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Political Crisis - 2016

Ukraines next presidential vote isnt due until 2019, but two years after the massive protests that led to the ousting of Yanukovych, widespread discontent was simmering once more. Frustration at the slow pace of change threatened the present governments stability. Its approval ratings have plummeted. Polling in December 2015 showed Poroshenko's approval rating had fallen so low that he was less popular than his ousted predecessor Viktor Yanukovych, and the prime minister and his cabinet are faring no better.

Another indication that endemic corruption and a failure to establish rule of law plagued reform efforts arrived on 03 February 2016, when Lithuanian-born Economy Minister Aivaras Abromavicius announced he would resign over what he called a 'sharp escalation in efforts to block systemic and important reforms.' He likened recent developments to 'the style of the old authorities.'

Ukraine needs a stable government to conclude negotiations with the International Monetary Fund for new aid worth $1.7 billion to keep its war-torn economy afloat and pass economic and judicial reforms demanded by its Western backers. Top members of President Petro Poroshenkos ruling bloc began Ukraines destabilization in an internal offensive against reform, as Aivaras Abromavicius spelled out upon his resignation as Minister of Economy and Trade. They ousted reform-minded ministers with the intention of appointing less-reformist ministers.

Yatsenyuks approval rating evaporated, hitting single digits in 2016, dwindling to close to zero prior to his April resignation. But Poroshenkos popularity declined, with his approval rating hovering below 10 percent. The president had been able to shift the blame for domestic failures onto Prime Minister Yatsenyuk and his party. Self-Reliance already put forth unrealistic demands for supporting a new government, while Oleh Liashkos Radical Party was strictly interested in securing government posts.

The embattled Ukrainian Prime Minister, Arseniy Yatsenyuk, faced a no-confidence vote 16 February 2016. "In order to restore trust in the government, the president asked the prosecutor general and the prime minister to quit," presidential spokesman Svyatoslav Tsegolko said 16 February 2016. "Is it not clear that successful reforms can only be conducted by a government that enjoys sufficiently high public support?" Poroshenko added. To restore trust, "therapy is no longer enough - you need surgery," he added.

The president said that all four parties that comprise Ukraine's current pro-Western coalition should take part "in a complete cabinet reshuffle." Ukrainian lawmakers gathered enough signatures to hold a no-confidence vote on the government. The president's party would vote to criticize the performance of Prime Minister Arseniy Yatsenyuk's government as "unsatisfactory", its parliamentary leader Yuriy Lutsenko announced.

Yatsenyuk survived the no-confidence vote in parliament, hours after President Petro Poroshenko called on him to resign "in order to restore trust in the government." A total of 194 lawmakers voted that they had no-confidence in Yatsenyuks government, shy of the 226 votes required to pass the no-confidence resolution introduced earlier in the day by Yuriy Lutsenko, leader of Poroshenko's own party, the Poroshenko Bloc, in parliament.

Initially parliament voted on a resolution expressing dissatisfaction with the cabinet of ministers. Two hundred forty-seven voted in favor, including 120 votes from Poroshenko's bloc. This preliminary vote had no legal consequences. Then came the much more significant resolution -- the vote of no-confidence in the government. On this resolution, the Poroshenko bloc provided 22 fewer votes. Furthermore, the deputies of oligarchs Rinat Akhmetov, Ihor Kolomoyskiy, and Viktor Pinchuk did not vote no-confidence in Yatsenyuk, who had been working fruitfully with them for some time already.

An ally in Ukraine's ruling coalition quit, calling the alliance a "clans' coalition that brought the nation to the extreme point of destruction." The leader of the Batkivshchyna (Fatherland) party, Yulia Tymoshenko, made the announcement on 17 February 2016 and urged other lawmakers to also walk out of the coalition. Samopomich (Self-Reliance) party said 18 February 2016 it had decided to quit the ruling coalition, increasing pressure on Prime Minister Arseniy Yatsenyuk to find new allies or risk the collapse of his government. The loss of the Samopomich's 26 lawmakers left the alliance of Yatsenyuk's party and the president's faction without a majority in parliament.

Natalie Jaresko should be the next prime minister of Ukraine as a person who has an unblemished reputation, Economic Development and Trade Minister of Ukraine Aivaras Abromavicius who resigned said 12 February 2016. "Anyway, irrespective of holding the early election or not, Ukraine needs the technocratic government. If this concerns the crisis of values, the next prime minister should have the unblemished reputation. The obvious candidate who meets the requirement is Finance Minister Natalie Jaresko. She could be blamed only for her American origin, but as experience of the Baltic states shows this is more positive that negative fact".

By March 2016 negotiations to form a new coalition government had reached a dead end and alternatives were being considered, such as the Cabinet of Minister being led by Volodymyr Hroisman, the current speaker of parliament and close presidential confidante. Jaresko also remains a top candidate, the report said. Shes unlike to work in a Cabinet led by Hroisman, the report said, which threatens future IMF funding. Hroismans candidacy also wouldnt be supported by Western leaders.

On 21 March 2016 parliament coalition members privately agreed on another candidate for the post - Volodymyr Groysman, speaker of the parliament and an ally of Poroshenko. Groysman as prime minister, however, would be seen as a business-as-usual choice that would do nothing to advance the reformist and anti-corruption fight in the nation.

Ukraine's Finance Minister Natalie Jaresko confirmed on 22 March 2016 that she wanted to head a technocratic government as prime minister. Ukrainian media reported that President Petro Poroshenko had offered to nominate Jaresko as the replacement choice for the deeply unpopular Prime Minister Arseniy Yatsenyuk. Jaresko had big support among younger, politically independent and pro-Western lawmakers.

Ukraine's incumbent parliament speaker Volodymyr Groysman is more likely to be elected as prime minister than Minister of Finance Natalie Jaresko, according to MP from the Bloc of Petro Poroshenko faction Svitlana Zalischuk. "The probability of electing Groysman as prime minister is higher than Jaresko today," the deputy told journalists in Kyiv 21 March 2016. The MP added that she personally would support the candidature of Jaresko for the post of prime minister, "as she is most distanced from all the political forces, financial political groups that would make it possible to obtain better decisions in parliament."

Concorde Capital informed clients in an online advisory 21 March 2016 MP Serhiy Leshchenko suggested on his Facebook page that all the publicity surrounding Jareskos nomination is being used as a smokescreen and that could very well be the case. The most likely scenarios for forming the next government coalition are (1) Poroshenko Bloc, Peoples Front and Radical Party, or (2) the current Cabinet remaining in place until September, when new early parliamentary elections could be called. The second option is more likely and, unfortunately, far worse than the first, likely delaying the arrival of the next IMF loan.




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