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Globe in Kiev: Yatsenyuk’s precarious balancing act

Ukrainian Prime Minister Areseniy Yatsenyuk in a joint press conference with Prime Minister Stephen Harper at the Cabinet of Ministers in Kiev, March 22, 2014.

Sean Kilpatrick/THE CANADIAN PRESS

He has been Ukraine's Prime Minister for barely a month, but already Arseniy Yatsenyuk doubts anyone will vote for him again.

That's not surprising, given that his agenda includes raising taxes, slashing spending, cutting subsidies, stamping out corruption, and transforming nearly every government institution. And all while the economy stagnates and the country faces a possible military confrontation with Russia.

"Who is to vote for me after this?" Mr. Yatsenyuk said with a smile during an interview Friday. "Not sure about my wife, even."

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The 39-year old lawyer and economist took over as Prime Minister on Feb. 27, rushed into office by parliament just five days after President Viktor Yanukovych fled to Russia. Now it's up to Mr. Yatsenyuk to lead a nation caught up in a crisis over Crimea and still reeling from a popular uprising that swept Mr. Yanukovych from power.

He was not a popular choice. Tall and lanky, the bespectacled Mr. Yatsenyuk has a reputation for being too cerebral, and his attempts to be fiery during the recent protest movement often fell flat. There were plenty of boos when he took the stage in Kiev's Independence Square last month and told thousands of protesters that he was forming a new government.

But since taking office, he has surprised many observers with his skillful handling of the job. He got kudos for taking on Russia's UN ambassador during a recent Security Council meeting on Crimea, and he has been a near-constant presence in Brussels, pushing the European Union to take a tougher line with Moscow and organizing a financial package for Ukraine. Back home, he won points for travelling economy, selling government cars, and even showing flashes of humour. When Prime Minister Stephen Harper mused about kicking Russia out of the G8 during a press conference in Kiev on Saturday, Mr. Yatsenyuk jumped in and said: "If there is an empty seat at the G8, we'll take it." The line broke up many in the room, particularly Ukrainian journalists who were not used to seeing such lightheartedness from their leader.

Sitting in a boardroom near his office Friday evening, Mr. Yatsenyuk appeared to be relishing the many challenges facing his country. He was relaxed, talkative, and eager to offer his thoughts on a variety of topics, including Russian President Vladimir Putin, the dire state of Ukraine's economy, and the tough remedies he has in store.

He has been on a whirlwind since taking office, travelling to Western Europe, New York, and Washington to meet President Barack Obama at the White House. In Kiev he has received a stream of diplomats including UN Secretary-General Ban Ki-moon. His job is a "huge responsibility," he said, and he is lucky if he sees his wife and two daughters for 20 minutes a day.

"I saw a friend of mine in Brussels [last week] and he said a very outstanding thing, personally, for me," Mr. Yatsenyuk said. "He said 'You need to realize that you are a wartime prime minister.' And he's absolutely right."

While not exactly outright war, Mr. Yatsenyuk and the country have been consumed with Russia's annexation of Crimea and fears that Mr. Putin has designs on other parts of Ukraine. The Prime Minister has vowed to fight the Russians if they move into more regions, and he has admonished the international community for not imposing more sanctions on Russia. "This is my land and this is my country, not Putin's," he said emphatically.

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He certainly knows what he's up against. Mr. Yatsenyuk said he has met Mr. Putin several times and he described the Russian leader as a clever strategist, someone who knows when to pounce and when to ease back. He's convinced Mr. Putin is interested in southern Ukraine, particularly in Odessa, the country's main port. Losing Odessa would cut Ukraine off from the Black Sea and cripple the economy. "He is not friendly to Ukraine," Mr. Yatsenyuk said, almost wincing. "And it seems to me that he is not friendly even to the entire globe, and to his people."

Crimea, Russia, and Mr. Putin are just one set of troubles. Mr. Yatsenyuk also has to deal with a faltering economy, hit hard by years of recession and worn down by decades of corruption.

By some measures, around half of Ukraine's economy operates in a so-called "shadow world," underground and unreported. Corruption is so rampant that nearly every public servant expects a payoff, and departmental budgets include provisions for bribes. One cabinet minister recently said that cleaning up the justice system alone would involve firing 8,000 officials, bringing the courts to a standstill. How can you run any department if you fire all the corrupt staff, he wondered.

"We still have this so-called post-Soviet legacy or post-Soviet mentality, which is a corrupted one too," Mr. Yatsenyuk said. "Every public servant has some kind of authority. If he has the authority, he has the chance to get something for executing his job."

To tackle the problem, the government has brought in experts and set up an anti-corruption office. It's also implementing a transparent system of awarding government contracts. But the only lasting solution, Mr. Yatsenyuk said, is to change the public's mindset. "We need to ask people not to pay bribes."

Widespread corruption and inefficiency have also left the government's finances in a deplorable state. The treasury is so low on cash that the military had to ask for donations recently to pay for badly needed equipment. Several banks are in shaky condition as well, and the currency has been tanking.

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Mr. Yatsenyuk believes there is more bad news ahead. Ukraine is dependent on Russia for most of its natural gas, and he's convinced that the Russians will soon jack up the price. He's also expecting them to slap tariffs on Ukrainian products, cutting off the country's biggest export market.

None of that is going to stop Mr. Yatsenyuk from introducing sweeping changes that he believes are long overdue. While hardly a neoconservative, Mr. Yatsenyuk takes a practical approach to the economy, drawing on his experience in the banking world before joining government.

For him, fixing Ukraine's economy involves higher taxes, less spending, and fewer public servants. It also means simplifying the tax system to encourage investment, eliminating costly subsidies, and curtailing the power of the superrich oligarchs who control much of the country's economy. That will all be a tough sell. Cutting gas subsidies could send prices up by as much as 40 per cent, and there are already complaints that the government plans to hike taxes on cigarettes and alcohol.

"I am absolutely sure that I won't hear applauses with this kind of austerity package, but someone has to do this. And someone has to take responsibility," he said.

There's a bigger problem. Mr. Yatsenyuk knows that every time he introduces some painful economic measure, the Russians will use it to whip up pro-Russian sentiment in Eastern Ukraine. "If I increase tariffs for households, if I increase the gas bill, if I increase the utility bill, they will say 'look at these guys, this so called pro-Western government, they deteriorated your living standards. So it's better to go to Russia,'" he said. The Russians have already said as much in Crimea, denouncing the Yatsenyuk government as illegal and puppets of the West while promising higher pay and pensions now that the territory is part of Russia.

He vows not to back down, no matter what the Russians do. "There is no other way out," he said, adding that Ukraine should have lessened its dependency on Russia ages ago. Russia's tactics might work in the short term, he added, "but in the long-term perspective, this is a disaster for every country, including Russia."

There are plenty of risks, and the public could easily turn on him, just as it did on Mr. Yanukovych. "We can have another Maidan," he said, referring to the name of the protest movement which means "square" because it was based largely in Independence Square. "If people will not accept that this country is in a very complicated stance, I will try to explain to every Ukrainian, 'Look what we have done.'"

To be sure, Mr. Yatsenyuk has been underestimated before.

Born into a family of academics in Chernivtsi, in Western Ukraine, Mr. Yatsenyuk was always a serious student, picking up university degrees in law, economics, and accounting. At law school, he earned extra money by setting up a law firm with a group of students, attracting clients and hiring lawyers to do the actual legal work. After three years as a bank executive, he joined the economics ministry in Crimea.

The experience gave him a taste for the tension to come in the territory. Almost entirely Russian-speaking, Crimea has a large ethnic-Russian population that has long felt neglected by Kiev. Few thought Mr. Yatsenyuk would have much success on the peninsula with his pro-Western European outlook and Ukrainian bias. But he won accolades for deftly pushing the Ukrainian language in the department and turning around the territory's finances.

From Crimea, Mr. Yatsenyuk was given ever more senior positions, including foreign minister, economics minister and head of the central bank. He won a seat in parliament in 2007 and became leader of the largest opposition party, called Fatherland. During the uprising against Mr. Yanukovych, Mr. Yatsenyuk joined the other opposition party leaders in denouncing the president, but none of them were embraced by the protesters and many still want more radical change.

For now people seem to be giving Mr. Yatsenyuk the benefit of the doubt. "He's a young guy who could change the situation in this country," said Julia Aleksenko, an unemployed high-tech specialist.

Others are more cautious. "In my opinion there has been very slow movement and frankly they haven't even started the reforms," said Mykhailo Savolyuk, who lives in Vinnystia. "They have to understand that if reforms aren't implemented in the very near future … we'll be watching."

Follow me on Twitter: @pwaldieGlobe

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About the Author
European Correspondent

Paul Waldie has been an award-winning journalist with The Globe and Mail for more than 10 years. He has won three National Newspaper Awards for business coverage and been nominated for a Michener Award for meritorious public service journalism. He has also won a Sports Media Canada award for sports writing and authored a best-selling biography of the McCain family. More

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