Ukraine teeters a few steps from chaos

Aivarus Abromavicius's resignation prompted dismay among other politicians and observers

The surprise resignation announcement this week by Ukraine's economy minister Aivarus Abromavicius - seen by many as one of the country's leading reformers - is a blunt reminder that, even though it has slipped somewhat from the world's headlines, Ukraine very much remains a country just a few steps away from chaos and instability.

Unlike other recent high-profile departures from the Ukrainian government, Mr Abromavicius sensationally went into great detail over what he said was rampant corruption and dysfunction in the corridors of power.

Mr Abromavicius's accusations were not new. Nor was it a revelation that there are deep divisions within the Ukrainian government. (A meeting in December that ended in a profanity-laced shouting match and a water glass being thrown was perhaps the strongest indication of the difference, and personal hatreds, among top officials.)

But he described in the starkest and strongest detail the political and economic ills that still plague Ukraine, two years after the country's pro-Western revolution - and the potential catastrophe if the country's leaders continue to delay major reforms and leave corruption unchecked.

Mr Abromavicius has made accusations against some of President Poroshenko's inner circle

Mr Abromavicius claimed there had been significant interference from vested interests within President Petro Poroshenko's own circle of confidantes, and he even named names.

"It has become clear that any kind of systemic reform is decisively blocked. It is more than the mere lack of support or political will," Mr Abromavicius told journalists. "I refuse to be part of this system.

"Neither me nor my team have any desire to serve as a cover-up for the covert corruption, or become puppets for those who, very much like the 'old' government, are trying to exercise control over the flow of public funds.

'Final straw'

"Evil forces still want to wind things back," he said. "Let us get rid of all those who shamelessly siphon billions off the Ukrainian economy. These people have no place in Ukrainian politics or the Ukrainian government."

The final straw, he said, was when Ihor Kononenko tried to strongarm him into hiring one of Mr Kononenko's proteges as his deputy. Mr Kononenko, who is a business associate of Mr Poroshenko and the deputy head of the president's faction in parliament, flatly denies this.

Ihor Kononenko denies any wrongdoing

Whatever the truth, though, sympathies were predominantly on Mr Abromavicius's side. The reaction from politicians and observers to his announcement was one of dismay, anger and even depression. "For the first time today, I'm thinking of emigration," Taras Berezovets, a prominent civic activist, said on his Facebook page.

And the outcry was not just among the chattering classes. Ukrainian bond prices plummeted on the news of Mr Abromavicius's possible departure. (Parliament must still approve his resignation; nevertheless, he posted a photo on Facebook of himself clearing out his office.)

Ten ambassadors, including those from the United States, Germany and the United Kingdom, issued a joint letter, expressing their "disappointment". This was an uncharacteristic co-ordinated reaction to the parting of a government minister, but at the same time it was an indication of the level of international investment in Ukraine's struggles.

"It is important that Ukraine's leaders set aside their parochial differences, put the vested interests that have hindered the country's progress for decades squarely in the past, and press forward on vital reforms," they wrote.

At the heart of this reaction is concern over the fragility of the situation in Ukraine.

The economic situation in Ukraine is still fragile

The country's economy has recovered somewhat from last year's double-digit drop in output, but growth is still sluggish. Last week, the national currency, the hryvnia, lost even more of its value, after plummeting more than two-thirds over the past two years.

Adding to the economic uncertainty are questions of whether Western donors will provide billions of dollars for financial stability. The International Monetary Fund in particular has withheld a $1.7bn (£1.2bn) loan tranche since last September, waiting for the government to undertake key tax and spending reforms.

Ukraine's economy

• Shrank 7% in 2014 and 12% in 2015

• The hryvnia has lost about 70% of its value against the dollar over the past two years

• Ranked fifth in a Bloomberg report on the world's most miserable economies, based on high inflation and unemployment levels

• The IMF approved a multibillion-dollar bailout for the country in 2014, with the money to be released over two years, but the latest tranche has not been released until further reforms have been implemented

Calls are also increasing to replace Prime Minister Arseniy Yatsenyuk, which could trigger early elections and further instability. Mr Yatsenyuk has become a focus of corruption allegations, though he denies the claims, and no concrete evidence has emerged.

There are calls for PM Yatsenyuk to be replaced

At the same time, the war against Russian-backed insurgents in the country's east continues to chew up lives and bodies. Fighting has at times decreased; however, in recent days observers have registered what they say is a worrying escalation, approaching levels of a few months ago.

For the moment, there appears to be no end in sight to the violence. Peace talks seem to be focusing on building individual, positive steps.

But the big questions are still unresolved:

• how and when to conduct local elections

• the removal of "foreign fighters" from the conflict zone

• re-establishing Ukrainian control over the border

• what a final political arrangement would actually look like

The battle with pro-Russian rebels in eastern Ukraine goes on

Moscow's attitude also remains a mystery. In recent months, a number of commentators have predicted a drop in Kremlin support for the rebels, given Russia's own struggling oil-dependent economy and the added burden of war operations in Syria.

A meeting last month between US Assistant Secretary of State Victoria Nuland and Vladislav Surkov, a close adviser to President Vladimir Putin, seemed to back up this idea of a Russian shift.

But no breakthrough was announced after the meeting, and those with inside knowledge of the talks say that progress was minimal.

Is Vladimir Putin shifting his attention away from Ukraine?

Russia appears to be holding out for a resolution that would give it maximum control over Ukraine, a prospect that the Ukrainians unsurprisingly are resisting. And, so far, Ukraine's Western allies have President Poroshenko's back.

Political give-and-take

All this would be challenge enough for Ukraine's leaders. However, they also have the country's chronic political instability to contend with - much of it of their own making.

In a sense, Ukraine's strength is also its weakness: a healthy political give-and-take, which includes a highly engaged population.

In the best of times this produces what is probably the most vibrant civic sector and public dialogue in the former Soviet space. Also, in the past two years, a number of key reforms have been introduced, though these are not as transformative as what the majority of Ukrainians think is required.

When the public debate becomes too charged or polarised, however, paralysis sets in. Or worse.

Growing numbers of Ukrainians say they are tired of what they see as a lack of progress, and disgusted with the infighting. Corruption is still entrenched, no major figures have been jailed and many people say they are struggling to survive economically. Talk of a "third Maidan" - a new mass protest movement - is consistently raised in conversations.

The stakes, then, couldn't be higher, as US Vice-President Joe Biden told Ukrainian lawmakers on a visit last year to Ukraine. Mr Biden encouraged them, and at times implored them, to embrace reform and end their squabbling. They very likely wouldn't have a second chance, he said.