• Minsk II & the Last Gasp of Old Europe: the ink on the agreement had not yet dried before the fighting resumed and the deadline for the withdrawal of heavy weaponry failed to be met. Wednesday brought news of Ukraine pulling back its forces from Debaltseve –one of the towns liberated in the summer anti-terrorism operation and the strategic rail link between the DPR and LPR. At this rate, it is unclear if any of the controversial provisions of Minsk II will ever be implemented and it appears likely that it will be disregarded as irreverently as the first Minsk Agreement from last September. Even if the heavy weaponry had been withdrawn, the cease fire implemented and Debaltseve still held by Ukrainian forces, the other provisions of the agreement give Ukrainians little hope for the future.
For the first time, the leaders of the so called Donetsk and Luhansk People’s Republics (DPR and LPR) are legitimized and given a role in Constitutional reform for Ukraine affecting the Donbass. The agreement stipulates that Ukraine must pass Constitutional changes to decentralize power to the local governments including “due account of the specific features of certain districts of the Donetsk and Luhansk regions coordinated with their representatives”. Local elections must be conducted in the Donbass as well but they must be “discussed and agreed together with representatives of the Donetsk and Luhansk regions within the framework of the Trilateral Contact Group”. Given that the composition of the Trilateral Contact Group includes the leaders of the DPR and LPR as well as Russia, there is no possibility of the elections being conducted in a manner that will produce pro-Ukrainian results. As a token gesture for European consumption, the agreement allows the OSCE (see “OSCE Outrages and Impotence” below) to supervise and monitor the elections. Given that the OSCE has failed to prevent bloodshed and effectively monitor the frontlines in the Donbass, they will be a useful fig leaf for elections conducted under Ukrainian law that will inevitably validate pro-Kremlin leaders. With more than one million refugees from the war in the Donbass, the remaining voters in the region are primarily pensioners (nostalgic for the Soviet Union) and those too poor and unable to move to Kyiv. These demographics, combined with the fact that the region gave Yanukovych 90.4% of the vote in the 2010 presidential election, offer no hope of electing local leaders who will be willing to work with Kyiv. An extra insurance provision, the agreement also prevents the Ukrainian Parliament from shortening the term of office for those elected in the Donbass local elections. Thus, now that the elections are required, they are guaranteed to produce pro-Kremlin leaders and will be blessed as democratic and representing the will of the people by the OSCE. No doubt someone at the Russian FSB is getting a promotion…
In addition to snookering the West on local elections in the Donbass, the Minsk Agreement appears to give Russia an opportunity to veto and/or amend provisions of the European Union Association Agreement – specifically relating to the Deep and Comprehensive Free Trade Agreement. Why the EU allowed a third party such a powerful privilege is incomprehensible. Minsk II was the last gasp of “Old Europe” (i.e. Germany and France) trying to pre-empt the US Congress from supplying the Ukrainians with lethal weapons. With the US Congress already talking about increasing the amount of lethal aid from the $100 million per year passed two months ago, to $1 billion this month, Merkel and Hollande forced Poroshenko’s hand on signing a bad agreement. Interestingly, polling last week showed that Ukrainians favored the anti-terrorism operation by a 53-37% margin. Minsk II was well intentioned – as most cease fires and peace treaties tend to be. However if the Russians will violate the 1987 INF Intermediate Range Missile Treaty with a nuclear superpower like the US, what hope does Ukraine have of getting the Russians to honor a mere cease fire? Given that Minsk II is already in “intensive care”, it’s time for President Obama to approve the weapons authorized by Congress. This is the only action that will allow Ukraine to maintain what is remaining of its territory and ultimately bring the conflict to an end.
• IMF Success: the good news last week, announced the same day as Minsk II, was that the IMF had agreed with the Ukrainian government on a record $40 billion loan package. In addition, the package will be “front loaded” as lobbied for by Finance Minister Natalie Jaresko. This means that Ukraine will receive as much as 60% of the total in the first year of the IMF portion of the package. This influx of money is expected in early March and will allow Ukraine to meet its’ debt obligations and avoid a default. Restructuring talks will continue until June with bond holders likely to accept lengthened payouts. The IMF package does come with strings attached such as the demand to accelerate reforms, steep increases in utility prices, and the requirement to free float the hryvna (not artificially prop it up as has been done for many years). These requirements will certainly cause at least short-term difficulties for average Ukrainians. However, just like a sweating out a fever, sometimes the patient has to get worse to kill the infection that is harming him/her. Credit goes to the Ukrainian government for having the courage to take the necessary remedies to fix the country’s economic and corruption diseases.
• OSCE Outrages & Impotence: the Minsk Agreement last week may have jeopardized Ukraine’s security, but it brought job security to the OSCE (Organization for Security and Cooperation in Europe) in the form of additional observers and an extended monitoring mandate. Under the agreement, the OSCE will continue to monitor the battlefront in the Donbass and receive more monitors to do so (read: more money). However the performance of the OSCE so far has left many Ukrainians less than satisfied. To date, the OSCE monitors have spent six months monitoring the “cease fire” while more than 1000 Ukrainians have been killed. In addition to failing to reach any concrete conclusions and/or preventing further bloodshed, OSCE monitors have allowed Russian backed terrorists to use their vehicles on multiple occasions, have been accused of collaborating with the Russians by sharing locations of Ukrainians forces, and have done a “serious inadequate” job of patrolling the more than 400 kilometer frontline by monitoring just two checkpoints – according to Daniel Baerm, the US Ambassador to the OSCE. The Ukrainian government has complained that 80% of the OSCE observers based in Mariupol are Russian citizens – many of which have ties to the FSB (successor to the KGB) and/or GRU (military intelligence). Last week brought additional outrage against the OSCE when Secretary General Lamberto Zannier told reporters in Dnipropetrovsk that his organization’s observers cannot identify Russian military personnel on Ukrainian territory. “We often see Russian fighters and Russian weapons [in Donbas], but we cannot say whether they are regular military personnel, if they do not tell us themselves.” Zannier added, “We are an unarmed civilian mission and cannot go into many places in Donetsk or Luhansk, because of security concerns”. This of course begs the question “why does the OSCE receive $160 billion annually from the US and Europeans if it’s so impotent?” To compare, the $160 billion annually of OSCE funding is four times the $40 billion IMF loan package for Ukraine – which is spread over four years. In the meantime, one can imagine the conversation when OSCE monitors meet an AK-47 toting Russian soldier in Donetsk:
OSCE Monitor: “Are you a Russian soldier?”
Russia Soldier: “Nyet”
OSCE Monitor: “Whew! Good to hear. Thank you for clarifying the matter. Please let us know if you see any”.
The OSCE is a classic example of an international organization founded to do a good thing, which became impotent by refusing to call a spade a spade. No doubt that with a weak world economy, the OSCE will have no problem filling the new monitoring jobs in the Donbass. However, those new hires should remember Dante’s words, that “the hottest places in Hell are reserved for those who, in times of great moral crisis, maintain their neutrality”.
• Prosecutor General Produces Shock: Viktor Shokin began his first days on the job by criticizing the poor investigation of the Maidan snipers and arresting former Regions Party faction leader Oleksandr Yefremov. Yefremov, believed to have a slew of ill gained assets littered from Luhansk to Las Vegas , was detained on suspicion of abuse of power under aggravating circumstances (later explained as inciting interethnic tensions). While it is highly likely that Yefremov has committed worse crimes, his arrest is the first of any high profile leader from Yanukovych’s close allies. Besides, no one cared that Al Capone was in prison just for tax fraud – they were simply happy that he was behind bars. In the same manner, a successful conviction of Yefremov by a Ukrainian court would be a much needed sacrifice to appease the public’s appetite for justice. However it should be remembered that Shokin is the fourth Ukrainian Prosecutor General in the last year and until he wins a conviction, everything is merely theater.
• Conform or be Cast Out: the first of what is likely to be many deputies were kicked out of their factions in Parliament last week. First, Serhiy Melnychuk was booted from the Radical Party faction for his participation in demonstrations against the Ministry of Defense relating to the government taking tighter control of the controversial Aidar battalion. Melnychuk was also sacked by a Parliamentary vote as the Vice Chairmanship of the Parliamentary Committee on National Security and Defense. Radical Party Leader Oleg Lyashko called Melnychuk’s actions “subversive” and noted that since he got into Parliament on the party list (rather than elected from a district), he was no longer welcome in the faction. While the action doesn’t bode well for internal party democracy, it is a leading indicator that Lyashko is remaining a loyal supporter of the government coalition.
Meanwhile, following her vote to approve Viktor Shokin as Prosecutor General, Samopomich’s Iryna Suslova was notified that she would be excluded from the Parliamentary faction. Suslova was sixth on the party list for Samopomich and the only person from her faction to vote in favor of Shokin. On the day of the vote, it appeared Shokin was a just another career apparatchik and unlikely to make any arrests as Prosecutor. Thus, Samopomich declined to endorse him. However, given the arrest of Yefremov days later, Suslova is look much smarter than her former Samopomich colleagues – at least for the moment.
The bigger issue is how strictly should party and/or factional discipline be exercised? In the US Senate, if a Republican voted for a Democrat Attorney General nominee, he/she would not be booted from the faction. In fact, outside of failing to vote for the party leader (Speaker, Majority Leader, etc), there are no “unpardonable” transgressions in the US Congress. In Ukraine however, expulsion from factions for any independent vote is a common occurrence. In 2007, the infamous “imperative mandate” was created to allow party leaders to expel Members of Parliament, and subsequently force them to give up their deputies’ mandate for not voting the party line on every single vote. It is hoped that as Parliament debates the election system for the October local elections, they will avoid dictatorial devices like the imperative mandate which have hampered Ukraine’s democratic development in the past.
• Georgian Wrestling Match: the appointment of Mikhail Saakashvili as Chairman of the Advisory International Council for Reforms put an end to speculation about the role the former Georgian President would play in the Poroshenko administration. Saakashvili, a divisive figure with an occasional authoritarian streak, has a clear record of achievement in reforming Georgia’s governmental structures. The appointment has three implications: 1) Poroshenko sees Saakashvili’s reforms in Georgia as something to be emulated in Ukraine; 2) Poroshenko wants to consolidate the entire anti-Russian world behind Ukraine as previously Saakashvili was the chief nemesis of the Kremlin; and 3) Poroshenko has sent the current Georgian government led by Premier Irakli Garibashvili (and de facto, Bidzina Ivanishvili) a clear message that he views their criminal allegations against Saakashvili as political posturing akin to Yanukovych’s charges against Tymoshenko. This is a clear blow to the new Georgian government’s attempts to prosecute Saakashvili. Polling in Georgia consistently shows Ukraine and the United States as their most trusted and respected allies. With both the US and Ukraine refusing to pay heed to the allegations against Saakashvili, it isolates the Georgian government internationally and sends signals to other key allies like Azerbaijan to do the same. Poroshenko has the luxury of Ukraine being Georgia’s third largest trading partner (whereas Georgia doesn’t crack the top ten of Ukraine’s biggest trading partners) to force the Garibashvili government to accept the decision. In response the Georgian government summoned the Ukrainian Ambassador in Tbilisi to the Foreign Ministry for an explanation. However, short of making an unpopular move into the arms of Russia (whom invaded Georgia in August 2008), there is little more that the Georgian government can do at this time. Thus, it was no surprise when the Georgian Foreign Ministry announced on Monday that a scheduled state visit to Ukraine by Premier Garibishvili will proceed as planned. In Georgia, wrestling is a popular sport in which one competitor tries to pin down the other. Thus, it would appear that in the contest over Saakashvili, that Poroshenko has pinned down Garibashvili to win the match.
• Moldovan Surprise: In a surprise announcement Wednesday, Chiril Gabiruci was nominated for Prime Minister by the Liberal Democrats following the failure of incumbent Prime Minister Iurie Leanca to secure the 51 votes needed to stay in office. Instead he received only the votes of his Liberal Democratic Party and their coalition partner the Democrats (42 total). Under Moldova’s Constitution, the Parliament can be dissolved and new elections called if it fails to elect a Premier on two votes. With just one vote remaining and the clock ticking (the Parliament has only till March 9 to elect a Premier), it appears the Communists will now provide the key votes to confirm Chiril Gabiruci. The 39 year old Gabiruci, ran Moldova’s Moldcell mobile phone company from 2008-2012 and until recently, Azerbaijan’s Azercell mobile provider before resigning two months ago. He is a newcomer to politics but is an in-law of former two term President Vladimir Voronin, who heads the Communist Party of Moldova. With Voronin refusing to give his factions’ votes for Leanca, and demanding a new candidate who was unscathed by politics, it appears Voronin now has a candidate his faction can vote for. Gabiruci needs just nine of the Communists 21 votes to be confirmed and Voronin can certainly provide that. However the appearance of heavy handed politics combined with nepotism may yet cause a rift in the Communist faction. For years the Communists have been divided between the true Communist ideologues and Voronin’s personal allies (typically capitalists). This may lead to the formation of a new “Social Democrat” faction in the Parliament led by Voronin and his supporters. In the process he would jettison the more Marxist members of Communist faction who then would likely go into opposition with the pro-Kremlin Socialists. This would give the new government a center-left ideology (and majority) as opposed to the center-right bent of the last few years, but allow it to continue its European path. The nationalist Liberals are also likely to stay in opposition as they have been fierce opponents of Voronin in the past. The next big drama in Moldovan politics will be the vote on Gabiruci and watching how many Communist votes he can muster. In the event Voronin maintains party discipline and provides 19 of his 21 votes for Gabiruci, it will also signal a likely change in the presidency next year (as 61 of 101 votes are required for Parliament to elect a President). Though Moldova is the poorest country in Europe, lately it is rich in political intrigue and that isn’t likely to change anytime soon.
Dates to Watch:
February 20: the one year anniversary of the murder of 76 protestors on the Maidan by snipers:
March 2: Next Scheduled Parliamentary Voting Session: don’t be surprised if they meet sooner though due to the need to ratify parts of the Minsk Agreement and other national security matters. Another Minsk II provision requires Parliament to adopt legislation within 30 days to specify the exact territories where the “special regime of local government” will be applied in the Donbass.
June: IMF Talks with Bondholders Completed: the record $40 IMF loan package for Ukraine includes $15 billion for debt restructuring. Due to the planned restructuring of Ukraine’s debts (mostly incurred under Yanukovych) in which maturities are likely to be lengthened, it is necessary to negotiate with bondholders over the exact terms. Most importantly, the IMF loan will pay off debts due to the Russia Federation which provide Putin with far more in political leverage than the interest rates they earn.
October 2015: National Local Elections for Mayor and City Council