Parliament Appoints Regions-Dominated Cabinet.

Parliament late on Friday appointed a full Cabinet of Ministers dominated by Prime Minister Viktor Yanukovich’s Regions party and returnees from his 2002-2004 cabinet, but also including allies of President Viktor Yushchenko and a few non-party compromise figures. However, Yushchenko’s Our Ukraine bloc is thinly represented and it remains unclear whether it will be in the majority coalition. The cabinet was endorsed by 269 of parliament’s 450 MPs, including solid votes from the Regions, Socialist and Communist factions and 34 out of 80 Our Ukraine MPs. The most important appointments included Nikolai Azarov (Regions) as first deputy prime minister and finance minister; Andry Klyuyev (Regions, co-owner of Ukrpodshypnik) as deputy prime minister for energy; Yuri Boiko (2002-2004 chairman of Naftogaz, ally of Dmytro Firtash/RosUkrEnergo) as energy minister; Anatoly Holovko (former deputy governor of Zaporizhya, ally of Konstantin Grigoryshyn/Sumy Frunze et al) as industry minister; Volodymyr Makukha (former ambassador to Japan, compromise figure) as economy minister. Although there are no Communist ministers, they remain formally in the majority coalition for now, as last week’s agreement between the Regions, Socialist and Our Ukraine factions to form a new “Coalition of National Unity” has not yet been formally implemented. Tom Warner: With Yanukovich and his allies holding most of the important positions, this Cabinet will have very similar policies to his previous cabinet in 2002-2004. Mykola Azarov will be the brains of the Regions party’s economic program, and he is already actively pushing his agenda of a restoration of special economic zones and higher import tariffs. Azarov will be particularly influential in trade policy and we expect to him to revive the stalled talks on a Common Economic Area with Russia, Belarus and Kazakhstan. Although Yanukovich and Regions agreed in last week’s “Universal of National Unity” agreement to adopt all laws necessary to join the World Trade Organization by the end of 2006, we see 2008 as a more realistic target for WTO entry. There are no strong voices for liberal economics in the Cabinet, and much will depend on how strongly Yushchenko will be able to influence economic policy from outside. One of the biggest surprises is the appearance of Yuri Boiko, whose appointment makes it clear that his ally Dmytro Firtash, the Moscow-based Ukrainian businessman behind RosUkrEnergo, will remain the key player in the gas market. The other surprise was the non-appearance of Petro Poroshenko, who was earlier tipped to be first deputy prime minister. Poroshenko and several of his allies did not vote for Yanukovich or his cabinet, and it remains unclear whether he will cooperate with the new Cabinet or try to join up with the popular but politically weak opposition headed by Yulia Tymoshenko. We will issue a more detailed report on the new Cabinet later today.