Ukraine: Weekly Bulletin
April 7-13, 2018
Canadian Armed Forces personnel deployed to Ukraine on Operation UNIFIER send condolences to the families and friends who lost so much in the Humboldt bus crash, #HumboldtStrong
1. Russian Invasion of Ukraine
The General Staff of Ukraine’s Armed Forces reported that during the week of April 6-12, one Ukrainian soldier was killed and 17 Ukrainian soldiers were wounded in action on the eastern front. Throughout the week, Russian-terrorist forces opened fire 320 times on Ukrainian positions on the Luhansk and Donetsk sectors of the front, including at least 51 times with heavy weapons – mortars, artillery and tanks. On April 11, Russian-terrorist forces shelled residential areas of Avdiivka with mortars. No civilians were injured.
2. Russia’s ruble, Rusal, Sberbank take hits as US sanctions bite
Reuters reported on April 9, “Russia’s ruble suffered its biggest daily fall in over three years on Monday and stocks in major Russian companies also slid, as investors reacted to a new round of U.S. sanctions targeting some of Russia’s biggest tycoons.
The sanctions, announced on Friday, target officials and businesspeople around President Vladimir Putin in an aggressive response to alleged Russian meddling in the 2016 U.S. election. […]
Russia’s currency briefly dipped more than 4 percent before recovering slightly to trade at 60.31 to the dollar at 1512 GMT, down 3.67 percent, its biggest daily percentage fall since January 2015. Shares in Russia’s two biggest banks, Sberbank and VTB fell 17.3 and 9.1 percent respectively.
State-owned Sberbank is traditionally seen as a barometer for the wider health of the Russian economy, and is also a creditor for businesses hit by sanctions. […]
On equities markets, Russian aluminum tycoon Oleg Deripaska saw the share price of one of his companies halve after he joined six other so-called ‘oligarchs’ sanctioned together with their businesses, as well as 17 political figures.”
3. Nominee for US Secretary of State: Years of soft policy that enabled Russian aggression are now over
Nominee for US Secretary of State Mike Pompeo.
Photo – CSPAN
Nominee for US Secretary of State Mike Pompeo testified at his confirmation hearing at the US Senate Foreign Relations Committee on April 12. In written testimony presented to the Committee, Pompeo stated, “Russia continues to act aggressively, enabled by years of soft policy toward that aggression. That’s now over. The list of this administration’s actions to raise the cost for Vladimir Putin is long. We are rebuilding our already strong military and recapitalizing our nuclear deterrent.
We have imposed tough sanctions and expelled more Russian diplomats and intelligence officers from the U.S. than at any time since the Cold War. We are arming brave young men and women resisting Russian expansionism in Ukraine and Georgia. This list is much longer, and I’m confident I’ll have the opportunity to add to it today.
But the actions of this administration make clear that President Trump’s national security strategy, rightfully, has identified Russia as a danger to our country. Our diplomatic efforts with Russia will prove challenging, but as in previous confrontations with Moscow, must continue.”
4. Ukraine’s President: To change Russia’s behavior, one has to ensure the maximum effect of sanctions
|Ukraine’s President speaks at Kyiv Security Forum.
Photo – Presidential Administration
Speaking at the Kyiv Security Forum on April 12, Ukraine’s President Petro Poroshenko stated, “Being united, we remain strong. This was confirmed by the policy of non-recognition of the illegal annexation of Crimea in the world. This was proved by our agreed approach to a thorough and independent investigation of the MH17 tragedy – a terrorist attack carried out by the Russian Federation and its militants. Finally, this was demonstrated by our solidarity response to the attempt of poisoning Skripal in Salisbury. Of course, the Kremlin never expected this answer.”
The President praised the powerful and resolute step of the United States against the Russian leadership and its entourage. “In just a few days, the Kremlin entourage has lost tens of billions and the price continues to grow every day. Why is this so important? Because this money will never be spent on deadly missiles, bullets or even poisonous Russian propaganda against the civilized world. Not only against Ukraine.”
According to the President, to change the behavior of Russia, it is necessary to ensure the maximum effect of sanctions. “This is only possible if the European Union follows the example of the United States and the whole world synchronizes sanctions with them, especially in the financial sphere.”
5. German Chancellor: New Pipeline Impossible Without Clarity For Ukraine
Ukraine’s President meets with German Chancellor,
photo – Presidential Administration
Radio Free Europe/Radio Liberty (RFE/RL) reported on April 10, “German Chancellor Angela Merkel has said that a new natural-gas pipeline linking Russia with Germany cannot go ahead without clarity on Ukraine’s role as a gas transit route.
‘I made very clear that a Nord Stream 2 project is impossible without clarity on the future transit role of Ukraine,’ Merkel said at a news conference with Ukrainian President Petro Poroshenko in Berlin on April 10. She said that ‘it is not just an economic issue but there are also political considerations.’ […]
Nord Stream 2, which is to run from Russia through the Baltic Sea to Germany — the European Union’s biggest economy — would double the existing Nord Stream pipeline’s annual capacity of 55 billion cubic meters.
But critics argue it will increase dependence on Russia and enrich its state-owned energy companies at a time when Moscow stands accused of endangering European security.
Merkel said she had told Russian President Vladimir Putin in a phone call on April 9, ‘It cannot be that through Nord Stream 2, Ukraine has no further importance regarding the transit of gas.’ […]
In an interview with German business daily Handelsblatt on April 9, Poroshenko urged Berlin to abandon plans to build Nord Stream 2, saying it would enable an ‘economic and energy blockade’ against Ukraine and blasting it as ‘political bribe money for loyalty to Russia.’ […]
Poland and the Baltics oppose Nord Stream 2, and U.S. officials have spoken out against it. In Warsaw in January, then-Secretary of State Rex Tillerson said that ‘the United States opposes the Nord Stream 2 pipeline,’ adding, ‘We see it as undermining Europe’s overall energy security and stability and providing Russia yet another tool to politicize energy as a political tool.'”
6. World Bank: Ukraine’s economic growth projected at 3.5% in 2018
The World Bank stated on April 10, “Ukraine’s economy grew by 2.5 percent in 2017, the second year of modest growth, according to the World Bank’s latest Ukraine Economic Update. Growth in manufacturing, services, and construction was robust, but weaknesses in the agriculture and mining sectors, together with delays in key reforms to further strengthen investor confidence contributed to the modest overall growth performance. […]
Economic growth is projected at 3.5 percent in 2018 if pending reforms in anticorruption, land markets, state-owned banks, and privatization can be advanced in the next few months. This would provide an important signal to investors. If reforms are delayed, growth could drop below current levels in an uncertain macroeconomic environment as financing risks rapidly increase.
Ukraine faces major financing needs to repay public debt and fiscal pressures from higher public sector wages and social benefits in 2018 and 2019. Mobilizing adequate international financing by completing pending reforms in the months ahead will be important to maintain macroeconomic stability.
Meeting the fiscal deficit target of 2.5 percent of GDP in 2018 will require improving targeting of housing utility subsidies, making further wage increases contingent on measures to optimize the school and hospital network and public-sector staffing, and identifying affordable options to update public sector pensions. […]
The recently adopted reforms in education, health, and public administration seek to improve compensation for teachers, doctors, and public servants to strengthen incentives and attract quality personnel. Achieving this in a fiscally affordable manner will require coordinating further increases in salaries with time-bound measures to optimize staffing and the school and hospital network.”
The World Bank’s latest Ukraine Economic Update is available here