Chris Johnston
August 03, 2006

The leader of Ukraine’s Orange Revolution put forward as prime minister last night the man he defeated two years ago, in an attempt to end four months of political deadlock and form a coalition government. President Yushchenko said that he would propose Viktor Yanukovych, the opposition leader, for the post after the latter signed a declaration of principles to safeguard Ukraine’s policies of closer integration with Europe and market reforms.

“I ask people to understand that we have a unique chance about which we talked on Independence Square, about which we dreamt,” Mr Yushchenko said in a televised address, referring to the protests that followed the disputed election.

“We have another chance to unite Ukraine today,” Mr Yushchenko said. “Whatever decision the President makes, it would not have been accepted by part of the population or it will cause some misunderstandings. But I think that now is the very moment when we must unite Ukraine.”

An election in March left no party with a parliamentary majority. The Russian-speaking east, which looks to Moscow, strongly backed the pro-Russian Mr Yanukovych, while many in the Ukrainian-speaking west and centre gave warning that a Yanukovych premiership would be seen as a betrayal.

The party led by Mr Yanukovych, which won the most seats, eventually formed a coalition with two other parties. The new majority coalition nominated Mr Yanukovych to be prime minister last month, but that decision had to be approved by Mr Yushchenko. The deadline for him to do so fell at midnight last night. The President took a further two hours before announcing his decision. Mr Yushchenko said that his decision might be painful for some Ukrainians.

Mr Yanukovych rigged the election in 2004. Protests that became known as the Orange Revolution followed and Mr Yushchenko won a fresh election. The President had faced the difficult choice of agreeing to work with his former rival, who was accused of ordering his near-fatal poisoning, or dissolving parliament and calling new elections.

Such a high-risk move could have prolonged the political chaos in the former Soviet republic. However, it has created a potentially awkward “cohabitation” with Mr Yanukovych. As President, Mr Yushchenko retains control over foreign policy, defence and national security, but observers say that he will struggle to push through his policies.

Mr Yanukovych’s party aides have said that they will not block Ukraine’s preparations for Nato membership. That is unlikely to happen for at least five years and all sides agree that final accession must first be put to a referendum. On economic policy, Mr Yanukovych is seen as a pragmatist and has promised to lower taxes for business, including the big industrial exporters that drive Ukraine’s economy. He is also expected to use the central bank to weaken the currency.

Market analysts are concerned, though, that he will allow a return to cronyism and lack of transparency in economic policy. Challenging these problems was seen as one of Mr Yushchenko’s few achievements.