Analytical review of the week No. 114 of 02/05/2021.

SUMMARY AND KEY TRENDS.

Summing up the results of the outgoing week, it is important to note the following:

First, there has been a confrontation between the Office of the President and external players for control over the main state-owned enterprises of Ukraine, as well as the energy system. As part of this trend, a new Minister of Energy Herman Galushchenko was appointed, and the head of the board of Naftogaz Ukrainy, Andriy Kobolev, was replaced by Yuriy Vitrenko. The new personnel reshuffle does not entirely suit the Western partners, since they can reduce their influence on the Ukrainian energy system. The government is also considering options for reformatting and weakening all supervisory boards at state-owned companies, which could further weaken the influence of European and American partners.

Likely, this is not the last reshuffle in the government - the chairs are also reeling under the ministers of health, economy, and internal affairs.

Secondly, the main trend in international relations that is relevant at the moment is the growing US-Russian and US-China confrontation. Since neither side intends to concede in the geopolitical struggle, it should be assumed that the “list of unfriendly countries” prepared in Russia and the ban on hiring local personnel by the embassies of these countries is far from the most severe confrontational measure, which the RF can be used against the USA. In the future, restrictions for American business in Russia are quite likely, as well as the maximum tightening of the visa regime. This will mean the lowering of a new "iron curtain" between the United States and the Russian Federation. Relations between the United States and China are developing along a similar path.

Thirdly, the impasse in the issue of a peaceful settlement in Donbas has not yet been overcome, and the positions of the parties do not allow us to hope for its speedy resolution. Against this background, public statements about the likelihood of a meeting between the presidents of Ukraine and Russia, as well as the discussion of a possible venue for it, look like an imitation of violent activity, and not real steps to establish peace. The initiatives of the Ukrainian side to change the "Minsk" format and to include the United States, Britain, and Canada in the "Normandy" format of negotiations look similar.

Fourthly, the vote of the Verkhovna Rada for amendments to the Land Code is the final touch of preparation for the opening of the agricultural land market. As a result, land legislation turned out to be spelled out in such a way that it leaves a lot of loopholes for the purchase and concentration of land in the hands of banks, foreign individuals and legal entities, and large Ukrainian agricultural holdings. As we have repeatedly predicted, the land market in Ukraine is opened in such a way as to bring maximum benefit to large players, and not too small and medium-sized farms.

Fifth, the positive conjuncture of prices for Ukrainian exports (ore, grain) on the world market creates a “window of opportunity” for the Ukrainian authorities in strengthening their influence on large state-owned companies. This process is characterized by the dismissal of several heads of supervisory boards of large enterprises.

INTERNAL POLICY.

Briefly:

This week, a confrontation has emerged between the Office of the President and external players for control over the main state-owned enterprises of Ukraine, as well as the energy system. As part of this trend, a new Energy Minister Herman Galushchenko was appointed, and the head of the board of Naftogaz Ukrainy, Andriy Kobolev, was replaced by Yuriy Vitrenko. The new personnel reshuffle does not entirely suit the Western partners, since they can reduce their influence on the Ukrainian energy system.

The holding of events similar to the SS "Galicia" memory march held in Kyiv is both a political provocation and a natural consequence of the fact that after 2014, Ukrainian integral nationalism became, albeit unofficial, but imposed on other levels of the state apparatus, ideology. This opened the "Overton window" for the entry of national radicals and even outright neo-Nazis into the legal political field. The aforementioned march demonstrates that radicals and neo-Nazis actively use this "window", constantly expanding the degree of "acceptable" in the public space, including through the rehabilitation of persons associated with Nazism during the Second World War. In addition to the unhealthy political situation in Ukrainian society, this can spoil Ukraine's relations with several countries, including Israel and some EU countries.

1. The Cabinet of Ministers dismissed Andriy Kobolev from the post of the head of the board of NJSC "Naftogaz of Ukraine" and appointed Yuriy Vitrenko. Appointment of German Galushchenko as Minister of Energy.

On April 28, the Cabinet of Ministers dismissed Andrey Kobolev from the post of head of the board of NJSC Naftogaz of Ukraine. Based on the results of the general meeting of shareholders, work The Supervisory Board and Management Board of NJSC Naftogaz of Ukraine in 2020 was recognized as unsatisfactory. During the year, the company received a loss of 19 billion hryvnia due to low demand and gas prices. At the same time, in 2019 the company received UAH 2.6 billion. Arrived.

On April 29, the head of the board of "Naftogaz" was replaced with former deputy Minister of Energy Yuriy Vitrenko. The Cabinet also announced a competition for the positions of four independent members of the supervisory board.

On the same day, the Verkhovna Rada appointed the vice-president of Energoatom German Galushchenko for the post of Minister of Energy of Ukraine. She has been free since March 2020. During this time, Yuriy Vitrenko could not be appointed as First Deputy Prime Minister - Minister of Energy. At the last vote, he received the support of deputies from the Rinat Akhmetov influence group, according to one version, as a result of an agreement, according to which the oligarch could receive preferences in the energy sector.

Interestingly, 305 deputies voted for G. Galushchenko. These are 227 "Servants of the People", 20 representatives of the HLS, 19 members of the Trust Group, 17 members of the Batkivshchyna faction, 14 members of the For the Future group, and 8 non-factional members (including the speaker and both his deputies). Thus, the new minister approached the main groups of influence in the energy sector.

“European Solidarity” and “Golos” categorically refused to support G. Galushchenko. At the same time, representatives of the "European Solidarity'' stated that G. Galushchenko is the man of A. Derkach, whom the United States considers an agent of the Kremlin. The candidacy of G. Galushchenko was allegedly proposed by the ex-head of Energoatom Andrey Derkach. Now his activities are supervised by the first assistant of V. Zelensky Sergey Shafir. There is a version that G. Galushchenko, managing Energoatom, provided large discounts on the purchase of electricity to the trading companies of R. Akhmetov and I. Kolomoisky. One way or another, G. Galushchenko is on good terms with the president's entourage. We can say that Bankova got control over the Ministry of Energy into its own hands. Having become Minister of Energy, G. Galushchenko will probably retain control over Energoatom. As a result, this company, as well as the Ministry of Energy, will be directly subordinate to the Office of the President.

In Naftogaz, the replacement of A. Kobolev with Yu. Vitrenko was called "legal manipulation". Kobolev’s team also said that Naftogaz operates with large sums that are under the threat of misappropriation. The existing regulatory framework provides for the possibility of dismissing the first person of the NJSC only after approval by the supervisory board of the company. Now the government, together with A. Kobolev, dismissed the entire supervisory board, which is expected to cause outrage on the part of external players, in particular, the IMF. Probably, at Bankovaya they considered the requirements for obtaining IMF loans impracticable, and now they are acting in their interests.

Also, Kobolev's supporters claim that the Ukrainian government has found a new source of income - 50 billion hryvnias of Naftogaz reserves.

A. Kobolev during the time of Poroshenko played the role of a balancer between the President and Western partners, a new balance of relations with which the people of V. Zelensky must now build for themselves. Yu. Vitrenko simultaneously has well-established relations with Western partners and balances all the most important energy players. Previously, he also worked at Naftogaz, his candidacy should not cause strong protest from external partners. However, this resignation could diminish the US influence on the Ukrainian energy system. The State Department has already sent a negative signal to replace A. Kobolev. By and large, the President's Office aims to establish its control over the main state-owned enterprises, one of which is Naftogaz. And external influence in these structures should be minimized. Subsequently, the continuation of this policy may lead to a serious conflict between V. Zelensky and his Western partners.

2. March of nationalists in memory of the SS division "Galicia".

On April 28, in Kyiv, a march was held in honor of the SS "Galicia" division, which was created in Lviv in 1943. The march took place thanks to the organization "Svoboda" and C14, as well as under the auspices of the organization "Golosiyivska Kryivka", which is financed by the capital's mayor's office.

After the march, the head of the Institute of National Remembrance, Anton Drobovich, condemned its holding. At the same time, A. Drobovich "balanced" criticism by equating the SS division with the Red Army. His predecessor Vladimir Vyatrovich also condemned this event. It is important that earlier the ex-head of the Institute of National Remembrance, now the People's Deputy from the "European Solidarity" V. Vyatrovich, stated that the SS Galicia division was a German formation and the Ukrainians got there either by force or by deception.

The day before the march was opposed by the people's deputies from the "Servant of the People''. -Buzhansky, Negulevsky, Dmitruk, Leonov, and Kasay. The ruling party as a whole condemned the march in honor of the SS Galicia Division, but only after the fact.

In particular, Servants of the People expressed their indignation at why the city authorities did not ban it. The march in honor of the SS "Galicia" was officially approved by the Kyiv City State Administration as the "March of embroidered shirts". But, in social networks, the organizers did not hide their true intentions. During the march, the nationalists were accompanied by guards. Their condemnation was also expressed at the Ministry of Foreign Affairs of Ukraine.

Quite predictably, the march in honor of the SS Galicia division was also condemned by the Israeli Ministry of Foreign Affairs. In turn, the German Ambassador to Ukraine Anka Feldgusen also gave a negative assessment of the march.

It should be said that such a march is being held in Kyiv for the first time, earlier the epicenter of the celebration of the SS "Galicia" was the Lviv region, in which commemorative events of this kind are regularly held.

In general, the conduct of such marches is both a political provocation and a natural consequence of the fact that after 2014, Ukrainian integral nationalism has become, albeit an unofficial, but imposed ideology at all levels of the state apparatus. This opened the "Overton window" for the entry of national radicals and even outright neo-Nazis into the legal political field. The march in memory of the SS "Galicia" division in Kyiv demonstrates that radicals and neo-Nazis actively use this "window", constantly expanding the degree of "acceptable" in the public space for the rehabilitation of collaborators of the Second World War.

The central and regional authorities, in turn, react to such events extremely sluggishly, and sometimes (as in the case of the Kyiv city authorities) and directly contribute to them. The reason is that the radicals marching in memory of the SS "Galicia" and the radicals who took part in the 2014 Maidan and the war in Donbas are often the same people.

Moreover, the radicals retain control over street protests, which the authorities are very afraid of.

3. Epidemiological situation in the country. The issue of dismissal of the Minister of Internal Affairs A. Avakov and Maksim Stepanov from the post of Minister of Health.

This week, Ukraine ranked 11th out of all countries in the world in terms of the number of new infections with coronavirus, and among European countries - 4th in terms of infections and 2nd in mortality. The number of cases per day in the country could exceed 11 thousand people, which is on average 5 thousand less than last week. But at the same time, the number of deaths did not decrease, and since last week it has exceeded 400 people.

For the second year in a row, Ukraine will celebrate the Easter holidays taking into account quarantine requirements. Adaptive quarantine restrictions will be in effect throughout Ukraine until June 30.

Since May 1, strict quarantine will be weakened in Kyiv, but the rules of the "orange zone" will apply in the city. As usual, but in compliance with anti-epidemic measures, public transport will resume work.

According to the Ministry of Health, since the beginning of the vaccination campaign, on February 24, 702,440 people have been vaccinated against COVID-19 in the country. The first dose of the vaccine was received by 702 438 people, both doses - 130 people. And although the pace of vaccination in the country is trying to accelerate, the level of complete vaccination remains below 1%. In addition, Ukraine remains among the first in the world in terms of both morbidity and mortality from coronavirus.

Health Minister Maxim Stepanov is blamed for the failure of immunization in Ukraine. 150 People's Deputies initiated an extraordinary meeting of the Verkhovna Rada on the issue of his dismissal. For the first time, the question of dismissing M. Stepanov was raised in the fourth month of his work. Then the minister was accused of the fact that during the lockdown the hospitals were not prepared for a new round of morbidity. Protective suits for doctors were bought by the Ministry of Health at inflated prices. In addition, doctors were not paid the promised 300% salary increase. A draft resolution on Stepanov's dismissal was submitted to parliament, but it remained unconsidered.

The question of the resignation of the Minister of Health was also raised in November 2020, when the hospitals were overcrowded, and in February 2021 due to the failure with the start of vaccination, but no one submitted the corresponding draft resolution. It is likely that during a pandemic it is not so easy to find a replacement for M. Stepanov, a new Minister of Health may be appointed when the epidemiological situation in the country improves somewhat.

Chairman of the Servant of the People faction David Arakhamia said that the resolution on the resignation of the Minister of Health Maxim Stepanov could be brought to the session hall no earlier than May 15. Several candidates are being considered in his place, one of which is M. Stepanov's deputy, state sanitary doctor Viktor Lyashko.

Rumors about the possible dismissal of A. Avakov from the post of Minister of Internal Affairs of Ukraine also intensified. Allegedly, the new administration in the United States may insist on this, and the reason will be the failure in the investigation of the murder of journalist Pavel Sheremeta (the consideration of the case in the courts has slowed down, and the key suspects are gradually being released.

The figure of A. Avakov has long been dissatisfied with the office of the President (there are conflicting relations between the minister and the head of the Office) and, against the background of the strengthening of the presidential vertical, is perceived as a barrier to the concentration of power.

4. Sociology. The attitude of citizens to the problem of using different languages ​​in Ukraine.

This week, the Ilko Kucheriv Democratic Initiatives Foundation published a case study on the use of different languages ​​in Ukraine.

According to the survey results, a third of Ukrainian citizens (33%) consider the language issue a rather serious problem in the country. And every fourth Russian-speaking citizen of Ukraine faced discrimination in one form or another.

Regarding the use of the Ukrainian language, the majority agree that citizens of Ukraine should be proficient in the state language -79%.

At the same time, they faced negative attitudes from other people because of their native language:

Native Ukrainian: faced - 14.2% of respondents. Not encountered - 80%.

Native Russian: 23.4% of the respondents encountered, and 73% did not.

Compared to other problems in the country, only 5% consider the most acute issue of using different languages ​​in Ukraine. But 28% consider the language issue a rather serious problem if there are more relevant ones. In total, a third of citizens (33%) consider the language issue a rather serious problem. 32% consider this problem to be far-fetched. And 26.7% - believe that the language issue is not acute, except for some isolated cases.

For a clearer understanding of citizens' sentiments, as an example, we will cite the results of a survey conducted in October 2020 by KIIS. Then 57% of respondents believed that in the future Ukraine will switch to a predominantly Ukrainian language (against 32% who “predicted” the state status of the Russian language). But at the same time, 50% considered the Russian language a historical heritage of Ukraine, which needs to be developed (against 30% who saw a threat in the Russian language).

The results of this survey can say the following: it cannot be argued that the problem of using different languages ​​in Ukraine is far-fetched. This problem is considered serious by at least 33% or one-third of the population. At the same time, every fourth Russian-speaking citizen of Ukraine faced discrimination in one form or another. For a rule of law, this is quite a lot.

FOREIGN POLICY.

Briefly:

The main trend in international relations, relevant at the moment, remains the growing US-Russian and US-China confrontation. Since neither side intends to concede in the geopolitical struggle, it should be assumed that the “list of unfriendly countries” prepared in Russia and the ban on hiring local personnel by the embassies of these countries is far from the most severe confrontational measure, which the RF can be used against the USA. In the future, restrictions for American business in Russia are quite likely, as well as the maximum tightening of the visa regime. This will mean the lowering of a new "iron curtain" between the United States and the Russian Federation. Relations between the United States and China are developing along a similar path.

Meanwhile, the impasse in the issue of a peaceful settlement in Donbas has not yet been overcome, and the positions of the parties do not allow us to hope for its early resolution. Against this background, public statements about the likelihood of a meeting between the presidents of Ukraine and Russia, as well as the discussion of a possible venue for it, look like an imitation of violent activity, and not real steps to establish peace.

1. Diplomatic activity around Donbas.

The likelihood of a military escalation in the Donbas has greatly diminished in recent years, while diplomatic efforts around the settlement process continue. Last week, all the parties involved in the peaceful settlement noted their statements, aimed at the truth not so much a pragmatic solution of controversial issues, as at maintaining their image in the eyes of the world community.

First, Ukrainian President Volodymyr Zelenskyy expressed the opinion that the Vatican could be a good place to meet with the Russian president to discuss the situation in Donbas. According to Zelensky, his office is already in talks with the Kremlin to agree on a date and place for the two presidents to meet. And the head of the Servant of the People faction David Arahamia added that such a meeting should take place before the beginning of summer.

In turn, the press secretary of the Russian president Dmitry Peskov made a statement that Kyiv should discuss the issue of Donbas, in fact, with the unrecognized republics, since Russia considers this conflict to be an internal Ukrainian one. In addition, the Kremlin said that it had not received a request from the Ukrainian side for a meeting between the two presidents. In France, Ukraine was offered to resolve the conflict in Donbas within the framework of the "Normandy format".

In an interview with the Financial Times published on April 26, the Ukrainian president expressed his desire to "change the Minsk format of negotiations" and "connect the US, Great Britain, and Canada to the Normandy format."

At the same time, by changing the “Minsk format”, Volodymyr Zelenskyy understood the change in the Package of Measures for the implementation of the Minsk Agreements itself, which follows from the context of the interview. Quote:

“We have two options: we can change the Minsk format, correct it. Or we can use some other format. Now I am participating in a process that was drawn up before me... The Minsk format should become more flexible and serve the purposes of the present, not the past ”.

By and large, there is nothing new in these proposals of the Ukrainian president. Since the time of Petro Poroshenko, official Kyiv has been trying to persuade its negotiating partners in the Minsk and Normandy formats to change the sequence of implementation of the Minsk Package of Measures. Specifically, the Ukrainian side is not satisfied with the fact that, according to the document, elections in the uncontrolled territories should take place before, and not after the transfer of the border with Russia under the control of Ukrainian security officials. Other important points that Kyiv does not want to comply with concern the prescription of the special status of certain regions in the Constitution and the general amnesty.

Earlier, Moscow had repeatedly made it clear that Russia would not agree to rewrite the Minsk agreements, as well as to join the negotiations of the United States or other countries. Actually, on April 26 this position was once again confirmed by Dmitry Peskov.

The foregoing suggests that all the parties involved in one way or another in the situation in Donbas are not ready to retreat from their previous positions and compromise. Europe is forced to bear the burden of supporting the fruitless negotiations in advance, of which it is the guarantor. Russia is putting forward proposals that are deliberately unrealizable for the Ukrainian leadership since Kyiv obviously will not agree to "negotiations with terrorists" at present. In turn, Ukraine also, apparently, makes statements for the sake of a statement and is not ready to move along the path of a peaceful settlement. In these conditions, the conflict in Donbas will remain unresolved until any significant changes in the system of international relations.

2. The US continues to confront Russia and China.

The United States' confrontation with Russia and China continues to be a key phenomenon in world politics. The process of formation and

The cohesion of geopolitical blocs testifies to the readiness of the great powers to continue rivalry and unpreparedness to defuse tension in international relations.

Last week, US President Joseph Biden, speaking in Congress, said that he had promised Chinese leader Xi Jinping to increase the US military presence in the Indo-Pacific region to a level similar to NATO's presence in Europe [https://ria.ru/20210429/bayden- 1730412161.html]. The owner of the White House determined the purpose of this presence to prevent a conflict, apparently over Taiwan. At the same time, the chief of staff of the US Navy, Admiral Michael Gilday, announced that the American fleet was on duty in Taiwan to prevent the capture of the island by China.

In turn, the Chinese Navy celebrated the 72nd anniversary of its creation of a video in which a YJ-18 supersonic anti-ship missile destroys a target in the form of an American ship [https://lenta.ru/news/2021/04/27/havy /]. In the context of the increasing military power of China, in the medium term, the United States may lose its absolute advantage over Beijing, including due to the vulnerability of its aircraft carriers. In this case, there will be a radical change in the balance of power in world politics and the loss of Washington's undisputed leadership in the naval sphere.

This is also facilitated by the ever-accelerating rapprochement between China and Russia. Chinese Foreign Ministry spokesman Wang Wenbin noted that China and Russia will support each other in matters of protecting state sovereignty. And although the American sanctions against Moscow are largely symbolic, the very fact of their introduction, as well as the further rapprochement between Russia and China, makes it possible to judge the rallying of the two great powers based on a common confrontation between the United States.

This is also facilitated by the position of Russia itself. In particular, last week, Russian Foreign Minister Sergei Lavrov admitted that Moscow and Washington would live in a "cold war or worse". According to him, he offered the American Secretary of State Anthony Blinken to "nullify the diplomatic conflict", but the United States did not support this initiative. Lavrov also announced the appearance of a list of unfriendly countries that will be prohibited from hiring Russian citizens to work in diplomatic missions [https://tass.ru/politika/11263885]. It would seem an insignificant measure, but it can significantly complicate the work of Western embassies and consulates in Russia.

On the whole, the instability of the world system is only growing and there is no reason to believe that in the medium term the parties will agree to detente. Rather, on the contrary, relations between the United States on the one hand, and Russia and China on the other, will only get worse.

3. Recognition by the White House of the Armenian Genocide in the Ottoman Empire.

On April 24, US President Joe Biden fulfilled his campaign promise and recognized the massacres of Armenians in the Ottoman Empire as genocide.

As stated in the official statement on the White House website, quote:

“The American people pay tribute to all Armenians who died in the genocide that began exactly 106 years ago ".

In his statement, the US President emphasizes that "1.5 million Armenians were deported or killed in the course of the extermination campaign."

Biden explained that his task is "not to put the blame on someone for what happened, but to make sure that nothing like this ever happens again."

Armenian Prime Minister Nikol Pashinyan sent a letter to the US President, in which he noted that the Armenian people and all Armenians of the world received the message on the official recognition and condemnation of the Armenian Genocide in the Ottoman Empire in 1915-1923 with great enthusiasm.

Meanwhile, Turkish Foreign Minister Mevlut Cavusoglu said that Biden's decision is populism. Quote:

“Ankara does not accept and strongly condemns the statement of the President of the United States of April 24 on the events of 1915/2219481] ".

On the eve of the publication of an official statement, Biden informed Turkish President Recep Tayyip Erdogan that Washington recognizes the Armenian genocide. Genocide refers to the deportation, famine, and massacres of Armenians by the Ottoman Turks, which began in 1915.

The Turkish leadership is already warning the United States of further deterioration in relations. As noted by the head of the Turkish Foreign Ministry Mevlut Cavusoglu, statements about the Armenian genocide will not bring any benefit but will damage the ties between Washington and Ankara. Quote:

“If the United States wants to worsen relations, then this is their decision".

Erdogan, in turn, said that Turkey will defend the truth from those who, quote: "lies about the so-called Armenian genocide and supports this slander for political reasons."

Considering that on how painful the topic of the Armenian genocide is for Turkey, and also the fact that it is precise to the historical experience and aesthetics of the Ottoman Empire that Erdogan has recently publicly appealed to in his domestic policy, American-Turkish relations are likely to deteriorate. Along with previous disagreements over Ankara's purchases of Russian weapons, territorial disputes with Greece, and Turkey's "special position" on several issues within NATO, the situation is fraught with the country's "isolation" within the Alliance, which will undoubtedly negatively affect any US attempts to exhibit itself as a preserving world hegemon.

The United States is trying to put pressure on the leadership of Turkey and the Russian Federation, to regain the role of a moderator in the Nagorno-Karabakh conflict, having won over the Armenian elites to its side.

4. Border conflict between Kyrgyzstan and Tajikistan.

On April 29, the State Committee for National Security of Kyrgyzstan reported about the shelling of the water intake of the Golovnoy water distribution point in the Kok-Tash village of the Batken region, accusing the special forces of the Ministry of Internal Affairs of Tajikistan.

In turn, the National Security Committee of Tajikistan said that it was the Kyrgyz military who opened fire on their border guards.

A day earlier, a conflict broke out on the Batken section of the border between the two countries because representatives of the Tajik side tried to install CCTV cameras on power line poles. Representatives of the Kyrgyz side opposed and began to cut down the pole. The confrontation escalated into stoning, and at night the conflict escalated.

The incident took place at the site of the still Soviet water distribution point "Golovnaya" in the upper reaches of the Isfara River. In Tajikistan, they consider the territory their own, in Kyrgyzstan, they dispute it.

Both sides accuse each other of aggravating each other and are pulling additional forces to the border. At the same time, negotiations have begun at the moment, and the situation has shifted to a diplomatic channel.

During the conflict on April 29, each side lost at least 15 people killed. About 1000 people were evacuated from the area of ​​hostilities, which were conducted with the use of light armored vehicles, small arms, and grenade launchers.

At the moment, the exchanges of fire have ceased, and the parties have agreed to withdraw troops to their places of permanent deployment.

Strictly speaking, the reason for this situation lies in the fact that in the conflict area deep in the territory of Kyrgyzstan there is a Tajik enclave, to which Tajikistan has no direct (not through the territory of the Kyrgyz Republic) communication. Borders in the region were drawn in the early Soviet period and did not take into account the fact that in the future the union republics could become separate states, which would cause problems with transport links.

In this regard, sporadic border conflicts between Kyrgyzstan and Tajikistan may continue to occur in the future.

ECONOMY.

Briefly:

The vote of the Verkhovna Rada for amendments to the Land Code is the final touch of preparation for the opening of the agricultural land market. As a result, land legislation turned out to be spelled out in such a way that it leaves a lot of loopholes for the purchase and concentration of land in the hands of banks, foreign individuals and legal entities, and large Ukrainian agricultural holdings. As we have repeatedly predicted, the land market in Ukraine is opened in such a way as to bring maximum benefit to large players, and not too small and medium-sized farms.

The positive conjuncture of prices for Ukrainian exports (ore, grain) on the world market creates a “window of opportunity” for the Ukrainian government in strengthening its influence on large state-owned companies. This process is characterized by the dismissal of several heads of supervisory boards of large enterprises.

1. Parliament adopted amendments to the Land Code regarding the land market.

On April 28, the Verkhovna Rada adopted Law No. 2194 "On Amendments to the Land Code of Ukraine and Other Legislative Acts to Improve the Management and Deregulation System in the Sphere of Land Relations" .ua)].

The law provides for the transfer of state-owned lands outside of settlements into communal ownership of local self-government bodies. The exception should be the lands necessary for the state to perform its functions. These include the lands of the Ministry of Defense, the Environmental Fund, government agencies, enterprises, and organizations. The right to lease land (emphyteusis) can be alienated, pledged without agreement with the owner of the land plot, except for cases determined by law [How to buy land in Ukraine - Rada adopted law No. 2194 (strana.ua)]. Previous and next land users can sign a contract without the participation of the landowner. This law partly negates the right to private property as such, since the owner of the land becomes the user behind the process of transferring his land between users without his permission. The tenant is also a priority when buying land from the owner.

The land market is expanding at the expense of protected land, land near water bodies. Agricultural land can be allotted for the extraction of minerals, including by foreigners. The document allows local authorities to change the purpose of private land plots. There is a loophole in the law to overcome restrictions on land ownership by one person by uniting land by mutual consent of owners, land users, or mortgagees. The land can be sold, bought, donated, exchanged for lifelong maintenance (for lonely old people), bequeathed, contributed to the authorized capital of an enterprise. Agricultural land plots inherited by legal entities that, by the Land Code, cannot acquire their ownership, are subject to alienation within one year. Citizens will not be able to rent a plot of more than 0.6 hectares for gardening. If the sale of land to one person cannot exceed 20 hectares, then the land will certainly be enlarged after the purchase without restrictions. The supervisory function is assigned to local authorities and regional regional state administrations, which themselves will be turned into prefectures (the corresponding law has not yet been adopted). Ukrainian lands are being prepared for foreign landowners by integrating all relevant documentation. All procedures for land management should be accelerated and simplified.

Ultimately, the land will be sold for 20 hectares per person, and then immediately enlarged without restrictions. Unification and free access to all documentation required for landowners means that Ukrainian land is planned for sale to foreign investors who do not understand the intricacies of the shadowland market in Ukraine that existed before the adoption of this law. Taking into account the norm on land restrictions for gardening, this law is not aimed at meeting the needs of ordinary citizens, but exclusively of large players in the land market.

2. Raw material scissors instead of the IMF. As a result of a pivot in world markets, Ukraine can do without external loans.

As of April 27, the price of iron ore jumped to $ 177.6 per ton, although on April 12 the quotes did not go beyond $ 171. Moreover, prices will continue to grow: as of June of this year, the ore is already being contracted at almost $ 185 per ton. Corn on the Chicago Stock Exchange last week soared in price by 11%, in just one day, April 22, May futures jumped 4%, to 255.9 dollars per ton. The same trends for wheat: last week, May futures rose 11% (to $ 247.4-264 per tonne depending on the variety) - the biggest weekly jump since 2015. Black Sea wheat (this group also includes Ukrainian grain) is traded even more expensively in May - at $ 265-270 per ton [How a U-turn on world markets allows Ukraine to do without creditors (strana.ua)]. Ukrainian sunflower oil added 3-3.5% in price (up to 1560-1585 dollars per ton). Sunflower with deliveries in October rose from $ 530-550 to $ 570-600 per ton. Last week, rapeseed on the Paris stock exchange rose 5.7% to $ 573 per ton. Because of this, forward prices for rapeseed with delivery in July-August in Ukraine jumped from $ 520 to $ 535-545 per ton.

On April 26, Ukraine successfully placed Eurobonds for $ 1.25 billion at 6.875%. "Over the past 12 months, iron ore has risen in price by more than 120%, corn - by 101%, rapeseed - by 68%, wheat - by 31%", - lists senior analyst at Emporio group Artem Berkovich. In April 2021, iron ore rose by $ 6.6 per tonne (to $ 177.6). Ore will continue to rise in price - for June supplies are already contracted at almost $ 185 per ton. The rise in ore prices is stimulated by China, Iran, India. Ore production in Western Australia fell 2%. China plans to buy 4 million tonnes more corn than expected, while corn crops in Brazil were hit by a drought and the US and France were hit by frosts. Egypt is increasing purchases of wheat. At the same time, oil prices on the world market fell by 1%.

It follows from the above that the Ukrainian government can do without IMF loans in the short term, postponing the increase in gas prices for the population for the future.

 

3. Change in the composition of the supervisory boards of Ukrgasbank, Ukrzaliznytsia, and the State Depository.

On April 28, the previous head of the Supervisory Board of Ukrgasbank, Shrenik Davda, applied for the termination of his powers to perform other professional duties [Ukrgasbank received a new chairman of the Supervisory Board (zn.ua)]. The Cabinet of Ministers announced the selection of candidates for the positions of two members of the Supervisory Board of JSC "Ukrzaliznytsia" at its disposal No. 363-r [The Government announced a competition for two members of the Supervisory Board of Ukrzaliznytsia | Economic truth (epravda.com.ua)]. The shareholders of the National Depository of Ukraine (NDU) OJSC by the decision of the annual general meeting terminated the powers of the chairman/member of the supervisory board Oleksandr Danilyuk [Danilyuk was called for the sake of the National Depository | Economic truth (epravda.com.ua)]. The new composition of the National Commission for Securities and Stock Market initiated the replacement of the Supervisory Board of the National Depository. According to Danilyuk, they want to appoint the right person to the post of head of the NDU board. President Volodymyr Zelenskyy has appointed four new members of the National Securities and Stock Market Commission to their positions. ёNational Commission on Securities and Stock Market was headed by an adviser to the head of the Office of President Ruslan Magomedov. It is planned to amend the decree governing the holding of competitions for the positions of heads of state-owned companies [Corporate management of state companies under the threat (zn.ua)]. The government plans shortly to amend the Cabinet of Ministers Resolution No. 777, which regulates the competitive selection of heads of state-owned companies to expand its influence on these processes. This is confirmed by the fact that on April 28, 2021, the "Drat Resolution of the Cabinet of Ministers of Ukraine" On Amending the Resolution of the Cabinet of Ministers of Ukraine No. 777 dated September 3, 2008 "appeared in the register of the NAPK for conducting anti-corruption expertise. Resolution No. 777 applies to most state-owned companies, in addition to the same "Naftogaz", enterprises "Ukroboronprom", the State Space Agency, state banks, and "Ukrzaliznytsia." The conclusion on the draft amendments to the Resolution of the Cabinet of Ministers "Some issues of the activities of the joint-stock company" Ukrainian Railways "is ready.

It is proposed to expand the powers of the chairman of the board or the person temporarily exercising his powers, adding the following wording to the charter of the company "taking into account the position of the chairman of the board or the person temporarily performing his powers, the following will be carried out:

● appointment and dismissal by the general meeting of deputy chairmen and board members;

● deciding by the supervisory board on the removal of the deputy chairman, a member of the management board from exercising powers, submitting proposals to the general meeting about the person, temporarily exercising his powers;

● submission by the supervisory board to the general meeting of proposals (submissions) on a candidate for the position of deputy chairman and member of the management board.

The head of the supervisory board receives additional powers at the expense of the rest of the board members.

 

Edited by:

Ruslan Bortnik,

Daniil Bogatyrev.

Authors:

Daniil Bogatyrev,

Maxim Semyonov,

Oksana Krasovskaya,

Andrey Timchenko.