New Government: Stronger than Expected

THIS WEEK ALL VACANCIES IN NEW GOVERNMENT WILL BE FILLED

President Victor Yuschenko on Oct 7 appointed Sergiy Golovatiy as justice minister. This left only ministerial seat to be occupied in the new government - the post of healthcare minister. It is expected that the name of the minister will be disclosed this week and the new government will be
formed completely.

GOVERNMENT INCLUDES ONLY VICTOR YUSHCHENKO'S SUPPORTERS

The appointment process revealed several peculiarities. FIRST, the joint memorandum signed by president Yuschenko and his counterpart in 2004 presidential elections Victor Yanukovych did not influence at all the composition of the new government. The president's consultations with leaders of parliament factions also had no impact on the final list of ministers.

The consultations and memorandum simply helped Yuri Yekhanurov to receive 289 votes that were enough for his appointment as PM. No representative of Yanukovich's Party of Regions or any other oppositional party got any ministerial chair. The same happened to supporters of ex-PM Yulia Timoshenko.

None of the ministers that declared support of Timoshenko after the dismissal of her government was included in the new government. These were economy minister Sergey Teryokhin and deputy PM Mykola Tomenko. Victor Penzenyk had to support Yuschenko's party Our Ukraine to keep his finance minister chair.

That resulted in a split in the party Reformy and Poryadok (Reforms and Order) that Penzenyk headed. All in all, the government was filled up with representatives and allies of Our Ukraine. Socialist party members kept the 3 ministerial seats that they occupied in the old government.

LOCAL BUSINESS MOGULS EXCLUDED FROM GOVERNMENT

The SECOND peculiarity of the new government is that it did not include high-ranking officials that ran own businesses while occupying posts in government. Among them are ex-minister of transport Eugeniy Chervonenko, ex-justice minister Roman Zvarych, and ex-secretary of the national security and defense council Petro Poroshenko.

MINISTERS OBLIGED TO COORDINATE STATEMENTS WITH PM, PRES

Examining the new government staff, we doubt some experts' opinion that Yekhanurov's government is temporary and weak. It becomes obvious that the new government will avoid populist declarations in contrast to the previous one.

In line with president Yuschenko's "silence order", ministers will avoid frequent communications with mass media. A major part of the government's information will be placed only on government's web-site.

Every declaration of a minister should be coordinated with PM and the president. Such move prevents contradictions in ministers' declarations that had been typical of the previous government.

Lack of populism and possible improvements in the economic situation can serve the new government better that Timoshenko administration's actions.

The economic slump and price crises undermined the general public's opinion of the old government, as we wrote. If a positive perception forms now, the new government will create a core of the future government that should be formed after the parliamentary election in March 2006.

CANCELING REGULATORY PRESSURE ON BUSINESS SAID TO BE MAJOR TASK OF NEW GOVERNMENT

The main issue Yekhanurov's government is supposed to concentrate on is promoting business activities by means of weakening regulatory pressure and a new wave of privatization. At the same time, Yekhanurov declared that re-privatization is over, as everything that should be returned to the state has already been returned.

He pledged to provide immunity for private property. Any question regarding disputable property rights would be solved only by means of talks and only through voluntary settlement, Yekhanurov declared.

Taking into consideration the previous experience of Yuri Yekhanurov as a high-ranking state official it seems to us that Yekhanurov can cope with the task.

PM YEKHANUROV NOT STAINED WITH ANY SCANDAL OR WRONGDOING

Yuri Yekhanurov began his career as a state official in 1994 when headed the state property fund. That was a period of mass privatization in the country.

Many experts including foreign ones consider that economic reforms in 1994-1996 including large-scale privatization, fight against hyperinflation, and launch of a new national currency hryvnia) were among the most successful actions in the new history of Ukraine.

Heading the state property fund, Yekhanurov did not get involved in any scandal or wrongdoing.

ECONOMICS MIN HEADED BY YOUNG AND AMBITIOUS MINISTER

The new PM managed to include in the government new members with unspoiled reputations. First of all we are talking about new economy minister Arseniy Yatsenyuk. He is 31 years old and has an experience of serving as minister of economy of Crimea autonomy in 2001-2002.

At the post he succeeded in reforming the municipal economy of Crimea, determined the major problems in agriculture, and attempted to battle local corrupted oligarchs. Yatsenuk says he is not involved in the recent scandal about recent illegal privatization of Crimea resorts.

After his work in Crimean government, Yutsenyuk was invited by NBU chairman Sergiy Tigipko to work in the national bank. Yatsenyuk is young, ambitious, and speaks English fluently.

TRANSPORT MINISTER VICTOR BONDAR AT 29 IS YOUNGEST MINISTER

However, Yatsenuyk is not the youngest new minister. Victor Bondar, 29, has headed the ministry of transport and communication. In fact, his youth became a key factor that helped him be appointed as minister.

After the resignation of ex-minister of transport and communications Eugeniy Chervonenko there was a tough battle for the ministerial chair between Stanislav Dovgyi and Oleg Shevchuk.

The former had been communication minister. The latter was an MP, previously a top executive in communication monopoly Ukrtelekom.

To avoid any scandals, the PM and president decided to appoint aide of ex-minister Chervonenko, young Victor Bondar. The decision was taken by Yuschenko in spite of his close personal ties with Chervonenko.

SOCIAL, ENERGY BLOC IN GOVERNMENT STRENGTHENED

In the new government the most problematic social and energy departments were strengthened significantly. Ex-minister of labor and social policy was appointed as deputy PM. Ivan Sokhan who once headed the social policy ministry got his chair back.

Before his appointment, Sokhan was CEO of Ukrainian Aluminum, a subsidiary of Russian Aluminum. Stanislav Stashevski became first deputy PM. He previously worked in Kyiv municipal administration.

It is said that appointment of Stashevski, Ivan Plachkov as energy minister and Pavel Kachur as head of new construction ministry creates a "Kyiv builders group" in government. They to various extent were in charge of construction issues before. That increases chances of Kyiv mayor Olexander Omelchenko of keeping his post.

Also, it bodes well for expansion of the construction boom not only in Kyiv (supported by Omelchenko), but also all over the country. It does not contradict the plans of PM Yekhanurov, who intends to initiate several large construction projects funded from the state budget.

NEW GOVERNMENT HAS ALL CHANCES TO RESTORE ECONOMIC STABILITY

The likely smaller political ambitions and high professional skills of new government members are major factors that can bring back economic stability in Ukraine. On the other hand, the government is short on time to provide structural reforms due to the forthcoming general vote.