Ukraine

Timothy AshBy Timothy Ash of Standard Bank

The media will be focusing on the one year anniversary of the Maydan, what has changed, and whether it was all really worth it. Here is my two penneth worth.

It it easy to be critical and say little has really changed. But Russia’s annexation of Crimea and its intervention in eastern Ukraine have provided a cruel head wind. Most Ukrainians, I would wager, would argue that these developments were not of their making and, as a sovereign and independent country now since 1991, i.e. for 23 years, they have a right to self determination and to not be bullied by east or west over their choices of geopolitical orientation. Read more

Leaders from Kiev and Brussels were busy this weekend warming up their energy ties as Vladimir Putin bailed out early from the G20 summit in sunny Australia where he faced one could shoulder after another from international leaders over his actions in Ukraine.

Ukrainian president Petro Poroshenko spent Saturday and Sunday receiving a warm welcome from Visegard state leaders meeting in Slovakia (he is pictured above with his Czech, Polish, Slovakian and Hungarian couterparts). He also received guarantees from Bratislava that his country – still at odds with Moscow over fair natural gas prices – would be guaranteed what officials said could amount to 21bn cubic metres of annual reverse flow inflows, enough to meet a majority of the country’s import needs. Read more

Ukraine’s international reserves are drying out rapidly. According to the central bank, in October they plunged by 23.2 per cent to $12.6bn, the lowest level since 2005. Even greater decline is expected by the end of the year. Kiev must pay a $3.1bn gas bill to Russia’s Gazprom alone. The situation could get even worse, should the central bank find itself forced to sell foreign currency to support the hryvnia, and with further hefty gas payments likely over the forthcoming winter.

Emergency funding from international donors, primarily the IMF, could provide a lifeline. But experts believe any such measures would depend on the authorities in Kiev showing a real commitment to fast and effective economic reform. Yet three weeks have passed since snap parliamentary elections last month, and the indication is that the pro-western camp in Kiev is far from taking such steps. Read more

One of the most powerful emerging markets fund managers in the US is accusing the west of acting “capriciously” by imposing sanctions on Russia.

Justin Leverenz, who controls the $42.3bn Oppenheimer Developing Markets fund, and who has put 7.2 per cent of his fund into Russian stocks, questioned the wisdom and the motives of a confrontation with the Kremlin over the Ukraine. Read more

By Taras Kuzio of the University of Alberta

Internationally unrecognised ‘elections’ held on November 2 in the so-called Donetsk and Luhansk People’s Republics (DNR and LNR) have entrenched Russia’s annexation of the eastern Donbas region and established a de facto new border with Ukraine. A proposed Russian treaty with the DNR and LNR is suspiciously similar to its September 2008 recognition of the independence of South Ossetia and Abkhazia. Read more

By Mohammad Zahoor of Istil Group and the Kyiv Post

I have been investing and doing business in Ukraine since its independence in 1991. I first arrived, aged 19, from Karachi on a scholarship to study metallurgy at Donetsk Technical University and after the break up of the Soviet Union stayed on and eventually invested $150m in Istil Ukraine, creating the most technically advanced steel facility in the CIS. I left the steel business in 2008, and today Istil Group is a Ukrainian conglomerate operating in many areas including real estate, media, manufacturing and coal enrichment.

Now, like many entrepreneurs in Ukraine I find myself depressed by the conflict, which potentially will cut GDP by 7 per cent this year and continues to cost lives every day. However, as an entrepreneur I am also excited by the investment opportunities in Ukraine. But for these opportunities to be fully realised it is essential that the pro-western parties who dominated last week’s parliamentary elections address the long-running issue of corruption. Read more

Timothy AshBy Timoty Ash of Standard Bank

Ukraine is a fast-moving target, making any appraisal something of a work in progress. But taking the country on a stand-alone basis, I see a number of positives:

First, parliamentary elections held last weekend produced a strong majority for reform and even the prospect of a constitutional majority. Pro-EU reform parties took 70 per cent plus of the votes and could have 275 seats in parliament, and even over 300 with independents and some of the more populist/nationalist elements. As with the presidential elections, Ukrainians voted firmly in favour of a pro-western reform agenda. Extreme nationalists performed poorly, as did supporters of the former Regions regime. Read more

By Samuel Greene of King’s College London

Thursday’s EU-brokered Ukraine-Russia gas deal restores energy flows to Ukraine, and thus also to Europe, that had been blocked by Moscow since June, ensuring that homes will be heated through the coming winter. However, beyond that obvious plus, it is a remarkably bad deal.

The agreement turns the gas back on for the next six months, for an undisclosed price, while the EU essentially buys Ukraine’s debt to Gazprom, putting Kiev in hock to Brussels instead of Moscow. What the deal doesn’t do is provide a transparent price point or any certainty beyond the end of the winter. Come the thaw, we can be pretty sure we’ll end up right back where we were. Read more

Ukraine’s new parliament will be pro-western, according to the preliminary results of Sunday’s vote. But those results also show that the Kiev-controlled eastern regions of the country supported parties that strongly oppose president Petro Poroshenko and his likely allies in a ruling coalition. Authorities in Kiev will have their work cut out to build bridges with local elites and the general population in the east of the country. Read more

The results of Sunday’s parliamentary elections in Ukraine give president Petro Poroshenko and the potential members of a future pro-Western ruling coalition a rare chance to start economic reforms and launch an effective fight against corruption. However, some experts are not concealing their incredulity.

Last week, Poroshenko signed a package of anti-corruption bills which had been approved earlier this month by the old parliament. These documents include, in particular, a law on a new bureau to investigate corruption among Ukraine’s elites. One of the first goals of the new parliament is to approve financing for the newly-created body. Read more

By Taras Kuzio, University of Alberta

Ukraine’s political map was recast on Sunday as the country elected its first pro-European parliament. The new political geography took shape after support for pro-Russian parties was decimated following the kleptocracy of ex-President Viktor Yanukovich and Russian President Vladimir Putin’s military incursions.

The pro-EU political forces that won 63 per cent of seats in parliament were those of President Petro Poroshenko, Prime Minister Arseniy Yatseniuk, Lviv Mayor Andriy Sadovyy and Yulia Timoshenko’s Fatherland party. There is little doubt that Yatseniuk will remain head of government after his hastily created new Popular Front received only two per cent less than the Poroshenko bloc. Read more

“It is time to unite.”

The slogan ambushes Ukrainians from all sides these days as Petro Poroshenko, the president, deploys it to win votes ahead of parliamentary elections on October 26 that will determine whether he can secure a mandate for important but stalled reforms.

Appeals to unity are easy to understand. Since the popular protests in Kiev against the rule of ousted former president Victor Yanukovich a year ago, Ukraine has lost Crimea while big parts of the Donbas, an industrial region in the south-east, have fallen to separatists. Read more

By Taras Kuzio of the University of Alberta

Ukraine’s pre-term parliamentary election on October 26 will elect a new parliament that will be undoubtedly pro-European but the jury is still out if it will lead to long overdue reforms and a strong fight against corruption. Three factors will influence the election results. Read more

By Riccardo Puliti of the EBRD

Until recently the Nabucco pipeline, just like the chorus in Verdi’s opera of the same name, was a symbol of freedom. It was designed as an alternative route for large quantities of natural gas coming into Europe, reducing the continent’s dependency on the Soviet-built pipeline system that runs from East to West.

But the Nabucco dream did not become reality, mainly because it would not transport enough gas to make it viable and especially because Turkmenistan, a big producer of natural gas, was not part of the project. However, this vision of independence could yet live on in another guise – but only if there is the political will to drive it forward. Read more

By Taras Kuzio of the University of Alberta

Vladimir Putin’s strategy of creating a “New Russia” from eight Russian-speaking regions in Urkaine has failed. Russia’s president has covertly and overtly supported violent separatism in Donetsk and Luhansk (known collectively as the Donbas), where over 10,000 combatants and civilians have died, with the aim of controlling eight Ukrainian regions. Yet Putin currently controls only a third of the Donbas that was never part of historic, Tsarist “New Russia”.

Putin faced – and continues to face – five obstacles to his initial goals. Read more