HomeAnalyticsWeekly Highlights: 15-21 December 2014

Weekly Highlights: 15-21 December 2014

West urges Ukraine real reforms in exchange for financial assistance. NSDC becomes another governing body of the state. The energy crisis in Ukraine is growing. The US president signed a law on the support of Ukraine. EU, US and Canada imposed strict sanctions against businesses in occupied Crimea. Scandal erupted with the “humanitarian convoy” of Akhmetov’s Fund.

The National Security Council became a new center of the power

Former Speaker of the Verkhovna Rada Turchinov was appointed as the Secretary of the National Security Council. The law which gives the significant expansion of the power of this President’s advisory board and relocate part of the control functions and power to combat corruption and crime will be introduced to the Parliament. NSDC becomes a legal entity, and its decisions will be mandatory for the state authorities.

Investigation of crimes against Maydan stalled

Civil society activists believe that the General’s Prosecutor Office does not investigate crimes commited by the most high-ranking officials included in EU sanctions lists. There is no single case in the court until now.
If the results of investigations of crimes commited by the people who are on the sunctions list will not be presented to the European Union before April 2015, sanctions  will be canceled.

Money in exchange for reforms

Europe and the United States sharply increased pressure on the Ukrainian authorities to force them to implement political and economic reforms as soon as possible. Increasing of the financial support for Ukraine is impossible without an immediate reform.
IMF mission in Ukraine will resume its work  in mid-January, when a decision on the allocation of the third and fourth tranche of the stabilization loan to Ukraine will be made. According to financial institutions, the country needs at least $ 15 billion over the next year. Debt obligations for the next year are equal $ 11 billion.
US ready to increase financial assistance to Ukraine through the World Bank and the IMF in response to the implementation of reforms, liberalization of the economy and strengthening the fight against corruption. Chairman of the Council of Europe Tusk believes that Ukraine needs the financial and humanitarian assistance immediately – Kiev must receive 2 billion euros before the new year.

Energy Crisis in Ukraine

“Ukrenergo” announced the introduction of scheduled power outages equal to the magnitude of the imbalance of power grid which is more than 5 GW (power of one nuclear power plant unit – 1 GW) from December 15 due to an insufficient supply of coal to coal burning power plants, low water levels in reservoirs and repair of several units. Supply of electricity to the occupied territories of Donbass and the Crimea is also limited.
The Cabinet authorized businesses independently purchase electricity from any foreign suppliers.
Residents of small towns and rural areas are protesting against the constant rolling blackouts that last for several hours.
Ukraine exported electricity worth $ 466 million in 11 months. The main exporters were DTEK subsidiaries which belongs to oligarch Akhmetov. Another auction on the export of Ukrainian electricity announced for the next year.
Ukraine and Poland have agreed on the integration of gas transport systems, which makes it possible to increase the reverse supply and ensure the storage of the European gas in Ukrainian underground storage facilities.
Administration of the President of Ukraine has officially confirmed that Chevron company declined to participate in the development of shale gas in Western Ukraine.
Ministers of Energy and Oil Industry of OPEC countries are not going to reduce oil production. Its price in world markets rests on a stable low level – about $ 60 per barrel, with a tendency to decrease. The petrol prices at the Ukrainian service stations not failing due to the devaluation of the hryvnia.

Ukraine’s economy continues to fall

In the absence of loans from international financial institutions fall in industrial production in November compared to October has not slowed down and equal 16% compared to last year.
Rating agency Standard & Poor’s downgraded the rating of Ukraine for obligations in foreign currency to CCC, in national currency – to SSS- with a negative outlook.
The official hryvnia exchange rate for the week has not changed, but inflation expectations are very high. National Bank continues to refinance commercial banks to maintain liquidity at the rate of 3 to 7 billion hrivnya per day. Curators were appointed by NBU to all banks receiving refinancing.
NBU said that the balance of payments deficit of Ukraine in the third quarter increased from $ 5 to $ 700 million due to the worsening situation in the east. Gross foreign debt of Ukraine has increased from 80 to 88% of GDP and is $135.9 billion, public debt reached $73 billion.

Sanctions against Russia and military aid for Ukraine

President Obama signed the bill “On freedom in Ukraine”, which gives the right to impose additional sanctions against Russia. New sanctions due to the annexation of the Crimea are prepared in close coordination with the EU institutions. The law allows the military, consulting and financial assistance to Ukraine, which is already incorporated in the US budget for 2015.
USA, Canada and EU imposed additional sanctions against Crimean businesses including a ban on investment, buying real estate, tourism activities, the export of goods and technology.
Some NATO countries independently negotiate an increase in military aid to Ukraine. US began supply of non-lethal weapons to Ukraine.
US Senator Kinzinger said the United States does not supply weapons to Ukraine due to the differences in military standards. Ukraine can purchase weapons in Eastern Europe using borrowed funds.
Russia demands that Western countries should refuse to supply lethal weapons to Ukraine and stop putting pressure on Ukrainian leaders to carry out constitutional reforms and political dialogue.

“Ceasefire” in the Donbass. New talks in Minsk

Last week the number of assaults by militants of Donetsk and Luhansk ‘people republics’ on Ukrainian positions and settlements decreased, but did not stop, killing more than 10 Ukrainian servicemen and civilians. Ukrainian troops did not open fire in response.
Despite the statement by the Russian authorities, the number of Russian troops, mercenaries and military equipment in the Donbas increases according to observers. Experts say that Russia is not going to stop the project “New Russia”, but only masks its continuation and tries to create a regular army, which is difficult due to the mass desertion of local militants and their looting.
OSCE reported that joint patrols of fighting line by Russian and Ukrainian servicemens are preparing. Verkhovna Rada deputy Levus raised the question that country leaders exceeded their authority and accused them in treason, as the decision on the admission of foreign military into the country should be approved by the parliament.
UN Secretary General Ban Ki-moon said that the freezing of the conflict in the Donbass lead to serious consequences at regional and global levels.
The leaders of the EU and the US insist on the implementation of the agreements previously reached in Minsk. President Poroshenko has consistently emphasized the need to continue the peace talks in the “Minsk” format, but they are constantly disrupted by the militants unwillingness to compromise. Experts and the media are convinced that negotiations with the militants useless, and the ceasefire will not be observed.

Humanitarian aid for Donbass. Problems of the population on the occupied territories and temporary migrants

The UN High Commissioner for Human Rights report on the situation in Ukraine emphasizes that the conditions of the population in eastern Ukraine is getting worse as winter approaches and due to the warfare. The number of temporary migrants and refugees has exceeded 1 million people. The government should be responsible for protecting the rights of all citizens, including those who are on the territory not controlled by the state. About 50,000 children are unable to attend schools in the conflict zone according to UNICEF.
Russian Prime Minister Medvedev ordered a special commission to assist “affected areas of Donbas”. Tenth Russian ‘humanitarian’ convoy delivered the goods in the Donbass without Ukrainian customs inspection. The population of the occupied territories of Donbass is on the brink of food riots because of the nontransparent distribution of “humanitarian aid” from Russia.
Akhmetov’s Fund convoys to the occupied territories of Donbass, are commercial transportation according to experts as humanitarian aid should be distributed to the public under the supervision of the International Red Cross. In addition, content of return cargo convoys is unknown due to the lack of inspection on departure. On top of that militants do not allow Ukrainian and international humanitarian aid on the occupied territory. Representatives of the “Akhmetov’s Fund” claim that they can not find a common language with international organizations regarding the delivery of goods in the Donbass.
Authirities of  Dnepropetrovsk region held a meeting with representatives of the OSCE and international humanitarian organizations. Ban on movement of humanitarian aid without international control and commitment of the full report on their distribution has been announced. Volunteer battalions demand a ban on the supply of goods to the Donbas until the release of all prisoners of war.
Eight trucks of humanitarian aid from the International Red Cross arrived in Ukraine with the standard customs procedure.

Battle for Ms Savchenko

Ukrainian pilot, the MP of Ukraine Nadiya Savchenko went on a hunger strike in a Moscow jail, demanding to recognize her as a prisoner of war. According to lawyers, her health deteriorated. Eariler In October, the court extended her detention until February 2015. Court hearing challenging this extension is scheduked for December 22. Deputies of Verkhovna Rada have been allowed to attend the court.
Russian President Putin said that the fate of Savchenko has to be desided only by the court during his latest press conference.
Security Services of Ukraine provided proof of her innocence to the lawers.


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