Analytical review of the most important events of a military-political, economic and social nature in Ukraine

(from 07/01/2019 to 13/01/2019)

І. DOMESTIC POLICY

1.1 Tomos and everything connected with it.

1.2 Nomination and registration of candidates, as well as their election statements.

1.3 Rumors of the detention of P. Fuchs and A. Ivanchuk in Mexico.

1.4 The death of Ukrainian sailors off the coast of Turkey.

1.5 84 place of Ukraine in the index of democracy.

Results.

II. FOREIGN POLICY

2.1 «Shutdown» in the USA and the issue of fulfilling D. Trump's campaign promises.

2.2 The development of rumors about a possible merger of Russia and Belarus, as well as a diplomatic debate between the two countries.

Results.

III. ECONOMICS

3.1 IMF forecast for inflation in Ukraine in 2019.

3.2 The decrease in profits of the 100 largest state-owned companies of Ukraine in the 2nd half of 2018.

3.3 Growth of tariffs for water supply in Kiev.

Results.

CONCLUSION

І. DOMESTIC POLICY

1.1 Tomos and everything connected with it.

The past week in Ukrainian politics was marked by Tomos. Having received a long-announced document from the Patriarch of Constantinople on January 6, the president and his administration tried to squeeze the maximum out of the church theme. On Christmas Day, January 7, the Tomos was represented by P. Poroshenko and by the Metropolitan of the NCU Epiphanius in the St. Sophia Cathedral in Kiev1. Then, Yevgeny Nishchuk, the Minister of Culture of Ukraine, stated that during the inventory of the Kiev-Pechersk Lavra, there was a loss of several icons, in fact, criminal proceedings were opened2. After that, the Tomos was greeted by the United States. The official website of the American representation in Ukraine states that the United States considers the presentation of the autocephaly tomos of the Orthodox Church of Ukraine on January 6 as a “historic achievement in making Ukraine its own path to the future"3. Another event from the same series is the President’s Tomos tour by regions.

All of the above news was widely distributed in the Ukrainian segment of the Internet, as well as reports of voluntary-compulsory (under pressure from local authorities) transitions of the UOC communities to the OCU in the Volyn, Odessa, and Zhytomyr regions.

Despite the fact that the Tomos itself was obviously signed in a hurry (on January 6-7, there were no signatures of members of the Synod of the Constantinople Patriarchate under it, but they appeared only on the 9th), election staff officers Poroshenko and the media controlled by him managed to complete use this occasion to capture the information agenda in the country for the whole week.

It is unlikely that the Tomos will help the current President to increase the real rating, however, we can predict the emergence of a number of custom polls that will show a systematic increase in electoral sympathy for P. Poroshenko. In this case, the Tomos will be used as a reason to explain another electoral technology the formation of public opinion through the publication of data from custom-made case studies. The real growth potential of the presidential rating due to Tomos is unlikely to exceed 1.5 2%.

As for the political situation in the country, the provision of a Tomos and the subsequent campaign to put pressure on the clergy of the UOC will most likely lead to an increase in social tension and conflict potential in Ukrainian society.

1.2 Nomination and registration of candidates, as well as their election statements.

On January 8, it became known that the Central Election Commission registered candidates for the presidency of the leader of the Social Democratic Party Sergei Kaplin, leader of the Social and Political Movement "Justice" Valentin Nalyvaychenko, leader of Self-help Andrei Sadovy and self-nominated candidate Vitaly Skotsik. Earlier, the Central Election Commission registered the first candidate for the presidency of Ukraine the ex-minister of ecology and natural resources (2014-2015), Igor Shevchenko. Thus, as of the end of the week, there were 5 officially registered candidates.

In addition, last week it was announced the nomination as presidential candidates:

• From the party "Ours" Evgenij Muraev (nominated at the congress).

• From the party "Popular movement of Ukraine" Viktor Krivenko4.

• Extra fractional deputy Vitaly Kuprij (as a self-promoted candidate).

In general, the final number of presidential candidates is likely to be around 30 people.

Last week, talks about the nomination of a single candidate from the "democratic opposition" also intensified. So, MP Mustafa Nayem, joined the initiative to nominate a single candidate for the presidential election "Together", said:

"Voters expect unification and overcoming our eternal" jinxed" where there are two cossacks there are three hetmans"5.

"And there are three key figures who, having sat down at the negotiating table and having agreed on a single candidate, can change the course of these elections this is Anatoly Gritsenko, Andrei Sadovoj and Svyatoslav Vakarchuk, " Nayem said.

In view of the fact that S. Vakarchuk did not express his intention to run, and A. Sadovoi declared that he was ready to unite with A. Gritsenko only before the parliamentary elections6, the initiative of M. Nayem and others like him could be considered failed.

Regarding A. Gritsenko, it should also be said that last week his PR specialists tried (almost unsuccessfully) to use the call of this presidential candidate for questioning in the SBU on the case "about the circumstances of the occupation of Donbass and the annexation of Crimea"7 as a witness in order to promote him in the media . The PR attempt failed due to the insolvency of the occasion (Gritsenko was not accused of anything, but was called to give evidence and give information known to him in order to contribute to the investigation).

Summing up the “election” aspect of the past week, it should be noted that the "heavyweight" candidates have not yet entered the registration phase and are waiting for the right moment (the end of January the beginning of February, when the winter holidays end and the information effect of their registration will be maximal).

1.3 Rumors of the detention of P. Fuchs and A. Ivanchuk in Mexico.

On January 8, Natalia Sedletskaya, a journalist with the Schemes program, reported that, according to her information, the famous Ukrainian oligarch of Russian origin, Pavel Fuchs, was detained upon arrival at the Mexican resort of Cancun. She published this information, citing sources in the "system of international law and order and surrounded by the businessman"8. In addition, N. Sedletskaya said that at the time of the arrest of P. Fuchs, the deputy head of the Popular Front faction Andrei Ivanchuk was present, but he was released immediately after the arrest and only Fuchs had problems at the border. Later, a similar version of the incident was voiced by the head of the Ukrainian Foreign Ministry, P. Klimkin9.

At the same time, P. Fuchs himself denied reports of his arrest, calling them fake.

The fact that this story has received a public outcry is explained by the attempts of journalists to look for "scandalous" information occasions during the "festive" period, which is usually not rich in them. Probably, it was supposed to fan the information wave on the topic "a high-ranking deputy flies abroad with an oligarch and is engaged in dubious affairs". However, this attempt failed. Last but not least, due to the fact that the journalists were not aware of both the reasons for Fuchs’s likely detention, and whether it really was.

1.4 The death of Ukrainian sailors off the coast of Turkey.

On January 7, due to weather conditions off the coast of Samsun province in Turkey, a cargo vessel sank with 11 Ukrainians on board, killing four Ukrainian citizens as a result of the disaster 10. According to the Ministry of Foreign Affairs, the ship failed to withstand the impact of the wave and broke.

According to local authorities, the incident killed 6 of 13 crew members. The Ministry for Temporarily Occupied Territories and Internally Displaced Persons stated that a cargo ship carrying Ukrainians on board, sank off the coast of Turkey, was transporting coal from the port of Azov (RF) to the port of Samsun (Turkey) and could carry coal from CRDLR11.

Attempting to use the tragic story of the death of Ukrainian citizens for another statement about the re-export of coal from CRDLR looks not only immoral, but also extremely thoughtless on the part of the Ukrainian authorities, because if you start investigating the coal re-export schemes from the territories of Ukraine not controlled by Donbass, you can open its supplies to the territory controlled by the same Ukrainian authorities, which will inevitably lead to scandal.

1.5 84 place of Ukraine in the index of democracy.

On January 9, it became known that Ukraine took the 84th place in the Index of Democracy 2018, compiled by specialists from The Economist, reserving the status of a "hybrid mode". Among the countries of Eastern Europe, Ukraine is ranked 17th, receiving, as in the past year, 5.69 points out of 1012.

The theory distinguishes between two types of hybrid regime: dictocracy and democrature. According to the definitions, the second is obtained in Ukraine:

"Democrature implies democratization without liberalization. This means that elections (provided that they are held at all), multi-party system and political competition are allowed only to the extent that they do not threaten the power of the ruling elite. In fact, the political participation of the majority is seen as a direct demonstration of support for the ruling elite. Examples of these regimes include El Salvador and Guatemala, where, since the mid-1980s. Elections were held in violation of political and civil rights"13.

Such a characteristic of the ruling political regime in Ukraine on the part of experts from an influential Western publication, which cannot be suspected of a negative bias towards our country, is a worrying sign. This circumstance states that in the 5th year after Euromaidan, Ukraine still has serious problems with respect for democratic rights and freedoms of citizens.

Results.

In domestic policy last week, two trends became main. The first is the dominance in the information space of the church theme. It is explained by the purposeful promotion of everything connected with the Tomos by the electoral headquarters of the current president. They probably expect to use the religious theme if not as a means of raising the guarantor’s rating, then as a pretext for applying another political technology modeling public opinion with the help of customized opinion polls.

The second trend is the activation of "second-tier" candidates in the issues of nomination and registration. Such activity is quite understandable. Candidates, who have almost no chance of getting into the second round, decided to use the lull between the holidays to once again promote themselves, announcing themselves, and at the same time register officially. "Top" candidates will be registered in late January early February.

II. FOREIGN POLICY

2.1 «Shutdown» in the USA and the issue of fulfilling D. Trump's campaign promises.

In the United States, the "shutdown" continues (a period of shortage of funds for the performance of certain functions of the state, caused by budget inconsistency). On January 9, President Donald Trump called on Congress to provide $ 5.7 billion to erect a wall on the US border with Mexico14.

The story stretches from the end of December, when US senators were unable to agree on the draft budget of the country, which is why the work of state institutions in the US temporarily stopped ("shutdown")15. The document was not adopted due to disagreements between Democrats and Republicans about the plans of the US President to build a wall on the border with Mexico. Trump is demanding almost $ 6 billion to fund the wall, and Democrats categorically reject the proposal. The House of Representatives of the US Congress, the majority of which are Democrats, adopted a number of bills aimed at the completion of the "shutdown". At the same time, the Chamber rejected President Trump’s demand for additional funding for the border wall.

The unprecedented long continuation of the "shutdown" in the USA is connected with the events described above. For D. Trump, building a wall on the border with Mexico is of fundamental importance in view of the fact that this was one of his main campaign promises. Despite the fact that now the rating of the President of the United States is at around 44%, "finishing off" the democratic opposition in Congress on the wall issue, he expects to significantly increase electoral sympathies at the expense of conservative-minded voters who advocate for limiting immigration. According to the team of D. Trump, the fulfillment of the promise to build a wall can finally protect him from impeachment until the end of the current term and provide a good foundation for a possible election for a new term. In this regard, one should not expect a softening of D. Trump's position.

2.2 The development of rumors about a possible merger of Russia and Belarus, as well as a diplomatic debate between the two countries.

On January 8, the Bloomberg published an article stating that "Russian President Vladimir Putin, who has been in power for no more than 5 years, is looking for ways to secure his further influence by creating a closer union with neighboring Belarus"16.

This article was published against the background of continuing diplomatic debate between the Russian Federation and the Republic of Belarus on the issue of tax maneuver and deepening integration within the framework of the Union State. Thus, on January 10, President of Belarus Alexander Lukashenko declared that Russia could lose its only ally in the western direction due to the lack of agreements on compensation for the tax maneuver in the oil sector17. On the same day, A. Lukashenko called the discussion on the issue of the unification of Russia and Belarus "stupid and far-fetched", stressing that it can only be about deepening integration within the Union State, but not about merging the two countries18.

In fact, the logic of the next dispute between Russia and Belarus is simple: the Russian Federation promises the Republic of Belarus preferential oil prices in exchange for a deeper degree of integration within the Union State, which, in fact, is seen as a confederative union of the two countries in the future. In the conditions of the growing confrontation with NATO in Eastern Europe, expressed in the accelerated militarization of the region, Russia needs to finally consolidate its control over such a strategically important state as Belarus, securing it from any "Maidan" and other fluctuations towards the West, which may be associated power (after all, Lukashenko is not eternal). The most reliable way to consolidate such control is to merge the Russian Federation and the Republic of Belarus into one state. Probably, the current information campaign on this topic is aimed at probing the ground (public sentiment in both countries regarding this association).

Results.

The continuation of the "shutdown" in the United States and the desire of Russia to strengthen its own influence on Belarus are the most important foreign policy trends of the past week. The first of these is associated with D. Trump's desire to fulfill one of his main promises, ensuring a rating growth and a good chance of re-election. The second is explained by Russia's desire to arrest any possible attempts by the West to level its influence on Belarus, which is of great importance from a military-strategic point of view, given the increasing militarization of Eastern Europe.

III. ECONOMICS

3.1 IMF forecast for inflation in Ukraine in 2019.

In a recent review, the International Monetary Fund predicted that inflation in 2019 would be 7%. It is noted that maintaining a tight monetary policy and slowing domestic demand should help gradually bring inflation to just under 7% by the end of 201919.

This forecast seems to us too optimistic, due to the fact that last year inflation was about 10%. In addition, over the past six months, the IMF has repeatedly predicted the growth of the Ukrainian economy. The same can be expected from inflation paces forecasts.

3.2 The decrease in profits of the 100 largest state-owned companies of Ukraine in the 2nd half of 2018.

According to the results of 6 months of 2018, the 100 largest state-owned companies as a whole received a net profit of 21.5 billion hryvnias, which is almost 41.9% less than in the same period of 2017 almost 15.5 billion hryvnias.

This is stated in the report of the Ministry of Economic Development and Trade20. As noted, the main factor affecting the decline was the decrease in net profit of Naftogaz of Ukraine, which accounts for about 51% of the total financial result of the entire portfolio.

A very alarming fact is both the decline in the profits of state-owned companies and the fact that the profits of the gas monopolist account for more than half of its structure. In such conditions it is impossible to ensure a stable high inflow of currency into the economy, due to the fact that the main profit is collected in the form of tariffs from its own citizens, and does not come from the export of manufactured goods abroad. This trend indicates that the country's economy will continue to stagnate in the coming years.

3.3 Growth of tariffs for water supply in Kiev.

On January 7, it became known that the National Commission for State Regulation of Energy and Utilities (NCSREU) intends to increase the current tariffs for water supply and sanitation services for JSC AK Kievvodokanal21.

The tariff for centralized water supply and drainage services for Kiev consumers will be UAH 20,832. (in t. Ch. VAT 3,472 UAH.) for 1 cu. m., and the tariff for services for the centralized supply of cold water and sewage (using intrahouse systems) will be UAH 22,212. (including VAT 3,702 UAH.) for 1 cu. m

This growth of tariffs takes place against the background of the deteriorating quality of the services provided. This problem is inevitably converted into political discontent, and as a result a downgrade of the current government in the capital. At the same time, since the power is perceived by citizens as something holistic, the described dissatisfaction can have an impact on the result of the presidential elections in the capital districts.

Results.

The situation in the Ukrainian economy remains disappointing. Here, as before, the trend for stagnation is relevant, with a likely fall in the next crisis due to the inability to pay the accumulated debts. The profit of state-owned enterprises is declining, they are trying to compensate for this by increasing tariffs, but this method is counterproductive. Under these conditions, the IMF forecast of 7% inflation in 2019 seems too optimistic.

CONCLUSION

After analyzing the events of last week, we identified the following trends in them:

The first is the dominance of the church theme in the internal political discourse. It could have been predicted since it was announced that the newly formed OCU would receive a Tomos from the Patriarchate of Constantinople on January 6. Due to the fact that "Faith!" is one of the three main slogans of the campaign of the current president, his headquarters tried to squeeze out of this event a maximum of informational reasons. These include the statements of the Ministry of Culture about the "lost" values ​​in the Lavra and the "Tomos-tour" of the president by regions, and the transitions of the UOC temples to the OCU under pressure from local authorities. As a result, even if the Tomos does not bring the president a real growth in the rating, it can be used as a pretext to show a fictitious growth of electoral sympathies, with the goal of forming in the public consciousness the idea that Poroshenko will certainly come to the second round.

The second is the activation of politicians in the matter of nominating their candidacies for presidential elections and registering with the CEC. So far, mainly those who have almost no chance to really fight for the presidency are being nominated and registered. The lull between the long holidays was a good time for them to declare themselves. More serious contenders for the presidency will be registered closer to the end of the month, when the time of holidays and winter holidays will pass. The nomination of each of them will try to turn into a loud informational occasion.

The third is the Protracted "shutdown" in the United States. President D. Trump does not intend to retreat in his confrontation with the Democrats in the matter of building a wall on the border with Mexico. For him, the fulfillment of this election promise is fundamental, since it can significantly improve his rating at the expense of the sympathies of the most conservative part of the electorate. A high rating, in turn, will put an end to even the ephemeral attempts of democrats to initiate impeachment, and also give D. Trump a good chance to fight for the next presidential term. In this regard, one should not expect a softening of the position of the President of the United States. He is determined to "squeeze" the Democrats in the matter of the wall.

The fourth is not falling away activity around the topic of a possible unification of Russia and Belarus. The Russian Federation offers its ally preferential oil prices for Belarusian refineries in exchange for closer integration within the framework of the Union State. In the future, such integration can lead to the creation of a confederative state with a single currency, control system, and army. For Russia, strengthening its influence on Belarus is crucial because of the growing confrontation with NATO and the militarization of Eastern Europe, where Belarus is a strategically important Russian springboard, which can be used for symmetrical responses to the deployment of the North Atlantic alliance in the region. In this regard, Russia intends to prevent the slightest possibility of “loosening” of Belarus according to the technology of color revolutions, or its drift towards rapprochement with the West after A. Lukashenko’s retirement from power. The ground for strengthening Russian influence on the Republic of Belarus is being prepared now.

Fifth a difficult situation in the Ukrainian economy with a tendency to worsen. The revenues of state-owned companies are falling, and their structure itself does not contribute to the inflow of foreign currency into the country, since more than half of these revenues are Naftogaz profits collected from its own population and enterprises in the form of tariffs. Production and export of goods abroad are underdeveloped. The government is trying to compensate for the decline in revenues of state-owned companies by raising tariffs. Under these conditions, the 7% inflation forecast for 2019 made by the IMF should be taken as overly optimistic.

The authors:

Ruslan Bortnik,

Daniil Bogatyrev.

 

1 https://www.pravda.com.ua/rus/news/2019/01/7/7203153/

2 https://interfax.com.ua/news/general/557743.html

3 https://www.state.gov/secretary/remarks/2019/01/288411.htm

4https://www.facebook.com/photo.php?fbid=2274004932874421&set=pcb.2274005102874404&type=3&theater

5 https://www.facebook.com/Mustafanayyem/posts/10214259838475930

6 https://hromadske.radio/news/2019/01/11/andriy-sadovyy-prypuskaye-ob-yednannya-z-vakarchukom-i-grycenkom-na-parlamentskyh-vyborah

7https://www.facebook.com/SecurSerUkraine/posts/2306423712920954?__xts__[0]=68.ARCnhkzQzJvtJEkuq73jJZF0grIjhvT5WTmTlOy0Tf4y2YCwf_YH4OUs_KPzovFNJvuGQ5sX7x0TYdevP1PCQ_sRTdyvgLr1ia-u3v5DDBGFrBt6TSbp0EEbquxfBjJtRGDCkUSHcrVl28L7iVLUJnSwjNMAW4rBnmyyo7lpbBZopR1_Xq3hCrLszxemH3PXH6kwzJh19fe1q6dOe_PAkiAZTUzIP6sxCSQf2jnpaId7TlffBX6aKqbn0LXC-zjHH-sq7ycQXXCnhLFRpNOT4DwS7bjWj9_CXPuZMbijeuijD_gmBxjh2AbVre_kVXfruGf8n860uegyoOXOfXutnLlj&__tn__=-R

8 https://www.facebook.com/natalie.sedletska/posts/10157090269302652

9 https://www.pravda.com.ua/rus/news/2019/01/9/7203330/

10 https://www.reuters.com/article/us-turkey-ship/two-dead-as-coal-ship-in-distress-off-of-turkeys-black-sea-coast-idUSKCN1P10UW?il=0

11 https://www.facebook.com/MinistryforTOTandIDPs/posts/1976520942461862?__tn__=-R

12 https://www.eiu.com/public/topical_report.aspx?campaignid=Democracy2018

13 https://www.facebook.com/permalink.php?story_fbid=1981385081910683&id=100001176306864

14 https://www.reuters.com/article/us-usa-shutdown/trump-demands-u-s-border-wall-sidesteps-declaring-emergency-idUSKCN1P20AR?utm_source=twitter&utm_medium=Social

15 https://www.pravda.com.ua/rus/news/2019/01/9/7203272/

16 https://www.bloomberg.com/opinion/articles/2019-01-08/putin-is-seeking-to-retain-power-through-a-union-with-belarus

17 https://www.interfax.by/news/belarus/1252865

18 https://www.belta.by/president/view/nikto-nikogo-ne-naklonit-lukashenko-nazval-pritjanutymi-za-ushi-razgovory-ob-objedinenii-s-rossiej-332159-2019/

19 https://www.imf.org/en/Publications/CR/Issues/2019/01/08/Ukraine-Request-for-Stand-By-Arrangement-and-Cancellation-of-Arrangement-Under-the-Extended-46499

20 http://www.me.gov.ua/News/Detail?lang=uk-UA&id=7e022dfb-0b4f-4e61-a7f7-ab4990c10bc6&title=Top100-DerzhkompaniiUPershomuPivrichchi2018-RokuOtrimaliPributokV21-5-MlrdGrn

21 https://vodokanal.kiev.ua/news/vіdbulisya-gromadskі-sluxannya-shhodo-vstanovlennya-tarifu-dlya-kiїvvodokanalu/