Orange eats itself, what’s the next course?

At the Verkhovna Rada’s session this morning, Speaker Arseniy Yatseniuk announced that the ruling coalition composed of the Yulia Tymoshenko Bloc and the Our Ukraine-People’s Self Defense Bloc (NU-NS) was officially dissolved.

This spells the end not just to the  ’democratic coalition’, but to ‘Orange’ itself.

Four years after the Orange revolution stopped former prime minister, now opposition leader Viktor Yanukovych becoming president in rigged elections, the two main figures in Orange, President Viktor Yushchenko and Prime Minister Yulia Tymoshenko, are now  as distant from each other as each is to Yanukovych.

Moreover, Timoshenko and Yanukovych possibly share something very important  against Yushchenko:  at the heads of strong parties, both might stand to gain from shifting political power from the presidency to Ukraine’s parliament, the Rada.

It is still unclear whether the current political crisis is a repeat of 2007’s early elections and coalition reshuffle, or something very different: a concerted effort by the Rada majority to seize power from the president.

What does seem clear is that the Orange coalition  between Tymoshenko’s Bloc Yulia Tymoshenko (BYuT) and Yushenko’s Our Ukraine-People’s Self-Defence (NU-NS) will not be renewed.

Early elections are the most likely outcome.

According to the Constitution, parliamentary parties have 30 days to form a new coalition, after which point the president has the right, not the obligation, to dissolve parliament and call new elections.

Brokerage Galt & Taggart analysts write, “with the majority of parties already renting billboard ad space and organizing election offices around the country, pre-term parliamentary elections remain the most likely scenario.”

Ukrainskaya Pravda reports today that Prime Minister Yulia Tymoshenko, head of the eponymous bloc, has already ordered her deputies to mobilise for elections.

Tymoshenko is reported to have told deputies that she sees the Orange being reformed as 10% with a 90% chance for  elections.

Confirming the low probability of any coalition being formed, BYuT deputy Andrei Shkil said today that both Yushchenko’s party Our Ukraine and the Ukraine Communist Party were refusing to hold talks with BYuT on forming a coalition, according to korrespondent.net.

Early elections will benefit BYuT. BYuT stands to pick up votes both from NU-NS, suffering from the single digit ratings of ineffective president Yushchenko, as well as from the oppositional pro-Russian Party of Regions: Tymoshenko has conspicuously flirted with a pro-Russia position during the Georgian crisis.

However, all members of the current coalition will do all they can to avoid the blame for another bout of expensive early elections.

Thus Yushchenko has called for a renewal of the ‘democratic coalition’, by taking the small Lytvyn Bloc on board.

BYuT has also been in talks with the Party of Regions (PR). But an alliance with PR would prove unpopular among Tymoshenko’s core constituency. The possibility of a coalition of BYuT with the Party of Regions (PR) was not even discussed at today’s BYuT parliamentary faction meeting, according to Millenium analysts.

A BYuT-PR coalition would, however, create a huge majority in the Rada, sufficient to override the presidential veto on legislation and allow the Rada to continue shifting power from president to parliament.

“A coalition between BYuT and the Party of Regions would serve to unite Ukraine’s east and west, but it is unlikely to be supported by the Donbas business elite, including Rinat Akhmetov, Serhiy Taruta and Vitaliy Hajduk,” write Galt&Taggart analysts.

Millenium analysts agree that “a coalition  between BYuT and the Party of Regions would be very unlikely due to diverging opinions of these political forces on most policy matters.”

“We continue to see an anticipated election as the most likely scenario,” says Millenium analyst Bogdan Kochubey.

Rencap’s Geoff Smith, however, says BYuT-PR could work out: “Tymoshenko and Yanukovych have a chance to prove that they have tired of deadlock,that they accept that power must be shared and exercised with restraint,that they realize how urgently effective government, reform and privatization are needed.” says Smith. “It could be beautiful – but don’t hold your breath.”

What we don’t know:

We don’t know what Tymoshenko wants.  Does she want simply to shore up her majority in parliament at the expense mainly of Our Ukraine, to free herself on dependence on Yushchenko? In this case, elections are on the cards. But Ukraine would remain a presidential republic, with Yushchenko responsible for foreign policy and able to veto laws.

Does she want to change Ukraine into a parliamentary republic, thus usurp power from Yushchenko? She would then have the top job without having to wait a year for presidential elections. A year is an eternity in politics, her current popularity is only slightly in front of Yanukovych’s, and next year could see economic problems ahead. To make the changes, she would need to hook up again with Party of Regions, but not necessarily in a formal coalition. But what would be in it for Party of Regions?

What’s the significance of her shift to moderation regarding Russia, and her obvious ambivalence about Nato membership? Is this preelection manoeuvering to  win the pro-Russian vote from Party of Regions? Or a concession towards the Party of Regions? or an attempt to stave off a potentially crippling gas price hike?

Tymoshenko might be hoping for a landslide elections victory, eliminating Our UKraine and cutting swathes into the PR vote. That would set her up in a position to change the constitution and move to a parliamentary republic with herself as prime minister.