Resignation of reformist minister sheds light on rampant Ukraine corruption

Aivaras Abromavicius [Georgi Gotev]

Aivaras Abromavicius [Georgi Gotev]

Ukraine’s Economy Minister, Aivaras Abromavicius, abruptly tendered his resignation today (3 February), saying overwhelming corruption had stifled his efforts to push through measures essential to getting growth back on track in the cash-strapped country.

Abromavicius’s shock departure laid bare divisions within the pro-Western government of President Petro Poroshenko and highlighted the uphill battle the former Soviet nation faces in enacting the necessary changes to join the European Union.

“Today, I made the decision to submit my resignation from the post of minister of Ukraine’s economic development and trade,” the Lithuanian-born minister told reporters in Kyiv.

“The reason is the sharp escalation in efforts to block systemic and important reforms.”

Abromavicius published a letter, saying that it had become clear “that any kind of systemic reform is decisively blocked”. 

Abromavicius and Finance Minister Natalie Jaresko were both appointed in December 2014 as part of Poroshenko’s efforts to bring new blood into the war-shattered country’s attempts to return to growth.

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In a statement, the ambassadors of six EU countries, the USA, Canada, Japan and Switzerland, expressed deep disappointment by the resignation of Abromavicius, who in their words delivered real reform results for Ukraine.

Reacting to his resignation Kyiv’s US Ambassador Geoffrey Pyatt tweeted that Abromavicius was “one of the Ukrainian government’s great champions of reform… and a believer in the future Ukraine’s people deserve.”

“Abromavicius’s announcement is a worrying signal for foreign investors,” Concorde Capital economist Oleksandr Parashchiy said.

The resignation comes in the midst of growing parliamentary displeasure with Poroshenko’s cabinet and infighting between political interests tied to powerful business tycoons.

‘Can’t work in this system’

Abromavicius alleged that unnamed powerful figures were “trying to establish control over financial resources – first and foremost those of the Naftogaz (state oil and energy company) and the defence industry.”

“I refuse to work in such a system,” the 40-year-old former banker said.

“Neither me, nor my team have any desire to serve as a cover-up for the covert corruption, or become puppets for those who, very much like the ‘old’ government, are trying to exercise control over the flow of public funds”, Abromavicis writes in an open letter. He continued:

“These people have names. Particularly, I would like to name one today. The name is Igor Kononenko. Despite representing the political party that had nominated me for my post, lately he has been bent on obstructing our efforts,” Abromavicus wrote.

Kononenko is deputy head of Poroshenko’s party and known in the Ukrainian media as a “grey cardinal” who implements the president’s political will. His alleged ties to the prime minister underscore the complexities of Ukraine’s shaky ruling elite.

Abromavicius explains that during the past year, Kononenko, hard-pressed for his candidates to take the position of CEOs at state-owned main ammonia pipeline Ukrhimtransammiak, in which he seems to have a stake. Kononenko also attempted to influence key appointments in the state-owned enterprise for monitoring international commodity markets Derzhzovnishinform, in metal powder factories, and the National Accreditation Agency.

“This entire rampage culminated in Mr Kononenko’s desire to have his personal deputy minister of economy – one responsible for Naftogaz and other state-owned companies. His candidate simply showed up with a complete set of documentation, and told me: ‘I want to be your deputy. I’m part of Kononenko’s team, and my appointment was approved upstairs.’ Following this conversation, I received a call from the President’s Administration, whereby I was emphatically suggested to hire this individual, as well as another one, who would take the position of my deputy in charge of defence industry. I responded by declining to take part in this corrupt arrangement and by offering to resign my post,” Abromavicius writes.

The graft-riven country of about 40 million has been one of Europe’s worst economic performers since winning independence in 1991.

A January report by Transparency International showed Ukraine ranking 130 out of 168 countries and territories surveyed for its 2015 Corruption Perceptions Index (CPI).

Initial government estimates show Ukraine’s economy shrinking by 10.4% of gross domestic product last year.

Abromavicius’s resignation must still be approved by parliament at a meeting on Thursday (4 February).

Poroshenko himself failed to mention his minister’s decision during brief remarks devoted the appointment of a new regional governor.

Bitter rivalries

Some of Kyiv’s more acrimonious battles have been waged between billionaires linked to Poroshenko, and those of Prime Minister Arseniy Yatsenyuk – a hawkish leader who delivered passionate speeches atop barricades during Ukraine’s 2014 pro-Western revolt.

Yatsenyuk and Poroshenko were seen as allies in the heady days that followed Ukraine’s break from Russia’s historic embrace.

But bitter rivalries have since surfaced, and Yatsenyuk’s own place in the government no longer suits some of the more outspoken members of the president’s team.

Mikheil Saakashvili – a former Georgian president who fought a brief 2008 war with Russia and currently serves as governor of Ukraine’s historic Odessa region – said he spoke to Abromavicius on Tuesday (2 February) and knew that something was wrong.

“Aivaras and I both work on the council of state enterprise reforms,” Saakashvili wrote on Facebook.

“And I would like to confirm that all our initiatives aimed at changing the leaders of state enterprises are being blocked personally by the prime minister at the suggestion of Igor Kononenko,” he claimed.

Saakashvili is a close ally of Poroshenko.

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