01-07.09.2014 Ukraine: Weekly Highlights - Summits of EC and NATO, Minsk protocol of truce in East Ukraine

01-07.09.2014 Weekly Highlights by “Digests & Analytics Ukraine” News Agency

On behalf of Ukraine, Ex-president of Ukraine Leonid Kuchma has signed a cease-fire protocol with terrorists occupying Donbass, in the presence of Russian ambassador and OSCE representatives. NATO has held a summit in the Wales devoted to policies related to the Russian aggression in Ukraine. The European Parliament have decided to introduce additional sanctions against Russia and its puppets. Political parties are getting ready for the early elections against the backdrop of worsening of the situation in the eastern Ukraine and economic decline.

War in Ukraine

• President Poroshenko, after consulting with the parliament fractions leaders, decided not to introduce a martial law in the country. The cease-fire, reached on 5th of September during negotiations, which included ex-President of Ukraine Kuchma, Russian ambassador Zurabov, OSCE representatives and representatives of terrorist groups DPR & LPR, is being regularly breached by militants. They are regularly shelling Ukrainian military positions and residential areas of the cities, at the same time, intensity of shelling have declined. Luhans’k has been without water and electricity supply, as well as without garbage removal, for about one month. Prime-minister Yatsenyuk hasn’t excluded an option of martial law introduction, should the truce fall apart. The same has been confirmed by the Speaker of Verkhovna Rada Turchunov. Under the truce conditions, both sides exchange military prisoners, which from Ukrainian side is being conducted by a coordination center created within the SSU.
• At the beginning of the week Russian army and militants continued to advance on Ukrainian army positions across the front. That has enabled to unify territories, controlled by LPR and DPR. Ukrainian troops faced severe casualties in the encirclement near Ilovaysk. Ukrainian army has left the Luhans’k International Airport, blasting the take-off runway beforehand. Russian troops have seized the south of Donets’k region and attempted to advance to Mariupol, but the attack has been repelled by Ukrainian army. Two fortification lines have been built around Mariupol. Fortification construction is ongoing in Zaporizhya, Dnipropetrovs’k and Kherson regions. Several Ukrainian settlements have been completely annihilated as well as hundreds of civilians have been killed and wounded during the warfare.
• International observers, as well as US and NATO intelligence, have evidenced thousands of Russian military units and tens of thousands of Russian troops, fully ready for invasion, concentrated on Ukrainian borders and on the line separating the Crimea from continental Ukraine.
• SSU massively captures subversive and intelligence groups engaged in preparation of terrorist acts both in the combat zone, a well as throughout the Ukraine.
• President Poroshenko has signed a law simplifying the military conscription.

Politics

• NATO summit took place in the Wales with the central topic being alliance policies related to Russian aggression in Ukraine. As a result, a decision to support Ukraine and provide the country with military and technical assistance, have been made. Rapid Deployment Forces will be created as a response to the situation. Military exercises are being conducted throughout all CEE countries, aimed to work out the combat collaboration.
• Central Elections Commission have formed 213 election districts for the upcoming early parliamentary elections, which will be held according to the old law with closed party candidate lists and majority districts, excluding temporarily occupied Crimea. Former members of the Party of Regions, as well as several odious politicians have already became parliamentary candidates. Political parties started to hold conventions and form election blocks. Parliament refused to adopt a law on the elections financing, as various patties propose significant budget reductions.
• School year has just started throughout Ukraine, excluding territories controlled by LPR and DPR terrorists, who’ve declared they will introduce a Russian school system curriculum within these regions.
• Russia is getting prepared for a revision of its military doctrine, moving from the nuclear containment policy to the concept of preventive nuclear strikes.
• European Parliament has adopted a package of new sanctions against Russia to be announced on September 9 as a response to Russian troops present in Ukraine and a continuing supplies of arms and mercenaries.

Economy

• National Bank has strengthened Ukrainian Hryvnya via market interventions, allowed fluctuations of 3%, finishing with 1% of currency improvement to 12.82 UAH/USD, 16.69 UAH/EUR, 3.42 UAH/10 RUR. All in all during the month, NBU reserves have shrunk by 1.5% and are equal to 15.8 bln. USD.
• Due to the sharp decline of coal mining output throughout Donbass mines and erosion of its stockpiles at thermal power stations, production of electricity have declined within the Ukrainian power system. That could cause a need for imports. Crimea will face black-outs for few hours during the day. Reverse gas supplies from Slovakia have recently started in full scale. Prime-minister Yatsenyuk stated that gas reserves within the country are sufficient for residential areas heating during the winter, but high temperature couldn’t be promised.
• Inflation increased in August to 0.8% monthly, reaching 12.9% as of YTD. IMF has provided Ukraine with the consecutive tranche of stabilization credit and foresee that if the conflict in Ukraine progresses further, 19 bln. USD of extra financial aid will be required.  
• Prime-minister Yatsenyuk introduced a program of reforms «The Country Renewal», which includes renewal of Ukrainian sovereignty, activation of the Association Agreement with the EU, introduction of the visa-free regime, rehabilitation of the combat operations participants, renovation of Donbass, decentralization of power, new tax system and a fight against corruption.
• National Agency of Donbass Renewal has been created. Prime-minister Yatsenyuk projects that around 8 bin USD are needed for the project.
• Volnogorsky and Irshansky ore mining and processing enterprises, previously rented by oligarch Firtash, have been recently returned to the state ownership.