Ukraine is on it's way to a Failed State

Cadian

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Ukraine Is in Danger of Becoming a Failed State

1260 NOV 6, 2015 10:02 AM EST
By Leonid Bershidsky

The most effective thing Russian President Vladimir Putin did to destabilize Ukraine was the one thing the West was demanding: He leaned on pro-Russian separatists in the country's east to cease fire. Left without the much-used cover of a war, the internal divisions and dysfunctional core of the Ukrainian political elite didn't take long to reveal itself. Rather than the democratic hope it might have become after last year's "Revolution of Dignity," Ukraine now looks like just another incompetent and corrupt post-Soviet regime. It's no wonder cracks are appearing in Kiev's all-important relationship with the West.

The government is in turmoil: Prime Minister Arseniy Yatsenyuk is in danger of being fired as soon as that becomes legally possible in December, threatening the fragile ruling coalition, in which Yatsenyuk's party is the second strongest force. If the coalition falls apart -- a likely outcome if Yatsenyuk is forced to resign -- there will be an early parliamentary election. Pro-European Ukrainians might actually be relieved at that. Populists dominate the legislature, which would have made it difficult to push through meaningful reform -- if anyone were trying. On Thursday, the parliament rejected a bill specifically banning workplace discrimination against homosexuals.

Despite attempts at change by a new generation of bureaucrats, Ukraine's economy remains unreformed. Taxes are oppressive but widely evaded, the shadow economy is growing and the regulatory climate for business has barely improved. The International Monetary Fund, the country's biggest source of hard currency after a steep drop in exports, is optimistic about next year's economic growth prospects, forecasting a 2 percent expansion, but last month it revised this year's projection to an 11 percent decline. Ukraine's most popular politician -- not a Ukrainian but Mikheil Saakashvili, the former president of Georgia, appointed by Ukrainian President Petro Poroshenko to run the Odessa region -- has proposed a libertarian reform package, but Poroshenko hasn't given it his official backing and the current parliament is not likely to adopt it.

Equally unreformed is Ukraine's incredibly corrupt justice system. In September, Christof Heyns, the United Nations special rapporteur on extrajudicial, summary or arbitrary executions, said after visiting Ukraine that the country lived in an "accountability vacuum." Heyns bemoaned the failure of the Ukrainian authorities to investigate the deaths of more than 100 people on the streets of Kiev in the final days of the revolution and of 48 pro-Russian protesters in a burning building in Odessa in May, 2014. Those investigations are stalled, and attempts by the victims' lawyers to speed them up have been stonewalled by authorities as some of the suspects in the Kiev shootings are still employed by the Interior Ministry.

Heyns also said Ukraine's Security Service "seems to be above the law." Apart from raiding a number of tech companies in an apparent scare campaign in recent weeks, last weekend the service arrested Gennady Korban, a top lieutenant of oligarch Igor Kolomoisky, who has been resisting the consolidation of power by Poroshenko. The arrest gave rise to accusations of selective justice in the Ukrainian press. Other oligarchs, after all, face no reprisals -- perhaps because they've accepted Poroshenko's dominance.

Two years after the corrupt team of President Viktor Yanukovych fled Ukraine corruption is still rife and the country's intrepid investigative journalists have been especially busy again. Setting the tone is Poroshenko -- the only of the country's 10 richest people to see his net worth increase in the past year -- who seems to have forgotten his promise to sell off his businesses; his bank has only expanded as many others lost their licenses. Poroshenko's and Yatsenyuk's close allies are routinely named in connection with corrupt schemes involving Ukraine's customs service and state energy companies. Sergei Leschenko, Ukraine's best-known investigative reporter, who last year got elected to parliament on Poroshenko's party ticket, on Thursday published a column in Novoye Vremya that succinctly described the current political layout:

The system of checks and balances that has been sold to the Americans isn't working. Instead of keeping an eye on each other, the Poroshenko and Yatsenyuk teams have made a deal. They have divided up spheres of influence and responsibility so they don't get in each other's way and come into conflict.

Americans are highly visible in the Ukrainian political process. The U.S. embassy in Kiev is a center of power, and Ukrainian politicians openly talk of appointments and dismissals being vetted by U.S. Ambassador Geoffrey Pyatt and even U.S. Vice President Joe Biden. "Pyatt and the U.S. administration have more influence than ever in the history of independent Ukraine," Leschenko wrote.

Europeans too are involved in shaping the way Ukraine is governed, not just because they are donors -- the U.S. is more important in that respect because of its influence on the IMF -- but because visa-free travel to Europe is one of Poroshenko's major goals. In his eyes, it would validate his efforts at making Ukraine more European and revive his flagging popularity.

Europe's requirements for the visa-free regime center on Ukraine's seriousness in fighting corruption. The European Union recently refused a request for more funding for the anti-corruption prosecutor's office, because of "concerns raised with regard to some people who participate in the selection" of prosecutors for the office. This is a clear reference to the team of Prosecutor General Viktor Shokin, a Poroshenko appointee and long-time associate, who has been accused of undermining the anti-corruption efforts.

On Thursday, European Commission President Jean-Claude Juncker wrote Poroshenko a letter saying that "progress in reforms in the area of the fight against corruption remains a key priority for achieving visa-free travel" and supplying a long list of reforms Ukraine would need to implement.

All told, Ukraine's war on its past has been even less successful than its military efforts against Russia and its proxies. Too much time has passed since the "Revolution of Dignity" to justify the absence of tangible progress. U.S. and European efforts at external management have largely failed, too: The grip of oligarchs and a corrupt bureaucracy on what's left of the Ukrainian economy has proven too strong, the schemes too entrenched.

Ukrainian civil society is stunted by these powerful vested interests. I doubt it can push the country to a more civilized direction with the usual tools of electoral democracy: The local elections have proven that post-Soviet practices of fraud, bribery and intimidation have not been overcome. There's little will for further upheavals so soon after the revolution and the war in the east. But unless the current political elite finds it in itself to clean up -- a highly unlikely turn of events --Ukraine's history of violent regime change is probably not over yet.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

http://www.bloombergview.com/articles/2015-11-06/unreformed-ukraine-is-self-destructing
 

jouni

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Watching Ukraine and Russia, Belarus has lately looked not so bad country. Russian Gdp per capita is only 8500$ sits comfortably at 72nd place. Some superpower....

It hurts to see Russian tourists coming to Finland, for common man window shopping is the way to go. Few more years and living standards there are at Soviet level...
 

Kshatriya87

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Watching Ukraine and Russia, Belarus has lately looked not so bad country. Russian Gdp per capita is only 8500$ sits comfortably at 72nd place. Some superpower....

It hurts to see Russian tourists coming to Finland, for common man window shopping is the way to go. Few more years and living standards there are at Soviet level...
In my view, if you can de-stabilize a country the size of Ukraine, annex some of it, fight a war half way around the world with the actual so called superpower watching and too scared to do anything about it; You ARE a superpower.
 

Akim

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Even the name of the theme - delusional. It was necessary to create new branch?
 

Cadian

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Fitch Downgrades Ukrainian City of Kyiv's Foreign-Currency IDR to 'D'

(The following statement was released by the rating agency) Link to Fitch Ratings' Report: City of Kyiv - Rating Action Report here MOSCOW, November 11 (Fitch) Fitch Ratings has downgraded the Ukrainian City of Kyiv's Long-term foreign currency Issuer Default Rating (IDR) to 'D' (Default) from 'C'. Under EU credit rating agency (CRA) regulation, the publication of International Public Finance reviews is subject to restrictions and must take place according to a published schedule, except where it is necessary for CRAs to deviate from this in order to comply with their legal obligations. Fitch interprets this provision as allowing us to publish a rating review in situations where there is a material change in the creditworthiness of the issuer that we believe makes it inappropriate for us to wait until the next scheduled review date to update the rating or Outlook/Watch status. In this case the deviation was caused by the missed payment on the city's eurobond. KEY RATING DRIVERS The following are the key drivers for today's rating action and their relative weights: HIGH The downgrade of Kyiv's Long-term foreign currency IDR follows missed payment on the city's USD250m eurobond and the subsequent activation of the cross default clause on the USD300m eurobond. The city introduced an interim moratorium on any payments to its eurobond holders on 6 November 2015. According to the original schedule Kyiv's USD250m eurobond final maturity date was 6 November 2015 and its USD300m eurobond 11 July 2016. Fitch treats the introduction of the interim payment moratorium on the city's eurobonds as defaults in accordance with its distressed debt exchange (DDE) criteria, leading to today's downgrade of the city's Long-term and Short-term foreign currency IDRs to 'D' from 'C'. The introduced payment moratorium will be valid until the eurobonds' conditions are amended and the exchange offer accepted. The right for the city to suspend the repayment of its eurobonds was granted by Ukraine's parliament in May 2015. The city was mandated to extend the maturity of its external debt as part of a broader exercise to support Ukraine's public sector finances and external liquidity following the introduction of the IMF's Extended Fund Facility for Ukraine in March 2015. Additionally, the City of Kyiv extended the maturities of its domestic bonds, which led to the recent downgrade of its Long-term local currency IDR (see 'Fitch Downgrades Ukraine's City of Kyiv Local-Currency IDR to 'RD'' dated 8 October 2015 at www.fitchratings.com). Prior to that Ukraine had missed the payment on its eurobond, which led to a recent sovereign downgrade (see 'Fitch Downgrades Ukraine's Foreign-Currency IDRs to 'Restricted Default'' dated 6 October 2015 at www.fitchratings.com). As the city's all four outstanding bond obligations are in default, the Long-term local currency IDR has also been downgraded to 'D' from 'RD'. Simultaneously Fitch has withdrawn the City of Kyiv's Short-term foreign currency IDR as it is no longer considered by Fitch to be relevant to the agency's coverage because the city is no longer issuing short-term external debt. MEDIUM Fitch expects Kyiv's budgetary performance to remain volatile due to the overall weakness of the sovereign's public finances, lower predictability of fiscal policy and short planning horizon, all exacerbated by a negative macro-economic trend. Fitch expects Ukraine's economy to contract 10% in 2015, negatively affecting the city's fiscal capacity. RATING SENSITIVITIES Fitch will review the city's ratings once the debt exchange is completed and sufficient information is available on Kyiv's credit profile. Kyiv's Long-term foreign- and local currency IDRs will be upgraded after Fitch determines that the exchange has been accepted. The new ratings will be consistent with the city's prospective credit profile. However, the ratings will likely remain low, given high country risks and Ukraine's 'CCC' Country Ceiling.

Read more at Reuters http://www.reuters.com/article/2015/11/11/idUSFit93935220151111#f6h8z4000BJLmDr5.99
 

Akim

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Because there was no a dedicated thread related to Ukraine's deep sh*t adventures. So I have created one.
Be sure to swear? Yes, we are now hard. the economy is weak. Corruption corrodes these countries for 24 years. And immediately all the change will fail. If, after the collapse of the Soviet Union, Ukraine's economy was equal to the French economy, now its economy is at the level of ass. Ukraine was held as a state and as a nation. This is easily seen, since as рrorussian orcs stormed the border detachment in Lugansk.
 

Cadian

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Rofl ! Russians calling others as "failed states".
Specially for you, I will repost here information about the author of the first article:

LEONID BERSHIDSKY

Leonid Bershidsky is a Bloomberg View columnist. He is a Berlin-based writer, author of three novels and two nonfiction books. Bershidsky was the founding editor of Russia's top business daily, Vedomosti, a joint project of Financial Times and the Wall Street Journal, and the first publisher of the Russian edition of Forbes. He also founded the opinion website Slon.ru; ran the business book arm of Russia's biggest book publisher, Eksmo; and worked as managing director at KIT Finance investment bank. He has an MBA from Insead in Fontainebleau, France.
http://www.bloombergview.com/contributors/leonid-bershidsky
 

Gabriel92

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Specially for you, I will repost here information about the author of the first article:

LEONID BERSHIDSKY

Leonid Bershidsky is a Bloomberg View columnist. He is a Berlin-based writer, author of three novels and two nonfiction books. Bershidsky was the founding editor of Russia's top business daily, Vedomosti, a joint project of Financial Times and the Wall Street Journal, and the first publisher of the Russian edition of Forbes. He also founded the opinion website Slon.ru; ran the business book arm of Russia's biggest book publisher, Eksmo; and worked as managing director at KIT Finance investment bank. He has an MBA from Insead in Fontainebleau, France.
http://www.bloombergview.com/contributors/leonid-bershidsky
I have never said Ukraine wasn't a failed state,but Russians almost making fun of them is "too much" i think.
Is Russia so different from Ukraine ? Both are actually corrupt chitholes,semi failed states,almost all ex soviet states are,exepct maybe the baltic countries?
It's like if i'm from Somalia,but i make fun about Greece and laugh at them being or on their way to be a failed state. @arpakola
 

punjab47

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http://thesaker.is/russia-in-an-invisible-war/

Naturally, there is never too much time, and Russia would have preferred to postpone the direct confrontation with the US, which started in 2012-13, by another 3-5 years, or even avoid it altogether, but the diplomacy won 12-15 years for the country – a huge period of time in today’s rapidly changing world.
 

Akim

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Ukrainian tram "Electron" compared to the old Czech tram "škoda"
 

pmaitra

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Ukrainian tram "Electron" compared to the old Czech tram "škoda"
The old tram is blue and yellow, which means "Slava Ukraini."
The new tram is white, which means "surrender?"

:hmm:
 

spikey360

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I have never said Ukraine wasn't a failed state,but Russians almost making fun of them is "too much" i think.
Is Russia so different from Ukraine ? Both are actually corrupt chitholes,semi failed states,almost all ex soviet states are,exepct maybe the baltic countries?
It's like if i'm from Somalia,but i make fun about Greece and laugh at them being or on their way to be a failed state. @arpakola
Says citizen of a country which panders to Muslims who in turn show up on the streets with AK47s and kill hundreds without the french police being able to do anything.
At least in Russia, terrorists are not treated as citizens. France is one of the most idiotic nations.
 

Akim

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At least in Russia, terrorists are not treated as citizens. France is one of the most idiotic nations.
Kadyrov and thousands of militants who fought against Russia in the Chechen wars.

Volgograd 12.2013
 

spikey360

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Kadyrov and thousands of militants who fought against Russia in the Chechen wars.

Volgograd 12.2013
Kadyrov left his terrorist buddies and chose Russia. He maybe a terrorist, but he spreads terror in the hearts of enemies of Russia, not Russian citizens.
 

Akim

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Kadyrov left his terrorist buddies and chose Russia. He maybe a terrorist, but he spreads terror in the hearts of enemies of Russia, not Russian citizens.
He is loyal to Putin until receives tribute from the Kremlin.
 

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