Ukraine’s New President Must Begin Reforms Immediately

Ukrainian President Petro Poroshenko will need to buid a partnership with Prime Minister Arseniy Yatsenyuk to advance the reforms he has promised to implement. (Photo: Kathrin Mobius/CC License)

Poroshenko Must Partner With Prime Minister Yatsenyuk to Make Progress

As Petro Poroshenko begins his first week as Ukraine’s president, his country needs him to begin difficult reforms immediately, even as his government struggles with the Russian-backed uprising in eastern Ukraine. The immediacy is enforced by a shriveling economy that is likely to lose between 5 and 7 percent of its gross domestic product this year – and by the political demands of the masses of Ukrainians who drove the Maidan protest movement that forced out Poroshenko’s predecessor in February.

Since the departure of former President Viktor Yanukovych, Ukraine’s interim leaders have passed important reforms, amending the public procurement law, for example, to achieve transparency and integrity in state purchases and qualify for bailout loans from the International Monetary Fund. But Poroshenko must begin delivering the broad structural changes – punishing corrupt elites, decentralizing power that is concentrated in the national government, and giving businesses, especially smaller ones, an environment in which to build themselves and the national economy. This will require a partnership with Prime Minister Arseniy Yatsenyuk, and above all, an avoidance of the partisan infighting that stalled government reform efforts after the Orange Revolution protests of 2004.

Poroshenko has only limited powers with which to achieve this urgent agenda. Under provisions of the 2004 constitution that Ukraine reinstated after the Maidan forced out Yanukovych, the leading decision maker is Yatsenyuk, who is backed by a parliamentary coalition of some 250 MPs. Poroshenko has popular legitimacy, but constitutionally his role is to represent the nation in international relations, administer foreign affairs, and oversee national security and defense. He will nominate new ministers of foreign affairs and of defense, but his authority does not extend over other ministers, most of whom are expected to retain their posts.

Thus a partnership between Yatsenyuk and Poroshenko is essential. Before the parliament designated Yatsenyuk as prime minister, he led the parliamentary faction of the Batkivshchyna (Fatherland) party, which backed Poroshenko’s election rival, Yulia Tymoshenko. Poroshenko has no party machine of his own, and allied himself with that of a Tymoshenko rival, Kyiv Mayor Vitaliy Klitschko. As long as Poroshenko is able to reach out to Batkivshchyna members, whose 85 seats in parliament are the largest bloc there, he, Yatsenyuk and the parliament could as a triad push through the needed anti-corruption, decentralization and pro-business legislation. That unity also will be essential to counter Russia’s occupation of Crimea and its threat to Ukraine’s east.

Poroshenko’s first hours in office signaled that – despite his offer of political dialogue with his opponents in the east of Ukraine, including amnesty for fighters and safe passage home for those who came from Russia – the war will continue. In his inaugural speech, Poroshenko underscored his desire for dialogue with those in eastern Ukraine who are fearful and suspicious of the national government. He switched from Ukrainian to address them in Russian, offering to guarantee Russian-language rights, economic revitalization for the industrial rust belt of the Donbas region, and a decentralization that would give greater powers and electoral accountability to provincial governments.

But just a day after Poroshenko’s inauguration, serious fighting resumed in Luhansk and Donetsk provinces, underscoring that he will have to divide his energies between restoring his country’s territorial integrity and rebuilding a new state that is functional, transparent, and no longer captured by oligarchs and their private interests.

Poroshenko promises early parliamentary elections. Most Ukrainians interviewed informally in Kyiv demand a new vote to rid the Rada of many members who were seated in a 2012 election under Yanukovych that was described by international observers as tilted in his favor. (The desire for a new vote is no surprise; in September 2013 and February this year, polls by the International Republican Institute found that 80 percent of Ukrainians surveyed disapproved of the parliament’s performance.) With 80 seats, Yanukovych’s former supporters in the Party of the Regions still form the second-biggest voting bloc in the Verkhovna Rada, or parliament. But the president’s authority to dismiss the Rada is extremely constrained. Poroshenko could perhaps force elections by persuading the UDAR party of his electoral ally, Kyiv mayor-elect Vitaliy Klitschko, to pull out of the governing coalition. But there is always the risk that another group of parties would form a new majority coalition to keep this parliament in office.  

Plenty of reform can be done even with the existing parliament. Already an important law on state procurement passed to put an end to the enormous corruption that existed particularly around health, education and infrastructure related purchases. But there are many other laws that the Reanimation Package of Reforms, a civil society coalition which developed out of the Maidan, has been unable to push through. Activists in the coalition complain that legislators often fail to show up to vote and remain focused on their personal interests more than a national reform process.

To speed reform, the government has invited the Reanimation Package to create a Center for Reforms with an office inside the Cabinet of Ministers. This unprecedented governmental-civil society cooperation may now bear fruit.

But the Cabinet of Ministers is disunited. While many ministries now are headed by dynamic and ambitious new appointees of the interim government, they tend to work separately, with little coordination, according to one high-level government official interviewed last week who called the Cabinet of Ministers a federation of ministries.”  And while reform-minded activists may hold the top ministry positions, the ranks of officials below are from the old system, either unwilling or uninterested in changing procedures and policies. Ukraine is not Georgia in 2004, when the Rose Revolution government led by President Mikheil Saakashvili fired large numbers of state officials virtually overnight. Ukraine’s state administration and civil service remain bloated and inefficient, and their reform is urgently needed.

As a successful businessman, Poroshenko faces high expectations that he quickly will take steps to improve the economy and attract foreign investment. He pledged in his inaugural speech to build a “modern, high-tech, tenable, competitive country,” and called for an “anti-corruption” pact between the government and the people. Ukraine’s shrinking economy is being further drained by the 10.5 billion hryvna spent to boost the army’s capacities to fight in the east. Ranked 112th out of 189 world economies for ease of doing business, Ukraine can do a lot to help ensure that investors can register properties, pay taxes efficiently, and keep their investments protected. The Association Agreement (AA) and the Deep and Comprehensive Free Trade Agreement (DCFTA) which Ukraine will finish signing with the European Union on June 27 will offer a clear roadmap for economic reform.

Decentralization is another change that Poroshenko has promised to advance, in part with constitutional amendments that will create new elected positions in local government. This could reduce the grievances in eastern Ukraine, while also giving citizens across the country more ability to defend their interests and participate in decision making. Constitutional reform has so far made few steps forward and could benefit from the establishment of an independent Constitutional Assembly to guarantee transparency and participation by a wider number of groups than the current parliamentary committee system provides. E-governance is another tool that the government is developing to increase transparency and reduce opportunities for graft.

Poroshenko joins an already fast moving train – a country with a highly talented citizenry pushing for reform. Neither the war nor early parliamentary elections should serve as excuses to delay big changes. Ukraine has already waited since February for a new and fully legitimate president. He and the rest of the government have no time to waste, and need quick international funds, for justice to be done to the spirit of the Maidan.

Sabine Freizer is a nonresident senior fellow with the Atlantic Council’s Dinu Patriciu Eurasia Center and Program on Transatlantic Relations. She is based in Istanbul.

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Image: Ukrainian President Petro Poroshenko will need to buid a partnership with Prime Minister Arseniy Yatsenyuk to advance the reforms he has promised to implement. (Photo: Kathrin Mobius/CC License)