The Jaresko manifesto for Ukraine

The Jaresko manifesto for Ukraine
Ukrainian Finance Minister Natalie Jaresko declares willingness to become PM. / Ukraine Ministry of Finance
By Ben Aris in Moscow March 23, 2016

​Ukraine’s US-born finance minister, Natalie Jaresko, released a statement in the evening of March 22 that amounts to both a political manifesto and a direct challenge to President Petro Poroshenko to act decisively and give her the job of PM.

Jaresko said she is ready to take over from Prime Minister Arseniy Yatsenyuk and form a “technocratic” government. Her statement ratchets up the tension in the roiling political crisis, as behind it is the implicit threat that if nothing changes, she will quit. That could cause the government to collapse and trigger early elections, which could end in the pro-EU parties being mauled at the ballot box.

The stakes are high and Jaresko’s detailed statement has refined the starkness of the choice on offer: appoint an apolitical cabinet that is exclusively focused on reform, or stick with the status quo where vested interests and entrenched oligarchs continue to milk the system for personal gain.

Jaresko is calling Poroshenko out, who last week proposed Jaresko for the job of PM together with Lviv Mayor Andriy Sadovyi in order to end the current political deadlock. But given Poroshenko’s flim-flams of the last two months, the sincerity of the statement is in doubt.

More recently the partliamentary speaker, Volodymyr Groysman (aka Hroysman), has emerged as a possible candidate to replace PM Yatsenyuk, who reportedly could step aside as soon as March 23. However, Groysman is another Poroshenko ally and if he gets the job, that could trigger another wave of reformers leaving the government, speculates Tim Ash, head of CEEMEA strategy at Nomura International. Poroshenko is in a bind, as even if he sincerely attempts to give Jaresko the job, it will remain extremely difficult to get the Rada to accept the appointment.

Action is needed because the Ukrainian ship is sinking. The state statistics agency downgraded its estimate of last year’s GDP contraction to a worse 9.9% following a 6.8% contraction the year before. Even so, the government led by Yatsenyuk has failed to grasp the nettle and make significant changes to reverse the tide.

In her statement on March 22, Jaresko called for real change and implicitly threatened to follow the foreign-born, reformist ex-economy minister Aivaras Abromavicius out the door, who quit in February over the lack of commitment to reform and the rampant corruption that pervades the government.

“In Ukraine, it is time to 'depoliticize' economic processes and concentrate the best talents and resources to solve the unprecedented challenges facing the country. For this purpose, the Ukrainian government should focus on two key issues: restoring public confidence and economic growth. Giant strides, not baby steps, are needed,” Jaresko said in her statement.

Negotiations to replace Yatsenyuk are already well under way, but Jaresko’s declaration will take the game up a notch. She is by far the favourite of Ukraine’s international donors, who are already extremely unhappy with the lack of change or visible commitment to reform in Ukraine. The International Monetary Fund (IMF) de facto suspended Ukraine’s $17.5bn extended funding facility without formally saying so, and has not made a transfer for five months now. The last tranche of $1.7bn was supposed to come in February following the government’s adoption of an IMF-compliant tax code, but Abromavicius’ departure started a fresh political crisis that has put everyone off. Appointing Jaresko PM would end this crisis and should avoid the need for calling early elections. But no one is saying it will be easy.

“People believed in their strength to change the system in favor of ordinary people and decent human values of respect and freedom. The path from revolution to actually producing concrete results for Ukrainians’ European future is long and complex,” said Jaresko.

The outsider

The stakes are higher now because if Jaresko is not given the top job, she may well resign. This would have an even bigger impact than Abromavicius’ departure, as she has been so high profile during the negotiations to restructure Ukraine’s debt and in a fight with Russia over a $3bn Eurobond that Kyiv is refusing to repay.

Jaresko took a sideways swipe at Poroshenko by highlighting that the government is still riddled with business interests and the president has already tarnished his image by preferring to cut backroom deals with leading businessmen on the future of the PM job rather than act decisively to end this crisis by appointing a new one. In another shocking move, the widely derided prosecutor general, Viktor Shokin, returned to work on March 16 after reportedly resigning at Poroshenko’s behest. Shokin epitomises Ukraine’s failure to tackle corruption.

“There comes a time when politics needs to be great, so that the whole country comes together to address fundamental issues for its future,” Jaresko said. “In my opinion, only technocratic government can address these challenges. The new team must 'belong' to nobody other than the people of Ukraine.”

And there is the rub. Jaresko might be loved by Western donors, but she remains an outsider in Ukrainian politics with no powerbase of her own. Amongst her demands is the need to exclude party politics from the cabinet. Yatsenyuk has offered to resign, but only if two of his key people retain their jobs: Interior Minister Arsen Avakov and Justice Minister Pavel Petrenko.

Jaresko’s statement is clearly designed to force the president’s hand by making him choose between going with the liberal, non-partisan reformist government the West wants, or to maintain the status quo and pander to the demands of the business cliques and existing political parties that have dominated the Rada since the Orange Revolution in 2005. 

“New leaders should have no political past or, indeed, have no desire for any political future. The team must not be subject to the domination of the oligarchs or any politicians’ ‘friends’. I am ready to assemble such a team that right now is able to work in the interest of the whole country, all its citizens, not some political or business groups,” Jaresko said, figuratively throwing the gauntlet down in front of the oligarchs.

5 elements

Jaresko went on to lay out the five elements of a technocratic government she wants to head:

1. Members of the government should be devoted exclusively to serving the people of Ukraine; not themselves nor their party nor vested interests. The main criterion for team members is impeccable reputation;

2. Members of the government must be completely intolerant of corruption and political interference in the work of executive authorities;

3. Members of the government should be concerned neither about participation in the next elections, nor their own political careers. Their sole purpose shall be to create prosperity in Ukraine. Populism is the worst enemy in this regard;

4. They all should believe that Ukraine can be successful only through democratic and economic freedoms, in particular, through the implementation of the EU-Ukraine Association Agreement and IMF program;

5. Members of the government should be experienced crisis managers and have experience of successful reforms and organizational management.

In short, Jaresko has called for decisive action on the part of Poroshenko and demanded he sweep the oligarchs from power. The irony here is that this is precisely the reform that Russian President Vladimir Putin made when taking office for the first time in 2000, when he called all the oligarchs in to his now notorious “oligarch meeting” and told them: keep what you have but get out of politics. Something similar has to happen in Ukraine.

The appeal of Jaresko’s offer is that it would unlock international donor money. For the government of technocrats to work, it must have the support of at least 226 votes in parliament with the aim of implementing the EU Association Agreement and IMF programme, or an additional coalition agreement that would ensure conducting all reforms under these international obligations, Jaresko stressed.

The clock is ticking and Poroshenko is running out of time. The country badly needs that international money to start flowing, not only to repair the damage from the fighting in the eastern regions, but to start the long process of rebuilding an economy where reforms have been ignored for 20 years.

The population is rapidly losing confidence in the government and the prospect of a collapse and fresh elections are looming large. If voters go to the polls again, there is now the distinct possibility of a political backlash to the current pro-EU stance and move back towards closer cooperation with Russia, which is offering lots of money with few strings attached. A return of former prime minister and populist firebrand Yulia Tymoshenko would come with unpredictable results.

“The more successful we will be, the more people’s confidence will be repaired and the greater support we will receive from our international partners, without whom it is impossible to conduct fundamental structural reforms. Today the world is looking at Ukraine with some disbelief, questioning our ability to fight the disease of corruption and to create a healthy foundation for a decent future for millions of Ukrainians,” Jaresko said.

The finance minister closed with a modest statement, declaring that she has no real political ambition and that she is acting purely in the interests of the people and the country. “I have never sought a high position of political power and have no plans or desire to make a political career in the future. My only desire is to conduct reforms in Ukraine that will ensure economic growth, the development of a democratic society and promote the welfare of every Ukrainian,” she wrote.

And in this she is probably sincere, which is her appeal to many Ukrainians.