A sign last week in Kiev, Ukraine, showing that one United States dollar could be exchanged for 5.85 Ukrainian hryvnia. The hryvnia hit a low point that week.

By SABRINA TAVERNISE
Published: November 3, 2008

KIEV, Ukraine — Four years ago this month, hundreds of thousands of people took to the streets of this capital city to take back an election they saw as stolen. That outpouring, called the Orange Revolution, brought fresh hopes for freedoms and for a release from the country’s Soviet past that few other former republics had ever experienced.

Yulia V. Tymoshenko, the prime minister of Ukraine, and Viktor A. Yushchenko, the president. Former allies, they are locked in a power struggle that has paralyzed the state as it struggles to cope with a global financial crisis that threatens its stability.

The early promise of those days frayed in recent years, but economically times were good, and the country always seemed to manage.

But now, confronted by the global financial crisis, the new Ukraine is facing the single biggest test of its stability, and its leaders, by most accounts, seem to be close to failing.

Yulia V. Tymoshenko, the prime minister, and Viktor A. Yushchenko, the president, onetime political allies, are now locked in a bitter power struggle that has paralyzed the state, leaving it without a leader at precisely the time it most needs one.

Even as the West bends to help it, with the International Monetary Fund pledging an emergency $16.5 billion loan last month, it barely pulled itself together to meet the conditions for the money. Mr. Yushchenko, intent on getting rid of Ms. Tymoshenko, is trying to force early elections for December. To make sure the elections come off, his party spent most of last week trying to slip a campaign finance clause into the legislation that was required for the loan.

On Monday he relented and signed the crisis legislation into law without the clause. But his administration continued to insist that the elections proceed.

“It is a crime to conduct elections in this situation,” said Yulia Mostova, a prominent writer at Dzerkalo Tyzhnya, a weekly newspaper published in Kiev. “The chain of authority in Ukraine is broken. It’s at war with itself.”

Ukraine’s paralysis raises difficult questions for the West. It is a country of 46 million in a strategic spot between European Union countries and Russia, and its stability is crucial to the region.

Mr. Yushchenko has taken a combative approach toward Russia, which demonstrated a new willingness to settle disputes by force in Georgia this summer. He has pushed for Ukraine to join NATO, an agenda not particularly popular among Ukrainians, 17 percent of whom are ethnic Russians. And he has vowed not to renew a contract that allows Russia’s Black Sea fleet to dock in a Ukrainian port. On Saturday, a ban on Russian cable television programming took effect.

For Ukrainians, the fears are more about their immediate future. At one point last week, their currency hit its lowest point since it was introduced in 1996, and securities that insure Ukrainian government debt are trading at near-default levels. But perhaps their greatest disappointment is over their leaders, whose energies are focused not on ways to lift the country out of crisis, but instead on what is widely seen as a selfish struggle over power.

“People feel let down to the point of tears,” Ms. Mostova said. “Many feel they’ve been used. Ukraine had a chance for a qualitative, civilized jump forward, but it wasn’t taken.”

Ukraine’s economy is particularly vulnerable. About 40 percent of its foreign currency earnings come from the sale of industrial metals, which have plunged in price in recent weeks. And while its government has borrowed responsibly, its banks have not, having taken billions of dollars in foreign currency loans. With global credit markets drying up, those loans will be difficult to refinance. Ukraine’s central bank has already had to bail out one, Prominvestbank, the country’s sixth largest.

Despite the turmoil, Mr. Yushchenko’s main focus in recent weeks has been on attacking Ms. Tymoshenko. He has issued presidential decrees blocking the majority of her decisions since she became prime minister for the second time in December. When a judge in Kiev ruled that his decree to dissolve the Parliament and call elections was illegal, Mr. Yushchenko disbanded the court.

“Yushchenko thinks he is God,” said Mikhail Pogrebinsky, a political analyst at a research and polling center in Kiev, pointing to Mr. Yushchenko’s visit last week to Istanbul, where he gave Patriarch Bartholomew I of the Eastern Orthodox Church a specially minted coin with his image on it, while at home his country’s currency plummeted.

Ms. Tymoshenko is also capable of political magic tricks. Last year she colluded with Mr. Yushchenko, withdrawing all her deputies from Parliament to give him legal justification for dissolving it and calling new elections.

Neither has ever liked the other. Ms. Tymoshenko, a former gas industry executive whose head is wreathed in a signature blond plait, is Ukraine’s political celebrity.

Mr. Yushchenko, a former banker whose own popularity has plunged, has lashed out. There are even hints of the political fight in Mr. Yushchenko’s infamous poisoning episode, which left his face pockmarked and ravaged in 2004: His political opponents have been called in for questioning in the case.

Ms. Tymoshenko came from Ukraine’s business world, where quick wits and bare knuckles made fortunes in the 1990s. But her aim appeared to be less money than power, and she later joined the government. She and Mr. Yushchenko led the revolution in 2004 with the motto, “bandits to prisons,” but they soon grew beholden to yet another set of wealthy men.

Oleg O. Zarubinsky, a member of Parliament from an opposition party, put it bluntly: “Our political parties aren’t funded by membership fees.”

Oleksandr S. Donii, a Ukrainian lawmaker who led a popular student movement against the Soviet regime in 1990, compared Ukraine’s first-generation businessmen to divers dizzy with the bends. “The Ukrainian business elite was born too quickly,” he said, adding that “there was no sense of social responsibility.”

The country’s current predicament is not entirely the fault of its leaders. It runs much deeper, into the roots of Ukrainian society. Communism pitted citizens against one another, leaving people distrustful and incapable of the collective action that holds governments accountable in developed countries.

“We trust our brother, son, father, mother and godfather, but no one else,” said Ms. Mostova, the writer. “That’s our problem.”

That is why the Orange Revolution was so important: It seemed to break that pattern.
“People found their backbones,” Ms. Mostova said. “They cried in front of strangers.”

But after the protests ended, there was little follow-up. The crowd came together and then broke apart.

Still, the fact that it happened at all was a big step forward for Ukraine, which has been independent for only 17 years, and is now going through a period that Mr. Pogrebinsky compares to the tumultuous late 18th century in the United States, during the ratification of the Constitution.

The economic crisis, for all its pain, may also be a catalyst. Financial turmoil has swept out governments in Indonesia, Turkey and Russia in recent history, and even, many argue, the Soviet Union. Today’s Ukraine may be similarly susceptible.

Ms. Tymoshenko seems to realize this. In a television talk show about the economic crisis on Friday night, she extended a hand to Mr. Yushchenko. “Let’s for once not get into these political dogfights and come together as a national team with a united program, like the president said,” she declared. “Be a team in the face of this big global challenge.”

Mr. Yushchenko did not return the favor. He accused Ms. Tymoshenko’s government of accumulating debts from energy purchases “like fleas on a dog,” and of allowing inflation to rise.

“Who did it?” he railed. “The world crisis? Lies! The crisis is sitting right here.”