In July, Ukraine yet again appeared on the agenda of the international institutions: NATO, the EU, the IMF. It was mentioned during the Trump-Putin summit too. At the same time, fighting corruption was of current interest in the domestic political front.
Domestic Policy: Fighting corruption is still the priority
The fight against corruption and strengthening of institutions that deal with the corruption investigations remain among the top priorities for Ukraine. On July 12, the Verkhovna Rada of Ukraine amended the law on the Supreme Anti-Corruption Court, removing the scandalous norms that provided ordinary courts with competence to deal with the cases investigated by the National Anti-Corruption Bureau (NABU). According to the amendments, all anti-corruption cases will be forwarded to the Anti-Corruption Court.
At the same time, on July 17, an unpleasant incident occurred: a group of unknown people broke into the NABU premises. According to the institution representatives, this incident was a “planned provocation”. It demonstrated that the “untouchables” still retain a strong position, and moreover, can count on the silent connivance of the police, which was nearby but didn’t act in any way. The incident showed that anti-corruption institutions in Ukraine are still very vulnerable, though the NABU continues to do its work.
The ambiguous situation in July also took place in regard to the Special Anti-corruption Prosecutor’s Office (SAP). The Qualification and Disciplinary Commission of the prosecutors issued a reprimand to the Head of the SAP, Nazar Kholodnytskyi, but refused to dismiss him. The dismissal submission was filed by the Prosecutor General’s Office and the NABU. Kholodnytskyi himself explained that the case against him was registered under the article of the Criminal Code on the disclosure of the pretrial proceedings and forcing witnesses to testify.
The decision of the Disciplinary Commission caused some criticism within the country and among the international partners. In particular, the US Embassy in Ukraine stated that in the modern democracy the prosecutors manipulating witnesses and obstructing justice, resign themselves to preserve their department reputation and the rule of law. However, the sharp reaction did not encourage Kholodnytskyi to resign, instead, the discredited prosecutor went on a long vacation.
Economy: Energy in focus
In July, the economy of Ukraine was dominated by the issues related to the energy segment. The main topics were the gas prices in Ukraine, as well as the prospect of the Russian gas transit to Europe through the territory of Ukraine.
In regard of the Russian gas transit, Germany officially confirmed its position, saying that the Nord Stream-2 should not cast doubt on Ukraine’s status as a transit country for the Russian gas. The Ukrainian side, represented by Naftogaz, in its turn made a proposal to apply the European rules to the Russian gas transit through the territory of Ukraine.
On July 17 in Berlin, the first round of the EU-Ukraine-Russia trilateral talks took place (with the participation of the Ukrainian Foreign Affairs Ministry and some representatives of Naftogaz, the Minister of Economy of the Russian Federation, the Vice President of the European Commission, and the Minister of Economy of Germany). The sides mentioned the results of the preliminary talks with the restrained optimism. They agreed to develop a roadmap for the negotiation process and continue the meetings in a trilateral format after the summer holidays.
As for the gas prices in Ukraine, the catalyst for the discussions on this issue was the next stage of the negotiations between the International Monetary Fund and Ukraine. Although the IMF approved the amendments to the law on the Supreme Anti-Corruption Court, it was not enough to resume the tranches (with the IMF financing suspended in April 2018).
Now the IMF insists on raising the gas prices for the population, considering it as one of the key conditions fo resume the IMF programs in Ukraine. At the same time, taking into account the approaching of the presidential and parliamentary elections of 2019, the Ukrainian side refrains from the unpopular steps that could affect the already weak electoral support for the current authorities.
Among other things, as a result of the uncertainty in relations with the IMF, the overall situation in the economy shows some signs of instability. The National Bank of Ukraine (NBU) raised the refinancing rate from 17% to 17.5% to reduce the inflation, the Pension Fund delayed the payments of pensions, and Ukrainian currency Hryvna somewhat weakened against USD. The budget deficit for the first half of the year was about 10 billion UAH (approximately $373 million).
At the same time, some optimism is prompted by the fact that according to the NBU survey, the Business Expectations Index for the next 12 months equals 118.3%. A high level of the business activity is forecasted by the respondents for the sixth consecutive quarter.
Foreign Policy: Month of summits
July turned out to be rich in events of the international scale, directly or indirectly related to Ukraine’s foreign policy. First of all the Ukraine-EU Summit was held on July 9. It proved to be quite successful for Kyiv. Brussels recognized some progress in the reforms in Ukraine, and called Kyiv to continue reforms regardless of the approaching election campaign.
In addition, Donald Tusk called on Russia to release the Ukrainian “prisoners of conscience” Oleg Sentsov, Volodymir Balukh, Olexandr Kolchenko, Stanislav Klykh, Olexandr Shumkov, and Roman Suschenko.
Ukraine was mentioned in the Declaration of the NATO Summit, held on July 11-12.The Alliance supported the territorial integrity of Ukraine, and although there were no fundamental changes and breakthroughs, Ukraine was granted with a “candidate” status, with the Alliance leaders recognizing Kyiv’s desire to become a NATO member in the future.
The Ukrainian issue was also discussed during the summit of the US President Donald Trump and the Russian President Vladimir Putin in Helsinki on July 16.
Both sides stressed their commitment to the Minsk agreements (although the Russian Federation insists on its interpretation of the order of their implementation). And on July 25, the US State Department presented the “Crimean Declaration”, emphasizing that the United States does not recognize the annexation of the Crimea by Russia, and urge the latter to respect the international rights and laws.