Why The Honeymoon Is Over For Ukraine's Premier: QuickTake Q&A

KIEV, Ukraine -- Like all Ukrainian prime ministers, Volodymyr Hroisman got a one-year pass on opposition challenges to his rule when he was appointed. That shield is about to disappear.

Ukrainian Prime Minister Volodymyr Groysman.

With a 1 percent approval rating, corruption still rampant, tensions rising in the conflict with Russian-backed insurgents and widespread unhappiness over increases in utility tariffs, the chances that Hroisman’s rivals will test him appear to be as high as his popularity is low.

While it’s certainly possible he’ll cling to office, it’s less clear whether he -- or anyone else -- can overcome the political friction to meaningfully advance Ukraine’s pro-Western reforms.

1. Why is Hroisman in trouble? 

Part of a much-maligned political class, Hroisman’s ratings aren’t much worse than those of his political patron, President Petro Poroshenko.

But as head of the government, he’s taken the blame for many of the unpopular steps demanded by the IMF to make the budget more sustainable.

While Ukrainians swallowed higher heating bills as part of the medicine needed to modernize the ex-Soviet economy, they’re less inclined to accept the failure to tackle corruption.

Brought in by Poroshenko in April 2016 to end months of political turmoil, Hroisman’s term has done little to combat graft, the main reason his predecessor’s cabinet collapsed. 

2. Who wants him out? 

Hroisman’s biggest rival is former Prime Minister Yulia Tymoshenko, now a populist opposition leader who’s rallied against the government’s cuts in household energy subsidies.

While it’s not saying much, she’s Ukraine’s most-popular politician, and her party leads polls with about 18 percent backing.

The Opposition Bloc, formed from the remnants of ousted pro-Kremlin President Viktor Yanukovych’s administration, is also keen to unseat Hroisman and would push more friendly ties with Russia at the expense of Ukraine’s pivot to the European Union.

Among newcomers, there’s ex-Georgian President Mikheil Saakashvili -- a fiery opponent of corruption who’s wanted by the authorities back home.

3. How would a challenge work? 

The main risk to Hroisman is a no-confidence motion in parliament, where the coalition backing him doesn’t have a strong majority.

Were he to lose a vote, lawmakers would have 30 days to build a new alliance and another 30 days to form a government.

Some opposition parties are also seeking snap elections, though they’d need to be called by President Petro Poroshenko, who picked Hroisman for premier and has ruled out such a move.

4. What could Hroisman or Poroshenko do to stabilize things? 

One Poroshenko ally says a reshuffle of some ministers may be in the works, though Hroisman is likely to keep his job.

Changes are possible at the energy, health and infrastructure ministries, according to Yuriy Yakymenko, an analyst at the Razumkov Center for Economic and Political Studies in Kiev.

One is almost certain at the top of the central bank, where Governor Valeriya Hontareva, unpopular among Ukrainians, has submitted her resignation.

5. Either way, sounds like a lot of upheaval. What’s that doing? 

Political volatility will make it harder for Hroisman to advance his agenda.

Top of his list is maintaining the flow of cash from Ukraine’s $17.5 billion bailout.

Already dogged by delays, future transfers require a tricky reform of the pension system.

Other areas could also suffer, from the nation’s so-far-disappointing attempts to tackle corruption, to kick starting sales of state assets.

6. Is this spooking investors? 

So far, no.

The hryvnia has strengthened 1.6 percent against the dollar in 2017.

But investors shouldn’t forget what happened the last time politics got messy.

Early 2016 saw Ukraine’s reformist economy minister quit, complaining of corruption among Poroshenko’s allies.

Prime Minister Arseniy Yatsenyuk was eventually replaced with Hroisman, but only after yields on the government’s 2019 dollar-denominated debt spiked beyond 12 percent.

Source: Bloomberg