Analytical review of the week No. 122 of 26/06/2021.

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

21.06.- 27.06.2021

 

CONTENT:

SUMMARY AND KEY TRENDS.

INTERNAL POLICY.

1. V. Zelensky's interview to 1 + 1 TV channel: main messages to the society.

2. V. Zelensky signed a decree on the decision to impose sanctions against P. Fuchs, D. Firtash, and V. Putin's entourage.

3. A group of MEPs from Italy attacked the “anti-Akhmetov” bill.

4. The Cabinet of Ministers is changing the bill on the abolition of the moratorium on the export of round timber.

5. Sociology. Parliamentary and presidential ratings.

FOREIGN POLICY.

1. Incident with a British destroyer off the coast of Crimea.

2. The proposal of Germany and France to resume the Russia-EU summits.

3. Presidential elections in Iran.

4. In Moscow and a number of other regions of Russia, mandatory vaccination against coronavirus has been announced for workers in some areas.

ECONOMY.

1. Irina Venediktova urged to intensify "civil confiscation" to fill the budget.

2. The Ministry of Finance allows the optimization of expenditures in the event of a negative development of relations with the IMF.

3. Tariffs for heating will increase by 30% by the end of the year, and for water supply - by 20%.

 

SUMMARY AND KEY TRENDS.

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

First, in the domestic policy of Ukraine, the authorities continue to form public opinion that the implementation of the Minsk agreements is unrealistic. Against the background of the stalled process of a peaceful settlement of the conflict in Donbas, the President of Ukraine himself has already declared that the Minsk agreements are, in fact, dead and a new format is needed. In parallel, the need for the reintegration of the uncontrolled territories is being questioned. However, the president does not want to take full responsibility for the plan to “fence off” these territories and therefore speaks of the likelihood of putting this issue to a referendum.

Secondly, this week the struggle for the main economic assets of the country continued. Volodymyr Zelenskyy imposed sanctions against Dmitry Firtash and Kharkiv businessman Pavel Fuks, associated with political groups opposing the authorities. Sanctions were also imposed on a number of Russian citizens, including the head of the Gazprom board, Alexei Miller. The political motivation for sanctions is here side by side with the likelihood of the redistribution of assets of some representatives of big business in favor of others, or in favor of Western partners. Against this background, it is not surprising that Ukrainian oligarchs order lobbying campaigns even from European parliamentarians in order to avoid redistribution.

Third, the incident with the British destroyer off the coast of Crimea has once again demonstrated that NATO countries and Russia are in a new Cold War, despite the rather restrained atmosphere at the recent US-Russian summit. And while the United States is trying to negotiate with the Russian Federation on strategic stability (that is, arms control), defining the boundaries of what is permissible in this confrontation, the role of the main antagonist of Russia from among the countries of the North Atlantic Alliance has been taken over by Great Britain. What is happening is fully consistent with the results of all the summits of Joseph Biden's "European tour" with the participation of the EU and NATO countries, in which the Russian Federation and the PRC were unequivocally designated as opponents of the "collective West".

Fourthly, another important international political trend was reflected this week in the proposal of the leaders of Germany and France to invite Vladimir Putin to the summit of the EU heads of state for the first time since 2014. Despite the fact that the proposal was rejected by other countries of the union, it demonstrates the desire of Berlin and Paris to restore economic ties with Moscow and smoothly get out of the determining political influence of Washington by sovereignizing their foreign policy.

Fifth, the attempts of the Ukrainian authorities to increase budget revenues by fighting corruption run up against the resistance of the very system of power in the country. Any anti-corruption initiative turns into an instrument of pressure on political opponents, as is the case at the moment with the development of cases within the framework of “civil confiscation”, which comes under the pressure of only politicians outside the ruling party, who, moreover, do not have levers of pressure on the authorities in answer.

Sixth, in relation to the IMF, Volodymyr Zelensky will face a zugzwang situation as the next presidential election approaches. At the moment, both sides are trying to maneuver, defending their interests. V. Zelensky understands the toxicity of the topic of cooperation with the IMF, which means that he may try to abandon this on the eve of the 2024 elections, but the IMF knows about this and will force the president to make concessions, delaying the allocation of the next tranches. Finance Minister Sergei Marchenko already predicts cuts in spending, which means, first of all, a halt in the growth of public sector wages and pensions, which, accordingly, will also hit the president's rating as well as continued cooperation with the IMF. It follows from this that the Ukrainian government must find a fundamentally new way to budget fulfillment - rejection of the raw material model of the economy by creating products with high added value and exporting them to the world market.

INTERNAL POLICY.

Briefly:

In the internal politics of Ukraine, the authorities continue to form public opinion about the unrealistic implementation of the Minsk agreements. Against the background of the stalled process of a peaceful settlement of the conflict in Donbas, the President of Ukraine himself has already declared that the Minsk agreements are, in fact, dead and a new format is needed. In parallel, the need for the reintegration of the uncontrolled territories is being questioned. However, the president does not want to take full responsibility for the plan to “fence off” these territories and therefore speaks of the likelihood of putting this issue to a referendum.

In addition, this week the struggle for the main economic assets of the country continued. Volodymyr Zelenskyy imposed sanctions against Dmitry Firtash and Kharkiv businessman Pavel Fuks, associated with political groups opposing the authorities. Sanctions were also imposed on a number of Russian citizens, including the head of the Gazprom board, Alexei Miller. The political motivation for sanctions is here side by side with the likelihood of the redistribution of assets of some representatives of big business in favor of others, or in favor of Western partners. Against this background, it is not surprising that Ukrainian oligarchs order lobbying campaigns even from European parliamentarians in order to avoid redistribution.

1. V. Zelensky's interview to 1 + 1 TV channel: main messages to the society.

On June 24, Volodymyr Zelenskyy gave an interview to the host of the 1 + 1 TV channel Natalya Moseichuk. The President discussed issues related to the KSU, the head of the OP Andrei Yermak, the meeting of Biden and Putin in Geneva, communication with Russia, the Minsk agreements, etc.,

According to V. Zelensky, what is happening around the KSU and its former chairman Alexander Tupitsky is "the only possible struggle" in the current circumstances. Through the NSDC, he enacted a decision to block the destruction of all anti-corruption reforms, land reform, language law, etc. The President spoke about the need to reboot the judicial system, and for this, there are already two laws in the Rada. As for the NSDC tool itself, V. Zelensky considers it "one of the types of weapons" in his arsenal.

At the same time, the president denies that he has absolute power in his hands. As for the second term, V. Zelensky said that he wants to do a lot more and does not yet see competitors for himself in this matter.

Regarding Andrei Yermak, the president confirmed that his positions in the OP remain strong enough. And there are no questions to A. Yermak about Wagnerians. "Yermak is with me for a reason. I trust this person."

Regarding Viktor Medvedchuk and Petro Poroshenko, the president said that they had crossed not red, but bloody lines, and none of them were interested in ending the war. They worked together and made money. His confidence in this "is based on facts and information that came from the SBU and intelligence."

V. Zelensky also noted that under P. Poroshenko, Ukraine incorrectly aspired to NATO, while this is a security issue. One of the issues to be discussed with D. Biden is the MAP, as well as the issue of Nord Stream -2, Donbas, Crimea, and security in the Black and Azov Seas. Zelensky is sure that D. Biden did not promise anything to Putin and "did not sell" Ukraine.

In addition, the president believes that the Minsk agreements are dead and hopes for a new format. He also noted that a meeting with V. Putin is necessary and preparations for it are underway. Recall that after the introduction of new sanctions against a number of Russian citizens, the Kremlin considers a meeting between the two presidents unlikely.

It is important that V. Zelensky voiced as a message to society not only the unwillingness or unwillingness to comply with the Minsk Agreements, but also the scenario, in fact, of rejection of the uncontrolled territories of Donbas. According to him, if an agreement with Russia fails, the "wall" plan will be submitted to a referendum. Note that such an option would suit Russia as well, since it would mean Ukraine's withdrawal from the Minsk agreements, and, accordingly, the possibility of lifting the sanctions.

For comparison, in his interview this week, Speaker of the Verkhovna Rada D. Razumkov said that the issue of the country's territorial integrity cannot be put to a referendum. This is contrary to the law of the referendum itself.

It is worth noting that the speaker quite often demonstrates a position different from the presidential line on some issues, and this causes irritation in the OP. While the president and his political forces are smoothly drifting from the moderate to the nationalist electoral segment, Dmitry Razumkov is trying to adhere to more neutral positions within the framework of the Constitution and the law, which were originally declared by the "Servants of the People" as their ideological guidelines.

2. V. Zelensky signed a decree on the decision to impose sanctions against P. Fuchs, D. Firtash, and V. Putin's entourage.

On June 24, Volodymyr Zelenskyy signed a decree on the decision of the Council of the National Security and Defense (CNSD) of Ukraine on June 18 to impose sanctions against 540 companies and 538 people - for three years and indefinitely.

The corresponding decree No. 266/2021 of June 24 comes into force from the day of its promulgation.

In particular, the decree introduced sanctions against Dmitry Firtash, Kharkiv businessman Pavel Fuks, and against a number of Russian citizens, including the head of the Gazprom board of directors Alexei Miller, businessman Oleg Deripaska, Rostec CEO Sergei Chemezov, and others. D. Firtash's attitude is explained by the fact that his enterprises allegedly supply raw materials to defense plants in Russia. P. Fuchs is allegedly involved in the illegal obtaining of licenses for the extraction of minerals in Ukraine.

D. Firtash and P. Fuksu block assets, restrict trade operations, completely stop the transit of resources, flights, and transportation through the territory of Ukraine, they are prohibited from withdrawing money outside Ukraine, certain licenses and permits are canceled, they cannot participate in privatization, lease of state property, etc.

Russian citizens on the sanctions list are blocked assets, prohibited from withdrawing money from Ukraine, as well as canceled visas and banned from entering the country.

In turn, the Kremlin reacted to the sanctions against the head of the Gazprom board, Alexei Miller. They are asking themselves who will now sign the gas supply contract. Also, the sanctions call into question the possibility of a meeting between President of Ukraine Volodymyr Zelensky and President of Russia Vladimir Putin.

In addition, on June 24, at a briefing after a meeting of the NSDC staff, A. Danilov announced the consideration of new sanctions against Ukrainian citizens, which are already included in the US sanctions lists. On June 29, for consultations on this issue, specialists who are involved in the sanctions policy of the United States will arrive in Ukraine.

In total, 134 Ukrainian citizens are under US sanctions. 130 fell under the sanctions of the US Treasury, and four more - under the sanctions of the State Department.

It is quite obvious that foreign inspectors will control the process of further imposition of sanctions in Ukraine against certain individuals. There is a high probability that I. Kolomoisky will be on this list.

As we wrote earlier, D. Firtash and P. Fuchs are associated with weakly defended political forces opposing the authorities and own significant assets in the energy sector.

In addition, in the metallurgical industry, Ukrainian titanium is of interest to the United States, for which titanium ores are in short supply. The sanctions against Firtash, Chemezov, and Shelkov may serve the process of the global redistribution of the titanium market.

The parliament criticized the system of sanctions from the NSDC. In particular, Parliament Speaker Dmitry Razumkov did not support the NSDC sanctions against Dmitry Firtash and Pavel Fuks, since the law prohibits the introduction of restrictive measures against Ukrainian citizens.

 

3. A group of MEPs from Italy attacked the “anti-Akhmetov” bill.

This week it became known that the members of the European Parliament from Italy Fulvio Martushello and Gianna Ganchav sent a letter to the government and parliament of Ukraine, in which they tried to convince the Ukrainian authorities not to adopt bill 5600 as it could threaten the collapse of the most important sectors of the economy. Recall that on May 12, 2021. The Cabinet of Ministers approved a bill that introduces amendments to the Tax Code of Ukraine aimed at balancing budget revenues. June 2, 2021, Bill No. 5600 "On Amendments to the Tax Code of Ukraine and Certain Legislative Acts of Ukraine Concerning Balancing Budget Revenues" was registered in parliament. The Committee on Finance, Tax, and Customs Policy considered draft law No. 5600 and recommended it for consideration by the Verkhovna Rada under an abbreviated procedure.

The previously proposed amendments to the tax code caused a negative reaction from representatives of large businesses, in particular, among farmers, "green" power engineers, and others, who perceived the innovations as "tightening the screws".

In connection with this fact, in "Evropeyskaya Pravda" they suggested that it is a question of bribery of members of the European Parliament by Ukrainian oligarchs. Therefore, the letter is part of a lobbying campaign involving European politicians.

It should be said that the American Chamber of Commerce (ACC) and the European Business Association also called for the rejection of the tax amendments bill (# 5600), noting that its adoption would increase fiscal pressure on businesses and negatively affect the economy and worsen the country's investment climate.

People's Deputy, member of the Committee on Anti-Corruption Policy Volodymyr Kabachenko said that by introducing an excise tax on green electricity, the Cabinet of Ministers is killing Ukraine's European integration course. In his opinion, if the deputies accept the government's proposed introduction of excise duty on green electricity, investors will turn to international arbitration, and this will actually destroy the country's investment climate.

People's Deputy, Member of the Financial Committee in, tax and customs policy Nina Yuzhanina said that the law violates the principles of tax stability and negatively affects the investment attractiveness of Ukraine. Therefore, the project needs to be finalized, balanced with liberal changes.

4. The Cabinet of Ministers is changing the bill on the abolition of the moratorium on the export of round timber.

On June 22, on the website of the Ministry of Economy under the heading "Discussion of draft documents", a draft law appeared "On Amendments to the Law of Ukraine" On the Specifics of State Regulation of Business Entities Related to the Sale and Export of Timber. " The Association Agreement between Ukraine, on the one hand, and the European Union, the European Atomic Energy Community and their member states, on the other hand, and the good-faith implementation of the Arbitration Panel's Order in a dispute in connection with a temporary ban on the export of raw timber. in essence, it should lift the ban on the export of round timber from Ukraine and continue the harmful practice of cutting down the Carpathians.

At the end of last year, Ukraine argued with the EU in an arbitration court over whether the sale of untreated timber could be banned. As a result, the Arbitration ruled that Ukraine has the right to prohibit the export of timber.

The ban, which was introduced in 2005, is in line with Ukraine's international obligations and rights. The ban, which was introduced in 2015, does not comply with the Association Agreement with the EU; it needs to be rewritten.

Since 2015, the deputies indicated as one of the reasons for the export ban - the protection of their own manufacturer, the economic interests of Ukraine, the arbitration considered this ban illegal, but recognized the legality of the previous restriction.

 

5. Sociology. Parliamentary and presidential ratings.

This week, the Razumkov Center published a sociological study, according to which the leader in the presidential rating:

Volodymyr Zelenskyy, 32% of respondents are ready to vote for him, compared to the poll published in early May, the president's rating increased by 3.7% (it was 28.3%).

This is followed by:

• P. Poroshenko - 17% (the rating has not changed significantly).

• Yu. Boyko - 13% (did not change significantly).

• Y. Tymoshenko - 10% (did not change significantly).

The rest of the candidates have a significantly lower rating and do not show much change.

In case of electoral rivalry in the second round:

• in a pair, V. Zelensky, and P. Poroshenko wins V. Zelensky with a score of 60% and 40%, respectively.

• in a pair V. Zelensky and Y. Boyko wins V. Zelensky with a score of 76% and 24%, respectively.

The leader in the party rating:

party "Servant of the people" - 28% of respondents, compared to the poll conducted in early May, the party's rating has not changed.

• “European Solidarity” - 19% (did not change significantly).

• “Opposition Platform - For Life” - 15% (unchanged).

• VO "Batkivshchyna" - 10.5% (unchanged).

• “Strength and Honor” - 6% (unchanged).

The rest of the parties do not overcome the 5% barrier, their rating has not changed significantly.

The results of the research by the Razumkov Center demonstrate that V. Zelensky's team has so far managed to maintain a leading position in the rating, despite the fact that the presidential rating is showing an upward trend. A sociological study, published two weeks earlier by KMIS, showed a downward trend in the presidential rating with leading positions.

FOREIGN POLICY.

Briefly:

The incident with the British destroyer off the coast of Crimea once again demonstrated that NATO countries and Russia are in a new Cold War, despite the rather restrained atmosphere at the recent US-Russian summit. And while the United States is trying to negotiate with the Russian Federation on strategic stability (that is, arms control), defining the boundaries of what is permissible in this confrontation, the role of the main antagonist of Russia from among the countries of the North Atlantic Alliance has been taken over by Great Britain. What is happening is fully consistent with the results of all the summits of Joseph Biden's "European tour" with the participation of the EU and NATO countries, in which the Russian Federation and the PRC were unequivocally designated as opponents of the "collective West".

Another important international political trend was reflected this week in the proposal of the leaders of Germany and France to invite Vladimir Putin to the summit of the EU heads of state for the first time since 2014. Despite the fact that the proposal was rejected by other countries of the union, it demonstrates the desire of Berlin and Paris to restore economic ties with Moscow and smoothly get out of the dominant political influence of Washington, sovereign foreign policy.

1. Incident with a British destroyer off the coast of Crimea.

On June 23, the destroyer URO "Defender" of the British Navy, operating in the northwestern part of the Black Sea, crossed the state border of Ukraine (now controlled by the Russian Federation, together with the Crimean Peninsula) and entered the territorial sea in the area of ​​Cape Fiolent for three kilometers.

The Ministry of Foreign Affairs and the Ministry of Defense of Russia said that in order to expel the British destroyer from the territorial waters, warning fire was fired by coast guard ships along its course, as well as warning bombing by the Russian Aerospace Forces. The Ministry of Foreign Affairs and the British Navy denied the fact of warning fire from the Russian side. However, later the Russian side published a video of the incident.

From a political point of view, this incident demonstrates two trends, one of which is situational, and the other is long-term.

The situational trend is that while the United States is trying to establish a dialogue with the Russian side on strategic stability (arms control) for a while, the escalation of tension on its own is not beneficial to them. Therefore, while the "palm tree" in the military-political confrontation with the Russian Federation within the NATO bloc has passed to Great Britain.

The long-term trend, in turn, is the continuation of a new "Cold War" between the United States and the rest of NATO on the one hand, and the Russian Federation with China on the other. After the recent Biden-Putin summit in Geneva, some colleagues from the expert community hastened to declare almost detente in relations between the US and the Russian Federation. However, the program documents adopted by the EU and NATO members following all the summits, in which Joe Biden participated during his European tour, testify to the opposite. In all of them, both Russia and China are unequivocally named opponents and threats.

In connection with the above, we believe that incidents similar to the approach of the British destroyer to the coast of Crimea will continue in the future. Moreover, not only NATO countries, but also their opponents in the person of the Russian Federation and the PRC can resort to such tactics.

2. The proposal of Germany and France to resume the Russia-EU summits.

This week, the Financial Times reported that German Chancellor Angela Merkel offered to invite Russian President Vladimir Putin to a summit with the leaders of the EU countries.

The initiative was supported by the French leader Emmanuel Macron. The FT claims that the German and French ambassadors on June 23 have already offered to consider this issue to other European colleagues in order to develop closer cooperation with Moscow. According to sources, Berlin and Paris considered Putin's meeting with US President Joe Biden in Geneva as a good reason for this.

FT writes that the proposal of the ambassadors to invite Putin to the summit drew criticism from diplomats of some EU countries. This is partly due to the fact that the initiative was announced at the last moment - on the eve of the EU leaders' summit on June 24-25. Subsequently, during the summit, European leaders rejected this proposal from Germany and France.

The Ministry of Foreign Affairs of Ukraine reacted sharply to the initiative, calling it an unpleasant and unexpected attack, and also summoned the ambassadors of Germany and France for a conversation. The ambassadors of France and Germany said that the idea of ​​resuming the EU-RF summits was not supported, and promised to discuss such issues with Kyiv.

In the above, we see two trends.

The first and most important of them is the interest of Germany and France, as the "core" of the European Union, in the gradual resumption of relations (primarily economic) with Russia. In addition to purely economic benefits, Berlin and Paris see such a policy as an opportunity to strengthen their subjectivity, weakening foreign policy control by the United States, which seeks to build up the Joe Biden administration.

The second tendency is the attempts of the current Ukrainian authorities to play "tough diplomacy" with the West. Calling the ambassadors of Germany and France “on the carpet” at the Foreign Ministry, outraged by the actions of the leaders of their countries, is an unprecedented precedent in Ukrainian diplomacy. Despite the mild and courteous reaction of the ambassadors to this, such behavior may, sooner or later, cause a complete loss of Kyiv’s support from the leading countries of the European Union.

3. Presidential elections in Iran.

Presidential elections were held in Iran on June 18. The winner was predictably the Conservative candidate, Chief Justice of the Supreme Court Ebrahim Raisi. He received 17.9 million (or about 62%) of the votes of those who came to the polls. The turnout was only 48.8%, the lowest rate in the entire history of presidential elections in Iran.

Taking into account the conservative orientation of the new Iranian president, the continuation of the country's current political course should be expected. In particular, Tehran does not intend to make preliminary concessions to Washington for the sake of concluding a new "Iranian nuclear deal".

The US needs the agreement more than Iran, and therefore, if anyone has to expect unilateral concessions from anyone, it is from Washington.

As part of the recently signed strategic agreement with China, Iran will continue to develop relations with that country.

Active proxy operations of pro-Iranian forces will also continue in various conflict points in the Middle East (Yemen, Syria, Iraq, Lebanon).

 

4. In Moscow and a number of other regions Russia announced compulsory vaccination against coronavirus for workers in some areas.

In connection with the recently deteriorated statistics of coronavirus infections, Russia began to resort to the practice of compulsory vaccination. On June 16, the chief sanitary doctor of the Russian capital obliged employers in Moscow to vaccinate 60% of workers employed in such industries as trade, catering, client departments of financial organizations and post offices, beauty salons, beauty salons, spa salons, massage parlors, tanning salons, baths, saunas, fitness centers, fitness clubs, swimming pools.

In addition, organizations of public transport, taxis, education, health care, social protection, and social services, housing and communal services, and energy, as well as couriers fell under mandatory vaccination. In addition, we are talking about organizations working in the field of culture and leisure, including children's, sports, theaters, cinemas, concert halls, etc.

The requirement to vaccinate 60% of workers in certain service sectors was also introduced in the Moscow region and other regions (10 regions in total).

From Monday, June 28, the practice of compulsory vaccination in the Russian Federation will be extended to 8 more regions.

The transition to the practice of compulsory vaccination in the Russian Federation caused a wide resonance and discontent among certain groups of the population. On June 26, a rally against compulsory vaccination was held in Moscow, organized by the local branch of the Communist Party of the Russian Federation. It was attended by from 1000 to 1500 people.

According to a recent study by VTsIOM, 30% of Russians are rather negative about the decision of the authorities in Moscow and the Moscow region to vaccinate the overwhelming majority of those working in the urban economy. 49% of respondents are positive about this decision, 16% are indifferent. Most often, residents of Moscow and St. Petersburg spoke negatively about compulsory vaccination (36%). Most of all positive reviews regarding this decision were among residents of small towns with a population of up to 100 thousand people (54%).

The topic of compulsory or voluntary coronavirus vaccination is likely to become an important political factor in many countries in the near future. The reasons for this are both the loss of the economy from the periodic introduction of quarantine measures, due to which the authorities of various states are thinking about compulsory vaccination and the lobbying of the interests of pharmaceutical companies seeking to sell as many doses of vaccines as possible.

ECONOMY.

Briefly:

Attempts by the Ukrainian authorities to increase budget revenues by fighting corruption run up against the resistance of the very system of power in the country. Any anti-corruption initiative turns into an instrument of pressure on political opponents, as is happening at the moment with the development of cases within the framework of “civil confiscation”, under the pressure of which only politicians outside the ruling party fall, who, moreover, do not have the leverage to pressure the authorities in response.

In relation to the IMF, Volodymyr Zelenskiy faces a zugzwang situation as the next presidential election approaches. At the moment, both sides are trying to maneuver, defending their interests. Zelensky understands the toxicity of the topic of cooperation with the IMF, which means that he may try to abandon this on the eve of the 2024 elections, but the IMF knows about this and will force the president to make concessions, delaying the allocation of new tranches. Finance Minister Sergei Marchenko already predicts cuts in spending, which means, first of all, a halt in the growth of public sector wages and pensions, which, accordingly, will also hit the president's rating as well as continued cooperation with the IMF. The Ukrainian government must find a fundamentally new way of filling the budget - abandoning the raw material model of the economy by creating products with high added value and exporting them to the world market.

1. Irina Venediktova urged to intensify "civil confiscation" to fill the budget.

On June 23, Prosecutor General Irina Venediktova called on the heads of the SAP, NABU, SBU, GBR, NAPK, National Police, SFS, and ARMA to activate "civil confiscation" to fill the budget. The mechanism of civil confiscation, according to I. Venediktova, "does not depend on the conviction." “The determining factor is the difference between the value of the acquired assets and the legal income of persons authorized to perform the functions of the state or local government, which must exceed one million hryvnias,” the Attorney General said.

The authorities' desire to fill the budget at the expense of corrupt officials runs into opposition from the very system of power in the country. Although the mechanism of “civil confiscation” was legally put into operation back in 2019, in a year and a half there were only two lawsuits under this procedure - against Mikhail Volynts (“Batkivshchyna”) and Ilya Kiva (“OPZH”), that is, “not their own” politicians, not belonging to the ruling party. Thus, the anti-corruption initiative automatically turns into an attempt to redistribute resources at the expense of “unfriendly” political players who lack the influence to defend against attacks.

I. Venediktova's call to use “civil confiscation” will lead nowhere, given the similar ineffectiveness of many years of work by numerous anti-corruption structures. Any attempt to fight corruption within the ruling team threatens the stability of the government itself, and against opponents such as V. Medvedchuk, the government has been using the NSDC mechanism for six months.

 

2. The Ministry of Finance allows the optimization of expenditures in the event of a negative development of relations with the IMF.

On June 23, Ukraine's Finance Minister Sergei Marchenko gave an interview to Forbes, during which he expressed his hope that Ukraine would receive an IMF tranche of $ 2.9 billion. Otherwise, Marchenko predicts optimization of government spending. Bank of America (BofA) analysts believe that Ukraine may try to abandon cooperation with the IMF during the 2023-2024 electoral cycle.

Cooperation with the IMF is becoming a toxic topic for the Ukrainian authorities. During a poll conducted in September 2020 by the Center for Social Monitoring, 70% of respondents spoke out against the obligations that Ukraine took to the IMF. Considering V. Zelensky's careful attitude to his rating, as it was in February 2021 amid protests due to the increase in gas prices, the fears of Bank of America analysts are not unfounded. A year before the presidential elections - in 2023 - V. Zelensky may end cooperation with the IMF in order to save his rating. The Fund understands this, and in turn will try to blackmail the Ukrainian authorities by delaying the allocation of the next tranche and forcing the government to cut spending in this way, although it was previously believed that Ukraine could do without IMF tranches amid rising prices for Ukrainian exports - grain and ore, for the world market.

Volodymyr Zelenskiy is driven into a situation of chess zugzwang, where each subsequent step worsens the situation. Cuts in government spending actually mean a freeze in the growth of public sector wages, pensions, benefits to the poor, or the increase in payments is immediately accompanied by inflation, leveling the nominal growth of citizens' incomes in the national currency. In March 2020, the government, for example, planned to save 124 billion hryvnias by cutting local budgets and cutting subsidies for housing and communal services.

3. Tariffs for heating will increase by 30% by the end of the year, and for water supply - by 20%.

On May 31, 2021, the Cabinet of Ministers of Ukraine adopted Resolution No. 586 "On Approval of the Forecast of Economic and Social Development of Ukraine for 2022-2024", where it predicted an increase in tariffs for hot water and heating in 2021 by at least 30 percent, and for cold water supply and sanitation - by 20 percent.

The forecasts of the Cabinet of Ministers on tariffs may be underestimated. For example, heating may rise in price already this year, not by 30-36%, but by all 70-80%, water - by 30% instead of 15-25%, etc. The forecast for tariff growth in 2023-2024 by 5 percent per year is a projection of inflation, that is, it is implausible.

From the point of view of utility monopolists, this forecast is, de facto, permission to raise tariffs. The electricity tariff will also rise by 30%. The calculation of the forecast for the growth of gas tariffs is based on an estimate of the future gas price in 2022, which will begin to fall (which may not happen). A decrease in pressure in the GTS due to a decrease in gas pumping volumes will increase the cost of gas transportation to end consumers, inevitably leading to an increase in gas transportation tariffs. There is also no tariff audit as previously promised.

 

Edited by:

Ruslan Bortnik,

Daniil Bogatyrev.

Authors:

Daniil Bogatyrev,

Oksana Krasovskaya,

Andrey Timchenko.

 

[2] https://goloskarpat.info/rus/analytics/60d3780b6a1e5/