Is Viktor Yanukovych Ukraine’s Putin?

In February 2010, Viktor Yanukovych was freely and fairly elected president of Ukraine. It was not too surprising: The Ukrainian economy had contracted by 15 percent in 2009, and near political stalemate reigned in this fragile democracy. One year later, Yanukovych appears to be following the prescription of his political model, Russia’s Vladimir Putin, by swiftly concentrating power in his own hands and wealth among a small circle of associates.

In October, the Constitutional Court suspended the Ukrainian Constitution of 2004, returning to the 1996 constitution, which granted greater presidential powers. The country is no longer regarded as a democracy; Freedom House downgraded Ukraine to being only partially free, and Reporters Without Borders ranks Ukraine 131st out of 178 countries in press freedom. And local elections last October ended Ukraine’s string of free and fair elections.

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The authorities defend their roughness as necessary to achieve reforms. Last summer, these statements had some credibility. In June, Yanukovych presented an ambitious economic reform program. In July, he reached agreement on a stabilization program with the International Monetary Fund, backed by $15 billion of credits. Impressively, Ukraine swiftly carried out the required early actions, such as tightening the state budget and raising gas prices for consumers.

The ensuing “reforms,” however, did not boost Ukraine’s competitiveness or market freedom but instead benefited a few businessmen close to the president. Yanukovych favors privatization, but the deals are neither transparent nor competitive. The national telecommunications company, Ukrtelecom, was sold to a single permitted buyer — an Austrian private-equity firm named EPIC — at the minimum price. More such deals are in the works. Last summer, Ukraine enacted a new law on government procurement, but major infrastructure projects connected with the Euro 2012 soccer championship were excluded from competition and appear reserved for a couple of the president’s closest associates.

Ukraine’s grain exports boomed in recent years, with domestic and international entrepreneurs stepping in. But last summer, Yanukovych ordered an embargo on exports, with quotas granted only to his associates. Food processing is declining as a result.

The key reform law was the tax code adopted last fall, but it cut taxes on big corporations while increasing the burden on small entrepreneurs, arousing protests all over Ukraine. In an apparent charade, Yanukovych vetoed the tax code, eliminating its worst aspects, but even so, big international auditing firms say the tax system has deteriorated, and many small businesses have closed.

In a brief annual address to parliament on April 7, Yanukovych appeared to have given up his reform pretenses, presenting platitudes, apart from insisting on privatization. Major pension and gas market reforms agreed to with the IMF have been postponed, while the grain export quotas have been maintained and tax reimbursements have stalled. As a result the IMF reforms have fallen apart.