A new government
in Kiev has chance to reform, if it acts quickly.
3/31/16, 9:37 PM CET
Ukrainian President Petro Poroshenko waves to the crowd at a visit to Washington | Alex Wong/Getty
KIEV — Ukraine’s complex, at times Byzantine, politics continues to
confound and confuse.
Since independence, the main drivers of positive change in the country have
been mass civic movements, Western economic pressure and incentives, and the
necessity to act to avert economic disaster.
Nothing that will happen under a new government is likely to change that.
But a new government is exactly what Ukraine is about to get.
In the coming days, President Petro Poroshenko will likely succeed in
pushing through the election of his protégé, parliamentary speaker
Volodymyr Groysman, as prime minister, and a new government will embark on a
new reform trajectory.
Poroshenko’s main motivation for forcing a change in the government has
more to do with long-simmering personal animosity towards current Prime
Minister Arseniy Yatsenyuk, driven primarily by ego and aggrandizement, rather
than policy differences.
Nevertheless, there is a chance that — at least for a short time — the
new government will be able to push forward much-needed reforms. These include
modest changes to the legal system, the privatization of inefficient state
enterprises, and the reduction or removal of a wide array of rents that favor
large businesses and oligarchs.
There are several reasons for short-term optimism.
First, Poroshenko, who hitherto counted on Yatsenyuk to bear the
brunt of unpopular reforms, is increasingly viewed by Ukrainians as the leader
most responsible for the country’s economic stagnation.
Poroshenko, moreover, realizes that unless rents are reduced and new
revenue streams secured, Ukraine will have few resources to fund economic
growth. He also understands that if courts do not protect property rights and
enforce contracts, foreign direct investment will not come.
Second, the outgoing
government was essentially a power-sharing arrangement between Poroshenko and
Yatsenyuk in which both relied on the support of powerful, competing
business leaders and oligarchs who command vast financial and media resources
and have numerous proxies in parliament. By removing Yatsenyuk, Poroshenko is
likely to put the squeeze on the oligarchs that the prime minister
protected. That will increase state takings.
Third, the new government will have a good
selection of reformers. Despite rumors about the imminent departure of key
reformers from the current government, the list of names floated for economic
posts is reassuring. These include former Slovak Finance Minister Ivan Miklos
and the well-regarded former Microsoft executive Dmytro Shymkiv. There is
also a good chance that former Polish Deputy Prime Minister Leszek
Balcerowicz will serve as a key strategic advisor on reforms and will act
as liaison with Ukraine’s unruly legislature.
Time is not on their
side
Regrettably, even if it implements reforms, the life
of the new government is likely to be brief.
The current parliament has a large cohort of
populists, proxies of oligarchs, and rent-seeking businesspeople. These forces,
coupled with a group of frustrated and increasingly rebellious members of the
president’s own political bloc and an angry civil society, are likely to lead
to new elections well before the current parliament’s term expires. New
elections are likely to lead to an equally fragmented legislature. Or
worse.
In short, any new coalition will be weak and given its likely razor-thin
majority, its reform capacity will be of limited duration. So European and
North American leaders should understand that in Ukraine, change inevitably
comes in short, incremental bursts. That means policymakers should be prepared
to nimbly react to opportunities to promote change when and if they occur.
Such a pattern of policy instability and inconsistency is likely to persist
under the new coalition unless Poroshenko finds a way of building consensus
between Ukraine’s political and business elites and civil society. Only by
doing so can the country make a sustainable, long-term march toward reform. Any
other approach is likely to lead to more of the same or to the empowerment of
demagogic and populist forces.
Dmytro Shymkiv was an executive at Microsoft. A previous version of this
article misstated his association.
Adrian Karatnycky is senior fellow with the Atlantic Council and
co-director of its Ukraine in Europe Initiative.
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