Ukraine Quarterly Digest: April-June 2018

BY ANDRIAN PROKIP

In the second quarter of 2018, parliament approved a number of important bills, including one on a special court to try corruption cases, which was sought by international organizations and Western governments as a condition for Ukraine to receive more aid. In the same session, however, parliament voted to dismiss reform-minded Finance Minister Oleksandr Danylyuk. The IMF decided to proceed cautiously in releasing another loan tranche, saying it would evaluate the new law on the anticorruption court. In the meantime, the EU agreed to another large aid package of €1 billion, with disbursal dependent on Ukraine making further progress on reforms. Ukraine also received military assistance from the United States in the form of powerful anti-tank missile systems.

On the domestic front, little progress was made in negotiations over the situation in the Donbas. Instead, violations of the cease-fire agreement increased, and the conflict ramped up to a “hot” phase. International attention was also drawn to the problem of Ukrainian citizens being held as political prisoners in Russia.

1. FOREIGN POLICY ISSUES

Ukrainian Political Prisoners in Russia: #FreeSentsov
Since the annexation of Crimea and the start of the Russia-backed war in the Donbas, dozens of Ukrainian citizens (including residents of the Crimean Peninsula) have been imprisoned in Russia, accused of political crimes. One of the best known of these is the Ukrainian filmmaker Oleg Sentsov, who was arrested on May 10, 2014, charged with planning a terrorist act (in the absence of any supporting evidence), and sentenced on August 25, 2015, to 25 years of incarceration in a high-security prison.

After Sentsov went on a hunger strike, timed so that day 30 would coincide with the start of the FIFA games, a huge campaign was mounted under the hashtags #FreeSentsov and #SaveOlegSentsov. Its aim was to increase international awareness of the imprisonment of Sentsov and other Ukrainian citizens inside Russia. Social activists, prominent figures in the entertainment industry, and officials from a huge list of counties joined the campaign, calling on Russian officials to release Sentsov and the other political prisoners. In late June Thorbjørn Jagland, secretary general of the Council of Europe, filed an official appeal to Putin under the European Convention on Human Rights seeking a pardon for Sentsov. However, the Kremlin turned down the request on the ground that the prisoner had to file the appeal himself.

Another Ukrainian being held as a political prisoner of Russia is Volodymyr Balukh, who went on a hunger strike in late March 2018. Balukh was also a resident of the Crimean Peninsula and had regularly hoisted the Ukrainian flag over his house. A Russian court found him guilty of illegally storing ammunition and sentenced him to serve three years and five months in prison. Later he was also accused of beating an prison officer.

On June 4, a Moscow court took into custody the Ukrainian journalist Roman Sushchenko, found him guilty of espionage, and sentenced him to twelve years’ imprisonment. Sushchenko had been arrested on September 30, 2016, during a visit to Moscow on personal matters.

The imprisonment of Ukrainian citizens in Russia on political charges represents a new mechanism for inspiring terror in the occupied territories as a way to counter the dissidence of Ukrainian citizens living in those territories. Officials, civil society activists and organizations, actors, writers, and people from many walks of life and many countries have demanded that the imprisonment of Sentsov and others on trumped-up charges be recognized for what it is: an act of aggression against Ukraine. These efforts have borne no fruit. Russia usually refuses to allow those prisoners to meet with the Ukrainian commissioner on human rights or even to allow the commissioner a Skype chat with the prisoners.

Military Assistance from the United States
On April 30, President Poroshenko confirmed that Ukraine had received a first installment of Javelin anti-tank missile systems from the United States Poroshenko indicated that these powerful systems would be used only in response to a provocation. In mid-May Ukraine alsoreceived 500 anti-tank grenade launchers of the RSRL-1 type, produced in the United States.

U.S. Special Representative for Ukraine Kurt Volker in an interview with Ukrainian media on May 28 saidthe United States and the EU were in accord with respect to providing weapons to Ukraine, including the Javelins.

Macrofinancial Assistance from the EU
On May 29, the European Council approved additional loans to Ukraine in the amount of €1 billion. Those loans are intended to support Ukraine’s economic stabilization and structural reform program over the next two and a half years. Earlier, in 2014 and 2015, Ukraine had received loans totaling €2.81 billion from the EU. Subsequent macrofinancial assistance will be conditional on progress being made in reducing corruption and carrying out the IMF-recommended program of reforms.

The Nord Stream 2 Debates
Ukrainian officials have become more concerned about the Nord Stream 2 pipeline. This pipeline, with a capacity of 55 billion cubic meters (bcm), will run parallel to the existing Nord Stream pipeline. Starting in Russia, it will pass though the sovereign waters of Finland, Sweden, Denmark (if the government does not ban it; otherwise the pipeline will have to omit Denmark’s waters), and Germany, terminating in the German city of Greifswald. All countries except Denmark have granted the necessary permits to build the pipeline.

If the pipeline is successfully constructed, the Ukrainian gas-transporting system will no longer be in high demand. Nord Stream 2 has enough capacity to bypass Ukraine in delivering gas from Russia to the EU. The threat is not just to revenues (which amounted to about U.S. $3 billion in 2017, or 2.67 percent of Ukrainian GDP) but to the country’s security. If Ukraine is eliminated from the gas-transporting chain, there will be more opportunities for Russia to destabilize the situation in the country, including provoking a full-scale war.

Thus, in the first half of 2018, Ukrainian officials’ statements on Nord Stream 2 grew sharper and more frequent. On April 5, the Ukrainian parliament adopted a draft resolution, “An Appeal of the Verkhovna Rada of Ukraine to the International Community on the Inadmissibility of Construction of the North Stream 2 Gas Pipeline and the Russian Federation’s Monopoly of the Gas Markets of the World.” The language of the resolution noted that the operation of the new pipeline would have results far outside traditional realms of commerce, with the potential to cause “energy crises, the economic and political destabilization of Europe and thereafter of the whole world.”

President Poroshenko has also issued a number of increasingly pointed statements on Nord Stream 2. He has denounced the project as totally political (April 13, 2018) and a political bribe for loyalty to Russia, which he also called an extraordinarily unreliable partner (April 8, 2018), and has referred to supporters of the pipeline as Russia’s accomplices in its hybrid war on Ukraine (March 31, 2018).

The chairman of the Verkhovna Rada, Andriy Parubiy, called the pipeline a military threat, opining that its launch could result in conditions favorable to an all-out attack of Russian forces against Ukraine (April 8, 2018). Members of parliament and some other officials have made similar statements.

Parubiy also stipulated that the risks were not to Ukraine alone but also extended to the EU. The fear is that Russia could leverage its provision of energy supplies to put pressure on the EU, just as it did in Ukraine and other post-Soviet states. Naftogaz’s CEO Andriy Kobolyev said that “like the Trojan Horse, Nord Stream 2 is wrapped as a gift but is designed to weaken the EU from within.” Once Gazprom achieves a dominant position in energy supply, it can use its control over that scarce resource to force political concessions from the leadership of EU countries, he said.

The Ukrainian anti-Nord Stream 2 campaign has developed into a security-and-threat narrative in which both Ukraine and the EU itself are at risk. The part of the narrative concerning the risk to Ukraine has gained some traction recently: German chancellor Angela Merkel after her meeting with President Poroshenko on April 10, 2018, recognized that the pipeline may have political and strategic implicationsnecessitating some guarantees for Ukraine. The position of Ukrainian officials, however, is that the pipeline must not be allowed to go forward. But stopping or halting the pipeline will require the firm exercise of political will on the part of the EU, with a potential role for the United States, possibly to include sanctions that would affect several giant European energy companies.

Belarus
On May 23, the Belarusian Supreme Court found the Ukrainian journalist Pavlo Sharoiko guilty of spying and ordered him imprisoned for eight years. Sharoiko had been arrested in Minsk on November 17 and charged with spying for Ukraine. The Belarusian security services said he had established his own network of agents and was investigating the Russian military in Belarus. The Intelligence Department of Ukraine’s Ministry of Defense stated that Sharoiko, who had been the department’s spokesman, had left the service in 2009 for health reasons.

Ukraine Withdraws Envoys from the Commonwealth of Independent States
On May 19, President Poroshenko signed a decree withdrawing Ukrainian representatives from all CIS statutory bodies, a move recommended by the National Security and Defense Council of Ukraine. The CIS reacted with surprise, for Ukraine had previously made several unfulfilled threats to stop participating in the CIS, including in 2005, after the Orange Revolution, and in 2014, right after the Revolution of Dignity. Evidently Moscow had not expected the firmness of Kyiv’s decision to withdrawn from most of the CIS covenants.

2. INTERNAL AFFAIRS

Babchenko’s “Assassination”
On May 29, police announced that the Russian journalist and Kremlin critic Arkady Babchenko had been assassinated at his Kyiv flat. The announcement raised the alarm that journalists cannot feel safe in Ukraine.

However, at the following day’s joint press conference of the prosecutor general and the head of the State Security Service of Ukraine (SBU), a spokesperson announced that Babchenko was alive and that the “assassination” had been staged and was a special operation. The intent was to expose those who in fact wanted to kill Babchenko and 47 other well-known journalists and civil society activists in Ukraine. One person who had sought to organize Babchenko’s assassination was arrested.

This unusual episode prompted several international organizations, including the OSCE and Reporters Without Borders, to question whether staging a fake assassination was the best way to bring plotters into the light, and to underscore the potential damage to the credibility of the press when news correspondents become involved in spreading disinformation.

Ukrainian internal affairs minister Arsen Avakov addressed these criticisms, arguing that the special operation with an elaborate hoax at its center was much better than a real murder. President Poroshenko said in an interview with the Spanish newspaper El País that he considered such methods acceptable to protect journalists. The EU’s spokesperson for foreign affairs and security policy said that under existing conditions, Ukraine had the right to protect itself, its citizens, and its media. However, European representatives requested more information and details about the case.

The Orthodox Church’s Independence
On April 17, President Poroshenko announced to the heads of the parliamentary factions his intent to ask Ecumenical Patriarch Bartholomew I, the spiritual leader of the Eastern Orthodox church, to proclaim the autonomy of the Ukrainian Orthodox Church. Ukraine is largely a Christian country—historically, almost all branches of Christianity are represented here, including Greek Orthodox, Roman Catholic, Greek Catholic, and other confessions. The three major Eastern Orthodox churches are the Ukrainian Orthodox Church of the Kyiv Patriarchate, the Ukrainian Autonomous Orthodox Church, and the Ukrainian Orthodox Church (Moscow Patriarchate). The goal is to create a unified Orthodox Church in Ukraine that is independent of the Moscow Patriarchate. About 65 percent of Ukrainians consider themselves orthodox, and most of them affiliate with the Ukrainian Orthodox Church of the Kyiv Patriarchate.

Two days later the Verkhovna Rada voted for a corresponding appeal to Patriarch Bartholomew. Former presidents Leonid Kravchuk, Leonid Kuchma, and Viktor Yushchenko supported President Poroshenko’s idea of forming a single Ukrainian orthodox church and signed an appeal to the citizenry.

Though the Moscow Patriarchate expressed disbelief that the appeals would be successful, Patriarch Bartholomew’s much more positive response would come in July.

3. PROGRESS IN REFORMS AND SUCCESS STORIES

On May 24, Ukrainian Prime Minister Volodymyr Groysman during his meeting with President of the European Council Donald Tusk said there were no problems with conducting reforms in Ukraine. He pointed to successful reform in the arenas of medicine, education, pension system, and energy markets and the introduction of a public state e-procurement system, Prozorro. He also said he saw no reason for the pace of reform to slow.

Earlier, on May 15, IMF Resident Representative in Ukraine Goesta Ljungman had announced what he considered priority areas of focus for the Ukrainian economy to continue growing. Among those were reform of the national bank, cleaning up the financial sector, restructuring the system for managing state finances, progress on pension and energy reforms, continued efforts at privatization, a commitment to battling corruption, and the start of a land market.

According to an earlier decision on the privatization of large state-owned enterprises, the government approved a list of large enterprises to be sold. Their sale is expected to bring in 21.3 billion UAH (about U.S. $0.8 billion). However, few expect that all assets will be sold. In 2017 the government hoped to collect about 17.1 billion UAH through privatization but realized only 3.4 billion UAH.

Anticorruption Court
On June 7, the Verkhovna Rada finally approved the bill “On the Supreme Anticorruption Court,” and the president signed it into law four days later. Immediately after the parliamentary vote the Venice Commission, which had been deeply involved in discussions of the court’s functioning, expressed satisfaction that the bill had been approved, though it had not yet seen the exact text of the bill.

The first law, to establish the anticorruption court and the principles of its functioning, was then supplemented by a second law concerning the physical establishment of the court. President Poroshenko sent the corresponding bill to parliament on June 19, and it was duly passed by the Verkhovna Rada.

A couple of days later, anticorruption civil activists and MPs complained that the paragraph on appeals in the first law had been modified from the draft bill discussed earlier by parliament. The change had been made one hour before the vote. According to the new language, appeals in cases being heard by the National Anti-Corruption Bureau of Ukraine (NABU) when the new law was adopted would be processed not by the appeals chamber of the new anticorruption court but by existing regional appeals courts.

Parliament’s Committee on Justice claimed that this provision had been put in place to meet the requirements of the Venice Commission. The Venice Commission, however, said it did not intend the norm to be codified in law, but only recommended it as a way not to overload the new anticorruption court. On July 12, parliament amended this provision of the law so that all appeals will be heard by the anticorruption court.

UEFA Champions League Final
On May 26, Kyiv hosted the 2018 UEFA Champions League Final. Despite some issues with inadequate lodging and transportation infrastructure to handle so many fans, city authorities managed to solve most of the problems. Ultimately, the organization was successful: UEFA president Aleksander Čeferin said that no mistakes had been made organizing the Final and that the venue was appropriate.

Legalization of Organ Donation and Transplantation
On May 17, parliament voted to amend current legislation and legalize organ transplantation from deceased donors who had previously agreed to the procedure. The new legislation will enable organ transplantation for thousands and thousands of Ukrainians. The need for cardiac and renal transplantation is especially acute.

Law on Foreign Currencies
On June 21 the Verkhovna Rada voted to approve a law liberalizing operations conducted in foreign currencies in Ukraine. The new law voids a huge list of regulations and licenses previously needed for such operations, especially by businesses.

4. THE SITUATION IN THE DONBAS

On May 9, the U.S. Special Representative for Ukraine Kurt Volker in an interview with the Ukrainian service of Voice of America said there was no reason for conflict in the Donbas except for Russia, and that Russia was not meeting the Minsk 2 agreements. Any real chance to end the war, he said, was probably up to Putin. In late May Volker observed that the war in the Donbas had become “hot,” and called on Russia to accept responsibility for the ramped-up conflict.

The second quarter of 2018 saw a record number of cease-fire violations—7,700 in one week, according to OSCE monitors. Because of the worsening security situation, Alexander Hug, Principal Deputy Chief Monitor of the OSCE Special Monitoring Mission to Ukraine, decided to visit the region. U.S. State Department spokesperson Heather Nauert said that the United States supported Ukraine, and called on Russia to withdraw its forces from the Donbas and end the war.