Boris Lozhkin is close to President Petro Poroshenko, so his recent comments (about likely change in government) are likely close to the president’s thinking.
Lozhkin, a former chief of staff to Poroshenko, is also coming out today to rule out early elections, which I think was the overwhelming consensus anyway, as the only likely victors will be populists.
Neither the Bloc of Petro Poroshenko or the Peoples Front of ex-Prime Minister Arseniy Yatsenyuk are likely to back early elections as they will likely underperform still.
We are seeing Poroshenko get closer to billionaire oligarch Rinat Akhmetov (given the trade blockade in the east, and I guess the onslaught from billionaire oligarch Ihor Kolomoisky and Lviv Mayor Andriy Sadoviy now) and I guess Yatsenyuk as a result. I guess Akhmetov sees this as the best defense against the “raiders” in the east at this stage – both in (Kremlin-controlled areas of the Donbas) and in the rest of Ukraine.
An interesting realignment in Ukrainian politics is under way, with more populist/nationalist forces — Sadoviy, ex-Prime Minister Yulia Tymoshenko and then Kolomoisky in one corner — and arrayed against Poroshenko, Yatsenyuk, Akhmetov, and some elements of the former Opposition Bloc (who likely are hopeful of getting some of their people back in some key positions, which may well go down well with Moscow, but unlikely with the Maidan).
Interesting move by Poroshenko to ban trade across the (Kremlin-backed separatist) border, which obviously was aimed at taking the wind out of the sails of Sadoviy and Kolomoisky in the east.
I guess the aim was to re-take control of the situation in the east, break up the renegade blockades which were developing their own momentum and building popular support. I guess the hope in Poroshenko circles, and even Akhmetov, will be to somehow to try and re-instigate key bits of that trade as tensions calm down, and as the heating season ends – perhaps they will use the excuse then of the need to re-implement the Minsk II process. I doubt that Akhmetov has totally given up on those assets in Kremlin-controlled areas of the Donbas.
I guess Lozkhin’s offer of a cabinet reshuffle is a sop to the nationalists/populists at home.
My concern there is how this all plays out for the broader reform story – pension reform, land reform and the anti-corruption agenda are now center stage for the international financial institutions.
Who ends up as National Bank of Ukraine governor, and perhaps also finance minister and social policy minister will be really important in setting the agenda. I guess with the threat coming from populists/nationalists, the risk is that Poroshenko looks to undercut them by pandering a bit to that agenda – which might see backtracking around the International Monetary Fund program on these key themes. I would be surprised to see the next, fourth review under the IMF, completed quickly – albeit some around Poroshenko are promising positive “surprises” on both pension reform and land reform. Let’s see.
For me the anti-corruption agenda is center stage. Results are needed now, no more excuses. In the case of pension and land reform we need to see formulation of policy positions, and then some kind of legislative schedule.
My worry is that political flux and then populism around pension and land reform might be used as the excuse to stall on the anti-corruption agenda, which is the No. 1 problem/bottleneck now in Ukraine, key to improving the business environment, and raising the economy’s long-term growth potential, which can easily be up at 4-5 percent in my view.
