Archive for the ‘Business Admin – Staying Legal’ Category


Kremlin goes back to the DCFTA

March 4, 2015

Yesterday, away from all the headlines, EU Trade Commissioner Cecilia Malmstrom met with Russia’s Economic Development Minister Alexey Ulyukayev in Brussels – the issue discussed the EU-Ukraine DCFTA and The Kremlin concerns.

Kremlin meddling with the DCFTA at this time was to be anticipated, as this recent post made very clear.

“The Kremlin will now be swift to try and unpick these economy transforming and European integrating agreements prior to it coming into force on 1st January 2016. European political defeat lies in allowing an external 3rd party veto or amendment to a ratified bilateral agreement. Any such precedent would be a disaster for the EU.”

No surprises that The Kremlin was stone-walled over any chance of altering an already ratified bilateral treaty.

I place great importance on our trade and investment relationship with Russia, and it is in our mutual interest to overcome the current difficulties. To fulfil our relationship’s potential, the current Ukraine crisis needs to be solved. As I have stated in many occasions, this is a political problem requiring a political solution. I hope that the respect of the measures agreed in Minsk will lead to the way out of the crisis.

I therefore support the resumption of trilateral talks between the EU, Ukraine and Russia in order to achieve practical solutions to concerns raised by Russia with regard to the implementation of the DCFTA between Ukraine and the EU. We continue to stand ready to find ways to address the concerns expressed by Russia, within the flexibility provided by the EU-Ukraine DCFTA, which, however, will not be amended.

It is only via a solution to the Ukraine crisis that we can lay down the foundations for a renewed bilateral partnership based on dialogue and cooperation. Moreover, Russia needs to respect its WTO commitments in full. Once conditions are met, we can start envisaging something more ambitious for our bilateral trade relationship.”

Bravo – It is beyond time that Europeans stopped simply offering concessions, swiftly pocketed by The Kremlin, with no return.  A far more robust negotiating stance has to be adopted with the current Kremlin management.   The Kremlin has made it quite clear for several years, for those who have cared to look, that it has no intention of being like the rest of Europe – pretending otherwise is pointless, and also self-defeating.  Hopeful mirroring is not going to help, and is indeed a factor in how matters have been allowed to progress so far already.  Trust and goodwill are spent.

But what can be reasonably done to allay the purported/perceived Kremlin trade concerns (be they real or fabricated), beyond “country of origin” labeling/packaging/electronic tagging?  Should anything be done at all, and if so what is the cost of doing so?  Is it not beholding of Russia to insure its borders and customs deal with any such problem?  (Admittedly The Kremlin clearly has issues with the control of its own borders, when small armies and masses of military equipment pass through apparently unseen by the authorities after all.)

How much greater would the “reexport” problem become for Russia?  It does not complain about the (organsied) smuggling from Finland, or the Baltics.

The bilateral nature of the DCFTA was a point conceded by Mr Ulyukayev – at least publicly.  He stated “There is no doubt that the agreement is a matter between Ukraine and the EU, but our concern is to protect our companies, our business and economy from possible consequences.”  The anticipated threats to Ukrainian trade were also made “if Moscow’s concerns are not taken into account Russia would have to take protective measures, including the introduction or toughening of customs tariffs on Ukrainian goods.”  No surprise to anybody of course – though it is a double-edged sword when certain Russian industries, even in time of war, still rely on Ukraine.  The costs and timeliness of becoming self-reliant are not small.

If there is one place that the EU will beat the Kremlin without much effort, but simply due to natural design,  it is within its bureaucratic and technocratic system.  One of the very few advantages of being a behemoth of bureaucracy and technocracy, is that circumventing or short-cutting the system is simply not going to happen – not even for the Member States.    It is for this reason that The Kremlin stays as far from the EU machinery as possible, preferring far swifter bilateral agreements with Member States whenever possible.

Although rhetorical, there is the question as to why The Kremlin has a problem with the DCFTA, and yet Minsk and Astana have nothing to say.  They are now part of the same common economic space with Russia, that is the EurAsian Union after all.  What prevents European goods being reexported from Ukraine to Belarus or Kazakhstan, and then on to Russia?  Certainly not the rule of law, or the ethics of those meant to enforce it in those nations.  Thus, is it now, no longer a “Russia” issue but a “Eurasian Union” issue?

That said, the EU would be wise to avoid dealing with Kremlin concerns via the EurAsian Union entity.  Just as Russia avoids the EU structures and looks to bilateral national interaction as the preferred option, the EU should do the same.  Indeed both Belarus, Kazakhstan, and others, for the immediate future may also prefer to keep as many bilateral channels open as possible.

The war between Russia and Ukraine will not only be fought with tanks and guns, but also (and increasingly) with politics and economics (not to mention subversion, coercion, etc.)  It is also a war that will continue for as long as the current Kremlin management remains in place, or until Ukraine acquiesces and accepts The Kremlin yoke once more.  At least ten years of Kremlin obstructionism and aggressive interventionism awaits Kyiv (and Europe) – possibly longer.

In the meantime, if Russian concerns are to be met by “the flexibility provided by the EU-Ukraine DCFTA” one suspects that a lot of time will have to be spent upon the elasticity of the language therein, and agreeing upon some rather imaginative (bordering upon preposterous) interpretations thereafter, that do not entirely sacrifice the spirit or conditions of the bilateral agreement.

How far terms will be reasonably stretched to accommodate The Kremlin – if at all – remains to be seen in the months ahead.


Some US FDI – Odessa

March 2, 2015

Having not written about anything local for a while, it is perhaps time to write about something positive occurring for Ukraine, and in particular Odessa.

For those who are not acquainted with Odessa, it is home to three large ports.  Odessa, Yushni and Ilyichevsk.

Ilyichevsk is approximately 50 square kilometers of port-side and container terminal with its own rail spur and good road links (as have the other two).  The port itself is a State asset, whilst the container terminal is not – albeit there is an obvious symbiotic relationship of mutual necessity.

Indeed in 2005 Ilyichevsk Container Terminal, then owned entirely by Andriy Pavliutin, and the State owned seaport entered into a joint venture to increase the size of, and upgrade the port side and container terminal, with German forwarding company SSR Deutschland subsequently buying 25% of Ilyichevsk Container Terminal between then and now.  The total expansion and upgrade costs thus far are approximately $56 million to date – and there is much room for further expansion, throughput, and efficiency to be sure.

In January 2015, a court decision to nullify the joint venture between the State owned Ilyichevsk Port and the Ilyichevsk Container Terminal was taken over apparent violation of the Laws of Ukraine on seaports.  That decision is currently being appealed.

How is this positive?  A profitable going concern, and major employer in Ilyichevsk going through legal wrangles?

A few days ago, the US private equity firm Siguler Guff & Company, which manages $10 billion in assets, sealed a deal to buy a 50% share in Ilyichevsk Container Terminal.  The ownership now being 50% Siguler Guff & Company, 25% SSR Deutschland, and 25% still owned by Andriy Pavliutin.

“Siguler Guff & Company consider their interest in the terminal rather promising. Ukraine’s economy will recover. There has been a significant political reboot and important reforms are being implemented. Rich in resources and boasting highly educated population of over 45 million, Ukraine presents new opportunities for the investment firm.

The implementation of the Association Agreement between Ukraine and the EU will inevitably increase Ukraine’s involvement in the world trade. Illichivsk terminal, as one of the market leaders, will grow with the country’s economic recovery. Siguler Guff & Company believes that its decision to come to Ukraine will send a positive signal to the global investment community and contribute to the growth of foreign capital in Ukraine.”

Clearly, Siguler Guff & Company are taking a long term view – as anybody purchasing 50% of a major container terminal in Odessa would be – war with Russia or not.  With a corporate philosophy that states “Siguler Guff strives to provide its clients a diversified global private equity platform that captures outsized returns by investing in and targeting areas of market inefficiency and capital starvation” – Ukraine, it has to be said, is currently a natural magnet for them, and others like them.

We will see who follows their lead, and when – if anybody.  Nevertheless some good FDI news for Odessa and Ukraine.


EU standards – or not/Стандарты ЕС – или нет

February 23, 2015

Almost one year ago, 13th April 2014 to be precise, an entry was published bemoaning the lack of information for Ukrainian manufacturers and service providers regarding EU (and by extension ISO) standards certification.

“For those that are looking westward and desire greater integration, it is surely time to show just how attainable that actually is – in practical and tangible everyday ways.

One example was that of trade and Ukrainian products that already meet EU standards.

Somewhere between 20 – 30% of Ukrainian products already meet, and another 10% or so with simple changes to things like packaging, would meet, EU standards (not to mention ISOs).

Thus EU standards are not only achievable but have already been achieved by certain producers big and small across several market sectors – and yet nobody has produced a consolidated list that publicises what has already been achieved and is easily identifiable to a Ukrainian public that also buys those products.

Why not?

Would it not show quite clearly that European integration is not a pipe dream, but is something not only achievable, it is actually underway in practical and tangible terms?

Is it not an easy public relations win, psychologically fortifying for the believers, irrefutable for the detractors, and also cheap to do?

Considering the tens of thousands of spam commercial comments this blog gets advertising all and sundry each and every year – why, in all the years it has been running, has there never once been a comment offering/advertising a method of attaining EU standards?

Is there a campaign or programme to help Ukrainian businesses over the compliance line? 

If it is policy to talk the talk in an effort to make Ukraine walk the walk – why is it that those that can be held up as examples of success with regard European integration/standardisation aren’t?

That as stated, was written 13th April last year, with the DCFTA, and thus Ukrainian producers expected to meet EU standards by 1st January 2015 when the DCFTA was originally supposed to enter into force.

Yesterday this issue raised its head again when in the company of some business people in Odessa, with implementation of the DCFTA now due to occur on 1st January 2016, having been postponed for 1 year, despite ratification.

Almost a year on from that original entry, how far has this progressed – if at all?

How simple is it to locate direct assistance to Ukrainian business relating to making the necessary information, expert advice, and a simplified bureaucratic guide to achievement?  In short, why could those yesterday not find sufficient and easily accessible information?

The answer appears progress is almost zero – or at least it seems what has been done, has been communicated in such a way as to be an abject failure in reaching the vast majority of the relevant audience.

EU approved

Nobody amongst the business people spoken with yesterday had heard of the “New European Approach”, a way of making EU regulation flexible toward innovation.  None knew how to create “conformity declarations” or when to involve an EU “Notified Body” – let alone where to find an EU “Notified Body” if and when they were required to involve one.  “Assumptions of conformity” and liability if products fail? – No clue from those present.

The only unanimous agreement was that as EU standards are generally in line with ISO standards, more than one market opens up when compliance was met – the issue was how to comply, which was a matter more pressing after the RADA, on 15th January, adopted the law on Technical Regulations and Conformity, designed to implement the European system of technical regulations.

Indeed on both Russian and Ukrainian television advertisements, “Европейский стандарт” – European standard – is used to clearly infer that whatever is being subjected to the sales/marketing is superior in quality to the domestically produced equivalent.  In some cases that is indeed true.  In other cases it isn’t, but the domestically produced equivalent in either nation has not the slightest clue about how to obtain the “Европейский стандарт” it actually meets.

The EU will after all remain a major Ukrainian market.  Complying with the Russian/CIS GOST standards is not an issue regarding that market.

The Ukrainian government has primary responsibility, and the EU has at the very least a requirement of goodwill, if not some responsibility, to effectively communicate what needs to be done for those searching for, and reaching out for, that needed assistance for EU standards compliance.

So what has been done?

The answer it seems, is an interactive questionnaire, recently launched, (22nd January), that forms part of a survey.  “The aim is to assess the level of knowledge and the information needs of manufacturers with regard to the requirements that non-food products must meet to enter the EU market. This concerns the conformity assessment, certification, CE-marking and declaration of conformity.”

Eventually, it appears that a few seminars will be held in several large cities, but when, and how well they will be marketed and promoted, remains to be seen.

Only time will tell whether these seminars will be delivered with sufficient lead-in time for those who receive these pearls of wisdom to act upon the information imparted, and thus meet the required EU standards prior to 1st January 2016 – or whether 2016 will arrive with far too many Ukrainian businesses suffering from a collective governmental/EU lack of timeliness.

A down-loadable idiots guide to the basics, apparently not an option in the meantime it seems.  The publication and promotion of an idiots guide in the local media – which is read far more than the national media – an option perhaps?  Probably not, but you never know.

Perhaps those that read this blog within both the Kyiv and EU bubbles may consider it?  Doubtful, but maybe.

For the purposes of search engines, a few lines below in Russian, directing those that look for such information to the on-line questionnaire and website that is at the very least, a starting point.

Для тех украинских предприятий / производителей с целью получения информации о соблюдении стандартов ЕС и получения сертификата, нажмите здесь в качестве отправной точки.


A return to the 3G tenders – Ukraine

February 18, 2015

In November 2014, an entry was published that highlighted the tendering for, and licensing of, 3G in Ukraine – the outcome of which is due on 23rd February.  It was identified as one of the litmus tests for foreign corporate investment into the country.

“As such, one of the very first public and international tests Ukraine will face will be the national G3 tender and licensing, due to take place in January 2015.

Quite simply – Ukraine has to get it right!

Whether Ukraine is aware of it or not – there is a lot of corporate and private FDI watching the G3 tender very closely indeed. In fact, it cannot be typed in bold or underlined heavily enough. There can be no cock-ups with the G3 tender and licensing by Ukraine.

If it gets it wrong, or it is thought to be even slightly “smelly”, it is one of the (early) indicators that will have a notable impact on corporate/private inward investment. It will certainly be a significant nail – although not the final nail – in the inward investment coffin for Ukraine.

If it goes as it should, however, from the discussion, there is quite clearly some solid and significant interest in Ukraine – despite the current situation in the east.

Naturally, not only the international/foreign national corporations/private investors are looking closely at the G3 tender – or it would not have been agreed as a significant event amongst those present from the various nations during the discussion with this blog. The western political and diplomatic classes are also looking for clear signs of a perfect execution of this tender and licensing too.

Ergo, dear readers, keep a very watchful eye upon the events surrounding the G3 tender and licensing – for it has far greater implications for Ukraine than any communications (and security) issue.”

In mid January, another entry was published listing those that had submitted tenders – Kyivstar, MTS Ukraine, Life (owned by Astelit) and UkrTower (owned by Turkcell).

All clear and transparent so far – a fairly content international corporate investment audience looking on.

The bids are as follows:

MTS Ukraine: Lot 1. UAH 2,708 billion.  Lot 2.  UAH 2,715 billion.  Lot 3.  UAH 2,705 billion.

Kyivstar:  Lot 1. UAH 2,705 billion.   Lot 2.  UAH 2,710 billion.   Lot 3. UAH 2,7 billion.

Life/Astelit:  Lot 1, 2 and 3 UAH 2,703 billion each.

All bids just over the starting value set by the government of UAH 2,7 billion – unsurprisingly when the license winners are to carry all conversion costs themselves, estimated at another UAH 1,6 billion.  All those successful are contractually obliged to have 3G in all major cities within 18 months, and within all towns with 10,000 or more inhabitants within 6 years of license issue.  Licenses are for 15 years.

So far so good – except there are issues that may now come to the fore with at least two of the bidders.

The first issue may be the existing Ukrainian law relating to sanctions in place against Russia.

The second is a proposed law by MP Anton Gerashchenko (who has some considerable weight,  both physically and metaphorically) to limit Russian ownership within security related spheres to 25% or less.  Communications being considered, rightly, as a security related sphere.  “I ask the NSDC consider setting limits owned by Russian entities and individuals (final beneficiaries) and persons affiliated with them shares that do not exceed 25% in aggregate in the share capital of companies in the field of transmission (storage, processing) of information data, mobile and satellite communications, navigation systems and telecommunications.”

According to him, limiting the share of Russian legal entities in the authorised capital of Ukrainian companies “guarantee information security of the country and close the flow of financial resources, which are displayed in the form of dividends to Russian beneficiaries.

Indeed.  With Russia having clearly, if unofficially, declared war by other means not only against Ukraine, but also the western world, why would it limit it to tanks and artillery, little green men, or energy politics?  Why would any sphere or interaction be off-limits?  Dependency, subterfuge, and/or influence is just that, regardless upon how it is achieved.

But where does this leave the bidders for the Ukrainian 3G tenders?

MTS Ukraine is a 100% owned subsidiary of MTS Russia.  Thus it is clearly ruled out should the goal posts be changed.  Indeed MTS Ukraine had a run in with the Ukrainian regulator in April 2014, when an unannounced inspection displayed cases of illegal data protection leaks, allegedly to the Russian security services amongst others.  Hardly a surprise to many.  The outcome was MTS kept its license, but was ordered not safeguard its data more carefully.

Kyivstar operates under the umbrella of an international holding company called Vimpelcom.  Vimpelcom has a shareholder with 47.9% of votes (indeed the largest shareholder) called Altimo.  Altimo is part of the Russian Alpha Group.  Perhaps a little more tricky and difficult to justify – or not?

This leaves Astelit.  This bidder is owned 55% by Turcell, Turkey’s largest mobile operator, and 45% by SCM, Rinat Akhmetov’s financial/industrial group.

The issues of Russia related security threats has not changed since the first 3G tender related entry here in November 2014.  The setting of parameters that relate to Russian percentage of ownership/control could have been set when tenders were invited – rather than now.  Should Mr Gerashchenko’s proposals fall upon sympathetic ears within the NSDC and/or the RADA, thus changing the tender goal posts now, (and the law), how will this be viewed by the international corporate investors?

Is there a need to change the law or tender parameters anyway?  Winners and losers are not decided upon by the value of bids alone – regardless of their necessary technical abilities to deliver.  If there are legitimate or justifiable reasons to prefer one bidder over another, then if those reasons are transparently communicated, that is the end of the matter.  What of “preferred bidders” or “The management retains the right to refuse”?


(That said, Monsanto is set to announce $200 million investments in grain storage and lifters very shortly within Ukraine.  A long way behind Chinese investments in similar infrastructure, industrial parks, fertilizer plants etc., which is now approaching $10 billion since 2011.)

The announcements due on 23rd February will send a signal – but what that signal will be, and how it will be received, remains unclear.


Another foreigner joins the anti-corruption battle – Ukraine

December 12, 2014

Clearly in approaching a well known foreign reformer in Eka Zgulatze to head the National Anti-Corruption Bureau, President Poroshenko was attempting to send a domestic message that (corrupt) “business as usual” is about to meet an experienced and robust wall head on, should it try to continue per bygone days.  The message externally is that there is somebody to talk to who has dealt with this before and who will not bow to internal shenanigans.

Time will tell whether Ms Zgulatze will be as effective in Ukraine as she was in her native Georgia of course.

Ukraine has now seen another foreigner appointed in an anti-corruption role.

Algirdas Semeta

Algirdas Semeta, a Lithuanian, is a former European Commissioner for Taxation, Customs, Statistics, Audit and Anti-Fraud, and will assume the role of Business Ombudsman within the Ukraine Anti-Corruption Initiative.

This initiative was created via a Memorandum  of Understanding in May 2014 between Ukraine, the EBRD, OECD, ACC, EBA, Federation of Ukrainian Employers, UCC, League of Industrialists and Entrepreneurs and a good deal more of the alphabet soup relating to representative groups doing business in Ukraine.

As it is a fairly sensible thing to honour commitments made – particularly so after Ukraine requested assistance from the OECD regarding tax systems, competitiveness and tackling corruption – on 26th November, Cabinet Resolution 691 created created the Business Ombudsman Council, a permanent body, financed at least in part by the EBRD which has allocated Euro 1.5 million annually to the office of Business Ombudsman.

Thus the new Business Ombudsman creates a (foreign) independent person entitled to appeal publicly to the government if corruption in customs, tax services, public authorities or state regulators is being detected or where the rights of business and entrepreneurs are impaired, as well as keep the alphabet soup of interested business entities up to speed with any specific cases.

As the ombudsman’s office will apparently assess claims, will be able to request further investigation by the relevant bodies, and seek to have complaints addressed by governmental authorities where it believes wrongs have been committed, it does appear something of a major challenge for an ombudsman, two deputies and a sprinkling of employees from the secretariat.

It is quite easy to envisage an initial deluge of cases and a subsequent, ever-growing backlog.  Questions of administrative capability, and thus timeliness, may very well become issues that will effective the perceptions of effectiveness around this new office.

Nevertheless another small but positive step – and one that may become a major step if the new Business Ombudsman is actually allowed to do the job created and receive unquestioning political support when matters are raised.

What actually becomes of the cases brought to the attention of government by this new office remains to be seen – but if it is done publicly, then any inaction thereafter falls clearly at the governmental door.


Questionable timing of a little bit of privatisation – Back to Odessa Port Side (& others)

December 7, 2014

A couple of months ago, this entry appeared relating to the possible privatisation of Odessa Port Side, alleged and disputed debts to Dmitry Firtash’s RGK Trading of $1.39 billion, and the fact that gas was now being supplied by German energy company E.on.  It went on to question the ability to privatise Odessa Port Side with this issue outstanding, despite a clear need for the State to privatise assets and get them off of the governmental books.

On Wednesday 17th December, an official report appeared in the Vidomosti Pryvatyzatsii newspaper announcing several partial privatisations by the government.

Quite why they are partial privatisations rather than full – or even majority share – privatisations is something to ponder.  Perhaps the inability to shake the entrenched paternalistic “State involvement in everything” mentality that consistently weighs Ukraine down, leaving it mired in a quasi-Soviet economic system it cannot escape whilst such a mentality continues, or other perhaps perceived “strategic” reasons will be cited for partial privatisation, can be argued another day.  Maybe nobody would buy shares in such enterprises without the government holding the majority of shares and thus acting in effect as a de facto guarantor for investment after the Cabinet of Ministers, via Resolution 1186, instructed Oschadbank to loan UAH 5 billion to Odessa Port Side for gas payment.

Regardless, according to Vidomosti Pryvatyzatsii, on 24th December, a stake of 5% of Odessa Port Side will be up for sale on the Perspectiva Stock Exchange.  The 5% share sale expected to realise UAH 39.927 million.    The controlling stake to apparently be sold at sometime in 2015 – presumably once the issues with Mr Firtash and RGK Trading have been settled.

Nobody would be surprised to see that dispute disappear should Mr Firtash mysteriously/coincidentally acquire the controlling stake in Odessa Port Side of course.

As an aside, the Vidomosti Pryvatyzatsii newspaper also announced the sale of 10% of shares in the currently entirely State owned Centerenergo – the share price UAH 6.973, expecting to raise UAH 257.6 million.  This sale occurring through the Ukrainian Interbank Exchange, also on 24th December.

Also for sale on the Ukrainian Interbank Exchange on 30th December, will be 25% of shares in Dniproenergo, expecting to raise UAH 1.23 billion.

The last partial privatisation mentioned in the article is the 25th December offering of 25% of shares in Donbasenergo on the Eastern-Europe Stock Exchange, with the 25% being valued at UAH 282 million.

It would appear from the timing, 24th, 25th and 30th December, that these offerings may not be particularly aimed at attracting the rather merry/tipsy/drunk western-European investors mercilessly imbibing large quantities of sherry/port/whatever, at the epicentre of the festive period, as prescribed by the Gregorian religious calendar.

Indeed the timing would seem to invite some last moment Christmas shopping for the Orthodoxy oligarchy, and followers of the Julian calendar, for whom 24th, 25th and 30th December are just another working day.  Naturally, should the undesirable/dubious personalities or their entities purchase the shares, Ukrainian public ire is also likely to be dulled by the festive season/holidays commencing on 31st December – the day after the last share sale.

In politics, like comedy – timing is everything.


Ambramovich selling his Ukrainian assets?

September 8, 2014

Whilst the ceasefire in eastern Ukraine is anything but, European and US sanctions are still to begin to bite properly, and the future of The Donbas looks at best to be set in some form of frozen conflict providing The Kremlin with de facto control of the region – other interesting things are happening amongst the Russian and Ukrainian oligarchy elite.

Amongst them, it would appear that Russia’s arguably most famous oligarchy, Roman Abramovich, is putting his Ukrainian assets in Dnepropetrovsk up for sale – or at the very least having them valued in preparation for sale.  Specifically work on an independent valuation of PJSC “Evraz Dnepropetrovsk Metallurgical Plant (DMZ), Petrovsky” (Dnepropetrovsk), Mining and Processing Plant (GOK) PJSC “Evraz Sukha Balka” (Krivoy Rog, Dnepropetrovsk region) and PJSC “Evraz Bagleykoks” .

That would essentially leave Evas Plc with Lanebrook Ukrainian Mining “Sukha Balka”, Petrovskogo  coke plants “Bagleykoks”, “Dneprokoks” and Dneprodzerzhinsky koksohzavod which it bought from Ukrainian oligarch Igor Kolomoisky in 2007.

In short, out of Ukrainian metals but staying in Ukrainian mining – more or less.

It may well be that preparations to leave Ukrainian metals is to do with envisaged gas and electrical shortages in the near future that will naturally affect production.  Certainly mining will be less affected.

It may also have something to do with the direction sanctions have been heading, and their effects now and in the longer term.  For sure, by the turn of the year, if left in place, they will truly begin to bite and The Kremlin will start to burn through its reserves in order to maintain the status quo domestically.  Nobody has ever accused President Putin of being either an economics or technology genius after all.

The move does, however, raise some matters for thought.


Firstly, if supply to the metal plants owned by Mr Abramovich cannot be guaranteed, it would seem to suggest for those that believe in “Novorussiya”, Dnepropetrovsk is a step too far – at least for now.

It also suggests that the chances of any resolution to the Russian-Ukrainian gas war is also unlikely – as expected.

It raises the prospect of who would buy these businesses too.  A valuation of assets is one thing – their real value sat within what may well become a “front line oblast” is another.  Buyers would be few – and far from risk aversive.

What of Ukrainian sanctions?  As yet, whilst the USA and the EU are now well into sanctions mode – no matter how small their direct immediate effect has been – Ukraine is yet to sanction any Russian or Russian business.  Relevant laws have been passed by the RADA, but appear to be awaiting presidential signature before they can come into effect.

Is the Russian oligarchy now expecting Ukrainian sanctions on their Ukrainian based assets?  After all, some Ukrainian oligarchs have over the past 10 days just witnessed their Crimean based assets get “nationalised”, whilst some assets in Russia are now being “arrested” and investigated.

Not as headline grabbing as the ceasefire that isn’t in eastern Ukraine, granted.  Interesting though nonetheless.

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