Inside

October 16, 2014 №33 Content

The Government Policy ...... 1

The President summed up the peace plan implementation ...... 1

A breakthrough in anti-corruption legislation ...... 3

Economic Situation ...... 5

Donbass losses from Russian aggression ...... 5

Separatists seek “energy autonomy” ...... 7

Political competition ...... 9

Diversification “Privat-style” ...... 9

Increasing role of Serhiy Lyovochkin ...... 10

Inside Ukraine 33 The Government Policy Experts’ criticism regarding presidential adminis- This issue can be resolved by identifying and punish- tration’s mistakes in information policy on Donbas ing those responsible for provocations and unrest. issues has brought positive results. Communication The has adopted a package of between the President and citizens became more anti-corruption laws proposed by Petro Porosh- regular. Recently, he has summed up the first month enko and . The package includes of his peace plan implementation. Stopping the en- laws on prosecutor’s office, determining final ben- emy along the frontline and decrease in the number eficiaries of legal entities, anti-corruption strategy, of casualties have become the key achievements of the National Anti-corruption Bureau and National the plan. Peaceful settlement of the conflict remains Commission for the Prevention of Corruption. On the only possible option for the President. the same day, the President established the National Nevertheless, the President took several regional Council for Anti-Corruption Policy with similar trips in order to inspect the level of defense capabil- functions as those of the National Commission. ity and made several appointments in security block. This testifies that the President and the Prime Min- ’s attempts to destabilize the situation in ister will be trying to personally control the issue of using protests of radical groups and law enforcement combatting corruption. This also confirms the im- officers can become a new challenge for the President. portance of this issue for Ukraine. The President summed up the peace plan implementation

On October 12, 2014, in his video address to positive. Such a communication will enable Petro citizens, summarized the pre- Poroshenko to mobilize support groups for his ini- liminary results of the peace plan implementation tiatives, take the wind out of his critics’ sails, coun- and outlined the next steps of the Ukrainian au- teract Russia’s attempts to destabilize situation in thorities in Donbas. The The President Kyiv, radical groups’ activities and anti-govern- fact that communication improves ment protests. between the President communication As a result of Minsk agreements, according to and the society becomes with society the President, the enemy was stopped all along the more regular is extremely front, ceasefire at a considerable length of the con-

Inside Ukraine 33 1 The Government Policy tact line was achieved and the number of casual- of State Border Guard Service Mykola Lytvyn has ties reduced. 1500 Ukrainian military were released been dismissed. His dismissal was required by from captivity over one month of the nominal truce, civic activists since the The President made a partial rotation of military personnel was carried beginning of summer, a number out, military units were reinforced by equipment when border of appointments and several lines of defensive structures along the guard detachment had in security block contact line were established in Donbas. As a posi- been captured and un- tive result, the President also mentioned restoration impeded armament’s supply to militants through of infrastructure and organization of social security Ukraine-Russia border had been organized in this in liberated cities. region. Another dismissal concerns the Ministry Petro Poroshenko appointed veterans of law en- of Defense, where was replaced forcement structures and Olek- by , head of the National Guard. It sandr Kikhtenko as heads of Luhansk and should be noted that the National Guard is part of regional administrations In Donbass the Ministry of Internal Affairs, and not the Min- respectively. Taking into governors will istry of Defense. One of the reasons for such ap- consideration threats focus on the issues pointment may be problems with material provi- of terrorist attacks and of citizens’ security sion of the Ukrainian army, while these issues were sabotage activities in the successfully solved in the National Guard. liberated cities and continuation of armed conflict On the eve of the appointment of a new Minister in some front areas, providing law enforcement of- of Defense, some units of the National Guard, which ficers with posts in local executive authorities is a used to be a part of internal forces and participate in quite clear decision. This decision resembles the the Maidan confrontations, held a protest in front of establishment of military commandant’s offices in the President’s Administration, demanding demo- front-line zones. For the effective administration bilization. The soldiers returned to their permanent of the territory under control of Ukrainian au- stationing, but on the next day, there were clashes thorities, it is reasonable to set new borders of ad- between radical groups and police officers near the ministrative units in Donetsk region as it has been Verkhovna Rada. These two episodes testify Russia’s recently done in Luhansk region. attempt to undermine the Russia tries As for the next steps in peace settlement, Petro situation in the country to destabilize Poroshenko stressed the need for a complete cease- by inciting anti-govern- situation in Kyiv fire, establishing 30-km buffer zone and regaining ment sentiment. control over Ukraine-Russia border by the Ukrai- In order to counteract such a scenario, Petro nian side, including using drones, and increasing Poroshenko needs effective security structures the number of OSCE monitors to 1,500 people. As without Kremlin’s agents of influence. Any offenc- part of Poroshenko’s peace plan, local election in es that can lead to destabilization of the situation Donbas should be held on December 7, 2014 in in the country must inevitably lead to punish- accordance with the Ukrainian legislation and par- ment in accordance with applicable law. The fact ticipation of OSCE observers. At the same time, the that many law enforcement officers, prosecutors President stated that Ukraine would not recognize and judges have not been punished for fulfilling the results of the so-called election in separatists’ criminal orders during contributed republics scheduled for November 2, 2014. to problem freezing. As a result, there is a stra- The President also made a number of appoint- tum of law enforcement officers that can be used ments in security block. is appointed by the Kremlin for its own purposes in the fight as a head of the Intelligence Committee. The Head against the Ukrainian government.

2 Inside Ukraine 33 The Government Policy A breakthrough in anti-corruption legislation Fighting corruption is a system reform that will of competitive selection. The Commission mem- affect all aspects of society: public administration, bers are obliged to undertake a special assess- law enforcement system, Anti-corruption ment and not to belong to government bodies of economy, and even de- reform will political parties for at least one year prior to the fense. Its high priority influence all appointment. The Chairman of the Commission has been repeatedly em- spheres of life is elected from among its members for two years. phasized by the President The objectives of new body are to analyze fighting and Prime Minister, as well as by all the principal corruption process in Ukraine, develop anti-cor- foreign partners of Ukraine. The adoption of anti- ruption strategy, conduct research on corruption, corruption laws on October 14, 2014, provided a le- introduce the unified register of officials’ declara- gal framework for combating corruption. Now ev- tions and people who have committed corruption erything depends on how effectively these changes offences, and cooperate with whistle-blowers on will be implemented in life and who will head the corruption cases. newly established institutions responsible for deal- On the same day the President signed a De- ing with corruption. cree on the establishment of the National Council The Verkhovna Rada adopted laws on anti- on the Anti-Corruption Functions corruption strategy for 2014-2017, on the system Policy as advisory body of anticorruption of specially authorized subjects in the sphere of to the President. Sig- commission corruption counteraction, on the National Com- nificantly, the functions and council overlap mission for the Prevention of Corruption, and on of the National Council disclosure of final beneficiaries of the legal entities. and the National Commission duplicate in a lot of The success of the fight against corruption will cases. The bodies differ in formation mechanism also be influenced by adopted law on the prosecu- and accountability: the National Commission re- tor’s office, which was passed in the first reading ports to the Cabinet and selection of the mem- in October 2013 and then was defined as one of bers is based on competition, while the National the prerequisites essential for signing the Asso- Council members are appointed by the President ciation Agreement with the EU. Even after Victor and accountable to him. The National Commis- Yanukovych’s escape and signing the Association sion mainly aims at submitting proposals on anti- Agreement, the reform on prosecutor’s office was corruption strategy to the President, performing postponed for a long time due to the prosecutorial system analysis of anti-corruption efficiency in lobby resistance. The law The prosecutor’s Ukraine, submitting proposals on the improve- deprives the prosecutor’s office lost function ment of interaction between the subjects that fight office of general supervi- of general against corruption, evaluating the progress in the sion, which allowed the supervision implementation of recommendations from inter- Office to carry out in- national organizations on combating corruption spection of any business before, thus, significantly and providing scientific and methodological sup- increasing prosecutors’ punitive actions and cor- port for corruption elimination. ruption risks. The above mentioned National Council and Na- The Verkhovna Rada supported the establish- tional Commission are not included in the system ment of the National Commission for Prevention of specially authorized subjects in the sphere of cor- of Corruption, which will become the central ruption counteraction which includes prosecutors, executive body responsible for formulation and the National Anti-Corruption Bureau and special implementation of state anti-corruption policy. units of Ukrainian Ministry of Internal Affairs The Commission is appointed and accountable which combat organized crime. The activities of all to the Cabinet of Ministers. It consists of five the subjects are coordinated by Prosecutor-General members appointed for four years by the results and authorized prosecutors.

Inside Ukraine 33 3 The Government Policy

The Anti-Corruption Bureau is a law enforce- The Anti-Corruption Bureau carries out search ment body that consists of one central and seven work and pre-trial investigations of criminal vio- regional offices which can hire up to 700 employ- lations within its jurisdiction, verifies the officials ees. Political parties are prohibited. The Director and candidates for public positions, and cooper- of the Bureau is appointed for seven years and dis- ates with whistle-blowers. A considerable advan- missed by the . The competi- tage of the law is providing protection of those tive selection of candidates for the position is held who report on corruption incidents. by the commission with The Anti-Corruption Despite all the accusations that the adoption of three people from the Bureau is anti-corruption laws was imposed by the require- President, three people a non-partisan ments of external donors and the desire of pro- from the Prime Minister law enforcement governmental forces to “hype themselves” on the and three more from the body anti-corruption topic before elections, it is a con- Verkhovna Rada. siderable achievement for Ukrainian society. The The Bureau executives have to go through a anti-corruption laws provide a legal framework special assessment and psychophysiological inter- to combat corruption and create new apolitical view with the polygraph test. They are forbidden institutions responsible for this area. After the to be members of political parties and be involved elections it will become clear how the laws will in investigations if there is a conflict of interest. At be implemented and who will lead new institu- the same time, the internal control units monitor tions. However, the key and measure the income of civil servants against point is that the basis of Adoption their lifestyle. In case of discrepancy, a civil ser- combating corruption of anti-corruption vant is liable to disciplinary responsibility. Office has been laid and insti- laws is a victory staff is provided with high salaries and significant tutional transformation for the society social packages in order to decrease corruption has started. risks in the agency.

4 Inside Ukraine 33 Economic Situation The military actions in Donbass led to significant going on in spite of the nominal cease-fire. A total material losses, namely the destruction of transport estimate of direct losses may reach USD 10 billion. and social infrastructure, housing and municipal ob- Leaders of the Luhansk People’s Republic and jects, as well as industrial assets. Ukraine has also in- Donetsk People’s Republic negotiate with Russia curred heavy indirect economic losses related to the on direct gas and electricity supply with the aim of suspension of economic activities in Donbass and ensuring “energy autonomy of Donbass”. Coal defi- the disruption of industrial supply chains that link cit in Ukrainian energy “basket” leaves Ukraine no Donbass with other Ukrainian regions. An estimate other choice but to purchase extra fuel from Russia. of direct and indirect losses is hardly possible due to In addition, Ukrainian government allowed indus- incessant military actions in ATO zone, which are trial companies to import gas independently. Donbass losses from Russian aggression

Military actions in Donbass, which began in mid- rial losses in Donbass was needed. To make an es- April 2014, led to both heavy human and material timate of losses in Donbass under incessant hostili- losses, including the destruction of infrastructure, ties is extremely difficult, as almost every day new housing and industrial complex. It was repeatedly housing, infrastructure and industrial objects are stated that in order to draw up an estimate of costs destroyed as a result of shelling. Accordingly, the for Donbass restoration It is impossible to preliminary estimate of losses is rather relative. It and ensure financial and estimate losses in is also very difficult to evaluate indirect losses from technical assistance, the Donbas unless the the suspension of economic activity in territories exact estimate of mate- shelling stops where anti-terrorist operation was conducted.

Inside Ukraine 33 5 Economic Situation

The preliminary estimate of losses is constantly cocking coals) and iron ore. updated, with the figures increasing. In particular, The industrial recession in these two regions was in mid-September, the Deputy Prime Minister of the biggest one among all other Ukrainian regions Ukraine Volodymyr Hroysman stated that as many and had a negative impact on general industrial as 4500 houses, 4700 power supply facilities, 217 output in Ukraine. According to the State Statistics education facilities, 132 industrial facilities, 45 Service of Ukraine, industrial production dropped medical centers have been destroyed. A total esti- by 58.7% in Donetsk region, whereas in Luhansk mate put the amount of direct losses at UAH 11.88 region it fell by 85%. However, the Statistics Service bln. of Ukraine pointed out that the figures for Luhansk In an official statement last week, the Head of region were not accurate and needed verification. the State Agency for Donbass restoration Andriy As regards economic sectors, the biggest fall was Nikolayenko announced that a total amount of reported in coal industry, coking coal production, losses resulting from the destruction of social and mechanical engineering, metallurgy, chemical, and municipal infrastructure was worth UAH 20 billion. light industry. However, Mr Nikolayenko did not include figures In general, the main armed conflict-related costs for industrial destruction as well as private prop- may be divided into the following groups. erty destruction, which is now difficult to estimate. Direct losses: According to preliminary estimates of the Min- • The destruction of housing and municipal istry of economic development and trade, about facilities; 80% of economic potential has been destroyed in • The destruction of transport infrastructure Donetsk and Luhansk regions. (roads, railway lines, airports, electric power Unemployment rate rose from 50% for big com- transmission); panies to 80-90% for small and medium enterprises, • The destruction of industrial objects, part which is indicative of nearly complete shutdown of of which is either completely destroyed or SMEs in conflict zone. In 90% of MSEs cannot be restored due to special technological particular, in Donestk, suspended their processes; more than 90% of hotels, activity in conflict Indirect losses: restaurants and trade zone • Losses incurred due to the suspension of businesses suspended economic activity in affected territories; their economic activity. • Losses caused by the disruption of industrial An interesting question is the contribution supply chains; of Donestk and Luhansk regions to Ukrainian • The loss of investment attractiveness of the economy. The aforementioned regions occupy 9% region in particular and Ukraine in general of Ukrainian territory, their economic output ac- It should be noted that the costs for Donbass counted for 16% of Ukrainian GDP, 25% of indus- reconstruction should exceed the amount of the trial production, 25% of Ukrainian exports. From direct losses, as infrastructure as well as industrial the standpoint of budget revenues, Donetsk and objects were character- The wear of many Luhansk regions were ized by a large degree of industrial facilities subsidized regions. Ac- Donetsk and wear. Wear and tear of before the ATO cording to the IMF, taxes Luhansk regions many industrial compa- was estimated collected from Donestk are dependent nies in the regions prior at 60-80% and Luhansk regions ac- on subsidies to ATO was estimated at counted for 11% of state budget tax revenues. State 60%. Donbass companies produce uncompetitive subsidies for coal industry account for about 1% of products for relatively narrow market — a consid- Ukrainian GDP. In turn, the conflict-stricken zone erable part of their products was exported to Rus- occupies around 3% of Ukrainian territory, it ac- sia. However, in the near future the Russian market counts for 8-10% of Ukrainian GDP and about 15% will be closed for these products. In January-Au- of industrial output. The most important indus- gust 2014, Ukraine reduced its export to Russia by trial resources that link ATO zone with the rest of 25.5%, by the end of the year this figure may reach Ukrainian industrial complex are coal (black and approximately 35-40%.

6 Inside Ukraine 33 Economic Situation

The restoration of Donbass enterprises will not innovative technologies, which will allow for in- help them function effec- The restoration creased competitiveness ability of the industrial tively. Donbass compa- of Donbass should complex and better investment attractiveness of the nies need modernization be accompanied region. According to various experts, the situation and partial re-orientation by large-scale in Ukraine is unique in international practice. Thus, towards other markets. modernization of Ukraine needs to search for new models for restora- Thus, it is reasonable to industrial complex tion of affected territories and social adaptation of implement energy ef- and infrastructure internally displaced persons. ficient, ecological and Separatists seek “energy autonomy” While Ukrainian authorities are defending na- tioning of Ukrainian natural gas transport system. tional interests in protracted negotiations with The gas pipeline “Souyz”, which provides 25% of Russian “Gazprom”, the so-called Donetsk People’s transit Russian gas to Europe, runs through the Republic and Luhansk People’s Republic are en- conflict zone. In addition to gas transit to Europe, gaged in their own talks with Russia over the issues this gas pipeline ensures gas supply to many Ukrai- of gas supply. It is unclear under what conditions nian regions. In conflict zone there are Verhunsk and, more importantly, who is going to pay for Rus- and Krasnopilsk gas storage facilities, which allow sian gas supply to separatists. However, there are for storing 200 mln cubic meters of gas and which two possible scenarios. According to the first, Rus- were used to supply gas to Luhansk and Donetsk sia will keep increasing Ukrainian gas debt by add- regions. There are also 71 gas-distribution stations ing the costs of hydrocarbons delivery to Donetsk in the rebel-held territory. It leaves no doubt that People’s Republic and Luhansk People’s Republic. terrorists may block the stations at any time, which Under the second scenario, the Kremlin will be will allow Russian “Gazprom” accuse Kyiv of si- supplying gas to rebel-held regions as humanitar- phoning off transit gas and question the security of ian aid. Why would Russia need this? Firstly, Russia gas transit through Ukraine. will use it as an internal factor for upholding Putin’s On October 8-9, 2014, following the massive approval ratings, as Russian president may be seen shelling of Luhansk thermal power station in the by Russians as the saviour of Ukraine’s East from town of Shchastya, two transport blocks were dam- humanitarian crisis and Direct dependence aged. Severodonetsk, Rubizhny, , Pere- energy hunger. Secondly, of Donetsk People’s valsk, Bilokuranivski and Lusychansk districts were the direct dependence of Republic cut off from electricity. Today, Shchastya thermal Donetsk People’s Repub- and Luhansk power station remains the only source of energy lic and Luhansk People’s People’s Republic for the entire region. Terrorists’ fiendish plan is to Republic on Russian gas on Russian gas destroy this strategic object to paralyze big plants will tighten Russia’s grip will make them and coal mines, which operate on the territory on these Eastern Ukrai- more manageable controlled by Ukrainian army. At the same time, nian puppet “republics” . the leader of Luhansk People’s Republic Ihor Plot- According to the press secretary of the National nytskyi announced his plan to start the construc- Security Council of Ukraine, the Donetsk People’s tion of transmission lines from Russia. Republic leadership is looking for possibilities to Due to the military actions in Ukraine’s East, connect distributing lines of the region to Russian 80% of coal mines do not function. For this rea- gas supply lines by disconnecting northern regions son, most thermal power stations and power plants of Luhansk region which are controlled by Ukrai- experience sharp gas deficit and are actually on nian army. Theoretically, separatists have a chance the verge of their complete shutdown. Though the to agree with the Kremlin on direct gas supply and Ministry of energy and coal of Ukraine decided to secure “energy autonomy of Donbas”. However, import coal from South Africa and Poland, coal the intentions of separatists threaten stable func- deficit is still at a level of 5 million tons. Russia

Inside Ukraine 33 7 Economic Situation

has raw materials for Ukrainian energy producers. company enters into agreement with Russia, than Energy deficit makes national private energy pro- the transit agreement with “Ukrtransgas” is signed, ducers purchase extra coal from Russia. As a result, and later on relevant agreements are concluded Ukrainian energy holdings are forced to finance with regional or town gas distribution companies. Russian coal industry, while Russia deliberately de- Though the energy consumption of industrial stroyed Ukrainian indus- Ukraine is planning enterprises reduced by 20%, in view of the exist- try. Moreover, proceeds to purchase extra ing situation and limited reverse gas supply from from coal import may be coal from Russia Europe, Ukrainian government cannot meet the used for financing terror- energy needs of industrial enterprises. The permis- ists in Eastern Ukraine. sion for industrial enterprises to solve issues related On October 7, at the extended meeting of Ukrai- to short-term extra energy supply independently nian government Prime Minister Arseniy Yatseniuk (tactical move) is acceptable, as it will allow for pre- announced that the government would not impede venting the shutdown of enterprises and ensuring independent gas imports by industrial enterprises the full operating cycle as well as social stability in (earlier, all imported gas belonged to the NJSC the region. However, given the ongoing hybrid and “Naftogaz”). According to NJSC “Naftogaz”, the informational war against Ukraine, there is a danger company is ready to provide gas supply transport that Russia might use en- The government infrastructure to companies in compliance with ergy factor as an instru- will not impede Ukrainian legislation and European energy regu- ment to discredit Ukrai- independent gas lations. Under such circumstances, the single gas nian central authorities import by industrial supplier for energy demanding enterprises is Rus- in the eyes of Southern companies sia. The mechanism of cooperation is simple: the and Eastern Ukraine.

8 Inside Ukraine 33 Political competition During elections tradition- block” party lists. At the same time the largest stake ally invest in various political projects in order to se- is placed on Radical Party of , popu- cure their political and economic interests in future. larity of which started decreasing after information Ihor Kolomoikyi and Serhiy Lyovochkin come to attacks of Kolomosikyi’s team. the front in this electoral campaign. Though Kosty- While forming a parliamentary majority, Pet- antin Zhevago, Ihor Yeremeyev and Viktor Pinchuk ro Poroshenko will have to level the interests of may potentially get 3-5 parliamentary seats, their Serhiy Lyovochkin and Ihor Kolomoiskyi. Mean- influence will be considerably lower. while, society wants both politicians to become Ihor Kolomoiskyi’s team focused on elections more public figures, with a clear presentation of in the districts and may influence up to 20-30 MPs the vision how they see development of Ukraine in the next Verkhovna Rada. Serhiy Lyovochkin and their place in Ukrainian politics. It may be switched to independent party projects. People, achieved only when each of the oligarchs focus affiliated with the former head of presidential ad- on one political project instead of investing into ministration, are present in the top of “Block of several projects of different ideological polarity, Petro Poroshenko”, “”, “Opposition which is currently the case in Ukraine. Diversification “Privat-style”

Having prevented separatist scenarios in Dni- Ukraine decided to place his stake on different propetrovsk region and contributed a lot to fight parties. He delegated his representatives to “Block against terrorists and Russian soldiers during of Petro Poroshenko” and “People’s Front” and ATO, Ihor Kolomoiskyi’s team managed to in- nominated a number of strong candidates in ma- crease their political capital a lot. Influence of so joritarian districts. In general, Ihor Kolomoiskyi called “Privat” group increased so much that most may get an opportunity to influence 20-30 MPs in observers expected Kolomoiskyi to create his own the future parliament. political party. However, Ihor Kolomoiskyi’s Dnipropetrovsk is a basic electoral region for head of Dnipropetrovsk team managed the group. Out of 17 electoral districts in the region regional state adminis- to increase their Ihor Kolomoiskyi’s people may win in 11: three of tration and one of the political capital a lot them were nominated by “Block of Petro Porosh- richest businessmen in enko”, five are independent, and other three are

Inside Ukraine 33 9 Political Competition incumbent MPs from “Economic Development” Ihor Kolomoiskyi has a hidden reserve of influ- group headed by Vitali Khomutynnik. Ihor Kolo- ence, which lies in the fact that 23 MPs from “Eco- moiskyi is believed to have influence on this group. nomic Development” group will participate in the Kolomoiskyi’s team also nominated its majori- elections. Ihor Kolomoiskyi has a positive track re- tarian candidates in the regions where “Privat” has cord of cooperation with this group. large enterprises — Volyn and Ivano-Frankivsk. Ihor Kolomoiskyi placed stake on pro-government Four representatives of the group may win here. “Block of Petro Poroshenko” and “People’s Front” as Ihor Kolomoiskyi has ties with three candidates well as on majoritarian districts. Usually, MPs who in the top 100 of “Block of Petro Poroshenko”: Ihor win under FPTP system join pro-presidential major- Palytsia (33 place), Andriy Bohdan (74 place) and ity. It means that in mid-term “Privat” will continue Vyacheslav Fridman (99 place). In “People’s Front” supporting the President’s Kolomoiskyi placed the affiliation may be tracked with two candidates: policy, at the same time stake on pro- Yuriy Bereza (10 place) and Yuriy Savchuk (22 reserving the space for government parties place). Pavlo Kravchenko, representative of “Privat” maneuver through their and majoritarian group, got 28 place in “Strong Ukraine” list. majoritarian MPs. MPs Increasing role of Serhiy Lyovochkin At 2012 parliamentary campaign so called “gas project. Representatives of volunteer battalions group” of Lyovochkin, Boyko and Firtash focused may become an exception as they are inclined to a on nominating candidates in majoritarian districts. more independent play. Their quota in Party of the Regions list was insignifi- Serhiy Lyovochkin participates in the elections cant, but representatives of the group automatically as No. 12 of “Opposition bloc”. This reincarnation received high positions in the executive branch. At of Party of the Regions has rather low chances to the same time, in 2012 journalist tracked relations make it to the parliament. Serhiy Lyovochkin between Serhiy Lyovochkin and people in the top However, if they manage is No . 12 in of “UDAR” party list. to surpass 5% threshold, “Opposition block” At the current parliamentary elections Ser- it will give them 13-15 list hiy Lyovochkin is associated not with individual MP seats. Two options MPs, but with whole party projects, the major of are possible: either Serhiy Lyovochkin is confident which is Radical Party of Serhiy Lyovochkin that this party will get to the parliament or through Oleh Lyashko. The party is associated with presence in the party list he wants to distract public reached the peak of its a number of party attention from other projects of his. It is likely that popularity in July 2014 projects both motivations may take place. when ATO entered its ac- “Opposition block” is headed by , tive phase. After the cease-fire was announced in an affiliate of former head of presidential adminis- September 2014, it switched to the topics of fight tration. Party of Development of Ukraine became against oligarchs and popular lustration, but the an organization spine of a new project. Creation public gets tired of populism. It resulted in the drop of Party of Development was supervised by Yuriy of Radical Party rating. One of the reasons for such Miroshnychenko and Serhiy Larin, who are also as- trend was a powerful information campaign of Ihor sociated with Serhiy Lyovochkin and got places in Kolomoiskyi’s media empire against Oleh Lyashko the top of “Opposition block” list. Quarter of the and Serhiy Lyovochkin. With current rating of 8% top 20 in the block list may be associated with the and downward trend Radical Party may count on former “gas group”. the faction of 20-30 MPs. It is a serious argument in The group has a powerful presence in “Strong negotiations with Petro Poroshenko. Besides, most Ukraine” of Serhiy Tyhypko. This party has bet- of the candidates in the list are not public figures. ter chances to get to the parliament than “Op- Therefore, they may become an obedient tool in position block”. As both parties play on the same securing interests of the mastermind behind this electoral field, their confrontation has got more

10 Inside Ukraine 33 Political Competition intensive recently. One of “Strong Ukraine” lead- Some of “gas group” representatives run in ma- ers is , who is an inde- joritarian districts, but their number is much small- pendent politician and businessman, but always er than in 2012. had a good relationship with Serhiy Lyovoch- If all the stakes of Serhiy Lyovochkin play, he may kin. In the top of “Strong Ukraine” list journal- potentially influence 50 MPs in the future parliament. ists identified four people associated with Valeriy As the politician supports projects with different ide- Khoroshkovskyi and three people associated with ological polarity, he may get an opportunity to influ- . ence both pro-government The politician will MPs, who were in “UDAR” party list in 2012 as and opposition parties. It have influence remote associates of Serhiy Lyovochkin, are present strengthens already influ- on both pro- in top 100 of pro-presidential “Block of Petro Po- ential positions of Serhiy government and roshenko”. Five candidates of this kind were nomi- Lyovochkin in Ukrainian opposition parties nated under “UDAR” quota. politics in the long term.

Inside Ukraine 33 11 The aim of the publication is to provide objective information on current political events in Ukraine and thorough analysis of major tendencies in domestic politics. Such analysis will assist in setting priorities in the process of implementing reforms in Ukraine and in evaluating quality of state decisions from the viewpoint of their impact and sustainability. Special attention is paid to evaluation of political competition in Ukraine and ability of key political players to address challenges.

@2014 International Center for Policy Studies (ICPS) If citing please give reference on the ICPS

Idea of the project: Vira Nanivska

Responsible for the project: Iaroslav Kovalchuk

Responsible for the chapters:

The Government Policy — Iaroslav Kovalchuk Economic Situation — Vasyl Povoroznyk Political Competition — Iaroslav Kovalchuk

Team of ICPS experts: Vira Nanivska, Iaroslav Kovalchuk, Vasyl Povoroznyk, Angela Bochi, Anatoliy Oktysyuk, Olena Zakha- rova, Volodymyr Prytula, Vasyl Filipchuk

Inside Ukraine 33