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Ukraine Watch UKRAINE WATCH CEPI’s monthly digest of news and analysis regarding Ukraine provides insights on political developments as well as energy, security and other important issues affecting the country. Join hundreds of policymakers, diplomats, experts, business people, and academic researchers to stay informed! MARCH 2016 . Prime Minister Yatseniuk announces resignation . Dutch voters say ‘no’ to Ukraine’s Association Agreement. Referendum unlikely to stop Ukraine’s integration with EU but sends a ‘worrisome signal’. President Poroshenko under closer scrutiny after ‘Panama Papers’ scandal erupts . Western conditionality instigates slow progress in Ukraine’s anti-corruption reforms . Security situation in East Ukraine deteriorates, conflict resolution in deadlock . Prime Minister. Yatseniuk announces resignation: Prime Minister Arseniy Yatseniuk has finally announced his long awaited resignation. In his statement Yatseniuk confirmed that his ‘Popular Front’ will remain part of the pro-Western parliamentary coalition. A highly unpopular figure, Yatseniuk remained in office after a failed no confidence vote in February. Ukraine’s Western allies have prioritized political stability for the sake of consistent reform in Ukraine and were, therefore, wary of the political turmoil that was likely to accompany a spontaneous change of cabinet, or worse, early elections. Observers, thus, suggested that the failed vote was staged by the major players in parliament who heeded the advice of the West not fire Yatseniuk without a clear strategy on the future coalition. For the past weeks the potential coalition and cabinet lineup have been subject to an active discussion. Parliament Speaker Volodymyr Groysman, who is backed by the pro-presidential Petro Poroshenko Block, is presently seen as Yatseniuk’s likely successor in office. Dutch voters say ‘no’ to Ukraine’s Association Agreement. Referendum unlikely to stop Ukraine’s integration with EU but sends a ‘worrisome signal’: According to the preliminary results of the referendum, 61.1% of the Dutch voters rejected Ukraine’s Association Agreement with the European Union. The low turnout of 32.2% was just above the threshold. The referendum was organized by Euroskeptic forces and has arguably reflected the growth of a broader anti-EU sentiment in the Netherlands. The Dutch government placed itself in the ‘YES camp”, but, nevertheless, promised to heed the referendum results, legally not binding though they are. Key Western actors have expressed their disappointment with the Dutch vote. Yet, the referendum is unlikely to bar Kyiv from developing closer ties with Europe. The Dutch Prime Minister has already confirmed his commitment to pursuing the visa free regime for Ukrainians. And as European Parliament representatives stressed, the fate of the Ukraine-EU partnership must be decided by all 28 member states and ‘not 20% of voters of one Member State, representing 0,6% of the entire EU population’. Experts also predicted that the legal implications of the Dutch decision would be limited due to the actual distribution of competences between the EU and member states. In practice it would, thus, not seriously affect the implementation process. Nevertheless, senior experts regard this victory of the Dutch Euroskeptics as a major propaganda triumph for the Kremlin, who has sought to capitalize on Europe’s internal rifts. Security advisors to Ukraine’s President argue the referendum is part of Russia’s ‘hybrid warfare’ strategy that Moscow carries out through its ‘useful idiots’ inside the EU. The Euroskeptic rhetoric on Ukraine is, indeed, known to have borrowed propaganda clichés from Russia, and Western investigative journalists claim to have traced connections between the recent anti-Ukrainian campaigns in the Netherlands and the so-called internet ‘troll factories’ in Russia. Yet, it is also true that Ukraine’s present international image as being ridden by corruption and too slow in reform does not help win public support for the EU-Ukraine partnership. The referendum was a worrisome signal and we have no choice but to demonstrate to the international community that we are doing our homework, Ukraine’s Parliament Speaker Volodymyr Groysman admonished. President Poroshenko under closer scrutiny after ‘Panama Papers’ scandal erupts: President Poroshenko has recently come under attack in the Western media as The New York Times editorial board accused him of ‘accepting to continue corruption’ acting on a short-term political calculus. (The Ukrainian President’s immediate reaction to the op-ed sounded somewhat à la Kremlin, as he explained these corruption allegations as part of a ‘hybrid war’ waged against him.) Poroshenko is likely to face more blame as the Panama Papers scandal unfolds, unearthing more ties with offshore companies. Owning property abroad may not be a crime per se, and Poroshenko is claiming that offshore companies were used to prepare his assets for sale in fulfillment of his earlier promises. Yet, regardless of the legal aspect, Poroshenko is likely to bear reputational costs at home, as an asset sale through offshore companies reeks of tax evasion schemes, Ukrainian political journalist and member of Parliament Mustafa Nayem points out. Ukrainian media report that the majority of political groups in Parliament favor creating a parliamentary committee to investigate the case. Western conditionality instigates only slow progress in Ukraine’s anti-corruption reforms: The West does not cease to remind Kyiv that eradicating corruption in Ukraine is a vital precondition to receiving international assistance. A ‘new substantial effort’ in fighting corruption is needed to secure a support program from the IMF, its managing director Christine Lagarde warned. The progress in anti-corruption reforms, however, if any, has been a slow and painful one. It seems that in March Kyiv finally succeeded in meeting the EU’s preconditions for a visa free travel agreement. Following Poroshenko’s visit to Brussels Ukrainian media cited the European Commission President Juncker, who said the Commission is ready to introduce the proposal on visa liberalization, as well as the President of the European Parliament Schultz who committed to backing it. It took some time for Kyiv, though, to convince the EU that it had really been doing its homework. An earlier version of the bill on electronic income statements fell under sharp criticism. Brussels had to remind the Ukrainian ruling class that its attempts to emasculate the anti-corruption laws would cause visa liberalization to be postponed. Likewise, the creation of the National Agency for Prevention of Corruption (NAPC) has long been a sore point that jeopardized the Ukrainians’ visa free travel. On the eve of Poroshenko’s visit to Brussels the selection committee had still been failing to agree on NAPC members, and the President had to intervene to make sure he would not come empty handed. Civil society representatives in the selection committee accused civil servants of sabotaging the creation of NAPC. Thus, tacit resistance to anti- corruption reform in Ukraine remains high. Ukraine’s existing anti-corruption institutions suffer from multiple weaknesses (including information leaks). Though anti-corruption rhetoric is the trend with many members of parliament, political backing tends to evaporate when it comes to implementing actual measures, head of the National Anti-Corruption Bureau complains. It seems, reformers themselves can also come under attack. Before he was finally sacked, the infamous General Prosecutor Shokin fired his deputy David Sakvarelidze who tried to uncover corruption in his boss’s department. Subsequently, Sakvarelidze was himself interrogated by the General Prosecutor’s Office. Security situation in East Ukraine deteriorates, conflict resolution in deadlock: Conflict resolution in East Ukraine continues to be locked into the same dilemma. While the West insists on elections in the separatist controlled regions, Ukraine adopts a ‘security first’ approach. Representatives of the US admit that it would be unfair to expect of Ukraine to stick to its commitments so long as it does not control the Russia-Ukraine border and Ukrainians continue to die at the contact line. (The total count of casualties reported for March by Ukrainian armed forces amounts to 19 dead and 128 wounded - despite a ceasefire agreement). Europeans have been growing impatient over the lack of progress in the Normandy Format. The Minsk Agreements are still the best chance of dealing with the conflict, Germany’s Foreign Minister Steinmeier has insisted, however. For European policy makers, who are short on instruments to influence the situation – and, above all, Russia’s behavior - promoting the elections may be a way to put a good face on the sorry business - as some Ukrainian commentators suggest - as well as to prevent the return of large scale military action - the scenario that the EU fears most of all. First hand witnesses report that the security situation at the contact line has been deteriorating. Ukrainian military accuses the militants of provoking it to return heavy armament to the contact line, including tanks and mortars, banned by the Minsk Agreements. OSCE reports violations of the respective clause on both sides. Experts are suggesting an international police mission, as a tried and tested solution for the security dilemma in conflict resolution. The militants oppose the idea and so does Russia. Russia continues to play a central role in the conflict
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