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Volodymyr Zelensky: Servant of the People?

Volodymyr Zelensky: Servant of the People?

Ukraine
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Before being elected President of Ukraine last May, Volodymyr Zelensky had virtually no experience in public office. Despite his inexperience – or perhaps because of it – over 73% of the electorate concluded that the comedian and entertainer was the right man to replace Petro Poroshenko, the previous President, and now Zelensky finds himself, at 41, leading an entire nation.

Life Imitates Art

Volodymyr Zelensky was born in 1978 to an engineer mother and a cybernetics and computer hardware professor father. He holds a degree in law from the Kryvyi Rih Institute of Economics at the Kryvyi Rih National University, but he never practiced law.

“His story began as a stand-up comedian in various comedy shows,” says Avellum Co-Managing Partner Mykola Stetsenko, “and one of those shows evolved into a very popular production.” That show, called Servant of the People, ran for three years and starred Zelensky in a prophetic role. According to Stetsenko, strikingly, “the show was about a high school teacher who ends up becoming the President of Ukraine and deals with all of the country’s problems.”

“The main character in the show, which Zelensky portrayed, goes on a rant about how corrupt the country is and how badly it’s managed,” remembers Graham Conlon, Managing Partner of CMS Cameron McKenna Nabarro Olswang in Ukraine. “In the show, the rant goes viral overnight and he gets elected to office rather accidentally. Once President, he enacts reforms that change the country.” Conlon reflects. “Little did we know that, sometime later, Zelensky would be in the exact same position in real life.”

Servant of the People was viewed widely in Ukraine, with episodes posted on YouTube and available on Netflix. “The TV depicted Zelensky as a reasonable, patriotic, and ethical man,” says Stetsenko. “He spoke to a lot of people’s core values and, consequently, a lot of people believed that he was the right choice to lead the country in real life. The traits of the character and the man got comingled.”

Stetsenko says that the show helped Zelensky develop a reputation as a straight shooter. According to him, it seemed that “people took to this kind of talk, to having somebody completely outside of politics calling things the way they were.” Zelensky took his success, and that reputation, to heart. “He said that he was so successful in business and that he thought it was time he did something good for the country,” Stetsenko recalls. “He was well connected to a lot of people in the Government back then and he had the support of the business elites and the oligarchs – so the idea that he should run gathered a lot of traction really fast.”

“All of a sudden, after the Servant of the People became so popular, everybody was talking about him running, which caught me by surprise,” says Dentons Partner Adam Mycyk. “To be honest, I never really assumed that he had a realistic chance of winning, but it seems to be the case that a lot of folks misjudged how unpopular Poroshenko was – which became very apparent on election day.”

“I think that everything started back in 2015 when Zelensky and his friends saw the positive reaction of the public to the show,” says Vladimir Sayenko, Partner at Sayenko Kharenko, though he notes that “Zelenksy himself says that he made the decision [to run] much later, in 2018.”

For whatever reason, Zelensky’s role as an outsider without a real track record in politics helped him (as it had a similar political novice in the United States several years earlier). “Opinion polls quickly showed that people were fed up with the old breed of politicians and demanded radical changes,” Sayenko adds. “Society quickly became polarized, and people voted against candidates that they despised, rather than for a candidate that they thought to be fit for the role. Zelensky managed to play on these sentiments very well. His campaign was all about emotions.”

In the weeks leading up to election day Zelensky was given significant exposure by the Ukrainian media. “He clearly had the support of the major TV channels, he had a smart approach to campaigning on social media, and Servant of the People aired on the 1+1 channel all the time,” Stetsenko recalls. Capitalizing on his popularity, he says, Zelensky initiated some “new moves” for the Ukrainian political arena, such as proposing and then participating in the first live presidential debate in the country’s history.

The People Speak

On April 21, 2019, Zelensky won a second round of voting, beating Poroshenko in a landslide. “The people, ordinary citizens, were ecstatic – but the overall reaction was a bit less enthusiastic,” reports Stetsenko, who notes that parts of the country’s business community remained skeptical about Zelensky’s fitness for the role. “He had no experience in politics,” Stetsenko points out, “and he still had not, at the time, articulated his political goals and affiliations. Nobody knew his masterplan – or even if he had one!”

“I think he is generally a capable and a smart guy, but he is not an expert in state administration, macro-economy, or the political process,” agrees Olexiy Soshenko, Managing Partner of Redcliffe and Partners in Kyiv. Still, Soshenko notes, despite President Zelensky’s relative inexperience, he gets substantial expert help from his advisors.

Mycyk agrees, stating that the new administration “seems to have a young, energetic team – you can clearly see from some of them that they’re serious, methodical, and have a good approach.” According to Mycyk, this team composition sends out a positive signal when it comes to reforms, and he points to a recent digitalization initiative as a great example of this. “There’s a concept of a country on a smartphone – digital passports, driving licenses, and the like – being completely digital, backed by a blockchain, all with the aim of combating corruption and making things more transparent overall, especially when dealing with government officials.” Mycyk feels that, even though making this happen may be a tall order, it clearly signals a proper direction.

And indeed, Sayenko reports, “so far, the business community appears to be generally satisfied with the liberal statements coming from Zelensky and his team. The elections were very civilized, with no major incidents reported and the transition of power was smooth. The absence of significant public protests, a stable currency, adequate GDP growth – all contribute to the overall positive atmosphere.”

This sense of an administration able to get things done seems to have transalted well to all aspects of President Zelensky’s political presence – on July 21, 2019, less than three months after winning the presidency, his political party, also named Servant of the People, won a commanding 254 out of 450 seats in the Parliament, putting Zelensky in a strong position, both executively and legislatively, to enact change in the country.

Moving Forward at Speed

The first thing President Zelensky’s administration did, after winning a majority in the Parliament, was to move forward with an aggressive legislative agenda. “Quite a few good laws were adopted, even though I hoped for a bit more on this front,” says Stetsenko. “But it’s good that this administration finished some things that the previous one started.” Stetsenko points particularly to the creation of an effective legislative framework for concessions and privatizations of Ukrainian companies. Additionally, he says, “Zelensky is pushing quite hard to enact land reform and lift the moratorium on selling private land.”

“Ukraine is one of the very few countries in the world that has a ban on selling land – releasing it will increase the GDP and also finally provide people with a wider scale of use of their property,” Conlon explains. “People can then use the land as security for bank loans. It will open up the economy.” Of course, nothing comes without some controversy, and Conlon concedes that, “there is, on the other hand, some nervousness among the population about this opening the door to foreigners acquiring a lot of land – and hence it is looking likely that foreigners will be excluded from buying, at least initially.”

And the possibility of seeing significant amounts of Ukrainian land scooped up by foreigners, unsurprisingly, did not slip by the opposition. “Yulia Tymoshenko, the former Prime Minister and one of the most vocal opponents to President Zelensky, is furious about the land reform,” Stetsenko says. “And she’s quite firmly expressing this in the Parliament.”

Nonetheless, it appears that President Zelensky is likely to go through with the reform in this sector – and a number of others. “He, together with a few stakeholders, is in a position of almost total control of all branches of power,” says Soshenko, “and he is tackling a number of tasks.” Soshenko reports that Zelensky’s initiatives are already bearing fruit, with, as an example, the country’s new Law on Concessions allowing foreign capital to move in. “The new law was well received and we already have two pilot concession projects for a couple of seaports; we have a number of grain terminals expanding; the land reform is coming; there are several privatizations for big companies announced – most notably the Odessa Portside Plant.” Still, he warns, it will take more than good intentions. “The previous government attempted to privatize Odessa Portside and a number of other objects, but failed twice – perhaps this administration will succeed.”

Soshenko reports that the current administration’s attempt to lessen the country’s dependence on Russian minerals is moving forward as well. “The Government is looking to increase the exploration of structurally-owned national resources, including oil and gas, and some steps have been taken in this direction. Currently the government is negotiating production-sharing agreements with a number of investors,” he says. “Additionally, a process to digitalize this area has begun – online licensing regimes for deposits have been introduced, and a new law regarding production sharing agreements was announced as well.”

And Stetsenko adds that “the Zelensky administration is talking a lot about infrastructure projects – especially connecting the roads around Kyiv to Odesa and connecting Lviv to the EU network of highways – if these come to pass it will be a huge boost to the economy.”

In their entirety, the administration’s initiatives have been well received by the business community in Ukraine, Sayenko says. That community, he says, “does not expect any special treatment from the government – it just wants less interference, less pressure.” And Zelensky’s proposals could do just that. “Everything is driven by the need to attract additional investment into the country’s economy. As long as these priorities remain unchanged, I am sure that the overall business atmosphere will continue to be very positive,” Sayenko says.

Ultimately, early reviews of the former comedian’s first steps as President are encouraging. “Volodymyr Zelensky is doing a much better job than I expected him to,” Sayenko says, though he notes that Zelensky’s “lack of relevant experience is an issue.” Still, he admits to some optimism. “Most of the messages from Zelensky sound very positive and encouraging. The number of initiatives that come from the ‘servants of the people’ is also impressive and they appear to be driven by a sincere desire to improve the country.”

Inheriting a Challenge

Among Zelensky’s mandates is to complete the comprehensive reform of Ukraine’s judiciary and legal system that began several years ago. “From the business perspective one of the big priorities has, for a long time now, been the establishment of the rule of law and the efficacy of the court system – that’s the biggest problem to tackle,” says Mycyk.

“The most important thing is improving the rule of law,” agrees Conlon. “If the administration can achieve that, foreign investors will come in even greater numbers than now and the investment appetite for the country will grow.” He cautions that, in order to move the country forward, some difficult decisions will need to be made – which may not be so popular with the Ukrainian people in the short term. But, he says, “if President Zelensky follows through on the rule of law reform – the potential upside is huge.”

Soshenko notes that “big business, at least the majority of it, feels some optimism surrounding these reforms and they will try to support the administration’s efforts.” He feels that the overall expunging of corruption is critical and and is sure that the “majority of responsible businesses will cooperate.”

Not everyone is on board with all the proposals, of course. “The judicial reform may be the true hot potato for this administration,” Stetsenko says. He notes that one element of Zelensky’s program involves capping Supreme Court judges’ salaries. “It can be debated if this reduction is a good thing in the long run,” Stetsenko says, “as it would seem to be the case that people of Ukraine universally believe that higher salaries mean more independence and less corruption.” In addition, he says, “the Ukrainian Constitutional Court held these proposals to be unconstitutional.”

Sayenko says he’s not enthusiastic about the proposal either. “As a lawyer, I cannot support the reduction of the number of judges in the Supreme Court of Ukraine and a decrease of their salaries.”

Others, though they applaud the effort, concede they remain someowhat skeptical about the likelihood of success. “The administration may be setting itself up for failure,” Mycyk says. “There’s still a fair amount of oligarch rule in politics and the economy, and strong influence – if only a perception of it. It is of the utmost importance for a country to have strong governance. Increased reliance on political and personal connections distorts the market, which has been the case here for a long time, unfortunately.”

So Far So Good

A little under a year into his first term, the general consensus seems to be that President Zelensky is not only afloat, but – all things considered – doing well. The reform packages are well underway, and the business community seems to view him positively.

“I can’t say I was really optimistic when he got elected, but then again I didn’t know who he was and what he stood for,” smiles Mycyk. “But I like listening to him. He’s a straightforward person and he seems to know what needs to be done. Even with goals set as high as the ones he set out – there’s a pretty good chance that with the right team and strong support he’ll have a good first term, maybe even a second one!”

Still, Mycyk notes that it may be a bit early to judge, given the fact that the parliamentary elections were a little over six months ago. “There was a feeling of flying without a flight plan, in the beginning, with President Zelensky announcing something in the ballpark of USD 50 billion in FDI in the first five years along with 40% growth.” Mycyk describes this as a tall order, even with a detailed and worked-out plan. “Given these targets, some skepticism may be valid, but only time will tell.”

“He’s still polling quite high – not around 73% he had when he won, but well over 50%,” Stetsenko reports. “He is very patriotic and very pro-EU – which seems to go along the same lines as the old administrations’ direction of governing. With a solid parliamentary majority, President Zelensky is in much more control than Poroshenko ever was.” This unusual support, Stetsenko says, makes President Zelensky one of the strongest presidents in Ukrainian history.

Soshenko agrees that most of the maneuvers the President has made so far demonstrate a real business sense. “He did run a proper business before he got elected, so he does have the necessary experience to make common sense calls in this aspect. He’s interested in attracting foreign investors, in growing the GDP – and he may well be well-equipped to achieve these goals.”

Conlon agrees. “President Zelensky needs to continue to secure the support of his electorate going forward. If the country brings in foreign investors, as the administration hopes will be the case, the people will feel the difference.” Higher wages, infrastructure developments, and a stronger rule of law are all, he says, “building blocks, which are linked, so it’s a good thing this Administration seems to be taking them seriously.”

Of course, things are changing quickly and dramatically in Ukraine, as around the world, as economies struggle to adapt to the growing global health crisis. The effect on Zelensky’s administration and ability to affect the kinds of change he has promised is, ultimately, unclear. Never, it appears, has “only time will tell” been less of a cliché and more of a truism. Ukraine, like the rest of the world, is holding its breath.

This Article was originally published in Issue 7.3 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

 

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