Ukraine Quarterly Digest: January-March 2020
BY ANDRIAN PROKIP
With the COVID-19 pandemic dominating the news, it’s easy to forget that Ukraine began 2020 with a shock of a different kind, the downing of its civilian aircraft in Iran by the Islamic Revolutionary Guard Corps using surface-to-air missiles--an accident, the IRGC claimed. We begin this Quarterly Digest by looking back at that event, and then discuss how the country's economic and political life was affected by the twin blows of a continuing economic decline and the effects of the COVID-19 pandemic. On the governance side, President Zelenskyy, in an effort to push through reforms faster, reshuffled his cabinet and appointed a new prosecutor general. However, support for him is faltering, as evidenced by the failure of the Rada to approve bills he wants passed on first reading. The Rada is dominated by the presidential party, which has split its vote on some important bills, requiring a coalition of parties to save the bills on second reading. All of these issues, along with the unsettled Minsk process, are expected to continue into the summer.
1. INTERNATIONAL AFFAIRS
Downing of Ukrainian Civil Aircraft
On January 8, Ukrainian International Airlines Flight 752 crashed shortly after takeoff from Tehran’s Imam Khomeini International Airport. None of the 176 crew members and passengers—from Iran, Canada, Great Britain, and other countries—survived.
Initially, both Iranian and Western governments denied reports that the plane had been shot down. On January 10, however, Western media, backed by intelligence information, stated that Iran had shot down the aircraft. On January 11, Iran admitted that its air defense forces had brought down the plane, mistakenly identifying it as a hostile target. The incident occurred at a time of heightened tensions with the United States in the Middle East following the US drone strike that killed the al-Quds leader, Qassem Suleimani, in Baghdad on January 3.
Iran delayed giving Ukraine the black boxes from the destroyed aircraft. In the middle of March, Iranian officials promised to send the boxes to Kyiv, but because of the global coronavirus pandemic the transfer was postponed. The incident investigation is ongoing.
US Secretary of State Visit
On January 31, while US president Donald Trump’s impeachment trial was ongoing, US secretary of state Mike Pompeo visited Kyiv and met President Volodymyr Zelenskyy, as well as many other politicians and activists. The aim of the visit was to demonstrate that relations between Washington and Kyiv had not been affected by the impeachment trial. Secretary Pompeo once again assured the Ukrainian government that the Trump administration supported Ukraine in its struggle against Russian aggression.
Turkish Leader Visit
On February 3, Turkish president Recep Tayyip Erdoğan visited Kyiv. The Turkish and Ukrainian presidents have recently increased the frequency of their meetings, in part driven by shared concerns over oil and gas transit. This visit was symbolic, commemorating the date the two countries officially started diplomatic relations in 1992. They discussed bilateral trade and cooperation in energy and transportation, and signed an agreement on military and technical cooperation, which stipulated $36 million in military aid to be provided by Turkey to Ukraine. Erdoğan also asked Zelenskyy to investigate the activity of the controversial Turkish Muslim preacher Fethullah Gülen’s FETO centers in Ukraine. Erdoğan perceives Gülen as the leader of a failed 2016 coup attempt, which Gülen denies; nonetheless, his followers have been sought out and jailed, including some legally residing in Ukraine. This pursuit appears to have been quietly, geostrategically allowed by previous administrations and the SBU, a point of contention among civil rights activists.
For more on the future of Ukraine-Turkey relations, see the following Kennan Focus blog posts: “Ukraine’s Uncertain Foreign Strategy amid Turkey’s Growing Regional Power” and “Turkey, Ukraine, and the Energy Marketplace.”
2. INTERNAL AFFAIRS
Political Life Changes
In the first quarter of 2020, Ukrainians’ trust in authorities as measured by survey results dropped significantly. President Volodymyr Zelenskyy now is the only politician whose level of trust exceeds the overall level of distrust across the country. Zelenskyy’s allies, including the prime minister and the parliamentary chair, have lower levels of trust than he does. Though a decline in support after elections is to be expected, Zelenskyy’s popularity dropped from 63 percent in December to 49 percent in January.
This declining support was among several key factors that forced Zelenskyy to change the cadres in his line of command. The presidential team has lost many people who were with Zelenskyy during his unexpected rise to political prominence, among them Oleksandr Danylyuk, former head of the Security and Defense Council; former head of the presidential administration Andriy Bohdan; former prime minister Oleksiy Honcharuk; former prosecutor general Ruslan Riaboshapka, and other ministers and members of the administration. The newcomers took up positions in the fast-changing cabinet and presidential administration. At the same time, those who were close to Zelenskyy before his political career took off gained more power and strengthened their political stance.
Leaked Prime Ministerial Meeting
On January 15, a secretly recorded audiotape of a meeting held by Ukrainian prime minister Oleksiy Honcharuk with members of the cabinet and National Bank of Ukraine was published on YouTube. On the tape, Ukrainian officials are heard discussing economic issues in preparation for a report to the president. The tape reveals a certain disloyalty of Honcharuk toward the president, as well as the prime minister’s frank doubts about his own economic competence.
Most probably, the aim of whoever published the tape was to discredit the prime minister. President Zelenskyy demanded an immediate investigation of the case. In early February the Security Service of Ukraine (SBU) searched one of the offices of the national 1+1 TV channel (where the recordings were supposedly made). The channel is owned by the wealthy businessman Ihor Kolomoyskyi, and the office subject to search was that of Oleksandr Dubinskyi, an MP in Zelenskyy’s Servant of the People party and someone who, many believe, is close to Kolomoyskyi.
Honcharuk submitted a resignation letter to the president—a procedurally incorrect action, as the Ukrainian constitution stipulates that the prime minister should address a resignation letter to parliament, not the president. Contrary to expectations, Zelenskyy publicly supported Honcharuk and gave him and his cabinet a chance to show they could get things done.
Publishing secret recordings, both real and fake, of officials’ talks through anonymous internet channels has become a widely used attack strategy in Ukraine. For more on the issue, see the Kennan Focus article “Ukraine’s Democratic Leakocracy.”
Resignation of the Head of the Presidential Administration
On February 10, Andriy Bohdan resigned as head of the presidential administration. Bohdan was one of Zelenskyy’s closest allies during the 2019 presidential campaign. He urged Zelenskyy to enter the presidential race and was an architect of Zelenskyy’s “power vertical” after victory. He promoted ideas, helped reboot the Central Election Commission, insisted on an early dissolution of parliament, and helped choose people to fill key executive and legislative positions in the summer and fall of 2019. Finally, Bohdan was the one who orchestrated the Rada’s rapid delivery of new legislation, some of which, it is feared, will not have entirely beneficial consequences for the country.
Bohdan’s departure marks the start of a new period in Zelenskyy’s presidency. Bohdan’s successor is Andriy Yermak, another longtime Zelenskyy ally. In Bohdan’s power line, Yermak was responsible for foreign affairs and negotiations with Russia and was the major contact person in relations with United States: he spoke on behalf of the president with US special envoy Kurt Volker and with President Trump’s personal lawyer, Rudy Giuliani, for example. However, it is feared that Yermak will be too soft on Russia.
Concerns over New Head of Presidential Administration and a Split in the Presidential Parliamentary Faction
In March, a number of MPs from the Servant of the People party signed an open letter to demand that President Zelenskyy block the proposed redesign of the Minsk negotiating group and process. This protest came in response to a March 11 agreement by Andriy Yermak, the new head of the presidential administration, to establish a mutual dialogue platform that would include representatives from the noncontrolled part of the Donbas. The MPs feared that this arrangement would legitimize representatives of the Russia-backed armed separatists and change the status of Russia in the negotiations.
On March 29, Servant of the People party MP Leo Geros published a number of hidden camera videos, made at different times, in which Andriy Yermak’s brother Denis appears to be discussing the possibility of appointing various people to positions in the administration. Geros has alleged that Denis Yermak did so on behalf of Andriy Yermak in exchange for financial gains, and that the head of the presidential administration was trying to drive his program through the law enforcement and defense bodies. (Earlier, Geros was among those who initiated the open letter to Zelenskyy rejecting the adoption of the mutual dialogue platform as part of the Minsk process.) To date, President Zelenskyy has not reacted publicly to the scandal. Andriy Yermak has denied all allegations and referred the case to the SBU.
Rebooting the Government
Even though the January scandal with Prime Minister Oleksiy Honcharuk was resolved, in March he resigned again. On March 3, after being in the position less than half a year, Honcharuk submitted his letter of resignation to parliament. President Zelenskyy blamed the cabinet for small progress in reforms and lack of competence. Because Honcharuk and most members of the cabinet had been brought into positions of power by Andriy Bohdan, it was not surprising that they would have to leave their positions after Bohdan’s exit.
The dissolution of the cabinet took place when it became evident that the Ukrainian economy, especially industrial production, had dropped in the last quarter of 2019. Among the reasons for the decline was the overly rapid strengthening of the national currency, the result of unwise policies promulgated by the National Bank of Ukraine and the Ministry of Finance.
On March 4, parliament appointed Denys Shmyhal the new prime minister and voted for a new cabinet. Decisions were made in such a hurry that the new cabinet had at least four vacant positions. For more on the new Ukrainian government, please see thisFocus Ukraine article.
The second cabinet was fragile from the start. On March 30 the health and finance ministers were asked to resign, despite continuing economic decline and the spreading COVID-19 pandemic. Prime Minister Shmyhal, in addressing the resignations, said that the country needed specialists who could act faster to cope with the twin economic and health crises. Parliament approved the new ministers only on a second vote on the same day, a sign that Zelenskyy’s party, which dominates the Rada, is fragmenting; the second vote succeeded only because other factions joined the president’s faction. The president’s initiatives have received much less party support of late, and he needs situational coalitions with other parliamentary groups to push his initiatives through. The position of minister of energy and environment protection has remained vacant since early March.
New Prosecutor General
On the same day that former prime minister Honcharuk was dismissed, parliament expressed a lack of trust in Prosecutor General Ruslan Riaboshapka. He was accused of dragging his feet in investigating corruption and unsuccessful reform of the prosecutor general’s office. Conversely, the opposition factions declared that Riaboshapka had become the victim of his refusal to obey illegal orders to prosecute Zelenskyy’s political opponents, including former president Petro Poroshenko.
On March 17, parliament approved Iryna Venedyktova as the new prosecutor general. Previously she was an MP from the Servant of the People party and acting chief of the State Bureau for Investigation. Venedyktova is seen as a strong manager of law enforcement agencies and someone capable of making Zelenskyy’s electoral promises of fast justice a reality.
COVID-19 in Ukraine
On March3, Ukraine registered its first case of COVID-19. On March 19 the government reported that in addition to the infection being brought into the country by travelers, Ukraine had internal sources as well.
Looking at the example of other countries that experienced serious difficulties fighting COVID-19, the Ukrainian government and officials took action. Some cities demanded closure of all public places and stores other than groceries and pharmacies. The government has suspended metro service in all cities and restricted interregional and international transport operations, while simultaneously recommending that companies shift to telework where possible. Parliament voted for a law stipulating support for businesses affected by the pandemic, especially for small entrepreneurs, and quarantine measures. The problem is that the pandemic coincided with an economic crisis in Ukraine. This twofold shock will probably result in greater harm for the country than if either had occurred alone.
In an effort to reduce the expected harm, the Ukrainian leadership has tried to cope with the pandemic and prevent further economic decline simultaneously. President Zelenskyy held a meeting with Ukrainian oligarchs and tycoons to discuss their possible participation in battling the epidemic. Zelenskyy is aware that by trying to rein in the oligarchs’ control of the mass media and much of the nation’s wealth while soliciting a partnership with the same private sector they run, he is engaged in a precarious balancing act—but still must try. (For more on the role that the Ukrainian oligarchy plays in public policy, see the following special report and another Focus Ukraine article on this topic.)
The infection is spreading quickly. By March 31, Ukraine had 669 registered cases of infection and 17 fatalities. Other Focus Ukraine blog posts have addressed in more detail the first days of COVID-19 in Ukraine, how it will impact the Ukrainian economy, and how people feel about the possibility of a full-scale pandemic.
3. PROGRESS IN REFORMS AND SUCCESS STORIES
The looming economic crisis and pandemic overshadowed much else during the first quarter of 2020. The previously “turbo-mode” pace of voting in parliament also slowed.
However, parliament took a critical step forward in the matter of land reform laws. On March 31, it finally voted to lift the ban on buying and selling farmland that had been in force in Ukraine since 2001. The establishment of a land market is extremely politicized in Ukraine. To lessen opposition criticism and popular fears, in particular the fear that wealthy outsiders will gobble up large parcels of Ukraine’s best farmland, the land market will be introduced gradually. Individuals will be able to trade agricultural land of no more than 100 hectares beginning on July 1, 2021. Companies can start acquiring land of no more than 10,000 hectares by 2024.
On March 30, parliament voted on the first reading for a law to strengthen banking regulation. This act is intended to prevent the nationalized banks from being returned to their previous owners. In fact, the main goal of the law is to prevent the possible return of PrivatBank (nationalized in 2016) to its former owners, including Ihor Kolomoyskyi. The vote on this law split the parliamentary faction of President Zelenskyy’s Servant of the People party. Only 200 of its 248 members supported the act on the first reading. Zelenskyy personally went to the Rada to seek support for the bill. Both the land act and the “Anti-Kolomoyskyi Act” (as the banking law has been dubbed) are among the International Monetary Fund’s requirements to continue cooperation with Ukraine.
Zelenskyy has also submitted to parliament a long-awaited draft law on security service reform. Unfortunately, the bill sidesteps the most necessary reforms of the service. EU representatives have publicly criticized the reform of the SBU, reminding Ukrainian authorities that their security service should focus on terrorism, counterespionage, and the protection of state secrets. However, the submitted draft stipulates that the service will also deal with economic and organized crime, which duplicates the functions of other agencies and exposes the SBU to corruption temptations.
4. THE SITUATION IN THE DONBAS
During the first quarter of 2020, the situation on the Donbas front line did not improve. Rather, the number of shooting incidents and the number of victims increased on both sides.
On March 11, another meeting of the Trilateral Contact Group was held in Minsk. Since 2014, the group has been negotiating conflict resolution in the Donbas. This time, the meeting was attended by new participants from Ukraine and Russia: Andriy Yermak, the new head of the presidential administration, and Dmitri Kozak, its deputy chief. The new negotiators are expected to change the negotiation process and outcome.
After the previous meeting, on February 26, Ukrainian officials said that the parties had agreed to another exchange of detainees in the near future, a force pullback, and the establishment of a new advisory council. These officials, however, were vague about the council and why it was needed, which raised fears in Ukraine. According to the information released, representatives of the unrecognized Donbas republics, the self-styled People’s Republic of Luhansk and People’s Republic of Donetsk, are to participate in the council as full-fledged members. At the same time, Russia would be accorded observer status in the Minsk group, putting it on the same footing as Germany and France, even though Russia is the aggressor. In Ukraine, opposition experts and parts of civil society expressed their fear that the council would legitimize the Russia-backed separatists in the Donbas. Later, Yermak stated that no final decision had been made on the new advisory council.
We will continue to monitor these issues and report developments in the summer Quarterly Digest.
The opinions expressed in this article are those solely of the author and do not reflect the views of the Kennan Institute.
About the Author
The Kennan Institute is the premier U.S. center for advanced research on Russia and Eurasia and the oldest and largest regional program at the Woodrow Wilson International Center for Scholars. The Kennan Institute is committed to improving American expertise and knowledge of Russia, Ukraine, and the region. Through its residential fellowship programs, public lectures, workshops, and publications, the Institute strives to attract, publicize, and integrate new research into the policy community. Read more