Nepotism could quickly destroy Ukraine's positive image in the West — The Economist.
"Love your friends" is back. That's how The Economist magazine described the current political situation in Ukraine.
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In Kyiv's elite Tsarskoe Selo neighborhood, President Petro Poroshenko owns several plots of land. Across the street is an estate owned by Ihor Kononenko, a friend of the president and deputy head of the Petro Poroshenko Bloc parliamentary faction.
They met while serving in the Soviet army. After Ukraine gained independence, they gradually gained strength together in business and politics. Last week, Ukraine's Minister of Economy, Aivaras Abromavicius, announced his resignation, accusing Mr. Kononenko of obstructing reforms.
The minister stated that he was not prepared to shield officials who, in his words, "are very similar to the old government, trying to control financial flows." The 2014 revolution in Ukraine was supposed to cast aside concepts such as corruption and nepotism. Mr. Abromavicius, an investment banker of Lithuanian descent, was one of several foreigners invited to join the government to avoid the old abuses.
He also spoke out against the corporate interests of the president and Prime Minister Arseniy Yatsenyuk. The Minister of Economy became the second person to resign from his post since the revolution. So far, he is the fifth minister who refuses to serve in the government. Following the minister's statement, Western ambassadors expressed their disappointment with the incident.
In an unusually harsh statement, International Monetary Fund Director Christine Lagarde questioned the next tranche of aid from Ukraine's $18 billion loan program "without significant efforts to revive governance reforms and the fight against corruption." Subsequently, in a conversation with Ms. Lagarde, President Poroshenko promised to do more in this area.
At the same time, the head of Poroshenko's parliamentary bloc, Yuriy Lutsenko, stated that the country is now on the brink of a "full-scale political crisis." The government's resignation and early presidential elections are closer than ever. Ukraine's Western allies claim that the elections will destabilize the country's political situation and provide an opportunity for radical and nationalist parties to enter parliament. However, an irritated public may demand them very soon.
Abromavicius raised a question about the procedure for appointing the heads of more than 60 state-owned enterprises. The process of appointing the heads of these companies perfectly illustrates the relationship between business and government: groups of parliamentarians orchestrate the appointment of "loyal" managers, through whom the financial resources of state-owned enterprises flow into the pockets of oligarchs and political parties. The minister said he was pressured to appoint certain managers. The "turning point" came when Mr. Kononenko demanded that the minister appoint his "credible friend" as Deputy Minister of Economy.
Figures like Mr. Kononenko abound in the Ukrainian parliament; they are known as "gray cardinals" or "Love Friends." The line between friends, business partners, relatives, and political allies is blurred. According to Aivaras Abromavicius, reforms have stalled. "This isn't a technical problem, it's a political one," declared one of the government's foreign consultants.
Dissatisfaction with the government's policies is growing, and trust in the government is declining. According to the Kyiv International Institute of Sociology, not a single government agency has a positive rating. Investors are worried, says Tomas Fiala, head of Dragon Capital, Ukraine's largest investment bank.
On February 16, Arseniy Yatsenyuk is scheduled to present his government's progress in a report to parliament. This report could immediately be followed by a vote of no confidence in the government. Ukrainian politicians have been actively preparing for this day. President Poroshenko summoned the G7 ambassadors, hoping to regain their trust.
The prime minister convened his cabinet to demonstrate unity. Several ministers withdrew their resignations. Western diplomats immediately expressed concern that instability could derail Ukraine's reforms and the peace process. Sensing Kyiv's weakness, the Kremlin could further destabilize the situation: the ceasefire was violated too frequently last week, and Russia itself is actively transporting weapons to the front lines.
The fate of Mr. Yatsenyuk, who controls a large faction in parliament, is crucial in the upcoming vote. Although he and the president are publicly partners, insiders say the president wants to replace the prime minister. Around 70% of Ukrainians share this opinion. However, there is no consensus within society or the government on who should replace him.
Rumors are circulating about the possible candidacy of Natalia Yaresko, the American-born finance minister. This idea would likely find support among reformers, but she has not yet expressed any interest. Two other candidates are also considered: Yulia Tymoshenko, the former prime minister, and Mikheil Saakashvili, the former president of Georgia who currently heads the Odesa region, but they do not currently pose a threat to Arseniy Yatsenyuk.
A certain cyclical pattern is beginning to emerge in the process of Ukrainian reforms and political life. Poroshenko was among the "Any Friends" of former President Viktor Yushchenko after the Orange Revolution of 2004. This time, many hoped that real reforms would begin after the local elections last fall. But these hopes were not realized.
Arseniy Yatsenyuk is focused on clinging to the prime minister's seat despite his extremely low approval ratings. President Poroshenko retained an incompetent prosecutor general, and as a result, his authority has steadily eroded. For some activists, his refusal to demand Mr. Kononenko's resignation is the last straw. "Rest in peace, Poroshenko," says Daria Kaletnik, head of the Anti-Corruption Center of Ukraine. "Now he's digging a political grave not only for himself but for the country as well."
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Translation of the article Dear friends, The Economist; translation by Andrey Pavlov, published in the publication Delo.ua
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