Ukrainian Weekly Highlights March 21–27, 2016 from Digests & Analytics Ukraine
New candidate for the Prime Minister post is Parliament Speaker Groisman – The law on "dictatorship of the party leaders" – Scandal at the Prosecutor General's Office – Elections in Kryvyi Rih – Is the economy recovering? – Gas talks postponed till April – Gas stations simultaneously raised gasoline prices – Minsk talks came to a standstill – Fighting in Donbas renewed – Savchenko convicted by the Russian court – Terrorist attack on Brussels – Kerry and Steinmeier persuade Putin to comply with Minsk agreements
New candidate for the Prime Minister post is Parliament Speaker Groisman
Negotiations on reformatting the coalition and the government are continuing for the fifth week in a row. Prime Minister Yatsenyuk refused to resign. The parliamentary coalition ceased to exist after the the Radical Party MPs officially withdrew their voices. At the initial stage ofnegotiations, Finance Minister Yaresko was nominated for the Prime Minister post. She stated that she was ready to head the "technocratic government" to bring the country out of the crisis. However, the party congress оf the Petro Poroshenko Bloc eventually nominated Parliament Speaker Groisman.
The Presidential team is in hurry to give Poroshenko a chance to report during his visit to the United States that the parliamentary and government crisis is over.
According to some Ukrainian analysts, Groisman’s rating is nearing zero, similar to that of the current Prime Minister Yatsenyuk, so the Cabinet proposals will be sabotaged by the Parliament and will not receive public support. The decision to create a new coalition is not likely to be adopted on March 29, since the negotiations for the allocation of seats in the new Cabinet and for the post of the Parliament Speaker are in full swing.
Groisman is under the full control of President Poroshenko, so this appointment would mean the concentration of all the levers of power in the hands of the President. This would definitely be dangerous for the society. Prime Minister Yatsenyuk argues that with this goal, targeted attack were conducted against his government during the year to discredit it.
Next week, President Poroshenko’s team hopes to form a new coalition, however, if the People’s Front refuses to participate in it, Yatsenyuk would remain the Head of the Cabinet.
Scandal at the General Prosecutor's Office
Deputy Prosecutor General Sakvarelidze accused Prosecutor General Shokin of firing the group of investigators in the case of the so-called "diamond prosecutors" and of refusing to transfer cases to the National Anti-Corruption Bureau and the Specialized Anti-corruption Prosecutor's Office. According to him, the US stopped funding the reform of the GPO because of dissatisfaction with the Prosecutor General. Prosecutor General's Office responded that the investigators were not dismissed, but transferred to a new unit.
Shokin has not yet been dismissed, despite the direct demand of the foreign partners. He wrote a letter of resignation, which will only be considered by the Parliament on March 29. Sakvarelidze states that Shokin covers corruptionists in the GPO. Prior to his eventual dismissal, Shokin attempts to "bury" high-profile cases by dismissing or transferring to another position of GPO’s key investigators.
Some experts believe that the GPO is confident that even in the event of the possible Shokin’s resignation, the current system of mutual cover-up, bribery and "protection" would remain untouched.
Seven deputies from the Odessa region wrote a letter to the Prosecutor General demanding the dismissal of Sakvarelidze. It becomes obvious that the "Calling of the Varangians" to the government bodies combined with the President’s unwillingness to reform the power structure is only a cover for the absence of reforms. Poroshenko wants to keep under his full control the General Prosecutor's Office, which is formally considered to be an independent agency, but in reality serves the interests of the President.
Elections in Kryvyi Rih
Samopomich party did not acknowledged the defeat of their candidate in the mayoral elections in Kryvyi Rih on October 25. The party lost all court hearings to recognize the elections to be void. The Central Election Commission announced the incumbent mayor Vilkul the winner. However, after numerous protests and fighting in the Parliament, the Verkhovna Rada appointed new elections.
Surprisingly for the city residents, Samopomich named as the mayoral candidate not Myloboh, who won almost the same number of votes as Vilkul, but the controversial Donbass battalion commander Semenchenko. The GPO is investigating a number of criminal cases against Semenchenok, who is suspected of illegal deprivation of liberty, abuse of power, forgery, use of forged documents, and the illegal acquisition of a military rank. Therefore, the outcome of the election was obvious, and was only confirmed by March 27 vote. According to exit poll results, Vilkul won in a landslide.
Most analysts agree that the nomination of Semenchenko was part of the plan to lose the election and was the result of backroom agreements between Samopomich and the former Party of Regions. Such actions of Samopomich have significantly reduced its ratings, which in case of the possible parliamentary elections worsens its chances.
The law on "dictatorship of the party leaders"
The congress of the Petro Poroshenko Bloc revoked the Parliament seats of two MPs who had left the faction, and deprived 13 parliamentary candidates of their party tickets. The Central Election Commission excluded them from the lists of candidates for seats in the Verkhovna Rada. 9 candidates were also excluded from the list of the Radical Party and 11 from the list of Samopomich.
According to European lawyers, the law violates the basic rights of voters, as the excluded candidates increased the rating of the party before the elections. Several MPs filed a submission to the Constitutional Court to declare the law unconstitutional.
Is the Ukrainian economy recovering?
The government announced the major macroeconomic indicators of economic development, which show a slight growth. The State Statistics Service reported that industrial production grew in February by 7.6% compared to February 2015. Since the beginning of the year, Ukrainian industry grew by 3%. However, the drop in the world prices for the main commodities exported by Ukraine can affect the inflow of funds to the budget. It will be possible to assess the results not earlier than at the end of six months.
Prime Minister Yatsenyuk reported that in February GDP growth was 1%, which meets the expectations of the government. According to the official data, in 2015 GDP dropped by almost 10%. According to the CIA data, inflation in Ukraine in 2015 was 49%, while the GDP dropped by 11%. By all indicators, Ukraine is at the end of the list of countries covered by the CIA report.
The foreign exchange market reacts nervously to the unstable environment. During the week, there were significant fluctuations in the hryvnia exchange rate. However, by the end of the week, the rate gradually increased, allowing the NBU to buy $42 million. Financial stability indicators were influenced by the loan of the Government of Japan in the amount of $331 million, issued to Ukraine on preferential terms to improve the efficiency and transparency of the public sector and the business environment.
Gas talks postponed till April
Tripartite talks between the EU, Russia and Ukraine, scheduled for March, did not take place. Head of Naftogaz Kobolev argues that this was due to the unwillingness of Gazprom. The European Commission insists on holding the negotiations, as the preprations for the 2016/17 heating season are underway. Kobolev believes that the negotiation process is affected by the uncertainty of the status of the Ukrainian government. He believes that the negotiations will take place in April.
Gas station operators simultaneously raised gasoline prices
Most gas station networks during the day synchronously raised fuel prices at UAH0.3-1.0 per liter. The next day, Privat Group gas stations also raised prices. Experts explain this by increased costs and the instability of the national currency. Preparations are underway in Lisichansk to resume the work of the oil refinery, despite the proximity to the front line. Ukraine buys most of the automobile fuel abroad.
Minsk talks came to a standstill
The parties of the contact group at Minsk talks failed to agree on any of the major issues. Ukrainian delegation stated that the militants constantly violate the ceasefire and do not withdraw heavy weapons. Without solving the security problem, it is not possible talk about any progress in the humanitarian, political and economic issues. The issue of the control of the state border by the OSCE Mission also remained unresolved. Militants and Russia refuse to release hostages. The exchange process is stalled. Ukraine demands to release Nadiya Savchenko and other Ukrainians, according to the Minsk agreements, as well as those who have been in captivity for over a year and need medical attention. Ukrainian delegation insists on inviting foreign environmentalists under the auspices of the OSCE to assess the situation at the plants that could cause an ecological disaster in Donbas and in the Azov Sea.
The failure of the negotiations in Minsk and the complete refusal of the parties to comply with the "agreements" clearly show their futility. Most politicians came to the idea that the resolution of the conflict in Donbas requires a new negotiation format. However, President Poroshenko has built his policy of putting pressure on Russia on the implementation of these agreements. At the same time, foreign partners keep reminding Ukraine that it has committed to amend the Constitution, adopt the laws on the special status of the occupied territories, grant amnesty to the militants and hold elections there. In the current conditions of the de-facto occupation of the "certain districts of the Donetsk and Luhansk regions" by Russia and the ongoing hostilities, it is impossible to meet these requirements.
Fighting in Donbas renewed
Fighting for the suburb of Avdiyivka continues, as this is a key outpost from where the Ukrainian army can control the strategically important Donetsk-Horlivka highway used to move military equipment. Militants are using heavy artillery and tanks, but all their attacks were repelled successfully. Difficult situation persists in the outskirts of Horlivka and the Svitlodarsk salient, where there is no active fighting, but which are shelled on a daily basis. The occupation army tried unsuccessfully to test the Ukrainian defense at Maryinka and Novotroyitske, but retreated after suffering heavy losses.
Intelligence reports that Russia keeps sending to Donbas large numbers of troops, heavy equipment and munitions through the uncontrolled part of the border. Аdvanced forces are being reinforced with manpower and equipment, front-line hospitals are being deployed in close proximity to the front lines. Russia has relocated to the Ukrainian border another 10,000-strong division, which could serve the base for the supply of equipment and personnel to the militants.
Some experts believe that Russia is preparing the army corps formed in Donbas under the Russian command and staffed mainly with Russian military personnel to put pressure on Ukraine and to probably begin active operations in late spring.
Savchenko convicted by a Russian court
Russian court convicted Ukrainian MP Nadiya Savchenko and sentenced her to a prison term of 22 years. She and her lawyers said they would not appeal the verdict. President Poroshenko expressed his protest against the court's decision and announced that he was ready to exchange her for the Russian GRU officers captured during battle near Shchastye. Savchenko warned she would resume a dry hunger strike on April 6. Her main demand is her immediate release and return to Ukraine.
The OSCE and the United States called on Russia to release Savchenko. The US Department of State said that her conviction violates the Minsk agreements. The human rights organization Human Rights Watch believes that Savchenko was denied the right to a fair trial. Ukraine's Foreign Ministry called the court ruling a verdict to Russia. A spokesman for the Russian president Peskov, in response to Poroshenko’s proposal, said that Russia would act in strict accordance with the national legislation, but the final decision would be made by Putin personally.
Savchenko’s lawyers said that at the meeting of US Secretary of State Kerry with Russian President Putin, it was agreed to transfer Savchenko to Ukraine within two weeks, however, the Ukrainian Foreign Ministry mentioned the term of six months. Putin's spokesman Peskov said that the hysteria around Savchenko complicates her release, since "such cases are solved more easily in silence." Most experts believe that Putin is trying to use Savchenko for bargaining with the West, including on the issue of lifting or easing the sanctions.
Terrorist attack on Brussels
Three powerful explosions killed 38 and injured about 300 people on Tuesday in Brussels. Police detained three organizers of the terrorist attacks, and two others are wanted. Another terrorist attack questioned the European security system. Russian politicians reacted with satisfaction to the events, offering the EU to help fighting terrorism and warning that Germany could be the next target. Head of the SBU Hrytsak made an assumption that Russia could be behind the attacks, for which Russian Prime Minister Medvedev called him "an idiot."
Experts have agreed that the attacks benefit Russia as they distruct Europe’s attention from the aggression in the East of Ukraine and make it look for ways to agree on the joint fight against terrorism.
Kerry and Steinmeier persuade Putin to comply with the Minsk agreements
US Secretary of State Kerry after a meeting with the representatives of the Russian authorities stated that the sanctions against Russia would be lifted only after the Minsk agreements have been fulfilled. The parties have confirmed that the agreements have no alternatives. Kerry demanded the release of Nadiya Savchenko and her return to Ukraine. After the talks, he said that Russia was an important partner, and that dialogue on Syria and Ukraine was productive. Kerry said that Russia and the United States had some ideas on "better and more rapid progress in Ukraine." Foreign Minister Steinmeier said that the situation in Donbas should be resolved urgently. He expressed dissatisfaction with the deteriorating situation in the region and demanded immediate progress in the political process, by which he means the elections to be held in the occupied territory.
