Ukraine Update 4/11: Yatseniuk Exits & Petro to Washington

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Written By Brian Mefford

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Yatsenyuk has exited the political stage but can be expected to make some cameo appearances in the future- at least until his next starring role…

Yatseniuk Exits Stage: On Sunday, April 10th, Prime Minister Arseniy Yatseniuk announced his resignation. As a result, Parliament is expected to confirm the current Speaker, Volodymyr Groisman, to replace him on Tuesday. While more will be clear in the coming days, what is clear now is that Yatseniuk finally received the guarantees he had been seeking since the vote of disapproval by Parliament on February 16th.

Presumably at the top of the list is that there will be no new Parliamentary elections. Yatseniuk’s People’s Front has gone from a first place 22% performance in October 2014 in the Parliamentary elections to around 2% currently. With no new elections though, the People’s Front will maintain their 81 deputies of Parliament, and thus, remain politically relevant. In addition the early reports are that Yatseniuk’s allies, Arsen Avakov at the Interior Ministry, and Pavlo Petrenko at the Justice Ministry will stay in their posts. His party may also control the Ministries of Education and possibly even Ecology by the time of the vote on Tuesday. The People’s Front will also fill Groisman’s post as Speaker of Parliament, apparently with current Deputy Speaker Andriy Parubiy. Finally, it can be assumed that Yatseniuk also has guarantees from the President, that he and his allies will not be investigated for any possible wrongdoing during his term in office.

The soon to be 41 year old, will now move behind the political scenes for the first time in a dozen years. Through his cabinet allies and faction in Parliament, Yatseniuk may play the role of a ‘grey cardinal’ and influence events indirectly. By resigning himself and avoiding Parliament directly sacking him, he maintains his political viability – and possibility of making a comeback. Despite his rating of 2-3%, history will judge Yatseniuk’s performance more kindly than the voters currently do. Also in Ukraine, no politician is ever truly dead politically. Tymoshenko, Yanukovych, Kuchma, and Lytvyn have all made unexpected comebacks. Thus, Yatseniuk will return to politics, it’s only a question and when and how.

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Poroshenko is no romantic idealist like Senator Jefferson Smith (Jimmy Stewart), but he did get what we wanted from his Washington visit

Mr. Poroshenko goes to Washington: President Poroshenko went to Washington to officially participate in the annual Nuclear Security Summit from March 30th till April 2nd. However since Ukraine voluntarily gave up its nuclear weapons 20 years ago, the real purpose of the visit was to ensure continued US support for Ukraine in preparation for a new Prime Minister and government. The President’s trip was contingent upon Prosecutor General Viktor Shokin being replaced, and Parliament ensured that with 289 votes on March 29th – the day before the President’s trip. It should be noted though, that during Shokin’s final hours in the post, he fired First Deputy Prosecutor Davit Sakvarledize, and abolished his position to ensure that the Georgian would not succeed him in an “acting” capacity afterwards. While a new Prosecutor General has not yet been decided, the removal of Shokin met the minimum requirements for the trip to take place. Had Shokin not been dismissed, the Ukrainian delegation would have had to content themselves with visiting the Smithsonian, “selfies” in front of the White House, and dinners at The Capitol Grille. This is because Vice President Biden had warned Poroshenko that there would be no high level meetings if Shokin remained in his post.

On March 28th, it even looked like Parliament might vote in Poroshenko ally Volodymyr Groisman while the President was in DC, to further demonstrate to “Uncle Joe” Biden that there is a stable government and coalition in Ukraine. Alas, it was not to be. Instead, Poroshenko was forced to sweat it out and wait for Parliament to act. As evidence of the bad blood between Yatseniuk and Poroshenko, the outgoing Premier was in no rush to make the President look good on his DC visit. Instead the Premier slow rolled negotiations over cabinet posts to ensure that no vote on Groisman would take place that week. In doing so, Yatseniuk gave Poroshenko a parting humiliation to remind him that he still held important cards in the political game. Then on April 1st, someone attempted to make Poroshenko look like a fool in the New York Times, when the editorial board wrote a scathing piece on Viktor Shokin and corruption in Ukraine. The editorial ended with a call to “reinstate Mr. Sakvarelize”. While the New York Times Editorial Board writes their own content, insiders in the Presidential Administration believe that the story was written at the encouragement of Mikheil Saakashvili in retaliation for his lack of a post in the new government, as well as for the firing of Sakvarledize. Hence, the emphasis on Sakvareledze being reinstated in the editorial.

Despite the attempted humiliation by Yatseniuk and possible sabotage from Saakashvili, the President’s trip turned out as a “net success”. Poroshenko not only met with Biden, who ensured him that Ukraine would receive the next tranche of IMF money once a new government was installed, but he also got an unexpected meeting directly with President Obama. While the conversation was private, it was no doubt echoed by US Ambassador Geoffrey Pyatt speaking at a local governance conference of the International Republican Institute in Kyiv. Pyatt’s message was clear. First, Ukraine needs to focus on reforms and not new Parliamentary elections. Second, economic populism (particularly those proposals coming from Tymoshenko) could lead to the cancellation of the IMF program.

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Ukrainian politicians haggling over cabinet posts and the coalition is as Byzantine as a Turkish bazaar – except that in a Turkish bazaar, more deals get done…

While the US Government supports principles and not people, Poroshenko was clearly concerned that the US support for Ukraine and the IMF program might wane with the absence of Finance Minister Natalie Jaresko in the new government. Emboldened by the realization that the US will work with any Prime Minister committed to the IMF program, Poroshenko returned to Kyiv over the weekend. His enthusiasm didn’t last long when he understood that Parliament was still short of the minimum number of votes to form the coalition. Talks with Samopomich had gone nowhere. Negotiations with the Radical Party ended when party leader Oleh Liashko demanded the Speaker’s post. Tymoshenko stormed out of negotiations prior to the President’s trip to Washington, and declared that the government’s cooperation with the IMF is “illiterate, incompetent and doomed”. As a result, the uncomfortable coalition of the Poroshenko Bloc and People’s Front was forced to find independent MP’s willing to join the new majority. Following the sensational “Panama Papers” news story on April 3rd about Poroshenko possessing offshore accounts, an irritated President Poroshenko reminded Parliament that he has the legal right to dissolve it due to the lack of a majority and to call new elections. Fortunately for the President, his personal financial team led by Makar Paseniuk, quickly extinguished a potential firestorm. Pasenyuk released legal documents demonstrating that the offshore account related to Poroshenko’s sale of his Roshen chocolate business, and not nefarious activity. The Ukrainian people largely reacted with a yawn over the story due to the fact that 1) everyone knows Poroshenko is rich and they expected that he would have an offshore account, 2) an estimated quarter of all current MP’s have offshore accounts, and 3) the absurdity of Poroshenko being on the list and not Yanukovych for example, calls into question the political motivation behind the Panama Papers.

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MP Barna demonstrates his patented “cobra crotch clutch suplex” move on the Prime Minister. It now appears that Barna has been sufficiently “rehabilitated” to be able to rejoin the Poroshenko faction

As a result of his visit to Washington and success in beating back the potential backlash over using an offshore account to sell his chocolate business, Poroshenko proved himself politically resilient. Now it appears he will achieve his goal of inserting Groisman as Prime Minister on Tuesday, April 12th when Parliament reconvenes. The stripping of the Parliamentary mandates of Mykola Tomenko and Egor Firsov appear to have had the anticipated disciplinary effect on other MP’s. Not only has it prevented further defections from the factions but six MP’s have joined over the last two weeks. First Tomenko and Firsov were replaced by Dmytro Bilotserkivets (a 30 year old Deputy’s Assistant from Sevastopol) and Oleksandr Bryhynets (a former MP). These new Poroshenko faction MP’s include three expelled Samopomich MP’s, Iryna Suslova (who was expelled from Samopomich for voting in favor of Shokin as Prosecutor General), Viktor Kryvenko (professor from Dnipropetrovsk), and Pavlo Kyshkar (formerly a National Guard battalion leader). It also includes Oleh Barna (elected from District #167, Chortkiv in Ternopil oblast) who infamously put Arseniy Yatseniuk in the “cobra crotch clutch” hold during an address to Parliament in late January. Barna had to leave the faction as a punishment, but has apparently been rehabilitated during his 63 day absence from the faction to allow him to rejoin. These additions bring the Poroshenko faction up to 141 MP’s – up six seats from a month ago. Together with the People’s Front faction of 81 members, the President has 222 clear votes. Thus the votes of just four independents are needed to confirm Groisman. Here is the latest insight on the composition of the new Cabinet of Ministers and key government posts will look like:

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The “usual” quid pro quo for voting a particular way in Ukraine’s Parliament

Prime Minister: Volodymyr Groisman. It won’t be a mandate but the coalition will manage to get at least 226 votes (with the help of some independents), but it is enough to propel the 38 year old Groisman into the Premier’s job. There are also reports that some individual MP’s from Kolomoyskyi’s Renaissance faction and Ivakhiv’s (formerly Yeremeyev’s) People’s Will faction will lend their support for Groisman too in exchange for the “usual” quid pro quo.

First Deputy Prime Minister: Borys Lozhkin. A week ago Vitaly Kovalchuk appeared the front runner for this post but in the meantime, he has been displaced by his boss, Borys Lozhkin. Lozkhin is currently Chief of Staff to the President and Kovalchuk is First Deputy Chief of Staff. If Lozkhin leaves then Kovalchuk is likely to take the post as Chief of Staff.

Vice Premier for Social Policy: Pavlo Rozenko. The low key Rozenko (age 45) is being promoted from Minister of Social Policy to a Vice Premier’s post. Rozenko served as First Deputy Minister of Social Policy in Tymoshenko’s government from 2008-2010 and was elected to Parliament in 2012 from Klitchko’s UDAR party. Rozenko has consistently been the clear front runner for this post over the last couple weeks.

Vice Premier for Euro integration: Ivanna Klympush-Tsyntsadze. Klympush-Tsyntsadze (age 43) is the First Deputy Head of the Foreign Affairs Committee in Parliament. This newly created Vice Premier’s post will presumably work to help Ukraine accelerate its’ European integration and serve as a cheerleader for Ukraine in Brussels, Berlin and Strasbourg.

Minister of Foreign Affairs: Pavlo Klimkin. Under the Constitution, the Foreign Minister is selected by the President. Klimkin is generally well regarded internationally and safe in his post for now.

Minister of Defense: Stefan Poltorak. The Minister of Defense is also a Presidential prerogative and will continue in his post.

Minister for Regional Development: Gennadiy Zubko. Zubko (age 48) is one of the few current ministers who is expected to keep his post. Given the planned decentralization later this year, Zubko has been carefully executing Groisman’s plans at the ministry to ensure a smooth transition.

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Will Ivan Miklos’ love of his Slovak homeland outweigh his interest in serving as Ukraine’s Finance Minister?

Minister of Finance. The position was apparently offered to Slovakia’s former Finance Minister Ivan Miklos, but Miklos did not want to give up his Slovakian citizenship. Former Finance Minister Oleksandr Shlapak’s is well regarded as professional but appears to lack the political support to propel him back into the post. Like a baseball team that trades away its’ star player, whoever fills this post will have big shoes to fill following Natalie Jaresko. Poroshenko’s faction is apparently in charge of filling the position.

Minister of Economy: Oleksandr Danylyuk. The Deputy Chief of Staff to the President is now the leading candidate to be Minister of Economy. For tea leaf readers, Danylyuk was in Washington with Poroshenko last week as an apparent sign of his ascendency.

Minister of Infrastructure: Volodymyr Omelian (age 37). The current Deputy Minister of Infrastructure appears to be tapped to fill his bosses’ shoes. Andriy Pyvovarskyi, the current Minister, made headlines when he announced his resignation over frustration with low salaries for state employees and bureaucratic red tape.

Minister of Social Politics: Andriy Reva. Reva is the Deputy Mayor for Social Policy in Vinnitsya. Reva’s move to the capital will further strengthen the President’s control of the Cabinet of Ministers.

Minister of Energy: Incumbent Minister Volodymyr Demchyshyn (age 41) is trying to hold on to his post but Yatseniuk is insistent that it be filled by someone else. Other names floated include include Poroshenko Bloc MP Ihor Nasalyk (age 53) who has business in the energy sector in Ivano Frankivsk and the current First Deputy Minister of Economy, Yuliya Kovaliv. Kovaliv joined her boss, Aivaras Abromavicius in resigning last month in protest over corruption in the government.

Minister of Interior: Arsen Avakov (age 52). Despite many criticisms of the Interior Minister, Yatseniuk has been steadfast in his support of the Kharkiv native to remain as the country’s chief policeman.

Minister of Justice: Pavlo Petrenko (age 36). One of the few posts besides the Interior Ministry that Yatseniuk will be able to retain with an ally is the Justice Ministry. Pavlo Petrenko, a Yatseniuk friend from his school day, appears to hold on. Petrenko plays an important behind the scenes role in the People’s Front faction.

Minister of Information: Yuri Stets (age 40). Stets will remain the head of the controversial ministry. Despite calls to close the ministry by journalists and the international community, the ministry will continue operating which can only be explained by the Stets’ close friendship with President Poroshenko.

Minister of Culture: Yevhen Nyshchuk. Nyshchuk (age 43) became well known as the “master of ceremonies” during Euromaidan and was catapulted into the Minister of Culture post in the first Euromaidan government. He now appears poised for a return to the post. There has also been some talk of demoting current Vice Premier for Culture Viacheslav Kyrylenko into simply the Minister of Culture. However this is unlikely since Kyrylenko is from People’s Front and Yatseniuk has exhausted his political capital on saving Avakov and Petrenko.

Minister of Health: Dmytro Shymkiv. Another of Poroshenko’s Chiefs of Staff may move to the Cabinet of Ministers. Shymkiv (age 40), apparently isn’t eager to take the post since he doesn’t have a medical background. However the job is administrative in nature and Shymkiv’s experience as the CEO of Microsoft in Ukraine may be helpful in trying to reform the horribly corrupt ministry. Shymkiv even put out a statement that since his father is in the medical equipment business, it would be a conflict of interest for him to take the post. Such honesty and management skills are rare in Ukraine’s government and in fact, for that reason Shymkiv would likely make a good administrator of the Ministry of Health. Deputy Poroshenko Faction Head Oleksiy Honcharenko (age 35) has also been mentioned for the post. Honcharenko has a nursing background and is close to the Poroshenko family. Current Deputy Minister Ihor Perehinets is also under consideration.

Minister of Education: Liliya Hrynevych. Hrynevych (age 50) is the current Head of the Parliamentary Committee on Education and Science with People’s Front, and is well regarded in the educational community.

Long Road
When negotiating with Tymoshenko, it’s either her way, or the highway…

Minister of Ecology: To be determined. The post was offered to Tymoshenko’s Motherland party, but she deemed it insufficient and walked out of the negotiations.

Minister to the Cabinet of Ministers: Volodymyr Slishynskyi. Slishynskyi is currently the First Deputy Head of the Administration of Parliament and is expected to make the switch to the Cabinet of Ministers. Prior to his current, Slishynskiy was Deputy Mayor of Vinnitsya for Legal Issues. Thus, the Poroshenko-Groisman team will clearly be in charge of the Cabinet of Ministers.

Head of the State Fiscal Service: Nina Yuzhanina. Yuzhanina (age 51) is currently the Head of the Parliamentary Committee on Taxes and Customs. Yuzhanina, a Poroshenko faction member, was promoting “liberal tax reform” late last year in direct conflict with the IMF favored budget, which was ultimately approved and written by Finance Minister Jaresko.

Minister to the Agrarian & Food Policy: Taras Kutovyi. Kutovyi (age 39) is currently one of the Deputy Heads of the Poroshenko Faction in Parliament. Kutovyi was elected from District #151 in Poltava (Lohvytsia town, winning 63-13% over his nearest rival) and serves as the Chairman of the Parliamentary Committee on Agrarian and Land Issues. He was first elected in 2012 with UDAR from the same district.

National Bank Governor: Valeria Gontareva is said to be ready to resign if Jaresko and Abromavicius leave the government. Now that this is a distinct likelihood, it will be interesting to see if she follows through with this action. She has apparently also been named in the “Panama Papers” and her business relationship with VTB may become an issue. Nonetheless, Gontareva gets credit for her draconian currency measures in 2014 which ultimately stabilized the hryvna.

Speaker of Parliament: Andriy Parubiy. Parubiy (age 45) is a lawyer and three term Member of Parliament from People’s Front. He served as Chairman of the National Security and Defense Council for a two month period in 2014 at the height of the anti-terrorism operation in the Donbass.

Vice Speaker of Parliament: Iryna Herashchenko. With Parubiy set to give up his Deputy Speaker’s post to become Speaker, Iryna Herashchenko appears ready to fill the position. Herashchenko (age 44) was President Yushchenko’s longtime Press Secretary and has led many humanitarian efforts to assist the Donbass over the last two years. She is serving her second term in Parliament with the Poroshenko Bloc. MP Stefan Kubiv from the Poroshenko Bloc has also been mentioned for the post. Kubiv, a former Acting Head of the National Bank of Ukraine is a close Poroshenko confidante.

Prosecutor General: Pavlo Zhebrivskyi. The current Donetsk Governor and former Zhytomyr Governor under Yushchenko is the latest name floated for this key post. Zhebrivskyi was Deputy Prosecutor in charge of Anti-Corruption prior to the establishment of the National Anti-Corruption Bureau. Zhebrivskyi is the Chairman of the small, center-right Sobor/Cathedral Party and his sister Filiya, is one of the 100 wealthiest women in the country due to her pharmaceutical company Farmaka. Yuri Lutsenko and Anatolyi Matios had their names floated for the post. Lutsenko is a close friend of Poroshenko’s and Head of the Poroshenko Faction in Parliament. Matios is the Chief Military Prosecutor and Deputy Prosecutor General. However the US is apparently pushing the President to select someone not closely connected to his party and/or from among Shokin’s former deputies. It is unlikely that the recently fired, First Deputy Prosecutor Davit Sakvareledze, would end up in the post as Saakashvili is not a major factor in the current cabinet negotiations.

The State Ombudsman of Family Affairs & the Dutch Referendum: On February 24th the Cabinet of Ministers created a new position of State Ombudsman for Family Affairs. March 2nd, Adrian Bukovynskyi was appointed to fill the this new position. The post holds the status of a Deputy Minister’s post, and reports to the Ministry of Culture. The ombudsman works on an intra-agency level and is designed to mediate and resolve family issues in a manner that strengthens families – and ultimately the country. However on March 7th the appointment was withdrawn by the Cabinet of Ministers. This resulted in Hanna Onishchenko, Minister to the Cabinet of Ministers, having to come to work on International Women’s Day (March 8th) to design a “competition” to fill the position – per Yatseniuk’s orders.

What happened and why? First, Adrian Bukovynskyi is a devout Greek Catholic, and proponet of traditional marriage. Ukraine, having already passed legislation in Parliament to comply with EU requirements with regard to same sex unions, and facing the Dutch referendum last week, became jittery that Bukovynskyi’s appointment might upset the bureaucrats in Brussels. Even though the ombudsman must comply with legislation passed by Parliament and cannot independently decide policy, the Cabinet of Ministers feared the EU officials might still object. Hence the government’s withdrawal of the appointment four days later, and the urgent announcement of a “competition” to fill the post instead. This move by the Cabinet of Ministers has mobilized the religious community spearheaded by the Council of Churches and Religious Organizations of Ukraine (an interfaith group of Orthodox, Catholic and Protestant Christians, Jews, and Muslims), in support of Bukovynskyi. Protest actions near the Cabinet of Ministers and Presidential Administration are planned next week. Interestingly, Bukovynskyi is a Deputy’s Assistant to People’s Front MP Pavlo Ungarian. While Yatseniuk (and later Speaker and incoming Premier Groisman) had initially promised the appointment of Bukovynskyi to the religious community, the changing politically situation has prevented them both from fulfilling the appointment.

While it is not clear if Bukovynskyi will “win” the competition, what is clear is that such knee jerk moves undermine the government’s credibility across the board. It also plays into Putin’s hands by reinforcing stereotypes that belligerent bureaucrats in Brussels will dictate Ukrainian policies and personnel. Simultaneously, the Dutch rejection of the Association Agreement with Ukraine simultaneously reinforces the underlying fear that many Ukrainians have about the EU: that is, no matter what legislation Ukraine passes, no matter what requirements Ukraine meets, and no matter what reforms are made, that the EU will never fully accept Ukraine. This of course echoes the Russian propaganda which allows the Kremlin to say, “Hey Ukraine, come home to your abusive ex-spouse, because Brussels will never let you really be a part of Europe”. In short, Ukraine is who suffers, and Russia wins another public relations battle.

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