• End of the Euromaidan Honeymoon: The Parliamentary dismissal of SBU Chief Valentin Nalyvaychenko at President Poroshenko’s insistence, marks the end of the Euromaidan honeymoon for Ukraine. While the marriage of pro-Western partners from civil society and government remains intact, the romantic era of Euromaidan is now officially over as daily realities set in. In many ways, it is comparable to President Yushchenko’s firing of Tymoshenko as Premier just eight months after his inauguration following the Orange Revolution. While Nalyvaychenko served 16 months in his return as Head of the SBU, his dismissal is a leading indicator of problems in the unity of the governmental coalition.
Immediately after Nalyvaychenko’s dismissal, “viola” – the corruption case against former Deputy Prosecutor Danylenko was closed by Viktor Shokin, the current Prosecutor General. Nalyvaychenko had alleged that Danylenko was the governmental “roof” for financial schemes related to the BRSM-Nafta oil depot which caught fire and killed five persons. The SBU Chief stated that the financial activities of the oil depot had resulted in losses of around $1 billion hryvnas (about $47 million US dollars) to the national budget over the last year. On June 16th, the State Fiscal Service began a pre-trial investigation into tax evasion by BRSM-Nafta. It is now rumored that Nalyvaychenko, who previously had a friendly relationship with Danylenko, may have intentionally or unintentionally been given incorrect information by the Interior Minister Avakov, who mixed up Danylenko with former Yanukovych Deputy Prosecutor Viktor Kudryavcev. Regardless, following Nalyvaychenko’s dismissal by Parliament, Poroshenko dismissed four top SBU deputies and announced that Vasyl Hrytsak would be the Acting Head of the Agency. Colonel-General Hrytsak had served as a Deputy Head under Nalyvaychenko.
Poroshenko’s desire to replace Nalyvaychenko with his own guy has been clear since he took office as President last May. Constitutionally, the appointment of the SBU Chief is the prerogative of the President, although Parliament must confirm and dismiss the appointee. However, Nalyvaychenko’s experience and performance in fighting Russian terrorism and espionage proved too valuable for the country. As a result, when other government ministers were struggling to keep up with the demands of the job, the SBU Chief quietly and effectively fulfilled his duties.
Matters came to a head though when Prosecutor General Shokin summoned Nalyvaychenko for questioning on the BRSM-Nafta case which resulted in him being unable to testify before the US House of Representatives Foreign Affairs Committee in Washington. His former Deputy SBU Head Andriy Levus (and current People’s Front MP) testified in his absence. Within a week, Poroshenko called Nalyvaychenko’s performance “unsatisfactory” and began mustering the votes to dismiss him. Perhaps surprised by the support the SBU Chief enjoyed both domestically and in the West, Poroshenko briefly retreated by offering him posts as Head of Foreign Intelligence and Vice Premier Minister for Euro-integration – both of which Nalyvaychenko declined. That’s when the hardball tactics came into play with reports of $300,000 being offered to MP’s to support Nalyvaychenko’s firing. In the end Poroshenko gathered 248 votes for the SBU Chief’s dismissal. Kyiv Mayor Vitaliy Klitchko attempted to rally UDAR votes in Parliament to prevent the dismissal (as Nalyvaychenko was #2 on the UDAR party list in 2012 and an ally of the Kyiv Mayor), but failed miserably. UDAR has completely lost its key members as they have migrated into Poroshenko’s camp over the last year. The Kyiv Mayor no longer has much sway in Parliament – even among his former party members. Previously there had been talk about UDAR members splitting to form a separate pro-government faction with Parliament. That possibility clearly no longer exists. The majority of deputies (but far from all) in Parliament from the factions of Poroshenko Bloc, People’s Front, Samopomich and People’s Will factions supported the removal of Nalyvaychenko.
For Nalyvaychenko, the future is uncertain but it is evident that he maintains a strong following and can make a return to the political scene. Unfortunately for Nalyvaychenko though, he is a better soldier than he is a politician. His previous attempt at entering the political realm as Chairman of Our Ukraine in 2010 was not overly successful. Admittedly though, Our Ukraine was a completely spent political force by that time and Nalyvaychenko spent most of his time raising money to pay off the numerous party debts. Regardless, the creation of a true center-right political party, based on ideology and not personalities, (unlike UDAR which was based around Klitchko’s presidential ambitions more than principles) may be the next step for Nalyvaychenko. Already Deputy Speaker Andriy Parubiy is talking of splitting with Yatsenyuk and taking a dozen People’s Front MP’s (including former Nalyvaychenko SBU Deputy Andriy Levus) to form a center-right faction in Parliament. Relations between Parubiy and Nalyvaychenko have been close for years and this could lead to the emergence of a newly branded political force. With right wing parties like Svoboda and Right Sector that make the international community nervous, a mainstream center-right party (not tarnished by allegations of anti-Semitism) led by a professional like Nalyvaychenko can fill a needed niche. In 1998 Rukh (People’s Movement of Ukraine) won 8% of the vote campaigning as a center-right party, and the political environment now is far more favorable to such an ideological message. Meanwhile, darker rumors persist that Nalyvaychenko has evidence of collusion between the Presidential Administration and military commanders during the battle of Debaltseve. Such information would be damning for Poroshenko – and if it exists, gives the former SBU Chief an insurance policy to protect his interests.For Poroshenko, the risks are high. He has blatantly demonstrated that he values personal loyalty over professionalism. A future failure by the SBU to prevent a terrorist act of sabotage or subversion, opens him up to criticism for the firing of Nalyvaychenko. The firing has also cost him credibility with the West, where Nalyvaychenko remains widely respected. Now Poroshenko can expect his decisions to be scrutinized more closely by Western decision makers, and the blank check of goodwill to be increasingly restricted. The mere 248 MP’s in favor of dismissal demonstrates the growing cracks in the Parliamentary coalition, at a time when key votes on decentralization and constitutional reform are needed that will require 301 MP’s. For now though, Poroshenko has prevailed. The question remains though, is it a Pyrrhic victory? • Saakashvili versus Shokin: Initial impressions of Mikhail Saakashvili’s performance as Odesa Governor have been positive as the former Georgian President has taken on the Customs Control, Port Authorities, Police, Airport Authorities and the Prosecutor’s Office – all in the first month on the job. In doing so, Saakashvili has shown glimpses of the reformer that changed Georgia for the better in 2005-2006. “Misha’s” most recent rhetorical rant against Ukraine International Airlines (UIA) made particularly entertaining theater since flying UIA is typically an airline of last resort for most travelers. Of course, public spankings of inept, corrupt bureaucrats make good theater, but don’t always translate into concrete results.
Therefore it will be interesting to see who prevails in the battle between Saakashvili and Prosecutor’s General Viktor Shokin. Saakashvili accused Tetianna Gornostaeva, stepdaughter of the Prosecutor General, of shaking down an international investor that she was supposed to be protecting. The former Georgian President also accused Mr. Shokin himself of running a protection racket for the illegal mining of gravel in Odesa region. While no charges have been proven and presumably, the Prosecutor General would ultimately be in charge of investigating himself and his step-daughter, the allegations are stunning for their sheer irreverent nature. In addition, as possible payback for the alleged involvement of Former Deputy Prosecutor Danylenko in BRSM-Nafta, SBU Chief Nalyvaychenko dispatched a score of investigators to Odesa on his final day in office to assist his old friend Saakashvili with the case. Why would the Odesa Governor take on the Prosecutor General since both are presumably part of Poroshenko’s team?
First, Saakashvili must show results in Odesa, and has essentially been given carte blanche to do so by the President. By demonstrating to locals that he means business and can take on any interest – no matter how powerful – Saakashvili hopes to strike fear into the hearts of Odesa’s vested interests to convince them to end corruption. Second, if concrete reforms can be implemented in a tough region like Odesa, the model can be reproduced anywhere in Ukraine. Additionally, the master of implementing the reforms can be promoted to higher office to expand his efforts. It has been rumored for months that Saakashvili has his eyes on the Prosecutor General’s Office and the Odesa Governor’s Office would be a good stepping stone. With Viktor Shokin believed to be fighting cancer and diagnosed with less than a year to live, Saakashvili could potentially shift to the Prosecutor’s Office at the end of this year to replace Shokin.
Meanwhile Shokin’s initial “shock and awe” of numerous arrestshas now faded and the public again grows weary of investigations and arrests without convictions. Planned “trials in absentia” for Sergiy Arbuzov and Raisa Bohatyrova will hardly yield the justice the public is demanding. Meanwhile the keystone cop manner in which the authorities fail to find MP Sergiy Klyuyev gives the perception that the former Yanukovych confidante has already bought off the prosecution and will escape jail time. At a time when the public appetite for justice seeks something equivalent to blood in the gladiator’s arena, the Prosecutor General’s Office is gives them a clown juggling act instead. Combined with rumors of Shokin’s cancer, all signs point to a change in leadership in the Prosecutors Office – one way or the other. • More Kamikaze-Lincoln and Less Doolittle-McClellan Needed in Ukraine: When Arseniy Yatsenyuk became Prime Minister in late February 2014, he famously proclaimed, “The fate of all the members of this cabinet is the fate of a political kamikaze”. However 16 months later, Western businesses are questioning the Premier’s commitment to real reforms and complaining that little has improved for investors. That is hardly the “kamikaze” leadership that the Premier promised. Admittedly, no one (except Putin) planned on a war in the Donbass in late February 2014. Nonetheless, war is no excuse for failing to reform. Abraham Lincoln didn’t try to wait until after the American Civil War to free the slaves. He did it exactly in the middle of the war because war creates opportunities for radical reforms. Lincoln’s opponent in the 1864 Presidential Election, Democrat John McClellan, was a master of procrastination. General McClellan led the Union Army in the Civil War until he was fired by President Lincoln for being too hesitant to attack the Confederacy. Had McClellan been decisive and taken action, he could have defeated Lincoln in the election given the poor economic situation due to the war. However, history is made by people who take action, and as the Greek poet Ovid said, “Fortune favors the bold”.
As evidence of the frustration with the slow pace of reforms, Anna Derevyanko the Executive Director of the European Business Association (EBA), criticized Prime Minister Yatsenyuk on June 26th. Derevyanko said, “There is no considerable improvement of the situation, reforms as such are not being conducted, there are no deep structural reforms such as those in Georgia and Central Europe”. She went on to add that the absence of an effective fight against corruption, poor wages for public employees, obsolete Cabinet regulations, paperwork red tape, and smuggling are the key problems. Derevyanko noted that until those issues are resolved, foreign investors will continue to avoid Ukraine. Similar sentiments have been expressed by the US-Ukraine Business Council, albeit somewhat less publicly.In April 1942, just five months after the Japanese attack on Pearl Harbor, the US launched a daring air raid over Tokyo. While the raid caused little damage to the Japanese military, it was a huge propaganda and moral victory for the United States as it shattered Japan’s myth of invulnerability during the early days of World War II. The attack was led by Lieutenant Colonel James Doolittle and became known as “Doolittle’s Raid”. Premier Yatsenyuk gets credit for taking a tough mission and inspiring hope in the hearts of the Ukrainian nation during the difficult early days after Yanukovych. However the US did not defeat the Japanese by continuing to conduct Doolittle style raids. The US won the war against imperial Japan by committing all of it resources to ensure to victory. Conversely, Yatsenyuk’s rhetorical “Doolittle Raids” that give hope and promise of reforms, are not enough to win the war against corruption and bring real reform Ukraine. Near the end of World War II, Japanese pilots were willing to sacrifice their own lives in kamikaze flights against the American navy to save their homeland. If Yatsenyuk truly wants to reform Ukraine for the better, it’s time for more kamikaze-Lincoln action, and less Doolittle-McClellan cosmetology.
• Economic Turnaround Begins? After a difficult first and second quarter of 2015, the economy may be on the rebound. NBU Governor Valeriya Gontareva said, “We believe that the growth will start in the second half of the year, perhaps as early as this quarter”. Gontareva acknowledged the necessity of the “draconian” rules that were enforced earlier this year to stabilize the hryvna. However, in agreement with the IMF, those restrictions will begin to be lifted. These restrictions halted the hryvnas devaluation from a height of 40 to $1 in February to a stable trading range of 20-22 to the US dollar now. Meanwhile the IMF appears ready to release the second tranche of assistance to Ukraine in the amount of $1.7 billion US dollars.
The lack of industrial output from the Donbass due to the war has worsened the economic forecast for this year and the NBU predicts a 9.5% GDP decline with 48% inflation. However, the worst appears to be over as the economy is expected to grow by 3% next year with inflation being tamed to 12%, according to the NBU. Other outside groups such as the ICU Investment Group largely concur with those predictions as they increased their GDP forecast from zero to two percent next year as well. Consumers have now adjusted to the new economic realities and barring an escalation of the war, recovery is on the horizon.
In the backdrop of this news, the debt restructuring negotiations with a group of stubborn bondholders led by Templeton Funds continues. Ukraine is asking for a 40% reduction in principal and the bondholders are balking. The bondholders offered their vision of the compromise which would involve Ukraine raiding its’ newly restored NBU reserves to pay off debts. Ukraine has been supported in its position by the IMF Head Christine Lagarde and US Treasury Secretary Jack Lew among others. However the bondholders got unexpected help last week when Moody’s Investors stated that Ukraine can save $15.3 billion in debt payments without a principal write-down. The bondholders’ high powered media machine trumpeted the statement by Moody’s Senior Vice President Kristin Lindow that, “There are all kinds of ways to get to the $15 billion with and without a haircut”. In an attempt to sweeten the deal for the bondholders, Finance Minister Jaresko is exploring the introduction of a “value recovery instrument”. This would reduce the haircut that investors have to receive if Ukraine’s GDP performs better than expected. In other words, it would put bondholders in the position of rooting for Ukraine to succeed since it is in their own financial interests too. This week the negotiations will continue in Washington, but it is possible that they will continue well into July.• Political Funeral Pyres: Ecology Minister Ihor Shevchenko appears to be the next sacrificial offering in the buildup to the anticipated autumn reshuffle of the government. Following the sacking of SBU Chief Nalyvaychenko, the current government has become a ‘target rich environment’ as the politicians scramble to protect themselves and damage their opponents. In Roman times, politicians were often burned on funeral pyres – just like Julius Caesar. While Ihor Shevchenko is no Julius Caesar, he is expected to be the second casualty of the BRSM-Nafta oil depot fire fallout which will ignite a funeral pyre on his political future. Shevchenko’s mistake was failing to get permission from the Prime Minister to leave the country on two different occasions. Apparently Shevchenko visited the United Arab Emirates during the May holidays (May 5-7) and Nice, France from June 6-8. Under Ukrainian civil service laws, all government ministers must get the Premier’s permission to travel abroad on working days. Though Shevchenko claims he informed Yatsenyuk that he would be gone for the weekend, the matter was complicated by two factors. First, Shevchenko flew on a plane owned by People’s Will faction MP Oleksandr Onyschenko. Onyschenko is a close ally of oligarch Ihor Yeremeyev (People’s Will faction Head), who Yatsenyuk recently accused of owing a 373 million hryvnas (about $17 million US dollars) debt to the state owned Ukrgazvydobuvannia company. Shevchenko didn’t help his case when he stated, “It was difficult to get from there. I knew that the lawmaker was there, and his plane was in Nice, and I called him and asked for help…He agreed, and I just joined him in a flight. I paid nothing for that…There is no corrupt action there”. Second, Shevchenko returned to work on Monday, June 8th which was the same day the BRSM-Nafta oil depot fired ignited. Though he technically was back at work before the depot began burning, it opened him up to attack from Parliament’s premier populist demagogue, MP Oleg Lyashko. The Radical Party leader took the rostrum of Parliament to announce, “We had a man-made disaster in the town of Vasylkiv (a fire at the BRSM-Nafta oil depot outside Kyiv, which started on June 8 and lasted for more than a week), it’s a huge environmental disaster, which killed five people. And Ecology Minister Shevchenko was on holiday in Nice at that time”. Lyashko added fuel to the fire by stating, “Mister Shevchenko returned by flight PH-ARO in a plane owned by our colleague Onyschenko…who is related to the oil and gas production sector in Ukraine, which is the sphere of our minister’s responsibility”. Lyashko’s then further scorched Shevchenko by demanding that the Prosecutor General investigate the matter. The imagery of the Ecology Minister being chaperoned around the French Riviera, by an oligarch whom he is supposed to be regulating, at a time when there is a fatal environmental disaster – is politically devastating.
Shevchenko attempted a counter attack against Yatsenyuk on June 23, the day after the effects of Lyashko’s parliamentary spanking were still smoldering. “The reason for my address is connected to my political lynching, which is currently being done to me by the government’s leaders” said the embattled Ecology Minister. Shevchenko went on to state that “on numerous occasions, members of Yatsenyuk’s team and representatives of the People’s Front faction asked him to appoint a corrupt official to a position in the ministry and this is how the Head of the Geological Service was appointed“. Then Shevchenko went for the jugular by adding, “Yatsenyuk would have a moral right to demand my dismissal after the Prime Minister excludes his friend Mykola Martynenko from the People’s Front and deprives him of his MP status, as he was responsible for the corruption in Energoatom, and especially after a criminal case was opened against him in Switzerland. The same should be done to fellow party member Sergiy Pashynsky, who according to the media, is involved in stealing oil products worth 1.5 billion hryvnas that were supposed to be sent to the army”. Martynenko has been a long time financial backer of Yatsenyuk dating back to their time together in Our Ukraine under Yushchenko, and when Yatsenyuk headed Front for Change party. Pashynsky is the Chairman of the Parliamentary Committee for National Security and Defense and has publicly been a strong supporter of the Ukrainian military.
While Shevchenko’s charges are not likely to have any short effect, they do play into the growing narrative to dismiss Yatsenyuk at the end of the year. At that time, the effects of the recession, voter discontent over slow reforms, and corruption allegations against him are expected to reach a critical mass to allow for his ouster. Parliament meets for voting Wednesday through Friday of this week and Shevchenko’s dismissal has already been referred to the body by the Cabinet of Ministers. Yatsenyuk chided his former allies from Motherland Party by asking them to “take a responsible political decision” on whether or not they think Shevchenko should remain in office. Shevchenko is generally considered a part of the Motherland quota in the Cabinet even though he claims, “I emphasize that I came not via any party quotas…I came as an expert and a representative of civil society”. All claims aside, it is clear that Ihor Shevchenko will be dismissed by Parliament this week. What is not clear is who will replace him. Mykola Tomenko is the Chairman of the Parliamentary Committee on Ecology, but he is a member of the Poroshenko Bloc faction. Given Yatsenyuk’s chiding of Motherland Party, the Premier may have his eyes on the post for a member of his People’s Front. The Deputy Chairman of the Parliamentary Committee on Ecology, Anatoliy Dyriv is a member of People’s Front, but is not generally regarding as Cabinet level material at this time. Then again, if Motherland is allowed to keep the post by quota, Tymoshenko has a multitude of former MP’s who are currently unemployed and looking for government positions.
Parliament holds voting sessions this week and July 14-17. Thus, if any other ministers are dismissed before autumn and the anticipated “big shakeup”, it will have to be no later than July 17th.
• Petty Prosecutions: There are many crimes that the Prosecutor General’s Office could investigate in Ukraine. Yanukovych’s theft of $34 billion dollars through graft and corruption as well as the murders of Euromaidan activists should be at the top of the list. While almost no substantive progress has been made in those key cases, the Prosecutor’s Office has recently spent resources on attempts at petty prosecutions of minor matters. Take the case of launching criminal proceedings against Opposition Bloc MP Yuliya Lyovochkina, and former Regions MP’s Andriy Kravets and Yuliya Kovalevska. These cases were opened because the three MP’s “registered their assistants with the parliamentary staff even though they didn’t carry out their duties”. Il est un grand scandale!
To understand the case, it is useful to know how the system of parliamentary assistants works. Each Member of Parliament has staff advisors and a budget of 12,000 hryvnas/month (about $560 total) to pay for fulltime, paid staff. Up to four staffers can be classified as state “public servants” with a minimum salary of 2400 hryvnas (now about $110/month). Being classified as a “public servant” is useful for the individual’s labor book and future pension calculations. The MP can also have up to six paid assistants with minimum salaries of 1500 hryvnas (about $70/month), but these individuals do not receive the designation of “public servants” for their labor book and pension related matters. It’s up to each MP to decide how many staff to hire and make public servants or assistants, but he/she is limited to a state budget allotment of just 12,000 hryvnas/month regardless. In addition, most parties require that the MP allot one staff member specifically for the party and its’ needs. Samopomich, as a startup political party, requires two staffers per MP but other factions in Parliament require just one. As a result, the MP is typically understaffed and the staff is underpaid. Thus, to keep quality staff, wealthier MP’s supplement the salaries of their top advisers from their own pockets. There are no rules against this and given the ridiculously small staff salaries, it is necessary.
In contrast, the average US Congressional office has an annual budget of $1.4 million dollars (range of $1.3 to $1.9 million depending on the distance from Washington and cost of office space in the district). From this budget they are allowed up to 18 fulltime staff and four part time staffers. The average range of fulltime congressional staff salaries is between $2,500 to $10,000 monthly depending on position and duties, and of course they are all eligible for full benefits (medical, retirement, etc).
However in Ukraine, there is a legacy from Soviet times that still thrives with regard to Members of Parliament. In addition to public servants and staff, there are “Deputy’s Assistants”. Since in Soviet tradition, “People’s Deputies” served all of Ukraine, they were allowed up to 27 “assistants” – one for each oblast in Ukraine. These assistants receive no state salary (unless the MP selects them for the 1500 hryvna/month minimum salary and doesn’t exceed the 12,000 hryvnas/month salary limit for all staff) but provide services and advice to the Member of Parliament as required. More importantly, they receive a badge indicating that they are a “People’s Deputy’s Assistant”. Officially this badge carries no benefits or privileges. Unofficially, these badges empower the assistants to avoid traffic tickets, prevent police harassment, and occasionally obtain access to the front of a line or entrance to a building. The usefulness of these badges resulted in some MP’s selling their empty assistant positions to businessmen starting from $500 and higher. However most of these badges are simply rewards for key supporters. Rarely is any real work required of these assistants as the badge is more of an honorary designation. The only other state regulation pertaining to assistants is that the MP can have a maximum of 31 total staff (including assistants). Thus, with four public servants and 27 assistants, the staff can be fully filled.
Returning to the Prosecutors case against Lyovochkina, Kravets and Kovalevska, the fact that they registered assistants with Parliament “who didn’t carry out their duties”, is in fact a violation that could be applied to virtually every Member of Parliament. Awarding the title of “assistant” is commonplace with the MP’s, who almost never require any actual work to be done in exchange. Thus the question becomes, how are actual ‘duties’ interpreted?” If an assistant never comes to the office, but regularly provides sound advice to the MP by phone, isn’t that just as useful of a work product as someone who merely works as an office receptionist? In fact, the higher end task is clearly the good advice rather than the menial, message taking of phone calls. Even if the assistants registered by the three former Regions MP’s never assisted at all, it is still within an MP’s prerogative to decide what he/she will deem as acceptable performance to continue with their designation as an assistant. Perhaps the assistant was helpful during the campaign, is the relative of a party donor, or just simply a proud family member. It doesn’t matter because MP’s hire their own staff, and ultimately the voters will decide if their choices are wise.It is a common prosecutorial tactic to try to convict the associates of a key person on minor charges, in hopes of getting them to give evidence against the key person in exchange for a lighter sentence or immunity. Clearly, the Prosecutor’s Office is trying to put pressure on Opposition Bloc MP Sergiy Lyovochkin by launching this criminal proceeding against his sister, MP Yuliya Lyovochkina. One of Lyovochkina’s assistants was Lyubov Polezhay, who is rumored to be a business partner of Yanukovych. However even if the Prosecutor’s Office gets a petty conviction on the charges that Polezhay didn’t actually do any work for Lyovochkina, the MP has immunity from prosecution. Even if that immunity is soon lifted by Parliament, Lyovochkina is hardly going to turn state’s evidence against her brother. While Kravets and Kovalevska don’t currently have deputies’ immunity, prosecuting them for a petty interpretation of the law which is being selectively applied, is not what Euromaidan was about. Euromaidan was about the law being “one for all” and bringing real justice, rather than trying to criminalize political differences. There were real crimes that were committed under Yanukovych, and Mr. Lyovochkin may – or may not – have been a part of those. The Prosecutor General’s Office should aggressively investigate these matters so that the Ukrainian people know the truth. However, by pursuing this petty prosecution, the Ukrainian Prosecutor General’s Office does a disservice to all who stood for justice during the days of Euromaidan. In Victor Hugo’s “Les Miserables”, the Police Inspector Javert devotes his life to pursuing prosecution against a man whose only crime was stealing a loaf of bread while hungry. If the Prosecutor General’s Office doesn’t quickly refocus its energies on real criminal cases instead of petty prosecutions, it may soon become known as Ukraine’s own “Javert”. • Title of President: Recently Parliament passed a bill to strip Viktor Yanukovych of the title of President of Ukraine. The Poroshenko administration then submitted the bill to the Constitutional Court for a ruling. This tedious process seems like overkill given the fact that the Parliament impeached Yanukovych in February last year. No real Ukrainian recognizes Yanukovych as the country’s President any longer, and the disgraced official has zero chance to return to power in Ukraine through democratic means (only with the help of Russian military force). Stripping Yanukovych of his former title is an example of problems with the Ukrainian bureaucracy. Legitimacy of titles is achieved by recognition by the people – not by mere documents or legal maneuvering. Barrack Obama is President of the United States of America because he was elected by the people, and not because he holds a particular stamp or badge that identifies him as “President”. In addition, given the war and recession, this hardly seems like a top level governmental priority at the moment. Though he was a murderous and greedy tyrant, Yanukovych was democratically elected as President by the Ukrainian people in 2010. History cannot be erased and the best way to prevent the rise of future such tyrants is let the people know the truth, rather than try to whitewash it and pretend it didn’t happen. Yanukovych’s presidency was a dark chapter in Ukraine’s history, just as Saddam Hussein’s presidency was a dark chapter on Iraq’s history. History is history, but it can be prevented from repeating when people acknowledge the truth. As Jesus said to the Roman Prefect Pontius Pilate, “You shall know the truth and the truth shall set you free” (John 8:32). Rather than stripping Yanukovych of his old title, the Ukrainian government should be reminding the people of the evils committed under his regime. Give people the truth and they will remain free from such tyrants in the future.
• Moldovan Mayoral Runoff: With 89% of the protocols counted, incumbent Mayor Dorin Chirtoaca is holding on to a 51.9% to 48.1% lead over Socialist former Prime Minister Zinaida Greceanii in the Chisinau Mayoral Runoff Election. The fragile 8,000 vote lead out of approximately 290,000 ballots cast appears to be increasing in Chirtoaca’s favor at the time of this report. Assuming that Chirtoaca’s lead continues and he is re-elected for a third term, the results bode positively for reformatting the Parliamentary coalition in a coherent, pro-European manner.
Chirtoaca is a member of the Liberal Party and the nephew of Liberal Party Leader and former Speaker Mihai Ghimpu. A dispute over allotments of government posts following last November’s Parliamentary election led to the Liberals staying out of the governing coalition. A particular point of contention was the Liberal’s demand that the Prosecutor General’s post be filled by a foreigner. Now however, the Liberals have dropped this demand and in the meantime, the Democrats and Liberal Democrats have made favorable gestures to their old coalition partners by encouraging their supporters to back “candidates from democratically oriented parties” – a clear reference to Dorin Chirtoaca in the Chisinau Mayoral race. Thus, the coalition of Liberals, Democrats and Liberal Democrats which put Moldova on the path to the European Union, may soon return to govern the country.
While coalition talks will begin even as early as this week, respected Foreign Minister, Nataliya Gherman has been named the Acting Prime Minister of Moldova, following the abrupt resignation of Cirill Gaburici earlier this month. Gherman was under consideration for the Premier’s post in February prior to Gaburici’s appointment, and she is the daughter of Moldova’s first President, Mircea Snegur. Gherman, a member of the Liberal Democrats, will serve for up to three months until Parliament approves a new Premier. Under the Constitution, Parliament has two votes in which they must obtain 51 votes out of 101 members. Failure to do so will result in new elections. Given the momentum the Kremlin backed Socialist Party has had over the last eight months, snap elections would only lead to more gains for the pro-Russian party, and thus should be avoided.• Putin and Polls: On June 24th, the Moscow based Levada Center announced that Vladimir Putin’s approval rating has hit a record high of 89%. This surprise statistic comes despite the impact on the Russian economy of Western sanctions. Even though the Levada Center has the technical expertise to conducting effective polling, some might argue that that the numbers are manipulated for public effect. That may be true and the real approval rating of Putin is 59% for example, and not 89%. Often in totalitarian regimes, releasing non-astronomical polling numbers is considered weakness and invites political attacks from opponents. Nonetheless, it remains clear that Putin enjoys substantive public support in Russia – regardless of the real numbers. Thus, did the Levada Center falsify the data? Probably not. They likely just reported the responses they received. However, there is a new paradigm when interpreting polling results from Russia, and it is no longer about sociology. Answering a pollster’s question about politics in Russia is like taking a pop quiz in high school: That is, you are expected to give the “correct” answer and, can be punished for an incorrect one… Thus, respondents give the expected “correct” answer – rather than their own opinions.
• Personnel Moves:
Vadym Chernysh was appointed Chairman of the State Agency for Donbass Restoration. Chernysh, a former Yushchenko era Governor of Kirovohrad, has a legal background in fighting money laundering and terrorism financing. Chernysh also served three months on the National Security and Defense Council in 2007, during the time of Yushchenko’s dismissal of Parliament and negotiations for new elections.
Dates to Watch (for Ukraine unless otherwise noted):
June 30: Next Round of Debt Restructuring Negotiations: Despite talk of reaching a compromise, these negotiations appear that they will last into the month of July – and possibly longer. Ukraine’s Government Commissioner for Public Debt Management, Vitaliy Lisovenko will represent the Ukrainian side in Washington.
June 30: Next Round of Gas Talks with Russia: The talks in Vienna are likely to produce agreement between Ukraine and Russia (with the EU facilitating) on gas supplies for the second half of the year. The negotiations are currently between $206 and $290 (the current price) per cubic meter which is a dramatic decrease from the $486 per cubic meter price that the Russians were demanding just last year. Energy Minister Demchyshyn has stated that the third and fourth quarter prices are likely to be the same which would eliminate the need for another round of talks this year. While the $206 priced hoped for by Ukraine includes a discount, Russia has said that a discount is no longer possible. In the unlikely event that a price of less than $200 per cubic meter is reached, Demchyshyn has noted that Ukraine could store up to 19 billion cubic meters of gas in its extensive underground storage facilities as an insurance policy for continued gas supplies for both Ukraine and European partners. Nonetheless, an agreement is likely to be reached at less than the current price which would benefit both countries. This is due to the reality that Russia is feeling the effects of the Western sanctions (despite its’ public statements of denial) and needs to secure this gas contract to ensure its’ own economic interests.
July 7 & 21: Next Meetings of the Trilateral Contact Group (Ukraine, Russia & the OSCE): This will be OSCE Envoy Heidi Tagliavini’s farewell meeting before she returns to work at the International Red Cross. Austrian diplomat Martin Sajdik was been named her replacement. Sajdik has been Austria’s Permanent Representative to the United Nations since January 2012 and in 2007, was the country’s Ambassador to China. Sajdik studied at Moscow State University and previously worked at Austria’s Embassy in Russia.
July 1: Date Decentralization will be approved by Parliament according to Speaker Groisman: President Poroshenko has threatened to hold snap Local Elections if Parliament doesn’t pass decentralization by October 25th. However, it is likely that the coalition will have enough votes to comfortably pass the legislation on the first reading. The key will be getting enough votes on the second reading in September. The planned decentralization is expected to bring an additional 40 billion hryvnas (just under $2 billion US dollars) to local governments. Local budget receipts are already up 36% this year in anticipation of the changes. It should be noted that Speaker Groisman believes that after two years of decentralization being in effect, that snap Local Elections should be called (in 2017?). Thus, candidates for local office this October may not serve their full terms if Groisman is correct.
July 1-3: Parliamentary Voting Session Scheduled:
July 13: Ukrainian Investment Conference in the US: Ukraine’s government plans an investment conference to unveil its plan for privatization, fiscal reform and the energy potential of the country. About 150 executives of major US companies are expected to attend.
July 14-17: Last Parliamentary Voting Session Scheduled Until Autumn.
July 26: Special Parliamentary Election in District #205 (Chernihiv City): A whopping 93 candidates have been registered to compete in the July 26th Chernihiv Special Election for Parliament. The front runner in the race is former Dnipropetrovsk Deputy Governor, Kolomoyskyi ally, and businessman Gennadiy Korban. Last year’s third place finisher in the contest (with 12% to the winner’s 28%), Ihor Andriychenko from the Democratic Alliance, has also entered the race is likely to be one of Korban’s main rivals. With so many candidates in the race, it is clear that most are technical candidates for Korban and others. Only 44 of the 93 candidates are actually from Chernihiv.
September 23: Ukraine must repay $500 Million in Foreign Debt.
October 25, 2015: National Local Elections for Mayor and City Councils.
January 31, 2016: New EU Expiration Date for Donbass related Sanctions on Russia: The EU proved to be resilient for another six months by extending the sanctions against Russia for their actions in the Donbass. If Russia shows adherence to the Minsk II Agreement though, this is probably the last extension of sanctions that the EU will manage to agree upon. However, Crimea related sanctions have been extended for another year (till June 23, 2016) and are likely to continue into the foreseeable future, since Russia has no plans to withdraw from the peninsula anytime soon.
February 2016: Stockholm Arbitration Hearings on Counter Claims between Naftogaz and Gazprom. Naftogaz is seeking $16 billion dollars and a decision is expected by June 2016.
June 23, 2016: New EU Expiration Date for Crimea related Sanctions on Russia