May 2016
Israeli-Ukrainian ties in focus: from real estate and medical services to agriculture and IT
ISRAEL UKRAINE IN
Also inside: Monthly American Chamber of Commerce in Ukraine Newsletter
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BUSINESS UKRAINE: MAY 2016 This month we explore the growing strategic relationship between Ukraine and Israel - two nations brought together by a shared heritage now finding opportunities for contemporary cooperation in areas as diverse as real estate, agriculture and IT innovation. (On the cover: Seven Hills Group of Companies in Ukraine CEO Ari Schwartz pictured at the Group’s Park Avenue VIP Residential Complex in Kyiv. Photo: Olga Ahimsa)
May 2016
Israeli-Ukrainian ties in focus: from real estate and medical services to agriculture and IT
ISRAEL UKRAINE IN
Also inside: Monthly American Chamber of Commerce in Ukraine Newsletter
Ukraine’s European identity does not depend on Brussels Does Ukraine have any chance whatsoever of becoming an EU member state? The jury is still out on this issue, but most observers regard it as highly unlikely. The EU is too bloated, Ukraine is too big, and Russia is too Russian. The absence of a future membership perspective is often cited as a psychological barrier to the farreaching reforms Ukraine so desperately needs. There is certainly some truth to this assertion - anyone who has witnessed Ukrainians mobilize to meet the target date of a major national holiday will confirm the galvanizing effect a clear and coherent objective can have on the country. This hangover from the authoritarian habits of the Soviet era is entirely understandable, but it is not always very helpful. All too often, the lack of a concrete date or checklist can serve as an excuse to do nothing. With no EU roadmap on the horizon, it would probably be a good idea if Ukraine’s political leadership stopped talking about future membership entirely. Instead, they should focus on the far more appropriate objective of building a modern European state. After all, when Ukrainians speak approvingly of a European future, they are not expressing their admiration for the Byzantine Brussels bureaucracy or marveling at the wonders of the EU’s Common Agricultural Policy. To the average Ukrainian, Europe is simply a byword for the ‘normal country’ they dream about. In this context, ‘Europe’ serves as a semimythical place where things actually work as they are supposed to. It is a shorthand synonym for democracy, equal opportunities, and the rule of law. Creating such a society in Ukraine is undoubtedly a Herculean task, but there is no need to wait for the green light from Brussels before trying. May 2016
Nor is it clear whether EU membership is even in Ukraine’s best national interests. Free trade and freedom of movement both hold obvious appeal, but becoming a fully paid up EU member state could actually prevent Ukraine from capitalizing on the natural advantages derived from its status as one of the world’s great borderlands. While the term ‘buffer state’ is rightly perceived as derogatory and demeaning, modern Ukraine’s geographic location and historical inheritance make it tailor made for the role of commercial and diplomatic bridge between Europe, Eurasia, and the Middle East. The debate over Ukraine’s geopolitical strategy will necessarily rumble on for many years to come. As this conversation continues to evolve, arguments for and against the pursuit of EU membership should not be confused with the far more definitive issue of the country’s European civilizational choice. The EU flags on Maidan reflected the sense of European identify felt by the overwhelming majority of Ukrainians, but the success or failure of the revolution does not hinge on EU membership. The millions of Ukrainians who took to the streets during Euromaidan and joined the fight against Putin’s hybrid war did so because they wanted to live in a society shaped by European values. This can be achieved without the benefit of action plans from Brussels. Peter Dickinson, Business Ukraine magazine
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Seven Hills Group of Companies is part of Scorpio Real Estate Ltd international development company that has project in America, Asia, Central and Eastern Europe. In Ukraine, the company builds properties that are not only works of architectural art also technologically advanced facilities. Park Avenue VIP residential complex is the company’s flagship project. It adheres to international quality standards, utilizing the most advanced technologies and the best of contemporary international experience. Key advantages of Park Avenue VIP residential complex: • The only gated residential complex in Kiev with full security control; • Unprecedented quality of apartments, underground parking, landscaping and all supporting facilities; • High level of service delivered by, maintenance company; • Developed internal infrastructure; • The best value for money on the market; • Investment value that will stand the test of time; • A real community of residents; • A project built with added soul. Our top priority is your comfort and convenience. Seven Hills is currently in the process of building the last stage of the project: Park Avenue VIP. This last part of the complex is scheduled for completion by the end of 2018.
Kiev, 58А Goloseevskiy Ave., Office 12
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(044) 501 501 4 www.parkavenuevip.com.ua
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united by common heritage
israel in ukraine
Israel and Ukraine Israeli Ambassador Eli Belotsercovsky says shared past helps create basis for future cooperation The Ambassador of the State of Israel to Ukraine instinctively begins his interview with Business Ukraine magazine in fluent Russian, before effortlessly switching into English upon request. This minor detail of protocol serves as a reminder that Ambassador Belotsercovsky is part of the over one million strong Israeli population with roots in the former Soviet Union. By his estimate, almost half a million of today’s Israeli citizens were born in Ukraine. It is unusual, he says, to encounter anyone in Israel who does not have some kind of ancestral roots in Ukraine. These ties continue to bind modern Israel and Ukraine, helping to facilitate business links while reflecting Ukraine’s central role in the epic story of Judaism.
Almost every Israeli has ties to Ukraine
Ambassador Eli Belotsercovsky was born in Soviet Moldova. His family moved to Israel in the 1970s when he was nine years old. He has been with the Israeli diplomatic service for the past two decades, with postings including Singapore and India prior to his arrival in Ukraine in August 2014. Kyiv is his first ambassadorial role. It is a challenge he is clearly relishing. “It is a fascinating opportunity in light of the changes taking place in Ukraine and the country’s position at the centre of global attention,” he comments. Unlike many of his European ambassadorial counterparts, Belotsercovsky does not have to explain the basics of Ukraine to unknowing colleagues at home. As well as hundreds of thousands of immigrants, the country has provided the Israeli state with many of its most celebrated personalities, enjoying perhaps its highest profile beyond the borders of the former USSR itself. The Ambassador sees huge potential in this intimate awareness. “Ukraine is very well known in Israel. This serves as an excellent basis for developing relations,” he says, observing that Tel Aviv is one of the most popular international destinations from all of Ukraine’s regional airports. “And the flights are always full. It’s not an easy task to get a ticket,” he adds.
Historic home of European Jewry
This regular traffic is a mix of family visitors, tourists and business travelers. Many Israeli tourists are drawn by Ukraine’s wealth of Jewish heritage sites, reflecting the country’s historic role as one of the key centers of European Jewish life prior to WWII. The annual pilgrimage of tens of thousands of Hasidic Jews to the tomb of Rebbe Nachman in the Ukrainian town of Uman has acquired iconic status in post-Soviet Ukraine, but this sacred spot is actually only one of many similarly important sites dotted across the country. Ukraine’s rich Jewish heritage is not widely known to international audiences due to the common habit of referring to ‘Russian Jews’ and ‘Polish Jews’ when, in modern terms, the Jewish communities in question were actually located within Ukraine. Belotsercovsky sees huge potential for further development of heritage tourism in Ukraine. As well as pilgrimages to important Judaic sites, many Israeli tourists already visit Ukraine in order to explore the former hometowns of their ancestors. Lviv and Odesa are two particularly
popular destinations steeped in Jewish folklore, while every single Ukrainian town has a treasure trove of Jewish stories to share. The darker side of Ukraine’s historic relationship with the Jewish community has frequently been alluded to in the international headlines over the past two-and-a-half years of revolution and conflict, with Russia keen to portray post-Maidan Ukraine as a hotbed of anti-Semitic extremism. Belotsercovsky rejects these claims. “We do not see any more anti-Semitism here than elsewhere in the world. It is not a major concern,” he states. His dismissal of the Kremlin narrative mirrors similar comments from the leaders of Ukraine’s Jewish communities, who have been vocal in their support of Ukraine’s European choice. Israel has largely avoided becoming entangled in the geopolitical confrontation over Ukraine, choosing not align itself with international sanctions against Russia. Instead, Belotsercovsky says the Israeli emphasis has been on proving humanitarian assistance and helping Ukraine to deal with social issues resulting from the trauma of the conflict. Israeli trainers conducted 15 seminars in 2015 offering guidance to over 300 Ukrainian psychologists, social workers, and priests. This seminar programme will continue in 2016, with additional plans to support the establishment of a rehabilitation centre in Kyiv.
Security concerns and investor appeal
Israel’s long experience of daily life amid the constant security threats created by a hostile neighbourhood have led many in Ukraine to hold the Israeli experience up as a model for what can be achieved while facing military challenges. However, Belotsercovsky is cautious about drawing direct parallels, pointing to the suddenness of the Ukrainian crisis compared to Israel’s extensive experience of heightened security concerns. “Israelis have always lived in a conflict environment. We have learned to maintain a high standard of living despite the challenges. The current situation in Ukraine came out of the blue, so it is difficult to implement Israeli approaches developed over many years.” Nevertheless, the Israeli familiarity with challenging security situations does mean Israeli entrepreneurs and investors as far less likely to be discouraged by negative headlines relating to Ukraine. On the contrary, Belotsercovsky sees interest in the Ukrainian market growing and says the country’s transformation agenda is particularly appealing. “The fact Ukraine is moving towards Europe is very attractive to Israeli businesses,” he comments. “Israeli investors understand the potential.” On the subject of Ukraine’s post-Maidan reforms, Belotsercovsky is a realist. He recognizes the continuing problems with corruption but prefers to take a long view of the progress made and the challenges remaining. “Ukraine is going through the most difficult period since independence,” he offers. “It is a long process requiring huge efforts. But the Ukrainian people have clearly chosen their path and are moving towards the gradual fulfillment of their aspirations to be a Western, democratic, modern country.”
About the interviewee: Eli Belotsercovsky is the Ambassador of the State of Israel to Ukraine May 2016
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israel in ukraine
Israeli-Ukraine trade benefits from familiarity Close links between Israel and Ukraine create environment for strengthening economic cooperation What are the current main areas of economic activity between Ukraine and Israel? Israeli companies have been operating in Ukraine since the early 1990s in spheres such as cyber security, agriculture, energy efficiency, water resources management, and medical equipment. As an export-oriented country, Israel constantly seeks new markets and business opportunities. The Israeli government’s Kyiv trade mission opened in 2008, reflecting the growing economic importance of Ukraine as a potential partner. The trade mission aims to help Israeli companies find business partners in Ukraine, and to help Ukrainian companies discover innovative technologies that will provide solutions for their operational challenges. Israel and Ukraine have deep ties. Immigrants from Ukraine have shaped the history of Israel in many ways: Israel’s fourth Prime Minister Golda Meir was born in Kyiv. Meir Dizengoff, the first mayor of Tel Aviv, was born in Odesa. Israeli poet Ze’ev Jabotinsky was also from Odesa. The list includes hundreds of important figures from the fields of science, the arts, technology, and education. Given this shared past, it is not surprising that cooperation between Israel and Ukraine continues to strengthen. How has economic cooperation developed over the past 25 years? Trade turnover between Israel and Ukraine has grown steadily since the early years of Ukrainian independence. The current volume of bilateral trade is around USD 900 million. Ukraine’s primary exports to Israel are grain and metals, while the main Israeli exports to Ukraine are mineral and chemical products along with electronic equipment. In 2010, Ukraine and Israel launched negotiations for a FTA. Government officials from both countries hope to conclude the agreement in the near future. This would have positive impact on bilateral trade and increase the competitiveness of Israeli and Ukrainian products.
How important an economic factor is the familiarity many Israelis have with Ukraine and the former Soviet Union? There are around 400,000 Ukrainians living in Israel today. It is hard to overestimate the importance of human connections on business cooperation between Israel and Ukraine. Almost everyone in Ukraine has friends or relatives in Israel. This closeness brings a range of advantages including a common language and social familiarity, shared experiences and a good knowledge of the business environment in both countries. What can Israeli agriculture offer Ukraine in terms of knowhow? Israel has progressed from low-tech agriculture to hightech agro technologies, allowing the country’s agribusiness to become one of the most advanced in the world. Today, Israel has reached record heights in productivity per unit for dairy cattle, cotton, olives and other products. Israeli AgriTech and irrigation companies export more than USD 3 Billion annually. Israel’s vegetable seeds industry is at the forefront of the global effort to increase crop yields. The Is-
raeli AgroTech ecosystem offers innovations that are directly applicable to the Ukrainian market. For example, Israeli irrigation companies have been operating in Ukraine for over 20 years. Ukraine is in many ways the ideal partner for Israeli agriculture companies. Ukraine has a long agricultural tradition, some of the world’s most fertile lands, and a population of hardworking and knowledgeable agriculture professionals. Combining these assets with innovative and cost-effective Israeli technologies will help establish Ukraine as a global agriculture leader and encourage further international investment in Ukraine.
Israel has built a robust economy despite living with the constant threat of conflict. What lessons can Israel offer Ukraine in terms of developing economically despite security concerns? The development of today’s startup nation began in the 1980s with a major change in the government’s attitude toward the private sector. This saw official policy move away from socialist ideas and preferential treatment for state-owned enterprises, towards liberalization, openness in foreign trade, and a strong market economy. As a result, Israel’s economy has become a hub of technological innovation. Israeli companies have developed everything from voice mail and USB drives to an ingestible video camera that fits inside a pill. Israel’s experience demonstrates progress is possible in spite of security challenges and a precarious political situation. One of Israel’s key assets is its people, drawn from over 100 countries around the world. A lack of natural resources and the constant fight for survival have helped motivate Israelis to develop a high-tech sector and become innovative – initially in the defense sector and subsequently in all areas of the economy. Technologies first developed to help defend Israel have gone on to play major roles in the medical, IT, agriculture and cyber sectors. The Israeli Defense Forces continue to serve as an important and unusual source of high tech talent development. The army serves as a nationwide screening program to identify the most promising and talented young people, putting them through rigorous training via elite programs in technology and other military functions. Not only do participants gain an unparalleled education, they learn leadership and problem-solving skills and establish personal networks that often form the basis for later partnerships in industry. The co-founders of many high tech companies began working together while serving in the same army unit. How big a concern is corruption for Israelis looking to invest in Ukraine? In this context, what are the most important aspects of the reform program in terms of attracting Israeli investment? The main concern for every entrepreneur is uncertainty and unclear rules of the game. Structural reforms that will bring liberalization and predictability to Ukraine will send a positive signal to the international community about the readiness of Ukraine to provide comfortable conditions for foreign companies. It is important to note that Israeli businesses are generally used to operating in extreme conditions at home, and so they are not scared by the security situation in today’s Ukraine. What they are looking for is an effective judicial system and the ability to reply on the support of other state institutions.
About the interviewee: Elizabeth Solovyova is the Head of the Trade and Economic Mission at the Embassy of the State of Israel to Ukraine
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israel in ukraine
Israeli real estate developer
takes long-term view on Ukraine
Seven Hills entered Ukrainian market in 2005 and remains committed despite challenges When Israeli real estate developer Seven Hills first entered the Ukrainian market in 2005, the company was one of many international developers attracted by the exciting prospect of post-Orange Revolution Ukraine. Eleven years later, Seven Hills is among the few remaining global companies still active on the Ukrainian real estate market. Ari Schwartz, the CEO of the Seven Hills Group of Companies in Ukraine, puts this longevity down to sound foundations and a long-term approach to doing business in Ukraine. “There was a tangible boom town spirit throughout Ukraine in 2005. Everyone was entering the market hoping to make quick profits, but thanks to our international experience we knew not to expect fast money,” he says. Instead, Seven Hills spent an initial two-year period analyzing the Ukrainian real estate market and producing forecasts aimed at anticipating the likely needs of the market over the coming decade. The result was the company’s flagship Park Avenue VIP residential complex in Kyiv, which is now nearing completion.
Construction and conflict
Construction at the Park Avenue site began in 2007 and has continued uninterrupted ever since, despite intervening global financial meltdowns, a Ukrainian revolution, and hybrid war with Russia. “We did not stop construction for a single day, even at the height of the political crisis in early 2014,” says Schwartz. “We place great value on keeping to our commitments. If we brought construction to a halt because of revolution or war, it would have meant sending over one thousand people home. As a company operating in Ukraine, we have obligations to our Ukrainian clients and employees.” Having Israeli roots has certainly helped Seven Hills executives to understand the challenges of operating in today’s Ukrainian real estate market. Schwartz says there has been no discussion over the future of the company’s Ukrainian operations despite the instability of the past few years. On the contrary, the Israeli experience of prospering in difficult circumstances has helped to maintain a sense of optimism over the long-term future of the Ukrainian market. “As an Israeli company, we know what war is. We know how conflict can affect public morale and everyday life. We have lived in this 14
About the interviewee: Ari Schwartz is the CEO of the Seven Hills Group of Companies in Ukraine context for decades. Nevertheless, today’s Israel is one of the top real estate destinations in the world with large inflows of international investment. We see Ukraine in the same context. If you look at the bigger picture, Ukraine remains one of the most attractive markets in Eastern Europe if not Europe as a whole.”
Slow but steady market recovery
Construction work at the Park Avenue VIP residential complex is scheduled to finish in 2018. When complete, the complex will feature around 1350 individual apartments. Schwartz says sales have been steady over the past nine years and have remained strong during the turbulence of the postMaidan environment. Over 95% of the complex’s 980 completed apartments have already been sold despite an unwillingness to engage in the kind of price dumping practices evident elsewhere on the
Kyiv residential real estate market. These solid sales have given rise to an understandable sense of confidence regarding the future of residential real estate in Ukraine. Schwartz says he thinks the Ukrainian market actually bottomed out in earlyto-mid 2014, and has been in slow but steady recovery mode ever since. He sees 2017 as a potential breakthrough year for the Ukrainian economy in general, and is already plotting his next foray into the residential market. “Things are still far from easy but there is more and more evidence that the market is on the up,” he reflects. “It takes time to get back on track after the kind of shocks Ukraine has experienced recently, but I expect we will see a lot more international investment coming into the country next year. I would encourage additional international real estate developers to consider entering the Ukrainian market and often speak with industry colleagues around the world about the opportunities Ukraine represents.” www.bunews.com.ua
How Israeli IT experience can help
Ukraine become a startup nation
Israel offers insight into IT sector evolution as Ukraine seeks to upgrade from status as outsourcing hub
How big is today’s Israeli IT sector? The Israeli innovation ecosystem has emerged over the past quarter century as an alternative to Silicon Valley and currently includes 6,521 high-tech companies and 298 foreign R&D centers. Around 4,500 of these companies are active in the IT sector. Israel has become a center for innovation, attracting multinational companies to invest. One of the latest examples is the Volkswagen investment in Israeli startup Gett. Israeli companies like Netafim and Tal-Ya are active in environmental innovation, while HomeBiogas can turn garbage into cooking gas and BioBee uses insects to control pests. Cyber security, homeland security, new media and telecommunications are also key focuses.
Israel was the first country to be dubbed a ‘startup nation’. What can the Ukrainian government learn from the Israeli model in order to improve the environment for Ukrainian startups? It has long been the Israeli government’s explicit goal to position Israel at the core of the global knowledge economy. The Israeli economic model highlights the importance of investment in much-
needed human capital. The main strategic asset of any nation is its human resources. High quality human capital is essential for an innovation-based economy. The Israeli higher education system, supported by the government, has contributed a great deal to the success of Israel in the high-tech arena. Government policies have played a key role in fostering the development of the IT sector, as well as the growth of Israel’s high-tech industry as a whole. Starting over 20 years ago, Israel took full advantage of heavy investment in military and defense technologies, high educational levels, and the influx of skilled immigrants from the former USSR, as well as an existing culture of innovation, in order to cultivate the high-tech sector to a level that soon led to talk of Israel as a ‘startup nation’. Government initiatives have included heavy investment in education (reinforced by large-scale immigration to provide the necessary human capital), effective investment incentives favoring foreign investors bringing international expertise and management to the Israeli economy, investment in R&D, government-supported incubator and venture capital programs to convert academic
research into cutting edge businesses, and investment in defense technologies. Israel has also made important steps in laying the foundation for macroeconomic stability via controlling inflation, wide-ranging economic reforms to reduce the role of the state in the allocation of resources, and supporting the broader modernization of the economy. In addition, the Israeli government has developed a platform for international R&D cooperation, allowing the country to take advantage of foreign experience and bring additional knowledge and best practices into Israel. The resultant wide network of bilateral and multilateral R&D agreements assists Israeli and foreign companies to cooperate in order to create joint products. Israeli IT companies tend to be product exporters whereas the Ukrainian IT industry remains focused on providing outsourcing services. How can Ukrainian companies and individual entrepreneurs make the leap from services to creating and selling unique IT products? Most Israeli IT companies are export oriented
About the interviewee: Alexander Sinchenko is the Trade Officer at the Embassy of the State of Israel in Ukraine 16
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Which segments of the Ukrainian IT sector are most attractive to Israeli investors? Many of the companies in the Israeli IT sector are software companies. One key area of activity is cyber security. Due to the huge damage a cyber-attack is capable of causing, the cyber security industry is growing rapidly worldwide. Israel is second only to the US in terms of the number of products it produces to fight this costly crime. About 200 Israeli companies specialize in cyber security, accounting for around USD 3 billion worth of antiMay 2016
hacking exports in 2013. A quarter of the world’s venture capital-funded cyber security startups are Israeli. At the same time, Israel is investing major resources into a comprehensive cyber security innovative complex, CyberSpark, in Beersheba. Israeli and Ukrainian companies could seek to create joint projects where both companies combined technology and local market needs create unique products.
Ukraine is now actively working to produce a new generation of IT specialists through educational programs and cooperation with universities. What is the Israeli approach to training the next generation of IT professionals? The Israeli university education system has not dramatically changed in recent decades, with about 30% of students consistently receiving degrees in sciences and engineering. Growing demand for IT skills over the last 30 years has been met by liberalizing the higher education system to facilitate the foundation of private colleges, and by recognizing degrees granted by technical schools accredited by the Ministry of Education. Furthermore, attempts have been made from time to time to reprioritize various professional streams within Israel’s existing system of higher education. For instance, in the early 1990s, industry leaders in Israel saw the need to retrain many of the graduates from the top universities in electronics and computer science. This led to the creation of task forces, with universities focusing attention on these particular areas. In other words, there have been a number of fairly successful attempts to shift the priorities of career training within the public university system to reflect the most pressing needs of industry particularly the high-tech sector - because of its perceived growth potential and its contribution to Israeli GDP. At the turn of the millennium, Israel also undertook a major review of computer training at school level, and now has the most rigorous Computer Science high school program in the world. An important component of the IT focus within Israel’s professional educational system is Machshava – the Israeli National Computer Science Teaching Center. Founded in 2000 by the Israeli Ministry of Education, Machshava is regarded as the professional home for all Israeli computer science teachers. The Ukrainian high-tech sector can learn from the Israeli experience that the key to innovation is the capability to establish and cultivate a culture in which young people are not afraid to dare and to establish their own startup business. The human capital is already in place, as is the supporting business environment.
Invented in Israel
Many of the most innovative everyday items encountered globally today trace their origins to Israel. Here are just a few of our favourites:
israel in ukraine
because the Israeli domestic market is relatively small. After conquering the Israeli market, they have traditionally looked overseas. This has created growth challenges as Israeli IT companies have found themselves geographically far away from their customers in the United States and Europe. The solution has been to move marketing and headquarters out of Israel and establish operations closer to core markets while keeping R&D in Israel to take advantage of the country’s human capital. This outward migration of Israeli companies has been balanced by the arrival of multinational companies to Israel. Due to government incentives and the availability of high-level human capital, Israel has become an attractive location for the R&D operations of leading multinationals. Multinational companies seeking innovative technology have bought small startup companies and established local R&D centers. Today there are 298 multinational companies in Israel operating R&D centers including IBM, Intel, Apple, Cisco, Motorola and Microsoft to name a few. It is important to recognize that different skills are required to create service providers and product companies. While the main goal of a service company is to solve client needs, product companies aim to solve sector needs and address broader issues like effective agriculture, personal data security or water management. Ukrainian companies should try to think in similarly broad terms and seek to provide solutions capable of being relevant to a whole sector. Innovations that straddle sectors are particularly interesting, combining IT and agriculture and IT for medical purposes, for example. Your product must provide a solution to an unmet need, in the domestic market or abroad. Therefore, you as an entrepreneur should understand the target market very well. Entrepreneurs must be people who are not afraid of risky long-term projects. Policy makers need to cultivate a culture where entrepreneurs can thrive and prosper. This requires an environment involving risk-taking, audacity and ‘out of the box’ thinking. Daring, audacity and assertiveness need to be encouraged and respected.
Drip Irrigation The drip irrigation concept was invented by the Israeli engineer Simcha Blass. He found that slow and balanced irrigation increases the yield and went on to invent a flexible conduit to make the process possible. In 1965, the Israeli company Netafim created a whole industry based on this technology. The resultant advanced technology systems can be selfcleaning. They can also provide for the uniform distribution of the water regardless of water quality and pressure, allowing agriculture to expand into areas previously regarded as too dry for cultivation. Drip irrigation is one of many Israeli contributions to the world of agricultural innovation and has many direct potential applications for Ukraine.
USB Flash Drive
The first USB-Flash Drives appeared in September 2000. They were invented by Israeli company M-Systems. USB flash drive technology was sold in the US in conjunction with IBM with the relevant logo on board. The first USB flash drive had 8 MB of memory and cost USD 50. In 2006, M-Systems was acquired by SanDisk Corporation for USD 1.55 billion.
PillCam Camera Tablet
Israel’s Given Imaging company produces ‘pills’ with built-in cameras that allow you to accurately diagnose problems in the abdomen. The miniature pill contains a camera, wireless transmitter, module backlight, and battery. Doctors can observe the resultant images in real time. In 2013, Given Imaging was acquired by Covidien Irish for USD 970 million. PillCam is a good example of technology developed for Israeli army and later implemented in the medical devices sector. 17
israel in ukraine
Accessing Israeli healthcare in Ukraine
LISOD Israeli Oncology Hospital offers international medical care locally in Ukraine Israel has long been a popular medical tourism destination among Ukrainians. In February 2007, Israeli healthcare services became available inside Ukraine itself, with the opening of the LISOD Israeli Oncology Hospital in the Kyiv region. This healthcare facility brings together leading experts from Israel and Ukrainian doctors to offer international quality cancer treatment without leaving the country. Business Ukraine magazine spoke to LISOD Chief Medical Officer Professor Alla Vinnytska about the challenges of bringing Israeli healthcare to the Ukrainian domestic market. What kind of impact has the arrival of Israeli medical practices in Ukraine had on the domestic healthcare industry over the past nine years? We can talk about the steady adoption and implementation of Israeli medical practices in the Ukrainian healthcare community. In terms of cancer survival and recurrence indicators, current figures show that we have already reached the level of Israel and the most developed countries of Western Europe. Since 2007, the LISOD Israeli Oncology Hospital has been accredited and secured the highest category rating from Ukraine’s Ministry of Health. We have organised numerous international conferences and surgical workshops involving Israeli clinical oncologists and Ukrainian doctors, including the medical team working at our hospital.
How do the services and treatments available at LISOD differ from the healthcare patients receive in Israel itself ? There is actually no difference. LISOD is to all extents and purposes an Israeli hospital that happens to be located in Ukraine. It is a little piece of Israel in Ukraine. As the services we offer become known to wider audiences, we are now witnessing a new phenomenon – many of those who previously made the decision to receive medical treatment abroad are choosing to come to us instead. In some cases, these patients say the idea came from Israeli doctors themselves, who asked them: “Why have you come to Israel? You already have LISOD in Ukraine.” Given the services we can offer, coupled 18
About the interviewee: Professor Alla Vinnytska is the Chief Medical Officer at the LISOD Israeli Oncology Hospital in the Kyiv region with the advantages of treatment in a familiar environment, it does not actually make sense to leave the country. Our diagnostic and treatment procedures are identical to those on offer at top international medical tourism destinations. Before coming to work in Ukraine, many of our experts worked for 25 years or more at some of the largest medical centres in Israel including the Rambam Hospital, Hadassah Hospital, and the Asuta Clinic.
How has the arrival of LISOD in Ukraine effected the medical tourism industry in the country? Travelling abroad for medical treatment can be a very stressful experience in itself. As well as the obvious challenges presented by illness, patients also face a sudden change in environment, language barriers, and the emotional problems associated with separation from loved ones. Since the opening of the LISOD Hospital in Kyiv region in 2007, tens of thousands of Ukrainians have been able to avoid encounter-
ing these issues. The hospital has actually contributed to helping develop Ukraine as a medical tourism destination in its own right. We treat a number of patients who come to us from outside Ukraine, including Germans and Americans.
As well as international standards in medical care, what else can treatment at LISOD offer patients? As the Chief Medical Officer of the hospital, I consult with patients and doctors every day and see the impact of local treatment from the inside. Ukrainian patients receive the kind of quality care they would expect at top international clinics, but they are able to remain in their home country, bringing a range of benefits. The doctors and staff treating them speak their language and share their cultural background. Crucially, patients are able to undertake treatment with their relatives in close proximity in order to offer emotional support. Thanks to these advantages, we have found that patients tend to recover faster. www.bunews.com.ua
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an agriculture sector asset Crop protection company Adama Ukraine employs startup philosophy to expand business Ukraine’s famously fertile black earth makes the country a potential global agribusiness superpower, but succeeding in the farming sector requires more than simply harnessing the country’s natural agricultural wealth. Innovation is becoming an increasingly indispensable element for the Ukrainian farming sector as domestic producers seek to become more competitive on global markets. For the Ukrainian branch of Israel-based crop protection company Adama, this has meant a diversified business model and a drive towards greater utilization of digital tools.
Farming in the digital age
Dmytro Kashpor, the Managing Director and CEO of Adama Ukraine, says the company’s Israeli roots have helped create the entrepreneurial spirit underpinning its activities in Ukraine. He likens the Adama Ukraine philosophy to that of a traditional startup and says despite a challenging environment characterized by significant price pressure and farmers seeking to cut costs, the company is growing. “Our Israeli ties help foster an entrepreneurial atmosphere. The Israeli experience of innovation and transformation in a challenging environment of security threats and hostile neighbors is also useful,” he says. Adama Ukraine traditionally focuses on the distribution of crop protection solutions. The company posted an annual turnover of USD 50 million in 2015, representing a 9% share of Ukraine’s crop protection market. The Adama Ukraine presence in Ukraine actually dates back to the mid1990s, but the company underwent a major reorganization and rebranding in 2014 to replace the previous Makhteshim-Agan branding. Since this reorganization, Adama Ukraine has begun to develop additional aspects to its operations in Ukraine. New social media platforms represent just part of Kashpor’s ambitious plans for the transition towards a more digital approach to the agriculture business. A range of free apps have also been launched, including one allowing Ukrainian farmers to visually identity pests and bugs while also learning how best to deal with them. Kashpor sees social media as a way to improve communication with the farmers who make up his client base, allowing him and his colleagues greater insight into their requirements and concerns. “It helps us to understand what they are thinking,” he comments. Kashpor is also currently working on expansion into the commodity purchasing market, with a pilot project focusing on corn and wheat future markets expected to begin in autumn 2016. The goal is to offer Ukrainian producers some much-needed price protection – a step Kashpor believes could become the norm within as little as three to four years, creating the basis for a ‘booming market’.
Learning from Argentina and Brazil
While many Ukrainian economic analysts seek inspiration in the postSoviet transition stories of Poland and the other former Warsaw Pact
israel in ukraine
Israeli entrepreneurial spirit is nations of Central Europe, Kashpor prefers to point to South America. “Argentina and Brazil are in many ways much closer to today’s Ukraine,” he argues. “They are also export-oriented emerging markets with strong agricultural sectors featuring political instability and fluctuating currencies. We can learn a lot by studying their experience.” He is optimistic about the prospects for reform of Ukraine’s agricultural land sale moratorium, long cited as a key barrier to greater international investment. Kashpor says a revision of the moratorium is ‘inevitable’ within the next few years, but cautions against exaggerating the shortterm impact this will have on the sector as a whole. “A lot of hurdles will still remain, such as concerns over the protection of investor rights and the credibility of the country’s courts.” Despite this broadly optimistic appraisal, Kashpor argues there are no shortcuts to Ukrainian agribusiness success. Instead, he advocates an intensive, hands-on approach to all agricultural sector investments. “Attention to detail will always be crucial. When it comes to planting and harvesting, a few days too early or a few days too late can make all the difference. If you sit in Kyiv and expect your farm in rural Ukraine to become a success, you will end up being disappointed. You need to be involved on the ground on a day-to-day basis. This is essential in order to establish trust and prevent corruption.”
EU standards boost global markets access
Kashpor says his Israeli colleagues have been relatively unperturbed by the volatility in Ukraine over the past two years, and continue to see the country primarily as ‘a huge agricultural power on the borders of the EU.’ The recent advent of Ukraine’s EU Association Agreement has inevitably focused attention on the opportunities created by greater access to EU markets, but Kashpor also stresses the potential for further global market expansion beyond the European Union. “The adoption of EU standards throughout the Ukrainian agricultural industry will help Ukrainian exporters gain access to global markets as a whole,” he says. Israel itself is one of many countries already increasing imports of Ukrainian agricultural commodities. Kashpor also identifies Turkey, China, Iran, and even Russia. “The Russian domestic market offers great potential for Ukrainian agricultural producers,” he states. “Maybe not today, but tomorrow for sure.”
About the interviewee: Dmytro Kashpor is the Managing Director and CEO of Adama Ukraine May 2016
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SME sector growth holds the key to Ukrainian agricultural evolution New Ukrainian Agrarian Policy Minister Taras Kutovyi shifts focus to smaller farms and niche markets Despite frustration over the slow pace of reforms, European attitudes are slowly but surely seeping into everyday Ukrainian life. This process is even beginning to make itself felt in the way the government interacts with the public. Not so very long ago, the interiors of Ukraine’s government ministries were every bit as intimidating as the Stalinist facades of the buildings they inhabited. An attitude of splendidly isolated authority pervaded these vast halls and corridors of power, leaving visi-
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tors feeling distinctly unwelcome and making communication with ministry personnel a relatively thankless task. These days, the mood upon entering the Ministry of Agrarian Policy and Food is markedly different. The ministry is still located in an imposing Stalin-era building located on Kyiv’s downtown Khreschatyk Street, but upon arrival, it :
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About the interviewee: Taras Kutovyi is Ukraine’s Agrarian Policy Minister
: is immediately obvious significant efforts have been made to transform
the aesthetic and move away from the post-Soviet ambience. Instead of being accosted by humorless security sentinels demanding ‘dokumenti’ and asking what business you have encroaching on their hallowed turf, visitors to the ministry are now greeted by bright young Ukrainian reception staff and a public information center designed as the first port of call for Ukrainian farmers looking to reach out to EU partners. These cosmetic changes are not all the work of new Agrarian Policy Minister Taras Kutovyi. After all, he has only been on the job for around a month as one of the many ministers to take office in April alongside new Prime Minister Volodymyr Groysman. Nevertheless, they reflect Kutovyi’s stated vision of a more businesslike and communicative Ministry better designed to meet the needs of one of Ukraine’s most globally competitive industries.
pre-parliamentary career, Kutovyi was able to gain first-hand experience of the challenges faced by Ukrainian companies looking to attract international investment and develop global reach, including involvement in Ukraine’s first IPO on the London Stock Exchange. After becoming an MP, Kutovyi served as Deputy Chair and then as Chair of Ukraine’s Parliamentary Agricultural Committee, paving the way for his recent elevation to ministerial status. In this sense, the forty-yearold Kutovyi is a hybrid of the rival careerist politicians and technocrats currently vying for the right to dictate the direction of the new Ukraine. Like many of the 2014 governmental intake, he is part of a new Englishspeaking generation with a significant record of private sector success. However, he also brings credible prior government experience to the table – something many of the political novices in the previous government lacked.
Small is beautiful
Quotas and niches
Minister Kutovyi arrives somewhat late for his interview with Business Ukraine magazine and is full of courteous apologies. His excuse is a good one - the delay was due to a meeting with his German ministerial counterpart and an accompanying high-level delegation from the Bundestag, who came to Kyiv looking for ways to enhance bilateral cooperation in the agricultural sector. The information center located downstairs in the ministry entrance hall is among the early fruit of this enhanced German-Ukrainian agricultural cooperation. It is also an indication of the ministry’s focus on helping smaller Ukrainian agricultural enterprises make the most of the opportunities presented by EU integration. “If I could sum up my priorities in a single sentence, I would say there must be a bigger role for smaller farmers,” the minister states. “We must concentrate on small and medium-sized enterprises with less than 500 hectares of land and provide them with the support they need to become sustainable and competitive in global niche markets.” Given his extensive private sector background, this business-like approach is exactly what you would expect from Kutovyi. Prior to entering parliament for the first time in 2012, he held a number of senior executive positions in the real estate and agricultural sectors. Thanks to this
Kutovyi’s strategic emphasis on agricultural SMEs aims to help Ukraine take advantage of its natural agrarian riches and capitalize on enhanced access to EU markets by producing more of the value added products European customers are seeking. He has taken his lead from some of the European Union’s most successful agricultural models, citing Denmark’s comparatively small but impressively productive agrarian sector as a particular inspiration. The overall objective, explains Kutovyi, is to move the Ukrainian agricultural industry to the next level. “It’s all about efficiency,” he says. “By focusing on products with added value rather than relying totally on commodities, the contribution of the agriculture sector to Ukraine’s GDP will rise. It’s time to step up.” Initial optimism over the free trade component of Ukraine’s Association Agreement with the European Union has since given way to concerns over continuing EU quotas on a range of Ukrainian agricultural exports. However, Kutovyi believes a greater focus on value-added products and niche markets will help counter Ukraine’s quota blues, offering opportunities to export produce not subject to restrictive limitations. He acknowledges the current quotas represent a major barrier for many of Ukraine’s giant agricultural concerns, but points to the huge opportuni- :
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: ties for SMEs if they are able to tailor their output more specifically to
the needs of nearby European markets. By way of example, the minister points to free range eggs – a product not subject to EU quotas under the terms of the Association Agreement, but one very few Ukrainian farmers are currently able to offer. Another potentially bountiful sector for Ukrainian farmers is the organic foodstuffs market. Kutovyi believes Ukraine is particularly well placed to meet growing global demand for organic produce and says Germany and Japan are among the countries to have already expressed an interest in organic imports from Ukraine. At present, the organic share of the Ukrainian market is less than 1%, but Kutovyi says this could eventually rise to as high as 5%. Encouraging Ukrainian farmers to become more market-orientated in their choice of crops is one thing, but securing EU certification is quite another. Meeting EU requirements is a complex and costly repositioning process that cannot happen overnight. Kutovyi recognizes SMEs will need government assistance if they are to meet the necessary EU standards and make inroads into EU markets. “The Association Agreement creates huge export opportunities for SMEs but they require our support to complete the EU certification process and in order to find European partners. We will help them to grow market share. We also expect the dialogue with our European colleagues to deepen in parallel with the growing exchange of experience,” he says.
Ukrainian farmers look to Asian and African markets
EU markets are far from the only focus for the Ukrainian agricultural sector. With the once dominant Russian domestic market now largely off-limits to Ukrainian agricultural exporters, a process of global expansion is well underway with farmers seeking new market access, primarily in Africa and Asia. Kutovyi names Iran as particularly appealing. He sees the lifting of sanctions over Tehran’s nuclear programme as a huge opportunity for Ukrainian exporters, especially in light of the traditionally strong position enjoyed by Ukrainian agricultural produce on the Iranian domestic market. Export volumes to countries including China, 26
Egypt and Israel have already experienced significant growth in the past two years – a process that looks set to continue in the second half of 2016. Meanwhile, the entire Middle East, with its limited agricultural capacity, growing population and close geographical proximity, offers Ukrainian farmers a vast potential marketplace for the country’s core agricultural commodities. Unsurprisingly, this has led some analysts to speak of an over-emphasis on EU trade at a time when Ukrainian agriculture is making major inroads in some of the world’s most attractive marketplaces.
On the agenda: deregulation and land reform
Kutovyi’s predecessor as Ukrainian Agrarian Policy Minister Oleksiy Pavlenko won plaudits during his brief period in office for overseeing the removal of a wide range of suffocating regulatory practices. This process is set to continue under Kutovyi, who also played a key role in the deregulation process via his position as Chair of the Ukrainian parliament’s agricultural committee. However, he points out that even in a highly bureaucratic post-Soviet environment, deregulation has its limits. “In some cases we may even have gone too far,” he concedes. The centerpiece of the current reform agenda will undoubtedly be the law on land circulation, which Kutovyi hopes will pass its second reading in parliament by the end of 2016. This proposed reform aims to introduce the right to sell and pledge agricultural land lease holds. The minister argues it has the potential to make Ukrainian land a far more marketable commodity while increasing transparency and helping to generate huge amounts of working capital. He is confident the law in its current form will not provoke populist opposition, despite the long history of political posturing over the extremely sensitive issue of agricultural land sale. “It is fair. There is no counter-argument,” he states matter-of-factly. Nevertheless, Kutovyi accepts the success or failure of this land reform effort will go a long way to determining the broader investment climate in the Ukrainian agricultural sector, adding, “If the situation regarding the land itself is not good, nothing else will work.” www.bunews.com.ua
Can Savchenko reload Ukraine’s revolution?
Ukraine’s Joan of Arc freed as discontent mounts over President Poroshenko’s reform failures President Petro Poroshenko trumpeted the triumphant return of Nadiya Savchenko to Ukrainian soil in late May, but many commentators are already predicting she will soon become one of his biggest critics. In her first public statements following release from Russian prison, Savchenko spoke bombastically of ‘finishing the revolution’ and more than lived up to her unofficial status as Ukraine’s Joan of Arc. Savchenko’s uncompromising stance echoed the views of the Ukrainian soldiers I met during a recent trip to the front lines in eastern Ukraine. Not a single soldier had anything positive to say about President Poroshenko, while most were scathing in their condemnation and blamed him for betraying the ideals they were fighting for. In Savchenko, they will see a kindred spirit untainted by the failures of the post-Maidan period who possesses the courage to represent this significant constituency.
Savchenko the politician
Who, exactly, is Nadiya Savchenko, and what are her political beliefs? At this stage, it is difficult to say. The iconic pilot’s regular acts of defiance in Russian courtrooms over the past two years inspired Ukrainians and caught the imagination of the watching world, but the many memorable one-liners she offered up do not represent a political manifesto. In reality, it is still far too early to even begin the process of assessing her political philosophy. However, initial indications strongly suggest a hardline approach driven by passionate patriotism and a willingness to defend the sacrifices of Euromaidan and the national resistance to Putin’s hybrid war. It is extremely hard to imagine her being anything but a scathing critic of the Minsk Accords. Talk of a national role may seem overstated given the fact that Savchenko was completely unknown to the Ukrainian public prior to her imprisonment by the Kremlin. This skepticism fails to take into account the strength of emotion generated by her courageous conduct in Russia, or the levels of frustration felt towards the country’s current leadership. Savchenko may be a political novice but she currently enjoys levels of moral authority beyond the wildest dreams of Ukraine’s discredited political classes. Already an MP following election to parliament in 2014 during her incarceration, she has gone straight from her Russian jail cell to a position of national prominence. She is the number two person on Yulia Tymoshenko’s party list and a member of the Committee on National Security and Defence. Many observers now believe Savchenko has the ability to reenergize Ukraine’s faltering revolution, which has run aground amid accusations of political indifference and outright sabotage. This tide of criticism is increasingly focusing on President Poroshenko himself, who has succeeded in consolidating his grip on power but removed any potential scapegoats in the process.
Lutsenko costs Poroshenko credibility
President Poroshenko’s recent appointment of close ally Yuriy Lut-
senko as Ukraine’s new Prosecutor General will only add fuel to accusations of betraying the Euromaidan Revolution. By choosing an unqualified loyalist for the post, Poroshenko seems to be following the disastrous example of Viktor Yushchenko, another Ukrainian president brought to power by a popular uprising who failed to live up to expectations. Indeed, when I first read about Lutsenko’s appointment, I immediately thought of Roman Zvarych 11 years ago. Does anybody remember his scandal? Back in 2005, President Yushchenko appointed one of his ‘dear friends’ (‘lyubi druzi’) Zvarych to the post of Justice Minister, despite the fact that he appeared to have no legal qualifications for the position. Zvarych not only lacked the requisite legal training – soon after taking office, he faced accusations of falsely claiming to have an MA and PhD from Columbia University. At the time, I commented on his denials: “Instead of accepting guilt, he’s done the same thing the Kuchma regime had always done and claimed there’s a conspiracy against him. That is not a good sign for the new government. It is essentially the same tactics as in the Kuchma era.” Zvarych only lasted eight months in his ministerial position. It will be interesting to see if Lutsenko lasts any longer.
Sabotaging the revolution
President Poroshenko could have shown his commitment to Ukraine’s Europeanisation by appointing a young, English-speaking, Western trained lawyer as the Prosecutor General. Instead, his choice of Lutsenko suggests a rejection of the European values championed on Maidan and return to the old ‘business as usual’ approach to Ukrainian politics. This appointment of Ukraine’s fourth weak prosecutor general in a row since the Euromaidan Revolution cannot be written off as mere political expediency. President Poroshenko and acting head of state Oleksandr Turchynov before him must take joint responsibility for the appointment of a series of ineffective prosecutor generals, demonstrating that neither the Narodny Front nor the Petro Poroshenko bloc they represent ever had any intention of bringing fugitive ex-president Viktor Yanukovych or his kleptocratic clan to justice. This signals a complete lack of political will to improve the rule of law situation in the country or combat high-level corruption. To paraphrase the famous saying, history repeats itself in Ukraine first as a farce, second as a tragedy, third as a repeated mistake, and fourth as open sabotage. As a direct result of these appointments, Ukraine’s two current parties of power now stand accused of openly undermining Ukraine’s European integration. Without reform of the prosecution service, all other attempts to fight corruption are redundant. Ukraine’s current 20,000-strong prosecution service is approximately 300% over-manned (Great Britain, for example, has 8,000 prosecutors in its Criminal Prosecution Service despite having a population around 50% larger than today’s Ukraine). The ridiculous uniforms and political culture of Ukraine’s prosecution service demonstrate that it is still a Soviet institution at heart, with little or nothing in common with the rule of law.
Confrontation set to continue
A number of broad conclusions appear possible in the wake of President Poroshenko’s decision to appoint Lutsenko. Ukraine looks set to remain
About the author: About the author: Taras Kuzio is a Senior Research Fellow at the Canadian Institute of Ukrainian Studies, University of Alberta. His most recent book ‘Ukraine: Democratization, Corruption and the New Russian Imperialism’ (Praeger, June 2015) surveys modern Ukrainian political history from 1953 to the present.
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politically unstable as long as civil society, journalists and those political parties committed to European integration find themselves confronted by oligarch-backed Kuchma-lite political forces intent on blocking moves towards genuine justice and the rule of law. This confrontation has been underway for over two decades and it will certainly continue. However, when viewed from a broader historical perspective, the ultimate victory of the country’s Europeanizing forces begins to take on an air of inevitability. Ukraine’s European integration has gone through a number of transitions since 1991, but since 2010 it has entered a critical phase that can be split into two strategic stages. In the first stage, Ukrainian patriotic forces were able to secure a decisive victory over the neo-Soviet forces behind the Yanukovych presidency and the Kremlin’s failed ‘Novorossia’ project. In today’s Ukraine, pro-Russian and pro-Eurasian sentiment are at all-time lows – especially among younger demographics. The next stage of the contest is only just beginning – this is the phase pitting Ukrainian patriots against the remaining Soviet institutions still controlled by the Kuchma-lite parties blocking Ukraine’s Europeanization. Pro-European forces inside Ukraine will be able to count on the support of many vocal advocates of a European Ukraine outside the country, who will be calling on key allies such May 2016
as the US, EU and IMF to be far tougher in terms of the conditions they attach to financial and political assistance. Ukraine’s international partners have a potentially major role to play in the process of marginalizing the entrenched Soviet institutional structures in contemporary Ukraine by demanding an end to the sabotage of reform efforts in return for crucial aid and diplomatic backing. Nevertheless, the scale of the challenge should not be underestimated. The current levels of resistance to reform reflect the continued influence of the old guard and the lengths they will go to in order to maintain the status quo.
No counter-revolution this time
There is growing consensus among Ukraine watchers that with the appointment of Lutsenko, Poroshenko’s presidential term is now entering a period of prolonged stagnation, just as Yushchenko’s presidency did in 2008-2009. The only difference is on this occasion there will be no subsequent counter-revolution led by a new Yanukovych. Instead, there is much more likely to be a push to ‘finish the Euromaidan Revolution’. The big question at present is whether this reloaded revolution will be led by Nadiya Savchenko and her current political patron, Yulia Tymoshenko. 29
E-government needs political will to become reality Ukraine can benefit from existing global experience but state bodies need to work together Ukraine is a relative latecomer to the world of e-governance, but grassroots demand for electronic services is now pushing the issue further up the political agenda. As with many areas of post-Maidan Ukraine, volunteer initiatives are playing a key role, enabling regional authorities to introduce digital services on a localized basis. Due to the combined efforts of local officials, volunteers, and donors, electronic portals and services have already appeared in Ukrainian regions including Volyn, Kharkiv, Dnipropetrovsk, Lviv and Ivano-Frankivsk Oblasts. Over 260 information systems providing electronic services are now functioning across the country. This creates a dynamic but chaotic and fragmented basis for the development of e-government in Ukraine. The country now faces a choice of either adopting a more unified system or sticking with the current philosophy of de facto diversity.
Learning from e-government innovators
Ukraine’s late arrival on the e-government scene is in many ways a weakness, but it could be to the country’s advantage if lessons learned elsewhere are absorbed. International e-government experience varies widely from country to country, with different models depending on cultural factors as well as available technological frameworks. Early adopters of e-government electronic services were often unable to build highly centralized systems due to a lack of necessary computing capacity, creating problems further down the line. Back in the 1990s, e-government pioneer Finland initially opted for a diversified approach, only to spend EUR 60 million in the 2000s in order to create a single platform. Countries entering the e-government club after the initial wave, such as Estonia, the Czech Republic and Qatar, have almost exclusively chosen a onestop-shop system.
Ukraine’s Single State Portal
Based on this global experience, Ukraine’s Ministry of Economic Development and Trade (MEDT) is currently working to establish a single portal for state services capable of simplifying processes and eliminating delays. Implementing this one-stop-shop approach will require the cooperation of state authorities at all levels, but even at this initial stage, we can already see various specific examples of the role a more comprehensive service could play. In September 2015, the MEDT launched a pilot version of the Single State Portal of Administrative Services. This pilot platform contains regularly updated information about available services, application templates, and data on fees. In March 2016, the MEDT began offering businesses the chance to apply electronically for a range of licensing services, permits and other administrative processes. The site currently allows businesses to apply electronically for 12 services related to international trade, including the registration of foreign trade contracts for export transactions and the issue of import and export licenses. Before these services became available online, entrepreneurs had 30
About the author: Lesia Chmil is the Director of the IT and Document Management Department at the Ministry of Economic Development and Trade of Ukraine to come to the ministry at least twice in order to submit documents and to receive licenses. In practice, the process could take much longer, with incorrect forms or missing documents resulting in endless reapplications. This process would often take months and only be resolved following the intervention of expert intermediaries. The Single State Portal removes the need for these intermediaries while also reducing delays and increasing clarity. Applicants receive updates via personal profiles registered on the www.bunews.com.ua
A nationwide undertaking
As Ukraine moves towards greater e-governance, a centralized platform for all digitalized state services is becoming a necessity. In order for the leap into the digital age to be successful, everything from real estate registers to individual electronic identities will need to be coordinated via the relevant state information systems. The government now faces the significant task of creating and maintaining these registers. For example, passport data must be stored in electronic format rather than current paper records. This information must be secure but accessible. The creation of a national portal will address three key issues. It will lead to greater automation of administrative business processes, reduce direct contact with state officials, and minimize delays in securing the necessary documentation to conduct business in Ukraine as well as 5-time reduce a service rendering time and make the process easy and convenient for everyone. Few would argue with the goals of this e-government drive. However, sig-
nificant obstacles are blocking the implementation stage. Some state bodies do not have the requisite information systems in order to integrate into a unified platform. There is an absence of legislation covering the means of electronic identification, with relatively few Ukrainians currently in possession of legally recognised digital signatures. E-government efforts are also subject to the problems facing all major reform drives in Ukraine, such as the lack of mechanisms and resources to ensure thorough and comprehensive implementation. There is an absence of overall reform vision and too much in the way of half-hearted efforts. Coordination between the various state authorities remains weak. In order to overcome these challenges, the Ministry of Economic Development and Trade, together with the State E-Governance Agency, is currently working on the creation of an overarching strategy for the development of electronic administrative services. An action plan is being prepared to bring legislation in this area up to the required level. These legislative changes must take place in parallel with implementation of the services themselves. Practical experience has already shown that further steps towards the implementation of e-government in Ukraine will prove impossible without political support and the necessary legislative changes.
e-government
Single State Portal, keeping them informed of any issues regarding documentation or other aspects of their application. The system also allows different departments to process applications in parallel, reducing timeframes from 10-15 days down to 2-3 days.
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From outsourcing outpost to startup central Ukrainian IT talent requires additional business knowhow in order to attract international investment Ukraine’s IT industry has generated considerable buzz over the past twelve months as continued robust development amid a crisis climate has illustrated the growing strength of the sector. With year-on-year expansion over the past decade well into the double figure percentage points, many analysts are now predicting the emergence of a new Silicon Valley in Eastern Europe. This optimistic talk is not without foundation, but it may well be premature. While Ukraine’s IT industry is outperforming most of its regional rivals, it remains heavily concentrated in the outsourcing sector and has yet to make the leap towards innovation that could herald the country’s transformation into a genuine ‘startup nation’. This switch in emphasis will require considerable investment into the industry and the synthesis of Ukraine’s ample IT knowhow with the kind of business acumen required to push products on the global market. Business Ukraine magazine spoke to Oleksii Vitchenko, the CEO and Founder of Kyiv-based venture capital group Digital Future, about the challenges of mobilizing Ukraine’s potentially huge innovation economy.
Marketing Ukrainian IT talent
“There are around 300 to 500 Ukrainian startups each year and we see most of them,” says Vitchenko. “Generally speaking, only about 5% of them are viable options for investment. We focus on the business model and not just the product.” Digital Future concentrates mostly on seed-stage capital for Ukrainian tech startups with focus on artificial intelligence (AI), Ad- Tech, mobile, E-commerce, with the end goal of helping partners build up their business before selling on to major Western investors. “We try to envisage how a project can be grown on international markets,” explains Vitchenko. The company is as young and fresh as its ultra-hip Kyiv offices. Founded in 2014 at a time when many in Ukraine were looking to downsize or even exit the market, Digital Future is located in a stand-alone building with the interior ambience of a dot.com dynamo. Multi-coloured bannisters line the staircases while Star Trek: Voyager and Marvel Comics pop art posters line the walls. “I’m an entrepreneur who tends to see opportunities in a crisis,” Vitchenko says of the company’s 2014 foundation. “It was a chance to acquire equity at low rates. We helped numerous companies grow quickly. I like to invest in people rather than projects, and am always looking to invest in people with entrepreneurial backgrounds.”
Leaving the outsourcing comfort zone
Vitchenko likens the Ukrainian IT sector’s current emphasis on outsourcing to a convenient comfort zone and speaks wryly of the ‘coding factories’ currently dominating the domestic industry. “Moving from outsourcing to the world of startups means leaving the comfort zone of high salaries and relative job security. Startups are high risk, high stress, and high potential businesses.” The key to coaxing more people into the startup field, he believes, lies in creating opportunities for the technological and commercial sides of the business to enter into a dialogue. Digital Future holds regular events including hackathons with a specific tech focus (the company initiated the first Ukrainian AI Hachathon in April 2016), where they attempt to bring business professionals and IT specialists together. The objective is to build a diverse team capable of producing the ideal product for global markets. Vitchenko recounts an idea he heard at a recent web summit in Dublin about the ideal startup dream team that would include an Italian 32
About the interviewee: Oleksii Vitchenko is the CEO and Founder of Digital Future designer, a German financial manager, an Israeli sales team, American marketing, and Ukrainian developers.
Ukrainian IT enjoys improving image
The good news is selling Ukrainian innovation to international investors is becoming easier and the country’s knowledge industry gains in global status. Vitchenko regularly attends international events and says the reputation enjoyed by Ukrainian high tech continues to improve as more people become familiar with Ukraine’s human resources. Recent coverage of the country’s burgeoning IT sector has certainly helped this process. He also points to specific media events like the recent arrival of Antonov’s record-breaking ‘Mriya’ aircraft in Australia, arguing that they can play an important role as adverts for Ukrainian knowhow. “We received a number of inquiries from Australian companies thanks to the attention generated by the Mriya,” he shares. These Australian inquiries are part of growing international interest in opportunities presented by the Ukrainian high tech market. As Ukraine’s profile continues to rise, Vitchenko says the industry’s brain drain is also showing signs of slowing. Ukrainian high tech industries are particularly vulnerable to the loss of human resources as young Ukrainians with highly sought-after and easily transferable skills seek better pay and greater prospects in more developed markets. However, Vitchenko says the flow of talent is no longer exclusively in one direction. “Two years ago, developers were leaving Ukraine, but now the situation is changing. Some of those who left are actually coming back because they realize they are better off here, both in terms of salaries and lifestyle.” www.bunews.com.ua
Cross-border intellectual property issues Ukrainian exporters entering new markets must focus on protecting intellectual property rights Ukraine’s geopolitical pivot towards Europe and the closure of Russian domestic markets have combined to spark a rush for new markets among Ukrainian exporters. As they seek out fresh international opportunities, Ukrainian producers also need to take intellectual property issues into consideration. It is essential to get on top of the issues raised in order to create the foundations for successful expansion into new markets. Companies looking to benefit from cross-border trade need to protect their intellectual property rights in destination markets. In some cases, they may also need to take the necessary measures in transit countries. This will help them protect their own interests while also avoiding conflicts arising from accusations of intellectual property rights from others. Depending on type of goods marketed, protection of different intellectual property rights such as trademarks, designs, and technologies is generally possible. In most cases, trademark protection is the most important requirement for marketing products in foreign territories.
Researching target markets
Any company looking to export from Ukraine should begin by investigating the specifics of their target market. This means exploring existing registered trademarks and identifying any potential conflicts. It is worth noting that there are a number of publicly available resources to aid in this kind of research, including free online databases such as TMView, DesignView, Global Brand Database, and Global Design Database. These resources offer a good introduction, but you may still need to seek advice from local trademark attorneys regarding the eligibility and availability of your trademark. It is not merely a question of identifying an empty niche or checking for similar brands. There are numerous complex issues to consider including whether your trademark falls into categories not suitable for trademark protection in any given jurisdiction. Some patent offices may employ particularly broad definitions of similarity between trademarks, for example rejecting new applications for brands featuring terminology already featured in earlier registered trademarks. Each patent office is different, requiring specific approach to reflect local nuances.
Trademark challenges and international options
It is possible to register trademarks via the national route in each individual target country. However, in most cases it is far more time- and cost-effective to identify international registration options such as the Madrid system and the European Union trademark. This allows exporters to file a single application to cover various countries and jurisdictions. Applications filed under the Madrid system allow the applicant to designate member state signatories of the Madrid Agreement Concerning the International Registration of Marks or the Protocol related thereto. Applications must be filed with the International Bureau of the World Intellectual Property Organization (WIPO) via the patent office of the applicant’s country of origin. In most cases, the registration fee is due in full upon filing the application, although when the destina-
tion countries include either Japan or Cuba, the second part of the fee should only be paid once the application has been approved by the local patent office. Once the WIPO international registration process is complete, the application passes to all the individual patent offices in the designated countries in order to check against local regulations. In straightforward cases, no local trademark expert intermediaries are required. This means instances where the trademark in question is sufficiently distinctive, where there are no conflicting existing trademarks already registered, and where no forbidden or restricted elements feature in the branding. The EU trademark registration is particularly pertinent at present given the heightened interest among Ukrainian exporters towards European Union markets. The European Union Intellectual Property Office (EU IPO) manages the application process and offers coverage for the entire EU. This coverage is dependent on availability of the trademark in all member states. In other words, if an obstacle exists in a single member state, registration cannot be granted on a partial basis. In cases where this ‘all or nothing’ clause is activated, the parties involved are provided with a range of settlement opportunities designed to allow for compromises including a ‘cooling off period’ that could be extended for up to 24 months. If the parties are able to find a solution to the copyright dispute, a coexistence agreement allows the EU IPO to issue the necessary registration.
Defending your design
The process of registering designs is broadly similar to the conditions governing trademark aspects of intellectual property, with the Hague Agreement Concerning the International Registration of Industrial Designs and the Council Regulation on Community designs of particular use. However, in practical terms, the examination of a design application is in most instances limited to the formalities and checking for compliance with public order and morality. The experience of a bathroom sanitary product using the colours and design of the Ukrainian national flag offers insight into the kind of obstacles that could potentially arise on a national scale. On that occasion, the Ukrainian patent office refused to grant the Ukrainian component of the international registration. Community design regulations also provide for the protection of unregistered designs within three years of the design’s public launch within the jurisdiction of the Community. This is of limited use, however, and only offers the owner the right to prevent use arising from direct copying of the original design.
About the author: Julia Semeniy is a partner at Asters Law Firm and a speaker at the ЕВА-Аsters Legal School (www.asterslaw.com/ls) - a unique, free-of-charge platform for Ukrainian legal practitioners to share their experience and best practices in legal support and business protection.
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UKRAINE AT EURO 2016 The Ukrainian national football team is aiming for glory this summer in France follow all the action with fellow fans in Lviv!
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Navigating the Ukrainian real estate agency jungle The Ukrainian real estate market is opaque but multiple agencies might not be best solution In a well-regulated, orderly and mature real estate market in a ‘high trust’ Western society, where brokers are subject to licensing requirements and bound by codes of ethics, and where price information is transparent, it can be tempting for some resourceful customers to bypass brokers and ‘do it themselves’ in order to save money on commission fees. However, Ukraine’s real estate market is still some way short of these stands. Newcomers can easily get lost without an agency to help them navigate the unregulated chaos of asymmetric information, misinformation, and even outright scams by ethically-challenged brokers who aren’t required to carry a license. Which agency should you choose? Everyone everywhere always wants to get the best deal and pay the best price. In Ukraine, this means real estate sellers, buyers and tenants rarely work exclusively with one real estate agency. While it may sound like heresy, there are real advantages to working exclusively with one real estate agency in Kyiv. This article will explore the pros and cons of this approach for several types of real estate transactions.
A cheapskate pays twice
It is quite typical for Ukrainian property owners to refuse to pay a commission to their brokers. This sets up a conflict of interest that works directly against the interests of the owner. Instead of working to find the most suitable tenant or buyer, the owner’s broker will be motivated to find a tenant’s or buyer’s broker who will be willing to share their fee. In such cases, the owner’s broker is only representing his own interests. The owner may get free service will not get good service. Instead, the misalignment of incentives establishes owners’ brokers as unscrupulous gate-
“Many real estate sites in Kyiv are full of photos of attractive apartments that aren’t available. These ‘honeypots’ are scams designed to entice apartment hunters.” keepers - an especially common and unpleasant phenomenon at the lower and middle price segments in Kyiv, as many an apartment hunter will tell you.
Trusting agencies with the keys to your property
Many owners in Kyiv believe that the best approach to finding a tenant or buyer is to contact as many agencies as possible. This is a shotgun approach instead of precision targeting and can create headaches for the owner and confusion for the market. The owner has shared his mobile number with scores of hungry brokers and now his phone will ring constantly with few real leads and many nonsensical questions that he has already answered several dozen times. When an owner doesn’t exclusively work with one broker and his property appears on multiple agency sites, it can be difficult for brokers to determine whether the property is still available at all. Kyiv owners who decide to work exclusively with one real estate agency and pay a commission to their broker can still easily reach the broader market of potential clients. For example, for a very small fee, your agent can advertise your property on one of Kyiv’s mega real estate portals. An alternative is to ask your broker if their agency website uploads property listings regularly to these portals. Ukraine is a low-trust society and many owners are reluctant to trust a broker with the keys to their flat so they can show it to potential tenants or buyers without the owner’s presence. While this practice is still rare in Kyiv, it can save owners lots of time
and hassle, and it is another potential benefit of working exclusively with one real estate agency. Many Kyiv agencies also provide property management services. These services can be combined with tenant-search services if an owner decides to work exclusively with one agency.
Words of caution for Kyiv property sellers
If you’re selling property in Kyiv and considering working exclusively with one real estate agency, then you should be aware that a couple of Kyiv’s largest agencies will insist on holding the ownership documents of your property in a safe to protect their exclusive right to market your property. This aggressive practice can give these agencies too much leverage and control over a deal in a way that could maximize value for the agency at the expense of the seller. For example, this could mean insisting on an overly high commission that prevents a seller closing a deal on an attractive or reasonable offer for his property.
How to avoid ‘honeypot’ properties
When you’re looking to buy or rent an apartment in Kyiv, make sure to find a professional broker who will take the time to understand your budget and other search criteria, and won’t waste your time sending you links to unsuitable properties or scheduling viewings of apartments that don’t meet your requirements. If you are unfamiliar with Ukraine’s real estate market, then you probably have no appreciation of how much time a good bro-
About the author: Tim Louzonis (tim@aimrealtykiev.com) is a co-founder of AIM Realty Kiev, a real estate agency that specializes in real estate for foreign 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
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ker will spend on filtering out property listings that contain old, incorrect, incomplete, or fraudulent information. In fact, many real estate sites in Kyiv are full of photos of attractive apartments that aren’t available. These ‘honeypots’ are scams designed to entice apartment hunters to call a broker so he can pitch another apartment to the unsuspecting client. If you’re looking to buy or rent an apartment in Kyiv, then any competent agency can offer you access to the entire market. Most owners work with multiple agencies, and even if an owner works exclusively, brokers cooperate on deals. In practice, you will find there is not much downside if you decide to work exclusively with one real estate agency. In fact, if your brokerage knows that you are working with them exclusively, then you will be placed towards the top of their priority list. But if it’s clear you’re working with other agencies, then they will prioritize exclusive clients and the biggest-budget clients ahead of you. Let’s say that you’re an investor who plans to buy one or more one-bedroom apartments in Kyiv’s centre to renovate and let out. Keep in mind that the due diligence for purchases like that is a lot more time-consuming than the property search for a luxury long-term rental apartment that will have a more urgent deadline. And yet the commission to a broker for that luxury rental can be higher in many cases. So you’ll be competing for your agent’s time if he also handles luxury rentals. If you are a motivated buyer and you are already comfortable with your broker, then an exclusive monthly retainer agreement could make sense so you stay at the top of the priority list, since you definitely plan to buy and the retainer fees that you pay will be applied towards your broker’s commission when you conclude your purchase.
Realtors are evil, but...
Real estate brokers in Kyiv have a horrible reputation. Quite often this reputation is rightly deserved. There’s even a Facebook group called ‘rieltory – zlo’ (‘realtors are evil’) for Ukrainians who wish to find or let out an apartment and bypass brokers. However, if you don’t speak Russian or Ukrainian and don’t want or own a lower-end flat, this group won’t be very helpful for you. For better or for worse, Kyiv’s brokers are not going away any time soon. Picking and sticking with one good real estate agency can often be the best approach in this topsy-turvy market. 37
Protecting Intellectual Property Rights: Why is it Important and What Needs to Be Done? Andy Hunder, President of the American Chamber of Commerce in Ukraine
World Intellectual Property Day, celebrated globally on April 26th, is a great occasion to once again highlight and learn about important role that intellectual property rights play in developing business. The lack of enforcement of Intellectual Property Rights (IPR) legislation in Ukraine has resulted in widespread Internet piracy. Proper anti-piracy legislation that meets Ukraine’s international obligations as well as timely identification and neutralization of the IPR violations will help to effectively address this problem. Implementation of Ukraine’s Strategy for Cybersecurity should involve transparent procurement of software – only with legal software can we avoid security risks that may lead to data leakage and financial losses. At the moment there are nineteen certified collection management organizations (CMOs) operating in Ukraine. However, none of these royalties are distributed to legitimate rights holders. Shutting down rogue CMOs and certifying appropriate ones will contribute to the development of a clear and transparent system. Passing appropriate legislation in this sphere will establish clear procedures of authorization and distribution of royalties. 2016 Chamber Official Service Providers:
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Counterfeit goods pose a real threat to Ukraine’s future prosperity and economic growth. The widespread trade of forged products (especially dangerous pharmaceuticals and chemicals) is dangerous for human health, the environment and overall image of the country. By improving IPR legislation, ensuring proper implementation and by uniting efforts of the key state bodies we will create a stable, effective and predictable system of IPR protection. The American Chamber of Commerce in Ukraine has 12 Committees and 19 Working Groups actively working on resolving industry-specific and cross-sector problems of the Ukrainian economy. Our IPR Working Group is headed by Oleksandr Mamunya, Partner at AEQUO Law Firm, and led strategically by Nadiia Vasylieva, Member of the Chamber Board of Directors, General Manager at Microsoft Ukraine. The Working Group focuses on strengthening intellectual property rights protection, identification of violations in the respective field, through the study and analysis of the existing IPR legislation followed by development of respective Chamber proposals and comments based on the international best practices. Although IPR violation is a cross-sector issue that negatively impacts the Ukrainian economy at large, companies in IT, agricultural, seeds and healthcare sectors suffer the most. Common concerns include a lack of a comprehensive national strategy that identifies the required legal and policy reforms, delineates implementation and enforcement responsibilities in the sphere of intellectual property rights protection; lack of respect for the rule of law and for property rights, in particular, across the country; urgent need to join forces and build coalitions between relevant government agencies and representatives from business. Ukraine’s Government together with the business community and civil society should unite efforts in combating corruption in Ukraine. The “Three Ps” approach (Prevent, Publicize and Punish) may prove effective in rooting out this social evil. Concrete actions towards prevention of corruption in the sphere of IPR protection may include increasing salaries of civil servants, reducing bureaucracy, introducing smart technology where needed, leveling the playing field in the sphere of IPR and strengthening investigative capacity of the key anti-corruption bodies.
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Ukraine Must Embrace Crimean Tatar Culture
Beyond Eurovision
Jamala’s Eurovision Song Contest victory demonstrated the importance of soft power on the international stage - Ukraine’s cultural diplomacy strategy now needs to pay far more attention to safeguarding the nation’s rich but neglected Crimean Tatar heritage Ukrainian singer Jamala’s 2016 Eurovision Song Contest victory was unquestionably independent Ukraine’s greatest cultural diplomacy success. As Jamala delivered the coup de grace to her rivals with a soaring crescendo while bathed in the golden light of a sprawling tree symbolizing Crimea Tatar nationhood, she also reminded the world of Ukraine’s ancient multicultural roots while highlighting the nation’s historic and ongoing struggle against Kremlin injustice. It was a triumphant demonstration of soft power that returned the unresolved issue of Russia’s illegal Crimean annexation to the centre of international attention. While the song was technically apolitical, few missed the underlying geopolitical meaning of Jamala’s powerful ballad about her family’s experience during the 1944 Soviet deportation. If the subsequent torrents of discontent and anger on display in the Russian media were anything to go by, the Kremlin clearly got the message.
Ukraine’s international image woes This success makes a refreshing change. Ever since 1991, Ukraine has struggled to project itself onto the global stage, leaving the country with a chronically low international profile and making it uniquely vulnerable to the disinformation component of Russia’s hybrid warfare doctrine. Over the past two-and-a-half years, these international image problems have been exposed as a major national security issue. Russia’s infowar tactics have repeatedly demonstrated that outside audiences with no prior knowledge of the real Ukraine will inevitably be susceptible to deliberate Kremlin distortions, with disastrous consequences for Ukraine itself and for European stability as a whole. Jamala’s victory could now become a landmark event in the evolution of Ukrainian cultural diplomacy, but this will only happen if the country is able to harness and build on the positive attention engendered by the recent flurry of Eurovision coverage. If Ukraine wants the world to take the country’s
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European ambitions seriously, it must demonstrate a commitment to the European values at the core of Jamala’s winning Eurovision entry. This means creating the conditions for the preservation and development of Crimean Tatar culture at home.
Political pop Many people struggle to take the ultra-kitsch Eurovision Song Contest seriously, but we should be wary of underestimating its importance as a high-profile medium for soft power messaging. Ukraine’s 2016 entry was not the first song accused of seeking to use the contest as a platform for political statements. Georgia’s 2009 entry ‘I Don’t Wanna Put In’ and Armenia’s ‘Face the Shadow’ in 2015 were both banned, but Jamala’s haunting tune avoided exclusion after officials decided the song’s content was historical rather than political. Jamala’s entry had already made a significant impact prior to emerging as the ultimate winner of this year’s Eurovision. From the very start of the national selection campaign in early spring, it attracted considerable Ukrainian and international media coverage. This was a textbook example of cultural diplomacy: the delivery of a political message through a highquality cultural product – in this case, a perfectly constructed and brilliantly delivered pop performance.
Ukraine needs to take cultural diplomacy seriously Kateryna Smagliy, Director of the Kennan Institute in Kyiv, is one of many who are now urging Ukrainian authorities to take the political impact of culture more seriously. She says the positive impact of Jamala’s victory highlights the need to develop a concerted cultural-diplomatic strategy to protect Ukraine’s interests abroad. As anticipated, Ukrainian politicians were quick to latch on to the cache that the young performer had garnered via her Eurovision heroics. In the days following Jamala’s triumphant :
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: homecoming from Eurovision in Sweden, she was in huge demand
for photo-ops with a range of political leaders. Amid the general euphoria surrounding her victory, she even found herself nominated for the role of UNICEF Goodwill Ambassador. President Poroshenko was among those who spoke approvingly of the potential appointment, commenting, ‘it could help solve the problem of Russian-occupied Crimea and the return home of the entire Crimean Tatar nation.’ Such political opportunism is to be expected, but it will take more than the efforts of a talented young pop performer to resolve the complex geopolitical issues surrounding the Russian occupation of Crimea. Ukraine won an important pop battle at the Eurovision Song Contest, but it has a long way to go before it can win the war. Cultural diplomacy can certainly play an important role in countering the Kremlin’s hybrid war in Ukraine, but soft power initiatives must begin on the Ukrainian domestic front. Support for Crimean Tatar culture and identity could help highlight Ukraine’s emerging multicultural, multidenominational civic identity while drawing attention to the country’s commitment to European values at a time when Russia is facing mounting international condemnation over its treatment of the Crimean Tatar minority.
Forgotten Crimean Tatar culture
By almost any estimate, both traditional and contemporary Crimean Tatar culture is currently in pretty bad shape. Artists, musicians, and writers routinely experience impoverishment and displacement, while those still living in Russian-occupied Crimea suffer from mounting persecution. The Russian occupation authorities in Crimea are prone to labelling any expression of national sentiment by Crimean Tatars as ‘extremism’, placing huge strains on cultural life. Jamala’s Eurovision victory highlighted the soft power value of Crimean Tatar culture to the Ukrainian national cause, but there is little evidence of broader efforts to preserve this valuable inheritance. Even the most superficial of examinations into Crimean Tatar culture quickly reveals the extent of our ignorance of this rich yet vanishing cultural milieu. While Susana Jamaladynova (Jamala) is arguably the most prominent performer of Crimean Tatar heritage, it would be silly to suggest that her pop music is genuinely representative of contemporary Crimean Tatar culture. Jamala’s true success lies in exposing the injustices waged against her people to an international audience. It is now up to Ukrainian policy-makers and activists to fight for that justice, and for citizens to demand it of them.
Crimean Tatar issues on the international agenda Ukrainian politicians first began paying particular attention to protecting the rights of the Crimean Tatar ethnic minority in the immediate aftermath of the illegal annexation of Crimea in March 2014. The Ukrainian authorities were encouraged to speak out over Russia’s undemocratic actions against the Crimean Tatar population by vocal members of the Crimean Tatar community such as Mustafa Dzhemilev, and by international human rights organizations. Numerous international reports since the Russian seizure of the Ukrainian peninsula have highlighted the worsening plight of the Crimean Tatars, leading to condemnation from the likes of the European Parliament. In November 2015, the Ukrainian Parliament took the important symbolic step of making 18 May a National Day of Remembrance for the Victims of the Crimean Tatar Genocide. In recent years, there had been some efforts to place Crimean Tatar issues on the international agenda via cultural initiatives. In 2008, UK journalist and author Lily Hyde’s book ‘Dream Land’ received widespread critical acclaim. Based on numerous interviews with Crimean Tatars, it received an endorsement from Amnesty International for raising issues of displacement and genocide in the little-known context of the Crimean Tatar deportation. Hyde’s book was subsequently translated into French, Ukrainian, and Crimean Tatar. In 2013, filmmaker Akhtem Seitablaiev’s ‘Haytarma’ (‘Return’) made a cinematic statement about the Crimean deportation that received positive reviews and also succeeded in stirring up a controversy involving the Russian Consul in Simferopol. The Russian official attacked the film for failing to highlight alleged Crimean Tatar collaboration with the WWII Nazi German regime in Crimea, revealing how contentious the Crimea Tatar deportation remained in Ukrainian-Russian relations, even prior to the Kremlin invasion of February 2014. With Crimea back in the international spotlight, international interest in the Crimean Tatars is growing. One of the most eye-catching initiatives is a new academic course focusing on Crimean Tatar language and culture at the Ukrainian Studies department of Cambridge University in the United Kingdom. It is significant that these studies should take place within the broader context of Ukrainian Studies, thus reinforcing the idea that the Crimean Tatar legacy is part of the collective Ukrainian historic past as well as the political present.
A proud and ancient people
The Crimean Tatars are not simply political pawns or victims of history. They are a proud and ancient people with a strong claim to :
“If Ukraine wants the world to take the country’s European ambitions seriously, it must demonstrate a commitment to the European values at the core of Jamala’s Eurovision entry. This means creating the conditions for the development of Crimean Tatar culture at home.”
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: nationhood and a history in Crimea stretching back for many centu-
ries before the advent of Russian imperial involvement. As direct descendants of the Khanate of Crimea, the longest-lived of the Turkic khanates that succeeded the Mongol Empire of the Golden Horde, the Crimean Tatars constituted one of the strongest powers of Eastern Europe from the early Middle Ages until the last decades of the eighteenth century. For hundreds of years, their Crimean homeland was a world centre of Islamic civilization. The name itself, ‘Crimean Tatar’, at once vague and misleading, is a collective name given to the tribes that inhabited the region during the time of the Khanate. Crimean Tatars actually have little in common with the Tatars of Tatarstan in Russia. Waves of Russian oppression beginning at the end of the eighteen century led to a serious of Crimean Tatar exoduses. As is the case with many marginalized ethnic minorities, emigration has helped bring Crimean Tatar talent to prominence. While the Crimean Tatar community in Ukraine is the focus of contemporary attention, many Crimean Tatars have made significant contributions to the national cultural milieus of Russia, Turkey, Romania, and Bulgaria. For example, Crimean Tatars have flourished in modern Turkey, which has served as home to millions of Crimea Tatars since the mass migrations of the eighteenth, nineteenth and early twentieth centuries. The Crimean Tatar contribution in these different societies has often been lost in the broader national narratives of each country, leading to a further diluting of the Crimean Tatar cultural footprint.
Lviv: Crimean Tatar renaissance city?
There are signs that a Crimean Tatar cultural renaissance is slowly gaining ground in today’s mainland Ukraine. Lviv, Ukraine’s undisputed cultural capital and gateway to Europe, has emerged since 2014 as an unlikely stronghold of Crimean Tatar music and culture. Thousands of Crimean Tatars have fled occupied Crimea since spring 2014 and set up home in the western Ukrainian city. Halil Halilov, a music producer from Simferopol, has established a production studio for Crimean Tatar artists in Lviv. “I came to realize that cultural development was being affected by the conflict,” Halil says. “I felt my responsibility lay in helping to develop the Crimean Tatar culture outside of Crimea.” The young performers who congregate at Halilov’s Lviv studio draw on traditional elements of Crimean Tatar music, but are also well versed in the lexicons of rock and jazz. They are not interested in simply reproducing folk music, but instead seek to blend their unique influences into modern compositions that deal with contemporary
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“Jamala’s Eurovision victory highlighted the soft power value of Crimean Tatar culture to the Ukrainian national cause, but there is little evidence of broader efforts to preserve this valuable inheritance.” Crimean Tatar issues – if only on an emotional level. For them, the studio is a place to meet with others who have suffered similar loss and displacement. It is too early to name bands, they say, as collectives face frequent line-up changes and personal issues – few of them are able to sustain themselves through music alone – but given time, we may see the emergence of some truly unique bands, or even a scene, that could become part of the global world music realm. Lviv, with its vibrant cultural climate, is surely capable of incubating such talent.
Crimean Tatar rights and a European Ukraine
Today, Ukraine faces a tough nation-building challenge: cementing its contemporary national identity while remaining receptive to external culture influences. Post-Maidan Ukraine must find its own unique voice, but at the same time must shape its cultural and political institutions in keeping with the best European practices of openness, public accountability, and civil dialogue. It is not enough to denounce the human rights violations of the Russian government. Ukraine must be demonstrably different. Citizens of multicultural Ukraine come from a wide range of ethnic or religious backgrounds. Only a civic national identity grounded in European values has any real chance of uniting them. As Ukraine looks to the future, it must also safeguard the past. The conservation of cultural heritage is a prerequisite for the development of any nation. Ukraine must reconcile the country’s considerable historical overlap with other cultures – notably, Russian culture – while crystallizing its inherent cultural capital. Actively supporting the Crimean Tatars in their quest to revive and reinvent their traditional culture must become a strategic priority for the Ukrainian government. It represents a wonderful opportunity to demonstrate Ukraine’s ability to embrace cultural diversity and protect the rights of a vulnerable ethnic minority. Jamala’s Eurovision performance put the issue of Crimean Tatar identity on the international agenda, but Crimean Tatar culture has yet to flourish in contemporary Ukraine. We can only hope that we live to see its fragrant bloom.
About the author: Myroslava Hartmond is the owner of Triptych: Global Arts Workshop (www.tgaw.com) and a Research Associate of the Centre for International Studies, University of Oxford, where she explores the role of cultural diplomacy in Ukraine. (Photo: Serge Illin)
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Ukraine’s EURO 2016 hopes rest on wing wonders
Yevhen Konoplyanka and Andriy Yarmolenko offer unfancied Ukraine’s best chance of glory in France The Ukrainian national team overcame a long-standing playoff hoodoo in order to qualify for this summer’s Euro 2016 championship in France, but few fancy Ukraine to make much of an impact at the tournament. British bookmaker William Hill is currently offering odds of one hundred to one against a Ukrainian triumph, making Ukraine one of the rank outsiders. These modest expectations may well be justified – after all, prior to Euro 2016, Ukraine had never actually qualified for a European Championship finals. The country’s sole previous appearance came at Euro 2012, when they gained a place automatically alongside co-hosts Poland. Nor was the Euro 2016 qualification campaign particularly encouraging. Ukraine entered the playoffs after finishing third behind Spain and Slovakia, before squeezing past tiny Slovenia to book their berth in France. Nevertheless, Mykhailo Fomenko’s squad contains enough talent to have a realistic chance of making it to the knockout stages of the tournament. Ukraine has been drawn in Group C alongside Germany, Poland, and Northern Ireland. While the Germans are understandably hot favourites to progress, second place in the group looks distinctly realistic. Much will depend on the form of Ukraine’s two star players, wingers Andriy Yarmolenko and Yevhen Konoplyanka. Both are currently 26 years old and at the peak of their playing abilities. They will never have a better chance to shine on the international stage.
Ukraine’s marauding wide men
Yarmolenko travels to France having secured his second consecutive Ukrainian Premier League title with his club side, Dynamo Kyiv. He has been on the books of the Ukrainian capital’s talisman club since 2007, after emerging in his teenage years as the latest in a long line of exciting attacking talents to be hailed as ‘the new Andriy Shevchenko’. Following in the footsteps of the greatest player in modern Ukrainian football history is no easy task, but Yarmolenko has lived up to the hype. He is the national team’s current top scorer with 23 goals, and is perennially the subject of speculation over a big money transfer to one of Western Europe’s top clubs. He also has quite a temper. During a recent 0-3 Ukrainian Premier League defeat to arch rivals Shakhtar Donetsk, the wellbuilt winger attacked Shakhtar Donetsk player (and Ukrainian national squad colleague) Taras Stepanenko, kicking him to the ground during a mass brawl and earning himself a red card. Luckily, the two players have publicly made peace prior to Euro 2016. While Yarmolenko offers strength and trickery, his fellow winger Yevhen Konoplyanka brings explosive pace, dribbling dexterity and an eye for spectacular long-range goals. Former Dnipro Dnipropetrovsk player Konoplyanka goes to Euro 2016 following his first season in La Liga with Sevilla. He has not had things all his own way in Spain, spending prolonged periods on the bench since arriving in summer 2015. Nevertheless, he played a significant role in the club’s march to Europa League glory, and has also managed to score a few of his trademark wonder goals for the 52
Spanish club, endearing him to the Sevilla fans. The experience of playing in arguably the world’s best league will be invaluable as he seeks to help Ukraine progress at Euro 2016. Konoplyanka is also a vocal Ukrainian patriot noted for his frequent social media critiques of the Kremlin and mockery of Russian media disinformation tactics. We can expect some entertaining posts during this summer’s tournament in France.
Soviet 1980s sides were Ukrainian
Ukraine’s lack of international pedigree is one of the reasons why they travel to France with few expecting them to challenge for the trophy. The Ukrainian national team’s post-1991 record is certainly unspectacular, with just one World Cup appearance in Germany in 2006 prior to a mediocre showing as co-hosts of Euro 2012. However, this discounts the dominant role played by Ukraine in the great Soviet teams of the 1980s. The 20-man USSR squad that finished as runners-up at Euro 1988 contained no fewer than 12 Ukrainian players, while the spectacular USSR side that dazzled at the 1986 World Cup in Mexico featured a staggering 15 Ukrainians. Both sides were managed by legendary Ukrainian coach Valeriy Lobanovskiy. There is a strong argument for regarding both these fondly remembered teams as de facto Ukrainian national sides. As the legally recognized successor to the Soviet Union, the Russian Federation has been able to lay claim to anything even vaguely positive from the Soviet inheritance. The victory over Nazi Germany and the space flight of Yuri Gagarin are two classic examples of the Kremlin’s ability to renationalize achievements previously regarded as the epitome of collective Soviet success. Ukraine has recently gone in the opposite direction, seeking to distance itself from the Soviet past. Nevertheless, by laying claim to the Soviet football teams of the 1980s, modern Ukraine would be reminding the world of the country’s historic status as a regional football powerhouse. This would have little impact on the pitch in France this summer, but it might provide Ukraine’s players with a psychological boost to know they are following in the footsteps of Ukrainian legends.
EURO 2016 Group Stage Fixtures 12 June at 22:00 (Ukraine time) Stade Pierre Mauroy, Lille Ukraine vs Germany 16 June at 19:00 (Ukraine time) Stade de Lyon, Lyon Ukraine vs Northern Ireland 21 June at 19:00 (Ukraine time) Stade Velodrome, Marseille Ukraine vs Poland
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Mircea Lucescu leaves Shakhtar Donetsk after winning 22 trophies during historic twelve-year reign Ukrainian football witnessed the end of an era in May with the departure of Shakhtar Donetsk coach Mircea Lucescu. During his 12 years in charge of the Donbas side, Lucescu became the most successful manager in Ukrainian Premier League history and helped Shakhtar to usurp Dynamo Kyiv’s position as the dominant footballing force in the country. A worldly and highly educated man who was widely respected throughout Ukraine for his professionalism and affable decency, Lucescu will be sorely missed and impossible to replace.
The man who dethroned Dynamo
More than any other individual, Mircea Lucescu is the man who made Ukrainian oligarch and Shakhtar Donetsk club president Rinat Akhmetov’s dream of overtaking Dynamo Kyiv come true. Ever since taking on the presidency of Shakhtar in the mid-1990s, Akhmetov made no secret of his desire to build a dynasty capable of rivaling the aristocrats of Dynamo. As one of Ukraine’s wealthiest men, Akhmetov had the financial clout to challenge the Kyiv club. However, until Lucescu arrived in the summer of 2004, Shakhtar lacked the necessary empire-building vision to muster a sustained challenge to Kyiv. Two high-profile foreign coaches preceded the Romanian in the Shakhtar hot seat – but although Italian Nevio Scala secured the club’s first Ukrainian Premier League triumph in 2002, neither he nor German coach Bernd Schuster were able to settle successfully in eastern Ukraine. This was not the case with Lucescu, who had grown up in communist Romania and studied the Ukrainian language as a child. He arrived in Ukraine following a prolonged spell coaching in Italy and a successful period in Turkey, where he oversaw Galatasaray’s 2000 UEFA Super Cup victory. Silverware soon followed. Lucescu won the Ukrainian league in both of his first two seasons, breaking the monotony of Dynamo Kyiv’s stranglehold and encouraging other Ukrainian clubs to believe they could compete for the country’s top honours. Donetsk would eventually win eight Ukrainian Premier League titles under Lucescu, including a sensational run of first successive league triumphs from 2009 until 2014. His greatest success was winning the 2009 UEFA Cup – post-Soviet Ukraine’s first European honour. He also established Shakhtar as regular contenders in the latter stages of the UEFA Champions League, allowing the club to build a reputation throughout Europe as the most consistent side east of the old Iron Curtain.
Shakhtar’s boys from Brazil
One of the secrets to Lucescu’s success was his ability to identify and nurture young international talent. He established Shakhtar as a popular platform for emerging African and South American talent, purchasing highly rated players in their early twenties before selling them on to leading European clubs. Throughout his time in Donetsk, the Romanian’s favoured source of fresh talent remained Brazil. Lucescu’s preference for Brazilian players reportedly dates back to his own experience at the 1970 World Cup in Mexico, where he swapped shirts with the legendary Pele while representing the Romanian national team against Brazil. At times during his reign, the east Ukrainian club’s squad contained more than half a dozen May 2016
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Goodbye to Romanian who changed Ukrainian football Brazilians. This policy of large-scale foreign imports was not initially popular among all of the club’s fans, but as the trophies began to accumulate, misgivings gave way to excitement and appreciation. It also proved a very profitable approach. Players like Manchester City’s Fernandinho, Chelsea’s Willian, and Bayern Munich’s Douglas Costa are prime examples of Lucescu’s ability to identify exciting prospects who would later command massive transfer fees after first providing Shakhtar with sterling service. This policy of developing and selling top talent became an increasingly important strategy for Shakhtar following the advent of UEFA’s Financial Fair Play Regulations in 2009, which prevented clubs from spending more than they earned. With Ukrainian Premier League revenues insufficient to cover even a fraction of Shakhtar Donetsk’s astronomical wage bill, the sale of maturing on-field assets helped the club to balance the books and stay within UEFA’s financial standards.
Akhmetov’s most important signing
Money matters in modern football and Shakhtar Donetsk have benefited from one of the deepest purses in Eastern Europe. Over the past two decades, Akhmetov has invested hundreds of millions of dollars into the club. As well as recruiting a dizzying array of international players, he has also bankrolled the construction of a stateof-the-art training facility, a world-class stadium, and a five-star hotel to host visiting teams and officials. These solid financial foundations provided the springboard for the success Shakhtar enjoyed under Lucescu, but the Romanian remains arguably Akhmetov’s most important signing of all. Bringing Lucescu to Donetsk was not a straightforward task. Akhmetov’s pursuit of the Romanian began in 2000. After a number of initial invitations met with refusal, Akhmetov personally went to Istanbul to persuade Lucescu to take on the challenge of transforming Shakhtar Donetsk into one of Europe’s top clubs. “No other president would have done that,” commented Lucescu. This direct approach worked. In May 2004, he was unveiled as Shakhtar’s third foreign trainer in three years, becoming one of European football’s highest paid managers on a reported annual salary of EUR 2.5 million. It was to prove one Akhmetov’s most astute bits of business, ushering in a period of unprecedented achievement.
Shakhtar eclipsed and in exile
Lucescu leaves Shakhtar Donetsk with the club exiled by the Kremlin hybrid war in the eastern Ukraine. The fabulous Donbas Arena stadium now stands deserted, while Shakhtar play home matches at the Lviv Arena in faraway western Ukraine. Dynamo Kyiv have taken advantage of these unfortunate circumstances to win the Ukrainian Premier League in each of the last two seasons. This has made Lucescu’s departure appear somewhat anticlimactic, but in reality, his legacy as the man who transformed Ukrainian football was already secure. Fittingly, the Romanian went out on a high note – in his last match in charge of Shakhtar Donetsk, he oversaw a 2-0 Ukrainian Cup Final victory over Zorya Luhansk – the twenty second and final trophy of his Ukrainian odyssey. 55
Networking events
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networking events
New TUID Turkish Business Representative Office Opens in Lviv Members of Ukraineâ&#x20AC;&#x2122;s burgeoning Turkish business community gathered in Lviv in May to mark the official opening of the West Ukrainian branch of the International Turkey-Ukraine Business Association (TUID). Guests at the Lviv opening included Turkish Ambassador to Ukraine Yonet Can Tezel and Onur Cetinceviz, the Chairman of Onur Construction (the largest Turkish company present in western Ukraine).
May 2016
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and finally...
How Ukraine can win Eurovision 2017 Jamala’s victory at the 2016 Eurovision Song Contest means Ukraine will host next year’s continental extravaganza. This exciting news has sparked a flurry of speculation over which city should be given the honour of staging the event, with Lviv, Dnipro, Odesa, Cherkasy and Kherson all talking up their credentials as alternatives to Kyiv. A bidding process will now determine the venue for the song contest. In all likelihood, the Ukrainian capital will end up being the location of Eurovision 2017 – a repeat of its role as host city eleven years ago. The 2005 event (pictured) was widely acknowledged as a success. It also provided a number of handy pointers as Ukraine prepares to stage the country’s second Eurovision. Prior to the 2005 Eurovision, there was much confusion among Ukrainians as to the exact nature of the song contest. Many Kyiv businesses seemed to regard it as something akin to a major sporting championship and prepared accordingly. Hotels, restaurants and bars introduced special offers and braced themselves for hordes of arriving Eurovision visitors, while souvenir hawkers created entire product lines of Eurovision memorabilia. Much of this Eurovisionbranded merchandise was still prominently on sale on Maidan and Andriyivskiy Uzviz many years later, reflecting the fact that Europe’s premier song contest does not actually attract thousands of travelling supporters. It is not the World Cup. National fan clubs do not usually flock to the event. Those who come are a niche group of kitsch-loving jokers who regard it all as a bit of a hoot. From Ukraine’s point of view, the most important guests at Eurovision 2017 will be the hundreds of foreign journalists accredited to the event. They will arrive for the week of Eurovision and will be on the lookout for additional stories they can use in order to justify their ambitious expense accounts and general existence. This press pack represents a fantastic opportunity for Ukraine to sell itself to international audiences. Ukraine is notoriously starved of outside media attention and generally only warrants a mention when something particularly appalling or tragic happens. Over the past two years, Russia’s hybrid war has thrust the country into the international limelight, successfully scaring away both tourists and potential investors. Other than that, the majority of Ukraine-related stories tend to focus on ghoulish coverage of the Chornobyl disaster or other similarly downbeat material about AIDS and tuberculosis, mail order brides and parliamentary fistfights. These are all valid subjects, but they hardly constitute the sum total of what modern Ukraine represents. The Ukrainian authorities should make it their business to dazzle these Eurovision journalists with as much feel-good content as
they can possibly muster. Every single day should be crammed full of fun press events designed to showcase everything from the country’s tourist attractions to its IT industry. Correspondents should be packed into the cavernous interior of the world’s largest cargo plane, the Antonov Mriya, and given a joy ride in this legend of international aviation. They should go sailing on the Kyiv Sea and enjoy picnics at Yanukovych’s ludicrously ostentatious Myzhyhirya Residence. Nightly discos should be organized on Kyiv’s downtown beaches, with a fleet on boats to ferry members of the press over to the festivities. Meanwhile, the Ukrainian cities that fail in their bid to host Eurovision should lay on special charter flights and offer journalists free day trips. Many will jump at the opportunity to break up their weeklong Kyiv residence with an afternoon sipping coffee at a Lviv café or enjoying the view at an Odesa Black Sea beach resort. The result will be a flood of positive coverage about Ukraine. There will inevitably be much cynicism over such naked attempts to curry favour with visiting journalists, but the overall impression will be one of wonderment at the delights Ukraine has to offer. The actual hosting of Eurovision itself is important, but from a long-term perspective, the additional coverage of Ukraine it garners will have a far greater impact on perceptions of the country.
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