Ukraine: The closer to elections, the farther from Moscow

Sergiy Gerasymchuk, Foreign Policy Council "Ukrainian Prism"

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Ukraine is inexorably drawing closer to presidential and Verkhovna Rada elections in 2019 and that means hot issues have come to the fore in politics in order to grab voter attention. This past month, language, religion and the war on corruption were the focus of domestic policy. Economically, it was cooperation with the IMF and a new hike in household gas rates that could have a major impact on ratings. As to foreign policy, it continues to be focused on countering Russian aggression.

Domestic policy: Language, religion and fighting corruption

In domestic politics, the pace has picked up as critical and sensitive issues appear on the agenda in Ukraine. In early October, the Verkhovna Rada passed first reading of a Bill “On ensuring the functioning of Ukrainian as the state language,” which is intended to replace the controversial and ambiguous 2012 “Kivalov-Kolesnichenko” language law. This law was declared unconstitutional by the Constitutional Court in February of this year. The new bill considers protections for the use and functioning of the Ukrainian language. At the same time, the EU has been insistently recommending that Ukraine pass this bill to the Venetian Commission to ensure that it meets international standards and commitments made by Ukraine. All things considered, Brussels appears to be trying to head off a new series of complications in relations with Ukraine’s neighbors, including Hungary, where Kyiv’s language policy has raised hackles.

A major breakthrough has taken place in the gaining of autocephaly for the Ukrainian Orthodox Church. On October 11, the Synod of the Ecumenical Patriarchate in Istanbul made the historic decision for the Patriarchate to continue the procedure to grant autocephaly to the national Ukrainian Orthodox Church. The heads of the Ukrainian Orthodox Church of the Kyiv Patriarchate, Patriarch Filaret, and the Ukrainian Autocephalous Orthodox Church, Metropolitan Makariy, had their canonical status restored. The reaction of the Moscow Patriarch was not long in coming and on October 15, the Synod of the Russian Orthodox Church met in Minsk to rupture ties with the Ecumenical Patriarchate.

A no less vital theme in Ukrainian society was the launching of the Supreme Anti-Corruption Court. As the president put it, the process is going according to plan and the court should be operating fully no later than the beginning of next year. Meanwhile, an official at the Customs Policy Department at the Ministry of Finance complained that some anti-corruption measures, including the launch of a “One-stop shop” at Customs are being openly sabotaged.

Economy: The IMF partnership lives!

In October, Ukraine intensified work with international financial institutions: the IMF, the EBRD and the World Bank.

Some observers were disappointed that the World Bank downgraded its forecast for GDP growth in Ukraine from 3.5% to 3.3%. Meanwhile, the EBRD set its strategic priorities for Ukraine for the next five years. The Bank is expected to assist in promoting private sector participation in all sectors, to allocate resources to stabilize the energy market, and to promote the development of Ukraine’s banking sector. Its priorities also include infrastructure expansion and efforts to expand trade and investment flows.

Without any doubt the biggest news in October was the restoration of relations between Ukraine and the IMF. The two sides signed a 14-month Standby Agreement (SBA) that will replace the Extended Fund Facility (EFF) that expires in March 2019. Under the new program, Ukraine will be eligible to receive US $3.9 billion. The Finance Ministry expects the program to get final approval from the IMF board by the end of the year. In order to meet the conditions placed by the IMF, the Verkhovna Rada has already passed first reading of the 2019 budget, while the Government has agreed to a more painful decision: raising rates for household gas 23.5% as of November 1, and raising them again in May 2019 and January 2020.

Based on this mutual understanding with the IMF, Ukraine announced two emissions of eurobonds: one series for US $750 mn maturing in February 2024 and a second for US $1.25 bn maturing in November 2028. Expectations are that Standard & Poor’s and Fitch will rate the two issues no lower than B-.

Foreign Policy: Victory in the EU Parliament, strange maneuvers in Belarus

In the international arena, Ukraine was as notable in October as in September. One breakthrough was the European Parliament’s adoption of a resolution on the situation in the Azov Sea on October 25, in which it condemned Russia’s militarization of the Azov and Black Seas and Moscow’s violations of international commitments. Among others, the European Parliament criticized Russia’s blockade of the Kerch Strait, demanding that it comply with international conventions and adhere to international marine law. The European Parliament also proposed appointing a Special EU Representative for Crimea and Donbas whose mandate would extend to the Azov Sea.

Kremlin prisoner Oleh Sentsov was also on everyone’s lips in October. After being threatened with force-feeding, Sentsov was forced to stop his hunger strike. However, the international community continues to follow his situation as attentively before. On October 25, Sentsov was awarded the European Parliament’s 2018 Andrei Sakharov Prize “For Freedom of Thought.

On the northern “front,” that same day, the first Forum of the Regions of Belarus and Ukraine took place in Gomel with the participation of both presidents. After talks ended, Belarusian President Aliaksandr Lukashenka announced that his country was prepared, for the sake of peace, “to get involved in this conflict [sic]” between Ukraine and Russia.