It was one of those ghastly days — collapsing into bed at 4am after an official trip, up again too soon for a cabinet meeting on the economic crisis, and then an interview with a British journalist. When she arrives for our meeting, Yulia Tymoshenko, Ukraine’s prime minister and Europe’s second most powerful woman, has not even had time to produce the trademark peasant-style plait that normally hovers on her head like a halo: her hair is combed into a loose bun.
Tymoshenko first came to international attention during Ukraine’s so-called Orange Revolution in 2004. She and the pro-Western presidential candidate, Viktor Yushchenko, stood on the barricades for 13 days with tens of thousands of supporters demanding a re-run of elections. The supreme court decided there had been fraud and after a new election he became president and she prime minister.
But the two soon fell out, and Yushchenko sacked Tymoshenko in August 2005. Since then their long-running feud has been a major disappointment for the young people who put them in power, and the despair of foreign governments, EU officials and investors.
Appointed prime minister again after winning parliamentary elections in 2007, Tymoshenko now misses no opportunity to criticize her former ally for “purposely impeding the government’s work.” She is looking forward to the elections, due in January: “We will definitely run for president and we are bound to win,” she says.
She is ahead in the polls, but Ukraine’s economic woes have dented her ratings. The recession has hit eastern Europe very hard, and Ukraine and Latvia have suffered most of all. Sales of Ukraine’s main export, steel, are down by 40 percent. Real wages started to slip in December and by February were down by 13% from the year before. Unemployment is forecast to reach 10 percent — and this is probably an underestimate.
It has all come as a shock, especially to the country’s new middle class. The economy has been booming for five years and hundreds of thousands of them took loans to buy cars and flats in US dollars. But Ukraine’s currency, has now lost 40 percent of its value, and families will struggle to repay their inflated debts.
On top of that looms the constant crisis over gas. Ukraine hit the world headlines in January when Russia cut supplies owing to unpaid Ukrainian bills. Ukraine then cut supplies to much of the rest of Europe. Tymoshenko has made three trips to Moscow to resolve the crisis, the most recent one last week. Now she claims there is no chance of another cut-off “because we achieved a true breakthrough by concluding a contract with Russia for 10 years. We have completely removed any political implications from the gas price and gas transit calculation formulas. Ukraine has become dramatically more independent, both economically and politically.”
The woman once regarded in Moscow as an enemy (in Vladimir Putin’s early years in power there was an arrest warrant against her) is now seen as the Kremlin favorites. They like her role in balancing Ukrainians’ pro-EU aspirations with a keen sense of Russia’s interests and the need for co-operation, unlike Yushchenko “who never misses a chance to poke Moscow in the eye,” in the words of a European diplomat.
Even if the gas crisis is history, the wider economic crisis is ever present. Deadlock in the Ukrainian parliament meant that Tymoshenko had to use governmental decrees to pass various measures, including steeper taxes on tobacco and alcohol, to curb the ballooning budget deficit. Thanks to her tough approach, the IMF has agreed to release US$2.7 billion in a loan aimed at stabilizing the economy and restoring confidence. Analysts now see little risk of a total collapse of the economy, but recovery will be slow.
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