The VoxUkraine Brief: Milestones, Loans, and the War of the Oligarchs

#VoxUkraine weekly selection of best articles on Ukraine.

by Oleksandr Talavera and Oleksandr Zholud, VoxUkraine Editorial Board


Last week’s focus was on two anniversaries which were ‘celebrated’ — the new Ukrainian Cabinet celebrated its 100th day in office and Russia celebrated the anniversary of the pseudo-referendum in Crimea, the pseudo-referendum which many observers see as the starting date of the Russian invasion in Ukraine. In addition, commentators continued to analyze the agreement between Ukraine and the IMF and the role oligarchs continue to play in Ukraine

On March 12, the Ukrainian Cabinet held a press-conference during which ministers and the PM reported their achievements for the last three months. The latest weeks were quite successful in terms of reforms — The Index for Monitoring Reforms (IMoRe) value for the fifth monitoring period (February 23th — March 8 th 2015) was the highest since it was introduced, for the first time reaching the suggested lower bound of an ‘acceptable pace’.

VoxUkraine has published its first perception of the first 100 days of the Ukrainian government. Among the top-5 ministries are the Ministry of Infrastructure, the Ministry of Agricultural Policy and Food, the Ministry of Economic Development and Trade, the Ministry of Finance, and the Ministry of Foreign Affairs.

Ranking 2 was made after publication when 2 Ministers submitter their replies

In another post VoxUkraine scrutinizes ministerial plans and finds that most goals have not been achieved. Moreover, many aims are either ambiguously formulated or do not have an exact deadline. Notably, younger ministers are likely to make more challenging commitments.

On March 16, 2014 there was so-called independence referendum in Crimea. Just a few weeks before this event, Russian troops without identification marks arrived on the peninsula. Russian media glorifies the event..

While western press describes the results of the first year of Russian invasion.

Another important news is the decision of IMF Executive Board on March 11 to approve a four-year Extended Arrangement under the Extended Fund Facility (EFF) of about $17.5 billion for Ukraine. The new program replaces the previous Stand-by agreement, approved on April 30, 2014 and increases both volume (from 800% to 900% of Ukraine’s quota) and maturity (from 2 to 4 years). The loan is clearly positive news, but it is not a bonanza: economists fear that it will be barely enough, bearing in mind the dire state of Ukrainian economy.

Radio Liberty was somewhat skeptical about the IMF deal and thinks that it bring more pain than gain because of higher heating prices and reduced pensions.

Viktoria Hnatkovska (University of British Columbia) and Tymofiy Mylovanov (VoxUkraine and University of Pittsburgh) identified the key arguments for and against this deal. The pro-IMF argumentsentiment is based on the desperate need forof external financing, the monitoring role of the IMF, and the positive signal the agreement sends to other investors. However, this loan has to be repaid with interests. Furthermore, Ukraine, a sovereign state is dictated by IMF about laws and policies to be implemented. The IMF terms also require monetary discipline which might not be popular among Ukrainian public.

Despite uncertain outcomes, the rescue package should allow Ukraine to stay afloat in the nearest future.

Furthermore, the loan approval allows the Ukrainian Finance Minister Natalia Yaresko to seek more financing and initiate talks to ease debt burden. In a similar vein, Ukraine’s Central Bank Governor Valeriya Gontareva thinks that it is a positive outcome and money can be used for stabilization of Ukrainian economy. In particular, she says that the bank is likely to trim main rate once hryvnia steadies.

This week has also brought another turns of events in the “Oligarchs war”. Earlier in London, Viktor Pinchuk, a Kensington and Kiev-based oligarch, has brought a $2bn action against Igor Kolomoisky (net worth $1.3 billion), governor of Dnipropetrovsk region, and his business partner, Belgravia-based Gennadiy Bogolyubov. Allegations of violence, murder and corruption, which were a part of the action in the London High Court, have flourished with new details — The Independent reports.

On Thursday, the government appointed a new chief executive for Ukrtransnafta — state-owned oil pipeline operator, which belongs to Kolomoisky` business interests. In response, “he occupied Ukrtransnafta’s headquarters with a detail of camouflaged men, arriving with an entourage that included legislators, — writes Leonid Bershidsky, a Bloomberg View columnist. Video footage of the raid looks as dramatic as anything seen in the 1990's, when the former Soviet Union’s first billionaires were working on their first millions”.

The President is now expected to fire Kolomoisky from position of the governor of Dnipropetrovsk region for his bandit response to the Ukrainian Liberty journalist, which followed the raid. And two tycoons — Poroshenko and Kolomoisky — are also locked in an open battle…

Kolomoysky is swearing at the journalist at Radio Liberty office “Ukrtransnafta”

Also, this week on #VoxUkraine

Daria Kaleniuk at VoxUkraine.org suggests a simple recipe for tackling corruption in Ukraine. In particular, she suggests to launch an independent anti-corruption law enforcement agency, disclose information available to the state, and strengthen internal anti-corruption expertize.

While NATO is expanding its presence in Eastern Europe, puts more resourses to build the capacities, and changes the strategy from “reassurance through surge” to a forward defense deterrence strategy — Russia is increasing military cooperation with many of the West’s geopolitical challengers, and continues efforts to undermine the EU project and put herself as powerful opponent of the Western liberal hegemony. For Ukraine, neither Minsk II, nor Minsk I are not leading to the resolution of the conflict in the East — at best, we can achieve a stable frozen conflict — writes Edward Walker from UC Berkley. And the Western support — resembling the frog and the boiling water strategy — may eventually provoke even more irrational and unpredictable actions from Russia.

Have a great weekend!

VoxUkraine: Best Minds. Ukraine Analysis.

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