A man stands next to his car destroyed by shelling in rebel-held Donetsk. AFP

The VoxUkraine Brief:

The 4 Most Important Things About Ukraine This Week

#VoxUkraine weekly selection of best articles on Ukraine.

by Tim Mylovanov and Veronika Movchan, VoxUkraine Editorial Board

produced by Maxim Eristavi


Four topics dominated in the discussions on Ukraine last week:

✔️calls for arming Ukraine by the West

✔️the visit of the Western leaders to Ukraine and Russia

✔️abandonment of foreign exchange targets by Ukraine

✔️a stronger language from the West about the need for Ukraine to walk the talk about the reforms.

These events underscore the precarious state of Ukraine: it urgently requires international financial support to stabilize economy and diplomatic and, likely, military support to stabilize the crisis in Eastern Ukraine.
The most prominent call for military support was issued on February 3 by eight former senior US diplomats, ranking Pentagon and State Department office-holders, military commanders and US appointees to NATO. They urged the US government to provide military aid to Ukraine:

This call was echoed by many Western opinion makers and public figures, including VoxUkraine contributors:

The Budapest Memorandum provides the legal and moral basis for the US to provide Ukraine with military assistance. In light of renewed peace efforts by Germany and France, such assistance will be part of the solution and will safeguard any potential peace deal.

Although the U.S. Secretary of State John Kerry made it clear during his visit to Kyiv on Feb. 5 that his government has no plans to send arms to Ukraine:

For an excellent selection of pro and con arguments on arming Ukraine, check this out (spoiler alert: most of them are cons):

On the strategy for Ukraine, Ned Walker suggests in his VoxUkraine op-ed that Ukraine and the West should be pressing for a stable frozen conflict in Eastern Ukraine:

There is, however, at least some chance that a ceasefire could take hold that would allow for a genuine “freezing” of the conflict. The real choice for Kyiv now is whether to push for a stable frozen conflict along a new line of demarcation or to fight hard for every inch of ground, which increases the risk that we will see an unstable war of attrition and more Ukrainian human, material, and territorial losses in the months to come.

Also this week the National Bank of Ukraine (NBU) announced abandonment of foreign exchange target and increase in interest rates as a due course of preparations for inflation targeting. Immediately hryvnia lost another one third of its value heightening concerns over default (paywall):

The developments thrust the war-torn and recession-battered country one step closer to a financial meltdown. Ukraine’s hryvnia plunged 30 per cent to a record low against the dollar on Thursday after the central bank abandoned attempts to prop up the currency and let it float freely against other currencies.

It is expected that the IMF new bailout program will come soon as greater flexibility and elimination of multiple exchanges rates were among preconditions for the support:

Ukraine desperately needs external financial assistance to stabilize the economic situation, and this assistance is to be much higher than it was expected in 2014, at least $27 billion this year:

However, international donors want to see Ukraine not only asking for extra funds, but first of all stepping in with urgent and radical reforms. Principle ‘more-for-more’ is relevant as never before:

Plus, VoxUkraine’s iMoRe index, which monitors reforms, comes this week at 1.3 on the scale of -5 to +5, indicating some, but rather slow progress:

Ukraine President Petro Poroshenko shows Russian passports to demonstrate the presence of Russian troops in the Ukraine, as he addresses the 51st Munich Security Conference (MSC) in southern Germany, on February 7, 2015 (AFP Photo/Thomas Kienzle)

Also, this week on #VoxUkraine

According to calculations made by Svitlana Chernykh and Paul Chaisty, the current Ukrainian government is the most fairly composed cabinet in post-Soviet Ukrainian history:

http://voxukraine.org/2015/02/03/how-fair-is-portfolio-allocation-in-ukraine/

Ukraine wants to force the West and international organizations to acknowledge the fact of war with Russia — writes Agnieszka Piasecka in her column for VoxUkraine. But adoption of such a declaration on the international level is unlikely: first, Ukraine calls for sanctions but does not fully implement them itself, second, United Nations Charter makes enforcement almost impossible.

http://voxukraine.org/2015/01/31/resolution-of-verkhovna-rada-of-ukraine-on-russia-being-the-state-agresor-pr-vs-reality/

In his recent interview, Ukraine’s new Minister of Health, Alexander Kvitashvili, has confirmed that Ukraine is indeed preparing to introduction of medical insurance. As the country is doing only first steps in this direction, it is rather unclear, how exactly insurance system will be designed, and to what extend current universal coverage will shrink argue Olena Nizalova and Natalia Shapoval:

http://voxukraine.org/2015/01/30/dismantling-universal-healthcare-system-a-thoughtless-way-of-balancing-the-budget-or-a-true-attempt-to-improve-population-health/

Restructuring of the Ukrainian natural gas market will results in significant increases in prices. Current price controls create the situation when demand is encouraged and supply is discouraged” — writes Russell Pittman, a U.S. government economist in his column for VoxUkraine:

http://voxukraine.org/2015/01/29/increase-natural-gas-prices-but-carefully/

VoxUkraine’s Olkesandr Zholud writes that in 2015 Ukraine should deal with servicing of public debt. State and quasi-state debt is about $10 bln, which is impossible to pay off without external assistance. The Ukrainian government should consider alternative ways to manage public debts, e.g. the buyback — purchase of own debts at market prices.

http://voxukraine.org/2015/01/27/buyback-as-an-option-for-dealing-with-ukraine-state-debt/

VoxUkraine’s Zoya Mylovanova discusses a new law passed by the Ukrainian parliament on quorum reduction in corporate governance, saying that this is the right move, but without a full-fledged reform of corporate legislation it will upset the existing system of checks and balances in joint-stock companies, will provoke corporate conflicts and may encourage business to move offshore:

http://voxukraine.org/2015/01/28/profiting-from-ukrnafta-will-help-to-fill-ukraines-budget-at-the-expense-of-minority-shareholders-interests/

VoxUkraine weekly TwitterBook

among many people who followed our Twitter this week, were:

✔️Ukrainian Pravda

@ukrpravda_news

The biggest digital news-media in Ukraine

✔️Channel 24

@24tvua

Ukrainian news-channel

✔️Tom Barlow Brown

@Tom_BBrown

Writer/journalist. Church of the latter day gonzo. Radical politics, human rights, conflict | @VICEUK|@warisboring

✔️Natalia Antonova

@NataliaAntonova

Prominent English-speaking journalist, based in Moscow, Russia

✔️Maria Berlin

@lilleberlin

Assistant professor of economics, @SITEStockholm, @Handels_SSE, researcher in development, foreign aid

✔️Andreas Umland

@UmlandAndreas

Institute for Euro-Atlantic Cooperation Senior Research Fellow, Valdai Club Member & ‘’Soviet and Post-Soviet Politics and Society’’ Book Series Editor

✔️Cathy Sultan

@cgsultan1

Award winning author of books on the Israel-Palestine conflict, on Lebanon and its wars with Israel, a political thriller set in Lebanon-Syria. Peace activist.

✔️Markian Dobczansky

@mdobczan
M.A., History, Stanford University
B.A. in European History and German Studies, University of Pennsylvania
Markian Dobczansky is a Ph.D. candidate in Soviet and East European history.


Have a great weekend!

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