Archive for March, 2017


USAID places sanctions on Ukraine’s National Agency for the Prevention of Corruption (NACP)

March 28, 2017

If a reader were to define sanctions in the context of encouraging a change of behaviour, it would perhaps look something like – “An international sanction is a special form of sanction taken by one country against another. International sanctions are measures that are designed to bring a delinquent or renegade state into compliance with expected rules of conduct.  

Non-forceful international sanctions include diplomatic measures such as the withdrawal of an ambassador, the severing of diplomatic relations, or the filing of a protest with the UN, financial sanctions such as denying aid or cutting off access to financial institutions; and economic sanctions such as partial or total trade embargoes.”

Or words to that effect.

If selecting “sanctions are measures that are designed to bring a delinquent or renegade…..into compliance with expected rules of conduct” and combining it with “denying aid”, then effective immediately USAID has just placed sanctions upon Ukraine’s National Agency for the Prevention of Corruption (NAPC).

According to Justice Ministry Deputy Minister Ruslan Ryaboshapka, who is also a member of the NAPC, USAID has henceforth suspended cooperation with it.

The reason being the signing of the amendments to the e-declaration law by President Poroshenko on 27th March, despite very vocal and public statements not to sign by the UK, Canada, EU and US.

As a previous entry made clear, President Poroshenko had no choice but to sign if only to prevent unwanted issues with the military as the original legal prose stood.

That the amendments were subsequently hijacked, warped and disfigured within the Verkhovna Rada leaving the President to sign into law some very contentious military related text and perhaps untimely changes regarding civil society, is to be quite honest the fault of President Poroshenko.  It was well within his ability to have had the Verkhovna Rada deal with these amendments properly, long before legislative timelines became so critical.

The suspension of USAID cooperation will not have been a surprise to President Poroshenko, as no doubt some very blunt diplomacy took place during this entirely unnecessary spectacle.

As the law now stands the loopholes to avoid e-declarations for those that should be offered no avenues of avoidance are now in effect.

The obligations upon civil society, which is the reason for the USAID suspending its cooperation with the NAPC, are also now in effect.

As predicted by the blog, President Poroshenko when signing the law stated he was doing so in the interests of the military.  He went on to state that he supported the establishment of a working group with the participation of representatives of public organisations, the Presidential Administration and MPs to agree on changes to the amendments he had just signed into law.

Somewhat thin soup when considering the presidential ability to have had the Verkhovna Rada place the amendment higher up its agenda in a far more timely manner, and somewhat farcical to be planning amendments to amendments on the day it becomes law.

Nevertheless the law is the law, and civil society is now expected to abide by what will almost definitely change later – but what is done in the meantime by way of newly introduced statutory submissions obviously cannot be undone.  Currently new obligatory submissions while the amendments to the amendment are deliberately subjected to a long discussion period cannot then be un-submitted.

Who would be surprised to see the new contentious requirements repealed/significantly amended only after they have been fully met?

Nevertheless, it is what is in effect the USAID imposition of sanctions upon NACP that catches the eye – for very shortly a new draft Labour Code (the current Code having been consistently lamented at the blog for almost the entirety of the near decade it has been running) is currently unquestionably falling far short of the Ukrainian obligations made within the ratified EU Association Agreement.

Will a reader witness the EU following the USAID lead and effectively sanctioning an appropriate ministry or Ukrainian government programme should it fail to swiftly include within the new draft Labour Code what it has obligated itself to do when ratifying the Association Agreement?

If the effective sanctioning of Ukrainian aid/reform programmes is to become a (needed) tool employed by donor governments, just how many times President Poroshenko can afford to be perceived as being sanctioned by “friendly” governments when, albeit unofficially, campaigning for the next presidential election has already unambiguously begun remains to be seen.  Giving away political points so unnecessarily is simply folly.

This was an entirely avoidable mess (as any mess surrounding the draft Labour Code can also be avoided) yet a reader cannot be blamed should suspicions that this mess was deliberately and/or foolishly created be reached.


National Corpus (Azov) unblocks Russian banks

March 27, 2017

It has to be said that currently National Corpus doesn’t quite have the identity traction of either the Azov Battalion nor Azov Civil Corps from which it is born.

What identity/recognition it has within Ukrainian society is primarily associated with former Azov Battalion commander and Verkhovna Rada MP Andrei Biletsky.

So be it.  Political parties in Ukraine are generally associated with their leader(s) and being little more than a vehicle for their leader(s) – rather than for having an identifiable ideology of any longevity or consistency.  (National Corpus is something of an exception for it clearly has a very nationalist ideology, yet is very much the same in being identified for its leader.)

As part of its recent political activities National Corpus decided to blockade Russian banks in Ukraine, declaring them to have no place in the Ukrainian banking system.

It has to be said that Russian banks have no future in Ukraine – regardless of the success of any National Corpus initiative (or otherwise).  New accounts opened with them will not be an indicator any Russian parents bank will now have as a KPI – albeit the Russian banks in Ukraine will remain well capitalised by their Russian parent to avoid falling foul of the NBU capitalisation requirements but retain a market presence.

The NBU will (have to) find other reasons to remove them from the Ukrainian banking landscape – but a future in the Ukrainian banking market for them, there is not.

Regardless of the eventual (forced) Russian egress from the market,  National Corpus decided to blockade/picket Sberbank in Kyiv, Vinnytsia, Sumy and Zaporzhye with effect from 24th March.  (Before a keen-eyed reader asks about the Sberbank branches in all the other Ukrainian towns and cities, National Corpus claims it will roll out the blockade in the future.)

A reader is left to assume that Sberbank is simply the first Russian bank to be targeted and that others will follow once Sberbank is dealt with.  There is a limitation as to what National Corpus can accomplish at any particular time with a small, finite membership after all.

On 27th March, 3 days into the Sberbank blockade, National Corpus announced the suspension of said blockade – this to allow Ukrainian citizens to withdraw their savings prior to a resumption on an as yet unspecified date.

Something of an unnecessary false start!

There appears to have been some surprise that Ukrainian citizens still had their deposits with a Russian bank after some 3 years of war – “We are at war with Russia, and not with the Ukrainian citizens, but we are surprised by the behavior of those who in the third year of the war with Russia hold their savings in banks of the occupier. Therefore, we are for a short period unblocking branches of Russian banks……………however, we turn to them to show national solidarity with our common front against the aggressor.”

With the prospect of early parliamentary elections still a very real possibility, and with National Corpus, (even on an undoubted joint platform with other hardened nationalist parties), unlikely to do particularly well, there are perhaps lessons to be learned from this Sberbank action and drawing the ire of the voting constituency somewhat unnecessarily – particularly as it is clear the NBU sights will become fixed upon Russian banks now the work shuttering many Ukrainian “banks” has almost been completed.

It has to be made perfectly clear (again) that the blog has absolutely no liking for far right nor far left politics.  Furthermore it draws a very distinct and clear line between patriotism and nationalism.  They are neither interchangeable words nor ideology.

However, Azov was at least initially impressive when it appeared from nowhere, building from its (in)famous reputation gained on the front lines, it  began what can only be described as an outreach programme not dissimilar to that of the Muslim Brotherhood (albeit they may cringe at any such comparison).

For an organisation with such structural “foresight”, it is therefore perhaps surprising that it has seemingly bungled the preparation for the “bank blockades”.   A reader might have expected a far greater and much longer PR campaign preparatory to the “bank blockades”, thus forewarning the Ukrainian citizenry of the intended actions and the likelihood of some disruption at the banks due to their action – combined with a patriotic appeal to relocate their banking deposits prior to the political activism commencing.

Such political activism with the goal of seriously disrupting the targeted banks was surely deserving of informing a voting and banking constituency to which National Corpus must turn with far more preparatory warning time for the Ukrainian citizenry.

Quite how long it will be before the “banking blockade” is reinstated remains unclear – as does the timing of any expansion of the blockade across the nation – but to maximise the effect on the targeted banks and minimise the effects on potential voters, perhaps a serious information effort in local and national media is politically wise while the blockade is suspended.


E-declaration legislative changes – Ukraine

March 25, 2017

As to be entirely expected when positive changes regarding transparency occur in Ukraine, there is going to be some form of tinkering with such enabling legislation to provide wiggle room for those otherwise unwillingly trapped by it.

So it comes to pass with the statutory e-declarations required for Ukrainian public officials (be they elected, civil service, judicial, or appointed to State Owned Enterprises) and arguably this wiggle room was created without due parliamentary procedural adherence, thus immediately casting a shadow over what emerges as statute (subject to presidential signature).

An apparent procedural disregard for the Verkhovna Rada Committee that put forward some amendments occurred.  Those amendments were hijacked, altered and yet more apparently added and voted through, in violation of Verkhovna Rada protocols.  It is unclear at the time of writing just what was voted into statute vis a vis the amendments proposed by the Verkhovna Rada Committee.  Regardless there appears, prima facie, to be a gross violation of procedure.

It also appears that some slyly inserted loosely worded amendments offer a way out of submitting e-declarations for those currently obliged to do so – specifically for those who have (or will) attained the status of “combatants”, or who enroll in higher military education establishments.

How many corrupt legislators, judges and other public office holders will now enroll in higher military education or engineer their status of “combatant” to avoid obligatory e-declarations of their wealth?

The amendment suggested by the Verkhovna Rada Committee did indeed set out to save those fighting on the front lines from the requirement to complete e-declarations.  Indeed it appears that if this hijacked amendment is not been signed by President Poroshenko within the week, e-declarations will be applicable to many troops due to the current wording of the existing law – which was (rightly) not the intention or spirit of the existing law.

However it is not this newly inserted wiggle room that will possibly be employed for nefarious purposes to avoid e-declarations that has drawn the headlines or ire.

What is contentious is how the amendments will effect civil society and NGOs.

The UK, EU and US were all swift to denounce those civil society related amendments as a step backwards.

Twitter feeds from UK Ambassador Gough – “Changes to law a serious step back. Could limit NGOs capacity, expose them to pressure & affect reform. Needs urgent review“, EU Commissioner Johannes Hahn – “E-declarations should target in public administration – not hamper work of civil society.” and “Changes to the law on e-declarations are a step back, not forward, and should be reconsidered.”, notwithstanding the US Embassy Kyiv making clear:  “E-Declaration for senior public servants is a powerful step in the promotion of reforms in Ukraine. Members of civil society play a vital role in ensuring transparency; to make them a target – a step back.

Ergo there will be fairly significant pressure from international funders upon President Poroshenko not to sign the amendments (whatever they are as they remain far from clear), yet with statutory timelines pressing him to sign the amendment if only to avoid military issues ensnared in the statute.  An option is perhaps to sign it and then send an urgent Bill to the Verkhovna Rada to immediately cancel the amendment, or amend the amendment to something better crafted/drafted (perhaps something similar to the original Verkhovna Rada Committee amendment that was hijacked).

However a cursory look at the origin of additional amendments and the votes that hijacked this VR Committee amendment would suggest the presidential party is a willing conspirator in the hijacking (together with the People’s Front and The Radicals).

Indeed a reader may or may not be inclined to link this latest legislative hijacking to the recent Poroshenko Party-People’s Front shenanigans surrounding the NABU auditor appointment by way of Verkhovna Rada procedural naughtiness and pushing the envelope when it comes to overtly interfering in/influencing corruption initiatives.

Yet further, a reader may ponder how the presidential party is involved in two such machinations inside a month without the knowledge of the Presidential Administration and/or the President himself?  Such optics are not helpful and yet there will be many diplomatic missions that will have those within viewing these events through such a lens.

However, given that the Ukrainian civil society space is undoubtedly infected with pocket NGOs of the corrupt, notwithstanding those of distinctly unfriendly States, and considering that there are certain NGOs that are undoubtedly shaping policy and effectively lobbying government, is there not a reasonable moral case to be made for them to also disclose funding/wealth when preaching transparency (of governance)?

Is it not fairly common for those that would lobby government to be formally declared in a register, annotating those that are foreign funded?  Similarly, are not some in senior NGO positions required to declare their incomes?

Is this then an argument regarding the matter of timeliness and institutional robustness rather than a matter or statutory requirements?

Is it simply that the outspoken governments see the legislative amendments as untimely given full consideration to the unreformed corrupt judiciary and more generally a weak grasp on rule of law, that as a result Ukrainian NGOs and civil society should be allowed to continue working as they are – at least and until the domestic structures and processes are in place and robust enough to protect them from a currently untrustworthy State and State institutions?

That said, there will be some NGOs that will voluntarily disclose their funding just to set a public example to those in government.


NABU visits Odessa City Hall

March 24, 2017

The National Anti-Corruption Bureau of Ukraine (NABU) has visited Odessa City Hall.

Hurrah and huzzah!

The question being only which criminal and grubby incident or individual their official visit related to?

The visit appears to relate to what a previous blog entry from October 2016 called “an impressive fraud even by the standards of Odessa City Hall” – and impressive by both scale and blatancy it is.  (For the names, the “who’s” and the “hows” see the above link.)

However, while this certainly is a bullseye with regard to size and shamelessness, it is but one of several incidents within City Hall that are worthy of NABU attention.  In hitting the bullseye a reader must hope that NABU will not miss the rest of the target as a result.


Wetwork and ammo dumps

March 23, 2017

23rd March has been a somewhat eventful day for Kyiv.

The assassination of Denis Voronenkov is perhaps not a surprise.

A former Russian Duma parliamentarian fleeing Russia after corruption allegations, who then obtains Ukrainian citizenship and openly cooperates with the Ukrainian authorities giving evidence regarding former President Yanukovych and his appeals for Russian military intervention – notwithstanding outspoken remarks regarding Crimea – is sure to draw Kremlin ire.

That the assassin was slain is no comfort.

Presumably those such as Ilya Ponomarev will now receive increased security.

Ukrainian authorities have unsurprisingly swiftly pointed the finger at the Kremlin for this wetwork operation in Kyiv – and for sure The Kremlin has a well documented history, both home and abroad, of carrying out wet work against those it feels betrays it.

How swiftly any connection between the assassin and The Kremlin can or will be made public remains to be seen.

Despite the probability that this assassination is Kremlin wet work, and despite the very swift finger pointing by Ukraine at Moscow, there are obviously other possibilities that must be investigated.

It may well be that he was slain on a paid contract by those that are still in the Yanukovych orbit, and that it was done without the direct or tacit approval of The Kremlin.  It may also be an assassination for other business related reasons.  While both seem far less likely than a Kremlin approved wetwork operation, they are clearly possibilities that must be considered, however unlikely, and ruled out (or in).

President Poroshenko has stated that is was “no coincidence” that the assassination occurred upon the same day that a significant arms depot, Balakleya, Kharkiv) was blown up.  Clearly the inference being that the arms dump explosion was an act of sabotage by Russia.

It has to be noted however that ammo dumps have blown up before with the initial allegation from Kyiv blaming Russia only for the cause to be identified as negligence of ammo dump employees – Svatove in 2015 being one example.

That said this particular ammo storage facility, without going into too much detail, was a major artillery dump that will undoubtedly have a real effect upon artillery ammunition logistics for Ukraine.  (A reader may ponder why Ukraine employs a policy of ammunition storage that is (more or less) centralised rather than more dispersed and therefore less of a military problem when such incidents (no matter how caused) occur.)  Initial official statements claim about 50% of the stored munitions are lost.  Unofficially that figure appears to be understated.

Regradless, such is the extent of the ammunition loss it seems very likely that in the absence of suitable domestic manufacturing capability, Ukraine may have to seek out and purchase stocks from the former Warsaw Pact nations.

Would any reader be surprised to note that The Kremlin also made a statement on the 23rd March to the effect it does not see the Minsk deal being implemented any time soon?

Thus reading between the lines, perhaps a reader may now expect some form of escalation that would require a Ukrainian artillery response over a period of time designed to yet further reduce remaining arty ammo stocks significantly?

Dependent upon the true scale of the munitions loss due to the blast, how quickly Kyiv can locate, purchase, and store old Warsaw Pact calibre artillery ammunition from neighbours remains to be seen.  Whether the decentralising of ammunition storage is a policy result of this incident also remains to be seen.


Eurovision – A reflexive control win for Russia

March 22, 2017

Over the years, both the subject and application of  reflexive control has appeared on the blog.  It is not new.  Neither is Eurovision.

For those unaware of what reflexive control is, the above link provides a very reasonable definition thus – “Reflexive control is defined as a means of conveying to a partner or an opponent specially prepared information to incline him to voluntarily make the predetermined decision desired by the initiator of the action.”

This entry however is the first time that both reflexive control and Eurovision appear together.

Though many readers may pooh-pooh Eurovision, it was quite a big deal for Ukraine when it won the competition in 2016 giving it hosting rights in 2017.

That it won with an entry sung by a Crimean Tatar themed upon 1944 Stalin implemented mass deportations of the Tatar from Crimea will have deliberately irked the Kremlin as much as rightly attempting to keep the illegal annexation of Crimea by Russia in the headlines.

Naturally Ukraine could expect some form of Eurovision reciprocity from Russia in response – and it has now come.

Ukraine has banned the Russian singer Samoilova from entering Ukraine, and thus from performing the Russian entry in Kyiv.

The reason for this ban is due to the Russian artist entering Crimea directly from Russia, rather than via Ukraine therefore undermining Ukrainian sovereignty, and also her performing there in 2015 – post the illegal annexation.

Samoilova joins a very long list of Russian artists banned from Ukraine for performing in Crimea since its illegal annexation.

Obviously The Kremlin is well aware of the Ukrainian policy of banning entry to Ukraine for Russian artists that perform in Crimea.  It is a policy that is nothing short of consistent.  Prima facie there have been no exceptions.

Ergo Samoilova was deliberately chosen to perform the Russian entry in the full knowledge that either Kyiv would make an (extremely unlikely) exception allowing The Kremlin a policy-breaking win, or that Kyiv would remain robust in its policy and in doing so knowingly causing some angst with the Eurovision establishment and quite possibly among the Eurovision faithful.

As predicted by The Kremlin, Kyiv has remained true to its policy and Samoilova has been banned from entry into Ukraine due to her performance in the peninsula in 2015.

Also as expected by The Kremlin (and probably Kyiv) the Eurovision establishment has issued a statement that hardly paints the Kyiv decision favourably – “It has been confirmed to the EBU that the Ukrainian authorities have issued a travel ban on the Russian artist chosen for the Eurovision Song Contest, Julia Samoylova, as she has been judged to have contravened Ukrainian law by entering Crimea in order to perform. 

We have to respect the local laws of the host country, however we are deeply disappointed in this decision as we feel it goes against both the spirit of the Contest, and the notion of inclusivity that lies at the heart of its values. 

We will continue a dialogue with the Ukrainian authorities with the aim of ensuring that all artists can perform at the 62nd Eurovision Song Contest in Kyiv in May. “

Hosts Kyiv left looking less than entering into the spirit of the competition, despite the obvious Kremlin maneuvering to create this outcome via the most blatant of reflexive control operations.

The whole affair however was avoidable -. and thus questions have to be asked as to why it wasn’t avoided?

The Russian artist in question performed in Crimea in 2015 and therefore could have been barred from entering and performing in Ukraine immediately thereafter – as many Russian artists have been,   That she was not barred from entry and performing in Ukraine in 2015 has led to this belated, Kremlin engineered banning in 2017 – and the policy consistent but undeniably poor public framing Kyiv has allowed itself to be put in.

All in all, something of an easy (and avoidable)point score for The Kremlin vis a vis Ukraine.


Ukrainian judicial transparency (not something you see every day)

March 21, 2017

With the distinct whiff of (at the very least partial) transparency, the disclosures/declarations of the 50 candidates for the highest judicial positions in Ukraine have appeared upon the website of the High Qualification Commission of Judges of Ukraine.

To say this event is extremely rare would be misleading – this is in fact precedent setting, not only the public listing of all the candidates, but also their declarations (of hopefully legitimate) wealth.

Whether there is anything within these disclosures that will prove to be somewhat smelly for any particular candidate remains to be seen, as will the fullness of the disclosures – nevertheless, a flicker of light in the otherwise dark and grubby world of the Ukrainian judiciary.

A moment to savour in fact – for there are too few and they are far too far in between when it comes to the Ukrainian judiciary.


Ukraine acceeds to (parts of) COSME

March 18, 2017

Long has the blog opined that the “deoligarchisation” of the Ukrainian economy will not manifest by the removal of the oligarchs (for that won’t happen), but by their oversized role within it being reduced by a transformation of the economy.

In short, conditions should be created to see the parts of the Ukrainian economy without outsized oligarch interest grow as rapidly, but as prudently, as is practicable.

There are obvious sectors in which there is no oligarchical monopoly/hidden barriers to entry.  The first industry sphere with no serious and dominating oligarchy interest, and where Ukraine is already strong with regard to internationally qualified personnel, is IT.  It ranks fourth globally for Apple and Microsoft certified programmers for example.

The second by its very nature is the economic sphere of the small and medium sized enterprises (SMEs).

The accepted wisdom is that SMEs create competition, and competition creates better goods and services thus driving the economy ever onward across a plethora of business sectors.

Clearly such economic shifts will not happen over night – or even in a year or two.  This is especially so when Ukrainian SMEs still struggle with unnecessary, outdated, pointless, and no small amount Soviet legacy regulation and statute at every turn.

To be entirely fair to the current authorities they have canceled and/or repealed hundreds of irksome, discombobulated and/or Acts that were simply more than a little fractious with other existing laws and regulations.

(On 23rd November 2016 Gov UA claims to have axed 367 bureaucratic abnormalities – and occasionally lists can be found regarding some of that which has been cast asunder.)

Another 100 statutory nonsense filled acts are slated to head to the bureaucratic waste bin very soon – with yet another 400 under examination.

To be clear, this is still the tip of a very large statutory/regulatory iceberg much of which never had any economic benefit other than to impose another method of extracting bribes from businesses that when adhering to one statute, were immediately were at odds with another.  (Undoubtedly some of the most lucrative legislative flapdoodle will remain simply because it is so nefariously lucrative.)

Nevertheless it cannot be said that nothing has been done, even if it can be said not enough has been done thus far – even when allowing some mitigation for parasitic bureaucrats deliberately slowing (or stopping) the reordering of their corrupt administrative fiefdoms.

On 22 February the Verkhovna Rada paved the way for Ukrainian accession to specific parts of the EU’s Competitiveness of Small Medium Enterprises (COSME) scheme.  The specific parts being improving access of small and medium-sized enterprises (SMEs) to markets, improving the regulatory environment for SMEs functioning, and creating a culture of doing business.  The 18th March witnessed President Poroshenko complete the process.

It remains to be seen whether Ukrainian SME associations/business NGOs/civil society will form solid partnerships with EU counterparts, and whether that in turn can be used to encourage the Ukrainian leadership not only to expedite the removal of unnecessarily hindering rules, but also approximate any new legislation/regulation with any relevant European normative.

Just how much remains to be done is difficult to assess, however measurable (somehow) it must be, for it is surely achievable.

There is then the question of timeliness – both for the SMEs and by extension the reduction of an oligarchy (almost captured) economy.

(The SME demographic will also be a key battleground constituency for elections upon the distant (or not so distant) horizon.)

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