Parliamentary and presidential elections were held in Ukraine in 1994. In the first contest, candidates affiliated with the revived Communist Party emerged as the largest single group, winning approximately one-fifth of the seats. Factoring in the deputies of the Socialist and Agrarian parties, the latter of which drew its support from rural interests and farmers, the left now constituted a strong—although not united—bloc in the new parliament. In the presidential election the incumbent president, Kravchuk, was narrowly defeated by former prime minister Kuchma, who promised economic reform and better relations with Russia. The two contests seemed to reveal a political polarization between eastern and western Ukraine. Kuchma and the left received their greatest support from the more heavily industrialized and Russophone regions of eastern Ukraine, whereas Kravchuk did particularly well in western Ukraine, where Ukrainian speakers and national democrats predominated. Nevertheless, the minimal number of irregularities in the elections and the peaceful replacement of the president were widely interpreted as signs that democracy was taking root in Ukraine.

Once in office, Kuchma maintained many of his predecessor’s policies. Significantly, while seeking more cordial relations with Moscow, he did not reorient Ukraine’s foreign policy northward. Ukraine continued to participate in the CIS but in much the same manner as it had previously. Moreover, Kuchma maintained Ukraine’s pro-Western policies and aspirations. In 1994 Ukraine joined the Partnership for Peace Programme run by the North Atlantic Treaty Organization (NATO); the country also established a “special partnership” with the organization in 1996. In 1995 Ukraine joined the Council of Europe.

Kuchma faced a major challenge in dealing with a strong parliamentary opposition, particularly in respect to economic reform. Ukraine managed to achieve macroeconomic stabilization by 1996, the year in which it introduced its long-awaited currency, the hryvnya. However, the economy continued to perform poorly through the end of the decade. Cumbersome bureaucratic procedures and unenforced economic legislation led business to be both overregulated and rife with corruption. In addition, the country was able to attract only a limited amount of foreign investment. The Russian economic crisis of 1998 negatively affected Ukraine’s economy as well. But in 1999 the introduction of tax-reform measures saw a growth in the number of small private businesses established or emerging from the country’s significant shadow economy. At the turn of the 21st century the legitimate economy began to grow.

In the 1998 parliamentary elections the Communist Party actually improved its showing. In the 1999 presidential election, however, Kuchma defeated Communist Party leader Petro Symonenko by a resounding margin. Politically, Kuchma had benefited from the splintering of the left among several candidates. He also had campaigned vigorously, using all the means available to him, particularly the media. Indeed, a strong bias in favour of Kuchma became evident in the television coverage of the election. International observers were critical of Kuchma’s handling of the media and some obvious electoral irregularities. His margin of victory, however, indicated that these factors alone had not determined the outcome of the vote.

The result of the 1999 election was significant in two respects. First, it represented a rejection of the communist past. Some observers remarked that it even constituted a second referendum on independence. Second, the vote did not split neatly along geographical lines, indicating that—for that moment at least—the east-west divide seen in the 1994 elections was not as important a factor in Ukrainian politics as many analysts had suggested.

During Kuchma’s second term, conflicts between right- and left-wing forces sometimes threatened political stability. Nevertheless, newly appointed prime minister Viktor Yushchenko shepherded economic reforms through the legislature. The economy grew steadily in the first years of the 21st century, but the political situation remained tense in Ukraine as it sought membership in NATO and the European Union (EU) while also pursuing closer relations with Russia—a delicate balancing act. In 2003 Ukraine accepted in principle a proposal to establish a “joint economic space” with Russia, Belarus, and Kazakhstan; however, Ukrainian-Russian relations were strained by Russian accusations of deteriorating conditions for the Russian minority in Ukraine, along with Ukrainian concerns over what it viewed to be Russian expansionist designs in Crimea.

Yushchenko became an opposition leader following his dismissal as prime minister in 2001. The following year, audio tapes allegedly revealed Kuchma’s approval of the sale of a radar system to Iraq, in violation of a United Nations Security Council resolution, and implicated him in the assassination of a dissident journalist in 2000. Opposition groups called for the impeachment of Kuchma, who denied the allegations.