Ukraine Quarterly Digest: April-June 2021

 BY ANDRIAN PROKIP

The beginning of the second quarter was marked by the threat of new round of military aggression against Ukraine amid a concentration of Russian troops near the Ukrainian border. A potentially larger threat to Ukraine’s sovereignty, however, is posed by Russia’s ongoing “passportization” of the Donbas. The Ukrainian government continued applying the National Security and Defense Council’s sanctions against Ukrainian citizens identified as smugglers and crime lords, and against foreign entities, chiefly Russia-based foreign banks, helping to strengthen the rivalrous regime in the Donbas and Crimea. On the administrative front, the dismissal of the state-owned Naftogaz’s CEO was cause for serious concern both in Ukraine and abroad; the debate over the legality of this move is ongoing. On a more positive note, the situation in regard to the COVID-19 pandemic in Ukraine has stabilized, and some progress in vaccinating the country is evident.

1. INTERNATIONAL AFFAIRS

Risk of Military Escalation by Russia

In March–April 2021, Russia positioned military troops and equipment along the border with Ukraine and in the occupied Donbas and Crimea. Ukraine and the West saw these developments as an effort to put pressure on Ukraine with the threat of military escalation. The Kremlin, however, insisted that the deployment was merely in preparation for a military drill. The Pentagon countered by pointing out that the military build-up—estimated by the EU at more than 100,000 troops, though precise numbers are difficult to come by—was larger than that in 2014 and it was not clear whether a deployment of that size was needed for drill purposes.

Western governments and international organizations demanded a pullback of Russia’s military forces from Ukraine’s border. In late April Russia started withdrawing troops, but part of the military contingent remains near the Ukrainian border.

Since late April, Russia has blocked the Kerch strait and several other parts of the Black Sea around Crimea, and has announced that restrictions on navigation will be in force for six months, until late October. Two weeks earlier, at the beginning of April, Russian border guards attempted to block a group of Ukrainian warships in the Sea of Azov. These restrictions appear to be in violation of a 2003 agreement signed by Ukraine and Russia giving both countries access to the waters of the Kerch Strait and Sea of Azov. The restrictions on navigation are expected to affect Ukraine economically.

Relations with the United States

After Russia conducted military maneuvers on the Ukrainian border, the U.S. Department of State stressed U.S. readiness to cooperate with Ukraine on security and defense matters.

On May 6, U.S. secretary of state Antony Blinken paid Ukraine an official visit, during which he met President Zelensky and other top officials. The visit underscored the progress being made in bilateral U.S.-Ukraine relations. The parties discussed Russia and corruption as key threats Ukraine faced.

On June 7, President Biden and President Zelensky held a phone conversation. The parties discussed security issues, the future of the Nord Stream 2 pipeline (some sanctions against which were waived by President Biden recently), Ukraine’s prospects for joining NATO, progress with reforms, and progress in the fight against the COVID-19 pandemic. President Biden invited President Zelensky to visit Washington, D.C., in July 2021.

Ukraine-NATO Commission

On April 13, at Ukraine’s request, NATO held an emergency meeting of the Ukraine-NATO Commission to discuss the latest political developments between Ukraine and Russia and the security situation in the region. Ukrainian officials sought to draw NATO’s attention to the rapid deterioration in the security situation in eastern Ukraine and the border region, in particular Russia’s military and political escalation, which started with military drills at the beginning of April and moved on to a massing of forces near Ukraine’s borders. Following the discussion, the commission issued a formal statement of support for Ukraine’s position with respect to the occupied territories.

Relations with Russia

Diplomatic tensions with Russia continued, marked by a striking incident. On April 16 the Russian Federal Security Service (FSB) detained the Ukrainian consul for a few hours, charging him with receiving classified information extracted from a database maintained by the FSB. The Russian government declared him persona non grata and ordered him to leave the country. In response, Ukraine demanded that a senior Russian diplomat leave Kyiv. In a follow-up tit-for-tat, the two countries expelled one more diplomat from the other’s side. The detention of a diplomat is uncommon and could only worsen tensions between the two countries.

In early April Ukraine’s National Security and Defense Council (NSDC) imposed sanctions on eleven Russian organizations and companies, including the Russian Rossotrudnichestvo, a cultural and diplomatic umbrella organization that Moscow has developed into an instrument of soft power. Later, President Zelensky extended for another three years sanctions against fifty-five Russia-based banks that operate in the noncontrolled areas in eastern Ukraine and in annexed Crimea and are believed to be underwriting Russian aggression against Ukraine.

In a continuation of policy actions from 2014, Ukraine withdrew from two more agreements with the Commonwealth of Independent States (CIS) in the fields of consumer protection and intellectual property protection. This process has been ongoing since Ukraine decided to quit the CIS.

In April, when the threat of Russian aggression was growing, President Zelensky in a public speech offered to meet Vladimir Putin in the Donbas. Putin responded that he was ready to meet, but not on the issue of military conflict in the Donbas; for this Putin “advised” Zelensky to hold a dialogue with the leaders of the unrecognized republics of Luhansk and Donetz.

Later in June, President Putin described Ukraine as fully controlled by the U.S. government, which made a meeting with President Zelensky unnecessary. Official Kyiv denied any such external management and demanded that Russia respect Ukraine’s sovereignty.

Relations with Poland

President Zelensky paid a visit to Poland on May 3, 2021. The formal reason for the summit was the celebration of the 230th anniversary of the Polish constitution, in which the heads of the Baltic countries also participated. After the presidential summit, Zelensky and Polish president Andrzej Duda discussed security cooperation in light of Russia’s military escalation in April, as well as joint infrastructure projects, trade, and mutual partnership on regional issues, including the situation in Belarus. President Duda intends to pay a return visit to Ukraine on August 24, that country’s independence day.

Relations with France

On April 16, French president Emmanuel Macron welcomed President Zelensky to Paris, marking the Ukrainian president’s third visit to that city since 2019. Among the key topics discussed was military cooperation, including Ukraine’s request to purchase French Rafale fighter jets. Ukraine has not purchased any fighter jets in the three decades since the dissolution of the USSR, and the French aircraft could replace the Soviet-era Mikoyan MiG-29 combat aircraft to meet Ukraine’s future needs. The bulk of the conversation, however, focused on Russia’s escalation in the East of Ukraine and the future of the Minsk agreements and peace talks in the Normandy format. No specific results were announced.

Relations with Turkey

President Zelensky visited Turkey’s president Reccep Tayip Erdoğan on April 10. The visit was designed to demonstrate that Ukraine has broad international support in the run-up to possible conflict with Russia.

Though Turkey does not recognize Russia’s annexation of Crimea and has often expressed support for Ukraine, Ankara’s "double game" with Russia might place limits on what Turkey would be willing to do in the event of undeniable invasion of Ukraine. Russia’s decision, announced on April 12—two days after the meeting with Zelensky—to halt flights to Ankara can be seen as an economic-political threat signal to Turkey.

Though a discussion of Russian posturing and threat dominated the discussion, the two leaders also concluded agreements on household projects for Crimean Tatars in the southern regions of Ukraine and on the establishment of a bilateral consultation body, to be headed by foreign and defense ministers.

The parties also signed a political declaration in which Turkey reiterated its support for Ukraine’s position on Crimea but emphasized the need to resolve the conflict in the Donbas peacefully based on the Minsk agreements. The wording was much the same as in the last joint statement issued after the two leaders met in October 2020. Turkey uses Ukraine as buffer to deter Russian influence in Eastern Europe in energy, religious, and humanitarian spheres

2. INTERNAL AFFAIRS

A New Round of Ministerial Reshuffling

In April 2021, the Verkhovna Rada appointed Herman Halushchenko energy minister after more than a year of the post lying vacant. Halushchenko received an unusual level of support from the MPs and from parliamentary groups controlled by oligarchs. Before his appointment, Halushchenko had served as a vice president of the state-owned Energoatom, which operates all four of Ukraine’s nuclear power plants.

In May 2021 parliament replaced three minsters: those for health care, infrastructure and transportation, and the economy(Oleksiy Liubchenko, the new minister of the economy, was also appointed first deputy prime minister). The replacements were prompted by the president’s dissatisfaction with the old leadership of the three ministries.

Naftogaz Reshuffles

On April 28, 2021, the government decided to dissolve the Naftogaz supervisory board, dismiss CEO Andriy Kobolev, and appoint former Naftogaz top official Yuriy Vitrenko the new CEO. Many in Ukraine and abroad considered this move a regressive step undermining corporate reforms. The main reasons for such a decision apparently were management’s failure to boost domestic gas production, Naftogaz’s large financial losses, and the company’s unwise pricing policy (for more on this topic, please watch the Kennan webcast with Ukrainian experts discussing this issue, and read a special Focus Ukraineblog article). Initially, the supervisory board members indicated their intention of resigning, but as part of politically driven agreement reached afterward, members of the supervisory board and the management board remained in office and only the CEO was replaced.

Further Proceedings with National Sanctions

After first steps in sanctioning Ukrainian citizens suspected of engaging in different crimes by the NSDC in early 2021, in the second quarter the NSDC continued this policy, despite its unconstitutional nature. The council imposed sanctions on Ukrainian citizens suspected of being smugglers and crime lords.

In late June, President Zelensky also approved the council’s economic sanctions against former president Viktor Yanukovych, former prime minister Mykola Azarov, and twenty-five other individuals who were considered responsible for strengthening the occupation regime in the Donbas and Crimea.

Viktor Medvedchuk’s Prosecution

In May 2021, the General Prosecutor’s Office placed Viktor Medvedchuk and Taras Kozak, oppositional MPs and politicians with ample pro-Russia credentials, under formal suspicion of high treason. In February the NSDC had imposed economic sanctions against both because of suspicion that they were financing terrorism. Now Medvedchuk is confined to his flat while Kozak has fled Ukraine.

According to numerous audio files provided to the press by unknown sources, Medvedchuk operated as an energy and political “ambassador” to Russia during the early years of the Poroshenko presidency. According to the published tapes, Russian companies were selling their Ukrainian assets to Medvedchuk or his associates, in this way supporting a politician who was promoting stronger political and economic ties between Ukraine and Russia during wartime. (Please see another Kennan Focus Ukraine blog  piece on Medvedchuk’s petrol business in Ukraine, tied to Russia.)

In June, Ukrainian journalists leaked recordings of Medvedchuk’s phone calls with Russian officials and Russia-backed separatists in Donbas and Luhansk during 2014–2019. These tapes bring to light some of the many ways in which Medvedchuk worked against Ukrainian national interests in his negotiations with Russian parties, including attempting to block a prisoner exchange in 2015.

COVID-19 Developments

In the second quarter of 2021,the pandemic situation in Ukraine stabilized somewhat, with the numbers of infected and deceased falling to their lowest levels at the end of June and the vaccination rate ramping up. That said, the proportion of the population that has been fully vaccinated is still very low—only 2 percent of Ukrainians at the end of June.

3. PROGRESS IN REFORMS AND SUCCESS STORIES

Referendum Law

On April 6, 2021, President Zelensky signed the law “On Referendums,” which had been approved by parliament at the beginning of 2021. While formally, this act increases citizens’ involvement in decision-making affecting the country, there are serious risks that the act opens up ways for referenda to be manipulated for political ends, especially by crafty populists.

4. THE SITUATION IN THE DONBAS

The situation in the Donbas did not change significantly in the second quarter. Low-level armed conflict continues, with ten to twenty killed and up to twenty wounded in aggregate each month (see the OSCE daily reports).

The Trilateral Contact Group on Ukraine, formed to find a diplomatic resolution to the conflict in the Donbas and comprising representatives from Russia, Ukraine, and the OSCE, remains largely ineffective. The parties have consistently failed to find ways to reach an armistice agreement, a necessary first step before further negotiations can be successful. Instead, the OSCE has reported observing heavy weaponry located near the front line, in violation of earlier agreements, and the OSCE Special Monitoring Mission to Ukraine has found its freedom of movement restricted and its GPS signals blocked.

The Russian government has simplified the process  for residents of the noncontrolled areas of the Donbas to obtain Russian citizenship. According to Ukrainian officials, as of mid-May, 600,000 Ukrainian citizens, or more than 15 percent of the population of the self-styled Donetsk and Luhansk people’s republics, had received Russian passports. In creating a "passport protectorate," Russia has done something potentially far more lethal to Ukrainian sovereignty and with farther-reaching consequences than saber-rattling on the border, for Moscow has made clear that it is the Kremlin’s policy to come to the defense of Russians wherever they may be. The dual passport situation creates a specific problem for Ukraine, for Kyiv considers Ukrainian citizens resident within Ukraine’s boundaries to be solely Ukrainian citizens, even should they acquire citizenship in another country. Ukrainian foreign affairs minister Dmytro Kuleba called on Ukraine’s Western partners to respond to this “passportization” and prevent any merger of the Donbas with Russia.

We will continue to monitor these events and report again at the end of the next quarter.

The opinions expressed in this article are those solely of the authors and do not reflect the views of the Kennan Institute.