Global News Insider

6 months after the landslide victory in the presidential elections in Ukraine the former comedian Mr. Volodymyr Zelensky is unexpectedly reshuffling the prime minister, general prosecutor and some proreform ministers. This replacement comes only 6 months after a new governement in Kiev was formed to push forward reforms and solve crucial economic problems of Ukraine. But the traces of distrust between the President and the now-ex-prime minister Oleksiy Honcharuk had been there even before this replacement. The first crisis in relations arose after the leakage of audio material in which the prime minister criticized Zelensky for his incompetence and bad understanding of economic issues. But if the first crisis was shortly overcomed, now it seems that Zelensky who is also the head of the ruling party (Servant of the People party) had definitely lost confidence in O. Honcharuk.

The replacement of the prime minister comes in a quite difficult time for both Ukraine and Mr. Zelensky. Mr. Zelensky after being elected the President promised the citizens of Ukraine to make swift radical reforms in the country which faces serious economic challenges and is close to bankrupcy on some international loans. The tempo of reforms is still very slow and there is no reason to believe that this tempo would accellerate rapidly after the new replacement of the head of government.

Explaining the reasons of the cabinet’s reshuffle Mr. Zelensky told the public that “ Let’s be objective – this government has its achievements, which includes the reduction in inflation, the fight against shadow markets, in particular against gambling and illegal gas stations, beginning of the privatization of state-owned enterprises, which had been plundered for many years, provision of loans to small and medium-sized businesses as well as the reduction of the role of the state in the economy. “But”, Zelensky continued, “that is not enough for Ukrainian citizens”. According to Zelensky many issues remained unresolved: “the issue of smuggling has not disappeared, there was a decline in the industrial production by 4% as the government has not provided tools that stimulate domestic production and new production capacities, there is a chaos in utility payments.” “Another pain is the situation with miners and the coal industry. First of all, we are talking about the salaries of miners and the sale of Ukrainian coal,” Zelensky said.

But if we neglect the economic issues of the country, the replacement of Honcharuk by Shmygal raises also other questions: one of them is whether a new prime minister would be absolutely unbiased and independent in his policy? The new prime minister Mr. Shmygal had worked between 2017-2019 as an executive at an energy holding owned by the richest Ukrainian oligarch Rinal Akhmetov. We are not sure whether Akhmetov has any influence on the new prime minister, but even the Volodymyr Zelensky became very popular in Ukraine due to his work for a TV channel owned by other influential Ukrainian oligarch Kolomoisky? It is not clear whether Shmygal was chosen by Zelensky for his outstanding work as a governor of Ivano-Frankovsk region or are there other reason, but it seems that oligarchs continue to play significant role in a political and economic life of Ukraine.

In this context it is quite interesting how international creditors would react to the cabinet reshuffle in Ukraine? There is a much needed international loan from the IMF at stake and Kiev literally plays with fire. Another hot issue is the reshuffle of the general prosecutor who according to Zelensky was not eager to start judicial proceedings against the breaches of law of the former president Poroshenko.

Has Mr. Zelensky a capacity to cope with the pressure from the Ukrainian citizens who are waiting for new reforms as well as the pressure from the oligarchs who play their own interests? To our opinion, the international community, including the EU and IMF, has a very bleak understanding on what is really going on in Ukraine. Shadow economy, oligarchic influence on political and economic life in Ukraine, difficult and stalemate on Donbass issue and the unexpected replacement of ministers icluding the prime minister after 6 months in charge is a very bad signal. Due to the unprecedented global situation caused by the outbreak of coronavirus, Ukraine would face another challenge: thousands of Ukrainian migrant workers who are transfering significant part of their wages received in the EU might lose their jobs as many employers are either temporarily ceasing their production or sending their employees on home office.