Business Ukraine 03/2018

issue 03/2018

BRAND UKRAINE RECEIVES CHAMPIONS LEAGUE BOOST Liverpool vs Real Madrid in Kyiv: Ukraine’s capital city hosts the 2018 UEFA Champions League Final

This BUSINESS UKRAINE 03/2018: Kyiv is expecting to welcome over 100,000 football fans this month as the Ukrainian capital city hosts the 2018 Champions League Final between Liverpool and Real Madrid. The event provides Ukraine with a welcome opportunity to make a positive impression on global audiences and visiting representatives of the international media.

Brand Ukraine Enjoys Timely Champions League Boost For many of the thousands coming to Kyiv for the Champions League Final on 26 May, the Ukrainian capital will come as a pleasant surprise. They will no doubt arrive expecting to encounter a grim and dour post-Soviet concrete jungle. Instead, they will find themselves confronted by one of Europe’s most spectacularly pretty cities at its blooming best. The likely outcome will be a fresh round of media coverage hailing Kyiv as an undiscovered gem and labelling it as the next big thing in city break tourism. This is nothing new.

Indeed, visitors to last year’s Eurovision Song Contest were similarly shocked to learn that Kyiv in springtime is quite so splendid. The real question is why, after more than a quarter of a century as an independent state, Ukraine remains such an unknown quantity to the outside world.

After all, it is not as if Ukraine is either small or historically insignificant.

On the contrary, it is the largest country located wholly in Europe and a land of such strategic importance that many geopolitical theorists believe it holds the key to Eurasian domination. Hitler and Stalin certainly thought so. The conquest of Ukraine was the German Fuhrer’s principle reason for waging WWII, while Stalin recognized that without Ukraine the Soviet Empire was unthinkable. Both dictators committed many of their worst crimes in Ukraine, earning the country its unenviable status as the epicenter of twentieth century totalitarianism while leaving behind a staggering death toll of anything from ten to twenty million victims. Forty years later, Ukraine’s declaration of independence would prove the decisive moment in the breakup of the Soviet Union, bringing to a successful conclusion one of the longest-running statehood bids in world history and redrawing the map of Europe once more.

This barely plausible backstory should be enough to make Ukraine a household name, but that is emphatically not the case. Twenty-seven years since it escaped from centuries of foreign domination and debuted on the world

stage, Ukraine remains shrouded in obscurity. This is partially a problem of perception that is rooted in the outside world’s limited historical understanding of the Russian state. It has long been customary to regard Russia as a country much like its European neighbors, but in reality Russia has always been an empire. Russocentric views of the region prevailed in Tsarist times and continued throughout the Soviet era, serving to obscure the existence of captive nations like Ukraine while robbing them of their own historical narratives. Inevitably, this also led to considerable confusion when these previously unknown nations suddenly appeared in 1991. Such attitudes linger on, encouraging some in the worlds of politics, academia and the media to treat Ukraine and other former Soviet republics are somehow less deserving of sovereignty than others.

However, it is unfair to place all of the blame on Russia when explanations for Ukraine’s low profile can also be found far closer to home. Ukrainian society has spent much of the period since 1991 engaged in endless memory wars that have prevented the country from creating a coherent image for international consumption. Preoccupied by this ongoing national identity crisis, Ukraine has made little attempt at the kind of global branding campaigns or cultural diplomacy favored by emerging nations from the Balkans to southeastern Asia. The situation has improved somewhat since 2014, but much more is required before Ukraine can shake off the long shadow of anonymity.

Events like the Champions League Final are welcome opportunities to boost Brand Ukraine, but the likelihood of low expectations among visiting fans is also a reminder of just how much work lies ahead. Ukraine is no longer a newcomer to the community of nations, but it has yet to find its voice.

About the author: Peter Dickinson is the publisher of Business Ukraine magazine and a nonresident fellow at the Atlantic Council

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romania in ukraine

Romania in Ukraine

Romanian Ambassador to Ukraine Cristian-Leon Turcanu sees untapped potential for greater economic ties between the two neighboring Black Sea nations

What are the key investment opportunities for Romanian companies in Ukraine?

Ukraine continues to make significant progress to improve the business and investment climate, including macro-economic stabilization, reforming the banking system, and deregulation. Nevertheless, Romanian investors continue to perceive that they could face many risks and difficulties in the country, while the agreement on the mutual protection of investments between Romanian and Ukraine is still awaiting ratification. Investments of Romanian companies in Ukraine in 2017 amounted to USD 22 million. The most successful Romanian companies currently present in Ukraine include Romstal Ukraine, Valrom Ukraine, Arabesque/ Budmax and Wood Panel Plus.

Investment opportunities for Romanian companies can be identified in several sectors in the Ukrainian economy such as agriculture, the wood processing industry, the food industry, domestic and industrial equipment and installations, and the textile industry. To make these opportunities a reality we need to improve communication between the business communities in Romania and in Ukraine. Moreover, investments and business in general need a stable and predictable climate.

What do you see as the most attractive investment or expansion opportunities for Ukrainian companies in Romania?

Annual bilateral commercial exchanges have generally been at the level of over USD 1 billion, with only a few exceptions in certain years. In 2016, the figure amounted to USD 1.23 billion, which represented a year-on-year increase of 26.5%. Meanwhile, in 2017 the total rose to USD 1.45 billion, an increase of 18.36%. This positive impulse for bilateral cooperation is in large part due to the session of the Joint Romanian-Ukrainian Intergovernmental Commission on economic, technical and scientific cooperation held in July 2017. During the meeting in Bucharest, current problems and cooperation opportunities in different economic sectors were discussed.

There is substantial and still untapped potential 10

About the interviewee: Cristian-Leon Turcanu is Ambassador of Romania in Ukraine for expanding bilateral commercial exchanges and the establishment of joint ventures between Romania and Ukraine. The investments of Ukrainian companies in Romania today amount to USD 110 million. The key factor that enables the development of bilateral trade is Ukraine’s European path. I would like to mention the fact that Romania was the first EU country to ratify the EU-Ukraine Association Agreement.

Romania offers attractive opportunities for foreign investors, who have at their disposal more than 80 state and private industrial parks spread throughout the country, and a favorable legislation that provides additional tax incentives for the creation of new jobs and for investments exceeding EUR 10 million. Moreover, Ukrainian investors can take advantage of the geographical proximity of our two countries and of improvements in the transportation infrastructure connecting Romania and Ukraine. For example, the opening of a new border crossing point is expected this summer between Isaccea (Romania) and Orlivka (Odesa region, Ukraine). I should also mention the good training of the Romanian workforce in both traditional economic sectors and new areas like IT. There is considerable coverage in the media regarding the status of Ukraine’s minority communities in the border regions of western Ukraine. How would you characterize rela-

tions between the Romanian minority and the Ukrainian state, and what do you regard as the current priorities in this relationship?

The Romanian-speaking minority in Ukraine of around 450,000 people is the second largest among the ethnical minority groups in the country. As early as 1991, ethnic Romanians had strongly supported the creation and independence of the Ukrainian state. The contribution of the Romanian community to the development and prosperity of the Ukrainian state is significant.

In the constant dialogue we have with the authorities in Kyiv on the issue of national minorities, we always set out from the idea that persons belonging to the Romanian minority in Ukraine and persons belonging to the Ukrainian minority in Romania represent bridges between our states. We try to benefit from these connections in order to enhance mutual knowledge and understanding between the citizens of the two countries. In order to support this dialogue, we have established a governmental mechanism – the Joint Romanian-Ukrainian Intergovernmental Commission on the issue of respecting the rights of national minorities. It represents the traditional framework of openly and constructively analyzing issues regarding protections and respect for the rights of persons belonging to the Romanian minority in Ukraine and the Ukrainian minority in Romania, in conformity with the established international standards in this field.

It is true that the issue of national minorities in Ukraine, including those in the country’s western regions, has gained new nuances with the adoption of the new Law on Education by the Verkhovna Rada and its promulgation by President Petro Poroshenko in September 2017. It is a substantial and ambitious law whose main goal is the reform of the education system and its modernization to international standards.

High-quality education is the basis of the modernization and development of any society and this must take into consideration all the issues of interest to all citizens, while providing special status to those belonging to national minorities.

Regrettably, this law contains provisions that : www.bunews.com.ua

romania in ukraine

Romanian tourist attractions await visa-free Ukrainian visitors: Ukraine’s EU visa liberalization breakthrough now makes Romania far more accessible as a tourism destination

: will significantly diminish the ability to receive

education in the Romanian language. Since the adoption of the law, this negative impact has been criticized internally by parents, teachers and Romanian associations in Ukraine. Furthermore, at the international level, the authorities in Bucharest have immediately adopted a series of very firm positions and measures on this subject.

On this matter, I would like to underline that Romania pays special attention to the issue of respecting the rights of Romanian minorities in neighboring countries, including Ukraine. This is in line with the attention the Romanian state gives to the issues of persons belonging to national minorities that live in Romania. In other words, we would like ethnic Romanians that leave outside Romania to have the same rights

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that national minorities living in Romania enjoy.

The principles we follow are in the first place the standards of the Council of Europe in this field.

The schools in Ukraine where teaching takes place in Romanian have a long historical tradition and have greatly contributed to the preservation of Romanian culture and language in the region. The ethnic Romanians living in Ukraine have been the keepers of traditions inherited from the past, while at the same time being loyal citizens of the Ukrainian state.

We consider it extremely important to continue concerted actions to support the preservation of the current school network and of teaching in Romanian as requested by the members of the Romanian community in Ukraine. I believe it is an approach that ad-

heres to the European line of action which the authorities in Kyiv have chosen to follow.

Many observers regard Romania as a model for anti-corruption activities. What can Ukraine learn from the Romanian experience in this field?

During the past years, Romania has taken important steps in fighting corruption, a process that the EU and other international partners acknowledge and appreciate. Most importantly, Romanian citizens benefit from this process. As such, we are ready to share our experiences and best practices. We are also ready to learn from others. There is specific cooperation between the relevant Romanian and Ukrainian specialized agencies at the bilateral level and within : www.bunews.com.ua

romania in ukraine

: the framework of different EU programs. In

particular, I would like to mention the presence of a Romanian expert in the International Anti-Corruption Advisory Board of the EU AntiCorruption Initiative, a group of well-recognized professionals engaged in the process of strengthening the capacity of the Verkhovna Rada’s AntiCorruption Committee to examine anti-corruption related legislation and to monitor reform implementation.

Both Ukraine and Romania are experiencing demographic stresses caused by large-scale economic migration. How does Bucharest approach this issue? Are there any lessons for Ukraine from Romania’s own experience of addressing a shrinking workforce?

Labor migration is a characteristic of the contemporary world due to greater access to information and free movement. It is normal that people search for better paid work places, and this phenomenon is particularly prominent within the highly qualified workforce. Romania has been facing this phenomenon for the past 25 years, ever since the immediate aftermath of the collapse of the socialist bloc, whereas Ukraine has only started facing increased migration in the last few years.

The Romanian state has adopted a number of measures to discourage this process. One focus has been raising salary levels. Another has been improving living conditions for the young – the “First Home” program has helped tens of thousands of young families in Romania to have access to low interest loans for housing partially guaranteed by the state. There have also been efforts to stimulate the development of small and mediumsized enterprises and encourage the labor force to return to Romania. I would like to highlight the “StartUp Nation” program, through which the Romanian state provides grants of EUR 40,000 for Romanian citizens living in Romania that wish to become entrepreneurs, and the “Diaspora StartUp” program which provides grants of EUR 40,000 for Romanian citizens from economically disadvantaged areas that have worked abroad in the last year, in order to establish companies that create at least two jobs.

What does the Russian occupation of Crimea mean for Romania’s defense doctrine and security strategy in the Black Sea? The illegal annexation of Crimea, which Romania does not and will not recognize, has been a game-changer for the regional security and for the entire Euro-Atlantic area. As a neighbor of Ukraine, we are deeply worried about the secu14

rity developments taking place in and around Ukraine and the deteriorating security situation in the Black Sea region. In response to this, and taking into account the overall security context, we have intensified efforts to modernize and better equip our military forces and to strengthen national resistance against all types of threats, both conventional and asymmetrical ones, such as hybrid and cyber-attacks or propaganda. At the same time, we have assumed an active role in shaping up and implementing NATO’s response to these developments. Following the events of 2014, the Alliance initiated a complex process of adaptation centered on its founding principle of collective defense. Romania has been fully involved in all processes related to enhancing the Allied deterrence and defense posture, by contributing to the efforts of implementing the allied forward presence on the Eastern flank. We host NATO structures and forces on our national territory while also contributing to the allied battle group deployed in Poland. Allied ships have also increased their presence in the Black Sea. In parallel, the Alliance has decided to increase its support for its Eastern partners – Ukraine, Georgia and the Republic of Moldova. Romania participates actively in projects developed by the Alliance to the benefit of these countries and we see potential for launching new initiatives aimed at strengthening their security and defense capacity and increase their resistance.

How have the events in Ukraine since the start of the 2013-14 Revolution of Dignity affected public perceptions of Ukraine among Romanian audiences and Ukrainian policymakers?

The Romanian people, who experienced a bloody revolution of their own in 1989, have shown great empathy for the Ukrainian people both during the Revolution of Dignity and afterwards. Our nations are very similar given our shared desire for freedom, and for democratic and European values.

What do you see as Ukraine’s greatest reform achievements since 2014 and where do you see the biggest challenges ahead?

As recent analysis reveals, some of the best reform results have been recorded so far in areas such as competition, barriers to trade, decentralization, energy, sanitary and phytosanitary standards, statistics and industrial standards. Certain steps were also taken in the sectors of agriculture, transport and customs.

The reforms undertaken in Ukraine during the

past few years have had very practical results including visa liberalization for Ukrainian citizens travelling to the EU and implementation of the DCFTA/Association Agreement. The entire population of Ukraine can benefit from these processes. One of the biggest challenges remains the fight against corruption, where very good developments have been registered. However, Ukrainians have high expectations and expect greater concrete results.

With visa liberalization now a reality for Ukrainian citizens, many will be considering possible tourism options in Romania. Which destinations would you recommend?

We are certain that visa liberalization for Ukrainian citizens will have a positive impact on tourism and on the number of Ukrainians wishing to visit our country. I would like to emphasize that Romania has a very special tourism potential from a geographical point of view. It is suitable for visits in all seasons. Whenever I speak with people who have travelled in Romania, they have only positive impressions of their time in the country and are generally eager to return for further visits.

I believe there are a number of tourist destinations and routes that are definitely worth a visit. Regarding tourism in the Carpathian Mountains, travelers should consider visiting the resorts of Sinaia and Predeal, the region arounding the town of Brasov, Bran castle, and the painted monasteries in the northern region of Moldavia. For those interested in a vacation at the seaside, we recommend the resorts of Mamaia and Neptun, as well as the port city of Constanta, which has been familiar to Ukrainian tourists since the times of the USSR. For city travelers, the Romanian cities of Bucharest, Cluj-Napoca, Sibiu, Iasi, Sighisoara and Suceava all have much to offer in terms of cultural life and tourism. I would also mention the city of Timisoara, which will be the European Cultural Capital in 2021. This will give tourists the opportunity to see various shows, exhibitions and all types of cultural events aimed at marking this special historic honor for the city.

An important link between the Romanian and Ukrainian peoples is faith, with both countries being majority Orthodox. In Romania, there are seven tourist sights included in the UNESCO world heritage list: the monasteries in Moldavia, the Danube Delta, the Horezu Monastery, the villages with fortified churches in Transylvania, the wooden churches in the Maramures, the six Dacian fortresses in the Orastie Mountains, and the historical center in Sighisoara. All are worth a visit. www.bunews.com.ua

Ulf Schneider Founder and Managing Partner

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romania in ukraine

Romanian wood processing plant plans EUR 10 million western Ukraine expansion

Wood Panel Plus attracted by the timber wealth and human resources of Ivano-Frankivsk Oblast

dustry, the company was able to sign a number of contracts with numerous foreign companies in a short space of time and successfully met all of its initial targets.

About the interviewee: Volodymyr Kushnir is technical director of Wood Panel Plus Ukraine’s European Union member state neighbors have a key role to play in facilitating the country’s greater integration into EU markets, with each individual investment from across the border helping to build bridges and introduce EU standard business practices to the Ukrainian market.

Wood Panel Plus is a Romanian venture established in 2017 in the IvanoFrankivsk Oblast town of Kolomyia, which lies a relatively short distance from the Ukrainian border with Romania. Founded and financed by Romanians, the Wood Panel Plus plant in western Ukraine aims to develop a complete no-waste cycle of wood processing. The plant already employs over 100 people, with the production of furniture and other finished products using modern European technologies and environmentally friendly wood identified as the company’s top priority. Business Ukraine magazine spoke to Wood Panel Plus technical manager Volodymyr Kushnir about ambitious expansion plans for the coming five years that envisage EUR 10 million in investments and the creation of up to 1000 new work places.

Why did Wood Panel Plus choose to locate its production specifically in Ivano-Frankivsk Oblast?

The decision to establish a center of operations in the Ivano-Frankivsk region was not accidental. The area offers access to a range of unique natural resources including beech, pine, oak and birch trees along with other advantageous ecological factors. Meanwhile, the infrastructure and human potential on offer in the region are also very attractive.

Where are the primary markets for your products and who do you see as your core clientele?

We are primarily focused on the European market along with Asian markets with an emphasis on China and Japan. Thanks to the well-established reputation of our investors within the international wood processing in16

You have been active in Ukraine for less than one year but already have plans to invest EUR 10 million over the coming five years. What will this expansion mean for the company’s operations in western Ukraine and for the local economy in Kolomyia?

The economic integration of Ukraine into European Union markets is a mutually beneficial process for all participants. Promoting the process of implementing European business standards in Ukraine is to a certain extent the mission of our company. We are confident that our efforts will not be in vain and will prove useful for both our investors and for Ukrainian society. The investment plan we have developed includes the creation of up to 1000 jobs.

It also envisages the introduction of new state-of-the-art production technologies and extensive staff training. This should have a significant positive impact on the local economy in Kolomyia.

You mention that your investment plans envisage the creation of up to 1000 new work places in the coming five years. This comes at a time when there is much discussion within Ukrainian society over the challenges posed by the large numbers of Ukrainians currently working abroad. Since 2014, millions of Ukrainians have left the country in search of higher salaries and better job prospects, with the drain particularly significant in western Ukrainian regions such as Ivano-Frankivsk Oblast that are geographically closest to the European Union. Do you expect to encounter any recruitment difficulties due to this outflow of Ukrainians leaving the country for employment in the EU? Yes, we do anticipate challenges in the recruitment of new staff as we embark on our expansion plans. The migration processes currently underway are undoubtedly making themselves felt throughout the broader Ukrainian economy and will continue to do so for the coming years. For Wood Panel Plus, the issues this raises are primarily related to the recruitment of employees with the appropriate technical skills and qualifications. In order to address this issue, we plan to establish close cooperation with specialized Ukrainian colleges and universities with a view to developing targeted training. By financing education and providing Ukrainian undergraduates with the opportunity to study at the Wood Panel Plus production base, we will be able to prepare a motivated and suitably skilled pool of future personnel for the company.

What steps does Wood Panel Plus intend to take in order to support the sustainability of the timber industry in Ukraine?

The Wood Panel Plus project is focused on the manufacture of finished products for the furniture industry and associated woodworking. This type of production involves extensive cooperation with many other forestry enterprises. We anticipate that this cooperation will definitely contribute to the overall economic growth of the region while also supporting the development of the timber industry in particular in Ivano-Frankivsk Oblast.

The Romanian who

helped build Ukraine Petro Mohyla played a crucial role in the development of Ukrainian national identity

Petro Mohyla’s consecration as Metropolitan of Kyiv, Halych and All Rus took place in May 1633 at Lviv’s Assumption Church, also known historically as the “Wallachian” or “Romanian” Church Petro Mohyla was an influential Romanian Orthodox theologian who became Metropolitan of Kyiv, Halych and All Rus in the mid-seventeenth century and played an important role in the development of the Ukrainian Orthodox Church, the Ukrainian language, and Ukrainian national identity on the eve of the great Cossack wars of liberation. His legacy lives on today in the National University of Kyiv-Mohyla Academy that bears his name.

Mohyla was born into an aristocratic family in 1596. He was the son of Simion Movila, who was briefly the ruler of Moldavia at the turn of the seventeenth century. Mohyla spent much of his childhood and formative years living in today’s western Ukraine before arriving in Kyiv and taking up resident at the Kyiv Pechersk Lavra Monastery, where he became involved in the struggle for the spiritual independence of Ukraine. At the time, much of Ukraine fell within the Polish-Lithuanian Commonwealth and Ukrainian Orthodoxy faced huge challenges from Catholic Poland.

He was named archimandrite of the Kyiv Pechersk Lavra Monastery and was subsequently elected as Metropolitan of Kyiv, Halych and All Rus in 1633. Following his rise to the head of the Ukrainian Orthodox Church, Mohyla was able to secure significant religious concessions from Poland. The rulers in Warsaw recognized the Orthodox Church as equal in rights to the Ukrainian Greek Catholic Church.

This was just part of his remarkable achievements as the head of the Ukrainian Orthodox Church in the first half of the seventeenth century. His efforts managed to significantly raise the prestige of Eastern Orthodoxy and favorably influence religious developments in Ukraine’s Ukraine’s Orthodox neighbors (including Romanian regions), lending his reform efforts a European dimension. He was against the country moving closer to the Moscow tsars and favored the Latin form of Orthodoxy that was closer to Catholic Poland.

Mohyla is perhaps most widely remembered today as an education innovator. Beginning

with the Lavra printing presses, he played a leading role in the development of Ukrainian publishing and was one of the first to publish books in the Ukrainian language. Perhaps most significantly, he founded an Orthodox school in Kyiv organized along the lines of the instruction norms developed by the Jesuit order. Students studied a wide range of subjects including Aristotelian philosophy, Ukrainian, Polish, Latin and Greek. In addition to a diverse curriculum, students also performed various liturgical celebrations and Christian shows. This school then merged with the Kyiv Brotherhood School to form the Mohyla Collegium, which later came to be known as the Kyiv Mohyla Academy. The Academy was one of the first institutes of higher education in the Orthodox countries of Eastern Europe. It has since played an outsized role in Ukrainian history, educating many leading national figures including Hetman Ivan Mazepa and the Ukrainian philosopher Hryhori Skovoroda. Since the Soviet collapse in 1991, the National University of Kyiv-Mohyla Academy has returned to the center of Ukraine’s national narrative.

Myhola’s religious and educational reforms were so far-reaching that observers have given his efforts the title: “The Kyiv Mohyla Movement”. A key idea of this movement was the role of Kyiv as the “New Jerusalem” and the cradle of Eastern Slavic Christianity. Mohyla also paid attention to important Ukrainian landmarks, renovating Kyiv’s iconic Saint Sophia Cathedral in the Baroque style to expand the ancient house of worship first established by Kyiv Rus ruler Yaroslav the Wise in the early eleventh century. The Mohyla Movement left a big impression on the region and is believed to have influenced the European innovations of Russian Tsar Peter the Great, as several of Peter’s leading eighteenth century reformers were educated at the Mohyla Academy in Kyiv.

About the author: Razvan Theodorescu is a member of the Romanian Academy and the former Romanian Minister of Culture and Religious Affairs (2000-2004) 18

www.bunews.com.ua

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romania in ukraine

Romanian Orthodox theologian and reformer Petro Mohyla appeared prominently on a 2015 Ukrainian stamp to mark the 400th anniversary of the National University of Kyiv-Mohyla Academy

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Carpathian cooperation can help Ukraine attract Romanian tourists

Poor connections and low profile mean relatively few Romanians visit Ukraine despite proximity

How many tourists visit Ukraine each year?

The only honest answer to that question is that nobody really knows. The available state statistics suggest growing numbers of international visitors in recent years, with 14.8 million people crossing into Ukraine in 2017 compared to 13.6 in 2016. However, these figures include all foreign nationals entering the country. Moldovan citizens currently account for the highest number of visitors, followed by Belarusians and Russians, which strongly suggests that this cross-border traffic does not represent tourism in any traditional sense. Instead, 20

the key reasons for Ukraine’s post-Soviet neighbors to pay a visit tend to include work, shopping or family visits.

Considerable Untapped Neighborhood Potential

One country from Ukraine’s neighborhood that does not currently feature on the list of the country’s top visitors is Romania. Despite sharing a border with four Ukrainian regions (Uzhgorod, Ivano-Frankivsk, Chernivtsi and Odesa administrative oblasts), relatively few Romanians visit Ukraine for tourism purposes. The official stats for

2017 show just over three-quarters of a million Romanian arrivals, but this total does not reflect the reality of the situation. “The real figure is much lower and is possibly less than 100,000 Romanian tourists,” says Ukrainian Deputy Minister for Economic Development and Trade Mikhail Titarchuk, who is responsible for the country’s tourism trade. He believes that the Ukrainian tourism industry must look to the country’s immediate neighbors as its primary nondomestic market, and is hopeful that closer bilateral cooperation and improved connections can help attract Romanian tourists to

Wanted: Better Border Crossings

The situation is already showing some signs of improvement. Titarchuk points to the recent progress made upgrading the Odesa Oblast highway linking the Black Sea port city with the Romanian border region. He says this is one example of how the two countries are gradually coming closer together. “The Odesa-Reni road is now 90% complete. It used to take seven hours to reach Izmail but the journey can now be done in two to three hours.”

However, frustrations remain over the failure to upgrade outdated and inconvenient border crossing facilities along the Romanian-Ukrainian border. The EU had allocated significant funding for a project designed to modernize Ukrainian border crossings with Romania, Hungary, Slovakia and Poland, but the almost EUR 30 million initiative was cancelled in early 2018 due to dissatisfaction with Ukraine’s failure to meet its commitments.

Carpathian Cooperation

Titarchuk is hopeful that bilateral cooperation with his Romanian colleagues will help to energize the relationship and overcome the kind of institutional obstacles that derailed the planned EU-funded border crossing improvements. A Romania-Ukraine www.bunews.com.ua

Economic Commission met in July 2017 for what was the first such meeting in a decade.

This led to the establishment of a working group on tourism that convened in Kyiv in December 2017 for its inaugural meeting.

The goals of the working group, says Titarchuk, include creating greater tourism flows in both directions and exploring the possibilities of putting together mutual tour packages.

One of the focuses of the working group is the tourism potential of the Carpathian Mountains, which serve as one of the most attractive tourism assets for both Ukraine and Romania. Ukraine ratified the Carpathian Convention in May 2017, which promotes the idea of sustainable tourism and provides a framework for standardized tourism products across the numerous international borders of the Carpathian region. “The Carpathian Convention can serve as a platform for the development of Romanian tourism in Ukraine,” says Titarchuk. “We have not previously done a good job of promoting Ukraine among potential Romanian visitors, but the Carpathian Mountains are well-known and can help us to make the breakthrough.”

The Carpathian Mountains are particularly appealing to the tourism industry because they offer attractions throughout the year and are not limited to one particular season. “We can promote skiing throughout the winter months and outdoor activities for the rest of the year including everything from cycling and rafting to hiking and traditional camping holidays. Then there is the entire segment of health tourism. The spa resorts of the Carpathian region are already popular throughout post-Soviet markets.”

consider. The challenge will be getting other Black Sea nations to join the initiative and present cruise companies with sufficiently diverse itineraries. The Russian occupation of Crimea creates considerable complications in this direction, but cruises often pass by geopolitical hotspots and contested regions in other parts of the world, so the Black Sea remains an interesting avenue to explore as Romanian and Ukrainian officials look for ways to boost tourism cooperation.

romania in ukraine

Ukraine in far greater numbers.

Thirty-something Titarchuk represents the new generation of senior Ukrainian government officials, a role he underlines by arriving to chat with Business Ukraine magazine on a hipster-friendly electric scooter. However, there is nothing faddish or frivolous about his pragmatic vision for the Ukrainian tourism industry. Tourism is one of Titarchuk’s portfolios at the Ministry of Economic Development and Trade, and it is a sector commonly regarded as brimming with potential. Ukraine’s tourism industry remains in its infancy, with Lviv, Odesa and Kyiv the only Ukrainian cities able to boast of anything approaching an international profile. Part of the problem is Ukraine’s lack of accessibility. “Logistics is always going to be a key factor for tourists,” says Titarchuk.

“When we talk about boosting the numbers of Romanian tourists, we clearly need more flights between Bucharest and Ukraine, better border crossings, more convenient rail connections, and ferry crossings.”

Logical Partners

Ultimately, Titarchuk recognizes that much will depend on the practicalities of improving connections between the two countries. As we come towards the end of our conversation, he digs out his smartphone and searches for information on train services from Kyiv to Bucharest. “You see? The train journey currently takes twenty-seven hours,” he notes. This will have to change before Ukraine can expect to attract significant numbers of Romanian tourists, but the objective is a worthy one. Neighboring Romania is an obvious source of tourists for Ukraine. As Kyiv officials explore how to capitalize on the country’s untapped tourism potential, the immediate neighborhood would be the most logical place to start.

Black Sea Cruises

While the Carpathian Mountains can act as a gateway to greater Romanian tourism in Ukraine, Titarchuk sees it as only one element in a far wider process. Given the long history of Romanian involvement in southwestern Ukraine and in the Bessarabia region in particular, there is potential for the development of heritage tourism that could include excursions to places of historic importance and tours outlining particular aspects of Romanian history.

The Deputy Minister also identifies considerable scope for cooperation in the Black Sea cruise market. Both Romania and Ukraine can offer attractive Black Sea destinations for international cruise liners to

About the interviewee: Mikhail Titarchuk is Ukraine’s Deputy Minister for Economic Development and Trade

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AmChams visit Washington, D.C.

About the author: Andy Hunder, President of the American Chamber of Commerce in Ukraine, Member of the National Reforms Council under the President of Ukraine, and Treasurer of AmChams in Europe Executive Committee.

“Well, that’s a complicated one,” Madeline Albright responded, when I introduced myself as coming from Ukraine. I managed to exchange a few words on geopolitics with the remarkable American politician and diplomat, former US Secretary of State, at the presentation of her new book last month in Chicago. I was in the US for the annual board meeting and conference of AmChams in Europe, the umbrella organization for 44 American Chambers of Commerce from 42 countries throughout Europe and Eurasia.

AmChams in Europe, where I serve as a Treasurer, represents the interests of more than 17,000 American and European companies employing 20 million workers – accounting for more than $ 1.1 trillion in investment on both sides of the Atlantic. As part of the once yearly visit to the US, the heads of the AmChams have a wide array of meetings set up with business and government in Washington D.C. and, this year, also in Chicago, a sister city of Kyiv.

Each specific AmCham also has an opportunity to arrange an event and meet with their country’s key stakeholders in the US capital. Our particular roundtable discussion was branded: “Ukraine’s

Business Outlook: A Diamond in the Rough” most kindly hosted by Baker & McKenzie, a top law firm, at their amazing DC offices overlooking the White House. It is, probably, the best view of the official residence and workplace of the President of the United States in all of Washington D.C. In my presentation I focused on the tangible encouraging examples of US companies operating in Ukraine. The list was rather extensive, to the surprise of many in the audience, three dozen corporate decision makers and analysts. A report

by Robert Homans, a DC based Ukraine-watcher, commenting on the event, summarized: “The more US owned or affiliated companies will be present in Ukraine – the more irreversible changes in anti-corruption practices we’ll see. In this regard, both AmCham and the US-Ukraine Business Council can be proud of their efforts in fostering US companies operating in Ukraine.”

En route to this roundtable event, I stopped by a local CVS, an American convenience store, and purchased an Oreo chocolate bar. Oreo, as you (and especially children) are probably aware, is a favorite US brand, “the world’s favorite cookie.” I pulled out the chocolate during my presentation and amazed many by exhibiting that the candy bar had MADE IN UKRAINE printed on its wrapper. Mondelez, the $25 billion American multinational confectionery food company produces and distributes Oreos biscuits from Ukraine across Western Europe. Next time you’re in the US pick up an Oreo Milka bar made at the Mondelez factory in Ukraine’s Sumy region. I recently visited the plant, located 45km from the Russian border, and was inspired by the Mondelez Ukraine team.

In light of discouraging and sometimes depressing news coming out of Ukraine, there is still much positive to tell about the multinational companies working on the ground successfully. Not all wish to be overly visible, with some preferring to continue to operate modestly. Still, with the excellent progress that has been made over the past 12 months in regards to refunds of Value Added Tax (VAT) to

exporters, this has made a significant improvement for international businesses operating out of Ukraine. This was one of many encouraging messages that we delivered during meetings.

Trade between US and Ukraine is seeing positive instances. A worrying issue, however, in US-Ukraine trade relations remains the state of Intellectual Property protection and enforcement. Intellectual property protection is critical to fostering innovation. It covers everything from original plays and novels to inventions and company identification marks. The purpose of intellectual property laws is to encourage new technologies, artistic expressions and inventions while promoting economic growth. Ukraine remains a “Priority Watchlist country” judged by the United States Trade Representative (USTR) as having “serious intellectual property rights deficiencies” that require increased USTR attention. The three key issues remain (1) the unfair, nontransparent administration of the system for Collective Management Organizations (CMOs), which are responsible for collecting and distributing royalties to U.S. and other right holders; (2) widespread use of unlicensed software by Ukrainian government agencies; and (3) failure to implement an effective means to combat the widespread online infringement of copyright in Ukraine.

We look forward to the establishment of the National IP Office as a new independent body that can become a strong voice for Intellectual Property in Ukraine.

Hearing plenty of good news from international companies in Ukraine, there is still much to do in regards to enhancing Rule of Law. Most importantly - launching the Anti-Corruption Court. The business community sees this as an indispensable next step, continuing on Ukraine’s reform path.

21

Expert view Lana Sinichkina Co-Chair of the Chamber Food & Beverage Committee Partner Arzinger Law Office

Sergey Movchan Co-Chair of the Chamber Food & Beverage Committee Director on Government Relations and Security DANONE LLC

ANTIMONOPOLY ISSUES – PROGRESS IN REFORMS AND KEY CHALLENGES

UPCOMING NOVELTIES IN LABELLING: FOOD INFORMATION TO CONSUMERS

Ukrainian antimonopoly reform is being actively pursued in different directions and in this regard certain issues should be mentioned.

Looking back at the history, food freshness has always been the most important criteria in selecting a product by a consumer. As the years go by it became possible to transport products for longer distances which caused appearance of the first labelling requirements related to product’s name and weight, information regarding the producer. The introduction of mandatory labelling requirements was aimed at combating counterfeiting and eventually they became more complex.

Firstly, Draft Law #2431 that was initiated and supported by the American Chamber of Commerce in Ukraine way back in 2015 and is aimed at: • Transforming of the existing Anti-Monopoly Committee of Ukraine (AMCU) guidelines on fine calculation from recommended to binding legal act; • Empowerment of the national court with the competence to review the amounts of the fines imposed by AMCU. Unfortunately, the Draft Law still waits for the second hearing in the Parliament, and the current guidelines on fines calculation is used at the discretion of the AMCU and is rejected in courts.

Secondly, on December 5, 2017 the AMCU Standard Requirements for Vertical Concerted Actions of business entities came into effect. The document provided for navigation to safe harbor particular vertical restraints, has become a clear guide for business and the next step in harmonizing national competition law with European approaches and regulations.

Thirdly, talking about the state aid – in August 2017 the law regulating the procedure for granting and admissibility of state aid aimed at supporting equal conditions in competition in product markets came into effect. State aid is a new area of growth and the AMCU is in charge of control over state aid that may distort competition in Ukraine.

And last but not least – merger control. Significant amendments entered into force in December 2017, which were aimed at prohibiting transactions involving persons and companies included in the Ukrainian sanctions list introduced by the Law of Ukraine “On Sanctions”. The sanctions issue should from now on be evaluated much more carefully along with the usual preliminary analysis of control relations within merging groups. On March 16, 2018, the AMCU adopted its Non-horizontal Mergers Guidelines on the basis of the respective European Commission Guidelines on the assessment of non-horizontal mergers.

By the 80’s of the 20th century European food legislation was mainly focused on economic pillar. Due the demands of the market and prioritization of food safety issues, labelling requirements gradually were shaped to the present ones. This allowed consumers to make informed choices about food products as well as ensure free movement of legally produced products.

Following the European course taken by Ukraine, there are certain obligations to be fulfilled, inter alia, approximation of national food safety legislation to the European one. Within the last 2 years the Chamber Food & Beverage Committee jointly with the EU Project “Improvement of Food Safety Control System in Ukraine” have been engaged into the process of development of the Draft Law “On Information for Consumers regarding Food Products” which is in line with the respective Regulation (EU) №1169/2011. The Draft Law is to ensure consumers with better access to clear, comprehensive and reliable food information, which includes easier to read approach, information on allergens, engineered nanomaterials, etc. The Draft Law was included to the Roadmap of legislative support for implementation of the Association Agreement with the EU recently presented by the Government of Ukraine.

As expected by the business community, adoption of the Draft Law will lead to significant industry-wide improvements, strengthen consumers’ protection in Ukraine, and due to requirements to food information unification will lead to reduction of burden on business.

At the same time, establishment of a sufficient transition period along with development of the respective manuals and guidelines for business operators should be provided.

Expert view EAT WELL & RECYCLE CLEAN: ENHANCING UKRAINE’S FOOD & BEVERAGE INDUSTRY In the words of Voltaire – “Nothing would be more tiresome than eating and drinking if God had not made them a pleasure as well as a necessity.” According to statistics, an average adult person eats about 1 ton of food per year. Only imagine, around 30 million of tons of food products were consumed by working-age Ukrainians last year. Food and beverage production represents a huge industry in Ukraine with a strong rate of growth. In 2016, total Ukraine’s processed food production was 15 billion USD, accounted 21.5 percent of the total industrial productivity. Nowadays, altogether, there are around 2000 food processing companies across Ukraine. Global food & beverage giants and Chamber Member Companies successfully operating in Ukraine include Carlsberg, Coca-Cola, Danone, Lactalis, McDonald’s, Metro Cash & Carry, PepsiCo, Sun InBev, Tetra Pak and many others. That’s why ensuring the sustainable development of market-based food and beverage industry as a reliable and efficient supplier of quality products both for domestic and international consumers is a priority for the Chamber.

Streamlining food safety

As all of us, without exceptions, are consumers it’s natural that we want to have an assurance that food products we’re all buying are safe and of high quality. As consumers, we want to understand that food safety is as great a concern for suppliers as it is for us.

It means that food safety should be a competitive issue, as companies need to be recognized when they meet certain food safety standards. Today food safety assurance systems are generally becoming stricter in response to current problems. In Ukraine, it’s essential to pass legislation to streamline food safety and consumer protection regulation. In particular, the implementation of regulations based on the recently adopted Law #2042-VIII “On State Control over Compliance with Legislation on Food Products, Feeds, Byproducts of Animal Origin, Animals’ Health and Welfare” and adoption of Draft Law “On Information for Consumers regarding Food Products”. These actions will help to meet the needs of both consumers and producers and make the system of Ukraine’s food safety compliant with international standards.

waste management system in line with the EU standards. By supporting the National Waste Management Strategy, a background for a new regulatory framework in the sphere of waste management in Ukraine, the Chamber highlights the necessity to create an eco-friendly Ukraine, based on positive experience and best practices of other countries. The Chamber has been and is advocating for the “green” way to deal with the waste management issue in Ukraine – introduction of the Extended Producer Responsibility (EPR) approach. It is quite simple, but effective: producers are given significant responsibility for the treatment or disposal of post-consumer products. As we know, encouraging unsorted waste burning, as well as nontransparent fiscal approach to resolve waste management issues only worsens the existing problems with the recycling of municipal and packaging waste and separate collection in Ukraine.

International trade facilitation

To remain competitive on the European market, Ukraine needs to bring national legislation and regulation in line with international standards. First steps to do are facilitation of regulation on veterinary control and simplification of customs procedures for food products thereby eliminating ambiguous technical, sanitary and phytosanitary barriers to trade. Business wants predictability in regulations, as any unpredictable changes in the regulatory sphere automatically reflect on business losses and possibility to deliver quality products to the customers. No less important – facilitation of procedures related to mutual approval of international certificates and proper enforcement of legislation by local authorities of the State Service of Food Safety and Consumer Protection. Business community is looking forward to establishment of the new regulation with regard to importing of food products of animal origin, which will fix existing problems and give a chance to propose more wide range assortment for Ukrainian customers.

Ukraine is moving its food safety laws and legislative basis for

The American Chamber of Commerce in Ukraine will continue working on important issues for the food and beverage industry to help companies remain competitive domestically and internationally by promoting food safety, regulation of consumer protection and deregulation, facilitating trade operations and bringing Ukraine’s waste management system in line with the EU standards.

Yana Pozniakova Chamber Food & Beverage Committee Assistant ypozniakova@chamber.ua

Yuliia Stelmakh Chamber Senior Policy Officer (Food & Beverage Issues) ystelmakh@chamber.ua

Think green, act green

B2G Dialogue MEETING WITH NATALIYA BOYKO, DEPUTY MINISTER OF ENERGY AND COAL INDUSTRY OF UKRAINE FOR EUROPEAN INTEGRATION, AND LEADERSHIP OF THE MINISTRY’S DIRECTORATES The meeting was devoted to discussion of plans of the Ministry of Energy and Coal Industry of Ukraine for implementation of the state policy and further energy reforms in energy sphere in 2018 as well as status of implementation of the Energy Strategy of Ukraine, organization of cooperation between Directorates and relevant Ministry’s Departments and Units.

MEETING WITH YAKIV SMOLII, GOVERNOR OF THE NATIONAL BANK OF UKRAINE Members of the American Chamber of Commerce in Ukraine were the first to meet with Yakiv Smolii, newly appointed Governor of the National Bank of Ukraine. Participants of the meeting discussed with NBU Governor the strategy of the National Bank of Ukraine, current macroeconomic situation, current state of banking system and vision of its further development, protection of creditors’ rights and increase in lending, foreign currency control liberalization and monetary policy.

ROUNDTABLE DISCUSSION REGARDING DRAFT LAW #8125 “ON CONCESSIONS” Member Companies of the American Chamber of Commerce in Ukraine discussed Draft Law #8125 “On Concessions”, recently passed in the first reading by the Parliament of Ukraine, with Yuliya Kovaliv, Head of the Office of the National Investment Council under the President of Ukraine (Council) and Nadiya Kaznacheyeva, Project Manager of the Council, Mykhailo Titarchuk, Deputy Minister of Economic Development and Trade of Ukraine, Raivis Veckagans, Acting Head of the State Enterprise “Ukrainian Sea Ports Authority”, and Taras Boichuk, Head of Spilno - Public-Private Partnership Management Office. Representatives of the business community presented their comments to the Draft Law and stressed on the importance of the partnership between the business and the state aimed at ensuring the effective management of state property objects.

B2G Dialogue MEETING OF THE WORKING GROUP ON ELECTRICITY ISSUES WITH VOLODYMYR IEVDOKYMOV, ADVISER TO VICE PRIME MINISTER OF UKRAINE, HEAD OF THE PROJECT OFFICE UNDER THE CMU COORDINATION CENTER ON INTRODUCTION OF NEW ELECTRICITY MARKET The meeting was devoted to discussion of current activities of the CMU Coordination Center and Project Office in the context of development of the secondary legislation for implementation of the Law “On Electricity Market”, possibility to elaborate and introduce amendments to the secondary legislation approved by the Energy Regulator as well as update on development and approval by the Energy Regulator of the latest secondary legislation for implementation of the Law “On Electricity Market”.

MEETING REGARDING ECOLOGICAL AND RADIOLOGICAL CONTROL IN THE SEA PORTS OF UKRAINE The American Chamber of Commerce in Ukraine gathered representatives of business community, Ministry of Ecology and Natural Resources of Ukraine, Ministry of Infrastructure of Ukraine, Ministry of Finance of Ukraine, State Ecological Inspection of Ukraine, Ukrainian Sea Ports Authority, and State Service of Ukraine for Food Safety and Consumer Protection for discussing a disputable issue on conducting environmental and radiological controls at sea ports of Ukraine.

“BELIEVE IN LVIV” REGIONAL OUTREACH TRIP Did you know that Lviv is a business tourism destination full of opportunities tailored to your business needs? To showcase this potential to Chamber Members as well as unveil it for the benefit of their businesses and corporate events, the Hospitality & Tourism

Working Group of the American Chamber of Commerce in Ukraine organized “Believe in Lviv” Regional Outreach Business Trip. The agenda of the business trip was filled with excursions to the best sites of Lviv, networking cocktails, and meeting with Andriy Sadovyi, Mayor of Lviv.

Meeting with Congresswoman Marcy Kaptur The American Chamber of Commerce in Ukraine was delighted to welcome Congresswoman Marcy Kaptur, who represents Ohio’s Ninth Congressional District and is currently serving her seventeenth term in the U.S. House of Representatives. Congresswoman Kaptur is co-founder and co-chair of the Congressional Ukraine Caucus and the longest-serving woman from Ohio State in the history. Being passionate about Ukraine and having a great desire to empower Ukrainian women farmers, Congresswoman Marcy Kaptur presented her project Seeds of Hope during the roundtable discussion on market needs for locally grown products with the Chamber business community. Seeds of Hope aimed at shining a light on Ukrainian women, par-

ticularly rural women who produce most of food domestically consumed. “I know the power of these women...they feed this country and I want them to have a chance to promote their products to international markets” – said Congresswoman.

During the joint reception with the U.S.-Ukraine Business Council, on behalf of Ukrainian business community, president of the American Chamber of Commerce in Ukraine Andy Hunder presented an award to Marcy Kaptur “For Continuous Commitment to Support Ukraine” and expressed gratitude for all the support she provided to Ukrainian economy and its people.

Business Lunch “Four Ways to Lead the Workforce of the Future” The American Chamber of Commerce in Ukraine jointly with U.S. Embassy in Ukraine and America House, with a support of WELDI*, held a business lunch with Rania Anderson, a leading global speaker and executive coach on the issues of women’s career advancement.

Along with this event, Ukrainian translation of Ms. Anderson’s book was published and warmly welcomed by the audience. It proved the importance of women’s leadership in modern businesses, especially in emerging economies like Ukraine. That was the reference point from which the speaker started to provide the participants with the mix of useful recommendations, facts and personal experience.

The speech and subsequent Q&A session have resulted in productive discussion and reflection on the women’s role in business today. “We need to be aware, to engage and value the achievements”.

These basic rules apply to both sexes and don’t require any investment but indeed can offer substantial benefits. *WELDI - Women’s Executives Leadership Development Initiative is a personal development & business-networking platform of the American Chamber of Commerce in Ukraine that brings together successful, goal-oriented, and modern women leaders.

Easter Family Day American Chamber of Commerce in Ukraine gathered its Members’ families together for a traditional Easter Family Day. All guests enjoyed sunny spring time outdoors with delicious food, refreshing drinks, games and, of course, favorite kids’ entertainment - Easter Egg Hunt. That was such a fun even for the smallest participants!

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legal

Government Relations emerges as new legal niche Ukrainians are learning to lobby legally as attention focuses on better business-government dialogue the Ukrainian context). In such circumstances, a GR specialist is often engaged both to defend specific interests and to offer the necessary amendments for the benefit of the entire industry. This is in everybody’s best interests. Updating existing legislation and promoting the economic wellbeing of growth-generating companies are two critically important issues for the development of any country’s economy.

Learning the art of lobbying

About the author: Andriy Dovbenko is the Managing Partner at EVRIS law firm Ukrainian law firms are increasingly introducing the practice of GR, or Government Relations, the process of seeking to influence public and government policy at all levels. Broadly speaking, the concepts underpinning GR are nothing new in Ukraine. Indeed, the lobbying of public officials is as old as government itself. However, such activities used to be very much out of public sight in Ukraine. This is now changing, with the current trend suggesting an industry-wide shift towards a more civilized, standardized and transparent approach.

Why GR is in fashion

GR and lobbying are not currently subject to any kind of specific regulation under existing Ukrainian legislation. At the same time, there is a wealth of available international experience available demonstrating that a more regulated and communicative relationship between business and the authorities can be mutually beneficial for the country as well as for individual private enterprises. In the US, for example, lobbyists and GR specialists have official status and their activities are subject to detailed regulation. These specialists promote business interests in state institutions and other agencies, while also sometimes representing third sector or public initiatives.

All large US law firms have a separate GR practice. The main goal of these practices is to build bridges between business and the state. At the same time, much of the work of the GR specialist also has an educational component. After all, it is often possible to mitigate some contradictions between business and the state by simple enlightenment.

An experienced lawyer understands the application of legislative norms in practice, while also knowing what the real powers of state regulators are. He can analyse a company’s activities and make optimisation recommendations in the legal field without significant losses. A lawyer specialising in GR needs to possess a comprehensive understanding of the work of state structures and have the ability to find a common language in a legal way.

GR services are particularly relevant when legislative norms go against the actual situation in the market while also contradicting common sense (it is worth acknowledging that this is often the case in 34

Lobbying is an important and prominent tool in the complex communications strategy of Government Relations. It is commonplace to hire lobbyists for specific tasks or to seek out the support of lobbyists when it is necessary to solve certain complex issues. The term itself dates from nineteenth century America, when representatives of business interests would typically wait in Washington DC hotel lobbies hoping for an opportunity to speak with government officials.

Naturally, representatives of the lobbying profession tend to tread a fine line between the development of business in general and promoting the quite specific interests of a certain company or group of companies. Nevertheless, a Western-style lobbyist sticks to persuasion and avoids anything that might appear as bribery. Bribery of an official is corruption, not lobbyism. A GR specialist’s task is to convince the government that his client is important and necessary for the country’s economy, and that the changes he advocates will positively affect not only a single business but will have a beneficial long-term economic impact.

Adhering to lawful methods when lobbying for one’s interests brings benefits to the business itself. After all, the task of Government Relations is not to solve specific problems of individual clients at any cost.

Instead, building a healthy relationship with the state is a necessary part of creating an effective ecosystem with a large number of participants. In this context, sometimes even competitor companies will unite for the sake of sectoral Government Relations.

GR gaining ground in Ukraine

Many of the ethical aspects governing GR are already subject to unofficial regulation in Ukraine, if not by law, then at least by a generally accepted code of conduct. For example, the Ukrainian Association of GR Professionals and Lobbyists has established an openly available ethical code. Among other things, this code states that for the lobbyist, “it is forbidden to act to the detriment of democratic state processes or to commit actions that show disrespect to the government of the country.” In the legal business, the same rules apply. If a lawyer tries to persuade you to act in the GR sphere through bribery or corruption, this should be an occasion to reflect on whether you have chosen the right specialist.

Not only is it possible to establish mutually beneficial relations between the state and business, it is necessary. This will provide the business community with transparent conditions while creating additional opportunities for growth. As this sector of the legal services industry develops in Ukraine, the country as a whole also stands to benefit from the dynamically developing markets and companies that it produces.

business

Corporate Social Responsibility taking root in Ukraine More companies now look to give back to communities – but positive examples remain crucial

Credit Agricole Bank employees pictured during “Trees for Car Loans” tree-planting activities in Kyiv in 2017 The principle of Corporate Social Responsibility (CSR), or of businesses giving back to the surrounding society, is no longer a novel concept in today’s Ukraine.

However, while growing numbers of Ukraine-based companies are developing their own CSR strategies, information on the subject remains limited. Viktoriia Torianyk, Head of Communications at Credit Agricole who manages the bank’s CSR activities in Ukraine, identifies a clear trend towards socially oriented business in the country. “Fewer companies now think only about themselves and more are striving to bring value to society by increasing their social activity. We are seeing this in areas like eco-projects and care for the environment, philanthropy, charity and volunteering, and employee care initiatives. By supporting different CSR initiatives and giving back to communities, companies are increasingly seeking to balance their commercial and social activities.”

Nevertheless, Ms. Torianyk says the CSR sector’s evolution in Ukraine is not fast enough. “Despite the fact that rising numbers of companies are engaging in CSR, there is clearly still a general lack of awareness about what is happening in the sector,” she explains. “A recent conference on the subject in Kyiv spoke volumes about growing Ukrainian business interest in CSR activities. At the same time, members of the conference jury expressed genuine surprise to learn of so many impressive CSR initiatives in Ukraine”.

Ms. Torianyk sees sharing best practices and serving as an example as ways of facilitating further CSR development in Ukraine. “Communicating publicly about CSR efforts is not primarily about providing your company with positive PR. The main goal of greater CSR communication needs to be creating a consensus within the Ukrainian business community that this is an important issue. It is all about serving as an inspiration for others and encouraging them to initiative their own CSR activities. Every company with a CSR program can become part of the snowball effect within Ukrainian society.”

Viktoriia sees a number of parallel factors driving the current evolution of CSR culture in Ukraine. She believes

the spirit of volunteerism that has emerged in Ukraine since 2014 is very much part of this process, while the growing presence of global companies on the Ukrainian market has also led to the introduction of internationally established corporate practices such as CSR programs. This has certainly proven the case at Credit Agricole in Ukraine, where a global commitment to CSR has meshed well with an existing local trend favoring company teambuilding activities. In line with the strong CSR commitments of France-based Credit Agricole Group, the bank’s current CSR program in Ukraine was launched in 2016. The program currently consists of around 15 initiatives per year.

The Credit Agricole CSR strategy in Ukraine focuses on four areas: care for employees, charity and volunteering, care for the environment, and sponsorship of business and culture events. Of all the CSR activities undertaken

by Credit Agricole in Ukraine, the most eye-catching is probably the “Trees for Car Loans” program, which reflects the leading position of the bank in the Ukrainian car loans market, while also dovetailing well with the current enthusiasm for environmentally informed initiatives. “We calculated that in 2016, we provided loans for the equivalent of 13 cars per day, while in 2017 this figure rose to over 20 cars per day,” comments Viktoriia. “As well as contributing to the increasing number of cars on the roads in Ukraine, we wanted to make a contribution to protecting the environment.” The result was “Trees for Car Loans”, which sees bank employees volunteer to plant trees in Kyiv. The first stage of the project took place in 2016 and saw 50 fir trees planted in Shevchenko Park close to the bank’s downtown Kyiv central offices. The same initiative took place in 2017. It has since grown considerably in scale, with the most recent massing planting involving 12,000 baby firs in Kyiv’s Holosiyivskiy Park in April 2018.

In 2018, the Credit Agricole budget for charity activities in Ukraine doubled for the second year in a row. This financial backing is essential in order to create an effective CSR program. Based on her own experience, Ms. Torianyk says a successful CSR strategy also depends on support from senior management and employee engagement along with CSR promotion and leadership within the company. She expects the current CSR growth trend in Ukraine to continue as more companies recognize the importance of a socially conscious approach.

“Though we remain a society of consumers,” she reflects, “we are increasingly asking ourselves what value we can give back to society.”

About the interviewee: Viktoriia Torianyk is head of PR and Corporate Communications at Credit Agricole Bank in Ukraine

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reforms

Local optimism vs national pessimism Ukrainian politicians must make the case that decentralization is more than a local success story

In today’s Ukraine, pessimism at the national level is a well-established phenomenon and one that often obscures the very real progress that is taking place at the local level. In fact, since 2015 the local picture has often been strikingly optimistic across Ukraine, at least according to polling data compiled by the International Republican Institute (IRI). For the past four years, residents of Ukraine’s largest cities have consistently noted an improving municipal environment while expressing optimism in their local governments and voicing a more positive outlook for the future economic prospects of the locality.

Many see this relatively positive but markedly localized perspective as the fruit of Ukraine’s decentralization reforms. Far-reaching financial and administrative decentralization legislation passed by the Ukrainian parliament in 2014 and 2015 is now allowing mayors and city councils across the country to work with greater shares of tax revenue than ever before. This is providing local authorities with the ability to spend on projects previously managed by appointed oblastlevel administrators or handled even higher up the national administrative food chain. This decentralization reform process is in many ways a remarkable achievement worthy of far greater international attention, especially as it is taking place despite the ongoing conflict in eastern Ukraine, the continued occupation of Crimea, and an economy still trying to find its footing following the shocks of 2014-15.

The International Republican Institute is in a good position to assess the impact of decentralization reforms on Ukrainian attitudes towards local government. With the recent release of its fourth annual Ukraine nationwide municipal survey, the IRI now has four years of tracking data indicating how these reforms are affecting Ukrainian municipalities. The annual survey, which has been carried out every year since 2015, sought the opinions of more than 19,000 Ukrainians from regional oblast centers across Ukraine. The survey results for 2018 include responses from Mariupol and Severodonetsk as proxies for the traditional regional centers in the Donetsk and Luhansk oblasts.

The results of the 2018 survey of-

fer a window into the realities on the ground in regional centers that international coverage of Ukraine often overlooks. Understanding developments at the sub-national level in Ukraine is critical to understanding where Ukraine is heading at the national level. This is particularly important given the dominance in national and international media coverage of large set-piece reforms such as the anti-corruption court, future IMF tranches and the persistently pessimistic national political outlook.

In addition to highlighting local-level successes, the latest survey confirms long-term trends indicating that many of the reforms passed by parliament since 2014 are having a positive impact on communities throughout the country. Roads and kindergartens have been built and public spaces refurbished, while administrative services have been streamlined and made more efficient and transparent. All this is because of national government initiatives, but with the results taking root far from Kyiv, this progress tends to go largely unrecognized beyond the local communities themselves.

Several interesting new findings from across Ukraine’s cities include signs of cautious optimism that the economic situation may improve in the coming year. While high inflation and energy tariffs negatively impacted perceptions of the national trajectory, at the local level residents are clearly seeing the local economies of their respective cities improve. Additionally, in 17 out of 24 surveyed cities, residents noted a significant

improvement in the quality of roads from 2016 to 2017, while only three cities felt that road quality had actually worsened.

These findings suggest that as cities have gained the ability to allocate more tax money for municipal projects, road repair works have improved markedly. As noted in IRI’s 2017 survey, travel between Ukrainian cities (with the exception of Kyiv) is still remarkably infrequent. This is at least in part due to the poor quality of roads and related infrastructure. This year’s improvements at the municipal level, together with last summer’s intensive road repair works on several major inter-city highways, bode well for increased interconnectivity across Ukraine.

Despite these successes, which are attributable to both local and national authorities, national leaders are not receiving any of the credit. Instead, local mayors and city councils have capitalized on the public credit they have received to proactively effect public change.

With national elections scheduled for 2019, it is imperative that political parties at all levels, but particularly on the national stage, communicate their successes to the Ukrainian people and make the connection clear between national decentralization reforms and improving circumstances at the local level. In doing so, political leaders at all levels should make it clear that decentralization is not just a victory for local government. Decentralization is both a product of a national initiative and a platform capable of building better outcomes for the entire country.

About the author: Michael Druckman is Resident Program Director for Ukraine at the International Republican Institute

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reforms

Can healthcare reform cure corruption?

Ulana Suprun’s ambitious healthcare reform agenda is a test case for Ukraine’s ability to change viet times – if it ever really worked at all. In contrast, the current reform process aims to provide state-funded medical insurance for all Ukrainian citizens. Only around 5% of Ukrainians previously had any form of medical insurance. Now everyone is insured.

Change Already Underway

About the author: Michael Getto is a public affairs consultant currently based in Southern California who previously lived and worked in Ukraine and Eurasia for 16 years.

In April 2018, another key element of Ukraine’s ambitious healthcare reform agenda came into effect. The reform process continues to gain ground despite vocal opposition from influential elements within the country’s medical and political establishments. In light of this entrenched opposition, many now regard healthcare reform as a test case for Ukraine’s ability to implement meaningful postMaidan change. What will the recent introduction of patient-family doctor contracts mean for individual Ukrainians, and how does this latest reform fit into the broader plan to transform the Ukrainian healthcare system?

Why Ukraine Needs Healthcare Reform

Ukraine inherited a broken Soviet healthcare system when it became independent in 1991.

This antiquated system has remained mired in corruption for the past 26 years, resulting in Ukrainian life expectancy rates that are 11 years shorter than the European average. Though the Ukrainian Constitution technically promises “free medical assistance” for all, patients generally have to pay bribes for treatment, while the meager USD 180 average state-financed monthly salary paid to doctors essentially forces them to accept these bribes. As one focus group participant in Kharkiv commented, “It all starts with a bottle of champagne for your doctor to say thank you, but it soon spirals out of control until nobody can afford treatment.” In short, the system has not functioned effectively since So40

Some of the envisioned changes to Ukraine’s healthcare system underwent pilot implementation last year. These changes remain in effect, including the popular “available medicines” program, which provides free medicine to patients suffering from chronic diseases such as asthma, Type II diabetes and cardiovascular disease. Last year also saw the introduction of reference pricing for pharmaceuticals, allowing consumers to know the average cost for medicines and helping them to protect themselves from price gouging at the pharmacy.

Beginning in April 2018, patient-family doctor contracts took effect. These agreements between patients and doctors outline mutual responsibilities between the two. With each Ukrainian family choosing a primary care doctor, the doctor becomes more familiar with the health peculiarities of each patient. This brings to an end the Soviet “propiska” system that limited treatment to wherever a patient was officially registered. Instead, patients can now select a family doctor wherever most convenient, be it where they live, where they work, or even near their dacha. If patients like their current doctor, the can continue. If not, the patient can dismiss their current doctor and hire a new one. Patients are empowered to take control of their healthcare on a level that finally meets international standards.

The patient-family doctor contract model also benefits doctors, who will no longer receive a flat and subsistence level salary each month regardless of the number of patients they treat. Each family doctor may now treat up to 2,000 patients. The more patients a family doctor treats, the higher the salary he or she will earn. This will result in doctors being able to earn more than UAH 15,000 per month, representing a potential threefold increase from their current salary.

To break away from the bribe-based current system for medical treatment, the new state-funded medical insurance payments will go directly to the family doctor for services rendered. The days of patients needing to provide their doctors with

handfuls of cash and other unofficial incentives are over. No money need change hands between patient and doctor any longer. The insurance system will pay the doctor, the doctor’s salary will be legalized and official, and the state will collect more in tax revenues by having such transactions “on the books”. These increased tax revenues will then help fund the health insurance program.

Public Response Exceeds Expectations

In Ukraine, passing reformist legislation is always notoriously difficult. Implementing reforms has often proven to be even more challenging. These difficulties are due to institutional sabotage and the powerful financial interests that often work to protect their positions by undermining the effectiveness of new laws. The Ukrainian people appear unwilling to allow this to happen to the current healthcare reform process, or at least that is the impression if we judge by the strong initial response to the introduction of patient-family doctor contracts. Since the program began in April, almost two million Ukrainians have signed contracts with 20,000 family doctors. This has significantly exceeded expectations nationwide.

The key goal for healthcare reform in the current year is transforming the primary care system to a family doctor contract basis, where “money follows the patient”. This is in stark contrast to the old system of state financing of healthcare based on the number of hospital beds and infrastructure. Next year, the reform agenda will begin to address the secondary care system for medical specialists.

Other changes on the way include the establishment of regional health centers in every oblast of Ukraine to promote healthy lifestyles. Up until recently, 99 cents of every healthcare dollar spent in Ukraine focused on treatment rather than prevention. By focusing on prevention and promoting healthier lifestyles, Ukrainians should begin to see improvements in both the length and quality of their lives. This is just one example of how Ukraine’s healthcare reforms aim to introduce tangible improvements to the daily lives of ordinary people. Patients are being empowered with choices while doctors receive rewards for hard work and opportunities for corruption decline. After decades of communism and post-Soviet dysfunction, Ukrainians are finally moving towards a healthcare system that actually works.

media

Europe still struggling to counter Kremlin infowar

Russian tactics are no longer a secret but too many countries only react after becoming targets

About the author: Margo Gontar is cofounder of StopFake.org and presenter at StopFakeNews When we launched the StopFake initiative in Ukraine in spring 2014, Kremlin disinformation was still a novel and little understood subject for much of the outside world. Today it is a mainstream theme, routinely addressed throughout the international media and debated by politicians across the globe. Nevertheless, there is still no consensus on the best way to respond to the challenges posed by Russian information warfare. Indeed, countermeasures tend to be piecemeal and reactive in nature, all too often only occurring after individual countries have encountered Russian disinformation activities for themselves.

The UK is currently going through this process as it comes to grips with the information offensives that have accompanied the aftermath of the nerve agent attack in Salisbury. Russian sources have promoted stories offering a wide range of alternative explanations while also accusing the UK of staging the attack. Britain was already among the first major Western nations to recognize the dangers of Russian information operations and has announced plans to form a special unit to deal with fake news. Recent developments in connection with the Salisbury attack will only strengthen this resolve.

In France, President Macron has proposed a new law to “defend democracy from fakes”.

There are still major questions over whether this concept is workable, but it is significant that the idea first arose following an election campaign in which Macron was able to expe42

rience first-hand what it means to be a target of Russian disinformation. Macron also has the distinction of being the first European leader to tell Vladimir Putin to his face that Kremlin media platforms RT and Sputnik are propaganda tools. Despite the fact that we in Ukraine have been saying this daily for the past four years, Macron’s comments constituted a watershed moment in the international battle against Kremlin disinformation.

Germany has also responded to disinformation concerns arising from the country’s recent election campaign by adopting a so-called “Facebook Law”. This followed on from comprehensive election preparations that focused on combating potential information attacks.

Nevertheless, not everyone in Germany is convinced. Sandro Gaycken, the director of the Digital Society Institute in Berlin, monitored online platforms during the 2017 election campaign and told the New York Times that her team “hadn’t seen any verified attacks”.

I find the situation in Germany particularly interesting. One of my first international trips representing StopFake was to a Berlin conference in 2014. I can still recall the tendency among my German colleagues back then to downplay the Russian threat while suggesting that we were exaggerating the role of Kremlin disinformation. Four years on, I generally find that it is no longer necessary to explain the dangers to German audiences. Instead, we can now focus on how to respond. This is huge progress, but it is heartbreaking to reflect on how many lives have been lost in order to bring us to this point.

One of the most alarming recent developments in the European disinformation debate has been efforts in the Netherlands to derail the EU’s “EU vs Disinfo” debunking project.

This rather small-scale initiative, launched following a European Council meeting in 2015, has refuted more than 3,500 examples of disinformation so far. However, when it erroneously labeled a number of Dutch media reports as fakes, there were calls to scrap the entire project. This response came despite confirmation from the Dutch intelligence service in their 2017 annual report that Russia is clearly spreading fake news in the country.

The backlash in the Netherlands focused on the role of Brussels in countering disinforma-

tion and served to highlight the free speech concerns that make fighting disinformation such a tricky balancing act. Dutch objections included claims that the EU’s debunking efforts posed a threat to media freedoms and risked infringing on the right of all people to freely access information.

Sweden may currently be the most wellprepared European country when it comes to combating Russian information warfare.

The Swedes have a reputation for thoroughness and this certainly seems to be the case regarding their preparations ahead of coming elections in the country. As well as protecting the information environment before the forthcoming vote, Sweden has also adopted a longer-term approach and is incorporating critical thinking as part of the national school curriculum. This kind of media literacy training can certainly help societies defend themselves against manipulation and disinformation. Providing classes for children will not produce overnight results, but it could help to create a future electorate of informed media consumers. Alongside classes for schoolchildren, Sweden is also providing training for public servants. While this response to the Russian infowar threat looks promising, it also raises certain questions. Will the current training programs remain in place after the coming election campaign is over? What else can we expect to see after the vote? When I pose these questions to Swedish colleagues, the answers I receive are often frustratingly vague.

This lack of long-term clarity is a cause for concern. Russia’s information warfare is global in scope and the coming months will see flashpoints all over the world. Key targets will be elections, with votes scheduled for Mexico in July, Sweden in September, and Latvia and Georgia in October, to name a few.

Many more countries are under threat, but it still feels as though we are a long way from a common understanding of the very real dangers posed by Kremlin disinformation operations. This lack of consensus is what bothers me the most. Instead of responding to specific information operations against individual countries, we need to identify ways of countering the threat together. This is our only option if we want the democratic world to survive intact.

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Ukraine’s gas sector reforms

Can Ukraine build on post-2014 progress and realize the country’s energy industry potential?

Ukraine’s gas sector has witnessed some of the most dramatic reforms since the country’s 2014 Revolution of Dignity, but while analysts praise the changes taking place in the sector, many ordinary Ukrainians remain preoccupied by the accompanying sharp rises in their gas bills. Business Ukraine magazine invited Olha Bosak of the Center for Oil & Gas Sector Reforms and SOE Corporate Governance at Naftogaz Ukraine to explore how energy sector reforms can make a positive contribution to the wellbeing and security of the nation.

As somebody directly involved in the ongoing transformation of Ukraine’s energy sector, I am always pleased to hear positive feedback about Ukraine’s gas market reforms from prominent economists such as Francis Fukuyama and Anders Aslund. However, beyond the expert community, public attitudes towards recent developments in Ukraine’s gas sector are still taking shape. Are the changes within Ukraine’s natural gas industry strategic, operational or merely tactical in nature?

Will these changes have long-lasting effects on Ukraine’s economy? How will the average citizen of Ukraine benefit from the reforms? These are all important issues with serious ramifications, both for individual Ukrainians and for the geopolitical balance in the entire region.

A basic overview of today’s European gas market 44

illustrates the significance of Ukraine’s role within the wider continental market. Ukraine has the largest underground gas storage facilities in the whole of Europe and currently ranks among the top three European countries in terms of proven gas reserves. Meanwhile, Ukraine is number four in terms of gas production and, for the time being at least, remains the number one country for Russian gas transit.

The future trajectory of the Ukrainian gas sector depends on a number of different internal and external factors, with the ongoing reform process itself chief among them. At present, it is possible to identify three key directions of this reform process that are laying the foundations for positive change while offering the prospect of future benefits for ordinary Ukrainians.

Gas Market Liberalization

Ukraine’s wholesale gas market has undergone an unprecedented process of liberalization in recent years. In 2015, Ukraine’s flagship oil and gas company Naftogaz ceased importing gas from Russia and began receiving reverse flow deliveries from Slovakia, Poland and Hungary, thus ending decades of gas dependence on Russia. Domestic resources and reverse flow deliveries from the European market proved sufficient to meet Ukraine’s gas demand. Thanks to this diversification, Naftogaz

and other Ukrainian importers now have access to alternative gas sources and can choose from dozens of potential suppliers. Traders including Engie, Trafigura and AOT Energy have duly entered the Ukrainian gas market.

Both the 2015 Natural Gas Market Law and the 2017 Electricity Market Law brought Ukraine closer to compliance with current EU legislation. One of the main goals of these new pieces of legislation is the liberalization of the Ukrainian natural gas market in compliance with the Energy Community Treaty and the EU’s Third Energy Package.

The creation of a liberalized gas market featuring market-driven competition and a supply-demand balance will lead to greater gas production. Another crucial expected outcome of gas market liberalization is the freedom of consumers to choose suppliers. If realized, this will allow Ukrainians to shop around for the most attractive offer. The current priority is to ensure that the new legislation works effectively for Ukrainian citizens and Ukrainian businesses alike.

Support for Greater Domestic Gas Production

Since the start of Ukraine’s gas sector reforms, the country’s gas production has benefited while gas consumption has decreased dramatically. In 2017, Naftogaz subsidiary Ukrgazvydobuvannya pro-

energy

duced the company’s highest annual gas total in twenty-four years. At present, Ukraine still meets around one-third of domestic gas demand via imports, but developments in the country’s energy sector regulatory framework could lead to an increase in the proportion of Ukraine’s gas requirements covered by domestic resources.

Recent legislative changes are giving rise to hopes that Ukraine can finally reach its true potential as an energy-producing nation. Many observers expect the new legal framework to boost oil and gas production while stimulating investments in the upstream sector. Meanwhile, growing supply coupled with decreasing domestic demand can result in lower natural gas prices on the Ukrainian market.

Crisis Resilience

Confidence in the Ukrainian gas industry’s ability to withstand potential crises has increased noticeably since 2014, not least due to Ukraine’s proven ability to diversify its supplies. After a four-year long legal dispute over gas transit terms and conditions between Ukraine’s Naftogaz and its Russian counterpart Gazprom, the Stockholm Court of Arbitration ruled earlier this year in favor of Ukraine, leaving Gazprom with a bill of over USD 2.5 billion. Naftogaz’s success convinced many doubters of Ukraine’s growing ability to www.bunews.com.ua

defend its interests in confrontations with Russia.

This resilience bolsters Ukraine’s reputation as a reliable partner capable of playing a significant role in European energy security.

Implementation is Key

The reform road ahead remains long and challenging, but it is already clear that the prospects for the Ukrainian gas market are more promising than at any point in the post-independence era. Despite Russia’s military intervention in Crimea and eastern Ukraine, the country has managed to pursue strategic reforms that create room for considerable optimism. If the announced reforms are now able to reach the stage of full implementation, they will lead to long-lasting effects for Ukraine’s broader economy. A fully functioning domestic gas market will have a very positive influence on the wellbeing of ordinary Ukrainians.

For the time being, Ukraine remains the most powerful gas transit nation in Europe and home to one of the largest domestic gas markets on the continent. While the reform process is cause for encouragement, it is only the beginning. Numerous important issues require addressing before Ukraine can hope to achieve anything approaching its full energy sector potential. Regulatory and administrative barriers require removal. The country must find new ways to monetize its unrivaled gas

storage capacity. Gas production must be further increased and targeted subsidies introduced, while at the same time consumption must continue to decline. All these processes should take place against a backdrop of enhanced energy sector dialogue at the European level. Ukraine must seek to play a greater role in Europe’s energy debates in order to address issues that resonate beyond Ukraine and affect the functioning of the entire European gas market.

About the author: Olha Bosak is Director of the Center for Oil & Gas Sector Reforms and SOE Corporate Governance at Naftogaz Ukraine

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HELP UKRAINE TO ENGAGE THE WIDER WORLD! GoCamp is an initiative designed to promote language learning among young Ukrainians. In the space of just two years, it has already become the biggest educational volunteer programme in Eastern Europe. Since 2016, 550 foreign volunteers have helped kids all over Ukraine to learn English, French and German language skills.

We continue to grow and need more volunteers!

How To Participate:

Members of Ukraine’s international community are invited to get involved and volunteer for the 2018 GoCamp program. This year, the GoCamp volunteer lineup already includes the Deputy U.S. Ambassador to Ukraine George Kent, President of the American Chamber of Commerce in Ukraine Andriy Hunder, Kyivstar President Petro

PLEASE CONTACT US to register or to learn more

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Chernyshov, as well as the Ambassadors of Canada, the United Kingdom, India, Poland, Belgium, Norway and Sweden.

Volunteers are welcome across Ukraine. You can volunteer for one day or two weeks depending on your availability. All expressions of interest are welcomed. Businesses are invited to volunteer collectively as part of their Corporate Social Responsibility activities.

By giving your time and energy, you will help provide the emerging generation of Ukrainians with the chance to make a historic breakthrough. Knowledge of foreign languages and engagement with members of the international community are great ways to broad en horizons and break down psychological barriers.

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Ukraine’s Hundred Billion Dollar Question Why is the sale of farmland such a toxic issue?

Conceived as a temporary measure 16 years ago, Ukraine’s moratorium on agricultural farmland sales remains firmly in place thanks to populist mythmaking and the politics of protectionism Ukraine is an agricultural paradise. It possesses a staggering one-third of the world’s ultra-fertile black soil (“chernozem”) and enjoys a reputation as one of the most farming-friendly countries on the planet. Even the Ukrainian flag, with its depiction of golden crops under a blue sky, is an ode to this ancient agrarian heritage. Meanwhile, Ukraine’s strategic location at the crossroads of Eurasia offers relatively easy access to the markets of Europe, the Middle East, Africa and Asia. Despite this immense agribusiness potential, Ukraine remains one of only six countries globally (along with Cuba, Venezuela, Tajikistan, Congo and North Korea), where owners of agricultural land are not entitled to dispose of it.

Ukraine’s moratorium on farmland sales has been in place for 16 years. From a purely legal standpoint, this moratorium contradicts the very essence of ownership rights. As many as seven million citizens of Ukraine, who own 28 million hectares of farmland plots, do not currently have the right to dispose of their property as they see fit. The moratorium also undermines Ukraine’s position in well-respected world rankings that consider private property protection as one of the foundations of economic freedom. For example, ac48

cording to the Heritage Foundation’s 2018 Index of Economic Freedom, Ukraine received just 41 out of 100 points for property rights protection.

Nevertheless, the chances of lifting the moratorium before the end of 2018 are alarmingly low. One of the key factors preventing land sale reform is the lack of awareness among both state authorities and landowners about the potential benefits of a free farmland market. Negative public perceptions of land sale reform are also a major obstacle to progress on the issue. These perception problems are largely the result of aggressive media campaigns by populist political parties who promote the moratorium by playing on Ukrainian society’s timeless agrarian traditions and deep ties to the land. The populist potency of the issue means support for land reform is politically dangerous and unlikely to be forthcoming until fast-approaching presidential and parliamentary elections are out of the way in late 2019.

Myths vs. Data

To an external observer, it might be difficult to comprehend why the majority of Ukrainians would support the idea of denying themselves the right to dispose of their own land as they choose. This situ-

ation did not arise without some prompting. Populist forces, with backing from numerous somewhat dubious associations of small and medium farmers, have invested enormous resources into the promotion of a number of simplistic but very persuasive myths designed to make land reform daunting for landowners and risky for politicians who might otherwise support it.

The most resonant myth is the claim that Ukrainian farmland will be massively purchased by foreigners. This plays on fears for the future development of Ukraine’s agricultural sector while stirring up painful historical memories of unwelcome past foreign influence. In reality, no financial entity, either local or international, has sufficient liquidity to purchase land in such vast volumes. Moreover, according to a recent comprehensive study of land reform in sixty countries conducted by the EasyBusiness think tank, only about 20% of agricultural lands underwent sale following the abolition of land sale moratoriums in the former Warsaw Pact countries of Central and Eastern Europe. The other 80% of landowners who did not sell their land continued farming and were able to benefit from bank loans by using their newly sellable assets as collateral.

One broadly believed myth is that the livelihood of

sufficient, while the dominant consensus among MPs is to retain the moratorium.

Opposition to reform is strong among farmers interested in retaining cheap land rental rates. Additionally, despite the widespread notion that agricultural holdings are the only beneficiaries of any prospective future land sales, a number of Ukrainian agribusiness holdings do not actually support the reform. This primarily relates to those businesses that have not yet accumulated sufficient capital to buy out the plots they are renting and those who produce low-margin and low added value agricultural commodities.

Political Paralysis

Due to the efforts of the Cabinet of Ministers, international institutions, the expert community and MPs, the debate around the moratorium has moved forward in recent years from discussion of whether Ukraine needs a land market to talk of market alternatives and its preferable models.

Nevertheless, there is no sign of concrete progress.

In 2017, the IMF made adoption of the respective draft law on abolition of the moratorium a condition for continued support, but President Poroshenko was able to have the issue removed from the memorandum for the disbursement of the IMF’s next tranche. It is not clear how this came about, but many attribute it to the lack of progress surrounding the establishment of an anti-corruption court and the need to prioritize this anti-corruption issue above all others. Instead of cancelling the moratorium, the Ukrainian parliament voted in December 2017 to prolong the ban on farmland sales until 2019. Even this was not enough for some political factions. For example, Yulia Tymoshenko’s Bloc sought an extension until 2023.

Legislative proposals have long been prepared.

The latest available version of the most discussed parliamentary model states that foreign citizens

can only inherit land, while Ukrainian nationals are restricted to purchases of up to 200 hectares. Alternatively, the latest available government model envisages the sale of up to 500 hectares to Ukrainian nationals and grants foreigners the right to buy agricultural land starting in 2030. Both models envisage strong restrictions for legal entities. While these models can serve as a good basis for further discussion, most experts and a number of MPs believe there is room for considerable improvement.

agriculture

the average farmland owner would decrease because of low market prices for farmland. However, according to information provided by the State Statistics Service of Ukraine, the average rental cost of one hectare of agricultural land per year is as little as UAH 1,369. This is noteworthy as lower quality land in neighboring countries generates rental fees many times higher. In reality, the main reason why Ukrainian landowners do not currently receive an appropriate income is low rental prices caused by the absence of free agricultural land circulation.

Another questionable concern is the idea that the abolition of the moratorium would deprive farmers of a stable income. First of all, it is worth noting that UAH 900 per hectare annually, which is the average amount landowners in rural areas of Ukraine receive, in no way reflects the actual value of the land itself. For example, comparative rates in Western Europe currently range from USD 150 to USD 700, or approximately four to twenty times the average rate in Ukraine. The abolition of the moratorium would allow for the emergence of a land market based on realistic asset evaluation, leading to the establishment of sound market prices for rent. Farmers would be able to rent out their land plots at adequate market prices, thus making the rent of land their actual source of income without necessarily deciding to sell up.

Despite the obvious effectiveness of these myths in distorting public understanding of the land sale issue, the economic data paints a persuasive picture.

A survey conducted by EasyBusiness indicates that a fully liberalized market would be the most economically effective model for Ukraine and could generate additional GDP of USD 10 billon annually or USD 100 billion over the next 10 years. The end of the moratorium would lead to a surge in interest from both foreign investors and local SMEs. It would drive positive mid- and long-term price prospects for Ukraine’s farmland assets, which remain undervalued due to the moratorium.

Historic Challenge

It is important to remember that Ukraine’s present moratorium was originally a temporary measure introduced until the adoption of suitable land sale legislation. Sixteen years later, we are still hearing that Ukraine is “not ready”. This argument, however, only benefits those interested in maintaining the status quo. With populism increasingly dominating the Ukrainian pre-election agenda, no party is likely to risk political suicide by taking the lead in something as misunderstood and volatile as the land sale issue. However, now may be the time to engage in a major public communication campaign in anticipation of renewed parliamentary engagement following the coming election cycle.

At present, the sale of farmland is arguably the most misinterpreted and politically toxic item on the entire reform agenda. The government, civil society and Ukraine’s international partners should now seek to close this information gap. Rather than waiting for a new window of legislative opportunity to open following elections in 2019, preparations should begin now to lay the groundwork for reform once the political environment is more favorable. Introducing agricultural land sales in Ukraine would be a truly historic step with major implications for the country’s economy, but it will require equally historic efforts if populist opposition is to be overcome.

Support and Opposition

The land reform issue is politically explosive, but it is not short of well-placed political supporters.

The Cabinet of Ministers, the Ministry of Agricultural Policy and Food, and the Ministry of Finance all support the opening of the farmland market in Ukraine and made efforts to enable progress in 2016-2017 when the issue was still high on the political agenda. Strong support for reform also comes from international organizations including the IMF and the World Bank. The pool of MPs publicly supporting abolition of the moratorium is growing, rising from just three MPs in 2015 to seven in 2016 and sixty-six in 2017. However, this level of parliamentary support remains far from www.bunews.com.ua

About the authors: Olena Prokopenko (@O_Prokopenko_IR) is Head of International Relations at Reanimation Package of Reforms, Ukraine’s largest civil society coalition uniting 83 NGOs and over 300 experts. Dmytro Lyvch is Head of Analytics and Project Manager at EasyBusiness think tank.

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Lviv Real Estate Top 10 Investor Tips

A thriving IT industry, close links to the EU and an expected international tourism boom make now the ideal time to invest in Ukraine’s fairytale city

While Lviv is only Ukraine’s seventh largest city, it has established itself as the country’s No.2 real estate market. These top 10 tips should provide some insight into the many Lviv-specific factors that make the west Ukrainian capital such an attractive but challenging city for potential real estate investors.

1. Lviv’s Diverse Architecture is a European Treasure Trove

Given the scale of the devastation throughout Ukraine during World War II, it is difficult to comprehend how Lviv’s beautiful Old Town emerged virtually untouched by the ravages of the conflict. Unsurprisingly, Lviv’s pristine historical center features on the UNESCO World Heritage list. This large area encompasses over 300 acres (120 hectares). Here you will find examples of Gothic architecture like the Latin Cathedral alongside Renaissance pearls such as the Black House on Market Square. Much of Lviv’s Old Town gained its Renaissance style from Italian architects imported to the city following the Great Fire of 1527.

There are buildings in Baroque style such as the Peter and Paul Church on Teatralna Street and numerous highly ornamental Art Nouveau buildings with decorative ironwork, glass, ceramic tiles and brickwork built when Lviv was part of the Austro-Hungarian Empire. You will also find impressive buildings 50

dating from the Interwar period (1918 to 1939) such as the wonderful Jonasz Sprecher building on Mitskevych Square. Few cities anywhere in the world can match this ensemble.

2. Older Apartments Present “Historic” Opportunities

While Lviv’s historical architecture was fortunate to escape the destruction of World War II, time and lack of proper maintenance have not necessarily been kind to the apartments in Lviv’s Old Town. Many if not most of them require a complete renovation. If you are considering buying and renovating one of these gems, it is important to engage a professional for a thorough technical audit prior to purchase. You should find a skilled contractor with experience renovating historical buildings. Potential pitfalls include energy inefficiency and old wooden floors that require replacement. Many older apartments in Lviv were once part of larger apartments and as a result can have poor sound isolation and odd layouts. The high ceilings of older apartments can be glorious, but can also add to energy inefficiency issues.

Technically, Lviv has regulations that require owners of apartments in historical buildings to replace their windows only with wooden windows that have

real estate

the same look as the original windows. However, a quick browse around Lviv’s Old Town will show you that violations of this rule are numerous and enforcement has been incredibly lax. Nevertheless, in recent years there have been anecdotal accounts of increased enforcement, especially for apartments with windows facing Lviv’s Market Square.

The electrical load capacity of most historical buildings in Lviv can be woefully inadequate for modern living unless they have already been subject to thorough reconstruction. You should keep in mind that you need permission and cooperation from the local utilities service to make this upgrade. This can be a particularly important consideration if you are planning to buy space on the first floor of one of these buildings in order to lease it out as commercial space.

The roofs, stairways and entrances of Lviv’s historical buildings can be in terrible condition due to inadequate maintenance. If you are looking to renovate these areas at your own expense, you should be aware that many of your neighbors could be penniless pensioners who will not have the means to share the costs of renovating common areas with you. While your contractor may be able to help you with solutions that do not require replacing the roof, a complete renovation of your building’s roof would definitely upgrade the value of your investment. Moreover, in some cases, the roofs of older buildings in Lviv’s Old Town have undergone renovation with grants from the Lviv municipal authorities and the German organization GIZ, so you should also investigate if this is possible for a building that you are considering for investment.

Leaky roofs, the ravages of time and, on many occasions, the ill-advised removal of load-bearing walls have all compromised the structural integrity of many of Lviv’s historical buildings, making their rehabilitation a special renovation challenge. The appropriate building technologies and methods exist to mitigate such structural damage, but you should select an accomplished contractor and prepare yourself for the additional expense of doing this properly.

For decades, Lviv residents suffered from water outages due to the city’s “historical” sewage system that included wooden pipes from Austro-Hungarian times. In recent years, the water and sewage systems have undergone renovation. However, the existing sewage lines inside many of Lviv’s older buildings www.bunews.com.ua

still require replacement.

In addition to poor sewage lines, many older buildings in Lviv do not have secure entrance areas. If you buy real estate in one in these buildings, you will also want to consider securing the entrance area and rehabilitating the stairway. The original stairways of Lviv’s historical buildings can be quite beautiful, but some of them are wooden and will need more than a cosmetic renovation.

Lastly, cobblestone streets certainly add to Lviv’s romantic charm but they can also create a lot of noise for residents, particularly for those who live along the routes of trams and bus lines.

3. Look Beyond Lviv’s Historic Heart

Numerous examples of stunning but dilapidated historical architecture, especially Art Nouveau buildings, lie well beyond Lviv’s Market Square and Prospect Svobody – the relatively tiny central area most popular with tourists. Until recently, only these tourist spots were renovation targets, but this situation is changing and gentrification is accelerating outward. For example, the Forum Lviv shopping center and Belgian Village apartments have expedited urban renewal in area about a 12-15 minute walk from Lviv’s Old Town to the north of the Opera House. The facades of older buildings on Pid Dubom Street opposite the mall have received a beautiful facelift. Once completed, the Forum Apartments complex opposite the shopping center will also provide an aesthetic boost to the neighborhood. In the very near future, it is easy to envision that nearby Dzherelna Street (towards Krakiv Market) and Kulisha Street will be prime candidates for investment and gentrification as they lie between the Forum Lviv oasis of development and the Opera House, Prospect Svobody and the heart of Lviv’s Old Town. With Lviv’s relative prosperity and huge inventory of historical buildings, we can expect similar redevelopment to proceed eastwards, westwards and south of Market Square and the city’s inner core.

4. Coming Soon: International Tourism Boom

According to Lviv’s center for tourism, the total amount visitors in 2017 was 2.6 million, which is the same as the 2016 total. However, average spending per : 51

Lviv International Airport will welcome low-cost airline Ryanair in autumn 2018, providing budget connections to a range of European destinations. Many expect this expansion in Lviv’s air travel connections to fuel the next stage in the development of the city’s tourism industry

: visitor per day increased from EUR 49 to EUR 75. In 2017, Ukrainians repre-

While we are not currently witnessing the absurdly low prices of the early 1990s, in 2018 prices for apartments in Lviv’s historical buildings remain well below the peaks reached in 2006-2007. Small fixer-upper apartments in the heart of Lviv’s Old Town are available for USD 900 to USD 1,300 per square meter. It is even possible to find central apartments with partial renovations in unique historical buildings for USD 1,500 to USD 1,800 per square meter. Why are local buyers not snapping up all of these attractive deals? One big reason is that Lviv’s most solvent middle and upper middleclass buyer segment is IT workers, who overwhelmingly prefer to buy property in Lviv’s new apartment developments for living and for investment.

Many of these buyers are simply too busy or uninterested in taking on the special challenges of renovating an apartment in an historical building.

Together with tourism, IT forms the other pillar of Lviv’s current economic growth. By many estimates, Lviv’s IT industry currently occupies the No.2 position in Ukraine ahead of much larger Kharkiv, which has a population roughly twice that of Lviv. Lviv’s 30,000+ IT workers form the core of the city’s young middle class and drive demand for real estate in three key sectors: office space, new residential housing, and accommodation for business travelers.

Many of Lviv’s IT companies are growing at a rate of 10-12% per year. To meet the demand for future office space and to support further development of the city’s creative class, Lviv’s IT Cluster is leading a consortium of local companies and universities to build the Innovation District Park that will feature office space for 10,000 workers, a 100-room hotel and an “IT university.”

Lviv’s IT workers also represent the city’s most attractive middle class segment of home buyers and property investors. They overwhelmingly prefer to buy apartments in Lviv’s new buildings. This preference is due to the ability to buy at pre-construction and pre-commissioning prices, along with new infrastructure and parking spaces. By contrast, there is an acute deficit of parking in Lviv’s Old Town. Many residents of these new buildings tend to be twentysomething singles or young families. Unlike Kyiv, it is still possible to find affordable apartments in new buildings fairly close to Lviv’s downtown.

Lviv’s IT industry stimulates business travel to the city. Many IT companies rent several “corporate apartments” per month to host visitors from client companies. In many cases, the renovation quality of these apartments leaves a lot to be desired and almost none of them offer the services and amenities that you would expect to find in a professionally run serviced apartment. Indeed, despite high levels of demand, serviced apartments are currently in extremely short supply on Lviv’s hospitality market.

Despite flat growth in the total number of visitors to Lviv in 2017, the 2018 market entry of low-cost carrier Ryanair (and others) will bring hundreds of thousands of new foreign visitors to Lviv. The average spend per day of these new guests will be two to three times higher than that of Ukrainian tourists, which will accelerate gentrification outward from Market Square and Prospect Svobody to provide more restaurants, cafes and shops to serve the new arrivals. This will increase demand for quality commercial space in Lviv’s Old Town and further afield.

Typically, the first floor of Lviv’s historical buildings is suitable for commercial space but may require additional investment. If you are planning to invest in a fixer-upper property in one of these older buildings, then you should keep in mind that all of the aforementioned challenges of renovating apartments in historical buildings also apply to commercial properties and there are certain additional issues that require special consideration.

For example, if you are planning to open restaurant or cafe, then you will need to increase the electrical load capacity of the property. You may wish to expand or move the entrance of a commercial property to make it more convenient for your clients. However, in most cases this will not be possible as Lviv’s historical buildings are subject to strict preservation restrictions.

5. Lviv IT Sector Drives Real Estate Demand

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6. Now is the Time to Buy

sented over 41% of tourists in Lviv, while Poles and Belarusians represented about 22% and 8% respectively. Another 7.3% of 2017 visitors to Lviv were Turkish, and combined visitors from Germany, the US and UK accounted for just 7.1%. By comparison, nearby Krakow attracted a record 13 million visitors in 2017. While Lviv does not boast mega tourist attractions such as Krakow’s Auschwitz and the Wieliczka Salt Mine, Lviv’s rich history and huge Old Town mean there is much room for the growth of foreign tourism. The good news is that from October 2018, low-cost carrier Ryanair will begin five routes and fourteen weekly flights to Lviv. Following Ryanair’s announced market entry in Ukraine, existing low-cost carriers like WizzAir have expanded routes from Lviv. Even more low-cost carriers are expected to enter Lviv’s market in 2018 and 2019. This will likely fuel a new wave of tourism industry expansion.

7. Expanding Demand for Commercial Space

8. Lviv’s Hotel Industry Offers Room for Growth

When analyzing Lviv’s tourism and hospitality market, it is useful to compare Lviv with Krakow - a nearby city across the border in Poland with a slightly larger population, a similar history and an attractive Old Town. In 2017, Lviv had only about 20% of the foreigner visitors that Krakow at-

real estate

tracted (2.6 million vs. 13 million) and yet Lviv has around 39% of the total hotel rooms that Krakow has (4,132 rooms compared to 10,710 rooms ).

At first glance, it would seem that Lviv has plenty of hotel rooms to support tourism growth in the near-term. However, Lviv has an acute lack of internationally branded hotels. Various plans are in progress but it remains far from certain that the local owners of hotel projects in Lviv will develop them as internationally branded hotels. Thus far, the owners of new hotels in Lviv have been more interested in spending money on luxurious renovations rather than investing in hiring and training personnel to ensure high service quality. For example, European hotels spend 35% of revenue on personnel, but in Lviv this figure is 25% or even lower at the city’s most expensive hotels. This undersupply of branded hotels in Lviv is a clear opportunity for investors. In the opinion of Lviv hotel consultant Ivan Loun, the first group to develop a large international-branded hotel in Lviv with a good location will quickly claim a large market share and enjoy pricing power over local competitors.

9. Demand for Daily Rentals

Unlike Kyiv, Lviv does not have sizable market demand for premium multibedroom long-term rental apartments. Even though Lviv is attracting more foreign investors, the lack of international schools in the city discourages expat managers of foreign companies from relocating to Lviv with their families. Instead, many expat managers who have children often fly home for the weekend and typically sign long-term rental agreements for relatively small apartments or elect to stay in hotels or daily rental apartments for shorter stays. However, the quantity of high-quality hotel rooms in Lviv is quite low and the renovation and service quality of most daily rental and short-stay apartments in Lviv is also far below the needs and expectations of foreign business travelers. According to Lviv’s center for tourism, approximately 28% of visitors to Lviv stayed in rental apartments, but given the size of the black and grey markets in Ukraine, it is safe to assume that the real figure is probably much higher. However, most short-stay apartments in Lviv cater to local tourists who have lower budgets and modest expectations. The market entry of Ryanair in 2018 will bring an estimated 250,000 additional visitors to Lviv per year. This should stimulate demand for higher quality daily rental apartments. If you plan to invest in short-stay apartments with Western-style renovations in Lviv, then you should also target the city’s many

IT companies, some of whom rent several apartments per month to accommodate clients who often come for longer stays and would prefer to stay in apartments rather than in hotels.

10. Lviv Oblast Opportunities

The EU-Ukraine Association Agreement provides for increased trade ties and economic integration in a series of gradual steps. It is already paying dividends, with Ukraine’s exports to the EU increasing by 27% in 2017.

During Medieval times, Lviv owed much of its prosperity to its fortunate location along trade routes connecting Europe and Asia. Today, history seems to be repeating itself as growing numbers of foreign manufacturers set up operations in Lviv Oblast to take advantage of Ukraine’s EU Association Agreement and gain quick access to EU markets. Downtown Lviv is only about 80km from the EU border, but today there is a shortage of industrial real estate for large production sites inside the Lviv city limits, so manufacturers are looking for sites in the towns of Lviv region, many of which are much closer to Poland. In addition to favorable geography, manufacturing wages in Lviv region are much lower than in neighboring Poland. As international investment expands in Lviv region, real estate investment opportunities will also grow.

Lviv Real Estate: 2018 and Beyond

In 2018, Lviv appears poised for further economic growth based on a combination of positive factors including tourism, IT services and manufacturing. Real estate investment opportunities in Lviv seem plentiful, with the hospitality sector, commercial real estate, and industrial real estate all bearing closer consideration. For investors who are especially captivated by Lviv’s historical architecture, perhaps now is the time to bet on Lviv’s bright future by buying part of the city’s spectacular past.

Special thanks to Ivan Loun (hotel consultant at AstoriaHTL.com), Ihor Tsebriy (real estate investor), Areta Kovalsky (blogger @ Forgotten Galicia), and Aaron Fust and Leon Guerrero (Lion City daily rentals) for their contributions to this article.

About the author: Tim Louzonis (tim@aimrealtykiev.com) is a co-founder of AIM Realty Kiev and AIM Realty Lviv, real estate agencies that specialize in real estate for foreign investors and expats. Tim is a long-time expat with Ukrainian roots. He first came to Ukraine as an exchange student in 1993 and returned in 2008. www.bunews.com.ua

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Ukraine Seeks Orthodox Independence Appeal to Constantinople could lead to historic recognition for unified Ukrainian Orthodox Church

Russia’s 2014 invasion of Crimea and ongoing aggression in eastern Ukraine have forced the issue of religious loyalties to the fore while at the same time undermining the position of the Russian Orthodox Church among Ukrainian congregations. The Russian Church’s perceived support for Putin’s war and the refusal of priests to bless or bury Ukrainian soldiers have left many of the Ukrainian faithful distressed and disillusioned, leading to the defection of entire parishes from the Moscow Patriarchate to the Kyiv Patriarchate. This religious element of the broader geopolitical split between Ukraine and Russia is now entering a new phase as Kyiv aims to gain international recognition Ukrainian President Petro Poroshenko meets the leader of the Orthodox Christian world Archbishop of Constantinople Patriarch Bartholomew during an official visit to Turkey in April 2018

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for an independent Orthodox Church of its own.

Since the Soviet collapse in 1991, the rival Kyiv and Moscow Patriarchates have competed for the loyalties of Ukrainian Orthodox Christians, with the Russian Orthodox Church enjoying the considerable advantage of official international recognition. As the undeclared war between Ukraine and Russia enters its fifth year with no end in sight, Kyiv is now seeking to reduce Russia’s ability to interfere in the country by securing recognition of the Ukrainian Orthodox Church’s independence from Moscow. In April, President Poroshenko sent an official appeal to the Archbishop of Constantinople Patri-

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This is not the first time post-Soviet Ukraine has sought official international recognition for a unified Ukrainian Orthodox Church. Why might this effort succeed while previous attempts failed?

There have been numerous attempts ever since the early 1990s, beginning with President Leonid Kravchuk. These efforts then went into recess under President Leonid Kuchma, who supported the idea of an independent Ukrainian Orthodox Church in rhetoric but did nothing to back it up. Kuchma was very even-handed in his treatment of the Russian Orthodox Church in Ukraine - officially registered as the Ukrainian Orthodox Church-Moscow Patriarchate (UOC-MP) - and the Ukrainian Orthodox Church-Kyiv Patriarch (UOC-KP). For example, he transferred the Pecherska Lavra to the former and the rebuilt St. Michaels Cathedral to the latter.

President Viktor Yushchenko’s approach to the issue of an independent Ukrainian Orthodox Church was similar to his position on other sensitive national :

interview

arch Bartholomew, who is recognized as the worldwide head of the Orthodox Church. The appeal came days after Poroshenko had met with the Patriarch personally during an official visit to Istanbul.

President Poroshenko has portrayed this bid for religious independence or “autocephaly” as part of the campaign to free Ukraine from Russian influence.

He has received parliamentary backing for his appeal, but political opponents have accused the Ukrainian leader of seeking to exploit religious tensions as part of his re-election campaign ahead of Ukraine’s March 2019 presidential vote. Meanwhile, Russia has responded to Poroshenko’s initiative by accusing Kyiv of attempting to “split” the Russian and Ukrainian Orthodox Churches, which Moscow continues to regard as indivisible. Business Ukraine magazine spoke to veteran Ukraine watcher Taras Kuzio about this escalating religious confrontation and asked him whether Ukraine was genuinely on the brink of an historic breakthrough.

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The undeclared war between Russia and Ukraine has placed the Russian Orthodox Church in Ukraine in an impossible situation. Unable or unwilling to bless and bury Ukrainian soldiers, the Moscow Church has watched as entire parishes have defected to the Kyiv Patriarchate

: themes such as the Ukrainian language and NATO membership. He was loud

on rhetoric but did little to back it up with action. His image was also arguably too nationalistic because of his over-focus on memory politics.

Yushchenko’s successor President Viktor Yanukovych displayed an open bias towards the Russian Orthodox Church. He championed a vision of Ukraine as belonging to the “Russkii Mir” (“Russian World”) civilisation, with Russian Orthodoxy playing a central role in uniting the three core branches of this Russian World in modern Russia, Belarus and Ukraine.

Few would describe current Ukrainian President Petro Poroshenko as an extreme Ukrainian nationalist. He has done businesse in Russia and has generally escaped accusations of Russophobia. In this sense at least, he is very much a political centrist.

President Poroshenko has also approached the issue differently to previous Ukrainian presidents. Instead of demanding autocephaly for the Kyiv Patriarchate, he is seeking autocephaly for Ukrainian Orthodoxy as a whole. This would potentially unite all or part of its three wings: the Moscow Patriarchate and the Kyiv Patriarchate along with the smaller Ukrainian Autocephalous Orthodox Church.

From the perspective of the international Orthodox Church, it is reasonable to assume that the Constantinople Patriarch would like to see Ukrainians as allies to help balance against the perceived arrogance and overbearing demeanour of the Russian Orthodox Church, which often behaves as a first among equals.

Russia has long made recognition of a separate Ukrainian Orthodox Church one of its biggest red lines. How far will the Moscow Patriarchate go to prevent the loss of Ukraine?

In light of the policies undertaken by Putin over the last five years, we can safely

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say that anything is possible. If he is willing to use Novichok nerve agent on the streets of Salisbury in rural England, why should we assume he has any barriers? It is also important to appreciate how critical this issue is for Russia’s role in the post-Soviet region. Unlike other national churches, the Russian Orthodox Church lays claim to congregations throughout the former USSR, with Ukraine as by far the biggest prize. The Serbian Orthodox Church, for example, did not lay claim to jurisdiction over all of the former Yugoslavia.

For Vladimir Putin and other Russian leaders, the Ukrainian Orthodox Church is just as much a part of the Russian World as Ukraine itself. Putin still views Ukraine as fundamentally “Russian” and regards the medieval Kyiv Rus as the “first Russian state”. We see evidence of this in his frequent assertions that Ukrainians and Russians are “one people”, and in the unveiling of a monument to Grand Prince Volodymyr in November 2016 in central Moscow - a city that did not exist when Volodymyr reigned in Kyiv. Putin even sought to bolster Russia’s historic claims to Crimea by saying the Ukrainian peninsula was the site of Volodymyr’s baptism in 988.

In practical terms, Ukrainian autocephaly would mean the dramatic downgrading of the Russian Orthodox Church within the world of Orthodox Christianity. The Moscow Church would lose approximately half of its parishes if it loses Ukraine. While Russia is far larger than Ukraine, the two countries both have around 14,000 Orthodox parishes each.

The Russian Orthodox Church is often described as Moscow’s last bastion of influence in Ukraine. How important a role has the Moscow Patriarchate played in Ukrainian society since the Soviet collapse?

It has played a significant role but that role is now diminishing in line with the general trend towards declining Russian influence in Ukraine. In recent years,

ger see Russians as “fraternal brothers” (a myth introduced in the Stalin era).

Three-quarters of Ukrainians currently have negative views of the current Russian leadership. They see Russia as an aggressor state and believe its goal is to destroy Ukrainian independence. In other words, the timing is opportune for Ukraine’s autocephaly bid.

Many Ukrainians accuse the Russian Orthodox Church of supporting Russian military aggression against Ukraine. How credible are these accusations?

Reports supporting these claims have appeared in numerous reputable media outlets such as the New York Times, while there is extensive open source evidence of Russian Orthodox priests blessing Russian nationalists and other combatants traveling to fight in eastern Ukraine. In the Donbas itself, one of the Russia nationalist groups actually calls itself the Russian Orthodox Army.

How damaging for the Moscow Patriarchate in Ukraine are perceptions of its closeness to the Kremlin?

The Russian Orthodox Church finds itself in a conundrum. As the official Russian state church, it is obliged to support Putin’s policies. However, within Ukraine it tries to sidestep the current conflict because three-quarters of Ukrainians believe that normalisation of Russian-Ukrainian relations can only happen if Russia withdraws from Crimea, halts its military aggression in eastern Ukraine, and ends interference in Ukrainian internal affairs. This has led to the defection of Ukrainian Orthodox believers and fuelled growing support for the Kyiv Patriarchate. The Russian Orthodox Church is losing ground because it cannot answer the straightforward questions: “Do you support the annexation of Crimea?” and “Do you condemn Russian military aggression in Ukraine?” It cannot answer because it can neither condemn Russia nor openly support Russia.

The Russian Orthodox Church is also losing public sympathy because it often refuses to bury Ukrainian soldiers. This is proving particularly damaging for the Moscow Patriarchate’s position in Ukraine. Many Ukrainian military casualties come from Russian-speaking eastern and southern Ukraine, with by far the highest number coming from Dnipropetrovsk Oblast, where pro-Kremlin political parties generally held sway up until 2014. The Russian Orthodox Church is therefore losing public sympathy in parts of the country where sup-

port for closer ties with Russia had traditionally been strongest. These are the same regions where Russian aggression is leading to the most striking changes in attitudes towards Ukrainian national identity.

interview

Russian soft power in Ukraine has both collapsed of its own accord and been legislatively restricted. There are bans in place on Russian books, social media, TV channels and pop stars. Only 2% of young Ukrainians watch Russian TV. Putin’s biggest export - corruption - used to be hugely influential in Ukrainian politics but even this has declined because the energy sector has undergone a thorough clean up under President Poroshenko. Politically, the pro-Russian Party of Regions used to monopolise eastern and southern Ukraine but it no longer exists, while electoral support has splintered since 2014 among a series of unofficial successor parties.

This leaves the Russian Orthodox Church as one of the last levers of Russian influence and as a means of keeping Ukraine psychologically within the Russian World. However, the Moscow Church must contend with dramatic shifts in attitudes towards Ukrainian identity that are taking place throughout the heartlands of Russian-speaking Ukraine in the south and east of the country.

There has been a collapse in allegiance to traditional Russian and Soviet identities in these regions since 2014 as more people self-identify as Ukrainians.

There has also been massive growth in the number of Ukrainians who no lon-

With Ukrainian presidential and parliamentary elections on the horizon, could religious tensions end up mobilizing the pro-Russian electorate?

This is unlikely because, as I mentioned earlier, the pro-Russian world has collapsed in Russian-speaking eastern and southern Ukraine and cannot revive as long as Russia continues to occupy Crimea and conduct military aggression in the Donbas. Nor are supporters of the Russian Orthodox Church concentrated in any one part of the country. One of the biggest stereotypes about Ukraine in the international media is the idea of a nation split between “Orthodox East” and “Catholic West”. This is wrong in many ways, not least because four of the seven western Ukrainian oblasts annexed by the USSR in World War II already had Orthodox majorities. In fact, the majority of Russian Orthodox parishes are located in western and central Ukraine, with southern Ukraine in third place.

In the Donbas up to 2014, Protestant churches actually had as many parishes

as the Russian Orthodox Church. Therefore, the granting of autocephaly cannot lead to an east-west religious confrontation because Russian Orthodox believers are not actually concentrated in the east of the country.

Although pro-Russian politicians Yuriy Boyko and Vadym Rabinovych are both relatively popular in the polls today, they have no chance of winning the 2019 presidential elections (I personally doubt Boyko will stand). Instead, the second round will see Poroshenko face Yulia Tymoshenko and he will win a second term.

What would a unified Ukrainian Orthodox Church free from Russian control mean for Ukraine’s nation-building project?

It would be an additional and important element in Ukraine becoming independent of Russia. This is already happening in many other areas and through the implementation of de-communisation laws. Psychologically, Russian aggression has broken the bonds between the two countries.

Ukrainian autocephaly would correct three historical wrongs. Firstly, it would correct the illegal transfer of the Kyiv Metropolis to the Moscow Patriarch in 1686. Ukraine would henceforth have its own Orthodox Patriarch.

Secondly, Ukrainian autocephaly, together with the process of Ukraine more broadly breaking away from the Russian World, would force Russians to debate who they really are as a nation and where they come from historically.

Continuing to claim that they are Russians from Kyiv Rus would become ridiculous. Ukrainian historians have long pointed to Russians having their origins in Novgorod, Vladimir-Suzdal and Muscovy, not Kyiv Rus. Thirdly, Russians would eventually have to accept that they are the younger brothers in relation to Ukraine. This might prove particularly difficult, as Russians routinely face accusations of engaging in “elder brother” chauvinism towards Ukraine. Kyiv, founded in 482, celebrated its 1,500th anniversary in 1982 and is therefore far older than Moscow, which dates from 1147. According to my calculations, being 665 years older means that Ukrainians are the “elder brother” among the eastern Slavs.

About the author: Taras Kuzio is a Professor at the Department of Political Science at the “Kyiv Mohyla Academy” National University and a Non-Resident Fellow at the Center for Transatlantic Relations at Johns Hopkins University - SAIS. www.bunews.com.ua

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Odesa Goes Center Stage Music festival aims to return Ukraine’s Black Sea port city to the European cultural map Ukrainian classical pianist Alexey Botvinov is an infectiously enthusiastic character who seems curiously immune to the default pessimism more commonly associated with many of his compatriots. “They say that the phrase “may you live in interesting times” is actually an ironic curse, but I never saw it that way. I even enjoyed Perestroika,” he quips. That this sunny disposition has survived the traumas of the post-Soviet years is in large part thanks to the endless inspiration Botvinov draws from his home city of Odesa. After completing his musical education in the twilight of the Soviet era, he joined the early 1990s exodus of classical performers fleeing the wreckage of the USSR. However, after a few years of comfortable exile in Dusseldorf, his nostalgia for Odesa proved too strong and Botvinov returned home. “Cultural life in the early years of Ukrainian independence reached 58

rock bottom, with empty theatres and dangerous streets that even made it difficult to attend events, but I felt that I simply had to renew my connection with Odesa. This connection makes me strong and inspires me.”

Botvinov has remained in Odesa ever since, using the city as a base from which to continue his global touring schedule at some of the world’s most prestigious classical music festivals. Over the intervening two decades, Botvinov’s love affair with the Black Sea port city has shown no signs of waning. On the contrary, the pianist is now trying to repay his hometown by putting Odesa firmly back on the European cultural map. Since 2015, Botvinov has been the driving force behind the annual Odessa Classics festival, which takes place at venues across the city in early June. Currently in its fourth year, the festival has expanded from an initial four-day sched-

ule to become a ten-day extravaganza. The list of performers has also grown impressively, with superstars like Israeli violinist Maxim Vengerov set to headline at this year’s festival. Other highlights include a gala concert by the Berlin Chamber Orchestra on Odesa’s iconic Potemkin Steps.

The idea for the festival first came to Botvinov in summer 2014 when Ukraine’s future as an independent state appeared to be in grave danger.

Russian hybrid forces were seizing towns and cities across eastern Ukraine and efforts were underway to destabilize Odesa itself. “Those were the darkest hours for our nation,” he recalls. “As events unfolded, I found myself asking what I could do for my country.” He decided that his most meaningful contribution would be to establish a classical music festival capable of promoting Odesa and portraying Ukraine in a positive light internationally. Given the military

culture

emergency in the country at the time, cultural diplomacy was not high on the agenda. Indeed, he chuckles as he recalls the difficulties he faced when trying to enlist the support of the municipal authorities. Ultimately, the inaugural festival was only possible thanks to Botvinov’s own personal contacts within the world of classical music, together with the magical allure of Odesa itself. “The Odesa branding was crucial,” he admits. “If I’d come to many of the musicians with a proposal to perform in Kyiv, there is a good chance that they would have said “thanks, but unfortunately I am busy.” When the invitation is for Odesa, people are more inclined to make room in their schedules.”

Odesa’s continued pulling power in classical music circles may come as a surprise to observers more familiar with accounts of Ukraine’s impoverished arts scene. Botvinov says this is a legacy of the city’s rich cultural heritage, together with the many famous performers who spent their formative years in Odesa before going on to become major international stars. “Every violinist in the world knows Odesa and regards it with a sense of www.bunews.com.ua

awe because it features in the biographies of some many legendary performers. This gives us a wonderful foundation to build on.”

Botvinov hopes that the festival will help to improve outside perceptions of Ukraine while also raising Odesa’s international profile. Looking back at the reaction to the first festival in 2015, he recalls the impact of coverage in the Russian media, which was then at the height of its “fascist Ukraine” propaganda offensive. “All those articles and reports about the dynamic cultural life of Odesa came as quite a surprise to Russian audiences who were then being encouraged to believe the country was spiraling into extremist

chaos. The impression created was more powerful than any political speech.”

He also sees the festival as a way of promoting Odesa as an international tourist destination while demonstrating that the city has much to offer in addition to its legendary nightlife. “We already have a lot of tourists coming to Odesa to party, but my goal is to boost cultural tourism.

There is so much more to Odesa than beaches and carousing. This city has enough of a classical music heritage to serve as one of the cultural capitals of Eastern Europe. Tourists should come for the culture. If they like, they can go to a nightclub afterwards.”

Odessa Classics

International Music Festival 1-10 June Tel.: 048-7040733 www.odessaclassics.com

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Turkish Airlines Celebrates

25 Years in Ukraine Turkish Airlines celebrated a quarter of a century in Ukraine this spring with a gala evening of festivities in Kyiv attended by friends and partners of the airline along with representatives of the diplomatic community and senior members of the Ukrainian government.

Turkish Airlines first began its Ukrainian service in 1993, soon after Ukraine had gained independence. Initially the airline offered two flights to Kyiv per week. This service has now expanded to include more than 60 flights per week from six Ukrainian cities (Kyiv, Odesa, Kharkiv, Lviv, Zaporizhia and Kherson).

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“Turkish Airlines is more than just a company. It represents a culture of service, a culture of quality,” commented Turkish Ambassador to Ukraine Yonet Can Tezel during the gala celebrations. “As the Ambassador of Turkey, I become proud each time my Ukrainian friends tell me why they prefer Turkish Airlines. This airline plays an important part in connecting the “new Ukraine” with the world. I know that Turkish Airlines sees Ukraine not only as a market but also as a partner to work with and to build more together. That is also Turkey’s policy toward Ukraine.”

networking events

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Ukraine Investment Opportunities A well-attended Fryday Afterwork event in midApril at the Radisson Blu Hotel in Kyiv’s picturesque riverside Podil district featured a presentation from new international investment company Ukraina Invest. Guests were able to meet Ukraina Invest managing partner Marcus Kling to discuss Ukrainian investment opportunities and exchange ideas. The networking event attracted a good selection of foreign and local business people who mingled and shared investment experiences in the kind of professional setting that is a trademark of both Fryday and Radisson Blu.

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networking events

Ukraine’s Legal High School Launches Criminal Practice The recently launched Legal High School educational initiative in Kyiv expanded further in spring 2018 by unveiling a Criminal Practice School. The official opening of the new school took place on 17 April at Leonardo Business Centre in the historic heart of the Ukrainian capital. Legal High School founder and Yuridicheskaya Practika general director Rustam Kolesnik was joined on stage by Legal High School supervisory board chair Natalia Kuznetsova and Yaroslav Zeykan of Criminal Practice School general partner EQUITY Law Firm. Classes began immediately after the opening ceremony, with EQUITY partner Alexander Lysak delivering the inaugural Criminal Practice School lecture to attorneys and law enforcement officers.

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Oschadbank retained its crown as Ukraine’s leading bank for the second con-

secutive year at the 2018 Financial Club Awards as representatives from across Ukraine’s banking sector gathered in April for the industry’s annual awards ceremony in the heart of blossoming Kyiv. While Oschadbank took the overall head-

line award, Tamas Hak-Kovacs of OTP Bank was named Top Manager of the Year

while Credit Agricole’s Regis Lefevre was recognized as Best Financial Director and Konstantin Lezhnin of UkrSibbank was named Best Retail Banker. The Finan-

networking events

2018 Ukrainian Banking Industry Awards

cial Club Awards have been held annually in Ukraine since 2012 and are based

on research conducted among more than 80 banking sector authorities and key market participants.

Nomination Oschadbank

Cash Loans

FUIB

Savings Deposit Credit Cards Car Loans

Mortgage Loans

Premium Banking

Branch Servicing of Individuals Internet Banking Salary Projects Overdrafts

Loans to SMEs

Services for Legal Entities Best Operational Director Best Financial Director Best Retail Banker

Best Corporate Banker Best Top Manager

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Winner

Ukraine’s Leading Bank

OTP Bank Alfa-Bank

Credit Agricole Bank Bank Globus OTP Bank

PrivatBank PrivatBank

Raiffeisen Bank Aval Ukrsibbank

Raiffeisen Bank Aval Ukrgasbank

Elena Lukyanchuk, Operational Director of Alfa-Bank Regis Lefevre, Credit Agricole Bank Konstantin Lezhnin, UkrSibbank Alexey Volchkov, FUIB

Tamas Hak-Kovacs, OTP Bank

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Cocktail Networking at Kyiv’s Almondo Bar & Restaurant As the spring socializing season got into full swing in the Ukrainian capital expats and locals alike welcomed in the weekend in style at Kyiv’s prestigious Almondo Bar & Restaurant complex in the Pechersk district. Guests at the event, which was organised by The Big Meet, enjoyed a relaxed atmosphere while working their way through one of the city’s more adventurous cocktail menus! For information about upcoming events, simply search for BigMeetUkraine on social media.

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Cyborg Movie Dominates Ukrainian Oscars As Ukraine Celebrates Cinema Renaissance

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The Donbas war movie “Cyborgs” stole the show at this year’s National Film Awards on 20 April, picking up a total of six “Golden Dzigas” or Ukrainian Oscars including Best Film, Best Screenplay and Best Actor. The film, which depicts the epic 242-day defense of Donetsk International Airport, broke Ukrainian box office records in 2017. It is part of a broader cinematic trend in Ukraine towards locally produced movies focusing on historic and contemporary Ukrainian issues. The rising popularity of Ukraine-themed movies is very much in line with similarly growing demand for other pop culture expressions of Ukrainian identity amid the patriotic impulses of a country seeking to come to grips with a national revolution and an ongoing conflict with Russia that many see as a war of independence.

This was Ukraine’s second annual National Film Awards event. The Ukrainian Film Academy hosts the awards, with the results determined based on voting by all members of the Academy. The evening presented an opportunity to take stock of the remarkable renaissance in the country’s film industry since the 2014 Revolution of Dignity. Just five years ago, a gala event of this nature

would have been unthinkable because the Ukrainian film industry simply did not produce any movies of its own. A glance at the array of entries at the 2018 National Film Awards illustrates just how far Ukrainian filmmakers have come in the past few years.

This remarkable progress has allowed Ukrainian cinematographers to resume a proud tradition. Ukraine has an impressive history of cinematic innovation dating back to the early years of the Bolshevik period in the 1920s. Throughout the Soviet era, Ukraine was home to some of the most celebrated studios in the USSR. However, the post-Soviet years saw the collapse of Ukrainian filmmaking, leaving local talent to seek opportunities elsewhere. Since 2014, the industry has enjoyed a remarkable revival thanks to a combination of renewed audience interest in locally produced movies and a surge in state financing. With domestic audiences now growing accustomed to watching Ukrainian movies and international distributors showing increasing interest in Ukrainian output, the industry is gaining a financial foothold that should allow it to move beyond reliance on government funding in the coming years.

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2018 Champions League Final A Football Fan’s Guide to Kyiv Kyiv expects to welcome over 100,000 football fans this month as the city hosts the 2018 Champions League Final between Liverpool and Real Madrid. It promises to be a memorable occasion for everyone in Kyiv and a welcome opportunity to show the outside world that there is much more to today’s Ukraine than the headline-grabbing conflict with Russia.

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Champions League guests arriving in Kyiv for the first time will likely be surprised to find that the Ukrainian capital is one of the greenest cities in Europe. They will also be delighted to discover that Kyiv boasts miles of sandy beaches within walking distance of the downtown area. Many will not be expecting to encounter such a quintessentially European city complete with its very own coffee culture, vi-

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(the 2004 Orange Revolution and 2014 Revolution of Dignity) both brought upwards of one million protesters onto the streets of central Kyiv for extended periods of time, providing the local authorities with an unprecedented schooling in crowd control issues.

Kyiv clearly has the potential to be a top-class venue for the Champions League Final and visitors to Ukraine should enjoy an unforgettable stay in the country. Nevertheless, like any major city, Kyiv has all sorts of local quirks and nuances that are worth taking into account.

The following tips aim to provide some useful background information and help visiting football fans get the most out of their time in the Ukrainian capital. Whether you are a supporter of Liverpool or Real Madrid, there is no reason why you should not leave Kyiv having also become a fan of Ukraine. :

champions league final

brant nightlife and thriving hipster scene. Perhaps the biggest shock of all will be the prices. While many of Kyiv’s hotels have shamelessly hiked up rates ahead of the big match, day-to-day expenses for things like dining out or using public transport are among the lowest in the developed world.

Although Kyiv remains something of an unknown quantity to international audiences, the city should be more than capable of coping with the challenges of staging one of the world’s biggest sporting events. The Ukrainian capital is actually rather well versed in the art of hosting major events and handling large crowds. Kyiv was the main venue when Ukraine co-hosted UEFA’s 2012 European Championship. The city also staged highly successful Eurovision Song Contests in 2005 and 2017. Meanwhile, Ukraine’s two post-Soviet revolutions

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:

The Olympic Stadium Kyiv’s Olympic Stadium is Ukraine’s main sports arena and the host venue for the 2018 Champions League Final. It has undergone several transformations since the 1920s and received a complete facelift prior to Euro 2012, when it hosted numerous matches including the final itself. Throughout the Communist era, the stadium was subject to the Soviet passion for politicized name- changing. Originally christened as the Trotsky Red Stadium, in the middle of the twentieth century it became the Khrushchev Republican Stadium until he too fell from grace. Following independence in 1991, the Ukrainian authorities eventually settled on the current Olympic Stadium moniker. How did Kyiv come to have an Olympic Stadium without actually hosting an Olympic Games? The stadium’s claim to Olympic status is tenuous but technically correct. During the 1980 Moscow Olympics, Kyiv served as a secondary venue and hosted seven football matches. The stadium even had an Olympic flame installed for the occasion.

The Death Match

The legendary Liverpool manager Bill Shankly once famously commented: “Some people think football is a matter of life and death. I can assure you it is much more important than that.” This witticism continues to resonate with football fans around the world, but it has special meaning in Kyiv, which was the scene of the WWII football drama known as the “Death Match”. During the Nazi occupation of the city, the German authorities arranged a series of football matches against a local side made up largely of former Dynamo Kyiv players. The Germans lost the first encounter 5-1 and so demanded a rematch. This return fixture was to enter history as the so-called “Death Match”. Despite strengthening their side with a number of new players, the Nazis lost once again, with the Ukrainians recording a 5-3 victory. At this point, the story becomes lost in the fog of war. Soviet propagandists would later claim that the Germans executed many of the defiant Ukrainian players after the match. Other subsequent fictitious embellishments helped to enhance the political potency of the story, with the Germans depicted as brutal cheats and the Ukrainians as loyal Communists inspired by visions of proletarian glory. We do know that the Germans arrested most of the Ukrainian team in the weeks following the match, and that at least four players subsequently died in captivity, but there is no evidence to link their deaths to the “Death Match” itself. Nevertheless, the legend surrounding the game has grown over the years. It has inspired a wide range of books and films including the 1981 movie “Escape to Victory”.

Fans wishing to learn more about this celebrated and much mythologized chapter of WWII history can visit Start Stadium in Kyiv and see the venue where the Death Match took place. Lukianivska Station is the closest metro station.

The Other Shevchenko

Football fans visiting Kyiv could be forgiven for thinking that Ukrainians have gone a little overboard in their veneration of superstar striker Andriy Shevchenko. After all, the Ukrainian capital city has a Shevchenko Park, a Shevchenko Boulevard, a Shevchenko Museum and a Shevchenko University. These honors are actually for Ukrainian national bard Taras Shevchenko, the nineteenth century artist and writer who is widely regarded as the father of the modern Ukrainian language and one of the primary spiritual inspirations behind Ukraine’s long struggle for independence. Taras Shevchenko grew up as a slave in rural Ukraine before his obvious artistic talents convinced admirers to purchase his freedom.

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His Ukrainian language writings are required reading for all Ukrainian schoolchildren and he enjoys pride of place in virtually every single Ukrainian city, town and village. Dynamo Kyiv and AC Milan hero Andriy Shevchenko is also a rather popular figure among Ukrainians, but he has a long way to go before he can rival his illustrious namesake.

Lobanovskiy Stadium

As well as the Olympic Stadium, Kyiv also boasts Lobanovskiy Stadium, which takes its name from celebrated Ukrainian trainer Valeriy Lobanovskiy. While the Olympic Stadium is monumental in every sense, Lobanovskiy Stadium is one of Europe’s quaintest and coziest sports arenas. Nestled among lush parkland and surrounded by a canopy of greenery, this single tier stadium has an air of aristocratic elegance that makes it the kind of football venue you would expect to encounter in a wealthy and obscure European principality. Its full name is the Valeriy Lobanovskiy Dynamo Stadium and it is the official home ground of Dynamo Kyiv, but Dynamo rarely play here anymore, preferring the vast expanses of the Olympic Stadium instead. Outside the colonnaded entrance to the stadium is a statue of a seated Lobanovskiy that captures the famously scientific tactician in thoughtful pose.

Name Games

When Irish rockers U2 sang about a place “where the streets have no name”, they clearly did not have Kyiv in mind. Confusingly, the Ukrainian capital is a place where the streets often have three names. This can include the old Soviet-era name (in both Russian and Ukrainian variations) along with the post-Soviet name. The 2014 Revolution of Dignity ushered in a new round of street renaming that continues to this day, creating further complications. Consequently, visiting fans trying to navigate their way around Kyiv may find that the addresses they encounter do not always match the information they have been given or the details they find online. Even if you are able to read the Cyrillic alphabet, you may still encounter situations where the street signs themselves are out of date. This should not be a major issue, but it is something worth bearing in mind if you encounter contradictory addresses.

Maidan Memorials Football fans generally like nothing better than coming together in large groups to enjoy some beer and bonhomie. One of the most popular gathering places in Kyiv has traditionally been Maidan Nezalezhnosti, or Independence Square. This open space in the heart of the city was the focal point of Ukraine’s two post-Soviet revolutions. Thanks to extensive TV coverage of both revolutions, it is probably the most iconic and internationally recognizable spot in Kyiv. However, it may not be the best place to engage in alcohol-fuelled revelry. Dozens died on Maidan when snipers opened fire on protesters in the final days of the 2014 Revolution of Dignity, transforming the square and the surrounding area into sacred ground for Ukrainians. Memorials to the victims line the street leading up from Maidan towards the government district. In light of these sensitivities, it would be sensible to avoid causing potential offense by keeping any excesses on Maidan to a minimum. Instead, fans will find plenty of other public spaces to gather, including designated fan zones and the area around the Olympic Stadium itself. Having said that, visiting fans are welcome to offer expressions of condolence and to pay their respects at the many memorials around Maidan to those who died during the revolution.

Language Issues Football is a universal language of its own and visiting fans will find that many residents of football-loving Kyiv have a detailed knowledge of both Liverpool and Real Madrid that will help to overcome any communication barriers. Those looking to learn a few local phrases can consider trying their hand at either Russian or Ukrainian. Despite the ongoing conflict with Russia, Kyiv remains a largely Russian-speaking city where Russian is the default language of everyday communication.

Ukraine is also widely spoken and universally understood. Either of the two languages would be acceptable, although knowledge of a few Ukrainian phrases is probably more likely to break the ice and impress any new Kyiv acquaintances.

Learn Some Toasts

According to the ancient chronicles, Ukraine’s historic enthusiasm for alcohol played an important part in the country’s adoption of Christianity. When tenth century Kyiv Crown Prince Volodymyr the Great was considering a range of different possible state religions, he allegedly dismissed Islam with the epic comment: “Drinking is the joy of the Rus. We cannot do without it.” We will never know if this Kyiv quote is genuine, but there is no disputing the fact that alcohol plays a prominent and often ritualistic role in Ukrainian social interaction. If you are lucky enough to become friendly with Ukrainians during your visit to Kyiv, this will likely involve an invitation to drink together. Anyone wishing www.bunews.com.ua

champions league final

This monument to legendary Ukrainian football manager Valeriy Lobanovskiy is located outside the entrance to the downtown Kyiv stadium that bears his name. Lobanovskiy managed the great Dynamo Kyiv sides of the 1970s, 1980s and 1990s. He also coached the USSR team in the 1980s.

to make a positive impression would be wise to practice some toasts.

For Ukrainians, toasting is an intrinsic part of the drinking experience.

Toasts are often long, elaborate, and disarmingly sincere. In a society where public displays of emotion are still often the subject of suspicion, toasts are an exception. They are a socially acceptable opportunity to open up and express yourself. Simply stand up with glass in hand and wait until you have everyone’s attention, then launch into your toast.

Anything complimentary about your hosts will go down well, as will odes to international friendship. As the toasts start flying, newcomers often run the risk of going too far. Those wishing to retain at least some recollection of their time in Kyiv will be pleased to learn that it is not obligatory to drain your shot glass completely with every fresh toast.

Sometimes a sip is the smart option.

Avoid Ungentlemanly Conduct

One of the darker sides of Kyiv is the city’s extensive sex industry. There is no single red light district, so the lines separating the sex trade from ordinary Kyiv life can sometimes appear blurred. This does not mean that it is OK to approach women unsolicited or to make random indecent proposals. Doing so is not only shockingly rude and ignorant – it could also easily lead to ugly and physically dangerous confrontations.

Visiting fans are advised to remain respectful of the Kyiv population and to exercise the same levels of gentlemanly conduct they would expect from guests in their own countries.

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West Ukrainian city receives annual PACE award for promoting “European ideal” PHOTO: Mykola Markovych

and finally

Ivano-Frankivsk wins 2018 Europe Prize

Ukrainian city Ivano-Frankivsk was awarded the 2018 Europe Prize in April. The Europe Prize is an annual award given each year by the Parliamentary Assembly of the Council of Europe (PACE) to the town or city most active in promoting the European ideal. The prize is recognition of the western Ukrainian city’s efforts to develop relationships with other European cities while also promoting academic and cultural links at the grassroots level.

Created by PACE in 1955, the Europe Prize is the highest distinction that can be bestowed on a European town or city for its actions in the European domain. The prize consists of a trophy, a medal, a diploma and a scholarship for a study visit to European institutions for young people from the winning town.

The PACE announcement of Ivano-Frankivsk’s triumph outlined how the city has developed robust international co-operation in numerous fields, particularly in the domain of academic activities. IvanoFrankivsk universities collaborate closely with many other European universities and institutes of higher education. The city also organises a range of thematic and festive events annually to mark Europe

Day and holds a European Week of Local Democracy each year.

According to PACE officials, Ivano-Frankivsk is renowned for its vibrant cultural life. The city’s annual cultural calendar attracts guests from across Europe, notably to the International Blacksmiths Festival, Ivano-Frankivsk Half Marathon, the International Festival of Christmas Carols, and the Days of Polish Culture.

Named after Ukrainian literary figure Ivan Franko, the city has a population of just under a quarter of a million. It is one of the gateways to the Ukrainian Carpathian Mountains, which are emerging as one of the country’s most popular tourist destinations. Ivano-Frankivsk is the closest city to Ukrainian ski resort Bukovel, which ranks as the largest in Eastern Europe.

Ivano-Frankivsk is the second Ukrainian city to receive the annual Europe Prize and follows eastern Ukrainian city Kharkiv, which claimed the award in 2010. Five other towns, namely Bamberg and Munster in Germany, Cervia in Italy, Issy-les-Moulineaux in France, and Sopot in Poland, were also shortlisted for this year’s Europe Prize.

Letters to the editor: editor@bunews.com.ua Advertising inquiries: +38-067-4032762 Business Ukraine magazine is distributed every month free of charge at a wide range of leading business centres, embassies, international organizations, hotels and restaurants throughout Kyiv.

Registration: KV 15006-3978PR Published by: Open Borders Media Director: Susanna Dickinson

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