CEPI Ukraine Watch

Week of November 8 – 14, 2014

Photo: prezident.sk

17. 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

As Russian military equipment has been moving to east Ukraine (see Security Update), Russian TV Dozhd channel has interviewed Alexander Boroday, former “prime minister” of the self-declared Donetsk People’s Republic. Boroday has criticized Igor Girkin (aka Strelkov), former “defence minister of DNR”, mocking his desire to become a political leader. The other day, Strelkov has attacked Boroday[1], saying that his actions were managed by Vladislav Surkov. According Strelkov, Surkov was the man behind the scenes who directed all actions of the Russian militants and their arrivals in the Donbas. The internal struggle within self-proclaimed LNR and DNR has intensified after so called November 2nd “elections.” While the world is anxiously watching new military build-up, Donbas warlords have basically split into two categories. Insider is covering the recent development. Hromadske International has published A Guide to the Warlords of Ukraine’s ‘Separatist Republics’

Insider has published report covering coalition talks and fight between Bloc of Petro Poroshenko and Popular Front. Novoe VremjaCapital.ua and Levy Bereg’s Sonja Koshkina also wonder what hinders the coalition dialogue. According to the Insider Ihor Kolomoyskyi has quarrelled with Poroshenko’s team over the election results in some single-mandate constituencies. Independent deputies are in active talks to form own factions, Capital.ua reportsNovoe Vremja has published the profile of Andryi Sadovy, leader of Samopomich Party and Lvyv Mayor.

The EU has granted Ukraine the next tranche of EUR 260 million in macro-financial assistance[2] and provided an additional EUR 3.3 million as humanitarian assistance[3] to the population affected by the conflict in Donbas. Russia’s consumer rights watchdog Rospotrebnadzor has imposed a ban on another group of Ukrainian food exports, cheese-like products. IMF mission to review Stand-By Arrangement with Ukraine only after formation of new cabinet. The European Union is refusing to organise a donors’ conference to help cash-strapped Ukraine until Kiev produces a detailed blueprint for the country’s economic development, Johannes Hahn, the new EU commissioner in charge said.

1. POLITICAL DEVELOPMENT

Six (+ four) parties enter the Verkhovna Rada with 100% of ballots counted. The Central Election Commission has announced the official results of the parliamentary elections on party tickets and in 196 majority constituencies: People’s Front Party (22.14%), Bloc of Petro Poroshenko (21.81%), Samopomich Union (10.97%), the Opposition Bloc (9.43%), the Radical Party (7.44%) and Batkivschyna (5.68%). The Bloc of Petro Poroshenko will get the largest number of seats in the Verkhovna – 132 seats, People’s Front get 82 seats, Samopomich Union – 33, the Opposition Bloc – 29, Oleh Liashko’s Radical Party – 22 and Batkivschyna – 19. 96 people would enter the Verkhovna Rada as independent MPs. + Four: Svoboda will be represented by 6 deputies who won the elections at single-member districts, Strong Ukraine, Zastup and Right Sector each got one representative in Rada.

Young post-revolution party Volya splits before parliament convenes: Yegor Sobolev has announced that he and others were leaving the party. Before the parliamentary election the party joined forces with MP and businessman Yuriy Derevyanko. The split in Volya’s ranks became public when Derevyanko stated that the party had decided to create its own grouping to represent its interests in the Rada. Sobolev and his associates have refused such movement and intend to work within Samopomich faction.

Details on Ukraine coalition government protocol, agreement emerge: Ukraine’s coalition government will consist of five political parties that will form parliamentary factions, said Viktoria Siumar, an elected MP from the People’s Front party. Their representatives have already signed a protocol determining the procedure for forming the coalition government. The prime minister will nominate candidates for ministerial positions after consultations with coalition members, she said, and the ministers will select their deputies without quotas. Individual MPs must join a parliamentary faction in order to join the coalition, the protocol said. The coalition consists of an assembly and a council, which consists of three representatives from each faction. Each faction in the coalition has an equal voice. The coalition council approves decisions with a three-fourths majority.

Svoboda party members in Ukrainian government resign: Ukrainian Deputy Prime Minister Oleksandr Sych, Agricultural Policy and Food Minister Ihor Shvaika and Environment and Natural Resources Minister Andriy Mokhnyk, who are representatives of the Svoboda have announced the termination of their powers in the government. In addition, statements of resignation have been submitted by the heads of state administrations from Svoboda.

Early elections for local government agencies are impossible in Ukraine under the current law and conditions, parliamentary candidate from the Bloc of Petro Poroshenko Mykola Tomenko has said.

On Friday, Aresenyi Yatseniuk – who is likely to retain his post in new government – offered his own vision of new cabinet. Yatseniuk has said that the new parliament should immediately pass the law on Ukraine’s state budget. Ukraine’s top priority is to build an army strong enough to stop Russian military aggression, he said. The draft coalition agreement was published on Friday.

2. SECURITY UPDATE

OSCE has said it has observed convoys of heavy weapons and tanks heading toward the frontline in separatist-controlled eastern UkraineOn Sunday, OSCE SMM has observed another two convoys moving to west, which included artillery and multiple-launch rocket system on the territory controlled by separatists. Weekly update from the OSCE Observer Mission at Russian Checkpoints Gukovo and Donetsk based on information as of 10:00, 12 November 2014: The OM observed the highest number of persons in military-style clothing crossing the border in both directions, since the beginning of its mandate – 35 persons crossing the border at Gukovo BCP, 18 of them left for Ukraine while 17 entered the RF; 630 persons crossing the border at Donetsk BCP individually and in groups, mostly to Ukraine.  The OM observed continued high numbers of dumper trucks transporting coal from the Luhansk region to the RF. On 11 November, the OM observed a van marked with signs “gruz 200” [“Cargo 200” which is a well-known Russian military code used for “military personnel killed in action”] crossing from the RF to Ukraine and returning several hours later.

The United States and European Union have voiced concern over reports of large convoys of troops and weapons moving through territory controlled by pro-Russian rebels in eastern Ukraine.  NATO’s supreme allied commander in Europe, General Philip Breedlove has said“Across the last two days we have seen the same thing that OSCE is reporting. We have seen columns of Russian equipment, primarily Russian tanks, Russian artillery, Russian air defense systems and Russian combat troops entering into Ukraine.” Breedlove said that “the violence continues to increase day by day,” adding that the number of Russian troops inside east Ukraine who were helping and training rebel forces to use sophisticated weaponry had probably risen from earlier estimates of 250-300.

There are no Russian troops in eastern Ukraine, Russian Foreign Minister Sergei Lavrov said. Lavrov said U.S. Department of State Spokesperson Jen Psaki had admitted earlier that Washington had no evidence indicating Russian military presence in Ukraine. Lavrov also said that Russia was not directly involved in the implementation of the ceasefire agreements between the Ukrainian government forces and the militias. U.S. Secretary of State John Kerry said in Beijing Saturday the U.S. and Russia agreed to exchange information about developments in Ukraine. Lavrov said that US involvement in resolving the conflict in Ukraine would be a “step in the right direction”.

Worst shelling for a month in east Ukraine: An eyewitness said the Saturday’s overnight shelling was the worst in more than a month, lasting almost eight hours. The shelling in Donetsk started, just after elections in rebel areas, but the round which took place overnight into Sunday was extremely heavy.

Former head of counterintelligence at SBU Volodymyr Bik detained: A former head of counterintelligence at the Security Service of Ukraine, who was involved in the mass shooting of people on Independence Square in Kyiv, as well as crimes related to national security, has been detained and arrested in Ukraine, SBU Chief Valentyn Nalyvaichenko told.

Origin of the Separatists’ Buk – A Bellingcat Investigation: This report analyses evidence from open sources, in particular social media, relating to the Buk missile launcher filmed and photographed in eastern Ukraine on July 17th that many have linked to the downing of Malaysia Airlines Flight 17.

The second stage of lustration, which begins on November 10, will affect ministers and the heads of the central bodies of the Ukrainian executive administration, as well as the top officials of the Justice Ministry, the prosecutor’s offices, and the Ukrainian Security Service, Ukrainian Deputy Justice Minister Ihor Alekseyev said. From the moment of the start of lustration checks a total of 354 officials have been dismissed, Justice Minister of Ukraine Pavlo Petrenko has said.

A total of 1,052 Ukrainian army soldiers have been killed since fighting broke out in Ukraine’s eastern regions in April, National Security and Defense Council spokesman said. In captivity of terrorists there are still 400 Ukrainian servicemen. The fate of another 400 military is still unknown, NSDC hasbriefed.

The OSCE SMM scandal: The adviser to the Minister of Defense for the exchange of prisoners Vasyl Budyk said that 80% of OSCE employees, working in the area of Mariupol, Donetsk region, are citizens of the Russian Federation. He added that they are either former or current FSB workers; moreover they reveal information about the location of Ukrainian troops. Zerkalo Nedeli has written that special observers of the OSCE, who met with representatives of Ukraine and Russia at the “common center of control and coordination,” published information on location of Ukrainian military deployment. Thus, the Russian military came to know about the details of the location of heavy artillery and tanks of Ukrainian security forces near the village of Karlivka, Donetsk region. Radio Liberty asked former Ukrainian diplomat Bohdan Yaremenko, who worked on the issue of the OSCE mission’s work in the Donbas conflict zone, to comment on the growing Ukrainian criticism towards OSCE SMM. Novoe Vremja is also covering the topic. The Ministry of Foreign Affairs has warnedagainst hasty attacks on the organization. OSCE has denied allegations of pro-Russian bias in Ukraine’s east[4]. OSCE Secretary General Lamberto Zannier has rejected accusations that the OSCE monitoring mission in Ukraine is mainly composed of Russians. Zannier admitted that the escalation of the situation in the east of Ukraine and failure of the Minsk agreements was making it impossible for observer mission to fulfil its mandate in the Donbas. He said that OSCE mission in Ukraine had no freedom of movement on rebel-controlled territory. The mission used to monitor vehicles and drones, but even here, “we are faced with obstacles and unforeseen problems. They’ve brought down [our] drones with weapons. I was told that this was not the work of amateurs… The Ukrainian border, about 400 kilometres of it, is not monitored. Zannier said that rebels managed to push cease-fire separating line several kilometres west. The Crimean authorities have closed the OSCE office on the peninsula and do not allow observers to return there, which creates a problem for the Crimean Tatars, Zannier has said. OSCE Parliamentary Assembly President Ilkka Kanerva has criticized “unacceptable restrictions” on OSCE observers: “Let’s be honest: the Mission is restricted to report only on what it sees pass through the official crossings along the tiniest strip of border. If we are not permitted to do it right, the question is, is it worth doing at all?” Just in case, the Russian foreign ministry has accused international monitors in conflict-racked eastern Ukraine of bias towards the government. In a statement, the ministry said it was concerned about statements by the OSCE. It said the OSCE reported rebel troop movements while ignoring ceasefire violations by Ukrainian forces.

An emergency meeting of the UN Security Council on Wednesday night, November 12: Ukraine’s ambassador to the United Nations, Yuriy Sergeyev, said that it is due to his country’s “restraint” that the conflict in the east between Ukrainian forces and pro-Russia separatists has not yet turned into an all-out war. Sergeyev said  that Russia had broken its promise to withdraw troops from the border with Ukraine, where there are currently 39,000 soldiers, 200 tanks, 1,600 vehicles, 640 artillery units, 191 aircraft and 121 combat helicopters on the border with Ukraine according to Kyiv. U.S. Ambassador Samantha Power[5] said Russia and the separatists had not lived up to any of the conditions of Minsk cease-fire agreement, including pulling out all foreign fighters from Ukraine. Deputy Russian Ambassador Alexander Pankin told the council it was Ukraine that was concentrating its forces along the front lines after Kyiv and the separatists agreed to pull them back. He accused European monitors of failing to take note of this and called reports of Russian military build-up “propaganda”.

Ukrainian President Petro Poroshenko said peace in Donbas should be achieved on the basis of the Minsk agreements“I have no doubts that the Minsk agreements are fundamental to the implementation of the peace plan…”. Ukraine Foreign Minister Pavlo Klimkin has said that “what we need is de-escalation. We need real political solution.” Klimkin has said that the authorities are planning to seek a political solution to the crisis in eastern Ukraine, rather than hold a military operation to return the territories controlled by members of illegal armed groups.

Seventh “humanitarian convoy” will be sent to Donbas, official representative of the Russian Ministry of Foreign Affairs Alexander Lukashevich said, TASS informs.

Russian aviation division to be deployed in Crimea: An aviation division is being formed within the Fourth Air Force and Air Defense Command of the Southern Military District and its units will be stationed in Crimea, a source in the Russian Armed Forces General Staff told Interfax-AVN.

Self-proclaimed Donetsk republic calls for convening Minsk group including OSCE, Ukraine, Russia: Denis Pushilin, a representative of the self-proclaimed Donetsk People’s Republic at negotiations of the trilateral contact group in Minsk, has called for the soonest possible resumption of the talks on settling the conflict in eastern Ukraine. Markian Lubkivskiy, an adviser to the chairman of Ukraine’s SBU has said that “there will be no ‘Minsk-2’, as we have ‘Minsk-1’ agreements which Ukraine is implementing and the terrorists are not.” Ukrainian Foreign Ministry representative said that Kyiv would continue talks but only on implementation of existing agreement. Lubkivskiy has also said that on the territory of self-proclaimed DNR and LNR, there are currently 7.5 thousands Russian soldiers.

The Cabinet of Ministers has approved the list of settlements[6] in Donbas, which are not under government control (and those which are only partially controlled).

The Ukrainian and Russian heads of the Joint Centre for Control and Co-ordination informed the OSCE SMM of an agreed draft schedule for gradual disengagement of forces along the line of contact. The draft document, which they signed at the end of the meeting, proposed three phases: a ceasefire (two days); withdrawal of heavy weapons (five days); and disengagement of forces to the line of contact referred to in the Minsk Memorandum (21 days)

UN OCHA Situation report No.19 as of 14 November 2014: The President did not sign the new IDP law into force within the required 15-day time period. As a result, the law is essentially ‘adopted by default’, but will only enter into force after Presidential signature. The displaced population has increased significantly. As of November 14: 460,365 people have reportedly been displaced (source: SES) and 508,515 people have reportedly fled to neighbouring countries (of these, 419,610 have sought refuge in Russia). At least 4,132 killed (conservative estimate) and 9,747 wounded in eastern Ukraine as of 11 November (source: OHCHR/WHO). Estimated number of people living in conflict-affected areas is 5.2 million. The graphical overview of population displacement can be found here.

3. ECONOMY & REFORM EFFORTS

The forex rate of the Ukrainian hryvnia on the interbank forex market on Monday slid to 16.10 UAH per dollar, having hit new record lows.

The European Investment Bank will provide EUR 108 million to seven Ukrainian higher educational institutions to modernize equipment and laboratories with focus on energy saving and EUR 800 million to finance foreign economic operation of small and medium-sized business.

The Ukrainian government will provide Hr 300 million to finance the territories of the Donetsk and Luhansk regions controlled by Kyiv, Ukrainian Prime Minister Arseniy Yatsenyuk said[7].

The EU has granted Ukraine the next tranche of EUR 260 million in macro-financial assistance[8] and provided an additional EUR 3.3 million as humanitarian assistance[9] to the population affected by the conflict in Donbas.

Russia’s consumer rights watchdog Rospotrebnadzor has imposed a ban on another group of Ukrainian food exports – cheese-like products.

The Vice Prime Minister Volodymyr Hroisman has stressed that Ukrainian citizens living in the territories controlled by rebels can receive social payments only after registration as internal migrants on the territory, controlled by the Ukrainian authority.

IMF mission to review Stand-By Arrangement with Ukraine only after formation of new cabinet: IMF mission, which is currently in Kyiv, will start reviewing the Stand-By Arrangement with Ukraine only after the formation of a new Cabinet of Ministers.

Ukraine’s trade surplus for goods fell to $803 million in January to September from $1.2 billion in January to August, the state statistics committee said on Friday.

The European Union is refusing to organise a donors’ conference to help cash-strapped Ukraine until Kiev produces a detailed blueprint for the country’s economic development, Johannes Hahn, the new EU commissioner in charge said.

4. ENERGY UPDATE

Gazprom paid Ukraine’s national oil and gas company Naftogaz for gas transit services on Friday, Gazprom’s official representative Sergei Kupriyanov told. Kupriyanov added that the amount of payment was determined based on the price formula included in the contract. Naftogaz hasconfirmed it has received the payment and has said that Gazprom’s payment had been in excess of the transit bill submitted by Naftogaz for September and October, and the excess sum had been returned to Gazprom. The reason for the current lack of clarity over the level of transit charge is that Gazprom is using a higher gas price in the formula, while Ukraine is using a lower one, in order not to be seen accepting a higher price for its Russian gas supply, which could impact on future price negotiations.

Cabinet obliges large gas consumers to buy gas only from Naftogaz between Nov. 11, 2014 and Feb. 28, 2015: The Cabinet of Ministers adopted a resolution that makes Naftogaz of Ukraine the exclusive supplier of natural gas to the 90 biggest consumers in Ukraine. The companies included in the list are prohibited from buying gas from any other supplier between Nov. 11, 2014 and Feb. 28, 2015. Energy Community Secretariat Director Janez Kopač has expressed serious concerns in terms of decision’s compliance with the Energy Community Treaty. The Cabinet of Ministers was requested to provide the Secretariat with an explanation for the measures.

Coal businesses: President Poroshenko had questioned the transparency of the scheme for supplying coal from South Africa to Ukraine at a meeting of the NSDC. Suggesting the price was too high and suspecting corruption at the Energy Ministry. The heads of the companies Ukrinterenergo and Centrenergo had been summoned to the Prosecutor General’s Office for questioning[10]. The companies’ premises have not been searched and no documents have been seized. LigaBusinessInform wonders what is behind the “case”.  Coal shipments from the South African Republic have been carried out on market-based conditions, Minister Prodan said after his visit to the PGO office where he was questioned about that deal.   The coal seller from South African Republic has published the contract to prove transparency of coal shipments to Ukraine. Prodan has also saidUkraine is not holding any talks on coal purchases from the self-proclaimed Donetsk and Luhansk People’s Republics. The experts on the coal market have said for Capital.ua that South African coal does not seem to be overpriced and indicated that scandal has most likely political background connected with fight for distribution of power within future ruling coalition. It was reported that Poroshenko wants to give Prodan’s energy portfolio to a political ally. Ukrainska Pravda has investigated the case, the excellent report can be read here. At the same time, companies owned by Rinat Akhmetov continue to export coal.  Ukrainian state company Centrenergo will buy 509 thousand tons of coal from Russia until the end of 2014 ($ 80 per 1 ton without the shipping costs).

Ukraine has lowered natural gas reserves in its underground gas storage facilities by 6.5 percent, or by 1.089 million cubic meters, since the start of the 2014-2015 heating season, according to preliminary data from gas transport operator Ukrtransgaz.

Ukraine on November 7 imported 30.9 million cubic meters of natural gas through Slovakia, while the previous high was set on Oct. 28, when the country received 30.7 million cubic meters of gas, the press service of PJSC Ukrtransgaz has told.

The European Investment Bank in will provide 150 million euros financing to reconstruct the Urengoi-Pomary-Uzhgorod gas pipeline. The European Bank for Reconstruction and Development said it could provide up to $200 million to reconstruct the Urengoi-Pomary-Uzhgorod gas pipeline.

Secretariat publishes policy guidelines aimed at closing the regulatory gap within the Single Energy Community Market: The aim is to ensure the consistent application of the EU’s internal market legislation on the borders between the Contracting Parties and the EU Member States.

European Commission Vice President for Energy Union Maros Sefcovic met with Ukrainian President Petro Poroshenko and Prime Minister Arseniy Yatsenyuk in Kyiv on November 14. Ukraine has asked EU to mediate gas talks with Russia on ‘summer package’.

Ukraine will most probably buy around 1 bcm of Russian gas by the end of the year, Energy Minister Prodan has said. Naftogaz said it may send prepayments to Gazprom by the end of November. Until now Kiev has not committed to new orders.

Ukraine has enough supplies of nuclear fuel to last until September 2015, and may secure supply sources alternative to Russia, Minister of Energy Prodan has said. “We have an alternative supply source of nuclear fuel – U.S. company Westinghouse.”

5. VISEGRAD NEWS AND VIEWS

Ukrainian President Poroshenko visited Slovakia, talked with V4 representatives
Slovak Civil Society Initiative for Ukraine
Czech Deputy Prime Minister Calls for Political Solution to Ukraine Crisis
Hungary to stand by EU’s Russia sanctions, wants help on gas
Russian aggression revives sanctions support in Eastern Europe
EU allies alarmed at Hungary’s Kremlin drift
Balázs Jarábik: Russia, Ukraine and the Visegrad: Time to Get Real

Noteworthy Resources

Further economic sanctions on Russia not planned, Merkel says
Ukraine rebels: A disunited front run by warlords
NATO commander concerned by armoured convoys entering Ukraine from Russia
EU foreign ministers unlikely to step up Russia sanctions on Monday
Crimea Nationalizes the Means of Bread Production
Vice News: Sentenced to Death by a Crowd: Russian Roulette (Dispatch 86)
Hromadske TV: Eastern Ukraine. Before the Front Lines
Hromadkse TV: The ‘Ceasefire’ Near Luhansk. Popasna
Crimea: between Russia and Ukraine
Under Fire In Ukraine, OSCE Questions Its Worth
Luhansk Power Plant works at 20 percent capacity after months of shelling, limited coal supplies
NATO chief says he sees no military solution to Donbas conflict
Miller and Weiss: Putin sends his ‘leopard’ to the battlefield of eastern Ukraine

Food for thought

Is a Rebel Offensive Imminent?
Balazs Jarabik: Frozen Donbas?

Polls:

Levada: Most Russians still support the annexation of Crimea, but oppose participation of Russian “volunteers” in the war at Donbas

Interviews:

Interview with Igor Girkin (aka Strelkov)
Interview with Naftogaz’s Andriy Kobolev
Interview With New EU Enlargement Chief Hahn
Interview with Michael Bociurkiw, Spokesperson for the OSCE Special Monitoring Mission in Ukraine

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