HomeAnalyticsWeekly Highlights: 08-14.09.2014

Weekly Highlights: 08-14.09.2014

The “ceasefire” established in Minsk is not an obstacle for Russian troops and militants in the escalation of the conflict. Sanctions introduced by EU and US are not stopping Russian aggression in Ukraine. Ukrainian politicians are behaving like there is no war in the country. Economic forecasts for Ukraine are disappointing.

War in Ukraine

●      OSCE observers are recording constant ceasefire violations by LNR and DNR militants and Russian troops. On September 14th, militants have shelled an OSCE monitoring group with mortars during an inspection near Kirovske.
●      Terrorists are declaring that they are not responsible for ceasefire violations because they have signed the agreement as observers and not as a party to negotiations.
●      Truce within the Minsk protocol can not be sustained, since Russia is not able to supply occupied Crimea after the ferry service across the Kerch Strait gets shut down for winter. Therefore, Russian and Ukrainian units use the period of the announced ceasefire to regroup and prepare reserves. The conflict can flare up at any moment.
●      The situation in Donets’k during the truce continues to be hard. Militants are continuing to shell Ukrainian troops positions and sleeping city neighborhoods with artillery and multiple rocket launchers “Grad”. Civilian population suffered numerous casualties. Several mines are flooded and the water is not getting pumped out, which could lead to flooding of large city areas. According to information from Luhan’sk authorities, more than two thousand civilians died over the course of fighting. The city is still with no water or electricity.
●      A preliminary report about downing of the flight MH-17 by the Dutch security service says that the catastrophe was caused by multiple shrapnel injuries of the airplane frame from outside.
●      Several dozen trucks of the “second humanitarian convoy” from Russia have crossed Ukrainian border without customs inspection and not accompanied by staff of the International Red Cross. They’ve left the country within 24 hours. There are no reports about what cargo they carried on the way back.
●      Exchange by POWs with the militants continues according to the ceasefire agreement. By September 14th, there are still 853 prisoners of war or hostages held by militants. 409 people are counted as “missing”.
●      SSU is detaining numerous sabotaging terrorist groups however those that are still out there remain active.
●      Defense Minister Geletey has declared that some NATO countries started to supply arms to Ukraine.
●      Illegitimate elections of local authorities have been held in Crimea. Local Crimean Tatars community boycotted these elections.

Politics

●      The introduction of the economic part of the agreement with the EU on free trade zone has been postponed until December 31st, 2015 at the request of Russia. Association Agreement with the EU will come into force on 16th of September, after the simultaneous ratification by the parliaments of Ukraine and the EU. As a comforting measure, the European Commission extends preferences for Ukrainian producers for the same period until the end of 1015. However, European goods supplied to Ukraine will be subject to custom duties.
●      Political parties held their pre-election congresses to nominate candidates for early elections to the Verkhovna Rada. On the lists of candidates are current deputies, party leaders, journalists, commanders and combatants. At the same time, some of the running for reelection politicians have sullied themselves by collaborating with the occupiers, or by participating in the persecution of Maydan activists. President’s Party “Solidarity” was unable to agree on a common list with the “Popular Front” party of the Prime Minister and the Speaker of Parliament. However, Prime Minister Yatsenyuk believes that the coalition agreement must be signed before the elections.
●      The United States and the EU have imposed additional sanctions against Russian oil and gas companies and the banking sector. Newly included on the sanctions list are “Transneft”, “Lukoil”, Gazprom’s “Gazprom Neft”, “Surgutneftegaz” and “Sberbank Rossii”. At the same time, despite France’s claims of freezing the contract for the supply of helicopter carriers “Mistral” to Russia, first of them has began its trial with Russian crew.

Economy

●      President Poroshenko has signed a law authorizing lease of the gas transportation system and underground storage by enterprises with participation of foreign capital from Europe and the United States, while maintaining a controlling stake in the state.
●      In connection with military actions the situation in the coal industry has become critical. Many mines in the areas of fighting have been flooded and can not be restored. According to Deputy Prime Minister Groisman, coal deficit is at the level of 5 million tons. Due to a shortage of coal, electricity generating plants are forced to shut down.
●      Government has allocated about 1 billion UAH from its reserve fund for holding of early elections to the Verkhovna Rada.
●      NBU rate for the week has changed slightly: 12,82-12,95 UAH/$ 16,60-16,74 UAH/€. The head of the National Bank Gontareva said that the regulator has all the levers to counter attacks on the foreign exchange market by entities associated with Russia.
●      According to the statement of European Commission President Barroso, the EU will allocate 1 billion euros for macro-financial assistance to Ukraine and also will help in the restoration of the Donbass.
●      The construction of the two lines of fortifications on the border with Russia has been started.
●      Ukraine to launch commercial development of the previously explored gas fields, due to the reduction of gas supplies from Russia and from areas of military operations.
●      World oil prices dropped to the level of a year and a half minimum.

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