Grayling Blog

Ukraine makes a Prime choice in its new PM…

Posted on 11.03.2010 by Unknown User

On March 11, 2011 The Ukrainian Parliament appointed Mykola Azarov as its new Prime Minister. This followed a hastily assembled coalition, and even more hastily law amendment pushed through this week by Yanukovych to allow a coalition to be formed by individual MPs, as opposed to bloc factions. The new coalition comprises the Party of Regions, Communist Party, the Lytvyn Block and several MP of BYuT and NU-NS factions; a total of 235 MPs representing a shade more than 50%. It is highly possible however, that the new law will be disputed in Ukraine’s Constitutional Court which could yet derail Yanukovych’s best laid plans.

Russian-born Azarov is considered one of the most influential figures in the Party of Regions and a close ally of Yanukovich; serving as finance minister and first deputy prime minister in his premierships from 2002-2005 and 2006-2007. During his time he undertook tax reforms, bringing the variable tax rate on personal income down to a uniform flat rate, and was credited with calming investors’ concerns of a financial meltdown following warnings of a crisis by then President Kuchma.

A trained geologist, Azarov previously held scientific and managerial positions at scientific and research institutions specializing in geology and mining both in Russia and in Ukraine.

He is a strong supporter of tight state control of the economy and is thought to be a safe (and conservative) pair of hands with the country’s purse strings. We can expect his operating style to be characterized by pragmatism and caution. In policy terms, we could expect to see potential increases in protectionist measures in favour of local Ukrainian industry and exports, stricter taxation discipline but with a focus on new technologies and modernization.

His experience of steering Ukraine through choppy economic waters must surely have a positive influence on a country which is still some way from clearing the recession. It is hoped that his pragmatic and conciliatory approach will encourage the IMF to resume the funding promise it suspended in 2009 following a number of breached promises.

At 62 years old and a trusted long-term ally of Yanukovych,  Azarov is unlikely to pose a any serious competitive challenge to the new President which should mark an end to the in-fighting which ultimately destroyed the previous administration.