In many respects this would be a best case scenario for international creditors and investors, as Jaresko is respected at home and abroad as a clean and driven technocrat.
However, the obvious question is why the delay? Why is this taking weeks to deliver and why is the Maydan administration being allowed to drift now for weeks – seeing the hryvnia weaken, and the National Bank of Ukraine lose scarce foreign-exchange reserves.
This might well relate to several issues:
Jaresko will want real reformers
— First, Jaresko has been around the Kyiv business, political and policy circle for sufficient time that she will want to ensure that the cabinet has her mark on it, and is filled by real reformers, and not just political place men and women.
Jaresko may threaten oligarchs’ vested interests
— Second, Jaresko’s nomination will need confirming by the Verkhovna Rada and this is by no means assured. She has had her critics in the Rada, particularly over the way in which last year’s budget and tax amendments were forced through the legislature. There are also likely to be strong oligarchic interests well represented in the Rada who will be nervous that a technocrat reform administration will threaten their current rent-seeking activities and also perhaps threaten legal action for past misdemeanors, on which there are likely to have been many. They are likely to resist her appointment.
Obviously to secure confirmation in the Rada, Jaresko might need to compromise both on the shape of her cabinet and potentially her reform program.
Presumably the days that have lapsed since rumors first broke over Jaresko’s nomination have seen horse trading in the back rooms of power to secure assurances that Jaresko will have the freedom both in terms her cabinet and the reform agenda in order to deliver meaningful but much needed reform. It is still unclear at this stage whether such assurances have been forthcoming – Jaresko’s nomination, let alone confirmation in office, is still far from a done deal as I understand things.
What do do with Yatsenyuk?
— Third, there is then the question as to what to do with the incumbent prime minister, Arseniy Yatsenyuk. Yatsenyuk survived a no-confidence motion on Feb. 16, so the opposition have proven unable to muster the votes to eject him.
That said, it is unclear whether he has the majority backing in parliament to govern effectively – likely not. Yatsenyuk though still heads one of the two main parties in the ruling coalition, the People’s Front, so if he is to step aside both his and his party’s loyalty will presumably need to be assured. Perhaps in recent days we have seen efforts to placate Yatsenyuk and his People’s Front, with offers of positions in government and the executive.
A couple of rumours doing the rounds this week were that Yatsenyuk was offered/seeking the position of either central bank governor or head of the National Security Council, obviously two critically important positions at this juncture.
It is difficult for me to comment on Yatsenyuk’s potential appointment as NSC head as that is not really my own field of expertise, but I would argue that his appointment as NBU government would be a step backwards for Ukraine.
First, Yatsenyuk already held this post previously for a short stint and then did not particularly reveal himself as able/willing to fundamentally reform the institution.
Second, yet another political appointment as NBU governor (the fourth or fifth in as many years) would do little to cement the idea of NBU independence which the new management, supported by the IMF has been looking to establish.
Third, it would do great disservice to the existing management at the NBU under Valeria Gontareva who have made remarkable, even revolutionary changes across a range of functions at the NBU, from its own administration, to monetary policy, banking regulation, et al.
Gontareva has had her critics but she has done an exceptional job in hiring and retaining talent, delegating and motivating some exceptional individuals to deliver revolutionary change against remarkable odds. Changing the person at the top at this stage would I think threaten mass departures from the management, and could set back reform efforts at the NBU by years. At this stage the NBU does not need another leadership change, but needs the existing team to be given time to further implement and bed in reforms.
Indeed, I would argue that at this stage the NBU is a beacon amongst public administration for reform, and a model for other ministries and government departments to follow. Why rock the one institution in Ukraine at this stage which is delivering on the reform agenda?
I would also argue that forced changes at the NBU, to engineer the exit of Yatsenyuk and for Jaresko to succeed would be false economy, and would count signify against the benefits of changing the top leadership of the government at this stage.
Rather I would see two driven women at two key institutions of state, the government and the NBU as offering a powerful driver for reform – they also have established a strong track record of working very well together.
