Something’s Rotten in the State of Ukraine; International aid groups grow impatient with the government.

(Bloomberg – bloomberg.com – Leonid Ragozin – February 18, 2016)

Two years have passed since a popular uprising in Kiev toppled a Russia-backed regime in Ukraine. The glory of that people power moment has faded, and Western supporters are losing patience with the government as corruption hampers efforts to jump-start the economy. The gross domestic product of the war-plagued country contracted 10.5 percent in 2015. Inflation reached 43 percent. On Feb. 10, International Monetary Fund Managing Director Christine Lagarde expressed concern “about Ukraine’s slow progress in improving governance and fighting corruption.” She said it would be hard to keep financing Ukraine in the absence of real change.

On Feb. 3, 10 Western ambassadors also called on Ukrainian leaders to “set aside their parochial differences” and crack down on corruption. The statement was prompted by the resignation of reformist Economy Minister Aivaras Abromavicius, a Lithuanian who assumed Ukrainian citizenship to join the government in 2014. He said “actions aimed at paralyzing reforms” triggered his resignation. He pointed a finger at Ihor Kononenko, the senior legislator of President Petro Poroshenko’s party in Parliament and Poroshenko’s former business partner. Kononenko had engineered the appointment of a close associate to the post of Abromavicius’s deputy without telling the minister, according to text messages released by Abromavicius.

Investigative journalist Serhiy Leschenko, a Parliament member, wrote online that Kononenko was trying to get his man into the Economy Ministry so he could stop Abromavicius from reforming a state-run company unofficially controlled by the president’s allies. In an e-mail, Kononenko said he wouldn’t comment pending an investigation into Abromavicius’s allegations. To address voter anger, on Feb. 16, Poroshenko asked for the resignation of his prosecutor-general, Viktor Shokin, who was widely disliked for failing to root out corruption.

Ordinary Ukrainians’ wrath is aimed primarily at Prime Minister Arseniy Yatsenyuk. Eighty-two percent disapprove of the job he’s doing, according to a recent poll by the International Republican Institute, a Washington nonprofit.

On Feb. 16, Yatsenyuk narrowly survived a no-confidence vote in Parliament after Poroshenko called for a “full reset” of the government. Opponents blame the prime minister for hampering reforms and accuse his allies of corruption. “Ukraine is the same kleptocracy as it was before the people ousted the previous leaders,” says Yegor Sobolev, who heads Ukraine’s parliamentary committee on corruption.

Poroshenko and Yatsenyuk do have achievements they can point to. Police reform is under way, and the government procurement process has become more transparent. The new National Anti-Corruption Bureau is investigating high-profile cases, including Abromavicius’s accusations.

Vladislav Burda, who owns a chain of stores that sell goods for children, says the system is rife with corruption. Without radical reform and a sustained war on corruption, IMF loans are useless, he says. “Before the revolution, everyone used to feed one family,” he says-that of ousted President Viktor Yanukovych. “But now there are many actors eager to milk businesses.”

Legislator Sobolev says that former Georgian President Mikheil Saakashvili, now governor of Ukraine’s Odessa region, would be a better prime minister than Yatsenyuk. Saakashvili, who’s credited with institutional reforms in Georgia, is one of Ukraine’s two most popular politicians, according to polls. The other is Lviv’s mayor, Andriy Sadovy, who heads the liberal Samopomych party, of which Sobolev is a member.

In December, Saakashvili accused Prime Minister Yatsenyuk and his ministers of blocking reforms. During a meeting, Interior Minister Arsen Avakov, a target of corruption allegations in the media, yelled invectives at Odessa’s governor and hurled a glass of water at him. Saakashvili’s fans in Ukraine-mainly political activists, advocates of a free-market economy, and various MPs and journalists-are gradually coalescing into a political movement. They’re calling for parliamentary elections as soon as possible.

The bottom line: Ukraine has imposed some reforms, but they aren’t deep or effective enough to reinvigorate the contracting economy.

Article ©2016 Bloomberg L.P. All Rights Reserved. Article also appeared at bloomberg.com/news/articles/2016-02-18/something-s-rotten-in-the-state-of-ukraine