Poroshenko ally Groysman on track to be Ukraine's next PM

Poroshenko ally Groysman on track to be Ukraine's next PM
Parliament speaker Volodymyr Groysman (right) is Petro Poroshenko's preference for the PM job.
By Nicholas Waller in Kyiv March 28, 2016

Ukraine's parliamentary speaker Volodymyr Groysman has emerged as the main frontrunner to replace embattled Prime Minister Arseny Yatsenyuk after gaining a major public endorsement from long-time political ally President Petro Poroshenko.

"If the coalition factions consider it possible for me to switch to the cabinet of ministers, I will be ready to take responsibility," UNIAN news agency quoted him as saying. "I believe that the people coming to work in the government should have an impeccable reputation and professional qualities, because the debate on technocratic or political government has no meaning – it may last forever."

While other names have circulated in recent weeks, Groysman is now regarded as the key candidate, while rival Nataly Jaresko, Ukraine's finance minister, looks likely to leave the cabinet altogether after the appointment of a new PM from March 29 onwards. While the US-born financier may ostensibly leave for personal reasons, reports say, she is thought to have been given the option of a graceful exit by the leadership rather than being dismissed. 

Groysman could potentially rally a new ruling parliamentary coalition that could include controversial former prime minister Yulia Tymoshenko's Batkivshchyna (Fatherland) faction and Lviv Mayor Andriy Sadovyi's Samopomich (Self-Reliance), both of which left the current parliament coalition in February in protest against Yatsenyuk's government, and the Radical Party which quit in September.

Groysman's appointment is expected to end the months-long political crisis that has engulfed the country since Yatsenyuk survived a no-confidence vote on February 16.

A 38-year-old trained lawyer, Groysman publicly announced on March 24 that he was ready to become the next prime minister and head a new ruling coalition that would strictly adhere to the anti-corruption reforms the current government promised to both the International Monetary Fund (IMF) and European Central Bank in exchange for billions in credits. The political turmoil brought an effective freezing of the funding that Ukraine's reeling economy has so desperately relied on since its pro-Western EuroMaidan revolution swept the sitting government into power in early 2014.

Western donors have repeatedly urged Ukraine's notoriously combative leaders to settle their differences and unify behind a new reform-minded government. Both US and European lenders have in recent weeks publicly castigated the current coalition for its inability to compromise over a replacement for the unpopular Yatsenyuk.

Groysman meanwhile said he believes Kyiv should "flawlessly" perform its obligations before the IMF and the EU.

"I believe that all of the obligations... [under] the programme of cooperation with the IMF, the issues related to the association with the EU, to a free trade area with the EU, must be carried out by Ukraine flawlessly," Groysman said. "This is essential for our reputation and for reforms."

Western 'darling' exits

With a freeze already on $3.3bn of the $17.5bn IMF bailout package secured by Jaresko a year ago, there are rumbles from the lender that a further $1.7bn tranche will be withheld unless the political infighting stops. This has alarmed local and foreign investors, as well as the country's vocal civil society, causing them to warn of a new round of social unrest unless Poroshenko initiates a concerted anti-corruption drive.

Ukrainians are greeting the news of Groysman's possible appointment with scepticism, as he is essentially regarded as the president's man, who can potentially perpetuate the failure to effect reforms and stamp out endemic graft. Meanwhile, Ukraine's foreign backers will rue Jaresko's apparent intention to drop out of the race after recently saying she would form a "technocratic" government if needed.

Jaresko has been the darling of Ukraine's Western backers and one of the few widely respected politicians in the country. However, her candidacy remains unpopular with Ukraine’s entrenched oligarch class, who are openly hostile to her promise to head a stridently reform-minded government that would be untainted by nefarious business holdings or questionable national loyalties.

Committed reformer?

Widespread speculation that Groysman would be less inclined to lead a reform-minded government has dogged his candidacy since his name emerged as a possible replacement for Yatsenyuk.

Though a sitting member of a government that came to power on the back of Ukraine's Euromaidan revolution, Groysman is not considered a firebrand supporter of the anti-corruption, pro-reform platform demanded by many of the Maidan movement's strongest supporters.

Despite his perceived lack of revolutionary credentials, Groysman is known as a skilled, even-tempered political operator who has shown a keen ability to stay above the fray when the Ukrainian parliament breaks down into highly visible public spats and all-out brawls.

His oratory skills have won him applause from supporters who view his youth and background in jurisprudence as the antithesis to the often boorish behavior of some deputies in Ukraine's Verkhovna Rada parliament.

However, Groysman is seen by some sectors of society, including members of Ukraine's military, thousands of whom remain locked in low-level combat with Russian-backed separatists in the eastern Donbas region, as being too closely linked with corrupt officials and vested interests to represent a fundamental break from the current government's policies.

He has been Poroshenko's choice for prime minister after the October 2014 parliamentary elections, but the Yatsenyuk-led People's Front party derailed his appointment.

Though his appointment would be welcomed by Poroshenko's coalition, support for Groysman from Ukraine's foreign creditors is not guaranteed. Their growing frustration with Ukraine's lack of reforms would necessitate a public pledge as well as private assurances from the new premier that his government will end the paralysis and infighting that has plagued Ukraine's reform drive for the last year.

In contrast with Jaresko, Groysman has refused to endorse the idea of a technocratic government, saying Ukraine is in desperate need of a permanent and professional coalition.

Members of the coalition continue to hold talks regarding his candidacy, but stress that his appointment can only be confirmed if the parties agree to a new coalition deal. Analysts in Ukraine believe Groysman would likely gather enough parliamentary support for his bid, unlike Jaresko who, though popular, has failed to secure enough votes from key members of the ruling coalition.

"The Poroshenko Bloc faction leader said they had been considering a government of technocrats as an option, but they were not sure whether it would score enough votes. Accordingly, they suggested options of a party-based government that would be headed by the Bloc's nominee, Groysman," Viktoria Siumar, deputy chairperson of the parliamentary faction of the People's Front led by Yatsenyuk, told journalists on March 24.

Groysman's possible appointment has been met with a tepid market response, though Nomura International senior strategist Timothy Ash noted that most have yet to realise that Jaresko will soon be gone if Groysman becomes the new prime minister.

"The market has taken the announcement of Groysman's nomination in stride, with limited reaction in Eurobonds," said Ash. "They've tended to underperform in recent weeks, giving back their earlier gains when people thought Jaresko was going to be prime minister and head a technocratic dream team. In the end this seems to have been too radical a change for Poroshenko or the business interests in the Rada to stomach as her government may have actually changed things!"

Shoes still to fill

Groysman's favoured candidate for finance minister appears to be former Slovak finance minister Ivan Miklos, who has tentatively agreed to take up the post, the Financial Times reported on March 25.

"I was approached by Groysman. We met and spoke over the last two days about the possibility (of becoming finance minister) and I preliminarily agreed," the paper quoted Miklos as saying.

For his part, Yatsenyuk has called for an immediate end to the current political crisis, saying he would support any measures that will stabilise the country to achieve progress. .

"Personalising policy leads to a loss of confidence in Ukraine with both the citizens of the country and our foreign partners," Yatsenyuk's media office quoted him as saying on March 25. "It wasn't me who created this crisis, but I demand that it is resolved as soon as possible by gathering 226 votes, introducing a cabinet, a programme and a real coalition to implement it or support the incumbent cabinet," he added.

Nomura's Ash said the overall wait-and-see mode Ukraine's creditors seem to have taken will hinge on how Poroshenko handles Groysman's appointment and if he acquiesces to the general public's demand to dismiss embattled Prosecutor General Viktor Shokin. The prosecutor, also an associate of Poroshenko, has been accused by the West and Ukraine's civil society of blocking several investigations brought against allegedly corrupt officials.

But any new measure of stability now will also be welcomed, Ash added: "From one respect the market will be relieved, if Ukraine actually gets a new PM and government approved, as this will offer the prospect of IMF monies coming back on stream, however fitful."

Team Groysman

As well as Miklos, Groysman on March 28 said he would like to see the deputy head of the presidential administration, Dmytro Shymkiv, in his cabinet. Shymkiv, a former head of Ukraine's operations of Microsoft, has "modern visions of the development of Ukraine" and he adheres to "principles without exception and our strategic goal - European integration", Groysman said.

Poroshenko Bloc lawmaker Ivanna Klympush-Tsintsadze was also invited to join the new government, he added.

Earlier, Groysman also invited to his cabinet First Deputy Economy Minister Yulia Kovaliv and Deputy Economy Minister Maksym Nefyodov.