Archive for November, 2014

h1

The UIA Chess Piece

November 30, 2014

A few days ago, an entry appeared that mentioned newly proposed Aviation Regulations that would not been seen as particularly favourable to most international air carriers operating in Ukraine.

“There is then an entire raft of retarded legislation that would counter the interests of Ukraine – though of course not the interests of certain Ukrainians – tabled and pending the new legislature’s decision. Draft legislation such as the proposal on aviation regulation, likely to turn European carriers away from Ukraine, rather than toward it.”

Indeed so.  The rules, that were proposed on 24th October would require carriers with bases in Ukraine to be more than 50 percent locally owned and to offer domestic flights with international ones.

Let’s be blunt.  The only airliner operating in Ukraine that could meet all criteria in the linked regulations would be Ukraine International Airways (UIA).

Nobody would be surprised if the new Regulations were written, if not by, then with a kindly eye toward, UIA, which is currently making losses, rewriting it’s corporate strategy for the next 5 years, and has been so far refused government stability/bailout funding.  Funding, however, should not be that much of a problem when UIA is owned by such as Ihor Kolomoisky.

That government funding has not come is no doubt an exceptionally minor and almost meaningless move in the on-going oligarchical  three-way chess match between President Poroshenko, Ihor Kolomoisky and Dmitry Firtash/Sergei Lyovochkin.

A somewhat more significant move by the Poroshenko camp is that the Justice Ministry, yesterday,  agreed to suspend the new Aviation Regulations in order to consult with all stakeholders in the Ukrainian aviation market – meaning everybody else who had little/no input into the new Aviation Regulations, compared with UIA lobbyists that the State Aviation Service appear to have accommodated so well.

The outcome of those consultations will be watched just as closely as the G3 tender and licensing – and for the same reasons.

Advertisements
h1

Foreigners to sit in Ukrainian government?

November 29, 2014

It appears that President Poroshenko has the desire to implant – or at least have the ability to implant – foreigners within the Ukrainian civil service, within government, and indeed within the Cabinet of Ministers itself.

“My idea is to introduce amendments to laws to provide the right to involve foreigners in civil service, right up to membership in the government, or to expand the list of persons to whom the Ukrainian president may grant Ukrainian citizenship under an expedited procedure.  Decisive steps by foreigners who will be ready to give up their own nationality and accept Ukrainian nationality will be a confirmation of the decisiveness of intentions of our potential partners and candidates.”

Perhaps the logic behind that is fairly clear.  For example, why not have somebody foreign and entirely untainted by Ukrainian corruption become the head of the National Anti-Corruption Bureau after all?

What could possibly go wrong?

The fact that the President expects a foreign national to surrender their own nationality in exchange for Ukrainian nationality, for what could be no more than a 5 year job – perhaps less – is not a little “hopeful” for the official salary of a Ukrainian civil servant?

Are they are to be offered more than a Ukrainian civil servant to make changing their nationality worthwhile?

The existing practice of appointing foreigners as “advisors to whomever/whatever” no longer will suffice?

Is there is a lengthy queue of suitable foreigners with EU or US passports willing to drop their nationality and exchange it for the current limitations on Visa-free travel for Ukrainian passport holders?

How would the generous national pensions of these foreign. top notch policymakers/implementors  earned through many years of service to their nation, be effected by voluntarily revoking their own citizenship to become Ukrainian for a (officially) poorly paid civil service role that may not even last a full electoral term should those who appointed them leave office prematurely (one way or another)?

Perhaps these “foreign experts” will come from nations that are similar to Ukraine by way of pensions, strengths of passport and civil service salaries?  Georgian, Russian, Belorussian, Armenian or, Moldavian policymakers/implementors?

What to make of a senior policymaker/implementor who would agree to surrender their own nationality and assume that of Ukraine, to take up what could be a very short term job, for low civil service pay?  A spy?  A person deprived of their senses? Somebody who will accept a pittance by way of remuneration in the hope of making a nefarious fortune on the side?  An egotist that needs to be in the public eye – regardless of the nationality of that public?  Those who have fallen out with their national leadership and seek sanctuary in Ukraine?  Somebody genuinely driven to make a difference and who cares more about Ukraine than retaining their own nationality – prepared to potentially suffer political costs in their nations of birth in doing so?

It is perhaps not a question of commitment to any new office held in Ukraine – but one of underlying motivation for those that accept.

Do all positions within the civil service require the office holder to be Ukrainian?  For example, is there a need for the head of the supposedly independent National Anti-Corruption Bureau to be Ukrainian?  If so, why?  The current head of the Bank of England is a Canadian – subjectively, a far more sensitive and policy forming/government influencing role.

If the law changes, what then when the Poroshenko epoch has passed?  If those who have very different views to the current government regarding the national direction accede to power and decide to appoint half the Kremlin inner circle – or that of China – or Hungary etc, this is an acceptable outcome in the future?

What happens when the first scandal surfaces of those who didn’t really surrender their nationalities before assuming that of Ukraine – thus being in contravention to the legislation of Ukraine that bans dual citizenship?  Having been deliberately implanted within the top policymaking echelons by the Ukrainian elite, who resigns along with the guilty party?

Is dual citizenship the answer?  Would such a move be more negative than positive when it came to election day with regard to changing the national direction and voter dynamics?  How much of any Ukrainian diaspora would emerge with eastern looking views, vis a vis western voting views?  A can of worms worthy of opening simply to accommodate a handful of foreign policymakers/implementors?  Probably not.

So who and how many will be approached, and who would accept, given the requirement to become exclusively a Ukrainian citizen?  Kwaśniewski? – Doutful.  Adeishvili? – Possibly.  Who else with genuine reforming and reform implementing experience?

Rumour has it that 5 or 6 “foreigners”, if they can be called that after assuming Ukrainian citizenship, have been approached.  How accepting of the implanting of “foreigners” in positions of power will the Ukrainian constituency be?  How many potential candidates will go the distance?

On balance, a wise policy when foreigners can already act as “advisors”?

h1

And so RADA VIII begins

November 28, 2014

Today saw 419 or 423 MPs take their oath in the RADA, officially beginning the 8th RADA since Ukrainian independence.

That it is the 8th in a period of 23 years tells its own story, when considering a RADA term is supposed to be for 5 years.  Simple math ably displays that the average term of any sitting RADA has been far shorter than 5 years.

Will this RADA last its full term?  Time will tell, but it does seem somewhat unlikely.  Therefore the first 90 days of this RADA need be energetic, considered, workmanlike, and priority driven, if it is to either do enough to insure a far greater chance of seeing out a full term, or to pass critical legislation that will improve the quality of any subsequent legislature.  Far better election laws, the removal/limiting of MPs inviolability etc., certainly top the ability to self-cleanse any future RADA at the ballot box – and/or remove the attractiveness of becoming or remaining an MP for the most dubious of characters.

Sergei Kivalov & Eduard Matviychuk - MPs of dubious character

Sergei Kivalov & Eduard Matviychuk – MPs of dubious character

There are of course, many other very pressing issues.  The task facing not only any new government, but the legislature as well, is nothing short of gargantuan.  Especially so when the easy stuff – that which is being watched closely by those external of Ukraine – seems to be far too difficult for some people to leave alone.

There is then an entire raft of retarded legislation that would counter the interests of Ukraine – though of course not the interests of certain Ukrainians – tabled and pending the new legislature’s decision.  Draft legislation such as this proposal on aviation regulation, likely to turn European carriers away from Ukraine, rather than toward it.

Time will tell whether the new RADA will actually read the legislation put before it, and have the collective comprehension of the casual effects of anything it passes.  Just as the G3 issue linked above is a test of any new Cabinet getting it right for the international audience – the draft Aviation Regulations will be a very similar test for that same audience relating to the new legislature.  Both issues will become powerful indicators for foreign corporate and private FDI.

The protracted arguments over the wording of constitutional changes will be particularly interesting – particularly as the document itself is contradictory in places already.

One can also be forgiven for feeling somewhat glum when noting that Yulia Tymoshenko, Olexandr Turchynov and Yuri Lutsenko will head the party factions of Batkivshchyna, People’s Front and Block Poroshenko respectively within the majority coalition.  A more fractious cast from the old-school days of grubby, feckless, nefarious Ukrainian politics that has so ill-served the country since 1991 couldn’t be harder to find.  In fact, so fractious historically have these individuals been, what hope that the other two parties in the majority coalition can realistically play “peace-keeper/mediator” between them for 5 years?

Nevertheless, it is expected that by next Tuesday a new and full Cabinet of Ministers will have been elected – the Prime Minister and Speaker anticipated to be elected into their roles by the end of today.

……..And so it begins.

Keep our expectations low, but spirits high – and RADA VIII may just muddle through somehow without alienating the Ukrainian constituency or European goodwill.

h1

Cybersecurity

November 27, 2014

Part of Ukraine’s security and defence reconstruction will have to include cybersecurity.

Despite having a nation with more than its fair share of seriously and mind-bogglingly clever programmers/hackers, Microsoft competition winners and IT geeks  – external help if not required, has been offered and accepted.  Indeed it is being given, in particular by one nation, if not a nation many would immediately think of.  And rightly so.

This link can become quite mesmerising watching cyber attacks being sent, and cyber warfare taking place in real time.

All such IT things are far beyond the competence of this blog.  Indeed “IT retarded” would overstate its competency.  Nevertheless, below is a very interesting speech by Dan Geer, a man with fascinating sideburns, who knows far more about cybersecurity than most – actually almost anybody.

“Power exists to be used. Some wish for cyber safety, which they will not get. Others wish for cyber order, which they will not get. Some have the eye to discern cyber policies that are “the least worst thing;” may they fill the vacuum of wishful thinking.”

A significant realpolitik statement for a virtual realm.  Particularly so when  Ukraine has the desire to significantly move toward both e-governance and e-democracy – and away from paper (not withstanding creating a robust cybersecurity system).  That said, Ukraine should perhaps begin by putting legitimate, licensed software on government hardware, instead of pirated software (and whatever nasty extras that may contain hidden within the code) as a starting point.

Anyway, have a listen to Mr Geer – and try not to get addicted to watch the cyber attacks in the link above – whilst pondering just how incredibly difficult cybersecurity actually has become, and will continue to be.

 

h1

Election weekend in Moldova

November 26, 2014

This weekend sees elections in Moldova – another nation that has signed and ratified the Association Agreement with the EU recently, much to Kremlin angst.

Currently the Communist party is polling at about 25%, and the Socialist Party, which is particularly weak this election, is on or about the threshold to enter parliament.  Whether that Socialist Party weakness has anything to do with President Putin’s overt support for the party is subjective – as is the outcome of any pondering as to why President Putin overtly backed the Socialists.  To kill their chances and divert their vote to either the Communists or a certain other runner soon to be commented upon perhaps?

In bygone days this combined Communist/Socialist approximately 30% polling, would have left the pro-European integration parties with a firm electoral mandate, in no way putting any doubt over the continued adherence to the recently ratified agreements with the EU.

However, this year there is a new candidate with some momentum polling about 18%.  Naturally “populist” in nature, a candidate who claims to be both anti Association Agreement and anti Eurasian Union too.  Currently, anyway.  His manifesto is more or less maintaining the status quo between Europe and Russia whilst eliminating corruption, renationalising previously privatised State assets, and espousing the imperialist nature of Romania toward Moldova.

The populist candidate is Renato Usatii, a thirty-something Moldavian who has made a fortune in business with a specific Russian client.  Indeed, he is very well connected in Moscow.  His business more or less has the monopoly in supplying specialist fabrication equipment to Russian Railways, run by Vladimir Yakunin.  Mr Yakunin being a long time friend and trusted ally of President Putin.

Whether or not Mr Usatii knows Mr Yakunin or Mr Putin personally is somewhat irrelevant.  Anybody who knows anything about Russia and the necessary maneuvering required to corner any significant market there, knows only too well, this does not occur by ability or business acumen alone – indeed often neither count for much.  It is about who you know and how a deal can be structured to insure “everybody eats” from it.  In short, cronyism/corruption – the combating of which is one of the cornerstones of the populist manifesto Mr Usatii is running under.

Anyway, a return to the polling numbers.  Approximately 25% + 5% + 18% comes to 48% of the vote that is for candidates who are either outright, or very likely to make, European integration a glacial process – or attempt to reverse it.  A somewhat safer margin for the pro-European factions should the Socialists fail to gain 5% or more of the vote and thus fail to enter parliament perhaps – but still a significant number that can make swift progress complicated.

Ergo, the question arises as to whether there will be a repeat of the Ukrainian scenario for Mr Usatii, when the populist support for the Radical Party significantly contracted on the day at the polling station?  Alternatively, will it significantly increase – if so, at a constituency cost to whom?

Keep a watchful eye on Moldova this weekend.  There will be repercussions both within and beyond its borders, whatever the result.

 

h1

Odessa refinery shenanigans

November 25, 2014

Following on from yesterday’s entry and the successfully prevented appointment of Petr Hlytsov as Chairman of Odessa Regional Administration – and the anti-reform, ex-Regionaire, Klyuyev puppet constituency of the elite within Odessa that backed him – some commentators are rather speculatively see that his opponent, Mikhail Shmushkovitch, falling tantalizingly close to, but not reaching the 67 votes required to take permanent office, is really a battle between President Poroshenko and Ihor Kolomoyskyi for control of Odessa – when combined with the fact that Igor Palitsia, the current Govenor, is a Kolomoyskyi man who will also be required to resign to take his seat in the next RADA.

Time for a disclosure.

On Friday afternoon this blog was in the office of Alexie Goncharenko at the Regional Administration, shortly after his resignation as Chair.  Discussions about the next Chairman and Governor occurred – although that was not the purpose of being there.

To be blunt, the voting results would have been much closer if Mr Goncharneko had not spent the previous week lobbying the council members hard on behalf of fellow Block Poroshenko  party member Mr Shmushkovitch to become his replacement.

To be equally clear, Mr Goncharenko considers repelling the forces of Mr Hlytsov, albeit temporarily, a victory.

Two weeks ago, whilst Mr Goncharneko was in Strasbourg, Mr Hlytsov began gathering the corrupt and corruptible hordes, those about to be subjected to lustration within the council, and the external local Odessa “players of influence” to his flag.  A case of whilst the cat was away, etc.

Hence, demolishing a good deal of what was nefariously constructed in his absence, Mr Goncharenko deems a victory – and perhaps it is.

By the time the next vote takes place in mid-December, things may look different.  In the meantime, Mr Shmushkovitch assumes the position of “Acting Chair” in place of Mr Goncharenko.

What have all these Regional Council shenanigans got to do with Igor Kolomoyskyi? – Very little.  Whether Mr Shmushkovitch sits in the “Chairman” chair in an acting or substantive role, neither diminishes nor increases the power he holds.  Mr Kolomoyskyi has no candidate in the fight for Chairman of the Odessa Regional Council.  With Mr Hlytsov being a bought and paid for Andrei Klyuyev man, he seems hardly likely to be the preferred choice of Mr Kolomoyskyi.  Therefore, any muted supported for Mr Shmushkovitch from the Kolomoyskyi people (if indeed it was muted) within the Regional Council relate to concessions to be hopefully gained rather than toppling a Poroshenko candidate for the sake of it.

So, if Odessa Regional Council is so unimportant to Mr Kolomoyskyi that he has no runner in the race for Chair, what concessions could he be seeking in Odessa for any “currently restrained” support?  His active  business interests in Odessa at not particularly extensive.  They have not noticeably increased since his friend became Governor either.

Well, one of Mr Kolomoyski’s main interests in Odessa, is in an entity in which he has no interest – financially speaking.  That is the Odessa refinery.

Odessa refinery was sold to now fugitive Sergei Kurchenko, a man thoroughly emeshed within “The Family” Yanukovych regime, and who has currently taken refuge in Moscow for the foreseeable future.

Aside from a governmental need to prevent the refinery working, thus preventing a possibly fraudulently acquired asset generating illicit revenue for “The Family” whilst in Russia – there is also a Mr Kolomoyskyi interest.

Ihor Kolomoyskyi’s Privat Bank has a 42% share in an oil refinery called Ukranafta.  That refinery has not been working at full capacity – thus neither have its profits been all they could be.  Ergo it is in the interests of Mr Kolomoyskyi to see the Odessa refinery officially closed under the auspices of money laundering prevention/further facilitation of fraud that would benefit the previous regime – even if that is not his real driver.

Today, that closure is going to happen.  The Prosecutors Office in Odessa will arrest Odessa Refinery to prevent illicit oil sales.  Mr Kolomoyski’s comment?  “It’s not our asset, and we are not interested in it, we have underused Kremenchug plant, and the Odessa refinery should be closed so as not to spoil the ecology of Odessa.  Odessa should shine after the loss of the Crimea.”

There is no political need to own either Governor or Regional Council to achieve the closure of Odessa Refinery, and in doing so improving the output of Mr Kholomoyski’s Kremenchug refinery.  Owning or renting a prosecutor or a judge is all that is necessary for the asset to be arrested.

Once arrested, there can be no doubt that the refinery will remain closed for some time.  Ukraine is busy trying to privatise assets to get them off of the government books – not put them back on.  Mr Kurchenko will have great difficulty in releasing this asset – and until it is released, nobody can do anything with it.  Presumably all oil at Odessa Refinery will now be stored at the State owned Ukrtransnefteprodukt.

One of Mr Kolomoyskyi major interests in Odessa (in which he has no interest) has been achieved – no Governor or Regional Council (Chairman or otherwise) required.

As for who will become the next Governor of Odessa – a position in which Mr Kolomoyskyi current does have the top dog?  That discussion took place on Friday afternoon too, although all opined on that subject – for now – will remain unwritten.

h1

Odessa politics – Resistance is not necessarily futile

November 24, 2014

A few days ago, within this entry, the following paragraph appeared:

“Locally, the fact the current Odessa Governor Igor Palitsia, and Chairman of the Regional Council Alexiy Goncharenko (both Block Poroshenko) become MPs when the new RADA sits, leaving an organised criminal for a Mayor, and a possible replacement for Goncharenko, his current council Deputy Chairman, a bought and paid for Andriy Klyuyev drone, are a concern – the new Chair of the Regional Council, an issue to be resolved this afternoon. Whomever the new Governor will be, will need to spend a significant amount of political energy trying to keep any reform agenda and implementation alive against the willing obstructionism that the Mayor, and possibly the new Regional Council Chairman, will surely robustly present. All rather grim when adding to that mix, many of the infamous returned single mandate seat MPs for Odessa, such as Sergei Kivalov, Anton Cisse etc. A toxic concoction.”

Perhaps an outcome, such as it is, should be given, prior to addressing the question in the title of this entry.

The current situation is as follows:  The Chairman of the Odessa Regional Council, Alexie Goncharenko resigned from that position on Friday – necessarily so having been elected to the RADA on the Poroshenko party list.  He officially cannot sit in two chairs, though historically many have tried to do so.  Thus the Regional Council is required to elected a new Chair following Mr Goncharenko’s resignation.  The same applies to Igor Palitsia the current Governor of Odessa – theoretically, he too must resign as Governor, though it falls to the president appoint a successor under current legislation – no elected replacement for Governor.

The runners and riders to replace Alexie Goncharenko as Chair are Mikhail Shmushkovitch, currently First Vice Chairman of Block Poroshenko Party in the Odessa region.

Secondly, Petr Hlytsov, a bought and paid for drone of the  Andrei Klyuyev.  Mr Klyuyev is currently wanted by the Ukrainian authorities in connection with his actions whilst highly placed in the Yanukovych regime.  Mr Hlystov supported by many ex-Regionaires and the pro-Russia Rodina Party lead by Igor Markov, currently in Moscow making televised appearances in support of the separatist cause in The Donbas.  Indeed, one Party Rodina deputy from Odessa Regional Council, Vadim Savenko, is actually fighting for the separatist cause in The Donbas against Ukrainian troops.

Also amongst that number, unsurprisingly, are those currently undergoing the “lustration process”.  The promises made for their support, should they be lustrated, that they would be appointed as advisors/councilors, and thus continue to “lead” (and bleed) the Oblast – albeit from a slightly different position.

In short, Mr Hlytsov went to great efforts to rally around him the anti-reformist ranks – whatever their reasoning and/or loyalty.

The voting required one candidate to gain 67 votes to be appointed as Chairman – which failed to occur.

The results were, Mr  Shmushkovitch – 62.  Mr Hlytsov – 44.  Abstentions – 6.

Thus, temporarily, Mr Shmushkovitch assumes the position of “Acting Chairman” until mid December when another vote is held.  Looking at the numbers, Mr Klyuyev, via his representatives, will have to dig deep and bribe a lot of Regional Council members to turn it  around.  Mr Shmushkovitch, need convince those who previously abstained and/or a few that previously voted for Mr Hlytsov of the hopelessness of their position – something perhaps easier to achieve from the position of “Acting Chairman”.

Thus the political forces of reformation verses regression continue to do battle for ascendancy – albeit  now at the local level and without any media attention.  Yet if the horribly captioned concept of “decentralisation” is to occur –   “devolution of power” would have been a far better expression – then the political fight for Odessa administration (and the administrations of every other city and Oblast) matters, and matters considerably.

The degree of resistance from the regions against any reform agenda is going to matter with regard to effective implementation – hopefully not something lost on those in Kyiv.

%d bloggers like this: