Ukraine economy minister resigns over state corruption

Aivaras Abromavicius attends the "Europa-Forum" on April 1, 2015 in Berlin (AFP Photo/Tobias Schwarz) (AFP)

Kiev (AFP) - Ukraine's economy minister abruptly tendered his resignation Wednesday citing overwhelming corruption that stifled his efforts to enact measures essential to returning growth to the cash-strapped state.

Aivaras Abromavicius's shock departure laid bare divisions within pro-Western President Petro Poroshenko's cabinet and highlighted the uphill battle the former Soviet nation faces in accepting transparent practises needed to join the EU.

"Today, I made the decision to submit my resignation from the post of minister of Ukraine's economic development and trade," the Lithuanian-born minister told a hastily-arranged press conference.

"The reason is the sharp escalation in efforts to block systemic and important reforms."

Abromavicius and US-born Finance Minister Natalie Jaresko were appointed in December 2014 as part of Poroshenko's efforts to bring new blood into the war-shattered country's attempts to return to growth.

His resignation was greeted with instant alarm by Ukraine's foreign investor and diplomatic communities.

US Ambassador Geoffrey Pyatt called Abromavicius "one of the Ukrainian government's great champions of reform".

"It is important that Ukraine's leaders set aside their parochial differences, put the vested interests that have hindered the country's progress for decades squarely in the past, and press forward on vital reforms," Pyatt and eight other Western ambassadors added in a joint statement.

Concorde Capital economist Oleksandr Parashchiy called the announcement "a worrying signal for foreign investors".

The resignation comes in the midst of growing parliamentary displeasure with Poroshenko's cabinet and infighting between political interests tied to business tycoons.

- Fight over money -

Abromavicius alleged that powerful figures were "trying to establish control over financial resources -- first and foremost those of the Naftogaz (state oil and energy company) and the defence industry."

"I refuse to work in such a system," the 40-year-old former fund manager said.

The graft-riven country of about 40 million has been one of Europe's worst economic performers since winning independence in 1991.

A January report by Transparency International showed Ukraine ranking 130th out of 168 countries and territories surveyed for its 2015 Corruption Perceptions Index.

Abromavicius's resignation must still be approved by parliament at a hearing that may come as early as Thursday.

Poroshenko himself failed to mention Abromavicius during morning remarks devoted to the appointment of a new regional governor.

But Kiev media reports said he met Abromavicius later Wednesday in a seeming effort to change his minister's mind.

- Bitter rivalries -

Some of Kiev's more acrimonious battles have been waged between billionaires linked to Poroshenko and those of Prime Minister Arseniy Yatsenyuk -- a hawkish leader who delivered passionate speeches atop barricades during Ukraine's 2014 pro-Western revolt.

The two worked closely and in seeming harmony in the heady days that followed Ukraine's break from Russia's historic embrace.

But bitter rivalries have since surfaced and Yatsenyuk's own place in the government no longer suits some of the more outspoken members of the president's team.

Mikheil Saakashvili -- a former Georgian president who fought a brief 2008 war with Russia and currently serves as governor of Ukraine's historic Odessa region -- said he spoke to Abromavicius on Tuesday and knew that something was wrong.

"Aivaras and I both work on the council of state enterprise reforms," Saakashvili wrote on Facebook.

"And I would like to confirm that all our initiatives aimed at changing the leaders of state enterprises are being blocked personally by the prime minister at the suggestion of Igor Kononenko," he claimed.

Kononenko is deputy head of Poroshenko's parliamentary faction and known in the Ukrainian media as a "grey cardinal" who implements the president's political will.

His alleged ties to the prime minister underscore the complexities of Ukraine's shaky ruling elite.

Yatsenyuk himself accused the economy minister of "running from the field of battle" and falling under the influence of those "who want to bring back the past".