Ukraine: Anticorruption November

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November was marked by the “anti-corruption scandals”, deficit of the EU’s foreign policy signals and some prudent economic growth. When it comes to the domestic policy, competing for the “anti-corruption policy” influence is rather acute for the Ukraine’s security agencies. The country’s economic growth is rather uncertain, with its growth rate being insufficient. As for the Ukraine’s foreign policy, the Eastern Partnership summit brought few results, while a spy scandal ruined trust and perspectives inside the Ukraine Belarus relations. These two were the most significant November developments

Domestic Policy. Anti-сorruption сompetition beyond common sense

The beginning of the month was marked by the National Anti-Corruption Bureau’s of Ukraine (NABU) ongoing anti-corruption investigation of a “backpack case”,   with Alexander Avakov, the Minister of Internal Affairs Arsen Avakov’s son involved. However, soon this high-profile case had to be forsaken. First of all, the court released Avakov’s son from custody on the condition that he appears in court as required, which is a true sign that there will be no anti-corruption sensations related to this case in the nearest future. Secondly, the Head of NABU Artem Sytnyk rather soon turned from a hunter into an anti-corruption and political target. On 3, November the National Agency on Corruption Prevention (NACP) invited Artem Sytnyk for questioning in relation to the NACP requirements not fulfilled by Mr. Sytnyk (a list of claims to Sytnyk included a possibility for his dismissal in the end). The NABU’s Head denied the accusations and in his turn invited the NACP’s Head Natalia Korchak for questioning to the NABU’s head quarters.

On 14, November, the former Head of NACP Financial Control Department Anna Solomatina accused Natalia Korchak of falsifying the electronic asset declaration results, and also made a statement that the NAPC was under the Presidential Administration’s control. Later on she published the correspondence with the “curator from the Presidential Administration”.

On 16, November, the situation unfolded with the Ukrainian Prosecutor General’s Office (PGO) opening a criminal case against Artem Sytnyk due to “disclosing the materials of the recorded telephone conversations without abiding by the relevant legal procedure, abuse of power and so on”, and on 17, November the NABU followed with launch of the criminal proceedings against the Prosecutor General Yuriy Lutsenko on charges of the alleged “illegal enrichment”.

The aftermath of the “November anti-corruption competition” included losing trust for both anti-corruption agencies and the Ukraine’s legal system in general

The “anti-corruption month” reached its climax on 29, November: the operatives of the Security Service of Ukraine (SBU) under command of the PGO prosecutors detained seven NABU employees. The reasons, conditions and results of this detention are fundamentally different depending on which competing side provided this interpretation and/or explanation (NABU vs. SBU and PGO). The SBU justified its actions by suppressing the NABU’s illegal operation regarding the first deputy of the State Migration Service of Ukraine (MIA agency) Dina Pimakhova. The NABU, in its turn, qualified the SBU actions as brutally compromising its special operation on detecting the members of an organized crime group in the State Migration Service of Ukraine and accused the PGO of disclosing some personal data of the NABU’s secret agents. As a result the President of Ukraine Petro Poroshenko made several statements in the course of briefing in the PGO saying that 1) “the conflict between the anti-corruption agencies in Ukraine is reminiscent of some Latin American carnival”, 2) the actions of the Ukraine’s security agencies are “beyond the common sense competition”, 3) “our society is waiting for a war on corruption and other crimes, not for a war of the compromising materials”.

As for the aftermath of the “November anti-corruption competition”, the results of the developments included losing trust for both anti-corruption agencies and the Ukraine’s legal system in general.

In November the Global Terrorism Index was also published, with Ukraine ranking 17th as a country with a high level of the terrorism influence. In 2016 Ukraine was placed 11th, which signifies some improvement against the previous year. The main reasons behind the Ukraine’s “high” position in the rating are the military actions in Donetsk and Luhansk regions, as well as the low efficiency of the Ukrainian security forces.

Economy. Two steps forward–one step back 

The macroeconomic stability was a November’s key point, while the defining feature of the Ukrainian economic dynamics remains to be the “development with an insufficient growth rate”. Given the general economic growth, the growth rate of the Ukrainian economy somewhat decreased by the end of the year. For example, according to the results of the third quarter, the Ukraine’s GDP increased by 2.1% against the same period in 2016. However, the first quarter GDP went up 2.5%, second – by 2.3%, and the third one – by 2.3% against the same periods of the previous year respectively.

The European Federation of Energy Traders (EFET) for the first time included Ukraine in its top twenty Europe’s best gas hubs, placing Ukraine 18th. It was also stated that Ukraine needs to continue the liberalization of the gas market.

In November the international ratings agency Standard & Poor’s affirmed Ukraine’s long-term sovereign credit rating in foreign and national currency at “B-“. A short-term sovereign rating in foreign and national currencies was affirmed as well at “В”. The rating outlook was “stable”, which reflects the “view that over the next 12 months the Ukrainian government will maintain access to the official creditor support by pursuing the reforms on the fiscal, financial and economic fronts, and that the Verkhovna Rada is able to broadly pass key reforms, thereby implementing the International Monetary Fund requirements for a new tranche”.

According to the “Paying Taxes-2018” (a joint annual publication by the World Bank Group and PwC, which is a part of the Doing Business rating) results, Ukraine went up and now ranks 43rd out of 190 countries. This is considerably better than a year ago: in 2016 Ukraine ranked 84th. However, the Ukrainian taxation system still needs further reforming. For example, according to PwC, tax compliance in Ukraine on average takes 327.5 hours per year, while in the EU it is only 161 hours and the global indicator is 240 hours.

Foreign Policy. Same old songs

The fifth Eastern Partnership summit in Brussels was the key November foreign policy development for Ukraine. However, this summit brought no considerable results particularly for Ukraine: it lost the hope to receive the EU macro-financial assistance worth of 600 mln euros and the “European perspectives” were left behind the frames of the Ukraine – EU relations, the final Declaration only acknowledged the “European aspirations and the European choice” of the relevant partners. On the contrary to the Declaration made at the previous summit, which included statements condemning the “illegal annexation of the Crimea”, this summit’s Declaration does not make any statement regarding the situation involving Ukraine and the Crimea. The Russian observers highlighted this issue and perceive it as the EU’s readiness to take into account the Russian interests in the region.

As for the current EU’s position regarding the Russian military aggression, it has rather softened to general phrases and principles, like: “The European Union remains committed in its support to the territorial integrity, independence and sovereignty of all its partners”.

On 14, November the Third Committee of the UN General Assembly adopted an updated draft of the resolution on the human rights in the Autonomous Republic of Crimea. The adopted resolution confirms that “there exists an international military conflict between Ukraine and the Russian Federation, condemns the enforcement of the Russian law on the temporarily occupied territories and obliges the Russian Federation to implement the interim decision adopted by the international court of the United Nations on restoring the rights and freedoms of Ukrainians in the Crimea”. The draft resolution was adopted by a vote of 71 in favor to 25 against, with 77 abstentions.

On 30, November Ukraine signed the Government of Ukraine – United Nations Partnership Framework for 2018-2022, with an estimated budget of $675 million. The assistance will be provided in four main areas: “sustainable economic growth, environment and employment; equitable access to quality and inclusive services and social protection; democratic governance, rule of law and civic participation; human security, social cohesion and recovery”.

The key negative foreign policy development in November was the “spy scandal” in the Ukraine – Belarus relations, which, despite the ruined Ukraine – Russia relations, had previously remained at a high level of cooperation. On 17, November the news appeared that a Ukrainian Radio journalist based in Minsk Pavlo Sharoyko was arrested by the Belarusian KGB and charged with espionage. Igor Skvortsov, an employee of the Ukrainian Embassy in Belarus, was accused of espionage as well and was declared a persona non grata. Moreover, on 20, November, the Belarusian KGB detained Alexander Skiba, the Head of the JSC Weighting Plant (Kostiantynivka, Donetsk region) under the corruption charges. The “anti-espionage initiatives” of the Belarusian KGB were well known to the President of Belarus Alexander Lukashenko, which can considerably complicate the bilateral relations in the future.