The decree issued yesterday is a slap on the wrist for Prime Minister Yuliya Tymoshenko, one of his most radical allies to take power with Yushchenko's election following mass protests last year.
The presidential decree said that the government's administrative policy "does not correspond to the basis of a market economy." It also gave the Economy Ministry a week to rescind decisions setting prices on the oil market.
On the surface, the disagreements appear to only be about tactics. But some analysts say they could point to basic differences within the new government over where to take reforms from here.
Stuart Hensel of the London-based Economist Intelligence Unit (EIU) says the two politicians, Yushchenko and Tymoshenko, represent two different economic approaches and appeal to two different segments of the electorate.
"I think the two are trying definitely to capture different parts of the political spectrum in Ukraine," Hensel said. "I think Tymoshenko sees herself as a center-left politician. I mean [she] is much more willing to embrace some of these nonmarket solutions [and] to favor a greater degree of state involvement in the economy than is Yushchenko, who is much more of a center-right politician and, in that respect, there are some differences between the two."
Prices for gasoline and other fuel products in Ukraine rose by more than 10 percent last month. Tymoshenko says fuel shortages and rising energy prices are the result of what she calls "a plot" provoked by Russia. She says Russia is not happy with the outcome of the Ukrainian elections and has raised prices by 30 percent in order to "sabotage" Kyiv. The Ukrainian government has struggled to stabilize the situation by freezing fuel prices and banning fuel exports.
Meanwhile, Hensel says that disagreements also exist within the cabinet. "This just underlines the fact that the government is very much a heterogeneous coalition that includes a variety of different political forces – including [Tymoshenko’s first deputy, Anatoliy] Kinakh, including Tymoshenko supporters, including Yushchenko supporters, including backers of the Socialist Party," he said. "And I think the disagreements with Kinakh very much underline the friction that exist within the government on important policy issues."
This week, Tymoshenko announced that her deputy Kinakh, who criticized Tymoshenko's dealing with the oil crisis, might resign soon. Kinakh is the head of the Party of Industrialists and Entrepreneurs of Ukraine. He was a presidential candidate in the first round and supported Yushchenko in the second.
Hensel says inevitably there will be more disagreements and threats for resignation in the future.
Tatyana Stanovaya, a senior analyst at the Center for Political Technologies, a Moscow-based think tank, says differences between different fractions in the Ukrainian administration are serious and fundamental. "There is no consensus on the most burning and important problems, it is impossible to say that [Yushchenko's] team is united," she said.
Stanovaya says that the lack of unity comes from the very nature of the Orange Revolution, which brought politicians with different economic and political agendas to power. Stanovaya says the "revolutionary" situation made the coalition too combustible to be effective when difficult solutions need to be made.
"The system of forming the government itself was based on the contribution a politician made to the victory of the Orange Revolution. This system makes the authority ineffective because it is difficult for those politicians to find a common understanding," Stanovaya said.
Stanovaya says it is still difficult to predict when these differences will lead to a split among the former allies. Hensel, too, says it may be too early to suggest that there is a serious split between Yushchenko and Tymoshenko.
"I think both of them are very much still on the same page in terms of where they want to take Ukraine and what they think needs to be done to address the bad legacy left over from the Kuchma period," Hensel said.
Hensel says that there are still too many things that unite the people who came to power after the revolution for them to break ranks immediately. He says the main bonds are antipathy to the legacy of the former regime and a shared desire join European structures.