Ukraine's Iron Lady

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Shortly before Viktor Yushchenko announced that Yuliya Tymoshenko was his choice for Prime Minister, Ukraine's President met with his controversial political ally and gave her a simple message. Tymoshenko would have to work hard to overcome the dislike and mistrust many Ukrainians, especially in the Russian-speaking east, feel for her; she'd have to win over opposing factions in parliament; and she'd have to do it on her own. "Viktor told her she must address people's concerns, starting with parliament," says Oleg Rybachuk, a Yushchenko confidant and M.P. for his Our Ukraine party who will soon become Deputy Prime Minister for European Integration. "That is Yuliya's headache. It's not just about getting the minimum number of votes needed to win; it's about getting broad support for the future."

That support may not be so easy to come by. Though parliament is expected to confirm her nomination this week, Tymoshenko remains a divisive figure. Roman Bezsmertny, another M.P. for Our Ukraine, which is allied with Tymoshenko's party, called on fellow deputies to vote against her because he believes she'll foster disunity — despite the fact that it was her forceful rhetoric that helped keep demonstrators' spirits high during the street protests that brought Yushchenko to power. But questions persist about her integrity, especially about how she acquired her wealth — estimated in the hundreds of millions of dollars — during the mid-1990s when she ran the country's largest energy firm. Last September, at the height of Ukraine's presidential campaign, Russian military prosecutors placed Tymoshenko on Interpol's wanted list, alleging that in 1996-97 she bribed Russian officers to buy Ukrainian goods from her companies. Tymoshenko dismisses those charges as a Kremlin trick, and she's convinced she can help heal the country's political rifts. "Russia now understands that Ukraine chooses its presidents and appoints its prime ministers itself," Tymoshenko told Time. "I'm sure I'll handle the job well."

She's certainly got all the right qualifications. Charismatic, competent and driven, Tymoshenko, 44, trained as an economist and launched one of the first Gorbachev-era cooperatives — a chain of videotape-rental shops — in the late 1980s. In 1995 she founded United Energy Systems of Ukraine, which managed Russian natural-gas supplies to energy-starved Ukraine under then-Prime Minister Pavlo Lazarenko. Her ties to Lazarenko, who was arrested in 1999 and convicted last year in the U.S. on charges of corruption and money laundering, first raised suspicions about her business dealings.

When Yushchenko himself was Prime Minister in 1999, he made Tymoshenko his deputy. She forced reluctant businesses to pay cash for energy supplies but when she tried to take on the country's coal industry in Jan. 2001, President Leonid Kuchma fired her. She subsequently spent 42 days in jail on charges of bribery, money laundering, corruption and abuse of power, all of which were eventually thrown out of court. Indeed, no evidence of any of these crimes was ever produced. "So either it just wasn't true or she's the smartest person in the world," says a source close to Yushchenko. In 1999, Tymoshenko launched her own opposition party and last year joined forces with Yushchenko's Our Ukraine.

Having clawed her way back into power, does Tymoshenko have a political agenda? While Yushchenko focuses on diplomacy — last week at the World Economic Forum in Davos, Switzerland, he promised the "swiftest possible attainment" of the criteria for E.U. membership — Tymoshenko says economic reform is still her priority. "Taxes must become inevitable but affordable," she says. "I want to say to people, 'Forget about paying bribes. Pay taxes.'" Yushchenko is confident that public doubts about her will fade; "Time is the best doctor," he said in Davos. People "must feel that life is becoming steadier," Tymoshenko says. "Once they acquire new opportunities, all the fears and confrontations will collapse like a house of cards."

Still, some Western businessmen are uneasy. "Yushchenko will be flying around the world and she'll be running things in Kiev — and running circles around him," says one U.S. exec who does a lot of business in Ukraine. Even so, Yushchenko is likely to be much better off with Tymoshenko heading his Cabinet rather than leading the opposition.