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  • Ambassador Morel visited Kyiv
  • Runoff mayoral elections took place
  • The central power in regulated conflict with oligarchs
  • The tense relationship between Poroshenko and Yatsenyuk
  • Kyiv’s bumpy road towards visa liberalization
  • Next IMF tranche on hold, pending budget and tax reform approval
  • Power black-out in annexed Crimea, Russia and Ukraine trades economic blows

 

Morel in Kyiv: The chairman of the Trilateral Contact Group’s working group on political affairs Pierre Morel visited Kyivto find out what hinders realization of his plan advancing political solution to the Donbass conflict on the part of Ukraine. The concept of special election law elaborated by the Ukrainian side leaked to the media. Once passed by Ukraine´s parliament, the law should lay down grounds for local election in Donbass, theoretically leading to the re-establishment of Kyiv´s sovereignty over the region.

The runoff mayoral elections: The 2nd round of mayoral elections took place on November 15 in 29 cities, following the first round vote on October 25. The turnout reached 34 percent. Mariupol and Krasnoarmiysk held rescheduled polls on November 29, after both cities could not participate in local elections earlier, due to the ballot printing violations. The Poroshenko Bloc, Batkivschyna, and Nash Kray were most successful among political parties. No political party gained monopoly in local and regional councils; therefore political players are forced to search for compromises to build collations. The following are the main trends as observed by local experts: The attempt to create “the party of power” as was the case with Yanukovych Party of Regions in 2010 has failed. Instead the Poroshenko Bloc is facing gradual loss of electoral support and opposition to the presidential force is on the moderate rise (Opposition Bloc, UKROP, Svoboda, Batkivshchyna, Samopomich) in some cases with limited space for further electoral grow. The attempts to negotiate with the Opposition Bloc and local elites brought some results in terms of influence in local policy making, but in some cases turned against the Poroshenko Bloc (Dnipropetrovsk). The political map of Ukraine is now more diverse and the electoral picture of the country split across the Dnieper River (West-Centre versus South-East) which has dominated Ukraine over 10 years is now outdated. Pro-Ukrainian parties managed to spread their influence to the South-East, overcoming tradition of parties based in certain regions and managed to transform themselves into nationwide projects. The South-East is not completely satisfied with the diverse offer of rebranded Regionals (Opposition Bloc, Nash Kray, Vidrozhdenia) and there is a real demand for an alternative. The results of polls proved that if pro-Ukrainian parties join their forces, there is chance to score a solid result, if not a victory (Kryvyi RihMykolayiv). The specifics of local environment and different interests of political parties on national and local level exposed the regionalization and localization of politics. The strong influence of oligarchs is present (MariupolZaporizhia) but more diffused, with a growing role of local elitesand their local interests. The electoral violations did not have systematic or centralized character and the abuse of administrative resources was present, but is weakening due to the better performance of law enforcements. The interactive infographic with detailed results of local polls can be found here.

The central power in regulated conflict with oligarchs: Hennadiy Korban, close ally of oligarch Ihor Kolomoisky and leader of UKROP party, was arrested on October 31. Korban is suspected of creating an organized criminal group, kidnappings, and embezzling millions of hryvnia from the non-profit defence fund. Korban, the country´s most famous corporate raider, served as the deputy head of Dnipropetrovsk Regional State Administration under Ihor Kolomoisky until his team resigned over the conflict with the central authorities. Samopomich and Batkivshchyna, minor ruling coalition parties, condemned the arrest as an act of political repression. Several deputies from Samopomich with ties to Dnipropetrovsk group reportedly spoke on behalf of the party leaving the ruling coalition. Kolomoisky interpreted the arrest as a reaction to the strong performance of the UKROP party in the local elections and denied that President is using Korban to put him under the pressure. Poroshenko tried to persuade public that the arrest should be seen in the context of de-oligarchization and as a further step towards the restoration of the rule of law. The decision to move against Korban may be explained by Kolomoisky’s unwillingness to abide by the terms agreed after his departure from the post of the Dnipropetrovsk governor. Further developments depend on the ability of the parties to reach a new agreement related to the dispute around the Ukranafta and PrivatBank.  Much will also depend on the political course adopted by Korban, who is currently under the house arrest. The UKROP tries to form a group of its own deputies in the Verkhovna Rada and may soon compete with Poroshenko party in the by-election for three single-mandate constituencies. Only several days after Korban´s arrest, the investigators summoned for questioning three Opposition Bloc MPs related to Rinat Akhmetov.The SBU said it suspects Akhmetov’s supermarket chain of embezzling UAH 26.7 million from the state budget. In his dealings with oligarchs, Poroshenko must rely on an extensive network of ambiguous alliances. Carnegie Russia points out, that this makes him unable to decisively move against oligarchs since he risks turningthem into enemies and disrupting the fragile balance of power which allows him to maintain hispower and stability of state. Contrary to the President, the Prime Minister Yatsenyuk enjoys good relationship with key oligarchs. A tactical alliance behind his back may change the balance of power and provide both parties with the desired leverage in their relationship with Poroshenko.

The tense relationship between Poroshenko and Yatsenyuk: Poroshenko shifted the responsibility for the unpopular austerity measures on the Prime Minister – whose electoral rating is now a few points above zero – in order to keep the upper hand in their relationship. Interested in having a weak Prime Minister, Poroshenko’s allies constantly challenge Yatsenyuk, who will report on his performance and might face a non-confidence vote in December. He has hinted such a move would make the National front leave the coalition. Despite speculations about the disunity within the ranks of his party, the party claims it does not envision Yatsenyuk being replaced even by someone else from the Party.  Western partners would prefer keep the ruling tandem together, break up the ties between the authorities and oligarchs and prevent the monopolization of executive power by Poroshenko. The visit of U.S. Vice President Biden in early December against the background of the political crisis and long awaited cabinet reshuffle is seen as a point of a possible restart for the ruling tandem.

The clans are marching: The tensions within Opposition bloc are growing. With Serhiy Lyovochkin and Boris Kolesnikov unable to find common language, a split within the party of former Regionals becomes feasible. An oligarch and former Donetsk governor, Serhiy Taruta, associated with Rinat Akhmetov, is reportedly forming an inter-factional group of deputies. The parliamentary group of the late Ihor Yeremeyev, thePeople´s Will, also does not stand idle. Therift between radicals and moderates within the ranks of the Right Sector led to the resignation of Dmytro Yarosh as the party’s leader. However, he has accepted an offer to lead the Volunteer Ukrainian Corps, the Right Sector’s paramilitary wing. 15 lawmakers inside the Poroshenko Bloc created an Anti-corruption platform and announced their intention to fight corruption within the faction and in the parliament.

Kyiv´s bumpy road towards visa liberalization: The parliament passed several anti-corruption laws required under the Ukraine-EU Visa Liberalization Action Plan. The implementation of the Plan will be evaluated by the European Commission in December. Anti-corruption activists voiced concerns that some of the adopted measures were softened by lawmakers in the process. The deputies approved “controversial” anti-discrimination amendments to the country’s labour code, which prohibit discrimination on the grounds of sexual orientation. EU Ambassador Tombinski stressed that it is important to have the adopted amendments in the new Labor Code, currently under consideration in the parliament. Yielding to the pressure by anti-corruption activists and EU officials, the prosecutor general Viktor Shokin replaced two of his four controversial representatives in the Commission. The commission nominated Maxim Hryshchuk and Nazar Kholodnytsky. Shokin appointed the later one.

The next IMF tranche on hold due to pending budget approval: A disagreement between the government and some of parliamentarians (including the leadership of the president’s faction) over the proposed tax reform delayed the submission of the budget to the Verkhovna Rada and consequently, the disbursement of the next tranche from IMF. The IMF’s mission left Kyiv without announcing a staff-level agreement, urging the government to submit a draft budget for 2016 that cuts the deficit in line with the agreed four-year program.

Black-out in annexed Crimea. Ukraine and Russia trade economic blows: As the Finance Ministry announced that it had managed to restructure around $15 billion of the Ukraine’s debt to private creditors, Russia signalled it is ready to make concessions but emphasized that the debt could not be considered commercial. Ukraine insists on Moscow accepting the same terms as other bondholders. Russia announced it will impose a full ban on food imports from Ukraine effective January 1, 2016 when the EU-Ukraine free trade pact enters into force. The PM Yatseniuk said that Russia will get a mirror-like response. Ukraine temporarily suspended cargo traffic to the annexed Crimea, which wasleft in darkness when unknown saboteurs blew up electricity pylons connecting peninsula to the Ukrainian power grid. The representatives of Crimean Tatars and Ukrainian nationalist launched unsanctioned economic blockade of Crimea back in September to protest against political repressions. They call for a full energy blockade of the peninsula and the cancellation of the law which established free economic zone with Crimea. Ukraine closed its airspace for Russian flights and said it will stop buying Russian gas, while Russia said it will supply no more because Ukraine has not paid in advance for more deliveries. Russia and separatists in eastern Ukraine halted coal shipments to Ukraine. The situation with gas stock and nuclear fuel is not critical; coal shortage can be expected in early January, unless Ukraine manages to arrange coal supplies from abroad.

Visegrad and Ukraine: The most important debate related to Ukraine was about the announced plan to construct the Nord Stream II pipeline bypassing the Brotherhood pipeline. András György Deák and Tomaš Kulda argued that the route via Ukraine is important to maintain the country stable and that any deterioration of its income and influence might have negative impact on the whole region. Despite that, the Czech Republic refused to support seven European states led by Slovakia to oppose the new project. Eventually, the group of EU member states criticizing the plan and calling for a special summit on the issue augmented to ten.

Edited by Gabriela Mikušová, CEPI’s Associate Fellow.

            

 

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