Editor’s Note: This is the English-language translation of an op-ed by Ukrainian member of parliament Sergii Leshchenko, originally published in the Aug. 18 edition of Novoye Vremya news magazine. It is republished with the author’s permission.
It’s time for First Deputy Prime Minister Stepan Kubiv to look for a new job. Under his direction, the Ministry of Economic Development and Trade has lost the status of a locomotive of reform, and it is failing to meet the challenges of the moment.
There are economy ministries in countries all around the world, and history books are full of the names of successful reformers, such as Ludwig Erhard, the architect of Germany’s post-war “economic miracle.”
In Ukraine, after the EuroMaidan Revolution that drove President Viktor Yanukovych from power on Feb. 22, 2014, Lithuanian Aivaras Abromavicius was appointed head of the Ministry of Economic Development and Trade, but a year later he lost his job when he tried to put things in order in the state-owned companies – the cash cows of the ruling clans.
After Kubiv was appointed as the replacement for Abromavicius, the Economy Ministry lost its status as a locomotive of reform. Kubiv’s remaining reformist deputy, Max Nefyodov, is busy with a narrow range of tasks, while the rest of the ministry has become a source of problems for business – and an obedient tool of oligarchs and the security services.
I started to hear complaints about the ministry at the beginning of the year. That was when Kubiv, having received instructions from the Security Service of Ukraine, or SBU, and without hesitation or looking into the issue, imposed sanctions on independent traders of liquefied gas.
A month later, the SBU admitted that it had no complaints against the independent traders. But by that time the niche that had opened up in the market for liquefied gas for automobiles had been occupied by companies linked to the odious Viktor Medvedchuk.
Another example is when the Ministry of Economy urged the SBU to impose sanctions on Matimex, an Austrian producer of sausage-making equipment. According to those familiar with the matter, the previous owners of the company, in order to have a quiet life doing business in Ukraine, used to pay $250,000 a year in “tips” to government officials. Ukraine’s business ombudsman, Algirdas Shemeta put forward proposals for sanctions to be imposed only under a court order, but his reform initiative was never taken up.
And in the autumn of last year, the Economy Ministry tried to reassign control of UkrTransGas (one of the most corrupt enterprises, which had been given after the Maidan to the People’s Front to milk) from state oil and gas company Naftogaz to the cabinet. The company’s then president, Igor Prokopiv (a protégé of former People’s Front lawmaker Mykola Martynenko), found support precisely in the person of Kubiv. The situation was saved only after the intervention of the U.S. ambassador to Ukraine, who pointed to the unquestionable need to keep Ukrtransgaz under the subordination of Naftogaz.
The Economy Ministry has also created favorable conditions for Dmitro Firtash, who has monopolized the fertilizer market. The ministry accelerated the entry into force of anti-dumping duties on fertilizer imports, which allowed Firtash to inflate prices, ripping off farmers. The process was overseen by Kubiv’s deputy, Nataliya Mykolska, who, prior to joining the civil service, worked with Firtash, who was a client of the law firm where she worked.
Also telling are the Economy Ministry’s attempts to get rid of inconvenient officials who have remained since the days of Abromavicius, such as head of the State Reserve Vadym Mosiychuk.
The unpleasantness with Mosiychuk began after the conclusion of an agreement on the supply of fuel from the company Trade Commodity, which up until then had been little-known.
The company’s patron is Andrey Adamovsky, a business partner and office neighbor of Oleksandr Granovsky, the presidential “fixer” for law enforcement agencies and the courts.
Granovsky personally came to the State Reserve with a request that it take the fuel, but was refused because of the poor quality of the product. After that, Kubiv launched an official check on the head of the State Reserve – not about the work of his agency, but about where and when he spent his holidays or sick leave, and, most interestingly, why he had dismissed subordinates who had been involved in corruption.
Another sphere where the Economy Ministry has failed is in the appointment of state company managers via competitions. The process had been moribund since the end of last year, and came to life only before the summer holidays, under pressure from Western donors and government consultants. As of today, a list of enterprises at which independent managers should be appointed has been agreed upon, but the Economy Ministry is, in every possible way, blocking the appointment of a new chief on the United Mining and Chemical Company, which is subordinate to the ministry. This asset, which manages titanium mills, had been put at the mercy of Martynenko, and the suspended director Ruslan Zhurilo was even taken to a remand center during an investigation by the National Anti-Corruption Bureau of Ukraine. But even now, when all the schemes have been uncovered and all the beneficiaries named, its exports still go through the conduit of Austrian company Bollwerk, which is linked to Martynenko.
Another strike against Kubiv is the stalling of the appointment of the head of engineering plant ElektroTyazhMash, where the competition for the post started even under Abromavicius.
The Frenchman who won the competition has not yet taken up the post, as the approval process has been delayed. The reason for this is that Kubiv does not want to transfer either the titanium business or engineering assets to the management of the State Property Fund, thereby blocking their privatization. The disruption of the appointment process led the head of the International Monetary Fund office in Ukraine, Jerome Vacher, to walk out of the nomination committee.
Kubiv may have been an active participant in the EuroMaidan Revolution, but his work as a minister is clearly not up to scratch in these challenging times. He can skillfully carry out the requests of the Presidential Administration, but he is unable to grasp the aspirations of business, which is awaiting a new economic policy from the government.
And that means it’s time for him to look for another job.
