UPDATE 2-Ukraine government No.2 quits over reappointment of PM

Fri Dec 14, 2012 10:45am EST

Related Topics

* Resignation comes day after Azarov re-appointed

* Khoroshkovsky is influential oligarch

* Move points to divisions among supporters of Yanukovich

KIEV, Dec 14 (Reuters) - Ukraine's acting First Deputy Prime Minister Valery Khoroshkovsky resigned from the interim government on Friday in protest at Prime Minister Mykola Azarov's reappointment for a second term, his office said.

In a move that could indicate a rift among President Viktor Yanukovich's supporters, Khoroshkovsky blasted Azarov who was reappointed by parliament on Thursday amid an outcry from the opposition.

"Valery Khoroshkovsky considers this candidate (Azarov) incapable of carrying out economic reforms and defending our country's strategic course for European integration," his office said in a statement.

One of Azarov's early tasks will be to help negotiate a new stand-by programme from the International Monetary Fund. The current $15 billion package, which lapses at the end of the year, was in any case suspended in early 2011 largely because of Azarov's refusal to meet reforms requested by the Fund.

The unusually forthright comment by Khoroshkovsky, a wealthy and influential 43-year-old businessman with large stakes in media and metals, suggested he did not see Azarov as the person who could deliver on a deal with the Fund.

"I think (Khoroshkovsky's resignation) reveals deep divisions within the Regions camp, and suggests the ruling coalition could be fraught and more unstable than perhaps assumed," Standard Bank analyst Timothy Ash said in a note.

"I guess Khoroshkovsky, an oligarch in his own right, was hoping to get a more prominent reform position, and I think this suggest that he thinks Azarov is not capable of pushing an IMF reform agenda."

All government members, including Khoroshkovsky, have been working in an interim capacity following the formal resignation of the Azarov government on Dec. 3 following a parliamentary election.

Azarov has yet to announce the line-up of his new cabinet. The cabinet's press service said on Friday Khoroshkovsky had been informed he would not be reappointed.

"Khoroshkovsky had hoped Azarov would fail to secure parliament's approval, making him (Khoroshkovsky) acting prime minister," political analyst Volodymyr Fesenko said.

"He could also be playing a game where he pretends to be joining the ranks of (anti-Yanukovich) opposition in order to weaken the opposition before the presidential election" by draining support from anyone who tries to challenge Yanukovich.

Yanukovich has indicated he would seek a second five-year term in office in 2015. It is not clear who of the opposition politicians would challenge him.

Khoroshkovsky, an image-conscious fitness freak, served as head of the SBU state security service before being appointed No. 2 to Azarov and has also held the posts of finance minister, economy minister and head of the customs service in the past.

Analysts say he is close to Dmytro Firtash, one of Ukraine's major industrialists with interests in energy and chemicals who contributed to Yanukovich's 2010 presidential campaign.

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