(Bloomberg) -- Ukrainian leader Volodymyr Zelenskiy, who swept to power pledging to draw a line under the post-Soviet politics of his nation's past, turned back the clock in a top-down revamp of his government.
Facing growing disillusionment among voters less than a year into his presidency, Zelenskiy replaced his prime minister and other cabinet members with more established officials. One even worked under the administration of Viktor Yanukovych, who fled to Russia in disgrace in 2014 after protesters ousted him.
The reshuffle, backed Wednesday by parliament, signals a shift away from the fresh faces brought in to tackle endemic corruption and retool the ex-communist economy. The changes drew criticism among some watchers of Ukraine, a battleground between the West and Russia that recently took center stage in Donald Trump's impeachment.
| Position | Outgoing minister | Replacement | Background |
|---|---|---|---|
| Prime Minister | Oleksiy Honcharuk | Denys Shmyhal | Previously deputy head of of energy company owned by Ukraine's richest man, Rinat Akhmetov. Also briefly governed western region of Ivano-Frankivsk. Age: 44 |
| Finance Minister | Oksana Markarova | Ihor Umanskyi | Worked for several governments between 1998 to 2004 and for a year at central bank. Served as acting finance minister under PM Yulia Tymoshenko. Age: 45 |
| Health Minister | Zoryana Skaletska | Illya Yemets | Heart surgeon who served in same role under Yanukovych in 2010-2011. Age: 64. |
“These moves are unfortunately a step back in the reform movement,”said Mark McNamee, practice leader for Europe at research and advisory firm DuckerFrontier. “Zelenskiy seeks to stabilize the situation and achieve effective governance under known bureaucrats, however tainted they may be from their experience in previous governments.”
Outgoing Premier Oleksiy Honcharuk paid the price for delays in a $5.5 billion loan from the International Monetary Fund, a plunge in economic expansion and insufficient progress on tackling graft.
But Zelenskiy, whose ratings slid in lockstep with the government's, shares some blame.
Ties to billionaire Igor Kolomoisky -- accused of a multi-billion-dollar fraud that prompted the nationalization of Ukraine's No. 1 bank -- continue to raise eyebrows. Efforts to end the Kremlin-backed war on Russia's border have drawn accusations he's caving in to Vladimir Putin.
The reshuffle echoes the fate of the first team of reformists Ukraine drafted in following the revolution that toppled Yanukovych. Young ministers soon began quitting amid complaints their superiors weren't committed to cleaning up government.
“Although the ousted government did underperform on several fronts, it's not certain the new cabinet will prove more capable, considering it lacks proven reformers,” investment bank Dragon Capital said.
Zelenskiy said the new arrivals will revitalize reforms that are behind schedule.“I'm not ashamed of our government,” he told lawmakers in Kyiv. “But I'd like to be proud of it.”
But while investors talked of continuity in promoting Honcharuk's deputy, there was also disappointment at the departures of respected officials from the Finance Ministry and the Economy and Agriculture Ministry.
“I'm sorry to see Finance Minister Markarova leave,” said Blaise Antin, the Los Angeles-based head of emerging-market sovereign research at TCW Group Inc., which manages about $220 billion. “She was an effective steward of Ukrainian fiscal policy and had good working relations with both the IMF and international investors.”
The manner of Wednesday's personnel changes was also concerning. Some candidates declined offers, dragging out the whole process. Zelenskiy's party will hold an emergency meeting to mull alternatives.
But before that, parliament will convene for another extraordinary session Thursday. This it will discuss the possible firing of Prosecutor General Ruslan Ryaboshapka, a respected reformer praised by Western countries. Once again, the move has the potential to rattle investors.
To contact the reporters on this story: Daryna Krasnolutska in Kyiv at dkrasnolutsk@bloomberg.net;Kateryna Choursina in Kyiv at kchoursina@bloomberg.net;Volodymyr Verbyany in Kiev at vverbyany1@bloomberg.net
To contact the editors responsible for this story: Andrea Dudik at adudik@bloomberg.net, Andrew Langley
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