Analytical review of the week No. 128 of 08/29/2021.

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

23.08.- 29.08.2021

CONTENT:

 

SUMMARY AND KEY TRENDS.

 

INTERNAL POLICY.

 

1. Independence Day and the adoption in the first reading of the large state emblem.

2. A register of terrorist organizations will appear in Ukraine.

3. The work of the TCG. Ukraine accused Russia of disrupting negotiations on Donbass.

4 The duties of the mayor of Krivoy Rog will be performed by the former mayor of the city, deputy of the city council Yury Vilkul.

 

FOREIGN POLICY.

 

1. Visit of Angela Merkel to Kiev.

2. Summit of the Crimean Platform and its results.

3. The terrorist attack in Kabul on August 26.

4. The US National Intelligence Report on the origin of the coronavirus has been published.

 

ECONOMY.

 

1. Morgan Stanley downgraded Ukraine's GDP growth forecast to 3.4%.

2. The Cabinet wants to take control of the expenses of citizens of Ukraine: the bill may appear before the end of the year.

3. The government changed the interim head of the United Mining and Chemical Company (OGHK) before privatization.

4. How the economy has changed over 30 years of independence.

5. Prime Minister D. Shmygal said that the Cabinet will send $ 2.7 billion for social benefits.

 

 

SUMMARY AND KEY TRENDS.

 

Summing up the political results of the outgoing week, it should be noted that:

First, in the country's internal policy, the general course of administrative, economic and informational strengthening of the power of the president and his entourage continues. Independence Day served as a good reason for Bankova to carry out a large-scale PR campaign, demonstrating the power of the current government to society and opponents. The parliament adopted in the first reading the presidential draft law on the large state emblem of Ukraine, which is also used for PR purposes.

Secondly, within the framework of the “tightening the screws” trend - cleaning up, discrediting and suppressing the main competitors, the Cabinet of Ministers initiated the creation of a register of terrorist organizations and simplified the criteria by which they can be determined. In the long term, this may result in the classification of certain opposition political forces and the media affiliated with them as "terrorist".

Thirdly, at the regional level, V. Zelensky's team again lost control over the president's hometown. The duties of the mayor of Krivoy Rog, instead of the deceased Konstantin Pavlov, until the appointment of new elections, will be temporarily performed by the deputy from the Ukrainian Perspective party, the former mayor of the city, Yuriy Vilkul.

Fourthly, one of the most obvious foreign policy tendencies that manifested itself in the outgoing week was the weakening of the influence of the United States in the international arena and the weakening of the influence of the Democratic Party within the United States. The catalyst for accelerating these processes was the apparently unsuccessful withdrawal of American troops from Afghanistan and the evacuation from the Kabul airport, exacerbated by a major terrorist attack in which 13 American troops were killed. Amid criticism from domestic political opponents and foreign allies, Joe Biden and his administration even decided to abandon their plans to blame China for the coronavirus pandemic. As a result, the report of the National Intelligence Agency published this week, from which it was expected to summarize the factual basis for such accusations, did not contain anything of the kind.

Fifth, another foreign policy trend that made itself felt this week is the continuation of the expectation of serious economic problems for Ukraine after the expiration of the current gas transit contract in 2024. As Angela Merkel's recent visit to Moscow and Kiev showed, there is no compromise on the parties that have not yet been able to reach this issue. Last but not least, this is due to the inadequate position of Kiev, which, instead of looking for a solution to the impending and inevitable problem, continues to harbor illusions about the possibility of stopping Nord Stream 2.

Sixth, the Ukrainian government, continuing the trend towards total fiscalization, plans to track the expenses of citizens. The forthcoming "voluntary" declaration of income and the "tax amnesty", in fact, will become mandatory, since in parallel with them it is planned to pass a law on tracking citizens' expenses by indirect indicators and their subsequent taxation.

Seventh, the lucrative state enterprise United Mining and Chemical Company (OGHK) is getting ready for privatization, violating the logic of the OECD Principles of Corporate Governance, which argue that the state is a priori an ineffective owner, but in the case of OGHK, we are talking about a profitable state the enterprise, and, accordingly, its profits, will go to private owners.

Eighth, over 30 years of independence, Ukraine has transformed from an industrial economy into a post-industrial economy, based mainly on the service sector and extremely dependent on external and internal loans.

INTERNAL POLICY.

Briefly.

In the domestic policy of the country, the general course of administrative, economic and informational strengthening of the power of the president and his entourage continues. Independence Day served as a good occasion for Bankova to carry out a large-scale PR campaign, demonstrating the power of the current government to society and opponents. The parliament adopted in the first reading the presidential draft law on the large state emblem of Ukraine, which is also used for PR purposes.

As part of the trend towards "tightening the screws" - cleaning up, discrediting and suppressing the main competitors, the Cabinet of Ministers initiated the creation of a register of terrorist organizations and simplified the criteria by which they can be determined. In the long term, this may result in the classification of certain opposition political forces and the media affiliated with them as "terrorist".

At the regional level, V. Zelensky's team again lost control over the president's hometown. The duties of the mayor of Krivoy Rog, instead of the deceased Konstantin Pavlov, until the appointment of new elections, will be temporarily performed by the deputy from the Ukrainian Perspective party, the former mayor of the city, Yuriy Vilkul.

 

1. Independence Day and the adoption in the first reading of the large state emblem.

On August 24, Ukraine celebrated the 30th anniversary of independence. One of the central events of the celebration of the Independence Day of Ukraine was a military parade in Kiev. More than 5 thousand military men, tanks, rocket launchers and armored personnel carriers passed along Khreshchatyk. Also, fighters, bombers and the legendary Mriya flew over the capital.

Among the participants in the march were representatives of the troops of 15 partner countries of Ukraine - Canada, USA, Lithuania, Estonia, Georgia, Denmark and others. During his tenure as president, Vladimir Zelensky hosted a military parade of this magnitude in Kiev for the first time.

V. Zelensky's speech on the occasion of Independence Day had a pronounced emotional color. The President clearly outlined the European integration and Euro-Atlantic vector of the country and voiced anti-Russian theses. Nothing was said specifically about the future of the country, but a lot was said about the past and partly about the present. Volodymyr Zelenskyy announced the introduction of a new holiday - the Day of Ukrainian Statehood. According to the president's proposal, the Day of Ukrainian Statehood should be celebrated on July 28, the Day of the Baptism of Rus, and will actually erode this holiday. Thus, the OP wants to give their alternative to the multi-hundred-thousand-year processions of the Ukrainian Orthodox Church, which are annually held on the eve of the Day of the Baptism of Rus.

Independence Day served as a good reason for Bankova to carry out a large-scale PR campaign, demonstrating the power of the current government to society and opponents.

At an extraordinary meeting timed to coincide with the Independence Day, the Verkhovna Rada adopted in the first reading the presidential draft Law on the Great State Emblem of Ukraine, it was supported by 257 people's deputies. It will be necessary to approve in the second reading the large State Emblem of Ukraine with a vote of two-thirds of the composition of parliament - at least 300 deputies. Nevertheless, the chances of the approval of the large coat of arms promoted by the president, whose faction has a majority in the Verkhovna Rada, are quite high, despite the fact that the bill has many critics.

V. Zelensky's political opponents call the idea of ​​a large state emblem of Ukraine a cheap PR of the pro-government forces. The opinion is quite popular that the whole idea with a large coat of arms is the initiative of Volodymyr Zelensky personally, who thus seeks to leave a mark in the history of Ukraine. The arguments of the supporters of the large coat of arms boil down to the fact that its existence is spelled out in the Constitution.

The bill establishes a description of the large state emblem of Ukraine and determines the procedure for its use. It is established that the large coat of arms must be reproduced on: the official symbols of the President of Ukraine; large state seal of Ukraine; seals of the President of Ukraine, the Verkhovna Rada of Ukraine, the Cabinet of Ministers of Ukraine, the Constitutional Court of Ukraine, the Supreme Court; the facade of the building of the residence of the President of Ukraine in the capital of Ukraine - the city of Kiev; facades of buildings of the Verkhovna Rada of Ukraine, the Cabinet of Ministers of Ukraine, the Constitutional Court of Ukraine, the Supreme Court; in the meeting room of the Verkhovna Rada of Ukraine; banknotes of Ukraine by decision of the National Bank of Ukraine.

Therefore, it is expected that the transition to the use of the large State Emblem of Ukraine will entail certain difficulties and additional costs.

 

2. A register of terrorist organizations will appear in Ukraine.

On August 26, the Cabinet of Ministers approved amendments to two laws - on the fight against terrorism and on the SBU, which now must be considered by the parliament.

The draft law proposes to introduce a list of terrorist organizations. The Cabinet of Ministers has simplified the criteria by which an organization can be recognized as terrorist. And if now an organization can be recognized as such only if at least one of its structural units is engaged in terrorism - and with the knowledge of at least one leader of the entire community, then, according to new proposals, an organization can be included in the list of terrorist if at least one person who is a member of, or otherwise has a relationship with, this organization, carries out terrorist activities if this activity is covered by the intent of at least one of the organizers or leaders (governing bodies), or the ultimate beneficial owner.

Organizations will be recognized as terrorist on the basis of a court ruling that will issue a verdict in a terrorism case. We are talking about Article 258 of the Criminal Code of Ukraine (act of terrorism). The subparagraphs of this article do not relate to the terrorist act itself, but to the accompanying actions: involvement in the commission of a terrorist act, public calls for terrorism, the creation of a terrorist organization, assistance to a terrorist attack, financing of terrorism.

The inclusion of an organization in the list of terrorist organizations automatically prohibits its activities on the territory of Ukraine and is the basis for the confiscation of property and assets.

You can leave the register if the court decision on the basis of which the organization was recognized as terrorist is canceled.

The government's innovations fit well into the “tightening the screws” trend since they make it easier for the authorities to ban unwanted organizations under the guise of terrorist organizations and can be used to further suppress dissent. So, for example, on the basis of the NSDC sanctions against V. Medvedchuk or I. Guzhva for "financing terrorism", the media that are related to them can be recognized as terrorist organizations with the prospect of their complete elimination. In particular, the OSCE and the Council of Europe have already expressed their concern about the situation of the media in Ukraine. According to the proposed mechanism, some political parties' opposition to the authorities may also be included in the list of terrorist organizations.

In addition, an opportunity opens up for the recognition of the "DPR" and "LPR" as terrorist organizations, which will significantly complicate the process of a peaceful settlement and may even lead to the breakdown of the Minsk format, since in this case Ukraine will finally refuse to conduct any negotiations with the "DPR" and "LPR", and Russia does not recognize itself as a party to the conflict.

 

3. The work of the TCG. Ukraine accused Russia of disrupting negotiations on Donbass.

After a short break, the Trilateral Contact Group was to resume its work on 25 August. Instead of Leonid Kravchuk, the Ukrainian delegation was represented by Deputy Prime Minister and Minister for Reintegration of the Occupied Territories Alexei Reznikov. The agenda of the TCG meeting, in particular, indicated the implementation of the Minsk Agreements, ensuring security in the conflict zone, restoring the operation of the checkpoint, and exchanging detainees. But as a result, the Ukrainian delegation refused to hold meetings, citing the fact that Maya Pirogova, a representative of the “DPR” convicted of terrorism in Ukraine, had again announced negotiations in less than a day. Recall that in July 2018, the Shevchenko District Court of Chernivtsi sentenced Maya Pirogova in absentia to 10 years in prison - so-called. head of the information policy department of the DPR Ministry of Information. She was charged with creating a terrorist organization.

In addition, A. Reznikov quoted German Chancellor Angela Merkel and reminded the Russian side that Russia is a party to the conflict with Ukraine.

For his part, the plenipotentiary representative of Russia in the negotiations of the TCG Boris Gryzlov said that the Ukrainian delegation disrupted the meeting of the humanitarian subgroup, demanding to change the composition of the participants from the Donbass. He called the incident a "clown" and noted that the OSCE coordinator was forced to close the meeting because of the position of the Ukrainian delegation.

B. Gryzlov accused the Ukrainian side of making every effort to completely disorganize the dialogue in all areas of the political settlement of the conflict. He noted that the draft law "On the State Policy of the Transitional Period", introduced by the Cabinet of Ministers of Ukraine to the Verkhovna Rada on August 9, 2021, contains direct bans on the settlement of the conflict in Donbass in accordance with the Minsk Agreements.

It is also worth recalling the draft law initiated this week by the Ukrainian government on clarifying the procedure for recognizing organizations as terrorist, which will significantly complicate the process of a peaceful settlement. Opening in the future the possibility of recognition as terrorist organizations and the "DPR" and "LPR" themselves, and not just their individual representatives.

The deadlock in the negotiation process on Donbass is primarily a consequence of the irreconcilable position of the parties regarding the political conditions for resolving the conflict. Despite the demonstration to the world community of readiness for a peaceful settlement, in fact, the approaches to resolving the issue of Ukraine and Russia diverge more and more. Neither side wants to give up its positions to the opponent. At the same time, both Ukraine and Russia do not want to be guilty of disrupting the Minsk format, so they are trying in every possible way to shift all the blame for the failure to implement the peace processes on the opponent.

 

4 The duties of the mayor of Krivoy Rog will be performed by the former mayor of the city, deputy of the city council Yury Vilkul.

On August 25, it became known that the information of the mayor of Krivoy Rog of the Dnipropetrovsk region instead of the deceased Konstantin Pavlov until the appointment of new elections will be temporarily performed by the deputy from the Ukrainian Perspective party, the former mayor of the city, Yuriy Vilkul. Earlier, in the elections, the mayor of Krivoy Rog Yuriy Vilkul refused to participate in the second round due to heart problems. Then he named his "successor" Konstantin Pavlov a candidate from the "Opposition Platform - For Life". Due to the withdrawal from the elections of Yuriy Vilkul, he went to the second round and won.

The appointment of Yu. Vilkul as the secretary of the City Council by secret ballot was supported by a majority - 32 deputies. The deputies also adopted an appeal to the Verkhovna Rada on the appointment of early elections.

City Council Secretary Alexander Kotlyar, who was supposed to act as mayor of Kryvyi Rih, decided to resign because, as he said, he was called interested in the death of K. Pavlov. And the deputies supported his decision with 33 votes.

Only deputies from the Vilkul Ukrainian Perspective Bloc and the Opposition Platform - For Life took part in the secret ballot. Deputies of the Servant of the People and the Forces of the People did not take part in the voting.

In turn, the Servant of the People of Krivoy Rog called the resignation of A. Kotlyar a betrayal. Already the former secretary of the City Council was called "an untenable politician" and "a non-team player." They noted that the politician did not discuss his decision with the faction or party. In particular, the head of the party, Alexander Kornienko, said that "the traitor Kotlyar must resign, if he does not want to, we will force him."

Thus, the balance of power before the election of a new measure changed in favor of the opposition forces and V. Zelensky's team again failed to take control of the president's hometown. The former secretary of the City Council preferred to maintain established relations with the local authorities and did not want to enter into conflict with Y. Vilkul for the sake of V. Zelensky's interests. And the presidential political force has no choice but to try to take revenge in the election of a new mayor. In this situation, any form of pressure from the authorities on Yu. Vilkul or representatives of his team are also not excluded.

The problem for the OP is that the Servant of the People candidate in Kryvyi Rih does not have a starting advantage. V. Zelensky's team will have to take the election campaign very seriously, since another loss in his hometown will significantly damage the president's reputation. An extraordinary mayoral election can take place either on the last Sunday in October 2021 or on the last Sunday in March 2022. Due to lack of time, elections in October are less likely, but in March the ratings of the government's team may already significantly sink. To start the election campaign, a decision of the Verkhovna Rada will be required. The legislation sets aside 50 days for the election campaign.

It is not excluded that the OP may stake on Yuri Koryavchenkov, who is in charge of Servants of the People in Kryvyi Rih, in the elections. In the city, you can already see boards with his image. But Yu. Koryavchenkov has repeatedly shown in corruption scandals, including, he appeared in the so-called. "Kryvyi Rih'' records.

FOREIGN POLICY.

Briefly:

One of the most obvious foreign policy tendencies that manifested itself in the outgoing week was the weakening of the influence of the United States in the international arena and the weakening of the influence of the Democratic Party within the United States. The catalyst for accelerating these processes was the apparently unsuccessful withdrawal of American troops from Afghanistan and the evacuation from the Kabul airport, exacerbated by a major terrorist attack in which 13 American troops were killed. Amid criticism from domestic political opponents and foreign allies, Joe Biden and his administration even decided to abandon their plans to blame China for the coronavirus pandemic. As a result, the report of the National Intelligence Agency published this week, from which it was expected to summarize the factual basis for such accusations, did not contain anything of the kind.

Another foreign policy trend that made itself felt this week is the continuation of the expectation of serious economic problems for Ukraine upon the expiration of the current contract for gas transit in 2024. As Angela Merkel's recent visit to Moscow and Kiev showed, there is no compromise on this issue for the parties so far. cannot be achieved. Last but not least, this is due to the inadequate position of Kiev, which, instead of looking for a solution to the impending and inevitable problem, continues to harbor illusions about the possibility of stopping Nord Stream 2.

 

1. Visit of Angela Merkel to Kiev.

 

On August 22, German Chancellor Angela Merkel paid a visit to Kiev. Given that she will leave office after the September elections to the Bundestag, this is her last visit to the Ukrainian capital as chancellor.

Two days before her visit to Kiev, Merkel visited Moscow. Ukraine became the main topic of discussion during her talks with Russian President Vladimir Putin.

The most important issues on the agenda were gas and Donbass.

Angela Merkel lobbied for an extension of the transit contract with Ukraine and after 2024 - when the current contract ends. This is part of Germany's obligations after the completion of Nord Stream 2 - they are recorded in a memorandum with US President Biden. In addition, this memorandum, in fact, put the so-called "Ukrainian gas issue" at the mercy of Germany, allowing it to directly negotiate with Moscow on future transit conditions "over the head" of Kiev.

During a meeting with the German Chancellor, Vladimir Putin said that he was not against extending the contract with Ukraine. But he will do this only if Europe can guarantee an increase in gas purchases. Otherwise, why pay Kiev for transit, if fuel can be pumped directly through two "streams"?

Actually, following the meeting, Merkel and Putin never signed any agreements. This determined the pointless nature of the subsequent visit of the German Chancellor to Kiev.

Judging by the reports on the website of the President of Ukraine, Zelensky and Merkel talked for about an hour before going out to the journalists.

According to the Ukrainian president, the priority topic of the talks was Donbass. The basis of the peace plan should be "clusters" and the "Paris agenda" (we are talking about the decisions of the Paris summit in 2019). Zelensky said nothing about Steinmeier's formula. But he mentioned that an exchange of prisoners was needed.

With regard to Nord Stream 2, the Ukrainian president repeated the topic that he had repeatedly voiced earlier that it was an energy weapon. And he promised that Ukraine will join the "European green course". Earlier this was mentioned in the memorandum of Biden and Merkel on the "SP-2".

Angela Merkel began her speech at a press conference in Kiev by laying flowers at the Monument of Eternal Glory in Kiev (with the same she began her visit to Russia).

Then the chancellor said that the German foreign minister would not fly to the summit of the Crimean platform. As a result, the German energy minister attended the summit instead, which once again emphasizes the priority of the "gas issue" for Berlin.

Also in Kiev, Merkel said that there are no agreements with Putin on a transit contract yet; no compensation has been promised to Ukraine for Nord Stream 2 yet; and Kiev should prepare for the fact that there will be less gas, so it is necessary to develop "green" energy and hydrogen production.

At the same time, V. Zelensky was clearly not enthusiastic about the topic of "green" energy. He inserted a remark that this is long-term work, and Nord Stream 2 will start working now.

 I mentioned the German chancellor and the Normandy format. “Here we are not going forward, unfortunately,” she stated. Merkel believes that a high-level meeting is needed to develop an agenda, but Russia is against such a meeting until the decisions of the Paris summit are implemented.

In general, the results of Angela Merkel's visit to Kiev were quite expected. Since she failed to reach agreements with Putin on the future of gas transit through Ukraine (and was it possible to do this in one meeting?). During negotiations with Volodymyr Zelensky, she raised the worn-out topics of the "Normandy format" and a peaceful settlement in Donbass. Stumped.

At the same time, it is worth noting that the Germans do not forget their interest and are increasingly imposing on Kiev the need to "switch to green energy." Considering that such energy is several times more expensive than that generated by a more traditional method, its introduction in Ukraine threatens V. Zelensky with a complete collapse of the rating due to the rise in electricity prices.

 

2. Summit of the Crimean Platform and its results.

Another diplomatic event of the outgoing week, which the Ukrainian authorities have been waiting for for several months, is the summit of the Crimean platform. It took place on Monday 23 August, on the eve of the 30th anniversary of Ukraine's independence.

In total, according to Interfax-Ukraine estimates, representatives of 46 countries and international organizations, including all EU countries, took part in the summit, 14 of them at the level of heads of state and government. The European Council was represented by President Charles Michel.

However, if you analyze the composition of the Crimean Platform participants more carefully, it turns out that everything is not as rosy as they would like to present it in the President's Office.

Representatives of the ministerial level arrived from the most influential Western countries - the USA, Britain, Germany, France.

Moreover, all these ministers have nothing to do with the problem of Crimea. Although initially it was different. The French and Germans promised to send foreign ministers, and London - the defense minister.

However, on the eve of the event, it became known that Germany was making a replacement - instead of the Foreign Minister, the Minister of Energy arrived.

And right at the summit, it turned out that Paris and London also changed their presence status at the last moment. The Minister of Trade arrived from France, and from Britain, instead of the Minister of Defense Ben Wallace promised by Dmitry Kuleba, the representative for European and American affairs of the Foreign Ministry Wendy Morton arrived. That is, not even the Minister of Foreign Affairs.

In other words, right on the eve of the summit, the main countries of Europe sharply lowered the level of their presence at the "Crimea platform ".

The reason for this, probably, lies in the unwillingness to exacerbate relations with Moscow too much. After the recent meeting between Putin and Biden in Geneva, NATO countries have somewhat reduced the degree of anti-Russian rhetoric, although they have not changed its general confrontational tone. European capitals are waiting for the end of the 6-month period allotted by Putin and Biden to search for compromises on some issues of modern international relations.

As for the substantive part of the event, no specifics about what still needs to be done in Crimea have not been sounded.

President Volodymyr Zelenskyy opened and closed the Platform. At first, he said that the summit was not needed for the sake of the summit, and the goal was concrete progress. And then, as if to refute himself, he said: "The main achievement of this summit was that it happened."

For the rest, the president tried to show that the holding of this event means not just shifts, but tectonic shifts. At the beginning of the summit, he suggested that "the de-occupation of Crimea began on 23 August." And in the end he said that, as a result, Moscow would put a signature on the return of the peninsula. And this last summit of the "Crimean Platform" will take place in Yalta.

As a result of the "platform", the parties signed a general statement of the summit. Its essence boils down to the following:

1. "Crimean Platform" is a "consultative and coordination format".

2. In each country that took part in the summit, a contact group will be established to coordinate efforts on the work of the "Platform".

3. The National Office of the Crimean Platform is being created in Ukraine.

4. Participants of the event "expect the return to Ukraine of the uncontrolled territories of the Autonomous Republic of Crimea and the city of Sevastopol."

5. The signatories agreed "to consider the introduction of further political, diplomatic and restrictive measures against the Russian Federation, if this is provided for by the legal system of each participant of the Platform" and "if Russia's actions require it."

In other words: they gave Volodymyr Zelensky the opportunity to promote himself and "agreed to negotiate further."

Probably, the effect of such a PR will be short-lived and will dissipate as soon as citizens receive the first payments for utility bills for October, the numbers of which will increase significantly.

 

3. The terrorist attack in Kabul on August 26.

In the area of ​​the Kabul airport (from where the US military is still evacuating its citizens and accomplices) on August 26, two explosions thundered. According to Pentagon spokesman John Kirby, one of them occurred at Abby's gate, one of the main entrances to the airport.

As of August 28, the world media reported that about 200 people were killed in the explosions, 13 of them were the US military. For the American army, these are the largest losses in Afghanistan over the past few years, which caused a huge resonance around the terrorist attack in the West.

As the Internet resource Amaq used by the militants reported on Telegram, the Islamic State terrorist group claimed responsibility for the attacks. According to the English-language channel Al-Jazeera, it is about Vilayat Khorasan (VKh), the Afghan branch of IS. "Vilayat Khorasan '' opposes the Western countries, as well as against the militants of the Taliban, which has established control over Afghanistan.

Members of the VH maintain ties with IS units in Syria and Iraq, and are also known for a number of extremely brutal attacks, in particular, in 2020 on a maternity hospital in Kabul, when women and babies were killed.

On the night of Saturday, August 28, the US Central Command reported that one of the organizers of the IS attack on the Kabul airport was allegedly killed in a special operation using an unmanned aerial vehicle. However, such special operations are no longer able to drown out the criticism of the Joe Biden administration in the United States.

The terrorist attack near the Kabul airport, in which 13 American soldiers were killed (the dead local in the Western press is not accepted as something significant) may become the link in the chain of events that will lead it to a rapid collapse of American influence in the world, instead of the previously expected gradual decline. We saw something similar in the late 1980s in the USSR, when literally everything went wrong. Troops were withdrawn from foreign countries, in the former zones of influence there were coups in favor of a geopolitical competitor, Chernobyl exploded, and trains collided with each other. Yes, some of these events were not associated with the general degradation of the system of political governance. But being a strong emotional and moral shock, they finally finished off the faith of citizens in their state and society, accelerating its collapse.

Judging by the reaction in the American media and politicians, the recent terrorist attack in Kabul could be just such a shock for the United States, after which all its influence in various parts of the world will crumble like a house of cards.

 

4. The US National Intelligence Report on the origin of the coronavirus has been published.

On August 26, US National Intelligence declassified its report on the origin of the new coronavirus that causes COVID-19. According to intelligence agencies, SARS-CoV-2 was not developed in a laboratory as a biological weapon.

The document says that various US departments agree with the intelligence community that the coronavirus is most likely not the fruit of the hands of genetic engineers.

In addition, the report says that the American intelligence services have not come to a common conclusion about the origins of SARS-CoV-2, their opinions on this matter differ. But the departments agreed that the most plausible versions of the transfer of the virus to humans were due to natural contact with an infected animal or some incident (possibly a leak) in the laboratory.

The intelligence officers are also confident that the Chinese authorities were unlikely to know about the coronavirus before the first outbreak of COVID-19.

The significance of this news for assessing international relations at the present stage can hardly be overestimated.

The fact is that in late spring, Joe Biden made a number of statements that the covid "could be of artificial origin", unequivocally alluding to China's guilt, and instructed the intelligence community to investigate and prepare a report on the origin of the virus within 90 days. It was supposed to use this report to organize the international persecution of the PRC in the framework of the American-Chinese confrontation. After Biden's statements, Facebook and Twitter even stopped marking messages about the artificial origin of covid as fake. However, as we can see, the past 3 months forced the American leadership to abandon its plans to blame China for the pandemic, instead deciding not to "aggravate" the confrontation with the Celestial Empire.

In this regard, a natural question arises: what happened during these 3 months that made Washington abandon the massive media and sanctions attack on Beijing? The answer is obvious: Afghanistan, Kabul, airport. And as a result - a general weakening of the position of the United States in the international arena and a weakening of the position of Democrats within the United States.

Under these conditions, another aggravation of relations with the PRC is of no use to Biden.

 

ECONOMY.

Briefly:

The Ukrainian government, continuing the trend towards total fiscalization, plans to track the expenses of citizens. The forthcoming "voluntary" declaration of income and the "tax amnesty", in fact, will become mandatory, since in parallel with them it is planned to pass a law on tracking citizens' expenses by indirect indicators and their subsequent taxation.

The profitable state enterprise United Mining and Chemical Company (OGHK) is preparing for privatization, violating the logic of the OECD Corporate Governance Principles, which claim that the state is a priori an ineffective owner, but in the case of OGHK, we are talking about a profitable state enterprise, and accordingly , its profits will go to private owners.

For 30 years of independence, Ukraine has turned from an industrial economy into a post-industrial economy, based mainly on the service sector and extremely dependent on external and internal loans.

 

1. Morgan Stanley downgraded Ukraine's GDP growth forecast to 3.4%.

 

Analysts at Morgan Stanley downgraded the estimate of Ukraine's GDP growth in 2021 to 3.4% against the previously predicted 4.5%, they also expect the NBU rate to rise.

One of the reasons is the low rate of vaccination in the country, which potentially threatens to develop into another lockdown. The NBU is also expected to increase the discount rate from 8 to 8.5 percent in September 2021, making lending in the country more expensive, which means perhaps forcing some market players, on the contrary, to abandon higher market activity. The cost of GDP warrants is also down 5 percent from previous forecasts. The forecast for Ukraine's GDP growth in 2021 by the Kiev School of Economics repeats the trend forecast by Morgan Stanley. The NBU forecast is more optimistic - from 4 percent.

 

 

2. The Cabinet wants to take control of the expenses of citizens of Ukraine: the bill may appear before the end of the year.

On August 25, Finance Minister S. Marchenko said in his interview to Interfax-Ukraine that the Ministry of Finance has begun developing a bill on indirect methods for determining citizens' incomes, the document may appear in 2021. Details were not disclosed. It is only known that now attention will be paid to expenses, and not income, as it was before. Marchenko also added that the introduction of indirect methods for determining income was the main condition of the International Monetary Fund regarding the launch of a voluntary income declaration system.

On August 5, D. Getmantsev said in an interview with Kyiv Live that the Cabinet of Ministers is also developing a bill that will give the State Tax Service the right to ask citizens for the origin of money for the acquisition of valuable assets and, if a citizen cannot explain it, to pay taxes. This measure should encourage citizens to participate in the voluntary tax return and subsequent amnesty.

D. Getmantsev cites as an example country such as Argentina and Indonesia, which have carried out similar reforms to shade the economy. In Argentina only since 1995 to 2004, 7 tax amnesties took place. None of them were successful. The reasons are partly due to the lack of clear rules and guarantees from the state. Each of the amnesties provided, as a rule, a reduction in fines and penalties, but not the main tax rate on returned assets. The capital amnesty held in 2017 alone ensured the return to the economy of assets worth $ 116 billion (about 20% of all estimated foreign funds of Argentines) and the receipt of $ 9.5 billion in taxes. Entrepreneurs and individuals were offered to pay a one-time fine ranging from 0 to 15% of the value of assets.

The initiatives of the Cabinet of Ministers and the Tax Committee of the Verkhovna Rada to track the expenses of citizens and knock out taxes from them for the funds spent on the purchase of valuable assets are nothing more than a continuation of the course towards total fiscalization. Its main goal is an attempt to knock off funds from citizens for their subsequent spending on compensation of the budget deficit.

 

3. The government changed the interim head of the United Mining and Chemical Company (OGHK) before privatization.

On August 20, the Cabinet of Ministers, at its disposal No. 970-r, agreed on the temporary imposition of the duties of the head of the board of the United Mining and Chemical Company JSC (OGHK) on a member of the board, Yegor Perelygin. Prior to this, the acting head of the board of the OGHK was Artur Somov.

On January 15, 2021, Economic Pravda published an interview with Artur Somov, who assured that OGHK's profit in 2020 increased 6 times compared to 2019. This sharp rise in profitability took place after the effective management reform of the enterprise. OGHK is suspected of trading with “Crimean Titan,” and A. Somov admitted that it was so in the past, but in new contracts the company warns about the inadmissibility of trade with sanctioned territories. He cited the example of Japanese companies, which are also large consumers of titanium, as well as the American holding Dupont, Turkish trader Esan, ArcelorMittal Kryvyi Rih, Metinvest, Zaporozhye Titanium and Magnesium Plant, Sumykhimprom, Plazmatek.

Thus, a profitable state-owned enterprise is preparing for privatization, violating the logic of privatization as such. After all, privatization is designed to make unprofitable state enterprises profitable again. The OECD corporate governance standards state that the state is an ineffective owner of property, while in the case of OGHK, the opposite is true - the management of the state-owned enterprise increased its profits 6 times in 2020 compared to 2019, and now this profit after privatization will belong to new private owners.

 

4. How the economy has changed over 30 years of independence.

 

Nominal GDP contracted in the 90s, and only in 2000 began to grow, which collapsed only in 2008 during the global crisis. In 2014, it collapsed even more than in 2008.

Real GDP as a whole follows the nominal trend.

The largest collapse of Ukraine's GDP took place in 1994 - by more than 22 percent. The highest GDP growth was in 2004 - over 12 percent.

GDP per capita follows trends in nominal and real GDP.

The dynamics of growth and decline in real GDP per capita is smoother than in the case of the nominal one.

The service sector in the structure of the economy increased from 30 to 70 percent, while the share of industry and even the agro-industrial complex decreased from 40 to 20 percent and from 25 to 10 percent, respectively.

Meat production in Ukraine has fallen by 2 times compared to 1990.

The number of pigs fell by 4 times.

Poultry production is close to 1990 levels, but has not yet reached them.

The number of cows fell 4 times, milk production fell 2.5 times.

Grain production has almost doubled.

Sugar beet cultivation has dropped by 3.5 times.

The volumes of potato and sunflower cultivation have increased.

Metallurgy and the agro-industrial complex remain the main sectors of the economy, but over the past decade, the importance of the service sector has grown significantly.

Ukraine continues to depend on imports of minerals and services.

Cement production has stagnated after falling in 2008, while ammonia production has been falling until 2018.

Electricity production fell by 2 times.

The largest amount of foreign investment in Ukraine came in 2005 - at the level of 9 percent of GDP.

In the entire history of Ukraine, the budget was surplus only twice - in 2000 and 2002.

The share of the state in the Ukrainian economy (excluding state-owned enterprises) remains at 35 percent.

The state's debt rose from $ 0 to $ 92 billion. The sharp rise in debt began to rise in 2008.

 

5. Prime Minister D. Shmygal said that the Cabinet will send $ 2.7 billion for social benefits.

On August 26, Prime Minister Denis Shmygal said at a meeting of the Cabinet of Ministers that the Cabinet of Ministers of Ukraine plans to allocate $ 2.7 billion received from the International Monetary Fund for social payments.

First, the special rights loan SDRs are not real money, but an instrument of the IMF that can be converted into currency from a basket of 5 major world currencies - the dollar, euro, pound sterling, yuan, and yen. In order for Ukraine to exchange its SDRs for currency, it must contact the country that holds the desired currency (dollar or euro) and request the exchange of its SDRs for currency. The US government reserves the right to refuse any country to exchange SDRs for dollars if the country exhibits policies that are contrary to US interests. Thus, the issuance of 1.9 billion SDRs to Ukraine is another instrument of influence on Ukraine, making it more compliant to its Western partners. Instead of exchanging SDRs for US dollars directly, Ukraine can conclude a loan agreement with the IMF on financing, provided, again, additional conditions are met. The Ministry of Finance of Ukraine already has experience in obtaining financing in hryvnia from the National Bank on the security of SDR. In any case, D. Shmygal's statement regarding the direction of SDRs for social payments is PR, since this money is planned to be spent on social payments solely in order to increase the rating of V. Zelensky's team, and not on the long-term economic growth of the country's economy.

Each country administers its SDR differently. For example, in Mexico, a public discussion broke out between the president and the country's National Bank about what to spend $ 12 billion on. The President offered to spend this money on paying off the country's external debts, but the head of the National Bank rejected this proposal. Mexico has a law prohibiting the use of SDRs to pay off debts.

It is important to note that Belarus received a larger percentage of its international reserves than Ukraine from the IMF.

 

Edited by:

Ruslan Bortnik,

Daniil Bogatyrev.

Authors:

Daniil Bogatyrev,

Oksana Krasovskaya,

Andrey Timchenko.