Frankly, I had never heard of Danylyuk as he has kept quite a low profile, so I had to call my Kyiv contacts to get the spin.
Therein Danyluk has an interesting CV, see:
The McKinsey & Company experience will no doubt be a focus/spin, and he has quite a lot of experience in public administration, consultancy/advisory, etc.
A few things spring out from his CV, but particularly his stint advising advising former President Viktor Yanukovych. I guess a lot of economists did similar assignments so you need to be careful apportioning blame therein (President Petro Poroshenko served in a Yanukovych cabinet).
And note that this was in the coordination centre for the introduction of key economic reforms within the presidency which spanned the two presidents. The latter entity was created by Yanukovych’s main economic adviser, Iryna Akimova, back in 2010.
Akimova was ex-World Bank and was brought in with some fanfare in 2010 upon Yanukovych’s presidential election victory as someone who could spearhead real and meaningful structural reforms. Expectations were very high – there were lots of D.C. advisers running around. She did indeed put together an economic reform plan, but in the end very little, if anything was implemented as entrenched vested interests came to play.
Danylyuk’s experience in the Yanukovych administration, close to the former head of the Presidential Administration, Serhiy Lyvochkin, will make EuroMaidan view this appointment with suspicion. That said most people view Danylyuk as progressive/technocratic, albeit the contacts into former elites will raise concern as to whether he is the kind of person willing/able to undertake meaningful reform. Perhaps the number one issue for Danylyuk will be reform of the tax administration – which anecdotal evidence still suggests is operating by the old means. Has he got the bottle and political backing to really clean out the tax administration and complete the job started by Finance Minister Jaresko? I have my doubts, but am prepared to give him the benefit of the doubt.
I guess the plus from Danylyuk’s nomination as finance minister is that it might assure support from billionaire Rinat Akhmetov, lawmaker and former Yanukovych chief of staff Lyovochkin and the Opposition Bloc of former Yanukovych supporters for Volodymyr Groysman’s cabinet, as they will view this kind of appointment as offering a sop to them, and eastern interests.
This increases the chances that Groysman will secure a majority, albeit EuroMaidan will be frustrated by this appointment and the assumption that old elites are retaking control of government. They would argue that Ukraine’s old elites are simply incapable of reform and Ukraine needs root and branch reform. Lyovochkin, et al., will argue that they know how to run the country, and bringing in technocratic/pragmatic reformers such as Danylyuk makes sense.
Western creditors I think will be willing to give Poroshenko, Groysman and Danylyuk the benefit of the doubt at this stage.
In the short-term, perhaps, just relieved that Ukraine might again actually have a functioning government.
They will adopt a wait-and-see approach in terms of seeing the new government’s program, holding to relatively tight conditionality in terms of the International Monetary Fund program, albeit at this stage I would assume that Groysman/Danylyuk will do enough to get the next IMF tranche signed off by the end of Q2-16. Further down the line I expect problems with the IMF relationship, unless rule of law related reforms make real and significant progress – again this all looks a bit like a repeat of the Yanukovych administration circa 2011-2013.
I did note the post from the Ministry of Finance website this morning calling for an agreement over the $3 billion in Russian December 2015 Eurobonds – you have to assume that Danylyuk was somehow involved in the original agreement back in December 2013, given his position as part of Yanukovych’s economic policy team.
Is this some kind of message that with the composition of the Groysman cabinet moving somewhat eastern, towards former Yanukovych advisers, that Kyiv is looking for Moscow to deal? Moscow could indeed now send out an olive branch to Groysman by cutting a deal over the $3 billion in debt liabilities.
