Archive for the ‘Politics’ Category

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Gaidar becomes Presidential Adviser – Why, and why now?

April 5, 2017

As unusual as it is to read anything so clearly favorable about a Ukrainian politician on this blog, or to write about a politician rather than policy per se, the following prose will be something of an exception.

Maria Gaidar has featured in the blog several times having arrived in Ukraine, being granted Ukrainian citizenship (and relinquishing her Russian citizenship), and subsequently acting as Deputy Head of Odessa Oblast Administration under Governor Misha Saakashvili.

She is perhaps the closest thing Ukraine currently has to political aristocracy, albeit her political aristocracy is rooted in Russia via her late father Yegor Gaidar (Prime Minister of the Russian Federation 15 June – 14 December 1992) and Great Grandfather Arkady Gaidar.

Nevertheless there are few, if any current Ukrainian politicians that can claim 4 generations of political lineage that have all featured at the pinnacle of national policy shaping.

(She also worked with an old friend of this blog, the late Boris Nemtsov.)

All of that said, to be fair, it is all somewhat irrelevant even if interesting.

What matters is what, if anything, Ms Gaidar not only accomplished, but how she went about it, as a Ukrainian politician in Odessa since her adoption of Ukraine (or perhaps vice versa).

Having met her several times, she is undoubtedly one of the best mannered, humble, accessible and intelligent women in Ukrainian politics – and certainly to grace the political and policy stage of Odessa.

She is clearly more than capable of acting upon a stage far greater than Odessa Oblast and yet decided to remain as a local Deputy in the Oblast Rada when the rest of “Team Saakashvili” moved on/was eased out/quit and headed to Kyiv, thus honouring her public mandate.

She has remained a solid, reliable, conscientious, almost media invisible Oblast Deputy who has, so far as can be ascertained, avoided the usual trips and traps of local governance corruption.

She also did a decent job, where it was possible, at clearing up the unintended mess left behind by Hurricane Saakashvili as he whirled around the Oblast when she was his Deputy (while allowing the intended devastation to do what it was intended to do) .

It follows therefore that the blog has no issue with the surprise appointment of Maria Gaidar as Presidential Adviser.   She is certainly brighter and far less tainted than many within the Presidential Administration.

Two questions however – Why, and why now?

Is Ms Gaidar deemed a “Saakashvili legacy” by the new Governor of Odessa, akin to an unwanted fly in his soup – and thus this appointment giving opportunity to have her officially out of Odessa often, despite her local public mandate?

Is it nothing more than a cheap. non point scoring poke at The Kremlin?

Is it a poke at Misha Saakashvili?

Is it an attempt by the Presidential Administration to lure some former “Team Saakashvili” people across?  (Albeit Ms Gaidar was clearly different in her approach to her work than the majority of that team – publicly at least.)

Cynicism asks whether Kyiv simply bereft of smart people to advice the President?

Are there other reasons, be they less than obvious or distinctly motivated by events behind the curtain, for this appointment?

And why now?

For almost a year Ms Gaidar has been, by choice, a lowly Oblast Deputy having resigned as former Governor Saakashvili’s Deputy when the Law on Civil Service came into force in May 2016.  She has been left to fester in Odessa in a political position far below her abilities, so what has now changed to warrant her appointment as a Presidential Adviser (along side her local mandate)?

Is this a reward for perceived loyalty to the President and/or people of Odessa because she did not abandon her responsibilities in Odessa and follow Misha Saakashvili?

It has to be said the appointment is a surprise, and although she is more than equal to the role, the questions of why, and why now, thus far provides for few convincing answers.  Nevertheless President Poroshenko has made this appointment for a reason and that may become clearer only later.

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What is past is prologue (Shakespeare)

January 16, 2017

With Vice President Biden bidding adieu in Kyiv having been point man for the out going US Administration, naturally official statements are a mixture of thanks and platitudes for efforts past and also words of hope for the future.

Yet the words used by both President Poroshenko and Vice President Biden at their farewell meeting are hardly the most robust and unambiguous when it comes to confirming continued US policy toward Ukraine.

“We really count on the succession by the new U.S. administration in our common work” and “hope that the Ukrainian issue will further unite the entire American political spectrum and remain among the top priorities” the oratory of President Poroshenko is hardly that of a political leader confident in the future policy of an ally.

Further, despite President Poroshenko’s “hope” it is already fact that the Ukrainian issue will not unite the entire American political spectrum insofar as where Ukrainian issues overlap with Russian issues.  The reverse is abundantly clear.  Divisions are widening within the US political arena where Ukrainian and Russian policy overlaps.

In response, VP Biden stating “I hope that the next administration will also want to be a supporter and partner in your continued progress” does little to convey anything solid either.

Yet more “hope“.

Perhaps one more forlorn “hope” is that the in-coming administration even has a Ukraine policy around which the American political spectrum can either diverge or unite – particularly when it comes to overlapping Russia issues.

What is past is prologue (Shakespeare)

Thus what has gone before may have little to offer by way of predicting, and therefore understanding, what is to come.  It may be that there is, as yet, no policy regarding Ukraine as far as the in-coming Administration is concerned, and thus policy drift and/or meandering is what awaits to be exploited by those that seize the moment.

“Hope” no matter how many times it appears in presidential prose is not a strategy.  And it is certainly not a strategy Ukraine will be wise to employ with regard the emissions of the new US Administration.

If “hope” is to play any part in Ukrainian strategy, it is perhaps better replaced with “optimism” and employed within a domestic political and policy context.  “The essence of optimism is that it takes no account of the present, but it is a source of inspiration, or vitality and hope where others have resigned; it enables a man to hold his head high, to claim the future for himself and not abandon it to his enemy.” (Bonhoeffer).

It may be prudent therefore to deliver some swift, sensible, domestic inspiration by way of policy!

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Odessa gets a NABU Chief (not without history)

January 13, 2017

Odessa has eventually been appointed a regional NABU Chief.

In fact the “Odessa” NABU region covers Odessa, Kherson, Mykolayiv and Kirovograd.  A geographical area larger than some European countries and given the number of NABU mandated public officials within, no small number of fish to shoot at in the regional barrel.

The appointee, following what was probably not a competition but rather a “competition” is Dmitry Rudenko, 15 years in law enforcement in Vinnitsa and holder of 2 law degrees and a further degree in accounting and auditing.

Prima facie a fairly good mixture of education and experience for his future role.

Of course the cynical reader cannot help but note he hails from the same city as Prime Minister Groisman, and Petro Poroshenko’s political stronghold.  One of those “coincidences” that so often occur – no differently than being able to pick the “winner” from “competitions” in sensitive appointments relating to power and regional control almost every time.

Mr Rudenko however does not come without his own skeletons – the largest of which relates to the late, well known human rights activist from Vinnitsa, Dmitry Groisman.

Mr Groisman died a week before a court in Vinnitsa acquitted him of prosecutor nonsense.  Criminal proceedings were opened into those that brought the case which it was stated in court, was fabricated.  Mr Rudenko was one of those against criminal proceedings were opened (and then, it would appear, quietly closed).

Mr Rudenko should of course be wished happy and successful hunting.  There are many fish in his barrel to be easily shot, and some that will require a little more skill.  The cynical reader will also ponder whether some will require tacit political approval or deniable political targeting.

Time will tell whether those close to the leading BPP political lights will suffer NABU attention in Odessa as swiftly or as thoroughly as those that are not.  The perception in Odessa however, will be that Mr Rudenko is already sullied.

(Quite a week for Odessa now President Poroshenko has officially appointed Ihor Kolomoisky’s man Maxim Stepanov as Governor.)

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Ukraine begins to lobby DC – professionally

January 7, 2017

Many times it has been written that Ukraine would be wise to lobby Washington DC beyond the abilities of its own diplomatic mission and occasional delegations.

So it comes to pass, and probably due to a Trump presidency almost being upon Ukraine, the national leadership has decided to engage professional lobbyists to champion Ukraine inside “The Beltway”.

That said, whilst Ukraine as a State has taken its time to arrive at this decision, many of the Ukrainian elite have long since lobbied their own causes/interests within DC.

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Ms Tymoshenko outspends all others (despite her meager income according to her e-declaration.)

The Ukrainian State has chosen to spend a seemingly meager sum of $50,000 per month having BGR Group strengthen ties between the USA and Ukraine, and further encourage US investment and/or US investors to look at Ukraine.

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Not before time, and perhaps only because of who the next US president will be, has Ukraine as a State started to spend money where many of its nefarious elites have done so for years.

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The contract would seem to last for the duration of 2017.

Although this is definitely the right policy for the Ukrainian State to engage in – indeed to belatedly engage in – a reader may ponder just what returns can be expected for $600,000 per annum when considering that Ms Tymoshenko spent more than that amount in 2014, that same amount in 2015, and would appear to have very little to show for it – unless her lobbying was intended to insure very little was publicly shown regarding her.

So, what do you get for $600,000 of lobbying inside “The Beltway” (even if leveraged with a cooperative Ukrainian Ambassador and embassy)?  BGR Group and 2017 will provide the answers!

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Moldavian meetings

January 5, 2017

For the first time since 2008, a President of Moldova, Igor Dodon met with a “President of Transnistria” Vadim Krasnoselsky.

Whether it proves to be anything more than a symbolic gesture by pro-Kremlin Moldavian President Dodon remains to be seen, for his powers as president are extremely limited (which is perhaps a good thing being a robust supporter of federalising Moldova).

Moldova is a parliamentary democracy with the President having very little sway over policy or legislation.  (As such the Moldavian parliamentary elections of 2018 matter far more than the recent election of Mr Dodon as President of Moldova.)

What was known to be discussed appears to have been all rather sensible – and occurred outside of the longstanding 5+2 format which may or may not further frustrate an already frustrated process.  Nevertheless issues such as agriculture in the Dubasari district, education and diplomas, and the movement of citizens across the Dniester river were discussed.

It is said they will meet again soon with proposal to solving the issues discussed and to set timelines to implement agreed solutions.

Time, as it always does, will tell when it comes to results, particularly as President Dodon would have to have the Moldavian parliament “on side” to actually deliver much (if anything).

With regards to meetings, and perhaps worthy of note for those in Kyiv, on 26th December, 3 days after Mr Dodon’s election as president, the odious and criminal Mykola Skoryk MP (Oppo Block) quietly visited Moldova attending a Party of Socialists event to celebrate Mr Dodon’s success.

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President Dodon had been a long serving Chairman of the Party of Socialists after leaving the Communist Party.  Needless to say the Party of Socialists is a robustly Russophile political entity.

That the obnoxious Mykola Skoryk would surround himself with russophiles is in keeping with his personal views (as inferred in the above link).  As regular readers will note however, it is not his russophile views that make Mykola Skoryk obnoxious.  Quite simply there is nothing about his political history, business activities, or egocentric personality that make him likable – russophile or not.

Time will tell whether Prosecutor General Lutsenko will actually get around to trying to strip Mykola Skoryk of his parliamentary immunity and prosecute him as he stated he would in September – but as yet hasn’t.  Perhaps he has forgotten, perhaps he opened his mouth before gathering sufficient evidence, or perhaps a grubby deal has been struck that he won’t now go after Mr Skoryk.  Neither Messrs Lutsenko or Skoryk have been adverse to grubby (and criminal) little deals throughout their political careers.

The question however is what was Mykola Skoryk doing at a Party of Socialists gathering for, and with, the newly invested President Dodon?  A shared russophilia is unlikely to be the answer in and of itself.  There will be more to it.

Perhaps it is a matter of insuring any cross-border “business” is not interrupted under a new presidency.  Perhaps there are now opportunities to expand “business”.  Maybe an arrangement made for an immediate “bolt hole” from Odessa should Prosecutor General Lutsenko actually put action where his rhetoric already exists.  Per chance some plotting and scheming regarding stirring up matters in “Bessarabia” occurred – as one domestic result of a Trump victory in the USA will probably be an emboldened pro-Russian political voice within Ukraine from those that have generally kept a low profile over the past 2 years – those like Mykola Skoryk.

Whatever the case, Mykola Skoryk did not become the first Ukrainian MP to personally congratulate Mr Dodon on his election simply because of a shared russophilia and as Odessa shares a border with Moldova he thought he’d “drop by”.  He is hardly otherwise a regular face at the Party of Socialists gatherings.

That Mr Skoryk has said very little about his trip probably means that more questions should be asked.

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Ukrainian MIC to produce the M4 WAC47

January 3, 2017

Although it is perhaps not secret despite being secret, for quite some time the US has been toying with the idea of (limited) tech transfer to Ukraine with regard to matters MIC (Military Industrial Complex).

Issues that have prevented such (limited) transfers are not Ukrainian ability to produce weaponry from the transferred tech, nor those of any licencing limitations,  but its ability to prevent any tech transfer immediately being leaked to Russia.  Kremlin infiltration withing all institutions in Ukraine remains despite sweeps to remove the most obvious traitors from all institutions.

As is almost always the case, the most obvious infiltrators are not the most damaging.  Low hanging fruit etc.

Hence the tech transfer for the much mentioned Javelin (and other) weaponry providing Ukraine with the ability to manufacture its own remains in purgatory.

No surprises at the desire to assist Ukraine to arm itself vis a vis the obvious problems of a compromised and thoroughly infiltrated institutional structure with the latter prudently holding in abeyance the former.

Infiltration of Ukrainian institutions and structure is a problem that is not going to go away, but it is a problem that can be far better managed with a lot of work over the coming years.

However, there are MIC tech transfers and licencing that can occur whereby there are no or manageable classified issues to consider – thus predominantly only commercial issues are to be solved.

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It has come to pass that Ukrboronservis, part of the State Ukrboronprom monolith, is about to commence the manufacture of the M16 (or more accurately the M4 Carbine WAC47) in Ukraine in partnership with the US company Areoscraft.  The aim of this project is to equip the Ukrainian army with NATO standard weaponry produced in Ukraine by Ukraine and for Ukraine.

Messrs Vladimir Korobov (Ukrboronprom), Sergei Mykytyuk (Ukrboronservis) and Igor Pasternak (Areoscraft) made the very clear inference that the M4 WAC47 was the first weapon for this pilot project and cooperative agreement.  Ergo by inference there will be others, similarly of NATO standard.

The question is whether what follows this first project involves a tech transfer far more sensitive than how to manufacture, and licence the manufacture of, a M4 Carbine.  In short, how quickly and thoroughly can Ukraine reduce the amount of institutional and MIC Kremlin infiltration to a level that the US is prepared to transfer the tech and licencing for the manufacturing of weaponry more advanced than an M4 Carbine?

It appears the M4 WAC47 is set to become a Ukrainian produced standard piece of equipment for the Ukrainian military with the unambiguous intent of making its armed forces and its equipment interoperable with those of NATO.  A welcome step along an obvious MIC pathway – as stated in a less than flattering entry from February 2015.

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Good business, bad politics. Tigipko

January 2, 2017

Having written about Viktor Pinchuk in the previous entry, this post concentrates on another Dnipro Clan oligarch and long time acquaintance, Sergei Tigipko, who has been spending money recently.

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Mr Tigipko it has to be said is an interesting soul whose business activities are somewhat difficult to keep an all-seeing eye upon.

Perhaps he is fated to be that way, for ever since birth Mr Tigipko has not been what he appears to be.  Mr Tigipko was actually born on 13th February 1960 – officially, but in fact he was born in the early hours of 14th February.  Due to a bureaucratic mix up between medical night shift and morning shift workers the wrong date was officially recorded.  It is claimed, similar to Queen Elizabeth II, he therefore has two birthdays, an official one and a real one.

Fair enough – surely all oligarchs can afford to have two birthdays.

In the late 1970’s the family moved from Moldova to Odessa and Mr Tigipko then headed to Dnepropetrovsk and the Metallurgy Institute where (perhaps with the help of a well placed step-father) he became a member of the Komsomol Committee.  In true Marxist-Leninist adherence he busied himself with organising discos and supplying the evils of western decadence – Pepsi.  It appears that a disco-loving Ihor Kolomoisky was a regular and that they became good friends.

(As an aside Mr Tigipko, or more precisely Mrs Tigipko, retain their interest in Odessa in an act philanthropy annually organising and sponsoring the Odessa International Film Festival – which is actually a very good event.)

Indeed Mr Tigipko has had good fortune in meeting business acquaintances, whilst suffering an equally poor fortune in the world of politics.

A few years of questionable military service and teaching intervene before Mr Tigipko lands the role of chief of psyops/reflexive control when he became the Second Secretary of the (Communist) party and Komsomol committees in Dnipro.  Propaganda and agitation commonly being the role of the Second Secretary – a role he was destined to fail at with the date being 1989 and the implosion of the Soviet system only 2 years away.

Nevertheless, having already forged a friendship with Ihor Kolomoisky, it is within the regional Komsomol committee he also meets Olexandr Turchynov (the current head of the Ukrainian national security apparatus and once upon a time, an ardent Tymoshenko ally).

When the Soviet nonsense all eventually crashed, Mr Tigipko had become First Secretary and in charge of the regional Komsomol cash box.  He was also by then known to Gennady Tymoshenko who was head of ideological manipulation for the Kirov District.  Gennady is the father of Alexander Tymoshenko – the unfortunate husband of Yulia.  Indeed it is rumoured that Mr Tigipko played a role in funding Ms Tymoshenko’s video empire back in the day – presumably with Komsomol cash.  Controlling that cash, he also came to the attention of Dnepro Regional Council Chairman, the infamous Pavel Lazerenko.  He had also made direct acquaintance with (soon to be President) Leonid Kuchma and Viktor Pinchuk.

A reader can now literally see the Dnipro Clan forming.

As the Komsomol system was collapsing Mr Tigipko was swiftly given a senior position within Dnipro Bank – no doubt moving to the position along with the Komsomol regional cash.  (There is no reason to believe that events in Dnipro would be any different than those elsewhere in Ukraine at the time when it comes to moving regional Komsomol cash).

Within a year the bank owners were far from getting along well and Mr Tigipko set up PrivatBank with Ihor Kolomoisky, Gennady Bogolyubov, the late Leonid Miloslavsky and Alexie Martynov.  From 1992 – 97 Mr Tigipko was Chairman of the Board of PrivatBank – although what share holding he had will probably never been known.  What is known is that the initial shareholding was not equal.  How much Komsomol/Dnipro Bank cash was used in the creation of Privat is somewhat unclear – and will undoubtedly remain that way.

Meanwhile Mr Kuchma became President Kuchma and Pavel Lazarenko became Prime Minister – leading to a split within the Dnipro Clan and President Kuchma using Mr Tigipko to keep an eye on the out-sized and out of control criminal appetites of Pavel Lazarenko.  He becomes Vice Prime Minister for Economic Reforms in order to carry out that task.

(This move obviously ruffled feathers and PrivatBank came under scrutiny for laundering money via its Riga branch.  Some things don’t change.)

Whilst in post, Mr Tigipko acted as “roof” for the French cement company Lafarge who then had a few issues with assets in Ukraine.  As Bernadette Chirac (wife of Jacques) then sat on the Lafarge board it is perhaps no surprise that Mr Tigipko was awarded French honours personally by Mrs Chirac in 1997.

By 2000 Mr Tigipko wisely quit as the conflict of interests of those around him in the Kuchma government were in all probability intractable at best and very bad for the health at worst.

By 2001 whatever shares in Privat he had were sold for a figure unknown, and he set up on his own with the TAS brand containing banking, insurance, and numerous other interests held under the usual Cypriot holding company  – which today is a beast of many tentacles – and is in fact the reason for this entry.  (Indeed Mr Tigipko sold one of his banks to Swedbank pre 2008 crisis for $735 million via TAS Overseas Investments (Cyprus)).

If business has been good, politics has not been.

Politically Mr Tigipko did not fare well under Viktor Yushenko and Yulia Tymoshenko.  Having chosen the Kuchma side of the Dnipro Clan split, thus backing Yanukovych in 2004/5 elections, that clearly did not sit well with the new “Orange” president, nor a Prime Minister that chose the Lazarenko side of the Dnipro Clan split.

Further when Yanukovych eventually became president in 2010, despite initially welcoming him into the fold, he very clearly and publicly shafted by Mr Tigipko politically.

Lo, tax avoidance aside, it clearly pays in a business sense to hold your assets offshore and in a different legal jurisdiction in a predatory political environment like Ukraine.  It is simply far easier to defend and retain your assets.

Under the current president Mr Tigipko has kept his head down making no discernible political moves and very few business moves.

However, in the past few months Mr Tigipko appears to be going on a spending spree domestically.  Having recently bought another insurance company and rolled it into his TAS insurance entities, it appears he is now entering the hotel business too.

Not only is he entering the hotel business his seems to be doing getting good deals.  For a mere $10 million Mr Tigipko has bought the Radisson Hotel in Kyiv from the Russian owners who for a long time have desperate to sell.

Now a reader may think that the hotel business in Ukraine is not one where returns will be swift – and they’d be right too.  There are no swift returns with anything to do with hotels in Ukraine.  That said, the price paid for this asset being so low, it is possible he will see a 7 year ROI.

However, it may also be that Mr Tigipko has some insider knowledge regarding the return of licensed gambling in Ukraine and any amended parameters regarding what premises can host casinos – and which can’t.   It may well be that the absolute nonsense proposed a year ago for the return of gambling has now had a more sensible eye cast upon it – or is about to have a more sensible eye take a look.

If so, then the Radisson in Kyiv would have additional potential – and a far swifter ROI.  As Mr Tigipko has a knack for good business and poor politics, then who would be surprised if that will ultimately prove to be the case?

More generally, does Mr Tigipko now think that the bottom has now been reached and that the small economic bounce is likely to continue in an upward trend, so now is the time to buy?

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