Sunday, February 21, 2016

Week’s balance: Cabinet in limbo, transit war with Russia, and Yanukovych debt

Artem Belousov (UNIAN)

Despite recognizing the Cabinet’s performance as unsatisfactory, the Parliament failed to dismiss it; Ukraine temporarily banned the transit of Russian trucks in response to the actions of the Kremlin; and the Russian Ministry of Finance lodged a suit with the London court against Ukraine for its failure to pay back the so-called "Yanukovych's debt" - these are the main economic news of the past week.

The Cabinet of Ministers managed to avoid dismissal. Despite the President Poroshenko’s call for a complete reboot of the Government, there were not enough votes in Parliament to support his initiative.


"Now it is clear that there is a demand for a full reboot of the Government. At the moment, the prime minister retains an opportunity to choose the best way to meet this demand," said Poroshenko, one hour ahead of the government’s report to parliament, referring to the opinion polls.

The president said that more than 70% of voters favor the dismissal of the Cabinet headed by Arseniy Yatsenyuk.

On the same day, February 16, the parliament recognized unsatisfactory the results of the government’s work in 2015 with a majority of votes following several hours of abundant criticism.

According to the majority of deputies who spoke in Parliament that day, Prime Minister Yatsenyuk and members of his government have failed to fulfill its task to rescue Ukraine’s plunging economy, exhausted with the Russian military aggression in Donbas and the acute shortage of foreign currency earnings due to falling prices on the markets of raw materials.

Despite the seeming determination to get rid of Yatsenyuk’s Cabinet, only 194 MPs supported the presidential party’s motion of no confidence in the government of the necessary 226 votes.

Nevertheless, the current composition of the government is still in limbo, while the authorities continue to call the situation a political crisis. It remains a mystery how and when the Cabinet will be reformatted. The leader of the Bloc of Petro Poroshenko faction, Yuriy Lutsenko, said that in the next three weeks, the prime minister must propose a new composition of the government, otherwise the Rada will consider a question of no confidence in him personally.

Transit wars


Last week, the Ukrainian-Russian conflict with the blocking of cargo transit through the territories of the two countries has raised to a new level. After the Ukrainian activists announced the indefinite campaign in 10 regions of Ukraine on preventing the transit passage of the Russian trucks, the Russian Federation on February 14 stopped the transit movement of the Ukrainian trucks on its territory in a unilateral move.

In response to Russia’s unwarranted actions, the Cabinet of Ministers on February 15 took up mirrored measures. Until receipt of explanations from the Russian Federation and the resolution of this dispute, the government temporarily suspended the transit permits issued for trucks with the Russian registration plates, which entails termination of transit of the Russian trucks through the territory of Ukraine.

Prime Minister Arseniy Yatsenyuk said that it is not just the explanations that Ukraine wants. The country wants the unlawful decision to ban transit of the Ukrainian trucks lifted.

He also said that the Ukrainian side was holding consultations on the matter with the EU member states.

By the way, just ahead of this, after several days of a mutual blockade of trucks, Ukraine and Russia made some concessions. On February 18, the “returning home” mode was introduced when the Russian trucks were allowed to leave Ukraine, convoyed by the National Police, and the movement of the Ukrainian trucks restarted through the territory of Russia.

Minister of Infrastructure of Ukraine Andriy Pivovarsky expressed hope that Russia would return to the framework of international agreements in the issue of the settlement of transit of the Ukrainian cargo through its territory.

"Russia should withdraw transit restrictions for the Ukrainian vehicles, in order to return to the framework of international agreements on the principles of reciprocity", - the minister said.

Yanukovych debt


Last week, Russia lodged with the High Court in London a lawsuit against Ukraine over the failure to pay back a $3 billion debt taken by ex-president Viktor Yanukovych from the Kremlin as a bribe for abandoning the path of Ukraine’s European integration o, which subsequently resulted in massive civilian protests and his ousting.

The Ministry of Finance of Ukraine declared its readiness to defend its interests in the English court.

"The Ministry of Finance has confirmed that The Law Debenture Trust Corporation PLC, the creditor’s trustee over eurobonds maturing in December 2015, has formally started proceedings in the High Court of England," said the Ukrainian Ministry of Finance.

According to Foreign Minister Pavlo Klimkin, Ukraine will prove in court that the "Yanukovych debt" was in fact a bribe.

"Of course, we will be working to prove that it was actually a bribe, both in its form and content," he said.

The struggle for Crimea’s power generating assets

Ukraine’s largest state energy holding Naftogaz on February 18 made another step to return the assets lost as a result of the annexation of Crimea by Russia.


The Ukrainian company sent a written notice to Russia over the investment dispute regarding the assets seized in the occupied peninsula.

"If the dispute is not resolved through negotiations, Naftogaz intends to forward it to arbitration," the company said.

Naftogaz evaluates its lost energy assets in Crimea at $15.7 billion.
If Russia ignores the notice of Naftogaz, the following lawsuit will complement a series of arbitration claims of Ukraine against Russia over the assets in Crimea.

In 2015, Ukraine's largest oil company Ukrnafta and Privatbank appealed to international arbitration with claims against the Russian Federation regarding the protection of their investment in Crimea.








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