Posts Tagged ‘USA’

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What is past is prologue (Shakespeare)

January 16, 2017

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

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

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

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

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

Yet more “hope“.

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

What is past is prologue (Shakespeare)

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

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

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

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

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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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Chernobyl reactor entombed at last

November 29, 2016

A very short entry to firstly acknowledge a major piece of engineering, and secondly the symbolic entombment of a toxic Soviet legacy within a western funded and built sarcophagus – (Sarcastic readers are now pondering whether the Verkhovna Rada should be next perhaps?)

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The full facts and figures can be found at the EBRD website, together with a video showing the final settling of the sarcophagus in place, outlining what a major feat of engineering the project has been.

Bravo to all concerned.  A truly significant achievement.

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Normandy Four – 19th October

October 12, 2016

Having not mentioned the “Minsk document” for some time, and on the last occasion being/remaining somewhat dismissive, the Normandy Four will meet in Berlin on 19th October.

That the meeting occurs when President Putin was originally due to be in Paris (opening a new Russian Orthodox Church among other things) boils down to the fact that France accused the Kremlin of war crimes in Syria and wanted the bilateral agenda to focus accordingly – an agenda which President Putin was not going to accept.  Thus the Paris trip was called off and the 19th October witnesses a gathering of the Normandy Four to discuss The Kremlin’s denied war in eastern Ukraine.

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That said it seems unlikely that President Putin would head to Berlin and a Normandy Four meeting without something to talk about – and The Kremlin will only talk if it believes that its agenda upon its terms will be furthered.

The options for his attending may be one of PR for domestic (and certain foreign) audiences turning out to be nothing more than a photo op to belie the impression of isolation and/or complete belligerence but that seems less likely than there being something to talk about (on Kremlin terms).

It may also be that the Kremlin thinking is that it is overdue another round of “make it, break it, counter-accuse” negotiation made in bad faith.

Kremlin momentum is currently behind forcing Ukraine to adopt an election law for the occupied territories prior to Ukraine regaining control over its borders.  Both Germany and France whose diplomats have hardly gained any concessions from The Kremlin in more than 2 years of talks seem to have decided that when faced with a belligerent Kremlin it is far easier to press Ukraine to therefore meet Kremlin terms with regard to Minsk event scheduling.

A reader may perceive this (rightly) to be a reflection of the problem of handing policy to diplomats who instinctively want to talk (and prize contacts highly) whilst simultaneously displaying an unwavering and almost principled refusal to learn from experience when it comes to interaction with the current Kremlin.

The out-going US Administration with only 2 months left in office also seems to suffer the same western diplomatic stubbornness when it comes to refusing to accept that the only terms acceptable to The Kremlin are its own – particularly in what it still firmly believes to be its rightful and indisputable sphere of influence.

It is also a US Administration that would like to leave office with something of a foreign policy gain to hand on to those that will follow.

As such this twilight US Administration is going to be tempted to also quietly push Ukraine toward the Kremlin terms regarding the adoption of an election law for the occupied Donbas – even if the US political class more broadly is far more unlikely to agree with such maneuvering in accordance with Kremlin terms.  After all, officially the US is not involved in the “Minsk document” or associated negotiations, so the ability to blame Paris, Berlin, Moscow or Kyiv for any failures to solutions it may quietly push exists and may blunt wider US political unease at such a strategy.

Ukraine for its part has actually managed to defend its current diplomatic position for more than a year when it comes to a ceasefire actually commencing and in which the fire actually ceases, the verified removal of Kremlin personnel and weaponry, and the regaining of control over its borders occur before passing election laws and establishing the conditions of holding free and fair elections.

At no point during the past two years has The Kremlin actually bothered to progress “Minsk” issues over which it has control.  To be entirely blunt, the immediate future and beyond also provides little reason for the Kremlin to seriously pursue doing so either.

Further, The Kremlin’s “conversation” with the current US Administration is over – unless that conversation relates to unilateral US concessions, either directly (Syria) or by influence over third parties (Ukraine), to Kremlin interests.  Both existing and new levers will currently be being prepared for use upon the in-coming US Administration in the New Year.  Kremlin contempt for the current US Administration is crystal clear.

A reader may therefore ponder the content of any on-going Surkov-Nuland diplomacy with regard to Ukraine.  It seems unlikely that they would be unambiguously to the benefit of the Ukrainian State if any negotiating ground is to be given to The Kremlin that forces the order of “Minsk” implementation per a Kremlin list of priorities.

The 19th October therefore may be a severe test of the Ukrainian position if “progress at any cost” tops the German, French, Russian and behind the curtain US agenda – for “any cost” will be borne by President Poroshenko who is eyeing ever-poor popularity figures while already positioning for a run at a second term.

If the assumptions described above are even halfway accurate and Ukraine is forced to cede to a Kremlin led Minsk implementation timetable (which The Kremlin probably wouldn’t fulfill on its part), what wiggle room is available to the Ukrainians regarding any proposed law that would stand even the remotest chance of getting through a Verkhovna Rada vote?

(A reader will note that this is a statutory law requiring 226 majority rather than any Constitution changing vote that will simply not see the required 300+ votes no matter how much money or coercion was offered to vote “the right way” to amend the basic law of the land.)

Firstly the Ukrainian State and any “special” statutory electoral legislation has to try to avoid stating a definitive date around which circumstances can and will be manipulated.  Rather, it may be prudent to consider a definitive set of circumstances that automatically trigger the election date.

A definitive set of circumstances may include a consolidating and verifiable time period based upon an absolute and verified ceasefire.  For example 100 days (or whatever) from a complete and strictly observed ceasefire becomes election day.  Any breach of ceasefire resets that clock.

During the electioneering Ukrainian and international media has full and free access to the occupied Donbas.  Should that freedom be curtailed, the 100 day clock is reset.

International election observers have unconditional access during the electioneering period, on election day, and during vote counts – which in turn demands a security environment that facilitates such freedoms.  Any failure resets the election day clock.

Who can actually vote needs to be unambiguously stated.  Perhaps only those voters registered in the occupied territories on 1st January 2014 in order to avoid “constituency stuffing”.  IDPs wherever their location, if registered as a genuine resident upon any specified historical registered voter date will need to be afforded the maximum opportunity to vote – be they displaced within Ukraine or have left for other nations (including Russia).

In short it could be possible to write an election law that may possibly be forced, coerced and bought through the Verkhovna Rada and that possess enough “snap-back clauses” to prevent a volatile reaction among the more militant of Ukrainians, and which would also avoid the most serious of political damage within the majority of the Ukrainian constituency.

Naturally the Kremlin would not be keen on such a law, but it may be enough to appease the “friends of Ukraine” all of whom have domestic political reasons to push the Minsk timetable and proclaim “successes” no matter how small, and yet avoid being perceived to cave into the Kremlin.

(For the sake of sarcasm – Alternatively, following the experience of the Budapest Memorandum, perhaps Ukraine should agree to a Kremlin timetable only and exclusively under the explicit guarantee (not assurances or other woolly terminology) from Berlin, Paris and Washington that should the Kremlin fail to abide, a very specific set of actions would occur.  Naturally none would agree to providing such guarantees when there is no trust in the current Kremlin – so why should Ukraine be any more trusting?)

As 19th October is unlikely to be a PR exercise for President Putin, and neither is any pretense at being constructive likely to seriously influence western capitals regarding sanctions or increased top level interaction, there is probably something else that brings President Putin to the Normandy Four gathering.  Thus questions as to what degree of further concessions and/or appeasement does he expect, what if any will be given with regard to and/or by Ukraine, and what is the substance of any Surkov-Nuland deals behind the curtain?

Will there be another Normandy Four meeting before the year end?

If so will there be yet another official rolling over of “Minsk” as there was last year?  Will somebody within the EU see any wisdom in loosening the rhetoric that ties sanctions to “Minsk” if its rolling over is not to occur but it is instead finally pronounced dead?  Do such sanctions die if “Minsk” to which they are consistently rhetorically tied dies?

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The gathering reform storm of 2017 – Ukraine

October 6, 2016

Many Ukrainian eyes are focused on 2017 and what external events will mean for the nation.

How will US policy change when a new president sits in the Oval Office?  What of the elections in France and Germany?  How much of a distraction will BREXIT be when it is eventually triggered?

All good questions – and as stated a few days ago “….. unless the Ukrainian leadership really start making strides (rather than tip-toe) with real and effective reforms US patience will expire sometime in 2017, just as the European patience will.  Real support will ultimately be reduced to little more than that surrounding territorial integrity and sovereignty.”

That statement fails to include Ukraine meeting its obligations to international institutions.  There are agreements with the IMF, World Bank, EIB and EBRD that will either be met – or broken.  This in turn will have a major impact upon FDI if (or possibly when) these agreements go unfulfilled.

To keep a watchful eye upon the external, currently” friendly” influences that will effect Ukraine in 2017 is understandable, but there are some extremely prickly and difficult issues internally that have the ability to magnify or reduce the thus far (surprisingly robust) goodwill of the international community (minus Russia) which seem destined to once again radically and negatively effect Ukrainian standing among its “friends”.

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In short there is a reform (or distinct lack of) storm brewing that is going to hit Ukraine in early 2017 and which when it does, the feckless domestic politicians will be once again at its core.  The issues are vividly clear, yet as normal, preparation, professionalism and policy are entirely absent.

Before looking at 2017 however, 2016 has yet to run its reform course.  The next tranche of IMF money, about $1.3 billion, is due in November.  For this tranche to be forthcoming there are but a few obligations to meet.

Clearly insuring reform progression thus far does not reverse is necessary.  The irreversibility of what has been done thus far is highly questionable.  What reforms, if any, can be claimed as being irreversible and consolidated?  Some may be close, but which are truly over the line?  The NBU has done a very good job, but a change of leadership and/or policy could undo almost all that has been done.  NABU is under direct assault by the PGO and Attorney General.  The new national police for the most part is refusing to buckle to corruption despite the police service remaining only half reformed and far from ethical as an institution.  The military are now a capable fighting force, yet its leadership remains poor and con tinuing corruption is as corrosive as the war of exhaustion with Russia in the occupied east.

Nevertheless, aside from holding the reform line that has be advanced thus far,  to meet the requirements for the next IMF tranche NABU should be given the right to wire tapping.  The list of SOEs for privatisation in 2017 completed (notwithstanding the November 2016 second attempt to sell Odessa Port Side – and the equally robust attempts to prevent its sale by vested interests.)  The e-declarations of politicians and relevant public office holders are to be filed in their entirety.  A “fair” budget for 2017 is to have been submitted.

All this to be accomplished by the end of this month so the IMF can give a timely nod of approval for November’s $1.3 billion.

Thus far, “fair” or otherwise, the budget has been submitted for consultation within the Verkhovna Rada.  The outcome of those consultations and the guaranteed subsequent amendments remain to be assessed by the IMF.  The budget however, is possibly the least problematic of the IMF requirements.

An independent NABU logically should not require the SBU to carry out wiretaps on its behalf.  The more people that know that “Mr X” is subject to a wiretap, the more chance there is that “Mr X” will find out.  Having to use a third party brings with it an unnecessary potential for leaks and/or tip-offs.  It should therefore not require stating that a nefarious elite and feckless parliament do not want a self-sufficient NABU that is far more difficult to infiltrate, influence or preempt.

The e-declaration fiasco remains just that.  The  declaration system still fails to meet the legislative framework requirements.  The e-declaration legislation itself also requires some amendment – just not the amendments to remove criminal liability that so many politicians want to see.

The sheer scale of opposition to the e-declaration reform is naked to the observing eye when considering it took EU conditionality to get the e-declaration law passed initially, and then months later it requires IMF  conditionality to actually get e-declarations completed by those who are required to do so (by the end of October).

At the time of writing about 1600 e-declarations have been submitted.  Of those only one of that number is of a parliamentarian (Mikhail Gavriluk).  None of the other 400+ MPs have yet filed.  Not a single member of the Cabinet has either.  About a dozen of the 300 NABU detectives have filed, and only two of the four NAPC members charged with policing e-declarations have done so.  Even if all e-declarations are submitted by the end of October, as stated long ago, court challenges are inevitable when the system still fails to meet the legislative framework it operates within.

In March the blog forecast that by the autumn Ukraine would not need external financing (although it would continue to accept it gratefully), but that it should nevertheless earnestly complete its obligations for reasons of external confidence in the nation’s governance.  Naturally the usual issues of fecklessness loom large, for when it is clear to the political class that there is no impending and immediate fiscal doom, the will to complete prickly reform legislation evaporates – which is where Ukraine finds itself today.

Reform orientated legislation has more or less stopped and requires resuscitation.  In fact it requires steroids if Ukraine is to meets its reform obligations to the IMF (let alone others) for 2017.

There are issues with compiling a list of SOEs ready for privatisation, liquidisation or remaining State owned.  There are at least 20 outstanding audits from those commissioned.

If the next few weeks in meeting the November 2016 and the $1.3 billion IMF tranche requirements appears optimistic, then meeting the obligations for the scheduled February 2017 tranche of $2 billion is perhaps as remote as riding a unicorn naked through the centre of Kyiv without once being snapped by a smartphone.

Despite the reform orientated legislative work completed in the energy sphere, the Ukrainian energy market remains entirely impenetrable, thus looking to 2017 the privatisation of Centrenergo is perhaps the only realistic chance of breaking into this market if it be sold to a foreign investor.  As such, the sale of Odessa Port Side in November has to be seen as a fair and transparent process by all onlookers.

Whatever the case, there is no way the list of SOEs for privatising, liquidisation or remaining State owned will be completed (and made publicly accessible upon the Ministry of Economic Development) by the year end.  Even if the only list of those SOEs identified for liquidisation is completed by then, there is simply little interest within the Verkhovna Rada to kill off such entities.  Gathering 226 votes for an exercise where none have any interests close to the New Year break is somewhat unlikely.  Auditors will not be rushed either.

Likewise “supervisory boards” such as that Naftogaz currently has (and which seems to be working well) for another 10 major SOEs is very unlikely to be achieved prior to 2017 as planned.  There is really no political will to do it – and a good deal of vested interests that will obstruct it.

Thus this reform requirement will roll over into 2017.

Fecklessness, lobbying/nefarious acts, and legislative short-comings aside – now to ever-present populism.

There two obligatory reforms by year end 2016 that seem simply beyond reach, will thus roll over into 2017, and yet are still unlikely to get through the Verkhovna Rada to facilitate the $2 billion February IMF tranche – thus finally breaking the IMF agreement and dealing a critical blow to “friendly” transatlantic assistance beyond issues of Ukrainian sovereignty and territorial integrity.

The first is the long-standing issue of pension reform that almost every government has stated it will tackle – but hasn’t.  Pensions from the age of 50 are simply unsustainable, and to be blunt most people continue to work way past being 50 because the pensions do not sustain them.

It is a policy that has to be addressed, but one that when push comes to shove, and despite a decade of rhetoric regarding the necessity of raising the pension age, every Ukrainian leadership succumbs to populism.

Nevertheless it simply has to be raised.

It is foolish to believe that any attempt to raise it significantly in one go will ever get through the Verkhovna Rada.  A system, for example, of raising the retirement age by 1 year every 2 years over 20 years (or a variation therefore) may stand a chance – however slim.  A system of greater contributions equating to greater pensions may also find some traction – but enough?  The populists however (Ms Tymoshenko, Mr Lyashko etc) will always seize upon pension reform for short term politicking and pre-election electioneering rather than looking at long-term policy necessities.

There are also existing process issues relating to checking the authenticity of claimants – something aggravated by the large number of internally displaced people.

Most difficult of all however, is the issue of land reform.  Ukraine has obligated itself to creating legislation regarding agricultural land reform by the end of October 2016.  That simply is not going to happen.  As of the time of writing the blog cannot even find a draft law registered regarding the issue.

It may be that the IMF will allow this sensitive/populist issue to roll over into 2017 and allocate the November 2016 tranche if all other conditions are met.  It will not issue the $2 billion tranche in February 2017 without this issue being tackled however.

Ms Tymoshenko is already noisily calling for the current moratorium upon the sale of agricultural land to be extended to 2022.  The Radicals being equally as populist will enthusiastically support her.

The sly oligarchy or slightly less mega-rich will look to provide/create agri-loan businesses with formidable foreclosure clauses to assume agricultural land of those farmers they lend to should the sale of agricultural land be permitted.  Huge ranges of State land will be swiftly leased through cronyism prior to any right to buy.  The farmers must be given more time to save the capital to buy the land they current lease and farm.  All such reasons will be presented not to create an agricultural land market.  Those farmers that do own their land will be tricked out of it by the unscrupulous, or simply coerced into selling it for a pittance – by continuing to stop them being able to sell the land they currently own, we are saving them from themselves (rather than infringing upon their rights to sell their own property).

There will be some societal “buy in” for some of that rhetoric, but that rhetoric can perhaps be employed to create safeguards within any laws creating a land market – if anybody actually drafts a law to create a land market that will be fair, regulated, and if necessary contain legislative restraints.  (Perhaps Ms Tymoshenko would like to draft a law that explains how a land market will be created after her 2022 moratorium expires?)

If it proves simply impossible (as is likely) to find the political will not only to lift the current moratorium but also prevent its extension, then perhaps legislation creating a fair land leasing market  is an alternative?

If the land cannot be bought and sold in a (regulated) free market environment, then create a transparent free market where leases for the land can be.  Some imagination might be required, but there is surely some way to create a land market that brings about transparent and fair benefits to all and around which Ukraine and its “friends” can agree as constituting positive market driven reform.

Although it is possible to continue with examples that are going to lead to a reform storm in 2017, it is perhaps unnecessary insofar as highlighting how swiftly matters are going to come to a head and when a probable breach of IMF conditionality occurs – with undoubted repercussions with a newly installed US Administration and immediately prior to both French and German electioneering.

Indeed it may also become the catalyst for the long anticipated early Verhovna Rada elections in Ukraine (which are unlikely to bring about a reformist critical mass as current election laws stand).

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A note to regular readers – For the next few days your author will be in Poland locked behind closed doors with a dozen sages and otherwise insightful boffins from across the region.  Although undoubtedly returning far wiser, the normal rambling and low-brow blog entries will continue upon return.

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