UKRAINE CONFIDENCE BUILDING INITIATIVE II SEMI-ANNUAL REPORT APRIL 2020 – SEPTEMBER 2020 SWIFT IV IQC AID-OAA-I-14-00006 TASK ORDER AID-OAA-TO-17-00009 October 2020 This publication was produced for review by the United States Agency for International Development. It was prepared by Chemonics International Inc. The author’s views expressed in this publication do not necessarily reflect the views of the United States Agency for International Development or the United States Government. CONTENTS ACRONYMS II PROGRAM DESCRIPTION 1 UCBI II PROGRAM AREAS 1 UKRAINE NATIONAL AND REGIONAL COUNTRY CONTEXT 3 NATIONAL 3 REGIONAL 6 ACTIVITY HIGHLIGHTS 11 OBJECTIVE 1: BUILD ACCEPTANCE OF A DIVERSE UKRAINE 11 OBJECTIVE 2. INCREASE CONFIDENCE IN POSITIVE, DEMOCRATIC CHANGE 14 OBJECTIVE 3. INCREASE MEDIA NARRATIVES ABOUT UNITY AND POSITIVE CHANGES 24 PROGRAM EVALUATION 31 1 UKRAINE CONFIDENCE BUILDING INITIATIVE II SEMI-ANNUAL REPORT, APR 2020 – SEP 2020 ACRONYMS ASC Administrative Service Center ATC Amalgamated Territorial Community BUR Building Ukraine Together CATI Computer-assisted telephone interviewing COVID-19 Coronavirus Disease 2019 DDGS Direct Distribution of Goods and Services EU European Union EECP Entry-Exit Checkpoint FAA Fixed Amount Award FGD Focus Group Discussion IDP Internally Displaced Person GCA Government Controlled Area KPI Key Performance Indicators M&E Monitoring and Evaluation MP Member of Parliament NABU National Anti-Corruption Bureau NBU National Bank of Ukraine NGCA Non-Government Controlled Area NGO Non-Governmental Organization OSCE Organization for Security and Cooperation in Europe OTI Office of Transition Initiatives SBU Security Service of Ukraine SCORE Social Cohesion and Reconciliation Index SO Sub-Objective 2 UKRAINE CONFIDENCE BUILDING INITIATIVE II SEMI-ANNUAL REPORT, APR 2020 – SEP 2020 STTA Short-Term Technical Assistance UA Ukraine UAH Ukrainian Hryvnia UCBI II Ukraine Confidence Building Initiative II USAID United States Agency for International Development USD United States Dollar 3 UKRAINE CONFIDENCE BUILDING INITIATIVE II SEMI-ANNUAL REPORT, APR 2020 – SEP 2020 PROGRAM DESCRIPTION The Office of Transition Initiative (OTI)’s program in Ukraine, the Ukraine Confidence Building Initiative II (UCBI II), helps to ensure political stability and national unity in Ukraine by expanding acceptance of a pluralistic Ukrainian civic identity based on common values. While the program handed off its regional efforts in Donetsk and Luhansk to long-term United States Agency for International Development (USAID) programs in early 2019, OTI continues to implement confidence building initiatives at a regional and national level. In the Azov Sea region, OTI implements activities that mitigate the effects of Russian aggression by demonstrating the dividends of reform, inspiring confidence in economic transformation, and supporting media that counters disinformation. At a national level, OTI supports diverse and innovative media and communications activities, that promote national unity, raise awareness of reforms, and foster inclusive civic values. In the past six months, UCBI II provided citizens with opportunities to play a more productive role in their communities by supporting civil society efforts to hold the government accountable and by using media as a platform to better disseminate balanced information and amplify public awareness as well as the impacts of reforms. This approach has required significant and ongoing dialogue with host authorities and communities, both in Kyiv and in the regions. UCBI II adapted its programming early in March 2020 to quickly respond to the effects of the COVID-19 pandemic in Ukraine by expanding on its current stabilization programming. This approach increases citizens’ confidence and media narratives around unity and positive democratic changes. Additionally, UCBI II supported local authorities in their efforts to mitigate the effects of flooding in Zakarpattia and Ivano-Frankivsk regions. UCBI II assistance comes in the form of small, in-kind grants (goods, services, and technical support procured directly by UCBI II and provided to grantees) and fixed amount cash awards to a range of partners, including national and local civilian government entities, civil society organizations, and community leaders. UCBI II provides targeted assistance in order to: 1. build acceptance of a diverse Ukraine; 2. increase confidence in positive, democratic change; and 3. increase media narratives about unity and positive change. UCBI II PROGRAM AREAS UCBI II’s overarching goal, to expand acceptance of a pluralistic Ukrainian civic identity based on common values, remains a valid guiding framework for the program, yet changes have been made to quickly respond to the effects of the COVID-19 pandemic and strengthen government and civil society’s efforts to address the crisis. To achieve the program goal, the team has identified three objectives. UCBI II’s programming is guided by contextual analysis of local dynamics and geographic regions; activities addressing each objective vary based on the assessed needs and identified opportunities. 1 UKRAINE CONFIDENCE BUILDING INITIATIVE II SEMI-ANNUAL REPORT, APR 2020 – SEP 2020 The UCBI II’s strategic framework prioritizes the following program areas: In response to this framework, UCBI II supported activities in Ivano-Frankivsk, Zakarpattia, Kharkiv, Zaporizhzhia, and Kherson oblasts during this reporting period as well as at the national level through support to multi-location or government level interventions and media activities. 2 UKRAINE CONFIDENCE BUILDING INITIATIVE II SEMI-ANNUAL REPORT, APR 2020 – SEP 2020 UKRAINE NATIONAL AND REGIONAL COUNTRY CONTEXT Since taking office in spring 2019, Ukrainian President Volodymyr Zelensky has made ending the Russian- Ukrainian War his top priority. However, almost eighteen months into his presidency, he has little to show for his efforts. A ceasefire introduced in late July has succeeded in reducing the death toll in eastern Ukraine, but the Russian occupation continues and genuine breakthroughs towards a lasting settlement remain as elusive as ever. President Zelensky’s commitment to peace was central to his success in Ukraine’s 2019 presidential and parliamentary elections. Despite this focus, his administration has yet to demonstrate a clear strategy for ending the six-year conflict. Instead, Zelensky has adopted a scattergun approach that has included numerous front-line concessions to the Kremlin and a conscious effort to downplay bilateral tensions. Since the March 2020 dismissal of a largely Western-leaning reformist government, numerous figures from the discredited regime of Viktor Yanukovych and Ukraine’s previously marginalized pro-Kremlin camp have been appointed to senior posts. This trend continued in September 2020, with news that a lawyer with close ties to Russia’s main Ukrainian ally, Viktor Medvedchuk, had been appointed as the country’s new Deputy Prosecutor General. Zelensky’s credentials as an anti-corruption politician have been further undermined by a series of developments in the escalating campaign against Ukraine’s National Anti-Corruption Bureau (NABU). Controversial Constitutional Court rulings in late August and early September have left NABU in legal limbo and raised doubts over many other aspects of the anti-corruption reform agenda adopted since Ukraine’s 2014 Revolution of Dignity. Critics have slammed the rulings as politically motivated. This has sparked alarm within Ukrainian civil society and the country’s international partners. Russian aggression in the east and south of the country are creating vulnerabilities that USAID is trying to address through UCBI II and other programs. USAID has made the Sea of Azov region a strategic priority and is building the appropriate mechanisms to advance national unity and effectively address the challenges of Ukraine’s media and communications environment. NATIONAL Several key issues impacted the country context during the reporting period. NBU Central Bank Chief Submits Resignation The National Bank of Ukraine (NBU) Governor, Yakiv Smolii, submitted his resignation on July 01, 2020, in what was widely seen as a major blow to Ukraine’s reform agenda. In his resignation letter, Smolii cited “systematic political pressure” as the reason behind his departure. The nature of Smolii’s exit raises serious questions over the continued independence of the NBU, which has been credited as a key factor behind Ukraine’s macroeconomic stabilization in recent years. 3 UKRAINE CONFIDENCE BUILDING INITIATIVE II SEMI-ANNUAL REPORT, APR 2020 – SEP 2020 He was replaced by Kyrylo Shevchenko, a state banker with ties to the Zelensky team. In the aftermath of Smolii’s departure, three of six NBU board members resigned, not least, because they could not afford to stay in their positions without pay. In early October 2020, the Council of the NBU issued a reprimand and expression of no confidence in First Deputy Governor, Kateryna Rozhkova, and Deputy Governor, Dmytro Sologub, who happen to be the last two remaining members of the reformist NBU board established by former Governor Valeria Hontareva. Officially, this reprimand was for violating ethics and internal procedures by giving a joint interview to the Kyiv Post. However, most observers believe the real reason was their continued defense of reformist NBU policies. Russia Is Quietly Occupying Ukraine’s Information Space In June 2020, journalists from the respected investigative Ukrainian TV show