2009-10-14 | Natalia Orłowska-Chyż

The Chief of staff of the Armed Forces of Ukraine, General Serhiy Kyrychenko, resigned on 5 October. Health problems were quoted as the official reason for his decision, although the media and experts in Ukraine have pointed out that the deteriorating condition of the Ukrainian army was probably the real motive behind Kyrychenko's resignation. If the president approves the resignation, Ukraine will have vacancies in the country's two most important defence posts (no defence minister has been appointed since June), which is an unprecedented situation. These problems have arisen in a situation where the army is increasingly underfinanced. Defence spending has been reduced considerably this year, and further cuts are expected in 2010. If this trend continues for the next two or three years, the Ukrainian army will lose its combat capability. The crisis in which the Ukrainian armed forces have found themselves is mainly due to the fact that most members of the Ukrainian leadership are not interested in defence issues, and PM Tymoshenko has been pursuing a populist policy in which welfare spending is the priority. The prospect of membership in NATO used to provide an impulse for the army reform which the government saw as a platform of co-operation with the West, but this has now become more distant.

Personnel problems in the army...

The problems with making appointments to key posts in the defence sector started on 5 June 2009, when the Ukrainian parliament dismissed defence minister Yuriy Yekhanurov following allegations concerning irregularities in the ministry. The real reason for the dismissal was presumably PM Tymoshenko's desire to undermine the position of President Viktor Yushchenko, who designates the defence minister in his capacity as commander-in-chief of the armed forces.
On 7 October, the General Staff confirmed media reports that two days previously, Serhiy Kyrychenko had submitted his resignation for health reasons. However, the real reason behind the resignation was presumably Kyrychenko's refusal to accept further cuts in defence spending. President Yushchenko, whose competences include dismissing the Chief of Staff, has stated that he is considering Kyrychenko's request, and that the general's motives are "not simple". The deepening problems with making appointments to key defence posts demonstrate that the army's problems have now become part of the current political strife between President Yushchenko and Prime Minister Tymoshenko.

...in conditions of financial collapse

The Armed Forces of Ukraine have been struggling with insufficient financing for many years, which has been the main impediment to reform. The current economic crisis has resulted in drastic cuts in the defence budget, and left the army in a state of de facto financial collapse. In 2005-2008, the proportion of defence spending decreased from 1.3% of GDP to 0.99% (the 2005 armed forces reform programme stated that Ukraine would allocate 2% of GDP to defence purposes).
This year, the structure of the Defence Ministry's budget was altered in order to conceal the decreasing spending (the Tymoshenko government has been treating the budget as an election campaign tool, and has established welfare spending as a priority when facing finance shortages). The proportion of the so-called special fund in the budget, which consists in the Defence Ministry's revenue from the sale of the army's fixed assets, has increased from over 10% of total spending in 2000-2008 to nearly 30% in 2009. The real amounts obtained from such sales have always been lower than those foreseen in the Budget Acts. Figures on budget implementation in recent years indicate that this category of revenue amounted to around US$120 million annualy in the past. In 2009, the special fund is expected to finance spending of US$527.6 million, although its real revenues will amount to around US$80 million (due to the deep decline of the Ukrainian currency's exchange rate). Moreover, in 2009 the main heading of the Defence Ministry's budget, the general fund, which used to guarantee relatively stable financing, has been cut for the first time. In 2008, the general fund amounted to US$1.6 billion, which has been cut to US$925 million in 2009. At the same time, funding of armed forces reform has been cut radically; this year, the reform is once again to be financed from the special fund, which in fact means that no financing at all will be allocated to army reform.
The 2010 budget assumptions indicate that this unfavourable trend for Ukraine's defence will continue. Out of the projected US$1.6 billion, US$1 billion will come from the general fund, and the remainder from the special fund. Given the macroeconimic indexes used in the preparation of the budget (which are considered to be unrealistic), as well as the problems with obtaining financing from the special fund, total real defence spending will not exceed US$1 billion next year.

Consequences

In 2000-2007, the Ukrainian army underwent a reform programme that was quite ambitious, given the modest financing available. The structure it inherited from the USSR was transformed, and selected units became valuable participants in the US and NATO-led operations which at the same time served as the main point of reference for the modernising Ukrainian armed forces. The financial collapse which has been observed since 2008 will lead to the results of earlier reforms being squandered. Ever more serious shortages in material (including the increasing amount of sales from Ukrainian army stores of its most valuable equipment) and in personnel (the young officers trained to NATO standards are leaving the services), together with the drastic reduction of practical testing-ground training, mean that the new structure of the Ukrainian armed forces which were trained in the middle of this decade will become ineffective. This situation will not only delay the completion of armed forces reform, but also poses a real risk that Ukraine's military potential will be degraded. This in turn may undermine Ukraine's position as a partner in its military co-operation with the West, and also weaken its standing in the relations with Russia.
co-operation: Andrzej Wilk
 
 

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