Maidan, February 2014, Photo: AFP

The VoxUkraine Brief: Calm Before the Storm?

#VoxUkraine weekly selection of best articles on Ukraine.

By Kateryna Dronova, VoxUkraine Law Editorial Board, and Natalia Shapoval, VoxUkraine

produced by Kseniya Alekankina

In contrast to the last week’s intense confrontation between the President and oligarchs still resonating in media, this week has been relatively calm. Ukraine and Russia signed provisional agreement on gas supplies. The results of an audit for Naftogaz and its subsidiaries for 2012–2013 have been announced. Council of Europe has expressed its discontent with the low standard and lack of efficiency in Maidan investigations. Roskomnadzor (Russian agency supervising the media) has forced the Crimean Tatar media to shut down. With an increasing frequency media predict the collapse of the fragile peace in the eastern Ukraine.

Ukraine/Russia gas deal

On April 2 Ukraine has signed an interim deal for cheaper gas supplies from Russia at a lower price regardless of ongoing conflict. During the April-June quarter Ukraine would pay $248 per thousand cubic meters (instead of $329 paid in the winter quarter) on the condition that Ukraine would pre-pay for its gas supplies.

Ukrainian politicians view this deal as a “victory” of an economic ratio over political one in relations between Naftogaz and Gazprom, as well as a fortunate opportunity to develop a longer-term solution. However, this “victory” is not so unequivocal as it might seem at a first glance. Tomas Hirst in his post for Business Insider attempts to interpret this sudden abatement by Russia: by requesting Gazprom to lower gas prices in Ukraine Russia makes an effort “to cool tensions in the region to wriggle out of international sanctions.

The audit report of Naftogaz has been published

An audit report for the Public Joint Stock Company “National Joint Stock Company NAFTOGAZ of Ukraine” and its subsidiaries for 2012 and 2013 years has been released this week.

Although this has been an anticipated event, it didn’t get much attention by now.
Paul R. Thomas, the president of IRE (USA), in his column for VoxUkraine argues, that the quality of the report is unsatisfactory and reveals not only the depth of the near-fatal financial position of this key company but also the depth of mismanagement during those years. To illustrate,
Naftogaz did not disclose the physical amount of gas and oil production for 2012 and 2013 but instead reported a total UAH value of oil and gas production
Naftogaz failed to report how much gas in physical units was transported from Russia through Ukraine to Europe; similarly, only a total value of transported gas in UAH has been disclosed.
Naftogaz did not conduct independent revaluations of its fixed assets (property, plant and equipment) as required by the IFRS standards
● Important documents are missing from the company’s records, e.g. documents justifying “sales of petroleum products to certain customers in the amounts of UAH 2,853 million and UAH 1,734 million.

The majority state-owned but de-facto controlled by an oligarch Ihor Kolomoiskiy Ukrnafta company has also mentioned the publication of the report, but for a different reason: the company claims that the audit underreports the value of debt owed by Naftogas to it for 10.1 billion cubic meters (bcm) of natural gas at UAH 3.753 billion consumed by the households during the period.

Ukrainian investigations into the deadly clashes during the Euromaidan protests: ineffective self-analysis and obsolete approach

The International Advisory Panel on Ukraine of the Council of Europe has delivered a highly critical assessment of the investigations of violent incidents which took place during the protest demonstrations starting from 30 November 2013. The Panel has reported insufficient progress, lack of independence and low effectiveness of the investigation.

The report draws attention to a number of serious structural and operational deficiencies in the course of investigation:
● There was no genuine attempt to pursue investigations prior to February 22nd 2014.
Maidan investigations that started after February 22nd 2014 lacked practical independence in circumstances where the investigating body belonged to the same authority as those under investigation.
● The public has not been appropriately and sufficiently informed about ongoing investigations, which hindered the public scrutiny in securing accountability.

● Investigation lacked efficiency: the number of PGO investigators involved was wholly inadequate; cooperation between the responsible authorities — Prosecutor General Office, Kyiv City Prosecutors’ Office, the Ministry of the Interior, Security Service of Ukraine — was neither effective, nor coherent, and this created a substantive negative impact on the investigation; in addition, the courts involved failed to comply with the European Convention on Human Rights.

As a result of such deficiencies the investigative response to the violent events in Maidan have been significantly and unduly protracted. The Panel has also emphasized that the grant of amnesties to police officers found guilty in commission of arbitrary killings or acts of ill-treatment would immediately result in breach of the Convention. It has been stressed that the complex situation faced by Ukrainian authorities does not pardon them from compliance with relevant standards established under the Convention and practice of the European Court on Human Rights.

Russian authorities in Crimea are shutting down independent Crimean Tatar-language media outlets

ATR Channel has been broadcasting in the language of the Crimean Tatars since 2006. On April 1 this channel was shut down by Russian authorities after the deadline for re-registration under Russian law has expired, while the new Crimean authorities rejected a request to renew license for broadcasting. This case is not unique: the wide range of Crimean Tatar media outlets have been denied a license under Russian legislation, including news agency QHA, radio station Maidan (Майдан), website, newspaper Avdet (“Авдет”), magazine Yildiz (“Йилдиз”), magazine Armanchyk (“Арманчыкъ”) and popular children’s television channel “Lale”. Although authorities stated that the closure happened due to mistakes in submitted paperwork, ATR’s director assumes that clampdown on the channel happened because of the critical coverage of peninsula’s conditions under the Russian rule.

Amnesty International reports that in all cases every (including repeated) attempt to re-register was faced by a denial without a clear reason.

While Amnesty International has been urging international community to pay attention to the suppression of the freedom of speech in Crimea for a long while, this time it has not been alone in putting this event under the spotlight. New York Times and The Guardian reacted with insightful pieces condemning the oppression of Crimean media.

The Guardian’s conversation with the ATR’s director, Shevket Memetov, illustrates that this is just one of many measures performed by Russians on the peninsula aimed to restrict an access of the population and local politicians to the impartial media and promote the republic’s new Moscow-backed leadership.

The New York Times also describes this media clampdown as an isolated incident in a wider chain of actions directed against Crimean Tatars, which range from persecution of Tatars leaders to raids in Tatar schools and mosques.

Briefing from Ukraine’s Front Lines

Russia is undertaking a hybrid-heavy form of warfare in Ukraine. “Russian Soldiers Have Given Up Pretending They Are Not Fighting in Ukraine”- states Alec Luhn in his piece for Vice News. Interviews with the soldiers, Dmitry Sapozhnikov and Dorji Batomunkuev, reveal that Russian officers directly command large military operations in the eastern Ukraine.

Even though Ukraine’s capabilities are woefully inadequate — reports General Wesley K. Clark (Ret.), Former NATO Supreme Allied Commander, in the report for Atalantic Council — Ukraine is not helpless against Russia. Report forecasts that an attack is possible within the next sixty days. With regard to the power asymmetry in the conflict with a notable military advantage on the Russian side, Wesley Clark suggests that Ukraine should get an immediate military assistance in seven critical areas.

The international discussion this week has been focused on the framework agreement on nuclear program between the USA and Iran, as well as on the growing threat of ISIS. has prepared a detailed feature discussing the major recent events in the Middle East, the origins of the Islamic extremist rebel group and its place on the international arena. The authors also elaborate on the potential effect of ISIS expansion on the role of Ukrainian military crisis in a powerplay between the USA and Russia.

The Guardian covers duplicitous life of the Putin “troll army” using the case of a big St. Petersburg enterprise working entirely in the “black economy”, speaking about the continuation of the informational war.

Also this week

The IMoRe value for the sixth monitoring period (March 9th — 22nd, 2015) totaled +0.7 points out of the possible range from -5.0 to +5.0 points. The experts noted some positive steps, but the pace of reforms decelerated considerably after a significant breakthrough in the last period. Overall, the pace of reforms remains too slow to provide effective transformation of the economy.

Ukrainian Central Bank published inflation report predicting a 7.5% decline in real GDP and consumer inflation to be at the level of around 30% in 2015. This is a deterioration compared to earlier forecasts of -5.5% GDP and 25–27% inflation.

Oleksandr Zholud, the Editorial Board of VoxUkraine, explains in his column what CPI inflation means and what are the reasons for February 34.5% year-to-year level.

Wizzair announced about their decision to close its subsidiary in Ukraine and move one of its Kyiv-based aircraft out of the country. Volodymyr Bilotkach, the Editorial Board of VoxUkraine, articulated the lessons for the new Ukrainian Government.

The National Bank of Ukraine announced its intention to cancel a 16-year old requirement for registration of inbound loans. Oleh Zahnitko, Gide Loyrette Nouel Ukraine, and Zoya Mylovanova, the Editorial Board of VoxUkraine Law, argue why this measure is not a good idea in the long run.

Have a great weekend!

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