8 February 2010
By Daryna Krasnolutska and Kateryna Choursina
Viktor Yanukovych, the Ukrainian opposition leader whose first presidential election victory was overturned by the courts after the 2004 Orange Revolution, won yesterday's vote on a promise to end years of turmoil.Yanukovych, 59, took 48.68 percent over 45.73 percent for Prime Minister Yulia Timoshenko, with 98.97 percent of the ballots counted, according to the Central Electoral Commission's Web Site. Timoshenko, 49, has yet to concede the election, while Yanukovych urged her to concede and step down as premier.
"I think Timoshenko should start getting ready for her dismissal," Yanukovych said in a broadcast from his Kiev headquarters today. "Timoshenko showed she was a strong opponent and it is very important that she accepts defeat."
Yanukovych promised to cut taxes to lift the nation out of recession, unfreeze a $16.4 billion bailout loan and improve relations with Russia and the European Union. He replaces Viktor Yushchenko, whose fortunes plunged over political gridlock. Uncertainty may be prolonged after Timoshenko accused Yanukovych of fraud and promised to challenge the result. He may call early parliamentary elections to unseat her as head of government and form his own coalition with a handpicked premier.
Falling Bonds
Ukraine's dollar-denominated bonds due 2016 fell 0.5 percent to 81.83 cents on the dollar at 4:30 p.m. in Kiev, the lowest level since Jan. 6, lifting the yield to 10.379 percent from 10.279. The hryvnia weakened 0.5 percent for the first day in four, to 8.0679 per dollar.
The extra yield investors demand to own Ukraine debt instead of U.S. Treasuries rose 6 basis points to 8.37 percentage points, the highest since Jan. 6, as of 4:30 p.m. in Kiev, down from a peak of 35.93 percentage points in March, according to JPMorgan Chase & Co.'s EMBI+ Index.
"We are likely to see heavy confrontation from Timoshenko in the courts and probably on the streets," said Fyodor Bagnenko, the director of equity sales at Dragon Capital, Ukraine's largest brokerage, in an e-mail to Bloomberg. "She is not going down easy, for sure."
Turnout was 69 percent, according to the Central Electoral Commission.
Turmoil Ahead
Yanukovych's promise to voters to settle years of political infighting may be foiled by the specter of early parliamentary elections. Yanukovych's Party of Regions lacks the majority control in the 450-seat Parliament needed to pass his policies.
"My main tactic after the elections is to create a new coalition in the parliament," said Yanukovych on Jan. 29. "It will be either a new coalition in the current Parliament or a coalition in a new Parliament after general elections."
Timoshenko urged her supporters to monitor the counting of ballots last night, adding that her team was doing its own "parallel" count.
"We are fighting for every single vote," said Timoshenko on state television. "A single vote may determine the future of Ukraine. Any celebrations before the official results is manipulation."
Timoshenko canceled a press conference twice today and rescheduled it for an indefinite time tomorrow.
Yanukovych initially won the 2004 election, but the Supreme Court bowed to the pressure of millions of demonstrators who called for a new vote and threw out the result.
A total of 3,779 observers, including 650 from the Organization of Security and Cooperation in Europe, were dispatched to monitor the election.
'Transparent' Election
Ukraine's presidential election, the fifth since the country regained its independence when the Soviet Union collapsed in 1991, was democratic and "organized in a transparent manner," the OSCE said today in an e-mailed statement.
"Yesterday's vote was an impressive display of democratic elections," said João Soares, the president of the OSCE's Parliamentary Assembly and Special Coordinator for OSCE short- term observers. "For everyone in Ukraine, this election was a victory. It is now time for the country's political leaders to listen to the people's verdict and make sure that the transition of power is peaceful and constructive."
A prolonged post-election battle would prevent the country from freeing up a delayed $16.4 billion emergency loan by the International Monetary Fund. The bailout was put on hold indefinitely after the country failed to pass the 2010 state budget and cut spending.
Calm in Streets
At Independence Square, the central point of the Orange Revolution, people casually strolled past the towering needle and glass dome that houses a shopping center.
The small groups of green-capped soldiers milling about the square were ignored by passers-by who were offered soccer club scarves, refrigerator magnets, CDs and T-shirts of the candidates for 40 hryvnia ($5) apiece. In the center of the square, four Falun Gong followers practiced their meditations while standing in a half-meter high pile of snow.
"Nothing poses a threat to the public order, every street and every square is under our control," Deputy Interior Minister Oleksandr Savchenko said in remarks broadcast by private TV Channel 5. He said that buses with 6,500 people from the country's regions arrived to participate in organized street demonstrations.
Growing Cynicism
"I voted for Viktor Yanukovych as he is the person who will be able to boost the economy and industrial production," said Andriy Bezpalyi, a 24-year-old lawyer, after casting his ballot. "I think he will win."
Still, a growing cynicism among the electorate may keep either politician from claiming a strong mandate. The electoral commission said 4.38 percent voted against both candidates.
"The mood in the country toward these two presidential candidates is for the most part one of fatigue and cynicism," said James Sherr, the head of the Russia and Eurasia program at London-based Chatham House, in a Jan. 29 interview. "They are both seen by a very large proportion of people in relatively negative terms. That doesn't provide a basis for mobilizing significant numbers of people."
Yanukovych has also promised to move ahead to meet EU requirements for signing a so-called Association Agreement, including a free-trade package that would help exporters gain more market share in the 27-nation bloc.
Ukraine's economy plummeted 15 percent in 2009, the steepest decline since 1994, Yushchenko's office estimated. The hryvnia has lost 42 percent versus the dollar since September 2008. It is the world's second-worst performer in the period after the Venezuelan bolivar.
Central Bank Appointment
The president also will need to appoint a new central bank governor to replace Volodymyr Stelmakh, whose term ended in December and who is staying until after the election. Yanukovych hasn't said who would take the post.
Yanukovych also has said he wants to review a natural gas supply agreement with Russia that was signed by Timoshenko in January, 2009. The accord ended a three-week spat between Ukraine and Russia that disrupted supplies to European nations. Ukraine ships 80 percent of the EU's Russian gas needs.
