Ukraine: Weekly Bulletin
October 20-26, 2018
Ukrainian Armed Forces training exercises.
Photo – Ukraine’s Ministry of Defense
1. Russian Invasion of Ukraine
Ukraine’s Ministry of Defence reported that during the week of October 19-25, one Ukrainian soldier was killed and eight Ukrainian soldiers were wounded in action on the eastern front. Throughout the week, Russian-terrorist forces opened fire 104 times on Ukrainian positions on the Luhansk and Donetsk sectors of the front. Ukraine’s Joint Forces Operation headquarters reported that returning fire, Ukrainian forces killed 21 and wounded 19 enemy combatants in the last week.
2. Oleh Sentsov awarded European Parliament’s Sakharov Prize for Freedom of Thought
For a report from Radio Free Europe/Radio Liberty on Sentsov being awarded the Sakharov Prize, please click on image above
The European Parliament stated, “Ukrainian film director Oleh Sentsov is this year’s winner of the European Parliament Sakharov Prize for Freedom of Thought. The award ceremony will be held in Strasbourg on 12 December. Sentsov was chosen from a shortlist of three by the Parliament’s political group leaders on 25 October.
Announcing this year’s laureate, Parliament President AntonioTajani said: ‘Through his courage and determination, by putting his life in danger, the film maker Oleg Sentsov has become a symbol of the struggle for the release of political prisoners held in Russia and around the world. ‘By awarding him the Sakharov Prize, the European Parliament is expressing its solidarity with him and his cause. We ask that he be released immediately. His struggle reminds us that it is our duty to defend human rights everywhere in the world and in all circumstances.’
Sentsov is a Ukrainian film director, sentenced to 20 years in prison for ‘plotting terrorist acts’ against the Russian ‘de facto’ rule in Crimea. Amnesty International has described the court process as ‘an unfair trial before a military court.’
He has become a symbol for the approximately 70 Ukrainian citizens illegally arrested and given long prison sentences by the Russian occupation forces in the Crimean peninsula.
Sentsov was on hunger strike from mid-May until 6 October, when he ended it because of the threat of being force-fed. The prize, consisting of a certificate and €50,000 will be awarded during a ceremony in the Parliament in Strasbourg on 12 December. […]
The Sakharov Prize for Freedom of Thought, named in honour of the Soviet physicist and political dissident Andrei Sakharov, has been awarded annually since 1988 to individuals and organisations defending human rights and fundamental freedoms. This year marks the 30th anniversary of the prize.”
3. European Parliament urges tough stand on Russia over blockade of Sea of Azov
Radio Free Europe/Radio Liberty (RFE/RL) reported, “The European Parliament has urged EU states to make clear to Russia that it will face tougher measures if it intensifies its ‘de facto blockade’ of international shipping in the Sea of Azov.
A nonbinding resolution passed on October 25 called on EU member states to warn Moscow ‘that the targeted sanctions against Russia will be reinforced’ if it further escalates actions it labeled as a ‘violation of Ukraine’s sovereignty.’ The parliament ‘deplores excessive actions of the Russian Federation in the Sea of Azov as far as they breach the international maritime law and Russia’s own international commitments,’ the resolution said. […]
The dispute stems from Moscow’s construction of a 19-kilometer bridge over the Kerch Strait from Russia’s Krasnodar Krai to Crimea’s eastern end in 2016 […]
The United States and the EU assailed the construction of the bridge, accusing Russia of impeding international shipping in the Sea of Azov by limiting the size of ships that can transit the Kerch Strait. The strait is the only path to reach Ukraine’s territorial waters in the Sea of Azov from the Black Sea. […]
The parliament said it was instructing its president to forward the resolution to the EU member states, the European Council, the European Commission, the Organization for Security and Cooperation in Europe (OSCE), NATO, the Ukrainian government and parliament, and the president, parliament, and government of Russia.”
The text of the European Parliament’s resolution is available here
4. Atlantic Council on new Ukraine IMF agreement
Writing for the Atlantic Council, Senior Fellow Anders Aslund stated, “On October 19, the International Monetary Fund (IMF) announced that it had finally reached a staff-level agreement with Ukraine on renewed lending. Ukraine hasn’t received any IMF funds since April 2017. Experts had warned that without an IMF tranche, Ukraine’s economy might face a serious financial crisis this fall.
Now the two parties have agreed on economic policies for a new 14-month stand-by agreement of $3.9 billion that will replace the previous agreement, a four-year Extended Fund Facility of $17.5 billion, which would have lapsed in March 2019.
This agreement is of vital importance and very much needed now. First, it will grant Ukraine sufficient international financing until the end of 2019. Second, it will help the Ukrainian government to pursue sound economic policies. Third, it will keep the Ukrainian economy stable during the 2019 election year with the presidential election slated for March 31 and parliamentary elections in October.
Ukraine has substantial debt service coming due in 2019-20 and it would need some $7 billion in external financing during this period. The IMF agreement should solve it all. The IMF itself will probably disburse $2 billion at the end of this year. With IMF approval, the European Union and the World Bank are likely to provide $2 billion, and the government can sell Eurobonds for an additional $2 billion at an admittedly high yield of some 9 percent. In addition, several state corporations are likely to sell Eurobonds or borrow by other means. Thus, $8 billion or so of additional government borrowing is probable.
Given that Ukraine’s public debt has shrunk to 62 percent of GDP, the additional public debt raises no concerns, while the central bank reserves of only $16.6 billion at the end of September corresponded to only 2.9 months of imports and were worrisome. Now the reserves should arouse no concern until the end of 2019. […]
Ukraine’s prior IMF agreement would have lapsed in March 2019, concurrently with the presidential election, which would have been unnecessarily destabilizing. With this new agreement, the IMF offers Ukraine the option of financial stability through both elections.
This is an important step forward for Ukraine that will hopefully reassure investors that Ukraine can maintain macroeconomic stability and thus promote economic growth.”
5. Ukraine raises $2 billion in Eurobonds; Naftogaz authorized to raise $1 billion
Ukraine Business News reported on October 26, “Ukraine has raised $2 billion in Eurobonds — $750 million for five years, and $1.25 billion for 10 years. The offering was oversubscribed, with bids totaling $4.9 billion. This demand pushed rates down about one quarter point from initial listing references. The final annual interest rate on 5-year bonds was 9%. On the 10-year bonds it was 9.75%. Of the new placement, $725 million will be used to redeem a bond that matures in February. This is the first long-dated dollar debt since Ukraine raised $3 billion one year ago. […]
The government has authorized Naftogaz to raise $1billion for up to five years via Eurobonds. Co-organizers of the issue will be Citigroup Global Markets and Deutsche Bank AG. The issue will be listed on the Irish Stock Exchange. Separately, another state company, Ukrzaliznytsia, or Ukrainian Railway, says it plans to raise money through a Eurobond issuance before the end of this year.
Dragon Capital writes on what Naftogaz might do with the bond money: ‘Naftogaz’s aggressive development program, including investments in gas production, oil processing and retailing, which it may find constrained to finance in case the government decides to extract hefty dividends to help it fund utility subsidies in 2018-2019. Another focus area encompasses energy saving projects intended to cut gas consumption among low-income households and reduce gas bills.'”
6. Ukraine, EBRD launching new cooperation strategy
Ukraine’s Cabinet of Ministers reported on October 24, “Ukraine and the European Bank for Reconstruction and Development (EBRD) are launching a new cooperation strategy, envisaging the implementation of long-term and financially large projects, both at the level of the private sector and at the level of public administration. Appropriate arrangements were reached during the meeting of Prime Minister of Ukraine Volodymyr Groysman and EBRD Vice President Alain Pilloux. […]
According to Alain Pilloux, the Bank is greatly interested in alternative energy projects, development of state-owned banks. That is why the legislative initiatives concerning the law on alternative energy, state banks, concessions and the activities of the business ombudsman are much awaited.
‘The volume of existing cooperation is not in line with our potential. You mentioned amendments to the legislation, and we support the majority of them. But these are work-related issues,’ Volodymyr Groysman said. ‘We are focusing on improving legislation, and at the same time we need to concentrate on the already existing opportunities. This should be parallel process. We can’t wait for the adoption of laws, their implementation – it can take years, we need to boost economy now.’
The sides stressed that a large-scale privatization, intensification of cooperation both at the level of municipalities and in the sector of infrastructure projects could become powerful impetuses to the process. Thus, by the end of the year the EBRD is planning to sign a number of practical arrangements with PJSC Ukrzaliznytsia and Ukrainian State Air Traffic Services Enterprise.”