IN THE SPOTLIGHT - Gorshenin Institute
IN THE SPOTLIGHT © Gorshenin Institute December 2014 All rights reserved ISSUE 41 (204) 12/15/2014 IN THE SPOTLIGHT ISSUE 41 (204) 12/15/2014 CONTENT 1. Top news…page 5 2. Armed conflict in Ukraine`s east…page 5 Trilateral contact group blames pro-Russian separatists for derailing Minsk talks on 9 December Ukrainian military implement cease-fire in Donbas Ukrainian president urges Russia to withdraw troops from Donbas, close border Russian special services start purge among separatists in Donbas UN estimates number of killed in Donbas exceeded 4,600 Red Cross resumes work in Donbas 3. International political…page 7 Ukraine-Russia Ukrainian parliament adopts resolution urging Russia to free female pilot Russian lawmakers discuss status of volunteers in Donbas Russia cancels trains to Ukraine Crimean issue Russia refuses to extend transition period for Crimea EU mulls banning investment in Crimea Ukraine-EU Czech Republic, Croatia ratify Ukraine association deal with EU Ukraine informs EU about closing criminal cases against former officials featured in sanctions list European parliament members unite in pro-Ukrainian group Ukraine-USA US Congress passes draft law on military assistance for Ukraine 2 © Gorshenin Institute December 2014 All rights reserved IN THE SPOTLIGHT ISSUE 41 (204) 12/15/2014 Ukrainian defence company, US firm sign deal on arms delivery Ukraine-NATO Ukraine sets up security secretariat to cooperate with NATO, EU NATO experts to train Ukrainian sergeants Ukraine-UN Poroshenko suggests stripping Russia of veto power in UN Security Council Ukraine-world Interpol neither rejects, nor approves putting Yanukovych on wanted list Venice commission says changes to vetting law to be ready by March 4. Domestic political…page 12 Parliament approves cabinet's action programme Gorshenin Institute expert on cabinet programme: "big bargaining" just begins First deputy head of Ukrainian presidential administration dismissed Turchynov can become national security supremo - media Parliament removes supporters of "dictatorship laws" from committee leadership Former European commissioner to protect business rights in Ukraine Information Policy Ministry to cost state 250,000 dollars - Stets Higher Qualification Commission of Judges elects head Law enforcers join efforts in investigating Maydan crimes Protesters in Zaporizhzhya demand mayor's dismissal Blast rocks central Odessa State Aviation Service closes sky above Kharkiv, Dnipropetrovsk, Zaporizhzhya Court of appeal cancels arrest of Gen Nazarov Prosecution says 241 servicemen killed near Ilovaysk 5. Economy…page 17 Ukraine needs another 15bn dollars to avoid default – premier 3 © Gorshenin Institute December 2014 All rights reserved IN THE SPOTLIGHT ISSUE 41 (204) 12/15/2014 Ukraine GDP to fall by 8 percent in 2014 – Moody's Premier expects adoption of 2015 budget by year's end Defence Ministry asks to double military budget Communications commission calls 3G license tender Hryvnya rate continues to fall Money supply up by 1.3 percent in November 6. Energy…page 21 Ukraine starts importing gas from Russia Ukraine almost doubles gas imports from Europe Gas transit from Russia via Ukraine drops by quarter President's administration suggests selling Naftohaz Naftohaz allows private companies to import gas Government plans to raise energy tariffs Ukraine almost halves coal production in November Ukrinterenerho denies reports on unsuitability of South African coal Purchase of coal from Donetsk and Luhansk “people's republics” illegal – Prosecutor-General's Office Ukraine to buy 1,500 MW of electricity from Russia – Russian minister Ukrhazvydobuvannya head detained by Security Service, released by court on bail Cabinet to build two units at Khmelnytskyy nuclear plant 4 © Gorshenin Institute December 2014 All rights reserved IN THE SPOTLIGHT ISSUE 41 (204) 12/15/2014 1. TOP NEWS Talks between contact group, pro-Russian separatists fail to take in Minsk Another cease-fire announced in antiterrorist operation zone. You can read more details in the section ARMED CONFLICT IN UKRAINE'S EAST and INTERNATIONAL POLITICS. UKRAINE-RUSSIA. Ukrainian parliament adopts new government's programme Zaporizhzhya activists have clashed with the local authorities. Similar clashes had taken place earlier in Vinnytsya. You can find more details in the section DOMESTIC POLITICAL. US Congress passes draft law on military support for Ukraine Ukraine needs another 15bn dollars to avoid default . You can find more details in the sections DOMESTIC POLITICAL and ECONOMY. 2. ARMED CONFLICT IN UKRAINE'S EAST Trilateral contact group blames pro-Russian separatists for derailing Minsk talks on 9 December A trilateral contact group represented by former Ukrainian President Leonid Kuchma, Russian ambassador to Ukraine Mikhail Zurabov and the Organization for Security and Cooperation in Europe's (OSCE) Heidi Tagliavini and tasked with settling the conflict in the east of Ukraine held a meeting in Kiev on 9 December. Its members expressed concern over the failure of “representatives of some districts of Donetsk and Luhansk regions” to prepare for negotiations on a cease-fire in Donbas and over the derailment of consultations slated for 9 December. Ukrainian President Petro Poroshenko previously said that the leaders of the self-proclaimed Donetsk and Luhansk people's republics had given their preliminary agreement to hold the next round of the Minsk negotiations on 9 December. However, pro-Russian separatists demanded that the talks be delayed without providing any reason. Later, on 10 December, rebels said that Kiev had derailed a video conference of the contact group for organizing the next round of consultations in Minsk by failing to phone in, Russian mass media reported. Ukrainian military implement cease-fire in Donbas On 9 December, the Ukrainian military implemented a cease-fire at all its positions in the east of the country. 5 © Gorshenin Institute December 2014 All rights reserved IN THE SPOTLIGHT ISSUE 41 (204) 12/15/2014 In their turn, pro-Russian separatists said they would also declare a cease-fire. On 12 December, the OSCE monitoring mission confirmed that shelling subsided in the area of military actions in the east of Ukraine. The Ukrainian National Security and Defence Council also noted that after the implementation of the cease-fire, pro-Russian rebels decreased the incidence of shelling against the Ukrainian antiterrorist forces without fully suspending it. Hence, there were killed and injured. Ukrainian president urges Russia to withdraw troops from Donbas, close border Ukrainian President Petro Poroshenko has demanded that Russia pull out its troops from Ukraine and seal the Russian-Ukrainian border. In the opinion of the Ukrainian head of state, if the border is sealed, peace will quickly prevail in Donbas. In his turn, the Russian Foreign Ministry's spokesman, Aleksandr Lukashevich, said that there were no Russian soldiers in Ukraine so the country could not withdraw anyone from Ukraine. He also stressed that Russia will not satisfy Poroshenko's demand to close the border because its Russian side was completely secure. On 11 December, a representative of the Ukrainian General Staff, Oleksandr Rozmaznin, said during a roundtable at the Gorshenin Institute that a new convoy of 40 KamAZ lorries carrying ammunition for Russian soldiers and two battalions of mercenaries had crossed into Ukraine. Additionally, on 12 December, the ninth Russian convoy allegedly carrying humanitarian assistance arrived in Ukraine. Like previous convoys, it crossed the Ukrainian border flagrantly violating laws of Ukraine. The OSCE reported that it consisted of lorries and gas tankers. Coordinator of the Information Resistance group Dmytro Tymchuk has reported that a group of Russian mercenaries arrived in Donbas together with the “humanitarian” convoy. Also, Ukraine's State Border Service reported that the Russian military have abandoned the territory of Kherson Region (Ukraine). Russian special services start purge among separatists in Donbas The Russian special services have started actively purging their former allies on the territories temporarily controlled by the forces of the self-proclaimed Donetsk people's republic, the press centre of the Ukrainian government antiterrorist operation reported on 13 December. Additionally, the press centre said that residents of Luhansk Region's Krasnyy Luch, which is temporarily held by pro-Russian militants, had forced out the socalled Cossacks who had taken over the leadership of the city. 6 © Gorshenin Institute December 2014 All rights reserved IN THE SPOTLIGHT ISSUE 41 (204) 12/15/2014 We would like to point out that a video showing a training camp of Chechen fighters in Donetsk suburbs have been posted by several mass media outlets. Chechen rebels said that there were approximately 300 people in their units and that all of them were volunteers, although they had also served in the Russian army and special services. They also pointed out that 70 percent of them were members of special units of various agencies, Insider website reported citing Reuters. UN estimates number of killed in Donbas exceeded 4,600 The UN has estimated that since the beginning of a conflict in the east of Ukraine in mid-April and as of 12 December, 4,630 people have died in Ukraine. This number also includes 298 people who were killed after a Malaysian Airline Boeing crashed in Ukraine. As many as 10,340 people were injured as a result of clashes and the number of refugees now exceeds 568,000 people. Red Cross resumes work in Donbas The International Committee of the Red Cross (ICRC) has resumed activity in the east of Ukraine, the organization's president, Peter Maurer, said on 8 December. As previously reported, the ICRC suspended its operation in the region following the death of its employee on 2 October as a result of shelling in Donetsk. 3. INTERNATIONAL POLITICAL UKRAINE-RUSSIA Ukrainian parliament adopts resolution urging Russia to free female pilot On 11 December, the Verkhovna Rada of Ukraine adopted a resolution addressed to the Russian State Duma and President Vladimir Putin, urging them to release a Ukrainian pilot and an MP of the Fatherland party, Nadiya Savchenko. Additionally, Ukrainian lawmakers called for the release of all Ukrainian nationals who had been captured during the armed conflict in the east of Ukraine, then illegally transferred to Russia and forcibly detained there. We would like to point out that the Ukrainian pilot's lawyer, Ilya Novikov, said that the health of his client, who is currently held in Moscow's remand centre, was deteriorating due to a partial loss of hearing and ear infection. Despite this, a Moscow court refused to consider on 15 December an appeal of Savchenko's lawyer against the extension of her arrest until 13 February 2015 due to reported procedural violations. The Russian news agency TASS reported that Savchenko's election into parliament did not change her procedural status: Russian legislation envisions 7 © Gorshenin Institute December 2014 All rights reserved IN THE SPOTLIGHT ISSUE 41 (204) 12/15/2014 special terms for suing individuals with a special legal status but it only affects Russian lawmakers. In her turn, Savchenko urged the leaders of the Russian Investigation Committee to drop criminal suits against her due to her status of a prisoner of war. Russian lawmakers discuss status of volunteers in Donbas On 9 December, the Russian State Duma held a meeting of the defence committee behind closed doors, during which lawmakers discussed the status of so-called volunteers who take part in the conflict in Donbas and the possibility of paying compensations to their families, the deputy head of the One Russia parliamentary faction and a member of the committee, Frants Klintsevich, has said. As previously reported, the Russian authorities have denied that Russian servicemen participate in military actions in Ukraine. At the same time, Russian human rights activist Elena Vasilyeva said that since the beginning of the Ukrainian antiterrorist operation in Donbas and as of 9 December, more than 5,000 Russian soldiers have been either killed or went missing. She said that the bodies of the killed are transported to Russia by so-called humanitarian convoys. We would like to point out that on 12 December Russian President Vladimir Putin summoned the Russian Security Council to discuss the conflict in Ukraine. Russia cancels trains to Ukraine The Russian Federal Passenger Company, which is a branch of the Russian Railways, has cancelled trains heading to several countries of the Commonwealth of Independent States (CIS), including to Ukraine, citing their low profitability. The policy came into force on 14 December. For its part, Ukraine's state-run railways Ukrzaliznytsya said that it would not cancel its trains to Russia. The company said that there would be 20 trains between Ukraine and Russia this winter and that 19 of them would be Ukrainian and one – Russian. CRIMEAN ISSUE Russia refuses to extend transition period for Crimea The Russian authorities have refused to extend a transition period for Crimea during which the peninsula should align its laws with Russian legislation, Russian Prime Minister Dmitriy Medvedev said on 8 December. As previously reported, the transition period will end on 1 January 2015. EU mulls banning investment in Crimea EU member states plan to slap a ban on investment in Crimea, including on sale of technologies for oil and gas exploration and for managing Crimea's tourist business by European companies, Reuters has reported quoting its own sources. 8 © Gorshenin Institute December 2014 All rights reserved IN THE SPOTLIGHT ISSUE 41 (204) 12/15/2014 Ukraine's ambassador to the EU, Kostyantyn Yeliseyev, said that Kiev also insisted that Brussels banned the sale of its products to Crimea, stressing that a ban on imports of products from Crimea to the EU was already in place. UKRAINE-EU Czech Republic, Croatia ratify Ukraine association deal with EU On 10 December, the Senate of the Czech Republic ratified the association agreement signed by Ukraine and the EU. On 12 December, the document was ratified by the Croatian parliament. The agreement has been already ratified by lawmakers in Bulgaria, Hungary, Latvia, Lithuania, Malta, Poland, Romania, Slovakia, Sweden and Estonia. Ukraine informs EU about closing criminal cases against former officials featured in sanctions list The EU is preparing to remove the names of three former Ukrainian officials from its sanctions list since Ukraine has already notified it about closing criminal cases against them, the Wall Street Journal has quoted European diplomats as saying. The WSJ reported that the EU was currently discussing whether it was appropriate to apply sanctions against 16 out of 22 former Ukrainian officials whose assets the EU had decided to freeze in March. The WSJ also said that 14 people on the list, including ousted Ukrainian President Viktor Yanukovych and his sons, had already filed lawsuits over sanctions with European courts. The mass media reported that the former head of the Ukrainian presidential administration, Andriy Portnov, might be dropped from the sanctions list. European parliament members unite in pro-Ukrainian group On 10 December, 47 members of the European Parliament, who represent 18 EU member states set up an informal group called Friends of European Ukraine. The move was initiated by a member of the European Parliament from Lithuania, Petras Austrevicius. The Verkhovna Rada of Ukraine also created a similar group intended to promote the country's ties with the EU. It consists of more than 50 lawmakers. The leaders of the groups are the European Parliament's Austrevicius and Ukraine's Ivanna Klympush-Tsyntsadze and Ostap Semerak respectively. 9 © Gorshenin Institute December 2014 All rights reserved IN THE SPOTLIGHT ISSUE 41 (204) 12/15/2014 UKRAINE-USA US Congress passes draft law on military assistance for Ukraine On 12 December, the US House of Representatives approved a bill on support to Ukraine and new sanctions against Russia. According to the document, Ukraine may receive military assistance from the United States to the tune of 350m dollars in the form of anti-tank weapons, counter-battery radars, tactical reconnaissance drones, secure means of communications, and also training for Ukrainian military personnel. The bill also promises 70m dollars of technical assistance to Ukraine in 2016-18 to strengthen the country's energy security and to develop its civil society. The document was developed based on the Ukraine Freedom Support Act previously passed by the US Senate. However, the document underwent some significant changes. In particular, the provision on granting Ukraine the status of major non-NATO was removed from the bill (with comments). The bill has been passed for signature to the US president, who has 10 days for the approval. Russia said that the adoption of the law by the US Congress was blackmail and promised to reciprocate new US sanctions. US President Barack Obama had previously urged lawmakers not to hasten sanctions against Moscow. We would like to point out that the spokesperson for the US Department of State, Jen Psaki, said that the US did not intend to send lethal weapons to Ukraine for now. Ukrainian defence company, US firm sign deal on arms delivery The Ukrainian company Ukrinmash, which is part of the state-run defence company Ukroboronprom, has signed an agreement with the US company Barrett Firearms on delivery of weapons for the Security Service of Ukraine and the Ukrainian National Guard, Ukroboronprom's press service reported on 12 December. Previously, Ukrinmash had already struck a deal with ATN Corporation and signed a number of contracts with the French Thales Group on deliveries of high-tech military equipment for the Armed Forces of Ukraine. UKRAINE-NATO Ukraine sets up security secretariat to cooperate with NATO, EU Ukraine has set up an international secretariat for security and civil cooperation between Ukraine and NATO and EU security bodies, the head of the Security Service of Ukraine (SBU), Valentyn Nalyvaychenko, said on 10 December 2014. 10 © Gorshenin Institute December 2014 All rights reserved IN THE SPOTLIGHT ISSUE 41 (204) 12/15/2014 It will be coordinated by a former chief of the SBU and ex-defence minister, Yevhen Marchuk. In addition to cooperating with NATO and the EU, the secretariat will oversee the reform of uniformed agencies and public control over them. The Ukrainian parliament is expected to consider Ukraine's non-bloc status these days. NATO experts to train Ukrainian sergeants NATO is making preparations for training sergeants of the Ukrainian army, Boguslaw Pacek, an adviser to NATO for the reform of the military education of Ukraine, has said. He said that Ukrainian officers were already being trained in the West. In particular, as far as he is aware, each of four military educational establishments of Poland has up to 10 students from Ukraine. UKRAINE-UN Poroshenko suggests stripping Russia of veto power in UN Security Council Russia should be deprived of its veto right within the UN Security Council, because it is an aggressor nation, Ukrainian President Petro Poroshenko has said. He added that the conflict in eastern Ukraine has demonstrated the ineffectiveness of the post-War global security system, including the Security Council of the United Nations. The Ukrainian president has expressed confidence that the world must now develop a new system which will be able to stop “this very dangerous development of the situation in the whole world”. UKRAINE-WORLD Interpol neither rejects, nor approves putting Yanukovych on wanted list Nine months after, Interpol has not decided whether to put former President Viktor Yanukovych, former Prosecutor-General Viktor Pshonka, former Interior Minister Vitaliy Zakharchenko and other high-ranking officials on an international wanted list, the Ukrinform news agency has quoted the Ukrainian bureau of Interpol as saying. Nevertheless, the issue has not been removed from the agenda and is still under consideration, Interpol has said. Earlier, Prosecutor-General Vitaliy Yarema said that Interpol had been delaying putting Yanukovych and seven other high-ranking officials on a wanted list because it is concerned about the risk of political persecution against them. 11 © Gorshenin Institute December 2014 All rights reserved IN THE SPOTLIGHT ISSUE 41 (204) 12/15/2014 Venice commission says changes to vetting law to be ready by March Amendments to the vetting law should be prepared by March 2015, a representative of the Venice commission, Gianni Buchicchio, has said after the consultations with the Ukrainian delegation. Justice Minister Pavlo Petrenko has said that the Venice commission has radically changed its previous conclusions on the vetting law after two-day consultations with the Ukrainian delegation. It was earlier reported that the entourage of former President Viktor Yanukovych might use any levers to make sure that the commission's conclusions prevent their vetting. 4. DOMESTIC POLITICAL Parliament approves cabinet's action programme On 11 December 2014, the Ukrainian parliament approved the cabinet's action programme presented by Prime Minister Arseniy Yatsenyuk. The coalition agreement is an integral part of the programme. It contains a plan of reforms and changes which the ministers commit to implement in the next several years. In particular, they pledged to significantly cut public expenditure, in particular by dismissing 10 percent of officials and reducing the number of controlling bodies, fight corruption and adopt European standards. They also plan to seriously reform the uniformed agencies, tax, budget policy and health care bodies. (Read more about the 2015 public expenditure in ECONOMY.) The cabinet's action programme says 1,200 facilities should be removed from the privatization freeze list in the first quarter of 2015. The programme foresees general income taxation. The cabinet pledges to introduce medical insurance, not to subject drugs licensed in the EU, the USA, Canada, Australia and Japan to registration in Ukraine, and transfer drugs procurement from the Health Ministry to UN institutions. The prime minister said that the law on land market was removed from the programme due to the lack of political consensus. Thus, the moratorium on land sale will stay in place until 2016. The news portal LB.ua said that MPs from the president's Petro Poroshenko Bloc at first refused to support the action programme of the new government, saying it should be based on the coalition agreement. However the faction later decided to support the cabinet programme. The website said that Hennadiy Zubko, an ally of President Petro Poroshenko and the incumbent deputy prime minister, attended the meeting after which MPs approved the cabinet's programme. 12 © Gorshenin Institute December 2014 All rights reserved IN THE SPOTLIGHT ISSUE 41 (204) 12/15/2014 Gorshenin Institute expert on cabinet programme: "big bargaining" just begins Yevhen Kurmashov, director for political programmes at the Gorshenin Institute, has said that now that parliament has approved the Cabinet of Ministers' action programme, Arseniy Yatsenyuk is the most safeguarded Ukrainian official. The expert recalled that parliament's support for the programme makes the cabinet immune for one year. Still, the analyst believes, "big bargaining" between the government and parliament just begins. In Kurmashov's opinion, there is great tension and lack of trust between Yatsenyuk and Poroshenko. However, he believes, this does not mean that the head of state and his entourage are interested in striking a strong blow against Yatsenyuk. "First, today Yatsenyuk was allowed to cross the stream, from which he is highly unlikely to emerge unharmed. Second, the situation in the east and other challenges mentioned by Yatsenyuk in his speech prompt even competing institutions of power to look for compromises and common points. Third, we should not forget about external factors. International players, whose opinion is taken into account by both the president and prime minister, are not interested in another domestic political escalation in Ukraine. One should not rule out that signals from Ukraine's western partners have played a certain role in the fact that the presidential faction voted for the government programme today," the expert said. Kurmashov predicts that the presidential administration will play its own game in parliament with the help of the Petro Poroshenko Bloc faction, the speaker and potential situational allies. "There is always a very high risk that the prime minister can feel like person No 1 in the country with the parliamentarypresidential model of governance. This may create certain tension in the presidential team which also wants to be player No 1. This is the reason why Petro Poroshenko and his managers reserve the right to somewhat redress the balance and build such a system of checks and balances which would keep the government as a whole and Yatsenyuk in particular always on alert," he concluded. First deputy head of Ukrainian presidential administration dismissed On 8 December 2014, Ukrainian President Petro Poroshenko dismissed Yuriy Kosyuk as deputy head of the presidential administration and appointed him an off-staff adviser. Kosyuk oversaw support and logistics for uniformed agencies. Yuriy Biryukov, the presidential adviser for volunteer work, said that he had never discussed support for troops with Kosyuk over the period of the security operation. He added that he discussed the problems directly with the president. According to media reports, Kosyuk's wealth is estimated at 1.3bn dollars, placing him among the top 10 wealthiest people of Ukraine. 13 © Gorshenin Institute December 2014 All rights reserved IN THE SPOTLIGHT ISSUE 41 (204) 12/15/2014 Turchynov can become national security supremo - media The leader of the People's Front parliamentary faction, Oleksandr Turchynov, is eyeing the post of secretary of the National Security and Defence Council (NSDC), the news portal LB.ua has quotes its sources as saying. It added that Turchynov can be appointed to the post after the relevant legislation is changed to significantly expand the powers of the council and its secretary. On 11 December 2014, parliament approved in principle the president's amendments to the law on the NSDC. Parliament also agreed that this bill would be prepared for its second reading through a simplified procedure. The NSDC has not had a secretary after Andriy Parubiy stepped down. His duties are currently carried out by NSDC Deputy Secretary Mykhaylo Koval, a former defence minister. Parliament removes supporters of "dictatorship laws" from committee leadership On 11 December 201, the Ukrainian parliament decided that 15 MPs, who voted for the so-called "dictatorship laws" on 16 January, may not hold the posts of heads, first deputy heads and deputy heads of parliamentary committees. These MPs have been demoted to ordinary members of respective committees. A former secretary of the Kiev city council, Oles Dovhyy, whom the media accused of election fraud, was removed from the post of a deputy head of the committee for economic policy. The same day, parliament appointed MP Serhiy Skuratovskyy from Oleh Lyashko's Radical Party as head of the construction, housing and utilities committee, and his fellow faction member Serhiy Rybalko as head of the committee for finance and banking. The regulations committee does not have a head yet. Former European commissioner to protect business rights in Ukraine Former European Commissioner for Taxation Algirdas Semeta has been appointed Ukraine's business ombudsman, the EBRD has said in a statement. His office will be funded at the EBRD expense. There are already three foreigners, who were granted Ukrainian citizenship, working in the Cabinet of Ministers. These are Lithuanian-born Economics Minister Aivaras Abromavicius, Georgian-born Health Minister Aleksandre Kvitashvili and US-born Finance Minister Natalie Jaresko, who has Ukrainian roots. Georgian-born Ekaterine Zguladze is expected to be appointed deputy interior minister soon. In addition, it was reported that the unified patrol police in Ukraine will be 14 © Gorshenin Institute December 2014 All rights reserved IN THE SPOTLIGHT ISSUE 41 (204) 12/15/2014 created under supervision of American citizen Ron Glensor, a senior adviser of the ISITAP programme. The news portal LB.ua quoted sources in the presidential administration as saying that President Petro Poroshenko's team was preparing a bill on the employment of foreigners in the executive which would not require them to apply for Ukrainian citizenship. Work permits are planned to be issued for one to two years. Information Policy Ministry to cost state 250,000 dollars - Stets The head of the National TV Company of Ukraine, Zurab Alasaniya, has published the edited draft regulations of the Information Policy Ministry which were ridded, as he said, of the most controversial clauses, including censorship over mass media, and development of the standards of TV production and professional journalism. According to the edited regulations, the ministry seeks to ensure the development and implementation of state information policy, mass media reform, and the strategy of state information policy. A number of journalists, Ukrainian and international organizations have criticized the idea to establish this ministry, fearing this may infringe on the freedom of speech in Ukraine. Information Policy Minister Yuriy Stets has said that he will run the ministry from Slovyansk, Donetsk Region. There will be 20 people on the staff and the ministry's annual budget will be 4m hryvnyas (250,000 dollars) at the current exchange rate. He noted that the ministry was established for the period of the military aggression against Ukraine only. Higher Qualification Commission of Judges elects head On 9 December 2014, the Higher Qualification Commission of Judges elected lawyer Serhiy Kozyakov as its head. He was appointed a commission member under the quota of the Justice Ministry on 28 October. Law enforcers join efforts in investigating Maydan crimes The Prosecutor-General's Office, the Interior Ministry and the Security Service of Ukraine have set up a joint operative group to investigate crimes against the Maydan protesters in Kiev, Prosecutor-General Vitaliy Yarema said on 8 December 2014. The group includes 83 investigators and an operative, he said. Almost 10 months has passed since the change of power in Ukraine. Some 115 people, including police troops, were killed during the Maydan 15 © Gorshenin Institute December 2014 All rights reserved IN THE SPOTLIGHT ISSUE 41 (204) 12/15/2014 protests on 18-20 February 2014. Four more activists had been killed before the massive shooting of the protesters. Protesters in Zaporizhzhya demand mayor's dismissal Around 200 activists came to the office of Zaporizhzhya mayor Oleksandr Sin on 10 December 2014 to demand his dismissal. Several dozen protesters accompanied by Radical Party leader Oleh Lyashko entered the building. Under the protesters' pressure, the mayor tendered a resignation letter. However the Zaporizhzhya city council did not approve it. It transpired that several people opened fire on the building of the Zaporizhzhya city council. In a while, police detained the suspected shooters. Earlier, on 6 December, activists stormed the office of the Vinnytsya regional council in protest against the councillors' attempts to dismiss their head Serhiy Svytko, and demanded that governor Anatoliy Oliynyk be dismissed. On 13 December, another rally was held in Vinnytsya, whose participants voiced demands for the resignation of the region's governor and the prosecutor. The Interior Ministry said that the riots in Vinnytsya were due to the differences between the region's leaders. Vitaliy Kovalchuk, a deputy head of the propresidential Petro Poroshenko Bloc, said that this situation played into the hands of Russian special services. He suggested that parliament should disband the Vinnytsya regional council. Andriy Sadovyy, Lviv mayor and Self-Help party leader, believes local elections in Ukraine should be moved from October 2015 to May. Blast rocks central Odessa The Odessa-based office of a volunteer group helping Ukrainian servicemen was hit by an explosion late on 10 December 2014. Earlier, an explosion rocked the Patriot shop selling Ukrainian souvenirs in Odessa. In the early hours of 9 December, unidentified persons blew up a memorial to the Ukrainian Insurgent Army in Kharkiv. No-one was injured by these blasts. In November, a terrorist act was committed at a Kharkiv pub whose management helped the army and displaced persons. Thirteen people were hurt as a result. State Aviation Service closes sky above Kharkiv, Dnipropetrovsk, Zaporizhzhya 16 The State Aviation Service of Ukraine has banned flights to Kharkiv, © Gorshenin Institute December 2014 All rights reserved IN THE SPOTLIGHT ISSUE 41 (204) 12/15/2014 Dnipropetrovsk and Zaporizhzhya as of 13 December for security reasons. Dnipropetrovsk airport said the sky was closed until 15 December due to a terror threat. The news agency Ukrainian News quoted an aviation source as saying that the flights were cancelled because Russian OSCE observers were planning to use Russian military and transport aircraft for their rotation. Court of appeal cancels arrest of Gen Nazarov On 9 December 2014, the Kiev court of appeal cancelled the arrest and lowered the bail to 97,400 hryvnyas (6,088 dollars), for a former deputy chief of the antiterrorist operation, Maj-Gen Viktor Nazarov, suspected of neglect of duty which resulted in the crash of the Il-76 aircraft in Luhansk Region. Earlier, Nazarov has deposited 365,400 hryvnyas (22,840 dollars), thus the court ordered that he be reimbursed 268,000 hryvnyas (16,750 dollars). Prosecution says 241 servicemen killed near Ilovaysk The Prosecutor-General's Office has established that 241 Ukrainian servicemen were killed near Ilovaysk, its chief Vitaliy Yarema has said. Azov regiment commander Andriy Biletskyy said in an interview with the news portal LB.ua that, according to unofficial accounts, over 1,000 soldiers were killed near Ilovaysk. He stressed that the Ilovaysk tragedy broke the army's spirit. The parliamentary committee for national security and defence decided to resume the work of the ad hoc commission investigating the tragic death of Ukrainian servicemen near Ilovaysk. According to preliminary conclusions drawn up by the investigation commission of the previous parliament, 1,000 people died, were wounded or went missing near Ilovaysk. MPs also concluded that the tragedy was a result of the mistakes of Valeriy Heletey as then defence minister and Viktor Muzhenko as head of the General Staff. In late August, pro-Russian militants and Russian troops encircled the Ukrainian security operation forces near Ilovaysk. It was the deadliest tragedy for the government troops over the period of the security operation in Donbas. 5. ECONOMY Ukraine needs another 15bn dollars to avoid default – premier In order to avoid default in 2015, Ukraine needs to raise another 15bn dollars in addition to the funds projected by the IMF standby arrangement, Ukrainian Premier Arseniy Yatsenyuk has said. At the same time, the prime minister expressed hope that Ukraine will receive the required assistance during a dedicated international donor conference. 17 © Gorshenin Institute December 2014 All rights reserved IN THE SPOTLIGHT ISSUE 41 (204) 12/15/2014 Yatsenyuk also cited three reasons behind the deep crisis in Ukraine, namely, the Russian aggression against Ukraine, its energy dependence on Russia, and corruption. For his part, IMF spokesman William Murray called on the international community to provide additional financial assistance to Ukraine, noting that the Ukrainian economy cannot bear the strain amid the military action in the country's east. An IMF mission is currently staying in Kiev, working on the technical issues in the loan programme. The mission is also discussing with the Ukrainian authorities the possible expansion of the loan programme, which is now limited to 17.1bn dollars. According to the Zerkalo Nedeli weekly, the next IMF loan may be granted to Ukraine next year at the earliest. However, the weekly noted, citing the mission's report following its November visit to Kiev, that Ukraine again failed to meet a number of conditions set by the IMF. At the same time, the mission admitted that the hryvnya has fallen more than it was expected. In addition, the current account deficit also exceeded expectations due to a heavy drop in exports. As a consequence of these processes and large-scale interventions in the interbank market, Ukraine's international reserves also dropped below forecast levels, the report says. The press office of the Ukrainian president reported that on 13 December Deputy Managing Director of the IMF David Lipton during a meeting with Petro Poroshenko highly praised the newly formed government of Ukraine, as well as the leadership of the National Bank. Earlier, the Financial Times reported that the IMF advised Western governments on the urgent need to raise 15bn dollars for Ukraine. However, the IMF's proposal was met with coolness due to Kiev's slow implementation of economic and administrative reforms, the newspaper says. The Wall Street Journal reported, citing its own sources, that the G7 member states are discussing the possibility of providing financial assistance to Ukraine in the amount of 4bn dollars. Ukraine GDP to fall by 8 percent in 2014 – Moody's According to Moody's Investors Service, a global rating agency, the Ukrainian economy will contract by 8 percent in 2014 and by another 2 percent in 2015. Among significant risks for the country, the rating agency's analysts name political uncertainty and geopolitical tensions, absence of structural reforms, high dependence on foreign investments, falling foreign exchange reserves and the need for significant recapitalization of commercial banks. The Ukrainian government forecasts a 7-percent drop in GDP in 2014. 18 © Gorshenin Institute December 2014 All rights reserved IN THE SPOTLIGHT ISSUE 41 (204) 12/15/2014 Premier expects adoption of 2015 budget by year's end Ukrainian Prime Minister Arseniy Yatsenyuk says that the state budget for 2015 with a new taxation base should be passed before the end of December. At the moment, the government is finalizing changes to the tax and budget legislation, as well as the law on the state budget, taking into account the propositions voiced by the parliamentary coalition. The Interfax-Ukraine news agency reported, citing its own sources, that the government has prepared a draft budget for 2015 based on a deficit of 3.7 percent of GDP, GDP of 1.72tn hryvnias (107.5bn dollars), real GDP of “minus” 4.5 percent, and inflation of 13.5 percent. It should be noted that last week the Zerkalo Nedeli weekly published changes to the legislation recommended by the Finance Ministry aimed at optimization of budget expenditures. In particular, the Finance Ministry proposes saving 4.3bn hryvnias (268.75m dollars) by raising the retirement age for men and women to 65 years and limiting payment of pensions to working pensioners to 90 percent of the pensions awarded to them. The document also suggests putting on hold indexation of pensions until Ukraine's economy stabilizes. In addition, the document recommends reducing the term of compulsory education in secondary schools from 11 to 9 years. At the same time, the Finance Ministry proposes amendments to the constitution that will reduce the number of lawmakers from 450 to 150 MPs. However, the Finance Ministry reported that the document published in the media is just one of several proposals developed by them. It has also become known that the Finance Ministry, jointly with the State Fiscal Service, is preparing a draft tax reform and is going to submit it to parliament for consideration. The document, in particular, projects a new 30-percent tax on any amount of individuals' expenditures that exceeds their income. Defence Ministry asks to double military budget Defence Minister of Ukraine Stepan Poltorak has said that there is the need to increase the defence budget for 2015 to 50bn hryvnyas (3.13bn dollars) because, in his opinion, very soon Ukraine will face a threat from the southern direction. The defence minister said that the money will be spent on creation of new units, special forces and four operational commands for controlling the army on the territorial principle. According to him, 6.5bn hryvnyas (406.25m dollars) will be channelled into purchase of weapons, including 5.7bn hryvnyas (356.25m dollars) for purchase of arms from domestic enterprises. Poltorak also outlined the plans to increase the size of the army in the next year from 232,000 to 250,000 people. It should be noted that back in 2013 Ukraine had 130,000 servicemen. 19 © Gorshenin Institute December 2014 All rights reserved IN THE SPOTLIGHT ISSUE 41 (204) 12/15/2014 Earlier, Prime Minister Arseniy Yatsenyuk said that 5 percent of GDP will be allocated in the 2015 budget for boosting national security, defence and law enforcement. In 2014, the ministry's budget was 15bn hryvnyas (937.5m dollars) while an additional 11bn hryvnyas (687.5m dolars) was allocated from the reserve fund of the national budget. Communications commission calls 3G license tender The National Commission for Regulation of Communications and Information System Development on 9 December announced a tender for the sale of three licenses for provision of mobile communication services in UMTS (3G) standard. The cost of one license will be 2.7bn hryvnias (168.75m dollars). It will be issued for a period of 15 years. The commission accepts applications for participation in the tender from 15 December to 15 January; the results will be announced on 16 February. Currently, only Ukrtelecom and its subsidiary Trimob (owned by Rinat Akhmetov) have a license for 3G communications in Ukraine. As it became known last week, the Prosecutor-General's Office demanded revoking Trimob's 3G communications license, according to website capital.ua. The agency explains that the license for 35 MHz was issued to Ukrtelecom in 2005, and Trimob received 30 MHz of this band in 2011. The prosecutor's office believes that the national commission violated the Ukrainian legislation by reissuing one license to two companies (Ukrtelecom received the remaining 5 MHz). Also, the prosecutor's office said that Ukrtelecom obtained the license without any competition and on preferential terms. Other companies had to receive the licenses only through a tender. Hryvnya rate continues to fall Over the past week the official exchange rate of the US dollar rose from UAH/USD 15.41 to UAH/USD 15.71. The euro rate in the same period increased from UAH/EUR 18.98 to UAH/EUR 19.52. Meanwhile, the dollar exchange rate on the black market exceeded UAH/USD 18. It should be noted that at the beginning of this year, the hryvnya exchange rate stood at UAH/USD 8. Money supply up by 1.3 percent in November According to the National Bank, the money supply in Ukraine, including cash in circulation and money on current and deposit accounts in commercial banks, in November increased by 1.3 percent to 971.78bn dollars (60.74bn dollars). 20 © Gorshenin Institute December 2014 All rights reserved IN THE SPOTLIGHT ISSUE 41 (204) 12/15/2014 Since the beginning of 2014, the money supply has increased by 6.9 percent. In addition, according to regulator's updated data, over 11 months, the monetary base, which includes non-cash money in commercial banks' accounts in the National Bank and cash in circulation, increased by 6.9 percent to 328.39bn hryvnias (20.25bn dollars). The volume of cash in circulation since the beginning of the year has increased by 18.8 percent to 282.401bn hryvnias (17.65bn dollars). 6. ENERGY Ukraine starts importing gas from Russia Ukraine on 9 December started importing natural gas from Russia in the amount of 43.5m cu.m. per day, the state-owned company Ukrtranshaz has reported. Ukraine on 5 December made an advance payment for 1bn cu.m. of gas. The state-run energy company Naftohaz Ukrayiny expects that the price of Russian natural gas in the first quarter of 2015 will be below 340 dollars per 1,000 cu.m. due to lower oil prices in the world market. Energy expert Yuriy Korolchuk at a roundtable at the Gorshenin Institute noted that, according to his forecasts, the price of Russian gas after the “winter package” ends will stay near 350 dollars if Ukraine and Russia manage to agree on continuing the supplies and the discount. Currently, the price of Russian gas for Ukraine makes 378 dollars. Ukraine almost doubles gas imports from Europe According to the state-run company Ukrtranshaz, Ukraine over 11 months increased natural gas imports from Europe by almost two times to 4bn cu.m. From the beginning of the current month to 8 December, Ukraine received 242.9m cu.m. of natural gas from Europe. Gas transit from Russia via Ukraine drops by quarter According to the state-owned company Ukrtranshaz, the operator of the Ukrainian gas transport system, the transit of Russian natural gas through Ukraine to Europe in January-November 2014 decreased by 25 percent compared to the same period of 2013, to 58bn cu.m. At the same time, the news agency Ukrainian News reported, citing a source in the Cabinet of Ministers, that Ukraine in November reduced transit of natural gas by 49.3 percent compared with November 2013 to 3.8bn cu.m. of gas. 21 © Gorshenin Institute December 2014 All rights reserved IN THE SPOTLIGHT ISSUE 41 (204) 12/15/2014 Prime Minister Arseniy Yatsenyuk has said that Ukraine plans to announce a tender for attracting investors from the United States and the European Union to modernize the gas transport system and to operate the Ukrainian gas storage facilities. President's administration suggests selling Naftohaz The state-run energy company Naftohaz Ukrayiny should be privatized, according to the deputy head of the presidential administration Dmytro Shymkiv. In 2012, the Ukrainian parliament allowed reorganization of Naftohaz with the condition that none of its subsidiaries will be privatized. It should be noted that the Cabinet of Ministers, according to its action programme, plans to ensure the full financial recovery of Naftohaz by 2017 and to close 32 unprofitable coal mines during 2015-19. Naftohaz allows private companies to import gas The state-run energy company Naftohaz Ukrayiny has given the green light to all private companies to import natural gas to Ukraine from any direction, Prime Minister Arseniy Yatsenyuk said on 11 December. Government plans to raise energy tariffs Tariffs on energy consumption in Ukraine will rise to market levels, Prime Minister Arseniy Yatsenyuk has said. At the same time, he mentioned that the state-run energy company Naftohaz Ukrayiny has a large deficit which has amounted to 110bn hryvnyas (6,88bn dollars) over the year. Naftohaz head Andriy Kobolev predicts a three to five-fold increase in gas tariffs for consumers. At the same time, he added that the government will develop a new, more effective system of subsidies for those who cannot afford buying gas at high rates. Ukraine almost halves coal production in November According to the Trade Union of Coal Industry Workers, Ukraine's coal mining enterprises in November 2014 reduced coal production by 43.7 percent to 4.1m tonnes from 7.3m tonnes in November 2013, the news agency UNIAN reported. At the same time, the Interfax-Ukraine news agency said, citing a source in the Energy Ministry, that last month imported coal accounted for 82.2 percent of the consumption in Ukraine. So, in November at was supplied to domestic thermal power plants and combined heat and power plants 693,400 tonnes of coal from Russia, 213,700 tonnes from South Africa and 65,100 tonnes from Australia. At the same time, shipments of Ukrainian coal to thermal power plants and cogeneration plants in November made only 210,700 tonnes. Experts believe that Russia, instead of its domestically produced coal, may be 22 © Gorshenin Institute December 2014 All rights reserved IN THE SPOTLIGHT ISSUE 41 (204) 12/15/2014 selling to Ukraine coal mined in occupied Donbas at inflated prices, the Zerkalo Nedeli weekly reported. DTEK and Centrenerho reported that no Russian coal was delivered to Ukraine after 6 December. As was reported, Ukraine is experiencing shortages of certain types of thermal coal (lean and anthracite coal) due to the military conflict in Donbas, which for Ukraine was the primary place of production of these types of coal. There is also a problem with transporting coal from the antiterrorist operation zone. Coal shortages have led to rolling blackouts across the country. Ukrinterenerho denies reports on unsuitability of South African coal The 248,860 tonnes of coal imported from South Africa have been entirely used by Centrenerho to produce electricity, and the company has no claims with regards to the coal quality, according to an open letter dated 8 December from Ukrinterenerho, which earlier signed a contract for the supply of this coal, to the president, prime minister, speaker and head of the Energy Ministry. British company Steel Mont Trading, the supplier of South African coal, has also denied the accusations that it had supplied a low-quality product at an inflated price. On 5 December, the Kiev Pecherskyy district court ruled to arrest Volodymyr Zinevych, director of the state-owned enterprise Ukrinterenerho, as was advised by the Prosecutor-General's Office. The Prosecutor-General's Office suspects that he signed a contract for purchase of South African coal, which by certain qualitative indicators is supposedly unsuitable for the use at Ukrainian thermal power plants. At the same time, the purchase price of coal allegedly increased from the initial 86 dollars to 134 dollars per tonnes. After the scandal around the state-owned company Ukrinterenerho, the remaining volumes of coal in the amount of 240,000 tonnes were bought out by DTEK of businessman Rinat Akhmetov. Also, President of Ukraine Petro Poroshenko and Australian Prime Minister Tony Abbott during a meeting on 11 December agreed to discuss in the near future supplies of Australian coal to Ukraine. Purchase of coal from Donetsk and Luhansk “people's republics” illegal – Prosecutor-General's Office Prosecutor-General Vitaliy Yarema has said that Ukraine cannot buy coal from the self-proclaimed Donetsk and Luhansk “people's republics” and such actions will be considered as financing of terrorism. Deputy Prime Minister Vyacheslav Kyrylenko has confirmed that the cabinet will not purchase coal from the Donetsk and Luhansk “people's republics”. 23 © Gorshenin Institute December 2014 All rights reserved IN THE SPOTLIGHT ISSUE 41 (204) 12/15/2014 Earlier, Energy Minister Volodymyr Demchyshyn noted that it was possible to maintain coal supplies from state-owned mines in the rebel-controlled parts of Donbas in a few days. On his part, governor of Donetsk Region Oleksandr Kikhtenko lobbied for the legalization of coal purchases from the Donbas territories occupied by the militants. According to him, the sides are continuously holding behind-thescenes negotiations on purchase of coal from the terrorists. Currently coal from the occupied territories is smuggled into Ukraine. Ukraine to buy 1,500 MW of electricity from Russia – Russian minister Russian Energy Minister Alexander Novak has said that Russia has received an order from Ukraine for supply of 1,500 MW of electric power. He added that electricity flows from Russia to Ukraine and from Ukraine to Russia never stopped. As was reported on 7 December, the Ukrainian cabinet agreed with the proposal from the Energy Ministry to allow temporary imports of electricity from neighbouring countries, including Russia. Ukrhazvydobuvannya head detained by Security Service, released by court on bail The Security Service of Ukraine and the Kiev Prosecutor's Office on 10 December detained head of Ukrhazvydobuvannya Serhiy Kostyuk on suspicion of malpractice resulting in damages to the state in the amount of 23m hryvnias (1.44m dollars). The case against Ukrhazvydobuvannya's top manager concerns a contract with a “private company which owns a major chain of gas stations in Ukraine” (according to unofficial information, the said company is WOG Trading of MP Ihor Yeremeyev). As a result of additional agreements signed by Kostyuk and his deputy, this firm received the right to receive nearly 18,000 tonnes of fuel without any prepayments and at an understated price. On 11 December, the Kiev Pecherskyy district court released Kostyuk on bail worth 1.1m hryvnias (68,000 dollars), according to the news agency Ukrainian News. Ukrhazvydobuvannya, which is fully owned by the state-run energy company Naftohaz Ukrayiny, is the largest Ukrainian producer and processor of natural gas and gas condensate. Cabinet to build two units at Khmelnytskyy nuclear plant In order to mitigate problems with energy supplies, the Ukrainian government has decided to complete the construction of two power units at the Khmelnytskyy nuclear power plant before 2018, Prime Minister Arseniy Yatsenyuk has said. 24 © Gorshenin Institute December 2014 All rights reserved IN THE SPOTLIGHT ISSUE 41 (204) 12/15/2014 According to him, the cabinet has also set a task to increase capacities of the Yuzhnoukrayinsk, Khmelnytskyy and Rivne nuclear power plants to a total of 3,000 MW during 2015. Also, on 13 December, the Zaporizhzhya nuclear power plant completed scheduled maintenance of its power unit No 1 ahead of time due to a large deficit of electric power in Ukraine's grids. Currently, 13 of 15 power units at four nuclear power plants in Ukraine remain operational; the rest of the units are undergoing repairs. In addition, the prime minister said that Ukraine plans to buy nuclear fuel from Westinghouse, an American company. Currently, nuclear fuel is supplied by Russia's TVEL company. Founded in July 2010, Gorshenin Weekly is a weekly digest of expert analysis covering the most important political, social and economic events in Ukraine. It is the key source of information about opinion polls carried out by the Gorshenin Institute as well as the best professional commentaries on recent developments. Gorshenin Weekly is available in Russian and English. Gorshenin Weekly has over 700 subscribers in the EU, the USA, Russia, Ukraine and other countries. Its regular customers are representatives of the embassies, the European Commission, the European Parliament, the US Department of State, leading international analytical centres, Ukrainian and international mass media. If you wish to subscribe to Gorshenin Weekly please send your request to the following e-mail address: [email protected]. Our contact information: 18b Mala Zhytomyrska st., Kiev 01001, Ukraine +38 044 230 4962 +38 044 230 4966 f [email protected] For more information please visit our website http://gorshenin.eu/ 25 © Gorshenin Institute December 2014 All rights reserved
© Copyright 2024