already led to a recession, with Ukraine’s 2020 GDP expected to contract by 4.5% in 2020 and raised the unemployment rate from 8% to 14%. The amended state budget was adopted with an enormous deficit that means an increase in state loans and state debt in 2020 just after the country managed to normalize its debt burden in 2018-2019.

GDP growth by quarters. Source: Economichna Pravda.

Other macroeconomic indicators such as state debt and international monetary reserves didn’t change significantly yet.

The average salary grew from UAH 10,200 (about $384) to UAH 11,400 ($420) over May 2019 – March 2020, continuing a trend from 2016-2018.

The IMF loan. Zelenskyy’s team couldn’t secure a new IMF loan yet, despite numerous talks, which is a bad sign. At the same time, key IMF demands were finally fulfilled in March and April (the above mentioned land market law and so-called anti-Kolomoiskyi banking law). Therefore, it’s reasonable to expect that the new IMF loan can come soon.

A promise to end the war far from fulfilled

President Zelenskyy visiting the front line in Donbas. Photo: president.gov.ua

A significant part of the promises Volodymyr Zelenskyy made at his presidential campaign had to do with the war in the easternmost Ukrainian region of the Donbas. First and foremost, he promised to end the war by bringing Russian President Vladimir Putin to the negotiation table. Secondly, Zelenskyy believed that he could bring home the Ukrainian prisoners held in Russia and in the parts of Ukraine under its control. And finally, he accused the government of making profits off the war and was going to fight high-profile corruption.

Ignoring Crimea. The Ukrainian peninsula of Crimea annexed by Russia a month before the first Russian armed group unleashed the war in the east of Ukraine remained mostly off Zelenskyy’s radar during his campaign, apart from some occasional Crimea-related statements made by the Ukrainian Ministry of Foreign Affairs.

Return of political prisoners and the Russian agenda. As the year has passed since Zelenskyy’s inauguration, more than 150 prisoners have returned home as Russia re-launched the negotiation process stalled for two previous years, however, the talks didn’t make the Donbas any closer to its de-occupation because Russia still stands on the same positions as in 2014. And the fighting didn’t even stop in the Donbas. The ceasefire negotiated in Paris by the Normandy Four leaders including the Ukrainian and Russian presidents proved to be little different from the other ceasefires agreed throughout the six years of war: the Ukrainian military continues to suffer losses in the front. The above-mentioned progress in organizing the exchanges of Ukrainian hostages also raised controversies since among the prisoners transferred to Russia was a potential witness in the MH17 case, and Ukraine handed over to the Russian occupation authorities of the Donbas the defendants of the Maidan massacre case who have nothing to do with the war in the Donbas.

Ghost of local elections on occupied territories. Zelenskyy believes that the occupied areas of Donbas can see local elections under Ukrainian legislation this fall; as well, he boosted the level of representation of Ukrainian officials in the Minsk group Trilateral Contact Group (TCG) by introducing deputy ministers to it. Zelenskyy’s determination to hold the elections in the occupied Donbas as soon as possible may eventually bring to what Russia has been trying to achieve since 2014, namely the return of the occupied parts of Luhansk and Donetsk oblasts as Russian-controlled enclaves and the federalization of Ukraine.

Army struggles. Meanwhile, various army reforms have either stopped or slowed down under Zelenskyy, such as improving the food-supply system and producing new types of weapons and ammunition.

Ukraine’s shifting focus in the policy regarding Russian aggression also has a significant influence on the country’s foreign policy.

Shifts in the foreign policy coordinate system

During Zelenskyy’s first year, Ukraine got embroiled in a USA impeachment scandal. Photo: Zelenskyy meets President Trump. Photo: president.gov.ua

When Zelenskyy swept to power in April 2019, many were worried about Ukraine’s prospects in foreign policy and foretold a pro-Russian turn. But one year later, neither international sanctions on Russia are lifted, nor did Ukraine refuse its course of Euro- and NATO-integration. However, that’s more or less where the good news stops, writes Aliona Hetmanchuk, director of the “New Europe” center.

Breaking a victim-aggressor coordinate system. Hetmanchuk believes that during Poroshenko’s era, foreign policy was more or less clear. Ukraine is a victim of Russian aggression and needs help, support, and partners. The world was divided into two categories: the aggressor country and its mostly marginal accomplices, and Ukraine-the-victim and its mostly respectable allies. With Zelenskyy, Ukraine did not stop being a victim, but the two-category system of coordinates was broken and was not replaced with any new one. This, Hetmanchuk says, is because Zelenskyy and his team do not view Putin as an ultimate danger, and believe he can be reckoned with.

Eliminating “aggressor” from rhetoric. In result, references to Russia as the aggressor disappeared from Ukrainian rhetoric, presumably – to help “end the war,” apparently – at Russia’s behest. But if the aggressor does not exist for the victim, why should it exist for the friends of the victim? This remains the main challenge for a number of Ukraine’s international partners.

No promised progress with investors. The proclaimed course to find investors has not been fruitful, with the largest news on this road being plans to create an “investment nanny,” while a more productive approach would protect the property of investors by fixing the rule of law in Ukraine. This would mean conducting reforms, and they are another field where Zelenskyy’s foreign policy differs starkly from Poroshenko’s. The current president is much less sympathetic to the desires of Ukraine’s foreign partners; as the dismissal of Prosecutor General Riboshapka despite the admonitions of G7 ambassadors shows, the era where they are either co-owners or drivers of Ukraine’s reform process is coming to an end. Ukraine’s reforms are now Ukraine’s business.

Less trust in western partners. It is noticeable, Hetmanchuk says, that Zelenskyy thinks that Ukraine’s western partners cannot be believed because in reality nobody needs or is waiting for Ukraine. This approach partially reflects reality: Ukraine will be forced to geopolitical solitude for yet some time. However, this attitude does not help establish constructive relations with any partners. As well, Zelenskyy prefers bilateral diplomacy instead of multilateral relations – hence, his hesitancy towards NATO and the EU. Regarding the EU, a rather serious challenge has emerged: there is a growing sentiment within Zelenskyy’s entourage that Eurointegration will harm Ukraine’s economy.

Business casual is the style Zelenskyy brought to Ukrainian diplomacy. His easygoing manners of an actor and informal-esque (read: no tie) attire have been instrumental to improving the atmosphere of negotiations with western actors for the better, writes European Pravda editor Serhiy Sydorenko. The other side of this informality is the shadow diplomacy of Zelenskyy’s team which led to Ukraine getting entangled in a USA impeachment scandal. Despite Ukraine emerging from it with a renewed image of a world corruption hotspot and getting top US officials responsible for Ukrainian relations fired, bipartite support has been preserved, which means that whatever the results of the presidential election in November, the USA will remain Ukraine’s partner.

Unexpected success with sanctions. At the end of Poroshenko’s term, the prospects for sectoral EU sanctions adopted in response to Russian aggression in Donbas were outright shaky. Not so anymore – talks about lessening sanctions have ceased in European capitals. The reason for this, Sydorenko believes, is Zelenskyy’s readiness to talk with Russia. Despite being criticized in Ukraine, it is this sort of ready-for-compromises position which was responsible for cementing Western support for Ukraine. Another positive outcome of Zelenskyy’s first year is a warming of relations with Poland; relations with Germany are also looking bright, and there is hope for improvements even with the problematic Hungary. However, Zelenskyy’s hopes for a friendship with Macron never materialized and France has been moving closer to Russia this last year.

 

Altogether, it would be fair to say so far, both the portenders of Ukraine’s doom under Zelenskyy and messianic believers have been disproven. The first year of the comic-turned-president is no miracle, but neither is it a disaster.

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