Posts Tagged ‘security’

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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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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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Pinchuk & the WSJ

January 1, 2017

It has to be said that Viktor Pinchuk of all the Ukrainian oligarchy has always been the most intriguing for this blog.

Firstly, compared to the others, Mr Pinchuk is actually a clever guy.  He had managed to become a multi-millionaire through his engineering creativity before marrying the daughter of former President Kuchma – and thereafter leveraging that marriage during the Kuchma epoch to move from being a multi-millionaire to a billionaire.

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His time directly (rather than indirectly) in Ukrainian political life as a parliamentarian was really rather brief and began in the same year as his marriage to former President Kuchma’s daughter in 2002 and ended with the “Orange Revolution” of 2004/5 with Mr Pinchuk having backed Viktor Yanukovych.  Despite easily being able to buy his way into any parliament, he chose not to do so.

Since then his political influence has been indirect insofar as manifesting via parliamentarians both national and local that are loyal to him.  It should also be noted that “his people” are generally far more subtle than the drones of Kolomoisky, Firtash or Akhmetov.

He also has a penchant for collecting famous friends – The Clintons, Damien Hirst, Elton John etc.

In fact, aside from feeding from the State subsidy trough and self-interest indirect political machinations, Mr Pinchuk set about rehabilitating his image through philanthropy and his own foundation from 2006 onward with very little domestic public oratory or prose.

The annual YES conference is a Pinchuk brainchild that he funds – which in 2016 notably saw Mr Pinchuk pay Donald Trump to speak at (albeit a speech lacking in clarity and not without technical problems) via a video link despite his association with (and donations to) the Clintons for many years.

Perhaps a lesser known fact was that during the “Revolution of Dignity”, Mr Pinchuk funded the provision of medical supplies to treat the injured.

Aside from a few historical legal battles, most notably with Ihor Kolomoisky over assets, Mr Pinchuk rarely features in the news – unlike many of his peer oligarchs.  There is in fact very little that can be attributed to him personally by way of public statements or on the record oratory.  Clearly a deliberate policy on his part.

It was something of a surprise therefore when an article appeared in the WSJ, authored by, or ghost written and then attributed to, Viktor Pinchuk.  The article has ruffled many Ukrainian feathers, both political and societal, being prima facie interpreted as a plan for capitulation to The Kremlin.

In a nutshell he spoke (wrote) out in favour of elections in the “DNR” and “LNR” by politely forgetting about Crimea if it meant an end to the deaths in the occupied Donbas, the abandoning of any thoughts of joining NATO and the creation of a formal understanding that Ukraine would not be joining the EU any time soon.

Now to be fair, there are those on the Crimea Committee of the Verkhovna Rada, even of patriotic leaning, that have privately told the blog that they foresee Crimea returning to Ukraine only if the Russian Federation implodes in similar fashion to that of the USSR – and if that be so then the returning of Crimea will be an issue dwarfed by the ramifications of such an implosion for Ukraine more generally.

That said, there is none on the said committee that would advocate anything other than “Crimea is Ukraine” as a domestic and international policy – quite rightly.

With regard to the EU, as previously written the Association Agreement (and DCFTA) is not an instrument that takes Ukraine into the EU.  Only the completion of the Aquis Communautaire can do that – and that is a process Ukraine has not even asked to commence.  The simplest way to view the Association Agreement is as a document that brings “European norms” to Ukraine at a speed at which Ukraine can achieve them – ie it brings “Europe” to Ukraine at a speed and in chunks that Ukraine can handle/digest.  For Ukraine to go to the EU, an entirely different thing, then it is the Aquis that is the only route – a route more demanding than anything within the Association Agreement.

Likewise, whatever Ukraine may or may not do with NATO, it is currently a long way from being at a civilian and military standard by which it could join.

In short, Ukraine is decades away from meeting the requirements of the Aquis for EU accession – if it ever applies.  It is probably about a decade away from fully meeting the civilian and military standards required for NATO entry – should it ever ask to join.

Those are the bureaucratic realities and limitations of Ukrainian reformation and their speed – notwithstanding political limitations of those that would have to agree to any Ukrainian accession.  None of this is a secret.  The respective institutions know it.  The Kremlin knows it.  Ukraine knows it.  And Mr Pinchuk knows it.

The domestic angst naturally, insofar as NATO and the EU is concerned, comes from his call for codification of such matters and the legislative boundaries they would place upon Ukraine for at best, uncertain and ill-defined “gains”.  Peace at any cost does not bring peace – it brings an armistice fated to fail at some undetermined point in the future.

Why then, has Mr Pinchuk who rarely makes public statements, decided now is the time to make such a statement and one that is guaranteed to irk the public, the political class, and paint him as a Kremlin stooge domestically and among many of Ukraine’s “friends” abroad?

Is it a reaction to witnessing fellow oligarch Dmitry Firtash exiled to Vienna, or Ihor Kolomoisky lose PrivatBank to nationalisation, or seeing all oligarchs with fingers in high energy usage industries (including Mr Pinchuk) now subject to energy pricing that sees an end to subsidies/most favoured user status?  It seems somewhat unlikely.

Will the oligarchy now find common ground for a robust fightback against the government in 2017, and this is somehow Mr Pinchuk declaring unity?  Also somewhat unlikely.

Has Mr Pinchuk simply decided that giving in to The Kremlin is the only way to undo the current deadlock?  Maybe, maybe not.

Has he been bought off or manipulated by Moscow somehow?

As the chances of any of his WSJ points being implemented are currently very slim at best, and will make him extremely unpopular at home, how does Mr Pinchuk benefit from his unusual public intervention?

All questions to be asked.

Also to be asked are why make such statements now, and why chose the WSJ to do it in?

The answer may be that the article was written and published in the WSJ specifically for one reader.  That reader being Donald Trump.

It may well be that Mr Pinchuk has little belief that what he has written will become policy and be implemented.

He may well not believe that this is the right policy either.

However, just as with voting at the UN, it is not that uncommon to see some nations prima facie voting against their own interests in order to curry favour with others – in the full knowledge that the vote will be vetoed by yet another.

Maybe it was written to defend the business interests of Mr Pinchuk in the USA?

Perhaps the end result here, considering Mr Pinchuk’s penchant for collecting “friends” like the Clintons, Damien Hirst and Elton John etc, is that Mr Pinchuk may be seeking to become the Ukrainian “name” most liked and granted most access by Donald Trump – no differently than Nigel Farage is angling to get (and may succeed) more personal interaction with Donald Trump than UK Prime Minister Theresa May.

 

If Mr Pinchuk can achieve a personal status that grants him more access to Donald Trump (and a kinder ear) than President Porosehnko simply by writing something he believes Mr Trump would read agreeably within the WSJ, then he may feel it a gamble worth taking with the repercussions among Ukrainian domestic politics a prize worth chasing.

Perhaps a lens through which to view Mr Pinchuk’s rare public prose?  Perhaps all it takes is being a billionaire, a few well chosen (if never implemented) words in the WSJ agreeable to a personality like Mr Trump and suddenly Mr Pinchuk becomes “Don’s man in Ukraine”.

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New Media Rules – ATO (Donbas) wef 01/01/17

December 29, 2016

For those few journalists that still attempt to cover the war in eastern Ukraine and the continuing almost daily death toll, be advised that with effect from 1st January 2017, new rules apply:

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“Since January 1, 2017, a new procedure of work for media representatives covering the ATO in the east of Ukraine will be implemented.

According to this procedure, media accredited to the Security Service of Ukraine will receive two types of press cards such as first and second level accreditation.

Second level accreditation press card (blue) allows working within the ATO area, except for forward positions of the Armed Forces of Ukraine. The procedure of reception of this press card is the same.

Meanwhile, the first level accreditation press card (pink, with number 1) allows working within the ATO area and allows working directly at the conflict line (at forward platoon strongpoints, company defence positions).

Media must undergo three day training at the Ministry of Defence of Ukraine (National Defence Ivan Chernyakhovskyi University — two days of theory, as well as at the 169th Training Centre of Land Forces of the Armed Forces of Ukraine in Desna, Chernihiv oblast (one-day practical training) to receive the press card of first level accreditation.

Foreign media accredited to the Security Service of Ukraine will receive first level accreditation press card only after obligatory one-day briefing!

More than 250 persons are undergoing training and will receive first level accreditation press cards this December. Considering the popularity of the training, three-day training will be conducted in January 2017, please, follow our updates.

Please note, a new procedure of visiting the ATO area is implemented as required by the Order of the First Deputy Director of the Anti-Terrorism Centre at the Security Service of Ukraine (Director of the Anti-Terrorism Operation in Donetsk and Luhansk oblasts) of 19.01.2016 No. 45 ‘On procedure of media admission to military facilities in the Anti-Terrorism Operation area in Donetsk and Luhansk oblasts’ (Annex 4, Order of First Deputy Director of the Anti-Terrorism Centre at the Security Service of Ukraine (Director of the Anti-Terrorism Operation) of 27.10.2016 No. 555).

If you have questions don’t hesitate to contact us +38 (067) 223 16 43; (044) 245 44 01″

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SBU claims Ukrainian State IT systems received 247 cyber attacks in 2016

December 23, 2016

According to the SBU, Ukrainian State information systems were subjected to 247 cyber attacks during 2016 (which is 2 weeks from ending at the time of writing – so there will be more before the year is through).  As a result 64 criminal proceedings are apparently under way – “proceedings” however is not defined as being arrests, or charged, or convicted.

As it appears only 64 instances have resulted in criminal proceedings with 5 convictions and 4 “wanted” circulations, it may be “proceedings” amounts to little more than “under investigation”.

Thus according to the SBU, if allocating 1 attack per day, 2 of every 3 days witnessed Ukrainian State IT systems under cyber attack throughout the entirety of 2016.  Naturally that is not how matters occurred on such an evenly spaced timeline – neither does it account for the cyber ops that are and have been on-going undetected daily for months, or perhaps years, against the Ukrainian State.

Were there peaks and troughs in cyber attacks?  Did those peaks and troughs align to peaks and troughs of Ukrainian allies?  If there is any correlation does that provide some form of guide to the capabilities of hostile cyber foes?

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Nevertheless 247 is the number of cyber attacks the SBU states the Ukraine State IT system has been subjected to.

It is however unclear what classification of cyber attacks have occurred and in what number under any sub-classifications of cyber attack.  Such attacks may vary from DDoS, to data hacks, to actually taking control of the systems themselves.

Further the SBU is not the only Ukrainian institution charged with looking after and monitoring cyber naughtiness to which Ukraine is subjected.   The Ministry of Interior also has a very similar statutory  obligation.  There is then the State Service for Special Communications and Information Protection, notwithstanding the Ukrainian Computer Emergency Response Team.

Quite whether each would measure and/or count the cyber attacks to which the Ukrainian State IT systems have been subjected to in the same way as the SBU is unknown.  Are the definitions the same?  Is the ability to monitor (and prevent/mitigate) such attacks the same?  Which is the lead agency?  Is there a lead agency?

Of the 247 attacks, which have been attributed and to whom?  Specifically what was the attack?  State (and/or State infrastructure)?  Business (State Owned Enterprises)?  Banking (State owned banks and/or the NBU)?  Others?

What damage was done?  What losses were incurred?  What was stolen?  Has the “how” been shared with allies and/or applicable regional/international treaty bound institutions?

How many can be publicly attributed to Russia and/or the known Russian proxies?  If they could be attributed, were they?  (Just because they can be, for either political and/or operational reasons they may not be.)

How many can be publicly attributed to organised crime – both that interconnected with Russia, that of domestic origin, and also others?

How many can be publicly attributed to those that are neither State actors (or known State associated actors), or organised (criminal) groups, but that are simply lone actors with either criminal intent or a curiosity that defies legal boundaries?

What is behind the SBU numbers?  Are the numbers of the other statutory monitoring agencies similar to those of the SBU?  If not, what are the discrepancies and where and why do they exist?

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Privat nationalisation and political weight loss

December 19, 2016

Ukraine has eventually taken the decision to nationalise Ihor Kolomoisky’s (and others) Privat Bank.

In some ways it is a surprise that the will to do so was actually found, despite that for more than 2 years everybody and anybody with any knowledge of Privat Bank has hardly been shy in opining that it presented serious risk to the Ukrainian economy and had it not been systemically vital to the Ukrainian banking system it would otherwise have been closed.

To a man/woman, of those spoken to one to one by the blog, be they politicians, economists, diplomats or international bankers, all recognised that the Privat problem had to be addressed and that nationalising it was the better of the options available – if the will could be found to do so.

Lo it has come to pass that 100% of Privat shares are now owned by the State.

How grubby the deal struck between Ihor Kolomoisky and The State is, remains unknown.  For a man like Ihor Kolomoisky to “voluntarily”  “sell” his shares to the State in what has been a significant political and financial lever over the State for him for many years with no gains to him pushes the boundaries of belief.  With the ability to simply put the Ukrainian banking sector into melt down, there is presumably a quid pro quo no matter how small yet favourable that may be in return for the “voluntary” handing over of all shares.

So be it.

Questions will undoubtedly be asked regarding the large amount of PrivatBank loans to its owners (Mr Kolomoisky and friends), other companies with the same owners, and to those associated with the owners, that have consistently been taken out with no intention of repaying them.

What is the exact cash figure these nefarious loans amount to?  What are the chances of those loans now being serviced and eventually repaid by those that took them and who are extremely skilled at historically saddling the State with their debts?

On balance, should a reader accept that those loans will probably not be repaid, thus in assuming these non-performing loans (debts) in however many $ billion they amount to, is that still a price worth paying to insure that PrivatBank can no longer collapse the entire Ukrainian banking system?

Even if agreements have been reached to now begin to repay these loans, the question is then over what period of time (in the unlikely event they will be repaid in full and in the spirit of any agreements made)?

The question presented is therefore one of short term (debt assumption leading probable loses when loans are not repaid) verses the medium/longer term view of what price is put upon insuring the entire national banking system will not collapse due to Prvat?

Financial issues aside, there is of course politics to consider.

The last time the nationalisation of Privat was mentioned by the blog in September, the politics were “Tymoshenko orientated”.  Mrs Tymoshenko is not in favour of the nationalisation of Privat as it doesn’t really work to her advantage.

Ms Tymoshenko aside, broader questions need now be asked about how the nationalisation of Privat changes the political and/or oligarch power dynamics with a major Kolomoisky lever now surrendered.

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Mr Kolomoisky can no longer use Privat as a personal piggy bank.  How does it change his ability to buy parliamentary votes for hire and/or buy entire political parties?  Will it effect any future voting outcomes?  To mitigate, will key voting personnel previously simply bought, now start to appear in Kolomoisky business structures instead for the purpose of leverage over their vote?

In short, just how much political weight loss has been incurred by Mr Kolomoisky – if any?

Without the “ace up the sleeve” of a persistent ability to cause national banking melt down, how does that effect the Kolomoisky position when negotiating how next to screw the State?

How will the rest of the oligarchy class react?  Will they make peace with the State or solidify around a common cause yet further in screwing it over?

How will this effect a poor presidential poll rating if he is perceived to have engineered the right thing for the country, or alternatively is perceived as having used his position to weaken yet another oligarch to his own advantage?  The two are not mutually exclusive, but that is how it will be presented.

Can Mr Kolomoisky now be certain that in what appears prima facie to be a weakened position, he will now not be called to account for innumerable scams and schemes over the years?  Was a de facto arrangement made that in effect grants amnesty via a promise of non-prosecution as part of the deal?  Are there other “compensatory” arrangements reached that will filter into the system over time that will be beneficial to Mr Kolomoisky’s other interests?

The repercussions of this nationalisation financially are on balance likely to be beneficial for Ukraine and the least worst option that could have been taken.  As long as Privat is managed prudently henceforth over the medium term this act is the most sensible option available.  In the long term, it would be wise to eventually return Privat to the private sector – once its systemic and internal risks have been mitigated against.

What is far less clear are the political and oligarchy/power behind the curtain repercussions.  It may be some time before those become fully evident.

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31 candidates to replace Misha Saakashvili as Governor of Odessa. Who’s who?

December 16, 2016

Although most readers will not be particularly interested in the replacement for Misha Saakashvili as Governor of Odessa, having written an occasional  few lines on the subject as potential candidates expressed interest, a full list therefore follows now that candidate applications are closed.

Surprisingly Pavel Zhebrivskyi, the former head of the Donetsk military and civil administration is not listed.  Sadly, for his eccentricity, flamboyance, questionably effeminate nature, and pure entertainment value Garik Korogodski is also absent.

Those successfully registering their candidacy are as follows (and appear in no particular order):

Igor Romanenko, Alexandr Vashenko, Alexandr Ostapenko, Sergei Pomazan, Elizabeth Pyshko-Tsibylyak, Volodymyr Levitskyi, Artem Vaschilenko, Vladislav Grigorchyk, Gennady Chekita, Dmitry Sokolyanskyi, Roman Saromaga, Anatoli Vorohaev, Volodymyr Gavrish, Yulia Melnik, Vasily Horbal, Igor Smirnov, Alexandr Tymoshenko, Valeri Stepanov, Dmitry Spivak, Maxim Berdnik, Oksana Tomchuk, Maxim Stepanov, Alexandr Vinglovskyi, Igor Skosar, Sergei Mazur, Petro Lykyanchuk, Hanna Trifan, Yevgene Chernvonenko and Yuri Chizhmar.

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The most (in)famous among the candidates was the first to throw his hat into the ring, Yevgene Chernovenko – a member of Tymoshenko’s first government and also a former Governor.  A man that if allowed to emerge the winner will have clearly have had to strike a deal with The Bankova to do so as his loyalty to the president is not exactly robust historically.

Gennady Chekita may have no loyalty issues as far as The Bankova is concerned (he is the MP for the Malinovsky district elected under Block Poroshenko and Verkhovna Rada Economics Committee member) but it is questionable if he will to be allowed to emerge the winner as it would mean a by-election for his single mandate seat – which may not go the way of Block Poroshenko.

Another current MP in the Verkhovna Rada is Yuri Chizhmar of the Radical Party – and therefore unlikely to get the tacit nod from The Bankova to emerge as the top candidate for a region as strategic as Odessa (both geographically and by way of large, healthy, illicit money channels).

The current Mayor of Balta, Sergei Mazur is also a candidate.

Also among those holding local governance office previously are former Governor Vasliy Horbal, former Vice-Mayor Anatoly Vorohaev, a former chairman of a Regional State Administration, Volodymyr Gavrish and former City Deputy Dmitry Spivak.  Also former Deputy Governor of Luhansk Elizabeth Pyshko-Tsibylyak.   Last but by no means least from the civil service , former Odessa Deputy Governor and Deputy of the Tax Administration Maxim Stepanov.  Also former Deputy Chief of Staff Lieutenant General Ihor Romanenko is noted for his inclusion, and before leaving matters military, “Cyborg” (Donetsk Airport veteran) Alexandr Tymoshenko also appears.

There are also several candidates from the current Odessa Regional Administration, Sergei Pomazan, Yulia Melnik and Volodymyr Levitskyi.

Of the remaining names of any note (without any research) Chairman of the Ukrainian Business Support Centers (and “widows son”) Artem Vaschilenko then leaves but one.

The last name is Alexandr Ostapenko a former City Deputy and former Deputy Head of the Regional State Administration.  Of all the names, prima facie, Mr Ostapenko is perhaps the individual most easily identified as suited to the methodical, systematic, bureaucratic, boring work associated with the office of a regional governor.

Nevertheless, who ever emerges from the “competition” to replace Misha Saakashvili will be ranked first and foremost by their loyalty to the president.  Any dubious history and their ability to do the job will be of secondary importance.  There is simply no way an oblast like Odessa will be allowed to have a governor that is not loyal to the president first and foremost.

All hats are now thrown in the ring and therefore a reader may perhaps tentatively decide to rank them by way of loyalty to the president, overt party affiliation (if any), and latterly ability, for within that scoring matrix is any real competition for the post.

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