No More Honeymoon for Ukraine’s President

(Bloomberg Opinion) -- Ukrainian President Volodymyr Zelenskiy rose to power on two main promises: fighting the country’s endemic corruption and bringing peace to eastern Ukraine. He’s losing ground on the first, and facing increasing pressure to make progress on the second.

Zelensky has enjoyed a remarkable run of luck since he and his party won two landslide elections earlier this year. Their popularity has grown thanks to a bumper harvest, surprising economic growth and a successful prisoner exchange with Russia — something that the previous administration had failed for years to achieve.

Now, though, Zelenskiy’s honeymoon might be ending. A key reformer and early ally, Oleksandr Danilyuk, has resigned as head of Ukraine’s National Defense and Security Council, reportedly due to dissatisfaction over the president’s relationship with billionaire Igor Kolomoisky.

Danilyuk — a former finance minister, investment manager and consultant for McKinsey & Co. Inc. — had lent credibility to Zelenskiy, helping make him palatable to Western partners who had viewed the former TV comedian as something of a populist clown. He had quit the government of Zelenskiy’s predecessor, Petro Poroshenko, in frustration over the lack of change in the country’s corrupt policymaking, regulatory and judicial practices. His support encouraged people to believe that Zelenskiy represented a clean break with the past.

But Danilyuk had one big concern: the potential influence of his archenemy Kolomoisky, whose TV channel had helped make Zelenskiy’s career as a comedian. “If there’s a risk of Kolomoisky surfacing next to Zelenskiy, I can’t even stand next to this thing because it would be very bad for my reputation,” Danilyuk told me back in March. Since then, Kolomoisky has surfaced a lot, and has been angling to regain control of the nationalized Privatbank.

Thus, Danilyuk’s departure — amid reported disagreements with Zelenskiy’s influential chief of staff, who once did legal work for Kolomoiskiy — is a bad sign for the president’s administration. It follows a couple of less high-profile resignations, including the respected head of the national police service and the Polish official who had been running the Ukrainian highway service.

The moves echo a pattern that plagued Poroshenko: Private-sector professionals and successful foreign reformers, who had been drafted into positions of power, quickly became disillusioned with the slow pace of change and sometimes with what they saw as improper pressure from the president’s friends and business partners. Their inability to make progress, and their departures, undermined Poroshenko and contributed to his defeat by Zelenskiy.

Zelenskiy needs all the support he can get. Along with sweeping reforms including the long-awaited liberalization of Ukraine’s land market, his government is attempting a crackdown on widespread tax evasion — a fraught endeavor at a time when Ukrainians have yet to feel much economic improvement.

Yet showing progress on the president’s second big promise — ending the war in eastern Ukraine — won’t be easy, either. The Ukraine scandal in the U.S. has crippled Zelenskiy’s strategy of broadening the Western coalition helping him negotiate a deal with Russian President Vladimir Putin. The U.S. special envoy on Ukraine, Kurt Volker, who could be counted on to support the country even when European mediators wavered, has resigned after being drawn into the political mess. The U.S. doesn’t have an ambassador in Kyiv. 

While the U.S. is distracted, the Kremlin is trying to ram through a deal many in Ukraine will view as nothing short of treasonous. It’s based on the so-called Steinmeier formula, named after Germany’s current president. In his former capacity as foreign minister, Frank-Walter Steinmeier proposed granting autonomy to the areas of Ukraine currently held by pro-Russian separatists immediately after holding internationally recognized local elections under Ukrainian law.

Ukraine has opposed holding the election before it regains control of its eastern border, a position that has never been popular with French and German negotiators. Without U.S. backing, Zelenskiy might have to accept the Steinmeier formula – which means holding elections in territories still controlled by Russian proxies, with the presence of international observers the only guarantee of the votes’ legitimacy. 

This is treacherous territory for Zelenskiy. Just a few missteps can send him down Poroshenko’s disappointing path, sealing Ukraine’s fate as a country perpetually run by people who betray its people’s hopes. He needs some quick wins, and it’s not obvious where he can get them. 

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Leonid Bershidsky is Bloomberg Opinion's Europe columnist. He was the founding editor of the Russian business daily Vedomosti and founded the opinion website Slon.ru.

©2019 Bloomberg L.P.

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