Ukraine Premier Starts ‘Kamikaze’ Mission as Crimea Erupts

Arseniy Yatsenyuk twice turned down opportunities to be Ukraine’s prime minister. He took the third chance, which he described as a “kamikaze” mission.

The 39-year-old lawyer takes over the government with the country reeling from its bloodiest week since World War II, inheriting a race against the clock to avert a default. He also has to deal with intensifying ethnic tension in the south, Russia’s disapproval and skeptical protesters holding out on Kiev’s Independence Square.

“It’s difficult to overstate the scale of the task,” Neil Shearing, an analyst at Capital Economics Ltd. in London, said by e-mail. “He faces challenges on three fronts: political, economic and geo-political.”

With deposed ex-President Viktor Yanukovych claiming he’s still the country’s rightful leader, Yatsenyuk must seal a financial lifeline as investors pull out of Ukraine. Yatsenyuk in an interview before his confirmation yesterday said he was prepared to be “the most unpopular prime minister in the history” of the nation.

The Cause of Unrest in Ukraine

“The fate of all the members of this cabinet is the fate of a political kamikaze,” Yatsenyuk said on his website after getting the support of protesters on Feb. 26. “The treasury is empty, pensions haven’t been paid in full for more than a month, gold and foreign currency reserves have been robbed.”

He signaled readiness to take bitter measures to obtain a bailout from the International Monetary Fund. Previous cabinets balked at loan conditions such as cutting energy subsidies.

‘Great Mess’

“We are in a great mess,” Yatsenyuk said in the interview. “We will do everything not to default. If we get the financial support from the IMF, the U.S., we will do it.”

Yatsenyuk, who led Yulia Tymoshenko’s party during her imprisonment, will be at the forefront of aid negotiations as the country prepares for presidential elections May 25. The new premier is ready to do the unpopular because he sees no alternative, according to Elmar Brok, who this week led a European Parliament mission to Ukraine.

“I fully believe that he knows what he’s talking about and what he wants,” Brok told reporters Feb. 25 at a parliament session in Strasbourg, France. Yatsenyuk has been “brutally sober” in describing the situation in Ukraine, Brok said.

He has also garnered support from U.S. President Barack Obama’s administration, which had approached him before he emerged as the premier designate on Feb. 26. Treasury Secretary Jacob J. Lew spoke with Yatsenyuk Feb. 23 and told him there’s broad international backing for a Ukrainian bailout, according to a Treasury official who spoke on condition of anonymity.

Familiar Face

In January, U.S. Assistant Secretary of State Victoria Nuland voiced support for him in a phone conversation with the U.S. ambassador to Ukraine that was eventually leaked and gained notoriety for her criticism of the European Union. She described Yatsenyuk as having economic and government experience.

Last night, U.S. Vice President Joe Biden called Yatsenyuk to welcome the formation of a new government and to assure the prime minister that the U.S. “will offer full support” as Ukraine works to shore up its economy, the White House said in a statement.

“He’s somebody the West is very familiar with,” Amanda Paul, an analyst at the European Policy Centre in Brussels, said by phone. “He’s somebody who can balance politics, between different politicians. He’s not controversial, he’s quite an easy person to get along with, he’s Westernized, he’s well-educated, speaks good English.”

Lawyer, Minister

The former central bank chief was one of three opposition leaders who held court with demonstrators angry at Yanukovych’s snub of European integration last November. While members of Vitali Klitschko’s UDAR party weren’t nominated for government posts, the ex-world boxing champion said he’d back Yatsenyuk. Oleh Tyahnybok’s Svoboda party stands to get three ministries.

After getting a law degree in 1996 in the western city of Chernivtsi, Yatsenyuk worked for Aval Bank, which was later bought by Raiffeisen Bank International AG. He went on to serve as economy minister, foreign minister and parliamentary speaker.

Yatsenyuk’s appointment means allies of Tymoshenko, who blamed her seven-year jail term for abuse of office on Orange Revolution adversary Yanukovych, are set to hold the positions of acting leader, premier and central bank chief.

Yatsenyuk’s long career shows that it would be too early to say he is doomed to political failure by his task, according to Marius Laurinavicius, an analyst at the Eastern Europe Studies Center in Vilnius.

Maidan Watches

“He’s probably overstating” the difficulty of his situation, Laurinavicius said by phone. “Yatsenyuk is projecting his long-term political power. This very ambitious politician is capable to maneuver and to adapt to any situation in Ukraine, even as powers and governments shift.”

Yatsenyuk showed a glimpse of that adaptability when Yanukovych twice offered him the premiership during the three months of protests that led to the ex-president’s bloody overthrow. Yatsenyuk turned him down, returning to support the protests that eventually led to the ex-president’s downfall in the wake of the violence that left at least 82 people dead.

That role won’t get him a free pass with the activists, who are wary of the country’s post-communist elite.

“They should know that if they betray us, we will come to them and ask why our guys, the heroes of Ukraine, died?” Volodymyr Panasyuk, an activist, told the crowd from the stage on Independence Square after Yatsenyuk was introduced as the nominee for premier. “We all understand that the country needs a government. But look what happened. There are dignified people in a new cabinet as well as disgraced people.”

To contact the reporters on this story: Daryna Krasnolutska in Kiev at dkrasnolutsk@bloomberg.net; Milda Seputyte in Vilnius at mseputyte@bloomberg.net; Aaron Eglitis in Riga at aeglitis@bloomberg.net

To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.