Turkish tech transfer to the Ukrainian MoD

July 4, 2018

Skepticism and cynicism are generally in healthy balance within the DNA of the blog.  Not too much and not too little.

They always force to the fore those irksome questions or statements such as “who benefits?” or “follow the money” or “who decides, and who decides who decides?” when pondering policy and politics in Ukraine.  Sometimes the answers to such thinking finds little or nothing.  Sometimes something rather grubby.  Occasionally something entirely odious and cancerous.

Whatever the case, such thinking is rarely immediately dismissive of the issues or matters under scrutiny – even when historically there is a case to dismiss them without a second thought.

Historically Memorandum’s of Understanding (MoU) entered into by Ukraine have frequently come to nothing.  At certain moments in Ukrainian history, MoUs were about as numerous as EEAS communiques – and with equal impact (almost none).

Thus no reader would be severely scorned for dismissing MoUs by Ukraine out of hand, or skipping them in any news cycle.  When all is said and done, a MoU is not a binding contract after all.

That 4th July witnessed Ukraine and Turkey sign a MoU regarding unmanned aerial complexes and more possible joint ventures could easily be cynically cited as (well intentioned) “fluff” that will otherwise probably not materialise – particularly as the meeting was at the level of Deputy Ministers.

However wise heads will know that it is the boiler room personnel and not Ministers, Prime Ministers or Presidents that do the tedious work so that their political masters can appear when “deliverables” are indeed “delivered”.

Ukrainian-Turkish relations are in fairly good shape.  Turkey will never be seen to abandon the Crimean Tatar.  Ukraine is making sure that the TANAP Azeri-Turkish gas pipeline is known to have its support (as well as its onward push into Bulgaria and Romania).  The Black Sea and trade (both legal and otherwise) are common interests.

More to the point however, there already exists some cooperation between Ukrainian and Turkish defence industries, and the relevant ministries.  In skipping the announcement of yet another MoU signed by underlings, a reader would miss the other matters mentioned that made it into the event reporting.

Leaving aside the “ifs”, “buts” and “maybes” that constitute the possible “fluff”, there were a few more solid points raised – such as the fulfillment of the Aselsan contract to supply military communication equipment to Ukraine.

What caught the eye of the blog however was this paragraph – “The parties agreed to transfer to the Ministry of Defense of Ukraine advanced technologies and software in the field of communications and signed an appropriate compensation (offset) agreement.”

While taking US Javelins is more symbolic than a military necessity (and readers may well argue that the French MMP system is better – but was France prepared to sell them to Ukraine?) what the Ukrainian MIC needs is tech transfer – whether simply buying it in, or via joint ventures, or allowing foreign companies into the Ukrainian MIC.

However it is achieved, Ukraine requires legitimate tech transfer.  (No doubt somewhere there are those engaged in reverse engineering and tinkering/”enhancing” somewhat dubiously acquired tech.)  As such this MoU announcement, however much “fluff” it contains that may never come to pass, held within it something of real interest.

Naturally it is now time to ask the usual cynical and skeptical questions – with such deals being struck now, prior to any liberalisation of the Ukrainian MIC, who gets access to the Turkish tech – only Ukrboronprom, or the entirety of the MIC?



Odessa City Council rightly named a defendant

July 3, 2018

Last September an entry appeared outlining the systemic corruption that killed once again in Odessa.

Naturally as is so often the case, attention turned to those individuals upon whom blame (and perhaps punishment) would fall.  Little thought, let alone expectation of City Hall ending up in court as a defendant was given.

Rarely would a reader find a City or Oblast Council named as a defendant in a case such as this despite systemic corruption and systemic governance failures oft having a role in horrendous and/or fatal outcomes for the Ukrainian public.

That, until 2nd July (some 10 months after the tragic events) continued to be the case with regard to the above linked incident.

However, Odessa City Council, due to its systemic corruption and incompetence, has now been named and accepted as a defendant.  Judge Viktor Chaplitsky accepted the petition of the legal team representing the victims that Odessa City Council should be held accountable for its collective and systematic failures.

The families are seeking a collective total of UAH 3.9 million (which appears to be a particularly small sum) in compensation for “moral damages”.  (No doubt somebody will have to explain what morals are to many of those within City Hall).

A drop in the ocean for the City budget to be sure.

Naturally there will probably be no (further) resignations nor any further individual accountability in this case.

The integrity of those at City Hall is not sufficient among its senior figures to even consider resignation.  After all the Mayor is facing at least 3 criminal investigations, without further accepting any personal leadership responsibility failings for this incident.  Thus many at City Hall will quietly be happy to have the City pay UAH 3.9 million to avoid any individual accountability – but otherwise accept collective responsibility (while continuing to say they personally are not at fault to anybody prepared to listen).

Nevertheless, the naming of Odessa City Hall as a defendant is worthy of a few lines – for local governance is rarely collectively held accountable in judicial proceedings for its calamitous failures.


EUCO Summit and Ukrainian defence

June 29, 2018

On 29th June, the European Council released its communique relating to the outcomes (perhaps a better word than “results”) of the conclave that had just gathered.

Much relates to foreign policy, albeit there is a good deal of internal issues too.  European eyes will be drawn toward the political issues relating to immigration and refugees from the African continent and via Turkey.  UK eyes will continue to ponder Brexit and the slow-moving car crash it was bound to become.

Also within the communique however, are mentioned matters that Ukraine may well be keeping a watchful eye upon – specifically Chapter II on Security and Defence, where PESCO, CARD, EDIDP, CDP and third party participation is mentioned along with the CSDP:

“calls for the fulfilment of the PESCO commitments and the further development of the initial projects and the institutional framework, in a way that is fully consistent with the Coordinated Annual Review on Defence and the revised Capability Development Plan adopted within the European Defence Agency. A next set of projects will be agreed in November 2018. It invites the Council to decide on the conditions for third State participation in PESCO projects;

welcomes progress on military mobility in the framework of PESCO and EU-NATO cooperation, expects the military requirements under the EU Action Plan on military mobility now to be finalised, and calls on Member States to simplify and standardise relevant rules and procedures by 2024. These efforts, which should fully respect the
sovereignty of the Member States, be mutually reinforcing and follow a whole-of-government approach, will be reviewed yearly on the basis of a report by the Commission and the High Representative, starting in spring 2019;

calls for the swift implementation of the European Defence Industrial Development Programme and for further progress on the European Defence Fund both in its research and capability windows;

welcomes the work undertaken to strengthen civilian CSDP and calls for an agreement on a civilian CSDP Compact by the end of this year, thus providing a new EU framework for civilian crisis management and CSDP missions, with ambitious commitments at EU and national level. It recalls that military and civilian aspects need to be addressed in a comprehensive manner with a focus on concrete deliverables;”

Ukraine has ratified obligations relating to the EU CSDP.  Article 7, Paragraph 1 of the ratified EU-Ukraine Association Agreement states “The Parties shall intensify their dialogue and cooperation and promote gradual convergence in the area of foreign and security policy, including the Common Security and Defence Policy (CSDP), and shall address in particular issues of conflict prevention and crisis management, regional stability, disarmament, non-proliferation, arms control and arms export control as well as enhanced mutually-beneficial dialogue in the field of space. Cooperation will be based on common values and mutual interests, and shall aim at increasing policy convergence and effectiveness, and promoting joint policy planning. To this end, the Parties shall make use of bilateral, international and regional fora.”

The EUCO communique mentions “third party nations”.  As such there will be those within Ukraine that will consider the nation to already be a “third party nation” with existing and ratified commitments to the CSDP.  Ratified agreements are not a one-way street.  It follows that whatever changes within, or whatever affects, or may affect the CSDP, should be of interest to Ukraine.  Ergo, PESCO, CARD, EDIDP, and the CDP are not to be ignored, not only for any changes or potential changes to the CDSP, but also any opportunities that they may provide – for third party nations like Ukraine.

So, what of this European Union alphabet soup, and how does it all fit together?

In 2016 the EU published a document called the “European Global Stratgey” (apparently there is a European Global Strategy).  Resultant from this, Permanent Structured Cooperation (PESCO) appeared in December 2017.  Both the EUGS and PESCO can be broadly stated, at least in part, as tools to develop “full spectrum” capabilities within the EU relating to security, defence and general “resilience” per the Washington Treaty Article 3 definition.  (The same foundation as the recent “On National Security” law recently passed in Ukraine.)  Defence cooperation and a robust and comprehensive European defence industry are clearly among the goals of EUGS and PESCO.

In order to get to those goals, the European Defence Agency (EDA) and/or other interested parties (the EUMS – European Military Staff) have written documents to guide the way and funds have been set up.  There is the Implementation Plan on Security and Defence (IPSD), the creation of a European Defence Fund (EDF), and the Coordinated Annual Review on Defence (CARD) to illuminate a path toward reaching the EUGS and PESCO goals.

There is also the EU Capability Development Plan (CDP) – which is actually a document worth reading relating to shortfalls, trends and projections.  A heady mix of strategic analysis, strategic guidance, political commitment and financial incentives.  Within this a reader can find yet further EU alphabet soup – SAEP, CCS, PC, RC, HICGs, CDS, CDM, GMTL and on and on – all of which provide ingredients to the mix that finally arrives at the EU CDP – which is worth reading.

The CDP does have an affect upon the EU CSDP to which Ukraine is obliged.

Indeed potentially any individual sovereign deployment of forces has an affect upon the CSDP, for by extension that affects the capabilities that may or may not be deployed on any EU military operation.  This led to the creation and mutually accessible Collaborative, Secure On-line Database (CODABA) theoretically allowing all to see what was deployed, what was available and what was undergoing maintenance among members.  The PESCO agreements entered into by those wishing to join it also makes binding commitments to forces for an EU CSDP and will, together with CARD and the CDP, provide something of a loop for National Implementation Plans (NIPs) which in theory will bring members closer to achieving EU security and defence with ever-decreasing capability gaps.

All of which should be interesting for Ukraine, but aside from perhaps being asked (and no doubt willingly providing) some stop-gap assets, it will not be anywhere near as interesting as the industrial and technological aspects looking forward.  After all as difficult as it may be to keep up with and ahead of tech and innovation, planners don’t just plan for today and tomorrow.  They attempt to plan 30 years ahead (for example, the sea life cycle of a Frigate may be 30 years, but will it be of any tactical use given design and equipment considerations and expectations in 30 years time etc).

As a recent entry duly noted, Ukraine has finally admitted that its own Military Industrial Complex (MIC) is not particularly fit for purpose (despite being a major international arms exporter) for the challenges Ukraine faces.  The industry retarding role of Ukrboronprom will undoubtedly change.  Privatisation and foreign investment is a requirement.  Import-export and procurement to and from abroad is planned to become significantly easier for the defence industry participants.

(Ukraine also produces, and holds on inventory, equipment that the EU doesn’t have in abundance (and sometimes at all)).

However, wise heads within Ukraine will hopefully be looking at the future of the CSDP and the projections within the CDP.

Where as a third party nation, if allowed to partake, could it add value in meeting those projections?

Perhaps some scrutiny of the European Defence Technology and Industrial Base (EDTIB) should not occur only with a view to Ukraine’s own immediate MIC needs, but also with a view to what the EU needs will be.  Perhaps attention should be paid to the EU’s Overarching Strategic Research Agendas (OSRAs)?

What are the EDA’s identified Key Strategic Activities (KSAs) that will shape the CSDP?  How will that affect Ukraine, and can it add value within the EDIDP as a third party nation within the elasticity of the text that form the obligations to the EU CSDP?

There are then questions of what to do with, and how to approach, the UK should it fall (as it may very well do) outside of all of this very soon.

Perhaps the 9th July EU-Ukraine summit may shed some light if gaps in the clouds of Russia and corruption allow for the illumination of other matters in any communique?


Constitution Day – (and domestic politicking about a new Constitution)

June 28, 2018

Just over a week ago an entry appeared regarding Ms Tymoshenko’s entirely unsurprising announcement of a presidential bid.

Within that entry mention was made of Ms Tymoshenko’s plan to give Ukraine a new Constitution in its entirety.  An accomplishment that would have to come to fruition under the parameters set by current Constitution as outlined in the above linked entry – lest it be unconstitutional.

Ne’er the less Ms Tymoshenko stated that she had a team on international experts and jurists already hard at work writing a new Constitution (whom she clearly believes will provide a better Constitution than the team of international experts and jurists that wrote the current Constitution).

Now to be fair the current Constitution is not perfect.  It is very broad in some areas, and far too detailed in others where simple statute would be better employed.

But it is not bad.  It’s content is not where the Constitution necessarily fails – even if there are places where it could be improved or updated.

The lines of power and their parameters to follow.

The problems have come about by through successive presidents continually treading heavily upon the Constitutional lawns of parliament.  Both successive presidents and parliaments have also stomped heavily all over the Constitutional lawns of the judiciary.  The citizen has struggled to enforce their constitutional rights etc.

In short, historically the constitution has been generally ignored, in particular by the political class – and that has been accepted by a politically led and subservient judiciary.  A distance between Constitutional prose and daily reality has been felt by the constituency.

Thus a new Constitution, no differently from the current Constitution, will only have any significance if it is scrupulously followed and all relevant parties do not trespass upon the manicured constitutional lawns identified for others.  What use is any Constitutional Right to any citizen of Ukraine if it cannot be, or is not enforced?  If fundamental law is not sacrosanct, then what of other laws?  Rule of law – or rule by law?

The current (and any future) Constitution already rightly notes the natural tensions between the executive, legislature, judiciary and citizen (plus any devolution of power where ever it may land institutionally/local governance-wise) and offers a system of remedy.  There is little indication that the current elites would pay any more attention to the “Keep Off The Grass” signs of a new “Tymoshenko Constitution” than they do now – even if the current executive and legislative powers are changed.

If the President became a symbol/figurehead with very little or no power, and the legislative lawn increased dramatically in size in assuming current presidential powers, the legislature (and the powers behind this current era of Ukrainian politician) shows very little willingness to stay off the Constitutional judicial grass, and a judiciary used to being politically subordinate shows very little appetite in having the grounds staff enforcing the “Keep Off The Grass” signage – whether the judicial grass be constitutional or statutory in nature.

Thus, though a reader will rightly cheer if and when a senior corrupt head or two eventually find their way upon a judicial spike (and jail), it is systemic change that will ultimately have the greatest impact if Ukraine is to change at its core.  That is not to excuse or diminish the requirement to see senior heads upon the judicial spike (justice must be seen to be done), but it is to put realistic expectations upon what it will actually achieve (beyond justice being seen to be done as far as individual cases are concerned).

There is a clear societal problem with identifying The State as distinctly separate from those temporarily in authority due to a short term democratic mandate, and vice versa.

Care is therefore required in identifying symptom and cause – and to be blunt the cause is systemic and will therefore take a generation (and the death of a political/oligarch generation) to see any irreversible improvements in Ukraine – if they are to come – for the system will now only change slowly.  The 2014 window for radical systemic change has long since closed.

Further, despite the progress that has undeniably occurred in recent years, it remains far from consolidated.  Energy is still therefore spent defending the gains made.

Nevertheless, on Constitution Day it is natural that the Ukrainian political class talk about the Constitution, its strengths and weaknesses, and the perceived need to amend it piecemeal or replace it entirely.  For example, the views of President Poroshenko, one of his opposing candidates Yulia Tymoshenko, and Oksana Syroid Deputy Speaker of the Verkhovna Rada all (unsurprisingly) differ.  In such an environment it is doubtful that much improvement upon the current Constitution can take place other than in piecemeal form.

Looking to the future and immediately after the October 2019 Verkhovna Rada elections, it looks increasingly difficult to see an easy coalition of 226 votes being forged, let alone a Constitution changing 300 required votes, as no party seems likely to garner more than 20% of the national vote and thus a simple majority coalition will require 3 parties – or two parties and almost every independent MP just to pass basic statute.

(2020 – 2024 will be no easy time for president, parliament, nor the citizenry of Ukraine if consistent and linear progress is the expectation of any reader – for that seems very unlikely.  What is required is the continual process of reducing the political, business and administrative space in which corruption can occur.  A long process measured in decades.  A difficult task when envisioning the legislative and disagreeable montage of 2020.)

This brings about the issue of how difficult or easy should it be to accomplish constitutional changes?

Is it to be a fundamental law that proves so difficult to change that it ossifies and becomes more hindrance than help as time passes, or a living breathing document that keeps pace with society and is therefore subject to change without too great an obstacle?  That therefore raises questions over what should be included (and in how much detail) and is perhaps a fundamental law rightly somewhat difficult to change, and what should be excluded and codified in normal statute with far lower barriers to amendment.

Without doubt this will become a public conversation between presidential candidates, for Ms Tymoshenko has been first from the blocks and framed constitutional change as a major electoral platform.  Whether any coherent conversation will be had is quite a different matter.  Even if there is a coherent conversation, will the Keep Off The Grass signs be respected in the immediate future?  Probably not.


Dramatic changes ahead for import/export and privatisation within the Ukrainian MIC?

June 26, 2018

Following the final successful vote on the “On National Security” law of 21st June, among several notable changes in a generally good if not perfect framework law, it became clear that serious changes to the SBU and Ukrainian military industrial complex would occur.

Both the SBU and Ukrboronprom in particular will feel the changes brought under the new legislation – and to be blunt, rightly so and long overdue.

While new legislation, or piecemeal amendments to the legislation that harnesses the SBU will take some months to appear, as will new processes for greater public scrutiny and a parliamentary intelligence committee being formed, it so follows that Ukrboronprom and the MIC will not see immediate change either.

Those MIC changes however begin with the creation of a body under the Cabinet of Ministers that takes away the management and administration of the MIC from the influence of State monolith (and to some degree monopoly) Ukrboronprom (and similar unwieldy State MIC entities).  They will be expected to produce and no longer direct the MIC.

Some potential industry changing noises have been made already.

In what will be a major shock to the Ukrainian MIC, contained within an announcement by NSDC Chairman Olexandr Turchynov, notable (indeed some might say radical) changes to procurement, import/export and privatisation will occur in the not so distant future.

While it is incumbent upon the Ukrainian authorities to insure that it meets any ratified international obligations relating to arms control, and also keeps a watchful covert eye upon foreign investors in any MIC privatisations, nevertheless in what would be a far more liberal/market friendly MIC regime it has to be stated that it is a long overdue measure if the Ukrainian MIC is to develop as swiftly and sensibly as is practicable.

Definitely something to keep an eye upon over the next 6 months or so as it could be a real game changer for the Ukrainian MIC.


Electrical storms (NKRECU)

June 23, 2018

It has been a long time since the blog wrote specifically about the NKRECU (National Commission for Energy Regulation and Utilities).  Indeed the last specific entry related to the concept of RAB (Regulatory Asset Based) tariff incentives for regional electricity providers, and pondering the benefits thereof should Ukraine pursue such a path – or not.

Suffice to say the RAB concept has yet to be adopted – but it has also yet to be dropped.

Clearly those involved in both the Ukrainian electricity and gas markets can see some serious benefits to adopting RAB if applying some creative asset accounting from the outset.  There are however potential political problems in allowing that to occur – which would undoubtedly be awkward should the concept go forward.  Thus RAB will continue to be a “subject of discussion” until politically expedient to introduce it.

In short, the question is whether to gift the energy barons – in particular Dmitry Firtash (gas) and Rinat Akhmetov (electricity) – prior to, or after the 2019 elections.  For as long as that question remains unanswered, the issue will remain “subject to discussion”.

Indeed, for as much as Ukraine has made solid legislative progress toward meeting the requirements of the EU Third Energy Package – particularly with respect to electricity (less so with regard to gas) – the domestic electricity marketplace remains almost entirely unaltered despite China buying up solar farms where and when it can, and a strongly rumoured joint venture between China and Rinat Akhmetov’s SCM/DTEK in solar energy in the near future.

There is something of an electrical storm brewing however.

On 27th December 2017, NKRECU adopted a number of decisions regulating the licensing conditions for the electricity market –  operators, producers, certified electricity buyers, and those conducting trading activities – all these decisions being necessary for launching a Ukraine new electricity market.

Those NKRECU decisions then required official publication in the Uriadovy Courier.  This did not happen, for reasons unknown, until 20th June 2018.

The NKRECU and the Ukrainian Association of Renewable Energy are now accusing the Uriadovy Courier of gross interference in its work and causing a multi-million losses within the renewable energy industry by delaying the publishing of the NKRECU adopted decisions.

Also in the same Uraidovy Courier publication of 20th June were published updated procedures for calculating compensation for electricity suppliers for delivery to the population (for single-zone and differentiated tariffs), as well as to other consumers under differentiated tariffs.  In addition, the procedure for calculating the compensation to Odesaoblenergo for the supply of electricity to the Young Guard camp was promulgated.  Again decisions taken by NKRECU long ago.

The question therefore is who benefits from the delays of the Uraidovy Courier publication?

The government, with the EU Third Energy package in mind, has decided to dilute the monopoly of regional supply companies with individual licensed sellers – or so goes the legislation and theory.  The idea is naturally to bring about competition and through market forces and thus drive down the costs to the consumer.

Time was therefore required for the current monopoly to insure its monopoly remained, whilst also being seen to adhere to the new legislation and regulations.  This has now been (more or less) accomplished – thus there will not be a drop in consumer prices – for the monopoly will be maintained while appearing to meet the legislative and regulatory requirements.

Having mentioned Rinat Akhmetov and DTEK at the beginning, it seems reasonable for the sake of consistency to use their model in explaining how the monopoly is maintained and why consumer prices will not drop – for no real electricity market place seems at all likely to appear.

In order to meet the basic requirements of the EU Third Energy Package and the requirements of the Ukrainian law “On the Electricity Market” it was necessary for the existing monopoly structures to separate the producers from the distributors and again from the consumer suppliers/end billing entities.

This takes time – for everything is subject to receiving a licence.

However, even if time stands still for no man, publication of NKRECU decisions can – at least for as long as it takes to line up all the monopoly-continuing ducks.

Using Kyiv as the DTEK/Akhmetov example, the citizens of Kyiv will no longer be billed by KyivEnergo (owned by Mr Akhmetov).  They will instead be billed by a newly licensed company called “Kyiv Energy Services LLC” owned by Mr Akhmetov.  This newly licensed customer supplier/billing entity will receive its electricity from a distributor called DTEK Electricity Grid.  DTEK is owned by Mr Akhmetov within his SCM empire.  DTEK Electricity Grid will receive is electricity from KyivEnergo owned by Mr Akhmetov – but to adhere to the EU Third Energy Package and the Ukrainian law “On the Electricity Market” it can no longer bundle together all the services under a single corporate entity as it does now.

And so it goes on throughout the empire.  Licenses for “Dneprovsky Energy Services LLC” and “Donetsk Energy Services LLC” were issued on the same day that “Kyiv Energy Servives LLC” received its license – all ultimately belonging to Mr Akhmetov.  The model for Kyiv will simply be replicated.

The letter of the law complied with, the spirit clearly not – for it in no way dilutes the electricity market and thus does not foster the competition that theoretically drives down consumer prices.  After all, having gone to all this trouble to maintain a monopoly, why would any part of the Akhmetov electricity empire sell to another distributor or supplier and create competition for itself?

To be fair to Mr Akhmetov, he is not alone in pursuing this model.  And to be fair to the monopoly/cartel that is the current Ukrainian electricity “market”, they are not blazing a nefarious trail where none have gone before.  This method is in fact the exact same method employed by the gas barons a few years earlier.

It can hardly be said that Dmitry Firtash has surrendered much (if any) of the domestic gas production, distribution or billing market place since the “On Gas Market” legislation came into force a few years ago.  The domestic Ukrainian gas market is not much more diluted today than it was in 2014.  All that has changed are the external suppliers to Ukraine, and perhaps slightly fewer nefarious gas schemes relating to import, VAT and resale spreads.

Yet it cannot be said that such shenanigans are all to be laid at the doors of the likes of Messrs Firtash and Akhmetov either, for the laws they comply with are hardly designed to make further market entry particularly easy when it comes to the actual supply to the public consumer – for to do that, there is a requirement to “fulfill special obligations” to get on a list of companies to which the Cabinet of Ministers will then grant such commercial abilities.

It also has to be duly noted, particularly with gas production. a more dispersed domestic and foreign licensing has occurred.  Perhaps Mr Firtash’s empire may lose a little market share when new drilling licenses bring results – but then again, when he owns approximately 65% or so of the distribution companies, perhaps his market share will actually increase?

Whatever the case there will be more electrical storms ahead, for the NKRECU belatedly published decisions don’t actually take effect until 2019 – and that leaves time for many more games.  Further the NKRECU and Uraidovy Courier problem remains far from settled.


An end to Department K of the SBU? Hopefully not!

June 21, 2018

With the second successful reading of Law 8608 “On National Security – a framework law to which many subservient laws will need to be written or amended, notwithstanding numerous Decrees, strategy documents and doctrines – the SBU will feel the consequences.

Rightly too.  Long has this blog called for an overhaul of the SBU remit.

However, care need be taken when that remit is redefined.

There are already wrong-headed statements spewing forth from Ukrainian parliamentarians.


Secretary of the Committee for Security and Defence, Ivan Vinnik has publicly stated that Department K of the SBU (which rightly delves into economics, but wrongly gets involved in the business of policing business) will cease to exist.

“Department K will not be needed.” Mr Vinnik has told journalists.  “The SBU loses the function of fighting corruption and will be limited to combating terrorism, counterintelligence activities, defending statehood and critical infrastructure”.


If the SBU is to effectively combat terrorism, be successful in counterintelligence activities, defend Ukrainian statehood and critical infrastructure, then Department K will still be quite necessary.

It will unquestionably have to retain active interest in industrial sized corruption and the economic effects thereof – for that is a national security issue.  Indeed, there is also an ever-converging space between terrorism, organised criminality, cyber crime and economic subversion from both without and within Ukraine all of which generate, facilitate or are end users of financial flows to the detriment of the Ukrainian state.

This not a purely Ukrainian issue but an issue for all security services the world over.

The SBU will still have to follow the money to be effective in its role.  “Follow the money” is a golden rule in policing and intelligence alike.  As such Department K will have to exist in order to keep a watchful counterintelligence eye to identify what may – or may not – be an issue of national security.

What is not necessary, and should long ago have been stopped, is the SBU being used as an instrument in the day to day policing of business (and the majority of criminal activity therein).  An entirely unnecessary and, to be blunt, extremely unsightly role that has been a daily serving on Ukrainian TV.  Daily criminal policing is the role of the police – not the SBU.

Thus, whatever the SBU may identify that is criminal but nevertheless falls outside any new, rightly tweaked and refocused remit, should nevertheless and insofar as the protection of intelligence sources will allow, simply result in the passing on of evidence to the appropriate institutions of state that have a remit to take any necessary investigative and/or prosecuting action.

Mr Vinnik is completely wrongheaded when stating “Department K will not be needed”.  It was, is, and will remain “needed” whether it continues to be called Department K or is renamed.  For the SBU to be effective in a counterintelligence role, it simply has to retain a watchful eye over economic issues that can affect the Ukrainian economy and it must also “follow the money” with regard to terrorism, organised criminality and industrial scale corruption that can adversely affect the Ukrainian economy or social cohesion etc.

Can Department K be downsized?  Probably.  Can many of its departmental staff be reassigned?  Why not.  Should it be refocused and have new parameters placed upon it?  Certainly.  But who, if not the SBU, does Mr Vinnik propose will take on the task of covertly following the money used to directly or indirectly destabilise the State, or that is involved in organised criminality and/or financing terrorism etc?

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