Ukraine: Economic growth and foreign policy struggle before elections

Sergiy Gerasymchuk, Foreign Policy Council “Ukrainian Prism” (Kyiv, Ukraine)

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In the first half of 2018, Ukraine’s domestic policy got a pronounced pre-election tint. At the same time, foreign policy showed the positive dynamics in the relations with the EU, Germany in particular. But the relations with Russia remain conflicting with the militants in the east ignoring the ceasefire.

Domestic policy. Scandals, arrests, and games with the Constitution

The domestic policy of Ukraine was marked by a number of incidents. Firstly, on February, 12 the ex-president of Georgia, ex-governor of Odessa Oblast and head of the party “Rukh novyh syl” (“Movement of the new forces”) Mikheil Saakashvili was expelled from Ukraine. He lost the lawsuit regarding the preservation of his Ukrainian citizenship and failed to receive the refugee status.

Secondly, the Nadezhda Savchenko case was no less explosive. A Member of Parliament, a Hero of Ukraine, and previously a political prisoner in Russian Federation, Savchenko was arrested for attempting the terrorist act in the Ukrainian Parliament and a coup. Both politicians, therefore, fell out of the political race. At the same time, the other participants of the political process are entering the election campaign (the presidential and parliamentary elections will be held in 2019).

Among the other events, on June, 15 a current leader of the public opinion Yulia Tymoshenko introduced her “New Course for Ukraine” and also stated the necessity to change the Constitution of Ukraine in favor of the parliamentary republic. In his turn, President Petro Poroshenko proposed to consolidate two strategic goals in the Constitution of Ukraine: Ukraine joining the EU and NATO, to avoid the country’s turn to the East if the pro-Russian powers win the 2019 elections. Also, the president touched upon the matter of decentralization, which, he said, will be a vaccination against federalization.

Economy: Growth and headwinds

According to the government statistics, the Ukrainian economy continues to grow for 9 quarters in a row. The success is the result of signing and ratifying the Deep and Comprehensive Free Trade Agreement which opened EU markets for Ukraine. Thus, the country was able to redirect producers to the markets, alternative to the Russian one. The Ministry of Economy of Ukraine informs that in 2018 export to the EU has increased by 26.6% ($1,4 bln).

The government of Ukraine also counts on the budget revenue from privatization (the law on privatization entered into force on March 1, 2018). Approximate revenues are expected at 21.3 bln hryvnya (about $820 mln).


Political actors are entering the election campaign  for the 2019 presidential and parliamentary elections


Ukraine still relies on the support of the international partners. In the first half of the year, Ukraine took several steps to ensure compliance with the requirements of international organizations. So that, on March, 7 a law On Supreme anti-corruption court was passed. Adoption of this law is in line with the recommendations of the Venice Commission and is a signal to the International Monetary Fund (IMF) and the European Union about Kyiv’s readiness to cooperate with international partners in the fight against corruption. As a result, on June, 26 the EU Council decided to grant Ukraine 1 billion euros of macro-financial assistance. Along with that, to a certain extent, the development of the economy is hampered by the lack of land reform. Land reform in Ukraine remains high-priority for IMF. Moreover, according to the decision of the European Court on Human Rights on May 22, 2018 in the case Zelenchuk and Tsytsyra v. Ukraine the complete prohibition of buying and selling agricultural lands violates European Convention on Human Rights. However, at present, the political environment in the country does not encourage the solution of this problem.

Foreign police: Attempts to reanimate Normandy format and regional activity

The positive dynamics in Ukraine-Germany relations is one of the Ukrainian foreign policy achievements in the first half of the year. On April, 10 the President of Ukraine Petro Poroshenko and the German Chancellor Angela Merkel met  in Berlin. During the meeting, Merkel agreed with Poroshenko’s arguments about the political component of the “Nord Stream-2” project and stressed that the project will be impossible until there is clarity on the future of the gas transit through Ukraine.

Also, active German participation in the negotiation process in Normandy format resumed. On May, 10 the heads of the Normandy format states met in Aachen: Petro Poroshenko, Angela Merkel and the president of France Emmanuel Macron. The meeting covered the matters of deoccupation of Crimea and regulation of military conflict in Donbass.  Besides, the topic of political and military prisoners was discussed. On June,11 the meeting of the heads of the Normandy countries foreign policy departments was held in Berlin. The parties discussed the possibility of deploying the UN peacekeeping mission in Donbass and for the first time touched upon the issue of releasing Ukrainian political prisoners who are illegally detained on the territory of the Russian Federation. However, there is no actual progress in this matter. Ukrainian public defender is not allowed  to the Ukrainian political prisoners, some of whom announced a hunger strike (Oleg Sentsov, Stanislav Klykh, Aleksandr Shumkov, Vladimir Baluch).

In the Minsk process, there is no significant breakthrough either. The representatives of separatists from Certain regions of Donetsk and Lugansk Oblasts and their monitors from Russia drag out and block the humanitarian initiatives from Ukrainian side (drawing up lists for the exchange of prisoners, opening the Zolotoy checkpoint), ignore Ukrainian readiness for compromises.

In this context, it is not surprising that Ukraine builds up its defense potential and adopted a new edition of the law on National Security and Defense, which determines Ukrainian membership in NATO and the EU as the priority, and guarantees to provide 5% of GDP to the security and defense sector.

At the same time, some progress could be noted at the regional level of the foreign policy. On June, 9 in Kyiv the heads of the parliaments of Ukraine, Moldova, and Georgia signed the statement on creating Interparliamentary Assembly of three countries.