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The BRE Special Issue on Ukraine



The BRE Special Issue on Ukraine contains nearly 50 top level articles on contemporary Ukraine.
november 2019
ISSUE no. 4
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Artis Pabriks
Latvia’s support
for Ukraine is
Dmytro kuleba
EU-Ukraine: A
two-way street
Oksana Syroyid
The words could
save the world
from the war
Oleksiy semeniy
Foreign policy
of Ukraine: Quo
special issue on
The Pan-European Institute publishes the
Baltic Rim Economies (BRE) review which deals
with the development of the Baltic Sea region. In
the BRE review, public and corporate decision
makers, representatives of Academia, as well as
several other experts contribute to the discussion.
ISSN 1459-9759
Editor-in-Chief | Kari Liuhto
(responsible for writer invitations)
Technical Editor | Elias Kallio
University of Turku
Turku School of Economics
Pan-European Institute
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FI-20500 TURKU, Finland
Tel. +358 29 450 5000
Data protection description
Pan-European Institute
Baltic Rim Economies
29.11.2019 ISSUE # 4
expert articles
Dmytro kuleba 4
EU-Ukraine: A two-way street
Artis Pabriks 5
Latvia’s support for Ukraine is
Oksana Syroyid 6
The words could save the world
from the war
ilkka kanerva 8
The new dialogue between Russia
and Ukraine creates potential
Ariana Gic, Hanna Hopko & Roman Sohn 9
No peace without truth: An honest
response to Russian aggression in
Vladimir Dubrovskiy 10
Ukraine’s after-election outlook:
Heaven or hell?
Arseniy Svynarenko 11
The Ukrainian politics are catching
up with changes in a society
Roman Horbyk 12
Transmedia storytelling ushers in
new populism in Ukraine
Illya Kvas 13
Economic cooperation between
Ukraine and Finland on an upward
William Taylor 14
Why Ukraine matters
Antti Hartikainen 15
Ukraine should be rich: Why isn’t it?
Peter M. Wagner 16
Towards a more resilient Ukraine
Kateryna Rozhkova 17
Ukraine: A modern, European
nancial system
Ulana Suprun 19
The New Global Dark Age
Oksana Holovko-Havrysheva 20
In support of European choice of
Mykhaylo Komarnytskyy 21
The future of US-Ukrainian
Strategic Partnership
Jan Strzelecki 22
Kremlin’s policy towards Ukraine
after Zelenskiy’s victory
Viktor Ogneviuk 23
Cooperation in human capital
Mariya Zubrytska 24
Lviv University: Where history meets
I. Farías Pelcastre, A. Anokhina & 25
K. Parkhomei
Corruption and reform in education
in Ukraine
Jarkko Lampiselkä 26
Learning together: Finland’s support
to Ukrainian school reform
Oleksiy Semeniy 27
Foreign policy of Ukraine: Quo
Andrzej Fałkowski 28
Defence reform in Ukraine: A new
Mykhailo Gonchar 30
Sentsov list: What’s next?
Oleksandr Sukhodolia 31
Critical infrastructure protection as a
tool of national resilience of Ukraine
Stanislav Maliar 33
Critical infrastructure: Safety
Rimantas Šikas 34
Oil rening challenges in Ukraine
Markko Kallonen 35
OSCE special monitoring mission
in Ukraine: Five years of crisis
Sergii Karasov 37
Gray zone conict in the occupation
waters and international law:
Ukrainian case
Peter Dickinson 39
Putin’s war and Ukraine’s nation-
building journey
Mykhailo Bechkalo 41
Ukraine: Sea change in investment
Adrian Prokip 42
Ukraine’s energy: The State and
oligarchs in a deadlock
Valeriia Loiko 43
Economic development of Ukraine
after 2014
Juhani Pihlajamaa & Alexander Pavlov 44
Konecranes in Ukraine
Iryna Sheiko & Roksana Petrova 45
Impact of globalization on the
Ukrainian economy
Lilia Ukrainets 46
Chinese business in Ukraine
Jaana Vuorio 47
Ukrainian immigrants in Finland
Viktoriia Hladii 48
Labour market for international
graduates: Perspective of an
Ukrainian in Finland
Nataliya Teramae 49
Love culture and make diplomacy
Arto Luukkanen 50
The archive-revolution in Ukraine
Kari Liuhto 51
Ukraine on My Mind
Baltic Rim Economies
29.11.2019 ISSUE # 4
Dmytro kuleba
EU-Ukraine: A two-way street
Ukraine nds itself in a unique moment following the
elections of a historically young parliamentary class
and a similarly reform-minded Cabinet of Ministers,
committed to transform Ukraine into a strong,
prosperous European democracy. The public has set
high expectations for the enactment of wide-sweeping
reforms and the government has responded with an ambitious ve-
year plan. For the rst time, European and Euro-Atlantic integration
has been included in the Government’s Action Plan as a separate
chapter and guiding principle for reforms in all spheres.
Guided by the Association Agreement, Ukraine will continue
pursuing full EU accession, even if this
is not yet on the Union’s agenda. Our
two overarching goals are to progress
towards meeting the economic EU
membership criteria (Copenhagen
criteria) and to become an integral
part of the common European
economic, energy, digital, legal, and
cultural space. In the next ve years,
the government committed itself to
introduce deep economic reforms
which will help unleash Ukraine’s
growth potential and bring it closer to
the EU. We already have impressive
results: our trade increased by almost
50%, making the EU Ukraine’s largest
trading partner. Over last 2 years,
Ukrainian travelers enjoy visa-free
regime with the EU.
At the 21st EU-Ukraine
summit in Kyiv this year, leaders
rearmed their readiness to deepen
economic integration and regulatory
approximation across the energy,
trade and judicial sectors, among others, within the framework
of the Association Agreement. One pressing task is the revision
and updating of the Association Agreement, since the structure of
Ukraine’s economy has changed over the last several years, as has
EU legislation.
Ukraine is committed to further integration with the EU; however,
our success depends not only on Ukraine’s ability to introduce
European standards and practices, but also on EU’s commitment and
involvement. The European Union holds an equal stake in Ukraine’s
European integration, including monitoring and evaluating its progress
along this path. Over the last ve years EU assistance package was
instrumental in overcoming immense challenges that Ukraine is still
facing. We should remember no country in Europe had managed to
transform itself without consistent and substantial support of other
Our aim is to make European idea comprehensive to the people
that will be associated with expanded opportunities and a better quality
of life. With this in mind, we plan to strengthen communication of the
European integration and developing people-to-people contacts. As
Dmytro kuleba
Vice Prime Minister of Ukraine for European
and Euro-Atlantic Integration
EU founding fathers envisioned, European integration is not only
about connecting economies, but about connecting societies. Our
particular focus will be on Ukrainian regions, in particular on Southern
and Eastern regions which are yet to feel all benets of moving closer
to the EU.
The ten-year anniversary of Eastern Partnership aords Ukraine
and its European partners an opportunity to set a bold and reinvigorated
agenda creating a common post-2020 vision. Dierentiation as a new
principle of EaP will help to tailor the policy according to the needs
and ambitions of each partner (more-for-more approach). A door
to EU accession for countries fullling EU membership obligations
should stay wide open. Ambiguity
and indecision from the EU side will
undermine the government’s ability to
deliver on reforms, aimed at bringing
Ukraine closer to EU networks and
their anticipated benets.
Ukraine’s integration into
the EU is determined by Ukraine’s
belonging to the family of European
nations and conrmed by the
Revolution of Dignity in 2014 (also
known as Maidan). Ukraine’s success
is EU’s success. Being ambitious in our
reform agenda, we urge our European
partners to stay ambitious about the
EU and its transformative power in
the neighborhood. We count on EU’s
united position in defense of Ukraine
sovereignty and territorial integrity as
we are trying to bring peace to our
Despite very dicult
circumstances – years of countering
Russian aggression and occupation
of part of our territory, Ukraine has managed to launch long-waited
reforms, and has set a program to accelerate the changes over the
next ve years. By doubling down on its commitment in Ukraine, the
European Union can win hearts and minds and become even stronger
while ensuring the success of the largest country in Europe.
Expert article • 2574
The public has set high
expectations for the enactment of
wide-sweeping reforms and the
government has responded with
and ambitious ve-year plan.
For the rst time, European and
Euro-atlantic integration has been
included in the Government’s
Action Plan as a separate chapter
and guiding principle for reforms
in all spheres.
Baltic Rim Economies
29.11.2019 ISSUE # 4
Artis Pabriks
Latvia’s support for Ukraine is
Expert article • 2575
Ukraine’s presence in Latvia’s foreign policy site make
an interesting and a rare example of multidimensional
cooperation. Even though there is no physical border
between Latvia and Ukraine, the joint past ties both
countries together more than it might initially seem.
There are two particularly signicant periods: the brief cooperation
between the governments of Latvia and Ukraine from 1917 to 1920
and the soviet era. Despite the generally negative burden of soviet
heritage, relationship between the two states as of today is widely
acknowledged in society and countries ocial political discourse.
For Latvia, being a member and
taking part in European Union’s,
NATO’s and other Euro-Atlantic
structure’s decision-making has
become almost synonymous with
independence. Main directions for
Latvia’s Foreign Policy was articulated
in back in the 1995, when the so called
“return to Europe” was articulated in
documents where the integration in the
European Union and Trans-Atlantic
security structures was pursued as
key focus of Latvia’s foreign and
security policy, since it was seen as
necessary condition to guarantee the
irreversibility of our independence.
“The Orange Revolution” in
Ukraine, as an immediate outcome
of the run-o vote of the 2004
Ukrainian presidential elections was
a fundamental turn in the relationship
between Ukraine and Latvia. It was the year when Baltics joined EU
and NATO, so for Latvia as well as for other Baltic states this meant
that Ukraine had nally stepped onto a path of change for better
governance and democracy.
In Latvia Russian aggression towards Ukraine and annexation of
Crimea was seen as a threat to Latvia itself. Because of the seemingly
possible chance of conict on Latvian soil, attitude towards Russia
among Latvian policymakers, civil society and Latvians in general
changed rapidly. Thus, giving additional impulse for strengthening
Ukrainian – Latvian relationship. Latvia’s support towards Ukraine
due to Russia’s aggression in Ukraine has become more and more
necessary and important. For fact Latvia’s Ministry of Defense and the
National Armed Forces have suspended all military cooperation with
Russia for the past ve years. As of today, Latvia provides support
for strengthening the capabilities of the Ukrainian armed forces, for
example by providing training to instructors of the Ukrainian regular
forces in the framework of the NATO Military Development Project.
This year alone Latvian soldiers have provided three training courses
for Ukrainian instructors.
Since summer 2014 children of Ukrainian armed forces and
Ukrainian National Guard soldiers have received consignments such
as school supplies, electronics, as well as Christmas gifts. Since
2017 humanitarian shipments with support of Latvian people and
government have been delivered directly to the area of Donetsk,
where both soldiers and civilians are most in need. Also in 2017
Latvian Youth Guard launched a tradition of organising summer camps
for the children of soldiers from Ukraine in Latvia, thus providing
an opportunity for both Latvian and Ukrainian children familiarise
themselves with European values, get
to know Latvia and it’s people in order
to build even stronger bond between
our countries.
In support of the request of
the Ukrainian side for the rehabilitation
of persons aected by the military
conict, the Latvian government
granted funds for the rehabilitation
of persons aected by the conict
in Ukraine. Latvia began providing
medical assistance to persons injured
during military clashes in the east of
Ukraine in 2014. Until now, a total of
42 citizens of Ukraine have received
necessary assistance in Latvia.
Latvia unconditionally
supports Ukraine’s eorts for further
integration into the European Union
and NATO. Latvia’s cooperation with
Ukraine is one of the priorities pursued
in the format of bilateral cooperation as well as in other international
formats. In the future we will continue this cooperation and try to
extend it.
Artis Pabriks
Dr., Deputy Prime Minister
Minister of Defense of Latvia
Ukraine’s presence in Latvia’s
foreign policy site make an
interesting and a rare example of
multidimensional cooperation.
Even though there is no physical
border between Latvia and
Ukraine, the joint past ties both
countries together more than it
might initially seem.
Baltic Rim Economies
29.11.2019 ISSUE # 4
Oksana Syroyid
The words could save the world from
the war
Expert article • 2576
We enjoy our lives in time of change of balance in the
world. In modern times it is not only tanks or missiles,
but also the words of media that change the borders,
kill people, destroy houses and undermine human
The most important geopolitical battles is taking place on Ukrainian
territory and for control of Ukraine. Understanding the nature of this
battle and its impartial coverage can save Europe and, probably the
World from the new World War as well as save the millions of lives.
Nowadays Russia is dissatised with its role on the world stage
and doesn’t hide their desire to reshape the world security order in
their favor. Its not the rst time when Russia is using war in order to
increase their inuence in the world. Every time during its aggressive
expansion, Russia views the territory of Ukraine as a source of
resources and a buer security zone.
Since the creation of the Moscow Kingdom, the main human
resources, agricultural lands and
infrastructure has been located
along the western border of the
Moscowia. In addition, the Moscow
didn’t have access to warm ports.
This determined the main strategy for
Russian westward expansion from
time of Moscovia to modern times – to
provide access to the Baltic and Black
seas and to increase the buer zone
around important infrastructure and
The defeat of the Russian Empire
in the World War I and the October
revolution in 1917 by no means
changed the imperial policy of the
Bolshevik Russia. On the contrary, immediately after the rise of the
Soviet state in 1917 Russia began the occupation of newly formed
Ukrainian Peoples Republic. During the Paris Peace Conference
in Versailles in 1919-20, the leaders of three countries – the United
States, Great Britain and France – distributed statehood to peoples,
who came out of the wreckage of the European empires. However,
they didn’t grant the recognition of the Ukrainian state which was
under Russian attack. The Western countries were exhausted by
the First World War and didn’t have strength and desire to confront
the Bolsheviks Russia whose intentions were unclear to them. They
decided to isolate and ignore the Bolsheviks.
The conquest of Ukraine and access to its resources opened new
opportunities for the Russia Bolshevik Empire. The most valuable
was the grain that could be exported in exchange for industrialization
of the Soviet Union. The appropriation of grain from the household
farmers (kulaks) was a dicult process, but collectivization needed
modern equipment. German industrialists were ready to supply
technologies in exchange for supplies, the most important of which
was Ukrainian grain. Germany was the rst country who broke the
international isolation of the Bolshevik dictatorship and to recognize
Bolshevik Russia and all its conquests.
In order to eradicate the peasant rebellions during collectivization
and guarantee the control over land and grain- the soviet main
currency in world’s trade – Stalin killed millions of Ukrainian peasants
by famine in 1932 – 1933 (Holodomor). While people in Ukraine were
dying out of hunger, the world was silent so as not to spoil relations
with the Soviet Union. Even countries like the UK and the USA were
buying grain from the soviets. The Soviet Empire, which was in
isolation for decades, returned to world’s arena as a ‘’new market’’
and a great trading partner.
Stalin intended to move to the West to establish control over
the seas and increase the “sanitary zone” under the banner of the
socialist revolution. Hitler, on the other side, needed Ukrainian land
and human resources for building his
own future empire. Ukraine, or to be
more precise - its land, remained the
main trophy in the war between the two
dictators. Therefore, people were not
sorry. About 40% of all human losses
of the Soviet Union in the Second
World War constitute Ukrainians.
Athrough, the Second World’s
War was resolved by both of dictators,
only Hitler was ever punished. Stalin
ended the war as a winner who dictated
conditions. As a result, the Soviet
empire in 1945 pushed its borders
to Berlin, establishing the German
Democratic Republic (another proxie
“ORDLO”).. Stalin intended to move further west.
Despite unsuccessful attempts at further expansion to the west,
the Soviet empire achieved the cherished dream of all Russian tsars.
The control over the Baltic Sea was guaranteed by the Kaliningrad
enclave - the remnant of the Kingdom of Prussia with the capital
in Königsberg, as well as occupation of Poland, Latvia, Lithuania,
Estonia and the GDR. The Black Sea was under control due to control
over Crimea and the Ukrainian coastline, which was guarantied
throuth Russian occupation of Georgia, as well as establishing
socialist satellite states -Bulgaria and Romania. The sanitary zone
was expanded enough to keep the empire’s “line of life” safe.
The democratic world correctly assessed the aim and methods of
the Soviet threat. It was mistaken only in the nature of this threat - for
decades of the Cold War, the West regarded communism itself, not
the imperial nature of Russia, as a threat. That is why the Western
world in the second half of the eighties became interested in the idea
of democratization of the USSR, and later of Russia and considering
We enjoy our lives in time of
change of balance in the world. In
modern times it is not only tanks
or missiles, but also the words of
media that change the borders,
kill people, destroy houses and
undermine human dignity.
Baltic Rim Economies
29.11.2019 ISSUE # 4
Oksana Syroyid
Co-Chair of Lviv Security Forum
Leader of Samopomich Union Party
Ex-Vice Speaker of the Parliament of
Expert article • 2576
In the same way, the major reasons for the occupation of the Eastern
Ukraine is obtaining leverage over Ukraine in persuading Russian
interest both in internal and foreign policy of Ukraine.
Understanding the nature of the conict shapes the reections on
it. The historical context denes the words that are used to describe the
reality. There is no “conict in Ukraine”, there is “Russian aggression”,
“Russian military intervention”. There are no “militants”, there are
“Russian armed forces invading Ukrainian sovereign territory” and
“Russian proxies”. There is no “civil war”, there is “Russian-Ukrainian
war”. And the words create the world because the words you use
design the things you believe.
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Pan-European Institute
Baltic Rim Economies
29.11.2019 ISSUE # 4
ilkka kanerva
The new dialogue between Russia and
Ukraine creates potential momentum
Expert article • 2577
Geographically distant conicts often seem politically
distant. The escalation of the Ukrainian crisis in the Azov
Sea last year showed again that Ukraine is not a frozen
conict. The total number of victims of the war, which has
been going on for ve years, is over 13,000, and people
living in separatist areas and near the front line are suering from
severe humanitarian problems. The diculties in the security situation
in Europe largely stem from this conict.
In recent weeks, we have seen some slight shifts in relations
between Ukraine and Russia. The most signicant outcome has been
the exchange of prisoners between Russia and Ukraine. However,
the most important step politically has been the adoption of the so-
called Steinmeier formula by all parties, including Ukraine. The idea is
that Ukraine would adopt a law on the special status of the Donbass
separatist areas and its local elections, which would be conducted in
accordance with international standards under the control of a OSCE
monitoring mission.
Ukraine has stated that weapons must rst be withdrawn from the
area before elections can be held - the idea of elections under the
shadow of ries, of course, does not arouse enthusiasm. In addition,
according to the Ukrainians, local elections in Donbass should be
held at the same time as the whole country. It is also important to
stress, that no progress will take place unless Ukraine gains back the
full control of its borders.
The agreement on adopting the Steinmeier formula by all parties
is potentially a positive step to end the long war. For the rst time
in three years, there is a situation, which could allow negotiations
between the leadership of Germany, France, Ukraine and Russia take
place in the Normandy format.
A Normandy format summit may become possible during the autumn
season that has already begun.
Ukrainian President Volodymyr Zelenskiy wants rapid results and
progress in solving the Ukrainian crisis. Zelenskiy has stated that he
does not want to spend the next ve years solving the crisis. This is
reected in his active approach, including opening a dialogue with
Russian President Vladimir Putin. Ukraine’s new foreign minister,
Vadim Prystaiko, also announced earlier that the country would seek
to end war by the end of the year. Prystaiko has even talked about
some “painful compromises”.
There are talks between Russia and Ukraine to increase prisoner
exchange and withdrawal of arms on both sides of the contact line.
There is also a need to build infrastructure in the occupied territories
of eastern Ukraine so that humanitarian aid can be delivered to the
local population. In many places, the situation is now completely
However, the most important part in nding ways to forward is the
compliance with the terms of the Minsk agreement. So far, Russia has
not taken decisive steps to change its policy towards Ukraine and the
Minsk ceasere agreement violated on a daily basis.
Right now Ukraine needs the support of its international partners
in its eorts. Some elements of the solution are clear and many
of them are associated with the OSCE, such as the SMM and the
Contact Group or numerous election observation missions. The
OSCE also has to play a strong role in facilitating the implementation
of the Minsk agreements, such as possible measures to organize
the autonomous status of the Donbass region, the organization of
elections and monitoring of the region.
For Finland, the impact of the Ukraine crisis has been great.
Post-Cold War geopolitics have brought NATO and Russia into
contact along the Baltic Sea Region, which has also meant tensions
are moving closer to Finland’s territories. Therefore, Finland has a
particular interest in seeking constructive opportunities to promote
conict resolution.
During his visit to President Volodymyr Zelensky in Kiev, President
Sauli Niinistö said that Finland would provide good services if we could
be instrumental in achieving peace in Ukraine. Finland has a long
history of promoting peace-mediation and facilitating negotations. If
the parties’ political will to nd solutions in Ukraine is real, Finland
must be prepared and have the means to advance peace-talks.
The implementation of the Minsk Agreements may require a
UN peacekeeping operation in the future, to which Finland could
contribute if necessary. In addition, Finland could have a role to play
in organizing the special status of the Donbass region, in line with the
example of Åland. Similarly, the possibility of supporting negotiations
at dierent levels should not be ruled out.
How a lasting solution to this crisis, which has a central impact
on the security situation in Europe, can be resolved is still an open
question. Dialogue is important but before any true progress towards
ending the war in Ukraine or European relations with Russia can be
improved, Russia must rst come halfway.
ilkka kanerva
Honorary Minister
Member of the Finnish Parliament (National
Coalition Party)
Baltic Rim Economies
29.11.2019 ISSUE # 4
Ariana Gic, Hanna Hopko & Roman Sohn
No peace without truth: An honest
response to Russian aggression in
In his statement at President Trump’s impeachment investigation,
U.S. Ambassador to Ukraine, William Taylor said: “If Ukraine
succeeds in breaking free of Russian inuence, it is possible for
Europe to be whole, free, democratic, and at peace. In contrast, if
Rus-sia dominates Ukraine, Russia will again become an empire,
oppressing its people, and threatening its neighbours and the rest of
the world.”
Despite recognition of Ukraine’s geopolitical importance, western
states have failed to adequately support Kyiv in its defence against
Russia’s unprovoked and undeclared war. The core of this failure is
the resistance to formally recognize that Russia is waging in-terstate
war on Ukraine. Without recognizing Russia as the aggressor, the
West cannot avail itself of the tools under international law that can
ensure Moscow’s aggression is repressed for a just peace in Ukraine.
Russia is responsible for an almost six years long multi-vectored
war eort against the entirety of Ukraine which includes covert
and overt military aggression in Crimea and Donbas, as well as a
host of other aggressive operations, including economic pressure,
terrorist and cyber attacks, hate propaganda and disinformation,
political subversion and assassinations, and interference in electoral
processes, etc., in areas outside the zone of military conict. Moscow’s
single objective is to destroy Ukraine’s political independ-ence and
territorial integrity.
Moscow has employed a massive disinformation eort to conceal
its role and avoid mor-al, political, and legal responsibility. Western
leaders have largely enabled Russia’s “plausible deniability” strategy
by indulging the lie of Moscow “backing” a “pro-Russian rebellion” in
eastern Ukraine.
In 2015, Kyiv ocially called on the United Nations, other
international organisations, and national parliaments to recognize
Russia as the aggressor state. No state rose to the occasion, instead
continuing with policies ranging from “avoiding confrontation” to
“partnership” with Moscow. The international community failed to take
decisive and ef-fective measures to repress Russian aggression,
emboldening Putin further.
Since Volodymyr Zelensky was elected president, Moscow has
renewed its eorts to force Kyiv to capitulate by agreeing to the
Kremlin’s interpretation of the Minsk ceasere accords.
Western governments are well aware of Moscow’s strategy to
create a regional belt of countries with restricted sovereignty where
Russia holds decisive inuence and control. Berlin, Paris, and
Washington know that local elections in occupied Donbas without
Russia completely ceding its war will only legitimize Moscow’s
occupation administra-tions. Giving Russian agents voice and legal
power in Ukraine’s domestic matters will sabotage Kyiv’s Euro-
Atlantic aspirations. “Solving” the problem of aggressive Russia at
the expense of Ukraine’s sovereignty promises only political havoc in
Ukraine’s rise to regional leader after its 2005 Orange Revolution
demonstrated that in-dependent, democratic, and Western-oriented
Ukraine, can become the center of gravity for the post-soviet space,
capable of transforming the region and restraining Russia’s aggressive
Moscow’s inuence in Belarus, Armenia, Georgia, Moldova
should make clear to the West that playing into Putin’s strategy in
Ukraine will not eliminate, but only enhance Putin’s power, and shift
the burden of dealing with Russian aggression entirely onto Ukraine.
The lack of recognition of Russia’s direct responsibility for the war
in Ukraine sets a dangerous precedent, undermining international
law, and endangering all sovereign na-tions. Lies do not beget peace
and stability, but war and an unpredictable world.
Empowering Russia by allowing it to act above international
law paves the way for future international security crises. Russia’s
militarization of the Arctic, expansion in the Middle East, meddling
in the Baltic and Balkan states, and a more assertive presence in
Africa and South America are ticking time bombs if Russia is allowed
to remain on its revanch-ist path. By upholding international law in
Ukraine, Putin’s destructive geopolitical design can be prevented from
The world must stand up to Russian aggression with truth and
moral integrity. An eec-tive international response to Moscow’s
aggression can be devised only after Western governments nally
have the courage and integrity to speak truthfully about Russia’s war
on Ukraine.
Truth is the key that unlocks the door to a just peace in Ukraine.
Recognition of Russia’s direct responsibility is essential in empowering
the international community with the nec-essary political and legal
mechanisms to repress Moscow’s aggression. Truth is the key to
greater international stability and peace.
Expert article • 2578
Ariana Gic
Independent political and legal analyst and
Hanna hopko
Former Member of the Ukrainian parliament,
the Verkhovna Rada
Former Head of the Committee on Foreign
Aairs, the Verkhovna Rada
Member of the Executive Committee of the
National Council of Reforms and the Anti-
Corruption Action Centre
Roman sohn
Legal expert, columnist, and civil society
Baltic Rim Economies
29.11.2019 ISSUE # 4
Vladimir Dubrovskiy
Ukraine’s after-election outlook:
Heaven or hell?
Expert article • 2579
The 2019’s electoral season turned upside down the habitual
way of Ukraine’s governance. For all of the times presidents
more or less successfully compensated weak institutions
and lack of legislative majority with informal instruments
(like blackmailing) operated by their own “political clan” – a
vertically organized reputation based web of clients and cronies that
Henry Hale called “pyramid”. But the voters elected Vladimir Zelenskiy
mostly for not being part of the post-soviet elites, particularly lacking
respective skills and having only tiny personal “pyramid”; instead they,
for the rst time in Ukraine’s history, endowed him with single-party
majority. This opens unseen opportunities but brings existential risks.
Logically, such president should lean on the formal institutions in
implementing his program (in turn, strengthening these institutions),
because for the lack of his own mighty pyramid these are his only own
instruments of power. Using somebody else’s pyramid (say, provided
by oligarch Igor Kolomoyskiy that secured Ze’s victory) would
mean ceding the lion’s share of the real power to its owner – which
cannot suit young and extremely ambitious new president. Besides,
becoming an arbiter over all oligarchs rather than staying with a single
patron is rational for the president: there are no historical examples of
large countries with plural oligarchs where president elected with high
majority remains the single patron’s puppet for any long.
Normally, a pyramid was needed for being eective arbiter, but
formal institutions could also make the trick if Zelenskiy oers to
oligarchs a credible road map of transformation towards transparent
impersonal “rules of the game”. All Ukrainian oligarchs said in
dierent times that they are interested in such rules, just lack credible
commitment that all of them will be perpetually treated equally –
which, in turn, can be assured only by establishment of the rule-of-
law, thus both processes should go hand-in-hand.
All of this taken together would mean a breakthrough towards
real liberal democracy and competitive market economy, which, in
turn, can boost capitalization and wellbeing, so that everybody wins
at the end. This all is possible, but so far remains rather an unlikely
optimistic scenario.
It is doable provided (a) abovementioned formal institutions are
suciently reliable to lean on them, (b) a well-thought reform program
exists, and (c) the president’s party is real – but none of above is true.
Indeed, the Ukrainian state institutions are of inferior quality so that at
least for some time Zelenskiy has no choice but using Kolomoyskiy’s
people and their informal networks – and the latter will do his best to
uphold this situation for as long as possible. Building his own pyramid
takes decades, current Ze-team is very far from this: it is rather a
narrow and heterogeneous circle of people that in many cases met
just a year ago or even later and failed to prepare a program they
ever dare to publish. Neither he can lean on his party that is still to be
built from scratch: as of now, the most of MPs were recruited by the
headhunting services. Last but not least, so far Ze demonstrates all
but respect to the RoL and institutions. He is also unskilled and even
ignorant in many issues necessary in his position, although learns
But if he fails to emancipate from Kolomoyskiy and become an
arbiter, the unchecked oligarchs’ competition for rents can destroy
Ukraine’s economy in months, and so can do Kolomoyskiy’s wishes’
materialization. Already bad governance is further weakened by
unskilled and often ignorant lawmakers that, above all, lack the
institutional checks and balances – this would lead to mounting
mistakes, some of them fatal. Within a year or even less this will result
in a crisis having three basic possible outcomes:
1. Better later than never, Zelenskiy takes above-described
“optimistic” way, but with much worse initial conditions (popularity
disappeared, his parliament faction split into the oligarch-controlled
groups, weaker economy …) – and, respectively, lesser the chance
for success;
2. Early elections with hardly predictable results and high
3. A coup d’état (likely – a military one) that can spark a real
civil war and serve as a casus belie for Putin’s Russia that, in this
case, could legitimize its interference or even invasion to remove
a real “fascist junta” so making it tolerable by both the West and
Ukrainian population.
There is no “political swamp” in Ukraine any more – actually, for
already six years since the Revolution of Dignity begun. The closer
to culmination this blockbuster is, the more important is voters’
education and enlightenment, as well as every move and every word
of our Western partners. Alas, the West still too often looks onto the
formal and surface things, lacks insight and understanding of the real
processes, and listens to the experts telling “understandable” things
that are far from reality. Not just Zelenskiy, but all of us need to learn
fast – otherwise it can be too late…
Senior Economist
Kyiv, Ukraine
Baltic Rim Economies
29.11.2019 ISSUE # 4
Arseniy Svynarenko
The Ukrainian politics are catching up
with changes in a society
Expert article • 2580
In Ukraine the political parties resemble groups of elites with own
interest, and they are far away from the genuine parties and
participatory politics. For decades, the neo-patrimonial system of
corrupt informal interdependencies, services and favours continue
to resist to reforms of state institutes, judicial and economic
structures (see Fisun, 2012). The 2014 parliamentary elections
brought to politics a handful of civic activists and former volunteer
ghters. The biggest political groups-parties were rebranded, while
the values and principles of their leaders remained mostly unchanged.
Opinion polls after the Euromaidan demonstrated that the Ukrainians
expected from politicians to focus on resolving the military conict,
improving the economic situation in Ukraine, and ghting corruption.
During the following 5 years political elites could not deliver on their
promises. In 2019 the majority of voters were tired with the war and
disappointment with politicians. This resulted in a major political shift
during presidential and parliamentary elections in 2019.
During his inauguration on 21 May 2019 President Volodymir
Zelensky dissolved the 8th convocation of Parliament (Rada). In his
speech, Zelensky asked members of the 8th Rada to vote for the
laws that would remove their immunity from prosecution, reintroduce
the criminal responsibility for unlawful enrichment, and change the
election law. He concluded speech with a reference to his previous
career of comedian: “Throughout my life I tried to do everything to
make Ukrainians smile. That was my mission. Now I will do everything
to prevent the Ukrainians from crying.” This was a response to voters
who shared dierent ideologies, supported dierent parties, and now
shared common tiredness with war and corruption. On July 21, 2019
the current 9th convocation of Rada was elected on early elections.
The early Rada elections allowed Zelensky to capitalize on the
support, which he received during the presidential campaign. His
campaign organization now focused on selection of candidates for a
freshly registered political party. Zelenskiy follows the steps of many
of his predecessors: making a new party for new elections and using
his power in the interest of this party. The name of the new presidential
party was taken from the TV comedy Servant to People (SP). In
this comedy, Volodimir Zelensky had a lead part of a schoolteacher
Vasyl Petrovych Holoborodko, who became a president of Ukraine.
According to the series’ plot, a group of shadowy oligarchs noticed
a viral YouTube video with a teacher Holoborodko and nominated
him for presidency. They expected to keep control behind the facade
gure of “people’s president”. Ironically, the very same accusations
President Zelensky faced during and after election campaigns when
his opponents accused him of being dependable on Ukrainian oligarch
Ihor Kolomoysky.
The during the parliament elections the SP lead by Dmytro
Razumkov had to recruit rapidly a sucient number of candidates
to cover most of constituencies and ll the candidates’ list. Ihor
Kolomoysky’s TV channel 1+1 gave the party an access to one of the
biggest tv audiences in Ukraine. In addition, a very signicant role had
the social media campaign. The SP’s digital oce was led by an IT
entrepreneur Mikhailo Fedorov who successfully organized a network
of regional party oces, volunteers, their training, coordination
of campaign messages and work with social media to support the
party and its candidates. A virtual political party got its faces and key
Dmytro Razumkov declared that no incumbent deputies would
be included on the SP’s party list. As a result, almost all of SP’s
254 deputies were unknown in the national level politics. Among
these new deputies many local politicians and middle-size or small
entrepreneurs. There is also a distinct group of two dozens MPs
thought be loyal to Ihor Kolomoysky. The fresh looking party attracted
attention of those voters of very diverse interests and ideological
camps. The SP’s voters share a strong feeling of disappointed with
political elites and distrust in towards the parliament (campaign
slogan was “Let’s trounce them again!”). Interestingly, the leader of SP
Dmytro Razumkov and a few other public gures from the SP party
spoke exclusively Russian in all their public appearances. They also
spoke in very general terms the war in Eastern Ukraine, and about
relations with Russia. This was a striking contrast to the militarist and
nationalist rhetoric of Poroshenko’s party European Solidarity (got
25 seats, lost 107 seats comparing to previous elections, campaign
slogan was “Let’s protect the European future of Ukraine!”) and openly
pro-Russian rhetoric of the former Party of Regions and rebranded as
Opposition Platform for Life (43 seats, second larges groups in Rada,
their campaign slogan was “United for peace”).
The 9th convocation of Ukraine’s parliament is very dierent a
preceding convocation. It is the youngest Ukrainian parliament to
date. Number of MPs, aged from 21 to 45 has increased by 26%.
There are 17 MPs aged from 21 to 30 years old, and 121MPs from
31 to 45 years old. From the total number of 424 elected MPs only
82 have been re-elected in this parliamentary election. As many as
342 newly-elected MPs have got into the Parliament for the rst time.
Although the parliament is male dominated - 336 men (80%) and 88
women (20%), there is 34 female MPs more comparing to previous
The 2019 elections marked probably the most signicant changes
in Ukrainian politics since the Euromaidan revolution. The society and
its political culture has changed. There is less tolerance to corruption.
Voters want to reload politics with more young people and women,
fewer older gures and ideological extremes. In the past western
regions voted for nationalist and pro-European parties, Central
Ukraine voted for leftist and populist parties, East Ukraine voted for
pro-Russian parties. In 2019 the Servant to People won in almost all
regions. It was a protest against old elites and their corrupt practices.
For the rst time in Ukrainian history, the president gets 70 approval
ratings and this disarms most of his opponents. Such parties as the
Fatherland (26 MPs), the Voice (20 MPs), Opposition Platform for Life
(43) are probably expecting that the internal conicts with in the SP
will cause the fragmentation of single party majority and any of them
may gain signicant political weight in talks about the joining the future
Research Fellow
Faculty of Social Sciences
Tampere University
Lecturer in Ukrainian studies
University of Helsinki
Baltic Rim Economies
29.11.2019 ISSUE # 4
Roman Horbyk
Transmedia storytelling ushers in new
populism in Ukraine
Expert article • 2581
On 22 April 2019, Ukraine elected Volodymyr Zelensky, a
comedian without any prior political or civic experience, as
its sixth president. A few months later, as the new country
leader basked in the light of cameras and attention of
international celebrities from Yuval Noah Harrari to Mila
Kunis at the summit of Yalta European Strategy, he returned to his
acting career and performed a sketch with former colleagues from the
comedy show where he had travestied presidents of Ukraine. Now,
a new actor acted as president Zelensky while the actual president
played a role of the president’s interpreter. Nothing seemed unique
about the trite jokes they cracked. Unique was the very situation
where an incumbent president who had risen to prominence by
performing president was now performing somebody else and was
himself parodied by an actor standing next to him. The entire 2019
election campaign in Ukraine got caught up in this double mirror: the
president was elected on the back of mind-boggling storytelling.
Unlike other post-Soviet Slavonic countries, Belarus and
Russia, Ukraine has set an example of perhaps chaotic but genuine
democracy, changing six presidents in 28 years of independence. A
typical presidency does not last over one term. Likewise, the 2019
presidential election has been lauded as a peaceful and democratic
change of government. I argue, however, that the election became a
step away from democracy for Ukraine, rather than a step forward,
due to the peculiarities of its media system.
The key aw of the political system is the charismatic leader-
centred politics controlled by oligarch clans, loose business groupings
bound by personal ties and seeking to inuence politics for private
gain. In the media sphere, the same system translates into the
ownership structure of mainstream outlets, especially large national
TV channels. They are used by their oligarch owners to project
inuence on vast masses of voters. At the same time, the smaller
investigative media outlets, often organized by activists on do-it-
yourself basis, have shown the limits of their independence after
having played such important role in the 2014 Euromaidan. In the
2019 campaign, many of them either willingly sold their muckraking
services in smear campaigns or let themselves be used unwittingly
for the same thing. On top of that, the rise of social media has further
subverted established models of political communication, opening
up the public sphere for microtargeting and other digital marketing
As a result, the campaign ran contrary to the principles of
rational deliberation, inherent to modern concepts of democracy
as theorized by Jürgen Habermas or Seyla Benhabib. The winner
appealed to the voters with transmedia storytelling that enwrapped
and entrapped the audience in an emotional story told in multiple
narratives across multiple media. As a familiar comedian occupying
the oligarch-controlled small screen for some 15 years, Zelensky
parodied and lambasted three dierent heads of the Ukrainian state
and eventually starred in a popular series “Servant of the People” as a
dierent (well-meaning and honest) reformer who unexpectedly gets
elected president. This narrative was extended by his social media
campaign bombarding Instagram with short videos and “stories”.
Split up between dierent media (this is exactly what Henry Jenkins
called a transmedia storytelling), not unlike a Marvel comic, this
campaign blurred the boundaries between a ctional character and
an actual candidate, leading many people to vote for Zelensky who
essentially continued performing during his campaign. At the same
time, he neglected traditional news media and avoided interviews or
other appearances where he could be questioned. The voters were
immersed in a story world that looked deceptively similar to their own.
Zelensky and his sta essentially substituted political participation
with political immersion. This runs contrary to rational deliberation,
which is why the election represents a step backward in terms of
media freedom and democracy.
Because of this most recent turn in “esthetization of politics” that
Walter Benjamin found stimulating for the establishment of populist
dictatorship in the 1930s, Ukraine should be closely watched.
Of course, in his rst month in the oce Zelensky already acted
problematically as he stronghanded the parliament into rubber-
stamping dubious laws, in particular launching the process of
introducing governmental leverage over the media. But not the
least is this attention due because the recent successes of populist
campaigns will likely be watched by populist politicians elsewhere in
Eastern and Western Europe and globally, in hope of repeating it.
The mediascape we live in – driven by storytelling and economies of
attention and emotion, as well as multiple media platforms caught up
in their inbuilt logic of virality – is extremely supportive for this new
type of populism, which is far more powerful than what we have seen
from the West so far.
Roman Horbyk
Postdoctoral Fellow
Umeå University
Senior Lecturer
Södertörn University
Baltic Rim Economies
29.11.2019 ISSUE # 4
Illya Kvas
Economic cooperation between
Ukraine and Finland on an upward
This February marked 27 years since re-establishment
of diplomatic relations between Ukraine and Finland. In
December 1992 Ukraine re-established diplomatic presence
in Finland, after a short period of mutual state recognition
between Finland and Ukraine People`s Republic in 1918
and early 1920ies. Since then bilateral relations between Ukraine and
Finland has been on a positive track with steady growth of bilateral
trade, regular political dialogue and people-to-people contacts.
Long ago Finland was perceived as country of origin of accessible
industrial and high quality consumer goods. Finnish industries
beneted from the proximity of the lucrative consumer market in the
east. Break-up of the USSR was more of a challenge than opportunity
for Finland, triggering large-scale process of modernization and re-
orientation of the Finnish industry. Joining the EU was a logical next
step rmly attaching Western orientation of the country, accelerating
European integration process and setting the stage for the next waves
of EU enlargement in Central Eastern Europe and the Baltics.
In early 1990ies, Ukraine, despite inheriting signicant but mostly
outdated industrial potential, was stuck in a lengthy and sometime
tiresome process of strengthening foundations of a state, dismantling
Soviet type state controlled economy, but neglecting its urgent
modernization. Modern history of Ukraine demonstrates ongoing
struggle for economic independence and continuous state building,
genuine desire to catch up with our Central European partners, fully
enjoying benets of their membership in the European Union.
Current Ukraine`s bilateral trade turnover with Finland is still quite
modest. For example, in 2018 it reached 470 mln USD, registering
25% growth in comparison with 2017. Finland is 22nd trade partner
of Ukraine in terms of trade volume among European countries.
Total share of bilateral trade with Finland is less than 1% out of total
Ukraine`s trade turnover with European states.
In the rst half of 2019, trade volume falls, in particular of both
Ukrainian export to Finland and Finnish export to Ukraine. This
trend reects uctuation of commodity prices on world market and
weakening of demand in Finland due to slowing down of the world
economy. Another explanation is scarcity of Ukrainian high value
added goods and dominant position of raw materials, like steel,
which makes Ukrainian export prone to volatility of commodity price
uctuations. At the same time, emerging of new export segments, like
ready-made garments, textiles and consumer goods, which testies
good potential for products of Ukrainian fashion industry.
Functioning of the Deep and comprehensive FTA between Ukraine
and the EU is a good instrument for Ukrainian exporters willing to
increase their presence on the European market. However, presence
of the export quotas provides certain limitations. In particular, EU
export quotas for some Ukrainian products, like honey and sugar,
are exhausted in the rst months of their application, which makes it
impossible to deliver additional quantities of available goods to the EU
We welcome gradual increase of the Finnish investments into
Ukrainian economy, which are still on a rather low level of about 130
mln USD. Apart from the long-term presence of big companies there
are positive examples of new business projects implemented by
Finnish businesses in Ukraine. Not long ago Sampo-Rosenlew started
a multimillion joint venture with Kherson machine-building plant on
assembling combine harvesters. Famous Finnish fast food chain
Hesburger invested in opening of several outlets in Ukraine. Market
leader in packaging Huhtamäki commenced business operations
on Ukrainian market. Business solutions oered by Konecranes,
Cargotec, Vaisala, Ferroplan and many other Finnish companies
have great potential for development and implementation on the fast
growing Ukrainian market.
High priority in bilateral economic cooperation is placed on energy
saving and energy eciency. Valuable technological expertise of
the Finnish companies in the areas of waste management, biogas
production, clean-tech solutions and forest management is in high
demand in Ukraine. Targeted nancial contribution of the Finnish
Government through a special Trust fund facilitates process of
identifying most acute problems, selection of projects for their practical
implementation using the technical assistance and guidance of the
Nordic Environment Finance Corporation (NEFCO).
The 7th meeting of the joint intergovernmental Commission on
trade and economic cooperation was held in Kyiv in September 2018.
It enabled re-focusing of attention of government bodies, business
structures and trade associations to the untapped potential in bilateral
economic relations. Recent change of power and introduction of the
new government administration in Ukraine provides new possibilities
for speeding up reforms in major sectors, including privatization
of state assets and land reform, aimed at attracting new foreign
investments and providing new business opportunities for foreign
companies operating in Ukraine.
Overall, last years demonstrated high intensity of political dialogue
between Ukraine and Finland, including at the highest level of heads
of states. Ukraine appreciates steadfast support of the Government
of Finland of the ongoing process of modernization and reforms in
Ukraine aimed at promoting economic development and well-being
of the population. It also contributes to implementation of Ukraine`s
European integration agenda.
Despite current security challenges related to the Russian aggression
and temporary occupation of the part of sovereign territory, Ukraine
proves to be able to proceed on the path of reforms, gradually
transforming itself into fully democratic, modern European state with
high potential for economic and business development.
Expert article • 2582
Illya Kvas
Charge d`Aaires a.i. of Ukraine in Finland
Baltic Rim Economies
29.11.2019 ISSUE # 4
William Taylor
Why Ukraine matters
40 million people. Abundant natural resources. A location in
the heart of Europe.
Add to that a new government. The country’s youngest
president ever. The youngest prime minister. The youngest
cabinet. And the youngest parliament.
It’s a very exciting time to be in Ukraine. The whole world is
captivated by this energetic, dynamic country with great potential.
Many diplomats, political analysts – and of course, the Ukrainian
people – are asking these days: Is this a new Ukraine?
Is something really dierent?
Is there a new commitment to European values?
Is there a new commitment to defeating corruption, oligarchs, and
Is there a new commitment – and perhaps new approaches – to
ending the conict in eastern Ukraine?
From what I’ve seen and heard in meetings with dozens, if not
hundreds, of Ukrainian ocials and civil society members, the answer
is clear.
The Ukrainian people want deeper connections with the EU, with
NATO, and with individual Western countries.
The Ukrainian people want to root out the corruption that has
plagued their economic progress and Western integration in the past.
The Ukrainian people want access to objective, well-researched
media, not Russian disinformation.
And the Ukrainian people want to explore all possible options for
resolving the conict in eastern Ukraine in a way that restores and
respects Ukraine’s sovereignty.
With steady support from U.S., European, and other partners
– combined with action from the Ukrainian government and civil
society I’m optimistic that Ukraine can make signicant progress
in the coming months along its Euro-Atlantic path. And the U.S. is
supporting free elections, market economy reforms and the eort to
defeat corruption to help Ukraine in taking its rightful place among the
nations of Europe.
Progress isn’t easy. We all know that. I served as U.S. Ambassador
to Ukraine in 2006 to 2009, following the Orange Revolution. Hopes
were high in that period, too, but Ukraine fell back into old patterns.
And then, in 2014, Russia illegally occupied Crimea and sent its “little
green men” to the Donbas, abandoning the post-World War II order
that had kept the peace and enabled prosperity in Europe.
It’s critical that Ukraine’s Western partners continue to band
together, in support of Ukraine and in support of the international
order established after World War II: The importance of sovereignty.
The sanctity of borders. The peaceful resolution of disputes.
This international order was not easy to build. It took a lot
of energy, a lot of focus, a lot of will, and a lot of funding. It took
commitment by nations to play by the rules, to submit ourselves, at
times, to international institutions that make decisions that aect us,
like the United Nations, the World Trade Organization. But over time,
trust grew. Nations realized the benets from this international order.
But Russia outed international norms when it invaded in Ukraine
in 2014.
Russia’s illegal aggression in Ukraine aects all of us – not just
Ukrainians, but other Europeans, Americans, and nations around the
William Taylor
Chargé d’Aaires a.i. at the U.S. Embassy
in Kyiv, Ukraine
world who believe in international order and in nations’ sovereignty.
We must continue to resist Russia’s attempt to destroy the order
that nations around the world painstakingly built.
Ukraine and its people are ghting back with soldiers, weapons,
and sanctions.
European nations and Canada are ghting back with sanctions
and with military training.
Meanwhile, the United States is providing Ukraine with lethal
weaponry and training, maintaining punishing sanctions on Russia,
and providing technical support to Ukraine as it builds government
infrastructure to support its Euro-Atlantic integration.
Each of our nations has a critical role to play – in stopping the
killing, in reestablishing Ukrainian sovereignty and territorial integrity,
and in supporting Ukraine as it tackles corruption and integrates
further into the Euro-Atlantic community.
Otherwise, what will stop Russia from applying the same
approaches and the same tactics it uses in Ukraine – disinformation,
hybrid warfare, cyber attacks, and election interference – in other
nations, including our own?
The success of the international order is not a given. It requires
the persistence, commitment, and contributions of all nations who
support freedom, democracy, and sovereignty.
The Ukrainian people are actively ghting two battles: against
Russian aggression and for a brighter, Euro-Atlantic future. We have
to help them win both.
Ukraine is at the center and the forefront of the global ght for
sovereignty and for international order. And so Ukraine matters to all
of us. And Ukraine must succeed.
Expert article • 2583
Baltic Rim Economies
29.11.2019 ISSUE # 4
Antti Hartikainen
Ukraine should be rich: Why isn’t it?
Ukraine is a country with phenomenal potential. As anyone
with any experience of Ukraine will know, the country has
a wealth of well-educated, hardworking people, a proud
industrial heritage and some of the most fertile land on the
planet. By rights, it should be a rich country with a steady
ow of international business visitors, whose only worry is which one
of the many lucrative opportunities on oer they should invest their
money in.
Sadly however, the experience of international investors and
domestic entrepreneurs in Ukraine has not always been worry free.
The worries that businesses have faced are closely linked to
weaknesses in the rule of law. After all, who apart from the most risk-
tolerant would start a business if there was a fear that the investment
might be raided by corrupt ocials or their backers? This was one of
reasons that law enforcement and rule of law reform was considered
a priority by the Ukrainian authorities following the Maidan events,
and why the EU was invited at the time to set up an advisory mission
focusing on civilian security sector reform – the EU Advisory Mission
(EUAM) Ukraine, which I head.
Ukraine has undeniably made signicant progress in strengthening
the rule of law in the past ve years. Indeed, the former President
of the European Commission Jean Claude Juncker complimented
Ukraine last year for achieving more in terms of reform since Maidan,
than in the previous quarter century. But signicant weaknesses
remain. If the new government’s ambitions to make Ukraine a leading
investment destination are to be realised, reform of law enforcement
and rule of law institutions will need to be sped up, particularly in
the following institutions: the Security Service of Ukraine (SSU), the
prosecution services and the judiciary.
There is no domestic intelligence service in Europe or North
America, which enjoys the SSU’s wide-ranging powers. With over
30,000 employees (compared to under 5,000 at Britain’s MI5), the
SSU’s competences include the power to investigate economic crime.
Allegations that businesses are being approached by SSU ocers
for hefty bribes have dogged the organisation for a long time, while
credible journalistic investigations have revealed some SSU ocers
living in mansions and driving cars worth multiple times their ocial
I should stress that many SSU ocers are discharging their duties
to protect their country against Russian aggression with undoubted
heroism. Unfortunately however, it looks like some bad apples within
the organisation undermine the patriotism and commitment of their
more principled colleagues. Ukraine’s new government has made a
commitment to root and branch reform of the SSU, and this is to be
At EUAM, we are working closely with the EU Delegation to Ukraine,
the NATO Liaison Oce to Ukraine, and the US Embassy to Ukraine
to support a reformed SSU. We are advocating for its activities to be
subject to oversight by the Ukrainian Parliament and for the majority
of investigative functions to be handed to other agencies. This will
allow the SSU to concentrate on core domestic intelligence functions
such as counterintelligence, counterterrorism and protection of state
secrets. This structure is widespread in democracies and if adopted
would strengthen the rule of law as well as security in Ukraine.
Antti Hartikainen
EU Advisory Mission Ukraine
Equally important is reform of the prosecution service. Few would
have expected that the names of past General Prosecutors of Ukraine
would ever feature so prominently in international news bulletins.
The sudden recognisability of names such as Viktor Shokin or Yuri
Lutsenko as a result of the impeachment hearings in the US gives
a good indication however of the outsized importance that the top
prosecutor holds in Ukraine. The position of General Prosecutor in
the Soviet period and the years that followed was a hugely political
appointment, and the incumbent’s powers were frequently used
to pursue political enemies rather than in the interests of justice. If
Ukraine’s new Prosecutor General, Ruslan Riaboshapka, manages to
introduce a culture of political impartiality into his organisation, he will
go down as a historic gure for his country.
The last rule of law institution in need of major change is the
judiciary. The judicial system is one of the least trusted bodies in the
country, with a recent survey conducted by the Razumkov Centre
demonstrating that only 15% of Ukrainians trust their judges. A lack
of trust in the judiciary acts as a major brake on Ukraine’s economic
There is no reason why Ukraine should not be a rich country. For
this to become a reality, Ukraine will need a domestic intelligence
agency, prosecution system and judiciary that have no other activities
than those proscribed by law. Until then, international friends of
Ukraine, of which I’m proud to call myself one, will be doing everything
in their power to support those Ukrainians trying to make this happen.
Expert article • 2584
Baltic Rim Economies
29.11.2019 ISSUE # 4
Peter M. Wagner
Towards a more resilient Ukraine
More than ve years after the Maidan Revolution of
Dignity, the illegal annexation of Crimea and Sevastopol
by the Russian Federation and a continuing conict in
Ukraine’s eastern regions that has so far claimed the
lives of over 13.000, it is a good moment to take stock of
the support the EU is providing to Ukraine in its ght for sovereignty,
territorial integrity and socioeconomic development and its sovereign
choice of a European path. In addition to the EU’s staunch political
support, the two elements probably best known to the wider public are
the ongoing restrictive measures against Russia – better known as
sanctions – and signicant nancial assistance to Ukraine.
Since the beginning of this intensied cooperation, the EU has put
resilience at the forefront of its eorts, thus substantiating President
Tusk’s repeated stance that there cannot be a resilient Europe without
a resilient Ukraine. In order to build resilience, support reforms, and
facilitate socio-economic recovery and development, the EU has
since 2014 mobilised the biggest support package for a partner
country, containing a number of innovations. The creation of the
European Commission’s Support Group for Ukraine (SGUA) has been
recognised as one of those innovations. It brings together experts from
EU institutions and Member States in order to allow Ukraine to make
the most of the opportunities oered by the Association Agreement
and Deep and Comprehensive Free Trade Area with the EU as well
as to support Ukraine’s wider reform agenda.
Since 2014, the EU has mobilised around 15 billion Euro for
Ukraine. The often-quoted “unprecedented level of support” is a
correct statement, though the size of the package is also a function of
the size of the country.
The biggest block includes concessional loans provided via
Financial Institutions such as the European Investment Bank (4.6 bn
EUR) and the European Bank for Reconstruction and Development
(4 bn EUR). These usually include support – via domestic banks
- to the nancing of the real economy, or major public and private
investment and infrastructure projects. The second biggest block is
the EU’s Macro-Financial Assistance (MFA), of which the EU has so
far paid out 3.3 bn EUR under four subsequent programmes. The
MFA consists of benecial loans to the state budget, guaranteed by
the EU budget and paid out after fullment of earlier agreed conditions
linked to the implementation of reforms.
The most visible EU support are the 2 bn Euro in grants mobilised
since 2014 from a multitude of EU instruments, including so far 133.8
million Euro humanitarian support. About 1.3 bn Euro mobilised from
the European Neighbourhood Instrument (ENI) are therein the funds
that are particularly available for economic development, capacity
building and change management in support of the reform agenda.
In a context of strong involvement of other international partners in
Ukraine, the jointly identied four priority areas are making up more
than 80 % of the actual ENI portfolio: energy, the rule of law, better
public services and the economy (notably small and medium-sized
The capacity-building programmes in these four areas have a
series of common characteristics. Firstly, many of them are large-
scale (double- to triple digit million price tags) which responds to the
size of the country and its thresholds for a critical mass. In order to
Peter m. Wagner
European Commission Support Group for
Brussels / Kyiv
achieve these dimensions, signicant Member States resources often
top up the EU budget. Member States also play a signicant role as
implementers (via their authorised agencies). Beyond enhancing
synergies and impact, this allows to involve targeted Member States
expertise, for example from experts who have worked on similar
changes during the accession of their own country. In addition, the
programmes involve in total hundreds of young Ukrainian experts
as mainly EU-nanced change agents of change, thus catalysing
capacity building and feeding back competencies into the Ukrainian
First results are becoming visible, e.g. in more transparent
recruitments for the civil service, more capable and accountable anti-
corruption agencies, hundreds of more autonomous and eciently
managed local communities (hromadas), thousands of young people
studying abroad, hundreds of thousands of visa-free visits to the EU.
Now it will be crucial that following the recent democratic change of the
country’s political leadership, the vigorous implementation of critically
viewed but in the end successful reforms continues and no time is lost
in “reinventing the wheel” and focussing on replacing people rather
than creating sustainable structures.
With EU and other international support, Ukraine has managed
to tame and reverse its economic and political crises – despite the
continuing military crisis in the East and South. But changes will have
to continue, and so will EU support. This EU support has contributed
that during this period the country has “not collapsed and has managed
to move on and try to get out of this crisis on a new basis. Despite
immense challenges Ukraine today is a much stronger country than it
used to be” (EU High Representative Federica Mogherini).
Expert article • 2585
Baltic Rim Economies
29.11.2019 ISSUE # 4
Kateryna Rozhkova
Ukraine: A modern, European
nancial system
Expert article • 2586
Ukraine continues to move towards a competitive and
ecient nancial sector. The banking crisis of 2014–
2016 led to the bankruptcy of more than 100 banks, the
nationalization of the country’s largest bank (PrivatBank),
and, in total, cost the state and Ukrainian taxpayers 16%
of GDP. The “clean-up” – or more accurately, the “recovery” – of the
Ukrainian banking sector was a necessary step towards building
a stable nancial sector that can eectively redistribute nancial
resources and support economic growth. In recent years, we have
managed to engage directly with the owners of all Ukrainian banks,
strengthen their corporate governance, introduce European regulatory
standards, and create a risk-based approach to banking supervision.
Today, Ukrainian banks are highly protable: Their prot this year
increased from €800 million in 2018 to €1.7 billion in the 9 months of
2019, and the ROE indicator increased from 15% in 2018 to 38%.
Today, Ukrainian banks are well-capitalized: The regulatory capital
adequacy ratio has grown from 12.7% in 2018 to 18%. By contrast,
back in 2015, for most banks, this gure was close to zero.
Today, Ukrainian banks are highly liquid: All banks, without
exception, comply with the LCR liquidity standard, which we have
introduced in 2019. And most important, Ukrainian banks have begun
to lend. This is not about lending to their owners or other parties
related to banks, but rather about lending to real businesses and the
general population.
For the second year running, lending to the public has been
growing at a rate of 30% year-on-year, and lending to businesses
that have not defaulted has been growing by 15%–20% year-on-year.
We can also talk about the return of public condence in the banking
sector of Ukraine, because over the past two years, the volume of
household deposits in local currency has grown by 24%.
But the nancial sector is not just about banks. It goes beyond
banks, into the nonbanking nancial sector. For a long time, we have
not had the full capability to supervise and regulate this sector, as
its regulation was actually divided between three regulators: The
NBU, the National Securities and Stock Market Commission, and the
National Commission for Regulation of Financial Services Markets.
In 2015, the NBU came to the conclusion that this sectoral model
for regulating the nancial sector could not be eective in and for
Ukraine, as it prevented the regulators from responding to systemic
risks by decentralizing decision-making. Therefore, we proposed
moving from a sectoral regulatory model to a consolidated one –
which would be in line with 70% of European nancial sectors. We
opted for the Two Agency model, where two regulators would remain:
The National Bank of Ukraine and the Securities Commission.
In September of this year, the Ukrainian parliament supported
what came to be known as the Split Law, or the division of the
Financial Services Commission’s responsibilities and relegation of its
capabilities to the two aforementioned regulators. In eect, the result
will be that from July 2020, the NBU will also become the regulator of
insurance, leasing, factoring companies, credit unions, pawnshops,
and other nancial companies: In total – almost 2,100 institutions. In
turn, the Securities Commission will further regulate the activities of
private pension funds.
We now have a nine-month transition period, in which we will:
Oversee the development of new legislation for each of the
sectors, as it has not been updated in years; we also want to bring it
into line with European regulations.
Build out new functionality in the NBU – including new units
and new sta for relevant new competencies.
Obtain relevant documents, reporting, and statistics from
the nonbanking sector to build a robust and comprehensive view of
the sector.
We want to streamline regulation for the nonbanking market.
Those nonbank companies that carry the lender’s risk will fall
under general supervision – for example, organizations that attract
investment from their customers to support their activities: Insurance
companies and credit unions. Companies and organizations that do
not bear the creditor’s risk, as well as pawnshops, leasing, factoring,
nancial companies, will not be subject to prudential supervision. The
result is that only their market behavior will be regulated, in terms of
protecting the rights of consumers of nancial services.
In general, we advocate a proportional risk-based approach
to regulation. The main thing that interests us is transparency
of the ownership structure, and compliance with legislation on
nancial monitoring and capital adequacy. These should be simple
requirements, and any company that intends to operate inclusively
in the market, and not withdraw money from it, will have no problems
fullling them.
The Split Law and the transition to consolidated regulation of the
nancial sector are part of our grand strategy for the development of
the nancial sector for the next ve years. The ultimate goal is to build
a powerful and competitive sector that will support our economy and
provide quality services to the citizens and businesses of Ukraine.
This move will make Ukraine’s nancial system simpler to navigate
and more secure to engage with. The added level of transparency
means that everyday Ukrainians will benet from greater access to
a full range of nancial services, and foreign investors will gain more
options for expansion into Eastern Europe, where labor is cheaper
and knowledge is plentiful.
It is yet another move that brings Ukraine a step closer to
its ambition of full alignment with its European peers. As with its
neighbors, Ukraine must pursue reforms of this nature to reect an
increasingly complex and dynamic nancial market, which is being
driven by ever-changing technology. Ukrainian entrepreneurs, like
many innovators around the world, have fast-tracked their own
country’s reform by spearheading development in nancial services
products at a rate never seen before.
As the boundaries between nancial products continue to evolve,
Baltic Rim Economies
29.11.2019 ISSUE # 4
Expert article • 2586
it is increasingly important that nancial regulation can keep up with
an ever-changing market, closing any loopholes as quickly as they
emerge. It would be no exaggeration to say that the Split Law will set
the foundations for the ultimate realization of the NBU’s reforms for
Ukraine, and set the stage for economic growth in Ukraine for years
to come.
Kateryna Rozhkova
Deputy Governor
National Bank of Ukraine
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Pan-European Institute
Baltic Rim Economies
29.11.2019 ISSUE # 4
Ulana Suprun
The New Global Dark Age
magine being forced to leave your home and all you could take was
one suitcase. What would you take? Nearly two million Ukrainians
were forced to make this decision since Russia occupied Crimea and
invaded Eastern Ukraine in 2014. Your medical records, medicines,
trusted physicians and clinics were all left behind. Finding new medical
care in new communities was dicult, as healthcare nancing was based
on residency registration. Absorbing their healthcare needs created a
substantial burden on the already underfunded Ukrainian medical system.
So, you let your hypertension go untreated, as you cannot aord to pay for
your medication. Then a stroke leaves you paralyzed on your left side, and
you are no longer able to work.
Imagine you have just become a parent, and your newborn is about to
get her rst vaccinations. You go online and see posts about the vaccines.
You are horried to see that vaccines are “experiments on children”, that
they “kill more people than the disease they prevent”, and that “vaccines in
Ukraine are dangerous and ineective”. Because of this disinformation, you
doubt the need for immunization and leave the hospital without vaccinating
your newborn out of fear.
Several years later, your child goes to preschool. Unvaccinated, she
enters the classroom, now daily exposed to 25 other children. You receive
a text message from the school: a kid in your child’s class has the measles.
Soon, your child develops a rash, a fever and begins to cough. Your child is
hospitalized, put on a ventilator and nearly dies from pneumonia.
Or, say you have lived your entire life in Ukraine’s Crimea. You are
an HIV positive intravenous narcotics addict, who has been receiving anti-
retroviral (ART) and opioid substitution therapy (OST) from the Global Fund
through Ukraine’s healthcare system. In 2014, Russia invades Crimea. You
are forced to obtain a Russian passport to receive medical care. You have
no choice as you may die without the therapy. Then you discover that OST is
unavailable in Russian controlled areas, and that the Global Fund has been
banned from supplying ART in Crimea. So, you buy a few hits of heroin,
inject a large dose into your vein, and die from an overdose.
These are the realities of life in Ukraine since Russia invaded Crimea
and parts of Eastern Ukraine. Russia’s hybrid war against Ukraine is often
described in terms of military, information, energy, and economic eects.
However, Russia is also attacking Ukraine on a more basic level, undermining
its most valuable asset- its human capital. By limiting the access to evidence
based, modern healthcare services, something that is a given in modern
civilized societies, Russia is threatening to throw Ukraine, and the global
community, into a New Dark Age..
The transformation of Ukraine’s healthcare system since 2016, with the
creation of the National Health Service of Ukraine, a single payer universal
health coverage provider, guarantees all Ukrainians access to healthcare.
They are now free to choose their primary care physician, no longer tied
to their residency registration, and over 28.5 million have done so in a little
over a year. The guaranteed service package and the pharmaceutical
reimbursement program have allowed patients with chronic illnesses, such
as hypertension, to receive uninterrupted care. And transforming medical
facilities from government owned and run institutions to publicly owned non-
corporations has created competition. Patients are now sought
after rather than being deterred from obtaining care due to lack of
A 2018 investigation into vaccination disinformation campaigns
in social media looked at 1.7 million tweets from 2014 to 2017 and
found that Russian trolls had a signicant impact online by coming
Ulana Suprun
MD, Acting Minister of Health of Ukraine
Chairman, NGO Arc.UA
down on both sides of the issue, creating controversy and hype
(American Journal of Public Health, October 2018). In 2019, the WHO
put forward its ve year strategic plan, naming the biggest threats to
global health, including “vaccine hesitancy,” fueled by “weaponized
health communication.”
Since 2016, the measles vaccination rate has grown from 44.5% to
91% in Ukraine. Procurement of vaccines through UNICEF, assuring
free vaccination, and targeted communication campaigns had a
positive eect. However, due to the low vaccination rate over the last
decade and lack of ecacy of vaccines procured from Russian owned
manufacturers in the past, Ukraine suered a measles outbreak: since
2017, over 115,000 cases were reported with 41 deaths. Ukraine still
has a low vaccination rate for other vaccine-preventable diseases such
as diphtheria and Hepatitis B. More work needs to be done, including
holding Russia accountable for disinformation and manipulation of the
subject, while Russia boasts near-perfect vaccination rates.
Russian occupied Crimea and sections of Donbas were
inaccessible for most humanitarian organizations since the start of
Russia’s war against Ukraine. Failure to access care has resulted in at
least 40 deaths of former OST participants. In 2017, Ukraine became
the rst country in Eastern European and Central Asian regions to
provide OST from the state budget. Over 12,000 Ukrainians benet
from the service. Harm reduction programs such as syringe and
needle exchange, condom distribution, free HIV testing at primary
care clinics, pre-exposure prophylaxis are all available and nanced
through Ukraine’s state budget. Ukraine is the rst country to initiate
and implement a Global Fund transition plan to take over full nancing
for the HIV programs through the state budget. These advances have
helped almost 200,000 HIV positive patients in Ukraine in the last few
years, but they have not reached the estimated 50,000 people living
with HIV in Russian occupied territories.
Ukraine has made great strides in creating a fair and equitable
universal healthcare system for its citizens, while facing the
challenges brought on by Russia’s hybrid war against Ukraine. The
Russian invasion of Afghanistan in 1979 drove Afghan society into
the dark ages. Now, Russia is doing that on a global scale, targeting
established and evidence based medical practices using the weapons
of drama and entertainment wrapped in disinformation coupled with
military invasion. To begin solving this global issue, we need to
start calling things by their real names. Russia is a state sponsor of
terrorism, whose real aim is to usher in a new Global Dark Age.
Expert article • 2587
Baltic Rim Economies
29.11.2019 ISSUE # 4
Oksana Holovko-Havrysheva
In support of European choice of
Expert article • 2588
In 2018 the Constitution of Ukraine was amended with a clause
conrming the European choice of Ukraine as the main course of
its external policy. The relevant provisions have been introduced
into the Constitution preambula underlining the European identity
of Ukrainian people and irreversibility of the European and
Euroatlantic course of Ukraine. The powers of Verkhovna Rada
of Ukraine, the Ukrainian President were determined in order to
support institutionally the European choice of the country. On the
road to these constitutional amendments Ukraine experienced huge
enormous civic engagement and empowerment during Euromaidan,
now it goes a dicult way in ghting for its territorial integrity while
facing the military aggression from Russian Federation and reforming
its internal policies at the same time.
The civic society engagement for supporting the European future
of Ukraine has always been routed into the activities of the local civic
society institutions, which operated throughout the country from East
to West and from North to South.
Ukrainian European Studies Association has been established
in 2006 in Donetsk as non-governmental and non-prot organization
to promote the cooperation among teachers and researchers of
European integration on individual basis. Currently it operates in all
regions of the country. It unites professionals not only from social
sciences and humanities, but also tries to boost the cooperation
and look for intersections with fundamental and applied sciences. It
conducts its meetings on annual basis and seeks to discuss among
its members as well as with wider audience topical issues in the EU-
Ukraine relations and contemporary trends and challenges in Europe.
Last Congress of the Ukrainian European Studies Association, which
was held in Odessa, addressed new challenges for the EU-Ukraine
relations in the times of the global crisis and focused upon resilience
strategies in the EU Foreign policy and its implications for the relations
with third states.
Following philosophy docendi discimus, the UESA seeks to
support professional development of its member and boost the
quality of the academic research in such areas as human rights,
rule of law and democracy, economics, sustainable development
and innovations, good governance, security in regional and global
dimensions and Ukraine’s integration into European Educational and
Research Area.
On constant basis it organizes annual congresses, which are
widely open for the participation and this year it started a European
Studies Research School aiming to equip young researchers and
scholars with much academic research skills.
The UESA is open for cooperation. More details is available
under or on our FB page https://www.
Oksana Holovko-
Ukrainian European Studies Association
Baltic Rim Economies
29.11.2019 ISSUE # 4
Mykhaylo Komarnytskyy
The future of US-Ukrainian Strategic
Expert article • 2589
It is an indisputable fact that the United States continues to be
among the world’s leading powers in the system of international
relations and one of the main strategic partners of the Eastern
European countries, including Ukraine. Among the main areas of
strategic partnerships between Ukraine and the United States can
be distinguished economic, political and military spheres. In particular,
Ukraine pursues a policy of close cooperation with the United States
States, developing cooperative programs that have been agreed
upon in the contractual framework. Legal basis of bilateral relations
covers a wide range of spheres of Ukrainian-American cooperation,
including trade, economic, technical, educational, humanitarian, law
enforcement, etc.
United States is not only interested in spreading democracy, but
also in establishing a strategic partnership in Central Europe for the
sake of ensuring sustainable development and further transformation
of countries of post-Soviet space. The main focus in relations between
US and Ukraine is made on the issue of security and stability, including
promotion of NATO membership, trade and economic cooperation and
implementation of energy independence. In my opinion, through the
resolution of these components of the strategic partnership between
Ukraine and United States, Ukraine can strengthen its economy and
the military-industrial complex, which in turn will partially inuence
on the resolution of the illegal annexation of Crimea by the Russian
Federation and conict elimination in the eastern part of Ukraine.
Strategic partnership is an important tool in the relationship
between countries in foreign policy, which are increasingly used by
leading countries and integration associations as it enhances the
eectiveness of their actions in the international arena. Strategic
partnership is a type of interstate relations, built as a coherent
system of states’ interaction with the direction of the realization
of common strategic goals and interests. Unlike allied relations,
strategic partnership does not imply a rigid system commitment of a
political, economic, humanitarian or security nature. In a broad sense,
strategic partnership is a system of interaction between the two or
several states, which is based on the recognition of shared values
and the vision of high level of cooperation in certain areas, mutual
foreign policy support, in particular in the framework of international
organizations, coordination of positions in crisis situations and in
solving international ones conicts. It is necessary to emphasize
the need for developing strategic and parity partnerships between
Ukraine, the US and the EU for the sake of stabilization of the situation
in the eastern part of Ukraine, as well as for reclaiming annexed
Crimea peninsula from Russia.
It seems that today there is no alternative for the government in
Kyiv to develop relations with the US comprehensively. In this context,
the rst task for Ukraine in the forthcoming years should be reviewing
the performance of existing bilateral mechanisms and developing
practical plans for the future. Ocial Kyiv should also take into
account the American style of foreign policy thinking, which underlies
Anglo-Saxon, that is, not a purely formal approach to alliances, but
a deep understanding and recognition that relations with another
country are based primarily on common interests and values. This
is the approach the United States has applied to Britain during World
War II and is applying to its current key ally, Israel.
Attention should also be paid to today’s strengthening of the US-
Poland partnership. Given the already steady course of US support for
Ukraine, it is advisable to concentrate eorts on its rooting and further
solidication in the American foreign policy tradition. Possible rst step
would be to grant Ukraine the status of Major Non-NATO Ally, a status
that was granted to Brazil on July 31, 2019. In addition to its important
political implications, it will also have signicant practical implications,
including new opportunities to deepen military co-operation with the
US, preferences in US arms procurement and streamline procedures,
broad assistance in military training, and more.
Undoubtedly, Ukraine’s value as a partner to the United States will
increase in case of the success of internal reforms, active economic
development, and strengthening of relations with the countries with
which the United States is already actively cooperating in our region,
in particular, Poland, Lithuania, Romania. In my opinion, it is also worth
analyzing in a more detail strategic partnership between Ukraine and
the US in the context of global threats. After all, world transformation
processes show that dynamic and multi-vector changes in the system
of international relations aect not only politics or economy but also the
whole structure of international relations in its global manifestations.
Ph.D. (Political Science), Associate
Department of International Relations and
Ivan Franko National University of Lviv
Center for American Studies
Ivan Franko National University of Lviv
Baltic Rim Economies
29.11.2019 ISSUE # 4
Jan Strzelecki
Kremlin’s policy towards Ukraine
after Zelenskiy’s victory
Expert article • 2590
From Russia’s perspective, the 2019 Ukrainian presidential
and parliamentary elections had fundamental importance.
After ve years of the Russian-Ukrainian conict, Moscow
had very few instruments left to inuence either public
sentiment or the election results in Ukraine. Moscow
adopted a wait-and-see attitude in hope that Ukraine’s position on key
issues would change after the election. Russian opinion makers have
interpreted the election results as a sign that the Ukrainian public is
tired of the confrontation with Russia and wants to normalize relations
with Moscow.
Kremlin’s Strategy
The Kremlin’s strategy involves forcing Ukraine into decentralisation
and granting the Donbas autonomy within the Ukrainian state, which
would mean the de facto legitimation of the separatists, and the
increase of the inuence Moscow can wield over Ukraine. To achieve
its objectives, the Kremlin is trying to weaken the government and
cause political instability in Ukraine. During the presidential campaign
Moscow counted that by openly supporting Volodymyr Zelenskiy it
could deepen the divisions in Ukrainian society. But during almost 6
years of conict between the two countries Russia has lost orientation
in social moods in Ukraine as well as the majority of instruments to
inuence Ukrainian society. In result, it miscalculated the level of
social support for the new president: Kremlin hoped that Zelensky will
be a week president and that the pro-Russian fraction in the Ukrainian
parliament will become more important because he himself will have
no major political base among the deputies. Whereas, the presidential
party “Servant of the People” not only won the parliamentary election
but also had a highest level of public support in Ukrainian history after
Nevertheless Kremlin hopes that after the 2019 elections Moscow
will be able to dictate the conditions of normalisation of the relations to
Kyiv, because Zelensky will try to realise promises of peace in Donbas
which he has made during the presidential campaign. Moscow knows
that if there is any real progress in the peace process, the main risk
for Ukraine’s new government will be how the Ukrainian public reacts.
If the active part of society, including veterans of the Donbas conict,
comes to see any such agreement as a betrayal, this could lead to a
serious domestic crisis.
Kremlin plays on this moods. For example a three days after the
second round of presidential elections in Ukraine, President Putin sign
decree introducing a simplied procedure for granting citizenship to
the residents of the separatist republics in the Donbas. Moscow is
aware that signing this decree fuels political divisions in Ukraine and
weaken the president-elect’s position.
New opening?
Moscow did not achieve compromise on the resolution of the
conict in Donbas. However, both sides are trying to create the
impression of a new opening and their readiness to negotiate. This
creates a chance to alleviate the conict: the intensity of the ghting
has decreased in recent months, on 7 September an exchange of
prisoners took place, and both sides agreed on withdrawal of troops
from a few areas. At the beginning of October President Zelensky
announced that an agreement had been reached to implement the
so-called Steinmeier formula, which is seen as a concession from
Ukrainian side. However, the implementation of the formula—that
means conducting the elections in the separatist-held territories
under Ukrainian legislation and under the supervision of the OSCE,
a special status for the territories, and the return of Ukrainian control
of its border with Russia--is in question. The main reason are the
dierences in its interpretation relate to the schedule of withdrawal of
troops and return of Ukrainian forces on the state border, the future
of the current “separatist’s” authorities, and also a way to create
conditions for conducting democratic elections in areas where war
has been going on for almost six years.
New situation in relations between Kiev and Moscow can entail
both hopes and risks. Moscow seeing the concession from the
Ukrainian side immediately strengthened demand that Kyiv should
formally recognize the puppet leaders of the separatist parastates
in the Donbas which Moscow supports. This shows that the Kremlin
is still trying to pursue its strategy of forcing Ukraine to formally
reintegrate the occupied part of the Donbas with current authorities
and bring about the federalization of the country. Moscow believes
that in the long term this will bring Ukraine permanently into the
Russian sphere of inuence, and allow Russia to gain control of its
policies, and prevent it from moving closer to the West.
Russia hopes that it can gain international acceptance for its
demands and interpretation of the Minsk agreements and “the
Steinmeier formula”. Meeting these expectations by the international
community is the greatest risk of the current situation. On the other
hand, the search for a way to return to negotiations gives some hope
that Moscow will make some concessions. However, it will not happen
if the West succumbs to Kremlin’s demands and weakens its support
for Ukraine.
Jan Strzelecki
Sociologist, Analyst
Centre for Eastern Studies
Warsaw, Poland
Baltic Rim Economies
29.11.2019 ISSUE # 4
Viktor Ogneviuk
Cooperation in human capital
Having dened the entrance to the consortium of democratic
European states as the vector for its external policy,
Ukraine is continuously making eorts to obtain the status
of a parity partner and a reliable ally in the promotion of
European values underpinning the value of human capital.
Such strategic vision of Ukraine’s European perspective sets the
format of cooperation with the EU countries in all areas of human
activity and particularly in the eld of higher education as a dominant
human capital creative domain. The Baltic countries play an important
role in this cooperation, because their positive inuence, notably in the
educational processes, contributes signicantly to the development of
Ukraine as the European state.
Thus, in accordance with the Intergovernmental Agreement
between Ukraine and the Republic of Finland until July 2022 they
are implementing the project “Finnish Support to the Reform of
the Ukrainian School” in Ukraine with the support of the European
Commission. The project “Learning together” (shortly, project brand)
is funded by the Ministry of Foreign Aairs of Finland and the EU and
is divided into 3 clusters (teacher training, educational promotion and
Borys Grinchenko Kiev University is actively involved in the
“Learning Together” project and motivated to study Finnish experience
of future teachers’ training as I did at Helsinki University and its basic
school Vikki created by Haaga-Helia while examining the Finnish
national quality assurance in education.
Besides, at the invitation of the President of the National and
International Association of School Directors of Finland Ari Pokka,
Grinchenko University sta studied Finnish experience in organizing
educational activities in elementary, primary, professional schools
and the functioning of the system of professional training of future
elementary school teachers in Jyväskylä city HEIs.
The cooperation of Grinchenko University with the HEIs of the
Baltic States started in 2010 with the joint Ukrainian-Swedish project
“Training of managers in the eld of education: European levels,
standards, competencies”, which was implemented jointly with the
University of Linneus (Växjö, Sweden) with Visby program support.
The results were large-scale and useful: from conducting training
programs by Swedish experts for Ukrainian scholars to developing a
new Master’s program in training managers in the eld of education,
licensed and accredited by the Ministry of Education and Science of
Ukraine. In fact, this project prompted the university to learn about
the experience of the Baltic region countries in the development and
implementation of educational policies, national strategies in education
and cooperation in HE and science. Thus, Grinchenko University has
established partnerships with HEIs in Finland (Tampere University,
University of Turku), Latvia (Rezekne Academy of Technology,
Daugavpils University), Lithuania (Kaunas University of Technology,
Vilnius University, Lithuanian Sports University, Lithuanian University
of Educational Sciences), Estonia (Estonian Business School) and
others. It has led to the next joint HE projects:
- “Education for Leadership, Intelligence and Talent Development
(ELITE)”, implemented with Tampere University (Finland), Estonian
Business School (Estonia), Kaunas University of Technology
(Lithuania) within the Tempus Program in 2013-2016. It was aimed
Viktor Ogneviuk
Sc.D., Rector, Professor, Academician
Borys Grinchenko Kyiv University
at enhancing the HEIs role as generators of social progress in
implementing public policy on HR development through the leadership
and organizational capacity development services;
- cooperation with the Lithuanian University of Educational
Sciences, in addition to joint scientic conferences, has resulted
in a collective monograph “The development of the spirituality of
education”, dedicated to the actual topic of the development of the
spirituality of education in the age of globalization and the role of
teachers as subjects of moral improvement of spiritual education
values and European priorities for sustainable development;
- development of cooperation within the Erasmus+ program
with Tampere University (Finland), Vilnius University (Lithuania) in
the academic mobility programs contributes to the enhancement of
multicultural education, and international communication and the IHE
strategy implementation.
The provided examples prove that cooperation between Ukrainian
and the Baltic States’ HEIs is very important for the EU priorities
implementation in the educational and scientic elds, development
of professional and sectoral contacts as well as HE standards with
focus on enhancing the value of human capital and leadership,
joint research activity and disseminating the Baltic states positive
experience in capacity building, public and institutional administration.
Expert article • 2591
Baltic Rim Economies
29.11.2019 ISSUE # 4
Mariya Zubrytska
Lviv University: Where history meets
Expert article • 2592
Lviv is a medieval city in Western Ukraine with a population
of 724,000 habitants. Founded in 1256 by Ukrainian king
Danylo, the city is located only 70 km from the Polish border
(EU border). It is the city with a rich history and culture, its
historic center assemble was included into UNESCO World
Heritage List. We used to say that Lviv is a model of old multicultural city
with dynamic nature of modern identity building. This multiculturalism
as a model living-together still is present in dierent pronunciation of
city name: Lviv-Leopolis-Lemberg- Lwów-Lvov. Among the tourists,
Lviv is famous as the coee capital of Ukraine. City coee houses
became a very important hub for academic, intellectual and cultural
life. Students and professors, painters, actors and lmmakers came
together to share plans and dreams with people of dierent origin and
One of the most famous Lviv interwar cafes was “Kawiarnia
Szkocka” (Scottish Coee House). There, the mathematicians from
Lviv School of Mathematics collaboratively discussed research
problems, particularly in functional analysis and topology. Among
them, there were scholars of dierent ethnic backgrounds Stefan
Banach, Hugo Steinhaus, Stanislaw Ulam and others. Stanislaw
Ulam recounts that the tables of the cafe had marble tops, so they
wrote in pencil – directly on the table surface or napkins during their
discussions. To keep the results from being lost, Stefan Banach’s
wife presented them with a large notebook that was used for putting
down the problems and answers and eventually became known as
the “Scottish Book”. Today the copy of this book can be found in a
contemporary cafe that bears its historical name.
This well-known story is only one of the brightest storytelling
fragments about Lviv as a city of academic life with long-lasting
intellectual traditions. In a very central part of the city is located Ivan
Franko National University of Lviv, one of the oldest universities in
East-Central Europe. It was founded in 1661, and throughout its
history has demonstrated scholastic innovation that fosters critical
thinking and social responsibility. Lviv University was named after
the famous Ukrainian writer, politician and activist Ivan Franko (1856-
1916), who studied at the university’s Faculty of Philosophy.
Currently, Lviv University is a leading Ukrainian higher education
institution. Over 20 000 students obtain academic degrees oered
by the University’s 19 Faculties and 3 colleges. The University
library is the oldest in Ukraine (founded in 1608), and it stores 3.2
million volumes in more than 150 languages, including famous
Manuscripts and Rarity Books Collection. University has 6 objects
of the National Property of Ukraine: Zoological Museum (founded in
1885), Herbarium (founded in 1783), Botanical Garden (founded in
1852), Microbial Culture Collection of Antibiotic Producers (1995),
Astronomy Observatory (founded in 1769).
Lviv University, like most universities around the world, maintains
a broad network of international partnerships. We signed 180
agreements with foreign higher education institutions and research
institutes from 61 countries. Over 1000 guests from dierent countries
visit University annually to study here, do eldwork, deliver lectures,
do research, participate in conferences, work in libraries and in the
archives of Lviv. Approximately the same number of researchers and
students of the University every year go abroad for studying, doing
research, participating in conferences and seminars etc.
We particularly enjoy a dynamic cooperation with Baltic and
Scandinavian universities, particularly with Tartu Ülikool (University
of Tartu), Turun yliopisto (University of Turku), Latvijas Universitāte
(University of Latvia), Lithuania Mykolo Romerio universitetas
(Mykolas Romeris University), Lithuania Kauno technologijos
universitetas (Kaunas University of Technology), Šiaulių universitetas
(Siauliai University), University of Bergen.
Lviv University is a member of the Baltic University Program. There
is a Center of Northern European Countries which is driving force
of our interactions with our partners from Baltic and Scandinavian
states. Our university is the only university in Ukraine which oers
students teaching of Estonian, Lithuanian, Swedish, Finnish and
Norwegian languages, Finally, the idea and the project of the Baltic-
Black Sea alliance of Eastern European states, is being developed
by Ukrainian, Polish and Lithuanian geo-political scientists for over
100 years. The rst President of Ukraine Mykhailo Hrushevsky, the
famous Ukrainian historian, introduced the idea of creation of the
Baltic-Black Sea Alliance in his work “The Black Sea Conception”
(1918). In 1894 Mykhailo Hrushevsky was appointed professor of
the newly created chair of Ukrainian history (ocially it was called
The Second Chair of Universal History, with special reference to the
History of Eastern Europe) at Lviv University. That is why it was very
symbolic for our academic community to oers students in a new
2019/2020 academic year Master’s Degree Program “Baltic-Black
Sea Regional Studies”.
Mariya Zubrytska
Ph.D. (Philology), Professor
Adviser to the Rector in International
Projects Development
Vice-Rector for Academic and International
Aairs (2014-2019)
Ivan Franko National University of Lviv
Baltic Rim Economies
29.11.2019 ISSUE # 4
I. Farías Pelcastre, A. Anokhina & K. Parkhomei
Corruption and reform in education in
Expert article • 2593
To this day, the government of Ukraine –from the local to the
national level– is still perceived to be one of the most corrupt
in the world. In Transparency International’s Corruption
Perceptions Index, Ukraine is comfortably positioned in the
upper half of the table, among some of the countries with
the most corrupt governments. Its rank in the 60th place, out of 180
countries evaluated, puts it closer to far-away Pakistan, than to its
geographical neighbour, Poland. For a country which is territorially
larger than France, almost as populous as Spain, and nominally as
rich as Hungary, this is hardly an achievement. Quite the opposite: the
continued prevalence of corruption in Ukrainian society, both in the
public and private sectors, imposes a heavy burden in the country by
hindering economic growth, increasing socioeconomic inequalities,
and diminishing the quality and accessibility of public services
including the provision of education.
In Ukraine, as in other countries, the most visible cases of
corruption are those involving high-level government ocials. While
corruption is also visible in the lower levels of the public administration
structure, in the eyes of most Ukrainians, addressing high-prole
cases is amongst the most pressing issues for the country. Yet, a
more pervasive phenomenon, which is closer to the lives of ordinary
citizens, is the involvement of mid- and low-level local education
authorities in corruption schemes, which will likely never be addressed.
In these low-prole cases, even where there might be evidence of the
authorities’ participation in illicit activities, those involved will probably
not be prosecuted for their actions.
In Ukraine, corruption in public education can be observed at
various levels in the school system, ranging from pre-school to
upper secondary and postgraduate education. Sadly, even the very
foundations of the system are aected by it. At pre-school level,
for instance, this phenomenon is generated and perpetuated by
various factors: the limited number of places available for pupils
at municipal kindergartens, coupled with the high demand for pre-
school education services; the problems experienced by parents
when using the current electronic enrolment system; the misuse of
parental nancial contributions to kindergartens and schools –due
to the lack of control mechanisms; and the lack of transparency in
the allocation of school budgets. While addressing all these issues
would require the implementation of complex, multi-tiered solutions, it
is possible to start by making very simple changes to the system. For
example, making the publication of budgets and nancial statements
of educational institutions, both compulsory and legally binding. As
small as it might appear, this would be a good rst step in the right
direction for improving the educational system in Ukraine.
A more comprehensive change, however, would require the full
implementation of the reforms –which started with the passing of the
laws for Higher Education in 2014, for Research and Scientic Activity
in 2015, and on Education in 2017, but that are now long overdue.
The new law, which the Ministry of Education deputies and experts
are said to have been preparing for almost three years, would replace
the current one, which has been in force since 1991. Although pupils,
teachers, parents, and the general public had positive views and held
high hopes about this and other fundamental changes in the system,
not new laws about it have been passed.
Moreover, while it is often said that all levels of government are
committed to the reform, the overall system still faces a chronic
problem: underfunding. Undoubtedly, the successful implementation
of reform also requires the making of a great number of capital
investments. In this regard, the biggest concern appears to be
reaching an adequate balance in the allocation of the state budget
for the educational sector. According to budget projections, in 2020,
in absolute terms, 136.4 billion Ukrainian Hryvnias (UAH) will be
allocated for investment in the sector. This is about 7.7 billion more
than the budget allocated in 2019. In relative terms, however, this is
more signicant. In 2016, only 5% of Ukraine’s GDP was allocated to
education. From now on, every year at least 7% of it will be allocated
to the sector. Even by Western European standards, the share of the
budget that will be now allocated to education is substantial. Whether
these nancial resources are enough to fully implement the long-
promised educational reform, however, remains an open question.
Lastly, the eects of all these changes are not expected to be
visible in earlier than three to ve years. Considering that there is
already, great dissatisfaction with the pace of the reforms which should
have been implemented in the country, President Volodymyr Zelensky
should prioritise the implementation of educational reform. While his
victory in the presidential election of 2019 brought hope to the people
–by making it seem possible to implement fundamental changes in
the way in which their society is run and governed– the patience of
Ukrainians is wearing thin. Since the events of Euromaidan in 2013,
Ukrainians been eagerly awaiting the implementation of such crucial
government reforms. Hence, if Zelensky is serious about taking action
against corruption and ineciency in the Ukrainian government, he
does not have to go farther than ensuring the full implementation of
educational reform.
Iván Farías
Ph.D. in Political Science and International
University of Birmingham
United Kingdom
Alona Anokhina
MA in Society and Politics
Graduate School for Social Research
MA in International Relations
University of Warsaw
Email address of the principal author:
Baltic Rim Economies
29.11.2019 ISSUE # 4
Jarkko Lampiselkä
Learning together: Finland’s support
to Ukrainian school reform
Expert article • 2594
The Government of Ukraine launched the New Ukrainian
School (NUS) reform in August 2018 to modernize of the
education sector and to improve teaching and learning
towards the requirements of the 21st century. Currently, the
NUS reform is a key reform of the Ministry of Education
and Science (MoES). The main objective of the initiative is to create
a school that will be pleasant to go to and will provide the students
not only with knowledge, as is the case now, but also with the ability
to apply it in real life. The Finnish support to the NUS reform seeks to
enhance the quality of education in Ukraine as well as the perceptions
the Ukrainian citizens have on their education system. The short
name of the combined project is Learning Together.
Finland’s Support to the NUS reform focuses on general primary
and secondary education (ISCED levels 1-3) and is designed around
three main result-clusters and cross-cutting elements. The three
initial, interlinked clusters are (1) teacher preparation, (2) education
promotion and (3) education environment. As a new element, the
EU support for enhancing the Ukrainian language instruction among
the national minorities is fully integrated into the initial three clusters
in a cross-cutting manner. In addition, inclusive education for all is
supported as an initial cross-cutting element across the three clusters.
While the recent reform eorts aim for major improvements, the
Ukrainian education sector is still facing major development needs.
Despite high primary and secondary school participation and overall
literacy rates, the following major issues call for action:
Quality and relevance – Insucient quality and outdated
relevance of education have been a key challenge in Ukraine, leading
to dissatisfaction among the wider public. With outdated curriculum,
teaching methods and materials, Ukrainian students lack essential
skills meeting the needs of the 21st century and many do not
adequately learn basic skills such as mathematics.
Ineciency Ineciency has marked the Ukrainian
education system over the past decades. The system has been
bureaucratic with outdated management approaches. Partly due to
the demographic decline, especially rural areas of the country tend to
have oversupply of teachers and schools.
Equity – Lack of equity in terms of education quality
and participation is a major concern in Ukraine, as it aects social
cohesion in a longer term. Especially minority language populations
and children in rural and remote areas lack opportunities for good
(enough) quality education and, subsequently, better opportunities
in life. Disparities in educational participation seem to concern the
IDPs, minority children or children with disabilities and the urban-rural
Finland’s support to the Ukrainian school reform addresses
various issues essential for overcoming the quality, relevance,
eciency and equity challenges:
Teacher preparation – Teaching as well as teacher quality
and motivation have a major impact on quality, relevance and equity
of education. While teachers are also the key for any educational
reform to succeed, the quality of teaching in Ukraine is insucient
in general and especially among the vulnerable groups including
linguistic minorities. Furthermore, the status of teachers has been
devalued in Ukraine.
Education promotion – While broad support from the
education community and the entire society is needed for any
major educational reform to succeed, the MoES lacks capacity for
an ecient channels of communication. Information dissemination,
capacity building and use of evidence help building ground for large-
scale educational improvement and encourage equitable educational
participation across the society.
Education environment – Eective implementation of any
major education reform requires a conducive environment at the
school level in a form of good school leadership and sucient support
resources. Adequate set of tools and materials – including ICT tools
and tools targeted to specic needs such as those of teaching and
learning Ukrainian as a second language (L2) – can help boost
education quality and relevance in an ecient and equitable manner.
The beneciaries and key rights-holders of Finland’s support to
the NUS Reform will be the Ukrainian Government, the teachers
and students in Ukrainian schools and their parents. The Finland’s
Support helps the Ukrainian Government – mainly the MoES – in the
education sector to ensure the realization of the right to education
among all its citizens. The students will benet from better trained
teachers in terms of improved learning. The parents, in turn, can
become eective advocates for improved standards and provision
and they can work to support the school, monitor children’s progress
and hold the school to account on its achievements.
Jarkko Lampiselkä
Dr., Senior Lecturer in Chemistry and
Physics Didactics
University of Helsinki
Adviser for Learning Environments and
Principal Standards
Learning Together project
Email: jarkko.lampiselka@helsinki.
Baltic Rim Economies
29.11.2019 ISSUE # 4
Oleksiy Semeniy
Foreign policy of Ukraine: Quo
Expert article • 2595
Results of presidential and the following pre-term
parliamentary elections have changed substantially
both political landscape in Ukraine and situation inside
the country in general. Actually citizens of Ukraine have
presented their unprecedented vote of non-condence
to previous ruling elites and opted for mostly unfamiliar political
newcomers. President Zelenskyi and his team are mostly persons
with no political experience behind them. This fact has both
advantages and disadvantages: for example, lack of knowledge about
bureaucratic procedures are often compensated with creativity and
exibility in pushing forward necessary solutions and processes. It is
still too early to make any assessments for the new team in power, but
we can elaborate on possible options of general development.
Foreign policy and international issues in general were very often
among priorities of all previous presidents of Ukraine due to dierent
reasons, but mainly because of high degree of Ukraine’s dependence
from the situation outside, especially its main international partners.
This emphasis became especially crucial after 2014 – Russia’s
illegal annexation of Crimea and interference into military actions in
Donbas have put foreign dimension of our security and respective
international activities on the top of our statehood agenda. Promise
#1 from President Zelenskyi and request #1 from Ukrainian citizens
today according to all polls is establishing peace in Donbas. Volodymyr
Zelenskyi has started from the beginning of his tenure to undertake
substantial eorts to reach progress and feasible results in this issue.
This approach has automatically led him to the question - how his
Foreign Policy should be dierentiated from his predecessor, namely
previous President Poroshenko?
Foreign Policy domain is always quite conservative sphere in
all countries due to its specics and complexity. Therefore dramatic
political changes in the country have not yet had any substantial
impact on personnel appointments in Ukrainian diplomacy. We
will not nd too many “newcomers” among already appointed key
stakeholders in this domain. This leads us to a very crucial issue – to
which extent new Foreign Policy of Ukraine by President Zelenskyi
(aspired due to his statements) can be conducted by many of the
same people from times of President Poroshenko? Actually there is
no problem in classical and old democracies with inuence of political
changes on state apparatus – it’s minimized by comprehensive
system of rules accompanied with checks-and-balances on many
levels. That means political changes do not lead to dramatic changes
in personnel appointments starting from level of directorates and
below. But unfortunately Ukraine has been practicing for last 15-20
years another approach – each change of power provokes “personnel
tsunami” almost at all levels which continuously decreased quality of
bureaucratic system in Ukraine.
Moreover, President Zelenskyi by nature understands that
Ukraine’s Foreign Policy should be changed in order to reach
proclaimed goals and adapt itself to quite ambiguous international
reality. Nevertheless he has not presented yet his comprehensive
view of such policy – be it in form of strategy or concept of Foreign
Policy or even keynote speech. May be, this will happen during next
months, especially after issuing new National Security Strategy. But
in any case it will be very complicated analytical task and challenge
as far as this policy should somehow nd compromise between many
contradictory elements and quite few unpredictable factors. Below
author will present key challenges and priorities which new Foreign
Policy of Ukraine should nd solutions or put emphasis on.
First of all President Zelenskyi should solve the task of
establishing peace in Donbas (in best case by its de-occupation and
reintegration in nearest term) without crossing redlines perceived
by Ukrainian citizens. This will include of course a need to conduct
direct negotiations with President Putin and accept some compromise
solutions. This in turn requires quite a pragmatic approach to our policy
towards Russia – to leave aside loud declarations and substitute them
by feasible results. It is not an easy task, but without nding solution
here Ukraine will not be able to reach many other goals.
Secondly, Foreign Service of Ukraine should be reformed and
adapted to new realities. Some elements for such transformation
have been already xed in new Law on diplomatic service adopted
this year, but the process should be continued. Ukrainian diplomacy
needs a structured view and comprehensive approach to MFA as the
real key implementation and coordination point of all state activities
with outside world, it requires also changes in personnel policy and
new focus of its priorities tasks.
Thirdly, we should be more active in developing our relations with
many other regions and sub-regional actors, going beyond Euro-
Atlantic area and establishing there strategic partnerships, if needed.
Moreover, Ukraine’s aspiration to be an integral part of Western world
does not in any case contradict to such extension of own foreign
activities. Rules of current globalized world don’t allow us to be xed
only on one region and pragmatic balanced foreign policy should
provide respective framework for such combination.
Finally, development of Ukraine and the way it opts for will
dene to a large extent the general development of two European
regions – Central Eastern Europe and Black Sea region, especially
crucial impact will be on Russia’s destiny. Therefore, Foreign Policy
of Ukraine, namely its eciency and conformity with reality, will
have an important impact on development of all-European security
architecture in the nearest time.
Disclaimer: views presented in the article are solely personal views
of the author.
Oleksiy Semeniy
Dr., Adviser to the Secretary of the NSDC of
Baltic Rim Economies
29.11.2019 ISSUE # 4
Andrzej Fałkowski
Defence reform in Ukraine: A new
Expert article • 2596
The Defence reform is the tip of the iceberg of a broader
change in the Ukrainian security and defence sector. Its
exhaustive description would signicantly exceed the
scope of this article. I will therefore only focus on chosen
aspects and priorities.
According to Ukrainian legislation, the security and defence
sector go beyond the functioning of the Ministry of Defence (MoD)
and the Armed Forces of Ukraine. It is a complex system of various
authorities, formations and agencies, functioning under democratic
civilian control. Determined by the Constitution and other specic
laws, its functional purpose is to defend the national interests of
Ukraine against threats.
The necessity of shifting towards a new paradigm was widely
recognized, and a new progressive and active role in the transformation
processes has been initiated after Revolution of Dignity 2014. It might
have been even earlier but with a signicantly slower pace.
The march towards Europe, NATO and democratic values
is encompassed by the Ukrainian constitution. This makes the
determination to change and evolve stronger than ever. There are
still, however, signicant challenges to overcome in meeting Ukraine’s
goals. Its institutions are still fragile and not yet t for democratic,
Euro-Atlantic purposes. The MoD has made some progress in
implementing modern principles of defence management, but the
process still requires fundamental institutional and cultural changes.
Although the situation remains very complex with a massive
reform agenda, it is clear that there is a fresh political will to make
transformative changes in Ukraine. The positive and promising new
opening to change represents a powerful rst step
The recent Presidential and Parliamentary elections have
transformed Ukrainian political landscape. With a majority in the
Verkhovna Rada, President Zelensky has been granted a strong
mandate for reform and change by the Ukrainians. Its main and
ambitious goals are to stop corruption, put an end to Russia’s
aggression against Ukraine and promote the economic growth
through investment and innovation. All those strategic transformation
goals are to be implemented as much in the public administration as
a whole, as in the defence sector.
Zelensky has appointed a Western-educated, civilian defence
minister, Andriy Zahorodnyuk giving him his full support for an
ambitious reform agenda. Zahorodnyuk has a clear track record with
regard to reforms and is committed to transforming the MoD’s culture,
practises, personnel and functioning.
A team approach has resulted in a new quality of partnership
between the Minister and the Chief of Defence (CHOD), Lt. Gen.
Ruslan Khomchak (still 2-star). This should lead to a reliable civilian
democratic control over the defence forces in accordance with the
Euro-Atlantic standards. The changes within the General Sta
leadership, so essential to enable and sustain the real progress,
being made on Command & Control (C2) transformation, are strongly
endorsed. The functions of the Ministry and the General Sta are not
yet clearly delineated. However, it is imperative that by strengthening
the Defence Forces management system, the C2 reform aims at
promoting integrated eorts rather than enabling the General Sta to
exist as a separate “kingdom”.
The Minister of Defence has already appointed a rst female
Deputy Minister (another welcomed change); he has made internal
changes that signal his intention to run the Ministry under the system
of democratic control and the accountability of the armed forces.
The “people rst” policy, soldiers’ welfare and well-being, and
the competitiveness of the servicemen on the labour market are at
on top of the priority list. Recruitment, retention and severe attrition
rates continue to drain and deprive the Ukrainian Armed Forces of
its best personnel. In addition, housing, family support, deployment
conditions in the area of the Joint Forces Operations (JFO) are all
high on the agenda. Motivated, professional and comprehensively
trained personnel, aware of the goals and objectives of the defence
policy, can be front-runners and agents for transformation and quality
change. This highlights the importance of introducing new approaches
to professional military education. Initiatives including an English
language training are required to dissolve the lingering Soviet legacy
culture and practices. Mental interoperability and the elimination of
“homo sovieticus” are as important as new structures and modern
equipment. Moreover, there are plans to involve citizens in building a
territorial defence of Ukraine.
Building Ukraine’s defence resource management system,
modern planning, programing and budgeting procedures and a new
approach to defence industry and acquisition – in order to eliminate
corruption and satisfy military requirements with new armament,
infrastructure and materiel – is the other ambition. It is time to get
rid of the post-soviet, obsolete weaponry, which paradoxically keeps
Ukraine strongly linked to the enemy. The new procurement system
and its self-controlling mechanisms are meant to eliminate the risks of
corruption within the armed forces.
There is still huge eort ahead of the Ukrainian defence. The
ongoing operations involving the Armed Forces have constituted
an obvious challenge the reform processes itself. The opponents of
the reform claim that changes cannot be carried out during war; its
supporters on the other hand argue that war is the reason for it to be
carried out as soon as possible.
Ukraine’s leadership has declared that it is in ‘turbo mode’, driving
forward legislation and a reform agenda at a erce pace. This brings
opportunities and challenges, but most importantly, it demonstrates
the acute awareness of President and his team - including Minister of
Defence - of the narrow window of political opportunity to implement
the deep, structural reform that the Ukrainians have demanded.
These multi-layers, parallel and multidimensional reform is carried out
under the “terror” of time that Ukraine does not have. On the other
hand, strategic patience is essential because reformers cannot aord
Baltic Rim Economies
29.11.2019 ISSUE # 4
Andrzej Fałkowski
Dr., Lt. Gen. (Ret.)
Member of Defence Reform Advisory Board
for Ukraine
Former Deputy Chief of General Sta
(DCHoD) of the Polish Armed Forces
Expert article • 2596
rushing into failure.
Given the intensity of the Ukrainian drive forward and the
rapidly moving political agenda, Ukraine’s key partners will need to
be exible, agile and ready to provide appropriate support, advice,
mentoring and capacity building to enable success. This includes the
main MoD international advisory body at the strategic level i.e. the
Defence Reform Advisory Board (DRAB) that is composed of senior
representatives from Canada, Germany, Lithuania, Poland, the UK
and the US. Simply transferring or transplanting someone else’s
solutions to Ukrainian soil would not be reasonable as there are still
too many cultural, legislative and systemic dierences and shackles
from the past. Long awaited and adapted Ukrainian solutions are
required for the Ukrainian problems.
The pace of the reforms is strongly dependant on aordability.
The needs generated by the General Sta are twice as high as the
means allocated for defence in the State budget. The Napoleonic
money, money, money will very soon exacerbate the split between
intentions and the speed of the implementation.
To introduce democratization, good governance, economic
development, conict prevention, innovations and cutting-edge
technology, as well as professional military education, will demand
not only resources, but also transparency and openness to the public
in explaining unpopular modications. Reforming the defence sector
also requires active involvement from both, the executive and the
legislative branches.
Baltic Rim Economies
29.11.2019 ISSUE # 4
Mykhailo Gonchar
Sentsov list: What’s next?
The West has enthusiastically welcomed the release of
Ukrainian director Oleg Sentsov by Russia into a group
of 11 Kremlin political prisoners. This has been seen as
an indicator of Russian-Ukrainian reconciliation. But for
many in Europe, the Russian aggression against Ukraine,
dubbed “the conict in and around Ukraine,” and the fact that the Putin
regime is engaged in repression of the Stalinist model in the occupied
territories of Crimea and Donbas, remain little known.
To the honor of the EU, we would like to remind that the newly
elected European Parliament, in one of its rst resolutions on July
18, 2019, named 130 people who were repressed by the Russian
occupation authorities. The release on September 7 of Oleg Sentsov,
who was serving a 20-year sentence in one of Russia’s most
fearsome polar colonies after being accused of terrorism, as well as
several other prominent prisoners, aimed to remove from the media
the names of those called by Western politicians and diplomats during
contacts with Russian counterparts.
But the Sentsov’s list is not limited to 11 surnames. Ukrainian
Ombudsman Lyudmila Denysova points out that 113 more remain in
the Russian prisons and are on the exchange list. These are those
who are in one way or another connected with Crimea, above all,
activists of the Crimean Tatar people who were deported from their
homeland by Stalin’s order in 1944.
And there are still 227 people held by Russian proxies in the
occupied territories of the east of Donbas. Among them, writer and
journalist Stanislav Aseev, who wrote reports from the occupied
territories for a number of Ukrainian publications and Radio Liberty
under the pseudonym Stas Vasin. He has been sentenced recently to
15 years.
The Kremlin’s calculation is simple - if you remove the most
media-dominant names from the list of Sentsov, then the lesser
known names will remain on the list, and the problem will no longer
be a problem. However, the Kremlin forgets that Ukraine is not
Russia. There is a strong civil society in Ukraine, a human rights
movement, which have a good memory and understand why certain
people become in the focus of Russian intelligence services. A typical
example is the case of Sevastopol saboteurs. On November 9, 2016,
Oleksii Bessarabov, Dmytro Shtyblykov and Volodymyr Dudka, were
arrested. Oleksii Bessarabov is a journalist, deputy editor-in-chief of
the Black Sea Security Journal, which had been published quarterly
by the NOMOS Center in Sevastopol since 2005. D. Shtyblykov was
the head of international programs of the NOMOS Center, a member
of the editorial board of the magazine. Both in the late 90’s - early
2000’s served in the Navy of Ukraine, as well as the third member of
the “group of saboteurs” - V. Dudka, who had retired long time ago.
Both Oleksii and Dmytro predicted Russian aggression against
Ukraine. In April 2011, O. Bessarabov wrote in one of his articles:
“Today, Russia does not apply military and political pressure on
Ukraine, preferring to seize its strategic assets and use economic
absorption... Such a course of events does not exclude the likelihood
of a situation escalating into a conict, including using force.”
D. Shtyblykov, who after Russia’s invasion of Georgia in 2008,
predicted that Crimea would be next, said in October 2012: “In terms
of military and economic performance, Russia is now unable to wage
Mykhailo Gonchar
CGS Strategy XXI
Kyiv, Ukraine
a war with either NATO, China or Japan. The obvious conclusion is
that the armed forces of the Russian Federation today are able to fully
handle combat missions in the post-Soviet territory.”
Such conclusions and forecasts provoked the command of the
Russian base of the Black Sea Fleet of the Russian Federation in
the Ukrainian Sevastopol. In essence, analysts have revealed the
future intentions of the Putin regime to occupy Crimea. Therefore, the
Kremlin’s revenge came after Russia’s annexation of the peninsula.
The FSB had falsied the “sabotage case,” which “on the task of
Ukrainian intelligence had to carry out sabotage on the peninsula”.
The cases were considered closed. Independent lawyers were not
admitted to them. Dmitry Shtyblykov received a 5-years sentence
in a penal colony. Oleksii Bessarabov and Volodymyr Dudka each
received 14 years. The names of Bessarabov, Shtyblykov and Dudka
are on the lists of Ukrainian human rights organizations, as well as
Freedom House (USA) and Russian Memorial as political prisoners.
Just after the exchange on September 7, two more citizens of
Ukraine were arrested in Crimea. Russia continues repressions.
In the meantime, with the assistance of a number of European
governments, the Nord Stream 2 pipeline through the Baltic Sea
continues to be built. The Kremlin is convinced that the European
desire to have business with Russia will, as usual, outweigh the issue
of brutal violation of the rights of Ukrainian citizens in the occupied
Expert article • 2597
Baltic Rim Economies
29.11.2019 ISSUE # 4
Oleksandr Sukhodolia
Critical infrastructure protection as a
tool of national resilience of Ukraine
Expert article • 2598
Ensuring national sustainability has recently become a
priority for governments of dierent countries. This was
conrmed in 2016 by the decisions of the NATO that at
Warsaw summit approved the seven baseline requirements
for the member countries and the EU that approved the
Global Strategy for the European Union’s Foreign and Security
Policy. Both decisions aimed at developing the resilience of member
countries against modern challenges.
At the same time, Ukraine has been developing own approach
to strengthening national resilience based on critical infrastructure
protection concept. The importance of critical infrastructure protection
became Ukrainian learned lesson. Russian hybrid aggression
demonstrated that critical energy, transport, and communication
infrastructure became targets of attacks to undermine Ukrainian
ability to resist and develop. Against Ukraine were used dierent tools
of hybrid warfare: physical and cyber attacks against infrastructure
(electric networks and substations, pipelines, railroads, bridges),
disruption of fuel supply to power plants and communication systems,
blocking of damaged infrastructure restoration, disinformation
campaigns, etc.
Ukrainian response on hybrid aggression gives understanding
that resilience of critical infrastructure is a foundation for securing
vital, for society and state, services and functions and by this provides
national resilience. Therefore, “resilience” has been chosen as a
methodological basis for the formation of a critical infrastructure
protection system in Ukraine. This approach was developed by the
National Institute for Strategic Studies of Ukraine and validated during
the preparation of the Green Book on critical infrastructure protection
prepared in 2015-2016.
Ukrainian Government supported the suggested strategy and
methodology using legal acts. The National Security and Defense
Council of Ukraine and Decree of the President of Ukraine decision
“On Improvement of Measures to Ensure Protection of Critical
Infrastructure Objects” (№8, January 2017) and the Cabinet of
Ministers of Ukraine Resolution “On Approval of the Concept for
Building a State Critical Infrastructure Protection System” (№1009-r,
December 2017) became the rst ocial documents that outlined the
principles and priorities providing critical infrastructure security and
The process of implementation of the proposed approach was
challenged by serious problems of interagency cooperation. The
absence of working common language (dierent terminology of
existing state systems: anti-terroristic and emergency, civil and
physical protection, etc), the lack of unied communication procedures
and interactions (dierent internal procedures).
Therefore, during 2016-2018 there have been invested a lot
of eorts in supporting implementation the Concept of critical
infrastructure protection (set of workshops and seminars discussing
the problem with public servants and experts, rising-awareness
measures, education, etc). Ukraine initiated a set of training programs
in the eld, understanding that such programs provide potential
students with knowledge on state policy, methods, and tools of its
For example, in October of 2017, Ukraine held the rst national
level Table-Top Exercise on the issue of resilience of critical
infrastructure. The table-top exercise named “Coherent Resilience
2017” (CORE2017) had goals: to check existed procedures on
prevention, protection, and response on incidents related to critical
energy infrastructure and; to facilitate the cooperation of dierent
agencies in their action to provide the resilience of the National Power
The invested eorts have helped to build understanding that
development of robust inter-agency cooperation, establishing of
unifying terminology and procedures is a priority for enhancing critical
infrastructure resilience. Now it is obvious for all involved actors as
well that Ukraine needs to develop a public-private partnership in the
In May 2019, the Cabinet of Ministers of Ukraine nalized a draft
law of Ukraine «On critical infrastructure and its protection” and
Ukrainian parliament took a lead in developing legislation for the
critical infrastructure protection system. The future law is supposed to
establish a coherent system of interaction, information exchange and
eorts concentration of various involved actors in ensuring security
and resilience of critical infrastructure of Ukraine.
The system under construction in Ukraine includes:
- Implementing into the legislation of the new terminology «critical
infrastructure», «resilience», «vital functions and services» etc;
- Dening the purpose of a critical infrastructure protection system,
namely «to ensure security and resilience of critical infrastructure»
and by this to guarantee vital for social functions and services;
- Implementing an «all hazard approach» into procedures of
critical infrastructure protection system functioning;
- Establishing government approved methodology and criteria to
assign certain facilities and systems to critical infrastructure;
- Establishing the institutional, organizational structure of the
system, as well as specifying role/place of the involved actors and
their responsibilities within the national security domain;
- Introducing a set of tools to be used within critical infrastructure
protection system: «Design basis threat», «Preventive Action Plan»,
«Emergency Plan», «Communication System», «Training» etc.
- Clarifying procedures of interagency interaction and exchange
Ukraine sees the development of a robust eective critical
infrastructure protection system as an eective tool to enhance national
resilience. The hybrid war against Ukraine has given an additional
impetus to our eorts to build critical infrastructure protection system
capable to prevent, mitigate and respond to all types of threats (i. e.
natural, man-made, criminal and terrorist threats) and their possible
Baltic Rim Economies
29.11.2019 ISSUE # 4
Expert article • 2598
Therefore, Ukraine ready to share its learned lessons. The
challenges and achievements of creating a critical infrastructure
protection system were discussed in the publications and conferences
held by the National Institute for Strategic Studies (for details see:
the English-language book «Developing the Critical Infrastructure
Protection System in Ukraine»).
Ph.D., Professor
Head of Energy Security and Technogenic
National Institute for Strategic Studies
To receive a free copy,
register at
Pan-European Institute
Baltic Rim Economies
29.11.2019 ISSUE # 4
Stanislav Maliar
Critical infrastructure: Safety
Expert article • 2599
With the collapse of the Union of Soviet Socialist
Republics, citizens were able to privatize a number
of strategic entities. At the same time, due to the
lack of funds in the population, such facilities have
been privatized by oligarchs who have permanent
ties with Russia. Control over these objects allowed the oligarchs,
throughout their independence, to inuence the state policy of
Ukraine. Especially since 2014, after the annexation of the Crimea
by the Russian Peninsula and the invasion of regular aggressor
troops into the territory of Luhansk and Donetsk regions, the issue of
protection of the critical infrastructure of the state was urgently raised.
Ukraine has not dened an exhaustive list of objects that must be
attributed to critical infrastructure and virtually no legislation to deal
with them. At the same time, on August 23, 2016, the Decree No. 563
of the Cabinet of Ministers of Ukraine approved the Procedure for
establishing a list of information and telecommunication systems of
critical infrastructure of the state, wherein denes critical infrastructure
as a set of state infrastructure facilities that are most important for the
economy and industry, the functioning of society and the safety of
the population and whose failure or destruction can have an impact
on national security and defense, the environment, lead to signicant
nancial losses and loss of life.
Therefore, we can conclude that critical infrastructure facilities
include, in particular, enterprises in the eld of water supply, sewage,
production, transportation and sale of heat and electricity, gas
distribution and transportation, and others.
The absence of specic legislation, including criminal liability for
the failure of owners and managers of critical infrastructure to fulll
obligations for its smooth functioning and purposeful use, creates
threats to the population. Such owners and managers have actually
been given the opportunity to blackmail the state.
For example, in September 2019 PJSC “Cherkasyoblenergo”
(an enterprise that distributes, transports and supplies electricity
in the Cherkasy region) stopped supplying electricity to the Smela
local water utility due to debt, leaving the city with a population of
70,000 without water. Due to lack of water, planned operations at local
hospitals were discontinued and school attendance was suspended.
A similar situation occurred in October of the same year in the town
of Lisichansk, Luhansk region, where the energy supply organization
also exposed the debt to the local utility. Almost the entire city, not far
from the territory occupied by Russia, was left without water. There
was a dispute over the size of the debt, but shutting o the water
caused considerable social tensions. Therefore, ocials were forced
to allocate signicant funds from the state and local budgets to help
with debt repayment to restore water supply, since there was no time
to go to court or dispute the amounts of the debt in another way.
Equally striking is the case when in 2017 the Kyiv City Council
terminated the contract with the Kyivenergo power company and
returned all networks to the city. Previously, the city’s multibillion-
dollar property was transferred to the organization under a four-sheet
agreement, which provided for the city’s reimbursement of all the
funds spent to modernize the networks. In fact, the city was trapped
because proper records were not kept and Kyivenergo billed UAH
900 million to the community. The city had to make concessions and
pay money.
In all three cases, the managers of critical infrastructure facilities,
in order to achieve their goals by abusing their monopoly position,
adversely aected public policy and resorted to blackmail by public
authorities. In the second case, these actions were particularly
dangerous as they could have been directed by the aggressor to
discredit the ocial authorities of Ukraine in front of the residents
of the frontline city. In the absence of relevant legislation, public
authorities were disadvantaged by the infrastructure managers and
suered signicant nancial losses, which negatively aected the
security of cities and the economic security of the country as a whole.
In the presence of special legislation, in such cases, these facilities
would have to be transferred under the control of the provisional
administration or central executive authority, and its administrators
should be brought to trial with the subsequent conscation of such
Therefore, it is necessary to develop and adopt the Law of
Ukraine “On Critical Infrastructure”, to amend the current Laws of
Ukraine “On the Privatization of State and Communal Property”,
“On the State Property Fund”, the antimonopoly legislation, and the
Criminal Code of Ukraine. The goal of legislative changes should
be to ensure state control over critical infrastructure; preventing the
abuse of critical capabilities by critical infrastructure managers to
the detriment of people; preventing the control of the aggressor - the
Russian Federation over the strategic objects of Ukraine.
Stanislav Maliar
Department of Finance and Economics
Boris Grinchenko University of Kyiv
Kyiv, Ukraine
Assistant to the Chairman of the Self-help
Union MP
Kyiv City Council
Kyiv, Ukraine
Baltic Rim Economies
29.11.2019 ISSUE # 4
Rimantas Šikas
Oil rening challenges in Ukraine
Ukraine takes one of the last places in the world in terms of
oil rening. However, Ukraine is considered to be one of
the oldest oil-producing countries. The raw material was
rst discovered on the Kerch Peninsula in the 3rd century.
Moreover, oil was also easy accessible in Transcarpathia.
The industrial extraction of the raw material began in 1771. In 1781
in Western Ukraine, almost 150 tons of oil were extracted per day.
The maximum annual production was 2 million tons in 1909, putting
Galicia into fourth place among the world’s oil-producing regions. The
development of deposits in Eastern Ukraine began more recently. Oil
deposits were rst discovered in the Sumy region in 1936. Mining
began in 1940 and was 10 tons per day. The maximum oil production
in Ukraine was 13.3 million tons (14.5 including gas condensate) in
1972 and has been gradually decreasing since then.
Today, oil resources in Ukraine have dropped by more than 60%.
The reason lies in the lack of nancial outlays for exploration and
production and depletion of existing resources. Consumption of oil
products in Ukraine is also falling, from 1991 to 2018 it decreased
from 58.1 to 10.1 million tons, respectively. This is because Ukrainian
reneries, as main consumers of crude oil, have gradually reduced
the volume of oil rening and production of petroleum products. The
majority of Ukrainian reneries as of 2018 are not working.
The situation was dierent in the past. In 1980s, Ukraine had six
reneries capable of rening above 60 million tons/year.
The development of the rening industry in Ukraine began in
Galicia together with the increase in oil production. In 1889, with 57
operating reneries in the region, Galicia was the third largest producer
(41,000 tons/year) of oil and rening after the USA and Russia.
In other regions of Ukraine, the rening industry appeared
much later (Odesa in 1935, Berdyansk in 1936 and Kherson in
1937). Soon after the end of World War II, the Kherson and Odesa
reneries was reconstructed. In addition, two more reneries were
built in Kremenchuk (1966) and Lysychansk (1976). Shebelynka Gas
Processing Plant (also produces oil products) was commissioned in
Currently, there are two functioning reneries in Ukraine: the
Kremenchuk renery (Ukrtatnafta) (design capacity – 18.6 million
tons/year, actual – about 7 million tons/year) and the Shebelynka gas
processing plant (Ukrgasvydobuvannya, Naftogaz Group) (design - 1
million tons/year and actual up to 0.6 million tons/year). In 2018, the
reneries rened a 2.7 million tons of oil, roughly 80 percent of which
was covered by oil of Ukrainian origin. Unfortunately, other Ukrainian
reneries are closed: Drohobych (design capacity – 3.9 million tons/
year); Nadvirna (3.5 million tons/year); Odesa (3.9 million tons/year);
Kherson (8.7 million tons/year) and Lysychansk (24 million tons/year).
The reasons for the closure are dierent - from lack of investment
outlays, non-compliance of production with quality standards and low
eciency of oil processing to a direct impact of Russian aggression.
Reneries in western Ukraine have also been closed and it is unlikely
that they will be restarted (investment outlays - over €100 million for
Due to its small oil reserves, Ukraine has limited chance to
become independent from oil imports. Nevertheless, it can try to
reduce its dependence on imported fuels. There are two ways to
Rimantas Šikas
Major, Head of Education, Training and
Exercise Division
NATO Energy Security Centre of Excellence
achieve the above stated goal. First, to increase reneries capacity
utilization level to meet internal demand. Second, to diversify and
ensure crude oil supply to the reneries and protect local oil product’s
market. It could give prospects for Ukraine to mitigate dependency on
import of oil products from Russia and Belarus. All mentioned depend
on state’s policy in Ukraine and could set basic conditions for further
development of oil rening industry in Ukraine.
There is little chance to rehabilitate ve Ukraine’s reneries which
were mentioned above as closed. Moreover, there is also no need to
construct new reneries from scratch (estimated cost of the project
could be around €6 billion — comparing to Socar’s €5.5 billion renery
complex, which opened recently in Turkey with rening capacity of 10
million tons/year). Thus, the only considerable way to increase volume
of rened oil is to make the Kremenchuk renery (as it is only renery
in Ukraine which has design capacity to meet a domestic demand
of oil products) much more ecient. According to rough estimation,
Kremenchuk’s renery would require €1 billion in investment to reach
stated goal.
Another important achievement of Ukraine would be diversication
of crude oil supply to the reneries. The capacity of the Ukrainian trunk
oil pipelines system is currently largely unused. This mainly concerns
pipelines designed to supply oil for the need of domestic reneries.
An alternative to Russian crude oil supplied to Ukraine may be
Saudi, Azeri, Kazakh or Turkmen oil. If Russia’s aggressive policy is
stopped and Ukraine’s integrity is maintained, the supply route from
the Black Sea (Odessa port) to Kremenchuk renery could provide
alternative supplies from any global supplier.
Which direction of supply Ukraine chooses, will depend primarily
on state’s policy in oil rening industry and domestic fuel market
regulation. Due to the fact that Crimea has been annexed, in the
near future Ukraine cannot count on natural resources that are on
the Black Sea shelf. In the future, if Ukraine manages to regain the
annexed territories, the potential of sea ports and shelf’s resources
will be an important asset.
Expert article • 2600
Baltic Rim Economies
29.11.2019 ISSUE # 4
Markko Kallonen
OSCE special monitoring mission
in Ukraine: Five years of crisis
conict is raging on for the fth year in eastern Ukraine.
The United Nations has estimated that the conict has
already claimed over 13 000 lives and generated 1,8
million internally displaced people. The waves of the
conict have been felt on the shores of the Baltic Sea in
terms of security, politics, diplomacy and economy. The fracture in
traditional security architecture has led the states around the Baltic
Sea to strengthen their defence policy and seek closer alliances -
both inside and outside of the North Atlantic Treaty Organization
(NATO) umbrella.
The Organisation for Security and Cooperation in Europe (OSCE)
Special Monitoring Mission in Ukraine (SMM) was deployed in
November 2014 following a request by the Government of Ukraine.
The OSCE is the world’s largest inter-governmental security
organisation with 57 member states. The decisions of the organisation
are based on consensus and thus the deployment of the SMM had
to be endorsed by all member states. The SMM is an unarmed, non-
executive impartial civilian monitoring mission, which is facilitating
implementation of the Minsk agreements signed by Ukraine, OSCE,
Russia and by the separatists (self-proclaimed People’s Republics in
Donetsk and Luhansk) to end hostilities. The mandate of the mission
is subject to renewal on annual basis and thus it has so far been
renewed for ve times.
Currently, the mission consists of 1500 monitors from over 40
participating states. The monitors hold considerable experience with
varying relevant professional backgrounds. This supports the mission
on one hand to generate a profound and accurate understanding
of the overall situation and on the other hand assign monitors to
positions, which require specic skills. The SMM covers the entire
Ukrainian territory (there are in total 10 teams in the country) but the
focus is in Donbas, in the conict region in the east. Two of the SMM
teams are operating in non-government-controlled territory (namely,
in Luhansk and Donetsk). The reports the mission compiles are made
public and available in Ukrainian, Russian and English on the OSCE
website. Due to their politically sensitive nature, the mission’s reports
are strongly scrutinized by the involved parties.
The SMM is utilising unmanned aerial vehicles (UAVs) to support
monitoring. Moreover, there are 25 SMM cameras positioned along
the contact line to record cease re violations. The SMM is the only
larger international actor who is focusing on the security situation in
Ukraine. Thus, its reports are also utilised by other stakeholders.
On an average day, the SMM conducts approximately 70 patrols,
which in the east usually consist of two armoured patrol vehicles.
The length of the contact line is approximately 450 km. The Mission
experienced a serious incident in April 2017, when one of the two
vehicles of an SMM patrol triggered a mine in the Luhansk Oblast.
In the explosion, the SMM paramedic was killed and two SMM
monitors were injured. Consequently, as a risk mitigation measure,
the operation ceased patrolling on unpaved surfaces. This restriction,
coupled with the fact that the SMM monitors do not operate outside of
daylight hours for their own safety, at times causes frustration among
the conict aected civilians who feel abandoned.
The freedom of movement of SMM patrols is regularly restricted.
As a result, the monitors are not able to use the planned routes or
visit desired locations. The SMM UAVs are also being targeted by
weapons. Shooting and shelling occurs frequently close to the SMM
monitors. Moreover, mines and unexploded ordnances (UXO) in the
soil create additional hazards. The sides have not been able or willing
to (re)commit to a permanent ceasere and the shooting continues.
Despite these existing challenges, the SMM has been able to improve
the situation for the conict aected civilians by facilitating repair and
maintenance works on critical civilian infrastructure (water, electricity,
gas and GSM networks).
The protracted conict has been assessed by some observers as a
miscalculation of the Russian Federation (who denies being an active
party to the conict) and its proxies with regard to the determination
and strength of the Ukrainian society and military. On the other
hand, Russia succeeded in halting Ukraine’s western enlargement
toward NATO and the European Union (EU). Conversely, according
to some assessments, the ongoing low intensity war together with
the consequential economic sanctions drain resources from Russia
and stimulate a negative impact on the popular support of its political
leadership among the population. The picture is complex and blurred
with disinformation and alternative interpretations.
The peaceful presidential elections in April 2019 and the following
parliamentary elections in July transformed the domestic political
landscape in Ukraine with new President Volodymyr Zelensky and
his Servant of the People’ s party (with 73% and 43% of the votes
respectively). Some observers hope that there is now a fragile
momentum for some advancement in peace talks. The new president
has stated that peace in Donbas and the end of the occupation in the
eastern territories is his main goal as the head of state. Moreover,
Zelensky signed in October 2019 the so-called Steinmeier Formula
to implement Minsk agreements. The implementation of the formula
would require OSCE to assess elections in Donbas, to ensure that
the elections are free and fair, and that they meet the international
standards. This entails considerable challenges. Some observers say
that it would be utterly dangerous for Ukraine to hand over to Russia
long-lasting inuence over Ukraine. Thousands of demonstrators in
Kyiv were displaying their discontent to any compromises with the
Russian supported separatists. Despite this impediment, President
Zelensky still enjoys large popular support. According to some
observers, the attempts to break the deadlock are half-hearted as
the existing status quo is crucial for the existence of the so-called
People’s Republic in Luhansk and in Donetsk. Finally, many purport
that the aim of the Russian leadership is to destabilize Ukraine – not
Expert article • 2601
Baltic Rim Economies
29.11.2019 ISSUE # 4
to end the conict.
The SMM maintains an important role as an impartial observer
endeavouring to mitigate the mistrust between the parties in Donbas.
Money is ‘well spent’ if the SMM’s existence can play a preventative
role and halt the outbreak of full-scale conict. Ultimately, the SMM
can only contribute in creating conditions where sustainable conict
resolution can take place. Because - as an adage goes - nobody can
create other people’s peace. The solution and will have to come from
The article solely presents the views of the writer.
Expert article • 2601
Markko Kallonen
Ph.D. in Diversity Management and
Governance, Expert of Civilian Crisis
Baltic Rim Economies
29.11.2019 ISSUE # 4
Sergii Karasov
Gray zone conict in the occupation
waters and international law:
Ukrainian case
The awareness that war and peace are continuous, rather
than discrete, elds of human endeavor have given rise to
the idea that they may blend into each other, producing a
gray zone that is neither truly war nor truly peace. These
trends gave rise to the concept of gray zone conict. This
notion is marked by ambiguity on the nature of the conict and the
legal status of the parties, which in turn generates uncertainty about
the applicable law. In the legal practice, the threshold between war
and peace and their attendant regulatory frameworks is not as rm as
the law may suggest. Conrmation of this was the Kerch incident on
25 November 2018 when Russia hindered passage against Ukrainian
warships through occupation waters of the Black Sea around the
Crimea peninsula, and the Kerch Strait to enter the ports of the Azov
It is very crucial to remind that the armed aggression of the
Russian against Ukraine began on February 20, 2014, when the rst
cases of violation by the Armed Forces of the Russian were recorded
in contravention of the international legal obligation of the Russian
to intersect the Ukrainian state border in the Kerch Strait and use its
military formations deployed in the Crimea.
The consequences of the occupation of the Crimea became the
establishment of factual control by Russia over a part of the territory
of Ukraine, including control over the maritime zones of Ukraine and
directly over the passage within the territorial sea of the Black Sea,
and the Kerch Strait to enter the ports of the Azov Sea that what has
become an obstacle to the freedom of navigation in this region for
Ukrainian ships (both state and commercial), and foreign ships as
Exploring and the legal assessment of the hindering shipping
against Ukrainian warships through the occupation waters requires
selection between peacetime rules of the International Law of the Sea
and the Law of Naval Warfare, which applies to International Armed
Conicts (IAC).
IAC is in all cases of declared war or of any other armed conict
which may arise between two or more of the High Contracting Parties
(HCP), even if the state of war is not recognized by one of them.
Geneva Convention (GC) (1-4) of 1949 and Protocol I Additional to
GC of 12 August 1949 (1977) shall also apply to all cases of partial
or total occupation of the territory of HCP, even if the said occupation
meets with no armed resistance.
The presence of international armed conict between states does
not depend on the fact of declaring war, how it is qualied and whether
the parties recognize it, and the degree of intensity. In accordance
with para. 70 of the Tadić decision, an IAC exists whenever there is
a resort to armed force between States and it is not dependent on its
recognition by either party.
The outbreak of an armed conict at sea does not necessarily
terminate or suspend the applicability of UNCLOS and bilateral
agreements between states (Agreement between Ukraine and the
Russian Federation on cooperation in the use of the Azov Sea and
the Kerch Strait). Instead, it is widely accepted that, by and large,
most provisions of UNCLOS will remain in operation in time of armed
conict, in the relationship between the Parties to the conict.
Thus, for example, the term ‘warship’, which is used during
international armed conicts, has nowadays to be interpreted on the
basis of the requirements reected in Article 29 of UNCLOS. However,
the provisions of the Law of the Sea as immunities of warships
according to Article 32, 95 of UNCLOS supplanted by particular rules
of the Law of Naval Warfare such as attacks against military objects
(legal targets) according to Article 52(2) of Protocol Additional to the
GC of 12 August 1949, (Protocol I), 8 June 1977.
The central argument is that between armed aggression against
Ukraine and the occupation of Crimea on February 20, 2014, and a
maritime incident in the Kerch Strait on 25 November 2018 exists a
causal connection. This incident is part of continuing aggression by
Russia against Ukraine since 2014, in violation of Article 2 (4) UN
Charter. Not recognition of the international armed conict between
Ukraine and Russia means to deny the fact of aggression against
Ukraine and the occupation of Crimea. Russia still has duties before
Ukraine regarding respect to the rules under the International Law of
the Sea even during international armed conict. However, it should
be recognized that Ukrainian warships lost their immunity during
passage through occupied water due to the presence of armed
conict. At the same time, the Ukrainian crew members were entitled
upon capture to be treated humanely as lawful combatants.
However, Ukrainian case and legal practice show us exactly the
opposite as Russia and Ukraine for dierent reasons are at exploiting
the seam between the contending peacetime and wartime legal
dimensions of the Crimea conict to create perceptions of a “gray
zone”. The concept of ‘occupation’ seems nowadays disengaged
from armed conict. Russia was the treatment of the captured
Ukrainian sailors as common criminals rather than prisoners of war. In
turn, Ukraine was considering captured sailors as lawful combatants
immediately after the incident. The state-owned warships under the
Ukrainian ag did not pass the Kerch Strait until September 2018.
Another conrmation of the gray zone of the conict is the decision
of the International Tribunal Law of the Sea on 25 May 2019, where
court dened that the distinction between military and law enforcement
activities of warships has become considerably blurred. Tribunal
noted that the arrest and detention of the Ukrainian naval vessels by
Russia took place in the context of a law enforcement operation in
violation of the immunity of Ukrainian warships. In light of this case,
the two States have acted in this maritime region before the incident
as if no armed conict would exist between them. Tribunal assessed
the circumstances of this case based on the International Law of the
Expert article • 2602
Baltic Rim Economies
29.11.2019 ISSUE # 4
Sergii Karasov
Former Research Intern
In order to mitigate risks arising from applicability peaceful legal
regimes and the law of naval warfare in the context of gray zone
conict, military lawyers under the command of the naval forces
should dene the international regime of occupation waters when
the party is not recognized such status and its impact on the military
activities of warships.
Expert article • 2602
To receive a free copy,
register at
Pan-European Institute
Baltic Rim Economies
29.11.2019 ISSUE # 4
Peter Dickinson
Putin’s war and Ukraine’s nation-
building journey
Expert article • 2603
Ukraine is Europe’s largest country. It is also the continent’s
greatest historic blind spot. Indeed, if we accept the notion
that history is written by the winners, then Ukraine must
rank high among the losers. For centuries, the world has
viewed Ukraine almost exclusively in terms of the country’s
imperial relationship with Russia. This has led to the widespread
misconception that Ukraine is actually a core component part of
Russia, “accidental independence” of 1991 notwithstanding. Such
thinking is particularly popular among contemporary Russians, but it
also enjoys considerable currency throughout the wider international
community. This regrettable reality has done much to cloud outside
understanding of today’s Ukraine. Crucially, it prevents observers
from grasping the full geopolitical signicance of the events currently
unfolding in Europe’s great eastern borderlands.
Ukraine’s low international prole is no accident. It is the product of
longstanding and remarkably successful Russian eorts to suppress
Ukrainian identity and prevent the emergence of a separate Ukrainian
polity. Russia’s motives are not hard to grasp. After all, Ukraine’s
closeness to Russia goes far beyond geography, culture, religion
and ethnicity. It extends to a common foundation myth that sees both
nations trace their roots back to the early medieval Kyiv Rus state.
This makes possession of Ukraine, along with Kyiv as the “mother of
all Russian cities”, central to Russia’s own sense of national identity.
Russia’s need to assert this claim has meant denying Ukraine’s
right to independence. Since the seventeenth century, this has
involved everything from language bans and rigorous russication
policies to mass deportations, population transfers and forced
famines. The drive to absorb Ukraine reached a tragic crescendo in
the 1930s, when the Soviet authorities starved millions of Ukrainians
to death while systematically executing the moral and intellectual
leadership of the Ukrainian nation.
Incredibly, Ukraine survived. Nevertheless, evidence of this grim
inheritance is all too easy to identify in the complex political divisions
of the Ukraine that emerged from the ruins of the Soviet Union. Post-
Soviet Ukraine spent the rst quarter-century of its existence wrestling
with a national identity crisis that was the direct outcome of Tsarist
and Soviet policies designed to deny Ukraine the ability to self-
govern. Traditional notions of Ukrainian identity rooted in ethnicity and
language meant little to the many millions of post-Soviet Ukrainian
citizens who neither spoke Ukrainian as their mother tongue nor
counted Ukrainians among their ancestors. This made progress
towards a national consensus slow.
Eorts to address the crimes of the Soviet era rendered this
transition even more dicult, with large portions of the population
alienated by attempts to demonize the USSR or place the Soviet
authorities on a par with Nazi Germany. With no Nuremburg Trial
to expose Soviet crimes against humanity, many rejected the worst
of the revelations. Meanwhile, the chaos of the early 1990s fueled
nostalgia for the modest certainties of the communist era.
Nevertheless, Ukraine gradually began to make progress towards
a more inclusive national identity. Landmark events such as the
2004 Orange Revolution served to dierentiate the country from
Russia, which under Vladimir Putin was then lurching back towards
authoritarianism. The emergence of a post-independence generation
also contributed, with young Ukrainians who had no personal
experience of the USSR gradually making their mark on the country’s
sense of self.
This glacial shift received a massive jolt in 2014 when Russia
attacked. The Kremlin seizure of Crimea and Putin’s hybrid war in
eastern Ukraine forced Ukrainians to address identity issues as a
matter of urgency. Moscow clearly expected a majority of Russian-
speaking Ukrainians to side with them, but in fact, the opposite
happened. Russian-speaking Ukrainians in the south and east of
the country had consistently given their votes to pro-Russian parties
ever since 1991, but with Ukraine’s continued independent existence
in the balance, there was no rush to join the Russian invasion. On
the contrary, tens of thousands mobilized to support the Ukrainian
resistance, joining hastily created volunteer battalions or collecting
essential supplies for the ramshackle military. A wave of activism
swept across the nation, overwhelming the political divisions of
the post-Soviet era and answering many of the most fundamental
questions about the loyalties of the diverse Ukrainian population.
Since the historic days of spring and summer 2014, Ukraine’s
nation-building journey has continued at an accelerated pace. The
shock of Russian aggression has challenged long-held notions of
fraternal ties between the two Slavic nations, while nonstop anti-
Ukrainian propaganda in the Russian state media has exposed
the ugly chauvinism behind the brotherly veil. This has encouraged
Ukrainian citizens to reect on their nationality in ways that would
have seemed outlandish prior to the outbreak of hostilities in 2014.
The once indivisible cultural worlds of Russia and Ukraine have
also grown apart. Whereas Russian TV shows, movies and pop stars
once dominated Ukraine, there are now increasingly vibrant Ukrainian
cinema, TV and music industries taking their place. Fewer Ukrainians
use Russian social media platforms. Instead, Ukraine has one of the
world’s fastest-growing Facebook user communities. In the business
sphere, the economic aspects of Putin’s hybrid war mean that trade
with Russia has plummeted to record lows. In Russia’s place, India,
China and the EU are now Ukraine’s primary markets. Throughout
Ukrainian society, old ties with Russia are giving way to a new Ukraine
seeking its place in the wider world.
Perhaps the greatest single change has been in the rise of a
civic Ukrainian identity that goes far beyond the narrow old connes
of blood and soil. Many of the troops defending Ukraine are native
Russian-speakers, while the Muslim Crimean Tatars have emerged
as vocal champions of Ukrainian statehood. Nowhere was this
trend more evident than in the 2019 electoral successes of the
Jewish Russian-speaker Volodymyr Zelenskyy. His twin triumphs
Baltic Rim Economies
29.11.2019 ISSUE # 4
Peter Dickinson
Business Ukraine magazine
Atlantic Council
Expert article • 2603
in presidential and parliamentary elections illustrate the growing
acceptance within Ukrainian society that language, religion and family
ties are not decisive in determining who qualies as a Ukrainian.
It is possible that the country would have eventually arrived at this
point of its own accord, but the speed of the progress made in recent
years is a direct result of Putin’s war. While the conict continues, it is
already evident that Russian eorts to reassert imperial inuence in
Ukraine have backred spectacularly. Rather than derail Ukraine’s bid
to create an independent identity, the war has supercharged Ukraine’s
nation-building eorts and transformed the geopolitical balance in the
entire region.
Baltic Rim Economies
29.11.2019 ISSUE # 4
Mykhailo Bechkalo
Ukraine: Sea change in investment
Expert article • 2604
In ve short years since the Revolution of Dignity, Ukrainian society
has undergone a tectonic shift, shedding its Soviet past and
unalterably choosing a pro-western democratic orientation that
gains strength and momentum daily.
Results of market-oriented reforms that took place in recent years
in Ukraine are already evident – Ukraine climbs seven positions in the
2020 edition of the World Bank’s annual Doing Business survey and
now occupies 64th position in the inuential report. We advanced in six
out of ten categories featured in the ranking including improvements
in getting electricity, registering property, and trading across borders.
Ukraine has now climbed 48 places since the October 2013 edition of
the annual survey, when it ranked 112th globally.
In addition to that Ukraine’s progress is recognized by the
business community present in Ukraine. According to a survey of
110 existing companies in Ukraine conducted in October 2019 by
the American Chamber of Commerce, one of the largest and most
inuential foreign business association in Ukraine, 64% armed that
the quality of Ukraine’s investment environment has improved since
2014 and 82% are planning to expand its business in Ukraine in the
next 5 years.
Moreover, Ukraine is on the growing track – its GDP grew 4.6%
in the second quarter of 2019 the most rapid growth in almost a
decade. It is worth mentioning that this happens at the time when
EU economies are slowing down. World Bank signicantly improved
Ukraine’s economic growth forecast for 2020 from 3% to 3.7%, while
most other countries’ growth forecast remained unchanged or was
revised downward. Ukraine becomes a really stable and predictable
emerging market with measurable risks and huge rewards.
This is just the beginning. Within the past few months, the new
Ukrainian Parliament and Government have demonstrated their
eagerness and readiness to continue the implementation of reforms
by passing important economic laws, which carry on the deregulation
process and further unlock Ukraine’s investment potential. Here are
just a few samples:
Law “On Amendments to Certain Legislative Acts of Ukraine on
Encouraging Investment Activity in Ukraine” abolishes an outdated
and inecient regulation including the obligation to pay a share
participation fee as part of the settlement’s infrastructure development.
It also introduces security for loan liabilities to minimize the creditors’
risk associated with repayment of bad debts and creates the
prerequisites for increasing the volume of business lending provides
additional mechanisms for the protection of minority investors’ rights
in Ukraine.
Law “On concession” will allow attracting a signicant amount
of private investments in modernization and improvement of
infrastructure, sea and river ports, highways, airports, and other
state-owned facilities. Now concessionaire selection is made to the
best international practices and the online platform for concession
procedure will be settled. Private capital will have the freedom
to choose governing law for contracts in the course of project
implementation. All disputes are to be solved through negotiations
or other ADR mechanisms in Ukraine or abroad subject to mutual
agreement by the parties.
Law on “Space Liberalization” is aimed at creating a competitive
environment for the development of private property enterprises along
with the public sector of the space industry and attracting investment
in Ukraine’s space industry. Ukraine is one of the few nations with
a full cycle of design, production, and operation of civil, military and
cargo aircraft, as well as supplying space technology. The new law
will bring competitiveness by allowing private companies to engage in
space activities, including the launch of rockets into space. It opens
outer space for citizens and legal entities and the ability to freely
explore and use outer space.
Meanwhile, a land market is planned to be opened in fall 2020.
According to the World Bank, the opening of the land market can
signicantly increase land productivity given larger private investment
in the owned rather than leased land and boost economic growth in
Ukraine by over 2%. The current draft law imposes some limitations for
selling land to foreigners as a transitional period was determined until
2024. During this period, companies with foreign benecial owners
will not be eligible to buy agricultural land. However, foreigners that
have rented land for over 3 years can acquire it after market opening.
The privatization of state-owned enterprises (SOEs) provides
further opportunities for foreign business. Currently, there are over
3,600 SOEs, 1/3 of which are non-operating and much of the rest are
loss-making. The new Government has already shown that it is keen
to launch large-scale privatization by approving investment advisors
for the rst 4 objects.
Overall, Ukraine has made signicant progress in improving
the business environment in the past few years and is now open
for business. With President Zelenskyy and the new government
setting a target of accelerating GDP growth to 5-7% per annum,
we expect to see even greater foreign investor interest in Ukraine,
thanks to growing international awareness of the country’s strong
economic fundamentals, Ukraine’s position as a Eurasian hub,
its strengths in innovation and highly educated workforce, and the
country’s competitive economic advantages. We at UkraineInvest
share Government’s ambitious agenda and are ready to provide
investors with appropriate advice, contacts and personalized service.
We enhance the investors ease of entry into the Ukrainian market and
provide sucient and eective aftercare to them to encourage the
Mykhailo Bechkalo
Executive Director
UkraineInvest, Ukrainian government’s
investment promotion agency
Baltic Rim Economies
29.11.2019 ISSUE # 4
Adrian Prokip
Ukraine’s energy: The State and
oligarchs in a deadlock
Expert article • 2605
As well as many other elds of economy, Ukrainian energy
sector is under the control of the state and oligarchs. In a
broad sense an oligarch is a person who possesses huge
business, has an impact on the government and controls
media giving him the possibility to shape public opinion.
On the one hand, privatization of energy assets, which had begun
in late 1990s, was a key to ecient management of the energy
sector. But on the other hand, big business related to politics and
the government later became an obstacle to developing market
competitiveness and transparency. Dierent governments aligned
themselves with dierent business groups supporting their struggle
for power. Besides, governments have avoided market approached
pricing for energy with regard to households for almost all the years of
Ukraine’s independence.
At nal extent, today the Ukrainian energy is not very ecient,
with no real markets emerged and being concentrated and controlled
by the state and a number of oligarchs. However, these oligarchs
dier: some of them are developing big businesses while the others
are just seeking to keep their rent-tied-to-government system.
The key non-governmental player of Ukrainian energy is Rinat
Akhmetov who managed to develop the biggest energy holding
in Ukraine DTEK working in dierent areas. His companies are
responsible for 20-25% of domestic electricity production (mostly coal
power plants) and 80% of coal production and deliveries. These are
the biggest private-owned gas producers in the country; however,
the biggest players are state-owned companies, responsible for 80
% domestic gas productions. Akhmetov’s companies are also key
players in Ukrainian renewable energy sector, being responsible for
about a third of country’s renewable energy production.
The second biggest group of energy players are state-owned
companies. Among these are Energoatom – operator of all nuclear
power plants, being responsible for 50-55% of electricity produced,
Centrenergo – group of coal power stations, responsible for 10-
14%, and Ukrhidroenergo – state operator of big hydro power plant,
responsible for 7%.
Energy distribution companies are owned by dierent oligarchs
and local elites. The most powerful among them are Rinat Akhmetov,
Igor Kolomoyskyi, Surkis brothers, Konstiantyn Grigoryshyn and
Russian VS Energy. Kolomoisky is a key player in petroleum
distribution who also controls national oil producer Ukrnafta, where
the state is a major owner.
State is a key player in the gas eld, owning Naftogaz of Ukraine,
responsible for gas transit through Ukraine, 80% of domestic gas
production and is a key gas importer. However, gas distribution is
controlled by private entities. And oligarch Dmytro Firtash controls 2/3
of this market.
But owning energy assets is not the most important way of
the state’s inuence on the energy sector. The most crucial are
government regulations, attempts of rent seeking by those, who are
close to government or by oligarchs themselves.
During Viktor Yanukovich Cabinet the major oligarchs were Serhii
Kurchenko and president’s son Oleksandr Yanukovych, who tried
to become new key actors in energy. Former member of parliament
Mykola Martynenko is now under investigation because of possible
corruption ties to Energoatom and state-owned uranium mining
company. Another former MP Igor Kononeko, who was close to former
president Petro Poroshenko, controlled Centrenergo and import coal
supplies. Now after the 2019 elections the ruling elites changed once
more and the control shifted once again to other people. This time it
is about people close to Igor Kolomoisky. In addition, some people
believe that Akhmetov was tied to President Poroshenko.
Government regulation aects transparency, protability and
investment attractiveness of the energy sector. In some cases, the
manner of state regulation depended on oligarchs’ interests, who
could inuence on government and parliament. Another sticking
point in state energy regulation is energy pricing for nal consumers.
For many years’ government postponed establishing market prices
for households. First of all, it is because of unaordability of these
payments for a big share of Ukrainian citizens. So that was a political
issue for every government.
Therefore, the problem of Ukrainian energy development is that
it remains blocked in a deadlock by the state and oligarchs. Possible
solution could be shifting to energy market and independent energy
regulations. In 2015 Ukraine adopted a law “On natural gas market”
and in 2017 a law “On the electricity market”. According to this
legislation Ukraine had to establish energy markets with the same
regulation as in the European Union. The hope is still for breaking the
deadlock by 2020 when Ukraine will probably have nally introduced
free energy markets.
But the new President and the Government do not seem to
support the idea of free energy markets and market oriented pricing.
Instead, they are looking for a way to overregulate the energy sector
again. This will only preserve the status quo and worsen the situation
in Ukrainian energy following a new round of competition among
Adrian Prokip
Energy Analyst
Ukrainian Institute for the Future
Kyiv, Ukraine
Senior Associate
Kennan Institute
Washington DC, USA
Baltic Rim Economies
29.11.2019 ISSUE # 4
Valeriia Loiko
Economic development of Ukraine
after 2014
Expert article • 2606
The peculiarity of modern economic development of
Ukraine is the reforming of the economy and its European
integration direction. The development of the Ukrainian
economy is directed towards cooperation with the
countries of the European Union. 2014 was a dicult
year for Ukraine. Territorial losses could not but aect the economy
of Ukraine. In the period 2014-2018, the gross domestic product
in monetary terms increased 2.24 times. Aggregate income per
month per household also increased 2.7 times. However, it should
be noted that Ukrainian households spend 93% of their income on
their own consumption. That is, as Ukrainian families’ incomes rise,
consumption increases proportionally, which prevents families from
making sucient savings. In today’s Ukrainian realities, having a job
does not guarantee protection against poverty. Poverty in the working
population in Ukraine is driven by low wages and signicant income
inequality across dierent household groups. Thus, the standard of
living of the population is growing at a very slow pace.
The development of enterprises and entrepreneurship reects the
economic and social changes that are taking place in society as a
whole. The number of economic entities in the territory of Ukraine
decreased in the period 2014-2018. by 4.79%. This tendency is
explained by the fact that non-competitive businesses are leaving
the market. Factors such as rising prices for consumables, high
taxes, increased competition and high interest rates on banks
are pushing them away. At the same time, the number of natural
persons-entrepreneurs is increasing, their share in the number of
economic entities is almost 81%. Production volumes of industrial and
agricultural products for the period 2014 -2018 increased in value.
However, this increase is largely due to the rise in prices for goods
and services.
Investing in the development of individual businesses contributes
to a faster development of the economy, which is a positive trend.
According to studies in Ukraine, only 4.6% of companies have at least
10% of foreign direct investment in seed capital. These businesses
are much more productive. Ukrainian companies working with
foreign investments account for 20.4% of the able-bodied population
of Ukraine and 24% of Ukraine’s total capital. These gures make
it possible to conrm the importance of investment activity in the
economic development of both individual businesses and cities,
regions and the country as a whole. The economic downturn in the
country is accompanied by a decline in investment in both industry
and other sectors of the economy. It should be noted that the rate of
decline in investment processes is higher than the rate of decline in
industrial output.
The inux of foreign direct investment in the country’s economy
is uneven. FDI volumes tended to increase before 2014 inclusive.
In 2018, FDI decreased by 39.89% compared to 2014. It should
be noted that the share of FDI inows into the economy of Kyiv is
signicant and ranged from 48.09% in 2014 to 50, 63% in 2018. Thus,
due to the increase in the share of foreign direct investment in the
economy of the city of Kiev, the city has not lost investment volumes.
By volume of investment it is possible to distinguish the top ve top
countries - investors in the economy of the city of Kiev. The share
of these countries in the total amount of foreign direct investment
in the economy of the city of Kyiv in 2018 is as follows: Cyprus -
22%, the Russian Federation - 19%, the Netherlands - 16%, France
- 5%, the United Kingdom - 5%, other countries - 33 %. Analysis of
the dynamics of foreign direct investment in the economy of Ukraine
by type of activity shows that the most attractive type of investment
activity is nancial and insurance activities.
The following changes were observed in the sphere of foreign
economic activity of Ukraine. Export operations decreased by 12.18%
in 2018 compared to 2014. Imports increased by 5.07% over the
same period of time. The foreign trade balance of Ukraine in 2018
was negative: imports exceeded exports by 17.23%. The situation in
2014 was better: imports exceeded exports by 0.97%. The dynamics
of the geographical structure of Ukraine’s foreign economic activity
in 2018 is as follows. The share of foreign trade operations with
European countries is 40.60%, with Asia - 23.81%, Africa - 1.33%,
the Americas - 7.19%, other countries - 27.07%. The share of export
operations between Finland and Ukraine in 2018 amounted to 0.23%,
of import operations - 1.1% of the total number of operations.
The development of the national economy at the expense of
innovative factors requires the growth of the share of innovatively
active enterprises. It should be noted that the share of innovative
enterprises was not high, accounting for only 14.1% of the total
number of enterprises in 2018. The share of high-tech exports in
total exports of industrial products to Ukraine in 2018 was only 6.9%.
Previous attempts to create a state innovation policy in Ukraine
through selective assistance in the development of specic industries,
sub-sectors and projects have had limited positive impact.
Valeriia Loiko
Doctor of Economics, Professor
Department of Finance and Economic
Boris Grinchenko University of Kyiv
Council of the European Economic
Kyiv, Ukraine
Baltic Rim Economies
29.11.2019 ISSUE # 4
Juhani Pihlajamaa & Alexander Pavlov
Konecranes in Ukraine
Konecranes is a world-leading group of “Lifting Businesses”,
serving a broad range of customers including the
manufacturing and process industries, shipyards, ports
and terminals. The company is dedicated to improving the
eciency and performance of businesses by providing
productivity enhancing lifting solutions as well as services for lifting
equipment of all makes. Konecranes is based in Finland but has
approximately 16,000 employees in 50 countries.
The company’s history dates back to 1910, when the electrical
motor repair shop KONE Corporation was founded. Konecranes
has grown over the years mainly organically but also has a strong
acquisition track record as well. Konecranes became an independent
company in 1994 via structural and strategic changes at KONE.
Konecranes is an example of how a foreign company can not
only survive but also be a successful foreign investor in the Ukrainian
market. Konecranes entered Ukraine in the early 1990s, establishing
the Konecranes Ukraine company in Odessa. In 2005, Konecranes
acquired the Zaporizhkran factory in Southeastern Ukraine, a well-
known company from the Soviet era that was the largest maker of
lifting equipment in Eastern Europe. Since the acquisition, Konecranes
has been one of the biggest Finnish investors in the Ukrainian market.
After being purchased by Konecranes, the Zaporizhkran factory
has gained new prospects for its development and undergone
extensive modernization. Today, over 90 percent of its products are
exported. The factory employs about 380 people, while another 150
work in the frontline oce in Odessa in sales and services. As an
example of its work, one of the largest projects of late is assembling a
huge shipyard crane with a carrying capacity of 180 tons and span of
53 meters for a customer in Chile 2018.
Ukraine is attractive to foreign investors due to its geographical
location, access to a relatively wide range of resources and
professional labor force. Ukraine has access to the sea and thus to
any country on the planet, plus huge territory on which enterprises of
any scale can be built.
Among the challenges of doing business in Ukraine are corruption
and bureaucracy in governmental and local administrative bodies;
the vagueness and complexity of business legislation; a complex
tax system; and the absence of an existing state program to support
investors, although there is talk of judicial reform as a way to protect
investments. An additional risk for investors remains the military
conict in Eastern Ukraine, although situation has stayed relatively
stable in the last few years. Ukraine’s weakening currency since 2014
has caused some risks, but on the other hand it has also beneted
foreign investors.
In 2019 we have seen the election of a new Ukrainian president
and new parliament plus the formation of a new government, with all
three repeatedly stating their readiness to create better conditions and
investment environment for foreign investors. The activity of the new
Ukrainian parliament (Verkhovna Rada) in adopting new reforms and
progressive laws in the very rst days of its work can be considered a
positive signal.
The free trade zone agreement with the EU has become a
real advantage for those Ukrainian enterprises which already have
world-class technology and are able to compete on equal terms
Juhani Pihlajamaa
Security Manager
Zaporizhkran factory
Zaporizhya, Ukraine
Alexander Pavlov
Corporate Communications Director
Zaporizhkran factory
Zaporizhya, Ukraine
with European manufacturers. Thanks to the investments from
Konecranes, Zaporizhkran is one such enterprise. Konecranes
has introduced European management approaches in Ukraine and
paid great attention to recruiting and relying on talented youth. The
company’s employees have great opportunities for training, including
going abroad. Zaporizhkran also has broad cooperation with local
technical university.
Among other activities, Konecranes has been developing an
Industrial Park project on the territory of Zaporizhkran since 2011.
The project was launched as a way to optimize land and facility
use and attract potential partners and contractors. This is a great
opportunity for the region and Ukraine as a whole to stimulate the
arrival of new investors. There is not only a developed infrastructure,
but also managerial experience, opportunities in terms of interaction
with contractors, and already existing administrative and security
structures. Today, two other Finnish companies work in the industrial
park – forming a unique conglomerate of Finnish business in Ukraine
– along with one German company and ten Ukrainian companies.
This is an indicator of the reputation of Konecranes – companies
entering the park can see it’s possible to create a successful business
Expert article • 2607
Baltic Rim Economies
29.11.2019 ISSUE # 4
Iryna Sheiko & Roksana Petrova
Impact of globalization on the
Ukrainian economy
Expert article • 2608
The processes of globalization – the growing interdependence
of citizens and states in the modern world, have become
a challenge for most national states, despite their
geographical location or the level of political, economic and
cultural development. Global integration has signicant
benets: international division of labor, the scale eects and the rapid
spread of innovations. Integration of Ukraine into European and world
economic, informational and social space allows to activate the ow
of goods, investments, information, interpersonal communication.
On the base of analysis the dynamics of globalization index of
Ukraine, economic globalization has left the country only 89th in the
world. However, in terms of de facto economic globalization, Ukraine
ranks 26th, ahead of Germany, Poland, the Czech Republic, Slovakia
and Lithuania but de jure, the country was only 120th place, which
determined the low rating. In terms of social globalization. This data
shows, that the real processes of economic globalization don’t receive
an institutional mechanism for promoting. Due to rating of social
globalization, Ukraine was on the 97th place in the world (the de facto
indicator is 78th, de jure - 102th). Here, the lack of mechanisms for
promoting information, interpersonal and cultural globalization (de
jure globalization) with the low level of real processes of globalization
in society (communication, business communication and business
relations, international tourism and migration) hinder the growth of
globalization processes in the country’s social sphere. Regarding
political globalization, Ukraine occupies the 30th position in the world.
One of the indicators of globalization is increasing of export and
import share in GDP of the country. According to the data of the
National Bank of Ukraine and the State Statistics Service of Ukraine,
the volume of exports in 2017 increased by 18% compared with 2016.
The volume of imports in 2017 increased by 26% compared to the
previous year. Machinery, equipment and transport vehicles (30%),
mineral products (25.6%), chemical industry products (20.5%) have
the largest share in the structure of imports in 2017. It is positive
tendency that one third of the imports relate to equipment: the usage
of latest technologies will improve the quality of products.
Among the sectors most promising for further development
and realization of export potential, we can highlight the information
technology sector. The IT service export revenue balance is steadily
increasing. In 2017, IT sector brought the Ukrainian budget 2.25 billion
dollars. In 2016, our country exported IT services on sum of $ 3.2
billion. But at the same time, Poland’s revenue from similar exports
amounted to $ 16.3 billion, and the undisputed leader in the ranking
was the United States with a IT revenue of $ 177.8 billion. Among the
problems of development of IT industry in Ukraine experts headline:
low level of protection of intellectual property rights, underdeveloped
markets of nancial and venture investments, “brain drain” abroad
(over 2017-2018 Ukraine has left more than 10 thousand specialists),
lack of foreseeable and consistent taxation and pressure from
regulatory authorities. In general, it is dicult to talk about a well-
developed IT industry in Ukraine, as only one of its segments is well
represented in the country – outsourcing.
Thus, the processes of globalization and integration, in which
Ukraine plays an increasingly important role, can both intensify the
spread of the newest technologies and create a basis for attracting
domestic enterprises, rms, research organizations and universities
to international projects and grants. Ukraine can hope to take its
proper place in global integration processes, while at the same time
gaining signicant advantages, namely:
using the latest achievements of scientic and technological
participating in the world division of labor on the basis of
self-analysis and creating a favorable legal and infrastructural
increase of tourist ow;
increase in volumes of direct and portfolio foreign
Countries with more competitive economic structure receive
the greatest benet from globalization, leaving most of their global
income inside. Thus, the activization of globalization and integration
processes makes the issue of choosing the place and role of the
national economy and its components in the world economic system
Roksana Petrova
Associated Professor
System Engineering Department
Kharkiv National University of
Kharkiv, Ukraine
Iryna Sheiko
Associated Professor
Department of Economic Cybernetics and
Economic Security Management
Kharkiv National University of
Kharkiv, Ukraine
Baltic Rim Economies
29.11.2019 ISSUE # 4
Lilia Ukrainets
Chinese business in Ukraine
In 2013 Ukraine and China have proclaimed the existence of
a strategic partnership between the countries by signing the
Friendship and Cooperation Treaty and the Joint Statement on
Strengthening of the Strategic Partnership. Virtually this level of
relations is not fully realized. In 2014 China thought long and hard
about the events of the Revolution of Dignity, taking a wait-and-see
attitude since revolutionary events never call for unequivocal approval
in China.
Given its strong nancial and technological resources, China has
long become one of Ukraine’s major economic partners and investors.
The strategic partnership with China — the Belt and Road initiative,
amongst other things — is increasingly aecting the business situation
in Ukraine. Chinese business interest in cooperation with Ukraine is
coming from the Chinese government’s decision to set up “foreign
food bases”. It provides among other things for taking advantage
of Ukrainian agricultural resources in combination with Chinese
investments and technologies.
Currently, China is in the top ve in 4 major categories of Ukrainian
imports and 3 major categories of Ukrainian exports. But at the same
time, Ukraine’s relative importance as a supplier of goods to China
is not only small in absolute terms but also demonstrates negative
The investment cooperation between Ukraine and China
also punches below its weight. At the beginning of 2019 Chinese
investment in the Ukrainian economy amounted only to $17.9 million,
which is 0.05% of the total foreign investment into Ukraine. China
does not count as the main investment source for Ukraine; however,
the Ukrainian business has high hopes for Chinese investment. The
principle of “using investment as an incentive for trade” is a new idea
of developing trade and economic cooperation with China. Money is
not a problem for China; the key question is to nd projects of real
interest. According to Chinese top ocials, if Ukraine would be able
to oer projects that meet market needs, then Chinese investments in
Ukraine might amount to $7 billion.
We should emphasize the positive moment that the interest of
Chinese business in Ukraine has recently been increasing in various
elds. Nowadays, Ukrainian agricultural, energy, construction,
communications industries are particularly attractive for China. Ukraine
is visited by the representatives of many Chinese companies seeking
for the logistics projects in all elds — maritime, automobile, air and
railroad. There are also investments in environmental protection and
renewable energy. Chinese business may deliver on the potential of
the biomass-based power plants, as Ukraine has every opportunity
to provide such attractive projects. An important area for pragmatic
cooperation between the China and Ukraine may be the area of
research activities. These spheres are not over-regulated, so they are
an interesting platform for active cooperation.
Ukraine might be a rather attractive country for investors, but it is
necessary to take into account the signicant risks. The uncontrolled
and volatile situation in Ukraine prompts many Chinese businessmen
to retreat. The Ukrainian crisis might be considered on three levels,
the rst of which is the geopolitical crisis. Ukraine is in the area of
geopolitical conict between Russia and the West; external factors
cause additional shocks to the stability and development of the state.
Lilia Ukrainets
Ph.D., Associate Professor
Ivan Franko National University of Lviv
The question is: will the contradictions between Russia and Ukraine
lead to an escalation of the warfare?
The second level is a political crisis in Ukraine. Is it likely that the
Maidan will re-ignite in Ukraine? The political development of recent
years has shown that government ability to control the situation in
the country has been somewhat strengthened; however, after the
Presidential elections in 2019, the political tension has increased
again. The level of political governance is inadequate, the legislative
framework is a subject to constant reconsideration, and the level of
people’s trust in the government is falling.
The third level is the economic crisis. The indicators show that the
economy is not at the lower recession point, but has started to slowly
recover. Still, the economic recovery is likely to be a long and dicult
As things stand at the moment, a number of Chinese businessmen
point to problems that prevent the increase of investment ows:
default on contract commitments, diculty in funds transfer, constant
changes in policy and legislation, corruption and bureaucracy, weak
infrastructure, increasing labor costs, etc.
In recent years organizations such as the Sino-Ukrainian Business
Council, the Ukrainian Chamber of Commerce and Industry, the
Chinese Association for the Development of Enterprises Abroad, the
Ukrainian Silk Road Association, and the Ukrainian House in Beijing
have often organized investment fairs that have become a platform
for the widespread expansion of business cooperation between China
and Ukraine. With help of these platforms, the Ukrainian government
and businesses were able to come into the spotlight. Notwithstanding,
little attention was paid directly to the audience interests, very few
options were given to address issues of concern for the Chinese
business. That is why the desired eect was not achieved yet.
Expert article • 2609
Baltic Rim Economies
29.11.2019 ISSUE # 4
Jaana Vuorio
Ukrainian immigrants in Finland
Historical overview
Finland recognized the de-facto independence of Ukraine
in 1918 and accordingly also accepted Ukrainian travel
documents. In June 1918 about 60 Ukrainians resided
in Finland. One of them, a labourer Stefan Kraurschuk,
was the rst Ukrainian to be granted Finnish citizenship on 3 May
1921. Ukrainians were not initially given deportation orders as other
subordinates of Russia. By September 1918, however, “nearly all
Russians appear to be subordinates of Ukraine and have Ukrainian
passports”. A Ukrainian journalist K. Wyshevitsh admitted in the
newspaper Uusi Suomi on 17 January 1919 that “along the streets
of Helsinki there are loitering persons who have Ukrainian passports
but who speak only Russian, and loudly announce themselves to be
Russians, aront Ukraine and its loyal sons who with heroic eorts are
trying to build up their own national state”.
After Ukraine had already lost its independence, such people
arrived in Finland with Ukrainian passports who according to the
Finnish Security Police “had as little to do with Ukraine as with New
Guinea”. The most well-known Ukrainian refugee was the leader of
the Kronstadt rebellion Stepan Petrishenko who came to Finland in
March 1921 but who was extradited illegally to the Soviet Union in
April 1945 and died in a gulag a couple of years later.
Ukrainians disappeared from immigration statistics in 1924. Even
though Ukrainians entered Finland during the years of war to work
as lumberjacks, they were considered Soviet citizens or citizens
of (German-occupied) Poland. Ukrainians cannot be traced in the
statistics until their new independence in 1991. The immigration of
Ukrainians restarted in 1992 and the following year Ukrainians were
once again granted Finnish citizenship. But for almost 70 years the
number of Ukrainians in Finland was unknown.
Present-day situation
According to population statistics there are currently over 4 000
Ukrainian citizens living permanently in Finland. Those Ukrainians
who have already been granted Finnish citizenship between 1990
and 2018 (in total, 1 985 persons) are not included in the afore-said
number but many of them also still reside in Finland.
Most Ukrainians, who have immigrated to Finland, have work
as their ground for applying residence permits. In the last few years
around 200-300 Ukrainians have moved to Finland annually as family
members and less than a hundred per year as students.
Most typically, Ukrainians come to Finland as seasonal workers
in agriculture, gardens and fur farms. Seasonal workers from Ukraine
amount to nearly 10 000 persons a year. Often same persons arrive
year after year. Cases of exploitation are rare but do occur: in 2014
- 2019, fourteen Ukrainian workers have been assisted as victims of
human tracking.
There have been also asylum-seekers from Ukraine. In 2014,
the number was at its highest: over 300 asylum applications. People
who applied for asylum originated from dierent parts of the country
and arrived to Finland on a visa. Many of the asylum applicants had
originally arrived in Finland as seasonal workers. The most common
grounds stated in their asylum applications were the general security
situation in Ukraine and unwillingness to do military service in Eastern
Jaana Vuorio
Director General
Finnish Immigration Service
Only very few Ukrainians have been granted international
protection in Finland. In addition, the number of applicants has
decreased since 2014. In 2017 there were 45 asylum applicants, in
2018 also 45 and this year until 16 September only 11. The numbers
have remained low in spite of the visa-free travel to EU countries of
Ukrainians, which was introduced in 2017.
This article has aimed to oer a succinct overview of Ukrainian
migration to Finland. Although not pertaining to Ukraine directly, as
a side note it may also mentioned that probably the best-known
Ukrainian surname in Finland is Eremenko. Alexei Eremenko Senior
has both played in and coached top Finnish football teams and his
sons, Alexei and Roman Eremenko have been prominent players in
the national team of Finland. The Finnish Football Federation chose
Roman Eremenko as Footballer of the Year in 2011 and 2014. Alexei
Eremenko senior was born in Novotserkassk, Soviet Union, and the
family migrated from Moscow to Pietarsaari, Finland, in 1990.
Expert article • 2610
Baltic Rim Economies
29.11.2019 ISSUE # 4
Viktoriia Hladii
Labour market for international
graduates: Perspective of an
Ukrainian in Finland
In the present times of military conicts and unsettling economic
situation, many Ukrainians nd emigration, whether for work or for
a better life, as the solution. My case is neither, as I have moved
to Finland on academic and cultural terms – even before the
Euromaidan and Russian annexation of the Crimea happened –
rst on an academic grant for exchange studies, and the following
year – to pursue my master’s degree. Could it be called a brain drain,
perhaps? However, the world is changing, and so does a labour
market. Considering the current trends in globalization, travelling, and
increasingly open borders, it may soon be that higher education in just
one country and one language will not anymore be enough to secure
a decent workplace. Furthermore, for me the concepts of national
borders or excessive patriotism are losing their places in favour to
open-mindedness, cultural diversity and respect. The “responsibility to
serve and help your own country” does not necessarily mean staying
your whole life in the place where you are coming from – I believe that
there are many other ways to contribute. For many other Ukrainians,
still, emigration is rather a necessary move, than a choice.
In terms of absolute numbers, in Ukraine, the “academic
emigrations”, such as in my case is insignicant compared to the one
related to search for better life. According to Eurostat, only in 2018
over half a million of Ukrainians received their rst residence permit in
one of the EU Member States. Only 11,9% of those permits were for
study purposes, while 65% were work permits. In total, 2 to 5 million
Ukrainians are estimated to be employed abroad.
While Ukrainians continue to be the largest group receiving rst
residence permits in the European Union, they constitute a relatively
insignicant minority group in Finland: as of January 2018, about four
thousand citizens of Ukraine lived permanently in Finland, and ve
thousand – in total. The Finnish cities with the highest population of
Ukrainians are Helsinki, Tampere, Jyväskylä, Turku, Oulu and Salo.
My Finnish hometown is the Southwestern city of Turku. It is
a city of three higher education institutions, 35 thousand students,
city of recently booming industry and economy, and consequently,
of numerous opportunities for young graduates. It seems natural for
a person who has studied and lived in a country for several years
to wish to stay after graduation, and decide to nd a job there and
eventually settle down. After all, Finland is investing money in
educating international young specialists, just like it is investing in
Furthermore, the Finnish work culture might feel more attractive
to some of those graduates than the one in their home countries,
just as it felt for me. From my own work experience gained so far, I
could conclude that Finnish work culture generally diers from the
one in Ukraine in a number of ways: there is much more focus on the
well-being of the employees, work hours are more exible, equality in
the oce is preferred to hierarchy and subordination. One of the key
dierences is the level of trust at work, both in the employee and their
professionalism and in the capacity to full the task they are assigned.
However, in some ways it seems that the Finnish labour market
is not yet ready to open up towards the international talents. The
paradox is that Finland has been putting a lot of eort into promoting
its higher education as multicultural, diverse, welcoming international
students to join its international degree programmes, but it has not
been very successful so far in utilising the international talent it has
Among the obstacles towards the employment of international
graduates, in most cases stands the lack of advanced Finnish
language skill, even where it is not necessarily needed for completing
the work. However, more than that, there is a general unwillingness to
change an already established routine and to make small adjustments
to accept somebody from another country and another culture, even
if in the longer term it would bring more diversity and more fresh
ideas to the team. While I have been lucky to discover some very
positive and enriching work experiences in Finland, my numerous job
applications, interviews and observations had also shown the other,
so far prevailing side of the Finnish job market.
A few of my Ukrainian acquaintances, who also completed their
master studies at Finnish universities, had already left Finland and
returned home. They stated that, despite having already settled
here, they decided to move back home, as there they would be more
likely get a job in their eld of studies, would be welcomed into the
team and listened to, as well as trusted with an appropriate amount
of responsibilities. And this doesn’t only concern Ukrainians, but
numerous other international students as well. In a certain sense, it
can be said that Finland helps battling the brain drain from Ukraine
and other countries. However, isn’t it too costly and unprotable for
Finland to do so?
Expert article • 2611
Viktoriia Hladii
MA in Baltic Sea Region studies
University of Turku
Centrum Balticum Foundation
Baltic Rim Economies
29.11.2019 ISSUE # 4
Nataliya Teramae
Love culture and make diplomacy
It’s quite symbolic that by the time this issue is printed the annual
festival of the Ukrainian Film Days in Helsinki will be over. ‘A short
course on the modern history of Ukraine’ – this is how the line-up
could be described. We started with the musical Hutsulka Ksenia
a playful lm, set in the Carpathian Mountains in the 1930s,
however, the end of the movie warns about the upcoming threat of the
WWII. Another lm – Mr. Jones – premiered at the Berlin International
Film Festival and is also set in the 1930s. Directed by Agnieszka
Holland, it tells about the Great Famine in Ukraine, touches on the topic
of media propaganda and fake news, and shows what can happen if
politicians refuse to see small tyrants as a threat to European security.
The third lm in our line-up was The Wild Fields, based on the novel
of well-known contemporary Ukrainian writer Serhiy Zhadan, which
describes Donbas before Russian tanks entered the territory of
sovereign Ukraine in 2014.
The idea of showing Ukrainian lms in Helsinki was a reaction
to the fact that Ukraine is quite unknown in Finland and still stays in
the shadow of “big brother”. I remember, that in 2015 I was shocked
to spot Oleg Sentsov’s lm Gamer as an entry of the Russian Film
Festival in Helsinki. At that time Oleg, a Ukrainian citizen, was already
a political prisoner of the Kremlin.
I’ve chosen cinema as a popular and accessible medium of cultural
diplomacy. We show Ukraine as it is; having problems, struggling and
succeeding. Despite being involved in a hybrid war with Russia, the
state can develop and produce new senses and new competitive
cultural products.
Any topic can enter the international discourse if it receives the
proper platform. The issue of the authoritarian and repressive Soviet
Union and its legacy received worldwide attention when the Nobel
Prize in Literature was awarded to Svetlana Alexievich in 2015 “for
her polyphonic writings, a monument to suering and courage in our
time.” In her Nobel lecture she stated: “Twenty years ago, we bid
farewell to the ‘Red Empire’ of the Soviets with curses and tears. We
can now look at that past more calmly, as an historical experiment.
This is important, because arguments about socialism have not died
down. A new generation has grown up with a dierent picture of the
world, but many young people are reading Marx and Lenin again.
In Russian towns there are new museums dedicated to Stalin, and
new monuments have been erected to him.” The events of at least
last decade showed that that empire has not died. It has been reborn
as the Russian Federation, that doesn’t want its former colonies to
be free. In the modern world we have a euphemism for colonies -
spheres of inuence.
To understand the Ukrainian question, we must recognize the
existence of modern imperialism and its destructive policies. “By the
time the Iron Curtain was torn down, the former Western colonial
empires had already entered an era where the exploitation of former
colonies was being recognized and dealt with. The mother country
of the former Soviet empire, Russia, never undertook a similar
decolonization process because it was never forced to do so,” said
acknowledged Finnish writer So Oksanen in her key speech at the
European Union Literature Prize Celebration in Brussels in October
When empire is well heard, the spheres of inuence are practically
Nataliya Teramae
Journalist, Lecturer
University of Helsinki
Board Member
Ukrainian Association in Finland
muted. As far as I know, there was only one book by a Ukrainian author
translated and published in Finland – a 1990s detective novel by
Andrey Kurkov. No contemporary ction serving as a mirror of society.
No historical books that speak for the millions of prosecuted and
killed. Is Ukraine too small or not important enough to be interesting?
No. Probably, its issues have not reached the proper levels to be on
the international agenda. Probably, something dominates over it (see
Sentsov’s case at the Russian lm festival). There are a bunch of
Therefore, it is extremely important to develop cultural diplomacy
at the level of the civil society. Person to person contact is not less
important than interstate relationships. Cultural diplomacy has been
the task for the Ukrainian diaspora worldwide since the war broke
o. Ironically, the Russian aggression gave some positive fruits
Ukrainians abroad, of dierent waves of emigration, realized the
necessity to distance from the empire (in Ukrainian terms it is called
‘Russian world’). Those people have been organizing bigger festivals
and smaller events, as well as showcasing borsch as the trademark
of the Ukrainian cuisine.
Cultural diplomacy on the civil level is the case of the Ukrainian
Cinema Days, a cultural project of the Ukrainian Association of
Finland. We love Finland, we absorb its history, culture and traditions
and we respect its laws and privileges. On the other hand, we want to
share the values we carry as well as the painful experiences we have
Expert article • 2612
Baltic Rim Economies
29.11.2019 ISSUE # 4
Arto Luukkanen
The archive-revolution in Ukraine
The end of the Cold War period opened up the Soviet
archives for Western historians.
Unfortunately, this “happy hour” lasted only few
years. When Vladimir Putin became a president of the
Russian Federation, the Soviet archives with more sensitive
material were closed again from foreigners.
Luckily, the Soviet archive revolution continued in Ukraine in
2014. Thanks to the new democratic regime, the Ukrainian archival
system was liberated. In 2015 the new government declared Soviet-
era security classications invalid and opened up the former KGB
archives in Ukraine.
However, the archive’s current management had to wrestle
with multitude of problems including vicissitudes of management,
personnel, reclassication and bureaucracy. By the new law, all
documents relating to Soviet security agencies must be held under
one roof – in the State Archive of the Ukrainian Institute of National
Memory. But so far, this archive exists only in legal terms: it still needs
to nd appropriate premises and hire sta. Therefore, they are located
to Ukrainian secret police buildings.
GDA – SBU and papers of perestroika
– Ukrainian secret police archives) includes the content of soviet
special services archives as well as main directions of activity of
Security Service of Ukraine Branch-Wise State Archive. It is also open
for non-Ukrainian scholars. This archives includes general CHEKA–
KGB legal acts and administrative documents from 1917-1991. For
example, it contains GPU–KGB USSR Secretariat material and all
material from directorates MGB such as 2nd-5th etc.
I have been able to work at that special archives since 2014
with the community of international scholars. The leadership and the
personnel of this archive has been most cooperative with my research
and I want to hereby express my deepest gratitude to these good
people working there.
In my presently published monograph “Suomi hajoavan imperiumin
sylissä” (Finland in the bosom of the decaying empire) I have dealt
with the years of the perestroika in Ukraine. This monograph utilizes
the material and reports send by the chairman of the Ukrainian KGB
to the highest leaders of the Ukrainian Communist Party during the
years of perestroika and they can be found from the Fond 16 (Фонд
16; 2293 одиниці постійного зберігання; 1930–1991 рр. Довідковий
апарат: здавальний опис, тематична картотека, історична довідка
– Секретаріат ГПУ–КГБ УРСР). Moreover, the research also include
the materials and reports from the Chernobyl-nuclear plant and the
operative les from the local investigators responsible to examine the
1986 disaster.
This fascinating material from archives gives us a unique possibility
to investigate the processes of disintegration of the soviet system at
Ukraine in detail. According to the material used in the monograph,
the Ukraine was “lagging behind” many years. The reason was
simple: the Communist Party of the Ukraine and Ukrainian KGB
apparently knew how sensitive and precarious the political situation
was in Ukraine and tried to isolate Ukraine. The plan did not work – in
1987 situation changed radically and the box of “perestroika Pandora”
Arto Luukkanen
Dr., Docent, University Lecturer of the
Russian Studies
University of Helsinki
was opened in Ukraine. The dilemma of the nationality question was
exploded together the worsening economical situation. People started
to activate themselves politically and KGB realized that it could not
tame the democratic movement anymore.
According to this material, it seems be clear that the local KGB
was very aware concerning the worsening situation inside Ukraine.
The security police had inltrated to all “non-ocial organization”
and NGO’s and was able to gather information straight from closed
dissident circles.
It also tried to “toll the bells” and wake up the local party leadership
concerning the dangers of the situation. However, the highest
leadership in Moscow did not show the “green light” and the “political
moratorio” which the local KGB demanded, was never executed.
This monograph also investigates the insider material of KGB
from the special periodical magazine “Sbornik KGB SSSR”. This
publication was a very secretive instrument of information to only the
very selected cadres of the espionage and security work inside the
Soviet Union.
It seems that the editorial board of this periodical magazine made
a real attempt to reform the activities of the Soviet secret police in
1990s. It opened the sensitive discussion and tried to inspire new
ideas inside the KGB. However, the result was a total failure and it
seems that according the periodical, the KGB made a sudden turn to
the more conservative direction.
This material gives us also the possibility to investigate the last
moments of the Soviet Union in Ukraine with more detail. According
to this archival material, the local KGB seemed to know the plans
of the Yanajev’s rebellion but when the coup did not work, the local
Chekisty were willing to defend the cause of “national sovereignty of
the Ukraine. After the victory of Yeltsin the secret police leadership
wanted to serve the new democratic forces and even demanded that
tactical nuclear weapons should be preserved in Ukraine.
Expert article • 2613
Baltic Rim Economies
29.11.2019 ISSUE # 4
Kari Liuhto
Ukraine on My Mind
September 1987: Along with ten of my young compatriots, I
arrived at the central railway station of the Ukrainian capital
with the aim of taking up studies at Kyiv State University,
today known as the Taras Shevchenko National University
of Kyiv. The unseasonal warmth and the city’s verdant
parks could not quite conceal its greyness, and for a capital of two
million, its inhabitants seemed to me surprisingly sluggish.
The moribund Soviet economy manifested itself in the austere
shelves of Kyiv’s supermarkets, at the heart of the region known as
Europe’s breadbasket. These stark realities were also reected in
the Soviet anecdotes with which we were regaled during our stay.
According to one, the socialism had even managed to make all the
sand of the Sahara disappear in only a few decades.
But to our relief, the lives of Western students were rendered
somewhat less ascetic by the reforms ushered in by Mikhail
Gorbachev. The non-state-run cooperative cafés, for instance, oered
a welcome change of dietary pace from the bread, eggs, and canned
goods that constituted the entire selection available at our state-
owned local shop.
Travelling the country was largely o the table as well, as University
policy was to conscate foreign students’ passports and replace them
with state internal documents known as propiskas. Thus we were
reduced to staying within a few dozen kilometres of central Kyiv, our
opportunities for regional sightseeing and cultural immersion severely
curtailed. Nor did it help matters that Kyivans, fearful of repercussions
by the KGB, conspicuously avoided contact with foreign students.
While my interactions with the locals were regrettably few, they
appeared to me reasonably content with their lives. I was taken aback
by the sight of families out in the park with their children, ostensibly
unconcerned by the Chernobyl nuclear disaster that had befallen the
country only the previous year. Though the KGB knew very about
the seriousness of the accident, the information on the accident
was disclosed to common people much later. Now a popular tourist
destination, Chernobyl lies only a hundred kilometres from Kyiv.
Soviet television programming largely revolved around
entertainment and culture, with news broadcasts limited to statements
by party leadership and panegyrics on the achievements of socialism.
Genuine reports from the West were nonexistent. I am put in mind of
the propaganda pieces about America’s homeless and unemployed,
designed, perhaps, to dampen Soviet citizens’ desire to emigrate.
In those days, life in Kyiv had a decided serenity about it. All was
well, or at least appeared to be. But a mere two years later the world
witnessed the dissolution of the socialist states’ economic organisation
COMECON as well as the Soviet Union itself, and Ukraine declared
its sovereignty. Lurking behind the Iron Curtain, it transpired, had
been a giant with feet of clay, whose military strength and operations
such as the occupation of Afghanistan had served to shield its internal
weakness from view.
Military aggression by authoritarian regimes is not, of course,
merely a thing of the past, but neither is their supercial stability,
punctuated without warning by internal crises and their possible
corollaries, radical political transformations and even social collapse.
November 2019: Even though the war in eastern Ukraine has
raged for half a decade, most of the country’s 40 million inhabitants
are able to lead normal lives.
I have made four visits to Ukraine this year, including one with
my family. My wife was rather enchanted with the architecture of
Lviv’s old town, while the fashion oerings of Chernivtsi, created in
collaboration with Italian and Spanish designers, made an impression
Kari Liuhto
Professor, Director
Pan-European Institute
Turku School of Economics at the
University of Turku
on my daughter. We were far from the only tourists there, as 15 million
foreigners visit Ukraine every year, and this gure is growing.
Despite the fact that the most acute phase of the Ukrainian conict
seems to have passed, we should not forget that, from the standpoint
of international law, Russia’s occupation of Crimea continues and the
war in the Donbass region rages on. Nearly 15,000 people have been
killed and almost two million Ukrainians displaced from their homes,
with many forced to leave the country in search of employment in the
West as well as the East.
Partly as a protest against the fecklessness and rampant
corruption of their leaders, the spring 2019 presidential election saw
Ukrainians ock to a political outsider. Chosen as Ukraine’s new
head of state in a landslide victory, Volodomyr Zelensky’s mandate
is to tackle corruption, put an end to the war in eastern Ukraine and
stimulate economic prosperity.
While glimmers of hope have come in the form of a recent
prisoner exchange between the warring parties (despite the recent
prisoner exchange, still nearly 100 Ukrainian political prisoners are
held in Russian prisons and some 250 Ukrainian prisoners are held
by separatists of Donbass), a partial withdrawal of troops from the
conict zone, and a rapid economic growth rate of almost ve percent,
Ukrainians’ standard of living still lags far behind that of even the
poorest EU member state, Bulgaria. When it comes to corruption, the
gulf between Ukraine and the rest of Europe stretches even wider. But
every marathon, as they say, begins with the rst step.
As I reect on the present situation in Ukraine and the time I spent
there as a student more than three decades ago, I am reminded of
Hoagy Carmichael and Stuart Gorrell’s song “Georgia on My Mind”,
whose nostalgic and peaceable lyrics bet today’s Ukraine as well as
they ever did the American state of Georgia or its namesake republic
in the Caucasus region – although its original dedicatee was probably
Carmichael’s sister, Georgia.
In spite of its tumultuous history (or perhaps precisely because of
it), the forty-million-strong Ukrainian people has earned its place as
a nation among nations over the course of the past three decades.
Moreover, they have made no secret of their desire for closer
integration with the West. More than a hundred Ukrainians gave their
lives to see this dream realized when protests against the authoritarian
rule of pro-Russian President Viktor Yanukovych rocked the streets of
Kyiv in early 2014.
The substantial progress already made by Ukraine as an
independent country cannot, however, undo the geographic realities
which force it into an eternal balancing act between East and West.
Such is the lot of nations located on geopolitical fault lines, Ukraine
and Finland included. There is no doubt that Russia will continue
to wield its clout as a regional power to inuence Ukraine’s future
development. But as long as the Ukrainian people remains united,
Ukraine has the capacity to resist external aggression and control its
own destiny.
Expert article • 2614
The University of Turku, the Pan-European Institute or the sponsors of this review are not responsible for the opinions expressed in the expert articles.
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the Centrum Balticum Foundation,
the City of Turku, the John Nurminen Foundation, the Port of
Turku and the Turku Chamber of Commerce
Pan-European Institute
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