CEPI Ukraine Watch

Week of January 5-9

Photo: CreativeCommons/ European External Action Service

12. 01. 2015
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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

 

An investigation by The New York Times into the final hours of Yanukovych’s shows that the president was not so much overthrown as cast adrift by his own allies. Business New Europe examines first Ukrainian reforms.

On December 25 Verkhovna Rada passed budget law, despite MPs complaining they had not seen the text of the law on which they were asked to vote for. Serhiy Leshchenko, a former investigative journalist, who joined the parliament, decried the situation in his column. Analysing the new law, Vox Ukraine has concluded that the role of the state is set to rise, contrary to what has been promised by government action plan.

Insider has interviewed two Aidar volunteer battalion fighters, exposing terrible atrocities committed by members of battalion.

The effort to unify and institutionalize a regular “LNR” armed force is only beginning, Vladimir Socor has written for EDM.

The investigation by Berlin-based investigative newsroom CORRECT!V unveiled what it claims to be a chain of evidence that MH17 was downed by a ground-launched BUK missile – launched by a unit of the 53rd Russian Air Defense Brigade from Kursk.

1. POLITICAL DEVELOPMENT

Negotiations aimed to advance ceasefire in eastern Ukraine and to prepare a summit in the Kazakh capital Astana have started in Berlin. It was reported, that meeting of senior diplomats in the “Normandy format” made some progress, but some “unresolved issues remain.” The foreign ministers of France, Germany, Russia and Ukraine will meet again on January 12. President of Kazakhstan Nursultan Nazarbayev met with German Chancellor Angela Merkel to discuss situation in Ukraine in the context of a possible meeting Astana in the near future.

Trilateral Contact Group consisting of senior representatives of Ukraine, the Russian Federation and the OSCE Chairperson-in-Office, held another round of consultations with representatives self-proclaimed Donetsk and Luhansk People’s Republics. No progress was achieved, Ukraine Foreign Ministry has reported.

French President François Holland called for sanctions on Russia to be lifted, if there is progress in peace process in Ukraine. Chancellor Merkel said that EU sanctions against Russia could only be lifted if there was full implementation of the Minsk agreement. Merkel said she did not expect separate sanctions tied to Crimea could be lifted, as this would require a reversal of Russia’s annexation of Crimea.  Federica Mogherini, the EU’s foreign policy coordinator, spoke of “limited but positive” signals from the Russians in recent weeks over the conflict in eastern Ukraine. Latvian Foreign Minister Edgars Rinkevics, whose country has just taken over the revolving presidency of the European Union, said he saw “signals” from the Kremlin indicating willingness for cooperation with the EU.

Ukrainian military pilot and MP Nadia Savchenko has been placed in solitary confinement at a pre-trial detention centre in Moscow.  The United States called for her immediately release. Savchenko is on the hunger strike for nearly a month.

2. SECURITY UPDATE

Rebel’s killing spurs war between Luhansk insurgent groups: Former insurgent leader Igor Girkin has urged the Russian fighters to leave “LNR” not to participate in an internal war. Girkin made his appeal following the reports about the liquidation of one of the rebel leaders, Oleksandr Bednov, aka Batman. The killing has triggered resentment from critics of official LNR’s leadership. Igor Girkin hascalled on Russia to admit it’s at war with Ukraine.

OSCE plans to double the number of monitors it has in Ukraine by the end of this month. The monitoring mission will be increased from 250 monitors to 500 because the security situation in eastern Ukraine has improved. The OSCE special monitoring mission noted that the situation in the ATO area in Donbas is deteriorating.

The human and cargo flows across the separation line of the conflicting sides in Donbas will be restricted, NSDC head Oleksandr Turchinov has announced. It will be possible to cross the military control line at seven designated crossing points. Ukraine has suspended passenger transportation services on bus routes to the areas in the anti-terrorist operation zone from January 6.

Lithuania has provided the Ukrainian army with “elements of equipment” that Kyiv requested earlier, Lithuania’s Defense Minister Juozas Olekas said. Canada has sent two vessels to Ukraine’s port city of Odesa with non-lethal military equipment for the Ukrainian army, presidential aide Yuriy Biriukov reported.

A volunteer centre in Odessa, which is helping to Ukrainian soldiers, was hit with an explosion. No one was injured. Police classified the attack as an act of terrorism. A series of explosions qualified as terrorist attacks hit a number of strategic Ukrainian cities, overshadowing the winter holidays.

President Poroshenko has transferred more than 100 items of modernized military equipment, including armoured vehicles, aircraft and weapon systems, to the country’s army. Poroshenko claims that the combat potential of army has been restored in full today.

The next prisoner swap could take place in mid-January, Denis Pushilin, the separatist envoy for peace talks, has said. According to a DPR official, less than 30 Ukrainian soldiers are detained in Donetsk, while Kiev still holds some 220 prisoners.

A KrAZ truck and a Bohdan bus of the Ukrainian army collided in the ATO zone in eastern Ukraine,killing 13 servicemen and injuring another 21, the Ukrainian Interior Ministry said.

Seven Ukrainian military personnel were taken captive by militants, the head of the Ukrainian prisoner exchange center, Volodymyr Ruban has said.

The number of internally displaced persons from Donbas and Crimea has reached 838,300 peopleas of January 5, the Ministry of Social policy has reported.

The coalition of NGOs and has filed a second motion to the International Criminal Court concerning Euromaidan case. The motion details numerous crimes against ordinary citizens committed over a three-month period by representatives of the government and government-affiliated paramilitary group.

SBU released a recording of a phone conversation that suggests that Russian Prime Minister Dmitry Medvedev promised one of the Cossack leaders of LNR to equip them with heavy weaponry and provide military experts.

Three Ukrainian soldiers were killed on 7 January and four more soldiers and two civilians on 8 January. Two Ukrainian servicemen were killed and another 20 were wounded in the area of the anti-terrorist operation on 9 January.

Another Russian ‘aid convoy’ has arrived in Ukraine on 8 January, heading to Dontesk and Luhanks. Spot report by OSCE SMM can be read here.

PM Yatseniuk has blamed Russian intelligence for a hacker attack against German government websites, for which a pro-Russian group claimed responsibility.

At the moment, there are about 7,500 Russian soldiers in Donbas, Defense Minister Stepan Poltorak has said. Poltorak said it was planned to increase the strength of army personnel from 232,000 to 250,000 people, as well as to create six mechanized brigades, a mountain infantry regiment, three artillery brigades and two army aviation brigades. The Defense Ministry is drafting Ukraine’s new military doctrine. UAH 14 billion will be allocated from Defense Ministry’s budget for arms development. As a result of reform the number of posts in the Defense Ministry will be reduced by 125 and in the General Staff by 74.

The head of Dnipropetrovsk SBU has been replaced. President Poroshenko has appointed Vadym Poyarkov chief of the Security Service of Ukraine office in Dnipropetrovsk region.

3. ECONOMY & REFORM EFFORTS

On January 1, 2015 the law on amending certain Ukrainian laws regulating the pension system in Ukraine, and revoking some laws, took effect. Taxation of non-residential property was introduced in Ukraine, with local authorities now empowered to set the rate.

Inflation in Ukraine accelerated to 24.9% in annual terms against December 2013, according State Statistic Service. Central Budget revenue shortfall was UAH 36.3 bln, or 8.2%, the State Treasury reported.

Ukraine and the EU conducted a technical consultation on the introduction of an additional import duty by Ukraine.

Annual steel production plunged by 17% year in one year.

Ukrainian government delegation visited Berlin. The delegation led by Prime Minister Yatseniuk included the Minister of Finance Natalia Jaresko, Minister of Economic Development and Trade Aivaras Abromavicius, Minister of Foreign Affairs Pavlo Klimkin and Board Chairman of the Naftogaz Andriy Kobolev. Ukrainian and German governments signed a joint statement over provision of EUR 500-million loan guarantees.

The IMF mission has returned to Ukraine. The mission is expected to complete its work in Ukraine by the end of January 2015. Finance Minister Natalie Jaresko has denied allegations that Ukraine is on the verge of bankruptcy.

The European Commission has proposed new macro-financial assistance to Ukraine of up to €1.8 billion in medium-term loans. The new MFA programme, which is to be approved by the European Parliament and the Council of Ministers, is linked to certain reform actions. If approved, assistance would be provided in three tranches, two of which could be allocated in the second half of 2015 and the third in early 2016.

The special commission was set up to select candidates for the directorship of the National Anti-Corruption Bureau held its first meeting. Refat Chubarov, chairman of the Mejlis of the Crimean Tatars was appointed head of the commission.

Ukraine will start issuing biometric passports from January 12, PM Yatseniuk has said.

4. ENERGY UPDATE

Ukraine has received 518 million cubic metres of gas from Russia in December 2014. Ukrtransgaz has said that gas supplies from Gazprom were stable.

The National Commission of Ukraine for Energy and Housing and Utilities Services Regulation willrevise natural gas prices in the first quarter of 2015 for consumers with the purpose of reducing the Naftogaz’s deficit.  The European Commission and IMF expect Ukrainian government to raise the gas price for households.

Ukraine’s imports of natural gas from Europe increased by 143% year in year to 5.1 bcm in 2014, up from 2.1 bcm in 2013. In 2014, Ukraine imported 3.6 bcm of gas from Slovakia, 900 million cu m from Poland and 600 million cu m from Hungary. In 2014Ukraine cut imports of natural gas from Russia by 1.8 times to 14.5 bcm.

The possibility of siphoning off of Russian natural gas by Ukraine has increased with the onset of cold weather, CEO of Gazprom Aleksei Miller has said. Naftogaz has expressed strong support for a tri-lateral monitoring mission to check gas transit flows at each of the 18 gas metering stations that measure gas crossing Ukraine’s borders.

Two British energy companies with operations in Ukraine – JKX Oil & Gas Plc and Regal Petroleum Plc, said their sales and investments in the country would be hurt by the government policies to address energy shortfall in the country.

Ukrainian coal mining enterprises saw a 22.4% decline in production of raw coal in 2014 (year on year), according to rough estimates, the Ukrainian Energy and Coal Industry Ministry said. The coal industry needs a new round of reforms that would finally switch the sector to the market economy,Vox Ukraine argues.

Ukraine has paid for two more vessels carrying coal from South Africa, Energy and Coal Industry Minister Volodymyr Demchyshyn said.

Ukrtransgaz, which operates Ukraine’s gas transport system, plans to use 2.58 bcm of natural gas to meet its own needs in 2015.

Ukrainian authorities have made some success in the fight against corruption in the energy sector , Prime Minister Yatsenyuk claims.

5. VISEGRAD NEWS AND VIEWS

Zeman criticizes Ukrainian PM
Hungarian opposition demands government to start talks with Ukraine to legalize dual nationality
From Pragmatism to Bear Hug: Hungary’s Russia Policy on the Eve of the Ukraine Crisis by András Rácz
CEID: Ukraine – Current Situation and Future Prospects-Event Summary
Evacuation plans laid for Poles in eastern Ukraine

Noteworthy Resources

Adrian Karatnycky: Warlords and armed groups threaten Ukraine’s rebuilding
EUBAM increases staff at Transnistrian stretch of Ukrainian-Moldovan border to allay security concerns
Azarov’s son free of charges in Ukraine
How Russians Are Sent to Fight in Ukraine
George Soros: A New Policy to Rescue Ukraine
The search for Petr Khokhlov. A Russian Soldier Vanishes in Ukraine.
Ukrainian business failed to compensate the damage from the loss of the Russian market

Interviews

Interview with Sergei Taruta, MP and former head of Donetsk RSA

Food for thought

Balazs Jarabik: Let’s Return to our Jobs as Analysts

Poll

Kyiv International Institute of Sociology has carried out big poll covering wide range of topics for newspapers Zerkalo Nedeli.

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