By Michael Bociurkiw
MSNBC CONTRIBUTOR

KIEV, Ukraine, Aug. 14 - Foreigners meeting Yulia Tymoshenko for the first time could be forgiven for harboring doubts she's one of the wealthiest women in Ukraine and until recently, one of its most powerful politicians.

SOFT-SPOKEN and serene, the 40-year-old gas tycoon- turned-politician is revered by many here for taking on some of the most powerful and entrenched business and political interests in Ukraine -and virtually ending antiquated arrangements in the energy sector which siphoned millions of dollars away from national coffers and into the hands of Ukraine's obscenely rich oligarchs.

Indeed, in the one year she held the post of deputy prime minister responsible for the energy sector (before being ousted), Ukraine's revenue collections from its state-run electricity industry skyrocketed.

What Tymoshenko accomplished in her short stint in the government was nothing short of revolutionary: She eliminated barter trade in electricity by forcing commercial and institutional customers to stop paying for power with goods - everything from chickens and steel to tires and vegetables - and instead settle their bills with cash.

Yulia Tymoshenko

Before the changes, so-called budgetary organizations were exempt from having their power cut off for non-payment. Tymoshenko's reforms ended such exemptions and forced business customers to pay in full, in cash - just like residential customers.

The system was rampant with corruption, according to one Western diplomat, and allowed middlemen to pocket considerable kickbacks. And, because huge power bills were not settled, the government often lacked the cash to pay civil servants their wages and old people their pensions.

Bringing about such deep reforms in a country just shedding its character as a centralized, planned economy is anything but insignificant. This is a land where unprofitable state run firms resist being broken-up, and where barter trade remains alive and well in other areas of the sputtering economy.

POLITICAL AMBITION

When Tymoshenko's launched her high profile clean-up campaign, many people here looked on in disbelief: her former business partner is the disgraced former Ukrainian Prime Minister Pavlo Lazarenko -who is behind bars in California awaiting possible extradition to Ukraine on power abuse charges and reportedly spiriting billions of dollars out of the county (part of which was allegedly used to purchase actor Eddie Murphy's mansion).

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But most observers here believe Tymoishenko's conversion from oligarch to do-good reformer was genuine. Despite attempts to exile her to the political wilderness for good, Tymoshenko is seen to have a future in Ukrainian politics.

Tymoshenko now heads a new Ukrainian political movement of a handful of opposition parties, and she makes no secret of her desire to one day replace scandal-ridden Leonid Kuchma as president.

"She's one of the few energetic dynamic personalities in a political scene (and country) full of stolid fatalists," says one Canadian observer with several years in Kiev. "She gave the government of (former Prime Minister) Yuschenko backbone and umph."

While the presence of well-heeled business people in Ukrainian politics is no longer a rarity -several members of the unicameral parliament, or Verkhovna Rada, are said to be millionaires - few in this dog-eat-dog arena in their 30s and few are women.

Western diplomats say that to its credit, the current government has not dismantled many of the economic reforms pioneered by Tymoshenko, some have even been given the force of legislation. Others say policies brought in by Tymoshenko are responsible for the economy being able to sputter along without much tinkering.

Indeed, Tymoshenko has become a role model of sorts for the country's disenchanted youth, who according to one poll see a future abroad - or a job that offers a chance to earn bribes - as the only way to earn a decent living.

In a survey of its readers earlier this year the influential newspaper Zerkalo Tyzhnya named Tymoshenko as "the most influential woman in Ukraine." "The current system has killed the spirit of many of our young people," Tymoshenko told MSNBC. "We have to prove to them that there is a better life here now."

OLIGARCH TURNED DO-GOODER?

With parliamentary elections next year and presidential elections in 2004, Tymoshenko is seen by some diplomats as one of the few people in the country with the financial backing and wherewithal to aim for the prime minister or president's office. She and Yuschenko presided over a government that helped produce record 6 percent economic growth in 2000.

Her position as deputy prime minister ended abruptly in January, just as her campaign to introduce deep reforms into the energy sector began to put the squeeze on business leaders close to Ukrainian President Leonid Kuchma. She was arrested in mid-February and thrown into prison for several months on corruption charges.

Tymoshenko's detractors describe her as an oligarch turned do-gooder.

From 1995 to 1997, she headed one of the largest energy companies in Ukraine, United Energy Systems. The gas trading company is said by some to have benefited from a gas-skimming scheme run by Lazarenko. After Lazarenko left the government, she joined the pro-reformist Yuschenko then turning against the very system that minted her as a tycoon.

"She honed in on exactly the right area and was ruthlessly effective. She demonstrated true insider knowledge," says a Kiev-based western diplomat.

Says Adrian Karatnycky of the New York-based Freedom House: "She felt the moral need to break with past practices and then worked inside government as a true reformer."

Rather than simply elbowing her way back to the trough, "she drew the conclusion that the crony system was at fault, and that bright energetic people like herself could do as well or better with a level playing field," said another observor.

"Knowing the gas sector skimming schemes as well as she did made her very effective in dismantling them when she became deputy prime minister," he said.

Tymoshenko said that within four months of talking office, she ended blackouts in many towns and villages and increased the gas sector's contribution to the national treasury by 10 times.

"With such positive results it was not logical to get rid of me but they did," she complains. Tymoshenko's demise is said to have been prompted by harsh complaints from oligarchs in the energy sector, who in turn put pressure on Kuchma.

Kuchma slams Tymoshenko as a politician obsessed with popularity polls. "She was mainly working for TV audiences instead of solving real problems," he recently told Ukrainian journalists. "Since then, the energy sector has been working much steadier," he said, adding that since Tymoshenko was ousted, "revenues in the electricity sector have grown enormously."

Asked why she left her lucrative business for an uncertain and dangerous life in the rough and tumble of Ukrainian politics, Tymoshenko, an economist by training, said she wanted to change a system that lacked logic and desperately needed new rules. "Nothing has changed since the Soviet system. The same people are still in power here," she says.

ECONOMIC DESPAIR

Foreign diplomats have few positive things to say about the Ukrainian economy, which is poorer than most Asian economies. In 1999, it's GDP per capita was less than one third of Russia's, and lower than neighboring Belarus. Its life expectancy rate is actually falling.

While the capital's historic streets are crammed with top-of-the-line Mercedes and SUVs, people in such regions as Kirovohrad live on about $10-a-month.

Foreign businessmen complain of widespread corruption, crippling red tape, a lack of enforcement of investment laws and a mentality among government officials that can hardly be described as foreign investor friendly.

A 1999 survey by the European Bank for Reconstruction and Development found that heads of companies in Ukraine spend up to 17 percent of their time trying to comply with government regulatory requirements. (Building and opening a new gas station needs up to 300 separate approvals, and a supermarket about 150).

More foreign businesses are leaving than oming in. As of October 2000, Ukraine received only $3.7-billion in foreign investment since independence in 1991. Ukrainian officials say they were hoping for as much as $ 40-billion in foreign investment in the five-year period from 1996.

In early 1997 a large number of foreign investors -including Coca Cola, Cargill, Motorola and Proctor and Gamble were on the verge of canceling investment projects due to corruption. The US Congress almost canceled US assistance to Ukraine after complaints by American businessmen that they were being mistreated.