How defense minister Umerov begins to reform his department – expert interview

Yuriy Nikolov, editor of the Nashi Hroshi (Our Money) project, explained in an interview with NV Radio on Sept. 18 how Ukraine’s newly-appointed Defense Minister Rustem Umerov begins his work to change the ministry.

NV: What do you think about these layoffs in the Defense Ministry? Does this mean the prayers have been heard?

Nikolov: It looks like the new minister comes in and gradually begins to clean out the holdovers which have accumulated in the ministry, from top to bottom. Yes, of course, we’ll see who will take the place of the dismissed so that any [former Deputy Defense Minister Denys] Sharapov doesn’t turn out to be there. But the steps are logical so far.

NV: You’re talking about Sharapov. Daria Kaleniuk from the Anti-Corruption Action Center spoke on our broadcast that it was Mr. Sharapov who was responsible for all rear logistics.

By the way, she called him a former business partner of Head of the President’s Office Andriy Yermak. And she called for his immediate dismissal. What could have gone wrong with Sharapov?

Nikolov: You’ve mentioned everything that was wrong with him. You know, he absolutely defended and actually built the procurement system that proved its effectiveness in terms of squandering state funds. What else can be added about him? If you position yourself as part of the problem, the attitude is appropriate. And the fact that he is Yermak’s business partner is an established and legal fact.

NV: And what kind of business did they have?

Nikolov: They had a joint company. It dealt with investments, real estate. It was sometime in the 2010s. They even had a company of four [partners]. Yermak’s father was a business partner there for a while, as well as Russian citizen Rakhamim Emanuilov, with a Soviet background. He worked in Iran during Soviet times. He worked as an attaché in Afghanistan. You know, it seems to me that the distance from the KGB to such a position is very short.

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And now he is a member of the Valdai Club, where [Russian dictator Vladimir] Putin [ranted] about how he would take over the world in 10 days. Therefore, let’s say, Yermak has a rather interesting business entourage. Therefore, when we say Sharapov or someone like him, we mean some old-new Yermak’s partner or, relatively speaking, the head of the President’s Office, will continue to exert influence on the [cash] flows in this sector.

NV: But from what we understand, from the procedure by which deputy defense ministers are appointed, it’s not the competence of the minister himself. What can we predict here? First, what are the risks? Secondly, how can the new minister, Rustem Umerov, influence the appointment of people he’s comfortable working with?

Nikolov: To be honest, I don’t know. We now have a country with a completely distorted legal system. Our President’s Office actually influences all personnel appointments in Ukraine. In defiance of the Verkhovna Rada [Ukraine’s parliament] and the Cabinet of Ministers. Therefore, you know, I don’t even want to delve into these legal details, who should stamp which visa when appointing a particular person. It’s absolutely clear that even a “mouse won’t slip by” without the President’s Office. So, let’s see which mice can slip by and whether the President’s Office can change its traditional practice of selecting loyalists rather than professionals.

NV: So maybe there are some obvious candidates that should be pointed out? The President’s Office also listens to us. Maybe you can advise something?

Nikolov: I definitely understand that I’m not the kind of person who would advise anyone since my advice can be a stop light for anyone. Therefore, no. As a media person, I will simply work to reveal who those people are. But I don’t really want to select or help select someone or, on the contrary, to dismiss them.

NV: Then let’s talk about the department which deals with military procurement. It’s about Mr. Arsen Zhumadilov who headed it. He’s a person who very successfully reformed medical procurement, where there was also terrible corruption.

Do we understand correctly that the agency remains on paper for now? That there is nothing to make it really work?

Nikolov: Yes. And most importantly, there is not even any money yet, since all the money that could be tendered, the entire budget has already been tendered in advance by the current Defense Ministry’s department. But so far, you know, there’s no disaster. I absolutely understand that the previous minister didn’t help to solve all the bureaucratic problems. Let’s see how the new minister will work with this.

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But I definitely understand that he needs time, as you can see that he’s getting into the swing of things and has only now come to the issue of his deputies. Therefore, in any case, it will take some time. I’m currently preparing a publication regarding the new purchase of bulletproof vests. It seems that the Defense Ministry has decided to raise the new purchase’s price by 10% compared to what it was just three months ago.

NV: That is, the bulletproof vests that can be purchased now are 10% more expensive than they were three months ago?

Nikolov: They were quoted 10% higher than the expected price. Yes, of course, I hope the prices will be reduced during the tender. But there are big questions even about the old June price. Are those bulletproof vests worth UAH 23,500 ($643), as it was? And let’s just say, there will be a lot of such questions. Zhumadilov will definitely not have an easy life there as he will often meet with the ministry’s contractors who occupied certain branches.

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Therefore, it will be difficult. But if we follow this path, we will definitely pass it. But if we don’t move, don’t change anything and regret that something will stop working, or everyone will see who we are, we shouldn’t fight corruption, we just need to talk less about it, we’ll simply preserve the previous procurement system.

NV: We can see that some deputy ministers were simply in the wrong place at the wrong time. For example, Vitaliy Deinega. He was fired after the first procurement scandal at the ministry.

He had nothing to do with rear support. He dealt with digitization. It is reported that all those who were dismissed will not be able to return to their positions. Why? Is it just to appoint all the new ones?

Nikolov: Yes, of course, all the new ones. As for Deinega. Honestly, I don’t know what kind of reform he managed to do, except that he broke what was being built before him. Unfortunately, I don’t know whether he became some reformer and did something. That is, once again, the question is not even about individual persons, but about the fact that a new minister is coming. And I’m sure he should introduce his new team so that we understand our strategic vision.

NV: Parallel news, which appeared just last week, that the Pentagon is creating a team to monitor the use of U.S. military aid.

And what does this mean for us? The fact that such a commission, a team from the Pentagon will arrive in Ukraine, what can it affect?

Nikolov: The only thing that lies on the surface is that a new additional bureaucratic element appears in relations with the United States. And maybe it will introduce some sticking points. Perhaps the Republicans are counting on this, so that, let’s say, not everything is as good as it was recently.

I’m pretty sure the United States still has bipartisan support for Ukraine in this whole story. Therefore, let’s put it this way, I don’t see a reason to be worried. Moreover, it’s not yet clear how this envoy will work. We have to physically see how it all happens.

NV: It seems to me that yesterday you published information that you had analyzed the 2024 draft budget. And you saw that the Infrastructure Ministry’s budget, which is currently headed by Oleksandr Kubrakov, has greatly decreased. It was UAH 119 billion ($3.2 billion), and now it’s UAH 39 billion ($1 billion).

NV: They plan to reduce it. Let me remind you this is a draft that has come out from the Cabinet of Ministers and has been submitted to the Verkhovna Rada. Therefore, everything can still change. They can send it back, add amendments. There is even such a nebulous story that even the Defense Ministry’s budget has been reduced. Of course, as you know, this is purely provisional, since the Defense Ministry will always get as much as is needs for the war. Therefore, there will be changes to the draft.

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I hope there will be similar changes in construction since the [infrastructure budget] reduction proposed there is so huge that it threatens to stop large projects that are really needed. I very often criticize local authorities for repairing the roads on some unnecessary streets. Relatively speaking, Kyiv’s central streets could survive even without replacing the cobblestones. Or without any new junctions in places where we can drive anyway.

But when it comes to large projects like repairing bridges, on which cars need to drive, because we understand that weapons are transported in different ways in our country, or the construction of protective covers at electrical substations. And when you understand that the intention to leave budget funds is much smaller than the cost of these projects, you have an absolutely logical question: why only Kubrakov’s budget was cut like that?

NV: I remember your publication that you find a political undertone there. <...> Our sources in the Defense Ministry confirm that Mr. Kubrakov and his team are treated differently in the President’s Office.

Sometimes everything is fine, and sometimes not. What conclusions can be drawn due to this constant tension among the country’s top officials?

Nikolov: The main conclusion I draw for myself is that, unfortunately, it seems that not everyone has understood that we haven’t won the war yet. And that someone has a lot of free time to engage in intrigue. What I really don’t want is exactly this. [Ukrainian President] Volodymyr Zelenskyy recently delivered a speech. I noticed he was in a black shirt for the first time [since Russia’s invasion]. No longer in khaki, but in black. And he warned that the war, unfortunately, will be long and difficult. And I also understand that the energy system will be attacked literally in a month, with all the resulting restrictions on electricity supply.

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And in this context, I absolutely don’t understand what these games are for. Therefore, let’s say, I have a similar appeal to local governors and mayors. For half a year, when I was describing their tenders, I kept shouting: what are you doing? Stadiums instead of drones? You must correctly use the taxes that you collect from military salaries. And there already almost one hundred and fifty billion hryvnias, if I’m not mistaken, which local budgets have collected from the assigned military [taxes] to these regions in a year and a half. But the war expenses from local budgets were very small.

And we constantly heard such cynical excuses that we must somehow live our lives, we cannot stop, the soldiers will come back, and we already have everything ready for them. And the consequence of this was the fact that in this very draft budget, the central government takes over this military income tax.

NV: It seems access to the president is the main resource now. Whoever has access, in principle, can solve some important issues. Whoever doesn’t have access will most likely become an outsider and his or her fate is unenviable.

Nikolov: The fact that the administrative resource in the form of access to the Supreme Commander-in-Chief became known in 2020, if I’m not mistaken. It somehow dragged on during the first half of the year, but it has become the only thing we are talking about since 2020. One of the most popular topics for talks and gossip among political journalists is who has this access now? And they constantly name a list of a handful of people. The list changes regularly.

It was recently reported that it was the infrastructure minister who had lost such a privilege as his own corridor to Zelenskyy. I’m not ready to conclude that this is the reason why his funding is being cut like this. We’ll have to wait for the adoption of the budget itself. It’s possible that they will find mechanisms to regulate these imbalances. If they aren’t found, some questions of political expediency will certainly arise.

NV: Your analysis regarding the possible reduction of the Infrastructure Ministry’s budget also states that Yermak is more friendly to Yuriy Holyk.

I have to remind who Yuriy Holyk is. First, he’s a businessman. He has never, if I’m not mistaken, held any official position. But he was called the coordinator of the Big Construction project before the full-scale invasion. What do we know about what role he’s playing now? Do you know anything about it?

Nikolov: Last year, he appeared in joint photos of the meeting with Yermak. The following people were in the photos: Yermak, the prime minister, and Yermak’s deputies, including Holyk. This is a recorded photo fact. He appeared in journalistic reports as one of those people who takes part in some strategic meetings. I mean not about the war, but regarding some political issues.

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That is, he continued to act as an advisor. Later, when, let’s say, he got on the journalistic radar once again, when the National Anti-Corruption Bureau of Ukraine had questions for him last autumn, he disappeared from the public radar. Although not publicly, sources from the President’s Office say that he continues to appear there and has a certain influence on the formation of opinion on certain issues.

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