CEPI Ukraine Watch

Week of November 1-7, 2014

Photo: CreativeCommons/Sasha Maksymenko

15. 11. 2014
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This is the latest in a series of CEPI weekly digest of notable local and international news and analyses covering the Ukraine crisis, all available in English. The CEPI Ukraine Watch focuses on domestic politics, reforms, energy and security developments. Published at www.cepolicy.org

 

1. POLITICAL DEVELOPMENT

The rebel-controlled parts of Donbas – self-proclaimed Donetsk and Luhansk People’s Republics – were electing presidents and parliaments on Sunday. Aleksandr Zakharchenko, current prime minister of DPR and leader of the Oplot paramilitary unit, has been elected head of the unrecognized Donetsk People’s Republic. Zakharchenko has received 765,340 votes (78.93%). His two competitors, deputy speaker of DPR’s parliament Alexander Kofman (11.45% of votes) and retired policeman Yury Sivokonenko (9.62%), were little known to anyone. The Donetsk Republic party, founded by pro-Russian activist and incumbent DPR deputy Prime Minister Andrei Purgin, received 68.38 percent of the votes for parliament and The Free Donbas party received 31.65 % of the votes.[1] Igor Plotnitsky, a former Soviet army officer, was elected president of Luhansk People´s Republic with 63.08% of the vote, or 440,613 votes and his party – Peace for Luhansk region has received 69.42% of votes[2]. Excellent reporting by BuzzFeed Max Seddon covering election atmosphere can be read here.

Ukrainian President Petro Poroshenko said that Sunday’s unlawful elections in the self-declared Donetsk and Luhansk republics ”have nothing in common with people’s expression of the will and brutally violate Minsk agreements.” West has pledged not to recognize the results of the election. “The vote is illegal and illegitimate, and the European Union will not recognize it,” EU foreign policy chief Federica Mogherini said in a statement. On Wednesday, Council of the EU has released Declaration by the High Representative on behalf of the EU on “elections” in eastern UkraineRussiahas said it respects will of Ukraine’s rebel regions[3]. According to Russian Deputy Foreign Minister Grigory Karasin newly elected leaders in eastern Ukrainian separatist regions have a “mandate” to negotiate with Kiev. UN Secretary-General Ban Ki-moon said that holding of separatist elections in eastern Ukraine was “unfortunate and counterproductive”. The United States has condemnedseparatist elections as illegitimate. The United States and Germany have warned Russia of additional costs if Moscow disregards it obligations under the Minsk agreements. Russian presidential aide Yury Ushakov was asked about the Russian government’s use of the word “respect” instead of “recognize” for the separatists held elections in eastern Ukraine, he said: “These are different words. The word ‘respect’ was chosen deliberately … We fundamentally respect the will of the voters.”

Oleh Liashko’s Radical Party has joined the talks on the creation of a parliamentary coalition.Batkivschyna has also joined the talks. A draft coalition agreement will be prepared by December 1, Ukrainian Deputy Prime Minister Volodymyr Hroisman (BPP) said. The first session of the Verkhovna Rada of the eighth convocation is tentatively scheduled for December 1.

Ekonomicheskaya Pravda has published report about coalition talks and oligarchic interest behind them. Levy Bereg has analysed candidates elected to the Rada via single mandate constituencies. Investigative report by Insider tries to discover what is behind election success of Dmitro Yarosh in Dnepropetrovsk, oblast where Opposition Bloc stood well. Ukrainska Pravda has introduced spin who run election campaigns of political parties. Levy Bereg has published report covering split within Maidan party – Democratic Alliance. Conflict has also appeared in Volya party (candidates of Volya were included in the election list of Samopomich), Insider and Urkainska Pravda are covering the topic.

Novoe Vremja in cooperation with Dragon Capital has published list of 100 richest Ukrainians.

Interviews

Interview with Boril Filatov, newly elected MP and deputy head of Dnipropetrovsk RSA Novoe Vremja
Interview with Hanna Hopko, newly elected MP(Samopomich) for LIGABusinessInform
UKR Interview with newly elected MP – Volodymyr Parasyuk, fighter of Dnipro-1 batallion and Euromaidan self-defence centurion (Hromadske TV)
UKR Interview with commander of Dnipro-1 Yuri Bereza, newly elected MP
RUS Interview with Igor Strelkov

2. SECURITY UPDATE

A column of 32 tanks, 16 howitzer artillery systems and trucks carrying ammunition and fighters has crossed into eastern Ukraine from Russia, the Kiev military said on Friday. It appears that the“ceasefire” has break down completely this week, with both separatists and the central government accusing each other of violating the terms of Minsk Agreement. The rebels slowly expand territories they control[4].  The National Security and Defense Council has reported intensified activity of militants in Donetsk area with Ukrainian army position coming under fire. Ukrainian army has said it has eliminated about 200 militants in past 24 hours, who were firing at the military positions on the grounds of Donetsk Airport. German chancellor Angela Merkel has “expressed her grave concern about recent reports that speak of renewed Russian troop movements on Ukrainian territory”. The US government does not possess independent confirmation of Ukrainian officials’ allegations that Russia has sent military hardware to Ukraine.

On Friday OSCE SMM to Ukraine stated that according SMM’s assessment – mortar shells which killed two teenagers and wounded others at School No. 63 close to the Donetsk Airport, had been fired from a location north-west (ed. where Ukrainian troops hold positions).The Ukrainian Foreign Ministry and the National Security and Defense Council insisted that the artillery rounds had been fired from territory controlled by the self-proclaimed Donetsk People’s Republic (from east[5]).

OSCE, Ukraine, Russia holding trilateral meeting in Donetsk: Representatives of Ukraine, Russia and the OSCE convened in Donetsk on Nov. 5 to discuss the fulfilment of the Minsk agreements. OSCE plans to expand its monitoring mission in eastern Ukraine by deploying up to 500 monitors there, including 350 in the self-proclaimed Donetsk and Luhansk People’s Republics, deputy chief of the OSCE Special Monitoring Mission to Ukraine Alexander Hug said. The conflicting sides have failed to agree upon a delimitation line, the head of the OSCE SMM said.

Ukraine imposes passport controls around rebel area: Ukraine’s Border Guard Service has announced that anyone crossing in or out of areas controlled by pro-Russian separatists in the east of the country will have to show a passport.

Poroshenko calls on lawmakers to revoke special status for east, sends more troops to key cities: Poroshenko called on the National Security and Defense Council and the Verkhovna Rada to repeal a law granting special status to separatist-controlled regions of Ukraine. The NSDC backed President’s call to repeal a law. Poroshenko also ordered additional troops be sent to Mariupol, Berdyansk and Kharkiv as well as northern Luhansk and Dnepropetrovsk oblast in case of a new offensive by Kremlin-backed separatists. Ukrainian government and other sources are reporting a build-up of separatist troops and Russian equipment in the east. President has warned rebels, that government may cut gas and electricity supplies to the rebel region[6]. Poroshenko has called for passing new legislation setting a new date for local elections in some territories of Donetsk and Luhansk regions. Verkhovna Rada Chairman Oleksandr Turchynov registered a draft resolutions, which proposes to abolish law on special status of certain areas in Donbas and the amnesty law. But the Minsk deal, including the ceasefire regime in east Ukraine, has not been called off, the Ukrainian National Security and Defense Council Information and Analytical Center has saidRussian Envoy to OSCE has said that President Poroshenko’s decision to repeal the law on a special status for the Donetsk and Luhansk regions cancels out the Minsk accords.

Kyiv will not cut the territories, controlled by terrorists in Donetsk and Luhansk regions, from electric and gas supply, but government won’t provide budget funding for rebel-controlled areas of Donbas, the PM has said.

Ukrainian President Petro Poroshenko issued a decree enacting the decision of the National Security and Defense Council dated September 12, 2014 on a package of measures to step up the state’s defense capability and proposals to the clauses of the 2015 draft state budget dealing with national security and defense. Full text can be read here (UKR). The government was ordered to urgently finalize the draft state budget for 2015, providing for the priority funding of defense programs (the funding of national defense is envisaged at the level not less than 3% of the GDP per year).

Igor Bezler, commander of pro-russian separatists based in town of Horlivka has resigned. Igor Strelkov confirmed Bezler’s resignation, and said he was now “in the reserves” in Crimea. DmytroTymchuk wrote on Facebook“In the settlement of Horlivka, activities of Russian troops completed to neutralize the former bandit formation of Igor Bezler (“Demon”). Part of the militants came under the unified command of the “DPR,” a part- disappeared.” SBU has said it has no information about elimination of Bezler.

New defense minister fires inept army supply officials:  Defense minister Stepan Poltorak fired a number of high-ranking officers from his ministry and general staff responsible for supplying the Ukraine army, Defence Ministry press service has reported.

25 Ukrainian soldiers released, Poroshenko says: Poroshenko announced on social media that: “25 soldiers were released in Snejnoe town from captivity.” On Friday 9 Ukrainian captives were exchanged for 5 separatists in the village of Schastia, in Luhanks oblast. Christopher Miller ofMashable has written report of life of Ukrainian POWs in captivity. The militants are holding 92 soldiers of the volunteer battalion Donbas as hostages, Donbas Commander Semen Semenchenko said. 

The sixth Russian “humanitarian convoy” has arrived in Donbas“We have no information about the contents of the cargo,” National Security and Defense Council spokesman has said. Spot report by OSCE OM can be read here. OSCE observers have no authority to examine Russian humanitarian aid, mission deputy head has saidSpot report by OSCE OM, 2 Nov 2014: Russian convoy of 32 vehicles crossed into Ukraine and returned back through Donetsk Border Crossing Point. Ukraine has no information about the contents of the fifth so-called humanitarian aid convoy from Russia, spokesman for the National Security and Defense Council’s Information and Analytical Center said.

Ukrainian authorities have been tasked with launching the mass production of biometric passports from January 1, 2015, Ukrainian Deputy Foreign Minister Olena Zerkal has said.

Ukrainian President Petro Poroshenko has signed decrees dismissing the chiefs of the Security Service of Ukraine (SBU) offices in Kirovohrad, Luhansk and Sumy regions.

People’s Front deputy and  commander of Dnipro 1 battalion Yuriy Bereza has said that the soldiers and volunteers which were elected to Rada on the electoral lists of different political parties will create an inter-faction  of those, who passed through ATO. Interview with Yuri Bereza for Hromadske TV can be watched here.

3. ECONOMY & REFORM EFFORTS

Association Agreement partially comes into force: Ukraine and the EU on November 1 start the provisional application of the Association Agreement.[7] Some sections of the Association Agreement have started being implemented.

Russia sets zero export duty for natural gas for Ukraine: Russia’s export duties for natural gas to be exported to Ukraine from November 1, 2014, to March 31, 2015, will be set at zero or heavily reduced, depending on the price of the gas, under a directive signed by Prime Minister Dmitry Medvedev.

Gazprom May Switch for Direct Supplies of Gas from Russia to Eastern Ukraine: Gazprom can supply gas directly to the regions of Donetsk and Luhansk, Mikhail Korchemkin of East European Gas Analysis, has said.

The National Bank of Ukraine has improved the estimate of GDP dynamics in 2014 from a fall of 9% to a decline of 7%, head of NBU Valeriya Gontareva has told. The fall of GDP in Ukraine in January-September 2014 was 3.5%, Gontareva said.

EBRD establishes multi-donor fund to support reforms in Ukraine: International donors have committed €11 million to a new fund established and managed by the EBRD that will support Ukraine’s efforts to reform its economy, improve its business climate and return to a path of sustainable growth.

Ukraine has agreed with International Monetary Fund that it will pay for Russian gas during the winter period from Ukraine’s exchange reserves, the National Bank of Ukraine said. Klaus-Dieter Borchardt, the director for energy markets at the European Commission has denied any claims that the EU guarantees payments for Russian gas by the Ukrainian Naftogaz. He said that the arrangements on gas deliveries included only an agreement with the International Monetary Fund.

Inflation in Ukraine in October 2014 slowed to 2.4% compared to 2.9% in September, State Statistics Service has reported. Since the beginning of this year consumer prices in the country have increased by 19%. On Friday hryvnia official exchange rate reached historic low at UAH 14.47 per U.S. dollar.

Ukraine reserves slide to lowest since March 2005: Ukraine’s central bank reserves have fallen to a near decade low of just $12.6bn ($16.3bn at the end of September p) after the country spent billions servicing foreign debts, protecting the currency and repaying parts of a Russian gas bill[8].

4. ENERGY UPDATE

Ukraine imported 3.1 billion cubic meters of natural gas from Europe in January-October 2014 (42% more than the same period last year), Ukrtransgaz has reported.

Ukraine’s Ministry of Energy and Coal Industry has agreed on the signing of a framework contract for the sale and purchase of natural gas between E.ON Global Commodities SE and Naftogaz Ukrainy.

Extra capacity announced for Slovak-Ukraine natural gas pipeline: Slovak transmission system operator Eustream has announced an open season for an additional 4.5 million cubic metres /day of interruptible capacity on the Vojany pipeline taking gas from Slovakia into Ukraine. The extra capacity will be available to successful bidders from 1 January 2015. Meantime, Eustream has made the additional capacity available to any interested parties from Wednesday until 1 January 2015. Currently the Vojany pipeline has a daily interruptible capacity of just over 26mcm/day. The amount of capacity available on a firm basis will increase to 26mcm/day by March next year. This equates to roughly 10bcm/year. Eustream is currently analysing the feasibility of increasing this capacity to 14.5bcm/year.

Naftogaz has transferred $1.45 billion to Russia’s Gazprom as a first tranche to repay debts for supplied gas. Final settlements for the gas supplied by Gazprom to Naftogaz since 2010 will be regulated under a ruling by the Arbitration Institute of the Stockholm Chamber of Commerce, Naftogaz said. Gazprom has confirmed the payment.

Ukraine has lowered natural gas reserves in its underground gas storage facilities by 4 percent, or by 665.93 million cubic meters, since the start of the 2014-2015 heating season, according to preliminary data from gas transport operator Ukrtransgaz.

DiXi Group has published the 3rd quarterly newsletter on the state of implementation of energy related reforms by Ukraine. Monitoring of Ukraine’s implementation of its commitments in the framework of the Energy Community. Release No.9.

Gazprom has sent Ukraine a bill to prepay for 2 billion cubic metres of November gas supplies at a price of $378 per 1,000 cubic metres. Naftogaz press service has issued statement in which it has informed that it will make prepayments to Gazprom depending on the volume of gas ordered“The scope and schedule of prepayments depend on how much gas and when Naftogaz orders from Gazprom.” Gazprom is delaying the payment for the transit of Russian gas through the Ukrainian gas transport system to the EU for September-October, Ukrainian President Poroshenko has toldGerman Chancellor Merkel in a phone conversation. Gazprom has said that dispute over price has slowed payment for the transit of Russian gas through Ukraine.

5. VISEGRAD NEWS AND VIEWS

Central European Factory Output Shows Resistance to Russia Sanctions
Despite Russia’s pressure Slovakia to continue gas supplies to Ukraine– Juraj Siváček
Hungary moves ahead with South Stream pipeline
Poland organizes seminar for deputy ministers of European integration from Ukraine
Czech PM says sanctions hurting Russia, not changing Putin’s behavior
Slovakia criticises own TV station for being unfair to Russia
FP: Hungary Is Helping Putin Keep His Chokehold on Europe’s Energy
OSW: Illegal elections in Donbas
OSW: Success? The Russia/Ukraine/EU gas agreement

Noteworthy Resources

EuroMaidan activists complain about low salaries for members of parliament
Mark Galeotti: Crime And Crimea: Criminals As Allies And Agents
Welcome to the Cossack People’s Republic of Stakhanov
The Battle of Ilovaisk: Details of a Massacre Inside Rebel-Held Eastern Ukraine
Elections Held in Separatist-Controlled Ukraine: Russian Roulette (Dispatch 83)
Volodymyr Parasiuk: Just don’t forget that Maidan 3 is not impossibility
Donbas Battalion delivers ultimatum to Poroshenko
Surrounded by rebels, Ukrainian soldiers battle on
Dzerkalo Tyzhnya writes that sociologists have identified different priorities among supporters of various political parties (RUS)
Simon Shuster: Cease-Fire in Ukraine Fails and Preparations for War Begin
Enemies allegedly take contract out on gas oligarch Firtash’s life
Analysts say separatist election results rigged
Mark Galeotti: How the Invasion of Ukraine Is Shaking Up the Global Crime Scene
Belarusian Institute for Strategic Studies: Battle for Ukraine: the fog of war has not dispersed yet
The deputy commander of the Azov battalion and member of neo-Nazi ‘Patriot of Ukraine’ organization appointed as Kyiv regional police head
Ilovaysk: The facts and figures (investigative report)_

Polls

VCIOM: Russians do not want to see DNR and LNR in Russian Federation
Levada: Ukrainian Crisis – politic of Russian Federation, responsibility and truce

 


[3] Full statement of Russian MFA can be read herehttp://www.mid.ru/bdomp/brp_4.nsf/sps/64C03E1336C1B4D3C3257D85002792D8

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