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NBU abolishes some currency restrictions for business

November 1, 2014

Though this will undoubtedly be hidden amongst gas news and reporting from the front lines – somewhat earlier that expected, the National Bank of Ukraine has abolished some of its temporary restrictions on foreign currency.

In short, with effect from 3rd November, the following temporary restrictions are lifted previously imposed under Resolution 591.

“transactions undertaken in foreign currency during import operations – without the importation of the goods onto the territory of Ukraine, and

· payments under import contracts under which the product was imported more than 180 days beforehand onto the territory of Ukraine.”

A step in the right direction to be sure.

 

 

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A new class of RADA Deputy – The poor

October 31, 2014

With the construction of the new RADA more or less complete – baring the few contested single mandate seats that remain unresolved – the return of the good, the bad and the ugly to the legislature is complete.

Forecast

A radically different picture to the historically more evenly times when the rich, connected/sponsored/owned and the outright nefarious took their places in what was first and foremost the most elite business club in Ukraine. It was the workplace of the good, the bad, and the ugly.

But there is now a new class of People’s Deputy – the poor Deputy.  The deputy that is not rich, not sponsored/owned and thus far not known for nefarious activity either.  A class of deputy that does not sit in prominent positions of large companies owned by the oligarchy, nor that own successful companies, or indeed have any other job or role outside politics having deliberately severed them prior to being elected.

With the majority of parties having hollowed out civil society, journalism and volunteer battalion leaders, placing them high enough on respective proportional vote party lists to insure many have now entered the RADA, it becomes the work place not only of the billionaires, multimillionaires, business leaders, puppet masters and assorted affluent criminals, but also that of those barely two kopeks to rub together.

Prior to the war in eastern Ukraine, an MPs salary was UAH 15,000 per month – or $1172 at today’s exchange rate.  However, in order to appear to throw money back into the public purse, and give the impression of personal sacrifice to fund the war effort, that was reduced to UAH 6000 – $469 at today’s exchange rate – by removing the First Grade Civil Service Allowance.  Not a  problem to the old RADA that was after all devoid of poor people, and also quite capable of continuing to graft funds far in excess of the publicly shunned pittance from such populist acts.

The days when the populist hollow token gestures of sacrificing the MPs salary to benefit the public purse (whilst often raping that same public purse behind closed doors) can no longer apply if these new, seemingly ethically upright people are to financially survive and fulfill their constituency mandated roles with integrity.   Whilst the billionaires and multimillionaires spend more in a week  on restaurants – in some cases at a single sitting – than an MP currently officially earns in a month now all other official and legal “bolt-ons” have been stripped away, much of the new blood taken from the otherwise historically ostracised public will have to rely entirely on the MPs salary during their time in office.

Now, however, such populist gestures need be undone.  Quite simply, UAH 6000/$469 does not even cover the rent of a below average apartment in Kyiv – and even if free accommodation were somehow provided, that wage still struggles to cover the cost of living, certainly ruling out any form of informal/social/out of the workplace meetings over lunch in a Kyiv restaurant, as few ethically and transparency orientated new RADA MPs will want to be seen to be “paid for” at such venues for fear of being beholding to – or perceived to be beholding to – those who foot the bill.

As for those new deputies from oblasts far from Kyiv, their salary would also have to cover travel costs to and from home as and when the legislative timetable allowed.

There is no need to labour the point being made here.  A return to the UAH 15,000/$1172 monthly salaries would seem to be entirely necessary if the new, unsullied and ethically motivated MPs are to be allowed to stay that way, without being forced to compromise themselves.

If there is to be a genuine fight against corruption, then it surely makes sense to insure that the new untainted anti-corruption/transparency/rule of law MPs that have now entered the RADA across so many different party lists, have at least a fighting chance of remaining that way, would it not?

Ukraine can ill-afford to lose currently unstained People’s Deputies needlessly to corruption because they have to make ends meet by other means, any more than it can afford to lose them in pursuit of another job that actually covers the bills.  Neither choice should be presented.

The days of empty populist nonsense have to end – nothing good ever came from populist nonsense.  It is also time to close the most exclusive business club in Ukraine to business.  Politics, legislation, debate and policy only within the RADA premises.  Of course what goes on inside those top of the range cars in the RADA car park, or those expensive restaurants that the new, poor, RADA Deputy will not be able to afford even with a return to pre-war salaries, will probably remain entirely dubious business – unfortunately.

However, if a fish rots from the head, downward – it seems wise to do what is necessary to prevent that head rotting entirely.

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Leaving the club – or several actually (Odessa)

October 30, 2014

As regular readers will have noted, the blog has recently become rather “Odessa-centric” – for good reason.  There are those that read this blog in Kyiv, Brussels and several capitals specifically to get a “feel” for what is going on in Odessa at certain times – particularly at times of unexpected incident, elections or “interesting developments” upon which it is felt necessary comment is made.

This, once again, is one such entry – prior to returning to matters more national tomorrow – now that (with a few exceptions) the results from the elections in Odessa have been announced and accepted.

Of note today, Odessa City Council has several decisions to leave international associations it considers ineffective and unable to justify regarding cost.  Membership fees, administration costs etc.

With effect from today, decisions were made to leave the International Assembly of Capitals and Major Cities of the CIS (Confederation of Independent States), the European Coalition of Cities Against Racism, The International Black Sea Club, the International Coalition for Environmental Initiatives and the European Federation of Local Solidarity Association.

These decisions made in response to the Cabinet of Ministers Decree “On saving public money and avoiding loses to the budget” according to the City Council session today, after consultation with, and the deliberation of, the Department of International Relations of City Hall.

It appears, for the time being at least, all remaining official associations will be spared the administrative and budgetary axe.

What savings this will actually produce, who knows?  Perhaps a move to e-government rather than remaining on paper would save just as much if not more?

As to the historical benefits of any of these organisations and how the have manifested themselves in Odessa, that is perhaps subjective, although without doubt none have ever had much of a public profile.

Also of note is the apparent arrival of lustration in Odessa within both the prosecutors and tax administration departments first to be targeted – though clearly it currently seems to be superficial rather than confronting the deep and ingrained corrupt culture that runs within these institutions.

Whether serious inroads will be made remains to be seen.

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A brief Post Mortem – Odessa

October 29, 2014

As election results start to be declared, there will be those who may be somewhat surprised by some results from certain regions of Ukraine – we can look to Kharkiv and Odessa for some that may, prima facie, make us ponder.

As it seems Kharkiv has returned 13 ex-Regionaires from 14 single mandate seats, and 8 from 11 in Odessa – notwithstanding the proportional vote percentages which present a different picture for Odessa, if not for Kharkiv, there is a perhaps enough interest to look a little further as to why this is.

It also has to be said that despite any superficial similarities, Odessa and Kharkiv are two distinctly separate regions and cities, with political, economic and social drivers that may apply for one city, but are not necessarily the same for the other.  Proximity to, and trade dependence upon Russia will have a varying impact for example.

Firstly, single mandate (first past the post) seats have always seen the most nefarious of election campaigning – and no doubt will continue to be so – as stated at every meeting with every election monitor, be they OSCE, NGO, politician or diplomat over the years.

Secondly, it needs to be recognised that not all former Party Regions MPs were bad, or at least were any worse than some in other parties, despite some poor legislative decisions they supported – sometimes, for some of them, under duress.

Thirdly, whilst Odessa and Kharkiv have proven themselves pro-Ukrainian unity, Russian speaking cities, that doesn’t make them anti-Russia or anti-Regions.  It is more a case of anti-Kremlin/Putin and anti Yanukovych and “Family”.  Most ex-Regionaires are not seen as being directly associated with The Kremlin or Mr Putin (thought some certainly are) or uncomfortably close to Yanukovych and “family” (though again some certainly are).  Many have made very deliberate (if possibly fake in some cases, unconvincing in others) attempts to prove their loyalty to Ukraine.

As tweeted:

Thus, it may well prove to be a mistake to frame these election results as anything other than a vote for internal reform.  It is necessary to be blunt.  The path ahead is more than challenging – it is daunting.  The first 100 days will need to see real headline reform delivered and be seen to be implemented.  If not, then trouble likely lies ahead.  This election was about reform and delivery of reform – not a compass point – whatever hyperbole and misguided rhetoric may be spouted by the media.

Next, it was completely unrealistic to expect a RADA free of ex-Regionaires.  The laws under which this election took place were the laws introduced under former President Yanukovych and are therefore somewhat “malleable”.  Ex-Regionaires also now sit within other parties.  Their complete irradiation from parliament was always nothing but fanciful – and also dangerous when considering eastern representation.

However, a new RADA would be very wise to make one of its first votes the passing of the pending electoral laws that were deliberately stalled right up until this election by the old RADA.  It would be wise to pass them immediately – as there is no guarantee that this new RADA will last a full term.

Anyway, returning to the post mortem of the single mandate seats.

One of reason the ex-Regionaires did (and were expected to do) well in the single mandate seats, is that those candidates from parties running against ex-Regionaires failed to organise themselves with the goal of defeating the ex-Regionaire.  When such a strategy eventually dawned on some, it was perhaps too little too late with only two weeks before the election to go.

Even after such a strategy eventually dawned, there was then the issue of effectively delivering a candidate field narrow enough to deliver a realistic chance of victory.  Some candidates were convinced to stand down – others weren’t.  Money had already been spent on campaigns.

As an example, simply because it is the district within which this blog is situated – District 135 – Odessa Primorsky.

In District 135 Odessa ran the notorious Sergei Kivalov, ex-Regionaire, friend, ally and fully-fledged functionary of former President Yanukovych.  Mr Kivalov owns several television stations, newspapers and media outlets, as well as building several universities where he is honorary Dean, a few churches and various other philanthropic acts, running into the many $ tens of millions over the years, with a small part of a dubiously earned personal fortune.  Needless to say a grateful church and easily pressured students provide a very large campaign force, notwithstanding his media entities being heavily biased to Mr Kivalov’s campaign to the exclusion of others.

Whilst several of the pending electoral infringements relate to Mr Kivalov’s campaign, he will win this single mandate.  After all, any infringements proven may only be capable of being tied to Mr Kivalov’s campaign manager or staff, rather than Mr Kivalov himself.   Plausible deniability may well be enough to be reasonable doubt in a court when considered in the context of a busy campaign schedule he doesn’t set himself.

Thus name recognition, a heavy and biased media presence, misuse of institutional/administrative resources, voter bribery etc., all add to those who, via his philanthropic efforts over the years in the city, consider him, if not perfect, better than somebody they know little about.

But could he have been defeated?  Certainly.  As a district, the majority of District 135 voted Block Poroshenko in the proportional representation vote.  Indeed 6 from 11 Odessa districts did – despite the very likely returning 8 from 11 former Regionaires as vote counts currently stand.

Running against Sergei Kivalov was the popular Mr Rondin – as an independent.  Mr Rondin could and perhaps should have been the Block Poroshenko candidate (and would have picked up some form of electoral bump from doing so).  Mr Rondin, however, chose to run as an independent, thus Block Poroshenko chose Mr Naumchak, a fairly decent man, but not as popular as Mr Rondin.  These two, along with a technical candidate (a candidate deliberately entered to split a vote) in this case Mr Selyanin, insured that those voters looking for somebody to vote for other than Sergei Kivalov had their collective power diversified by both poor strategy, as well as by deliberate design.

Thus, in sum, in single mandate seats in traditionally “Regions” regions, there was simply not the planning that went into the presidential election with regards focused choices for the voter – not withstanding the opportunities for more conspiratorial nefarious acts.

A consideration should also be made regarding campaign funding.  Whether single mandate ex-Regionaire candidates ran as “independents” or Opposition Block, it is likely that old sponsors made considerable funds available.  It is also likely that some, if not all, ex-Regionaire independent candidates will join the Opposition Block after the RADA is sworn in, or at the very least vote in concert with the Opposition Block far more often than not.  The practiced and deft manipulation skills of ex-Regions puppet master Sergei Levochkin should not be underestimated – especially with the gas lobby money and a tacit nod of approval from other ex-Regionaire oligarchy behind him.

Thereafter consider many such candidates are also major employers/senior position holders within/closely associated with the owners thereof.  The inference that an unsuccessful campaign on their behalf may result in unemployment can weigh heavily upon the workforce.  (An inference multiplied in a city like Kharkiv which trades quite extensively with Russia.)

Further, Ukrainian voters, almost without fail, return a local for a local seat.  Parachute candidates, regardless of calibre, are extremely rare victors.  That puts de facto parameters on quality candidature for a local single mandate seat.

Perhaps most importantly, there is then the voter themselves – and here are to be found national commonalities.

There are those who simply are too lazy to vote, or who see the electoral system unchanged and therefore don’t see a significantly different result being delivered.  Something akin to the thinking, “Insanity: doing the same thing over and over again and expecting different results.” – Albert Einstein.  Without the votes cast demographic statistics, and thus being able to drill down into the numbers to conifrm, it would be little surprise to find that far more women and elderly voted, than young men who were eligible.

Further, and at the risk of stereotyping, there are those voters who will vote for the infamous “buckwheat bribe”.  The bag of food stuffs given out in return for votes.  As a pensioner with little else, and a pension that is far beyond inadequate even for rudimentary living, there is an obvious attraction to free food.  Also within this bribe taking category are also those who will vote for a candidate who provides a new playground outside their apartment block, or newly laid road surface etc.  These, in short, whatever their reasons and motivation, will take what they can now, in the full knowledge far more will be stolen from them by the candidate they vote for via misappropriated budgets and thus absent but necessary public goods and social services once they reach office.  Unfortunately, there are a great many such voters for one reason or another.

These voters too, are the main reason single mandate seats are so nefarious in their campaigning.  The single mandate candidates know very well the size of this constituency, and the fact that other than bribes, they have absolutely nothing else to offer these voters by way of deliverable political promises.

There is then the “party faithful” or “ideological” voter – despite only the extreme parties left and right having anything like an identifiable political ideology – and neither far left nor far right have done at all well in this election.

These are the voters who will always vote for party “x” or the candidates of party “x”, without necessarily having a clue about what is contained in the party manifesto of party “x” – if it has a manifesto.  They are instantly dismissive of all other parties, and their candidates.  No different to die-hard Republicans or Democrats, Tories or Labourites.   Thus any candidate associated with their party (even historically) automatically and without question, gets their vote.

Lastly, there is then the considered voter.  Those that have read the manifestos, listened to the debates and understood the direction being offered (even if a strategy to achieve goals is never forthcoming).  This voter may even contribute to the campaign of a party or associated candidate after due deliberation over who best will serve the country in pursuit of the goals they also agree with.  This sadly remains by far the smallest voting Ukrainian segment – currently at least.

Should Ukraine ever embody those ideals many now chase, theoretically the buckwheat voters will diminish and the considered voters increase.  (There’s not much that can be done with the partisan die-hards in any nation).

This is naturally not an exhaustive list of reasons and influences as to why a pro-Ukraine, Russian speaking region like Odessa still returns so many ex-Regionaires from single mandate electoral seats – it is no attempt to be a sociological or political essay with any depth –  it is nothing more than a blog entry that takes 10 minutes to write  – but within the mix, all the aforementioned issues – empirically – play a part.

Simply put, notwithstanding the clever social and political science that may be delivered in due course by the academic community, those that are surprised by such results, perhaps shouldn’t be.

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Whilst counting continues – Odessa projections

October 28, 2014

Although counting continues and official winners are yet to be named, the expected outcomes of the elections as far as Odessa is concerned seems likely to produce the following results:

District 133 (Kiev district of Odessa) – Edward Matviichuk

District 134 (Malinovsky district of Odessa)  – Gennady Chekita

District 135 District (Primorsky district of Odessa) – Sergei Kivalov – legal challenges possible

District 136)  (Suvorov) –  Dmitri Golubova

District 137 (Hincheshti) – Leonid Klimov

District 138 (Shiryaevo)  – Ivan Fursin

District 139 (Rasdelniya) – Alexander Presman

District 140 – Counting has stopped – legal challenges likely – Predict David Zhvania

District 141 (Tatarbunary) – Vitaly Barvinenko

District 142 (Artsiz) – Anton Cisse

District 143 (Izmael) – Alexander Urbansky

 

From the party lists, based upon the projected percentages:

Igor Palitsa, Alexey Goncharenko, Sergei Faermark, Pavel Unguryan, Mykola Skorik – Possibly Andrei Kirilenko and Eduard Gurvitz will also take their seats in the next RADA.

A rather mixed bag of old and new faces to go to the RADA if these prove to be the eventual results – which hopefully will not be too long in their announcing.  Once they are confirmed, then perhaps a “post mortem” entry will be forthcoming.

 

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The electoral (infringement) map – Ukraine

October 27, 2014

Having mentioned electoral law infringements several times recently, it is perhaps wise to look at those infringements on a national basis, region by region.

Firstly there is this map relating to the lead up to today’s elections – input ending at yesterday’s legally imposed purdah.  It lists 2331 infringements of electoral law between 22th September and 26th October.

Then there is this map, leading up to, and including polling day.  It lists a total of 587 (and counting).

A difference at the time of writing of 1744 electoral infringements – though that discrepancy will decrease as the day goes on (unfortunately) – in part due to the SBU asking voters who witness infringements to photograph/video and upload any incidents for further investigation.  The police asking the public to help them police – quite rightly.

The second map clearly has far more correlation to the number of formal complaints submitted to the authorities and courts for investigation and subsequent ruling – as an example, this historical entry of a few days ago stated 15 such pending cases in Odessa – the second map listing 13 infringements, rather than the first map that cites 393 infringements for the Odessa Oblast.

Leaving aside the due diligence in corroboration of any claimed infringement by collating entities, as infringements can take many forms – innocent and/or genuine administrative blunders, deliberate administrative manipulation, the employment of administrative resources to support a candidate or party over another, corporate coercion, group or individual bribery/intimidation of voters, candidates, campaign staff, election commission personnel, observers and media etc – to far more minor issues such as forgetting to remove a photograph of the president in a polling station (an infringement far less likely to change the vote of any constituent, or effect any election commission shenanigans during vote counts) – the scope for deliberately, innocently, accidentally, or maliciously bending or breaking the electoral law is broad indeed – and not confident to either the lead up to polling day, nor polling day itself, but both (and perhaps a few days afterward too).

Thus, whilst the number of electoral law infringements will naturally catch the eye, perhaps what on-lookers should deliberate further, is the nature and intent behind each infringement in and of itself – together with that infringement’s ability to influence or change the actual vote both of the individual, and the possible collective effect in the overall results.

In short, whilst it would be possible for the number of infringements recorded to go up, the number of serious and vote changing incidents may actually go down – or vice versa – and that is based upon the presumption that the recording mechanisms remain constant.

As is historically the case with elections in Ukraine, most infringements occur either during the election campaigns prior to polling day, or after the polling stations have closed via corrupted election commissions or ballot boxes mysteriously disappearing for a period of time.

We shall see what today brings.  Probably a majority coalition of Block Poroshenko, People;s Front and Self Help, but it is the single mandate (first past the post) seats that are going to be the most interesting (not only through the high number of infringements they always produce) but in the overall makeup of the new RADA.

Notwithstanding that, there are a significant number of local elections also held today – and if “decentralisation” realises itself per the presidential plan/promise, then local government will have a far more significant role.

Before signing off for the day – a note of thanks to the thousands of international and domestic election observers need be, and indeed is, offered.

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Whilst in a state of purdah – security for polling day

October 26, 2014

Whilst Ukraine enters a state of purdah, and all electioneering has thus ended, in keeping with the spirit of an official and lawfully required end to campaigning, there will be no mention of the election – as far as voting, outcomes, infringements and speculative coalitions are concerned.

However, related in the current circumstances is the issue of security.

As if proof were required of that last tweet, the SBU in Odessa last evening arrested 11 people, including 2 serving members of the Primorsky (the central rayon) police department.

All allegedly part of the “Odessa Liberation Army”, with SBU sources claiming these 11 were the “Duma” – by which it is inferred inner council responsible for the organisation and planning of subversive activities in Odessa, prior to, on, and beyond election day.

It would seem quite clear that the arrests have been left as close to polling day as possible to cause maximum disruption within the “OLA” and prevent a renewed, connected and capable leadership structure being reinstalled had the arrests occurred earlier.  An attempt at effectively decapitating the organisation – temporarily at least – in the most timely and effective manner with regard democratic outcomes.  Somewhat textbook counter-terrorist policy, not to mention decent intelligence work.

That is not to say polling will go without incident tomorrow.  Single mandate seat 136 looks a possible candidate for problems – albeit not necessarily “separatist/Kremlin backed”.  Seat 136 issues, if they occur, will be due to bad blood between candidates and the crescendo of a dirty campaign for that particular seat.

Nevertheless, whilst external interested parties may rightly fret over the possibilities of subversive actors and actions (externally or internally sponsored) – the local populous and security services, if somewhat expectant of problems, seem quite determined not to be deterred.

Naturally, it is hoped that tomorrow runs without illegal incident – but as hope is not a strategy, there at the very least appears to be some tactics in play from the security services.

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