By Judy Dempsey, International Herald Tribune
WEDNESDAY, NOVEMBER 30, 2005

KIEV In Ukraine, where resignation and economic paralysis have replaced the hopes of the Orange Revolution of a year ago, the controversial and flamboyant former prime minister, Yulia Timoshenko, is planning her political comeback during parliamentary elections next March.

Only two months after President Viktor Yushchenko sacked her as prime minister, a more subdued but still determined Timoshenko is hoping to establish an alliance of convenience with the co-leader of the Orange Revolution in order, she says, to prevent old rivals from regaining power and to restart the reforms.

"I want to have a coalition with Yushchenko but not with these odious people around him," said Timoshenko, 45, who frequently clashed with Yushchenko during her eight months in office, criticizing him for failing to curb the powers of the oligarchs or stamp out corruption.

"This group of people who used the slogans of the Orange Revolution to come to power but then used it to satisfy their appetite prevented the real unity between me and Yushchenko," said Timoshenko during an interview in the offices of her Motherland Party. "I believe that the president is sincere in his wish to do good for Ukraine."

Yushchenko has not responded in public to Timoshenko's offer. He is facing a sharp diminution of his presidential powers under reforms that will make Ukraine more of a parliamentary democracy as of January, ahead of the March elections.

Essentially, he faces a choice among joining forces with Timoshenko and accepting her again as prime minister; trying to find a strong enough ally in his own camp for the post; or accepting that it go to his rival Viktor Yanukovich, whose rigged victory in presidential elections last year precipitated the Orange Revolution and Yushchenko's eventual triumph in rerun elections.

Yanukovich is currently waging a savvy campaign for the votes of those disillusioned by the lack of great reform in the past year.

The United States and the European Union had placed great hopes in Yushchenko and Timoshenko, believing the two could lead Ukraine toward democracy and provide stability to a strategically important country sandwiched between the EU and Russia.

After years of corruption under former President Leonid Kuchma and his prime minister, Yanukovich, Westerners and many Ukrainians were hoping for a fresh start.

But over the past few months, outsiders have looked on with frustration and almost disbelief as the two heroes of the Orange Revolution clashed bitterly over the pace of reforms.

The infighting has allowed the Russian-backed Yanukovich and his Ukrainian Party of Regions to regroup. As Ukrainians marked the first anniversary of the Orange Revolution last week, Timoshenko warned of a Yanukovich comeback.

"Today," Timoshenko said, "Yanukovich has just a chance. If we do nothing, he has a 100 percent chance" of winning. To prevent this, she said she was prepared to form a strategic alliance with Yushchenko's Our Ukraine party until the election.

Timoshenko acquired her political skills in the mid-1990s while running her multibillion-dollar energy company, Unified Energy Systems of Ukraine, and later as deputy prime minister in charge of the energy sector, when she clashed openly with several oligarchs. She blamed some of these same immensely rich and powerful businessmen for her dismissal, even though she and Yushchenko had a written pact on sharing power.

Once the elections were over, Timoshenko recalled how Yushchenko had invited her to "a frank talk. He told me he did not want to go along with the agreement. He would feel more comfortable if I resigned. He would appoint Petro Poroshenko as prime minister."

Poroshenko, an oligarch with interests in confectionery, shipbuilding and the media, supported Yushschenko's presidential election campaign. The two men are very close. They are godparents to each other's children.

Timoshenko said Yushchenko changed his mind when he went to Independence Square on the day of his inauguration, Jan. 23, 2005. "There, the crowds shouted 'Yulia! Yulia!' The president saw it would not be wise to appoint Poroshenko while society had other wishes," Timoshenko said.

As prime minister, Timoshenko said, she did not have a free hand to tackle corruption or reprivatize enterprises that had often been sold at below market prices or to oligarchs who supported Kuchma.

Yushchenko had been more cautious, unwilling to seek revenge. Timoshenko saw this as a sign that Yushchenko was not prepared to take on the oligarchs or break their stranglehold over the state.

"Those who controlled metallurgy, energy and refineries joined forces, sometimes with the most odious people in the Russian oligarchy from the Russian Federation" and tried to block re-privatization, Timoshenko said.

Despite what she claims was intimidation and attempted bribes, Timoshenko succeeded in reprivatizing the Kryvorizhstal metallurgical enterprise owned by the oligarchs Rinat Akhmetov and Viktor Pinchuk, Kuchma's son-in-law. It was sold last month for $4.8 billion, six times higher than last year's original selling price.

Timoshenko said it was supposed to be just the beginning in her attempt to break the power of the oligarchs.

"We had been working on a model for future ones," she said. "Some people approached me with huge bribes, basically trying to buy me. There was enormous pressure almost every day to prevent me from playing a constructive role. It was basically a war."

Economic advisers to Yushchenko who can be just as critical of the president as they are of Timoshenko said Timoshenko did not do a good job on the economy.

"As prime minister, Timoshenko pursued populist policies, increasing pensions and social assistance payments," said Igor Burakovsky, director of the Institute for Economic Research and Policy Consulting in a recent interview. Buoyed by state handouts, during the first eight months of 2005 real household incomes increased by 24.5 percent compared with the same period last year. Inflation is running at 13.9 percent.

When asked if she was a populist and had increased social assistance payments as part of her March election bid, Timoshenko denied it.

"I think for the first time in the history of Ukraine, I fulfilled my promises," she said. "We managed to keep inflation under control despite our social policies. These were the promises made by the president. But because there were intentions to dismiss me from the very moment I was appointed, they used this stereotype as a populist to justify their actions."

If elected, Timoshenko says she will be prepared to take on the oligarchs since she will have a freer hand in the strengthened prime minister's seat.

"The less state in the market, the better," Timoshenko said. "More state encourages corruption. It leads to an unholy alliance of the bureaucrats and the oligarchs.

"The more market we introduce into the economic sphere, the more difficult for these corrupt interests to flourish," she said.

"We gave promises to the Orange Revolution to introduce reforms. My campaign slogan is Move Ahead."

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