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Mergers and acquisitions: Would Zelensky slim down some ministries?

Author : Natalia Lebed

Zelensky’s Cabinet of Ministers has not yet been formed, the names of the ministers are largely undefined, an economic development strategy has not been written
14:44, 12 August 2019

Volodymyr Zelensky
Open source

Zelensky’s Cabinet of Ministers has not yet been formed, the names of the ministers are largely undefined, an economic development strategy has not been written, but the President’s team is already planning to slim down some ministries. Moreover, people who are far from the government speak of such innovations. For example, Oleksiy Honcharuk, the deputy head of the presidential office.

According to him, Zelensky is working to reduce the number of ministries in order to make the Cabinet "as pragmatic as possible." For this purpose, the Ministry of Information Policy, created under Poroshenko’s rule, is eliminated.

The "old" departments might be downsized or merged. National State and Defense Council (NSDC) Secretary Oleksandr Danyliuk offers to merge the Ministry of Economic Development and Trade with the Ministry of Finance. He also offers to unite the Ministry of Health and the Ministry of Social Policy. Because, according to his logic, healthcare is also a social function, which means that it must be accountable to one department.

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In the history of independent Ukraine, the number of ministries ranged from 16 to 20. At the beginning of the formation of the state, there were more of them were, and during the premiership of Yushchenko and Kinakh, there was the smallest number of them. Now we have 19 ministries.

Three of them were created during Poroshenko’s rule – Ministry of Informational Policy, Ministry of Veterans Affairs, and the Ministry of Temporarily Occupied Territories.

The fate of the latter, by the way, is still unclear. But, experts say, these departments would stay unchanged not to provoke image losses. But it is necessary to balance political, as well as economic risks.

Andriy Zablovsky, the chairman of the Council of Entrepreneurs under the Cabinet of Ministers, recalls that reorganization does not always bring benefits in terms of efficiency: “Before uniting the bodies, one needs to understand if there are duplicate functions. Therefore, it is necessary to carry out an audit in order to find out whether the creation of a new body is reasonable.

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Finally, does it make sense to complete the reform that has already begun, for example, the creation of directorates in ministries. Therefore, there must be some continuity," he says in an interview.

Version number 1: save the state budget

"As a result of the unification of the ministries, the staff will be reduced, which means that it will be possible to reduce red-tape. The relations between the state-citizen and state-entrepreneur levels will be simplified, it will enable the authorities to perform primarily service functions," Andriy Novak, Chairman of the Committee of Economists of Ukraine, notes.

However, he adds, this is only a draft of the future Cabinet. "The unification of the ministries is the only idea and not the final version of the roadmap," Novak is convinced.

 “It is quite possible to unite the Ministry of Regional Development and Trade with the Ministry of Public Utilities. By the way, the Ministry of Infrastructure could also be also joined,” he adds.

"We can talk about the option of uniting the Ministries of Veterans and Occupied Territories. The problems of these ministries are close. Given the Russian aggression and the fact that the issue is socially sensitive because it concerns both Donbas veterans and internally displaced persons, a separate ministry could exist, but there is no need to have two departments,” Novak states.

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When answering the question about the likely timing of the reorganization of departments, the expert predicts that interested people will keep within a minimum period of time. “Apparently, they want to do everything pretty quickly with the new president, so they probably won’t start audits before the merger of the ministries, because everything will stretch for too long,” he says.

Version number 2: playing with the mood of society

Bogdan Petrenko, the director of the Ukrainian Institute for the Study of Extremism, interprets the events somewhat differently. From his point of view, this is just populism.

“This is definitely a game of people’s desire to see as few officials as possible. Hence, by the way, there is talk about the unification of parliamentary committees. All this is caused not so much by heavy economic calculations, but by the need to play along with certain public moods,” he assures.

He is convinced of one more thing: all talks about reformatting ministries are premature because there is as yet no final idea about the power vertical and the perspectives of those who would shape it. "At present, there is still no clear distribution of ministries between members of the one-party coalition and between different parliamentary groups.

But when such a separation occurs, then, I think, there will be a strong desire to create several more additional institutions. After all, there are a lot of those who are eager to lead them, and, obviously, in order to satisfy every whim, new structures would be created," our interlocutor says.

The issue of sharing the offices and the posts "can be elegantly circumvented by creating departments or other structures of lesser importance, which would have similar or even greater powers and will not be subordinated to the ministries."

“In this context, for example, one can reflect on whether Ukrzaliznytsia state railways is a separate resource, or is it under the Ministry of Transport and so on," Petrenko notes.

"The Ministry of Occupied Territories will remain, since Zelensky’s policy is aimed at returning these territories, and the reduction of the department will play against Zelensky, reducing his public support. He will leave this ministry for his own rating," Petrenko is convinced.

Version number 3: meeting the needs of the oligarchs

Everything that is done in Ukraine is done primarily for the benefit of its individual "owners," and not for the society as a whole.

“Any reformatting of the government (especially with regard to the industrial and economic bloc) requires discerning the interests of oligarchic groups that would be camouflaged under the issue of cutting costs. That is, they will serve this “dish” under the guise of creating a new quality of power. This is how I would treat the initiatives of the new president and his team," political analyst Yevhen Bulavka notes.

He adds that he does not trust the sources of information that say about merging the ministries are not that trustworthy.

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“Recently, we have witnessed quite a few opposing or multi-directional statements, in particular, voiced by some competent people. These are just discussions on various topics – this is what we have, and this is our current political atmosphere when irresponsibility of statements becomes the norm, and the consequences of such "stuffing" into public space are not even analyzed."

“The social media with which Zelensky’s team got used to communicating with people played a cruel joke with them: the controversy became completely frivolous. Unfortunately, this style of communication has become usual for power cabinets. And the speakers who make such statements are more likely to attract attention and thus raise their personal ratings,” the expert says.

“Until the government is formed, or at least the prime minister is appointed, it’s too early to talk about the architecture of the new Cabinet. Moreover, we live in such conditions when the latest information should not be taken from statements of the NSDC secretary or other civil servants, but from private interviews with Igor Kolomoysky," he summarizes.

Version number 4: keeping up the tradition

“Any new Ukrainian government begins with shuffling the ministries,” financial analyst Oleksiy Kushch says. “Successful countries develop a strategy first and then select resources for it. But for us, everything is exactly the opposite: there is a set of people, for whom we need to create jobs, and then a strategy is developed. The authorities are now busy with this.”

Responding to a remark about whether Zelensky’s team is trying to save the state budget, Kushch replies as follows: “There will be no real savings. Usually, the staff is not being slimmed, but the vacancies are.

And this order of things very rarely affects economic performance. And if we talk about the merger of the two ministries, some of the people who really worked in the Ministry of Healthcare will simply go to work in the Ministry of Social Policy or vice versa. And the savings will be very conditional."

“In addition, uniting of these ministries is rather ridiculous. Why? Because, according to the Constitution, Ukraine is a social state, where, for example, combating poverty is one of the key tasks.

In our country, where, I would say, social frustration takes place, where socially destructive processes take place, it is too early to merge the ministries. And mixing social function with healthcare is also not worth it. All this ultimately leads to the social "uprisings" that we observe in the elections."

Oleksiy Kushch puts forward another version of why the president of Ukraine needed to enlarge the ministries: “Most likely, Zelensky has few specialists who could take on social work.

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Because showmen, IT specialists, and photographers are clearly not able to handle the problems of disabled people and pensioners. Libertarianism simply crosses out this. And in order to hide this fact, they act in such a simple way. They put on a good face. "

The expert is also convinced that not all the current structures should be liquidated or reformatted. “I also used to think that we had too many absurd post-Soviet ministries. But later, having studied the experience of the other countries, I came to the conclusion that some of their ministries would also cause criticism and rejection among the Ukrainians.

What's important here? A system of ministries should be developed for a specific state development strategy. We need a kind of matrix or skeleton.

By the way, the example of the merging of the Ministry of Social Policy and the Department of Health is tracing paper from the United States. But the social problems of the United States and Ukraine are completely different."

In conclusion, Kushch notes: “The key mistake of Zelensky or his significant disadvantage is that until now a comprehensive program of reforms for the next five years has not been presented.

He should have developed a broad program, a kind of roadmap, ten or more key directions, ten main points of economic growth in order to solve the problem of poverty.

I am quite skeptical about everything that Zelensky voiced as he has not presented such a strategy."

Does the new Ukrainian government recognize it? We would see it this autumn.

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