KYIV – As Ukrainians head to the polls on March 31 to elect their sixth post-Soviet president, questions still linger about the commitment the three front-runners have to continue reforming the country to realize its true economic potential.
At stake is the completion of a $3.9 billion International Monetary Fund lending program as well as hundreds of millions of dollars in supplemental loan guarantees from the West. Millions of dollars of foreign technical assistance from the United States, the European Union and Canada are also tied to structural reforms related to establishing the rule of law, including an independent judiciary.
Amid high-levels of perceived public corruption, Ukraine’s Western backers don’t want to see five years of investment wasted after the election, the Reuters news agency reported on March 26 based on interviews with Western diplomats serving in Kyiv. Money has been pumped in to create new anti-corruption institutions and a police force, to implement decentralization that gives more power to regional and local governments, to upgrade the Soviet-era military and to make governance more transparent and publicly accountable.
A review of investment notes by Kyiv-based investment banks like Dragon Capital as well as expert opinions by Ukraine observers reveal a consensus that incumbent President Petro Poroshenko would maintain the status quo. Lead candidate Volodymyr Zelensky still remains a mystery given his platform’s vague wording and his inexperience, while ex-Prime Minister Yulia Tymoshenko has made inconsistent statements that veer towards populism.
“Kyiv-based Western diplomats said all three left doubt over how effectively they would pass reform, tackle corruption and keep aid flowing,” Reuters reported in reference to the three front-runners.
Reuters cited anonymous foreign envoys, with one saying that “we certainly know what we get with Poroshenko,” while “we think we known what we’ll get with Tymoshen-ko… With Zelensky we have no clue.”
To his benefit, the showman, whose third season of “Servant of the People,” in which he plays a history teacher-turned-accidental president, premiered on March 27, has enlisted the help of reformers.
Former Finance Minister Oleksandr Danyliuk, a former McKinsey consultant, has navigated the Dnipropetrovsk Oblast native through meetings with the diplomatic and foreign investment community. Counsel also is given by Aivaras Abromavicius, a former investment banker from Lithuania who served as economy minister in the post-Maidan government.
National Deputy Serhiy Leshchenko, a former journalist who uncovered political and white-collar corruption as a journalist for Ukrayinska Pravda, has acted as adviser on graft issues.
“Their willingness to gamble on a political novice speaks volumes about Poroshenko’s failures as Ukraine’s leader,” wrote Russian exiled dissident Leonid Bershidsky in a Bloomberg Opinion piece.
However, much concern remains regarding Mr. Zelensky’s independence from the country’s oligarchic business interests – most notably billionaire Ihor Kolomoisky. Long-term contractual relations persist between the businessman’s 1+1 channel and the comedian’s production studio. Both hail from the same region and Mr. Kolomoisky has publicly said his mission is to deny the incumbent a second term.
Since 2014, Mr. Kolomoisky has lost control of the aviation regulator that gave his Ukrainian International Airlines favorable routes and limited competition to the detriment of flyers. He also lost influence over state-run oil and gas extractor Ukrnafta that was a burden on taxpayers.
The billionaire’s biggest loss was Privatbank, which has since been nationalized. It was the country’s biggest private lender but was revealed to be an alleged giant Ponzi scheme.
It was “subjected to large-scale and coordinated fraud” and suffered losses of “at least $5.5 billion” due to related-party loans that never were returned, Ukraine’s central bank said on January 16, 2018, citing a forensic audit by the New York-based risk analyst firm Kroll.
Mr. Zelensky and Mr. Kolomoisky deny acting in concert with each other. And the political newcomer has yet to address allegations that $41 million from Privatbank flowed through accounts affiliated with him before the financial institution was taken into receivership by the government.
Still, Mr. Zelensky’s “current rhetoric raises no major concerns, unlike his relationship with tycoon Igor Kolomoisky,” Dragon Capital wrote in a note to investors. “Zelensky’s potential presidency poses no immediate threat to the IMF program, in our view, but there is little visibility going forward given Zelensky’s political immaturity.”
The 41-year-old’s high ratings are mostly attributed to disgruntled voters who want to see a new political face, Brian Mefford, an American political consultant in Kyiv, wrote for the Atlantic Council on March 24.
“However, those who say they are voting for Zelensky are not voting for him, but rather against the status quo,” said Mr. Mefford, who owns the Wooden Horse Strategies consultancy. “His candidacy is a classic protest vote. The first round gives voters a chance to register their disapproval, but in a runoff, when the vote really matters, voters may re-evaluate their support for Zelensky.”
All three candidates have faced pre-election scandals. The campaigns of Mr. Poroshenko and Ms. Tymoshenko are under investigation for vote-buying schemes. The incumbent also saw his longtime business partner’s son allegedly embroiled in a $9 million arms procurement kickback conspiracy.
Mr. Zelensky has faced criticism for not initially revealing a business in Russia in his asset declaration when registering as a candidate. On March 28, the Slidstvo.info journalists’ investigative group found that he also didn’t declare a 15-room villa in Italy in an area where Russian oligarchs own property.
Mr. Zelensky’s press service didn’t immediately respond to an e-mailed request for comment. His team has so far declined two interview requests from The Ukrainian Weekly and never responded to e-mailed questions for which it had asked. Mr. Zelensky’s campaign later addressed the matter on Facebook by saying he didn’t violate the election law when filing his asset declaration, maintaining that assets owned through proxy – in this case a legal entity – aren’t required.
His discussion with Western diplomats “left an impression of being light on substance, one diplomat said,” according to Reuters. “The optimistic view, the diplomat added, was Zelensky would surround himself with reformers who treat him as a blank page to imprint their vision.”
As for Ms. Tymoshenko, who twice unsuccessfully ran for president, she has promised to challenge the election result if she doesn’t make into the runoff because a majority victory is needed in the first round. Mr. Zelensky’s camp also has vowed to challenge the outcome if he doesn’t make it to round two.
Ms. Tymoshenko’s biggest downfall is her “sense of entitlement,” wrote American political consultant Mr. Mefford. “Similar to Hillary Clinton in the 2016 [U.S. presidential] election, Tymoshenko’s statements suggest that she sees this election as a coronation rather than a real contest.”
The power of incumbency is behind Mr. Poroshenko’s chances. He secured an independent Orthodox Church of Ukraine free of Moscow’s command, has kept Russian-led forces at bay in the Donbas, won visa-free travel to most EU countries, stabilized the economy with modest growth, and intensified integrated with NATO and the EU.
Longtime Ukraine observer Timothy Ash, a senior sovereign analyst for Blue Bay Asset Management in London, wrote that he thinks “Zelensky wins the election,” while adding that “Poroshenko is the candidate for the status quo, security, stability. Tymoshenko [is] more for the older, more conservative electorate with [a] populist tone.”
Yet, all three “are flawed,” Reuters quoted a diplomat as saying. “There is no candidate where you will sit there and go: ‘Yes!’ ”
The latest polls released on March 28 – the last day allowed before Election Day – show that ratings and demographic trends haven’t changed, and that a second round of the presidential election is likely to be needed.
Mr. Zelensky is way ahead with 28 percent among voters who’ve decided for whom they’ll cast ballots, according to a joint nationwide survey by the Ilko Kucheriv Democratic Initiatives Foundation and Kyiv International Institute of Sociology.
He is the absolute favorite in the southern regions from which he hails (Kryvyi Rih, Dnipropetrovsk Oblast). Overwhelmingly, he enjoys 45 percent support among the youngest demographic, voters age 18-29. The more affluent and educated the voters, the more likely they are to cast their ballot for him.
Mr. Poroshenko has the highest support in the west and the city of Kyiv. He, too, is supported by more affluent and more educated voters.
In contrast, Ms. Tymoshenko draws support from voters age 45 and older, the western and central regions, and less educated and wealthy voters.
The Central Election Commission is supposed to announce the first round result by April 10 and the expected runoff is scheduled for 11 days later.