Business Ukraine 10/2019

New Year 2020

NORWAYIN UKRAINE

BUSINESS UKRAINE NEW YEAR 2020: 2019 has been a remarkable year of change for Ukraine which has seen a generational shift within the country’s political class and the establishment of an independent Orthodox Church of Ukraine. As Ukraine enters 2020, we take a look back at the people and events to have shaped the past twelve months in Europe’s largest country.

2020: Year of Opportunity for Brand Ukraine The past few months have given Ukraine ample opportunity to test out the old adage that there is no such thing as bad publicity.

Thanks to the country’s central role in the impeachment scandal unfolding around Donald Trump, Ukraine has enjoyed an unprecedented period of international media attention.

Unfortunately, most of the ensuing coverage has been decidedly unflattering. Ukraine has found itself branded one of the world’s most corrupt nations, accused of interfering in America’s 2016 presidential election, and generally slandered as an awkward and unreliable partner. This is not the kind of thing many countries would wish for, but it could yet work to Ukraine’s advantage.

Ever since gaining independence in 1991, Ukraine has struggled to emerge from the Soviet shadows and shrug off a lingering sense of international anonymity. This low profile is no accident of history, and can be traced to centuries of relentless russification policies specifically designed to blur the boundaries between Ukraine and Russia itself. The Tsarist authorities and the Bolsheviks may not have had much else in common, but they certainly shared an appreciation of the need to diminish Ukraine’s statehood claims if they wished to keep their own respective empires together. The success of these efforts can be seen in the continued readiness of many international observers to view contemporary Ukraine through the distorting prism of Russian narratives. This comes with very real costs. It makes the case for Russian intervention significantly more palatable, and lends a veneer of historical respectability to what would otherwise be seen as the naked imperialism of the Putin regime.

Ukraine must also shoulder some of the blame for the continuing ambiguity surrounding the country. For decades, successive Ukrainian governments neglected the issue of international image. This is not to say they were totally unaware of the problem.

For example, during his second term in office, former Ukrainian President Leonid Kuchma penned a book entitled “Ukraine Is Not Russia”. However, this was aimed at domestic audiences. Beyond the borders of Ukraine, little was actually done to introduce the country to the outside world.

In truth, Ukraine’s post-Soviet identity crisis made international messaging problematic. Despite overwhelming support for independence, Ukrainian society remained all-too-easily polarized by memory wars and the politics of history. Divisions

rooted in the past fed uncertainty about the country’s future. With the Ukrainians themselves seemingly unable to agree on their own national identity, it is hardly surprising that international audiences took little interest.

As Ukraine enters 2020, the situation is somewhat different. The Russian invasion of Ukraine and ongoing undeclared war between the two countries has had a profound impact on issues of national identity. Support for Euro-Atlantic integration is at all-time highs, while enthusiasm for a return to the Russian orbit has plummeted and is now confined to the margins of polite political debate. The old arguments about the past remain largely unresolved, but the urgency of the present has robbed them of their prior importance.

Instead, there is a new forward-looking sense of self-confidence about Ukraine that is reflected in everything from the country’s vibrant fashion and music industries to the landslide election victory of a comedian president. Today’s Ukraine has a fascinating story to share, and it may never have a better opportunity to do so.

The current media circus surrounding the Trump impeachment represents a once in a lifetime opportunity for Brand Ukraine.

With name recognition at record levels and the country set to remain in the spotlight throughout the impeachment process, 2020 could become the year when Ukraine finally enters the international mainstream. In order to achieve this, the government must flex its soft power muscles and engage global audiences with narratives that reflect the dynamism of today’s Ukraine while providing context that goes beyond the headlines. For a government so full of showbiz professionals, coming up with clever ways of getting Ukraine’s message across should not present too many problems. Team Zelenskyy’s famed social media skills can be channeled into a global charm offensive. The international media should be aggressively courted, with as many journalists as possible invited to Ukraine in order to experience the country for themselves. International celebrities and Instagram influencers should be issued with the latest Ukrainian designer ethno-fashions and invited to participate in Vyshyvanka Day 2020.

There is no time to waste. Ukraine may now be in the media limelight, but this attention will prove fleeting. Unless the present window of opportunity is exploited, post-impeachment Ukraine may soon find itself returning to the shadows of the international imagination.

About the author: Peter Dickinson is Publisher of Business Ukraine magazine and UkraineAlert Editor at the Atlantic Council

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FINLAND

THE BRITISH UKRAINIAN CHAMBER OF COMMERCE (BUCC) 2020 Annual Statement

The British Ukrainian Chamber of Commerce (“BUCC”) brings together companies and individuals doing business in Ukraine or the UK, including in the City of London, the international financial capital for Europe, Africa and the Middle-East. During 2019, the BUCC organized or participated in holding over 50 events in Kyiv, London and Lviv, and conducted numerous other activities for our Members. The BUCC holds monthly networking events in Kyiv, and is beginning to do so in London.

CURRENT BUCC INITIATIVES The BUCC has a number of initiatives to solve important problems for Ukraine that affect BUCC members, including: UK-Ukraine Trade Treaty. The BUCC, including in particular through its Ukrainian Week in London, promotes the priority execution post-Brexit of a new UK-Ukraine free trade agreement with no agricultural tariffs. Because the UK imports more than half of its food, Ukraine, as one of the world’s largest food exporters, should be a major beneficiary from Brexit as soon as a new UK-Ukraine free trade agreement applies to replace, for the UK, the restrictive EU-Ukraine DCFTA. Legal Ombudsman Proposal. For Ukraine’s judicial reforms and anti-corruption programs to actually help protect UK and other foreign, and domestic, investors in Ukraine, the BUCC has developed a proposal for a Judicial Ombudsman for Ukraine (in addition to the Business Ombudsman that focuses on administrative issues), as was successfully used by Sweden when corruption in the Swedish courts was a problem in the early 1900s. This proposal would allow litigants to take court decisions at any level that constitute an abuse of justice to the Judicial Ombudsman for an immediate outside review and, potentially, a quick re-hearing before different judges.

Political Risk Insurance. Ukraine needs greater availability of insurance for political/ conflict risk, so that such risk does not discourage foreign as well as domestic investment in Ukraine. The BUCC’s proposal for this is based on increasing the level of political/conflict risk insurance available from the World Bank’s MIGA, as has been previously successfully organized, for similar reasons, for the West Bank and Gaza and most other countries experiencing conflict.

Oxford and Cambridge Scholarship Program. We are raising funding to assist Ukrainian students accepted to Oxford and Cambridge to be financially able to attend.

Ukrainian Educational Programs. The BUCC is organizing the creation of foreign LLM and IT educational programmes in Ukraine.

Digitalization of Ukrainian Books and Drawings and Promotion of Ukrainian Art. The BUCC is encouraging the digitalization of the enormous number of important Ukrainian books and other documents held abroad to make them accessible to all Ukrainians, both in Ukraine and abroad. We are also leading an initiative to restore the reputation of the Ukrainian artist Mykhailo Tkachenko, a prominent impressionist in Paris in the 19th century who was largely forgotten after his death in Kharkiv in 1916.

We are working on this with Professor James Rubin, one of the world’s leading experts on Impressionism.

We also include within our focus trade among the Commonwealth nations.

THE BUCC’S MEMBERS DISCOUNT E-CARD The BUCC’s Membership “E-Card” gives discounts to our Members of 5% to 35% at many leading restaurants, hotels, shops and other establishments in Ukraine and the UK, the savings from which may exceed the cost of BUCC membership.

SPECIAL EVENTS The BUCC held many important events in 2019, including: John Hughes Memorial Dinner. The BUCC resumed this year holding the John Hughes Memorial Dinner in honor of John Hughes, the British founder of Donetsk and of the steel and coal industries of Ukraine, at the Opera Hotel, with the Ukrainian Chamber of Commerce and Industry (UCCI) and the John Hughes Business Club. The Minister of Economic Development, Trade and Agriculture, Timofiy Mylovanov, was the principal speaker, with speeches by others including Marcin Swiecicki, the Business Ombudsman. After a lively question and answer session, this event continued until late.

We have held many other significant events this year, including with (1) Transparency International, the State Enterprise Prozorro and the State Geology and Subsoil Service on Prozorro and Oil and Gas Licensing, (2) speakers from the Atlantic Council and other organizations and publications analyzing the Ukrainian Presidential elections, (3) Sharp Spring on AI website management, with David Walker speaking on website optimization, (4) Franklin Covey on Improving Business Efficiency and Productivity, (5) WebPromoExperts on search engine optimization, (6) the English filmmaker Reece Lynch on the situation and conditions in the Donbas and (7), at our annual event at the Leopolis Jazz Fest in Lviv, an EBRD presentation on Financing Ukrainian IT.

COMMITTEES The BUCC focuses on major projects and issues to address important business needs for Ukraine through the following Committees: Trade, Investment and Brexit Committee, which is reacting to Brexit with publications, events and other activities to encourage a new UK-Ukraine trade treaty and help develop further trade between Great Britain and Ukraine.

Agriculture Committee is currently focusing on (1) encouraging future UK markets post-Brexit for Ukrainian exports, (2) developing proposals on how best to end the moratorium on Ukrainian agricultural land sales and (3) encouraging greater irrigation farming to respond to the problem of decreasing crop yields in southern Ukraine from more frequent droughts, apparently due to climate change. The BUCC has a proposal to exempt, from the current moratorium on the sale of agricultural land, sales of agricultural land in designated drought destressed areas to farmers that commit to spend specified amounts on irrigation equipment, since generally land leases do not provide a suitable basis for such major investments.

British-Ukrainian IT Committee brings together IT associations and clusters, IT companies and others involved in IT in the UK and Ukraine. Ukraine is increasingly important to UK IT, as (1) Ukraine is one of the world’s leading IT outsourcing destinations and the leading IT outsourcing destination for the UK, (2) Ukraine is a leading destination for UK and other western IT firms to invest in branch offices for software development and (3) leading Ukrainian IT companies increasingly have branches in the UK, presenting cutting edge innovative ideas to the UK market, especially for fintech.

Law and Accounting Committee. The BUCC’s Law and Accounting Committee has projects for the reform of many Ukrainian laws as well as the Ukrainian legal system generally (please see our Legal Ombudsman proposal above), and for the creation of one-year UK LLM law programs at leading Ukrainian law schools.

Real Estate Committee is obtaining significant improvements to the laws and regulations on the OSBBs that manage buildings in Ukraine.

Infrastructure and Transportation Committee is concentrated on improving freight port and rail transport into, through and from Ukraine.

Tourism Committee promotes tourism in Ukraine and the UK, presently focusing on encouraging tourism for Ukraine from London, which is by far Europe’s largest market for attracting tourists.

Art, Culture and Design Committee that, among other cultural initiatives, has been holding exhibitions and receptions to restore to prominence the Ukrainian artist Mykhailo Tkachenko (see above). We are also organizing a Ukrainian art, culture and design event for Ukrainian Week.

UKRAINIAN WEEK IN LONDON Last year, the BUCC organized Ukrainian Week in London, attended by over 1,000 participants at the Savoy Hotel, the EBRD and RUSI, the largest event ever held abroad on Ukraine. At Ukrainian Week, the UK Secretary of State for Trade announced that Ukraine will now receive priority consideration from the UK for a new post-Brexit free trade agreement. Such an agreement should accelerate commercial integration of the UK, Europe’s largest net food importer, with Ukraine, Europe’s largest net food exporter. We are presently preparing to hold the next Ukrainian Week in London for 2020.

JOIN THE BUCC FOR 2020!

The BUCC is a very active Chamber, but we need your involvement and support to carry out our activities for a better Ukraine for our members. To join the BUCC, please contact us at +38 (044) 490-6000 or 278-1000 or by email to buccukraine@bucc.com.ua.

For further information on the BUCC, including membership forms and pictures and press releases on BUCC events, see www.bucc.com.ua and the BUCC Facebook Page.

norway in ukraine

NORWAY IN UKRAINE

Norwegian Ambassador to Ukraine Ole Horpestad says the Scandinavian country is committed to supporting Ukraine’s Euro-Atlantic integration aspirations but cautions against inflated expectations over the pace of the transformation currently underway in Europe’s largest country Norwegian Ambassador to Ukraine Ole Horpestad arrived in Kyiv to take up his ambassadorial role in September 2016 and says the changes he has seen in bilateral relations over the intervening three-and-a-half years give him considerable cause for optimism. Following a dramatic drop in bilateral trade between the countries in 2014-15, volumes have demonstrated strong annual growth and have now returned to the levels reached prior to Ukraine’s Revolution of Dignity. The October 2019 launch of direct flights between Oslo and Kyiv by Scandinavian Airlines (SAS) is expected to provide a further boost to bilateral economic ties in the coming year.

Norway’s principle physical export to Ukraine remains fish, with seafood products representing approximately 75% of all exports to the country. Alongside this traditional trade focus, recent years have witnessed a surge in Norwegian investment in the Ukrainian renewable energy sector, with three Norwegian companies currently active in the development of wind farms and solar power plants, representing a total existing and planned investment of around EUR 1.5 billion. However, recent revisions to the regulatory framework in Ukraine’s renewable energy sector have raised concerns over the future of these investments, with the prospect of retroactive changes causing disquiet throughout the sector.

Ambassador Horpestad hopes ongoing negotiations between renewable energy industry representatives and the Ukrainian authorities will produce a sustainable compromise that will allow for continued investment in renewables. “Investors want stability and predictability, so retroactive changes are not acceptable,” he says. “We realize there are challenges on the Ukrainian side when it comes to financing green tariffs. Our companies are ready to make compromises, but these compromises must result in a longlasting solution that creates a framework for the years to come. This is important for :

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About the interviewee: Ole Horpestad is the Norwegian Ambassador to Ukraine

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the wider Ukrainian investment climate as a whole.”

Ukraine’s booming IT sector is also attracting increasing attention among Norwegian companies. A number of Norwegian tech firms have already established offices and outsourcing centers in Ukraine. Collectively, they currently employ a total of around 2,000 Ukrainian IT professionals. “This is a dynamically developing field,” says the ambassador. “There is growing recognition in Norway that Ukraine has a very skilled and highly competent IT industry.”

Norway has been a consistent supporter of Ukraine’s Euro-Atlantic integration aspirations throughout the past six years, launching a range of assistance initiatives in 2014 that continue to this day with an annual budget of around EUR 20 million. Key focuses include support for the rule of law and democracybuilding, economic reform and European integration, and bolstering Ukraine’s energy efficiency efforts.

Ambassador Horpestad has managed to travel across most of Ukraine during his time in the country, and says he has been encouraged by the desire for change he has encountered. “I see a lot of talented and dedicated people who want to move Ukraine in a positive direction.

There is clearly a will and a commitment to change the country. But at the same time, we must also realize that this is not something that can be done in a matter of four or five years. It is a generational project. Transforming a country as big as Ukraine is a huge task.”

Despite these words of caution, the Norwegian ambassador points to a range of specific changes he himself has witnessed during his time in the country. “A lot has happened since 2014. Ukraine now has an Association Agreement with the European Union including a free trade component, while Ukrainians enjoy visa-free travel to the EU. Domestically, we have seen the development of decentralization and the launch of anti-corruption institutions. Digitization is taking root throughout the Ukrainian government, which is a good way to combat corruption. The business climate has also improved in terms of bureaucracy, red tape and transparency. When I first arrived in Ukraine in 2016, VAT refunds were a major issue. This is no longer the case.”

In common with most Europeans, many Norwegians knew relatively little about Ukraine before the international media spotlight fell on the country six years ago. Coverage that began with the Revolution of Dignity :

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norway in ukraine

: the renewable energy industry itself, and for

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norway in ukraine

: and escalated with the outbreak of hostili-

ties against Russia has since served to raise Ukraine’s profile within Norwegian society, but Ambassador Horpestad cautions that there is still a long way to go. “Maidan made a huge impression on Norwegians,” he says.

“It was a real eye-opener for many, both in terms of Ukraine’s importance for European security, and as a demonstration of the Ukrainian people’s will to choose their own future.

However, there is still much to be done in this direction.” While the subsequent conflict with Russia continues to cast a shadow

over Norwegian perceptions of the country, experience has taught the ambassador that when it comes to understanding the realities of today’s Ukraine, seeing is believing. “Every time we have visitors, whether they are official delegations or private guests, they always leave Kyiv impressed and tend to become very enthusiastic about Ukraine.”

As the relationship between the two nations evolves, the shared medieval history connecting Ukraine and Norway offers a range of novel opportunities for greater interaction and cooperation. During the height of the Kyiv Rus period in

the tenth and eleventh centuries, the predecessor to the modern Ukrainian state enjoyed close dynamistic ties with Norway’s own Viking royalty. Perhaps most famously, Kyiv princess Elisaveta Yaroslavna married Norwegian King Harald Hardrada in the mid-eleventh century. This made her one of three daughters of celebrated Ukrainian ruler Yaroslav the Wise to marry European monarchs, earning the Kyiv ruler the unofficial title “father-in-law of Europe”.

Interest in this shared heritage is on the rise in Norway and Ukraine, with historians and archeologists from both countries currently developing ties and looking to strengthen cooperation on a more systematic basis. Attempts to research the early medieval ties between Norway and Kyiv Rus are still in their early stages, but Ambassador Horpestad hopes these efforts will eventually lead to long-term academic links and public exhibitions. “This fascinating period in history deserves to be made more accessible to a wider audience,” he says.

At a time when many international observers continue to view modern Ukraine exclusively through the prism of Russian and Soviet history, the ambassador believes the country’s ancient ties to Norway offer an alternative perspective that has never been more relevant. “Whenever I give lectures at Ukrainian universities, I always begin by referencing the common medieval history linking Ukraine and Norway. To an extent, this relationship also helps define the identity of modern Ukraine,” he says. “These ties place Ukraine within the broader European historical narrative. They are also something that can serve to unite us.”

“Whenever I give lectures at Ukrainian universities, I always begin by referencing the common medieval history linking Ukraine and Norway.

These ties place Ukraine within the broader European historical narrative.

They can also serve to unite us”

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norway in ukraine

Norway-Ukraine trade ties: energy, IT and fish Norwegian investment is rising but concerns remain over retroactive renewables sector changes

About the interviewee: Kjartan Tveitnes Pedersen is Managing Director of the Norwegian-Ukrainian Chamber of Commerce You visited Kyiv in December 2019 and met with members of the Norwegian business community. How would you describe the mood?

The Norwegian-Ukrainian Chamber of Commerce (NUCC) is experiencing increased interest in bilateral trade. We see that more and more Norwegian companies are looking into the opportunities that are unfolding in Ukraine, and vice-versa. Ukraine’s macroeconomic indicators show positive developments and we acknowledge that the new political establishment has hit the ground running, while appearing eager to deliver on their policy goals. International investors, and Norwegian investors in particular, are viewing developments in Kyiv with interest. It is therefore very important that Ukraine deliver on its promises with an increased focus on building investor confidence.

Which sectors of the Ukrainian economy currently attract the most interest among the Norwegian business community?

Norwegian companies are increasingly aware of the opportunities in cooperating with Ukrainian IT companies. Norway simply does not educate enough IT developers. There is a lack of IT capacity in Norway at a time when digitalization processes are paramount in all industries. Ukrainian IT can help Norway in this regard, and we are experiencing particularly high interest among our 130-strong membership.

The biggest market players among the NUCC 18

membership estimate a 20 to 30 percent annual growth rate in this industry, with several thousand Ukrainian IT developers currently working for Norwegian clients.

There is also very strong interest in Ukrainian renewable energy within the Norwegian business community. In fact, it could be argued that close to 30 to 40 percent of total Ukrainian Foreign Direct Investments (FDI) this year come from Norwegian investment decisions in this sector, amounting to approximately USD 1.5 billion into wind and solar power plants. This illustrates the importance of these investments and their implementation.

Norwegian seafood has always been the biggest segment in our bilateral trade, and Norway continues to be the largest player on the Ukrainian seafood import market. There has been a very positive 30 percent increase during the first 10 months of 2019, chiefly in Norwegian herring and salmon for Ukrainian customers hungry for Norwegian seafood.

Production possibilities in Ukraine are also becoming more attractive to Norwegian companies. We receive many requests from Norwegian businesses looking for new partners or suppliers from Ukraine, as well as new production bases. We believe that skilled labor, highquality products, lower production costs, and Ukraine’s status as an EU neighbor can make Norwegian-Ukrainian manufacturing cooperation increasingly attractive.

How have perceptions evolved in recent years in Norway regarding Ukraine as a potential partner and investment destination?

Perceptions of Ukraine in Norway remain a challenge, with media headlines tending to focus on war and corruption while not giving enough credit to the positive developments since Maidan. However, the perception of Ukraine as a highly skilled IT hub is growing within the business community and this is spreading to society and media as well. Additionally, there is genuine interest in Norway regarding the new and ambitious generation of political forces emerging in Ukraine. This is a narrative that finds traction in Norway. I believe now is an opportune time for Ukraine to take big steps towards rebuilding the country’s image abroad and encouraging businesses to consider Ukraine.

Norway has emerged as a prominent investor in Ukraine’s renewable energy sector. What do the recent changes to Ukraine’s renewable energy policy mean for the future of these investments?

Norway is a major investor in the Ukrainian renewables sector. Retroactive changes to green tariffs are of course a very big setback and something that hurts investor confidence in dealing with Ukraine. It is crucial that the first wave of renewables investors don’t regret moving into Ukraine. Such a scenario would be devastating for Ukraine’s ability to attract new international investors, not to mention other Norwegian investors sitting on the fence. It is our hope that the current dialogue between affected businesses and the government will help solve the challenging environment we see today. This will make sure that the Ukrainian renewable energy market continues to be attractive for investors and brings much-needed FDI to Ukraine. These investors can be instrumental in helping the new government reach its very ambitious economic growth goals.

What are your expectations for NorwegianUkrainian business ties in 2020?

I am sure 2020 will be yet another exciting year in our bilateral trade relations. We expect to see continued trade growth in all sectors. The NUCC identifies large untapped potential for increased trade, and we will work to facilitate contact between Ukrainian and Norwegian businesses in order to build on this potential. We are looking for Ukrainian companies with high levels of good corporate governance who understand that their European and Norwegian counterparts expect transparency and zero-tolerance towards corruption. Such companies will find that there are many interesting business opportunities for collaboration with Norway. In 2020, the NUCC plans to focus on maritime links. We invite Ukrainian businesses to join this process. In the coming summer, we will hold a large NorwegianUkrainian Maritime Forum in Norway focusing on business opportunities within maritime industries. We want to see a sizeable Ukrainian delegation at this event and we urge Ukrainian companies involved in related industries such as energy, shipbuilding, seafood, tourism, IT, and manufacturing to get in touch with us. This Maritime Forum will be followed up with an event in Odesa in October. www.bunews.com.ua

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Bringing Norwegian business culture to the booming Ukrainian IT industry How Norwegian ties have helped Ukraine’s Infopulse become internationally competitive work with a diverse range of large enterprises, SMBs, and startups in 30 countries worldwide. While primarily a software services provider, Infopulse is also focused on establishing long-term partnerships and being a reliable technological partner and advisor for its clients.

In December 2019, Infopulse’s parent company EVRY ASA officially completed its merger with Tieto, a global Finnish IT services provider.

The combined corporation will be known as TietoEVRY. As the largest Nordic IT services company with a workforce of 24,000 experts worldwide, TietoEVRY will focus on accelerating the digital transformation of its customers.

About the interviewee: Lyubomyr Boychuk is Vice President of Infopulse IT services company Infopulse was founded in 1991 in Kyiv, Ukraine.

In 2006, Infopulse began its Nordic journey by becoming part of EDB, a Norwegian IT services company. In addition to capital investment, EDB agreed to develop new business lines together with Infopulse and contribute to the development of the IT industry in Ukraine. Following the subsequent merger of EDB with Ergo Group in 2010, Infopulse became a 100%-owned subsidiary of the newly formed EVRY ASA, the second-largest Nordic IT services company. The Infopulse acquisition was one of the biggest Norwegian investments in the Ukrainian business sector and remains the largest Nordic-Ukrainian IT services company in the country.

As a part of a large Nordic corporation, Infopulse is an international IT services provider with more than 2000 experts and offices in 11 countries across Europe. Infopulse’s services encompass numerous areas including software engineering, IT infrastructure, cloud services, and cybersecurity. The company covers the needs of specific industries such as telecommunication, automotive, financial services, energy, and others. Infopulse develops solutions based on the technologies of partners including Microsoft, SAP, Amazon, and others, while implementing innovations in areas such as artificial intelligence, augmented reality, the Internet of Things, and Blockchain. They currently 20

Infopulse is part of the largest Nordic IT services company. What impact has this relationship had on the evolution of Infopulse’s corporate culture in Ukraine?

Business ethics, honesty, respect and quality of service have always been our top priorities. However, Infopulse has also adopted numerous best practices from Nordic business culture. According to Infopulse’s Corporate Social Responsibility Report 2018, we build our CSR strategy around the concept of ‘Nordicness’, which combines openness, trust, respect for diversity and meritocracy. Our main goal is to provide added value in everything we do, forging the future together with our clients, partners, and colleagues. While striving for recognition of our success from our clients and partners, and focusing on building highly ethical partnerships, we also aim to be the top IT employer for our specialists. The strength of our company lies in the diversity of views and unity of principles that we adhere to every day.

All our activities, be it business development, or organizational, professional and personal growth, all stem from a core set of basic values which include involvement, openness, flexibility, and innovation.

How do your ties to Norway make Infopulse more competitive?

We frequently collaborate with our Norwegian colleagues on complex projects for large Nordic companies. Close connections with our parent company allow us to share and gain unique knowledge, expertise, and experience, as well as leverage our ability to implement Nordic standards of business ethics in everyday business. As we focus on innovations, our parent company also helps us learn more about adoption of innovative technologies in our daily lives. Being a subsidiary of a large Nordic corporation boosts our clients’ confidence in our company, and helps them recognize Infopulse as a reliable service provider.

What do your Norwegian ties mean for employees of Infopulse in Ukraine?

Norway is famous for its respect for human rights and regularly tops social progress rankings. While Infopulse keeps its Ukrainian identity, developing ties with Nordic culture and communication with our colleagues has taught us a lot. This is especially important for our specialists, who seek to apply their skills and knowledge in long-term

How do you assess the current state of Ukraine’s IT sector?

In recent years, the IT industry in Ukraine has evolved, making Ukraine one of the centers of IT outsourcing services in the European region. Convenient time zone, profitable cost-quality ratio, European mentality of Ukrainians, business ethics, and profound technical expertise all combine to create an overall positive impact on the business climate and attract new investments to the country. The Ukrainian IT industry is expected to continue growing steadily in the coming years. In 2018, Ukraine was ranked as the top outsourcing destination of the year by the UK’s Global Sourcing Association. With more than 185,000 experts, the Ukrainian IT industry is currently growing at a rate of 26% per year and is already the third-largest export service industry in Ukraine, according to the 2019-2020 IT Market Report compiled by N-iX.

What are the key challenges to maintaining current rates of IT industry expansion?

One of the key aims now is to have more people with a global look and multi-disciplinary education, as this helps to identify new ways of technology implementation in order to improve our daily lives. We need to extend the modern curriculum in schools and universities in the areas of STEM, entrepreneurship, humanitarian studies, and so forth. Ukraine is already doing a lot in this direction: the country’s biggest state universities provide top-quality education, producing 16,000 IT graduates yearly. By offering extracurricular IT education courses, numerous public and private organizations contribute to producing the new talents that the IT industry needs in order to maintain current robust growth rates. Infopulse also backs these education efforts via a range of activities including expert lectures at leading Ukrainian universities and IT competitions for students.

In 2016, the company launched an internship program for Ukrainian students, which focuses on both individual and group learning. Interns have the possibility to communicate with experts and participate in company projects.

Aside from education efforts, it is equally important to improve cybersecurity at the national level, including areas such as reducing the risk of data losses and bringing Ukrainian legislation into line with GDPR. Numerous large technology companies are currently working together with state structures in order to improve the protection of critical Ukrainian infrastructure against the threat of cyberattacks.

Ukraine should also focus on attracting global companies and encouraging them to open local offices and businesses in the country. There has already been considerable progress in this direction. At the moment, Ukraine hosts more than 100 international R&D offices of tech multinationals.

One important challenge remains to harmonize the employment principles within Ukraine’s IT industry and address the “private entrepreneurs” issue. Ukrainian IT companies are in close contact with the government to work out a sustainable model of employment.

norway in ukraine

projects and to build relationships on the basis of trust. As a result, Infopulse has a very low attrition rate among our team. For the last five years, Infopulse has ranked among the top five best Ukrainian IT employers according to DOU, the Ukrainian IT industry observer. In 2018, Infopulse was named IT Employer of the Year in the ‘Largest IT Company’ category.

What are Infopulse’s top development plans and priorities for the coming few years?

In 2019, Infopulse won the Microsoft Country Partner of the Year award and was recognized among the world’s best outsourcing service providers by IAOP. Looking ahead, we have identified four primary industry segments: telecommunication, automotive, financial services, and energy. As we strive to become an industry-focused solutions provider in our chosen markets, throughout the company our top objectives for the coming three years are to be effective through collaboration; create value for our customers, specialists, and society; drive customer advantage through innovation; and deliver meaningful experience.

Do you have a final message to our readers?

We feel excited and motivated about 2020, as we are now a part of the even bigger Nordic family of TietoEVRY. At the same time, Infopulse is proud to have its roots in Ukraine, and we are equally passionate to represent our country internationally as a Ukrainian business, serving companies worldwide. This reflects in everything we do, as we maintain the highest standards of reputation, and focus on building responsible business in Ukraine according to our Corporate Social Responsibility strategy. We bring the best practices from the Nordics to this country in terms of business conduct, and do everything in our power to demonstrate that foreign companies are welcome to work with Ukraine.

“Being part of a large Nordic corporation ensures stable development, allowing Infopulse to demonstrate consistent 15-20% yearly growth” www.bunews.com.ua

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Norway’s energy achievements A thriving energy industry has transformed the Scandinavian country into one of the world’s wealthiest nations – but economic success is only one of the lessons Ukrainians can learn from Norway, says AICE Hydro’s Olha Bosak

Since I first joined the board of a major Norwegian company, I have often found it hard to resist comparing Norway to my native Ukraine. Both countries are rich in energy resources, but while Norway is commonly regarded as Europe’s wealthiest nation, Ukraine typically ranks among the poorest.

This makes Norway’s experience particularly interesting for Ukraine as the country grapples with the historic transformations

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of recent years and seeks the right path towards a better future.

Norway is well-known for its oil and gas industries, but the Norwegian energy success story actually dates back far beyond the relatively recent development of these resources. More than a century ago, Norway began utilizing the country’s ample waterways to develop a hydroelectric power industry that continues to dominate domestic production

today. An estimated 98% of all Norway’s domestic electricity is produced by renewable sources of energy, with hydroelectric accounting for by far the dominant portion.

As this reliance on renewables suggests, Norway’s oil and gas companies are not the only reason for the country’s wealth and prosperity. Norway’s development of hydroelectric power has kept the country at the global forefront of this industry for the past

norway in ukraine

Ukrainians dream of repeating

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norway in ukraine

: hundred years and is a good example of the shrewd resource man-

agement that has made the Norwegian success story possible. As well as oil and gas, Norway also exports the renewables technologies it develops domestically, with the country’s power plants serving as symbols of progress and modernity.

In recent years, Norwegian energy companies have begun expanding their activities to Ukraine. I believe one of the reasons behind this trend is the sense among Norwegian energy professionals that Ukraine has the basic characteristics to follow in Norway’s footsteps and achieve similar success. It is common to hear Norwegians talk about “When we were poor”, when referencing the period prior to the oil and gas booms of the past fifty years. This is something of an exaggeration, as Norway was one of Europe’s richest nations long before the advent of today’s Norwegian Oil Fund, but it does hint at the transformative role that well-marshalled energy resources have played in Norway’s own national story.

Ukraine’s oil and gas industries are actually far older than Norway’s.

In fact, early nineteenth century western Ukraine was home to some of the world’s first oil companies. For over a century (from 1810 to 1917) Ukraine’s Halychyna region was the largest oil-producing area in Europe. The industry flourished into the 1970s, with peak production reached in 1972. This regional balance has now shifted, with eastern Ukraine currently believed to hold 85% of Ukraine’s natural gas reserves and about 61% of the country’s oil reserves.

About the author: Olha Bosak is a member of the board of directors at Norwegian company AICE Hydro. She is the founder of Energy Salon XXI and a 2019 Ukrainian Energy Industry Award recipient

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Ukraine’s fossil fuel wealth is not the only promising aspect of the country’s energy sector. The Ukrainian renewable energy industry is also growing steadily, and it is this that has attracted Norwegian investors. According to the Energy Post, Ukraine has the best potential in Southeast Europe for biomass/biogas power generation.

Meanwhile, the International Renewable Energy Agency, an intergovernmental organization supporting countries in their transition to a sustainable energy future, estimates that Ukraine also has large potential for solar and wind energy. The Ukrainian authorities appear to share this optimism, and have committed to a national renewable energy action plan that envisages the percentage of energy produced by renewables rising from 11% in 2020 to 25% by 2035.

Despite the challenges of the Ukrainian business environment, it is little wonder that Norwegian renewable energy companies see this as a land of potential opportunity.

Based on my own personal experience, I believe there is much that Ukrainians could learn from Norwegian society beyond the practicalities of effective energy policy. When I first started working with Norwegians, I initially thought they were little different than other western Europeans. However, I now believe Norway stands out as one of the most progressive countries in Europe. Visiting Norway is like travelling into the future. During my first trip, I remember how I barely encountered any paper money, using card payments even when on the highest mountain on at the bottom of the deepest fjord.

Despite their wellbeing, Norwegians are also very humble people.

Simplicity, tranquility and a lack of pretention are features that immediately caught my attention. While they have some of the highest salaries in the world, Norwegians tend to live modestly. Underlining this point, there are only two five-star hotels in the national capital of this famously wealthy nation. It often feels like Norwegians have learned to be completely content without luxuries, as if bound by an ancient Viking law prohibiting unnecessary displays of ostentation.

Another admirable trait that is common in Norwegian society is the ability to establish a strong work-life balance. Norwegians know how to put the smartphone and computer away during vacations and on weekends. It is a skill that many others could learn from. I count myself among them, as I write this article while on vacation in the Dominican Republic! As anyone will tell you, having quality time set aside outside working hours actually improves productivity. We all know this, but relatively few of us put this principle into practice.

In Norway, it is the norm. Norwegians guard their leisure time jealously. They typically have six weeks of annual leave, and will usually reject offers to accept extra work in return for additional pay. Time with friends and family is simply seen as more valuable. While many if not most Ukrainians would share these sentiments, I would estimate that far fewer would be prepared to pass up on the opportunity of additional income in return for overtime.

A common history is the final factor that draws Norwegians to Ukraine.

The two countries have ties going back around one thousand years to an era when the Scandinavian dynasties intermarried with the princes and princesses of ancient Kyiv. One of my Norwegian colleagues is fond of referring to Ukraine as “distant family”, claiming that this shared heritage is a good basis for business cooperation and a bright future together. This kind of optimism is very welcome indeed. Many in Ukraine would love to see their country repeat Norway’s success. It is encouraging to encounter Norwegians themselves also demonstrating confidence in our future cooperation. www.bunews.com.ua

Shared history unites Ukraine and Norway Common threads stretching back 1000 years link national stories of modern Ukraine and Norway

About the author: Vladyslav Kiorsak is a PhD student at the Krypyakevych Institute of Ukrainian Studies The Viking Age is one of the most fascinating periods of the Middle Ages. For many casual observers of history, it is an epoch when warriors from the north challenged settled European society with their endless raids. However, there was much more to the Vikings than mere piratical plunder. In reality, the era of Viking expansion transformed many aspects of European life. Few places were as profoundly influenced as the lands of Ukraine, which also played a significant role in Norway’s own national story.

The most unhelpful stereotype about the Vikings is their image as violent warriors robbing monasteries and killing civilians. In reality, Vikings were not only engaged in military affairs, but were primarily traders and entrepreneurs. It is also common to assume that the main arena of Viking activity was Western Europe. This is misleading. In fact, far more Vikings are thought to have settled to the east, establishing themselves in the lands around modern-day Ukraine. Furthermore, relations 26

between the Slavs and the Vikings are believed to have predated the dawn of the Viking Age in Western Europe by many decades.

What brought these Scandinavians eastwards? The lands of late seventh century and early eighth century Ukraine could not compete with the wealth and riches associated with Western Europe. It seems that the geographical appeal of the region stretching from the modern Baltic States down to Ukraine was the main attraction for the Vikings. With their superior fleets, they could navigate the advanced river systems of the region in order to establish trade routes from Scandinavia to the wealthy Byzantine Empire and the Arab world. The extent of this trade can still be seen in the sporadic discoveries of Arabic coinage along the ancient river trade routes of Eastern Europe. The local Slavic population is thought to have fulfilled numerous important functions in this evolving trade network, leading to greater interaction with the Scandinavians and the emergence of something akin to a cultural melting pot between the two cultures. The Vikings of Eastern Europe are believed to have differed significantly in culture and customs from their ancestral kinsmen in Normandy and the British Isles.

These Viking traders are traditionally given the leading role in the establishment of the polity than eventually came to be known as Kyiv Rus. Even the term “Rus” itself is believed to be of Scandinavian origin. According to the Icelandic sagas, the early Rus cities were located at key points along the region’s river trade routes and were ruled by Scandinavians. Unsurprisingly, the Vikings seem to have regarded the emerging Kyiv Rus state as very much part of their Scandinavian cultural space.

Over time, the ruling elite of the Kyiv Rus began to acquire more Slavic features. However, the Scandinavian ties of old remained a key influence on the princes of Kyiv. This was only natural given the ancestry of the ruling elite and the importance of the Scandinavian monarchies during this period in European history. The Icelandic sagas offer fascinating insights into the ties between Kyiv and Norway, including accounts of how four future Norwegian kings spent time in Kyiv before ascending to the throne.

The first Norwegian king to spend time in the future Ukrainian capital was Olaf Tryggvason. Accounts differ over his early years, but the young king and his mother appear to have fled Scandinavia after his father was killed in battle. Following numerous adventures, Olaf arrived at the Kyiv Rus court of Prince Volodymyr. Thanks to his courage and ingenuity, Olaf quickly earned the respect of the local warrior class, and was soon in command of the Prince’s troops. According to medieval chronicles, the future king assisted Volodymyr in battles against the Baltic tribes and even participated in the Christianization of Kyiv Rus. Olaf Haraldsson, better known as St. Olaf, was the next famous Norwegian guest to arrive in Kyiv. He spent less than a year at the court of celebrated Kyiv ruler Yaroslav the Wise, but this short visit was to

norway in ukraine

Last of the Vikings: This stained glass window in the Shetland Islands depicts Harald Hardrada, the famed eleventh century King of Norway whose death at the 1066 Battle of Stamford Bridge is traditionally seen as the final act of the Viking Age. Harald spent his formative years in the service of Yaroslav the Wise in Kyiv and married Ukrainian princess Elisaveta Yaroslavna have a significant impact on the development of both countries. According to medieval accounts, it was while in Kyiv that divine blessing fell upon Olaf. Chroniclers speak of miracles performed by the Norwegian, whose later sainthood was to become a central event in the adoption of Christianity throughout Scandinavia. Meanwhile, his ties to Kyiv meant that he would become equally revered in both the Roman Catholic and Orthodox churches.

Before leaving for Norway, Olaf left his son Magnus to be educated at the court of Yaroslav the Wise. This was a period of seemingly endless dynastic power struggles in Scandinavia itself. Following the death of Canute the Great in 1035, the eleven-year-old Magnus returned home and was crowned king of Norway.

This boy-king was not the last Norwegian ruler to enjoy the hospitality of Kyiv’s Yaroslav the Wise. Perhaps the most iconic Norwegian guest of all was yet to come. The future king of Norway, Harald Hardrada, first came to Kyiv as a teenager. Like many Scandinavian nobles of the time, he used the future Ukrainian capital as a place of refuge following reversals at home. He stayed for a number of years before moving southwards to Constantinople itself, where he gained considerable military renown as the commander of the Byzantine Emperor’s elite Varangian Guard, which was typically composed of recruits from Northern Europe including Harald’s fellow Scandinavians and Anglo-Saxon warriors from England. www.bunews.com.ua

Harald is thought to have gained considerable military fame while based in Constantinople. He fought in numerous wars for the emperor around the Mediterranean and amassed a large personal fortune, which he shipped across the Black Sea and up the Dnipro River for safekeeping with Yaroslav the Wise. After around eight years in the service of the Byzantine Empire, Harald fled Constantinople and returned to Kyiv, where he married Yaroslav the Wise’s daughter Elisaveta Yaroslavna. He then returned to Norway and succeeded in securing the crown, ruling with Elisaveta (known in Norwegian histories as “Elisiv”) as his Queen Consort. King Harald would go on to secure his place in history by founding Oslo before dying in battle during an abortive invasion of England. His death at the Battle of Stamford Bridge in 1066 is often portrayed by historians as the final act of the Viking Age. While the Vikings have passed into history, their impact on Europe remains. This is particularly true for today’s Ukraine, which traces its own national story back to a civilization with distinctly Scandinavian roots. Historians have long debated the true extent of the Viking influence on the development of Kyiv Rus statehood. However, nobody disputes the fact that the medieval Kyiv Rus and Norwegian states had plenty in common and played significant roles in shaping each other’s destinies.

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Ukraine’s government must not undermine growing mood of business optimism in 2020

Andy Hunder, President of the American Chamber of Commerce in Ukraine, Treasurer of AmChams in Europe It has been a bustling and profitable year for international companies working in Ukraine. 88% of American Chamber of Commerce member companies reported increased revenues in 2019, while 65% of our 600 members plan to increase their investments in Ukraine over the next 12 months, according to our latest membership survey. These positive indicators are one of the reasons why the current business climate is cautiously optimistic. However, concerns remain that the Ukrainian authorities could yet spoil this positive picture during the coming year.

We are now coming to the end of a remarkable twelve months in Ukraine packed with events that kept the country’s politicians exceedingly busy. Ukraine held a high-profile presidential election and summer elections to parliament, followed by the appointment of a young new government. Parliament hit the ground running, and was soon being referred to as “turbo-charged” due to the speed with which it began adopting new legislation.

Both President Zelenskyy and Prime Minister Honcharuk have wasted no time in demonstrating a business-friendly approach. The President has been amenable to hear the voice of business, meeting business community representatives even before he was elected. The PM has gone even further, inviting me together with two other heads of leading business associations to sit in on weekly government cabinet meetings. This engagement is encouraging, as is the new government’s vision for the future development of the Ukrainian economy. Soon after his appointment, PM Honcharuk demonstrated the scale of his ambition when he announced a plan to attract $50 billion in foreign direct investment and achieve 40% GDP growth by 2024. No wonder new investors are eyeing Ukraine and trying to understand the opportunities it represents.

What could possibly go wrong? Although the current business sentiment is certainly upbeat, I am getting signals that the mood could quickly turn sour. As we enter the New Year period, we are closely monitoring a number of key issues that risk sending dangerous signals to the international business community.

All eyes are currently on the National Bank of Ukraine (NBU) and its ability to maintain its independence from external vested interests. Ongoing rent-a-

crowd demonstrations convening outside the bank and, more distressingly, outside the homes of NBU management, are proof that the central bank is disrupting vested interests. Once a year, at Thanksgiving, we ask our members who they would like to thank most for making Ukraine a better place to do business. This year’s choice was unanimous: we presented the 2019 Thanksgiving Award of the Business Community to Ukraine’s National Bank. The NBU is on the right track and should continue to be supported.

Investment in Ukraine’s green energy sector has been booming over the past couple of years, attracting more than US $4 billion. The government now threatens to throw a spanner in the works and pull the plug on wind and solar renewable energy projects by introducing retrospective changes to existing legislation. If this proves to be the case, potential international arbitration and litigation will severely damage Ukraine’s investment appeal.

Rule of law is still the top concern for business. Protecting property rights, especially intellectual property rights, remains a challenge. Continued legal reform is much-needed to boost investor confidence.

The manner in which laws are made is also an issue. With things moving so speedily in the country’s turbo-charged parliament, MPs can amend texts of draft laws at the very last minute, introducing unexpected modifications to legislation. We have seen such examples with new legislation on excisable goods, including mind-boggling last-minute changes introduced targeting tobacco retailers. Such actions are disappointing and should be closely monitored.

IT is Ukraine’s fastest-growing export sector. The government should think twice before introducing any short-term fiscal measures that may devastate the industry in the long run. Ukraine’s flourishing agriculture sector is also doing well, with Ukraine number one in the world for sunflower oil and seed production. However, logistical issues relating to the country’s railways continue to hamper seamless delivery from field to fork.

While these issues give the business community cause for concern, there is also plenty of confidence as we look ahead to the coming year. In 2020, I look forward to the long-awaited opening of the first McDonald’s restaurant at Boryspil International Airport. The golden arches, along with other restaurant chains, have been kept out of Ukraine’s busiest airport for years. The new McDonald’s at Boryspil will serve as one more visible and tangible example of how things are changing in Ukraine.

Ukraine remains attractive to investors due to its talents, labor costs, and considerable access to European markets. Confidence in the authorities among the business community is also relatively high. According to our recent survey, 84% of members believe the Ukrainian state authorities are committed to further opening up the domestic market to foreign investment.

Thomas L. Friedman, the American political commentator and author, says that while pessimists are usually right and optimists are usually wrong, all great changes have been accomplished by optimists. Ukraine could perhaps learn from this observation as the country approaches what promises to be another vital year. While there are certainly reasons for pessimism, we hope the optimism of the new government will translate into policies that match the business community’s own optimistic mood and bring about positive change.

Source: Atlantic Council

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ANNUAL GENERAL MEMBERSHIP MEETING AmCham Ukraine held its Annual General Membership Meeting welcoming hundreds of top representatives of member companies, diplomatic community, Ukrainian state authorities, partners, and friends. Chair of the Board of Directors of the American Chamber of Commerce in Ukraine, Founding Partner and CEO of Horizon Capital Lenna Koszarny and President of the American Chamber of Commerce in Ukraine Andy Hunder delivered annual report on what the Chamber achieved in 2019 within the PARTNERS

B2G, B2B, and B2U directions of its mission as well as announced the 2020 Board of Directors of the American Chamber of Commerce in Ukraine.

As a highlight of the meeting, ChargÊ d’Affaires, a.i. of the United States Embassy in Ukraine William B. Taylor delivered remarks, and Senior Commercial Officer of the U.S. Embassy in Ukraine Ilona Shtrom delivered a short greeting from the United States Secretary of Commerce Wilbur Ross.

B2G Dialogue MEETING WITH ALIONA BABAK, MINISTER FOR COMMUNITIES AND TERRITORIES DEVELOPMENT AmCham Ukraine members met with Aliona Babak to discuss the Ministry’s priorities and long-term goals, draft legislation on waste management as well as wastewater treatment facilities regulation.

MEETING ON DISTRIBUTION OF UKRZALIZNYTSIA FREIGHT WAGONS THROUGH “PROZORRO.SALES” The transparent distribution of freight wagons between all market participants is important for the business community. AmCham Infrastructure Committee members discussed the distribution of Ukrzaliznytsia freight wagons on designated routes through the electronic system “ProZorro.Sales”.

ROUND TABLE “COMPETITION POLICY IN THE PORT AND TRANSPORT SECTORS” AmCham Ukraine Infrastructure and Competition Committee members discussed the creation of favorable conditions in the sphere of competition policy in port and transport sectors, as well as the promotion of protection and development of the economic competition.

MEETING WITH MIHAIL RADUTSKY, HEAD OF THE PARLIAMENTARY COMMITTEE ON NATIONAL HEALTH, MEDICAL ASSISTANCE AND MEDICAL INSURANCE AmCham Healthcare Steering Committee members met with Mihail Radutsky to share their views on acute issues within Ukraine’s healthcare sphere.

PANEL DISCUSSION “IMPETUS TO ECONOMIC GROWTH: RESOLVING THE LEGACY OF NON-PERFORMING LOANS” AmCham Ukraine Banking and Financial Services Committee discussed boosting of non-performing loans’ secondary markets, protection of creditors’ rights, and possible ways to decrease the level of NPLs in Ukraine.

WELDI BUSINESS BREAKFAST “SHE ROCKS: CELEBRATING WOMEN AT THE TOP OF BUSINESS AND ARTS” AmCham Ukraine held the New Year WELDI session on the role of women in business and arts. Guests had an opportunity to master the art of creating masterpieces and the art of doing business with the Artistic Director of Pinchuk Art Centre Björn Geldhof and General Manager of GSK in Ukraine & Kazakhstan Nicolo Pome.

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AmCham Ukraine members had a chance to visit the Johnson & Johnson company and learn about the world’s largest and most broadly-based healthcare company with 25 popular brands in Consumer Business. Johnson & Johnson company embraces research and science, bringing innovative ideas, products, and services to advance the health and well-being of people.

Ukraine prepares for farmland sales

Society remains divided over end of moratorium despite potential for major economic benefits A Constitutional Right The Constitution of Ukraine stipulates that land is the main source of national wealth and belongs to the Ukrainian people. In other words, the use of land should enrich the population. Unlike other natural resources, land offers the possibility of long-term undiminished returns. However, high-quality processing and significant financial investments are necessary in order to unlock the potential of Ukraine’s fabled black earth.

The moratorium on agricultural land sales has removed this resource from the market, which significantly restricts the ability of agribusinesses to attract financing. Political sensitivities surrounding the issue have prevented previous governments from ending the moratorium, but Ukraine’s new President Volodymyr Zelenskyy promised to lift the ban as part of his vision for energizing the Ukrainian economy.

The country’s parliament, which is dominated by Zelenskyy’s Servant of the People party, voted through the first reading of legislation to create a land market in autumn 2019. Preparations for a second reading are ongoing. To put the potential impact of this legislation into context, the government has already announced ambitious plans to attract around USD 50 billion in land investments by 2028.

The economic arguments for the opening of Ukraine’s agricultural land market are strong. On paper, there is reason to believe it will result in significant gains for Ukrainian society and the national economy. Nevertheless, there are still widespread concerns over the nature of the process and the impact it will have on the future ownership of what many Ukrainians continue to regard as the country’s greatest and most sacred asset.

Restrictions and Referendums

About the author: Ihor Kravtsov is managing partner and head of the dispute resolution practice at Evris Law Firm Efforts to end the 18-year moratorium on the sale of agricultural land are sparking heated debate within Ukrainian society and proving to be among the most controversial policy initiatives since the new government took office in late August 2019. In a country with some of the world’s richest agricultural land and deep cultural connections to the soil, this is not surprising. While many agree that a land market is both inevitable and beneficial, much will depend on the details of the finalized legislation and the manner of its implementation.

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The moratorium may be on its way out, but a range of restrictions look set to remain in place. These will likely include limitations on the amount of land any single owner is able to acquire. Debate continues over the volumes involved, with limits of between 50,000 hectares and 200,000 hectares under discussion. It is assumed that the owner will be defined as the ultimate beneficiary, rather than the person or entity who appears on the title itself. Restrictions on concentrations of land are also envisaged, with this currently determined as 35% of any single territorial community, 8% of an administrative region, or 0.5% of the country.

Of all the problematic moments within the wider land sale debate, the issue that is causing the greatest wave of populism and political engagement is the potential sale of Ukrainian farmland to foreigners. In its present form, the Land Code does not permit the transfer of agri- :

legal

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legal

: cultural land to foreigners or foreign legal entities. However, this could

change. MPs and government officials including President Zelenskyy have committed themselves to holding a national referendum on the issue of sales to foreigners. This has led to allegations of political manipulation, with the government accused of seeking to open up the land market while at the same time also maintaining support among an electorate which is broadly hostile to the idea of foreigners purchasing Ukrainian farmland.

Market Evolution

The opening of the land market could lead to concentrations of money as existing market players buy out areas they are already cultivating, typically on a rental basis. This may then lead to a growth in rental rates, leading to rising agricultural production costs. Naturally, manufacturers will shift their costs to the end user, creating the potential for rises in the cost of the average food basket for Ukrainian consumers.

Removal of the moratorium will also mean a redistribution of resources between current market players. Due to the rising cost of rent and the ability to attract additional financing secured by land, less efficient agricultural producers will have to give way to more efficient competitors. In the long term, it is reasonable to assume that agricultural holdings will be divided. World practice demonstrates that the kind of large agricultural holdings that exist in today’s Ukraine are less efficient than medium and small-scale operations, where transaction costs are typically much lower.

A key issue in the implementation of the government’s farmland sale policy will be the scale of state support for agribusinesses as they grapple with the challenges of financing land purchases. The 2020 state budget already provides for the allocation of UAH 4.4 billion to compensate the high costs Ukrainian agribusinesses will encounter when seeking loans to buy agricultural land. This is clearly a necessary step and will reduce the financial burden on domestic farmers, but there remain questions over whether it will prove sufficient to maintain the international competitiveness of the sector. The average rate for hryvnia-denominated business loans in Ukraine is cur-

rently around 23% per annum, whereas German banks issue similar loans to local clients at 2% to 3% per year, or around one-tenth of the rate in Ukraine.

Selling Ukraine’s State-Owned Land

Huge public skepticism also surrounds the issue of selling off the Ukrainian state’s vast land bank. Much of this land is currently being utilized extremely inefficiently, sometimes in violation of the law. This strengthens the argument for selling these state-owned plots, but also raises concerns over the potential for corruption.

Many fear the process could be subject to manipulations regarding land valuations, purchasing procedures and other factors, with state bodies seeking to derive improper benefits. This pessimism is fueled by ample negative past experience of state selloffs. With the Ukrainian state currently the largest single landowner in the country, this issue is central to the success or failure of plans to create a farmland market that benefits ordinary Ukrainians. To a large extent, the sale of public land will serve as the decisive test for land reform in general.

Symbolic Significance

Anyone wishing to understand the passions aroused in Ukrainian society by the issue of farmland sales must first appreciate that Ukrainians have always endowed the land with a special spiritual value. This is reflected in the country’s ancient agrarian folklore, and can also be seen in the protections included in the modern Ukrainian Constitution. Efforts to address the land moratorium issue via Ukraine’s Constitutional Court have previously been rejected on technical grounds, leading to an appeal to the European Court of Human Rights in May 2018.

The issue is now at the top to the Ukrainian domestic political agenda and will likely remain so during the coming year. This is to be welcomed. The 18-year moratorium has led to a wide range of losses and opportunity costs for Ukrainian society as a whole. While there is much disagreement over the details of land reform, there is a clear need to create a market for the country’s farmland.

“Of all the problematic moments within the wider land sale debate, the issue that is causing the greatest wave of populism and political engagement is the potential sale of Ukrainian farmland to foreigners”

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www.bunews.com.ua

Zhytomyr hotel project aims to transform

Ukraine’s regional hospitality industry MOI Zhytomyr hotel concept offers everything from rooms and apartments to co-working

About the interviewee: Irantha Duwage is CEO of DBI Hotels & Resorts and the creator of the MOI brand December 2019 saw the launch of an ambitious new Ukrainian hospitality sector initiative that aims to shift the focus away from Kyiv and highlight the untapped potential of the country’s regional capitals. The plans for MOI Zhytomyr envisage accommodation for up to 350 guests in a mix of budget and four-star rooms along with long-stay five-star apartments, together with extensive coworking facilities, high street-style retail options, childcare, and a range of dining and social venues. “It will be a hotel, but much more than a hotel,” says Irantha Duwage, the creator of the MOI brand and CEO of DBI Hotels & Resorts, the Swiss-based international hotel group behind the project.

MOI Zhytomyr will be developed in partnership with Favoryt Development. It will be located in the heart of the city, with construction set to involve the complete transformation of an existing property. Building work is scheduled to begin in early 2020, 42

giving the project a provisional opening date of September 2021.

Favoryt founder and co-owner Olena Rosenblat, herself a native of Zhytomyr, believes the project is long overdue and says the current absence of quality accommodation options is out of step with Zhytomyr’s growing international business community.

Located around 130km west of Kyiv, Zhytomyr is home to a number of international companies but struggles to meet the expectations of visiting guests. “Foreigners traveling to Ukraine tend to focus on Kyiv and Lviv because of the service standards these cities can offer. But Zhytomyr is also a unique place. We aim to bring the highest standards to the city and create a place where visitors and members of the local community will want to spend their time,” says Rosenblat.

This concept of community lies at the heart of the MOI brand. Duwage envisages MOI Zhytomyr becoming a community in its own right, with work and leisure facilities to meet all tastes, and conveniences such as banking, groceries and daycare all located onsite. The community vibe will encompass everything from staffing policy to product procurement, with up to 80% of ingredients used in the venue’s kitchens locally sourced from within a 50km radius of the city. “MOI is all about people, from employees to guests and the local community. We want to create an experience-based venue that is more than just a place to eat or sleep,” he offers.

This will be the first MOI hotel in Ukraine, with a number of additional venues currently at the development stage, including a possible MOI Bukovel in the Carpathian Mountains. The Zhytomyr location of the brand’s Ukrainian flagship is no accident, with its proximity to Kyiv creating interesting opportunities to challenge many of the more deeply entrenched principles of the Ukrainian hospitality industry. “It often seems that everyone in the Ukrainian hospitality business wants to be located as close to the Kyiv city center as possible. We decided to adopt a different approach in order to demonstrate the untapped potential of regional centers,” explains Duwage. He argues that the Ukrainian business community as a whole must move beyond the current fashion for Kyiv-centric thinking if the country is to progress to the next level in its development. “At present, Zhytomyr acts as a satellite city feeding business to Kyiv. However, in more mature hospitality markets, the opposite is usually true. The big cities feed business outwards to venues located in regional centers.”

This vision applies equally to other small cities in the Kyiv region, with Duwage identifying Boryspil in particular as an obvious candidate for significant hospitality sector development. Zhytomyr itself has the added advantage of boasting a surprisingly young population, with around two-thirds of the city’s 200,000 residents under the age of forty. This makes it a particularly good fit for MOI Zhytomyr’s IT-friendly co-working environment, with its emphasis on high-tech tools and digital convenience.

hospitality

As well as appealing to local IT professionals, Duwage expects the venue to turn heads within Kyiv’s booming IT industry, with competitive rates and world class facilities making it an attractive alternative to the big city bustle of the Ukrainian capital. Indeed, he reports having been contacted by five separate IT companies within the first few days following the official launch presentation of the project in mid-December. With Ukraine’s digital economy enjoying strong double-digit growth throughout much of the past decade, this is an attractive and relatively inexhaustible niche to be entering.

Enhanced IT accessibility will also make MOI Zhytomyr interesting to the digital nomad generation beyond Ukraine’s borders.

Discounted taxi rates to Borspyil International Airport are already envisaged as part of the package for international travelers www.bunews.com.ua

looking to spend time in an original environment that offers both novelty appeal and convenient connectivity.

Corporate clients will also be catered for via a range of conference and meeting facilities. The business travel segment of the Ukrainian hospitality market is heavily focused on Kyiv and Ukraine’s other largest cities such as Kharkiv, Odesa and Lviv, but Duwage is confident that MOI Zhytomyr will prove competitive. “Ukraine is developing but this progress is not spread evenly around the country,” he says. “The time has come to look beyond Kyiv and take advantage of the many other great locations the country has to offer. With a vibrant young local population, great road connections to Kyiv, and the right level of international-quality service, MOI Zhytomyr can raise the bar for the entire regional hospitality industry.”

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Making Ukraine relevant to international investors Outgoing UkraineInvest Chairman Daniel Bilak reflects on 3 years of evolving investor perceptions

About the interviewee: Daniel Bilak served as Director of UkraineInvest then Chairman of the UkraineInvest Supervisory Board from 2016 until 2019 For the past three years, Daniel Bilak’s role at the helm of the Ukrainian government’s investment promotion office, UkraineInvest, has placed him at the forefront of the country’s efforts to attract international investors. Since UkraineInvest’s establishment in October 2016, Bilak has overseen its evolution from a consultative body to the prime minister to today’s status as a full-fledged state institution.

He says this process mirrors the Ukrainian government’s increasingly strategic approach to when it comes to engaging with foreign investors. As he prepared to step down as chairman of the agency’s supervisory board in New Year 2020, Bilak spoke to Business Ukraine magazine about the challenges involved in changing attitudes towards Ukraine, and the importance of finding a point of relevancy with investors who often have little prior 44

knowledge of what the country can offer.

Canadian-Ukrainian Bilak joined UkraineInvest in autumn 2016 direct from a senior executive position in the private sector in Ukraine. An intended one-year secondment turned into a three year engagement. During this time, he has regularly featured at investment events across the globe and in Ukraine, while working with successive governments and local authorities to achieve three key objectives: to help unblock impediments to further investment by existing investors in order to attract new FDI, to facilitate the improvement of the investment environment, and to institutionalize the functions of UkraineInvest as a permanent responsibility of the government toward the investment community. “Based on feedback from the business community, I am satisfied with the results,”

commented Bilak. “Through our joint efforts with the Prime Minister, the Government Investment Commissioner Oksana Markarova [now Minister of Finance], and other stakeholders such as the Business Ombudsman’s Council, we helped unlock about USD 3 billion dollars in investments from existing and new investors, and addressed systemic problems through changes to laws and regulations, such as reducing port fees and limiting the scope for law enforcement interference in legitimate business.”

Arguably UkraineInvest’s most significant achievement has been to challenge many of the negative narratives surrounding Ukraine’s investment climate. Bilak remembers at the outset being confronted by the country’s significant image problems. “There was a perception that Ukraine was backsliding away from the ideals of the Revolution of Dignity and towards old corrupt practices,” he says. While not all of the criticism was accurate, changing this narrative required a fundamental rethink of the way Ukraine interacts with the investment community.

“From the very beginning, it was clear that we were not going to succeed unless all levels of government began treating investors like guests in their own home.”

Bilak and his team drove this message home with government agencies in Kyiv, as well as with regional administrations throughout the country. He has also communicated these messages internationally, with UkraineInvest being a major participant at Ukraine House Davos in 2019, before taking on the leading role in Ukraine House Toronto. The impact of the Canadian event can be gauged by the 1.5 million views it generated on social media. Bilak emphasizes Ukraine House Davos as a watershed moment for UkraineInvest. “When EBRD President Suma Chakrabarti declared at Davos that Ukraine was open for business thanks to the success of the government’s reform agenda, and when we got feedback from major in-

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of 4% GDP growth in 2019, but this strong performance actually reflects the impact of reforms that are already taking root.”

The Ukrainian economy’s increasingly robust performance has certainly made selling the country on the international stage less daunting. With everyone from the IMF and the World Bank to Fitch and Moody’s upgrading Ukraine in recent months, investors have also taken note. This has allowed the team at UkraineInvest to move beyond defending the country’s reform record to focusing instead on highlighting the more dynamic side of the Ukraine investment story. “It is crucial to brand the country in a way that’s relevant to investors. We have to find common ground and make Ukraine real for them,” says Bilak. “Often the core of the problem is not Ukraine’s bad reputation, it’s the absence of any reputation at all. Most investors simply don’t know much about Ukraine. This is why sectors like IT and high-tech are particularly good topics for discussion. We want Ukraine to be seen as a global center of innovative technologies. When we discuss the number of leading global tech firms with R&D offices in Kyiv and other Ukrainian cities, or the emergence of a European automotive parts

supply chain cluster in western Ukraine, this resonates with potential foreign investors. It is something they can easily get their heads around.”

Looking back at his three years with UkraineInvest, Bilak sees the October 2019 international investment forum in Mariupol as a particularly important landmark. UkraineInvest worked closely with the new Zelenskyy administration to stage the flagship event, which attracted hundreds of international participants to the eastern Ukrainian port city and demonstrated that the country was committed to moving forward with an ambitious economic growth strategy that envisages attracting USD 40 billion in investments over the next five years. “Mariupol was UkraineInvest’s big debut with the incoming government and helped cement our relationship,” he says. “It demonstrated that the UkraineInvest team was ready for primetime.

We had passed the startup phase and were now entering the institutional phase. The role of UkraineInvest has evolved and will continue to develop as Ukraine itself grows.

What will not change is our commitment to providing high quality services to the foreign investment community.”

interview

vestors that they perceived that Ukraine was a stable and predictable emerging market with measurable risks, we knew that our messages and efforts were starting to pay off.”

Upbeat talk of this kind is relatively unusual, but Bilak stresses that in contrast to the typically gloomy coverage of Ukraine in the international media, this optimistic tone is more than justified. He points to the shift towards more positive attitudes over the past twelve months, reflected in surveys conducted by the American Chamber of Commerce and the European Business Association in Ukraine.

This improving mood owes much to the gradual impact of reforms, most of which were rooted in the EU-Ukraine Association Agreement. “We are now seeing the results of the post-Revolution of Dignity reforms in areas such as public procurement, automatic VAT refunds, open data digitalization, and the gas sector, to name but a few. It is common to hear complaints that nobody has gone to jail for corruption, but these are all long-term institutional anti-corruption measures that have shone a light into the darker corners of the economy and created transparency. There was significant surprise when the Ukrainian economy reached two successive quarters

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Putting Ukrainian real estate

on the global investment map

Real estate professionals look ahead to landmark Ukrainian participation at MIPIM 2020 in Cannes

Senior figures from across the Ukrainian real estate industry gathered at Kyiv’s Holiday Inn Hotel in December for a roundtable discussion addressing the challenges of raising Ukraine’s profile on the global investment map. The event was part of preparations for Ukraine’s participation at the spring 2020 MIPIM international real estate forum in Cannes. The next edition of the global property industry’s flagship event will take place on 10-13 March in southern France and will feature the largest ever Ukrainian delegation.

“As one of the organizers of Ukraine’s 2020 MIPIM delegation, I believe the country as a whole, and the Ukrainian business community in particular, needs to be more strategic in its approach to major inter46

national initiatives of this nature. Based on our prior experience of similar international trade events, foreign investors still know very little about Ukraine but are interested in learning more,” offered Anna Nestulia, the founding partner of Ukraine’s MIPIM representation and CEO of Invest in Projects (B2B Marketing Agency).

With Ukrainian Prime Minister Oleksiy Honcharuk setting the target of USD 50 billion in foreign direct investment (FDI) over the next five years, Ukraine clearly has much work to do in order to achieve a leap in FDI. Cushman and Wakefield’s Volodymyr Mysak provided context for current international investor involvement in the Ukrainian property market.

While neighboring Poland attracted ap-

proximately USD 7 billion in real estate investments during 2018, the comparative figure for Ukraine was USD 300 million.

MIPIM representative in Ukraine Dmytro Dopiro argued that Poland’s relative success in attracting international investment to the country’s real estate sector highlights the value of a consistent approach to promotional efforts on the global stage.

Poland, he explained, has a long-term approach to promoting the country’s brand among real estate industry investors, and this includes regular participation at leading industry events like MIPIM. In 2019, 12 different Polish cities were represented at MIPIM, with municipal authorities and local real estate businesses typically working together to finance participation. In con-

real estate

trast, Kyiv was the only Ukrainian city to feature its own stand at MIPIM last year.

Ukraine’s plans for an enhanced presence at MIPIM 2020 are part of broader efforts to raise the country’s international profile. Ukraine has also benefitted in recent years from greater prominence at the annual World Economic Forum in Davos.

Ukrainian investor and Aventure Capital managing partner Andriy Kolodyuk was the initiator of Ukraine House Davos, which debuted in 2019 and proved one of the most effective brand promotion tools for the country in recent years. Kolodyuk explained that Ukraine House Davos was only possible thanks to private sector backing, and underlined the importance of cooperation rather than competition when promoting Ukrainian investment opportunities to international audiences.

The numbers tell their own story. Five years ago, Davos hosted just 15 Ukrainian participants, whereas in 2019, the figure was 145.

Toronto-Kyiv president and managing partner Yuriy Kryvosheya has a long record of promoting Ukraine internationally and heads the supervisory board of the country’s 2020 delegation at MIPIM. He identified MIPIM as one of three key international events for Ukraine during the coming year, along with Davos and EXPO 2020 in Dubai. Based on many years of experience attending such global gatherings, he said there is already considerable interest in Ukraine, with many investors closely monitoring the situation in the country.

Kryvosheya argued that Kyiv is now wellplaced to become a real estate investment hub, and can emerge as the next destination for real estate investors who have already developed a presence in nearby regional markets such as Poland, Istanbul and Moscow. The challenge now is to move beyond the low profile and negative stereotypes that prevent international investors from fully appreciating the opportunities today’s Ukrainian real estate market represents.

MIPIM 2020 will take place on 1013 March at the Palais Des Festivals in Cannes. For details on how to participate in Ukraine’s MIPIM delegation, please contact Dmytro Dopiro via d.dopiro@gmail.com or by calling +38067-4018183. www.bunews.com.ua

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From hybrid war to frozen conflict No middle ground between Russia’s imperial ambitions and Ukraine’s desire for a European future Ever since his landslide election victory in spring 2019, Ukrainian President Volodymyr Zelenskyy has been eager to demonstrate that, unlike his “nationalist” predecessor Petro Poroshenko, he can negotiate a compromise with Russian leader Vladimir Putin.

However, it is now increasingly obvious this approach will not work, and there is very little Ukraine can do about it. Zelenskyy’s genuine desire for peace through compromise is simply anathema to Putin, who sees compromise as weakness and rejects any proposals that would mean tacitly acknowledging Ukraine’s right to full independence from Russia.

Crucially, a compromise peace would leave Ukraine open to pursue its strategic goal of Euro-Atlantic integration. This would thwart Putin’s primary objective of keeping his neighbor firmly within the narrow confines of the so-called Russian World. Zelenskyy talks of dialogue with Russia, but he remains committed to Ukraine’s integration into the European Union and NATO. Moscow’s objections to this westwards trajectory are fundamental in nature and have been at the heart of the conflict for the past six years. The road to today’s undeclared war between Russia and Ukraine is a long one, but the immediate causes can be traced back to Putin’s November 2013 pressuring of Ukraine’s thenpresident Viktor Yanukovych to abandon Euro-integration and drop plans to sign an Association Agreement with the EU. Putin is obliged to adopt an uncompromising stance because his vision of an eastwards-looking Ukraine is increasingly at odds with Ukrainian public opinion. Ironically, it is Russian aggression that has caused Ukrainian society to swing decisively in favor of Euro-Atlantic integration. Since the outbreak of hostilities, negative views of Moscow that were once largely confined to western Ukraine have gained considerable ground throughout the country, not least because Russian-speaking Ukrainians have suffered most from the Kremlin’s military intervention in Ukraine. Indeed, a recent poll found that 74 percent of Zelenskyy’s own

Servant of the People voters, many of whom come from Ukraine’s traditional Russian-speaking heartlands, regard Russia as the aggressor. This reality undermines Kremlin propaganda tropes about “repressed Russian-speaking Ukrainians”. In fact, there are large numbers of Russian-speaking soldiers currently serving in the Ukrainian Armed Forces. Illustrating this point, eastern Ukraine’s largely Russian-speaking Dnipropetrovsk Oblast has suffered the highest number of combat casualties nationwide.

There is an element of Groundhog Day in Zelenskyy’s belief that he can find middle ground with Moscow. A quarter of a century ago, Leonid Kuchma was similarly elected Ukrainian president in opposition to his “nationalist” predecessor Leonid Kravchuk.

Kuchma, like Zelenskyy, also claimed he would be more successful in negotiating with Russia. This proved impossible for Kuchma, just as it will prove impossible for Zelenskyy. Any Ukrainian leader dealing with Russia must grapple with the fact that the Russian political leadership does not respect Ukrainian sovereignty or borders, and believes Ukrainians and Russians are “one people.”

Regardless of who sits in the Kremlin, there is a consensus in Moscow that Ukraine is essentially a domestic Russian issue.

Putin himself underlined this point at his latest annual press marathon on December 19, referring to Ukraine’s southern and eastern regions as “native Russian lands”. This obvious incompatibility between Ukraine’s European ambitions and Russia’s imperial pretensions makes a meaningful peace unattainable. Instead, the conflict in eastern Ukraine is already de facto frozen, and will likely remain so for a long time to come.

Basic disagreements also exist over core elements of any roadmap to peace. Like Poroshenko before him, Zelenskyy cannot agree with Putin over the sequencing of political and security steps outlined in the 2015 Minsk agreement, while Putin refuses to countenance any talk of revisions. Meanwhile, the Ukrainian leader rejects Russian attempts to transform the occupied eastern regions into a Trojan house within Ukraine via constitutionallyenshrined special status.

Even if agreement on a general roadmap towards peace were to prove possible, the problems of implementation would be overwhelming. With an estimated 35,000 troops under Kremlin com-

About the author: Taras Kuzio is a non-resident fellow at the Foreign Policy Institute at Johns Hopkins-SAIS and a professor at the National University of Kyiv Mohyla Academy. He is also author of “Putin’s War Against Ukraine” and co-author of “The Sources of Russia’s Great Power Politics: Ukraine and the Challenge to the European Order”

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geopolitics

PUTIN REPEATS REVISIONIST RUSSIAN CLAIMS TO UKRAINE: During his 19 December annual press marathon in Moscow, Vladimir Putin referred to southern and eastern Ukraine as “native Russian lands” and claimed these regions had no historic connection to Ukraine. This was not the first time the Russian leader has publicly questioned the validity of Ukraine’s current international borders, and does little to build confidence in the prospects for a viable peace between the two countries mand, the demilitarization of Ukraine’s occupied eastern regions would necessarily take many years, if not decades, to complete.

To put this into context, it took a number of years to demilitarize Northern Ireland, despite involving only a few thousand paramilitary members armed with light weapons. In comparison, there are currently two armies established and supplied by Russia in Ukraine’s occupied east, with more tanks at their disposal than many major European countries. Russia could not allow these forces to simply withdraw across the border without undercutting the Kremlin’s attempts to define the conflict as an internal Ukrainian affair.

The issue of amnesties also presents challenges Ukraine is illequipped to address. Putin wants a blanket amnesty for all serving troops and officials in the occupied east, while Zelenskyy says those with blood on their hands must answer for their crimes.

In a best-case scenario, it would take years for a South Africanstyle Truth Commission to identify who was guilty of committing serious crimes during the conflict. Furthermore, there is ample reason to doubt whether Ukraine’s judicial system would be able to handle this burden. After all, Ukraine’s prosecutors have yet to complete a string of nationally important investigations including the 19-year old Georgi Gongadze murder case, the 15-year old Viktor Yushchenko poisoning, and the killings during the Euromaidan Revolution in 2014.

If peace talks somehow enabled the process to move towards local elections in occupied eastern Ukraine, major questions would then arise over voter eligibility. Zelenskyy supports the participation of the estimated 1.7 million internally displaced people (IDPs) who have left the conflict zone since 2014 for governmentcontrolled Ukraine. Putin appears to be moving in the opposite direction, issuing Russian passports to hundreds of thousands in www.bunews.com.ua

the occupied east and extending the invitation to all Ukrainians living in Donetsk and Luhansk oblasts.

The issue of voter rights for IDPs would prove particularly thorny.

Many IDPs lost family members, homes and businesses as a result of Russian aggression. They have already voted with their feet.

After spending the past five years living in government-controlled Ukraine, these potential voters would be significantly less likely to buy into Russian depictions of the country as “fascist”, with many becoming increasingly patriotic instead. Their involvement in future east Ukrainian local elections would, therefore, threaten the success of pro-Russian political forces, which means the Kremlin is unlikely to allow any such vote to take place at all.

There are clearly numerous practical obstacles to peace in eastern Ukraine, but none are as decisive as the Kremlin’s refusal to accept the loss of a country that many in Moscow continue to view as central to Russia’s national identity and crucial for Russian geopolitical security. This leads to the conclusion that a longterm frozen stalemate is the best option among the exclusively bad choices currently available to Ukraine.

The challenge now is to convince Ukrainian and international audiences that the Ukrainian authorities have done everything in their power to achieve peace and are worthy of continued support. Zelenskyy succeeded at the Paris summit in portraying himself as a peacemaker willing to compromise, while leaving Putin in the role of hardliner. This was a promising beginning. The Ukrainian leader now needs to be honest with his fellow Ukrainians. He must tell them that peace on Putin’s terms would threaten the country’s independence, leaving no alternative but to accept the reality of a frozen conflict. At the same time, US and EU policymakers need to recognize Russia’s responsibility for the creation of yet another festering wound on the eastern fringes of Europe.

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2019

REVIEW

It has been a dramatic twelve months of change in Ukraine that has seen a generational shift in the country’s political classes. The meteoric rise of political novice Volodymyr Zelenskyy has been the dominant story of the year, with the former comedian securing the presidency and an unprecedented one-party majority in parliament. Other historic events include the establishment of an independent Orthodox Church of Ukraine, and the inclusion of the country’s EU and NATO aspirations into the Ukrainian Constitution. Meanwhile, on the global stage, Ukraine has found itself at the center of a presidential impeachment scandal in the US that has thrust the country firmly into the international spotlight. As 2020 dawns, we look back at the people and events that dominated the Ukrainian headlines in 2019.

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2019 review

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The Zelenskyy Phenomenon Sweeps Ukraine Volodymyr Zelenskyy began 2019 with a televised New Year message declaring his intention to run for the presidency. At the time, Zelenskyy was a wildly popular comedian who had made his name poking fun at politicians and playing the role of an accidental Ukrainian head of state. Few expected him to seriously challenge the status quo among the country’s deeply entrenched political elite. However, as the year drew to a close, the former comedian had become arguably the most powerful politician in Ukrainian history.

Zelenskyy’s remarkable success came via a landslide victory in the April presidential election, followed by an unprecedented one-party majority in the summer parliamentary vote. His electoral appeal owed much to a deep sense of public disillusionment with the country’s existing political forces that proved equally potent throughout Ukraine. Zelenskyy was an unknown quantity, but he was also untainted. This promise of a fresh start was irresistible to Ukrainian voters tired of broken promises and false dawns.

Zelenskyy’s meteoric rise has shaken Ukraine’s political landscape to its foundations and raised fundamental questions over what he actually stands for. The former TV personality’s ties to oligarch Ihor Kolomoiskiy have been subject to continued speculation throughout the year, while the eclectic composition of his Servant of the People parliamentary party has led to all manner of contradictory messages and ideological confusion.

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There has also been criticism over Zelenskyy’s reluctance to engage with the mainstream Ukrainian media. In response, his team has staged to a number of high-profile press spectaculars that have served to amplify accusations of an approach to politics more akin to reality TV. Nevertheless, Zelenskyy ended the year as the country’s most trusted politician. He can also boast a growing reputation on the international stage, thanks to his largely sensible handling of the Trump impeachment scandal and a credible performance during a much-hyped first face-to-face meeting with Russian counterpart Vladimir Putin in early December.

Zelenskyy remains something of a political enigma, but his early policy positions reflect a desire to open up the Ukrainian economy and maintain the country’s Euro-Atlantic course while steering clear of the national identity issues and memory wars that have polarized Ukrainian society for much of the past 28 years since the country first achieved independence.

As a protest vote president, he continues to enjoy high levels of public support. However, this could rapidly change if he becomes bogged down in Ukraine’s notoriously toxic political quagmire and grows less distinguishable from the discredited forces he has promised to replace. For now, Zelenskyy remains a political phenomenon whose success has attracted global attention and demonstrated that Ukraine’s fledgling democracy is stronger and more open than many had previously imagined.

2019 review

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2019 review

The Ukrainian Hryvnia: World’s No 1 Currency Ukraine’s hryvnia was the world’s strongest currency against the US dollar during 2019, gaining almost 20% and stunning observers who had predicted a gradual loss of value during the course of the year. A number of factors drove this impressive performance. Ukraine’s expanding agricultural export sector has bolstered dollar incomes, with the country emerging in 2019 as the EU’s number three international food suppler and the world’s leading grain exporter. An unprecedented influx of foreign money into Ukrainian hryvniadenominated government bonds has also helped the national currency to surpass all expectations, as has the steady flow of foreign currency remittances from the wave of Ukrainian workers who left the country since 2014 in search of higher salaries in neighboring EU countries. The overall remittance figure for 2018 was around USD 14 billion according to the World Bank, representing a 19% year-on-year increase on the amount of money sent home in 2017.

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National Bank of Ukraine officials expect the final figure for the current year to be slightly higher than in 2018.

One of the more curious footnotes of the hryvnia’s excellent year has been the relative lack of media coverage it has attracted. Since the sharp devaluations of 2014 and 2015, the slide of the Ukrainian currency has regularly featured in the Ukrainian media as shorthand for the country’s wider economic woes.

Minor fluctuations in the hryvnia’s fortunes have consistently received lurid headline treatment, with “economic experts” eager to forecast another impending currency collapse and predict exchange rates of 40, 50, or 100 UAH to the US dollar. These naysayers have been strangely silent regarding the Ukrainian currency’s stellar performance in 2019. It would seem that for many in the Ukrainian media, the hryvnia exchange rate is only an accurate indication of the country’s economic health when it is in decline.

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We are the government’s investment promotion office created to attract and support investment in Ukraine.

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Ukraine’s long quest for Orthodox independence came to a successful conclusion in January 2019 when Ecumenical Patriarch Bartholomew of Constantinople granted a “tomos” of autocephaly, or independence, to the newly created Orthodox Church of Ukraine. The move ended centuries of Russian religious domination over Ukraine and sent shockwaves through the Orthodox world. The Russian Orthodox Church fought bitterly to prevent Ukraine from achieving Orthodox independence, and responded to Patriarch Bartholomew’s decision by cutting ties with Constantinople, which is traditionally viewed as the first among equals within the Orthodox Church.

Since Ukraine gained independence in 1991, the country’s Orthodox faithful had been split between the Kremlin-dominated Moscow Patriarchate and the numerically larger but internationally unrecognized Kyiv Patriarchate. The granting of a tomos has since led to hundreds of individual Ukrainian Orthodox parishes voting to leave the Moscow Patriarchate and align with the Orthodox Church of Ukraine. The process of gaining international acceptance for Ukraine’s Orthodox independence also continues, with the Orthodox authorities in Greece and Alexandria offering official recognition during the second half of 2019. While millions of Ukrainians remain loyal to the Moscow Patriarchate, the establishment of an internationally recognized and independent Orthodox Church of Ukraine is widely seen as a major landmark in Ukraine’s ongoing post-Soviet nation-building process.

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2019 review

Ukraine Gains Orthodox Independence

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2019 review

Free At Last! Ukrainian Hostages Come Home One of the most emotional moments of the year came in early September when 34 Ukrainians held by the Kremlin were released as part of a landmark prisoner exchange between Ukraine and Russia. The list of freed Ukrainians included Crimean filmmaker Oleg Sentsov, whose incarceration in Russia following a widely condemned show trial propelled him to international prominence and helped earn him the EU’s Sakharov Prize for Human Rights in 2018. The 24 Ukrainian sailors seized by Russia in late 2018 were also among those released. The sailors had been captured during a Russian attack on three Ukrainian vessels in the Black Sea that marked a sharp escalation in Moscow’s military aggression against Ukraine and drew attention to the Kremlin’s de facto blockade of Ukraine’s Azov Sea ports. In May 2019, a UN maritime tribunal condemned Russia’s actions and ordered the Kremlin to immediately release the Ukrainian sailors and 58

vessels captured by Russia, but Moscow chose to ignore the ruling.

The release of so many Ukrainian prisoners proved hugely popular among the Ukrainian public, with many rating it as the highlight of 2019 during end-of-year opinion polls. However, the exchange also sparked controversy due to the inclusion of a key MH17 suspect among the prisoners returned to Russia. Ukrainian citizen Vladimir Tsemakh was seized by the Ukrainian military in summer 2019 during a bold raid into Russian-occupied eastern Ukraine. Tsemakh was believed to be a key witness in the shooting down of commercial airliner MH17 over eastern Ukraine in July 2014, which an international investigation has blamed on the Russian military. Plans to release Tsemakh into Russian custody sparked protests among Ukraine’s international partners, but Moscow reportedly insisted on his involvement in order to proceed with the exchange. www.bunews.com.ua

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2019 review

Trump Impeachment Shines Spotlight on Ukraine A major political storm erupted in early autumn 2019 over the contents of US President Donald Trump’s July telephone conversation with Ukrainian President Volodymyr Zelenskyy. Did the US leader attempt to bribe his Ukrainian counterpart in order to obtain possible dirt on his likely 2020 presidential election opponent Joe Biden? By withholding military aid to Ukraine, was Trump guilty of abusing his authority?

The scandal over the phone call continued to grow throughout the last four months of the year, eventually leading to the launch of impeachment proceedings against Trump. As things heated up in Washington DC, Ukraine found itself increasingly caught in the crossfire. Swarms of international correspondents flocked to Kyiv in search of insights into the impeachment story, while news outlets around the world scrambled to meet the sudden demand for more Ukraine coverage.

Meanwhile, in an apparent bid to change the narrative and deflect attention away from President Trump’s conduct, US Republican Party representatives and surrogates began pushing claims that Ukraine www.bunews.com.ua

had meddled in the 2016 American presidential election campaign.

Adding to the chaos, President Trump’s personal lawyer Rudy Giuliani came to Kyiv and began spinning conspiracy theories with some of Ukraine’s most discredited politicians and pro-Kremlin figures.

This media frenzy has kept Ukraine in the global headlines throughout the final third of the year. Most of the coverage has not been flattering.

On the contrary, Ukraine has routinely been depicted as both hopelessly corrupt and impenetrably confusing. Nevertheless, for a country that has spent decades struggling to emerge from international obscurity, such exposure is quite literally priceless. It has done wonders for Ukraine’s name recognition, while also reminding the outside world about the country’s ongoing undeclared war with Russia. Underlining this point, President Zelenskyy has recently become the first Ukrainian leader to appear on the cover of TIME magazine. The question now is whether Ukraine will be able to capitalize on this rising international profile and exploit the attention garnered by the Trump impeachment in order to improve its own image on the global stage.

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Ukraine Wins Junior World Cup 2019 was a particularly good year for Ukrainian football. Under the tutelage of Andriy Shevchenko, the senior national side qualified for Euro 2020 in style, ending the year unbeaten and cruising to first place in a qualification group that also included European champions Portugal.

However, even this achievement was over shadowed by the exploits of the country’s junior team, which won the FIFA U-20 World Cup for the first time in Ukrainian history. Ukraine’s under 20s claimed the world

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title in Poland with victories over the US, Qatar, Panama, Colombia, and Italy before defeating Korea 3-1 in the final. It was Ukraine’s fifth appearance at FIFA’s junior version of the World Cup, and the first time the country had progressed beyond the first round of the knockout stages.

With Sheva’s boys among the hottest prospects at Euro 2020 and the youth team on top of the world, no wonder there is a renewed sense of optimism about the future of Ukrainian football.

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2019 review

#KyivNotKiev Finally Goes Global Ever since the mid-1990s, Ukrainians have been trying to convince the outside world to adopt the Ukrainian-language “Kyiv” spelling for the nation’s capital city, instead of the more traditional but Russian-rooted “Kiev”. Until relatively recently, the international media had chosen to politely ignore these pleas. However, Russia’s 2014 invasion gave urgent new meaning to the debate and transformed the spelling issue into a symbol of Ukraine’s wider efforts to assert an independent identity.

In 2018, the country’s diplomats and online activists entered the fray, launching a social media campaign around the hashtag #KyivNotKiev that called on media outlets to recognize the underlining imperial imwww.bunews.com.ua

plications of their spelling policies and officially switch to the more politically correct Ukrainian-language transliteration. It is difficult to gauge the exact impact of these efforts, but there is no doubt that the past year has seen a decisive swing in favor of the “Kyiv” spelling among the international English-language media. Outlets to make the change include the BBC, Associated Press, Washington Post, Wall Street Journal, Telegraph, Guardian, Economist, and Financial Times. Adopting the Ukrainian spelling for the Ukrainian capital city was once seen as a political statement, but it is now those who insist on the outdated Russian version who find themselves in a minority.

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MOI Zhytomyr Hotel Project Launch The management teams of DBI Hotels & Resorts Group and Favoryt construction company welcomed guests and members of the press to Kyiv’s Ramada Encore Hotel in late December for the official launch of the new MOI Zhytomyr hotel project. Work is expected to get underway on MOI Zhytomyr in the coming months, with a tentative opening date scheduled for September 2021. Described as “a hotel, but much more than a hotel,” this innovative new concept in multi-functional hospitality will offer a

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range of accommodation options including economy and four-star rooms alongside long-stay full service apartments. Meanwhile, an extensive coworking area, childcare facilities, retail services and a range of dining and social options will make this a community hub for Zhytomyr residents and city visitors alike. MOI Zhytomyr will be the first MOI venue to open in Ukraine, with plans to expand the brand across the country in the coming few years.

networking events

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Ukrainian Catholic University Sets New Fundraising Record The Ukrainian Catholic University welcomed friends and supporters to Kyiv’s Parkovy Congress and Exhibition Center in December for the university’s twelfth annual Charitable Evening and Silent Auction. Held each year since 2008, this year’s event was attended by more than 350 guests and set a new fundraising record, with over UAH 13 million raised to support the continued work of the university. Distinguished guests included former British Ambassador to Ukraine Robert Brinkley, who is now a Senator of the Ukrainian Catholic University and the Director of the

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Ukrainian Institute in London. “The Ukrainian Catholic University’s development is significantly more than the number of students or buildings.

It’s about reputation and quality,” commented Brinkley. “This is not only a private institution, independent of the government, which strives to be a leader in the area of high academic and ethical standards in a country where too many educational institutions are not developing and do not meet expectations because of corruption. This is a university that witnesses, that serves, and that communicates.”

networking events

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WTECH Community for Female IT Professionals Celebrates First Anniversary The WTECH professional community, which unites women from across the Ukrainian technology industry, marked its first anniversary in December 2019. WTECH was founded in late 2018 by Victoriya Tigipko, Managing Partner of TA Ventures, and Viroslava Novosilna, CEO and founder of Slova Tech PR, with the aim of providing a progressive platform for females in the male-dominated Ukrainian tech sector. The community offers networking opportunities and career growth support through activities including seminars and lectures.

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During its first year of activities, Kyiv-based WTECH has brought together over 1,400 women from the IT, tech and venture sectors, while establishing a presence across the country in cities including Dnipro, Odesa, Lviv and Kharkiv. Plans are currently being developed to launch WTECH in Ukrainian Azov Sea port city Mariupol as the community seeks to expand further. WTECH also has ambitions to develop an international presence in 2020, with a number of EU affiliates expected to launch during the course of the coming year.

networking events

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Women of the Ukrainian Energy Sector 2019 Awards The Women’s Energy Club of Ukraine (WECU), which brings together female professionals working in the country’s energy industry and related sectors, hosted the inaugural Women of the Ukrainian Energy Sector Awards in December 2019. This new annual event is designed to raise public awareness about the role played by women in the Ukrainian energy sector, according to WECU president Valentyna Beliakova.

A total of 72 nominees fought it out for this year’s top prizes, with the 2019 winners including Olha Bielkova (Politician of the Year), Olha Bosak (Manager of the Year), Viktoria Saravas (Educator of the Year), and Tetiana Amosova (Employee of the Year). The Women of the Ukrainian Energy Sector Awards was supported by the Kyiv office of the Heinrich Boell Foundation.

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networking events

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and finally

Coming in 2020: international border checkpoint at Lviv railway station

Passengers heading for EU destinations from Lviv’s Central Railway Station should soon be able to undergo border checks prior to departure following a decision by the Ukrainian border authorities to establish a checkpoint at the station. The forthcoming border control point is part of efforts to improve efficiency as Lviv continues to introduce new rail services connecting the western Ukrainian city to the EU. Mid-December saw the launch of a new Lviv-Berlin service, while there are also a series of trains running from Lviv and via the city to destinations in Poland.

The number of Ukrainians travelling by train to EU destinations has risen sharply since the advent of visa-free travel for Ukrainian passport holders in June 2017. For the first time since records began, more Ukrainians headed westwards on EU-bound trains in 2018 than the number travelling via rail to Russia. This trend has gained additional ground in 2019, with rail travel to Russia declining further while new EU services continue to be introduced.

Lviv’s Central Railway Station is an appropriate place to offer upgraded

check-in services for international travelers. Dating back to the golden age of railway travel prior to the outbreak of WWI, the station building was first unveiled in 1904 and is considered one of the finest surviving examples of the Art Nouveau architectural style in western Ukraine. Lviv railway station was once a key regional hub on the eastern fringes of the sprawling Central European Habsburg Empire, but found itself cut off once Lviv became part of the Soviet Union.

In addition to a border checkpoint, plans are also currently being developed to construct an express rail link connecting Lviv Central Railway Station with the city’s international airport. The introduction of new terminal facilities has already enabled Lviv International Airport to emerge as Ukraine’s busiest regional air travel hub, with more than two million passengers using the airport during the first eleven months of 2019. The addition of an express rail link would further improve the airport’s reach and upgrade the city’s overall transport infrastructure as it looks to cement its position as Ukraine’s leading tourist destination.

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