Ukraine's politicians edge towards a coalition

By bne IntelliNews November 20, 2014

bne -


Ukraine's politicians are moving slowly towards putting together a new coalition, following internationally acclaimed parliamentary elections on October 26. A new government has to be in place quickly to prevent economic meltdown, analysts says, but may not be appointed in time to meet an International Monteary Fund (IMF) delegation that will visit Kyiv at the end of November.

Deputy Prime Minister Volodymyr Hroisman said on November 19 that the first meeting of the new parliament could take place as early as November 27, which may be an indication that the coalition is nearly ready. If so, a new government could be in place by the end of the month, and may just still catch IMF representatives due to visit Kyiv at that time, although they are currently slated to leave by November 25.

Time is of the essence, with Ukraine's economic and security situation getting worse by the day. Ukraine's GDP is set to drop a further 4-5% in 2015, following a 9-10% drop in 2014, head of the National Bank of Ukraine, Valery Gontareva, said on November 19.  

Writes Tim Ash of Standard Bank: "Without [Western support] the exchange rate looks set to weaken very substantially which would create big losses in banks, and risk larger systemic crisis/economic collapse."

The results of the election were disputed between President Petro Poroshenko and Prime Minister Arseny Yatsenyuk, prompting fears that coalition talks could be protracted and bitter. Poroshenko claimed his Petro Poroshenko Bloc had won since it returned the most MPs, which would give the president the right to name the prime minister and appoint the new government. Yatsenyuk claimed his People's Front party had won, having marginally won more of the popular vote. In the end, Yatsenyuk got his way, reportedly with Western backing.

"Disappointingly given the context, tensions within the pro-European reform camp, and between the Yatseniuk and Poroshenko wings run deep," Ash says. "The Yatsenyuk camp [fears] that Poroshenko wants to force though constitutional reform beefing up powers of presidency again against parliament."

Poroshenko's plans for a new constitution for Ukraine demand a two-thirds majority in the house for the coalition, at least in the opening months. This would require support from all five pro-Europe parties, but also from some of the 96 independent MPs as well as six MPs from the nationalist West Ukrainian party Svoboda, adding to the confusion.

Poroshenko's constitutional plans will force him to keep Yatsenyuk on board, but if Yatsenyuk fails to back the proposed the constitutional reform, Poroshenko could dispense of Yatsenyuk altogether, says Ash, and form a more manageable coalition. "This could act swiftly in terms of rolling out legislation reaping the 'low hanging fruit,' but for more radical change he may still need to negotiate with Yatsenyuk anyway in parliament and to achieve the two thirds constitutional majority," Ash believes.

Even when the haggling over coalition membership is settled, the arguing over who gets which posts remains. All parties have committed to the principle that government posts will go to professionals and not be distributed according to party quotas as was traditional in the past. But few see this as realistic, with any grand coalition government to be dominated by party grandees, according to Otilia Dhand of Teneo Intelligence. The most likely scenario, according to Dhand, is for Yatsenyuk's Popular Front and Petro Poroshenko Bloc to each take six to seven ministerial posts. The surprise success in elections of Samopomich, founded by Lviv mayor Andriy Sadoviy, means they will take two seats, with populist nationalist parties run by Oleg Lyashko and former prime minister Yulia Tymoshenko each taking one seat, according to Dhand.

Related Articles

Ukraine's largest PrivatBank faces down nationalisation fears

Graham Stack in Kyiv - Ukraine's largest lender PrivatBank has survived a stormy week of speculation over its future, but there are larger rocks ahead, with some market participants anticipating the ... more

bne:Chart - Russia begins to steady the ship according to latest Despair Index

Henry Kirby in London - Ukraine and Russia’s latest “Despair Index” scores suggest that the two struggling economies could finally be turning the corner, following nearly two years of steady ... more

Austria's Erste rides CEE recovery to swing to profit in Jan-Sep

bne IntelliNews - Erste Group Bank saw the continuing economic recovery across Central and Eastern Europe push its January-September financial results back into net profit of €764.2mn, the ... more

Register here to continue reading this article and 2 more for free or 12 months full access inc. Magazine and Weekly Newspaper for just $119/year.

If you have already registered, enter the information below with the same email you used previously and you will be granted immediate access.

IntelliNews Pro subscribers click here

Thank you. Please complete your registration by confirming your email address. A confirmation email has been sent to the email address you provided.

Thank you for purchasing a bne IntelliNews subscription. We look forward to serving you as one of our paid subscribers. An email confirmation will be sent to the email address you have provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

If you have any questions please contact us at

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

IntelliNews Pro subscribers click here

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

If you have already registered, enter the information below with the same email you used previously and you will be granted immediate access.

Thank you. Please complete your registration by confirming your email address. The confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.