29/09-05/10/2014 Ukraine: Weekly Highlights - Early parliamentary elections - Battle for Donetsk International Airport - "Third gas war"

29/09-05/10/2014 Weekly Highlights from “Digests & Analytics Ukraine” News Agency

Early parliamentary elections will not dramatically change parliament’s composition and quality. Donetsk International Airport is a hot spot on the front line. Terrorists don’t adhere to the cease-fire agreement. They attack positions of Ukrainian army and shell towns. Gas war with Russia heads towards culmination.

Ukraine

Battle for Donetsk International Airport

• 10 Ukrainian military have been killed during non-stop militants attack and shelling of Donetsk International Airport. Casualties from attackers side: tens of dead and hundreds wounded. Territory of the airport is fully controlled by Ukrainian army. Rotation of troops has taken place. Ammunition and equipment have been provided.

Shelling of cities and civilian casualties

• Donetsk, Mariupol, Popasna, Debaltseve, Schastye and other cities and towns near the front line are continuously and intensively shelled by militants. Civilians are killed and wounded every day. An associate of the International Red Cross has been recently killed. Terrorists use residential areas as a cover when shelling Ukrainian army positions. Russian media presence in the hot spots of events demonstrates planned character of civilian intimidation actions.

Attempts to redraw borders of seized territories

• Militants have recently seized parts of the territories of southern Donetsk region in the area of Dokuchaivs’k, Volnovakha, as well as south-east of Mariupol. Across the frontline breaching the Minsk memorandum, terrorists are trying to push back Ukrainian units and seize additional territories.

Construction of military fortifications

• The project to build fortification complex «The Wall» along the state border with Russia have been transferred from the Ministry of Regional Development to the State Border Control Agency. Minister of Internal Affairs Avakov believes that The Wall should be placed along the border, but today around 200 km of the state border are under control of Russia and DPR, LPR terrorists. Ukrainian Government claims that readiness of defense fortifications is around 80% and that Mariupol is well protected.

Biased position of the OSCE

• OSCE officially confirmed the presence of DPR terrorists in a car belonging to the organization. OSCE observers are monitoring only Ukrainian army actions, as they’re not admitted to the positions of militants. Several episodes of OSCE observers helping Russian officers to move around territories controlled by Ukrainian army have been evidenced and documented in Debaltseve. As cease-fire has been breached, OSCE considers decrease of the mission patrols in the combat area.

Russia is getting ready to a new wave of war

• Russia is not going to solve the problem of supplying goods to Crimea without land corridor via southern Ukraine. Therefore, it is getting ready for an active combat operation, concentrating troops, armored vehicles and subversive groups along the administrative border of Crimea. Russian troops are consolidating in Donbass, receiving new armor and building command posts, installing transport and field commanding offices, reorganizing civilian hospitals for military use.
• One of the DPR leaders Purgin has confirmed that Russian troops are located in Donetsk. They lead militant units and Russian mercenaries attacking Donetsk International Airport and attack Ukrainian army strongholds within Donbass.

Problems of refugees, resettled persons and inhabitants of occupied territories

• Almost half of population have left Donetsk, as estimated by those who remained. Recently returned are fleeing the city again due to intensive shelling.
• According to information from the UN Humanitarian Mission as of 30 of September, around 800 thousands civilians have left the combat area. Among them are around 380 thousands, who left to other countries.
• DPR and LPR terrorists are trying to withdraw Ukrainian passports from population while providing «ID cards» in exchange.  Martial las have been introduced in many cities. Hospitals critically lack doctors. Evidence has been recorded of terrorists using weapons to disperse civilian food riots.

«Humanitarian Convoys»

• Russia does not intend to abloish the practice of «humanitarian convoys», despite the absence of coordination with the International Red Cross or customs clearance. The forth convoy brought to Ukraine around 2 000 Russian troops from the Pskov Paratroopers Division.

Politics

Early Parliamentary Elections

• Analysis of candidate lists of parties revealed more than 100 former deputies, who voted  on January 16 for «dictator laws» of Yanukovych. Central Elections Committee use a selective registration practice to eliminate objectionable candidates and register odious ones, which should be lustrated instead. Tax declarations, submitted by many of candidates, are formal and don’t reflect their real financial situation. Political programs of the parties mostly copy each other and are little more than declarations of intentions.
• DPR and LPR don’t prevent the placement of the outdoor advertising of the «Opposition Block» party within the territories they control.
• Bribing of voters, massive outdoor campaigns, non-transparent tax declarations of parliamentary candidates, inclusion of those involved in corruption and financing of terrorists on the candidate lists, and active campaigning by those in power - all of this reveals that current authorities would like to maintain the former system of elections and state governance.
• Voters believe that the money spent on election campaigns could be better spent to support Ukrainian army during the war.

Events in Kharkiv

• Situation in the city became tense after civil activists demolished the Lenin’s monument. City mayor Kernes declared that the monument will be restored. The city have been patrolled by the National Guard in armored vehicles. An arsenal of arms and APC have been discovered in a garage of one of the city enterprises.

International Politics and Ukraine

• Both European Council and European Commission are strongly against a revision of the association agreement with Ukraine, which is being strongly pushed for by Russian President Putin. European Union member states and the US are not considering termination of the sanctions against Russia and are getting ready to strengthen them if Russian aggression against Ukraine escalates. Chinese Ambassador in Germany said that his country will not join the sanctions. On the contrary, it is fully ready to get into the vacated niches of Russian markets.
• As mentioned by the US President Obama, Ukrainian conflict will not lead to a war between NATO and Russia. This could happen only in case of Russian aggression against one of the alliance member states.
• International Red Cross has terminated its activities in Ukraine until the question of personal security of its mission workers is resolved after the killing of one of the employees, a Swiss citizen, during a shelling in Donetsk.

Lustration and Reforms

• As per opinion of one of the leading experts of the World Economy Institute Oslund, the President and the Prime Minister haven’t made any conclusions from Maydan. Parties are trading positions on parliamentary election lists. Nobody fights against corruption. This could lead to a new wave of civil protests against the new authorities.
• Tension is growing within Ukrainian society. In the absence of reaction of law enforcement and the judiciary on corruption, support for terrorism, and with the lack of lustration, civil activists are beginning to use physical force against politicians, which could lead to transformation of peaceful protests into lynching.
• President Poroshenko continues to build the «power vertical» from his former colleagues. As per reports in media, the Deposits Warranty Fund could be given to the top manager of the «Mriya» bank and «Bohdan» corporation - Voryshilin.

Economics

«The third gas war» and energy challenges

• Gazprom reduced natural gas supplies to Europe by 25% in order to prevent re-export to Ukraine. The EU decided to revise its energy policy due to the Russian aggression in Ukraine and to diversify the sources of energy. Transit of natural gas through the territory of Ukraine has been cut by more than one third vs. August 2013.
• Poland renewed reverse natural gas supplies to Ukraine. Gazprom declined accusations in reducing natural gas supply to Slovakia.
• Prices for the Brent oil have reached two year low level. As a consequence, prices of URALS went down, below the level counted for in the Russian state budget.
• Naftogas paid its Eurobonds debt as planned.
• Ukrainian Government almost halved norms of natural gas consumption for households, which are used by regional authorities for their calculations, and prohibited chemical inductry to use natural gas from state underground storage facilities.

Hryvnya exchange rate and NBU policies

• National Bank has withdrawn Forex trade licenses of two banks for speculations on the exchange rate fluctuations. Official exchange rate of Ukrainian hryvnya vs. all major currencies remained unchanged. At the same time, NBU sells around 200 mln. USD daily on currency auctions. Cash currency exchange market went into shadows. Banks sell only the currency turned in. Real exchange rate is around 14.7 UAH/USD.
• Experts are skeptical about results of the first 100 days of the NBU Head Gontareva and criticize her for excessive administrative interventions into the foreign exchange market.

Reorientation of the economy towards the West

• Ukraine has decreased exports to the member states of the Customs Union by 30%. Exports to the EU have grown by 15%. Prime Minister Yatsenyuk declared readiness to introduce sanctions against Russia.