Abromavicius’ resignation statement stunned the political establishment, partly because the mild mannered minister specifically called out Ihor Kononenko, Deputy Head of the Poroshenko Bloc Faction as a specific cause of it. Abromavicius boldly said, “Neither me, nor my team have any desire to serve as a cover-up for the covert corruption, or become puppets for those who, very much like the ‘old’ government, are trying to exercise control over the flow of public funds. I am not willing to fly to Davos and talk about our successes to international investors and partners, all the while knowing that certain individuals are scheming to pursue their own interests behind my back. These people have names. Particularly, I would like to name one today. The name is Ihor Kononenko. Despite representing the political party that had nominated me for my post, lately he has been bent on obstructing our efforts”. The Economy Minister then went on to describe how Kononenko attempted to orchestrate his firing by Parliament, lobbied for his appointees (some of which were closely affiliated with the Party of Regions) at state owned enterprises, and finally arranged to have his personal Deputy Minister of Economy appointed as the key person responsible for the state owned Naftogaz company. According to Abromavicius, the candidate for Deputy Minister showed up with official documents stating, “I want to be your deputy. I am part of Kononenko’s team, and my appointment was approved upstairs”. The Economy Minister then received a call from the “presidential administration” (Chief of Staff Borys Lozkhin according to Cabinet insiders) emphatically endorsing this candidate, as well as another one to serve as the Deputy Minister responsible for the defense industry. For Abromavicius, that was the final straw resulting in his resignation.The Abromavicius resignation is important for three reasons. First, he was viewed as a key part of the new team of young reformers who would fight corruption and help integrate Ukraine into Europe. Abromavicius and Finance Minister Natalie Jaresko were the star examples of foreigners who gave up their citizenship to become Ministers in the Ukrainian government. Just as the Spanish conquistador Hernando Cortez ordered his soldiers to “burn the boats” to force his soldiers to conquer the Yucatan peninsula (or die trying), giving up a European Union country passport in exchange for a passport of a partially occupied country in the midst of a war and recession is an equally bold move. In short, it was Abromavicius’ bet “for” Ukraine and not against it like most of the so called “pundits”. The theory goes that if they can push out a European born reformer like Abromavicius, then the “Western experiment” in fighting corruption will be over and Ukraine can return to “business as usual”. Abromavicius departure follows Infrastructure Minister Andriy Pivovarskiy’s resignation in December, the withdraw of Agrarian Policy and Food Minister Oleksiy Pavlenko by his Samopomich faction last month and the repeated attempts by Georgian born Health Minister Aleksandr Kvitashvili to resign since summer. This will essentially leave just Finance Minister Natalie Jaresko as the last standing, well known reformer in the Cabinet.
Second, Abromavicius’s resignation is important because he had a positive record of results. Abromavicius was an important part of making the moves to stabilize the economy. In addition he started common sense reforms in public procurement allowing transparent competitions for government purchases; he deregulated bureaucratic barriers to doing business, and introduced human resource reforms to begin the hiring of professional managers based on experience, rather than political connections. Granted, none of these reforms were invented by Abromavicius, and certainly others are capable of continuing them. However the question is: will the next Minister continue them?Third, the Abromavicius resignation is also important because it echoes comments by fired SBU Chief Valentyn Nalayvychenko in June citing Kononenko (known as “The Enforcer”) as a source of corruption within the President’s surrounding. Nalayvychenko went further in October by presenting evidence of Kononenko’s corruption to a Parliamentary committee hearing during which Kononenko was forced to sit quietly and “take it”. To borrow a quote from Nixon White House Counsel John Dean, Ihor Kononenko has become a “cancer on the presidency”. When the cancer of Kononenko is combined with the self-serving maneuverings of Chief of Staff Borys Lozhkin, the diagnosis is that the President is either 1) not in control of his administration, or 2) has given tacit approval to the Kononenko- Lozkhin duet to run roughshod over the government. Neither scenario is good for Ukraine, but at least in the first scenario, the President could potentially retake control of his administration and set Ukraine back on the path of reform.
Last week reports began filtering out from Bankova and oligarchic circles that a decision had been made that “Yatsenyuk stays longer”. How much longer? No one is saying… However as part of this decision, it was agreed that the Cabinet of Ministers will be reshuffled. While there is no surprise about a long rumored shake up of the Cabinet, the question remains “who will fill the positions?” One rumor had Aivaras Abromavicius being promoted “up and out” to Vice Premier for European Integration. In theory, it seems like a move up, but in reality it would be more of a cheerleader position than a post of substance. The idea behind the proposal was to oust Abromavicius from the Economic Ministry and send him to Brussels, London, Strasbourg, Davos (hence, Abromavicius’ reference to it), etc. to tell the Europeans that everything is going well while the “good old boys club” back in Kyiv continued to do “business as usual”. Not surprisingly, Ihor Kononenko’s name had surfaced as a possible replacement at the Ministry of Economic Development and Trade (as well as at the Infrastructure Ministry). Abromavicius has made his power move and the Western community has reacted with uncharacteristically public support. Now the ball is in Poroshenko and Parliament’s hands. Will they accept the resignation? Or will Parliament keep him in political limbo and force him to stay on the job longer as they have done with Kvitashvili and others? Will Poroshenko react to Western criticism and offer Abromavicius another post (like he did for Nalayvychenko who ultimately turned it down)? Or, could public pressure and anger over the resignation result in a backlash (it’s not every day that 12 influential Ambassadors speak against a resignation of a Cabinet Member), and Poroshenko asks Abromavicius to stay on longer as Economy Minister? In such a scenario, Abromavicius would end up with more autonomy, and the Kononenko-Lozkhin duet would have to be publicly slapped down (at least for the time being). While this scenario is unlikely, a President with an approval rating in free fall can ill afford offending the Western leaders who have provided the diplomatic and financial support to keep Ukraine alive over the last two years. Thus, the matter is not yet decided. Aivaras Abromavicius may be a self-described “technocrat”, but his resignation has just become the most politically controversial Cabinet move since Yushchenko fired Tymoshenko in September 2005.
Meanwhile the government that took office in December 2014 contains not a single Cabinet Member who is not under fire, is being threatened with dismissal, or is not looking around for other opportunities. For now Parliament plans to vote on the new Cabinet on February 18th but Abromavicius’ resignation may accelerate that process. Here is a quick summary of the current Cabinet:Prime Minister Arseniy Yatsenyuk: With an approval rating around two percent, allegations of corruption within his circle, Odesa Governor Mikheil Saakashvili attacking him almost daily, and having been rudely grabbed by the crotch by an angry MP, Yatsenyuk’s days as Premier are clearly numbered. US Vice President Joe Biden’s visit in December last year propped up the Prime Minister temporarily, but he is not likely to stay in the post past his 42nd birthday on May 22nd. There are already enough votes in Parliament to dismiss Yatseynyuk, but the fact that no one can agree on who comes next is what is keeping him in the post. For example, Saakashvili wants the position, but without the support of Yatsenyuk’s People’s Front faction, it’s mathematically difficult to get enough votes. Poroshenko is publicly standing by Yatsenyuk, but privately is said to have told his team that he will not spend his dwindling political capital to prop up the Premier. Poroshenko’s preferred candidate is Speaker Volodymyr Groisman, but the public seems unlikely to tolerate any additional “Vinnytsya” influence in government at this point. Finance Minister Natalie Jaresko appears to be the only candidate who could get the support of Yatsenyuk’s faction when he is eventually dismissed, as well as maintain the support of the Poroshenko and Samopomich factions. While the math favors Jaresko becoming Premier when Yatsenyuk is fired, Jaresko is wisely avoiding speculation on the matter. Thus Yatsenyuk continues to stay, but don’t be surprised when the “fat lady sings” at his political opera in the coming weeks.
First Deputy Prime Minister: vacant since Vitaly Yarema left the post to become Prosecutor General. Ihor Kononenko and Deputy Chief of Staff Vitaly Kovalchuk are both said to be eyeing this post. This could also be combined with the proposed new Minister of European Integration, Ministry of Economic Development and Trade, or the Ministry of Infrastructure. Whoever becomes the Minister of European Integration (in conjunction with the post of First Deputy Premier or not), will need to be deemed a reformer who can assure Brussels that Ukraine is making progress on fighting corruption. That would eliminate Kononenko from holding the dual post, but not from being First Deputy Premier and Minister of Economy.
Vice Premier and Minister of Culture Vyacheslav Kyrylenko: The veteran Parliamentarian (six terms) is said to be first on the “hit list” when the Cabinet gets shuffled. Though Kyrylenko has stayed out of the public spotlight, the post of Vice Premier is too juicy not to be filled by a more ambitious politician. As a result, Kyrylenko will likely be ousted; the Ministry of Culture spun off separate from the Vice Premier’s post, and replaced either by the Ministry of Economic Development and Trade or the Ministry of Infrastructure.
Vice Premier and Minister of Regional Development, Building, Housing and Communal Services Gennadiy Zubko: Zubko has received positive marks for implementation of the decentralization legislation and is viewed as a competent manager. As a result, he “might” survive the reshuffle. However the Vice Premier post is much coveted and his continuation will depend on how much political capital the President is willing to spend to keep him in the position.
Minister to the Cabinet of Ministers Hanna Onishchenko: Onishchenko has been nominated for a post on the Central Election Commission (CEC) by People’s Front. Justice Minister Pavlo Petrenko is pushing her candidacy and she may also have support from oligarch Ihor Kolomoyskyi since her former law firm represented Privatbank and Ukrnafta (both largely controlled by Kolomoyskyi). Her nomination for the CEC post in November is further evidence that everyone in the Cabinet of Ministers is keeping their resumes up to date and looking for exit options.
Agrarian Policy and Food Minister Oleksiy Pavlenko: Samopomich announced their withdraw of Pavlenko from the post in late January sparking additional speculation on an imminent Cabinet shakeup. As the only Samopomich Minister in the government and angry over Poroshenko’s pursuit of decentralization (which they oppose), the party led by Lviv Mayor Andriy Sadoviy has decided to play hardball in the new Cabinet negotiations. Pavlenko is viewed as one of the reformers in the government and his potential loss will be another loss for the people of Ukraine.
Internal Affairs Minister Arsen Avakov: Support for the country’s top policeman has plummeted since he threw a glass of water at Odesa Governor Mikheil Saakashvili. In addition, the Kharkiv native has since been hit with allegations that he has evaded taxes, and illegal managed a business while holding the post as Minister. However as recently as last summer, Avakov was perceived as one of the most influential Cabinet Ministers. Now though, he is fighting for his political life and barring some major bargaining, is not expected to survive.
Economic Development and Trade Minister Aivaras Abromavicius: Resigned as of today.
Energy and Coal Industry Minister Volodymyr Demchyshyn: Despite the fact that Ukraine is no longer reliant on Russian gas, the Energy Minister has been a frequent target of the Prime Minister’s attacks. A petition has been circulated in Parliament calling for his resignation, and oligarch Rinat Akhmetov has organized many of the country’s coal miners against him. Nonetheless, Demchyshyn has survived with the President’s support. However there has been talk for months of a Poroshenko-Yatsenyuk deal whereby Poroshenko gives up Demchyshyn and Yatsenyuk gives up Avakov to keep the coalition together. Thus, Demchyshyn is unlikely to stay in his current post much longer.
Foreign Affairs Minister Pavlo Klimkin: The Foreign Minister is one of the more secure Cabinet Members. Poroshenko likes him and it’s one of the few posts directly proposed by the President rather than the Parliamentary majority. Klimkin is also liked by the international community and has received positive marks. Suffice to say, that among all the Cabinet Ministers, Klimkin is the only one making any work plans into summer. That being said though, Klimkin was interested in the United Nations Ambassador post which was recently awarded to Volodymyr Yelchenko.Information Policy Minister Yuri Stets: Poroshenko ally Yuri Stets has been under fire since the day he took office, not because of his work per se, but because the Ministry even exists. Creation of an Information Policy Ministry evokes images of censorship and dictatorship and the outcry from Ukrainian journalists has been harsh. Fortunately for Stets, the President likes him and is likely to shuffle him elsewhere as soon as the Ministry is abolished. Given the political environment and the President’s declining political capital, closing this poorly conceived Ministry is likely to take place in conjunction with the reshuffle. Resources used for this ministry will likely be shifted to the newly created Ministry for European Integration that is anticipated.
Infrastructure Minister Andriy Pivovarskiy: Another one of the young reformers, Pivovarskiy announced his resignation in December citing low pay (i.e. difficulty keeping quality staff) and massive bureaucracy. Pivovarskiy’s departure was clearly a leading indicator of the Cabinet shakeup that is too come.
Youth and Sports Minister of Ukraine Ihor Zhdanov is a capable politician confined to the least important Ministry in the Ukrainian government. In addition, he is the only Minister in the government from the Bloc of Yuliya Tymoshenko. With Tymoshenko’s rising rating and tenacious ambition, it is not inconceivable that her party could finagle another minister during the Cabinet shakeup. The President needs her votes on decentralization and few politicians drive a harder bargain that Tymoshenko. Thus, it may not be the dream job Zhdanov hoped for when he entered politics, but the post does have a lot of perks (i.e. great seats at all soccer matches) and at the moment, his job is one of the more secure in the Cabinet.
Education and Science Minister Serhiy Kvit: Kvit’s background with the Kyiv Mohyla Academy earned him the post, and there was hope that he would be one of the leading reformers in the government. However partly due to obstruction by Tabachnik era holdovers, combined with the enormity of the bureaucracy, and a staff which seems content on preserving the status quo, Kvit has become politically expendable. Abromavicius’s resignation can trigger a dozen diplomats objecting openly to the Ukrainian government. Kvit’s departure will be far quieter since he lacks the political capital to preserve his post.
Defense Minister Stepan Poltorak: The career military man has wisely avoided politics and deferred to the Commander in Chief, President Poroshenko. During war time this has proved a successful political strategy which is likely to keep Poltorak in his post into the future. The Defense Minister position is directly proposed by the President and Poroshenko is unlikely to make a change at this time.Health Minister Aleksandr Kvitashvili: The Georgian born Health Minister has been trying to resign since June, but Parliament continues to decline his request. Unlike most of the Georgian team which has strong backing from the Poroshenko Bloc, Kvitashvili has managed to lose the support of Saakashvili and instead relies on Yatsenyuk (Saakashvili’s ‘arch enemy of the month’) for his support. The vultures have been circulating around Kvitashvili for some time and last week the Poroshenko Bloc proposed Odesa MP Oleksiy Goncharenko for the post. In doing so, it both promotes a close friend of the President’s son Oleksiy Poroshenko, as well as gets an Odesa power rival out of Saakashvili’s way. Saakashvili has been frustrated by Goncharenko’s influence in Odesa affairs which often trumps his own. Thus, if Saakashvili has his way, he will promote his Odesa rival “up and out” making the President happy, while consolidating control over Odesa politics and eliminating the perceived “disloyal” Kvitashvili in the process. Deputy Health Minister Ihor Perehinets is also under consideration for the post but doesn’t seem to have enough support at the moment. MP Olya Bogomolets, a dermatologist and granddaughter of a famous Ukrainian doctor, is angling for the post too. Two other doctors, former Head of the Aleksandrivsky Hospital in Kyiv Roman Vasylishyn and the Head of the Kyiv City Cardiology Center Borys Todorov have also been mentioned. Even Deputy Chief of Staff and former Microsoft Executive Dmytro Shymkiv, has been mentioned for the post. In this highly unstable political environment, everyone is considering their options. The only certainty is that Kvitashvili will finally be replaced.
Social Policy Minister Pavlo Rozenko: A competent technocrat, Rozenko has performed well despite lack of budget funds for the social programs and initiatives. Rozenko’s appointment was a political favor to UDAR (i.e. the political party of Kyiv Mayor Vitaly Klitchko) but with Klitchko’s hands full managing Kyiv, and UDAR in mothballs, Rozenko may find himself unemployed soon as a casualty of the Cabinet shakeup.
Finance Minister Natalie Jaresko: Having saved Ukraine from financial collapse by negotiating the largest IMF (International Monetary Fund) bailout in history, Jaresko has earned a reputation as the leading reformer in the Cabinet. The oligarchs and some Poroshenko Bloc MP’s (particularly Ihor Kononenko) don’t like her, but her support from the international community is even stronger than Abromavicius’. While diplomatic policy is to invest in “policies not people”, her continuation in her post (or higher office) is an unofficial priority of the diplomatic and financial community. Though Jaresko is frustrated with her work being undermined by the bureaucracy and some Parliamentarians, expect the next government to pull out all stops to keep her in the Cabinet.
Justice Minister Pavlo Petrenko: this Yatsenyuk ally is influential within the People’s Front faction and with the Premier, but neither can protect him from dismissal by Parliament. The Justice Ministry is a powerful post and clearly one of the top bargaining chips in the coming Cabinet negotiations. Thus, Petrenko’s future as Justice Minister is uncertain.
SBU Chief Vasyl Hritsak: The SBU Chief is appointed by the President and confirmed by Parliament. Hritsak took over last summer after Nalayvychenko was fired and has performed reasonably well. His job is not at risk during the Cabinet shakeup.
Prosecutor General Viktor Shokin: Disliked by Ukrainians and the international community alike, Shokin has managed to become a symbol of the “old system” and what is wrong with the Ukrainian justice system in less than a year on the job. Nonetheless the position is proposed by the President, and all indications are that Shokin will stay in the post until his health no longer allows him to serve. To buy some additional time and shift the burden from the executive branch to the legislative, the President announced on January 30th that he was restoring Parliamentary control over the selection of the Prosecutor General. This political sleight of hand allows the President to shift responsibility to Parliament for the controversial Prosecutor. Meanwhile the Prosecutor recently embarrassed himself (and the country) by threatening to sue Hudson Institute Research Fellow Hannah Thoburn who merely tweeted that a way to fight corruption in Ukraine was to “remove Shokin”. Thoburn’s tweet was far more diplomatic than recent remarks by the US Ambassador and others about the Prosecutor’s lackluster performance, but since she lacks diplomatic immunity, Shokin decided to try to bully her. In a normal world, Shokin would be an easy sacrifice in the Cabinet shakeup. However in the convoluted political situation in Ukraine, he may ironically survive.
Dates to Watch (for Ukraine unless otherwise noted):
February: Stockholm Arbitration Hearings on Counter Claims between Naftogaz and Gazprom.
June 23: New EU Expiration Date for Crimea related Sanctions on Russia
June 2016: Stockholm Arbitration Courts Expected to Render a Decision on the Case Between Naftogaz and Gazprom.
July 31: New Date for Expiration of the EU’s Donbass related Sanctions on Russia