Ukrainian Politics Again Get the Better of a Would-Be Reformer
Ukrainian Politics Again Get the Better of a Would-Be Reformer
(Bloomberg) -- A reformer is stepping aside in Ukraine for the second time in less than five years -- and with a similar feeling of unease.
Aivaras Abromavicius, who quit the previous administration complaining about corruption, is awaiting President Volodymyr Zelenskiy’s approval to resign as head of state-controlled arms producer Ukroboronprom. While this time his exit is planned, there are parallels -- namely what he deems waning appetite to tackle graft and overhaul the economy.
Zelenskiy, 42, was elected in 2019 as an untainted newcomer who could clean up Ukraine’s murky politics, which have been dogged by corruption and influence from big business since the Soviet Union collapsed three decades ago. But after selecting a reformist government, the president dismantled it on the grounds it wasn’t delivering results, turning instead to old hands. Some were even part of the administration of disgraced former leader Viktor Yanukovych.
The reshuffle disappointed investors and voters alike, with changes at the top of the central bank and complaints by foreign directors serving on the boards of state-run enterprises adding to the gloom. Zelenskiy’s popularity is the lowest since he took office.
“Progressive people are replaced with conservative ones -- this is the biggest risk,” Abromavicius said in a phone interview. “This staff policy may lead to corruption, for sure.”
Lithuanian-born Abromavicius, 44, took Ukrainian citizenship to become economy minister after protesters ousted Kremlin-backed Yanukovych in 2014. But he resigned in 2016, saying he faced pressure over appointments at government-run companies and accusing a lawmaker close to then-President Petro Poroshenko of graft.
He arrived at Ukroboronprom in 2019 to oversee an audit, and boost transparency, corporate governance and efficiency. While he waived a salary, the issue of pay for foreigners working at Ukraine’s state-owned companies is concerning creditors abroad.
Foreign nationals appointed to supervisory boards to lift governance standards have seen theirmonthly wages capped at $1,660 -- part of measures to mitigate the financial hit from the Covid-19 pandemic. While the limit applied to all public officials, many others have now had their full pay restored.
The International Monetary Fund urges an end to the ceiling, which risks halting further disbursements from a $5 billion aid program. Some directors have quit in protest -- including Anders Aslund, a Swedish economist who’d worked at Ukraine’s state railway.
“The president and his loud MPs don’t believe in good corporate governance,” Aslund wrote last week in a column. Foreign board members “have been working hard to try to improve Ukraine’s state companies. From the president (the only Ukrainian president that I’ve never met), we only receive insults and obstacles.”
At Ukroboronprom, a comprehensive revamp is under way but politics are acting as a brake, according to Abromavicius. “Everything slows down bit by bit with every political change.”
But with Ukraine’s lowly ranking in Transparency International’s annual corruption perceptions index barely improving since 2015, the reformers are struggling to make headway.
“A fight is underway for which vector development of Ukraine will take, western or eastern,” Abromavicius said.
©2020 Bloomberg L.P.