Did the victors of the Orange Revolution manage to create a new Ukraine?
Splits in the Orange camp appeared almost immediately. Yushchenko had promised the prime minister's position to his valuable revolutionary ally, Yulia Tymoshenko, who was herself a powerful political player with her own party machine, the Yulia Tymoshenko Bloc (BYuT).
Yet, the new president was quickly growing uncomfortable with Tymoshenko's independence and popularity. His own team in Our Ukraine detested the need to share power with the BYuT people, and one of Yushchenko's oligarch supporters, Petro Poroshenko, also had prime ministerial ambitions. Instead of implementing a consistent reform package, the leaders of the Orange side struggled to undermine each other and to score points with voters in advance of the 2006 parliamentary elections. Their power struggles led to popular disillusionment and allowed the Party of Regions to reconstitute its support base.Tymoshenko's first term as prime minister turned out to be short-lived and controversial. She spent much of it fighting with Poroshenko, who was appointed head of the National Security and Defense Council, an organization with an ill-defined portfolio that he tried to build into an alternative cabinet. In the economic sphere, Tymoshenko showed a propensity for radical measures with a populist bent. Reversing insider privatizations of the late Kuchma period had been at the top of her economic agenda, and she managed to undo the biggest of them all, the 2004 sale of the country's largest steel mill, Kryvorizhstal, to the former president's son-in-law and another friendly oligarch (Viktor Pinchuk and Rinat Akhmetov, respectively) for US$800 million. At an open tender in 2005, the international giant Mittal Steel bought the same enterprise for US$4.8 billion. However, the government quietly shelved plans for additional re-privatizations after Western investors expressed concern over the instability that such a massive campaign would entail.
Tymoshenko's populist side emerged in her attempts to micromanage the consumer basket, most memorably in her promises to control the rising prices of pork and gasoline. She also increased public sector wages and some social benefits, thereby creating mounting inflationary pressures. In the fall of 2005 the power struggle between Poroshenko and Tymoshenko escalated into open and mutual accusations of corruption. As a result, Poroshenko resigned his position and Tymoshenko was dismissed by the president.The new cabinet, headed by Yuri Yekhanurov, a bureaucrat whom Yushchenko did not see as a threat, could not focus on any serious reforms either because the government was soon preoccupied by a “gas war” with Russia. As punishment for the Orange Revolution, the Russian monopoly Gazprom increased the price of gas for Ukraine from US$50 to US$230 for 1,000 cubic meters. With no deal reached by the year's end, on January 1, 2006, Russia cut gas deliveries to Ukraine, which then started diverting some of the gas being sent to Europe over Ukrainian territory. An international heating crisis in the middle of a cold winter forced all sides back to the negotiating table, but the new price of US$95 undermined the Ukrainian economy. It also became clear that in the future Russia would keep increasing it to the levels it charged other European countries.
Indeed, as far as the Russian leadership was concerned, there was no longer any reason to extend special treatment to Ukraine. Foreign policy came within Yushchenko's purview as president, and he pursued a policy of attempting to distance Ukraine from Russian influence. He established a separate ministry for “European integration,” which proved unable to make much headway with the EU bureaucracy. As counterweights to the Russian-led CIS, Yushchenko attempted to develop such regional organizations as GUAM (Georgia, Ukraine, Azerbaijan, Moldova) and later, together with the Georgian president Mikheil Saakishvili, the Community of Democratic Choice, which included nine post-Soviet and postcommunist Eastern European countries. During his triumphant visit to the United States as a victor of the Orange Revolution, Yushchenko self-assuredly discussed with President George W. Bush how Ukraine and the United States could work together to “support the advance of freedom" in Cuba and Belarus.6 Putin's administration was no less offended by Yushchenko's cultural policies, which involved decreasing somewhat the previously dominant share of
Russian channels on Ukrainian television and mandating Ukrainian subtitles for Russian films.