The German Chancellor Angela Merkel and Ukraine’s President Petro Poroshenko. Visit to Germany, May 13–14, 2015. Photo: Administration of the President of Ukraine

The VoxUkraine Brief: Harsh and Flattering Voices

#VoxUkraine weekly selection of best articles on Ukraine.

By Olena Bilan, Volodymyr Bilotkach, VoxUkraine Editorial Board, and Nataliia Shapoval, VoxUkraine

produced by Kseniya Alekankina

This week was marked by a “breaking-ice” visit of the US Secretary of State to Sochi where he held a four hour talk with Russian President over Syria and Ukraine. Coincidently or not, the visit happened the same time the report “Putin. War” by the assassinated Russian opposition Leader, Boris Nemtsov, was published. Internally, the personnel policy of the Ukrainian Government was overshadowed by two cases of loud resignations. On the economic front, debt restructuring saga continued with the sides seemingly raising stakes in negotiations.

This week has been marked by several developments, mostly outside Ukraine, but having potentially important implications for the country’s future.

Puzzling visit of the US Secretary of State to Sochi

On May, 12 the US Secretary of State John Kerry visited Russian city of Sochi, where he held more than four hour talk with Russian President Vladimir Putin as well as with Foreign Minister Sergey V. Lavrov. Kerry’s first visit to Russia since May 2013 was aimed to discuss situation in Iran, Syria, and Ukraine and was officially named as “a part of ongoing effort to maintain direct lines of communication”.

The Editorial Opinion of the New York Times points that the meeting didn`t achieve much, but was rather a sign of “readiness to tamp down the bitter acrimony of the past year” and the engagement in the diplomacy.

Following his visit to Russia, Kerry had a phone call with Ukraine’s President Petro Poroshenko. His post-visit and post-call rhetorics was interpreted in Ukrainian media as a sign of support for Ukraine in conflict de-escalation and importance of Minsk-II peace accord implementation.

However, Western commentators hinted that the need to cooperate over Syria, Iran, Yemen and Libya, and Russia-NATO relations in fact overweights the importance of Ukraine for the US.

“The Ukrainians must be thrilled to see Mr. Kerry volunteering their territory for the sake of America’s Middle East interests. Western Europeans will conclude that Americans won’t object when they ease sanctions, while Estonians, Moldovans, Poles and other Eastern Europeans will wonder if their territory is also negotiable” — says The Wall Street Journal opinion column.

Angela Merkel harsh comments regarding the annexation of Crimea

Before meeting the US Secretary, Vladimir Putin hosted the German Chancellor Angela Merkel. Merkel did not agree to visit the biggest Victory Day Parade since Soviet times (see pictures here) and came to Moscow the next day.

Merkel’s comments regarding the annexation of Crimea have been unusually harsh this time. She openly said the phrase “The criminal and illegal annexation of Crimea”, in Moscow, looking Putin in the eye. This can be considered as a rather strong indication that the West is not planning to forget about the Crimea issue anytime soon — any recognition of this Anschluss remains of course out of the question.

Boris Nemtsov report “Putin. War” and continuity of Russian propaganda

Since December 2014 Boris Nemtsov, a Russian liberal politician who was in opposition to the Putin regime until he was shot dead in February,2015, was gathering the publicly available facts about the Russian military presence in Ukraine. The report was completed by his friends and colleagues. It is intended as an antidote to the narcotic effect that Russian state-controlled media has on the country. Several Russian printing plants refused to take the job, so in the end only 2000 copies were printed.

✔ The annexation of Crimea, it argues, was the result of the falling popularity ratings of Vladimir Putin in 2011–2012 and the need to boost his legitimacy by offering a symbolic victory.
✔ The Kremlin never counted on the successful separation of the Donbas region, but wanted to launch a war there to strengthen its bargaining position with the West.
✔ Russian soldiers are fighting and dying in eastern Ukraine, including special combat units from Chechnya. At a minimum, they estimate that 150 Russian soldiers were killed in fighting in the summer of 2014, and 70 more during early 2015.
✔ The direct cost of the war in the 10 months beginning in April 2014 was estimated in the report as equal to at 53 billion roubles (about $1 billion), including subsidies for separatist fighters and compensation paid to “volunteers” and Russian regular soldiers, as well as maintenance of military hardware. This does not include the costs of the annexation of Crimea (estimated at about 680 billion roubles), or the more than a trillion roubles lost to increased inflation as a result of Western sanctions and Russian counter-sanctions.
✔ It is a war for the power and wealth of Mr Putin and his elite.

Report (In Russian):

And not without a reason, Nemtsov and his followers, were blaming Russian state television in mass propaganda. Tom Parfitt outlines in his Telegraph column, that recent poll in Russia indicates growing suspicion of possible invasion by Washington after crisis in relations over Ukraine. In particular, one third of the respondents thought the US represented a threat of military takeover; and this indicator constituted 21 per cent in 2007.

Loud resignations in Ukraine’s government

Two loud resignations of Ukrainian Government officials took place this week. Deputy Minister of Internal Affairs, Sergey Chebotar, who was rebuked in corruption by the journalist investigation program “Nashi Groshi” (Our Money) (ZIK channel) resigned on May, 13. It is only after a group of the MPs have registered the draft resolution on resignation of the Minister of Internal Affairs Arsen Avakov for consistent ignoring of the Chobotar case, has the Chobotar applied for the resignation reports

Echoing Chebotar’s resignation was a speech by John Herbst, former US Ambassador to Ukraine, at the recent Symposium “Ukraine: Escape from Post-Soviet Legacy”. Herbst claims that despite some progress in reforms, political elites are corrupt, and in their decision-making they don`t really feel the need to explain their actions to the public.

The second case refers to the dismissal of Sasha Borovik, expected to be appointed as the First Deputy Minister of Economic Development and Trade (MOEDT). Borovik announced his withdrawal from the government was caused by a conflict with the Prime Minister Arseniy Yatseniuk. His boss, the Minister of Economic Development and Trade, Aivaras Abromavicius claimed that Borovik was dismissed because of his confrontational style of behavior, the site of the MOEDT announced.

Borovik’s resignation draw a wide response in social networks with local observers blaming the government for lack of clarity with resignation of a person, which has been widely perceived as a reforms-oriented technocrat. VoxUkraine have published the column of Sasha Borovik outlining his story and vision.

Notwithstanding these unpleasant developments VoxUkraine’s Index for monitoring reforms (iMoRe) jumped above 2.0 points, recording one of the highest scores this year, and signaling that reforms are progressing.

Debt restructuring saga continues

Ukraine’s economic situation remains precarious with real GDP falling by 17.6 per cent year on year in 1Q15 and annual inflation spiking to 61 per cent in April, driven by sharp increase in utility tariffs and weakness of the national currency, the hryvnia.

As Deutsche Welle reports, “The economy in Ukraine has taken a nosedive in the first months of the year, contracting more than analysts predicted. The news comes as Kyiv negotiates a debt restructuring deal with creditors.”

In the meantime, Ukraine’s government is struggling to convince creditors to accept a haircut as part of plans to restructure $23bn of external public debt. During the week, the creditors` committee had submitted new detailed proposals to restructure Kyiv’s debt. In response, The Minister of Finance of Ukraine has publicly stated about the committee reluctance to take into account the sustainability objective, and their unwillingness to cooperate.

Delay in negotiations with creditors raises question whether the IMF will disburse the second $1.6 bn tranche for Ukraine. The IMF mission arrived to Kyiv on May 12 to assess the situation and economic policies of the government. Yuriy Gorodnichenko underlines in the column for the Atlantic Council, that there are still serious reasons to be hopeful about Ukraine’s economy. Even though negotiations may be thorny, the likelihood of a deal is high. Moreover, state-owned companies have already started and restructure their debts thus paving the way for a larger restructuring.

Also this week

Good intentions sometimes can yield rather embarrassing results. President Poroshenko’s idea to create International Advisory Council of Reforms is a good one. Inviting Senator McCain to join this Council can also be regarded as a positive move. However, someone should have checked whether it would be legal for a sitting US Senator to advise foreign governments before this idea was voiced by Mr. Poroshenko.

“Republican US Senator John McCain has turned down a post as advisor to Ukraine’s pro-Western President Petro Poroshenko, saying constitutional constraints prohibited him from accepting.”

In the meantime, Marine Le Pen’s closest advisor participates in commemoration of the first anniversary of “dnr”. It is not clear from the article below how Monsieur Leroy arrived to Donetsk. If he entered via Russia, this would constitute a violation of Ukrainian law.

Ukrainian authorities continue demonstrating what appears to be a lack of effort in investigating the crimes of the former regime’s key figures. At least we hope this is merely a lack of effort, and not outright sabotage…

“As of today, not a single court has ruled to confiscate property [abroad] or to send a request abroad to return it,” said Deputy Prosecutor-General Vitaliy Kasko. Such decisions may not come for a long time, if ever. Prosecutors have only initiated cases against a few of the 18 former officials who remain under EU sanctions.

VoxUkraine posts

Before the election VoxUkraine has asked the UK Parliament candidates three questions about their views on the Budapest memorandum and territorial integrity of Ukraine, economic and military support to Ukraine, and whether the actions of Russia pose a national security threat to the UK. Most candidates in the UK do not care enough about the situation Ukraine to answer questions about it. If Ukraine really wants to get support from the UK, it will have to work harder to inform the UK MPs of the importance of what is happening in the East of Ukraine, both for Ukraine and for the UK.

Fix the Hryvnia? Never Again! — By Yuriy Gorodnichenko, Editorial Board of VoxUkraine.

Skilled Emigration: Brain Drain or Brain Gain — By Chris Dunnett.

Have a great Sunday!

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