EVENT: In his televised address on September 11, President Viktor Yushchenko accused the Tymoshenko cabinet of taking sides in business disputes, overstepping its authority and working behind his back.

SIGNIFICANCE: Yushchenko's dismissal of the government is an attempt to take the situation under control and bring a degree of cohesion to his policies.

ANALYSIS: The dismissal of Yulia Tymoshenko's government on September 8 is a product of deep-rooted problems that have engulfed Yushchenko's presidency (see UKRAINE: Political manoeuvring set to intensify - September 9, 2005).

Business links. The current political crisis was precipitated by the resignation of the presidential chief of staff, Oleksandr Zinchenko, who accused three of President Viktor Yushchenko's close allies, including the head of the National Security and Defence Council (NRBO), Petro Poroshenko,
of corruption. A businessman and one of the wealthiest people in central-eastern Europe, according to the 2005 annual list by Polish journal Wprost, Poroshenko had provided the financial resources for the 'Orange Revolution'. Poroshenko had hoped to be appointed prime minister but was
undermined by his image as a Ukrainian oligarch. Excluding Poroshenko from the team was hardly an option for Yushchenko not only because of the role that he had played during the Revolution but also for personal reasons, as Poroshenko is the godfather of one of the president's children. His
subsequent appointment as NRBO head contributed to the popular perception that Yushchenko would be unable to end the corrupt practices of the Kuchma era.

Prime Minister Tymoshenko's reputation has been tarnished by her alleged links to the Privat oligarch group from her hometown of Dnipropetrovsk. Her deputy, the head of the Our Ukraine parliamentary faction, Mykola Martynenko, is believed to have ties to the businessmen in the outgoing government, such as Minister of Emergency Situations David Zhvania and Minister of Transport Yevhen Chervonenko. An opinion poll suggests that the number of Ukrainians who believe that under Yushchenko business was "being truly separated" from politics declined from 51% in April to 34% in August.

Power games. Yushchenko has proved unable or unwilling to halt the power struggle between the members of his team, notably Tymoshenko and Poroshenko. Although constitutionally the NRBO is only one of several coordinating bodies, Poroshenko appropriated extensive security functions, effectively turning the security council into a second cabinet. He made enemies within the government by attempting to play the role of a 'gray cardinal' in control of the country's media and judiciary. On the other hand, Tymoshenko's cabinet was "too politicised", according to Yushchenko, who accused her of failing to deliver, despite heading a cabinet with more powers than her predecessors (see UKRAINE: Opponents fear tough Tymoshenko - February 10, 2005).

In addition, Yushchenko's senior adviser Oleksandr Tretyakov, who has been suspended pending criminal investigation on corruption charges, is believed to have used his position to decide who would obtain access to the president and what subjects would be discussed. By controlling information channels, Tretyakov left the president under- or misinformed and created numerous
opportunities for corruption.

Presidential style. Following a series of resignations and allegations of corruption, Yushchenko had no choice but to act decisively in order not to undermine popular support for his presidency. This contrasted with his style since the elections, when he left the daily running of the country to
Tymoshenko and Poroshenko, and spent much of his time abroad. Yushchenko intervened only when crises became unmanageable, as when he warned Tymoshenko over her statist economic policies and against supporting one oligarch group (Privat) over another (Interpipe) in a dispute over the re-privatisation of the Nikopol plant. Generally, he abstained from using many of the extensive powers that the presidential office had inherited from former President Leonid Kuchma.

Yushchenko's seeming inaction has negatively affected his public standing. A Razmukov Centre poll concluded that the number of Ukrainians who believed that Yushchenko was a better leader than Kuchma has steadily declined - from 52% in April to 37% in August. The number of respondents who believed that Ukraine was "moving in the right direction" has also declined - from 51% in February to 32% in August. Meanwhile, the number of people who thought that Ukraine was "moving in the wrong direction" increased from 24% in February to 43% in August.

Tymoshenko's options. The dismissal of Tymoshenko will induce her to pose as a radical alternative to Yushchenko and may even lead to her political ascendancy. She is likely to attract those who believe that the president and his closest aides have 'betrayed' the Revolution. The Tymoshenko bloc in parliament has doubled to 41 deputies since the presidential elections, while Yushchenko's faction has suffered defections, falling from 100 to 45 deputies. As such, Yushchenko's faction has only four more deputies than Tymoshenko's and only one more than People's Party headed by parliamentary speaker Volodymyr Lytvyn.

Defectors from Yushchenko's 2002 Our Ukraine election bloc have created four factions - Rukh (14 seats), Reforms and Order (15), Forward Ukraine (19) and the Ukrainian People's Party (22) - which, if allied with Tymoshenko, will give her additional 70 votes. With such support, Tymoshenko will be tempted to run independently, rather than in a coalition with Yushchenko, in the 2006 parliamentary elections. In fact, she has already indicated her ambition to do so.

Yekhanurov's prospects. The governor of Dnipropetrovsk Oblast, Yuri Yekhanurov, has been appointed acting prime minister, but to replace Tymoshenko his candidacy has to be confirmed by the parliament. Yekhanurov has a good record on economic reform in 1999-2001, when he was first deputy prime minister, and in 1994-97, when he was head of the State Property Fund (SPF) during Ukraine's first privatisation phase. His reform credentials and lack of business connections make him different to Yushchenko's outgoing allies. He is untainted by corruption and, being originally from eastern Ukraine, is a good choice for the position of prime minister.

Outlook. The opposition composed of hard-line Communists, Regions of Ukraine, and the United Social Democratic Party are unlikely to benefit from the current political crisis, as they are led by unpopular leaders. Meanwhile, Tymoshenko, who will present herself as the standard bearer of the Orange Revolution, and Lytvyn, who portrays his party as a 'third force', may reap political dividends. Poroshenko's resignation complicates matters for Lytvyn, who having lost an ally within the presidential team, may now be investigated in relation to the murder of opposition journalist
Heorhiy Gongadze because he was head of Kuchma's administration in 1996-2002. The removal of Poroshenko will also reduce support for Lytvyn's People's Party (former Agrarians) within a 2006 coalition. The radicals in the Tymoshenko bloc have long opposed any alliance with Lytvyn, regarding his party as a 'protective roof' for former Kuchma officials who fear criminal charges.

Members of Tymoshenko's Fatherland Party probably would not agree to rejoin the cabinet, but other members are more likely to return under Yekhanurov. These include Defence Minister Anatolii Hrytsenko, Foreign Minister Borys Tarasiuk, and Interior Minister Yuri Lutsenko, a Socialist. However, Yushchenko may reconsider giving Socialists the posts of the minister of agriculture and head of the SPF, as his previous appointments drew widespread criticism from Western investors. Martynenko, who was reportedly being groomed to stand as a candidate for mayor of Kyiv in the 2006 elections, is now unlikely to be nominated by his party.

CONCLUSION: The broad alliance that brought Yushchenko to power in the "Orange Revolution" will no longer stand united in the March 2006 parliamentary elections. Radicals, unhappy with Yushchenko's leadership style and ability to implement reforms, are likely to rally around
Tymoshenko, whose stature as the opposition leader is set to grow. Yushchenko may try to salvage his popularity by appointing individuals committed to reforms.
ANALYSIS: Oxford Analytica, UK
Reported by The Acton Ukraine Report

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