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Will Kiev’s New Government Fight Ukraine’s 1 Percent?

Ukraine has a new prime minister and cabinet. Can they root out the endemic corruption that has plagued the country?

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Ukraine’s U.S.-born finance minister believes she knows the answers to her country’s economic and political woes. Unfortunately, she also believes that many of Ukraine’s business and political elites will fight to preserve the status quo.

The blunt assessment from Natalie Jaresko, who is being pushed out of her post to make way for the country’s new cabinet, comes as Kiev tries to resolve a bitter political standoff. The Ukrainian parliament announced the formation of a new government Thursday in a move designed to end months of deadlock, but reformers are already complaining that it gives powerful politicians and wealthy oligarchs greater influence over the country.

In remarks Thursday at an event hosted by the Atlantic Council, Jaresko acknowledged those fears. She used the remarks to tout her accomplishments in office, warn of rising populism in Ukrainian politics, and urge the newly-formed government to follow through with the International Monetary Fund’s reform program.

Ukraine is highly dependent on the IMF program and I believe that’s a huge asset,” Jaresko said. “The new Ukrainian government must stick to the IMF program and implement it fully, including painful reforms.”

The IMF program has imposed unpopular austerity measures while calling for structural changes to the Ukrainian economy. The new government will be closely watched by Kiev’s Western backers and the IMF, which put the next payment from a $17.5 billion loan on hold until Ukraine implements new anti-corruption measures and reforms the country’s bloated energy sector, among other measures. 

The outgoing finance minister also blamed Ukrainian oligarchs for resisting attempts to reform the country’s economy during her tenure in order to protect their “vested interests” and “preserve the old way of doing business.”

Ukrainian President Petro Poroshenko is one of Ukraine’s richest men and a self-made tycoon who owned Roshen, a massive confectionary business, as well as a stake in a television channel. In early April, the president was implicated in the so-called Panama Papers for having an offshore account in his name. Poroshenko said the account was opened in order to create a blind trust to oversee the management of Roshen, but the scandal has tarnished the president’s popularity at home and once again raised the specter of corruption in Ukraine’s highest office.

While refraining from directly criticizing the new government headed by Prime Minister Volodymyr Groysman, the former parliamentary speaker and a close ally of Poroshenko, Jaresko said that the recently-formed cabinet was a “political government” and that the lack of technical experts in high posts indicated that “the new government is set up with a different logic.”

“The Ukrainian political elite today is indeed deeply divided,” said Jaresko. “But I am certain that the progressive forces will prevail. It is only a question of speed and time.”

The 38-year-old Groysman received approval from the two largest parties in parliament to become Ukraine’s new prime minister on Thursday and amid jeers from the opposition announced that his government “will be intolerant of corruption.” Public clashes between Poroshenko and former Prime Minister Arseniy Yatsenyuk had created deadlock in the government, particularly over the reforms required to secure future installments of an IMF loan. Christine Lagarde, the IMF’s managing director, said in February that the money would be at risk without improved governance and a renewed push to battle the widespread corruption that has long plagued the former Soviet country.

With Jaresko on her way out, the composition of the new cabinet has already come under scrutiny, with reformers and members of the opposition criticizing the abundance of Poroshenko loyalists as a sign of the president’s growing authority over both branches of government.

The announcement of the new cabinet comes as public trust in the Ukrainian government, and Poroshenko in particular, continues to plummet. A poll released Thursday by the International Republican Institute found that a record 76 percent of Ukrainians believe the country is heading in the “wrong direction,” with public satisfaction in the president declining from 25 to 17 percent since November 2015.

Photo credit: GENYA SAVILOV/AFP/Getty Images

Reid Standish is a journalist based in Helsinki, Finland. He was formerly an associate editor at Foreign Policy. @reidstan

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