Analytical review of the week No. 119 of 06/06/2021

ANALYTICAL REVIEW OF THE MOST IMPORTANT DOMESTIC, FOREIGN POLITICAL AND ECONOMIC EVENTS OF THE WEEK

31.05.- 06.06.2021

CONTENT:

SUMMARY AND KEY TRENDS.

INTERNAL POLICY.

1. V. Zelensky submitted to the Verkhovna Rada a draft law on de-oligarchization.

2. The Odessa Court of Appeal overturned the verdict of Sergei Sternenko.

3. Meeting of the Congress of Local and Regional Authorities.

4. Sociology. Assessment of the situation in the economic sphere and the role of the state in the life of society.

FOREIGN POLICY.

1. Interview of Vladimir Zelensky to the German newspaper Frankfurter Allgemeine Zeitung.

2. The talks between Vladimir Putin and Alexander Lukashenko in Sochi, as well as new problems in the Ukrainian-Belarusian relations.

3. Disputes about defense spending during a video conference of NATO defense ministers.

4. Celebration of the anniversary of the conquest of Constantinople, as another example of the manifestation of the neo-Ottoman ideology implanted in modern Turkey.

ECONOMY.

1. Parliament wants to reduce taxes for the gambling business.

2. The Cabinet of Ministers adopted a budget declaration for 3 years.

3. Ukraine pays additional funds to the holders of the state debt.

4. Russia is changing the structure of funds in the National Welfare Fund, completely abandoning the dollar.

SUMMARY AND KEY TRENDS.

Summing up the political results of the outgoing week, we note that:

First, in domestic politics, the promotion of the topic of “deoligarchization” continues, expressed in the introduction of a relevant bill to parliament. Realizing this tendency, the President's Office pursues three goals, the first of which is to obtain electoral points, the second is to imitate the fulfillment of the requirements of Western partners, and the third is to redistribute assets from “disloyal” representatives of big business to “loyal” ones.

Secondly, the struggle continues between the OP and Western creditors for control of the judicial system. This week, she expressed herself in the overturning by the court of appeal of the verdict of Sergei Sternenko, which was promoted by pro-Western grantees as a symbol of the fact that "the Ukrainian judicial system is rotten and requires reformatting by the hands of international experts." By releasing Sternenko, the OP took away from them the reason for the promotion of the protests.

Third, there is an obvious attempt by the president to build relations with local elites in the framework of the Congress of Local and Regional Authorities. This is being done not only to strengthen the vertical of power, but also to prevent the "alliance of mayors" under the auspices of the capital's mayor Vitali Klitschko.

Fourthly, in the outgoing week, foreign policy again showed a tendency to destroy the conditions for fulfilling the political part of the Minsk Package of Measures, as well as the agreements in the Normandy Format of December 2019. It was expressed in the politicization of relations within the Normandy Four - direct and non-diplomatic reproaches from President Vladimir Zelensky addressed Germany in an interview with the German newspaper Frankfurter Allgemeine Zeitung. Seeing that Germany and France do not unequivocally support the idea of ​​revising or rejecting the Minsk agreements or changing the negotiation formats, the OP of Ukraine chose the tactics of reproaches and “shaming”. In the medium term, such tactics in relations with Berlin and Paris may be fraught with a gradual loss of their support for Ukraine.

Fifth, another tendency in Ukraine's foreign policy, which continued this week, is the deterioration of relations with Belarus. In response to Kiev's closure of the airspace and the ban on flights, Alexander Lukashenko hinted at the possibility of launching direct flights from Minsk to Crimea bypassing Ukraine. Considering that earlier Belarus took a clearly restrained and verified position, recognizing Crimea as an integral part of Ukraine, the launch of such flights could become a serious diplomatic blow for Kiev. In the short term, the deterioration of the Ukrainian-Belarusian relations will continue.

Sixth, Ukraine continues to look for ways to fill the budget, trying to reduce taxes for participants in the gambling business and exempting ordinary citizens-players of gambling machines and casinos from taxes. At the official level, according to the budget declaration for 2022-2024, the government does not plan to increase exports. The only significant source of income can only be the land market, otherwise the national currency will begin to depreciate, given the government's plans to raise the minimum wage. GDP warrants are becoming another limiting factor for the development of the Ukrainian economy, since they, de facto, become "a tax on economic growth in excess of 3 percent per annum."

Seventh, the Russian Federation is completely abandoning the dollar in the structure of its sovereign wealth fund, increasing the share of gold, yuan, and euro in it. This circumstance indicates that the Russian Federation does not seriously hope for a "detente" in relations with the United States in the foreseeable future and perceives the current geopolitical confrontation as a long-term one.

INTERNAL POLICY.

Briefly:

Three tendencies developed in the domestic policy of Ukraine last week.

The first of them is a continuation of "deoligarchization", which was expressed in the introduction of a relevant bill to parliament. Realizing this tendency, the President's Office pursues three goals, the first of which is to obtain electoral points, the second is to imitate the fulfillment of the requirements of Western partners, and the third is to redistribute assets from “disloyal” representatives of big business to “loyal” ones.

The second trend is the continuation of the struggle between the OP and Western creditors for control over the judicial system. This week, she expressed herself in the overturning by the court of appeal of the verdict of Sergei Sternenko, which was promoted by pro-Western grantees as a symbol of the fact that "the Ukrainian judicial system is rotten and requires reformatting by the hands of international experts." By releasing Sternenko, the OP took away from them the reason for the promotion of the protests.

The third trend is the president's attempt to build relationships with local elites through the Congress of Local and Regional Authorities. This is being done not only to strengthen the vertical of power, but also to prevent the "alliance of mayors" under the auspices of the capital's mayor Vitali Klitschko.

1. V. Zelensky submitted to the Verkhovna Rada a draft law on de-oligarchization.

On June 2, President V. Zelensky submitted to parliament a draft law [https://www.pravda.com.ua/rus/news/2021/06/2/7295833/] No. 5599 "On preventing threats to national security associated with excessive influence persons with significant economic or political weight in public life (oligarchs) ”. The document has a limited validity period of 10 years. On its basis, antitrust laws, a law on lobbying and other normative legal acts will be developed, designed to reformat economic and social relations in the country.

According to the bill, the "oligarch" meets the following four criteria [https://biz.liga.net/all/all/novosti/v-rade-poyavilsya-zakonoproekt-ob-o...

1) participates in political life;

2) has a significant impact on the media (including online media);

3) is the ultimate beneficial owner (controller) of a business entity, is an entity of natural monopolies or holds a monopoly (dominant) position in the national commodity market and maintains or strengthens this position for one year in a row;

4) the value of a person's assets exceeds 1 million living wages (UAH 2.19 billion), established for able-bodied persons on January 1 of the corresponding year (as of June 3, the subsistence minimum is UAH 2189).

A person can be recognized as an oligarch by the National Security and Defense Council of Ukraine on the basis of a proposal from the Cabinet of Ministers, a member of the National Security and Defense Council, the National Bank of Ukraine, the Security Service of Ukraine or the Antimonopoly Committee of Ukraine. Also, a register of oligarchs will be created on the NSDC website.

The following consequences await those who have received the status of an oligarch:

• Prohibition to participate in large privatization;

• Prohibition to finance parties;

The need to submit income declarations, as deputies and civil servants do now;

Officials who contacted the oligarchs privately are obliged to indicate this in their declaration. After meeting with the oligarch or his representative, no later than the next day, they must submit a "Declaration of Contact".

At the same time, the NSDC can also exclude a person from the register of oligarchs on the basis of an application from a person included in the register, if he falls under less than three criteria determined by this bill.

In a way, the NSDC instrument will act as the main regulator of the deoligarchization process. It is expected that this state of affairs will force big business to go to various behind-the-scenes agreements with the authorities in order not to get into the blacklist.

In addition, the criteria for defining "oligarchs" are presented rather vaguely. If you wish, you can bring quite a lot of different people under this definition by applying a selective approach. As a result, the norms of the law can be challenged in courts.

At the same time, the draft law does not say anything about strengthening the fight against corruption, illegal influence on government officials, improving antimonopoly legislation or fighting money laundering and tax evasion. Something that would really change the balance of business and power in our state.

As a result, the bill will not really affect the fight against political corruption, but will serve as a tool for another PR and distracting the public's attention from the unresolved issues of the world, the fight against corruption, tariff increases and other unresolved problems.

The presented bill will also serve as a report for Western partners on the de-oligarchization process, which in fact is only an imitation. In fact, there will be a redistribution of the assets of some representatives of large national capital (competitors) in favor of others (“their own” for the authorities).

It is also worth noting that after the president's statement, made following the NSDC meeting on June 4, in which he announced plans to bring the idea of ​​de-oligarchization to a referendum, the implementation of the aforementioned idea and you can forget, if not forever, then at least for a long time.

2. The Odessa Court of Appeal overturned the verdict of Sergei Sternenko.

At a session on May 31, the Odessa Court of Appeal overturned the conviction for robbery in the case against Sergei Sternenko and Ruslan Demchuk on charges of kidnapping deputy Sergei Shcherbich [https://www.bbc.com/russian/news-57267560]. On February 23, in this case, the Primorsky Court of Odessa [https://hromadske.ua/ru/posts/apellyacionnyj-sud-obuyavlyaet-reshenie-po... sentenced Sergei Sternenko and Ruslan Demchuk to 7 years in prison and confiscation of half of the property.

As a result, S. Sternenko received a suspended sentence under the article on illegal handling of weapons and will be released from house arrest. After the meeting, S. Sternenko announced that he would appeal the court decision.

It is worth noting that supporters of Sergei Sternenko have repeatedly gathered protest actions, escalating pressure on the courts and the President's Office.

The purpose of this was not only to get the conviction overturned on appeal, but also to demonstrate to the authorities that an attempt to prosecute the nationalists would be accompanied by serious street pressure. The verdict on S. Sternenko could serve as an unpleasant precedent for the "activists".

Sternenko was also supported by local lobbyists for the interests of the US Democratic Party, including the Golos party, structures of a “national liberal” orientation and organizations receiving Western grants. Probably, there was a calculation to promote S. Sternenko as "the new leader of the national liberals." Also, with the help of protests, pressure was exerted on the Office of the President in order to promote conditions of judicial reform favorable to the West. As a result of the cancellation of the sentence, the president has so far managed to get away from this unpleasant topic for him.

In fact, although S. Sternenko was not imprisoned, he was recognized by the court as a criminal and this marginalizes him as a political figure, deprives him of hopes for the support of the electoral center. Now he is not a potential political leader, but at best the leader of a part of the radicals. On the one hand, the authorities managed to politically “nullify Sternenko” without provoking protests. But on the other hand, the decision was reached at the cost of the authority of the authorities, and hopes for justice and the rule of law on all sides of the confrontation.

Now it will be more difficult for V. Zelensky's team to build a balance and demonstrate to society that supposedly fair measures of influence can be applied not only to representatives of the “anti-Western” opposition, but also to representatives of the “right flank”. As you can see, in this case, the authorities are much less decisive and are more likely to imitate the process. Nationalist groups retain control over street protests, so their representatives generally manage to maintain "immunity" in most cases.

3. Meeting of the Congress of Local and Regional Authorities.

On June 3, during a working trip to the Khmelnytsky region, President V. Zelensky took part in a meeting of the Chamber of Local Authorities of the Congress of Local and Regional Authorities under the head of state [https://www.president.gov.ua/ru/news/kongres-miscevih -ta-regionalnih-vlad-ye-vazhlivim-majdanchik-68821].

During the meeting, the chairman of the Chamber of Local Authorities of the Congress of Local and Regional Authorities under the president elected the mayor of Lvov, Andrey Sadovy, and the mayor of Dnipro, Boris Filatov, and the mayor of Zhitomir, Sergei Sukhomlin, were elected as his deputy.

During the meeting, representatives of the authorities discussed the conditions for the development of industrial parks, attracting private investment and preparing regions for the heating season.

The President announced the completion of the first stage of the reform of the basic level of local self-government. He noted that he is closely following the processes of transferring objects of communal property to communities and focused on the importance of financial independence of local budgets and the viability of territorial communities. Bills are expected that will allow more to leave in local budgets revenues from personal income tax and a single tax, as well as taxes on transport, real estate and land.

On the establishment of the Congress of Local and Regional Authorities in Ukraine [https://www.ukrinform.ru/rubric-polytics/3202533-prezident-utverdil-polo... President Volodymyr Zelenskyy announced in February this year. The Presidium of the Congress will act as a functioning body on a monthly basis. Next week, the President also plans to attend a meeting of the House of Regions Congress.

The initiative of the Congress of Local and Regional Authorities can be seen as an attempt to increase influence on a potentially strong opponent in the person of local elites, who have shown high results in local elections. In addition, this project acts as a competitive project of V. Klitschko of the Association of Ukrainian Cities, which is headed by the mayor of the capital.

Thus, the government as a whole seeks to establish control over the regional elites, and takes over the initiative in this segment from the potential competitor V. Zelensky for the presidency -- Vitali Klitschko. Additionally, this project can act as a platform through which to create the appearance of a community of opinion on a number of controversial issues.

4. Sociology. Assessment of the situation in the economic sphere and the role of the state in the life of society.

This week, Razumkov Center [https://razumkov.org.ua/napriamky/sotsiologichni-doslidzhennia/otsinka-g... -suspilstva] published a sociological study, according to which the majority of Ukrainian citizens consider the economic situation in the country bad - 60%; Only 5% consider it good, and 32% consider it neither bad nor good.

At the same time, almost 30% hope that the situation will change for the better in the next 2-3 years.

• 21.2% - believe that during this period the situation will change for the worse.

• 26.1% - do not expect significant changes.

Interestingly, 49% admit that the state has the right to intervene in economic processes in the country.

• only 21% are against it

• 87% point to the need for assistance to socially vulnerable groups of the population.

• 74% do not support the recognition of the state's right to interfere in the private life of citizens.

• 79% of respondents emphasize that the state should help citizens solve their problems without undue interference in their lives.

The above-described results of sociological research testify to infantilism and political illiteracy prevailing in Ukrainian society. The overwhelming majority of respondents do not see any contradiction in the fact that they simultaneously want social assistance from the state (quite in a paternalistic spirit) and demand that it should not interfere in their private life (despite the same paternalistic spirit).

FOREIGN POLICY.

Briefly:

In foreign policy, a tendency to destroy the conditions for the implementation of the political part of the Minsk Package of Measures, as well as the agreements in the "Normandy Format" of December 2019, manifested itself in the outgoing week. Germany's address in an interview with the German Frankfurter Allgemeine Zeitung. Seeing that Germany and France do not unequivocally support the idea of ​​revising or rejecting the Minsk agreements or changing the negotiation formats, the OP of Ukraine chose the tactics of reproaches and “shaming”. In the medium term, such tactics in relations with Berlin and Paris may be fraught with a gradual loss of their support for Ukraine.

Another trend in Ukraine's foreign policy, which continued this week, is the deterioration of relations with Belarus. In response to Kiev's closure of the airspace and the ban on flights, Alexander Lukashenko hinted at the possibility of launching direct flights from Minsk to Crimea bypassing Ukraine. Considering that earlier Belarus took a clearly restrained and verified position, recognizing Crimea as an integral part of Ukraine, the launch of such flights could become a serious diplomatic blow for Kiev. In the short term, the deterioration of the Ukrainian-Belarusian relations will continue.

1. Interview of Vladimir Zelensky to the German newspaper Frankfurter Allgemeine Zeitung

On June 3, an interview of the Ukrainian president with the German newspaper Frankfurter Allgemeine Zeitung [https://www.president.gov.ua/news/intervyu-prezidenta-ukrayini-nimeckomu... was published.

Reading it, one might get the impression that the President's Office decided to finally ruin relations with Western partners in the person of Germany and France, who have so far been quite loyal to Kiev. What is this phrase of the president alone from an interview concerning the meeting of the advisers to the heads of state of the "Normandy format", quote:

“The representatives of Germany and France did not directly answer that Russia is a party to the conflict. They again turned on such "cautious" diplomacy, with which Ukraine does not agree, since Russia is a party to the conflict, and we understand this ... They could not directly answer this question. I believe this is the problem. I cannot be diplomatic in these matters ... [Ibid. ] ".

In fact, this is a direct reproach of the President of Ukraine against Germany. And here's another quote:

“Germany has not provided us with any weapons, no military assistance since the beginning of the war. And she can - in Germany there are powerful ships, missile boats, patrol boats. "

In addition, in an interview, Volodymyr Zelenskyy noted that “what Germany is doing for Ukraine, it is doing for itself,” and said he was perplexed that Berlin did not understand this.

From our point of view, Ukraine, mired in loans and political problems, is now in no position to spoil relations with Germany.

In addition to the above, in the aforementioned interview, Volodymyr Zelenskyy once again noted the existence of a certain plan "B", which will ensure a comprehensive settlement of the situation in Donbass, in Crimea, and with the Nord Stream-2 gas pipeline. According to the president, about such a "universal plan that the world's leading players can guarantee, ”he intends to speak during his meeting with Joe Biden.

In fact, this statement is another attempt by the Ukrainian leader to promote the theses on changing the format of the conflict settlement. However, two questions arise here: first, why does the president say that he intends to inform Joe Biden in person, given that it is currently not known whether this meeting will take place at all until the end of his term? And secondly, how was he going to involve Germany and Russia in the negotiations, if the former would under no circumstances agree to stop the almost completed Nord Stream 2, and the latter categorically refuses to discuss the issue of Crimea?

Taking into account the above, it is difficult to get rid of the thought that Vladimir Zelensky is saying all this not in order to achieve a real result, but in order to delay the process.

By the way, in Germany and France recently, they once again reminded about the lack of alternative to "Minsk". This is stated in the joint German-French declaration, circulated on May 31 by the German Federal Government after the meeting between Angela Merkel and Emmanuel Macron. Quote:

“In light of recent tensions, we underline the importance of implementing the Minsk Agreements and the conclusions of the Paris Summit in December 2019 for a viable solution to the conflict in eastern Ukraine, we are committed to achieving this goal in the Normandy format, and we value the various OSCE actions on the ground [https: // www .bundesregierung.de / breg-de / suche / deutsch-franzoesische-erklaerung-von-berlin-1919726] ".

Thus, by proposing in his interview some "expanded settlement formats", Volodymyr Zelensky largely contradicts the positions of Germany and France on this issue. However, after the accusations against the German side, which we wrote about earlier, this looks quite natural.

2. The talks between Vladimir Putin and Alexander Lukashenko in Sochi, as well as new problems in the Ukrainian-Belarusian relations.

On May 28, Alexander Lukashenko flew to Sochi to discuss pressing issues of bilateral relations with Vladimir Putin.

The presidents' negotiations lasted more than five hours [https://iz.ru/1171408/dmitrii-laru/dogovorilis-na-beregu-chem-zavershila.... The conversation between the leaders of the two countries continued over the weekend - this time in an informal setting, without ties and jackets. At the same time, Lukashenka and Putin did not limit themselves to the Bocharov Ruchey residence and went on a sea voyage on a yacht. The politicians were accompanied by the youngest son of the Belarusian leader Nikolai.

As the press secretary of the head of the Russian Federation Dmitry Peskov said on Saturday evening, the main topics of the leaders' conversation were issues of further development of trade and economic interaction between the two countries, as well as the fight against the pandemic. A Kremlin spokesman clarified that Alexander Lukashenko, during a conversation with his Russian counterpart, "did not voice any requests for additional economic assistance." At the moment, only the transfer of $ 500 million of the second tranche of the state loan from the Russian Federation to Belarus has been agreed. According to Dmitry Peskov, the money will arrive "in the near future."

In fact, apart from the issues of economic interaction and the statement of the growth of trade turnover, no specifics about the results of the meeting were announced to the public. Regarding the process of further integration within the framework of the Union State, the President of Russia noted only that in this matter one should “act consistently and slowly in order to ensure the interests of the countries as“ each of the parties determines it for itself [Ibid. ] ".

Such wording may mean that the main topic of the meeting was not integration, but the solution of the current problems of Belarus, which arose as a result of the "air blockade" from the West. This aspect is also confirmed by the statements of the Russian and Belarusian sides following the talks. In particular, the press secretary of Vladimir Putin, Dmitry Peskov, said, quote:

“The Ministries of Transport of the two countries - Russia and Belarus - have been instructed to organize all aspects of air communication, including taking into account the upcoming vacation period and taking into account the large number of Belarusian citizens who want to come to the Black Sea coast of Russia, and also, which is important, taking into account the fact that a large number of citizens of Belarus will have to somehow return to their homeland [Ibid.] ”.

However, much more indicative in this respect is the statement of Alexander Lukashenko, quote:

“Ukraine has closed the sky for us. We have our own sanatorium in the Crimea, in Miskhor, where people always went and flew. In order not to aggravate relations, we are through Ukraine, some by train, some by car, some by plane. Now the sky has been closed. I told Putin: "Think about how we can get to Crimea. We will not fly through Poland: they are not allowed there either [https://ria.ru/20210601/aviareysy-1735117017.html]."

This statement is an explicit request for direct flights from Belarus to Crimea, bypassing the territory of Ukraine. Let us remind you that earlier the official Minsk took an emphatically restrained position in relation to Crimea, recognizing it as the territory of Ukraine and refraining from organizing direct transport links with the peninsula through Russia.

Now, as we can see, the situation has changed. And the impetus for its change, undoubtedly, served as Ukraine's rash ban on air traffic with Belarus after the story with Protasevich. Closing its skies for Belarusian carriers, it was to be expected that Minsk would not remain in debt and would revise its position on communication with the peninsula not controlled by Kiev.

Ukraine has already announced that if Belarus launches direct flights to Crimea, additional sanctions will be imposed against it.

Thus, relations between Ukraine and Belarus are systematically degrading, leading to mutual economic losses. And the initiative to deteriorate relations comes from Kiev.

 

3. Disputes about defense spending during a video conference of NATO defense ministers.

On June 1, a video conference of NATO defense ministers took place. The event was intended to prepare a summit at the level of the heads of the member states of the alliance, which will be held on June 14 in Brussels.

According to media reports, the main topic of the videoconference was the NATO-2030 initiative put forward by the Alliance Secretary General Jens Stoltenberg.

US Secretary of Defense Lloyd Austin expressed strong support for the initiative and said that it will keep the alliance strong from a military point of view "and" strengthened from a political point of view.

"He stressed that this initiative will strengthen readiness and make the alliance more resilient and capable of countering systemic challenges from Russia and China [https://regnum.ru/news/3285592.html]," the Pentagon said.

However, another outcome of the mentioned negotiations seemed interesting to us. The fact is that during them Jens Stoltenberg called on the member countries of the alliance to once again increase contributions to its budget. Quite predictably, this initiative has caused outrage in some countries.

Here is what the correspondent of the German Frankfurter Allgemeine Zeiteng Thomas Guchker writes about this, quote:

“No wonder France categorically rejects Stoltenberg's proposal. Diplomats in Brussels have repeatedly stated this since February. Defense Secretary Florence Parley did so again in public with her colleagues just before the videoconference. "This is all money that does not increase national defense budgets or advance European defense efforts, which NATO benefits from," Parley told the online magazine Politico. "Why? Nobody knows. We need to double the budget, and only then will we think about what to do with this money? [Https://www.faz.net/aktuell/politik/ausland/streit-ums-geld-bei- der-nato-geht-s-ans-eingemachte-17369211.html]".

As you can see, the French authorities are not happy with Stoltenberg's demands to allocate more money for NATO needs, while not even knowing what exactly they will go to. Greece, Spain, and Italy are also skeptical about increasing NATO spending. And Belgium and Luxembourg are categorically opposed to an increase in defense spending.

The foregoing indicates that in the new geopolitical conditions, the globalist plans of the Joe Biden administration (after all, we understand that it is from her that the ideas for the militarization of Europe emanate to use it in the so-called "exercise diplomacy" in the new "Cold War" ) are doomed, if not to failure, then at least to slip. Many countries of "old Europe" do not want to spend "their hard-earned money" on soothing Washington's phantom pains over the lost world domination.

It is especially significant that the first violin in this ensemble of "pacifist curmudgeons" is played by France, whose leadership several years earlier had already come forward with the idea of ​​creating a "united army of Europe", which would reduce military-political dependence on the United States.

4. Celebration of the anniversary of the conquest of Constantinople, as another example of the manifestation of the neo-Ottoman ideology implanted in modern Turkey.

On May 29, Turkey celebrated the 568th anniversary of the conquest of Constantinople (now Istanbul).

As the Turkish news agency Anadolu writes, “the capture of the city on the shores of the Bosphorus, the history of which counts not a single millennium, has become one of the turning points in world history” [https://www.aa.com.tr/ru/turkey/vturtsii - celebrate the 568th anniversary of the conquest of istanbul / 2257863].

But for us, of course, it is not these well-known historical facts that are of interest, but how exactly the next anniversary of the capture of Constantinople was celebrated in Turkey.

And they celebrated it with a grandiose light show. They arranged it not just anywhere, but over the Hagia Sophia, which was again turned into a functioning mosque last year

. Above the dome of the shrine, the date of the capture of the city, the silhouette of Sultan Mehmet II on horseback, and the Sultan seal of the Ottoman Empire were displayed.

Needless to say, such a "light show" over the dome of a once seized and Islamized Christian shrine does not add goodwill to Turkey's relations with its western neighbors and, in particular, Greece? Regardless, this celebration is another marker of what kind of historical period Erdogan relies on in building the ideology of modern Turkey. And this period is the Ottoman Empire. With all the ensuing geopolitical claims.

ECONOMY.

Briefly:

Ukraine continues to look for ways to fill the budget, trying to reduce taxes for players in the gambling business and exempting ordinary citizens - players of gambling machines and casinos from taxes.

At the official level, according to the budget declaration for 2022-2024, the government does not plan to increase exports. The only significant source of income can only be the land market, otherwise the national currency will begin to depreciate, given the government's plans to raise the minimum wage. GDP warrants are becoming another limiting factor for the development of the Ukrainian economy, since they, de facto, become "a tax on economic growth in excess of 3 percent per annum."

1. Parliament wants to reduce taxes for the gambling business.

On June 3, the Verkhovna Rada did not adopt in the first reading the bill 2713-d, which provides for a reduction in taxes on the gambling business, sending it for a repeated first reading [https://www.epravda.com.ua/rus/news/2021/06/3 / 674601 /]. According to the initiator of the bill, Oleg Marusyak, this will "legalize most of the market and attract foreign entities in this area." He also believes that the reduction in the Gross Gaming Revenue (GGR) tax rate "will be offset by license income, since Ukraine has the highest license fees in the world." The bill reduces the income tax rate for organizers of gambling - from 30% to 10%. The document also proposes to reduce the rate on the income of bookmakers and casinos - from 18% to 10%. In addition, the cost of licenses, according to him, will be reduced three times. And winnings up to 8 minimum wages (48 thousand hryvnia) are exempt from personal income tax and military tax.

Exemption of winnings up to 48 thousand hryvnia from personal income tax and military tax is intended to attract as many citizens as possible to the gambling business as players. In November 2020, the head of the commission for the regulation of gambling and lotteries, Ivan Rudy, suggested that opening a gambling business in Ukraine would attract 1 billion hryvnia in profit [https://biz.liga.net/pervye-litsa/all/interview/hotim-privlech -1-mlrd-grn-ot-zapuska-rynka-pervoe-intervyu-glavy-igornoy-komissii]. The plan for the state budget revenues from the gambling business in the amount of UAH 7.5 billion. will not be completed in 2021. Advisor to the Deputy Head of the President's Office Kirill Timoshenko and the developer of bills on the gambling business Boris Baum told about this in an interview with Levy Bereg [https://biz.liga.net/ekonomika/all/novosti/plan-po-postupleniyam-v-byudjet -ot-igornogo-biznesa-vypolnen-ne-budet-boris-baum]. The Ministry of Finance made a mathematical mistake in determining the amount of proceeds at UAH 7.5 billion, he said. Baum explained that the amount of budget revenues was determined at the level of 10% of the turnover of the entire gambling business in Ukraine, which is estimated at UAH 560 billion in a year. An additional 1.5 billion should have come to the budget from licenses issued. But it is possible to collect the entire planned amount of receipts only when the market is fully operational.

2. The Cabinet of Ministers adopted a budget declaration for 3 years.

On May 31, at an extraordinary meeting of the government, the budget declaration was approved for the first time [https://mof.gov.ua/uk/news/minfin_uriad_skhvaliv_biudzhetnu_deklaratsiiu_na_2022-2024_roki-2899].

The Budget Declaration for 2022-2024 is the government's vision of fiscal policy for the medium term. The document defines the main budget indicators, the goals of state policy in the relevant area with indicators of their achievement and is the basis for drafting the State Budget for 2022. The Budget Declaration approved by the Government contains proposals for changes to the Tax Code of Ukraine, which will become a resource base for increasing state budget revenues in the medium term. The budget declaration together with the financial and economic justification will be submitted within the time period specified in Article 33 of the Budget Code for consideration to the Verkhovna Rada of Ukraine.

The budget deficit in 2022 will be 3.5%, and in 2023 and 2024 it will decrease to 3% and 2.7%, respectively, according to the Budget Declaration, published on the website of the Ministry of Finance [https: //interfax-com-ua.cdn. ampproject.org/v/s/interfax.com.ua/news/economic/747951-amp.html?amp_js_v=a6&amp_gsa=1&usqp=mq331AQHKAFQArABIA%3D%3D#aoh=16228125695038&referrer=https.www.Fogle. com & amp_tf = From% 20% 251% 24s & ampshare = https% 3A% 2F% 2Finterfax.com.ua% 2Fnews% 2Feconomic% 2F747951.html]. According to the document, this year the state budget deficit is expected at the level of UAH 246.6 billion, in 2022 - UAH 188 billion, in 2023 - UAH 179.8 billion, in 2024 - 179, UAH 59 billion

At the same time, the trade deficit will increase in 2021 to $ 6.2 billion compared to $ 1.79 billion in 2020, and in the next two years, the trade deficit increased to $ 8.59 billion and $ 10.6 billion, respectively, according to the Budget Declaration. As indicated in the document, the expected growth in exports of goods and services in 2021 will be 8.8%, but in 2022 its rates will decline to 6.5%, in 2023 - to 7.7%, and in 2024 exports will grow by 7.9%. At the same time, the declaration provides for the growth of imports of goods and services at the level of 15.6% this year, 9.2% in 2022, 9.4% in 2023 and 8.6% in 2024.

As reported in the document, the size of the minimum wage in the next three years will increase from 6.5 thousand UAH. at the beginning of 2022 to UAH 7.665 thousand. at the beginning of 2024. At the same time, the declaration provides for an increase in the minimum wage in October 2022 to UAH 6.7 thousand, and from 2023 to UAH 7.176 thousand.

The budget declaration also contains an assessment of fiscal risks, including the further spread of COVID-19, a significant decrease in gas transit from the Russian Federation, an increase in hybrid threats from the Russian Federation, an increase in unemployment, a low grain harvest, a high share of public debt spending in 2022-2024, and others.

The government plans to reduce the budget deficit by selling land and launching a gambling business, since it does not plan to increase exports, but predicts an increase in the gap between imports and exports.

Taking into account the plans of the authorities to gradually increase the minimum wage, this will be possible only due to the depreciation of the hryvnia against the dollar and the euro and, accordingly, the fall in the purchasing power parity of the population. Even if we take the most optimistic forecasts of the Office of the President, Ukraine will earn from its own population by launching a gambling business 7.5 billion hryvnia, which is only about 300 million dollars. If we take the theoretical worst-case scenario, over 40 million hectares of Ukrainian agricultural land will be sold at a price of $ 1,000 per hectare [https://www.bbc.com/ukrainian/features-russian-50388919]. In total, in the future, Ukraine can gain $ 40 billion. But in this case, the food security of the country will be under threat. The price of sunflower oil for 2020-2021 for the retail consumer in Ukraine increased by 50% because oil producers prefer to export as many products abroad as possible, without worrying about the risk of creating a deficit in the domestic market. In the event of a sale of Ukrainian land, this trend will spread to all categories of Ukrainian agricultural products.

3. Ukraine pays additional funds to the holders of the state debt.

On May 31, Ukraine made the first payment on GDP orders issued as part of the restructuring of public debt in 2015, which amounted to $ 40 million 750.65 thousand [https://zn.ua/ukr/ECONOMICS/ukrajina-viplatila-40-mln -za-vvp-varranti.html]. GDP warrants emerged as a product of debt restructuring in 2015, when creditors agreed to write off $ 3.6 billion of Ukraine's debt in exchange for them. The total nominal value of Ukrainian GDP warrants is $ 3.24 billion, and their turnover expires in 2040. Under the warrant rules, Ukraine does not pay creditors if the economy grows slower than 3%. With GDP growth ranging from 3% to 4% per annum, lenders can expect 15 percent of this one percent growth.

In mid-August 2020, Ukraine announced the completion of a buyout on the open market of about 11% of its GDP warrants in order to reduce payments on them in the future. Approximately, payments on GDP orders in 2021 before their partial redemption were also estimated at $ 40 million. Funds for them are provided in the state budget.

According to the State Statistics Service, In the first quarter of 2021, real GDP decreased by 2% compared to the first quarter of 2020 [https://zn.ua/ukr/ECONOMICS/realnij-vvp-ukrajini-za-rik-znizivsja-na -2-derzhstat.html]. In 2020, Ukraine's GDP decreased by 4% with inflation of 5% and an average annual level of UAH 26.96. for the dollar. Recall that the reason for the increase in borrowing by Ukraine and, accordingly, the need for debt restructuring in 2015 by the Minister of Finance Natalya Yaresko was the drop in gold and foreign exchange reserves of Ukraine from $ 20.4 billion in 2013 to $ 7.5 billion in 2014 [https: // index.minfin.com.ua/ua/finance/assets/]. According to the popular version, billions of dollars of Ukrainian gold reserves were transported in trucks by Yanukovych to Russia, although there is still no evidence of this version.

In accordance with the terms of circulation of warrants in Ukraine, payments for them begin to be made after the GDP exceeds $ 125.4 billion. The national economy reached this indicator in 2018 (then the GDP exceeded $ 130 billion).

The first payments on warrants refer to 2019; Ukraine makes them with a two-year lag. That is, Ukraine paid for 2019 only now, in 2021. In 2022, payments for 2020 and so on should take place until 2040, when the last payment for 2038 will take place.

For example, if the government's forecast is correct, and Ukraine's GDP grows by 4.6% in 2021, then the size of payments on warrants in 2023 will be calculated as follows. First, you will have to pay 15% of the amount of GDP growth from 1% to 4%, that is, 15% of 1% of GDP or 0.15% of GDP. Second, it is necessary to calculate the payment for GDP growth of more than 4%. In this case, the amount will be calculated from 0.6% of GDP (4.6% minus 4%) to 0.24% of GDP (i.e. 40% of 0.6% of GDP). The sum of these two parts will be equal to the sum of payments for 2023: 0.39% of GDP in 2021 (0.15% plus 0.24%).

As for the volume of payments on GDP in Ukraine, there is a limitation: they cannot exceed 1% of GDP. However, this limitation is temporary and will only be valid until 2025. After that, the amount of payments will not be limited, and this creates big problems. For Greece and Argentina, in terms of GDP warrants, there is an upper limit on the amount paid.

In the case of Ukraine, this limit will be valid only for the first four years, and then this instrument will turn into a kind of "tax on economic growth", which will put pressure on the budget and the hryvnia exchange rate every year, because these payments will be made in foreign countries currency.

According to calculations made in 2019, even under a pessimistic scenario of economic development, which stipulates that GDP growth will not exceed 4% per year by 2040 and will average 3.5% per year, the total volume of payments under GDP varant may be $ 5.7 billion, that is, almost twice the amount written off during debt restructuring. The higher the indicators of economic growth, the greater the payments on GDP warrants will be. Under a more realistic scenario, if GDP grows at an average rate of 4.3% per year, payments will reach US $ 27.2 billion.

In 2019, the Verkhovna Rada created a temporary commission of inquiry to analyze the terms of agreements with creditors and bring to justice those responsible for concluding “agreements unfavorable for the state”. However, in six months, the TSC met only a few times. The deputies did not draw conclusions about the terms of the restructuring, although criticism from politicians and experts did not stop.

The coronavirus crisis of 2020 played both in favor of Ukraine and against it in terms of payments under GDP-varant. On the one hand, due to the economic downturn in 2020, there will be no warrant payments in 2022. On the other hand, Ukraine's GDP in 2021 has every chance to grow by more than 4% due to the low comparison base with 2020, which will automatically tighten the second part of the formula for calculating the amount of payments under warrants.

4. Russia is changing the structure of funds in the National Welfare Fund, completely abandoning the dollar.

This week, Russian Finance Minister Anton Siluanov announced the transition within a month to a new structure of the National Wealth Fund (NWF): dollar 0% (previously 35%), euro 40% (previously 35%), yuan 30% (previously 15%) , gold 20% (previously 0%), British pound 5% (previously 10%), yen 5% (unchanged) [https://www.bbc.com/russian/news-57347580].

Thus, the Russian Federation is taking another step towards the de-dollarization of its economy, but at the same time it is strengthening its interaction with the EU and China, and is also returning to the policy of filling its reserves with real gold.

The decision of the government of the Russian Federation falls into the outline of the deployment of a new "Cold War" with the United States. By making such decisions, Russia shows that it does not expect a "detente" after Putin's meeting with Biden in June 2021. At the same time, Russia is showing friendly gestures to the EU and China. Although there is no talk of creating a Berlin-Moscow-Beijing axis so far, Russia is apparently betting that the economic interests of the EU, in the foreseeable future, will not be completely subordinated to the political interests of the United States.

Edited by:

Ruslan Bortnik,

Daniil Bogatyrev.

Authors:

Daniil Bogatyrev,

Oksana Krasovskaya,

Andrey Timchenko.