Ukraine leader acts to form new gov't

Ukraine's President Viktor Yushchenko urged parliament to back his new prime minister on Friday.

But analysts said his political future hinges on whether dynamic ex-premier Yulia Tymoshenko turns on him.

Yushchenko fired Tymoshenko and her cabinet on Thursday to stem government infighting and allegations of mass graft in a risky move that commentators said had shaken confidence in the leaders of December's pro-Western "Orange Revolution."

As Yushchenko pressed parliamentary faction leaders to work with an incoming government headed by regional governor Yury Yekhanurov, analysts said much depended on which way Tymoshenko would now go.

The charismatic Tymoshenko, who has a huge following because of the important role she played in the revolution with her fiery pro-Yushchenko speeches, was due to give her position late on Friday.

The worst-case scenario for Yushchenko would be Tymoshenko going into opposition when Ukraine votes in a parliamentary election in March 2006.

The elections next March are important since they will provide an opportunity for Yushchenko to build a real base for political support to underpin his reform policies.

They will also be significant since, following changes to the constitution, the new parliament, not the president, will choose the government.

"The main political risk associated with the reshuffle is that of a breakdown in co-operation between Yushchenko and Tymoshenko ahead of the elections and possibly beyond," said Sergei Voloboev, an analyst for Credit Suisse First Boston.

Voloboev said that if Tymoshenko chose to launch her own political campaign outside a coalition with pro-Yushchenko groups, targeting him personally, parliament would fragment.

This in turn could undermine the reform prospects for the country, he said.

Yushchenko said on Thursday that those in the outgoing government remained his friends but its infighting was hurting the policy and direction of the country.

Tension caused by economy

The crisis follows months of tension between Yushchenko and Tymoshenko over Ukraine's economic direction. It came to a head last Saturday when his chief of staff quit, alleging deep corruption in the administration.

Many commentators said the allegations have confirmed a growing cynicism among many after the euphoria of last December and a feeling that the new administration is as corrupt as the one it replaced.

The graft allegations have even extended to Yushchenko's son who, one newspaper said, was driving a car he should not have been able to afford with his modest income.

Under Tymoshenko, economic growth took a sharp downturn and inflation rose while her government's stewardship of the economy was erratic and marked by public rows and inconsistency.

Privatization, in particular, failed to bring planned revenues and the government will face budget problems at the end of the year.

Analysts expect the crucial privatization auction of steelworks Kryvorizhstal to go ahead as planned, however, as Yushchenko has backed to the sale of a business he said was stolen by allies of his predecessor.

Five companies have expressed interest in the auction, whose starting price is US$2 billion.

Analysts see Yekhanurov, a low-key technocrat, as being able to bring some consistency to Ukraine's economic policy in time for the March elections.

He will reduce state intervention in the economy and implement a more cautious policy on privatization and currency issues than Tymoshenko, the analysts said.

Yekhanurov, who must be confirmed by parliament where pro-Yushchenko forces do not have a stable majority, had initial contacts with faction leaders on Friday.

Source: China Daily