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September 6, 2024Original Analysis

Half of Zelensky’s Cabinet Is Resigning. What’s Next for the War-Torn Country?

Out: Foreign minister, two vice premiers, three ministers, a Presidential Office official, and the head of the State Property fund. 

In: Ukraine’s “victory plan.”

“Autumn will be extremely important for Ukraine,” Ukrainian President Volodymir Zelensky said in a televised address. “And our state institutions should be configured so that Ukraine achieves all the results that we need–for all of us.”

Ukraine’s leadership has been marked by steady turnover since the war began, but the mass exodus of multiple wartime officials within hours of each other has sparked international curiosity. With more than half Zelensky’s Cabinet staff booked for reshuffling, many wonder: Why now? And why them?

Foreign Minister Dmytro Kuleba is the highest-ranking official to tender his resignation, which awaits parliamentary approval. He has become one of the most recognizable faces of Ukrainian diplomacy during his time in office, traveling across the globe to broker supply deals and form alliances with Western countries. Rumors of his dismissal were swirling as early as last August, but Kuleba said at the time that he wasn’t worried about the possibility of losing his position.

“I work, no job is permanent, and I’m totally calm about everything,” he said. “I said at the very beginning that I would leave under two circumstances: the first is if the president asks me to do it. The second is if I get into some fundamental contradiction with foreign policy and don’t consider it possible to work with it.”

Kuleba’s resignation and those of his fellow officials–which many say are de facto dismissals–have come without much public explanation. Despite this, analysts say the changes were heavily foreshadowed.

“[The president’s office] wanted to do this last fall, then in December, then in May,” Mykola Davydiuk, a Ukrainian political scientist, told CNN. “The West can’t criticize [Zelensky] now because they have a lot of domestic issues to deal with–the U.S. election, election trouble in Germany and France.”

No turnover is expected at the presidential level, though Zelensky’s term expired earlier this year. Ukrainian law stipulates that presidential elections cannot be held under martial law, which has been in effect by Zelensky’s order since 2022. Many Ukrainians have viewed this marginal stability with a sense of relief.

“It’s impossible to hold elections during the war when millions of our citizens are abroad or internally displaced,” Olena Shulyak, MP, told the BBC last year when the elections were canceled. “We can’t  guarantee security to our citizens, [and] our soldiers … cannot vote or be nominated as candidates.”

With experts deeming it impossible to hold free and fair elections during wartime, Zelensky’s only strategy to change the country’s political course is to reappoint key officials. For now, it remains unclear whether ousted officials will receive new appointments, or whether their tenure in the government is over for good. New appointees could be revealed this week.

Alongside the governmental changes, Zelensky has promised to share a four-part “victory plan” with U.S. President Joe Biden. In an exclusive interview with NBC, Zelensky said the new strategy is aimed at ending the war and involves holding Russian territory seized in its incursion last month. The Ukrainian president withheld further information, noting that surprise has been key to his most successful military operations.

“We did not inform anyone,” Zelensky said of the incursion, which U.S. officials said was executed without their knowledge. “And it’s not the question of lack of trust … I shrunk to the maximum the circle of people who knew about this operation.”

According to Russian officials, any hopes for peace in the region were dashed the day Ukraine entered its territory–a sentiment that will only be exacerbated if Ukraine continues to occupy the country. That means there’s no end in sight to the war that has already dragged on for more than two years.

“There could be negotiations between Russia and Ukraine, but the gulf between the sides is large,” said James Goldgeier, professor and expert on U.S.-NATO-Russia relations. Without NATO support, he added, “Ukraine will not deter future Russian attacks credibly, and thus endless instability will persist along whatever border emerges between Russia and Ukraine.”

The Ukrainian governmental reorganization should serve as a warning for a fresh wave of aggression, which will further destabilize the region. Investors can expect supply chain hitches for primary eastern European exports, including timber, vehicle parts, petroleum products, and gold. Shortages will echo into the prices of related goods, forecasting more inflation in the U.S. economy.

If the U.S. removes restrictions on the weapons it has given Ukraine, as Zelensky has repeatedly urged, relations between the U.S. and Russia will be further soured. This could also affect trade with Russia’s informal ally, China, and hike the prices of cheaply manufactured consumer goods.

Amid this international crisis, experts have some advice for consumers: Go for gold.

“Our preferred near-term long is gold,” Goldman Sachs analysts wrote this week. “It remains our preferred hedge against geopolitical and financial risks.”

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