New Ukraine PM brings energy expertise as defence ouster signals graft risk
The appointment of seasoned energy executive Serhii Koretskyi as prime minister is overshadowed by the abrupt dismissal of anti-graft Defence Minister Mykhailo Fedorov, exposing deep institutional risks as Ukraine prepares to deploy €60bn in EU defence loans.
Ukraine has appointed Serhii Koretskyi, a former oil trader and veteran executive of state energy giants Ukrnafta and Naftogaz, as its new prime minister. However, the positive signal of installing a market-savvy technocrat was immediately undermined by the abrupt dismissal of Defence Minister Mykhailo Fedorov.
Koretskyi is widely viewed as an apolitical manager with no political affiliations. His elevation suggests President Volodymyr Zelenskiy is prioritizing resilience in the energy sector ahead of an anticipated heavy Russian bombardment this winter. He joins current Energy Minister Denys Shmyhal as another pragmatic, private-sector-oriented appointment in the cabinet.
The firing of Fedorov is a far more troubling development for international backers. Fedorov was reportedly Zelenskiy’s initial top choice for prime minister but was ousted following intense pressure from the military lobby. Commander-in-Chief Oleksandr Syrskyi, a Soviet-trained career soldier, had clashed repeatedly with the minister.
Before his dismissal, Fedorov detailed a sweeping modernisation of the military. In a parting tweet, he noted that he "Fundamentally overhauled the procurement system," while drone interception rates rose to 91% and cruise missile interception hit 87%. He also cited contracting Patriot missiles, procuring Gripen fighter jets, and securing $40bn in partner support.
The crucial question for investors is why an effective corruption fighter was removed as massive funds arrive. Ukraine is deploying a €90bn EU loan, with roughly €30bn earmarked for defence spending this year and an equal amount next year. This dwarfs the €100mn energy sector kickback scandal that recently saw former Energy Minister Herman Halushchenko arrested.
In that energy scandal, Halushchenko was accused of stealing funds meant to protect 70 critical 750kV substations. He posted $3.3mn in bail to secure his release. Meanwhile, Volodymyr Kudrytskyi, the former head of Ukrenergo who actually raised $1.5bn and successfully fortified the grid, was pushed out and faces separate corruption charges.
The contrast highlights a system where competent managers are marginalised while entrenched interests profit. The fallout has sparked a second wave of anti-government demonstrations, echoing July protests over anti-graft rollbacks. For creditors underwriting Ukraine’s defence and reconstruction, the ouster raises serious red flags about institutional oversight ahead of massive capital inflows.
