May 30, 2014 / 10:42 AM / in 3 years

Anxious Ukrainians hope Poroshenko can keep them from abyss

KIEV (Reuters) - Winning the election was the easy part. Now the real work starts for Petro Poroshenko, and few Ukrainians have any illusions about the scale of the challenge facing their new president.

Armed pro-Russian separatists watch as barricades are removed from outside the regional administration building in the east Ukrainian city of Donetsk May 29, 2014. REUTERS/Maxim Zmeyev

The burly billionaire businessman who built a vast fortune selling cakes and sweets has inherited a bitter legacy - a wrecked economy, rampant corruption, armed rebellion in eastern Ukraine and hostility from giant neighbor Russia.

His unprecedented feat of winning the election in Sunday’s first round of voting granted him an unexpectedly strong mandate, but it also reflected the anxiety among Ukrainians who took to heart his pre-election appeal for a swift victory because the country might otherwise face disaster.

The mood in Kiev, an elegant and normally relaxed city of 3 million people famed for its golden-domed churches and leafy boulevards, is somber but also cautiously hopeful - not least in the business community that broadly backs Poroshenko.

“I would say people are anxious for positive news. And they don’t want just declarations; they really want to see actions that can change perceptions of Ukraine,” said Anna Derevyanko, chief executive of the European Business Association in Kiev.

“Of course the situation is tough, indeed unprecedented. We have never had such problems in the east and south ... But if there is a change in the mindset of the people governing the country, if they tackle corruption and promote the rule of law, I would say there would be chances of improvement.”

Ukraine’s economy, still dominated by smokestack heavy industry and reliant on exports of steel and grain 23 years after Kiev won its independence from Moscow, is expected to shrink by 3 percent this year as it reels from political turmoil and Russia’s annexation of the Black Sea Crimea region in March.

“BACK FROM THE ABYSS”

Kiev clinched a $17 billion bailout with the International Monetary Fund to avoid defaulting on its large debt load, and Poroshenko has vowed to sign a deal on closer economic ties with the European Union after his inauguration, expected on June 7.

For Vadim Bodayev, vice president of agricultural firm Agro Generation, salvation now lies with entrepreneurs who must be freed from the shackles of venal, intrusive bureaucrats.

“Only business can provide a way out. We need to review all the rules of the game,” he said, calling for cuts in the number of bureaucrats and higher salaries for those who remain so they will be less tempted to demand bribes from job-creating firms.

Ukrainians believe that Poroshenko, as a successful self-made businessman, understands such things very well.

“He is rich enough already, so we hope he will not steal from the state coffers,” added Katya, 22, a student.

Ukrainians say they can no longer be fobbed off with fine words about reform, uttered by successive leaders in the past two decades, including Viktor Yanukovich, the Moscow-backed president ousted by street protests in February and whose name is now synonymous for many with sleaze and abuse of power.

Some Ukrainians doubt Poroshenko, for all his resounding election win, will get much done without the active cooperation of the ‘oligarchs’, the fabulously wealthy individuals who wield clout in parliament and own much of the economy.

“Changing things will depend more on the oligarchs than on the president,” said Tatyana Nesterenko, 43, owner of a beauty salon in Kiev.

“The oligarchs have influence on investment and on the laws. If they don’t squirrel away their cash and instead invest it in companies and develop them, people will have work.”

Poroshenko, himself an oligarch with an estimated fortune of $1.3 billion who has served in various governments, including Yanukovich‘s, has promised to sell most of his business empire.

For all the anxiety over the economy, Ukrainians agree that his most urgent task is ending the revolt by pro-Russian separatists in eastern Ukraine, the country’s industrial heartland, which accounts for 15 percent of national output.

“Yes, he has to rescue the economy, create jobs and revive factories. But first of all comes peace in the east,” said Inna Kulikova, 48, a public sector worker strolling in central Kiev.

Above Kiev’s main Khreshchatyk boulevard hangs a huge blue and yellow Ukrainian flag with the slogan “One Country” - a forlorn aspiration after Russia’s seizure of Crimea and the revolt in eastern Ukraine.

The flag hangs on the side of a shopping mall, under renovation, which is owned by Ukraine’s richest man, Rinat Akhmetov, a steel and mining magnate who will be one of the people Poroshenko will have to deal with in his future plans.

Television channels, which also show the flag and slogan, beam images of carnage from the eastern city of Donetsk, where government forces are battling pro-Russian rebels who reject Kiev’s authority and have appealed to Moscow to intervene.

“What is happening there is very worrying,” said Bodayev.

At least 50 rebels were killed in a big government offensive this week, some of them Russian nationals who came to eastern Ukraine to defend its mainly Russian-speaking population against what they call a “fascist junta” in Kiev. On Thursday, rebels shot down an army helicopter, killing 14 Ukrainian servicemen.

In Kiev itself, the ‘tent city’ erected by anti-Yanukovich protesters last winter still stands, despite the election of a new president, and the 1,000 or so people still camped out there have vowed to keep up their pro-democracy vigil for now.

“We want to see how the new president turns out. We are not ready to leave yet. I want to live in a normal country. I want Ukraine to be independent,” said Lidia Kravchuk, 18, speaking in the heavily accented Russian of her native western Ukraine.

The pressure on Poroshenko is huge, and the stakes could not be higher for this sprawling country of 45 million people pitched on the crossroads between central Europe and Russia.

“I understand this is all very, very difficult,” said Kulikova, the public sector worker. “But he is the president now, and so he has to deal with all these problems. But I am an optimist - we have stepped back from the abyss.”

Additional reporting by Natalia Zinets, writing by Gareth Jones; Editing by Richard Balmforth and Will Waterman

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