Ukraine: Weekly Bulletin – August 26-September 1, 2017

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Ukraine: Weekly Bulletin
August 26-September 1, 2017
 
1. Russian Invasion of Ukraine
The General Staff of Ukraine’s Armed Forces reported that during the week of August 25-31, no Ukrainian soldiers were killed and three Ukrainian soldiers were wounded in action on the eastern front. Throughout the week, Russian-terrorist forces opened fire 150 times on Ukrainian positions on the Luhansk, Donetsk and Mariupol sectors of the front, including at least 17 times with heavy weapons.
2. EU-Ukraine Association Agreement fully enters into force
On September 1, the EU-Ukraine Association Agreement fully entered into forces. Ukraine’s President Petro Poroshenko spoke on the occasion. To view President Poroshenko’s remarks, please click on the image below:
3. US Special Representative Volker interview in Deutsche Welle
 
Special Representative Volker. Photo – McCain Institute
US Special Representative for Ukraine Negotiations Kurt Volker was interviewed by Deutsche Welle on August 29. The following are excerpts from the interview.
Some are concerned that Washington might strike some kind of a separate deal with Moscow behind the backs of the Europeans and Ukrainians as well…
 
[Volker] – That’s absolutely not going to happen. There is no such thing and there will not be any kind of separate deal over the heads of the Ukrainians or behind the backs of the Europeans.
In fact I’ve been in very close touch with both French and German colleagues before a meeting with my Russian counterpart. And we went through everything in their process. The US has made clear we fully support the Normandy process and it’s not our intention to become a part of it or to try to go over the top of it. And as far as Ukrainians are concerned, I had three visits to Kyiv in just the past six weeks and we’re in very close touch about the contents of any discussions and there is clearly no deal-making over their heads.
You’ve recently said that the US administration is reevaluating its stance towards providing Ukraine with lethal defense weaponry. This prompted critical comments from Moscow. Have the Russians raised this issue in their private conversations with you? […]
 
[Volker] Having been invaded and part of its territory taken it’s quite reasonable for Ukrainians to want to be better able to defend themselves. […]
           The way I see it is that there is no distinction between Russia’s invasion, occupation of either Crimea or the Donbas. In the case of Crimea, however, they have also claimed to annex the territories – not only occupying it, but taking it for themselves. I don’t think we should be accepting or legitimizing any of that. That being said, the Minsk agreements are only about eastern Ukraine. And if we can make progress there, we should try to make progress everywhere, but I don’t think progress in one place should be hostage to progress in another. […]
           I think it’s a failure of the international community and first on the part of Russia to invade and take a part of Ukraine territory in violation of the Budapest memorandum, but also for the United States, UK, France and the broader international community to have given a security guarantee like that and then not have stood by it. And so it is important that we don’t give up on that and try to actually restore Ukraine’s integrity and to ensure the safety and security of its citizens. […]
           I think Secretary Tillerson and Secretary [of Defense James] Mattis have both defined it very clearly: success is the restoration of Ukraine’s territorial integrity and sovereignty as well as security for all of Ukraine’s citizens.”
4. Moody’s upgrades Ukraine’s rating, outlook changed to positive from stable
On August 25, Moody’s Investors Service “upgraded the government of Ukraine’s local and foreign currency issuer and senior unsecured ratings to Caa2 from Caa3, and changed the rating outlook to positive from stable. Consequently, Moody’s has upgraded to Caa2 from Caa3 the ratings of Ukraine’s nine senior unsecured eurobonds issued in the context of the government’s debt exchange operation in November 2015. […]
         The upgrade of Ukraine’s government ratings to Caa2 from Caa3 is based on the following key drivers:

– The cumulative impact of structural reforms that, if sustained, are expected to

   improve government debt dynamics;
– The significant strengthening of Ukraine’s external position.”
The full press release from Moody’s is available here
5. US Overseas Private Investment Corporation commits financing to two projects in Ukraine
On August 30, the Overseas Private Investment Corporation (OPIC), the US Government’s development finance institution, “committed financing support to two projects in Ukraine that will promote lending to small and medium businesses that are critical to economic stability and growth.
  • OPIC committed $10 million to Ukraine’s Agroprosperis Bank (AP Bank) to support lending to small and medium enterprise (SME) farmers in Ukraine, who are a critical source of food production in the country, but often struggle to access financing to purchase seeds, spare parts and fuel for the machinery that is used in planting and harvesting.
  • OPIC is also supporting $7.8 million in financing to Ukraine’s Bank Vostok to help expand the bank’s SME lending portfolio to reach underserved populations such as businesses located in rural areas.
          OPIC’s commitment to supporting private sector development in Ukraine has resulted in quadrupling OPIC’s investment portfolio there since 2014, across sectors ranging from financial services to agriculture and energy.
           This week, OPIC President and Chief Executive Officer Ray W. Washburne is visiting Ukraine, his first official visit with OPIC, as part of an official delegation led by U.S. Deputy Secretary of Energy Dan Brouillette. Ukraine is a foreign policy priority for the U.S. and OPIC continues to work on projects that will support further private sector-led development in the country. […] OPIC’s current investment portfolio in Ukraine totals $522 million across 18 projects,” OPIC stated.
6. Anders Aslund: The Achilles Heel of Putin’s Regime
Writing for Project Syndicate, Atlantic Council Senior Fellow Anders Aslund stated, “Russian President Vladimir Putin’s authority is weaker than it seems. In fact, the bedrock of Putin’s power – the clientelist economic arrangements that he has assiduously consolidated over the past generation – has become the main threat to his political survival. The reason is simple: the lack of credible property rights under Putin’s system of crony capitalism forces senior Russian officials and oligarchs to hold their money abroad, largely within the jurisdictions of the Western governments against which Putin rails. […]
           In the absence of credible property rights, wealthy Russians, including Putin’s own cronies, know that the only safe places to keep their assets are abroad. And, thanks to a fully convertible ruble and the absence of restrictions on capital outflows, they can transfer their gains to offshore tax havens. […]
          With the Financial Action Task Force having reduced bank secrecy in Switzerland and cleaned up the many small island tax havens, there are two major remaining destinations: the United States and the United Kingdom, both of which permit anonymous currency inflows and allow asset owners to hide their identity. In the US, tens of billions of dollars move through law firms’ opaque bank accounts each year, facilitating money laundering.
           In general, Western governments do not really exert much control over such activities within their borders. In fact, while the assets of Putin’s cronies in the US and the European Union are supposed to be frozen, according to the sanctions imposed after Russia’s illegal annexation of Crimea in 2014, hardly any have been found.
           It is time to change this, by initiating comprehensive investigations into the assets of sanctioned people. The US and the UK, which presumably hold the vast majority of Russian offshore wealth, must also catch up with their counterparts in most of Europe by prohibiting the anonymity of beneficiary owners. The US should also proscribe the use of attorney-client privilege to transfer anonymous or dirty money into the country.
           The good news is that progress may be on the horizon. A new bill, which US President Donald Trump signed into law on August 2, calls for far-reaching investigations into ‘senior foreign political figures and oligarchs in the Russian Federation’ – including ‘spouses, children, parents, and siblings’ – and their assets within 180 days.” The full article is available at The Achilles Heel of Putin’s Regime

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