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The number one question between #Ukraine government and its people.




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The 20th EU - Ukraine Summit was recently held in Brussels, where both sides discussed many issues, including those connected with the partnership between the two sides, in particular the implementation of the provision for Association Agreement, signed in 2014. Taking into consideration the previous year, this meeting was more successful for Ukraine, as European officials made important formal announcements admitting Russia to be an aggressor in the Crimea’s annexation and Donbas conflict. In addition, Brussels praised Ukraine for carrying out different reforms. However, the issue concerning corruption was high on the agenda in the dialogue between representatives from Brussels and Kyiv.

At the same time many experts say that the results are not satisfactory enough for the Ukrainian president Petro Poroshenko. During this summit it was especially important for him to get endorsement of the intentions of European integration from his western colleagues, as this factor was among the most important ones in his pre-election campaign. In the meantime, Ukrainian sociological research demonstrates that suspicion towards authorities is increasing.

The primary causes of crisis

Let’s figure out what is actually going on in Ukraine. What are the primary causes of the situation right now? They are, without doubt, extremely interesting.

Having dedicated a lot of time and effort to exploring Ukraine  in order to communicate with my Ukrainian colleagues, I came to the conclusion that the primary cause of the current crisis is the oligarchic influence, which as you know, exists in Ukrainian politics and economics, being the main brake on the way of  development. This problem is fundamental, because it cannot be changed even by large-scale actions, as Euromaidan.

As for Ukrainian political forces during the last 15 years, in the Western Ukraine they are regarded as a field for fighting between different financial and industrial groups of Ukraine and have influence and an access for resources, which give posts in the administrative apparatus. It is quite obvious that the result of this is the corruption in Ukrainian journalism and the poor rating by Transparency International, according to which Ukraine is in the 130th place, equal to Gambia, Iran and Sierra Leone. Let’s agree that it is not impressive. One of the reasons for such at rating is considered to be the lack of political will by the authorities to fight corruption and can really be explained by the fact that future draft laws, which should be approved in parliament depends on such mechanisms. Of course, I don’t assume that all members of the Ukrainian parliament are submerged into corruptive schemes, but if we try to gain an understanding of the way in which a mandate is given, and draft laws are passed, we’ll come to the conclusion that such phenomenon exists within legislature.


Infographics. The source: Transparency International:

Ukraine needs more investments now than at any time. On the one hand this country is indeed attractive for investors as it is still an unknown market for them. There are projects which are worth investing in.  First of all, there is the agrarian sector, the IT sphere, forestry, and other branches. What is more, with the opening of the New Silk Road new possibilities will be available. On the other hand, however, according to an estimate by the political expert in international relations Anton Kuchuhidze, constant changes of rules and the corruption of political forces are not a guarantee of the correctness of their investments. Unfortunately, this factor often prevents foreign investors from investing their money in Ukraine. It is obviously not good for the national interests of the country.

That’s why I have the following question: Why is it impossible to make MPs change the rules of the game, move towards the model of flourishing country, where everyone has the possibility to realize themselves within consensual norms as it was in Georgia? Successful examples exist, and they are very close. The monopolization of mass media, economy and politics, corruptive schemes, unofficial agreements, pressure, intimidation – all these examples are the vestiges of the past. Ukrainians needs to get rid of them in order not to lose themselves and to continue moving towards a successful country.

‘Forest-related problem

Ukrainian corruption scandals are not new even for Europeans: publications about such events as the ‘Rotterdam+’ program of last year is a vivid proof of it. However, being here, I mean, at a distance, we cannot review these issues and all we have are general facts, without any details, that   will explain the anatomy of Ukrainian politics

Having understood that, I started to communicate more with my colleagues, journalists from Kyiv and to get to know many interesting things. I want to share with you the recent example, which is extremely painful for me. Recently, my attention was drawn by the law № 5495.  “The amendment of some laws of Ukraine about the preservation of Ukrainian forests and the prevention of illegal export of raw materials” has drawn my attention. It was prepared to save Ukrainian forestry and prevent the illegal export of raw materials. It is generally known that in Ukraine the name of the law does not always reflect its essence and intentions and what is more, they can often be different things.

Photo. The source: Vsapravda

According to an estimate by the coordinator of  ‘Stop, corruption’ and well-known journalist Roman Bochkala, the forest-related problem is on the Ukrainian agenda for a long time and its essence lies in the need for preservation of resources of the country, which were destroyed in huge quantities. For example, in 2014 in Ukraine almost 25 million cubic meters of wood were destroyed, while only 58 thousand hectares were renewed. As if to solve this problem, and improve the situation in the forestry, in 2015 the moratorium on export of round timber for a term of 10 years was approved. Now it can be assumed that the results of this moratorium were not justified.

Ukrainian forest is used now as it was used earlier but the difference is that the forestry now is aimed more at the internal market than at the external one and sinks into corruption. In addition, after 2015 the ‘lishosps’ (the objects of material production, which deal with accounting, protection, deforestation, and renewal of forests) stopped getting government financing. Thus, they found themselves in a difficult situation with a lot of problems with the absence of a legal mechanism for getting enough money, necessary not even for making a profit but for the maintenance of the current situation. During the last year, the number of workers has decreased by 10%, scores of them have faced bankruptcy and the scale of reforestation has decreased due to the lack of money. In such conditions these problems mentioned before are still actual and the cases of the self-willed deforestation will increase in geometrical progression.

Photo. The source: Pogliad

Unfortunately, in Ukraine this problem is still being manipulated by politicians, who want to satisfy their business needs, the proof of which is the aforementioned law №5495. I want to mention that in a declarative way it is aimed at strengthening the moratorium, approved in 2015 and to compensate its disadvantages through limiting the amount of timber cutting to 25 million cubic meters a year, and especially importantly will increase the responsibility for the violation of law. However, it is not so simple as it can look like from the first sight. The new law does not constitute criminal liability for the illegal deforestation and the size of the administrative responsibility decreases. Practically, the new law makes the process of punishment easier and lets them continue doing their illegal activities.

Apart from this, the issues about reforestation stay unregulated by law and without them the moratorium and any restrictions will not make sense in the short nor long term. The same is true about the implementation of the economic measures to restrain the export of sawn timber and the stimulation of the export of the products, both are neglected. The first is possible because of the increase of the custom tariffs on the export of the raw materials and the products of the low degree of processing. The second one – because of the government support of timber industry in general. Instead of that, we get regular lobbying draft laws ‘ –economy expert  Yuriy Gavrylechko said.

Who is standing behind the law №5495 and why?

Being lobbied by the representatives of populist Radical party by Oleh Lyashko, under loud declarations on the protection of the nature, this law moves forward the interests of Ukrainian oligarchs, who are trying to reverse the local market of the wood and therefore put it under their control, in order to gain a lot of profit. In this case, this is about such figures as Leonid Yurushev and Yuriy Kosyuk – persons, who are very different according to their publicity, but both extremely powerful in Ukrainian business and politics.

Taking into consideration this duo, Mr. Kosyuk,  is currently a dollar billionaire and is constantly on the list of the five richest people in Ukraine (according to Forbes ($ 1 billion)), and is unofficially known as a close friend of Petro Poroshenko, whose daughter-in-law runs a joint business project - presented last year in Davos -  with Yuriy Anatolyevich . Being known as the “Agrobaron” and one of the largest Landowner in Ukraine, Kosyuk holds key positions in the agriculture sector at the expense of the minimum taxes, export quotas and state subsidies with a refund of UAH 4.5 billion. All other entrepreneurs did not receive more than 250 million even though, most likely, they needed more. There are legends about the wealth of the "chicken baron" (in particular, about a huge estate near "Pheophany", built on the territory of the Scythian settlements), which was loudly selected at the National Academy of Sciences. As for Leonid Yurushev ($ 900 million (2015)), his activity is displayed much less often, but he is known of being one of Arseniy Yatsenyuk's investors and owns many enterprises, including the Ukrainian Holding Sawmill Company.

Photo. The source: RBK-UKRAINE

At the moment, it can be said that the forestry sector was interesting for Mr. Kosyuk, who is trying to purchase Mr. Yurushev's business, which lobbied by all possible means for the adoption of the Law 5495, in order to help the partner and to get more benefit from this. Aimed at creating incentives for the development of forestry, this law actually destroys it, since it makes it impossible for forestry companies to trade with European countries and receive much more money than it is possible in Ukraine, and thus become economically self-sufficient. Given that the lishosp is a state-owned enterprise, it transfers the majority of its profits to the state treasury without leaving the necessary minimum in order to fulfill its primary functions (prevention, firefighting, effective control of the territory) and maintain the forest area in good conditions, taking into account that there are enough problems with the forest in Ukraine. One of the most important threats is the distribution of bark beetles, and to overcome it, it is necessary to cut out "sick" trees in time. In general, in Ukraine there is a false idea that the forest can not be cut off. It is not only possible but also necessary: but I admit that it must be done exclusively in a civilized way, paying attention to resource recovery, because otherwise it will turn into thoughtless exploitation and resource utilization.

Euros, obtained from European partners and investors, will help Ukrainian foresters to solve this problem. European countries have long understood this principle, and therefore, even in ecological countries, they continue to engage in logging. For example, in 2016, 73.3 million cubic meters of timber were harvested in Sweden, 57 million in Finland, and 16.4 million in much less in Ukraine, but the above-mentioned Scandinavian countries do not complain about environmental problems, on the contrary. they are examples to the whole world. Ukraine must realize how to use effectively the natural resources, which are given by nature. Against this background, it is sad that the recently adopted law does not foresee such a development path; at the moment, it is not the best suited for the short-sighted business interests of the duo Yurushev-Kosyuk, since it actually enables them to access cheap, almost free raw materials, which are circulating only on the local market will  and be sold in the cost price, and then in the form of finished items will be exported. Such a scenario does not take into account the interests of forestry and local communities, and moreover, it cynically ignores them, leaving key stakeholders, on their own, with economic and environmental problems that are likely to result in receiving huge profits. What national interests in this case can be discussed?

What are the conseqences?

It is important to say that the use of the practices of shadow lobbyism has a bad impact not only on the forest-related issue. What you observe now can be used for any other spheres, which are connected with money or power in Ukraine. The further Ukrainians go, the more they understand about the negative influence of the preservation of rules and methods.

Now, European investors are ready to invest their money in the forestry (about 200 million euros), but observing the way in which laws are made according to certain business goals of the local oligarchs, the chances for the successful cooperation between Ukraine and EU do not look strong. Ukrainians should understand what they want and separate their true national interests from false ones. So, if the president Poroshenko is a guarantee of the Constitution of Ukraine and the one, who represents the interests of Ukrainian people, he should use the veto on this law. This scenario is obvious for me but who knows what our politicians are thinking about?

The story I told is just a little example of what is going on with corruption in the Ukrainian political system. Of course, such issues as the situation with forestry was not the main point in the agenda at the summit on the 10th of July, but however it was discussed unofficially. To sum up, I can say that the topic of corruption will be always one of the most discussed  in the dialoque between the Kyiv and Brussels, but what is more important, will be always the number one question in the dialoque between Ukrainian government and Ukrainian people.


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