Pavlo Sheremeta failed to form a team and to conduct the reforms he promised

Over half a year Pavlo Sheremeta failed to bring new reforms to fruition

Photo: Konstantin Melnitsky

Sheremeta was short one week of retaining his half-year tenure as Ukraine’s Minister of Economic Development and Trade. His candidacy and the entire composite of the Cabinet of Ministers was approved by the Verkhovna Rada on February 27. After the meeting of the government on August 20 Sheremeta tendered his resignation, which now the parliament must accept and approve. «For six months I fought hard with ‘yesterday’s’ people and the other day a number of red lines were crossed to which I must react,» the ex-minister commented on his resignation.

He explained that the reason for this decision was «violation of administrative principles and the resolution about the minister personally submitting the candidature of his deputies». The minister got wound up by the fact that Premier Arseniy Yatsenyuk proposed the appointment of the Government’s Commissioner on European Integration Valeriy Pyatnytskiy as the Trade Representative of Ukraine and Deputy Minister of Economic Development and Trade.

As a result all ministers with the exception of Sheremeta supported this initiative. Sheremeta proposed Yuriy Buts for this position, which Yatsenyuk refused to approve. «This most likely played the decisive role in the conflict between Sheremeta and Yatsenyuk. This situation flared up a long time ago,» a source of Capital in the government underscored.

Spokes in the wheels

In one of his first interviews as Minister of Economic Development Sheremeta said in five years Ukraine will be in the top ten of countries in terms of conducting business with a per capita GDP of US $10,000 and a 6% annual growth of the economy on average. For now, the merits of Sheremeta’s department are humble. The first thing that was done under the new minister was the revision of the law on state acquisitions. In April the document was passed by the parliament. Later the concept of the reform of tax legislation was drafted, though it did not garner the support of other ministries. The Ministry of Economic Development proposed lowering the VAT tax for settlements between taxpayers to 7% and between non-payers to 17%, reduce the rate of the single social contribution from 36.77% to 18% and merge all social security funds into one.

According to information the publication possesses, the Ministry of Finance and Ministry of Social Policy were against Sheremeta’s tax concept. Later Minister of Finance Oleksandr Shlapak fully assumed the initiative of drafting the concept and bills on tax reform, thereby alienating Sheremeta from the process.

Unfinished business

Sheremeta’s latest initiative was reform of regulatory policy. He presented the concept that would draw in UAH 300 bn by the year 2020. The document contains a thousand initiatives on deregulation, including those directed toward minimizing corruption in the national economy.

The proposals on reform also include the abrogation of licenses, approvals, certificates and other bureaucratic elements that obstruct the conducting of business. «Implementation of only 14 priority initiatives will lead to the liquidation of corrupt money by UAH 8-9 bn,» the press service of the Ministry of Economic Development reported.

Head of the Secretariat of the Council of Entrepreneurs under the Cabinet of Ministers Andriy Zablovskiy stated the work on drafting of this document was executed together with specialized associations and experts in the sphere. «Sheremeta listened to what members of the business sector had to say. He held many meetings with the business society. He understands their problems, which is why it was easy to speak with him on these issues,» says Zablovskiy.

At the same time, the interlocutor with Capital said Sheremeta did not have experience in bureaucratic work as he was «a new kid on the block» in the structure of the government body. In addition to that, over half a year the minister failed to bring in his people into the ministry’s apparatus and consequently was unable to fully control the work of the ministry and manage it. As a result, this had an impact on collaboration with other ministries.

Executive Director of the European Business Association Anna Derevyanko confirms that the ministry under Sheremeta became more open to business. «Perhaps he did not make decisive staff changes during his tenure, but as for decisions on business issues about which the EBA appealed to the Ministry of Economic Development, there was certain progress. This included technical regulation, certain elements of deregulation and protection of consumer rights,» Derevyanko believes.

Minister of the Cabinet of Ministers Ostap Semerak confirmed that the resignation of the minister has already been submitted to the parliament. It will remain there until September 2 when the people’s deputies convene at the next plenary session.

Meanwhile, Sheremeta said Deputy Minister Anatoliy Maksiuta will temporarily head the Ministry of Economic Development. The parliamentarians are somewhat surprised by the harsh decision of the minister. «If Sheremeta wants to see real changes in the country in the spheres of politics, economy and public relations, he should publicly and openly explain his move and tell about the circumstances that forced him to take such a step. Until I hear his argument, I am not prepared to vote for his resignation,» noted people’s deputy Pavlo Rozenko (UDAR).