Ukraine: main foreign policy outcomes of January

For Ukraine’s authorities, the year of 2018 started straight away. Western press (Newsweek, Le Figaro, Al Jazeera that synchronizes its information policy with the West, Atlantic Council* and European Council for International Relations think tanks) levered harsh criticism at Ukraine’s government from the very beginning of the year. Ukraine’s leadership was blamed for failing to ensure supremacy of the law, anti-corruption measures, and engaging in financial fraud and other corrupt schemes. All this shows that Washington and Brussels are very discontented at President Petro Poroshenko.

Those in power have failed to fulfill a certain set of commitments: launch of an anti-corruption court, lifting of the moratorium on exports of round timber, opening of the agricultural land market, further privatization of state assets, raising of tariffs for natural gas for public enterprises and the population, creation of a credit register of the National Bank, election system reform. This led to a halt in money transfers from the European Union and IMF, and Brussels. As a result, Ukraine’s government has faced problems with approval ratings and social programs ahead of elections, as well as failed to pay foreign debts.

On sidelines of the WEF 2018 in Davos, Poroshenko tried to have the IMF resume the financial aid to Ukraine. He held talks with Christine Lagarde of the IMF, to that end. However, Western financial organizations insist on reforms, namely on establishing anti-corruption court, raising gas prices, and appointing a new head of the National Bank. Poroshenko is likely to try to exchange Supreme Rada voting to approve (in the first reading) establishment of anti-corruption court and appointment of new chief of the National Bank for resumption of IMF, WB and EU financing. However, foreign players will hardly agree to pay for the process without seeing the result. At least $2 billion are “at stake.” According to the latest reports from the National Bank, Kiev anticipates financing from IMF no sooner than in April.

It is worth mentioning that $2 billion is almost as much as Ukraine’s economy has lost due to the Donbass blockade ($1.8 billion, according to the National Bank). Besides, it is evident that foreign borrowing cannot recompense for the losses Ukraine has suffered due to breach of ties with Russia (that results in de-industrialization), off-shore “money pits” and a range of absolutely useless decisions by Ukraine’s top power. Foreign investing is still a critical problem.

The WEF Forum in Davos is the world’s traditional crowd funding platform, but Ukrainian delegations failed to sign any investments memorandums there. The sides made a series of non-binding statements and avoided signing any documents. Potential investors were not motivated with Poroshenko’s words about “autumn of reforms.” Ukraine’s opposition was amused with Kiev Mayor Vitali Klitschko’s statement saying he was negotiating with Starbucks Corporation, which plans to enter Ukraine’s market. On the very next day, Starbucks refutes reports about its plans to enter Ukraine.

Speaking of investment (un)attractiveness of Ukraine, it should be noted that the Association Agreement with the EU little helps raising foreign investments. Lifting customs barriers makes its senseless localizing industries in Ukraine, the more so as Ukraine is not a full participant of either European (at least in the format of EU Customs Union, like Turkey) or European integration. Neither Ukraine is attractive as an industrial platform for further export in third countries. As to the domestic market, it keeps shrinking due to continuous impoverishment and migration of the population.

In this light, it is noteworthy that Russia has been that largest foreign investor in economy of Ukraine for the recent years. Nevertheless, Ukraine’s economy will further experience severe decline unless cooperation chains with Russia are restored. This will help reloading highly technological machine-building enterprises with new orders. Such suggestions are made just by a few representatives of the industrial capital from the parliamentary Opposition Bloc and Ukrainian Choice – People’s Right all-Ukrainian organization of Viktor Medvedchuk. Neither has the political part of WEF 2018 given Ukraine any reasons to feel optimistic. In fact, “Ukrainian issue” is gradually diminishing from the sight of Big Powers. Look back at the WEF 2015 and 2016, where Petro Poroshenko was one of the central figures and “Russian aggression” was a spotlight. In 2017, attention to Poroshenko decreased tangibly, but Ukraine’s delegation managed to get $100 million loan from the Swiss Confederation.

In 2018, Ukraine’s leadership failed to get either money or personal attention by Donald Trump. The 45^th president of U.S. “had no time” for Poroshenko, instead he met with Rwanda president. Secretary of State Rex Tillerson was charged to hold a brief meeting with Poroshenko. They discussed “further steps in the swap of Ukrainian detainees in Donbass and the release of Ukrainian political prisoners from Russian prisons” as well as “coordination of actions in security matters.”

It is not clear what Tillerson has to do with exchange of political prisoners. Earlier, the Kremlin has repeatedly stated that Medvedchuk, special representative of Ukraine for humanitarian issues at Tripartite Contract Group in Minsk and the key communicator between Kiev and Moscow, is in charge of exchange of POWs and illegally retained people. The December 27 swap of POWs in the “233 for 73” format became possible due to direct talks of Medvedchuk with the president and prime minister of Russia, leaders of Donetsk and Lugansk People’s Republics, and Patriarch Kirill. A second stage of exchange of POWs may be held in February. That issue was on agenda of Medvedchuk’s talks with Vladimir Putin on January 10, 2018.

Some members of the pro-government coalition at Supreme Rada spread rumors that U.S. will impose new sanctions on Medvedchuk over “the Russian aggression.” These are just rumors, but not groundless ones, considering that the Kremlin Report contained some classified part and Medvedchuk opposes Ukraine’s reforms on Western scenarios.

Poroshenko’s statement on “coordination of actions in security matters” was made almost during regular talks of Kurt Volker and Vladislav Surkov on Donbass. The talks between U.S. and Russian representatives on Ukraine are another evidence of Kiev losing its sovereignty. Quite recently, the former vice president Joe Biden said it took him just 6 hours in 2016 to persuade Kiev government to dismiss prosecutor general Viktor Shokin (in exchange for credit guarantees for $1 billion, under which Kiev raised money some six months later).

Once pro-Ukrainian PACE adopted two resolutions on January 23 and both were unfavorable to Ukraine. Resolution on Protection and Development of Regional Languages and Languages of National minorities in Europe once again outlined the flaws of the Education Law passed in Ukraine last autumn and demanded implementation of the Venice Commission recommendations. In addition to it, Foreign Ministry of Hungary Péter Szijjártó demanded legal guarantees from Ukraine to ensure that the scandalous education law is applied with prior consent of the Hungarian national minorities in Zakarpattia. Until then, Hungary will keep blocking Ukraine’s issues at EU and NATO.

The second resolution - on humanitarian consequences of the armed conflict in Ukraine – touched another scandalous law “on reintegration/de-occupation of Donbass,” which was actively promoted by Kiev and welcomed by “the patriotic society.” The PACE resolution recommends amending the law, as it complicates the process of political and diplomatic settlement of the conflict in Donbass.

However, it is not likely that the Kiev leadership is going to reckon with PACE resolution. Recall the resolutions necessitating amendments to the laws on lustration and de-communization, which were ignored by those in power in Ukraine.

Yet, it is not surprising that Ukraine ignores PACE recommendations. Those in power in Kiev just do what they need to retain power. If this happens, they can ignore all the recommendations. If they fail to remain in power, all this will have no sense for them. Considering their failures at WEF 2018, Kiev government is losing foreign support and will have few chances to retain its grip on power.

Igor Federovsky, Kiev

*Организация, деятельность которой признана нежелательной на территории РФ