KYIV BLOG: Yanukovych takes on the bureaucracy

By bne IntelliNews December 17, 2010

James Marson in Kyiv -

After the damage-limitation exercise of Ukrainian President Viktor Yanukovych's first attempt at a big reform, the tax code that brought thousands of protestors onto the streets in protest, the authorities have gone for a more popular overhaul to public administration - firing bureaucrats.

Streamlining the civil service is certain to be a popular move in a country dominated by powerful pen-pushers in a Kafkaesque system largely unreformed in the last 20 years. The reforms certainly sound draconian - 112 government bodies down to 63, including 20 ministries cut to 16; the number of deputy ministers allowed reportedly limited to two rather than seven or eight; and the cabinet of ministers' staff halved from the current 1,174.

This downsizing is set to reduce expenses (although it's not yet clear by how much), a key requirement of the International Monetary Fund as part of its $15bn loan programme. But the aims are much higher. The reform is being touted as a way to streamline governance, remove inefficiencies and as the precursor of broader and deeper overhauls.

At the moment, analysts say the announcement amounts to little more than a reshuffle, with key players such as Prime Minister Mykola Azarov staying in place. But Yanukovych's chief of staff, Serhiy Lyovochkin, promised in a meeting with journalists that this is just the start of a comprehensive reform programme that will include local administrative overhauls and a new package of anti-corruption laws. Without these additional elements, the changes could have limited positive effects.

Power concentration

Fewer officials at the state level can just lead to a concentration of power (and, therefore, potential corruption) in fewer hands. Opposition leader and former PM Yulia Tymoshenko claims the reshuffle is about deciding "the heads of cash flows in the country," and that the reform was also aimed at removing "any double management of cash flows from the side of various clans."

One major problem with Ukraine's administrative system has traditionally been the nepotism that sees people with the correct surname, or the right backers, placed in the so-called "juiciest" jobs - the places where the opportunities to steal, and the amounts available, are greatest.

The content and implementation of the promised new anti-corruption legislation will be crucial to whether the changes have a tangible effect on governance and, ultimately, the business climate.

Some analysts offer another strong current motivation for the reshuffle: to place all responsibility for unpopular reforms that lie ahead on Deputy Prime Minister Serhiy Tihipko, the central banker who came third in the presidential race in January and is not from the pro-presidential Party of Regions. He has been handed the post of minister of social policy.

Yanukovych has certainly taken a hit from IMF-backed decisions this year to raise gas prices and the pension age. In Tihipko - a man who can't stop repeating how he is prepared to push through unpopular reforms - he and his Party of Regions allies in government have the perfect ally, to be turned scapegoat at the most convenient moment.

Critics have also complained that the administrative reform was announced suddenly, late at night, without any public discussion. This is hardly a very effective way to get people on board with reforms and make them work.

Lyovochkin was quick to pounce on this criticism. If the reform had been made public, he said, there would have been huge opposition from the bureaucracy itself. "If the discussion about administrative reform had been carried out openly and publicly, even given the concentration of power, will and effort [we have], I seriously doubt that we would have been able to carry it out in such a short period. This is because the resistance of the mid-level bureaucracy is so great that every transformative step is difficult to take," he said.

In short, according to Lyovochkin, it's Yanukovych against the bureaucracy. With the opposition cowed by numerous criminal investigations into their alleged corruption while in government (they say it's a form of repression) and low popular support, this could shape up to be one of the more interesting confrontations of 2011.

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