Another Yuschenko ally joins Ukraine's cabinet

By bne IntelliNews March 26, 2012

Graham Stack in Kyiv -

President Viktor Yanukovych appointed businessman Petro Poroshenko, a close ally of former president Viktor Yuschenko, as Minister for Economic Development and Trade on March 23. The move adds another Orange oligarch to the government and will likely strengthen the ruling Party of Regions going into elections in October 2012, while potentially improving the chance of reform.

The appointment of Poroshenko, head of the national bank advisory council since 2007, and a foreign minister and head of the national security council under former President Viktor Yushchenko, sees another key West Ukrainian join the cabinet. Emergencies Minister Viktor Baloha, who was head of Yuschenko's presidential secretariat, joined the cabinet in November 2010.

The move will strength the government and could dishearten the opposition. While Poroshenko and Baloha were key figures in the Orange camp that denied Yanukovych an election victory in rigged elections 2004, they were also two of the most anti-Tymoshenko figures in the Yushchenko camp, and are likely to express support of the latter's jailing, as Yushchenko himself has done.

Poroshenko is in particular a key figure because as pro-Western Yushchenko's foreign minister, speaking fluent English, he was a pro-European and pro-Nato figure, who could now lobby internationally for acceptance of the Tymoshenko jailing, which has caused a rift between Ukraine and the West. The appointment will also increase the Party of Region's standing and administrative resources in West Ukraine going into the parliamentary elections, and as a liberal, whilst Poroshenko should also heighten the government's reform credentials.

At the same time, Poroshenko owns Ukraine's Fifth Channel TV station, which has been a noted source of criticism of the Yanukovych government, providing an alternative voice to Inter - the country' largest TV station owned by his new boss: first deputy Prime Minister Valery Khoroshkovsky. It is likely that Fifth Channel's critical reporting will be neutralized, suggest analysts.

Poroshenko made Forbes' list of billionaires for the first time in 2012, with a net worth of $1.0bn. Apart from Fifth Channel he owns the Roshen confectionary plant, and is also thought to control the indebted and loss-making Bogdan car factory. He thus becomes one of the richest cabinet members, alongside Khoroshkovsky and fellow deputy Prime Minister Serhiy Tigipko.

Poroshenko said his initiatives will include a transparent and simplified public procurement system, an open database of statistics, financial plans and disclosure of financial statements for state-owned enterprises, and a range of activities to protect local businesses and businessmen, reports Interfax.

The new minister took an unprecedented four weeks to accept the post, indicating a lengthy bargaining process before agreeing to a move that will discredit him in the eyes of many previous political associates. "The last few weeks have been very difficult for me. [Such a decision] is probably made only a few times in one's lifetime, and it is not made easily... and putting on the scale my personal political ambitions and the situation in the economy... I took the decision," Poroshenko wrote on his Facebook page.

Poroshenko indicated that the situation in the economy had prompted him to accept the offer. "Today, for the first time in my memory, 65% of Ukrainians are dissatisfied with the situation in the country and more than 50% are convinced that we must make a change. The global economic risks combined with adverse domestic factors cause an increase in the risk for Ukraine."

"We are cautiously optimistic about the appointment of Poroshenko, an investor-friendly and market-oriented politician, but question the prospects for his planned reforms," writes Concorde's Brad Wells. "With a parliamentary election coming in October, Yanukovych and the government have actively avoided rocking the boat, shunning unpopular and controversial reforms, and instead focusing on a wave of increases in social spending and benefits."

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