Ukraine minister quits in blow to reform hopes

Ukrainian Economy Minister Aivaras Abromavicius quit yesterday, saying that his ministry was being hijacked by corrupt vested interests, dealing another blow to Western hopes that the country can reform itself.
In his statement, Abromavicius singled out a close ally of President Petro Poroshenko, accusing him of blocking the ministry’s work and pressing for powerful jobs for allies, with the support of the president’s office.
Poroshenko later responded by urging Abromavicius to stay, adding that the anti-corruption bureau would investigate the allegations.
Abromavicius’s exit could derail plans to privatise around 100 state-owned companies, which were a plank of a reform programme to turn around an economy which shrunk by more than a tenth last year.
There has been mounting public anger that the new, pro-Western government that came to power after a pro-Russian president was toppled by protests in 2014 has not delivered on promises to stamp out corruption.
The government’s approval ratings have fallen sharply.
Ukraine’s international backers, including the United States and the European Union, have also become increasingly impatient with the slow pace of change in a country into which they have pumped billions of dollars in aid.
A group of envoys, including the US, German and British representatives in Kiev, said that they were “deeply disappointed” by the resignation, which also sent Ukrainian sovereign bonds tumbling.
Any threat of Prime Minister Arseny Yatseniuk’s government collapsing would also deeply worry Ukraine’s Western partners, who have backed the coalition in order to keep the country from falling back into Moscow’s orbit.
“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,” Abromavicius said in an English-language statement.
Ukraine has struggled economically since the 2014 revolt, which was followed by Russia’s annexation of its Crimea peninsula and by war in the east of the country against pro-Russian separatists Kiev says are supported by Moscow.
Abromavicius is a Lithuanian-born former asset manager who was brought in as one of several foreign experts to help run Ukraine’s new government.
He said Ihor Kononenko, a senior lawmaker close to Poroshenko, had lobbied to get his people appointed as heads of state companies, culminating in an attempt to appoint one of his people as Abromavicius’s deputy.
A candidate showed up, demanding to be appointed, he said.
After that, “I received a call from the President’s Administration, whereby I was emphatically suggested to hire this individual, as well as another one, who would take the position of my deputy in charge of defence industry. I responded by declining to take part in this corrupt arrangement and by offering to resign my post”.
Kononenko denied the accusations as “completely absurd”, and said that Abromavicius was trying to shift blame for his own failures in running the ministry.
Yatseniuk said there was a campaign to discredit his government, and accused Abromavicius of “running from the field of battle”.
Since coming to power in 2014, the government has vowed to stamp out the systemic graft that flourished under former president Viktor Yanukovych and kept Ukraine hooked on Russian money and cheap gas.
But many Ukrainians believe corruption has not improved, eroding support for the authorities, deterring foreign investment and causing Western backers to question Kiev’s ability to deliver real change.
They have warned Ukraine not to repeat the mistakes of more than a decade ago, when the euphoria of the “Orange Revolution” of 2004, an earlier popular protest movement that brought pro-Western leaders to power, eroded amid government infighting and a failure to stamp out graft.
The slow pace of change now threatens to derail a $40bn aid-for-reforms deal championed by the International Monetary Fund, European Union and United States.
“Abromavicius’ initial appointment was made precisely because, as a Lithuanian with no experience in Ukrainian politics, he came from outside a corrupt system and could credibly work to reform it,” said Daragh McDowell of the risk analytics firm Verisk Maplecroft.
His exit “will fatally undermine what little confidence investors still had in the Poroshenko administration and Ukraine’s economic prospects in general”.
Low approval ratings for Yatseniuk’s government have raised expectations of a major ministerial reshuffle, and the government also could face a no confidence vote in parliament around the middle of February.
“It is important that Ukraine’s leaders set aside their parochial differences, put the vested interests that have hindered the country’s progress for decades squarely in the past, and press forward on vital reforms,” the foreign envoys in Kiev said in a joint statement.
Some other cabinet members have also expressed frustration at the pace of progress in their ministries.
Infrastructure Minister Andriy Pyvovarsky has threatened to resign, while Health Minister Alexander Kvitashvili tendered his resignation last summer, only to have it rejected by parliament.
Abromavicius’s resignation must also be approved by lawmakers, and he urged them to meet today to green-light his departure.
Poroshenko said in a statement that Abromavicius had recognised the support the president had given him.
“As far as I’m concerned this support is guaranteed, in the future also. I believe that Aivaras should stay as minister and continue reforms. He went away to think,” he said.
The statement did not address the allegation of his office meddling in appointments in the ministry.

Ex-IMF chief Strauss-Kahn joins Ukraine bank

Disgraced former IMF chief Dominique Strauss-Kahn has been appointed to the supervisory board of a bank owned by Ukraine’s second-richest businessman Viktor Pinchuk.
Kiev’s Kredit-Dnipro Bank said the decision to accept Strauss-Kahn and five others to the advisory body was taken on Monday.
It added that Strauss-Kahn would serve as an independent committee member who does not represent shareholders’ interests.
Pinchuk is the son-in-law of former Ukrainian president Leonid Kuchma and is believed to have holdings worth $1.43bn (€1.29bn), according to Forbes magazine.
Strauss-Kahn led the International Monetary Fund (IMF) from 2007 until his forced 2011 resignation over rape charges in a New York hotel.
The scandal derailed the Frenchman’s presidential ambitions even though it was later dismissed in court.
Straus-Kahn made one of his first post-resignation public appearances in Kiev when he spoke to students on the personal invitation of Pinchuk.