Poroshenko heads to the White House

June 19, 2017

President Poroshenko heads to Washington DC, The White House, and a meeting with President Trump – perhaps.  If President Trump does not see President Poroshenko while he is there, then inferences will certainly be drawn in Ukraine and The Kremlin.

On the presumption (as risky as that may prove to be) a meeting occurs, then the two men have significant differences.  President Poroshenko is a micromanager.  He is very careful in how he frames matters and reasonably particular about what he says or that is attributed to him.  He also clearly goes beyond his constitutional powers and infringes upon and/or subverts the constitutional powers of the parliament.

President Trump appears incoherent when he speaks.  His framing is terrible even on policy issues that are sensible.  He is not a micromanager, but expects his will to be done with others sorting out the details and clearing up the mess.

They have things in common of course.  Both are very rich men.  Both are businessmen.  Both have their share of dodgy deals in their business résumé.  Both value loyalty over ability.  Both understand the value of personal relationships.  Both speak English.  Both know how to negotiate and strike a deal (even if bordering upon the absolute extremes of legality – or occasionally crossing them).

But what deals can be struck?

The world has become accustomed to State leaders publicly announcing deals – or no deals – when they meet (with the hard preparatory work done by those that receive no public recognition).

What new opportunities (as opposed to existing and well known to the US) are in Ukraine that can be offered as new deals to be done for which President Trump can claim credit?  Do there need to be new opportunities or simply a US administration less risk adverse than the previous?  What is US foreign policy when it comes to Ukraine?  To be blunt, it appears that currently the US Embassy Kyiv is pretty much left to do its own thing without much instruction or policy input from Washington.  As such a continuation of the previous administration’s policies in the absence of one from the current administration.

What are the Ukrainian priorities?  Clearly a good personable relationship between both presidents is a priority – and one from which President Trump should feel more drawn toward than any that will be struck with Russian President Putin later in the month when they meet for the first time.

A reader may question whether it is a diplomatic win for Ukraine that President Poroshenko meets with President Trump before meeting President Putin.  Perhaps given the circumstances surrounding the on-going issues of aggressive Russian meddling in US internal affairs, notwithstanding allegations of any personal Russian issues for the US President and his immediate circle, support for Ukraine, and a good personal relationship with Presdient Poroshenko, may well be employed as a defence against such accusations.  A cosy personal relationship may suit both US and Ukrainian presidents in current circumstance.

Perhaps therefore warm presidential handshakes, smiles, and a deal or two are required to reinforce the perception that by remaining firmly with Ukraine it somehow equates to President Trump (and by extension the US) being hard on The Kremlin (and by extension Russia) – which of course is not necessarily the case..

What therefore, are the Ukrainian priorities?  What, aside from creating a good personal relationship could Ukraine reasonably expect from President Trump that falls within his authority and that also promotes a perception that being supportive of Ukraine somehow equates to being tough on Russia?

The arming of Ukraine perhaps?  Ukraine, after all, is nowhere near ready economically, politically or militarily to conduct a Croatia-esque Operation STORM.  Arming it will not result in any such military action to retake occupied territory by force.  Also, whilst it is clear that President Putin is quite prepared to allow the war of exhaustion to continue for years to come, there is no indication that within The Kremlin any territorial advances are deemed worthwhile either.

The formal entrance of the US into the Minsk negotiation process?  It would be entirely naive to think the US has not been informally involved in the process from the start, but given that Minsk has failed to deliver anything like a ceasefire where the fire actually ceases, would the US want to enter as an official participant?  Further would the other parties officially involved want the US to become an official negotiator?

The creation of an alternative official negotiation body is fraught with the usual dangers, insomuch as if one party prefers one format and another the other format, matters may actually get worse rather than better.  Hence the Surkov-Nuland channel was viewed negatively.  Assuredly it presents the ability to play one format off against another by any and all negotiators for particular participants.

President Trump may make assurances that he will sign the legislation that was recently passed in the US Senate and which now requires Houseconsideration, should it reach him – legislation that codifies current sanctions that exist by Executive Order only.  (Legislation that irks Germany as it allows US interference with Nord Stream II.)  However promising to sign something that may or may not reach President Trump, (and if it does may not withstand amendments in the House prior) is hardly a major outcome for the meeting of two Heads of State.

A statement of US support for a NATO MAP for Ukraine?  The US has backed such a MAP before only to see no consensus among other NATO members – and it requires 100% agreement.  It would be words that cannot be met by deeds which both sides would be aware of.  The question then would be whether those words are said in the absolute knowledge that they will not translate into anything of substance, unless used as a platform to “upgrade” Ukraine with regard to its partner status with NATO.

The announcement of a bilateral alternative to the Budapest Memorandum?  In the current circumstances?

Support for a Marshall Plan for Ukraine?  As long as the Europeans are paying – and that proposal will not be tabled until November in Europe.

So what’s left that can be announced by way of deals?  Something in agriculture?  IT?  Space?  MIC cooperation?  Free golf lessons and membership of Mar a Lago for President Poroshenko?  Trump Tower in Kyiv?

We shall soon see.


UK goes after Nasirov? (It might and it should)

June 16, 2017

When Roman Nasirov, then Head of the State Fiscal Service was arrested in March 2017 by NABU on suspicion of nefarious acts, it has to be said it came as a surprise to almost all.

President Poroshenko claimed no prior knowledge – which may well be true, for if he had it is quite possible Mr Nasirov would still be in his job.

As part of the investigation NABU claimed Mr Nasirov holds both Hungarian and UK citizenship as well as Ukrainian – something that would statutorily bar him from holding any political or civil service position.

Mr Nasirov flatly denied any dual citizenship.

NABU requested the UK confirm or deny that Mr Nasirov was a UK citizen.  Promptly, officially and publicly the UK confirmed that Mr Nasirov had indeed been granted UK Citizenship a few years ago.

An entry then appeared relating to UK citizen Roman Nasirov and possible offences under The UK Bribery Act 2010.

As stated months ago, unfortunately for Mr Nasirov – “The UK Bribery Act is one of those rare British laws that extends beyond the territory of the UK but travels with the citizen.  Thus any acts of bribery, giving or receiving, be the reward financial or in another form, in which Mr Nasirov is complicit in Ukraine (or elsewhere), is also criminal offence in the UK for which he can be dealt with there.

The entry also made clear that a reader should expect that hurdles and sabotage of the case should be expected at every opportunity – “Naturally Ukraine should be given first bite at the Nasirov cherry – yet few expect Ukraine to actually manage to get the case (at least with Mr Nasirov in attendance) to a verdict and sentencing.  His disappearance if released and a trial in absentia (if the case got that far) is more probable when considering that nobody of senior position goes to jail under President Poroshenko.”

It has thus proved to be, as expected, that at every opportunity to slow the case has indeed occurred.  Yet more hurdles await to be thrown into the due process system.

The entry also went on to ponder, in the full expectation of a Ukrainian justice failure, whether the UK should therefore act – “The question therefore is whether the UK should begin its own investigation of crimes committed under its own legislation in support of the Ukrainian people?

One wonders after numerous hours spent with UK diplomats over the years, notwithstanding a sprinkling of UK politicians and an occasional Lord, all ruminating upon what can be done to aid Ukraine in its fight against corruption, if this option will be pursued.  It’s not often they will get the chance to look at one of Ukraine’s most powerful office holders under due process of UK legislation.

The question is will they do it, or will the UK consider it a possible politically expedient exit for some very unwilling Ukrainian elites in this case?”

Good questions, perhaps only answerable as and when the case against Mr Nasirov is sabotaged rather than continuously hindered.

But what of the anticipated sabotage of the case?

It is unclear exactly what evidence the UK was asked to provide by NABU.  Was it simply that he was a UK citizen, or was there more to it?  That Mr Nasirov has assets in the UK is known.  How were they were paid for?  What is their value?  How did Mr Nasirov gain UK citizenship – for it is not cheap in the absence of “Grandfather rights”.

It appears that whatever evidence the UK was asked to provide and subsequently did is irrelevant.  Solomiansky Court, Kyiv has now ruled that the UK evidence is inadmissible and is thus disregarded.

This has clearly irked the UK and/or UK Embassy Kyiv – and rightly so, for to be sure any evidence provided by the UK will have strictly adhered to protocol and bilateral agreement.

Indeed it now appears that, officially, consideration is being given to whether criminal offences have been committed by a UK citizen that can be tried in a UK court – as pondered in the March entry.

“British Embassy statement on the criminal case against Roman Nasirov:

We are deeply concerned about the recent decision in Kyiv’s Solomiansky Court, where evidence provided by the UK in relation to the case against Roman Nasirov was ruled inadmissible and disregarded. The UK authorities will now review the facts and consider if criminal offences have been committed by a British citizen which may be tried in the UK.

This case underscores the urgent need for progress towards a reformed, independent and transparent judicial system and the swift introduction of specialised Anti-Corruption Courts with strictly vetted judges capable of properly trying high profile corruption cases.

The UK is a strong supporter of reform in Ukraine, which is why we are hosting the Ukraine Reform Conference in London on 6 July. Reform of the Ukrainian judicial system is a crucial part of the Ukrainian Government’s programme. The Ukraine Reform Conference will offer a further opportunity for the Government of Ukraine to demonstrate commitment to real progress in reforming the judicial system and further tackling corruption.”

So, should the UK go after its citizen Roman Nasirov for nefarious acts that fall foul of the UK Bribery Act 2010?  It could and it should!

It rightly gave the Ukrainian authorities the chance to have the first bite at the Nasirov cherry, but clearly there is little appetite – to the point of dismissing the evidence provided by the UK upon Ukrainian request.


UN Office of Counterterrorism (undefined)

June 15, 2017

In 2006, then UN General Secretary Kofi Anan attempted to gain consensus over a definition of terrorism – “The deliberate killings of civilians and non-combatants for political purposes.”  Necessarily short and to the point using as few words as possible to minimise objections to words used.

The morality behind that prose thus being such acts are unacceptable and unjustifiable under all conditions.

He failed.

There was insufficient support for the text from Member States.  The reason for that failure being rather obvious if you live in a particularly fractious neighbourhood, or have allies that do, where borders are, or are likely to be redrawn by force and/or occupation.  The invaded and wronged sovereign State (and their allies) would wish to reserve the right for partisans to act and avoid being automatically labeled terrorists by the invaders and/or occupiers.

Thus there remains no UN definition of terrorism.

The 15th June 2017 witnessed the UN General Assembly vote unanimously for the creation of a UN Office of Counterterrorism.

The UN horsetrading done several months ago, this new office will almost certainly be headed by Sergei Kislyak, the current Russian Ambassador to the USA who features in the on-going issues within the Trump White House, or Vladimir Voronkov.

There will of course be squawking and screeching that Russia, considering its current actions in Ukraine, Syria, Libya and elsewhere, has no moral right to have their man head the newly created office.  Further some will argue, Russia has since the 1880s promoted and sponsored terrorism and continues to do so.

Be that as it may, the inaugural head of this new UN Office will not only have the usual administrative and bureaucratic teething troubles, but also faces fundamental challenges that may very well seriously effect its potency from the outset.

As there is no UN definition of terrorism, yet having created a UN Office for Counterterrorism, it would now be rather useful for the UN to define what it, as an organisation, deems terrorism.  How else will it act to support nations in anti-terrorism pursuits, mobilise resources, and insure its own transparency, if there is no UN definition of terrorism around which to hang a UN generated and/or implemented counterterrorism response?

If Kofi Anan’s very simply constructed 10 word definition gathered no traction, a far more complex definition would certainly fail to garner approval from Member States.

Anyway, what are the ingredients of any definition of terrorism and who decides?

Is it a practice or doctrine of violent action?  If so should that be expanded to include that it is either meant to instill fear, or only that it does instill fear?  Should that be clarified that it is predominantly political?

What about context?  Should there be reference to terrorism as a tactic?  A direct mention of victims?  What of mens rea (intent) – should that not be in a definition?  Is terrorism, in the modern age, limited to physical violence, or does the threat of violence qualify?  What of cyber terrorism?

Should a definition codify that the victims (civilian or otherwise) are not a target, or that they are?

Should it identify motivations for engaging in terrorism?  Should it mention the perpetrators, or that terrorist acts must form part of a campaign of violence?   Should it be part of international, regional and domestic criminalisation processes?

In a broad brushstroke cycle of – “Attention -> Respect -> Legitimacy -> Power” – inherent to much terrorism dynamics, how should that fit into any definition – if at all?

Is there a need to expressly codify guerrilla warfare as distinctly separate from terrorists?   Is it enough to generalise that guerrilla warfare is normally conducted against military targets avoiding civilians whereas terrorists don’t?

If, even arriving at a UN definition of terrorism (if only for its own counterterrorism use), will there then be drawn out discussions over categorising sub-divisions of terrorism for recording and/or accounting purposes?  What labels to proscribe?  Religiously inspired?  Ethno-nationalist and separatist?  Left wing/anarchist?  Right wing?  Single Issue?

How easy will it be to get real and traction-able international cooperation without a UN definition of what it proposes to counter?  On the other side of that coin, without such a definition how to prevent the abuse of the term terrorism for the use of suppression?

Will “State sponsor of terrorism” get a UN definition when considering the reasons for refusal of the 2006 terrorism definition offered by Kofi Anan?

There is then judicial issues.  Where there exists jus cogens/peremptory norms upon all sovereign nations (such as war crimes and genocide etc), would a UN definition provide for UN jurisdiction?

Without a definition to work from, just how effective will the UN Counterrorism Office be?

It would take several other, somewhat lengthy entries to offer thoughts on the “how”, “why”, “where”, “when”, and of any assistance and/or guidelines and/or recommendations the new office might consider.

But of immediate importance is the “what” with regard to an absent UN definition of terrorism, for that must surely be fundamental to a UN counterterrorism office.


Another coup in Odessa Oblast Administration? (Skoryk fails again)

June 14, 2017

Over the years Mykola Skoryk has featured many times within blog entries.

Of the former Party of Regions Verkhovna Rada parliamentarian, former Odessa Governor, and current Oppo Block Verkhovna Rada parliamentarian, not a single favourable word can be found.

That is for good reason.

It is not that Mykola Skoryk is a creature of Dmitry Firtash and Sergei Liovochkin or that his political life is dependent upon Mr Liovochkin placing him highly enough upon the party list of the Oppo Block to insure his election.  He does not partake in single mandate, first past the post, seats.  He relied upon Party of Regions, or now Oppo Block getting over the 5% threshold to enter parliament, for that insures, given his high party list ranking, he will enter parliament retaining his absolute immunity (and continued impunity).

As such it is not the people of Odessa that elect him, but the people of Ukraine who vote Oppo Block in sufficient numbers to insure the party crossed the 5% electoral threshold and enters the Verkhovna Rada.

The reason that there are no good words to say about him is that he is a terrible MP.  He rarely votes in the Verkhovna Rada and is often absent.  Nothing relating to the Oppo Block happens in Odessa without his knowledge – and by extension the many cases intrigues, machinations and filthy political subversion and/or (attempted) sabotage are his creation and/or occur with his explicit approval.

Worse still from an Oppo Block perspective, it continues to under perform under his management, losing seats and leadership positions that many, even today, would expect it to hold throughout the regional district councils.

Not only is he particularly useless as an MP and regional party leader, he is also beyond odious as a personality.

Yet further in the past few years Mr Skoryk when Governor, (together with then Deputy Head of the Oblast Administration, Mr Orlov) on 19th February 2014 was behind the thuggery when about 20 journalists, (national and local and from across all political biases), were covering a small “EuroMaidan” protest outside the Oblast Administration.  Approximately 150 men in helmets carrying baseball bats set upon them.  Naturally there were injuries and broken equipment belonging to the various media outlets.

He was also solely responsible for calling an extraordinary meeting of the Oblast Rada on 3rd March 2014 with the only item on the agenda being the disavowing of Odessa from Ukraine – as corroborated by the Glazyev tapes, though no corroboration is needed considering the Oblast Rada met to consider and robustly defeat the proposed motion.  It is thus a matter of record.

If that were not enough, in the weeks preceding the 2nd May 2014 tragedy, Mr Skoryk was involved in the pantomime planning that witnessed participants failing to stick strictly to the script and thus resulted in dozens of deaths.

On 22 September 2016, Prosecutor General Lutsenko stated he would seek the stripping of Mr Skoryk’s immunity so that he could face prosecution.  Unfortunately Prosecutor General Lutsenko says a lot of things that fail to materialise – the stripping of Mr Skoryk’s immunity being one of them.

A reader may ponder whether a grubby deal was struck either by Mr Skoryk, or by his lord and master Sergei Liovochkin on his behalf.

There are numerous regional “incidents” that can be further listed, but by now a reader will have formed an opinion regarding the loyalties and character of Mr Skyork.

So to the latest affront to decency, democratic normative and cancerous political sabotage.

Among the large number of undesirables within Odessa Regional Administration is Viktor Baransky, fellow beneficiary of the Oppo Block party.  Mr Baransky wants to lead the Olbast Rada and become Chairman – by whatever means – and as already stated nothing within the Oppo Block, or backed by the Oppo Block within the region occurs without Mr Skoryk’s knowledge and/or blessing.

The current Chairman of the Oblast Rada is Anatoli Urbanksy whose position relies upon a (reasonably well functioning) BPP-Batkivshchyna-Nash Krai coalition.

Lo it has come to pass that Messrs Skoryk and Baransky have conspired to attempt an Oblast Administration coup to remove Mr Urbansky and replace him with Mr Baransky at the next plenary session on 16th June.

Fortunately, just as Mr Skoryk’s separatist plans were thwarted on 3rd March 2014 in the Oblast Chamber, this latest coup attempt with the much smaller goal of assuming control in the Oblast Administration is also seemingly set to fail – despite cash offers of bribery to deputies, there will not be the required number of votes – the current (reasonably well functioning) coalition will prevail.

Therefore there is a question, firstly of whether the attempts of bribery to facilitate this local political coup will be investigated (for they are now common knowledge), secondly just how long the Oppo Block can or is willing to suffer such inept regional management by Mr Skoryk, and lastly just how long The Bankova is prepared to have to expend political energy in the continuing mitigation of Mr Skoryk’s subterfuge rather than actually strip him of his immunity and deal with him criminally as the criminal he is.

How and what grubby deal they may need to strike (if one necessary) with Sergei Liovochkin to accomplish this is a matter for speculation – if it is of a mind to do so.

There are presidential elections in 2 years and pre-election electioneering will begin come Autumn.  If President Poroshenko is to run again, and with no president in Ukraine having ever managed to flat-line let alone reverse declining popularity, the prospect of giving the nation a choice between the current president and Yuri Boiko (and a pro-Kremlin Oppo Block) or an insanely populist Yulia Tymoshenko (with a well developed party structure throughout every town and city) then clearly Boiko would be the preferred candidate to run against in the 2nd Round of voting.

That in turn requires allowing Oppo Block some room for maneuver and also “inflating” polling figures.  By extension that requires a different style of management over Bankova created ex-Regionaire parties such as Nash Krai.  (Notably Ihor Kononenko appears to have now been given that managerial role replacing the previous Bankova “manager”.)

Alternatively lopping off the very influential political head of those such as Mr Liovochkin within the Oppo Block machinery in the belief that their voters would head almost anywhere other than Tymoshenko (perhaps not a wise line of thinking) is also worthy of consideration.

The fate of Mr Skoryk therefore perhaps depends not on his continuous, odious, criminal subterfuge, sabotage and questionable loyalties, nor upon his dismal performance as an MP, but upon what political course of action The Bankova decides to take in any pre-election electioneering that will begin in the Autumn.

Whatever the case, when Mykola Skoryk eventually becomes vulnerable and is rightly confronted with his noxious actions, there will be few tears (other than tears of joy) in Odessa.


The PGO (eventually) gains access to PrivatBank audits

June 13, 2017

As any reader that has investigated organised crime and/or been responsible for the collecting and collation of evidence for the seizure and confiscation of criminally obtained assets will be aware it is a long, slow, bureaucratic legal process – even if you know where to look and what you are looking at.

Quite rightly, financial institutions are particularly strict about what they can provide and in how much detail, unless there is a judicial warrant/order that expressly requires the production of sensitive, often contractually otherwise confidential matters that are subject to non-disclosure.

Even with a court issued warrant/order they can, on occasion, still be somewhat “obstructive”.

Further a Learned Judge when visited in chambers, must be convinced by the applying law enforcement agency that there is a genuine suspicion of criminality and while the law enforcement institution will generally seek the widest possible parameters in any warrant application, the Judge will generally pursue a far narrower search and seizure/production limitation upon any such warrant/order if and/or when persuaded of the need for a warrant.

It is thus a time consuming, often prickly, very bureaucratic and a particularly exact science when seeking evidence and (hopefully) gaining profit confiscation results.  It can take years to reach conclusion – and this with an unbiased and ethical judiciary and reasonably well functioning justice system.

Long has the Prosecutor General’s Office in Ukraine sought to poke around in the grubby ledgers of PrivatBank – recently nationalised having been prized from the grip of Ihor Kolomoisky and Gennady Bogolyubov.

Despite the numerous journalistic investigations that have exposed by way of “leaked ledgers” etc (what everybody has known, certainly since the summer of 2014) and the management misuse of the bank solely for the interests of other commercial ventures of the banks owners (and their associates), law enforcement agencies and the PGO are duty bound to gather such evidence from the bank rather than a pdf file adrift in a Google cloud or a document scan within a media article.

Such pdf files and scans may well be useful for intelligence reasons, but are clearly not the best source of evidence for prosecution.

Also exposed in the media was the rampant looting by the previous owners of PrivatBank in the immediate months prior to its nationalisation.

None of the revelations however come as a surprise to anybody – and neither will the size of the taxpayer bailout required.  (Just wait until the last minute plundering prior to Naftogaz getting unraveled!)

PrivatBank was audited by Ernst & Young, and the PGO has been seeking a copy of the audit and accompanying report – including all annexes.  These documents will be used in the on-going embezzlement and misappropriation investigations and will undoubtedly form part of the body of evidence at trial.

However, the law is the law.  (Unless you are in that elite circle where, “for my friends everything, for everybody else the law”.)

Enrst & Young (be they “helpful” or otherwise”) rightly informed the PGO that the report contents fell under the Law of Ukraine regarding Banking and Banking Services, and it could not provide a copy, nor any other form of access, as some of the text met the “bank secrecy” provisions.  Ergo Chapter 4.61 of the Banking and Banking Services statute duly prevented Ernst & Young from meeting the PGO request.

Despite the documents already leaked in the media or floating around in accessible technology clouds, for any successful prosecution the evidence chain and its lawfulness requires robust and uncompromising integrity.

The PGO therefore was required to seek a judicial key/code for the Ernst & Young lock.

The combination for that lock is case №42014000000001261 wherein Pechersk District Court has granted the PGO “temporary access to documents and files subject to banking secrecy held by Ernst & Young relating to PrivatBank”.

A reader may well ponder what “temporary access” means.

Does it mean that Ernst & Young will provide a “reading room” and access to a copy of all the documents for the PGO to  study that are otherwise controlled under banking secrecy clause – or will it literally provide a copy of all applicable documentation to the PGO, thus far refused?

How “temporary” is “access” if providing the PGO a copy?  Is that not rather more permanent than temporary?

Whatever the case, the PGO plods on slowly with its investigation, poking about within the grubby affairs of PrivatBank under its previous ownership – negotiating the legislative hurdles along the way.

How long before the investigation is complete and is placed before the courts remains to be seen – and considering the current state of the courts and the lack of reform (albeit allegedly on-going) there is perhaps no rush (other than statute barred timelines where and if applicable).

Any court case will also drag on and on and on – particularly if Messrs Kolomoisky and Bogolyubov are defendants.   The very finest international lawyers will be hired.

In the meantime perhaps the more cynical of readers might ponder Mr Kolomoisky’s 1+1 and associated media assets taking a surprisingly pro-Presidential line during the election season (if not seized as an asset when PrivatBank loans to corporate entities associated with its previous owners go unserviced), and as a result of such favourable coverage a glacial judicial system may coincidentally become yet more glacial.

The truly cynical reader may ponder whether evidence may even be destroyed by a random fire.  Or via the activation of the fire alarm sprinkler system.  Including any copies or back-ups (if any exist).  Or an evidence chain of uncompromising integrity may suddenly become compromised.  Or documents left in the back or a car and subsequently stolen.  Such “unfortunate” incidents are not unknown.

Whatever the outcome, and whether any sabotaging of the case eventually occurs or not, the current slow pace of the investigation should perhaps be treated with a little understanding.  Such investigations are by their nature tedious, hopefully meticulous, and excessively bureaucracy-ridden involving entities that would rather not get involved.

This is a case to keep an eye upon if a reader has the time to watch paint dry – otherwise something worth the occasional glance to insure the paint remains on the wall will suffice.


Unbundling Ukraine

June 12, 2017

The EU’s Third Energy Package has been mentioned before by the blog numerous times over the years.

It is a Ukrainian obligation to meet.

It is an agreement that seeks to create a level playing field and open market across the energy sector.  Ergo, obliged (which it is) or otherwise it is in Ukrainian interests to adhere if foreign investment into Ukrainian energy is to be facilitated and protected in a predictable and regulated manner.

It is also in the Ukrainian interest to adhere to the Third Energy Package as the energy sector is one of the biggest fonts of domestic corruption and criminality – although clearly it is not necessarily in the interests of the corrupt and criminal for Ukraine to meet its obligations.

The more market players, the more diluted oligarch influence.

This being so, energy reform is a hard fought arena requiring political bravery and will to overcome many extremely profitable vested interests.

Ukrainian reform, it is fair to say, is not as swift as it could be.  It is also not progressing at equal pace across the plethora of political, economic and societal arenas.  In short, reform there is – but it is not distributed evenly (or effectively) across policy spheres.

It may therefore be something of a surprise that Ukrainian energy reform is actually plodding along far swifter than many other policy areas.  Indeed international investment in energy in Ukraine there is.  Notwithstanding a continued and significant march by China into Ukrainian solar power, Polish PGNIG has just won 5 of 15 gas tenders in Poltova and Kharkiv.

On 11th June, Draft Law 4493, which first entered the Verkhovna Rada plenary agenda on 22 September 2016 (and after 1200 amendments) finally became law and came into effect on 11th June 2017.

Domestic statute now demands that within the next 2 years (or by 11th June 2019 at the latest) that the electricity market comprise of bilateral agreements, a “day ahead interday market” and a balancing and ancillary market.

It also requires the separation with clear daylight between electricity generation, transmission and distribution companies.

If implemented, regulated and enforced, a major policy success awaits.

The biggest nightmare within Ukrainian energy is of course the infamous Naftogaz (despite its recent successes in Stockholm vis a vis Gazprom).

A behemoth of knotty, opaque grubbiness wrapped up in innumerable subsidiaries with dubious minority shareholders for each, undoubtedly with very questionable contracts with “off-shores” that bring no value added but quite deliberately the opposite – a method of draining capital .

Nevertheless Naftogaz is currently an entity that seems to have at least stopped the rot, if not reversed it, under the stewardship of Andrei Kobolev.

Naftogaz has also to be unbundled with regard to production, storage, transit etc., no differently to the electricity infrastructure.  Indeed much of Naftogaz, both oil and gas interests, can be simply sold off into the private sector.  However undoing longstanding grubby little deals, and deals within deals, designed to stand the strains and fluxes of Ukrainian politics over the past decades will be neither swift nor easy.

External assistance and council will be required.

It appears that PricewaterhouseCooper (PwC) have come out the winners of a Prozoro public tender to provide just that.  For the sake of accuracy, the PwC tender winning office is not PwC Ukraine, but PwC Poland.

For its fee of UAH 10.79 million, PwC Poland has, per tender terms, until 31st December to energetically assist in the unpicking of Naftogaz, and also creation of a plan for polished, newly wrapped and unbundled solutions for Naftogaz to fully meet Third Energy Package commitments.

Having recently mentioned Mr Kobolev as one of a few individuals to have increased in political weight this year, that weight will only further increase if by year end, Naftogaz has been effectively prepared for a long overdue evisceration.

Naturally, for the Ukrainian taxpayer, if it appears that an effective dissection of Naftogaz will manifest, all nefarious vested interests inserted at every part of the current set up will be keen to suck as much capital out  as if possible, with the probable outcome of the taxpayer having to settle the bills.  It also goes without saying that such villainy will have the likely outcome of none of the big fish being fried and sitting in a prison cell for years where they rightfully belong.  As yet no genuinely big fish have been fried and subsequently jailed in Ukraine.  There is little prospect that 2017 will see that change.

Regardless, it appears that reform in the Ukrainian energy sector continues to plod along toward the obligations of the Third Energy Package.  T’will be interesting to see just what the proposed dismembered carcass of Naftogaz will actually look like.


Visa liberalisation and Visa imposition – Ukraine

June 11, 2017

With Ukrainians finally witnessing the entry into force of Visa-free travel to the Schengen nations of Europe with immediate effect, naturally while the politicians take the spotlight, the majority of praise and/or thanks should in reality be directed toward the bureaucrats and diplomats on both sides that actually worked out the details and reached agreements.

May the constituents of Ukraine fully employ the opportunities presented responsibly, despite this event in and of itself being as much about symbolism as anything else.

For a nation subjected to a war on many fronts by The Kremlin, both kinetic and non-kinetic, symbolism matters.

What then to do about The Kremlin?  Russians still enjoy Visa-free travel to Ukraine despite the kinetic and non-kinetic war being waged upon Ukraine.

For 3 years of kinetic war, many in Ukraine have argued for the introduction of Visas for Russians entering Ukraine upon the grounds of national security.  The issuance of Visas however, would present the opportunity for some form of additional vetting of those to whom they are granted.  The argument presupposing that Ukrainian border guards are in some way less stringent in their checks for Visa-free entrants into Ukraine than they are for those requiring Visas is a dubious, and perhaps weak line to take.

The counterarguments 3 years ago for not introducing Visas for Russians are numerous but centered around a struggling Ukrainian economy and remittances,  the knotty Russian-Ukrainian business environment that would take time to undo, family members on either side of the borders and social issues, giving the Minsk process a chance to at the very least bring about a meaningful ceasefire (where the fire actually ceases) and the psychological/perceived national isolation that requiring Visas for Europe and Russia could have.  After all, as stated above,  the argument presupposing that Ukrainian border guards are in some way less stringent in their checks for Visa-free entrants (Russian or otherwise) into Ukraine than they are for those requiring Visas is a dubious, and perhaps weak line to take.

Ukraine is no longer where it was in 2014.  There is some semblance of command and control.  There is more professionalism within the State institutions (even if they remain far from optimal due to corruption).  The economy is adjusting to a diminished Russian market and finding other markets.  The full ratification of the EU-Ukraine Association Agreement is complete and thus fully enters into force on either 1st September or 1st October (depending upon the swiftness of publications in official EU journals).  Family members have made their personal decisions 3 years into this on-going war.   The national security threat has not changed.  (Further the Russian operatives and agents of the FSB, GRU and SVR already in Ukraine by and large remain.  It may be that those known and not under diplomatic passports can be quietly refused Visas and removed if desired.)  The introduction of Visa Ukrainian identity has now been forged in war – both with Russia and with its own domestic political class.  EU Schengen Visa-free brings about a psychological and symbolic victory for the majority over one or the other or both.

Thus there is now the possibility, 3 years into an on-going war with Russia, that Ukraine will introduce Visas for Russians.

The draft legislation is already written and awaits submission for a Verkhovna Rada vote.  That submission may well come 2 weeks from now when the parliament next sits in plenary session.

As it falls upon the Ministry of Foreign Affairs (and backed by the NSDC) to submit this draft, a reader can reasonably expect the majority of Block Poroshenko MPs to vote in favour.  Likewise the People’s Front.  In short, the majority of the majority of the governing coalition.

However, the majority of the majority coalition will not be enough.  There are those within both parties that will not want to, or not want to be seen to, impose Visas on Russians.  The number of abstentions and absentees for any such vote from the majority coalition may mean such a vote would fail.

Batkivshchyna (Ms Tymoshenko’s political vehicle) have clearly stated it will also vote in favour of introducing Visas for Russians.  The rhetoric of Oleh Lyashko would appear to prevent any other position for that party, and Samopomich are unlikely not to vote in favour either.

More than enough to get a vote to introduce Visas for Russians well over the Verkhovna Rada finish line – even accounting for those within the aforementioned parties that may be conspicuous by their absent assenting votes.

A reader will naturally expect reciprocity from Russia and the introduction of Visas for Ukrainians – something perhaps Kyiv is actually counting upon in a reflexive control operation – for that will bring down a “Visa Curtain” that will have significantly moved eastward with Ukraine upon the “European side” of that curtain.

Should The Kremlin decide not to reciprocate, then  it is to be expected that Ukraine will suffer an asymmetric response, and not necessarily along the front lines in eastern Ukraine, as the “Guns of August” that witness an increase in hostilities soon approaches anyway.

Would The Kremlin want to loose its specifically signaled/messaged response to Visa imposition within the annually anticipated increased noise, death and destruction associated with the “Guns of August”?

It remains to be seen whether the MFA Draft will be submitted to the Verkhovna Rada two weeks hence – but if it does it seemly very likely to be supported.  Maybe a milder control measure is preferred by the MFA, such as only Russians with biomentric passports can enter, with proof of funds, proof of address at where they stay, and on production of a return ticket.  No doubt that too would be supported, even if deemed not going far enough by some.

Perhaps therefore, the symbolism of the existing Schengen Visa-free should not be seen in and of itself.  Perhaps it should be seen in tandem with the possible imposition of Visas for Russians in the very near future.

For the President, The Bankova and the Verkhovna Rada, the symbolism of moving the “Visa-Curtain” eastward with Ukraine on the European side is of course apparent.  However with that may well come a yet further energised civil society and Ukrainian constituency expectant of a more concerted domestic effort from the political class and State institutions to meet perceived European norms (whatever those perceptions may be and whether they be grounded in reality or fantasy) and also implement tangible domestic reform in a much more timely manner.

Will the MFA submit the Draft Bill in a fortnight hence?  We shall soon see.

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