Ukraine appoints new Prime Minister
On July 14, President Volodymyr Zelenskyi initiated, and on July 16, the Parliament of Ukraine voted on a reshuffle of Ukraine’s government – the Cabinet of Ministers – appointing a new Prime Minister and 16 Ministers (see table below). Former Naftogaz CEO Serhii Koretskyi has replaced Yuliia Svyrydenko as the new Prime Minister just one year after her appointment.
The current reboot of the Ukrainian government is rather comprehensive, with only 6 ministers retaining their prior roles and 10 new officials introduced. Notable appointments include:
• Prime Minister Sergii Koretskyi – regarded by the business community as a good crisis manager and credited with clearing “Naftogaz” and “Ukrnafta” from tax debts and boosting oil and gas production.
• Minister of Economy and Environment Oleksandr Kravchenko – described as a competent professional in international strategic consulting, with expertise in industrial transformation and Ukraine’s economic recovery.
• VPM for European Integration Vsevolod Chentsov – considered as one of the most prominent diplomats within the Ministry of Foreign Affairs system, is seen as a logical choice thanks to his deep expertise in European Affairs.
• VPM & Minister of Energy Denys Shmyhal – a long-lasting member of the government who retained his prior position; known for bureaucratic skills and systematic approach to management.
• Minister of Finance Serhii Marchenko – another retention, likely as an assurance for international partners that Ukraine’s financial and fiscal policy will remain unchanged.
The reshuffle also reorganized the Cabinet by splitting the previously created ‘mega ministries’, namely:
1) Ministry of Economy, Environment, and Agriculture became:
– Ministry of Economy and Environment; and
– Ministry of Agrarian Policy and Food;
2) Ministry for Communities, Territories and Infrastructure Development became:
– Ministry of Reconstruction, Infrastructure and Transport; and
– Ministry for Communities, Territories and Internally Displaced Persons.
The reshuffle remains incomplete as two key appointments under the President’s quota – Minister of Foreign Affairs and Minister of Defense – were not put to a vote by the Parliament. Acting Ministers/First Deputy Ministers will temporarily fill these roles until Parliament can vote for full-time replacements, which can happen no earlier than the week of August 17.
In addition, because of the reshuffle, key executive roles such as Ukraine’s Ambassador to the US and Head of the State Security Service remain in jeopardy; while some notable military commanders also resigned in protest over the reshuffle’s controversial nature (see the section below for details).
Political context
The reshuffle was an unexpected change, supposedly triggered by the urgent need to replace Ukraine’s Ambassador to the US amid possible anti-corruption controversy. Public justification also referenced the need to better prepare for a difficult winter, with an implied distrust toward ex-PM Svyrydenko to do so successfully.
However, the lack of transparency and discussion of the changes (both within Zelenskyy’s team and with the public) triggered mounting controversies, which threw a wrench into the reshuffle plans.
First, ex-PM Yuliia Svyrydenko refused the proposed role of US Ambassador, choosing to completely resign instead. This leaves one of Ukraine’s most important diplomatic positions vacant, despite the reshuffle.
Second, the decision to remove popular Minister of Defense Mykhailo Fedorov provoked public protests across all of Ukraine. Fedorov, seen as a reformer and the face of Ukraine’s digital transformation, was to be replaced by the Chief of National Police, known for his conservative approach to military command. The public interpreted the move as potential sabotage to ongoing military procurement reforms and corruption backsliding. Later media reports and statements from Fedorov also confirmed an ongoing conflict between the MoD and the Army’s Commander-in-Chief, Oleksandr Syrskyi.
Overall, the Parliament managed to appoint a new Prime Minister and most of the Cabinet, while the Ministry of Defense and Ministry of Foreign Affairs remain vacant. As of the time of writing, President Zelenskyy has not directly addressed the protests and the protesters’ demand to reinstate Fedorov as Minister of Defense (potentially also removing Oleksandr Syrskyi as Commander-in-Chief).
For what it’s worth, the new PM Serhii Koretskyi appears to be fairly well-liked by the business community, despite his lack of public administration experience. He does have significant corporate governance experience; however, credited with returning Ukraine’s unprofitable energy giants, Ukrnafta and Naftogaz, to profitability. At the same time, his Cabinet is unlikely to be any more independent than the outgoing one.
Policy expectations
During his inaugural speech, PM Serhiy Koretsky announced the new government’s priorities, including: meeting the needs of the Armed Forces, scaling up the military-industrial complex, preparing for the upcoming winter, supporting the population through social protection, and paying attention to the needs of frontline communities, internally displaced persons, and veterans.
The Prime Minister explained that for economic recovery, access to capital through an accessible credit system is vital for the future development of businesses, and therefore for overcoming the shortage of human resources and creating conditions attractive enough for the return of those who have left Ukraine.
Separately, Koretsky stressed that one of the state’s priorities will remain the country’s future integration into the European Union, as this is a constitutional priority of Ukraine and the “historical mission of the current generation.”
Political trends to watch
The latest reshuffle revealed Zelenskyy’s deeply flawed and chaotic management style, which some say suggests a preference toward political loyalty above effective governance. In addition, it effectively rebalanced the various interest groups within the Government and Army, most notably: 1) modern vs Soviet style leadership; 2) military vs civilian wings at security agencies – in favor of the latter, in both cases.
With the reshuffle effectively incomplete, as well as the power shift not set in stone, businesses active in Ukraine should watch for the following political trends:
– Mykhailo Fedorov’s next steps: i.e., whether the bridges between President Zelenskyy and ex Minister of Defense Mykhailo Fedorov remain definitively burnt. If they do, the President will gain a new, powerful opposition figure with significant media and social media presence.
– Military service reform: One of Zelenskyy’s major criticisms of Fedorov was the lack of progress on the military service and conscription reform. Some say that a decision to appoint a more politically loyal Minister may mean a shift toward more aggressive conscription, with the new Minister taking the public responsibility for it. If true, this would mean reduced deferment opportunities for business as well as overall downward pressure on Ukraine’s economy.
– Commander-in-Chief’s dismissal: One of the protesters’ demands was for the dismissal of Syrskyi in favor of a more progressive figure. The decision to keep Syrskyi would signify a choice of vertical control over modernization. It could also precipitate further public protests, especially if coupled with intensified forced conscription.
– Pressure on business: The so-called ‘civilian wing’ of the State Security Service is often associated with unlawful pressure on businesses. It’s worth watching whether the new appointments will remain temporary in nature or signify a tectonic shift in Ukraine’s approach to business relations.
– International allies’ reaction: Initial statements from Ukraine’s allies also sounded surprised by the reshuffle, so there are potential concerns about the state of continued cooperation in both financing and defense. Whether the new Cabinet is able to quickly reassure/win back trust remains to be seen.
