Ukraine: New authorities – new challenges

Sergiy Gerasymchuk, Foreign Policy Council "Ukrainian Prism"

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The focus is on the parliament, the new government and its first steps – both inside and outside of Ukraine. The new leaders managed to make several huge achievements. First and foremost, the release of Kremlin prisoners and further economic development. Despite a certain degree of uncertainty in Ukraine’s dialogue with the IMF,  and difficult Washington talks, and the risk of terminating gas transit via Ukraine’s territory, the outlooks of rating agencies are positive, and expectations are high. The nearest future will show if such a trend remains.

Domestic Policy 

Freedom granted to Kremlin prisoners and political season’s turbo speed  

In September Ukraine’s society experienced an epic event – namely, a long-awaited prisoner exchange with Russia that resulted in the release of 35 Ukrainian citizens from Kremlin (that number includes 24 Ukrainian sailors the UN maritime tribunal ruled Russia to release and hand over to Ukrainian jurisdiction and 11 civilians  kept in Russian prisons as a result of fabricated allegations). Among them there are such names as Oleg Sentsov, a world-famous film director, Ukrinform journalist Roman Sushchenko, and Crimean Tatar activist Edem Bekirov. In return tThe Ukrainian side also released the same number of its prisoners to Russia, with Ukrainian citizen Vladimir Tsemakh, suspected of complicity in MH17 airplane crash in Donbas in July 2014, among them. Let us keep in mind (?not forget?) that the prisoner exchange between Ukraine and the Russian Federation hasd been put on hold by Moscow for almost two years (the last large-scale prisoner swap took place on December, 27, 2017). 

As an addition to such a joyful event in the life of the country, MPs worked really hard in the first month of autumn. To everyone’s surprise, MPs adopted several draft laws on making amendments to the Constitution of Ukraine in the first reading and handed them over to the Constitutional Court for expertise. In particular, there is a draft law #1017 by president Volodymyr Zelensky offering to reduce the number of lawmakers from 450 to 300 and introduce proportional representation. Another draft law introduced by the same system of making amendments to Constitution and by the same author – the sixth president of Ukraine – suggested that MPs may grant the guarantor of the Constitution the power to appoint the heads of the National Anti-Corruption Bureau of Ukraine (NABU) and the State Bureau of Investigation (SBI). The draft law    #1014, provided the parliament adopts it, may invalidate the autonomy of both NABU and SBI heads, with the increase of their dependency on the president increasing. Now the heads of the above-mentioned institutions are selected according to the recommendations of the relevant competition committees that include, on a side note, independent representatives. 


Post-election economic reality – achievements against high expectations 

Presidential and parliamentary elections in Ukraine led to rapid expectation growth of expectations and certain economic achievements. Already at the beginning of the month Fitch Rating upgraded Ukraine’s long-term and short-term foreign- and local-currency issuer default rating (IDR) from B- to B. Towards the end of the month a positive outlook was also confirmed by another agency, Standard&Poor’s. With such background it is no surprise that Ukraine’s national currency hryvnia significantly strengthened  its position against dollar and euro.

The new government demonstrates its readiness for bold reforms. Already Dduring just the first days of work the new Cabinet of Ministers developed the draft state budget, which was submitted to the Parliament by the end of the month, with the biggest expenditure serving to pay public debt. One third of the budget is allocated for public sector employees. Ukraine’s ministry of economy submitted its land market draft law for discussion. The ministry of finance states that IMF negotiations on launching a new stand-by arrangement are taking place.

Careful optimism may be expressed with regard to the results of the trilateral talks on gas transit between Ukraine, Russia and the EU. In particular, Russia declared its readiness to sign a new contract on gas transit involving Ukraine’s gas transmission system in compliance with European norms and regulations. Yet there is still a risk of negotiations breakdown.

Foreign Policy 

Seeking balance in relations with Washington 

As for the country’s foreign policy, this month developments can be evaluated with a changing degree of success. At the beginning of the month president Zelensky had an official visit to neighboring Poland to attend the commemorations of the 80th anniversary of World War II outbreak. In particular, the president had several meetings with Polish officials, with issues of energy security discussed as well.  During his visit to Poland Volodymyr Zelensky met with heads and representatives of other states as well. In the course of the negotiations with US Vice President Mike Pence, American top official stated that: “USA stands and have stood with Ukraine… We will continue to stand with the people of Ukraine on your security, on territorial integrity, including Ukraine’s rightful claim to Crimea”

However, towards the end of the month a fly in the ointment appeared in Ukraine’s relations with the USA. There was a whistleblower’s leak to the press regarding the alleged “pressure” Donald Trump used on his Ukrainian vis-a-via Volodymyr Zelensky (namely, withholding military monetary aid). A scandal unraveled in the USA that may have long-term consequences to Ukraine. Nevertheless, despite the recent negative vibe between Ukrainian and American sides, the meeting between the two presidents, that had been planned before, did take place. However, this meeting did not take place in Washington as it had been expected, but on the sidelines of the 74th session of the United Nations General Assembly. In the course of the meeting the Ukrainian leader thanked the American president for his support on counteracting Russia and invited him to Ukraine.