Ukrainian government reshuffle raises concerns over reform agenda
KYIV – President Volodymyr Zelenskiy has brutally reshuffled the Ukrainian government, questioning the country’s commitment to reform as Kiev seeks to finalize a new lending program with the International Monetary Fund (IMF).
In a special parliamentary session on March 4, lawmakers voted in favor of Prime Minister Oleksiy Honcharuk’s resignation and supported Zelenskiy’s choice for his successor, Deputy Prime Minister Denys Shmyhal.
The reshuffle comes six months after Zelenskiy inaugurated the youngest and freshest government to reduce the influence of the oligarchs and eliminate opportunities for corruption – two aspects that have dominated Ukrainian life since the country’s independence in 1991.
The upheaval also comes days after an IMF mission traveled to Kiev to discuss a long-delayed $ 5.5 billion loan. Ukraine failed to unblock the loan program, seen as crucial for economic stability and investor confidence, due to political and legislative disagreements.
A total of 291 members of the Verkhovna Rada approved Shmyhal’s appointment, with 59 against and 46 abstentions, while nine did not vote.
Earlier, 353 lawmakers voted to accept Honcharuk’s resignation. A total of 49 deputies abstained and nine did not vote.
Parliament approved other cabinet members, including the new foreign, defense and finance ministers.
In a speech to parliament ahead of the votes, Zelenskiy criticized Honcharuk for failing to end an industrial slump and meeting tax collection targets. Honcharuck, a political newcomer, was appointed Prime Minister in August 2019.
“We need new brains and new hearts in government,” he said.
But the reshuffle has raised fears that key political issues such as land reform may be delayed.
“All of a sudden, as we expected stability and the passage of major legislation, there has been a major upheaval and things seem to be on hold,” said Morgan Williams, Chairman of the Business Council. Ukrainian-American, a Washington-based company. lobby, said RFE / RL.
“The business world is wondering why now, who is behind all these changes,” he added.
Williams said the business community was concerned about the replacement of Finance Minister Oksana Markarova, who was highly respected by Ukraine’s Western markets and supporters, and Economy Minister Tymofiy Mylovanov, who had led the Controversial reform of the agricultural land market which is now blocked in parliament. .
John Herbst, former US Ambassador to Ukraine and Atlantic Council analyst, also questioned the merit of Zelenskiy’s sudden reshuffle.
“We all understood that he was a newbie and that there would be changes,” he told RFE / RL. “The question is, what do these changes bring? There is a default position to expect the worst ”because of independent Ukraine’s nearly 30-year history of reform promises and failures.
In the last reshuffle, Makarova was replaced by her deputy, Ihor Umanskiy.
Dmytro Kuleba replaced Foreign Minister Vadym Prystayko, who was appointed Deputy Prime Minister responsible for European and Euro-Atlantic integration.
Andriy Taran, a retired general, is the new Minister of Defense, replacing Andriy Zahorodnyuk.
The new Minister of Health is Illya Yemets, who held this post for several months in the administration of former President Viktor Yanukovych.
Controversial Home Secretary Arsen Avakov has retained his post.
The new ministers of economy, education, energy and environment have not yet been appointed.
Shmyhal, 44, was appointed deputy prime minister in February. He was previously head of the regional administration of the western Ivano-Frankivsk region, where he made a name for himself as a pro-business governor.
In 2017-2019, Shmyhal worked as an executive at DTEK, an energy holding company owned by Ukraine’s richest man, Rinat Akhmetov. Shmyhal dismissed claims that he was close to Akhmetov, saying he had never met him and that he was hired to work for DTEK as part of a competitive process.
Originally from Lviv, he ran several business enterprises for most of the previous decade before entering the civil service of the Lviv regional administration. He studied abroad, notably in Belgium, Canada, Georgia and Finland.
Responding on March 3 to reports that Shmyhal had been chosen to replace Honcharuk, Michael Carpenter, former Deputy Under-Secretary of Defense for Ukraine, warned Kiev against leaving the oligarchs “a path” to the power.
“If you do, you will lose the support of the Western community,” Carpenter, who is now executive director of the Penn Biden Center for Diplomacy and Global Engagement, said at a March 3 conference devoted to Ukraine.
“There is so much at stake here and if we see the influence of people like Dmytro Firtash, Rinat Akhmetov and other oligarchs through proxies, through people more committed to their interests than to the national interest, then the [reform] the project begins to unfold. I hope they consider very wisely who they put in what jobs, ”he added.
A 35-year-old former lawyer and political newcomer, Honcharuk was appointed prime minister in August 2019. He immediately fell out of favor with Ihor Kolomoyskiy, the powerful oligarch who backed Zelenskiy.
Honcharuk fought Kolomoyskiy’s attempts to take back PrivatBank, which was nationalized in 2016 following a $ 5.6 billion bailout. Western financial institutions could turn down requests for Ukrainian aid if Kiev returns the bank to Kolomoyskiy.
Some analysts have speculated that Zelenskiy’s reshuffle was an attempt to get other Ukrainian oligarchs, like Akhmetov, to support his clash with Kolomoyskiy.
Melinda Haring, Ukrainian analyst at the Washington-based Atlantic Council, rejected this interpretation, calling it a “big chance”.
Honcharouk has already submitted his resignation on January 17, amid a scandal surrounding an audio recording in which he allegedly disparaged the economic knowledge and skills of himself and Zelenskiy.
Zelenskiy at the time refused to accept it.
Honcharuk and his ministers had submitted a land market reform bill to parliament and handed over several hundred state-owned enterprises for privatization in moves hailed by Western governments and lenders.
The land reform passed at first reading in parliament in November 2019, but opposition parties submitted several thousand amendments, delaying its adoption at second reading.
Western analysts have said that land reform will be the main driver of Ukraine’s economic growth in the years to come. Ukraine is one of six countries, including Cuba and North Korea, that do not have a land market. However, powerful interests inside the country opposed land reform and other policies pushed by the Honcharuk government.
“The changes of government only create another period of uncertainty and instability and possibly delay what we thought was a major year for the Ukrainian economy,” Williams said.
Zelenskiy won a landslide victory in April 2019 by promising to end rampant corruption, attract foreign investment and end the war in the east with the Russian-backed separatists. Three months later, his Servant Of The People party won the national election, giving it unprecedented power to push through major economic reforms blocked by the oligarchs for decades.
However, public confidence in Zelenskiy has risen from nearly 80 percent in September to around 50 percent last month, according to poll figures from the Kiev-based political center Razumkov Center.