UkraineAlert

Ukraine is a challenging and confusing place to do business. At the same time, it’s also exciting and changing. I’ve been doing business in Ukraine for fifteen years, and while Ukraine has a bad reputation for international business, it deserves a second look.

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Four years after Ukrainians protested in the streets against jaw-dropping corruption, the most odious scheme of all—the corrupt natural gas market—continues to siphon billions from Ukraine. These proceeds underwrite a sophisticated bribery scheme in Russia and Ukraine, and more recently help subsidize Russia’s war and occupation against Ukraine.

The heist was devised years ago by mafia kingpin Semion Mogilevich, and has been fronted by Dmytro Firtash with the blessing of Russian President Vladimir Putin and his insiders. It was simple: A foreign intermediary company was established to buy gas from Gazprom, then sell it to Ukraine’s utility Naftogaz for huge profits that would then be diverted to Russian and Ukrainian politicians and officials.

The offshore intermediary was dismantled in 2016, but Firtash immediately devised another gambit. He now controls “zombie” intermediaries, or regional gas distribution companies inside Ukraine, that Naftogaz is legally obliged to sell eleven billion cubic meters of gas (about one-third of the market) at prices that are 50 percent below market. Worse, most of these zombies never pay for the gas, and Naftogaz cannot collect the bad debts in a timely fashion or cut off gas supplies. This includes companies that supply gas to Russian-occupied Crimea and Donbas and never pay for it.

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The noose is finally closing on the people and structures behind the downing of Malaysia Airlines Flight 17.

Almost four years after the Amsterdam to Kuala Lumpur-bound flight was shot down by a BUK missile over Ukraine, a clearer picture is emerging on the origin of the missile, its route to the firing zone in eastern Ukraine, and its return to base in western Russia.

On May 24, the Dutch-led Joint Investigation Team (JIT)—citing forensic and intercepted evidence—said the missile originated from the base of the Russian Federation’s 53rd anti-aircraft brigade in Kursk, not far from the Ukrainian border. 

The JIT found that “all the vehicles in a convoy carrying the missile were part of the Russian armed forces.”

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Anyone who claims Ukraine’s reforms have failed ignores the type of cases the National Anti-Corruption Bureau of Ukraine (NABU) has been able to pursue. NABU represents Ukraine's first government agency truly devoted to ending the impunity of corrupt, high-level officials. NABU continues to investigate and arrest senior officials previously considered untouchable.

NABU faces one huge obstacle however: Ukraine's hopelessly corrupt judicial system. A study from the Anticorruption Action Center (AntAC) and the Reanimation Package of Reforms found that judges use a wide variety of techniques—from denying search warrants to preserving official positions for people who are NABU suspects—to hinder investigations. The results are clear: Despite sending hundreds of investigations to court since 2015, NABU has been unable to obtain any major convictions.

Creating a truly independent anti-corruption court that would adjudicate NABU's cases and finally allow Ukrainians a chance to hold their corrupt politicians accountable is the final step.

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Violence is on the rise in eastern Ukraine again. There have been a number of civilian casualties and a massive number of ceasefire violations. Some have said that last week was the worst of all the fighting in 2018. Meanwhile, Ukraine’s army took control over the Donbas operation in April and the talks between US Ambassador Kurt Volker, US Special Representative for Ukraine Negotiations, and Russian presidential aide Vladislav Surkov seem to have broken down. In addition, Ukraine faces presidential and parliamentary elections in 2019.

We asked our Atlantic Council experts and UkraineAlert contributors what’s behind the uptick in violence. Should we expect more and more violence up until Ukraine’s March 2019 presidential election?

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Of all the stories that I've written about Ukraine, none has provoked and continues to provoke choruses of thank yous than this piece I wrote three years ago about the life and legacy of Roman Kupchinsky. Each time I go to Kyiv, I meet another young journalist who Roman quietly mentored. 

On Monday, as the United States celebrates Memorial Day, my family and I will visit Arlington Cemetery to remember Roman.  

Four years after Russia annexed Crimea and invaded the Donbas, Roman's voice and vision are sorely missed and needed now more than ever before.  

Вічна Йому пам'ять!

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Perhaps no one in Kyiv faces a more difficult task than First Vice-Speaker of the Verkhovna Rada Iryna Herashchenko. Herashchenko is Ukraine's lead negotiator tasked with freeing Ukrainians held captive in the Donbas. The Ukrainian government and Russia's separatist proxies in eastern Ukraine exchanged nearly 400 prisoners in late 2017—a notable achievement for which Herashchenko deserves her nation's gratitude. 

Herashchenko now faces an even thornier issue; she must track the fate of the approximately seventy Ukrainian citizens held as de facto hostages on Russian territory. While Herashchenko is not officially responsible for securing their release, she understands its emotional resonance in Ukraine. In an interview with the Atlantic Council, Herashchenko laid out the obstacles to freeing these hostages.

Russia remains determined to use the Ukrainian hostages as a weapon in its hybrid war against Ukraine, forcing Kyiv to make concessions on fundamental issues of sovereignty that no Ukrainian government could accept, she said.

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Anatoliy Hrytsenko, Ukraine’s defense minister from 2005 to 2007, is finally having his moment in the sun.

The latest poll shows that 12.7 percent of Ukrainians who have made up their minds would vote for Hrytsenko in the first round of the 2019 presidential election. This is progress compared to his previous results. The 2019 race will be the third attempt in Hrytsenko’s political career to become president; he scored 1.2 percent of the vote in 2010 and 5.5 percent in 2014. However, at least 29 percent of Ukrainians are still undecided, so take these numbers with a large grain of salt.

Hrtysenko’s political party, Civic Position, is also enjoying the same success. It polls second with 11.5 percent support, which is a massive improvement from its performance in the 2014 parliamentary elections, when it garnered 3.1 percent.

How did Hrytsenko and his party manage to climb the polls in a few short years?

Hrytsenko has one feature which sets him apart from other major Ukrainian politicians.

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Populists are flourishing almost everywhere. The demand for simple solutions in a complicated world makes their messages resonate.

Ukraine is no exception. The country’s situation with numerous security and economic hardships provides fertile ground for populists.

Over the last four years, Ukraine has embraced a number of painful structural reforms that have been partially successful. But so far they have not improved the wellbeing of ordinary citizens, although they may bring positive effects in the future. In the short-term, the poor often face worsening economic conditions.

According to a recent poll by the Democratic Initiatives Foundation, 74 percent of Ukrainians say the country is moving in the wrong direction, and 50 percent identify higher prices with stagnant wages as the biggest problem.

Populists are seducing precisely these types of people.

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Showing solidarity with other G7 countries following Russia’s 2014 invasion of Ukraine, Japan imposed sanctions on Russia—albeit reluctantly. The Ukraine crisis occurred amid Japan's efforts to reinvigorate Japan-Russia relations in the hope of solving the long-standing territorial dispute over the Northern territories (the Kuril Islands in Russian). Subsequently, maintaining Japan’s balance between other G7 countries and Russia became one of the main challenges for Prime Minister Shinzo Abe. 

While Japan felt obliged to support the international community and to impose sanctions, the geopolitical dynamics in the Asia-Pacific region forced it to take a conciliatory approach to Russia. This delicate balance resulted in Japan’s symbolic sanctions and in different narratives promoted at home and in Ukraine.

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