The Azarov/Arbuzov Government

22 January 2013, 16:38

The latest reshuffle in the top echelons of power, launched after the new parliamentary was elected, is almost over. The new Cabinet of Ministers appointed by President Yanukovych on 24 December 2012, proves that the Family has once more reinforced its position under the guise of Azarov’s reappointment as Premier, and so did Rinat Akhmetov’s group of influence (his key assets include steelworks, electricity production and coal mining) with the “old Donetsk” people (a group of the Party of Regions’ officials who had previously had influence) and those connected to Dmytro Firtash’s group of influence whose assets are mostly concentrated in the gas and chemical industries. One of the earliest representatives of the Family in the government Vitaliy Zakharchenko will continue to serve as the Interior Minister. Two newly-established ministries may also end up in the Family’s total control after possible reshuffles over a certain period.  

The Family’s biggest group includes five key ministries that will report to Serhiy Arbuzov, the newly-appointed First Vice Premier, ex-NBU Governor and a former manager at Oleksandr Yanukovych’s bank. Three of the five are already “in the Family”. The State Customs Service and State Tax Administration merged into the new Ministry of Revenues and Duties headed by ex-Tax Administration Chairman Oleksandr Klymenko who also started his career in Oleksandr Yanukovych’s business. As a result, virtually all budget revenues are heading there. Moreover, it has vast opportunities to exert pressure on any business that pays taxes and duties. Another representative of the Family and ex-Deputy Governor of the NBU, Yuriy Kolobov, stayed in his office of Finance Minister, controlling the distribution of budget funds. The NBU also remained under the Family’s control after Arbuzov was replaced by Ihor Sorkin, another ex-Deputy Governor of the NBU from Donetsk. Mykola Prysiazhniuk who is close to Yuriy Ivaniushchenko, the Family’s man with a criminal background, who is banned from entering the US, remains Minister of Agricultural Policy. The State Agency for Land Resources controlled by the Agriculture Ministry may become a key instrument in preparations to concentrate farmland in the hands of entities chosen by the Family despite the moratorium on land sale that was extended until the end of 2015 (read more on p. 20) but may be cancelled anytime now.  In addition to these three ministries, Serhiy Arbuzov will control the Economic Development and Trade Ministry headed by Ihor Prasolov (former Chairman of the NBU Supervisory Board and previously a top manager at Rinat Akhmetov’s SKM) and the Social Policy Ministry. The latter is headed by Natalia Korolevska who was an opposition candidate in the last parliamentary election. Her party Ukraine – Forward! did not pass into parliament but stole nearly 1.6% of votes from the opposition. According to some sources, her appointment is linked to Rinat Akhmetov.

Two other Vice Premiers, including former Interior Minister Kostiantyn Hryshchenko and Yuriy Boyko – both associated with Firtash’s group of influence – have no real power. Until recently, another Firtash man, Valeriy Khoroshkovsky, had the same status in the government. Perhaps this was why both Mr. Khoroshkovsky and Serhiy Tihipko rejected seats in the government, reluctant to play a purely decorative role. Unlike them, Boyko accepted it and will supervise the “Family-loyal” Energy Ministry headed by Eduard Stavytsky, the ex-Minister of the Environment and Natural Resources, who conducted the privatization of Mr. Yanukovych’s luxurious Mezhyhiria residence, the Environmental Ministry headed by Oleh Proskuriakov, ex-Deputy Minister of Environment and Natural Resources, as well as the Ministry for Industrial Policy, for which a minister has yet to be appointed. It looks as if Mr. Boyko will not stay in the government for very long. Just like that of Azarov, Boyko’s task may only be to prepare his successor, Eduard Stavytsky, who will become the supervisor of the Family’s second block of ministries if this assumption is true. On 9 January, President Yanukovych replaced SBU Chief Ihor Kalinin with Oleksandr Yakymenko, a former head of security at entities linked to the Family.

A number of ministers linked to the “new Donetsk group”, i.e. representatives of big and powerful Donetsk business in the Party of Regions – primarily Rinat Akhmetov, has grown visibly stronger in the government. In addition to Prasolov and Korolevska who report to Arbuzov, Raisa Bohatyriova remains Health Care Minister (although she lost her Vice Premier position); Pavlo Lebedev whose career is linked to Akhmetov’s business partner Leonid Yurushev heads the Defence Ministry (with the former Ministry for Emergencies merged with it); Leonid Kozhara is Minister of Foreign Affairs; and Olena Lukash is a Minister of the Cabinet of Ministers (the last two are probably directly loyal to President Yanukovych). Rinat Akhmetov finally has a loyal Vice Premier, Oleksandr Vilkul, former Governor of the Dnipropetrovsk Oblast and top manager at MetInvest. Vilkul will supervise the Ministry of Regional Development, Construction and Utilities with Minister Hennadiy Temnyk who was Vilkul’s long-time deputy, and the Ministry of Infrastructure with Minister Volodymyr Kozak, former manager at Akhmetov’s Lemtrans. Oleksandr Vilkul is going to represent his patron’s interests in the new government. So far, the influence of “the Donbas’ unofficial king” has been the only obstacle on the way to the Family’s omnipotence.

Justice Minister Oleksandr Lavrynovych who was one of the candidates for VR Speaker and Education Minister Dmytro Tabachnyk also remained in office. Lavrynovych is often linked to Firtash’s group although he is directly oriented towards Yanukovych. The fact that Tabachnyk is still Education Minister is probably linked to the Kremlin’s influence, which sees him as virtually the key figure in bringing Russian ideological expansion to Ukraine. This fits into Yanukovych’s ideas about concessions to Moscow at the expense of the political and ideological issues he finds obscure. Another telling fact is the unprecedented concentration of people with parts of their biography, both personal and professional, closely linked to Russia, in the new government.

Apparently, part of the plan is to show the country and the world that the government is able to reload the ruling team. The final chord is likely to be played when the Family prepares the parliamentary majority to vote for Arbuzov as Premier. Mykola Azarov barely conceals the moral readiness to hand over all government affairs to Arbuzov as soon as the latter has the power to handle them. Meanwhile, Yanukovych is offering more legislative initiatives to increase his control over the government and make the role of the premier purely nominal. Arbuzov is working to create the image of an effective and enthusiastic administrator and an anti-crisis manager, to fit in with the image of the “iron fist” that seemed popular for a while in Ukraine, according to surveys.  Despite new waves of frustration, quite a few people still believe that an authoritarian leader will take care of their problems with all his power and strength. Meanwhile, Serhiy Arbuzov’s behaviour proves that Ukraine risks getting yet another portion of petty tyranny whereby “strength” will be used as much as possible only to crush anyone who stands in the way of any of his arbitrary initiatives.

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