Crisis in Ukraine: Daily Briefing
19 December 2016, 5PM Kyiv time
1. Russian Invasion of Ukraine
The National Security and Defense Council of Ukraine (RNBO) reported that yesterday towards Donetsk, Russian-terrorist forces carried out attacks on Ukrainian positions near Luhanske village. Beginning at 6 am Kyiv time on 18 December, Russian-terrorist forces carried out massive artillery and mortar shelling of Ukrainian positions. Russian-terrorist forces nearly 700 artillery or mortar shells at Ukrainian positions near Luhanske village. Infantry of the Russian-terrorist forces attacked the Ukrainian positions in three separate attacks. Ukrainian forces repelled the attacks. Five Ukrainian soldiers were killed in the battles, six Ukrainian soldiers were wounded. These are the highest losses for Ukrainian forces in 5 months. According to Ukraine’s military intelligence, Ukrainian forces inflicted heavy casualties on Russian-terrorist forces – nearly 50 of the enemy were killed or wounded. Towards Luhansk, Russian-terrorist forces shelled Ukrainian positions at Troitske with mortars. Towards Mariupol, Russian-terrorist forces shelled Ukrainian positions on the Hnutove-Shyrokyne line with artillery, mortars and tanks.
2. Joint statement following meeting of EU-Ukraine Association Council
On 19 December, the EU-Ukraine Association Council met in Brussels. The Council was chaired by EU High Representative for Foreign Affairs and Security Policy F. Mogherini. First Deputy PM S. Kubiv led the Ukrainian delegation. Following the meeting, in a joint statement the Association Council stated, “The Association Council reaffirmed the close and comprehensive partnership between the EU and Ukraine, based on common values of democracy, rule of law and human rights. It reaffirmed the continuing commitment to political association and economic integration between the EU and Ukraine. […]The Association Council welcomed the substantial progress achieved by Ukraine in the reform process since its last meeting. […]The EU reaffirmed its support for Ukraine’s independence, sovereignty and territorial integrity, along with efforts aimed at a sustainable and peaceful settlement in eastern Ukraine.[…]The EU recalled that the duration of economic sanctions imposed against the Russian Federation was linked to the complete implementation of the Minsk agreements. The EU recalled its policy of non-recognition of the illegal temporary occupation of Crimea and the city of Sevastopol by the Russian Federation and condemned the severe deterioration of the human rights situation on the peninsula and its militarisation by Russia. […] The Association Council welcomed: signing of the financing agreement for Public Administration Reform (PAR) programme, a 104 million euro contribution to support policy development, civil service and human resource management; announcement of the PRAVO programme of 52.5 million euro to support rule of law in Ukraine, namely judiciary and law enforcement; signing of financing agreements for four Cross Border Cooperation (CBC) programmes in which Ukraine participates; signing of five agreements between Ukraine and the European Investment Bank, underlining the importance of further successful cooperation in line with the Memorandum of Understanding between the Government of Ukraine and the European Investment Bank. The full statement is available at http://www.consilium.europa.
eu/en/press/press-releases/ 2016/12/19-eu-ukraine- association-joint-press- release/
3. EU prolongs economic sanctions against Russia until 31 July 2017
The European Council stated, “On 19 December 2016, the Council prolonged the economic sanctions targeting specific sectors of the Russian economy until 31 July 2017. […]They target the financial, energy and defence sectors, and the area of dual-use goods. […]Having assessed the implementation of the Minsk agreements at the European Council meeting of 15 December, the EU heads of state and government paved the way to renew the sanctions for a further six months, until 31 July 2017. […]The economic sanctions prolonged by this decision notably: limit access to EU primary and secondary capital markets for 5 major Russian majority state-owned financial institutions and their majority-owned subsidiaries established outside of the EU, as well as three major Russian energy and three defence companies; impose an export and import ban on trade in arms; establish an export ban for dual-use goods for military use or military end users in Russia; curtail Russian access to certain sensitive technologies and services that can be used for oil production and exploration. In addition to these economic sanctions, several EU measures are also in place in response to the crisis in Ukraine including: targeted individual restrictive measures, namely a visa ban and an asset freeze, currently against 152 people and 37 entities until 15 March 2017; restrictive measures in response to the illegal annexation of Crimea and Sevastopol, limited to the territory of Crimea and Sevastopol, currently in place until 23 June 2017.”
4. Ukraine’s Government nationalizes PrivatBank
Ukraine’s Cabinet of Ministers met on 18 December. The press service of the Cabinet reported, “Taking into account the results of a meeting of the National Defence and Security Council of Ukraine, the Government has supported the proposal put forth by the National Bank and the Council for Financial Stability on the transfer of the PJSC PrivatBank to 100% state ownership. It is envisaged that the Government represented by the Finance Ministry will become the owner of 100% shares of PJSC PrivatBank and ensures smooth functioning of this financial institution and security of assets of its clients. […] The transition will begin on December 19. The state will provide a smooth transition.”
5. G7 Ambassadors – nationalization of PrivatBank an “important and necessary step”
The Ambassadors to Ukraine of the G7 countries (Canada, France, Germany, Italy, Japan, the United Kingdom and the United States), stated, “We recognize and applaud the leadership of the governor of the National Bank of Ukraine, the Prime Minister, the Minister of Finance and the President for their continued efforts to clean up the banking sector and stabilize the economy. The Government’s decision to nationalize Privatbank is an important and necessary step in this process, and it will help ensure that all banks in Ukraine are held to the same prudential regulatory standards. This will make the banking sector stronger and more resilient. This nationalization is also a means for the Government of Ukraine to safeguard deposits of household and legitimate businesses and to facilitate uninterrupted access to banking services for Privatbank’s client base. Ukraine’s banking sector clean-up is a vital component of its larger reform efforts. We look forward to continuing to support Ukraine and working together to promote macroeconomic and financial stability, improve the investment climate, and help the Ukrainian people continue on a path toward economic prosperity.”
6. IMF, EBRD statements on nationalization of PrivatBank
In response the Government of Ukraine’s announcement of the nationalization of PrivatBank, C. Lagarde, Managing Director of the IMF, stated, “Today’s decision of Ukrainian authorities to nationalize PrivatBank is an important step in their efforts to safeguard financial stability. This decision was taken to ensure the smooth operations of the bank given its systemic role in Ukraine’s financial system, and in view of insufficient efforts to strengthen its capital adequacy in recent months. […]The IMF will continue to support Ukraine in its efforts to build strong institutions, enhance transparency, and advance structural reforms which are critical to achieve strong and sustainable economic growth.” The President of the European Bank for Reconstruction and Development Sir Suma Chakrabarti stated, “The long-term stability of PrivatBank, the largest bank in Ukraine, is crucial to the country’s economic health. We believe the decision to nationalise it is the right one and have offered our expertise to the authorities whenever it is needed. We strongly support the National Bank’s continuing efforts to reform the banking system in Ukraine and ensure good governance across the industry.”