Two blows are dealt to Ukrainian leader’s clean-government image

A delegation from the International Monetary Fund left Ukraine on Friday without announcing a lending agreement, dealing President Volodymyr Zelenskiy a setback in his efforts to win a quick endorsement from foreign donors for his clean government pledges.

The inconclusive IMF talks coincided Friday with the resignation of the most senior official handling national security in Zelenskiy’s administration, reportedly over worries of corrupt influence at senior levels of government.

It wasn’t clear that either development related directly to the centre-stage role of the Ukrainian president, a former comedian, in the impeachment inquiry getting underway in the US Congress. Committees in the House are investigating whether President Donald Trump abused his powers in asking Zelenskiy for a political “favour” — an investigation in Ukraine into leading Democrats.

Trump’s personal lawyer, Rudy Giuliani, had for months pressured members of Zelenskiy’s administration to pursue investigations into former Vice President Joe Biden and his son Hunter Biden, who was on the board of an energy company owned by a Ukrainian oligarch.

Giuliani’s outreach had focused mostly on a faction in Zelenskiy’s government that includes his friends from the comedy industry and the associates of a Ukrainian billionaire, Ihor Kolomoisky, a former business partner of Zelenskiy’s.

This group also appeared to be at the center of the day’s IMF developments in Kyiv.

Ukraine has been seeking the IMF’s continued commitment to bailing out its struggling economy, which has seen only a weak recovery after a deep post-revolution recession. The potential funding is significant: A previous four-year IMF lending program had promised $17 billion.

But the IMF mission, which links its lending to the government’s action against corruption, issued a glum statement Friday, noting “shortcomings in the legal framework, pervasive corruption, and large parts of the economy dominated by inefficient state-owned enterprises or by oligarchs.”

The statement also included a dry reference to what Ukrainian news reports said were worries about influence over government by Kolomoisky.

The delegation said it had conveyed to Ukrainian officials “the need to make every effort to minimize the fiscal costs of bank resolutions.” The Ukrainian government in 2016 nationalized a bank co-owned by Kolomoisky in a bailout that cost $5.6 billion.

Still, Kolomoisky enjoys wide popular support in Ukraine for financing a pro-government militia, Dnepr 1, in the early days of the war with Russian-backed separatists. The militia helped hold the battle lines before the regular army could deploy enough troops equipped with weapons and winter clothing to keep the separatists at bay.

Liga, a Ukrainian news outlet, reported that the IMF talks broke down over concerns about Kolomoisky’s clout in Zelenskiy’s government. A phone number used previously to reach Kolomoisky went unanswered Friday.

The departure of the senior security official, Oleksandr Danylyuk, was also a blow to Zelenskiy’s image as a champion of good government. Danylyuk, the director of Ukraine’s National Security Council, had resigned a ministerial post in a previous Ukrainian government, citing corruption as the reason.

Danylyuk handed in his resignation before Zelenskiy departed for this week’s UN General Assembly in New York, a government statement said. The timing suggested that he did not resign in response to this week’s release of notes from the July phone conversation in which Trump asked the Ukrainian leader for a “favour.”

Novoye Vremya, a Ukrainian political affairs magazine, reported that Danylyuk resigned to protest efforts by Kolomoisky and a former lawyer for the billionaire, Andriy Bohdan, to influence bank regulation policy and gain sway over the National Security Council. Bohdan is now Zelenskiy’s chief of staff.

Danylyuk had accompanied Andriy Yermak, a presidential aide, on a trip to Washington in July to meet with State Department and national security officials. Yermak had been the main point of contact for Giuliani in the Zelenskiy government.

Yermak later called Giuliani to discuss investigation of the Bidens in a conversation arranged by Kurt Volker, the US envoy to settlement talks in the Ukraine war. There is no indication that Danylyuk discussed the investigations.

Before Volker made that introduction, two associates of Giuliani had tried another route: They sought to contact Zelenskiy by first meeting Kolomoisky.

“They came to me in Israel and told me how I needed to communicate with Zelenskiy,” Kolomoisky said in an interview with Radio Liberty. “I said I have nothing to do with Zelenskiy. After that, they disappeared. And this is where all these provocations began with Giuliani.”

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