Archive for September, 2016

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NABU exclusivity no more?

September 28, 2016

As predicted almost 2 months ago, the assault upon the legislatively ring-fenced prosecutor arena that is exclusively the remit of the National Anti-corruption Bureau of Ukraine (NABU) has begun.

It is naturally not framed in such a way as to undermine the jurisdiction of NABU by removing any competencies, but rather to open up that exclusive zone prescribed by statue to other parts of the PGO machinery.

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Prosecutor General Lutsenko, is clearly not happy with an independent entity within his empire capable of prosecuting his prosecutors and also challenging his interference.  Therefore with existing statute on the side of NABU, he has submitted amendments to the legislation – “There is so much crime that to give the exclusive right to fight the manifestations of high-level crime to one small law enforcement agency is inefficient.  We will not in the least reduce the powers NABU … but in parallel, if the same officials who may be suspected of committing corruption crimes leave the police, prosecutors or fiscals offices, these cases by the decision of the public prosecutor may be moved.”

Prima facie, what is wrong with that?  A small department dealing with the highest ranking institutional managers, public servants, civil service and political class, swamped by innumerable investigations among these most odious and nefarious of classes surely has its limitations and therefore why not pass the cases of those that leave their posts mid-investigation to other parts of the PGO?  Does that not allow NABU to concentrate upon investigations of those that remain in post?  Should the NABU remit not terminate once such people leave the office they hold specifically within the NABU legislative remit even if investigations are still on-going?

Should we not believe that this is a managerial decision based upon integrity by the Prosecutor General to efficiently concentrate the efforts of his empire more effectively?

Well perhaps – but there is a question/perception of trust, or the severe lack thereof, that immediately undermines and casts cynicism upon such a proposal.  There was good reason why NABU was created the way that it was and given the remit it exclusively holds.  Those reasons are as valid today as they were when NABU became a reality.

NABU has far more public trust than does Yuri Lutsenko – who will forever be perceived as a politician and grey cardinal associated with behind the curtain grubby deals rather than an independent prosecutor who leads a PGO that retains many of the most odious of prosecutors the Ukrainian constituency expects to be removed if there is to be even the thinnest veneer of change within the institution.

Given the perception of NABU vis a vis the Prosecutor General and the rest of his PGO empire, for the perception of public trust to grow rather than diminish with this proposal, as an alternative why not make that  “one small law enforcement agency” bigger rather than open up its statutorily protected turf to an otherwise distrusted PGO?

Is it a matter of money?  Could not the salaries of all those prosecutors that should have been sacked but haven’t be used for more duly vetted and trained NABU personnel?

Is there not the very real prospect, should such amendments become law, that many under NABU investigation will leave their roles simply to have their cases handed over to a PGO nobody trusts and who both suspect and public alike will expect to deliberately fumble or simply close those cases so the suspects are never held to account?

What happens to the cases of Messrs Martynenko (formerly People’s Front financial sponsor) and  Onyshchenko (Ms Tymoshenko’s financial sponsor) for example?

In avoiding that accountability, both criminal and administrative, could those suspects not then rejoin their former careers after a “career break” with “case closed” stamped upon previous investigations?  It is perhaps a particularly cynical lens to view the Attorney General’s proposal – but as already stated he is simply not trusted and is ingrained within the public psyche as a Grey Cardinal and doer of grubby deals.

It may be his decision is based upon esprit de corps for the PGO machinery that is not NABU.  Several successful prosecutions by the PGO of cases taken from NABU may be perceived by Mr Lutsenko as the only way to increase the trust of the Ukrainian constituency.  As societal opinion generally lags behind events however, even if that were to materialise it will still be years before the PGO managed to catch up with the thus far almost untainted image of NABU within the public perception.  Indeed several such successful prosecutions simply would not cut it – there would have to be dozens to undo the current dismal perception of the PGO.

Thus the merits, or otherwise, of this attempt by the Prosecutor General to not only tread upon the NABU  statutorily maintained manicured private lawns, but to actually remove part of its garden and open it up to others, is therefore open to debate – and time will tell whether the cynics will be (once again) proven to be right.

A reader may rightly err toward this being a decidedly retarded step.

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Back to judicial events – prior to 30th September

September 27, 2016

At the beginning of the month an entry appeared regarding the release of more than 500 judges from their mandates – the reason not being the much demanded purge, but a seemingly deliberate policy over the past 2 years of not releasing judges even when they wanted to go.

The 27th September witnessed President Poroshenko call upon the Verkhovna Rada to hold an extraordinary session specifically to sack a number of judges prior to the adopted constitutional amendments entering into force on 30th September.

Dutifully the Verkhovna Rada Speaker has called that extraordinary session for 29th September for the political class to sack those judges that could and should have been sacked long ago for breaching their oath and/or handing down clearly unlawful verdicts on behalf of the Yanukovych regime during EuroMaidan/The Revolution of Dignity.

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A reader will rightly ponder why such judges have been left in office until the very last day of the existing legislation.

Whilst all these last minute (politically grandstanding) dismissals are going on immediately prior to new legislation commencing in a few days time, Presidential Decree 410/2016 has also appeared.

Presidential Decree 410/2016 provides for the first new judicial appointments in Ukraine during the past 5 years.

104 new judges appointed by Presidential Decree to be exact.

23 new judges in Dnipro, 8 in Donetsk, 5 in Zhitomir, 9 in Zaporizhia, 2 in Ivan-Frankivsk, 1 in Kyiv, 8 in Kirovograd, 4 in Luhansk, 3 in Odessa, Mykolayev,  Lviv and Poltova, 5 in Rivne, 4 in Sumy, 1 in Kharkiv, 3 in Kherson, 5 in Khmelnitsky, 6 in Cherkasy, 1 in Chernivtsi and Chernihiv.

For Odessa, in Artsyzkogo District Court, Veronika Cherbaty and Sergei Varharaki are appointed as is Natalia Manzhos at Kiliskogo District Court.

Clearly finally allowing those that wanted to leave to do so, sacking a few judges on 29th in an act of political theatre prior to the constitutional amendments entering into force, and appointing 104 judges for the first time in 5 years does not equate to judicial reform – and it would be a very shallow claim to state that it is.  Reform has to be a much deeper process to warrant that label.  Indeed reform is far more about processes and institutions than it is about changing names within them – however, the current political pantomime aside, it is hopefully a start.

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In recognition of bravery – Dnipro

September 26, 2016

The 22nd September witnessed the desperately sad sleighing of 2 police officers in Dnipro.

The incident was caught on CCTV.

Immediately after the release of the video, the following tweet was made.

The tweet was made not only to rightfully acknowledge the bravery and good citizenship of the bus driver, Valeriy Timonin, but also to play its part in insuring that the authorities are aware that modern policing occurs with the consent of the citizenry, and at its best with the support of its citizenry.  Mr Timonin was evidently supportive and in the face of mortal danger and that had to be officially recognised.

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He was indeed shot at at least twice looking at the holes in the front of his bus.

Thus his example demanded to be officially recognised both by the City of Dnipro but also the national authorities in an effort to encourage the constituency to actively support the police – never more so than in a situation where the commissioning of a crime is on-going and the police clearly require some assistance.

It may well be that the police reform is only half complete, the prosecutors office remains a corrupt and also political tool, and that the judiciary is for sale – but in circumstances where the police require assistance during the commission of a crime, a conscientious citizen sides with the rule of law regardless of a half-reformed police, or otherwise disreputable justice system.  Certainly the thought of heroic recognition or reward does not feature at the time.

“The only thing necessary for the triumph of evil is for good men to do nothing” – Edmund Burke

Rightly, it has come to pass that Mr Timonin’s heroics have been swiftly and formally recognised by the City of Dnipro and the National Police/Interior Ministry on  23rd September – an official day of mourning in Dnipro for the two fallen police officers.

So how was Mr Timonin’s community spirit acknowledged?

A Community Action Trust reward?  No – And such a Trust providing reward to outstanding citizenry in support of the police probably doesn’t exit.  Freedom of the City of Dnipro?  Apparently not.  A national award recognising good citizenship?  Not quite.

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62 year old Mr Timonin was rewarded with the presentation a gun.  A Fort 17 pistol to be exact.

Quite what Mr Timonin is supposed to do with it is perhaps a question only Mr Timonin can answer.

It seems highly unlikely that he will happen to be passing the murder of police officers again any time soon.  Such events are fortunately very rare even with the amount of unattributed/licenced weaponry seeping out from the ATO zone after more than 2 years of war with The Kremlin.

Thus keeping it in his bus on the very slim chance lightening strikes twice and he does witness the same deplorable event again, the ability to point and shoot and hopefully hit the right person, and not the wrong person, may not appeal to a 62 year old man living in a nation that still overwhelming is against its citizens wandering around with guns – even with a war in its east on-going,

Further the police patrolling the streets who he bravely tried to assist are not likely to encourage any more firearms on the streets of Ukraine than there currently are either.

How is he going to store it at home?  Ukraine has legislation regarding the storage of legally held weapons (assuming the presenting authorities have actually provided him with a licence to go with it).

Perhaps he is a gun enthusiast.  If not, at the age of 62, perhaps he will now become one.  Converting bullets to brass and putting holes in targets can be quite fun as a hobby – although with a Fort 17 it is hardly an appropriate firearm for anything more than shooting single, aimed shoots at more than 30 meters or double-tap at more than 15 meters.

Whatever the case, at issue is not the acknowledgement of the brave act of Mr Timonin, but the actual reward itself when the government is actively trying to remove firearms from the streets and the majority of Ukrainians don’t want them on the streets.  With some form of Community Action Trust reward, if Mr Timonin wanted to buy a gun he then could have (or perhaps Mrs Timonin may have preferred a new kitchen).

There will be many across Ukraine that will question the appropriateness of this reward as a form of recognition for the outstanding citizenry displayed by Mr Timonin.

Further, there will be others that consider a Fort 17 pistol is simply unworthy of his actions too – they cost about $240.

Thus it seems quite likely that whilst Mr Timonin will rightly be hailed as a hero and solid citizen across the nation, no differently than the two murdered police officers, both the appropriateness and the (cash) value of the reward given will probably turn out to be less than helpful for the image of the Ukrainian authorities – and for that they will have only themselves to blame.

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Opposition Block on the western media offensive?

September 25, 2016

A recent article in The Guardian written by Vadim Novinsky has ruffled some feathers, not necessarily among the Ukrainian ruling elite, but among the Ukraine watchers, academics, diplomatic corps,  think-tanks et al.

Anders Umland making the comment “This is the second dubious publication by a former Yanukovych man in a major Western outlet after a recent article of Liovochkin in POLITICO.  Critique of corruption and bigotry in Ukraine is necessary.  But super rich former members of an oligarchic kleptocratic authoritarian regime like Novinsky or Liovochkin are the last to have a right to do so.  Why do you not publish an article about the lack of democracy in Africa written by Mugabe, The Guardian POLITICO Magazine?  Or are you against democracy in Africa?”

A statement that in sum highlights that objectivity is giving all a fair hearing. It does not equate to false moral equivalence.

Firstly, while no comment will be made about the authorship of the Sergei Liovochkin piece in POLITICO, most assuredly Vadim Novinsky did not write the piece for The Guardian, albeit he is the named author.

The Guardian piece was ghost written and published under Vadim Novinsky’s name.  It was written by Oleg Voloshin, a former Ministry of Foreign Affairs employee who is clearly willing to employ the literary skills and disciplines of diplomatic training and experience for the Novinsky coin and/or Opposition Block coin.

So be it.  There is a market for well thought out, deftly framed, ghost written public communication,  particularly by those exceptionally sullied by past and current deeds – such as Messrs Novinsky and Liovochkin.

A reader may ponder perhaps why the articles were not placed under Yuri Boiko’s name being the official head of the Opposition Block faction.

Equally worthy of consideration is that aside from the diplomats, academics, pro-Kremlin politicians, and assorted variously flavoured think tanks, it really doesn’t make much difference if Mr Voloshin or Mr Novinsky, or Mr Liovochkin, (or Mr Boiko) are named as author for the article published in The Guardian – none of the British public have any clue whatsoever who any of these men are, or indeed what the Opposition Block is made of, stands for, or would do if returned power.  The British public had little interest in Ukraine pre-Brexit and have even less post-Brexit.

The UK public could not tell you what interests the UK has in Ukraine, what public money is spent on here, how much, (and whether it is bilateral or via the soon to be exited EU), or for why.

Between the football season starting, Brexit, and whichever celebrity has been caught in a photograph doing something “risky” or “silly”, there is little interest in Ukraine among the UK hoi polloi.  Therefore the audience for these articles is not the average UK citizen (or indeed the average English speaking citizen).

Nevertheless these articles, appearing within a week of each other, are simply not “noise” but “signal”.  More of the same seems certain to appear.  The question is what do they signal?

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Having discounted them as being simply the usual disinformation, misinformation, half truth, half story propaganda noise – are they part of an influence operation??  If so, are they part of an Opposition Block influence operation, or that of The Kremlin – for neither article mentions Russia whatsoever (perhaps wisely considering it has just had its equivalent to its MH17 moment when bombing the UN convoy in Syria a few days ago).  Neither do the ties to Moscow that both (named) authors possess become apparent.  Nevertheless with the deliberate omission of mentioning Russia, neither article do the Kremlin narrative any harm (unsurprisingly).

To be blunt, although it does the Kremlin narrative no harm, and it may well be something The Kremlin co-opts along the way, it seems much more probable that it is an Oppo Block inspired attempt at an influence operation..

If that is true however, to what end?

If it is an Oppo Block influence op, then why isn’t it Yuri Boiko’s name on The Guardian piece rather than Mr Novinsky?  Surely the officially recognised leader would be the name to promote?

Mr Liovochkin rightly complaining in POLITICO about the criminality surrounding the Inter incident is understandable as a co-owner (even if more than a little hypocritical for a man that was Head of the Presidential Administration of Viktor Yanukovych when journalists were regularly beaten (and worse) around Ukraine).

(An outline of the criminal incident and also dubious internal workings of Inter has previously been written.)

Neither article however, places much emphasis upon the Oppo Block, and neither “author” really claim to be writing on behalf of the party.

As recently stated, Mykola Skoryk of the Oppo Block is likely to see his parliamentary immunity removed next week – perhaps somewhat ironically in connection with the beating of journalists and demonstrators in Odessa on 19th February 2014.

After Mr Skoryk, Mr Novinsky, the “author” of the Guardian piece is quite likely to soon top the parliamentary immunity stripping list having been accused of assaulting and threatening the head of the Ukrainian Orthodox Church Kyiv Patriarch.  Mr Novinsky is a firm adherent of the Moscow Patriarchy and finds the Ukrainian Patriarchy bid for autocephaly nothing short of scandalous (not to mention it would seriously reduce Moscow’s influence through “the church” and cost the Moscow Patriarchy a lot of  Ukrainian souls, earthly riches and property).  Indeed he partly funded a Moscow Patriarchy “Peace March” that was widely perceived by the Ukrainian constituency as a Kremlin influence operation – which it was.

(Few will doubt both Germany and France being subject to Kremlin influence operations in 2017.)

Rumour also circulates that Mr Novinsky may be stripped of the Ukrainian citizenship granted to him by former President Yanukovych (for (dubious) services to Ukraine), leaving him to rely upon his natural Russian citizenship and a hope that he will not be swiftly persona non grata (PNG) from Ukraine thereafter.

Mr Liovochkin is unlikely to face the same chances of prison (or being found guilty in absentia) or ejected from the country, but perhaps will see if not Inter taken off air soon, then broadcasting licence problems when it is due for renewal – an unquestionable disaster for the Oppo Block that projects its propaganda from the Inter platform.

Therefore if the UK (and English speaking) hoi polloi are not the target audience in this influence operation, it has not yet been co-opted by The Kremlin, and the article content doesn’t really promote Oppo Block positions,  then the journalists, diplomats, academics, think tanks, and political class that will take notice must be the target.

The articles therefore can possibly be considered as preparatory media plants that pre-frame “persecution” in relation to the foreseen events specifically surrounding these two men/”authors”.  He/she that frames first and robustly often wins the argument.

It is clear that these articles are not (coincidental) random noise generated by the Oppo Block to simply undermine the current authorities (despite some valid points albeit deliberately lacking more holistic optics) or to promote the “party position”.

Will this influence operation be sufficient to dissuade the above predicted domestic action against them in Ukraine (probably not), or alternatively generate “international concern” when their “persecution” begins and the “persecuted” claim “told you so”?

(They will be able to join the likes of Messrs Martynenko (formerly People’s Front) and  Onyshchenko (Ms Tymoshenko’s financial sponsor) on the self-proclaimed “unfairly persecuted list” – hopefully to be joined by others such as the ever-more nefarious Messrs Nasirov, Pashinsky and Kononenko one day soon.)

Perhaps the question for the immediate future is where the next article of similar theme will be published, or whether the Ukrainian authorities strike first.

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Prosecutor seeks to remove the immunity of Mykola Skoryk

September 23, 2016

On 22nd September Prosecutor General Lutsenko announced that he would be appealing to the Verkhovna Rada to strip Mykola Skoryk of his parliamentary immunity next week.

Mr Skoryk has featured fairly frequently over the years within the blog, naturally mostly during his tenure as Odessa Oblast Governor under the Yanukovych regime between November 2013 – March 2014.

His dismissal from post following the fleeing of Yanukovych however, did not dramatically lessen his appearance in the blog prose due to his actions and influence leading up to the tragedy of 2nd May 2014.  The most recent here.

To be entirely blunt, the local constituency will not be concerned with the plight of Mr Skoryk (unless they are paid to demonstrate for the cameras and/or he turns out his “sportsmen” in an aggressive publicity stunt).  For different reasons he is viewed dimly by both pro-Ukrainian and pro-Russian extremes, and being widely acknowledged as the Mr Firtash/Liovochkin man for the region, hardly scores highly within the domestic psyche.

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Mr Skoryk is also a man that clearly expected to rise far beyond being Odessa Governor under the Yanukovych regime.  He is a man with ambitions that stretch far beyond his rather average abilities.  Those ambitions remain – as do the “old school” methods of achieving them despite the damage such methods cause to the local constituency and nation as a whole.

To be specific, the Prosecutor General seeks to remove Mr Skoryk’s immunity following investigations into an incident that occurred on 19th February 2014 outside the Oblast Administration when Mr Skoryk was Governor.  About 20 journalists, national and local and from across all political biases were covering a small “EuroMaidan” protest outside when about 150 men in helmets carrying baseball bats set upon them.  Naturally there were injuries and broken equipment belonging to the various media outlets.

The involvement of Messrs Skoryk, Orlov and Fuchedzhi (the latter being the Odessa police chief on duty on 2nd May 2014 and now on the run) in such incidents has long been known within the local constituency.  There will be no shocking revelations.  Connecting Mr Skoryk to such incidents should not prove difficult – particularly as it appears Mr Orlov may well play ball with the PGO and give testimony.

The question is not one of revelations, but whether there will be any surprises – such as Mr Skoryk remaining in Ukraine if he believes he will actually be convicted or will see the inside of a jail cell for more than a day or two before being released on bail.

Perhaps he believes there will be insufficient votes to remove his immunity?  A reader should expect that such votes will be found even if Mr Skoryk doesn’t.  (Indeed assuredly there will be more parliamentarians facing a vote to remove their immunity during this session of the Verkhovna Rada – at least two others coming from the Opposition Block.)

Of intrest will be who of the 16 parliamentarians from Odessa will vote for the removal of Mr Skoryk’s immunity in any Verkhovna Rada vote?  Assuredly Alexie Goncharenko will as he has been responsible for petitioning the PGO to take action, but which others?  It is not necessarily a question of ex-Regionaire loyalties, for party names mean little compared to vested interests that cross party lines.

How would it effect any Dmitry Firtash bid for Odessa Port Side if his man is under the cosh?

Does this noticeably strengthen the position of Mr Goncharenko (and his people) in the city and/or the oblast political machinery and/or local constituency perception?  By extension how significantly does that strengthen the President’s party of which he is a part?

How will former allies turned enemies react?  Mr Rabinovych (and NewsOne)?

Despite Mt Skoryk having been politically sidelined for the most part over the last 18 months – partially in a self-imposed sulk – to be blunt hardly even bothering to vote if he decides to grace the Verkhovna Rada with his presence at all – how will the removal of his immunity (and perhaps successful prosecution (even if ultimately in absentia)) change the political dynamics of Odessa within a political elite?  Oppo Block does very little in Odessa without the approval of Mr Skoryk (who in turn does little of significance without the approval of Mr Liovochin/Firtash) yet Mr Skoryk can be replaced.

None of this matters compared to Mr Skoryk being rightly subject to due process for his actions – he is perhaps fortunate that investigative eyes currently focus only upon 19th February 2014 – but there will be political ramifications now this course of action has begun locally – and perhaps nationally when other Oppo Block (among others) parliamentarians become subject to investigations and immunity stripping, for clearly accusations of political persecution will be made.

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NKREKU – Draft Law 2966-d (Energy Regulator)

September 22, 2016

As part of the ratified obligations made by the Ukrainian State, within the Association Agreement with the EU is mentioned the Third Energy Package and Ukrainian adherence to it.

Quite rightly too for there is no way Ukraine would significantly overhaul its energy sector otherwise – energy is a significant font of corruption that continually spews (no differently to Government subsidies and VAT refunds/fraud/coercion).

It is true that Ukraine has made some real progress in reforming its energy sector – as difficult as each and every step (both forward and backward) has been.  Having now corrected an entirely retarded decision relating to Ukrtransgaz, a reader can nevertheless anticipate an all out assault by vested interests upon Naftogaz Ukraine and its subsidiaries almost immediately after any final Stockholm Court ruling is delivered regarding its claims against Gazprom.

Ukraine now faces the prickly issue of reforming its energy regulator into one that serves the interests of those other than vested interests.  Needless to say a process that has not, and remains, a far from smooth, influence-free, process.

Draft law №2966-d “On the National Commission in charge of regulation in the energy sector and utilities (NKREKU)” easily passed through its first reading within the Verkhovna Rada with 285 votes in favour on 12th April – unsurprisingly as it was authored by a dozen parliamentarians from across 5 parties (including those in opposition).

Nevertheless, despite its inclusive authorship, it has yet to receive its second and final reading and vote prior to being sent to the president for signature and eventually entering into law.

Amendments are being sought.  Meddling from the Bankova (Presidential Administration) occurs.

The draft Bill mandated a staggered replacement of the existing regulatory personnel, with limited departures every 6 months until all were replaced over a period of 18 months.  The fixed tenure appointments replacing them therefore also eventually departing in a staggered fashion some years hence too – which is perhaps wise if institutional memory is to be maintained in any meaningful way.

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As is always the case with Ukrainian politics, who decides, and who decides who decides, is a major issue in most appointments – and one that regularly slows down any process whilst decisions about decisions are decided.

The new regulatory personnel will be decided by a competition commission comprising of two presidential appointees, two parliamentary appointees from within the Verhovna Rada Coal and Energies Committee, and one appointee from the Cabinet of Ministers – when the law is eventually passed.

From this, apparently an independent regulator will emerge over the course of 2 years – allowing for the law to be passed, decisions about decisions to be decided, open competition, interviews, more competition appointment decisions, and eventually a full, staggered, personnel change.  There may yet appear an energy regulator that is an independent authority and arbiter (with a good deal of genuine independence) for the energy market that will defend the interests of consumers, and create fair conditions for suppliers and manufacturers.

Very good – so get on with it.

Indeed, Messrs Leszek Balcerowicz and Ivan Miklos who are part of the official advisory conclave regarding reform have rather tired of such nonsense and delays, stating “Further delay of the adoption of the bill as a whole can have a negative impact both on the state of the energy market in Ukraine, and the country’s international image as a reliable partner.  The independent regulator – A prerequisite for attracting foreign direct investment in the energy sector calls upon all political forces to immediately support the bill as amended, prepared by the Parliamentary Committee for a second reading.”

The passage of this draft law which pushes Ukraine further along its 3rd Energy Package obligations also releases more EU cash.

Perhaps the draft law will receive its final Verkhovna Rada vote this week.  Perhaps the President will sign it at some point.  Perhaps by Christmas the first new personnel will have been selected.  It will be 2018 however before the regulator has been completely overhauled as foreseen by the timetable within the draft law.

A reader may suspect that the necessary butchering of Naftogaz Ukraine as required by the 3rd Energy Package is not about the wait for a completely reformatted Regulator – and the guaranteed battle by vested interests over Nafogaz Ukraine and its subsidiaries prior to, and during Natogaz dismemberment will immediately follow the Arbitration Court in Stockholm making a ruling – that attack certainly won’t wait.  Thus how much more perverted and warped the market the Regulator will be asked to regulate once it is independent and fit for purpose remains to be seen.

In the meantime, as a reader will be accustomed by now, between attempts at amendments and politicking between the Verkhovna Rada Committee, Cabinet and Presidential Administration, Draft Law 2966-d remains exactly that – a draft law.

Nevertheless, if an independent regulator does eventually emerge, that can only be a positive outcome.

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Tymoshenko and the IMF – or is it really about the IMF?

September 21, 2016

Yulia Tymoshenko knows a thing or two about dealing with the IMF.  She has said so herself on several occasions when recently cricitising first former Prime Minister Yatseniuk, and latterly the current Prime Minister, Volodymr Groisman.

Indeed when Prime Minister she negotiated a deal with the IMF, the conditions to which she agreed she then reneged upon when required to implement them – which may make a reader wonder just how skilled at negotiation with the IMF she really is.  (If one instance of poor negotiation is not enough, then a reader may reference the gas deal she struck with The Kremlin resulting in the worst gas deal with Russia in Ukrainian history, (despite the welcome removal (visible) of intermediaries), is also worth pondering.)

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Ms Tymoshenko apparently knows what the current IMF conditions are according to a report by Interfax – “Among Ukraine’s obligations are the cancellation of the moratorium on the sale of agricultural land.  If the moratorium is not prolonged, Ukraine will lose its main resource.

She claimed that the IMF also planned to “virtually introduce external control over national, state Ukrainian banks.”  as well as seeking commitments to reduce the network of Ukrainian educational institutions.

So far, so standard regarding IMF conditionality just as the hiking of utility prices has long been a standard IMF demand – and the demand that she balked at when it was her turn to implement the IMF agreement she agreed that also included utility hikes.

The IMF has been fairly consistent with its requirements with every Ukrainian government that has negotiated with it – from gas pricing, to the funding of vast number of universities within the nation, to lifting the moratorium on the sale of agricultural land, there is really nothing new in her “revelations”.

Indeed the only thing new about the IMF demands this time is that both Prime Minister’s Yatseniuk and Groisman have more or less honoured the obligations they have entered into – unlike Ms Tymoshenko when it was her time to do so.

What catches the eye is this statement – “The nationalization of large Ukrainian private banks is foreseen. We want to know what the bank is, what the date of nationalization is and who will be responsible for the obligations the banks have to Ukrainians”.

Clearly she is referring to Ihor Kolomoisky’s Privat Bank.  A bank which is structurally critical to the current operation of the Ukrainian banking system, but that is otherwise bankrupt and has been for years.  This situation too, is no secret to anybody.

Indeed the nationalisation of Privat is unlikely to create too many issues for Ihor Kolomoisky given its otherwise bankrupt status.  He may well realise that if he can get rid of it now, it will save some severe and problematic issues in the not too distant future.  (The health of Ukrainian Airways (MAU) another Kolomoisky company is worthy of a look too for those interested in the Kolomoisky empire.)

Privat Bank, its condition and structural importance would of course raise flags for the IMF when considering the robustness of the Ukrainian banking system.

The question Ms Tymoshenko is really asking is what, if anything, Ihor Kolomoiskhy gets out of the deal on his side, and what the current leadership get (themselves) if the State nationalises Privat Bank removing this impending problem for Ihor Kolomoisky and also easing concerns within the IMF?

Do Mr Kolomoisky (and partners) retain any minority shares?  What about the high value loans heavily biased to other Kolomoisky companies and their ability to repay them – or not?  Are profitable bits of Privat (card payment infrastructure etc) to be split off, and if so who will own them and reap the rewards?  Who would be the negotiator with Ihor Kolomoisky if not President Poroshenko, the only person Mr Kolomoisky would negotiate with?

What reward does President Poroshenko personally desire from any such negotiations that ultimately remove a problem for Mr Kolomoisky?

The answer to that, if strong and repeated rumour be true, is a majority share in Mr Kolomoisky’s top rated TV station 1+1.

The President has one eye on his woeful popularity figures, and another eye on Presidential elections in just over 2 years time.  A 1+1 favourable editorial line toward President Poroshenko would be gratefully received and the only way to insure it with a sly character like Mr Kolomoisky is to own the majority share of 1+1.

1+1 together with the President’s Channel 5, and perhaps the fairly amenable (read rentable/for hire) Vadim Rabinovich and Evgen Muraev with NewsOne, will form a fairly solid national TV media platform from which to launch a presidential campaign for a second term – notwithstanding the administrative ability to throw a few policy sweeteners to the constituency and a few fairly big fish into the judicial frying pan if and when necessary – all with the timeliness associated to pre-election electioneering rather than official electioneering.

If this be the case, how does President Poroshenko buy a majority share in 1+1 when his business activities are now supposed to be run through a blind trust?  Is the trust blind in only one eye?  Will a trusted third party do the 1+1 (plausibly deniable) honours on behalf of President Poroshenko?

Will Mr Kolomoisky accept President Poroshenko saving him from serious banking problems/liabilities at the expense of control over the influential 1+1?  It is a question, according to rumour, that is still being pondered.

With Inter (if it is still operating and belonging to Dmitry Firtash) being an Opposition Block TV platform, the question in Ms Tymoshenko’s head perhaps is not what happens to Privat, but undoubtedly being aware of the persistent rumours surrounding the deals around what happens to Privat, is where she will find a national media platform that could compete.

Unless Ms Tymoshenko is entirely deaf to rumours circulating within her workplace, she already has a good idea of the answers to all the other questions – as do a lot of other people.

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