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Anders Aslund. Anders Aslund writes: With Yanukovych supremely in charge, one question is whether he' ll remove Prime Minister Mykola Azarov.

The economic situation in Ukraine is quite easy to assess. President Viktor Yanukovych is fully in charge, and he is quickly consolidating power.

So far he is balancing between two oligarchic groups – the so-called RosUkrEnergo group and the Donetsk clan. The big question is whether he will continue to do so, or oust the oligarchs to build his own power hierarchy.

Yanukovych has been surprisingly keen on fulfilling the requests of the International Monetary Fund, Ukraine’s biggest lender. But the president complies with the letter of the agreements, rather than with the spirit.

Economic growth is likely to stay around a respectable, but not very impressive, 5 percent a year. Yanukovych’s most delicate international task is to negotiate the association agreement with the European Union.

His personal relationship with Russian Prime Minister Vladimir Putin is terrible, and Putin seems determined to steer both gas and oil transit away from Yanukovych’s Ukraine.

Yanukovych’s political position is very strong and no domestic threat to him is apparent at present. His main goal is, obviously, his personal political power.

Yanukovych’s political position is very strong and no domestic threat to him is apparent at present. The next parliamentary elections are scheduled for October 2012.

Until then, it is difficult to discern any challenge to Yanukovych. His main goal is, obviously, his personal political power.

The Ukrainian government has just been changed and slimmed down. In terms of structure, this makes much more sense. The balance between the RosUkrEnergo camp (billionaire co-owner Dmytro Firtash, Energy Minister Yuri Boiko, presidential chief of staff Serhiy Lyovochkin and Security Service of Ukraine chief Valeriy Khoroshkovskiy) and the Donetsk group (wealthy and influential businessmen Rinat Akhmetov, Andriy Kliuev and Boris Kolesnikov) appears to be maintained, while Speaker Volodymyr Lytvyn, socialist and Communist Party cronies are gone.

With Yanukovych supremely in charge, one question is whether he will remove Prime Minister Mykola Azarov. My suspicion is that he will do so, because Yanukovych has appointed Sergei Arbuzov as chairman of the National Bank of Ukraine and two other young loyalists as heads of the State Tax Administration and the tax police.

All these three appointments undermine Azarov, and probably also the recent change of health minister. Now Azarov only has the weak minister of finance left. I would not be the least surprised to see both go soon.

Yanukovych undermined Azarov by vetoing the tax code and changing it substantially. Azarov has repeatedly objected to raising the retirement age, which Yanukovych supports publicly. My guess, thus, is that Azarov will leave within the next few months.

If Azarov would be ousted, I think that Deputy Prime Minister Sergiy Tigipko is likely to take his place, not because he is strong but because he is weak. Yanukovych wants a prime minister who is a moderator rather than a force in his own right, and he does not have any person purely of his own to appoint as yet.

An elderly woman begs for money as pedestrians pass by in central Kyiv on Jan. 13. A sign on her chest says: “Help for treatment of my eyes.” This scene is not unusual in Ukrainian cities, where the economy remains poor for most of the nation’s 46 million citizens. (AP)

The two obvious front-runners are Boiko and Klyuev, but either’s appointment would mean that one of the two leading camps had won over the other, and that would make Yanukovych a hostage of the winning camp, which would not suit him. Therefore, I think that both these two strong men are excluded. Yanukovych could not care less about democracy and freedom, while he is greatly concerned about his reputation in the West.

So far, he has arrested at least 10 of Tymoshenko’s top officials, and one former minister after another is being arrested or coming under investigation. Although corruption probably could be alleged, the actual arrest reasons are predominantly political. Yanukovych follows the example of Putin and Lukashenko, but faster and more successfully.

Yanukovych does not care about the details in economic policy. He focuses on the main features: reasonable macroeconomic stability and decent economic growth. He is likely to target an economic growth of 5 percent a year. He desires to streamline and simplify state administration and regulation, while he is not prone to pursue any anti-corruption program.

He stands out as a representative of a handful of big businessmen from eastern Ukraine. A number of big enterprises in coal, electricity, telecommunications and chemical industry are likely to be privatized in the next few years, but they are all likely to be sold at favorable prices to businessmen close to Yanukovych.

The biggest question is whether Yanukovych will continue to balance the big Ukrainian businessmen close to him who currently dominate his government or whether he will take them out.

Yanukovych appears adamant that the IMF standby loan agreement must be followed to the letter, if not to the spirit. The agreement was concluded in July and it is supposed to last for two and a half years. It gives Ukraine a credit of $15 billion.

So far, Ukraine has received two tranches, and the government is likely to continue to do what the IMF requires to give Ukraine $1.5 billion a quarter.

The IMF controls the budget deficit very firmly, and checks that the exchange rate is reasonable for the current account balance, while inflation lingers at 10 percent a year and its reduction does not appear to be a priority.

The tax code was adopted, and Yanukovych incorporated almost all the protesters’ demands after the first version was adopted and Yanukovych then vetoed it. This appears a political knockout for the opposition. The tax system is hardly improving or deteriorating because of these changes, revealing no real interest in systemic improvement.

Apart from the IMF financial stabilization program, Ukraine’s only big international project is to negotiate a substantial deep and comprehensive free trade agreement with the European Union, which is likely to be completed within a year or so.

Yanukovych’s problem, however, is to comprehend European values. He has refuted NATO membership. Russia offers no alternative in either regard, because the Russia-sponsored customs union with Belarus and Kazakhstan is not really operative. Moreover, Russia is trying to reduce its extensive transit of oil and gas through Ukraine by all means. Moreover, given the poor relationship between Yanukovych and Putin, Ukraine appears to tilt to Europe after all.

The biggest question is whether Yanukovych will continue to balance the big Ukrainian businessmen close to him who currently dominate his government or whether he will take them out. My mind is open.

Anders Aslund is a senior fellow at the Peterson Institute for International Economics in Washington, D.C.