UKRAINE FINANCE MINISTER RESIGNS

UNCLAS KYIV 000295 SENSITIVE SIPDIS DEPT FOR EUR/UMB, EEB/OMA E.O. 12958: N/A TAGS: EFIN ECON ETRD PREL PGOV XH UP SUBJECT: UKRAINE FINANCE MINISTER RESIGNS REF: KYIV 227 Sensitive but Unclassified. Not for Internet or Distribution Outside the USG. ¶1. (SBU) Summary. Ukraine's Finance Minister Viktor Pynzenyk abruptly resigned on February 12. As announced on the Ministry of Finance website and confirmed by Pynzenyk's special assistant, Pynzenyk did not "see any sense" in staying on "without influence" in the government. His assistant stated that Pynzenyk's professional views did not coincide with the GOU's economic policies, particularly on the budget. Pynzenyk's replacement is due to be announced next week, in what many expect to be a broad reshuffling in the Cabinet. End summary. ¶2. (SBU) Minister Pynzenyk announced the decision to quit his post on February 12, citing the fact that he had become "hostage to politics." Pynzenyk's special assistant Ivan Yurik told us on February 12 that Pynzenyk did not "see any sense" in staying on in the government, as he had been isolated on an imposed "sick leave" since the leak of his classified note to PM Yulia Tymoshenko on the dire state of Ukraine's economy and finances (reftel). The letter had caused a "scandal that the Minister never intended," according to Yurik, whereafter "Pynzenyk was used in political games." ¶3. (SBU) Even before the leaked letter was published on January 27, Pynzenyk had been on the sidelines of GOU anti- crisis decision-making. Dating back to early December 2008, the Minister and his assistant have told us repeatedly that Pynzenyk was cut out of dealings with the IMF on implementation of the Stand-By Agreement, on the Rada and Cabinet's budget deliberations, and on the GOU's efforts to devise mechanisms for bank recapitalization and liquidation. ¶4. (SBU) According to Yurik, there is a sense of relief in the Ministry. Officials have been demoralized by their lack of a formal role in the government, without even a nominal "decision maker" to influence policy. First Deputy (and now Acting) Finance Minister Igor Umansky had sought to avoid tough choices during the past two weeks, Yurik implied, delegating recent Ministry negotiations with the IMF to Yurik. An imminent Cabinet reshuffle next week may yield an "unpredicatable" result, said Yurik. ¶5. (SBU) Comment. The announcement of Pynzenyk's resignation comes as no surprise, given that the Minister had already been stripped of his authority. With the release of his 24-page letter and his subsequent two week hospitalization, Pynzenyk's days were considered numbered by most Kyiv analysts. Nonetheless, as his resignation announcement suggests, we have noted that Pynzenyk was "always guided by principles, such as a balanced budget." His drive to do the right thing, combined with an anxiety- driven temperament, may have been his undoing. End comment. TAYLOR