Corona Crisis in Ukraine: Long-term Consequences are Inevitable

Sergey Gerasymchuk, Foreign Policy Council “Ukrainian Prism”

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Coronavirus and the economic crisis accompanying it are increasingly affecting Ukrainian politics and economics. Amid the lack of resources, the struggle between political groups is escalating. The confrontation between the billionaires Rinat Akhmetov and Ihor Kolomoysky is growing. The financial assistance of the West becomes critically necessary. At the same time, while Washington and Brussels jointly support Kyiv in security and political issues, they set conditions in the economic sphere. Reforms and transparency should guarantee that macroeconomic assistance will not go into the pockets of the Ukrainian oligarchs.


Domestic policy 

Staff Shortages in the Presidential Team

In the last month, no cardinal and sharp fluctuations in domestic politics occurred. The parliament proceeded to work in committees and periodically in the session hall, adopting laws necessary for the country. The government, newly minted in March, continues its efforts to combat the dangerous illness and an impending financial crisis. The Presidential Office and the Head of the State V. Zelensky himself still play first fiddle in medical procurement issues, regularly reporting” about it to the Ukrainian society in the guarantors video messages. 

In mid-April, the Verkhovna Rada amended the main financial document of the country. With 249 deputies support, they created a UAH 64.7 billion (almost $2.4 billion) fund for combating coronavirus. Moreover, in late April, the Cabinet of Ministers extended quarantine restrictions till May 11.

Several posts in the Ukrainian government remain vacant. And this is despite the force majeure” circumstances and the need to develop the most effective policy to prepare for the upcoming economic crisis and make a plan for overcoming it. In mid-April, the Cabinet of Ministers at its ad-hoc meeting appointed Olga Buslavets to be the acting Minister of Energy and Environmental Protection of Ukraine. The government took such a step only because it would be impossible to find votes for this candidate in the Verkhovna Rada, and without the parliamentarians’support, the only option was to appoint her as an acting minister. O. Buslavets’s previous work in the structures affiliated with the Ukrainian oligarch and billionaire R. Akhmetov was one of the reasons why she could not get the votes in the parliament. Besides, an acting minister was well in with the current head of the government, Denys Shmygal. The latters track record also includes enterprises associated with the Ukrainian billionaire. And much more likely there is nowhere to look for a more or less compromise candidate as the pro-government teams bench is short.



Ukraine must pass an “anti-Kolomoisky” law and launch the land market to get the financial assistance from IMF


It is worth noting that at one of its ad-hoc meetings, the parliament adopted a law on legislative spam, that is important without any exaggeration and in many respects could be named revolutionary. It was supported by 242 deputies. And already in late April, the President signed the law. This document introduces a limit on the number of amendments that can be submitted by deputies in between the first and the second readings, simplifies some voting procedures, and helps to avoid delays in the passage of the laws. The people’s deputies were forced to adopt it by receiving more than 16 thousand amendments (a kind of anti-record) for the “banking law” or, as it is also called, the “anti-Kolomoisky” law, critical for getting the next tranche of international financial assistance. Reviewing these amendments could take several months though the law on banking and financial support are urgent for Ukraine.


The IMF and EU are Ready to Help, on Their Terms

The impending economic crisis has already made some adjustments to the state budget of Ukraine. President Zelensky approved relevant amendments which became a response to changes in the forecasts. If earlier the economic growth was expected at the level of 3.7%, now -3.9% is predicted. Inflation is expected to reach 8.7%, and unemployment will hit 9.4%. The agricultural industry, which was often able to mitigate some economic difficulties in Ukraine, this year could also fail. According to the relevant ministry forecasts, due to the drought the yield of grain and leguminous crops will be 60 million tons (after 98 million tons in 2019).

Under such conditions, substantial government deficit could be financed at a level of 7.5% of the country’s GDP only with the IMF support. It seems that the IMF understands the situation but firmly insists that Ukraine must pass an anti-Kolomoisky” law and launch the land market to get the financial assistance.

The situation with the macroeconomic assistance from the EU is taking the same turn. They allocated €1.2 billion to Ukraine for overcoming corona crisis aftermaths but plan to provide funds in two installments, first €600 million upfront, and another ‎€600 million after reforms in the public financial management, anti-corruption, taxation, and business conditions.


Foreign policy

Virtual negotiations and continued political support from the West

The foreign relations format, like many other spheres of life, underwent several changes due to the COVID-19 pandemic. Telephone and video conferencing in secure mode gained their popularity. Ukraine was no exception. In the last month, dozens of such virtual meetings” took place.

In early April, the NATO foreign ministers agreed on a new support package for Ukraine and other countries. In particular, they talked about support for countering cyber threats, as well as exchanging radar data in the Black Sea region. The United States also expressed its support in this matter, the Permanent Representative of the United States to the NATO Kay Bailey Hutchison reported.

In early April, the Pentagon Head M. Esper held a telephone conversation with his counterpart, the Minister of Defense of Ukraine A. Taran. The negotiations aimed to strengthen the strategic partnership between the United States and Ukraine. The European Union does not stand aside as well and continues to support the territorial integrity of Ukraine in the international arena, which was declared in a statement by the European External Action Service. Among other things, the EU condemned the decree of the Russian President Putin, which is prohibiting the Ukrainians from owning land in the Crimea.

The Ministry of Foreign Affairs of Ukraine continues to strengthen bilateral contacts in the Asian direction. So, on April 1, the Minister of Foreign Affairs of Ukraine D. Kuleba had a telephone conversation with a State Councilor and the Minister of Foreign Affairs of the People’s Republic of China Wang Yi. The Ukrainian side expressed deep appreciation to the Government of the People’s Republic of China for the humanitarian assistance provided to fight with COVID-19 and invited the Chinese minister to pay a visit to Ukraine. Wang Yi accepted the invitation from the Ukrainian side and, in his turn, invited the head of the Ukrainian MFA to visit China.


Photo: Due to the pandemic, the Minister of Foreign Affairs of Ukraine, Dmytro Kuleba, conducts international negotiations via videoconference.