Ukraine's minister of the economy resigns (01/11/04)

Ukraine's minister of the economy resigns

by Roman Woronowycz
Kyiv Press Bureau

KYIV - Minister of the Economy and European Integration Valerii Khoroshkovskyi, the political boy wonder who became a national deputy at 29 and a Cabinet minister at 33, resigned his post on January 3, citing his inability to work in the current government.

Mr. Khoroshkovskyi blamed First Vice Prime Minister Mykola Azarov, who also holds the post of finance minister, with shackling his ability to work successfully by forcing all the government ministries to concentrate their efforts on fulfilling budget requirements rather than on the development of longer term strategies and goals.

"The post of minister of finance in the new government structure has become the dominant one," explained Mr. Khoroshkovskyi in an open letter announcing his departure. He added that the current situation in the Cabinet of Ministers had not allowed the Ministry of the Economy to "properly execute its policies regarding the development of free markets and the need to increase the competitive level of the domestic economy."

Mr. Khoroshkovskyi had waged a political battle over the last year with Mr. Azarov on how to develop the Ukrainian economy. While Mr. Khoroshkovskyi, a Western-oriented businessman who has interests in Mercks Furniture and UkrSocBank, wanted to develop European markets, Mr. Azarov, a remnant of the Soviet era and ex-director of Ukraine's State Tax Administration, believed strong economic ties with Russia were in Ukraine's best interest.

Mr. Azarov played a key role in the development of the Single Economic Space, the agreement proposed by Ukraine's President Leonid Kuchma and Russia's President Vladimir Putin, along with the state leaders of Kazakstan and Belarus, to organize their countries into a common market.

The extent of the disagreement between the two government officials came to a head during parliamentary floor hearings on the SES, during which Mr. Khoroshkovskyi openly criticized his elder colleague for inaccurately portraying the benefits that economic union with the three countries would bring Ukraine. Mr. Khoroshkovskyi also was one of three ministers who voted against the government resolution authorizing President Kuchma to sign the document that began the country's march into the SES.

Ironically, Mr. Khoroshkovskyi came to the Ministry of the Economy from a position as first deputy chief of staff of the presidential administration. Many political pundits believe his downfall was his failure to support the SES plan after Mr. Kuchma made it clear he wanted government authorization to sign a SES agreement in some form in Yalta during an annual summit of leaders of the Commonwealth of Independent States, which Ukraine hosted in October.

While Mr. Azarov did not respond to Mr. Khoroshkovskyi's explanations for his departure, Prime Minister Viktor Yanukovych stated on January 5 that the young political prodigy had failed to become a team player in the Cabinet, which led to his isolation and resignation.

"From the very beginning of the work of this government we have tried to develop a strong, united team. When one player or another does not understand his place, that which occurred always happens," explained Mr. Yanukovych, who waxed optimistic that he would find a talented, experienced expert to replace the outgoing minister of the economy and European integration.

In his resignation letter Mr. Khoroshkovskyi did not limit his reasons for leaving the Cabinet of Prime Minister Yanukovych to those that involved his feud with Mr. Azarov, who like the prime minister, hails from Donetsk.

Mr. Khoroshkovskyi also blamed the prime minister for limiting his ability to appoint subordinates, which he said caused his staff to be overworked and ineffective. "Currently only five of the 11 deputy ministers that I should have at my disposal have been appointed. For over five months the Cabinet of Ministers has not considered any of the other nominations I have forwarded," noted Mr. Khoroshkovskyi.

In his letter of resignation, Mr. Khoroshkovskyi warned that the effects of the government's inability to focus on Ukraine's long-term growth could bear consequences as soon as this year. He said that the unrestrained effort to increase revenues and show a fully executed budget has led to administrative interference in the markets, which could stifle economic expansion. He also cautioned that if Ukraine failed to become a member of the World Trade Organization, a real threat with its move into the SES, the country risked economic isolation.

Mr. Khoroshkovskyi came to prominence in 1997 as a member of the National Democratic Party and a protégé of the party's leader and prime minister at the time, Valerii Pustovoitenko, who put him in charge of a special economic zone in the economically underdeveloped region of northern Crimea. A year later he was appointed an aide to the prime minister. Also in 1998, as well, he became a member of Parliament and secretary of the parliamentary Budget Committee.

After his party failed to gain entry into the Verkhovna Rada in March 2002, Mr. Khoroshkovskyi took a post in the Kuchma administration as first assistant to the chief of staff, Viktor Medvedchuk. He became minister of the economy and European integration in November 2002.

| Home Page |