Business Ukraine May 2015 by Business Ukraine magazine

May 2015 www.bunews.com.ua

ICON OF UKRAINIAN AVIATION Antonov President Dmytro Kiva

MADE IN UKRAINE French premiere for ground-breaking new Ukrainian cargo plane: Antonov prepares to showcase An-178 at Paris Air Show in June Also inside: Monthly American Chamber of Commerce in Ukraine Newsletter

MAY 2015 Ukrainian aviation giant Antonov will be unveiling its latest transport plane at this summer’s Paris Air Show as the state-owned company looks to expand international cooperation. Business Ukraine takes a look at Ukraine’s biggest brand name.

May 2015 www.bunews.com.ua

ICON OF UKRAINIAN AVIATION Antonov President Dmytro Kiva

From the editor Ukraine has defied Russia but must conquer corruption The death toll continues to rise in east Ukraine, and there is every reason to believe that the region will remain a heavily militarized conflict zone for the foreseeable future. Nevertheless, it is becoming increasingly hard to avoid the conclusion that Russia is losing the war - at least in as much as its war aims are proving unattainable, while the economic and geopolitical losses the Kremlin is incurring cannot be offset by the short-term strategic advantages it has gained from military intervention in Ukraine. The events of the past year have exposed the Kremlin’s Novorossiya dreams as fantasies based largely on wishful thinking and an outdated understanding of Ukrainian identity politics. Instead of establishing a pro-Moscow empire throughout southern and eastern Ukraine, Russia has only succeeded in occupying a relatively small enclave in parts of Donetsk and Luhansk oblasts. This failure can be attributed to two key factors: the unexpectedly resolute response of the Ukrainian nation, and the lack of popular support for Russian imperial ambitions among the Ukrainian residents of the regions identified by the Kremlin as the future Novorossiya. Contrary to Russian expectations, few in southern or eastern Ukraine have been eager to share the fate of Donetsk and Luhansk, and fewer still have been prepared to fight for Russian

run and run, but that needn’t prevent Ukraine from working towards the historic geopolitical breakthrough which is now almost within touching distance. Most analysts agree that European integration remains plausible despite the emergence of a potentially long-term frozen conflict in the Ukrainian Far East. To make this happen, Ukraine must first convince the international community that it is serious enough about reform to warrant the kind of financial and political support needed to make integration a reality. International patience with the Ukrainian authorities is already showing signs of wearing thin. If the threat of further Russian aggression begins to recede, the questions being asked about Ukraine’s commitment to reform will only grow more vocal. Without a clear international consensus over the credibility of a European Ukraine, the integration process is doomed to fail. Over the past year Ukraine has already proved itself strong enough as a nation to resist a forced Russian reunion, even when confronted by Russian tanks. This is a remarkable achievement in itself, but it is not enough. In order to secure a decisive victory, Ukrainians must now defeat the culture of corruption which has been the enemy within ever since the Soviet collapse of 1991. Many believe that corruption is actually a far more dangerous

interests in Ukraine. Instead, we have witnessed a consolidation of Ukrainian national identity which has exposed the old stereo-

adversary than the Kremlin, and the jury is still out on whether the current leadership pos-

types of a terminally divided Ukraine as increasingly obsolete. The reaction of the international community has also played a crucial role in derailing the Novorossiya juggernaut. While few

sesses the political will to tackle the deeply engrained corrupt practices which have hampered Ukraine’s development for the

would characterize the EU and US-led sanctions regime as particularly hawkish, the international response has still been far more

past two-and-a-half decades. If signs of progress are not soon evident, attitudes

robust and unified than anything mustered during Russia’s 2008 invasion of Georgia. It is safe to assume that Moscow was counting on significantly less opposition from the West.

towards the Ukrainian government will quickly harden, both at home and abroad. Thousands of Ukrainians have given their

In apparent recognition of these realities, the entire Novorossiya

lives for the chance to secure a European

project has recently been publicly shelved, while Kremlin officials have stepped up their calls for Donetsk and Luhansk to remain part of a united Ukraine. For perhaps the first time in recorded

future, and there will be little sympathy for the current authorities if they fail to meet the challenge after all the sac-

history, we are thus witnessing the bizarre spectacle of a military aggressor seeking to cement its gains by forcing its conquests

rifices which ordinary Ukrainians have made.

onto its victim. Negotiations over the future status of the occupied east will likely

Peter Dickinson Chief Editor

May 2015

Antonovâ&#x20AC;&#x2122;s next generation cargo carrier Ukrainian aviation giant set to showcase new An-178 transport plane at 2015 Paris Air Show in June

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tal. The Antonov An-178 cargo plane is a short-range, medium-airlift transout to the Kyiv public three weeks earlier. It will now be unveiled to global

quiring extensive airport infrastructure.

Catering to a vacant niche in the air freight market

audiences at the 51st Paris Air Show at Le Bourget exhibition centre in midJune, and is expected to be among the most talked-about premieres at this

The new An-178 is a next generation aircraft broadly based on Antonov’s

biannual gathering of the elite of the international aviation industry. The An-178 represents the next generation of cargo planes from Ukrainian

designed as a direct upgrade to the previous generation of Antonov cargo carriers. This new An-178 cargo plane has been on the drawing board

aircraft producer Antonov, and comes tailor-made to meet the demands of the global air freight industry. It offers all the trademark cargo conveniences of the Antonov brand, while incorporating the latest international

since 2011, and has been developed in line with the Antonov philosophy of identifying the contemporary requirements of the international aviation

air freight standards, including fully sealed cargo compartment, twin jet engines, simulator training software and digital avionics. This niche cargo

of the company’s clients. The An-178 can carry cargos of up to 18 tonnes, allowing it to occupy a relatively empty niche in the air freight market be-

plane’s other selling points include its ability to operate from the most ba-

tween the smaller, short haul carriers and the really big boys of the industry.

May 2015

industry

Ukraine’s latest transport plane will be among the highlights at this year’s Paris Air Show when it is showcased later this summer in the French capi-

New Antonov cargo transporter takes to the air: the An-178 was presented to the Kyiv public in mid-April, 2015, and

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industry

The decision to develop a transport plane in the 13-18 tonne range came following extensive Antonov analysis of recent international air freight trends, including statistics for typical loads carried by the widely employed Antonov An-12. This analysis found that An-12 models and existless than their capacity loads, meaning that there would theoretically be considerable market demand for a tailored cargo plane designed to offer 18 tonne market.

cluding foodstuffs and other perishables which can now be moved at high altitudes. The An-178’s cargo compartment is also particularly spacious for the aircraft’s size and class, having been custom-designed to accommodate today’s most common air freight cargos - including maritime containers to the maximum, while allowing for a minimum of wasted space.

Providing cargo access to out-of-the-way destinations Cargo planes are often called upon to transport freight to destinations which are beyond the reach of most commercial aircraft. With this in

Integrated into the Antonov family

mind, one of the An-178’s most attractive selling points is its ability to

The An-178 will be far cheaper to operate than the still widely used An12, not least because it has two engines instead of four. Unlike the An-12,

able to take off and land on unpaved runways and pebble-covered sur-

there is no need for costly and time-consuming maintenance of propel-

faces, while inbuilt loading facilities mean it can be loaded up without

able to save on personnel costs. Perhaps most important of all in terms of economic appeal is the full integration of the An-178 into the existing Antonov family, allowing partners to greatly reduce the expense of

loading capability, coupled with the plane’s enhanced runway versatility, mean that it is well-placed to provide cargo solutions for customers who need to carry air freight to hard-to-reach spots including desert

maintaining and servicing the new model. The An-178 also comes with a

and tundra locations.

to avoid additional outlay when integrating the new Antonov model into

Azerbaijan and China among initial customers models currently in production in Kyiv, with agreements inked between Antonov and China, as well as Azerbaijan’s Silk Way Airlines. Antonov has

Pressurised cargo compartment offers expanded freight options Other innovations and updates on previous Antonov cargo carriers include a fully pressurised cargo compartment, thereby removing the restrictions on the transport of people which had limited the service range and application of some previous models. This completely sealed cargo hold also sig-

May 2015

initial plans to construct over 200 An-178s, with additional production agreements currently also being considered with both Azerbaijan and international markets for both civilian and military use, and has reported ongoing talks with potential clients in Europe, Asia and Africa. The price of a single An-178 is estimated at about USD 40 million. 7

Icon of Ukrainian aviation Antonov’s Dmytro Kiva on boosting Ukraine’s aviation independence and reducing Russian reliance Antonov President and General Designer Dmytro Kiva is regarded

years ago, long before the Kremlin’s military intervention made

as something of an institution within the Ukrainian aviation industry. This status is hardly surprising, given the fact that the sprightly

it an urgent priority. “I don’t see it as a big tragedy,” he reflects, pointing out that Antonov has always had a history of international

septuagenarian has been with the company for over half a century. A lifelong aviation enthusiast who spent his student years in Kharkiv constructing planes as a hobby, Mr. Kiva first joined Antonov as a

sales and production cooperation with a range of nations including the likes of India, China and Iran, and was never actually as dependent on the Russian market as many may assume. He says

young graduate in the 1960s, after first having been hand-picked by company founder Oleg Antonov himself. He has since worked his

that Antonov’s former Russian partners have recently sought to renew cooperation and have actively proposed rebuilding ties, but

way up the company ladder, occupying a series of increasingly senior positions before finally becoming Antonov President ten years ago. Business Ukraine magazine sat down with the Antonov chief and Ukrainian aviation icon to preview the upcoming premiere of his company’s latest product, the An-178 cargo plane, at this year’s Paris Air Show, and to discuss the challenges presented by the need to reduce reliance on Russia and diversify Antonov’s international partnerships.

explains that he has thus far resisted any direct overtures, arguing that the issue of bilateral cooperation needs to be settled at the inter-governmental level and can only be resolved once the war is over. Despite acknowledging the political dimension to the debate over commercial cooperation with Russia, Mr. Kiva argues that it is essentially an issue of stability. “We don’t want to find ourselves in a position where we are reliant on Russian components which will not be delivered,” he reasons.

Identifying empty niches on the international aviation market

Expanding international cooperation top of the Antonov agenda

Mr. Kiva is understandably excited about the arrival of the new An178 plane, which he sees as a good example of Antonov’s ability to identify and exploit vacant niches in the international aviation market, while also playing to the company’s design and production strengths. The An-178 can accommodate up to 18 tonnes in its hold, and is also able to transport particularly large cargos and operate out of the most basic of airstrips, which allow it to fill a gap in the existing international air freight market. “The An-178 is a balance between the needs of the market and our own capabilities,” he offers, stressing that the entire development of the An-178 was undertaken using the company’s own resources. This new aircraft, he says proudly, can be regarded as a genuine Ukrainian achievement. “No plane anywhere in the world is produced using 100% domestic components. This is true for both practical and pragmatic

This rift with Russia has presented a number of practical production challenges for Antonov which have in turn led to greater cooperation with both Ukrainian and Western aviation firms - a process Mr. Kiva expects to expand and develop in the coming years as Russian suppliers are gradually removed from the Antonov production cycle and replaced by domestic or international alternatives. He explains the detailed work currently being undertaken by the company to reduce dependence on Russian suppliers, which involves parallel projects addressing the production of each and every aircraft Antonov makes. Thorough plans have been produced for every model, outlining the step-by-step reduction of reliance on Russian components, complete with deadlines and targets. Antonov has invested considerable company resources into the programme, reflecting the importance the company attaches to achieving greater independence.

reasons, as foreign production partners serve to increase the client base. The more international partners we can involve in a project,

In recent months the Antonov President has found himself drawn into the confrontation between Russia and Ukraine in a very direct

the greater the potential market for the aircraft. But the design and development of the An-178 was done here in Kyiv. the aircraft uses Ukrainian engines and flight systems, and it is produced entirely

and personal way, when he was invited to leave his post in Kyiv and take up a senior position within the Russian aviation industry in Moscow. “They offered very advantageous terms for me and my

in Ukraine.”

family but I refused their invitation. I cannot simply abandon my country,” he explains.

Rethinking Russian ties and increasing Antonov independence

The ongoing conflict with Russia over Ukraine’s geopolitical pivot

Profitability and the appeal of potential privatization

towards EU integration has meant an abrupt end to much of the

As one of Ukraine’s largest state enterprises, Antonov has long

economic cooperation which had previously characterized bilateral Ukrainian-Russian ties. As a former Soviet industrial giant with a long history of close cooperation with Russian companies, Antonov

been cited as a prime candidate for privatization. This obvious economic appeal has been blamed for repeated rumours of the company’s alleged financial mismanagement. Mr. Kiva dismisses

has been particularly impacted by this process. Mr. Kiva is philosophical about the changing relationship with Russia, and says

bankruptcy speculation out of hand as ‘simply lies’, before reeling off a string of impressive figures to reflect Antonov’s current

that the process of moving away from interdependence with Russian partners actually began to pick up pace at least three to four

strong economic health. Nevertheless, he is sympathetic to the idea of rethinking Antonov’s corporate status, and believes that www.bunews.com.ua

interview

if handled correctly, private sector involvement in the company

Paris premiere ‘prestigious for Ukraine’

could radically improve its performance and profitability. “The most ineffective form of management is state management,” he

Mr. Kiva says he is very much looking forward to personally attending the presentation of the An-178 at the biannual Paris Air Show

says matter-of-factly. “State-owned companies face a whole series of bureaucratic barriers and limitations on their business activi-

in mid-June, and sees the unveiling of Antonov’s latest creation as an opportunity to promote Ukraine as a whole to global audiences.

ties which are incompatible with the modern business climate. I am convinced that if we conducted a professional IPO, we could become five times more profitable. Our greatest assets are not

“It will allow us to demonstrate what Antonov and Ukraine are capable of. Presenting a new airplane is a matter of considerable prestige for the whole country, not just for the company itself. We

our property or production facilities but our human resources, which allow us to produce aircraft capable of competing on mod-

are looking forward to showing the world that our country is not only capable of defending itself from occupation, but can also pro-

ern global markets.”

duce such things.”

May 2015

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Antonov aircraft are Ukraine’s most recognizable exports and can be found all over the world In terms of commercial brand names, nothing else which contemporary Ukraine has

nity to work independently and was given control of his own design and research bu-

and number one largest cargo transport planes in the world, guaranteeing them a

to offer can realistically hope to compete with the global recognition enjoyed by the

reau, which would soon move to Kyiv and take on his name. Initial Antonov planes,

steady stream of international customers eager to book them in order to transfer

Antonov aviation brand, which is known in practically every corner of the world. Throughout its sixty-nine year history, An-

including the legendarily versatile An-2 biplane, were functional and practical aircraft whose designs were very much

particularly large and awkward air freight cargos across the globe. These two cargo kings have proved particularly popular as

tonov has produced a total of more than 22,000 aircrcaft of all shapes and sizes,

keeping with the proletarian principles favoured by the Soviet authorities. In 1956,

military transport planes. Since 2006, they have been used for strategic airlift tasked

from small passenger planes to giant cargo carriers. Antonov planes are currently in service in 78 countries. The Ukrainian aircraft producer’s main focuses are transport planes, regional passenger planes and special purpose aircraft. In terms of sheer size, Antonov may not be in quite the same league as global aviation industry leaders such as Boeing and Airbus, but it is nonetheless one of relatively few genuinely international players on today’s aircraft market, and a brand name which places Ukraine firmly among the thinly populated ranks of the aviation elite.

Antonov Design Bureau created the An-8 military transport - the first aircraft of its kind in the Soviet Union. In the 1950s, the company experienced a major breakthrough when it developed the An-12 cargo plane, which served both in commercial airlines and in the Air Forces of many countries. Many An-12s remain in service around the world to this day. In 1965 Antonov’s innovative An-22, the first widebody transporter in the world, won major plaudits when it made its international debut at the Paris Air Show.

within the NATO SALIS programme.

Soon to celebrate seventieth anniversary The Antonov story begins in the immediate post-WWII years. The company was established in 1946, and was initially based in Novosibirsk, before being transferred to Kyiv in 1952. Antonov has been based in the Ukrainian capital city ever since, and continues to occupy a vast plot just off Victory Prospekt close to Kyiv’s Svyatoshyna

The 1980s was to prove the era of giant Antonov transports, which saw the development of the massive An-124 ‘Ruslan’ and its (very) big brother, the An-225 ‘Mriya’. These two unfeasibly large models earned Antonov considerable international kudos and won the company increased credibility as a producer of groundbreaking and technically innovative aircraft which pushed the boundaries of aviation technology. The

Antonov’s An-124 and An-225 giants are undoubtedly spectacular flagships for the Antonov fleet, but they are vastly outnumbered by the workhorses of the Antonov production lines, which continue to swarm the global aviation market. Thousands of Antonov passenger and cargo planes remain in service all over the world. Antonov’s production output of over 22,000 aircraft is a staggering total which comfortably makes it one of the most prolific producers in the history of world aviation. Today, the Ukrainian aviation company is probably best known for its niche cargo transporters, which remain globally competitive. Over the past 25 years, Antonov has managed to weather the economic challenges of the post-Soviet period and maintain its position as the leading aviation enterprise in independent Ukraine. As it prepares to mark its seventieth an-

region. The company takes its name from initial chief Oleg Antonov, the eminent

mass-produced Ruslan and the one-off Mriya (the name means ‘dream’ in Ukrai-

niversary, Antonov is firmly installed as Ukraine’s biggest brand name, in every

aircraft designer who first built his reputation as an aviation expert by designing gliders in the 1930s. During WWII, Oleg

nian) remain respectively the number two

sense of the word.

Antonov played a key role in the creation of multi-seat landing gliders as well as ‘winged tanks’ for deployment direct to the battlefield. He spent much of that period developing the Yak planes which were mass-produced for use by the Red Army Air Force during the conflict with Nazi Germany.

Kyiv becomes cargo aircraft capital Following the defeat of Hitler and the end of WWII, Antonov requested the opportu-

May 2015

Gigantic Antonov flagships

industry

Ukraine’s most famous global brand

Over 22,000 planes and counting

‘In terms of commercial brand names, nothing else which contemporary Ukraine has to offer can realistically hope to compete with the global recognition enjoyed by the Antonov aviation brand’ 11

ou may already be aware that the Antonov An-225 ‘Mriya’ is the world’s largest aircraft, but until you have seen this gravity-defy-

ing Ukrainian giant up close, it is impossible to appreciate quite how huge it really is. Built to serve as a transporter for the Energia-Burat space shuttle programme, the An-225 has been the biggest plane in

Every schoolboy’s fantasy The An-225 is so oversized that it resembles an exaggerated school-

sized aircraft seem positively dainty in comparison.

interior. Once safely nestled in the pilot’s seat, you can monitor the but you must stretch and struggle in order to see the runway tarmac beneath the plane’s nose. Piloting the An-225 is not a job for sufferers of vertigo.

boy drawing of a fantasy mega-plane. From the over-the-top wingspan

The Colossus of Kyiv

the plane’s six jet engines, this is the stuff of testosterone-pumped

one in service - construction of a second An-225 began soon after

‘bigger is better’ daydreams. As you stand in front of it, the An-225 seems to loom over the runway like a winged skyscraper. It completely

Unique Ukrainian colossus 12

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No-frills interiors

is cared for by a team of technicians specially trained to service this unique aircraft. It returns to Hostomel on a regular basis in-between

Despite its record-breaking celebrity status, the An-225 is a no-frills -

frequent international air freight jobs, and undergoes a thorough technical checkup once every six months. The An-225 is in considerable demand as a cargo carrier, and holds

of the technical staff, who enjoy their own quarters towards the tail

many dozens of world records for the largest and heaviest loads ever delivered via air freight. International clients queue up to take ad-

of the craft. The cargo hold itself is so vast that it literally takes the breath away. Lined with a variety of pulleys and cranes, the 43-meter

vantage of its unique capabilities. In the past decade the An-225 has carried military equipment to the Middle East for the US and Canadian governments. It has helped out in numerous international aid

long chamber feels more like a factory interior than the inside of an aircraft. Five modern battle tanks can comfortably be parked inside the An-225, which, unsurprisingly, holds the current world record for

operations, and has generally made a habit of stunning the global air freight industry with its ability to carry loads which had previously

the longest piece of cargo ever transported by air - a pair of 42-meter wind turbine blades which it delivered to Denmark in 2010.

industry

been considered beyond the reach of modern aviation. be secured. The sole functioning An-225 is based at the Antonov Air-

s is worldâ&#x20AC;&#x2122;s largest aircraft May 2015

Defending Ukraine in the heart of Europe Ukrainian Ambassador to Austria Olexander Scherba on defending European values in Vienna Ukrainian diplomat Olexander Scherba is

Vienna is regarded as one of the key dip-

will prevail. It always does. My function as a

the country’s current ambassador to Austria, a role which has thrust him to the forefront of the fight to shape opinion in one of

lomatic hubs in today’s Europe. How does Ukraine’s diplomatic mission in Vienna compare to other missions in major glob-

diplomat is to make sure it happens sooner rather than later.

the most important capitals within the EU.

al capitals?

Do you ever feel outgunned by the scale of

Today’s Vienna serves as a headquarters for a wide range of international organisations such as the OSCE, and as such it is a crucial diplomatic hub where attitudes towards the Ukraine crisis are often forged and determined. Ambassador Scherba is a career diplomat who this year celebrated his twentieth anniversary in the Ukrainian diplomatic service. Previous overseas postings have included service at the Ukrainian embassies in Germany and America, but he first rose to genuine public prominence during 2014 while serving as Ambassador-at-Large for the Ukrainian Foreign Ministry. In this role, Ambassador Scherba became a regular commentator on international TV stations during coverage of the Euromaidan protests and the subsequent Russian military intervention in Crimea and east Ukraine. Ambassador Scherba, who says his diplomatic

It’s a rather small embassy which is understaffed and under-financed, just like most other Ukrainian missions are at present. That’s on the one hand. On the other hand, it is an energized embassy which is very much conscious of the responsibility resting on the shoulders of every Ukrainian diplomat amid today’s existential crisis. It is also important to note another immensely invigorating factor - the embassy is backed by a vivid, spirited Ukrainian community in Vienna. Seeking understanding and support for Ukraine among the Austrian public is often an uphill battle. I cannot offer what Russia offers on a daily basis. But I can offer the truth. And the truth is that by annexing Crimea and starting a hybrid war in east Ukraine, Russia destroyed Europe as we know it. The truth is that one region of Ukraine is under direct Russian occupation at the moment, while

the large Russian diplomatic presence in Vienna? I am outgunned in terms of the amount of money and manpower spent here by Russia. But what’s the purpose of all this ‘investment’? What the Kremlin is doing is the largest, most mind-boggling act of political seduction in the history of mankind. It seems like they are pursuing a threefold strategy designed to undermine Ukraine, confront America and seduce Europe. This strategy bets against freedom, democracy and tolerance, while offering all kinds of reasons to give up on things that until just recently were believed to be dear to Europe. Basically, it tries to buy Europe’s soul. In many cases this has not been unsuccessful.

role model is nineteenth century French diplomatic legend Talleyrand, spoke to Business Ukraine magazine this month about the

another region is filled with hateful Russian citizens holding Russian guns and Russian flags while fighting against Ukraine. No mat-

tion of Crimea and military intervention in east Ukraine? Austrians realize that something went mas-

challenges of representing Ukraine in one of Europe’s liveliest diplomatic hotspots.

ter how many billions you spend, you can’t hide this ‘elephant in the room’. The truth

sively wrong in Europe. And, instinctively, they now want this problem to go away.

‘The truth is that by annexing Crimea and starting a hybrid war in east Ukraine, Russia destroyed Europe as we know it’ 14

What is your impression of Austrian public opinion regarding the Russian annexa-

They understand that the annexation of Crimea was illegal, and that Russia is deeply involved in the events in east Ukraine. However, words like ‘war’ and ‘aggression’ are in most cases avoided. Saying them would mean taking sides, and Austrians passionately stick to their neutral status. My policy is to consistently remind them that neutrality doesn’t mean indifference. I remind them that all parallels, say, between the Ukrainian and Balkan wars are deeply flawed. What’s happening in east Ukraine is not an ethnic war. It is not a war for territory, but a war for values, for Europe’s soul. This means that it’s the kind of war where Europe, by www.bunews.com.ua

geopolitics

May 2015

‘What the Kremlin is doing is the largest, most mind-boggling act of political seduction in the history of mankind’

cracy and the internal political fights within Ukraine. Doing business in Ukraine must get easier. I see things evolving in this direction, and can only hope that it would happen more rapidly and prominently. Do you see any parallels in the post-WWII relationship between Germany and Austria and today’s relationship between Russia and Ukraine?

default, cannot be politically and emotion-

Russia) rather than as Ukraine’s struggle

No. There was no major hostility between these two countries, either in terms of political ties or human relations. In terms of

ally neutral.

for a European future? Frankly, the debate in diplomatic circles is

Ukraine and Russia, this seems to be the case. I’m afraid that this will be our new re-

How influential has the Russian information offensive been in shaping Austrian opinion towards the Ukraine crisis? I don’t know how effective it has been in terms of costs and benefits, as the cost to the Russian treasury must be enormous. But it successfully pulls all the right strings: the anti-Americanism, the sour mood within the EU, the pain of economic sanctions, the historic connections from the past, and so on. The amount of money spent seems to be just as important here as the level of sophistication. But fooling people and telling them lies is a thankless task that ultimately never succeeds. So I would say it has been ‘influential’ but not ‘victorious’.

ality for years to come.

How would you describe Austrian media coverage of the Ukraine crisis? Those media outlets which cover the war directly tend to try to avoid taking sides. Their motto seems to be: it’s a dirty war.

not my biggest problem. Diplomats are pragmatic, practical people who are generally deeply aware that the whole ‘Ukraine is just a battlefield’ mantra is being consciously cultivated by Russia. My problem is with politicians and the broader general public. And the further to the right or to the left of the political spectrum one stands, the more one is inclined to buy into this mantra. The centrists of the political debate realize that the Ukrainian revolution is the logical continuation of the revolutions that shaped Europe 25 years ago. Those revolutions were all about values. The left and right wingers tend to overlook these values, and look away from the fact that Ukraine has chosen the same things as eastern and central Europeans did 25 years ago. They also overlook the fact that, unlike the nations who left the Eastern Bloc 25 years ago, Ukraine is being punished for its choice. This is the danger we face: with one small

Both sides are guilty and in violation of agreements, and the civilians have to suffer. That’s also the prevailing tenor of Austrian

step, ‘pragmatic Europe’ can easily become a Europe without values. Is this the essence of the coming ideological shift on the conti-

Throughout the Euromaidan protests and subsequent Russian intervention, you have regularly been interviewed by

TV coverage. On the other hand, the analysts in serious newspapers are more critical of

nent, so vigorously anticipated by Russia? It may be.

the international media as a representative of the Ukrainian government. How

Russia as the party responsible for starting this whole mess. What is the most important factor here? TV coverage, I would say. As the

Austria is a major investor in Ukraine. Has this business involvement in Ukraine

have the lines of questioning you have faced, and the journalistic understanding of the issues involved, evolved during

Russian singer Boris Grebenshchikov commented, it’s a war between TV vs. common

played a role in bolstering official Austrian support for Ukraine in its confronta-

this period? At first, before the active phase of the war

sense, and TV is winning. If TV says it’s an ethnic conflict, then it’s an ethnic conflict. If

tion with Russia? Not as much as I wished it would. Ukraine is

began in the Donbas, interviewers kept asking me: “How do you plan to win this thing

TV says things are too confused, then they are too confused. And if TV says nothing,

at war and many investments are seen as being at risk, or as an actual or potential liabili-

without really defending yourselves?” Now they are asking: “Why do you keep defend-

then it obviously wasn’t worth mentioning and is not that big a deal.

ty. On the other hand, many want to see more encouragement of foreign investments on Ukraine’s part. I am not talking about fight-

ing yourselves, even though you know you cannot win?” I always feel tempted to ask in response: How can you overlook the fact

To what extent is the Ukraine crisis being viewed in Viennese diplomatic circles in

ing corruption which now, with Yanukovych gone, seems to be much less of a problem.

that we have no choice? We have to fight, and we will fight for as long as it takes to make

a geopolitical context (i.e. USA/NATO vs.

Today’s big problem seems to be the bureau-

Ukraine a better country.

Over the past eighteen months you have emerged as an active participant in the social media debate revolving around Ukraine. What tips would you offer to your colleagues in the Ukrainian diplomatic corps and the Ukrainian government on engaging with international audiences via social media? I am not sure that I’m entitled to give advice. My activity on social media is not flawless as it’s not part of some broader strategy. It’s deeply emotional, coming from the fact that I simply cannot remain silent while my country gets badmouthed. My advice would be to remain patient and to always remember one thing: this war is about defending Ukraine, not attacking Russia. I would also stress that it is crucial to always try and check your sources.

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DTZ Ukraine’s Levon Papoyan says market marked by reduced rents and renegotiation realities

real estate

Office rental sector seeks to weather storm signs that the economic recovery is undersector support such claims? The question remains rather debatable. We have witnessed relatively low occupier activof the relocation deals which we are seeing have been characterized by rented space deacross all property classes in Kyiv. In terms of new business centre delivery, the majority of developers do not consider the current business environment in Ukraine to be favorable in terms of additional project development. Most of the buildings that are still under construction are only progressing because the projects were launched before the end of 2014 and therefore cannot be interrupted. On the other hand, in 2016 some improvements in the general economic situation in Ukraine are expected, as well as a resultant increase in ocof positive economic dynamics in 2016 could also serve to attract potential foreign develop-

sponded to the shocks of the last 18 months? The instability of the last 18 months have afways. Tenants tend to decrease the space they rent and optimize their long-term occupational conditions. In present market conditions, a

Plans for new business centres in Kyiv may have to wait until expected economic recovery in 2016 (stock image/UNIAN) the coming two years as the country’s econom-

expenses and risks, investing in co-working

ic recovery proceeds, it will hopefully stimulate

when the situation in the country is stabilized

or one-year discounts, or gain a 10-20% rental

Have the challenging economic conditions of the past year led to any innovations on the

market do you see as the

rate decrease, depending on the contract conclusion date.

I would identify the co-working concept as one

most attractive for the coming few years?

number of major landlords have tended to give ground and renegotiate their lease contracts. In some cases there is a possibility for occupi-

of the innovations currently visible on the Kyiv developed to provide a solution for specialists

For the coming few years we see classes ‘A’ and ‘B’, especially

decade. Does the Ukrainian capital now risk

who are unable or unwilling to commit to tra-

high-quality ‘B’ class

a situation of oversupply? ceeds demand, but this is only due to the low

ditional lease terms. In terms of the Ukrainian market as a whole, the co-working concept is not that well integrated. But in spite of the ab-

attractive segments

levels of demand which we are now witnessing. If we adopt a slightly longer-term outlook, over

sence of strong growth, co-working in Ukraine has a future. If the entrepreneur is aware of the

There has been a considerable increase in

rental market.

About the author: Levon Papoyan is the Head of Office Brokerage and Consultancy at DTZ Ukraine

May 2015

Expat couple plots email address empire Paul and Lana Niland see online opportunities in email addresses with added expression What does your email address say about you? The chances are it currently says very little indeed, apart from perhaps your place of work. One Kyiv-based expat couple are looking to change all that by launching a company which offers customers the chance to choose while also helping to raise funds for the causes closest to their hearts.

Individual email addresses for added expression Statement Email is the brainchild of longterm Kyiv residents Paul and Lana Niland. The concept is disarmingly simple, with clients invited to purchase an email address which means something to them personally. In an age where electronic identity is playing an increasingly prominent role in how we present ourselves to the outside world, Paul and Lana say they saw an opportunity to personalize one of the last few remaining online areas where individuality is still in relatively short supply. Statement Email, which became fully operational in May, currently offers a range of email addresses to choose from, and the scope for additional options is virtually unlimited. For a small fee, users receive a new email address which can be adapted for use within the framework of their existing email communications, meaning that there is no obligation to reorganize mailboxes and no need for existing contacts to change or other-

tivized to play an active role in marketing and promoting the initiative. Examples of additional

company utilizes Ukrainian IT know-how, operating on software created to order by

emails currently offered by Statement Email include ‘RespectTheVets.com’ and ‘Demanding-

Ukrainian programmers at Maximum Decisions LLC. The company’s site, customer

As well as offering a personalised approach to

national ambitions and potential global reach of the company. With email addresses available

interface and step-by-step address implementation process were all designed in Kyiv, while ongoing IT support will create more

email communications, Statement Email also has a fundraising component which allows cus-

narrow and success will depend upon large vol-

causes they care about. The initial idea for the company came about while Paul and Lana were

umes. However, as Paul points out, with over 3.5 billion email addresses currently active globally, the initiative can draw upon a huge potential cli-

the test during 2014’s Scottish referendum on independence, with the campaigning address ‘@YesForScotland.com’ being made available

mulling new ways to help raise funds for the

ent base. Th ink about how many people would

to members of the public free of charge, and

Ukrainian armed forces. This led to the development of the email address ‘UkrainianPatriot. com’ and the realization that the same principle

like their email statement to be ‘@CurbClimateChange.com’ – another option which the expat couple say will be available soon.

the systems have since undergone consider-

wise update their own address books.

Potential global market of 3.5 billion email users

could be applied to a limitless number of fundraising initiatives. Statement Email revenues are split 50-50 between the company and fundraising partners, with recipient organisations incen20

jobs in the Ukrainian IT sector.

Utilizing the best of Ukrainian IT expertise While Statement Email is global in scope, the

Paul and Lana are now looking to expand the scope of the addresses on offer, while also identifying more potential partner organisaproach to fundraising. www.bunews.com.ua

Winning hearts and minds in the Donbas MP Alex Ryabchyn sees dialogue as key to reintegrating occupied regions of east Ukraine Ukrainian MP Alex Ryabchyn is a young man in a hurry. One of a number of fresh faces to enter the Ukrainian parliament via the October 2014 election, who are regarded by many as the country’s best hope for a new beginning. The 32-year-old member of Yulia Tymoshenko’s Batkivshchyna Party has taken an active role in the new parliament, co-chairing the cross-party ‘Euro-Optimist’ group which brings together many of the youngest MPs from the ruling proEuropean coalition. Additional roles include chairing the friendship group connecting Ukraine’s parliament with British MPs in Westminster - a role he is particularly suited to, having previously studied for a master’s degree at the UK’s Sussex University. Mr. Ryabchyn sat down with Business Ukraine at a hotel just around the corner from the Ukrainian parliament building at the end of a typically hectic day in mid-May. Clearly tired from the latest round of parliamentary debates interspersed by meetings with diplomats from a variety of European embassies, his enthusiasm for his new MP role was nevertheless impossible to conceal. Mr. Ryabchyn is a native of the Donbas and is understandably animated about the ongoing occupation of his home region. He was born in Mariupol and spent his formative years living and working in many of the previously anonymous Donbas industrial towns and cities which have gained notoriety and international recognition over past year when they became the central focus of the Russianbacked separatist insurgency which has gripped east Ukraine. “I never imag-

Wanted: Donbas dialogue

the border with Russia was blocked. The Batkivshchyna MP is also critical of the Ukrainian authorities for failing to engage in a direct dialogue with Donbas residents in spring 2014, when tensions could still have been defused.

begin in earnest. An Associate Professor at Donetsk National University, Mr. Ryabchyn is hoping to establish a ‘Universities in Exile’ group to help the sixteen institutions of higher education which have been forced to relocate from the occupied regions of east Ukraine. He sees the exiled undergraduates of these institutions as a crucial element in the regeneration of the Donbas as an integral part of a united Ukraine, and would like to see the government do more to provide temporarily displaced Donbas universities with the resources they need to survive and to attract donors. “This is the future generation of Ukraine,” he says. “These are the hearts and minds we need to be concerned with. We

He now advocates a hearts-and-minds approach to the region, stressing the importance of focusing on people and not territory. He recounts the tale of a

shouldn’t focus only on what Russia is doing, we should also be focusing on our own responsibilities and priorities.”

recent encounter he had with a Ukrainian waitress in Moscow whose vocabulary was littered with the key words and talking points of Russia’s state-controlled mass media. Mr. Ryabchyn claims that a half-hour discussion actually

Reform process will decide Donbas destiny

managed to make an impact on her understanding of what was really going on in Ukraine, and cites this as an example of the need for nonjudgmental

tions of the population in east Ukraine will be the reform process in Kyiv. “A lot depends on Russia and our Western partners, but much also depends on

discussion. “If we closed the border, there would be no problems reintegrating the areas which are currently occupied. On a person-to-person level, we

Ukraine,” he says. “If we are able to stick to the reform route which has been mapped out and create a new type of economy without corruption, then the people living in the occupied areas will be drawn back towards Ukraine.” He

Like many Donbas natives, Mr. Ryabchyn says before spring 2014 he had Russia for importing separatist ideas which previously enjoyed little traction among local communities. “This is not a civil war, this is Russian aggression

Mr. Ryabchyn argues that one of the keys to winning over the alienated sec-

best for Donetsk and for the region,” he argues.

economic interdependency of the wider Donbas region, which includes Ukrai-

generation has the right people and the right ideas. We just need time,” he argues. How long is he willing to wait for the return of the Donbas to a united Ukraine? “I have no doubt that Donetsk, Luhansk and Crimea will once again be

nian regions such as Dnipropetrovsk and Zaporizhia as well as parts of Russia’s Rostov region. While skeptical of the Minsk peace plan, he sees room for hope

part of Ukraine,” he says. “Germany waited for 40 years before achieving reuni-

in Russia’s desire to avoid further sanctions, and is already looking ahead to a time in the coming years when the process of reconciliation and rebuilding can

tions throughout the former Soviet Union. “If we fail, it will be a failure for the entire region,” he concludes. www.bunews.com.ua

Making the most of EU free trade EU expert Olivier Vedrine explores coming EU-Ukraine Association Agreement opportunities With the EU-Ukraine Association Agreement set to come into force on 1 January, 2016, companies across Ukraine are looking for ways to make the most of the opportunities presented by the free trade component of this landmark agreement. The ongoing conflict with Russia, which for decades had been a primary market for Ukrainian goods and services, has added a sense of urgency to the process of expanding into EU markets, creating a situation where thousands of Ukrainian companies are increasingly viewing trade with the European Union as the central component

of their long-term business plans. Trade between Ukraine and the EU has already been steadily increasing for some years, allowing EU nations to collectively surpass Russia as Ukraineâ&#x20AC;&#x2122;s number one trade partner. However, the advent of an extensive free trade zone between Ukraine and the EU will take this relationship to an entirely new level, bringing with it enormous opportunities while creating considerable challenges for Ukrainian companies looking to adapt to EU regulations and appeal to potential new European partners. As Ukraine prepares for the full implementation of the EU Association Agreement, Business Ukraine spoke to EU integration expert Olivier Vedrine about the opportunities and potential pitfalls which lie ahead. French academic Vedrine has been involved in activism and educational efforts to promote EU integration since his student days in the early 1990s, and currently serves as a member of the Academic Council of the Assembly of European Regions. A vocal advocate of Ukraineâ&#x20AC;&#x2122;s EU integration, Vedrine believes that the Association Agreement could serve as a watershed moment in Ukraineâ&#x20AC;&#x2122;s postSoviet development. However, he cautions that Ukrainian companies must first learn to navigate the Brussels bureaucracy and promote their interests at the EU institutional level, while also battling corruption and improving quality controls on the home front.

Which sectors of the Ukrainian economy are best positioned to

EU markets. Which areas of EU regulatory policy offer the biggest

take advantage of the opportunities presented by the free trade dimension of the EU-Ukraine Association Agreement? Ukrainian agriculture will be a key beneficiary, enjoying cuts in du-

challenges to Ukrainian exporters?

ties on agricultural and processed agricultural products of almost EUR 400 million. Energy and energy security, as well as affordable

and investment are also key instruments in helping secure long-term enormously from the ambitious DCFTA trade deal with the EU which

prices, are essential for the stability and security of Ukraine. The EU will work with the government in Ukraine, including through budget support, to ensure the long-term diversification of supplies and to

is part of the Association Agreement. For example, Ukrainian exporters will save almost half a billion euros annually due to reduced EU

make sure that the Ukrainian gas transit system continues to be an essential transit route for gas supplies to Europe. As such, the Eu-

agricultural and processed agricultural products of almost EUR 400

ropean Commission will continue to work with the government in Ukraine to modernize its gas transit system in cooperation with the

million. The different levels of economic development of the EU and

EIB, EBRD and World Bank, as gas sector reforms in line with European Energy Community commitments are carried out. Provided

Agreement. It is designed to provide Ukraine with favourable treatment, for example, through the faster and broader opening of EU markets, combined with a longer period for the implementation of similar

that certain conditions are fulfilled, an initial loan could be possible in the near future.

measures on the Ukrainian side. The European Commission stands ready to react quickly to ensure the rapid provisional application of

Few Ukrainian companies have significant experience of lobbying EU institutions to protect their interests. What key tips could you

the AA/DCFTA.

offer for Ukrainian companies looking to make themselves heard www.bunews.com.ua

eu integration

in the Brussels corridors of power? Various different interest groups are able to successfully influence policy-making within the EU. The question of lobbying in the EU is central to the study of modern European politics and economics. Ukrainian companies need to know how to deploy instruments of influence to make themselves heard in EU institutions. The Treaty of Lisbon introduced a new dimension of lobbying at the European level that is different from most national lobbying. Lobbying in the EU is not to be confused with lobbying in Ukraine! At the national level, lobbying is more a matter of personal and informal relations between officials and the national authorities, whereas lobbying at the European Union level is increasingly a part of the political decision-making process, and thus part of the legislative process. ‘European interest representation’ is a key part of the new participatory democracy emerging within the European Union. I think Ukraine as a whole, and individual Ukrainian companies, need to be more vocally represented in the European Union, and need to establish permanent representation in order to promote their own European interests. Adhering to EU regulations represents a significant investment for many Ukrainian companies. What advice would you give to companies to allow them to avoid unnecessary expenses while adapting to meet EU standards? Ukrainian companies have to organize themselves and should seek to share the burden of investments by engaging competent law firms and experienced officials to represent their interests among EU institutions. I think also that Ukrainian law firms should be looking to provide some training about EU lobbying to Ukrainian companies in order to better explain how EU policy works. What are the most important first steps for any newcomer Ukrainian companies seeking to establish a presence in EU markets? The first step for any Ukrainian companies looking to break into EU markets is to find the right place, at the right time, and with the right contacts! Engaging experienced professionals with large EU networks of contacts is the first step.

About the author: Olivier Vedrine (olivier.vedrine@gmail.com) is an of the Continental University business school in Kyiv and member of the Academic Council at the Assembly of European Regions in Strasbourg. biggest advantage Ukraine enjoys is the country’s strategic position. Combined with the adoption of EU standards, this should prove a winning combination. Ukraine is located at the geographical centre of continental Europe and occupies a prime gepolitical position as a gateway nation between the EU, Russia, and Central Asia. It also enjoys excellent access to the Middle East through growing business ties with Turkey.

What steps do you think the Ukrainian authorities should consider in order to support Ukrainian companies looking to develop

The Ukraine-EU Association Agreement is expected to attract investment into Ukraine. Which Ukrainian industries are bestplaced to attract EU investment?

their business interests inside the EU? The Ukrainian authorities need to organize economic diplomacy and

Economic support from the EU currently takes the form of both macro financial and development assistance. The European Commission

develop a broad strategy to support Ukrainian companies in their quest to expand their business interests inside the EU. The support of the Ministry of Economic Development or the Ministry of Foreign

is ready to mobilize some EUR 3 billion from the EU budget in the coming years, with the understanding that a substantial part of this money can be made rapidly available to help Ukraine address its

Affairs can be very useful for Ukrainian companies seeking to expand inside the EU. This approach has long been central to US strat-

more urgent needs, including stabilizing the financial situation and supporting the functioning of the country’s administration. Ukraine

egy in its dealings with the EU.

needs stabilization in order to attract international investments. In this context, the economic support of the EU is very important. First

By adopting EU standards, Ukrainian exporters will theoretically also gain increased access to global markets. How can Ukrainian

and foremost, international investors who are theoretically interested in Ukraine seek stability. They are also waiting to see some posi-

companies take advantage of these global opportunities? There is no question that Ukrainian companies will gain global advantages by adopting EU standards. However, the top priority for

tive results of the fight against corruption and the reform process which the Ukrainian administration is currently committed to. To answer the question directly, I think the five Ukrainian sectors best

Ukrainian producers is to improve quality norms. They cannot product products to the kind of quality standards common in the previ-

placed to attract international investment are the agricultural sector, energy sector, raw materials sector, chemical industries sector, and

ous Soviet era if they are serious about international expansion. The

metalurgy sector.

May 2015

The de-sovietization debate Leading Ukraine experts discuss new laws designed to distance country from totalitarian past Ukraine has recently introduced a series of laws which collectively attempt to draw a line under the ambiguous attitudes towards the Communist era which have lingered for the past 24 years in post-Soviet Ukrainian society. Supporters of this de-sovietization process have hailed the laws as a long overdue step in the right direction, while critics have warned that the legislation risks dividing Ukrainians at a time when national unity means national survival. Business Ukraine magazine invited Ukraine experts Taras Kuzio, Alexander Motyl and Bohdan Vitvitsky to address some of the key issues raised by Ukraine’s new de-sovietization laws. QUESTION 1. Will Ukraine’s new de-sovietization laws serve to further unite or divide Ukrainian society? TARAS KUZIO: Re-writing history and changing identities are always contested in every country, whether Irish-UK reconciliation under Prime Minister Tony Blair or in South Africa after the collapse of apartheid, when not all Boers supported the move to majority rule and an end to racism. I am sure many older Germans and especially Japanese and Austrians did not want to de-Nazify or debunk the old imperial Japanese imperialism - but this was all necessary. The USSR was a totalitarian empire that murdered millions of Ukrainians and steps that work towards removing the vestiges of that criminal empire should be applauded. As President Petro Poroshenko said to those who are against the new laws, they should have joined him on Sunday, 17 May, in the commemorations of the over 100,000 murdered in the Bykivnya forest near Kyiv. Some conwill divide Ukrainian society to a greater degree than hitherto existed. ALEXANDER MOTYL: This is the wrong question. The right question is: will the laws promote truth, justice, and freedom. The answer is a resounding yes. As we know from history, all such efforts to expand the

whether they were from Kharkiv, Poltava, Kyiv or Lviv, thought that the time for such laws had come. QUESTION 2: Are attempts to remove all public symbols of the Soviet era in Ukraine practical? TARAS KUZIO: Would we argue that Nazi monuments and street names should remain in place in Germany and Austria? Of course not. Then why should Soviet monuments and place names remain in Ukraine? After all, monument was removed in Kyiv, followed by 550 others in central, eastern and southern Ukraine, including the largest in Ukraine, which was toppled last September in Kharkiv. The Euromaidan movement was many things, one of which was an anti-Soviet revolution, because the Viktor Yanukovych administration was seen as neo-Soviet in its identity. Meanwhile, the proRussian separatist counter-revolutionaries are Soviet in their identity.

good meet with resistance from entrenched forces. Yet no one would suggest that civil rights legislation in America or laws forbidding discrimination of women and gays not be passed because they would be

ALEXANDER MOTYL: Immediately, no - but, given the ineffectiveness of Ukraine’s government apparatus, there’s little chance of that taking place anyway. Over time, yes. If the Germans could succeed in removing Nazi

- as indeed they were - divisive. Indeed, if divisiveness were the prime criterion for judging a law’s utility, then Ukraine should not be reform-

symbols, surely Ukraine can succeed in removing Communist symbols.

ing its economy and imposing high costs on a resistant society. Stasis and stagnation would then be the only option for any country. Besides, Ukraine is a revolutionary society that is attempting to move toward the

BOHDAN VITVITSKY: As with most things, if good will and common sense are applied in the law’s implementation, the answer is that it should be possible to remove all or the overwhelming majority of such symbols.

West as rapidly as possible. Everything the government does will elicit support and criticism.

QUESTION 3. What are the international consequences of laws crim-

BOHDAN VITVITSKY: That will depend, as the introduction of any new

inalizing criticism of Ukrainian nationalist forces accused of complicity in Nazi atrocities?

policy in any country depends, on how skillful a job the Ukrainian government does in explaining and providing a rationale for the four laws.

TARAS KUZIO: This was the weakest section of the laws and no criminal-

But in Ukraine this is even more important given that Russia and its various agents continue to conduct an information war against Ukraine. Be that as it may, based on my informal survey of friends and acquaintances

ization of criticism will ever take place. Let us recall that the 2006 law on the Holodomor (which was not supported by the Party of Regions or the Ukrainian Communist Party) also had a section on criminalization of those

in Ukraine when I happened to have been there for a week and a half between the time the bills were passed and their being signed into law

who rejected it had taken place or was a genocide. And yet, the Party of Regions and Communists from 2006-2014, and President Yanukovych in

by President Poroshenko, almost all of the people with whom I spoke,

2010-2014, did just that. www.bunews.com.ua

foreign effort to discourage voters from electing either Menachem Begin

is every indication that this (to my mind unnecessary) restriction will be revised radically in light of Western and Ukrainian criticism. Second,

or Yitzhak Shamir, two individuals involved in terrorist organizations that engaged in killings, kidnappings and extortion. The bottom line is that it

while Ukrainians were certainly involved in Nazi atrocities, the Ukrainian nationalists are not accused of being involved in Nazi atrocities. Rather, they are accused of engaging in their own atrocities during the war. The

wouldn’t occur to anyone to tell us Americans or the Israelis what they should do. Why then do any foreigners think it makes sense to try and instruct Ukraine’s elected representatives as to what they should do?

accusers were and are Soviet propagandists, Russian historians supporting a Putinite imperial narrative, and neo-Soviet Western historians who

QUESTION 4. How do Ukraine’s new de-sovietization laws compare

have succeeded only in demonstrating that Ukrainian nationalists, like all parties in WWII or, for that matter, in any war, engaged in excesses. These three groups have formed a “hegemonic” historical narrative that

to similar legislation elsewhere in the former Eastern Bloc?

excludes Ukrainian voices and reduces Ukrainians to innate fascists and anti-Semites - the quintessential ‘Other’ of postcolonial studies. What the

in Poland, Estonia, Latvia, Lithuania, Romania, the Czech Republic, Croatia and elsewhere. Those countries that underwent de-sovietization were

for Ukrainian independence (which of course they were - objectively, and by any measure), is to integrate the nationalists into Ukrainian history, undermine the above neo-Soviet hegemony, create a level intellectual

that the above injunction on offensive commentary will be repealed, as I’m sure it will. Unsurprisingly, supporters of the hegemonic narrative their right and privilege to determine the truth. BOHDAN VITVITSKY: I’ve read the legislation signed into law by President Poroshenko, and I’m not sure that the law criminalizes criticism of Ukrainian nationalist forces during WWII. Article 6 of the law that was registered as bill 33690 provides that public exhibitions of disprespect towards any of the more than 50 different entities/groups involved in Ukraine’s struggle for independence during the 20th century will have legal exposure, but it’s not clear from the law whether such exposure would be civil, administrative or criminal. The law already contains an exception for free discussion and analysis by scholars and such, as well as a provision that directs the government to ensure an ‘all-sided’ analysis

TARAS KUZIO: There are many examples, all with local nuances, such as

also the most successful in reform and European integration. As Andes Aslund writes in his new book, “Ukraine’s fundamental problem is that it did not experience any clear break from the communist system.” ALEXANDER MOTYL: Most East European states have similar laws, some go further, others are less ambitious. But there’s absolutely nothing new about what Ukraine is doing. (Indeed, Ukraine is a late-comer.) And the reason is obvious. All post-communist states understand that abandoning the Communist legacy requires abandoning Communist thinking, thought patterns, and mentalities. There is, in this regard, no difference between East European attempts to rid themselves of the Communist legacy and German attempts to rid themselves of the Nazi legacy. (As a matter of fact, Germany has also been quite effective in removing symbols of the Communist past from much of the former GDR!) Both Nazi Germany and Communist Russia wreaked absolute havoc on these countries, and the legacies of both need to be viewed as equally noxious. BOHDAN VITVITSKY: I would suggest that the more apt comparison States and other allies in post-war Germany. I say this because the penetration of Sovietism in Ukraine in terms of depth and breadth is more akin to the penetration of Nazism in Germany rather than the penetra-

of the history of the Ukrainian struggle, so the quasi-hysterical response by some academics to the law is rather overblown. And there is also the issue of Russia’s openly existential challenge to Ukraine’s very being. A

the removal of all physical symbols of Nazism was mandated and impmlemented. What is more, the US Army took control of German print and

part of the decades-long Russo-Soviet narrative about Ukraine has consisted of misrepresentations and distortions about the activities, context

electronic media to ensure there would be no ideological deviation, i.e., that there would not be any expressions of any pro-Nazi sympathies.

and motivations on the part of anyone involved in opposing Soviet rule, so it’s not as though Ukraine’s attempt to limit ongoing attacks upon its history as part of Russia’s information wars is off the wall. Be that as it may, I

And, the US compiled a list of some 30,000 books, ranging from school cated and physically destroyed. Possession of any of those titles was a

But there is another aspect to your question, namely, the propriety or au-

punishable offense. What Ukraine is doing is rather limited and circumscribed by comparison.

thority of foreigners to instruct Ukraine’s elected representatives as to whom they wish to acknowledge or memorialize and why. I presume that

QUESTION 5. Can Ukraine ever expect to achieve closure on its trau-

all of us would agree that slavery and racism are horrible. Yet two of our most important American Founding Fathers, Washington and Jefferson,

matic 20th century experience?

were slave owners and, thus, racists. Yet if a group of Canadian academics were to write an open letter urging us to stop visiting the Washington monument or the Jefferson memorial we would laugh or tell them to go

TARAS KUZIO: Closure takes decades and we should not therefore be surprised at the evolution of changes in identity in Ukraine during peacetime. This process has now gained new momentum since 2014 as Ukraine

rializing Washington and/or Jefferson we were, whether advertently or

has been at war with Russia. It took the French until the late 1980s, 3-4 decades after the Algerian War of Independence, to come to terms with

inadvertently, endorsing racism or slaveholding, would probably be more

its involvement in massive war crimes. It took the British nearly a century

May 2015

debate

ALEXANDER MOTYL: For starters, the law in question does not criminalize criticism. It states that offensive commentary can be subject to the

to reconcile its relations with the Irish, who became a semi-independent state in the 1920s. From these points of view, Ukraine is doing quite well (just look at the reconciliation of Polish-Ukrainian relations) and certain-

of the different individuals, groups and states acting in Ukraine? Who did what and when? And so on. To be sure, it may not be possible to arrive at factual answers to each question, but it should be possible to

ly better than Russia, whose president still believes the Nazi-Soviet pact was a good thing and ignores Stalinist crimes against humanity. Ukraine

arrive at answers to many. Then, and only then, will it make sense to make moral and political judgments about who did what and, perhaps,

is a country that honours the dead under the two totalitarian Nazi and Soviet states, while Russia focuses only on the former, because praise of criminal tyrant Joseph Stalin is the key to building an authoritarian great

why. There will probably be differences in such judgments, which is normal in any country, but at least the amount of shared information

Russian power.

political judgments.

ALEXANDER MOTYL: Of course. But that can only happen if Ukrainians begin to debate their own history without being instructed by outsiders on who, what, and how to remember and not to remember. Naturally, outside scholars can and should and will contribute to the debate. But the debate in Ukraine must be free and it must be in Ukraine. Thanks to the de-communization laws, there’s a very good chance that that free debate in Ukraine will indeed take place. BOHDAN VITVITSKY: Yes, if there is an honest and intelligent effort directed at understanding the events of that century. When I hear people speak about different ‘narratives’ possessed by people living in different regions of Ukraine and about how it is impossible to reconcile them, which one hears and reads regularly, I am dismayed. What needs to be addressed jointly is not narratives but the facts relating to the 20th century. What were the political circumstances and options encountered by Ukrainians? To what extent were Ukrainians able to shape those circumstances and options, and to what extent were they imposed upon Ukrainians? What were the goals and aims

THIS MONTH’S BUSINESS UKRAINE DEBATE PARTICIPANTS Taras Kuzio is Senior Research Associate at the Canadian Institute for Ukrainian Studies (University of Alberta), Senior Research Fellow at the Chair of Ukrainian Studies (University of Toronto), and Non-Resident Fellow at the Center for Transatlantic Relations (Johns Hopkins University-SAIS). Alexander Motyl is professor of political science at Rutgers University-Newark. Bohdan Vitvitsky has written and lectured on legal, historical and philosophical topics. He served for over 20 years as an Assistant US Attorney prosecuting complex fraud cases. In 2007-09, he served for two and a half years as a Resident Legal Advisor at the US Embassy in Kyiv. He holds a law degree and a Ph.D. in philosophy, both from Columbia University in New York.

www.bunews.com.ua

8 Years of Ukrainian History Industry: Outdoor sector leading advertising market upswing

Interview: Walid Arfush on the need to shake up state TV

Real Estate: New re-registration process eases developer concerns

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Official newsletter of the American Chamber of Commerce in Ukraine May 2015

Getting Ukraine’s message out Andy Hunder, President of the American Chamber of Commerce in Ukraine

perience and expertise to support implementation of reforms in every sectors of economy. Many are giving up jobs and taking on new roles across various ministries. The role of state authorities, among others, is to define the strategy and tactics for all stakeholders to be guided by, and business can play a major role to here. In terms of Ukraine’s reform agenda, many tangible things are starting to kick off. It is essential to communicate these reforms as this impacts investor confidence. During these turbulent times, there are examples of progressive Governmental solutions, some of which could be further communicated to the relevant stakeholders. Citizens and investors need specific facts and figures, practical exposure of quick wins that are happening.

I’m one month in to my new role at the Chamber. Every day I meet a lot of people who are doing great things here in Ukraine, and who are devoted to changing the country for the better. They work both in the public sector and in business. Most importantly - they inspire others to contribute to positive changes. They have a common goal - to bring the country to a qualitatively new level and make it successful. The business community operating in Ukraine now plays an unprecedented role and drives a comprehensive reform agenda forward. Business representatives share their practical ex-

I believe that this is the way to gain a qualitatively new reputation for Ukraine. Reputation ultimately means investments and new business projects in the country. I am sure there could be more focus and clear positive messaging on behalf of the state on the progress the country is making, but I would also like to specifically encourage the international business community to get involved in this process as well. Internationally, we need to show an alternative image of Ukraine: let’s communicate messages about new airplanes the country is building, IT products and solutions designed by Ukrainian specialists, and more. And therefore I see the role of business also in communicating its own success stories to the world and thus helping the country to attract much needed investment.

2015 Chamber Official Service Providers:

May 2015

April 2015

Lifestyle Classic cars in Ukraineâ&#x20AC;&#x2122;s capital of culture Leopolis Grand Prix weekend, 12-14 June, events across Lviv Classic car lovers will descend on the West Ukrainian capital Lviv in June for a weekend of retro auto fun which will include a rerun of the 1930 Lviv Grand Prix and a parade of cars from motoringâ&#x20AC;&#x2122;s Golden Age through the Lviv city centre. Lviv was one of the pioneering cities of the motor sports scene in the early twentieth century, hosting

slower speeds than their 1930s predecessors. Participating cars are expected to include vintage models from the

lifestyle

May 2015

lifestyle

Kyiv networking group Fryday goes global niversary in May 2015 with the concept fast gaining an international

plans for further expansion.

An open mindset, high social capacity and leadership, capacity for self

rival in Kyiv and had a desire to meet interesting people. Realising there was a limited afterwork culture in Kyiv compared to his native

partners and create events that meet their interests and the interests Good Morningâ&#x20AC;&#x2122; and is a small and very targeted event produced on demand from corporate partners. It is important to emphasise that across, Europe, Asia and America, including everywhere from Hanoi to

day provides online infrastructure, sales and marketing support, and

May 2015

amount of information and trust communicated when people meet

WEST UKRAINE’S LIFESTYLE GUIDE

The best of Lviv since 2008

serves primarily as a treasure trove of traditional Ukrainian folk styles, while also incorporating modern choreography innovations. the nationâ&#x20AC;&#x2122;s cultural heritage to more international audiences that Ukrainian dances since its foundation in 1937, winning thousands

dancers typically performing physical feats as a core part of their dance routines.

Global folk dance phenomenon

Traditional Ukraine on the world stage

international audiences which are still getting to know the country and its unique cultural heritage.

May 2015

lifestyle

Ukraineâ&#x20AC;&#x2122;s dance ambassadors

Networking events

Ramada Encore Kiev

welcomed guests to the hotel in late May as he hosted a chic

tige international award came as the Ramada Encore Kiev marked its third anniversary. Guests, partners and friends ness communities enjoyed live music, BBQ cuisine and a troupe as they joined the Ramada Encore Kiev team to cel

photo diary:events networking september 2012

May 2015

Investment Conference

investment conference, which focused on investment opportunities in a range of Ukrainian economic

society the new level of our country, a new approach initiatives to improve the investment climate, and

photo diary:events networking september 2012 and political communities gathered in late May of Commerce President Andy Hunder, who took up his post in April 2015. All guests had an opportunity to meet and engage in discussion

during these challenging times.

May 2015

investors together in May for a conference focusing on investment and cooperation opportunities was organised in partnership with the Ukrainian

and Ukraineâ&#x20AC;&#x2122;s Ministry of Agrarian Policy.

photo diary:events networking september 2012

Networking at In late May networking group Premier Palace Hotel to host a summer themed social event. Hundreds of guests attended the networking evening in the Ukrainian capital, which featured

May 2015

hotel, with the event attracting and international professionals. present in more than 20 countries across several continents.

photo diary:events networking september 2012

Burns Night in Ukraine Kyiv’s

international

community

a fundraising gala event hosted at Kyiv one of the highlights on the Ukrainian expat calendar and this year’s event

City Children’s hospital for infectious diseases and the Kyiv City Center for

May 2015

last word

Laughter as the secret weapon against Putinâ&#x20AC;&#x2122;s infowar

relentless and highly effective Kremlin propaganda, there is now an siaâ&#x20AC;&#x2122;s aggressive information strategies pose a threat to the EU as whole.

trolled Russian media may not strike everyone as a particularly ap propriate approach, given the deadly seriousness of the impact this

of Russian comics, creating an invitingly vacant niche which could ridiculousness of the Putin regime.

lost faith in traditional news sources. Comedy offers a way of cutting through the prevailing mood of cynicism which has increasingly under wider world over the past few decades.

pressed and occupied nations which have managed to keep the spirit art production values and dramatic presentation techniques straight lishment anecdotes and gallows humour served to expose the faĂ§ade of

comedic approach. Modern Russians tend to pride themselves on with all manner of hugely popular comedy shows lampooning ev last laugh.

Published by: Director: Susanna Dickinson

Business Ukraine is distributed every month at a wide range of leading business centres, the Ukrainian capital.

Feel the summer breeze with the best prices in Kiev

9 7 â&#x201A;Ź m

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Kievâ&#x20AC;&#x2122;s newest and most dynamic hotel, conveniently located out of hustle and bustle of the city center is an ideal family and business stay-over with 264 well-appointed and spacious air-conditioned rooms and 58 apartments, designed with taste and modern style in mind. Ramada Encore Kiev also offering conference facilities second to none it also provides state-of-the-art and fully equipped venues to cater from 6 to 1000 delegates ....simply better SM

The hotel offers relaxed and ne dining through either the HUB restaurant or new and exciting DK restaurant, where you can experience both a la carte and avant-garde style taste experience. This summer we have an open-air terrace with special BBQ menu which can also cater for more informal occasions.

For the best rates and more information visit: www.ramadaencorekiev.com or call +38 044 205 1515 103, Stolichnoe Shosse, Kiev, 03131, Ukraine

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