Ukraine: social-political outcomes of the year

One more year of hardships is coming to an end in Ukraine. Let’s sum up its key results.

1. Internal political life has become even more radical

In 2017, Petro Poroshenko de facto started his electoral campaign in an attempt to win over nationalist voters. For that purpose, he and his team kept imposing more and more anti-Russian bans: a ban on Russian social networks, films and books, entry restrictions for Russian actors, a ban on St. George Ribbon, tougher customs rules for Russians, a package of sanctions against the Ukrainian Orthodox Church of the Moscow Patriarchate, a number of laws aimed to Ukrainize all areas of Ukrainian society and continuing pressure on non-loyal mass media and journalists.

2. The benefits package has been reduced

The abovementioned bans were meant also to camouflage the anti-social reforms adopted by the Supreme Rada in the meantime. The most scandalous were the pension reform, aiming to extend the pensionable service, and the health care reform, aiming to commercialize the sector. The judicial reform implies a jump in legal costs, while the education reform aims to close all ethnic schools in Ukraine after 2020. In Nov, the Supreme Rada approved a law fostering monopoly in the sector of housing and public utility services and is going to adopt anti-social amendments to the labor and housing codes. According to Razumkov Center, the abovementioned reforms are supported by just 12-26% of the Ukrainians.

3. Government institutions continue to degrade

In early 2017, a group of “activists” decided to blockade Donbass. The Security Council approved that measure and faced $1.8bn losses as a result. During the year, the “activists” kept organizing different blockades and pogroms and the law enforcers turned a blind eye to it.

The autumn marked the start of a fierce war between the National Anti-Corruption Bureau and the Prosecutor General’s Office. The law enforcement system has de facto split into three camps - Arsen Avakov’s Interior Ministry, Petro Poroshenko’s Prosecutor General’s Office and the Security Service and Washington-sponsored National Anti-Corruption Bureau. As a result, any anti-corruption or anti-criminal initiative advanced by one camp can be easily blocked by the others. Today law enforcers in Ukraine are no longer engaged in enforcing laws but are focused on internal fights for corruption rent.

A whole number of public agencies have no chiefs but just acting executives: the National Bank, the Agricultural Policy Ministry, the Information Policy Ministry, the Health Care Ministry, the State Property Fund, the State Fiscal Service, the Auditing Chamber, the Ukrainian Railways.

4. External support has been curtailed following a series of diplomatic scandals

The scandalous law on education has spoiled Ukraine’s relations with Hungary and Romania. In 2017, Ukraine had some contradictions with Poland, Belarus, Serbia as well as with the EU, the OSCE and the Council of Europe.

The July EU-Ukraine summit and the Nov Eastern Partnership summit showed that Ukraine had made no slightest progress in its relations with the EU. Quite recently, EU Ambassador to Ukraine Hugues Mingarelli said that Kiev was behind the schedule fixed by the Ukraine-EU Association Agreement. According to his office, from Dec 1, 2016, till Nov 1, 2017, Kiev was supposed to implement 86 reforms but implemented just 10 ones or 11% of the total.

Ukraine failed to meet a number of crucial obligations and faced a cut in the western subsidies as a result. More specifically, the country failed to establish an anti-corruption court, to lift the ban on round wood exports, to create an agricultural land market, to privatize state assets, to raise gas tariffs for the population and public utilities, to create a credit register for the National Bank and to change the members of the Central Election Commission.

The key foreign political achievements of the past year were the visa-free regime with the EU and the agreements on exchange of POWs with the Lugansk and Donetsk people’s republics. But the ruling regime had a very small role in those processes.

Most of the points of the visa liberation action plan were carried out by the previous regime, and had there been no Euromaidan, the visa-free regime would have been imposed in 2014. Quite recently, French Ambassador to Ukraine Isabelle Dumont warned that the visa-free regime might be cancelled if the Kiev leaders continued pressuring anti-corruption structures.

The agreements with Donbass were adopted due to the efforts of Viktor Medvedchuk, Ukrainian representative to the Trilateral Contact Group on Ukraine. He has been the key mediator in the POWs exchange process since 2014.

Medvedchuk reached the agreements with Vladimir Putin and Dmitry Medvedev on Nov 15 in the presence of Patriarch Kirill contrary to the policy of the Kiev-based “war party.”

On Dec 27, some 74 Ukrainian combatants were exchanged for 240 Lugansk and Donetsk self-defenders. At first, the Donetsk side was supposed to get back 306 people, but it turned out that 43 people were already free, while 23 people either refused to be exchanged or were removed from the list by the Kiev authorities (among them were 14 Russian citizens and one citizen of Estonia).

The key one to blame for the removal of those 15 people was Vice Speaker of the Verkhovna Rada Iryna Herashchenko. The leaders of the Donetsk and Lugansk people’s republics were disappointed and were going to cancel the agreement and it took Medvedchuk several days to convince them not to do it. As a result, on Dec 25, in the presence of Patriarch Kirill, Alexander Zakharchenko and Leonid Pasichnyk promised that the swap would take place.

5. Donbass is still up in the air

The blockade of the uncontrolled territories has aggravated the humanitarian situation and has broken the remaining contacts between Ukraine and Donbass.

The bill on reintegration/deoccupation of Donbass has made things even worse. The bill says that Russia is “an aggressor” and that Donbass is “occupied.” If the Kiev authorities approve it, they will automatically withdraw from the Minsk process.

The last swap of POWs has given the mediators certain grounds for optimism. As Russian representative to the Trilateral Contact Group on Ukraine Boris Gryzlov said recently, in 2018, as soon as the sides guarantee long-standing ceasefire and lift all economic and transportation blockades, they will have to focus on a political settlement. Gryzlov reaffirmed Russia’s position that Donbass should be given a special status under the Steinmeier Formula. In Sept 2016, former German Foreign Minister, President of Germany Frank-Walter Steinmeier and French Foreign Minister Jean-Marc Ayrault visited Kiev and suggested a plan that was similar to the Medvedchuk peace plan, more specifically, a package of four laws: to amnesty all people that have fought in Donbass, to make constitutional amendments concerning decentralization, to organize local elections in some areas of Donetsk and Lugansk regions and to establish a special order of self-government in some regions of Donbass. The Medvedchuk plan also suggests restoring economic contacts between Ukraine and Russia

Regarding the possibility of a peacekeeping mission in Donbass, the UN Security Council is to consider it soon but even if it approves this initiative, there are a lot of technical obstacles to its realization. There is also a concern that this may internationalize the conflict. Today there are almost 100,000 fighters, hundreds of tanks, guns and armored vehicles on both sides of the contact line.

6. The economy continues to stagnate

Even though the State Statistics Committee of Ukraine reports a 2% GDP growth, the real incomes of most of the Ukrainians are declining. The growth in primary goods prices was a good stimulus for the Ukrainian economy (in Jan-Oct 2017, primary goods accounted for 20.9% of the exports and 27.4% of the imports) but the key beneficiaries of that growth were the oligarchs controlling the mining sector (Rinat Akhmetov, Konstyantyn Zhevago, Vadim Novinsky). According to Novoye Vremya, in 2017, the wealth of the 100 richest Ukrainians grew by 33% to $26.7 billion, which means an even higher rate of social differentiation in Ukraine.

In 2017, Ukraine’s state debt grew by $6 billion to $77 billion or 85% of the country’s GDP. This means that the country is turning into an eternal debtor.

During the period, Ukrainian-Russian trade recorded a growth. In Jan-Oct 2017, Ukrainian exports to Russia grew by 12.5% to $3.2 billion, while Russians imports to Ukraine grew by 36.5% to $5.5 billion. This year, Ukrtransgaz transmitted over 90 billion cubic meters of Russian gas to Europe – the highest level in almost seven years. The reason is low production in the North Sea and Europe’s environment-friendly move to switch from coal- to gas-fired power plants.

Now that Ukrainian-Russian relations have been spoiled, in 2018, Ukrainian-Russian trade will be fostered mostly by informal agents.

The year 2017 is coming to an end. Let’s hope that the next year will be better.

Igor Federovsky, Kiev