Leonid Bershidsky
The new Ukrainian cabinet, confirmed by the parliament on Thursday, is more
interesting for the people it doesn't include than for those it does. Ukraine's
experiment with bringing foreign reformers and private sector professionals
into the government is now officially over, and it has failed.
President Petro Poroshenko tapped his long-time protege and ally, former
parliament speaker Volodymyr Hroisman to form the government. The result,
for the most part, is a cabinet of Poroshenko loyalists; the unpopular
businessman-president is consolidating power, much the way his hapless
predecessor Viktor Yanukovych once did.
Though, at several points in the
negotiating process, Hroisman reportedly refused the prime minister's job unless his conditions were met, these
reports should be taken with a grain of salt: Poroshenko wants Hroisman to look
independent, not least in the eyes of Washington politicians who have been wary
of Poroshenko monopolizing power.
Hroisman was a popular mayor in Vinnytsia, the base city of Poroshenko's
confectionery empire, Roshen. He fixed the roads, persuaded the Zurich
city authorities to give Vinnytsia 100 perfectly serviceable streetcars that
the Swiss city was replacing, made the bureaucracy friendlier to city
residents and got Poroshenko to build a spectacular musical fountain in the
middle of the Southern Bug, the river that flows through the city. But the
Hroisman family also owns a large mall in Vinnytsia, built while
Volodymyr already ran the city, and financed with debt the Hroismans never repaid. The new prime minister is a typical Ukrainian politician, wily and
capable but at the same time always mindful of his personal
interests.
The new cabinet includes some of his old co-workers from Vinnytsia: One as
a deputy prime minister in charge of the secessionist regions of eastern Ukraine,
another as social security minister. It also includes plenty of seasoned
Ukrainian politicians and bureaucrats who did fine under all the previous
regimes, as well as a couple of veterans from the 2014 "Revolution
of Dignity" and a few allies of former Prime Minister Arseniy Yatsenyuk --
his reward for allowing Poroshenko to form a beholden cabinet and avoid an
early parliamentary election.
Gone, however, are the foreigners and investment bankers brought into
Yatsenyuk's government on the initiative of Poroshenko's chief of staff
Boris Lozhkin, a former publishing magnate (disclosure: I worked for Lozhkin in
Kiev in 2011 and 2012, before he went into politics). The chief of staff used
headhunters to locate suitable professionals, and Poroshenko granted them
Ukrainian citizenship so they could take up top positions.
“It was indeed my idea to infect the government with a different life
form,” Lozhkin told me in an interview a year ago. “They have to have a
different genetic makeup to change the system." Gone are Lithuanian-born
asset manager Aivaras Abromavicius as economy minister and U.S.-born venture
capitalist Natalie Jaresko. The health minister, a Georgian, was also cut from
the team.
Ivan Miklos, the former finance minister of Slovakia, might have been the
only foreigner in the Hroisman cabinet. Poroshenko's team negotiated with him
and a law was even initiated to allow him to keep his Slovak citizenship.
Yet all Miklos agreed to is an advisory role.
Some Ukrainian private sector stars who went into public service after the
revolution are also notably missing from Hroisman's cabinet. Absent is former
infrastructure minister, financier Andrei Pivovarsky, who had been trying to
reform Ukraine's antiquated, corrupt transport industry and who resigned in
December following unsuccessful efforts to secure living wages for his team.
Dmitri Shymkiv, the former head of Microsoft's Ukrainian operation who is
Lozhkin's deputy on Poroshenko's staff, was offered the job of deputy prime
minister for reforms but refused, saying he'd join a technocratic cabinet but
not a political one. Lozhkin himself decided not to move to a cabinet role,
though he had been offered one.
The only true star with a private sector background in the new cabinet is
U.S.-educated former McKinsey consultant Oleksandr Danilyuk, the new finance
minister, who was another Lozhkin deputy before this appointment.
The period from late 2014 to early 2015 was a romantic time for people with
Western degrees and backgrounds in Ukraine. Well-compensated professionals were
willing to interrupt their private sector careers and work practically without
pay, while playing for the highest stakes possible -- Ukraine's future and
their reputations. When I talked to the new appointees soon after they moved
into government offices, they were appalled at the quality of management and
pervasive graft in Ukraine's public sector, and they saw specific things they
could improve.
Individually and collectively, they failed to change Ukraine's rotten
post-Soviet system. They learned that Ukraine is a country where the political
and bureaucratic establishment know how to make a stranger look and
feel stupid; they were no longer willing, or no longer able, to keep
swimming against the current.
"There is not a single expat in the new government," wrote legislator
Mustafa Nayyem, who joined the parliament on the same romantic wave that swept
the foreigners into the Ukrainian cabinet. "They were pushed out for not
wanting to play by the old rules."
Though he is optimistic that a dozen local public servants are now
qualified enough to pick up the romantics' reform banner, I believe the
optimism is misplaced. Those who run post-Soviet systems such as Ukraine's are
no less smart or talented than the private-sector managers who seek to change
things; they just serve themselves first, not the public good. That's such
a powerful motivation that any reforms will backslide until selfless romantics
constitute a majority in government -- a difficult picture to imagine -- or
more advanced countries intervene to a greater degree than they are doing in
Ukraine today.
After the Hroisman cabinet was confirmed, Poroshenko spoke on the
phone with U.S. Vice President Joe Biden, who assured him of continued U.S.
support. That support is now as misplaced as Russian President Vladimir Putin's
backing of Yanukovych just before his ouster.
This column does not necessarily reflect the opinion of the editorial board
or Bloomberg LP and its owners.
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