KIEV, Feb. 6 – Tensions between President Viktor Yushchenko and Prime Minister Yulia Tymoshenko rose sharply on Wednesday after the government moved to replace the head of the country’s privatization agency through a controversial procedure.
Valentyna Semeniuk, the head of the State Property Fund, was suspended on Wednesday, while Andriy Portnov, Tymoshenko’s ally, was appointed acting head.
The development underscores rising struggle for control over the agency, which can generate billions of hryvnias in revenue from selling state assets.
It also highlights concerns the agency might be used to for re-privatization of those assets that had been “illegally privatized” as has been previously declared by Tymoshenko.
The reshuffle at the privatization agency is controversial as both, the dismissal and the appointment, would normally have to be approved by Parliament, according to Ukrainian law.
But the legislature remains blocked for more than two weeks now by the Regions Party, an opposition group, which has been protesting the declared speedy accession to NATO.
The reshuffle was immediately criticized by the office of the president as non-constitutional. Viktor Baloha, Yushchenko’s chief of staff, urged the government to cancel the reshuffle, or, otherwise, he said the president would suspend it.
“Today’s reshuffle of the SPF leadership, we have to say frankly and openly, is an act of arbitrariness,” Baloha said, urging the government to cancel it. “Otherwise, the president will suspend the resolution as non-constitutional.”
Yushchenko has frequently used his power to suspend the government’s resolutions late 2006 and early 2007 during his stand-off with then Prime Minister Viktor Yanukovych, a pro-Russian figure.
But this is the first time that Yushchenko’s office has threatened to use the same power against the pro-Western government of Tymoshenko.
Portnov was last month nominated by Tymoshenko to the post of the head of the SPF. He is thought to be one of Ukraine’s strongest lawyers focusing on privatization issues, and critics said Tymoshenko may be planning to use his skills to re-privatize some of the assets that had been earlier sold to some of her foes.
Tymoshenko is also seeking to speed up sell-off of state assets this year to be able to pay compensation for failed Soviet-era bank deposits, a campaign initiative that dramatically increased her popularity.
The payouts – to more than two million people over the past three weeks – boosted Tymoshenko’s popularity to a point she is now the most popular politician in Ukraine, according to opinion polls circulated within the Tymoshenko’s party, people familiar with developments said.
But Tymoshenko quickly needs new sources of revenue to continue to make or even to increase the payments, which forced her to speed u privatization and sell as much assets as possible.
“The declared plans by the government for the privatization this year are directly linked to the compensation payouts on failed Soviet-era savings bank,” Baloha said. “It’s clear the government has turned on privatization afterburning that had affected the leadership of the SPF.”
Yushchenko argued last month that massive sell-off of state assets would reduce the price and the amount of revenue that Ukraine could get from the privatization. He has repeatedly asked the government to scale back the sell-off, instead focusing on getting the highest prices for the assets. (tl/ez)