Ukraine’s political turmoil worsened as squabbling in the wake of a failed
no-confidence motion against Prime Minister Arseniy Yatsenyuk threatened to
sink the ruling coalition.
Ex-Premier Yulia Tymoshenko’s Batkivshchyna left the four-party alliance,
while fellow coalition member Samopomich boycotted Wednesday’s parliament
session. Both called the vote on Yatsenyuk political theater designed to
maintain the status quo. While the pair only control 45 of the legislature’s
450 seats, their departure would eliminate the coalition’s parliamentary
majority and raise the prospect of early elections.
Political tensions in the former Soviet republic are reaching breaking
point, jeopardizing the flow of aid from a $17.5 billion bailout and the
economy’s recovery after an 18-month recession. Infighting over the slow pace
of promised reforms prompted the resignations of top modernizers in the
government and prosecutors’ office. With bond yields near their highest since a
2015 restructuring, President Petro Poroshenko has urged a cabinet revamp.
“The viability of the coalition now hinges on the remaining junior
coalition partner, Samopomich, which was the strongest supporter of the
no-confidence motion and, therefore, poses a significant risk of leaving the
coalition as well,” Goldman Sachs Group Inc. said in a research note. “The
failure of yesterday’s no-confidence vote underscores the fragmentation of the
current administration, calls into question its ability to push reforms
forward, and increases the risk early elections will take place sooner rather
than later.”
The escalating political crisis adds to headwinds for Ukraine, which is
seeking to reshape its economy and institutions after a pro-European revolution
dislodged its Kremlin-backed leader in 2014. Almost two years after pro-Russian
separatists seized swathes of the nation’s easternmost regions, a peace accord
to resolve the conflict has yet to be implemented. Economic growth remains
fragile. The hryvnia has lost 10 percent this year.
Tensions boiled over Tuesday, when a surprise statement from Poroshenko
called for Yatsenyuk to step down and a government of technocrats to be
installed. A no-confidence motion later in parliament didn’t muster enough
support to oust him. Samopomich said Wednesday that there were technical
issues with voting and called for a re-run.
The vote followed the exits of Economy Minister Aivaras Abromavicius and
Deputy Prosecutor General Vitaliy Kasko, who quit accusing ruling-party
officials of blocking reforms and engaging in corrupt practices. Their departures drew concern from
allies including the U.S. Bond yields surged after International Monetary Fund
Managing Director Christine Lagarde warned Ukraine’s bailout may be halted. A
$1.7 billion transfer from the Washington-based lender has been delayed since
last year, holding up other bilateral aid.
“We’re going to see more bond volatility,” said Vitaliy Sivach, a trader at
Investment Capital Ukraine in Kiev. ”Since the prime minister doesn’t want to
leave, we could see a power struggle. That could slow reforms even further.”
If Samopomich quits the ruling alliance, leaving it short of the required
226 seats, parliament would have 30 days to form a new coalition and 60 days to
form a new government. The party will hold an extraordinary meeting
Thursday to determine its next steps.
Tuesday’s no-confidence motion has only worsened Ukraine’s predicament,
according to Parliament Speaker Volodymyr Hroisman, who also mentioned the
possibility of elections.
“Failing to dismiss the government didn’t resolve the crisis -- on the
contrary it deepened it,” he told lawmakers Wednesday, urging them to end
the gridlock within a week. “Either a way out will be found here, by political
forces in parliament, or the current cabinet must be completely rebooted
and if necessary this parliament must be rebooted too.”
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