Ukraine's cooperation with the IMF - unfulfilled hopes for deeper reforms. OSW Commentary No. 52, 2011-06-15

The Party of Regions took power in early 2010, after Ukraine had been plunged deep in economic crisis. Over the next year, with the external markets recovering, the country’s economic situation started to improve gradually. Ukraine’s economic stabilisation was also strengthened by its resumed cooperation with the International Monetary Fund, which provided for a loan worth $15.1 billion. The issuing of successive tranches of the loan was made dependent on the implementation of a comprehensive reform programme. The cooperation went quite smoothly at first; however, as the economic situation in Ukraine improved, the reformist zeal of the Ukrainian government started to fade, and obstacles began piling up. As a result, Ukraine was refused the third tranche, scheduled for this March, and for the moment the credit line remains frozen. Even though the IMF has numerous reservations about the Ukrainian government’s economic policy, the fundamental condition for resuming cooperation is reform of the pension system, which the parliament should adopt. The difficulties with fulfilling the obligations made to the IMF reflect the wider problem with implementing reforms in Ukraine, as the Party of Regions promised after taking power. Changes which do not affect the interests of influential lobbies are quite easy to carry out. Often, however, these changes are not conducive to the economy’s liberalisation; moreover, the influential lobbies are successful in blocking reforms that could harm their businesses. Another impediment to the changes is that some reforms are likely to bring about painful social consequences, and that can affect public support for the ruling group. Even though theoretically possible, it does not seem likely that Ukraine’s cooperation with the IMF will be terminated. But even if this cooperation is continued, deeper reforms in Ukraine are likely to be postponed until after the parliamentary elections in autumn 2012

Dark clouds over the Ukrainian gas market reform. OSW Commentary NUMBER 251 | 04.10.2017

In September, three out of five members of the supervisory board of Naftogaz, Ukraine’s largest gas company, announced their resignation and accused the government of stepping up political interference in the company’s activity and blocking measures aimed at reforming the company. This represents yet another instance of the fight for control over Naftogaz and its profit-making subsidiaries, Ukrgazvydobuvannya (which extracts over 70% of Ukraine’s gas) and Ukrtransgaz (the transit pipeline and gas storage facilities operator), which has been gaining momentum in recent months. On one side of the dispute lies what is broadly understood as the ruling camp (the surrounding of the president and the prime minister), while the other side is the pro-reform management of Naftogaz, headed by Andriy Kobolev and backed by Western institutions

Ukraine and Russia: a hindered rapprochement. OSW Commentary No. 44, 2010-12-15

The policy of rapprochement with Russia that President Victor Yanukovych and his entourage had been actively promoting in the first months of his presidency has slowed down notably. One of the reasons for this lowered pace is that current talks between Russia and Ukraine concern the spheres in which Kyiv is not ready to make concessions to Russia. Despite numerous top-level meetings, recent months have failed to bring a breakthrough in energy issues of key importance. First of all, no compromise was reached in gas issues where the divergence of interests is particularly large and where Ukraine has adopted a tough stance to negotiate the best conditions possible. Even though some agreements were signed during the October session of the inter-governmental committee presided over by the prime ministers (the agreement on linking the two states’ aircraft production and on the joint construction of a nuclear fuel production plant), these resulted from prior agreements. Economic negotiations will continue in the coming months but the observed deadlock is not likely to be broken any time soon. The results of these talks are likely to reflect the interests of both Russia and Ukraine, as well as the competition among Ukrainian business groups, some of which opt for closer cooperation with their Eastern neighbour. Ukraine’s consent to send oil to Belarus along the Odessa-Brody pipeline shows that the government in Kyiv is ready to engage in projects they consider profitable, even those that run counter to Russian interests. Ukraine’s adoption of this stance may trigger irritation in Moscow and lead to a cooling in bilateral relations

Euro 2012 – Ukraine’s wasted opportunity? OSW Commentary 80, 2012-06.08

Ukraine saw hosting the European Football Championship as an important project in terms of image-building and modernisation from the very beginning. The country’s government assumed, during the presidency of Viktor Yushchenko and Viktor Yanukovych alike, that Euro 2012 would provide a major impulse for economic development and show that the young Ukrainian state was capable of successfully preparing one of the most important sport tournaments in the world. Although UEFA’s decision raised eyebrows both in the West and in Ukraine, after initial delays the work gained momentum and, shortly before the championship, Ukraine’s progress could be evaluated as being satisfactory at the least. As part of the preparations, four stadiums were built or modernised, four airports in the host cities were developed and 1,600 km of roads were repaired or built from the ground up. The investments have doubtlessly contributed to an improvement of the infrastructure in Ukraine, but it would be rather inaccurate to say that Euro 2012 has brought about a real modernisation of the country. The funds allocated for the preparations were relatively modest, and part of them was spent in a non-transparent way, which gives rise to suspicions of corruption. The chance to improve Ukraine’s perception in the West has been to a great extent lost due to the trial of the former prime minister, Yulia Tymoshenko, who was sentenced to seven years in prison in October 2011. Over the past few weeks, Euro 2012 as a sports event has been overshadowed by discussions among Western politicians and in the Western media about rising authoritarian tendencies in Ukraine. In turn, football is currently treated as a minor issue in Ukraine’s internal politics. The government has so far not used Euro 2012 to improve its popularity although hosting it is supported by a clear majority of the Ukrainian public. It is still an open question as to whether the Ukrainian government will try to capitalise politically on this sports event; this is especially significant as parliamentary elections are approaching