Business Ukraine September 2016

September 2016

UKRAINE IN FASHION From the pages of Vogue magazine to a new department store in downtown Kyiv, how Ukrainian designers became the latest global fashion trend

Special focus GERMANY IN UKRAINE

Inside: Monthly American Chamber of Commerce in Ukraine Newsletter

UAH

FROM

899

PER PERSON INCLUDING VAT

WORL THE D’

GEST RAM BIG

CO A EN RE AD

S

BUSINESS UKRAINE ISSUE: SEPTEMBER 2016 Ukrainian fashion designers have been one of the big hits of the past year, featuring on the pages of glossy publications like Vogue magazine and appearing in the wardrobes of a growing number of global celebrities.

This month Business Ukraine magazine focuses on the Ukrainian fashion industry and explores the reasons why Ukraine has become some chic. (Cover image: catwalk show by Ukrainian designer Ksenia Schnaider)

September 2016

UKRAINE IN FASHION From the pages of Vogue magazine to a new department store in downtown Kyiv, how Ukrainian designers became the latest global fashion trend

Special focus

Inside: Monthly American Chamber of Commerce in Ukraine Newsletter

GERMANY IN UKRAINE

Ukraine survives statehood test but must learn to live with hostile Russia With distance comes clarity. As time passes, it is increasingly clear that spring 2014 was the decisive period in Ukraine’s modern nation-building story. Russia’s hybrid war sought nothing less than the removal of independent Ukraine from the European map. In the years prior to this attack, Vladimir Putin had repeatedly expressed his belief that Ukraine was not a real country. In early 2014, he finally moved to transform this vision into reality. Whether Russia planned to annex the eight Ukrainian oblasts designated by the Kremlin as ‘Novorossia’ (‘New Russia’), or merely to set up a puppet state, is immaterial. Either way, Ukraine would not have survived the shock of such a major amputation.

The miraculous grassroots response to this existential threat saved the country from destruction and created a powerful foundation myth for a new and inclusive Ukrainian nation. This was not a top-down, state-sanctioned attempt to create the impression of popular involvement – this was ordinary Ukrainians taking the destiny of the country into their own hands. The thousands of volunteers who rushed to the front lines or mobilized to crowdsource an entire army are quite literally the stuff of legend. Their intervention prevented Russian hybrid forces from breaking out of their Donbas beachheads in May 2014, while galvanizing a spirit of defiant resistance throughout the entire country. By July, the Kremlin found itself forced to throw more and more conventional troops into the fray to stave off complete defeat. The result was a September stalemate that continues, more or less, to this day.

Regular fatalities along the line of contact serve to remind Ukrainians that there is still a war on, but the days when Ukraine’s very existence was under threat are now long gone. Nevertheless, it would be foolish to entertain the possibility of a return to ‘normality’ or the demilitarization of Ukrainian-Russian relations any time soon. Even if a viable short-term peace agreement with Russia were achievable, continued Kremlin hostility to Ukraine’s European integration remains all but guaranteed. Moscow has already demonstrated its readiness to accept huge diplomatic September 2016

and economic costs in order to prevent Ukraine from leaving the Kremlin sphere of influence. The logic behind this position is simple: if successful, Ukraine’s westward pivot could create a precedent for post-Soviet democratization that would pose a direct challenge to Russia’s authoritarian model. This makes the failure of Ukraine’s European transformation a top Kremlin priority.

Russia is currently constructing a series of large military bases along the Ukrainian border and generally preparing for an extended military confrontation. Ukraine must do likewise. This does not mean silly PR stunts like the ‘Great Wall of Ukraine’ or rabble-rousing anti-Russian rhetoric and meaningless parliamentary votes. It means placing the nation on a long-term military footing and getting the population used to the idea that this is the new normal. It means carrying out reforms, not in order to tick boxes on EU and IMF wish lists, but because creating a better business environment and attracting investors is the only sure way to guarantee the future of an independent Ukraine. It means resisting the temptation to get back into bed with individual Russian business groups, and accepting the painful necessity of cutting bilateral cultural ties that only serve to reinforce dangerous notions of Ukraine as part of the ‘Russian World’.

Living with the reality of a constant Russian military threat is not for the fainthearted, but the likes of South Korea, Israel and Cyprus all provide examples of success in the face of similarly permanent military challenges. Ukraine survived the big statehood test of 2014, but it must now learn how to thrive in the shadow of continued Russian hostility. The Russian threat is clearly not going to go away. Independent Ukraine needs to convince the Kremlin that it, too, is here to stay.

Peter Dickinson, Business Ukraine magazine 5

Porsche recommends

What outstanding champions have in common: A brilliant performance. With extraordinary style.

The new Cayenne Platinum Edition models.

Arrival: commanding. Entrance: glamorous. Porsche dynamics refined with 20-inch RS Spyder Design wheels in satin platinum, eight-way electrically adjustable sports seats with Alcantara, and Porsche Communication Management (PCM) with online navigation and Connect Plus. Step onto the red carpet: www.porsche.ua

LLC “WINNER IMPORTS UKRAINE, LTD� Identification code 20054535

www.porsche.ua

education

Coming Soon: American University of Ukraine Georgian reformer plans to transform Ukrainian perceptions of private higher education institutions As the 2016 academic season got underway in the Ukrainian capital, work was continuing in Kyiv’s Syrets distinct on an innovative new private university that is set to welcome its first undergraduate intake in a year’s time. Located on the territory of a former Soviet-era integral microchips plant, the American University of Ukraine will open in September 2017.

The project is the brainchild of former Georgian Economy Minister George Arveladze, who served as an MP, government minister and presidential chief of staff during the Saakashvili era. Arveladze, who spent time as an exchange student at an American high school during the early 1990s, sees the American University of Ukraine project as a way to reinvigorate Ukrainian academia while also challenging current negative social attitudes towards private universities. “At present many Ukrainians regard private universities as fakes, but this stereotype will disappear as soon as the first world class university appears. We are planning to redefine perceptions of private universities in Ukraine,” he says.

Arveladze’s involvement in the Ukrainian education sector dates back to the early post-Euromaidan period. Like many of his fellow Georgians, he identifies with Ukraine’s post-Soviet struggle for a more democratic and European society, seeing it as part of the same geopolitical processes underway in his native Georgia. “Ukraine has always been a special nation for Georgians,” he says. “We are united by our aspirations and our Western mindset. Georgia is too small to reverse Russian neo-imperialism, but Ukraine is a significant player in international relations. What happens in Ukraine is important for the entire region and could be decisive in our own (Georgian) quest for Western integration.”

After identifying the huge potential for an internationally accredited private university in Kyiv, Arveladze commissioned Ernst & Young to conduct research and produce an investment memorandum. This has enabled him to attract

a number of private investors – mostly self-made members of the Ukrainian business community who are themselves well aware of the need for credible and career-focused higher education in the Ukrainian capital.

The American University of Ukraine will focus on four key areas: engineering, business, public administration, and media and communication studies. The flagship faculty will be the School of Engineering, with an emphasis on well-equipped modern laboratories and practical work experience. In a nod to the American university model, partnership agreements with corporate partners will play a big role in providing students with both professional experience and insight into the practical requirements of the business world. These partnerships will include the Saturn Center of Invention, with the concept for this ‘playground for engineering students’ being developed in cooperation with Ukrainian home appliances producer Saturn. “We want to create a pool of specialists with the skills that the new Ukraine needs,” says Arveladze. “At present, the education system is out of step with the needs of future employers. Ukraine has a fantastic academic heritage but it is suffering from 25 years of degradation. Almost nobody gains employment based on academic qualifications. We aim to change that by tailoring the educational process to meet the needs of the market.”

American professors from a number of US universities including Georgia Tech and the University of Missouri’s School of Journalism have been recruited to develop the American University of Ukraine’s specially tailored courses. All teaching at the university will be in the English-language, while upwards of half of planned faculty staff will be international hires. Arveladze took the highly unusual step of employing a headhunting agency to help identify the best candidates for faculty positions. He says he is able to offer recruits the promise of both competitive salaries and an innovative working environment. The recruitment drive is ongoing, with Arveladze also eager to engage with the existing expat community in Kyiv in order to identify current residents of the Ukrainian capital who may be able to contribute to the university’s development.

The process of gaining official US academic accreditation is currently underway and managed by the

university’s New York City office. The university is seeking to secure both general American accreditation and individual accreditation from the relevant institutions for specific courses. Ultimately, the goal is to offer graduates the opportunity to receive diplomas with both American and Ukrainian accreditation. The American University of Ukraine will operate on a not-for-profit business model, with a range of scholarships available for promising students, ATO veterans, IDPs and a range of other categories.

Arveladze seems undaunted by the prospect of establishing an entirely new institute of higher education in what is one of Eastern Europe’s most venerable centers of learning. He says in many ways it is actually an advantage to be starting from scratch because it means the new project is unencumbered by the outdated practices and corruption dogging the existing state education system.

“It means we don’t have to deal with the hangovers from the past,” he argues.

The American University of Ukraine is not merely seeking to fill a gap on the Ukrainian education market. Arveladze sees huge scope for attracting students from across the region and beyond, pointing to Ukraine’s long record as a destination for international undergraduates. “We aim to compete on Central and Eastern European markets. It is possible. Ukraine has traditionally been an attractive destination for international students.”

Private universities already occupy the top five places in his native Georgia, reflecting the progress that is possible once post-Soviet skepticism towards private education is no longer an issue.

Ukraine still has far to go before the private university sector enjoys national and international credibility, but the arrival of globally-competitive academic standards and cutting-edge study methods will likely be welcomed by many within the education sector.

American University of Ukraine E-mail: contact@auua.university Phone: (+380-44) 364-4440, 364-4442 Address: 3 Severo-Syretskaya, Kyiv Website: www.auua.university (Website will be operational from mid-October)

About the interviewee: George Arveladze is the President of the American University of Ukraine

8

www.bunews.com.ua

geopolitics

MH17 findings expose depths of Russian disinformation Moscow must explain why Russia’s elaborate MH17 theories went so far beyond mere denials The recently released findings of the Joint Investigation Team (JIT) into the 17 July 2014 downing of Malaysia Airlines flight MH17 have pointed the finger firmly at Russia, while raising awkward questions over more than two years of Kremlin denials and elaborate disinformation campaigns.

The results of the Dutch-led probe, made public on 28 September, clearly identified the cause of the attack as a Russian missile. Furthermore, the report concluded that the missile system involved in the attack came from Russia and travelled back across the border the same night.

While widely anticipated, these accusations create an array of problems for Russia. Moscow now finds itself held responsible for one of the worst aviation disasters in history and potentially vulnerable to court cases and compensation claims from victim families. Crucially, it must also account for an intensive disinformation campaign that has produced theory after theory in a bid to deflect blame from the Kremlin.

Unprecedented infowar

Over the past two years, the Kremlin’s unprecedented disinformation efforts surrounding MH17 have served to provide international audiences with invaluable insight into the nature of Russian infowar tactics. Rather than simply deny any knowledge of the attack, Russian sources have offered up a wide range of alternative scenarios, most of which have attempted to pin blame for the killings on Ukraine. In the days following the attack, the Russian Ministry of Defence produced what it said was radar evidence of a Ukrainian fighter jet in the immediate vicinity of MH17. Eyewitnesses gave interviews on Russian state media, claiming to have personally seen (and identified) Ukrainian jets attacking MH17 at an altitude of approximately 10km. A Ukrainian Air Force pilot subsequently found himself named as the man responsible for downing the airliner, while crudely photoshopped satellite images showing a Ukrainian fighter jet in the process of shooting down flight MH17 appeared on Russian TV news bulletins.

As the investigation continued and the net began to close around the Kremlin, the flow of fakes and false leads continued. The Ukrainian Air Force jet fighter theory gave way to arguments that the missile responsible for the attack was in fact Ukrainian in origin. Some of the versions propagated by Kremlin officials and the Russian media bordered on the absurd. One of the more bizarre episodes 10

of the whole affair was the appearance of a mysterious Spanish air traffic controller identified as ‘Carlos’, whose claims of Ukrainian guilt were given considerable Kremlin media exposure despite his complete lack of credentials. At one point, comically incompetent ‘secret recordings’ of incriminating conversations between supposed CIA agents were released. The fact that the voices featured bore no resemblance to the supposed individuals involved did little to bolster Russia’s case.

A fake too far

None of this came as a surprise to Ukrainian audiences, who have long since grown used to the Kremlin’s cynical use of fakes and distortions as a key component of Russian information warfare. However, until the aftermath of the MH17 attack, many outside observers had assumed the Russian media was merely guilty of the same kind of subjectivity and local biases found in any country. Russia’s response to MH17 has gone a long way to changing these perceptions, demonstrating to international audiences that Moscow feels no compunction about creating entirely false narratives – in many cases backed by the full weight of the state.

This realization will inevitably increase the pressure on the international community to adopt a tougher stance towards Russia, while dangerously eroding Kremlin credibility on the world stage. Few wish to enter into a direct confrontation with the Putin regime, but outrage over the apparent lies told by Moscow about MH17 will likely fuel demands for action. At the very least, the JIT findings

will strengthen the case for extending the current international sanctions against Russia.

Exposing Russia’s hybrid war

Russia finds itself in a particularly tight corner now because any acknowledgement of a role in the MH17 attack would mean de facto recognizing Moscow’s hybrid war in Ukraine in its entirety.

Sophisticated anti-aircraft systems such as the BUK complex used in the MH17 attack do not cross international borders in isolation. Nor is it the kind of weapon non-specialists such as Putin’s notorious ‘miners and tractor drivers’ could hope to operate.

The presence of a Russian BUK system in Ukraine is therefore a smoking gun pointing to the wider illicit deployment of the Russian military inside Ukraine. Kremlin denials of a conventional army presence in Ukraine already enjoy little credibility among the international community, but a direct confession would still be extremely damaging for Kremlin interests.

Even without any kind of acknowledgement from the Russian side of a role in the MH17 attack, it may take years to reverse the damage done by the Kremlin’s disinformation campaign. Russian officials will have to get used to encountering raised eyebrows and references to MH17, even when they are making relatively innocuous statements. In the early nineteenth century, Scottish poet Walter Scott penned the famous line: “Oh, what a tangled web we weave, when first we practice to deceive.” Russia may well have cause to reflect on the continuing relevance of this observation as the country comes to terms with the fallout of its MH17 evasions. www.bunews.com.ua

real estate

Are Kyiv landlords overcharging expats?

Expat tenants in Ukraine often complain of inflated rental rates – but undersupply is also a factor The early autumn months are traditionally the peak relocation season for expats. For new arrivals to Ukraine, this means coming to grips with the Kyiv real estate market. If you asked a random selection of Kyiv expats whether they believed they are paying a fair price to rent their apartments, a good number would tell you they suspect they’re being overcharged. There have long been suspicions of an unofficial “expat tax” imposed by unscrupulous Kyiv landlords, but are these fears justified?

Exploited expats?

The idea that you’re being ripped off because you are a foreigner who is far from home is not new. As human beings we are wired for this type paranoia. And let’s be honest - it does happen. Here in Kyiv there is no shortage of dishonest brokers who are prepared to take advantage of foreigners unfamiliar with the local real estate market. Actually, it is worth noting that such brokers do not generally discriminate and will readily victimize local clients too. If in doubt, it is a good idea to compare notes (and rental rates) with local friends.

Perhaps your employer is using a relocation company to provide you with housing in Kyiv. In this situation, the relocation company may be outsourcing your property search to third-party service providers who may not be interested in showing relocating expats all of the available properties on the market. Technically, you’re not being scammed, but often you’re not getting the best possible housing that your budget would allow. Other large businesses and international organizations may have housing committees, tender requirements, and cumbersome housing search policies that can “tie the hands” of your real estate agent and put you at a disadvantage when you’re competing with other tenants for “more desirable” properties in downtown Kyiv, leaving you with the leftovers or otherwise less desirable properties.

Quality property shortage

All of the above circumstances can obscure the fact that there is a real shortage of quality housing in central Kyiv suitable for expats. But what exactly constitutes “suitable expat housing”? In most cases, this will mean apartments in downtown Kyiv that have been renovated to the level, taste and style of expats. If you’re fortunate enough to have a generous housing budget in Kyiv, then apartmenthunting will mean encountering properties with a garish, baroque decor that recalls ex-President Viktor Yanukovych’s ostentatious Mezhyhiryia mansion. Inside these properties you’ll find lots of flashy but often impractical design touches such as overly fancy chandeliers, custom lighting, and giant gaudy murals on the walls. There’s often a mismatch between the tastes of owners and the size of these properties, leading to incredibly expensive, over-the-top renovations.

The owners of such apartments are usually looking to recoup their renovation costs quickly and can

seem mystified by the lack of tenants who are ready to meet their price expectations. By contrast, expats as a whole - and Scandinavian tenants in particular - usually want something light and bright, with neutral colouring and a minimal decor that is understated as opposed to heavyhanded, and more like IKEA than Beverly Hills.

Bathrooms and kitchens in expensive Kyiv flats can often be showrooms for puzzling design choices and missteps. Bathrooms will sometimes contain big jacuzzis that no one uses instead of more modest and practical shower closets or low-set bath tubs with showers. Or you’ll find toilets that are installed too close to the wall leaving no leg room, space-eating bidets in bathrooms that aren’t large to begin with, or flimsy hooks instead of large solid (preferably heated) towel racks. Sometimes otherwise nice apartments in good locations can fall short of expectations because the kitchen or bathroom hasn’t been renovated recently, or you encounter partial renovations where corners were cut and it’s obvious that the landlord ran out of money while renovating his apartment. Such apartments may feature older appliances which might have been top of the line in their day but are now approaching the end of their useful lives. Other questionable features include kitchen countertops made of compressed cardboard and composites instead of better materials such as natural stone, or a renovation style that dates back to the 1990s or early 2000s.

Easy fixes and structural problems

Sometimes the shortcomings of a flat can be easily remedied with relatively inexpensive fixes if the apartment owner is amenable, such as adding a boiler (hot water heater) or additional air conditioning units.

But other drawbacks are structural and offer no easy fixes. One common problem is the presence of “yolochka” - a cheap parquet flooring that easily collects dirt instead of higher quality laminate flooring.

Sometimes the building itself is the problem. For example, higher floors in older buildings can have weak water pressure, and entrance areas are often in bad condition. Some apartments lack elevators, or have elevators too small to accommodate baby strollers. And finally there is an acute shortage of parking in Kyiv. Even the underground parking garages of newer apartment complexes often have space for less than one car per apartment.

All of the above shortcomings limit the supply of housing for expats in Kyiv and contribute to a structural deficit in a city where the average living space per person is less than half the EU standard. While this deficit does exist, the news is not all bad. Despite the presence of landlords and agents seeking to inflate expat rents, in many cases expats can actually enjoy price leverage because they are seen as highly desirable tenants.

Expats are considered “safer choices” over local tenants since they will often stay longer, while a local tenant may be there only as long as it takes to complete a renovation, find a new job, or otherwise change his or her circumstances. So being an expat is not necessarily a disadvantage, but it can reduce your rental options.

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

12

www.bunews.com.ua

CURRENT INVESTMENT OPPORTUNITIES

$6,500,000 (100% stake)

$3,000,000 (100% stake)

Complete cycle agricultural complex Sector: Animal farming Region: Ukraine, Kyiv region Stage: Fully operational business

Terminal elevator for storage, cleaning and delivery of grain crops and products by river-sea vessels Sector: Logistics and warehouses Region: Ukraine, Kherson Region, Nova Kakhovka Stage: Fully operational business

Assets: agricultural land totaling 3,370 ha grain storage elevator with a capacity of 15,000 metric tons feed milling plant farm buildings (for livestock of 36,000 pig population, or 4,365 tons of live weight) equipment produced by EMF (Germany), INTERMIK (Poland) for meat processing (slaughtering — 120 pigs per daily shift; production — 5 tons of sausages and other meat products per daily shift)

Assets: Land: 2.17 ha (long-term lease in place running until 2064) Port dock (vessels up to 4.5m draft) Production capacity for transshipment: 1,000 tons per day Storage warehouses (capacity of 16,000 tons) Grain cleaning equipment (80 tons/hour) Certified laboratory Unloaders, truck scales (up 80 tons) and other equipment

$1,000,000 (100% stake) or JV 50-50%

$120,000 (100% stake)

Restaurant in downtown Kyiv

Development of granite quarry

Sector: Leisure and entertainment Region: Ukraine, Kyiv Stage: Fully operational business

Sector: Extractive industry Region: Ukraine, Zhitomir region, Olevskyi district, Olevsk Stage: Initial stage

Assets: Property with lease (280 square meters, seating for 90 guests).

Interior created by prominent designer in vintage style.

Unique atmosphere created by 200-year old wine racks, barrels, wine presses, and original furniture imported from Europe.

New branded kitchen equipment, fittings and utensils.

Independent ventilation and air-conditioning.

The restaurant currently generates monthly net income of $3,000 – $5,000.

Assets: Resources: 3.5 million cubic meters in solid state Special permission for the use of mineral resources (5 years) Property rights to land parcel (16 ha) Full research and industrial quarrying project

Contacts: 24 Starovokzalnaya St., Kyiv, 03150, Ukraine Tel.: +38 067 713 65 71; +38 067 354 01 75 Tel.: +38 044 223 39 71 E-mail: ib@inventure.ua Web: http://inventure.ua Web portal: https://inventure.com.ua

InVenture Investment Group is an experienced partner with a proven track record in the Ukrainian Private Equity and Venture Capital market.

InVenture Investment Group offers a range of services including investment finance support, M&A advisory services in a range of industries, development and implementation of investment strategies, and private banking.

14

www.bunews.com.ua

Savik Shuster pioneered media freedom in Ukraine but his non-oligarch channel is struggling to survive Ukraine’s television industry is in many ways a mirror of the country’s patchwork political panorama. Channels come and go with a regularity that matches the rise and fall of new political parties, with everything seemingly controlled from behind the curtain by a handful of oligarch owners. In this ever-changing and turbulent environment, one of the few televisual constants of the past decade has been Savik Shuster’s weekly political debate show. Every Friday evening, millions of Ukrainians tune in to see Shuster graciously play host to the great and the good of the Ukrainian political classes as they address the key issues of the day and generally shout at one another. This ritual has survived multiple political crises, numerous changes of government, a revolution and a hybrid war, but it is now under threat. The reason is simple – money.

Exasperated by the dominant role of oligarchs in Ukraine’s mainstream

September 2016

media

Who will pay for Ukraine’s free speech? media, Shuster set out last year to create a truly independent TV channel.

With limited funds and a dedicated team of associates, he established 3S.tv channel. The project is very much in line with the post-Euromaidan public hunger for credible and independent journalism, but it has struggled to secure the kind of funding required to finance something as expensive as a national TV channel. After a decade of championing free speech on Ukrainian TV, the Lithuanian-born media icon now finds himself asking who is going to pay for this media freedom.

Moving from channel to channel Shuster’s longevity on Ukrainian TV is largely down to his tenacity and the brand value that his name has acquired among Ukrainian audiences.

His flagship weekly political talk show has been broadcasting more or :

15

: less continuously since 2005, but it has moved from one channel to another

with depressing regularity. Indeed, it would probably be quicker and easier to list the channels that have not hosted his show at some point than to recite the chronology of his many arrivals and departures. Speaking to Business Ukraine magazine at his channel headquarters in Kyiv’s Syrets district, the dapper and diminutive Shuster explains the frequency of these moves as the product of Ukraine’s oligarch-controlled mainstream media. “Clashes are inevitable,” he says. “On the first show I hosted in Ukraine, I was just an employee. When that didn’t work out, my partners and I decided to set up our own production studio, but that didn’t work either. Even though we had made sure to have editorial control over the product written into the contract, we soon found that channel owners retained the power to kick us off the air.”

Given his well-documented troubles with the oligarch owners of Ukraine’s main media brands, Shuster is surprisingly philosophical about the influence they exert. However, he points out that the lack of genuine market forces and profitability in the Ukrainian media prevents journalists from doing their job properly. “Oligarchs have always played both positive and negative roles in society throughout history,” he says. “But today, all Ukrainian media runs on oligarch subsidies, so journalists are inevitably dependent on media owners.”

Shuster believes the current economic hardships in Ukraine have made a bad situation worse. Ukraine’s main TV channels have traditionally struggled to generate sufficient revenues to match their multi-million dollar annual budgets. The collapse of the advertising market that accompanied the economic crash of the past two years has only served to aggravate this problem, sending rates for advertising slots plummeting and forcing channel managers to depend even more on the deep pockets of oligarch owners.

Deteriorating media climate

A reliance on oligarch subsidies is only one part of Ukraine’s current media malaise, according to Shuster. He argues that the general level of media freedoms in country is deteriorating, and claims his channel has become a target for state agencies and other tools of intimidation more commonly associated with authoritarian regimes elsewhere in the former Soviet world. “Ukraine will never become like Russia or Azerbaijan, but this does not exclude the fact that those in power want to control the media,” he says.

Shuster is not alone in this negative assessment. Many national and international press freedom monitors agree that the Ukrainian media climate has darkened considerably in recent months, with the car bomb murder of prominent Belarusian journalist Pavel Sheremet in central Kyiv and the firebombing of Inter TV channel serving as grim milestones on the road away from the hardwon media freedoms of Ukraine’s two post-Soviet revolutions. The Ukrainian government has been widely criticized for failing to address these two inci-

16

dents with sufficient vigor. It also stands accused of doing too little to protect journalists from harassment and intimidation – dangers many had assumed were no longer issues in post-Euromaidan Ukraine. Inevitably, this apparent lack of government support for media freedoms has also served to make potential corporate sponsors of independent TV channels think twice.

Shuster initially sought to get round these problems by introducing a novel form of membership scheme to help fund his 3S.tv venture. Prospective members can join the 3S.tv family by contributing a donation of at least UAH 100. In return, they receive membership status and gain a range of benefits including access to shows and the chance to participate in outside broadcasts across the country. The public response to this initiative has been moderately positive, with around 19,000 Ukrainians signing up for membership since the scheme launched in spring 2015. However, this figure is dwarfed by the estimated four million memberships that would be required in order to fully finance the channel. Shuster is now looking into other options, but admits there are very few avenues open to him. He identifies three key sources: non-oligarch Ukrainian investors drawn from the country’s self-made upper middle classes, foreign investors, and international donors. If a solution to the channel’s funding problems is not found by the end of the year, Shuster is unsure whether they will be able to continue broadcasting into 2017.

Free speech icon

The departure of Savik Shuster from Ukrainian television screens would be widely interpreted as a symbolic setback for freedom of speech in the country.

As the leading light among the first generation of current affairs broadcasters to gain national prominence in the afterglow of the 2004 Orange Revolution, Shuster has come to embody the political pluralism that defines contemporary Ukraine’s media landscape. His shows have consistently attracted the biggest names in politics, often serving as stages for important national debates. This has made Shuster something of a national icon whose fame has reached such heights that people routinely refer to him by his first name alone. In many ways, he is the Elvis of the post-Soviet political talk show circuit.

Ukrainian television was not always like this. Prior to the Orange Revolution, Ukraine’s TV industry had been subject to the kind of unofficial but rigid government controls found in today’s Russia and other post-Soviet states. Government officials would provide TV executives with specific instructions on what to cover and who to ignore, with any deviations likely to lead to licensing problems or the application of other administrative resources. The watershed moment for Ukraine’s mainstream media came on the fourth day of the Orange Revolution in November 2004, when on-screen sign language translator Natalia Dmytruk managed to bypass the state TV censors by signing to her viewers that the official news bulletin they were watching about the presidential

www.bunews.com.ua

From Putin’s Moscow to Orange Kyiv

Born in Soviet Lithuania, Shuster moved to Canada in his youth before returning to post-Soviet Russia in the early 1990s as a journalist with Radio Liberty. At the turn of the millennium, he took on a high-profile position hosting a political talk show on Russia’s NTV channel. However, his days on prime time Russian TV were numbered after he incurred the displeasure of the Kremlin for his show’s coverage of the 2002 Nord-Ost terrorist siege in Moscow. Soon afterward, he found himself out of a job.

This experience as a political journalist in both Putin’s Russia and post-Orange Revolution Ukraine gives Shuster considerable insight into the contrasting media climates in both countries. While he is pessimistic about the current direc-

tion of Ukraine’s media industry, he rejects any direct comparisons with the situation in today’s Russia, and identifies stark contrasts between the respective television audiences in both countries. “Ukrainians and Russians are very different in their attitudes to the media. In Russia, whenever our ratings dropped we would do a show about NATO or America and our viewing figures would jump. Russians have an imperial mindset and like to be feared. In Ukraine, the opposite is true. Geopolitical themes are not engaging and audiences respond better to themes more closely related to everyday life. Ukrainians want to know their leaders and hear what they have to say.” Despite being among the losers during Vladimir Putin’s clampdown on the Russian media during the early 2000s, Shuster continues to harbor ambitions of broadcasting to Russian audiences. He says 3S.tv has already earned a following among Russian Federation viewers, and hopes to build on this if the channel is able to establish stronger financial foundations.

Shuster has experienced so many reversals during his eleven-year Ukrainian TV career that it is hard to imagine him throwing in the towel at this stage.

His dream of establishing a non-oligarch channel is clearly proving far harder than he had anticipated, but his celebrity status and public prominence may yet help to rescue the 3S.tv project before the channel’s existing funding runs out. Despite the challenges he currently faces, Shuster remains one of the few TV presenters in Ukraine capable of attracting multi-million audiences on a regular basis. At a time when the country is striving to reduce corruption and move towards the transparency of market forces, this audience appeal has to be worth something.

media

election was false. “Everything you have heard so far on the news was a total lie,” she told viewers using sign language. In a moment of pure poetic justice, Ukraine’s deaf community became the first viewers to hear the truth on state television. Within a few days, virtually every Ukrainian TV channel had broken with the old censorship practices and made public commitments to provide balanced coverage. This rebellion helped secure the success of the Orange Revolution. It also sparked a smaller revolution within the TV industry itself.

Suddenly, everything seemed possible and formerly taboo subjects could be addressed with an abandon that was quite literally intoxicating. This was the exciting environment Shuster encountered when he first arrived in Kyiv in 2005. The timing was perfect. He did not realize it at the time, but he was about to embark on the experience of a lifetime.

EASE YOUR MIND! AFFORDABLE HEALTH INSURANCE PLANS

AMC Health Insurance Plans, starting at $45 per month:* • • • • • •

hysician and Specialist consultations P 24-hour Outpatient and emergency treatment Radiology and Laboratory services (X-Ray, Ultrasound, Diagnostics) Child vaccinations (according to US schedule) Home or office doctor visits Expert second opinion with US and European Hospitals

Kyiv: +38 (044) 490 76 00 Lviv: +38 (032) 253 70 00 Tbilisi: +99 (532) 250 00 20

www.amcenters.com

*The AMC Health and Wellness Plan is a licensed healthcare delivery plan, paid on an annual basis, designed to provide primary and urgent care health and assistance services. The above price is AMC’s basic Outpatient Plan, covering all outpatient services with a plan utilization limit of $10,000 per person, per year. For more information about this and other health insurance products, please call us at 490.7600 or visit us at www.amcenters.com

September 2016

17

germany in ukraine

Germany in Ukraine

Interview: German Ambassador Dr. Ernst Reichel on Minsk, reforms and growing bilateral trade Kyiv must currently rank as one of the most challenging and important German ambassadorial postings in the world. What are your priorities as Germany’s new Ambassador to Ukraine?

My priorities are closely linked to Germany’s role in Ukraine at this point in time. This means that I will put special emphasis on two things: Firstly, the implementation of the Minsk agreements. I am convinced there is no better alternative for Ukraine than to fully support these agreements. The final goal of the agreements is the restoration of Ukrainian sovereignty over the entire conflict zone. The cessation of hostilities and the restoration of economic activity in the east are also in the economic interests of the entire country. The second priority is Ukraine’s comprehensive reform agenda and the continuation of reform dynamics. Ukraine offers business opportunities and has untapped potential, but economic development is linked directly to the effective implementation of its reform agenda. There is a tremendous amount of international capital available globally that is seeking investment opportunities. It is Ukraine’s job to attract this capital by creating beneficial conditions. This means an effective, corruption-free administration and justice system.

Ukraine is currently at the top of the geopolitical agenda and is at an historical, political, cultural and civilizational crossroads that has implications for the entire region. How did you familiarize yourself with these complex issues in preparation for your posting to Kyiv?

I have been to Kyiv a few times before my current role and gained knowledge and experience at previous postings abroad as well as at the Ministry of Foreign Affairs in Berlin where I was head of department for Russia, Ukraine, Belarus, Moldova and the Eastern Partnership some five to ten years ago. I also read a lot, especially books on the history of Ukraine. I found it particularly interesting to read about conflicting narratives of Ukrainian history as the Swiss historian, Andreas Kappeler, has demonstrated in his works. Another book that made a great impression on me is called “Decision in Kyiv” by the German historian Karl Schlögel, who portrays Ukrainian cities in a very extraordinary manner.

Germany has played a key role in maintaining a united European response to Russian aggression in Ukraine. How do you intend to work with your EU diplomatic colleagues in Kyiv to maintain this united stance?

From the very beginning, our response has been a joint one: together with our European and international partners, Germany fully supports Ukraine´s territorial integrity and sovereignty. We do not recognize the annexation of Crimea by Russia. This results in very concrete actions.

For example, the European Union has recently prolonged sanctions for another six months against 146 people and 37 internationally operating companies believed to contribute to the unlawful Russian activities in eastern Ukraine. This decision reflects consensus among the 28 EU member states. And of course, such a decision involves debate and discussions not only in the capitals of European Union member states but also here in Kyiv. Some sanctions aim to trigger Russian implementation of the Minsk agreements, others to impose costs on Russia for its illegal 18

About the interviewee: Dr. Ernst Reichel is the German Ambassador to Ukraine annexation of Crimea. It was clear from the outset that if Russia takes the steps we expect, the sanctions will have done their job and can be lifted. They were never intended as an indefinite punishment.

Germany has supported Ukraine’s post-Maidan reform efforts with a range of bilateral initiatives. Where do you see Germany being able to have the greatest impact on the Ukrainian reform process?

In the aftermath of the Revolution of Dignity, Ukraine has launched reforms in many areas and on an unprecedented scale. Let us take the allocation of public funds: ProZorro, the new E-procurement system, enjoyed support from the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ). It saves a lot of taxpayer money that would otherwise have gone into corrupt schemes. Other important reforms include the national police, banking sector reform, the establishment of new institutions to combat corruption, and the elimination of energy sector subsidies that were particularly prone to corruption, to name only a few.

Reforms are moving in the right direction but often doing so too slowly. : www.bunews.com.ua

We create chemistry that helps lush landscapes love thriving cities.

The construction industry currently accounts for about half of the world’s consumption of energy and resources. It’s a substantial amount - but it can be reduced, if you just add the right chemistry.

We’ve developed a number of solutions that make construction more mindful of the environment and buildings that are more durable and efficient throughout their life cycle. The result is that new developments are less taxing on our finite resources in the short and long term.

When we can build more while using less, it’s because at BASF, we create chemistry.

To share our vision visit wecreatechemistry.com

germany in ukraine

: They are encountering a lot of resistance in their implementation, as the

recent introduction of the e-declaration system showed. I believe that in the shorter term, practical implementation of justice reform will be key.

This is important to reduce the sense of impunity among wrongdoers, but also to create stable and reliable investment conditions.

Germany, in close harmonization with the EU and other important donors, provides extensive support in a combination of short-term emergency aid measures along with medium and long-term support to tackle structural deficiencies. Our assistance is closely linked to the Ukrainian reform agenda. In addition, we provide support where our own experiences enable us to foster significant change: energy and resource efficiency; economic development and infrastructure; decentralization and municipal self-administration; rule of law; fostering civil society, education, sciences and media.

You spent the past three years at the Foreign Ministry in Berlin. How have attitudes towards Ukraine among the German diplomatic and political communities evolved since the Euromaidan protests began in late 2013?

Euromaidan shed a completely new light on Ukraine in the eyes of the German public. It created the impression of Ukraine as a place where people stood up for their country and made a strong choice for a better life in a European-oriented society. Let me add that I am very impressed and pleased by how much attention and effort is devoted to Ukraine by our government, our Chancellor and many other German politicians. I am certain that Ukraine will remain a real priority for us, despite other international political crises. But there are also high expectations in Germany towards Ukraine: not to lose momentum in Ukraine’s struggle for significant and lasting reforms according to European standards.

Even more importantly, I am convinced this is what the Ukrainian people themselves expect from their political leadership.

Germany spent much of the post-Soviet era seeking to build strong business ties with Russia, making the current confrontation with Moscow particularly unwelcome for many in German business circles. How can German diplomacy strike a balance between furthering German business interests in Russia and upholding European security interests in Ukraine?

There cannot be a trade-off between business and security interests in Europe - they are inseparably intertwined. Respect for international law and a viable security order in Europe are preconditions for the sustainable future of this continent. That includes economic development.

The illegal annexation of Crimea and the unlawful Russian actions in eastern Ukraine represent the greatest challenge to the European security architecture since the end of the Cold war. These events have seriously damaged Russian-German political as well as economic relations.

The sanctions applied against Russia do harm to the German economy as well as other European economies. But there is a political prerogative to lifting the sanctions: They are directly linked to the implementation of the Minsk agreements. This has been the German and European stance all along.

Ukraine refuses to hold regional elections in the occupied areas of eastern Ukraine until Russia returns control of the international border, while Russia refuses to return control of the border until elections are held. Is the Minsk Peace Process effectively at a dead end?

After many months of stagnation, tireless efforts behind the scenes have 20

been gaining some momentum. The signing of the Trilateral Contact Group’s framework resolution on disengagement of forces on 21 September as a new instrument to calm the situation along the line of confrontation was an important step to ensure that weapons remain silent.

Disengagement along the entire line of confrontation must be ensured.

Making progress on this issue was also the goal of the joint visit of Minister Steinmeier and his French counterpart to Ukraine in September.

Of course, a sustained ceasefire alone will not ensure implementation of the Minsk agreements, but without it, we will not make any political headway. Without the willingness by the parties to the conflict to adhere to previously made agreements, there will be no progress. Instead, it will perpetuate a situation that gravely harms Ukraine. Germany expects constructive and intensive work on implementing the Minsk agreements. This means, inter alia, that Ukraine cannot assert 100% of its interests. We are strongly convinced that it is more beneficial for Ukraine to have the Minsk agreements and implement them rather than to be in a situation where there are no agreements with Russia.

The opening of the German Chamber of Industry and Commerce in Kyiv comes as German exports to Ukraine are growing at an impressive rate. Where do you see the greatest opportunities for further strengthening of bilateral trade ties?

We are obviously glad to see German exports to Ukraine on the rise but I would like to draw your attention to the fact that Ukrainian exports to Germany are also growing: Between January and July 2016, they have grown by 3.5% compared to the same period in 2015. I am sure we can expect further growth in future, particularly if Ukraine continues to conduct genuine reforms and Ukrainian companies keep implementing EU standards in their production processes. Quite a few German companies are not only exporting to Ukraine, but are also investing in Ukraine, thereby creating jobs as well as generating higher revenues for the Ukrainian state and regional budgets. To give you just one example: many Ukraine-based affiliates of German companies produce parts for the big German car producers (Daimler, BMW, Audi, Porsche etc.).

I think there is huge potential for further growth in this sector, given Ukraine´s qualified labor force and proximity to the German market.

Ukraine has to continue improving the general business climate in order fully realize the country’s potential. I already mentioned two key aspects: every investor needs a well-functioning, independent and reliably uncorrupt justice system. Freedom from bureaucratic “harassment”, where corruption is often at the core, is also crucial. If Ukraine continues in this direction and decides to implement the norms and standards established in the Deep and Comprehensive Free Trade Agreement (DCFTA) with the EU with even greater vigor, I am absolutely convinced German–Ukrainian bilateral economic ties will benefit hugely.

On a personal level, what has surprised you most about life in Kyiv since your arrival in the Ukrainian capital?

My first job abroad after I became a diplomat was in Leningrad, back then still part of the Soviet Union. As a result, I became a first-hand witness to the successful independence movements in the Baltic States, something that deeply impressed me and influenced my political convictions. Since then, although I have worked on the region a lot, this is the first time I actually find myself living in the region again. What strikes me most is the fact that Kyiv is a modern, liberal and free place.

It does not feel Soviet or post-Soviet any more. It simply feels like a part of Europe, which of course it actually is. www.bunews.com.ua

"Zeppelin Ukraine" LLC is the exclusive authorized dealer of world famous company CaterpillarŽ in the Ukrainian market. A wide range of products offered by our company helps customers to solve tasks of any complexity — from excavation to power of the constructed object.

Our company provides professional service by our mechanics at a high level in the shortest possible time.

Constant availability of spare parts in warehouses throughout the territory of Ukraine allows to provide an uninterrupted supply.

Zeppelin Ukraine TOV 03022, Vasylkivska str. 34, Kyiv

0 800 300 350

www.zeppelin.ua

germany in ukraine

New German chamber seeks to build on robust revival German exports to Ukraine up by over 30% in first half of 2016 as bilateral trade blossoms and also hints at the potential for further growth. The biggest winner from the 2016 revival in trade has been the machine-building sector – traditionally a leading component of German exports worldwide. Machinery currently accounts for 21% of total German exports to Ukraine, growing by 63% in the first half of 2016 compared to figures for the same period in 2015. If this striking growth trend continues throughout the second half of 2016, it will send out a strong signal that the modernization of Ukrainian plants and manufacturing facilities is well underway.

Ukraine narrowing bilateral trade gap

About the author: Alexander Markus is Head of the Board of the German-Ukrainian Chamber of Industry and Commerce October 2016 sees the opening the German-Ukrainian Chamber of Industry and Commerce in Kyiv. The arrival of this new trade support platform comes at a time when bilateral commerce between the two countries is growing at robust rates and outperforming many of the most optimistic forecasts for post-crisis recovery.

The new German-Ukrainian Chamber of Industry and Commerce in Kyiv is part of the global AHK chamber network, which has 130 offices in 90 countries. This will be the third German bilateral business chamber in the region, following the establishment of similar chambers in Moscow (2007) and Azerbaijan (2012). The Kyiv chamber is the product of a bilateral agreement between Germany and Ukraine signed in October 2015 in Berlin in the presence of Federal Chancellor Angela Merkel and former Ukrainian Prime Minister Arseniy Yatsenyuk.

The German-Ukrainian Chamber of Industry and Commerce is a self-regulating body and its main task is to improve German-Ukrainian economic cooperation in terms of both trade and direct foreign investment. The new chamber will offer services to German and Ukrainian companies seeking to develop bilateral relationships, with companies from both nations welcome to seek membership and participate in chamber activities.

German imports surge in 2016

Over the past three years of revolution and conflict, Ukraine has been plunged into an economic crisis that has inevitably made its mark on the country’s balance of trade. German exports to Ukraine plummeting by around onethird in 2014 and dropping by a further 18.6% in 2015. Given the scale of the challenges facing Ukraine, many economic commentators had predicted that the country’s gradual rebound from the post-Maidan economic crisis would see equally unspectacular growth in areas like bilateral trade. However, figures for the first half of 2016 point to an extremely robust recovery that is worthy of its own headlines. German exports to Ukraine have risen by more than 30%, while Ukrainian exports moving in the other direction have climbed just under 5%.

The spectacular increase in German exports to Ukraine is partly the result of the lowered bar created by the previous few years of sharp decline, but it nevertheless reflects the strength in depth of Ukraine’s economic recovery 22

The previously high trade imbalance between Ukraine and Germany is narrowing with every year. In 2008, when foreign trade between Germany and Ukraine reached its highest levels since Ukrainian independence at almost EUR 8.2 billion, Ukrainian exports only represented a quarter of German exports. Today the proportions have narrowed, with German exports less than twice the value of Ukrainian imports into Germany. Despite fluctuations in German exports to the crisis-hit Ukrainian economy, the growth trend in Ukrainian exports to Germany has remained fairly slow and steady.

A breakdown of Ukrainian exports to Germany reveals an interesting trend away from raw materials and heavy industry towards value-added manufacturing. Until 2012, metallurgy products like crude steel were consistently the largest single group within Ukrainian exports, accounting for around 29% in 2012. The current lead segment is automotive component parts, which now represent 25.6% of all Ukrainian imports into Germany. Automotive components totaling a value of EUR 227 have been imported from Ukraine in the first half of 2016 alone, and there is a good chance this total will top half a billion euros by the year’s end. This sector is currently growing at an annual rate of 4.6%, with growth fuelled by companies with (mostly German) foreign capital assembling automotive parts in Ukraine.

The impressive automotive parts sector is followed by agricultural exports, which currently account for 10.6% of all Ukrainian exports to Germany. Despite EU quotas on a range of Ukrainian agricultural products, agribusiness exports to Germany have grown by 45.3% in the first half of 2016, reflecting the large profit margins still available to Ukrainian exporters even once they have factored in WTO customs rates payable beyond EU quota limits. This strong showing is most likely due to the very low production costs in Ukraine thanks to the devaluation of the local currency in recent years.

The clothing industry occupies third place in Ukraine’s exports to Germany, representing 8.9% of overall Ukrainian imports and overtaking metallurgy, which now accounts for just 8.6% of Ukrainian imports to the German economy. Metallurgy was in third place in 2015, but exports to Germany have decreased 43% in terms of euro value and 32% in tonnage compared to the same period a year ago.

These figures for Ukrainian exports to Germany provide important insight into broader changes across the Ukrainian economy. There is a clear shift away from energy-intensive heavy industries towards light industry, and from commodities to manufactured products occupying a higher position in the value chain. This development comes in tandem with the growing penetration of EU markets by Ukrainian companies. Germany is in many ways the ideal point of entry, offering both the largest single EU market and the highest purchasing power. With Ukraine providing an attractive manufacturing base, the positive trends in bilateral trade look set to continue. www.bunews.com.ua

Study in Germany ways to success.

Whatever you expect from your future: Germany offers you a wide range of opportunities to achieve your academic goals. Excellent universities and colleges, international lectures in English and inspiration from people from all over the world will help you create your future. Make it your way!

For further information and inspiration: www.study-in.de

German-based bank backing

Ukrainian SME innovation ProCredit Bank achieves growth in crisis conditions thanks to SME focus and internal efficiency drive As they arrive for work each morning, employees at the Ukrainian head office of ProCredit Bank on Kyiv’s Prospekt Peremohy have to negotiate their way through teams of construction workers. The bank’s HQ is currently undergoing ambitious renovation works that will eventually see the introduction of a convenient new elevator and a range of energy efficiency measures. This functional and forward-looking renovation project is an apt metaphor for the innovative structural reforms the bank itself has undertaken over the past eight years, paving the way for ProCredit Bank to weather the post-Euromaidan turbulence in the country like almost no other Ukrainian bank.

ProCredit Bank’s strong recent performance stands in stark contrast to the uncertainty surrounding much of the Ukrainian banking industry.

Dozens of Ukrainian banks have gone out of business or been closed down since the 2014 Euromaidan Revolution as the sector has experienced the biggest shakeup since the Soviet collapse. Against this backdrop of instability, ProCredit Bank has thrived. Since late 2014, the bank has managed to climb from seventieth to nineteenth nationally in terms of assets, while posting 36% growth in its loan portfolio over the same period.

Learning the lessons of 2008

ProCredit Bank’s General Manager in Ukraine Viktor Ponomarenko puts this down to the strong foundations laid by the bank following the Credit Crunch crash of 2008. As global markets tanked throughout autumn 2008 in the wake of the unravelling subprime mortgage fiasco in the US, Ukraine fell harder than most. It was to prove a painful lesson for the country’s banking sector, but Ponomarenko believes it led to internal changes that made ProCredit Bank’s robust response to the current difficulties facing the Ukrainian economy possible. “We revised our entire business model and focused attention on improving our corporate infrastructure,” he recalls. “Given the magnitude of the crisis, we were able to prove ourselves a sound investment within a relatively short period of time. We spent the years from 2009 to 2013 fixing the system. By the time the fresh challenges of 2014 arrived, the

hard work had already been done.”

This internal reform process involved heightening the bank’s traditional emphasis on the SME sector, reducing branch networks, and streamlining personnel policies. At the same time, there was a concerted effort to invest more in existing staff and focus on creating user-friendly facilities.

Following these post-Credit Crunch changes, the number of employees at the bank dropped from a pre-2008 figure of 2000 to around 300. By reducing personnel, the bank has been able to invest more time and energy into the professional development of individual staff. Prior to 2008, employees would generally be interacting with clients within two weeks of joining the bank. They are now expected to complete a one-year paid probationary period that includes extensive international training in Bulgaria, Macedonia or Serbia alongside fellow recruits from the eleven other regional countries where the German-based ProCredit Group is present. Existing staff also regularly undertake regular training in Germany.

Ponomarenko says these changes have resulted in ‘huge efficiency gains’.

He identifies better infrastructure and greater investment in staff as key factors driving the bank’s profitability, which is no hollow boast given that ProCredit Bank in Ukraine has posted annual profits consistently since 2011. This improved performance would be eye-catching in any environment, but the real test for the viability of ProCredit Bank’s internal reforms arrived with the aftershocks of the Euromaidan Revolution and the subsequent upheavals of 2014. “We were already in a position to develop and were prepared to operate in a difficult environment,” Ponomarenko recalls. “We wanted to grow, our shareholders wanted to grow, and we had the resources to do so.”

This growth has come via a concentration on the small and medium-sized business niche. The bank is now focusing increasingly on its core interests in the SME sector, and has reduced exposure to micro-entrepreneurs while scaling down personal banking services. “Increased specialization in the SME sector is a big advantage as it allows us to tailor our services and provide the kind of training to our employees that will help them meet the specific needs of our customers,” says Ponomarenko.

“Ukraine is an attractive market but it requires a lot of upgrades. In this context, innovation is not limited to new inventions, but can also apply to the processes of modernization”

24

www.bunews.com.ua

germany in ukraine

About the interviewee: Viktor Ponomarenko is the General Manager of ProCredit Bank in Ukraine

Supporting SME innovation

Reforms moving in the right direction

The bank’s work in the SME sector will now also include a role as local partner in the European Investment Bank Group’s recently unveiled ‘Supporting Innovation in Ukraine’ initiative, which aims to provide Ukrainian SMEs with increased access to financing. Ponomarenko sees this as a continuation of the bank’s existing engagement with the SME community and says cooperation with the EIBG brings additional benefits that ProCredit Bank can pass on to clients. “In the current environment we can all gain from greater certainty and reliability. This programme reduces risk and uncertainty.”

The scope for effective innovation financing throughout Ukraine’s SME sector is undoubtedly vast. Ponomarenko identifies agriculture as one of many sectors where the introduction of modern technological approaches can have a huge impact. “Ukraine is an attractive market but it requires a lot of upgrades,” he says. “In this context, innovation is not limited to new inventions, but can also apply to the processes of modernization.” Ponomarenko sees this support for sustainable and long-term economic growth as a good fit for the corporate ethos of ProCredit Bank as a whole. “We are a development-oriented institution. Our shareholders do not think exclusively in terms of profit maximization. We aim to help implement sound and sustainable business models.”

Forty-year-old Ponomarenko is already a veteran of the Ukrainian banking sector. The Sumy Oblast native joined ProCredit Bank in 2004, having begun his Ukrainian banking career in 1997 following graduation. He says he is broadly optimistic about the changes taking place in the country’s banking industry and has been encouraged by the reforms implemented by the National Bank of Ukraine (NBU) since Euromaidan.

Nevertheless, he is keen to stress the scale of the challenges the sector still faces. “We are currently in a transition period that is likely to continue for another few years. The changes introduced by the NBU have been striking, but it is still too early to draw conclusions.”

Ponomarenko argues that the current banking sector upheavals are actually inevitable, given the relative youth of the country’s financial services sector as a whole. The experience of ProCredit Bank over the past decade has demonstrated the possibilities for banks that are able to adapt their business models to the evolving realities of the Ukrainian market, but he believes the industry as a whole needs time to mature. “The Ukrainian banking sector is still very young and has a lot to learn. In this environment, it is understandable that the changes currently taking place have created a sense of uncertainty.

But as long as we are generally moving in the right direction, this is not a problem.”

September 2016

25

germany in ukraine

Adidas unveils Dynamo Kyiv vyshyvanka kit

German sportswear brand wins plaudits for design featuring traditional Ukrainian national embroidery

Ukraine’s national costume, the open-collared and embroidered ‘vyshyvanka’ shirt, has become one of the must-have items of the world fashion over the past two years.

With Ukraine’s Euromaidan revolution and hybrid war against Russia making global headlines, an ever-expanding list of celebrities and catwalk models have been pictured sporting vyshyvankas. The latest big brand to pay homage to the eternal style of the Ukrainian vyshyvanka is German sportswear giant Adidas, which recently scored a big hit with the vyshyvanka design of the new 2016-17 Dynamo Kyiv home jersey.

Adidas enjoys a long-running association with Ukraine’s premier football club, having produced its first Dynamo Kyiv kits in the 1970s as the club was entering a golden age under coach Valeriy Lobanovskiy.

Over the years, there have been numerous memorable designs, but none has caused as much excitement as the current vyshyvanka-style shirts. Football website footy26

headlines.com ranked the design among the world’s top ten football shirts for the current season, while the Dynamo Kyiv players themselves have voiced their approval. Midfielder Serhiy Sydorchuk called the design ‘bright and appropriate’, while the club’s Brazilian striker Junior Moraes took to Instagram and posted: “I don’t have words to describe our new uniform! Adidas surprised us again.”

Unsurprisingly, the club’s fans have echoed this enthusiastic response. Dynamo Kyiv’s famously patriotic supporters played a key role in the development of the design, supplying their input to the club during the early planning stages. With patriotism at all-time highs in today’s Ukraine, the wishes of the supporters to opt for a vyshyvanka style received full backing from Dynamo Kyiv officials. The result is one of the most striking and original football jerseys in living memory.

Will this Dynamo Kyiv shirt go on to become an Adidas classic? Competition in this cat-

egory is particularly tough. Adidas has produced many of football’s most memorable shirts, from the minimalistic 1970s orange jerseys of the Dutch national team to the celebrated ‘banana skin’ away shirts worn by the Arsenal team of the early 1990s.

Other classics include the iconic ‘flag sash’ design sported by Germany’s 1990 World Cup-winning team and the acid house creations worn by the USSR sides during the twilight years of the Soviet Union.

Unlike other Adidas classics that served as templates for numerous club jerseys, the current Dynamo Kyiv kit stands out as a uniquely Ukrainian design. In this sense, it captures the current mood in the country and the growing sense of self-confidence in Kyiv itself. Dynamo Kyiv supporters can only hope it brings good luck to the team as they seek to retain their Ukrainian Premier League crown and improve on a poor start to this season’s Champions League campaign. www.bunews.com.ua

DELTA Ukraine: What if success was just a question of the right partner?

It is hard to overestimate the role of partnership in business. With so much hinging on interpersonal relations, the success of any project directly depends on the people participating in these relationships.

This is especially true when we talk about mid- and large-scale construction projects.

Naturally, we all look for trusted and reliable partners, as this will ensure adherence to construction terms and planned budget. Customers always ask three key questions: 1) How long have you been active in the market?

2) What is your project portfolio?

3) Do you have recommendations?

DELTA Ukraine has impressive answers to all these questions. Part of the Austria-based DELTA Group of companies, DELTA Ukraine will celebrate its 10th anniversary in November 2016. The mother company was founded in 1977, starting as a small private architectural company before growing to encompass eight subsidiaries in Austria, Czech Republic, Slovakia and Ukraine. The Group has built a reputation as a professional and trusted partner, gaining more and more projects and becoming one of the leading companies in the fields of architecture, general planning and construction management.

Today, DELTA is a one-stop full service provider in the real estate development and construction industry.

Our service groups include: General Planning, Architecture, Tender & Procurement Management, Construction & Project Management, Process Management, Approval Management & Client Representation, Data Pool and General Contractor services. We guarantee our clients a high level of ap-

plication and process knowledge in business areas including industry and offices, health and wellness, culture and education, shopping and entertainment, and residential construction.

Our expertise can be demonstrated by a score of successful projects including the multifunctional Ave Plaza complex in downtown Kharkiv consisting of shopping mall, entertainment complex, and office center. This project was quite a challenge involving 17 subcontractors. At times, we had to manage 350 specialists working simultaneously on the site, while also providing an almost full package of services from due diligence to tendering and construction management. This is a good example of a project where the customer and contractor become good friends due to shared values, goals and approaches. We significantly reduced the client’s time expenditures on internal organizational processes.

As a result, we have since secured several additional contracts from the same client.

High quality work, reasonable timeframes, budget efficiency, and strict adherence to client goals are the core pillars of our approach to any project.

Perhaps this is why foreign companies operating in Ukraine often choose DELTA. Our current clients include AWT Bavaria (we are managing construction of their first BMW showroom near Kyiv). We are also working on a new plant in Kolomyia (IvanoFrankivsk region) for Leoni, the leading manufacturer of cables and wiring systems. This work involves architecture and general planning together with construction management services. We have also just signed a contract with contractual electronics

For the right partner, contact us!

DELTA Projektconsult Ukraine TOV 13, M. Pymonenka St., 6A/w29 04050 Kyiv Ukraine

Tel.: +38-044-4981267 Fax: +38-044-4981268 www.delta.at office-ua@delta.at

manufacturer Jabil for accompanying control and technical supervision of their plant construction in Uzhgorod. Both these plants are of particular significance for us. As well as being world famous brands, they will generate significant local employment (like about 2600 people in Uzhgorod and up to 6000 in Kolomyia). This will contribute to the Ukrainian economy as a whole, and the development of the regions in particular.

We are convinced that commitment to the future will increasingly become a priority for Ukrainian businesses. This means paying more attention to the environment. Years ago, DELTA Ukraine started offering ‘green line’ services, aiming to optimize the life cycle costs of properties. In 2013, we designed, constructed and oversaw the “green” certification of the BILLA supermarket on Anna Akhmatova St. in Kyiv according to DGNB standards, making it the first “green” supermarket in Eastern Europe. Interest towards sustainable construction and energy efficiency has risen recently, and we are sure this will be key issue for many investors and developers in Ukraine over the coming years. DELTA Ukraine is the only company on the Ukrainian market that offers building certification according to three main international standards: BREEAM, LEED and DGNB. We also see promising and challenging partnership potential in the agricultural sector, following our first and positive experience with KWS Ukraine, one of the world’s top selection companies and seed producers. They’ve just finished construction of a corn seed conditioning complex in Kamyanets-Podilsky.

germany in ukraine

The case for clusters

Cost-effective clusters could help attract international investment to the Ukrainian economy

About the author: Dr. Ricardo Giucci is team leader of the German Advisory Group (www. beratergruppe-ukraine.de) in Ukraine and Managing Director of Berlin Economics. The primary goal of the German Advisory Group is to support the economic reform process in Ukraine. The group advises different ministries, the National Bank of Ukraine, the Presidential Administration and Parliament on issues of economic policy.

Economic policy in Ukraine is under pressure to rapidly support economic growth, boost exports and create employment. However, there are only very limited financial resources available for this task. Therefore, the government needs to seek out low-cost, high-impact measures to foster innovation and investment in promising sectors. Clusters may be one of the best available options.

Tailor-made for Ukraine

In the recent past, clusters have gained increasing prominence in international debates on economic development. Clusters are geographic concentrations of interacting companies and institutions in related value chains. They comprise players from three groups - private sector companies, government institutions, and research and educational institutions. The logic of clusters is simple - they are driven by the co-existence of collaboration and competition. While players collaborate in certain areas, they compete in others. Because of their proximity, cluster players can benefit from several location-specific externalities and synergies.

Cluster development is a particularly attractive ap28

proach given the current circumstances in Ukraine.

It requires limited resources from government, yet may generate a significant impact and high visibility amongst investors. In many countries, cluster programmes have been introduced to strengthen competitiveness and to tackle structural change.

In this context, investment and export promotion, innovation and competitiveness, as well as job creation and skills development, represent areas of strategic importance in which clusters can be leveraged to increase the efficiency of existing policies. Furthermore, cluster support is in line with the objective of decentralisation, which is of high relevance in the Ukrainian context.

Clusters are also of great interest for Ukraine’s international partners, which in many cases have had their own positive experience with this instrument.

Numerous international partners would likely be ready to support the establishment of clusters in Ukraine with both technical and financial assistance, in the hope that official financing is followed suit by export revenues and private investments flows into Ukraine, which in turn would contribute to a further macroeconomic stabilisation and to economic growth.

It seems advisable to start the cluster development process with a limited number of pilot clusters in order to generate impact as early as possible, raise awareness, and gather first-hand experience for a larger future rollout. Key selection criteria for pilot clusters include promising potential with respect to internationalisation (investment attraction and export promotion), employment creation, and skills development, as well as innovation and upgrading potential. Clusters need to have a sufficient critical mass and geographic concentration to generate the necessary synergies and attract investment. A balanced mix of SMEs and large anchor companies would provide a sound basis.

Crucially, cluster development also requires shared interests and a willingness to collaborate between the players. Against this background, a quick scan involving interviews with experts from companies, associations, government and financial institutions indicates that the Ukrainian IT and automotive industries offer particularly promising potential for the development of pilot clusters. Both industries have a strong track record of FDI attraction, export generation, and job creation, while they both boast sufficient geographic concentrations. Furthermore, existing cooperative initiatives in the IT

industry and initial efforts towards collaboration in the automotive industry indicate a willingness among market players to participate in cluster activities. The combination of automotive and IT pilot clusters would allow for the testing of support measures as well as institutional models in two industries differing significantly with respect to their structural characteristics, which is helpful for the future preparation of larger scale efforts.

Practical steps

To move the cluster initiative forward, the Ministry of Economic Development would need to take a policy decision and develop a cluster support programme. This would then need to be officially presented in a workshop with stakeholders from business, local governments and educational institutions. The workshop would also provide an opportunity to assess interest in participation amongst stakeholders. Taking into account the results, the programme could be refined and finalised. As a next step or in parallel, international organisations could be approached regarding the financing of the programme.

With adequate financing secured, the next step would be to select a number of regional clusters for the pilot phase of the project. The chosen clusters would then be provided with technical assistance and funding, with the necessary corresponding monitoring and evaluation mechanisms established. At the level of central government, a lean coordination and exchange mechanism would need to be formed to generate synergies between regional clusters (e.g. training for cluster organisations). Regional cluster management organisations could then integrate key stakeholders from business, the public sector and academia, and provide specific services in the areas of cluster marketing and business development, start-up and innovation support, and skills and infrastructure development. A sustainable financing model for regional clusters would encompass base public funding from government or international organisations, revenues generated (e.g. membership fees, income from cluster services) and third party funding. The necessary funding volume for a cluster support programme is estimated at about EUR 5 million for a five-year period. At a time when the Ukrainian state has huge ambitions but limited resources, this is feasible given the international support such an initiative could expect to receive. www.bunews.com.ua

germany in ukraine

Zeppelin still flying high after two decades in Ukraine Iconic German company supplies range of Ukrainian industries with cutting-edge equipment This year Zeppelin Ukraine celebrated the 20th anniversary of its activities on the domestic market. Since 1996, the Ukrainian branch of this iconic German company has supplied Caterpillar equipment and a range of other machinery to industries across Ukraine. Business Ukraine magazine spoke to Zeppelin Ukraine General Director Heiko Kreisel about the company’s experience in one of Europe’s most exciting and challenging markets.

Zeppelin recently marked 20 years in Ukraine. What do you regard as the most important landmarks in the company’s two decades in the Ukrainian market?

Over the past twenty years, we have become an integral part of this market. Almost every industry works with equipment that we supply. We regularly provide technological solutions to new industries and continue to branch out. This reach means that Ukrainian companies increasingly factor us into their future planning. For example, the mining sector works closely with our Component Rebuild Center that carries out huge volumes of servicing and repairs.

We provide help in planning effective workloads and the right utilization of machinery to help mining companies avoid downtime.

We participate in all the major Ukrainian road construction tenders. Our machines are present in every significant road project in the country. We were the first company to supply Ukraine with 500 horsepower crawler tractors. Ukrainian shipbuilding currently uses our Cat engines, while Ukrainian greenhouses, power plants, and factories use our generators.

How has the Ukrainian market evolved over the 20 years of Zeppelin’s activity in Ukraine?

When we first

arrived on the market, there was no culture of consumption of high-technology equipment and value-added service. This was particularly challenging for us because the high quality of our products meant relatively high prices. On the other hand, we were able to introduce market participants to new technologies and explain that the equipment would not only pay for itself but would also bring additional revenue and help optimize their business.

Which products have proved Zeppelin’s best sellers on the Ukrainian market?

For many years, the Caterpillar and Zeppelin brands were primarily associated with two products - bulldozers and mining dump trucks. Today, other popular products include backhoe loaders, skid steer loaders, wheel tractors and many more.

Thanks to the 2014 Ukraine-EU free trade agreement, many analysts now see manufacturing as a potential growth sector for the Ukrainian economy. Does your recent experience support these expectations?

We have not noticed the rapid construction of new plants or capacities, but many

existing factories have refurbished and undergone modernization according to European standards. For example, the ‘Luks’ chips factory recently acquired a cogeneration set (engine) that allows them to use potato waste for the production of energy and heat.

How has the challenging business environment of the past 3 years effected Zeppelin’s operations in Ukraine?

Naturally, sales have declined slightly during this period. We have responded by switching our attention to servicing, which is one of our core businesses.

What is your assessment of the post-Maidan reform process and the impact it has had on the Ukrainian business climate?

We had high expectations for this period.

Not all of these expectations have been met, but there are positive trends and developments. For example, the public procurement sector has become a little less corrupt, and participation in tenders is now more transparent. We continue to wait for major changes, but we are pleased to see small positive developments.

About the interviewee: Heiko Kreisel is the General Director of Zeppelin Ukraine

30

www.bunews.com.ua

Innovative products and technologies for tomorrow’s world The LEONI brand stands for first-class competence in wires, cables, wiring systems and related products. Our innovative solutions are used in the global automotive industry as well as in key industrial sectors such as telecommunications, IT, health and energy. Focused on delivering key customer benefits, they provide the best connections possible for nearly all areas of modern life.

Partners in industry As a global supplier of wires, optical fibers, cables and cable systems, we have been keeping pace with the developments of the last few decades as our world has become more densely networked. This has made us a sought-after partner and development supplier to leading international industrial companies. We work in close partnership with our customers and we also use our ideas and expertise to help them reduce their overall environmental impact.

A global leader Founded in 1917, LEONI is now a global wiring systems and cable technology leader. More than 76,000 highly qualified and motivated employees work together in 32 countries to maintain and expand our position as a global market leader. To do this, we focus on the following high-growth core markets: automotive and commercial vehicles, industry and the healthcare sector, communications and infrastructure, household and electrical appliances, wires and strands.

Forward-looking products and services LEONI offers a unique portfolio of products, technologies and services for nearly all fields of wiring systems and cable technology and is constantly working on next-generation environmentally friendly solutions. We were one of the world’s first cable manufacturers to develop a holistic sustainability concept for ‘green technology’. This concept underlines our clear commitment to environmental responsibility across the entire product and value chain.

LEONI in Ukraine – Representative of the Wiring Systems Division LEONI Wiring Systems UA GmbH is part of the LEONI Wiring Systems Division. The pilot plant project in the Ukrainian city Stryi opened in July 2003.

Assembly of the first production samples took place one year earlier. The facility is furnished with modern equipment, comfortable offices, household facilities, dining areas and dressing rooms. It employs more than 7000 workers. LEONI Wiring Systems UA GmbH is a bright example of close economic, scientific and technical cooperation between Ukraine and Germany. It is one of the largest enterprises in terms of capital investment and production with foreign investments in the Lviv region with more than EUR 65 million invested.

The automotive industry is the main customer for which LEONI develops and produces complex on-board systems with integrated electronics.

Manufactured at the LEONI Ukraine plant, we supply cable assemblies to LEONI plants in Poland, Slovakia, Hungary, Czech Republic, Germany, Spain, Portugal, Italy, Belgium, the UK, the USA and Austria. Colleagues in these countries assemble cars for renowned manufacturers such as Opel, Porsche, Volkswagen, Audi and Lamborghini.

The plant in Stryi produces the highest quality products based on quality management system ISO TS16949 and environmental management system ISO 14001. In 2015, the LEONI plant in Ukraine received the highest internal award “Plant of the Year 2014” among more than 50 LEONI plants worldwide.

LEONI Wiring Systems UA GmbH has received various awards: • 1st place in the competition “Plant of the Year 2014” in the nomination “Cost and Motivation 2014” • 2nd place in the competition “Plant of the Year 2005” and “Plant of the Year 2006” • 3rd place in the competition “Plant of the Year 2004” • 2nd place in the competition “Plant of the Year” in the nomination “Improvement” in 2008 • 3rd place in the competition “Plant of the Year” in the nomination “Improvement and Quality” in 2011 • 2004 - 2008 “Supplier of the Year” Award from General Motors • 2002 - 2006 and 2013 “Investor of the Year” Award • 2003 - 2005 and 2010 “Best Employer in Lviv Region” Award • 2012 “Investor of the Year” contest prizewinner • 2013 “Best Exporter” Award among members of Lviv Commerce and Industry Chamber

New investments from LEONI On 20 October 2016, the ceremonial laying of a memorable capsule will take place in Kolomyia to mark the foundation of the future LEONI plant.

Construction expected to finish by June 2017. The total area will be 6300 square meters. Total investment is about EUR 15 million. The plant is expected to employ 800 workers in 2017, with this figure growing to more than 8000 by 2021.

Chemical giant sees business growth in Ukrainian agriculture and light industries German-based global chemical giant sees Ukraine business grow with emphasis on agriculture

related data that will help them to make better decisions on how to grow and market their crops.

The Ukrainian agricultural sector is currently undergoing a period of intensive modernization. What is BASF strategy in this sphere?

For BASF Ukraine is a significant East European market and prime example of a rapidly developing country. More than a half of the total land area of Ukraine is arable, which alongside other favourable conditions like weather, logistics and approximately 30% of world’s black soil, makes the

About the interviewee: Andreas Lier is the Managing Director of BASF Ukraine and Head of the Country Cluster East Europe (Ukraine, Moldova, Georgia, Armenia) German-based BASF is the world’s largest chemical company and has been present on the Ukrainian market since 1992. Since arriving in Ukraine in the early days of independence, BASF has expanded from a small representative office into a well-developed mid-sized business with 130 employees and representatives in almost every Ukrainian region.

BASF currently serves a range of Ukrainian industries with a primary emphasis on agriculture and significant presences in the automotive industry, construction, consumer goods, home care, nutrition, packaging, paints, personal hygiene, pharmaceuticals, and plastics and paper. Business Ukraine magazine spoke to BASF Ukraine Managing Director Andreas Lier about the challenges of past few turbulent years and discussed why his company continues to see the Ukrainian market as the ideal environment for innovation.

The BASF brand has always been associated with innovative approaches. How is this commitment to innovation shaping the BASF presence in Ukraine?

The modern world is a place of rapid social changes driven by technological development. BASF believes that chemical expertise and ideas can help to shape these changes in a responsible and sustainable way. With EUR 1.95 billion committed to research expenses in 2015 and around 10,000 employees involved in research and development worldwide, BASF does its best to boost competitiveness and strengthen the industrial base of the countries where it operates. I am happy to be able to say that Ukraine is at the center of this process. Why? Because we are committed to the country, and because our Ukrainian partners are highly professional and ready to implement innovations. For example, this year BASF has identified Ukraine as one of two countries (together with the Czech Republic) for the projected 2017 European launch of the new Maglis online platform to help farmers improve crop management. Via this platform, farmers will be able to gather, interpret, and monitor a range of crop32

country the largest agricultural land in Europe. Agriculture is one of the main industries for Ukraine, and it is a key focus for BASF’s business activities here. Despite all the recent challenges facing the Ukrainian economy, our agro business is developing well due to our professional and committed team and reliable partners. The basis for BASF strategy here is to understand the needs and requirements of the farmers themselves. All decisions related to strategic products take the specifics of the Ukrainian market in mind. We therefore expect to see our portfolio enhanced in the mid-term with new solutions for Ukrainian agribusiness.

The past three years have been particularly challenging for Ukraine and its industrial sectors. What were the main lessons for BASF during this period?

The past three years have definitely not been the easiest for all Ukrainian marker players. The main lesson that we have learnt is that challenges mastered are opportunities won. If you have a good team and loyal partners, if you make reasonable business decisions and plan in advance, you will be able to manage your way through difficult times. We are proud that BASF products, solutions and continuous technical support has helped Ukrainian companies remain competitive and develop successfully throughout this challenging time.

The hyrvnia currency devaluation of the past two-and-a-half years has affected both businesses and ordinary Ukrainians. How did BASF cope with the negative consequences of this process?

Here I would repeat the old adage that there is no gain without pain. The main gain of currency devaluation for Ukraine has been a change of consumer behaviour towards UA-made products. One of the results of this import substitution process is the recovery of Ukrainian light industries.

More and more people are now buying Ukrainian food and beverages, clothes and footwear, furniture, cosmetics and home care products. Our Ukrainian customers operating in these sectors say that BASF innovations and solutions enable them to produce high-quality products, win the trust of Ukrainian consumers, and enter new markets. For example, Ukrainian food companies used to buy ready blends and mixes in Belgium, Netherlands, Germany and France, which was rather expensive and sometimes did not actually correspond to the needs and requirements of the local market. Today they can produce blends and mixes in Ukraine using BASF ingredients, which makes business more economically viable and gives them a certain market flexibility. www.bunews.com.ua

germany in ukraine

Agricultural online innovation: Ukraine has been selected as one of two countries for the projected 2017 European launch of BASF’s new Maglis online platform to help farmers improve crop management

Many analysts see the free trade element of the Ukraine–EU Association Agreement as an opportunity for Ukraine to develop as a major manufacturing base for European markets. Are you witnessing signs of growth in this aspect of your business?

I am strongly convinced that the EU Association Agreement is a longterm roadmap for Ukraine to modernize and become globally competitive. On the one hand, it is a great chance for all international companies operating in Ukraine to mentor and support local businesses.

On the other hand, this is an opportunity for Ukrainian market players to develop and win new markets by implementing new business processes while changing product ranges and marketing policies to better meet EU requirements. BASF has a role to play in this process. One example is the food fortification project we are currently developing in Ukraine in partnership with a leading local producer of sunflower oil.

As you may know, in some countries food fortification is mandatory, with food products enriched with micronutriens (vitamins). In line with these market requirements, vitamin A produced by BASF makes it possible for Ukrainian sunflower oil producers to enrich their products before bringing them to Asian and African markets. We also support the process of securing the necessary certificates and documentation to make new market entry easier and more successful.

For the sixteenth consecutive year, BASF features in the Dow Jones Sustainability Index as one of the best sustainability performers. Is there any sustainability programme in Ukraine?

Sustainability is integral to BASF’s global “We create chemistry” strategy and a main growth driver. In Ukraine, we strictly adhere to our September 2016

corporate sustainability principles. We believe it is not only chemistry that makes people’s life better, but also knowledge. BASF solutions help to develop agriculture in the country, but we appreciate that farmers also need knowledge in areas including finance, marketing, business planning, risk management, and innovations in agriculture in order to develop the industry better. This is why earlier this year, in partnership with the IFC, we initiated a unique educational project for Ukrainian farmers called The Growth Point. The main idea of the project was to provide participants with knowledge of how to manage an agribusiness while increasing its profitability and effectiveness.

The feedback we received from participants was positive and we are confident that our initiative was timely and useful.

What would be your advice to German companies considering Ukrainian market entry?

Ukraine is an exciting emerging market that can provide international companies with very good business experience. For companies entering the Ukrainian market my advice is to prepare this move thoroughly.

The main factors to analyze are customer landscape and development potential, local legislation and compliance regulations, together with Ukrainian finance and accounting systems. It is also useful to network with other international companies operating in Ukraine. Participating in the activities of business associations such as AHK, EBA, and the American Chamber of Commerce will give you a good overview of the business climate and will serve as a useful platform to help establish business contacts and further develop relations with Ukrainian customers and partners.

33

germany in ukraine

German education helping shape the new Ukraine

Scholarships and study options providing Ukrainians with vital skills and employment experience

About the author: Gisela Zimmermann is Director of the DAAD Information Centre in Kyiv (www.daad.org.ua) Germany is currently among the most popular destinations for young Ukrainians who are looking to study abroad, with more than 9000 Ukrainians enrolled at German universities. A combination of a wide range of study opportunities – prospective students can choose between 17500 different degree programs at more than 450 universities - and the affordability of higher education has helped to make Germany one of the favourite destinations for Ukrainian students. Most universities in Germany are public and do not charge for tuition - at least not for bachelor degrees. The picture regarding masters’ programmes is more varied, but here, too, a great many courses are free of charge. Even the traditional international study issue of language barriers is not a major obstacle for Ukrainians seeking to continue their education in Germany. At the graduate level in particular, international programmes taught in English are easy to find.

Internships and employment experience

Especially at the graduate level, German universities offer what could be termed as an agony of choice. Students can choose between highly specialized degree courses ranging from 20th Century History and Politics to Driver Assistance Systems, or opt for a solid all-round course in History or Electrical Engineering. Moreover, when studying economics and engineering at the bachelor level, they can choose between an education at a classical or technical university, and studying at a University of Applied Sciences. The latter type of institute is unique to the German higher education system and reflects the significant part SMEs play in the German economy. Universities of Applied Sciences tailor their research specifically to the needs of small and medium enterprises.

A bachelor degree from one of these institutes typically includes a mandatory internship of one semester. Frequently students even write their final thesis in the company where they did their internship. Such internships can provide Ukrainian students with crucial hands-on professional experience that can help them contribute to Ukraine’s European transition.

The opportunity to acquire practical experience is perhaps what Elena Ko34

shman appreciated most during her four years at the University of Passau in southern Germany. While studying for a degree in economics at Kharkiv’s Polytechnical Institute, she applied to the German Academic Exchange Service (DAAD) for a scholarship. The scholarship was for one year but she ended up staying for four. She used her vacations to do internships in different companies. One of them led to a regular summer job that helped pay for her studies.

Upon her return to Kyiv, Koshman found work with Siemens - a company she was familiar with thanks to one of her internships. “Initially I found that I was very much working as an interpreter of cultural differences and different mentalities. On account of my studies in Germany and my internships, I had a better understanding than my Ukrainian colleagues of how a German company functions,” she recalls. Thanks to this cross-cultural experience, she found that colleagues would often consult with her. The ability to work in and with various cultures is a key competence in today’s globalized world. Academic exchange goes a long way to helping foster this. The German Academic Exchange Service (DAAD) provides support for these exchanges from government funds. Each year, young Ukrainians can apply to DAAD for up to 200 scholarships ranging from a 3-week language course at a Germany university to a full Ph.D. program.

Most types of support are open to all disciplines. Scholarships for masters’ programmes are particularly sought-after.

Brain drain or brain circulation?

When it comes to looking for a job after finishing their studies, Ukrainian graduates have to decide whether to remain in Germany or return to Ukraine.

Most of them would prefer to return home, yet the tight job market in Ukraine and low local salaries, especially for those at entry levels, force a considerable number of Ukrainian graduates to stay in Germany and gain further experience. This process is frequently criticised as a brain drain, but it may actually turn out to be more of a brain circulation. Ukrainian graduates seeking employment in Germany tend to find work in international companies working with Eastern Europe, and thus contribute to the development of Ukrainian-German trade relations.

Yana Liashko was one of those who decided to return to Ukraine after completing her degree in Teaching German as a Foreign Language at the University of Leipzig. She decided to return after learning about the Reintegration Programme offered by the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) at a Ukrainian-German academic networking event in Berlin while still a DAAD scholar. She currently works as a project manager for the Centre of German Law at the National Taras Shevchenko University in Kyiv. Liashko is part of a programme through which the GIZ is topping up salaries of recent graduates from German universities employed in Ukraine’s public sector. Thanks to this programme, the Ukrainian employer is able to profit from the skills and international perspective that the young graduates can contribute, without having to meet the salary expectations that usually exceed those of their hometrained competitors.

In her new job, Liashko can build on the experience in public relations she gained during study, internships and jobs in Germany. What she particularly enjoys, next to working in a binational environment, is the chance to be involved in the internationalisation of the training of future Ukrainian lawyers.

In the future, she says, she might even opt for a second education in law. After all, this is one of the key focuses as Ukraine continues to build bridges with the rest of Europe. www.bunews.com.ua

WEST UKRAINE’S LIFESTYLE GUIDE №87/February 2016

PASSIONATE ABOUT TRUFFLES OLGA ZHENCHAK DELIGHTFUL OWNER AND GENEROUS HOST OF TRATTORIA TARTUFO

LVIV BECOMES CHESS CAPITAL AND IS SET TO CROWN THE NEW QUEEN!

Ramada Lviv Hotel

The best of Lviv since 2008 leave the rest to ussm

Тел.: +38 (032) 243-00-10, моб.: +38 (067)320-44-77 reception@ramadalviv.com.ua, www.ramadalviv.com.ua

germany in ukraine

Cultural bridge between Germany and Ukraine The Goethe-Institut offers a window on German culture and supports growth of Ukrainian civil society

for the Goethe-Institut and has enabled us to react quickly to changing circumstances while also remaining flexible to specific needs and local requirements – something that might not have been so easy to achieve if we had pursued a policy of opening additional GoetheInstitut centres in Ukraine’s region.

Post-Euromaidan focus on civil society

About the author: Beate Kohler is the Director of the Goethe-Institut Ukraine. Prior to arriving at her current posting in Kyiv in September 2015, she previously served as Director of the GoetheInstitut in Romania.

Since 1993, the Goethe-Institut Ukraine has served as a platform for German-Ukrainian cultural and education interaction. Based in Kyiv’s Podil district and active throughout the whole of the country, the Goethe-Institut has helped foster bilateral ties while also providing access to both contemporary and classical German culture. In recent years, the organization has increasingly focused on support for Ukrainian civil society initiatives as part of a broader response to the challenges facing Ukrainian society in the wake of the Euromaidan Revolution.

Teach training and library initiatives

One of the key focuses of the institute’s work during the first years of its activities in Ukraine was the development of language courses and teacher training programmes. This was regarded as particularly important as demand for German lessons was – as in almost all Eastern European countries – traditionally high in Ukraine. In order to be able to spread information about Germany as widely as possible, a library was established in Kyiv to provide access to current German print media and new books as well as classics of German literature.

In addition to this library, “German Reading Rooms” were set up in several Ukrainian regional capitals.

In the following years, the Goethe-Institut Ukraine cooperated with local partners to establish a network of German language centres, reading rooms, partner schools and cultural societies across Ukraine. The Goethe-Institut continues to work closely together with these partners, but they remain independent. The development of this kind of partnership programme was a new innovation 36

Since 2014, the escalation of the political situation in Ukraine as a result of the Euromaidan Revolution, the annexation of Crimea, and the war in eastern Ukraine, has led to a change in the emphasis of GoetheInstitut projects in the country. Discursive formats such as lectures, panel discussions and seminars for experts have traditionally always been paramount in our work. In response to the changing environment in Ukraine following the upheavals beginning in 2014, the development of cooperation with civil society - especially with independent young cultural players and activists, together with reformers in the public cultural sector – has become a major focus of our work.

Over the past two years, the Goethe-Institut Ukraine has been able to implement numerous projects in support of the “Development of Cooperation with Civil Society in the Countries of the Eastern Partnership” project of the German Federal Foreign Office. Most of these projects have focused on supporting the expansion of synergy efforts among public and independent cultural institutions, network building between cultural actors within Ukraine, and between Ukrainian and German civil society colleagues. Likewise, since 2015, the Goethe-Institut has supported cultural and civil society projects in the Ukrainian regions – far away from the big cultural metropolises.

Some prominent examples of these initiatives include support for the realignment of museums and libraries that want to open up towards their audience and are looking for new concepts and digital opportunities. An additional initiative mapping cultural infrastructure aims to initiate the first steps towards a broader restructuring of local cultural scenes. Art and culture in public spaces and the approach to the architectural heritage of Communism are further key themes within this initiative.

Raising awareness about IDPs

The flow of internally displaced persons in Ukraine as a result of the annexation of Crimea and the conflict in the Donbas is also an immense challenge for cultural sector actors across the entire country and a current focus for Goethe-Institut efforts. This has found expression in theater projects and youth initiatives, among other things. Cooperative and process-oriented work is indispensable when it comes to addressing these kinds of social issues. We still endeavor to present works of German literature, art and music in the form of concert tours, readings and exhibitions, but German-Ukrainian co-productions have taken on greater importance in light of the current challenges facing Ukrainian society. Bilateral initiatives such as such as the “Heroes” exhibition in Kyiv or the “Depeche Mode” theatrical performance in Kharkiv (both staged in 2015) contributed to this process, while also helping to raise awareness of the GoetheInstitut’s work in Germany itself. www.bunews.com.ua

German media and the Ukraine crisis

How have German journalists reacted to the crisis sparked by Ukraine’s Euromaidan Revolution?

Since early 2014, Germany has been a key battleground in the international information war waged over Russia’s armed intervention in Ukraine. Berlin has led the EU’s united response to the crisis and has been instrumental in maintaining sanctions, but Germany has also witnessed the rise of the so-called “Putin Versteher” or “Putin Understander” community that has sought to explain or excuse Russian aggression in Ukraine. Business Ukraine magazine invited German correspondents Benjamin Bidder of Der Spiegel and Alice Bota of Die Zeit to share their impressions of the German media’s response to the headlinegrabbing events in Ukraine.

Prior to the start of the Euromaidan protests in 2013, Ukraine suffered from a very low international profile. What impact has this previously low profile had on German media coverage throughout the Ukraine crisis, and how has this coverage evolved over the past three years?

Benjamin Bidder: Ukraine had previously been a closed book for the West in general, both in terms of politics and media. German business generally wants more coverage of interesting investment markets like Russia. Ukraine was never particularly appealing for German investors because it was viewed as high risk with high corruption, with rather lower returns from the domestic market due to low incomes.

Reporting on Ukraine since the beginning of the Euromaidan protests has suffered from a lack of understanding about Ukraine, leading to some extremely superficial coverage. Initially, almost every German news outlet ran feature articles about “Klitschko’s hardest fight”. While I do sympathize with him, it was already pretty clear in 2013 that there were figures with much more influence on the situation than Vitaliy Klitschko himself.

Another example of this superficial coverage was the characterization of “proRussian President Yanukovych”. While he clearly enjoyed closer ties with Russia than the West, Yanukovych was primarily a proYanukovych politician. In reality, his rela38

tionship with the Kremlin had always been a very difficult one. Nevertheless, many in the German media began coverage of the Euromaidan protests by painting a blackand-white picture. The Russian guy was the problem, whereas the Western guy (Klitschko) would fix it. We now understand that ‘fixing Ukraine’ is a very complex task, but in the early days of Euromaidan, there was a huge deficit of reporters with knowledge of Ukraine. Things have naturally improved since then, largely because so many German journalists have spent time in Ukraine.

Alice Bota: The majority of the German media was unprepared for the events that

have taken place in Ukraine since November 2013. There was a lot of Ukraine coverage after the Orange Revolution and some more during EURO 2012, but then it died down. Very few German media outlets had correspondents covering Ukraine on a regular basis. There were hardly any correspondents permanently based there. There was a lack of deeper knowledge and understanding of the history of Ukraine. Since then, the situation has improved. German journalists were on the ground during Euromaidan. They covered the annexation of Crimea and the beginning of the war in east Ukraine. However, it is too early to say how significant these changes will prove in the www.bunews.com.ua

As the crisis stretches on and becomes less of an immediate threat to European stability, is it becoming more difficult to interest German editors and media managers in Ukraine-related content?

Benjamin Bidder: On the one hand, there is certainly less breaking news related to Ukraine. As cynical it may sound, even the periodic eruptions of fighting in the east of Ukraine are no longer considered particularly newsworthy. Nevertheless, audiences and editors alike are – for the first time for years – highly interested in background information. They want Ukraine explained, maybe because of the lack of explanation we experienced until Euromaidan happened. The challenge for German media correspondents is to find interesting stories that help to explain Ukraine. For example, we recently produced a feature article about Ukraine’s young reformers, while my colleague Christian Neef ran a four-page portrait on Nadia Savchenko.

Alice Bota: A: It is true to say there has been a noticeable decrease in the attention paid by the German media to the conflict in eastern Ukraine and the reforms taking place in the country. The attention span of the German public and the German media appears to have been exhausted: there is neither a full-scale war nor peace in eastern Ukraine. From a macro perspective, not much has changed over the last two years. The public is getting used to the concept of ‘unrest somewhere over there in the East.’ This is unfortunately part of the Russian strategy. Eventually, people will get used to situation that would normally be regarded as unacceptable. This strategy is proving successful. It is our responsibility as journalists to keep covering the issues regularly.

September 2016

Much has been said about the prominence in Germany of “Putin Versteher” or “Putin Understander” sentiment promoting compromise solutions and attempting to rationalize the Kremlin’s conduct. What kind of impact has this had on German media coverage of events in Ukraine?

Benjamin Bidder: I see myself as a Russia understander. But I’m also a Ukraine understander. Unfortunately, people tend to confuse “Verstehen” (understanding) with agreement. For the last seven years as a correspondent in Moscow, I have tried to understand and explain a lot that I personally did not agree with. Understanding the true situation is the basis for any good analysis, and for adopting the right policies. There is indeed a rather large and influential group of self-styled “PutinVersteher” in Germany. Many of them see Germany’s and Europe’s relationship with Russia as a battlefield within a much larger conflict. Many dream of a reorientation of Germany and the EU, meaning a drift away from the United States. Interestingly, they usually have no understanding on what is actually going on in Russia or Ukraine.

They simply believe Putin is right, because they want to believe it.

Alice Bota: I don’t find this term very helpful. It is ambiguous and is often misused in debates. Typically, it is a way to accuse someone falsely, or it serves to trivialize a bigger issue. The real question should be whether we are reverting to the “Realpolitik” of the Cold War era, or whether our understanding of international relations has shifted since 1989. Should Germany be focusing intensively on bilateral relations with Russia, or should the focus also be on Russia’s neighbours and the need to strengthen EU policy? The term “Putin Versteher” implies that those who are critical of Putin’s policies somehow lack understanding, when in fact it is quite possible to understand him and his motives without accommodating him and his goals.

There is indeed a strong pro-Russian lobby in Germany for both economic and cultural reasons, and their impact is huge.

However, if you label somebody a “Putin Versteher”, you effectively end the discourse at the very beginning of the argument. I prefer to put all labels to one side.

Let’s discuss specific things over and over again, like Russia´s role in eastern Ukraine and the Kremlin’s attempts to destabilize Ukraine. Sometimes it is tiresome, sometimes it is upsetting, sometimes it seems like a waste of time. But in the end, it is absolutely essential.

germany in ukraine

long term. Some media outlets have opened offices in Kyiv, but most have not done so due to economic constraints. I try to cover Ukraine by paying regular visits, by spending a lot of time reading up and talking with Ukrainians. One of the other problems with Ukraine coverage has been the publication of outspoken opinions by people who lack the necessary local knowledge and simply reproduce clichés. This is more of a general journalistic problem than a German problem.

The fake ‘Our Lisa’ sexual assault story promoted by Kremlin media in early 2016 was likened by many to the kind of information attacks frequently used against Ukraine in recent years. Was this incident perceived as a wakeup call by German media regarding the dangers posed by Russian information warfare, and has it led to any changes in attitudes towards narratives originating in Russia?

Benjamin Bidder: Yes and no. It definitely was a wakeup call for the broader German public and for our government. On the other hand, the Lisa incident also showed that our society is pretty strong. Yes, there were some protests in Germany across dozens of cities. However, no more than 10,000 people joined these protests in total. So on the one side, this event showed how vulnerable Germany’s Russian-speaking community is. On the other side, 10,000 out of a mass of more than three million Russianspeakers is not actually so bad.

Alice Bota: Yes, the Lisa case shook many Germans, especially politicians, to the core. It laid bare some complex issues of mistrust and, in some cases, highlighted the failed integration issues within Germany’s Russian-speaking community.

Largely for these reasons, many people interpreted the Lisa incident as part of Russia´s hybrid war against the West. In this particular case, I do not find such terminology very helpful because it trivializes events in Ukraine. Russia is waging a hybrid war against Ukraine, not against Germany. There have clearly been numerous attempts to influence the German public, to misinform, and to confuse audiences by offering multiple alternative versions of events, but this is not a new phenomenon.

The Central and Eastern European countries have been facing this Russian strategy for years. However, very few politicians in the Western countries paid attention to these developments prior to 2014. Now that Russia has increased its information

39

germany in ukraine

efforts and Germany has faced disinformation aimed at the top level of diplomacy, Europe is trying to cope with the problem by debunking myths. However, these Western attempts have not had much success so far. The effect of all this debunking is limited. To put it in Churchill’s words: “A lie gets halfway around the world before the truth has a chance to get its pants on.” Crucially, we cannot react to propaganda by using counter-propaganda. As members of open, democratic and pluralistic societies, we cannot defend our values by using the same methods we condemn. Of course, we find ourselves stuck between a rock and a hard place because Russian propaganda deliberately exploits this pluralism, but we must remain true to our principles.

The Ukraine conflict has exposed the vulnerability of the entire Western world to information attacks, leading some to declare a crisis of confidence in the mainstream media.

Does the relative success of Russian information warfare signal a decline in the credibility of traditional international media?

Benjamin Bidder: I would disagree that Russian informational warfare is a real success. If you look at the German-language spin-off version of RT, it is real trash TV! If you already believed in the big “CIABilderberger-Nato-conspiracy”, you would probably like it. But Russian propaganda has so far failed to reach a broader, saner public. Even the English-language service of RT, which runs some clever propaganda, has proved to be pretty limited in influence. If you check the worldwide reach of their webpage with similarweb or other services, you can see their audience is not as big as you might expect given the budgets involved and the hype surrounding the channel. Nevertheless, Russia has had some success where they have tried to amplify the self-doubts existing in Western societies. That is why they cover things like the NSA/Snowden story all of the time, as well as the EU migrant crisis. They do exploit the West’s weaknesses. The easiest way (and perhaps the only effective way) to fight against this is to solve our own problems.

Alice Bota: A: The so-called crisis of confidence in the Western media is a much broader issue than the supposed success of the propaganda produced by Russian state-owned 40

media. Nevertheless, the impact of this propaganda is indeed visible. Traditional international media is facing many problems as the media landscape changes and audiences evolve all over the world. As a result of these changes, we find ourselves in what many people are calling the “Post-Fact Age”. Russia has seized this opportunity and mastered the art of disinformation. The Russian reaction to the international investigation into the MH17 crash demonstrates this process quite vividly, with the facts established by the independent probe simply ignored by numerous prominent Russian state media outlets. This changing environment creates enormous challenges for journalists but blaming Russia will not help to deal with the “Post-Fact” phenomenon. We have to keep on investigating, researching and reporting. Ultimately, it is a matter of keeping calm and carrying on.

At present, international coverage of Ukraine is understandably dominated by the hybrid war with Russia and the postMaidan fight against endemic domestic corruption. Nevertheless, there is much more to the country than these two key themes. Which other aspects of contemporary Ukraine do you think are worthy of greater international attention?

Benjamin Bidder: Ha! I could offer pages of advice here! In terms of business coverage,

the big story is the revival of agriculture in Ukraine. Socially, things like the peaceful multiculturalism of Odesa would make great stories for international audiences.

I encountered over one hundred different nationalities in a single Odesa school!

Alice Bota: A: Reducing any country to the context of revolution and war is tragic and wrong. There is so much more to write about. I would definitely mention the outstanding authors Ukraine has to offer, many of whom are becoming more and more popular among German readers.

There is a vivid art scene and an impressive amount of festivals such as the annual international film festival in Odesa. However, for now the war and the post-Euromaidan are the most attention-grabbing events for Ukraine. As such, we cannot neglect them.

We have to closely follow the developments in eastern Ukraine and monitor the process of reforms. Even Ukrainian writers like Serhiy Zhadan, Andriy Kurkov, and Kateryna Mishchenko deal with the topic of war in some of their recent publications. The upcoming years will be crucial for Ukraine. The outcome of the war in the Donbas and the anti-corruption fight will determine the future of Ukraine, so for the time being, these subjects should rightly remain the primary focuses for journalists covering Ukraine.

About the interviewees: Benjamin Bidder was the Moscow correspondent for Der Spiegel from 2009 until September 2016. He recently joined the publication’s economics and business team and will continue to cover Russia and Ukraine from an economic perspective.

Alice Bota is Head of the Moscow office of Die Zeit. She has been reporting on Ukraine since 2013 and has travelled extensively in the country covering Eurommaidan, the annexation of Crimea and the war in the Donbas.

www.bunews.com.ua

Vision 2020 - re-energizing Ukraine’s pharmaceutical sector Andy Hunder, President of the American Chamber of Commerce in Ukraine

“Your efforts have saved thousands of lives,” commented President Petro Poroshenko when granting Ukrainian citizenship to Michigan native Ulana Suprun on July 11th, 2016.

A fortnight later, Mrs. Suprun was appointed Ukraine’s acting Minister of Health, to the delight of many in civil society and the anti-corruption supporters. Ulana, a Detroit Clinical Professor in Pathology, moved to Ukraine with her husband during the Revolution of Dignity and launched Patriot Defense, a Non-Governmental Organization that has trained over 25,000 medical professionals and soldiers with first aid and trauma treatment over the last two years. She now faces a massive job in taking on one of the most challenging jobs that you can imagine - managing a system plagued with endemic corruption, the world’s second highest death rate, and an average life expectancy of 66 years for men. “We’re doing this for future generations. It’s going to be hard, nobody is saying this is going to be easy,” said Dr. Suprun.

Vision 2020

The American Chamber of Commerce in Ukraine has for over a decade been engaged in developing recommendations on how the healthcare sector should be reformed. Over a year ago we published a report on the inno2016 Chamber Official Service Providers:

September 2016

vative pharmaceutical industry “Vision 2020: Roadmap for Development of the Pharmaceutical Sector in Ukraine” together with PwC Ukraine and APRaD (Association of Pharmaceutical Research and Development). This analytical paper outlines specific key steps needed to reboot the national pharma industry: create favorable conditions to conduct clinical research (trials); further increase the efficiency and transparency of the system of registration of medicinal products; develop and finance sufficiently reimbursement system of medicinal products; modify hospital procurement regime of medicinal products as well as enforce decent protection of intellectual property rights.

By implementing all abovementioned steps, Ukraine will significantly improve the level of healthcare services and ensure continuous inflow of foreign direct investment into pharma.

Policy road map

The report presents a vision of the future, showing how the health of patients in Ukraine can be advanced with improvements of the efficiency of the healthcare system through development of the pharmaceutical sector. We base our approach on research that examines how best to strengthen the pharmaceutical industry, offering an analysis of ways to bring Ukraine into the top ranks of leading countries in biopharmaceutical innovation. While much work lies ahead, the report provides an achievable policy road map to guide policy-makers and industry.

Critical to the success of this ambitious strategy is the establishment of effective dialogue between the pharmaceutical industry and the government. This is the indispensable first step. Our road map calls for joint efforts aimed at improving the regulation of the pharmaceutical industry in Ukraine.

Agreeing on common goals and implementing policy changes during the next few years will

benefit Ukrainian patients and the global competitiveness of the strategic biopharmaceutical sector in the Ukrainian economy.

Among the causes of the premature mortality in Ukraine the cardiovascular diseases account for 47.5% of the total number of deaths, while neoplasms account for another 14.3%. Thus, these two groups of disease account for approximately 62% of the economic losses associated with the premature mortality in Ukraine.

Improvement in prevention, diagnosis and treatment of these groups of the diseases could bring significant contribution to both health and economy of Ukraine.

Health is wealth

Good health allows us to focus on professional goals, achieve success in personal life and make a contribution to the development of our own communities. On the national level, healthcare industry plays a vital role for the country’s economic development. Quality healthcare provides for increase in productivity, and, as a result, positively impacts revenues of enterprises. Rapid development of highly intellectual sectors such as pharmaceutics ensures transfer of know-how, usage of modern technology, positions the country as the brain basket and creates grounds for the inflow of additional tax revenues. Advanced pharmaceutical industry translates into improvement of key life indicators.

Together we are striving for Ukrainian citizens to have greater access to modern and effective medicine, obtaining the benefits that will come with improvement in healthcare. The Ukrainian pharmaceutical industry will become more attractive for investors who will fuel Ukraine’s growth as a leader in pharmaceutical innovation.

The Vision 2020 report is available in English and Ukrainian at www.chamber.ua

3DQWRQH 8 &

& 0 < .

41

Ukraine in Fashion

From the pages of Vogue magazine to the catwalks of Paris and Milan to the wardrobes of Hollywood celebrities and European royalty â&#x20AC;&#x201C; how Ukrainian fashion conquered the world in 2016.

Fashion inspired by traditional Ukrainian styles: designer Yuliya Magdych is one of a number of Ukrainian fashion designers to achieve international recognition via creations rooted in her countryâ&#x20AC;&#x2122;s sartorial heritage.

50

www.bunews.com.ua

fashion business

September 2016

51

Vogue magazine hailed Ukrainian designer Ksenia Schnaider’s ‘Demi cut’ denims as autumn 2016’s ‘coolest new jeans’

52

www.bunews.com.ua

ago, Ukraine has rarely been out of the international headlines. Media coverage has largely focused on the traumatic and tragic events surrounding the country’s anti-corruption revolution and hybrid war with Russia. However, this increased exposure has also served to draw attention to other aspects of Ukrainian identity.

One of the big winners has been the Ukrainian fashion industry, which has capitalized on heightened international attention to become one of the surprise hits of the past few years. With initial outside curiosity piqued by the post-Euromaidan explosion in patriotic streetwear, 2014 saw many early international adopters of Ukrainian fashions sporting variations on the traditional Ukrainian vyshyvanka embroidered shirts. This trend has since expanded to include everyone from Hollywood film stars and TV idols to European royalty. Indeed, when Holland’s Queen Maxima stepped out at the summer 2016 Rio Olympics in an embroidered dress by superstar Ukrainian designer Vita Kin, she was more copycat than trendsetter.

ever. Kyiv currently plays host to two regular fashion week events, both of which run shows twice a year. Once seen as somewhat parochial events populated by local celebrities and wealthy oligarchs keen to soften their public image, fashion week events in Kyiv now attract journalists and buyers from across the world, all eager to identify new talent emerging along the Ukrainian fashion conveyer belt.

From Paris catwalks to Vogue magazine

Ukrainian designers did not simply appear out of nowhere in 2014.

Anyone who has spent any time in Kyiv or the country’s other large cities will confirm that the local population pays great attention to personal presentation and follows the latest international trends closely, while also showing a flair for elegant originality. This passion for fashion, married with the tough economic realities of the post-Soviet era, has helped to fuel the growth of a vibrant domestic Ukrainian fashion scene populated by ambitious local designers and small-scale brands.

The Ukrainian fashion industry has been maturing and expanding for many years, although it previously did so off the international radar and with a largely domestic clientele in mind. The international attention generated by the geopolitical turbulence of the past three years has encouraged the international fashion industry media to take a closer look at what the Ukrainian scene has to offer. Ukrainian designers have seized this long-awaited opportunity, using the newly discovered spotlight to emphasize the vivid and unique aesthetics of Ukrainian design while also showcasing their competitiveness on the international marketplace. Euromaidan give a new generation of Ukrainians their political voice, but it also helped Ukrainian fashion designers express their point of view and creativity.

Since 2014, the Ukrainian presence at international fashion weeks and other prestige podiums has expanded rapidly. Three years ago, Ukrainian brands Paskal (founded by Yulia Paskal) and the eponymous Lena Lumelsky were among those to appear on the shortlist for the prestigious annual LVMH Prize for Young Fashion Designers. In 2015 Anton Belinskiy made the list, while in 2016 it was Anna October’s turn to fly the flag for Ukraine. As well as competing for major international awards, Ukrainian designers are also increasingly featuring on the catwalk. Paskal put on a show in the French capital during the first day of this year’s Paris Fashion Week, while the brand is also present in the US, Canada, Italy, the UK, Belgium, China, Georgia, Japan, Korea, and a host of additional international markets. Stunning redheaded Kyiv designer Anastasiya Ivanova has also confirmed plans to participate in New York Fashion Week with her Spring/Summer 2017 collection.

The Ukrainian catwalk invasion of the past few years has been impressive, but perhaps the biggest shift has been in the increasing amount of column inches and photo spreads dedicated to Ukrainian designers in the international fashion press. Industry leaders like Vogue magazine, NotJustALabel, and fashionista.com have regularly gushed over the latest Ukrainian designs, while the mainstream media has also taken note. Articles on the rise of the Ukrainian fashion industry have appeared in leading UK newspapers such as the Guardian, Daily Mail, and Daily Telegraph.

Elsewhere, international academics have been quick to identify the potential broader implications of this trend. “From Vita Kin to X’U by Ksenia Schnaider, the world has fallen in love with Made-in-Ukraine fashion offerings. Perhaps fashion can become a staple of Ukraine’s diplomacy in the future,” commented Stephan Rabimov, Director of Social Media and Fashion Journalism at Academy of Art University in San Francisco.

The foundations of Ukraine’s fashion scene success remain very much in Kyiv. At present, ‘Made in Ukraine’ brands are seen as must-have items in the Ukrainian capital, with competitively low prices combining with patriotic passions to make local labels more popular than

Despite the rising popularity of a diverse range of Ukrainian designers, notions of Ukrainian fashion inevitably remain intertwined with traditional Ukrainian vyshyvanka-style embroidered clothing. The ethno-chic style epitomized by Ukraine’s vyshyvanka costumes has

The rise and rise of Ukrainian fashion

Kyiv: Ukraine’s fashion capital

Embroidered ethno-chic

“The current international focus on Ukrainian brands has given the domestic fashion industry a major boost. It will inspire the next generation of Ukrainian designers to become globally competitive and raise the standards of the entire industry”

September 2016

fashion business

: Since the start of the Euromaidan protest movement three years

: 53

Kin and Yuliya Magdych, but it would be unfair to suggest that today’s generation of Ukrainian designers are overly reliant on this timeless source of inspiration. Ksenia Schainder’s innovative and original split denim jeans (known as a ‘Demi cut’ style) have been hailed by Vogue magazine as Autumn 2016’s ‘coolest new jeans’, while German web portal modepilot.de also dedicated an article to ‘those jeans’. Such exposure has helped to make Kyiv-based Schnaider one of the hottest names in world fashion despite the fact that her most popular creations are far away from the embroidered elegance more traditionally associated with Ukrainian designers.

Nevertheless, vyshyvanka-style items are undeniably popular, helping a number of Ukrainian designers to establish global presences in recent years. Vita Kin has probably enjoyed the most international success, and is currently available in North America, the UK, France, Italy, Monaco, Germany, and beyond. She is a favourite with celebrities and, as already mentioned, members of the Dutch royal family.

Fellow vyshyvanka devotee Yuliya Magdych is the first Ukrainian designer to be represented at the prestigious Selfridges department store in central London. In a summer 2016 profile interview with Vogue magazine, she explained her passion for Ukraine’s ancient vyshyvanka style as a tribute to the country’s colourful heritage. “Ukraine is a very mystical country with a lot of traditions,” she explained.

Numerous additional designers have managed to develop successful international businesses by adapting Ukraine’s traditional embroidery styles to contemporary tastes, producing everything from accessories to cocktail dresses featuring signature ethno-chic elements that are both uniquely Ukrainian and inescapably contemporary. The list includes the likes of Olena Dats, Roksolana Boguska, and Lviv icon Oksana Karavanska.

An increasingly big business

The growing popularity of Ukrainian designers both at home and abroad is fuelling the growth of the fashion business in a country where designers once depended almost entirely on individual sales to a handful of wealthy clients. The Ukrainian fashion industry is now becoming an increasingly profitable and professional business, with leading retail outlets dedicating growing floor space to Ukrainian designer labels. Leading Ukrainian retailer Helen Marlen Group is one of many to increase the space allocated for Ukrainian designers in recent years. “The quality and urgency of a collection is very important for us, as well as the professionalism of the whole design team,” says Helen Marlin Manadarin buyer Elena Paschenko. “We currently stock Ukrainian brands including Litkovskaya, Poustovit, Anna K and Sleeper. Our top Ukrainian seller in 2016 has been Anna October.”

The most prominent retail chain on the domestic Ukrainian fashion brand scene is the second and ‘more democratic’ line by celebrity designer Andre Tan, named A.Tan. Currently available via 30 outlets in Ukraine, the brand has plans to expand into Poland and the US. Ukrainian industrial fashion brand TAGO has two showrooms in Ukraine and operates online, selling their products in Russia, France, Italy, Germany, UAE and Los Angeles. TAGO has chosen the business strategy popularized by H&M, presenting itself as a mass-market brand with affordable prices featuring capsule collections produced each season in partnership with well-known Ukrainian designers.

Other commercially successful Ukrainian brands include Katerina Kvit and T.Mosca. The quirky ‘The Coat’ brand by Katya Silchenko has September 2016

recorded impressive sales on the Ukrainian domestic market while branching out internationally to Korea, Italy, Kazakhstan, England, and the US. In addition to the ever-growing list of Ukrainian designers based in Ukraine itself, there are number of brands with Ukrainian roots that have established themselves abroad. Natasha Zinko boasts a London boutique offering ready-to-wear designer items and jewelry. She has a private showroom at Paris Fashion Week and her designs are available at 80 stores worldwide. Meanwhile, American-Ukrainian fur-based brand Blood & Honey is registered in New York City and has a strong presence throughout North America, but also exhibits in Ukraine and around the world.

fashion business

: been beautifully exploited by popular Ukrainian designers like Vita

Brand UA: the next generation

The list of Ukrainian designers making their mark on the international fashion scene looks set to grow further in the coming years as industry opinion-shapers continue to flock to Kyiv in search of the next big thing. Milan-based La Rinascente buyer Fulvia Galbusera says: “when I first attended Mercedes-Benz Fashion Days in Kiev in March 2016, I was positively surprised by the choice on offer and decided to dedicate a whole corner to Ukrainian designers which will open during Milan Fashion Week. I hope our clients will support this initiative.”

Given the inherently fickle nature of the international fashion industry, Ukraine’s moment in the limelight will not last forever. Even so, it is exciting to see modern Ukraine receiving recognition as a creative and innovative country with a major contribution to make to global style trends. The current international focus on Ukrainian brands has given the domestic fashion industry a major boost. It will inspire the next generation of Ukrainian designers to become globally competitive and raise the standards of the entire industry.

About the author: Ana Varava is Chief Editor of L’Officiel Ukraine. She is also an experienced fashion business consultant and professional image-maker.

55

Ukraine Chic: Vsi. Svoi sales assistants Viktoria Khomenko and Serhiy Tamorka strike a pose outside the store on Kyivâ&#x20AC;&#x2122;s downtown Khreshchatyk Street.

(Photo: Serhiy Kustov) 56

www.bunews.com.ua

ukrainian fashion

Selling Brand Ukraine New Kyiv department store taps into rising public demand for Ukrainian designer fashions

The opening of ‘Vsi. Svoi’ (literally ‘All. Ours’) department store in downtown Kyiv in mid-September generated major media buzz. The store, which stocks the wares of 150 Ukrainian clothing, shoe and accessories designers, was a focus of attention for Ukrainian mainstream

September 2016

media and social media alike, highlighting the current wave of interest in the domestic fashion scene. This enthusiasm has translated into something of a consumer bonanza for Vsi. Svoi, with many of the store’s brands rushing to restock their outlets on a daily basis as

limited stocks of previously niche products sold out in record time.

Many commentators have attributed the current craze for Ukrainian fashion brands as a product of two key factors: the wave of post-Euromaidan patriotism that has gripped Ukraine since :

57

: 2014, and penny-pinching brought on by

economic hardships and the sharp devaluation of the national currency. Vsi. Svoi founder Anna Lukovkina believes there is much more to the trend, pointing to the high quality of Ukrainian fashion brands and the ability of local designers to respond rapidly to the ever-changing tastes of Ukrainian consumers. “In the immediate aftermath of Euromaidan there was a period when people would buy anything featuring patriotic symbols regardless of the quality, but this did not last long. The brands we sell are popular because they are fashionable, not merely because they are Ukrainian,” she says.

From brash brands to an emphasis on originality

Lukovkina also sees the popularity of Ukrainian designers as a reflection of broader changes in Ukrainian society. She identifies a shift away from the passion for ostentatious international designer brands that dominated street-level Ukrainian fashion for much of the 1990s and 2000s. “Wearing Ukrainian brands has become stylish and as-

58

pirational. People are now more interested in originality and subtlety than showing off expensive labels.” Nevertheless, the location of this homage to contemporary Ukrainian fashion is impressively upmarket. Vsi. Svoi is housed in one of the imposing and majestic Stalinist buildings lining Kyiv’s Khreschatyk Street – the most exclusive retail real estate in the Ukrainian capital.

Inside, the store offers a dizzying array of items set out over three floors. Thick winter knitwear and iconic pop art T-shirts line up alongside funky hats, leather bags, lingerie, shoes and all manner of accessories. The brands present in the store come from across Ukraine. Around fifty percent are Kyiv-based, with major regional capitals like Odesa, Kharkiv, Lviv and Dnipro each accounting for half a dozen designers each. Prices are relatively competitive when compared to many of the major international fashion brands, but this is not a destination for bargain hunters or budget dressers. Instead, during its first weeks in business, the store attracted a steady stream of stylishly attired young ladies, members of Kyiv’s burgeoning hip-

ster community, and a significant contingent of expats and tourists.

From Facebook post to department store

The backstory behind this Ukrainian fashion phenomenon is a tale straight out of startup central casting. Like so many stories of entrepreneurial success in post-Euromaidan Ukraine, it all began with a post on Facebook. 32-year-old Lukovkina recalls how she initially set up a page on social media in early 2015 in a somewhat speculative bid to bring together the many local designers who were then plying their trade in relative isolation. The response was immediate and emphatic, leading to the creation of monthly fashion markets at the D12 Gallery in central Kyiv. These events grew at such a pace that she soon introduced additional markets focusing on home décor, Ukrainian gastronomy, and locally produced items for children.

The popularity of these fashion fairs inevitably attracted the attention of established retail industry players, leading to an invitation to set up the new department store now standing on Kyiv’s central strip. Just

www.bunews.com.ua

September 2016

manding prepayment. This helped get the initial concept off the ground, paving the way for today’s empire building ambitions.

Growing waiting list of designers

There is now a significant waiting list of Ukrainian fashion designers looking to join the Vsi. Svoi success story. Lukovkina has 500 brands currently queuing up, but says she is cautious of over-extending her resources or exhausting her market by growing too rapidly. This over-supply raises the question of where all these designers were before Lukovkina began her efforts to gather them under a single roof. Some are relative newcomers to the industry, having gone into retail production since 2014.

However, others have been in business for many years or even decades. Most had previously worked from their own showrooms, boutiques or apartments. Lukovkina says the quality was always there, but explains that many small-scale brands lacked business models or the ability to market themselves. This continues to be problem for Vsi. Svoi, with many of the participating design-

ers struggling to bring the necessary business savvy to accompany their undoubtedly talents. “We are dealing with a lot of very creative people who may not always have the necessary professional skills,” she says.

“Our goal is to take the industry to the next level of professionalism. We want to help designers turn the creative process into a business.”

ukrainian fashion

over a year after first setting out on her fashion odyssey, Lukovkina began drawing up plans for an entire department store.

The rapid expansion of the Vsi. Svoi brand has been a veritable rags to riches rollercoaster that speaks volumes about the kind of opportunities in the new Ukraine for ambitious entrepreneurs prepared to think outside of the box. Lukovkina says she can still vividly recall the hardships she faced during the economic shocks of early 2014, when she regularly struggled to fill her car with petrol. She now finds herself overseeing a booming fashion empire at one of Ukraine’s most exclusive addresses, and is already working on a concept for online sales with a view to launching a website operation in early 2017.

Vsi. Svoi has managed to grow without the support of any major investors. One of the secrets of Lukovkina’s success is her previous career as an events manager. Years of organizing everything from business forums to rock concerts helped her establish a professional network of colleagues who were prepared to provide essential materials such as furniture and flyers without de-

About the interviewee: Anna Lukovkina is the founder the ‘Vsi. Svoi’ retail brand uniting Ukrainan fashion designers

59

sport

Sheva’s Greatest Challenge?

Legendary player turned novice coach Andriy Shevchenko must get best out of Ukraine’s stars ing of ‘playing for the fans’. This passion is a very important element of British football.

What is your response to those who question your appointment due to your lack of managerial experience?

Managing a club side and coaching the national team are very different things. My long career as a player in the national team is my qualification for the job. I know how this team works and I understand how international football works. I have also recruited highly qualified professionals to join my coaching staff. We plan to restructure the entire national football organization, incorporating all the different age categories so that when players make the breakthrough into the senior squad, they are familiar with our concepts and ready to meet our requirements.

Sheva selfies still in demand: Andriy Shevchenko remains a national hero but his decision to accept the Ukrainian manager’s job could end up tarnishing his reputation (Photo: Evgeny Kraws) Ukrainian football icon Andriy Shevchenko is the most celebrated player in the country’s history. Nevertheless, his recent appointment as Ukrainian national team manager has raised eyebrows due to Shevchenko’s complete lack of prior management experience.

As he approaches his new task, Shevchenko can at least count on relatively low expectations. The former European Footballer of the Year took up his new position in late summer 2016 following the national side’s dismal showing at Euro 2016 in France. Even this was an improvement on previous campaigns – since entering international competition in 1996, the Ukraine team has only qualified for one European Championship and a solitary World Cup Finals, despite being able to call upon many of the biggest stars in East European football.

Shevchenko began his reign without any major fireworks, securing a credible 1-1 home draw against Iceland in the first match of Ukraine’s World Cup 2018 qualification campaign. His second game in charge is likely to be a tougher challenge – an early October visit to Turkey that could set the tone for the rest of the qualification campaign. Will Shevchenko be able to get the best out of the notoriously underperforming Ukrainian national side? The ex-Dynamo Kyiv, Milan and Chelsea star spoke to Evgeny Kraws about his vision for the team and explained why he is unmoved by the criticism surrounding his appointment.

You played for some of the most legendary managers in football history. What lessons have you learned in the art of management from the trainers you worked under as a player?

As a young player, (Dynamo Kyiv coach) Valeriy Lobanovskiy taught me the importance of attention to detail and consistency. Nothing was too small or minor in our preparations – everything counted towards getting the right result. In Italy, I was able to gain great tactical experience.

Teams would often change their tactics several times during a single match. My time with Chelsea provided me with a better understand60

By taking on the job of national team manager, you are opening yourself up to inevitable criticism if things do not go according to plan. Is there not a danger that you could tarnish your reputation as one of Ukraine’s greatest football icons?

One of the most ambitious targets we have set ourselves is to develop a productive relationship between the national team, the fans, and the media. We have already introduced open training sessions where fans and the media can observe the team’s preparations. I will also be asking at least four players to talk to the press after every match. We cannot allow ourselves to lose sight of the fact that football is all about the fans. There is no other way of looking at it.

Ukraine’s performance at Euro 2016 was extremely disappointing.

Does the national team need a complete overhaul?

If we put our emotions to one side and look at Ukraine’s Euro 2016 campaign clinically, the verdict we reach should not be so damning. The only complete failure was the game against Northern Ireland, when the team clearly failed to come up with any new ideas. This suggests a lack of dialogue between the players and coaches. However, the games against Germany and Poland were interesting encounters full of exciting moments and examples of the kind of football the current Ukraine squad is capable of producing. Clearly, the results were unsatisfactory. However, Euro 2016 provided plenty of room for constructive analysis.

Who do you see as Ukraine’s toughest opponents in your World Cup 2018 qualification group?

Ukraine is in a very strong group. Crucially, all the teams appear evenly matched. There are bound to be plenty of surprise results because there is so much quality. Four of the teams in the group played at Euro 2016 (Ukraine, Turkey, Croatia and Iceland). All of our opponents have wellestablished squads with consistent playing styles. This gives them an advantage over Ukraine because our squad is currently going through a period of inter-generational change. Restrictions on where we can host games will also prevent us from playing across the country. It is not clear whether we will be able to play in Kharkiv and Dnipro due to their proximity to the conflict zone in the Donbas. The Lviv Arena is also not an option because of sanctions imposed following crowd misconduct in 2013. www.bunews.com.ua

Global gaming community discovers

Ukraine’s fairytale folklore heritage

Lesya Ukrainka-inspired game brings Ukraine to audiences more familiar with Cossacks and Chornobyl

American game developer Colabee Studios has recently released a game based on Ukrainian literary legend Lesya Ukrainka’s ‘The Forest Song’. News of the game spread across the Ukrainian national media and delighted diaspora communities worldwide. But does this surrealist adventure, based on a fairy drama from over a century ago, have any chance of success? Could its interpretation of Ukraine’s traditional cultural heritage capture the imagination of the global gaming community like Ukraine’s headline-grabbing postapocalyptic gamer hits S.T.A.L.K.E.R., Metro 2033, and Survarium, or achieve the popularity of the Cossack game series? With a host of indie awards under its belt following the preview in March earlier this year, ‘The Forest Song’ is gaining traction, not just as a game, but as an innovative social entrepreneurship project whose philosophy seeks to bring the forgotten folklore of Ukraine to the global audience.

‘The Forest Song’ is a videogame adaptation of Lisova Pisnya, the eponymous fairy drama in three acts by the most prominent female writer in classical Ukrainian literature, Lesya Ukrainka. Players assume the role of a peasant who has an extraordinary encounter with an elusive and powerful Forest Spirit.

Their connection opens the player to a spirit world and sparks a dramatic clash between the supernatural inhabitants of the forest and the world of humans. It is a first-person adventure inspired by traditional folklore of the Polesia region of Eastern Europe, a place of everlasting forests, vast groves and valleys, crystal lakes, and meandering rivers that still remembers the legends of ancient times.

This is not the first attempt to translate Slavic folklore into a gaming format.

‘The Witcher’ game series, based on Andrzej Sapkowski’s fantasy saga, is an ex62

ample of an established adaptation of Slavic lore, which gave rise to speculation on an eventual fantasy takeover of the CIS game-development scene, known predominantly for Chornobyl-inspired post-apocalyptic shooter survival horror games. The most successful of these, ‘S.T.A.L.K.E.R.’, based loosely on the Strugatsky brothers’ 1979 novel ‘Roadside Picnic’, gained worldwide acclaim for its original survival gameplay and captivating story, and enjoyed not only commercial success but also lasting appeal since its launch in 2007. Developed

by Ukrainian company GSC Game World for Microsoft Windows, it remains the textbook example of a Ukrainian game-development success story, conceived, developed, and launched by Ukrainians.

Ukraine’s global gaming pedigree

Today, companies such as GSC, Plarium, 4A Games, Frogwares, Playtech, Wargaming, Gameloft, Ubisoft, and Playtika UA (recently purchased by the Chinese) are at the forefront of the Ukrainian game-development scene, which is becoming more and more competitive despite the toughened economic climate and associated tech leakage. Meanwhile, it is estimated that there are around 100,000 Ukrainian developers worldwide, with only a small fraction of those employed by local companies. The rest form part of a global workforce of Ukrainians whose competitive skillset, work ethic, and adaptability make them an asset to international companies looking to hire.

The contribution of Ukrainian talent to major foreign productions is difficult to estimate, but is significant. Daniel Poludyonny, a seminal game developer with over 30 completed projects in his portfolio, says: “Ukraine is already globally www.bunews.com.ua

skills, and it is this academic training that is most often cited as one of the competitive features of Ukrainian talent. After that, he worked in Germany, moving to the US in 1999. As an artist, he took part in the creation of the SOCOM game series in Zipper Interactive and Sony Computer Entertainment America. But his best known work to date would become the BAFTA award-winning ‘Never Alone’, a game based on Inupiaq folklore of the Alaska Native people, produced in partnership between the Cook Inlet Tribal Council and E-Line Media. It is a touching puzzle-platformer video game that follows the adventure story of a girl and her Arctic fox companion, praised for its unique visual style.

Ethnography and IT innovation

‘The Forest Song’ is another such fusion of ethnography and IT development, conjuring its own inimitable world of fantasy. Materials for the game were gathered in the course of an ethnographic expedition to the Polesia region of Ukraine, led by Olena Ivanovska, Chair of Ukrainian Folklore in the Department of Philology at the Taras Shevchenko National University of Kyiv. In addition to providing invaluable information and context, she and her team facilitated interviews with key cultural experts throughout the region, including local residents captured on video sharing stories and lore. The trip made for a wellresearched, authentic narrative, as well as fascinating bonus materials. That Lesya Ukrainka’s work should be chosen at this time of political turmoil and warfare is also symbolic – she was a political and civil activist, a feminist, and a proponent of Ukrainian culture who was jailed for her attacks on tsarist autocracy. Promotional materials emphasized the suppression of traditional Ukrainian culture by the Soviet authorities.

The game features a living systemic game world in which its human and supernatural inhabitants follow their own goals and agenda. The game encourages players to explore connections and conflict between humans, nature and the supernatural world. This seems apt in a world increasingly riddled with environmental problems, globalization that threatens the survival of traditional culture, and migration issues. Producer, game designer, and analyst Volodymyr Yezhov comments: “Every continent has its own cultural traditions, and these include game consumption. Our culture is closely intertwined with that of Europe, its history and legends. Europe, meanwhile, has spread its culture around the world due to colonization. So the barriers for the cultural reception

of Ukrainian fantasy games aren’t too high.”

‘The Forest Song’ may bring much-needed focus to the challenges faced by Ukraine’s own development industry, especially the younger generation of developers. “What disappoints me is that in Ukraine, no-one would have believed in such a project,” says Igor Pospeshny, founder of GTP Media and GTP Indie Cup, a non-commercial game developer competition founded by his agency to encourage young independent talent.

Indeed, the problem of ensuring proper education of tech cadres in Ukraine is something that local developers have tried to solve. Pioneering game designer Aleksandr Khrutsky and artist Maya Veresen point to the drop in the general level of higher education in Ukraine since the 1990s. They also stress the detrimental effect the current war has had on Ukraine’s place on the global scene by forcing many of the established specialists to move abroad, squeezing Ukrainian projects out of CIS coverage, and discouraging international speakers from visiting. “Two major international conferences have been cancelled. Such events had previously provided great opportunities for artists like me to learn from world-level specialists like Jamal Jurabajev,” says Maya. Luckily, not everyone is staying away. In December 2016, Aleksandr Khrutsky and the team behind the Games Gathering conference will bring 32 lectures, workshops, and events to over 800 visitors.

cultural diplomacy

competitive, but the growth of this sector could be a lot higher if the government gave it better support by simplifying taxation measures for developers.

Believe me when I say that a guy who spends 40 hours a week behind a screen has very little patience for queuing in local government offices for days, filling out paper forms that make no sense.”

Perhaps the most fascinating aspect of the buzz around ‘The Forest Song’ is the fact that it is an American company pitching to a global market. But Colabee Studios’ interest in Ukrainian folklore is no accident: Co-Founder and Creative Director Dima Veryovka is a Ukrainian native, and the project became something of a personal ideological quest for him. “Ukrainian mythology has so much to teach us, but for people outside of Eastern Europe it has remained largely inaccessible. Having grown up surrounded by these magical tales, it is so exciting now to be able to share this part of my culture with gamers everywhere,” says Veryovka.

Veryovka’s story is in many ways emblematic of the archetypal Ukrainian developer. He graduated from the Grekov Odesa Art School and the St Petersburg Art and Industry Academy, where he developed his already considerable drawing

Commercially viable?

Will ‘The Forest Song’ become a success? Some experts insist that the only reliable indicator of a game’s success is sales – at least, whether the project makes enough revenue to fuel the creation of the next game. Other criteria include gamer reviews, industry awards, and features on international gaming websites. However, let us consider the shifting landscape of the games market.

In 2016 so far, free-to-play worldwide MMO revenue is USD 17 billion, while pay-to-play accounts for just over USD 2.7 billion. The emphasis on free games and open-access mobile gaming platforms means that indie companies and independent developers must invest in boutique-quality projects that have global appeal to keep up with the corporations. Colabee Studios offer a quality product that marries traditional storytelling with innovative visual means.

They also bring forth a progressive philosophy of cultural engagement, and their emphasis on authenticity and prior research may present an attractive model to game developers who want to produce a competitive product on an over-saturated global market.

Colabee Studios present themselves as ‘an international collective of game developers, storytellers and culture bearers’. This emphasis on culture sets them apart in the sprawling seas of game development.

The studio was founded upon the common belief that video games have the power to shape our world. By crafting games that celebrate people and their remarkably rich cultural traditions, Colabee invite a global audience to discover something new about themselves and the world around them. The enchanting world of traditional Ukrainian culture is a wellspring of inspiration, and ‘Forest Song’ its cultural ambassador among the global gamer community.

About the author: Myroslava Hartmond is the owner of Triptych: Global Arts Workshop (www.t-gaw. com), one of the first private art galleries in the ex-USSR est. 1988, and a Research Associate of the Centre for International Studies, University of Oxford, where she explores the role of cultural diplomacy in Ukraine.

September 2016

63

Kyiv Connoisseurs Enjoy Black Market Dining The Ukrainian Connoisseurs Club (TUCC) visited Black Market restaurant in Kyiv’s

Parus Business Centre building for an end-of-summer dining event in late August. Although Black Market is a new ven-

ue, the restaurant’s Head Chef Viktor Tym-

chyshyn is familiar to TUCC members as his previous restaurant earned a five-star

rating. He is also a previous TUCC Chef of the Year winner. This created high expectations, and Black Market delivered with

a five-star performance. Viktor’s cuisine was not the only secret to this success. The

wine selection was admirably presented by sommelier Julia Ignatuk. However,

what was really impressive and distinct was the way the waiting staff marched in

unison to each individual table to serve

the courses. This professional precision continued throughout the meal, whether serving the wines or clearing the tables.

Restaurant Manager Olga Kovalchuk must

surely take the credit for orchestrating this immaculate waiting service, probably

the best the TUCC has ever experienced in its 15-year history.

64

www.bunews.com.ua

On 15 September, the Kyiv office of SCHNEIDER GROUP gathered

friends and partners at a gala event in the Ukrainian capital to cel-

ebrate the tenth anniversary of its presence in Ukraine. SCHNEIDER GROUP is a German firm with multiple CIS branches that assists

international businesses in market entry as well as other back of-

networking events

German business service provide marks a decade in Kyiv

fice services including accounting, payroll, legal, and IT. The event

was attended by representatives of the international business community, executives from the Delegation of the German Economy in

Ukraine, American Chamber of Commerce, European Business As-

sociation, USUBC and international funds. Yuri Donets, Director of

the Kyiv office of SCHNEIDER GROUP, shared his perspective on the current business climate in Ukraine: “Throughout 2016, we have witnessed Ukraine’s gradual economic recovery. The country cur-

rently offers many solid business-related advantages that makes it

a very attractive place for foreign investment. We are now seeing a significant increase in interest towards Ukraine from investors from all around the world. This gives the country a solid platform for a successful and exciting upcoming decade.”

September 2016

65

in review

UEFA gives Ukraine a Champions League vote of confidence If asked to draw up a list of Ukraine’s most supportive international allies, most observers would begin by trying to rank the likes of America, Canada, the European Union, the IMF, and NATO. However, a strong case could also be made for the inclusion of UEFA on the list. In mid-September, European football’s governing body announced the decision to award the 2018 Champions League final to Kyiv’s Olympic Stadium. Hosting the Champions League final would be an honour at any time. Coming as it does with Ukraine engaged in a hybrid war against Russia and desperately trying to convince the outside world that the country is safe for business and tourism, the decision is little short of a godsend.

By selecting Kyiv, UEFA has sent out a clear and unambiguous message that the Ukrainian capital poses no security risk and is both ready and capable of hosting the showcase event of the annual club football calendar. The Champions League final attracts tens of thousands of fans, as well as a glittering array of international VIPs and footballing aristocracy. Hundreds of millions of viewers tune in around the globe. Understandably, the host city must meet a demanding set of criteria, with each city’s bid subjected to considerable scrutiny.

The fact that UEFA has given Kyiv its stamp of approval is hugely significant. Such an authoritative voice should serve to convince event organizers throughout the international business and entertainment industries that Kyiv is safe. This is crucial at a time when Ukrainians are regularly encountering difficulties inviting guests to their capital city due to the negative perceptions generated by television and online news coverage of the Russian hybrid war in east Ukraine and Crimea. Images of Russian occupation forces, tank and artillery battles, military casualties, and devastated landscapes have served to convince many outside observers the whole of Ukraine is a war zone. As a result, numerous international events ranging from pop concerts and sports tournaments to business forums and

academic conferences have been cancelled over the past two-and-a-half years. These exaggerated security concerns are understandable, but they create a major image problem for Ukraine as the country seeks to get its economy back on track. UEFA’s vote of confidence is a welcome signal for others to follow.

This is not the first time UEFA has demonstrated its faith in Ukraine. Back in 2007, UEFA chiefs awarded Ukraine the right to co-host Euro 2012 together with Poland. That decision was also timely. By early 2007, Ukraine’s 2004 Orange Revolution had run out of steam and the country was heading into a period of prolonged political turbulence. On the sunny spring day when UEFA announced Ukraine as co-hosts of Euro 2012, thousands of protesters had been bussed into Kyiv from east Ukraine to rally against President Yushchenko’s attempts to disband parliament and call snap a snap election. They faced off against opposing crowds eager to uphold the principles of the Orange Revolution and maintain the country’s pro-European course. The tense mood temporarily dissipated following

news of UEFA’s decision, leading to spontaneous celebrations that briefly united activists on both sides of the political barricades.

UEFA’s bold gamble on post-Orange Revolution Ukraine paid off. Euro 2012 was widely hailed as a successful tournament and a major triumph for Ukraine, allowing the country to show off its charms to global TV audiences while welcoming over one million visiting fans. The traumatic events of Euromaidan, Crimea, and the Donbas have since served to sully the positive image created by Euro 2012, but the championship remains Ukraine’s most single biggest success in the international spotlight.

Hosting the 2018 Champions League final is not on the same scale as Euro 2012, but it is sufficiently high profile to register with global audiences. Along with Eurovision 2017, which will also take place in Kyiv, it will provide Ukrainians with the chance to put on a show for the outside world. UEFA has given Ukraine a golden opportunity to demonstrate its appeal on the biggest imaginable stage. It is vital that the Ukrainian authorities now make the most of it.

Letters to the editor: editor@bunews.com.ua Advertising inquiries: +38-067-4032762 Business Ukraine is distributed every month at a wide range of leading business centres, hotels and restaurants in Kyiv and throughout Ukraine as well as on incoming flights to the Ukrainian capital.

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

66

No reproduction, use or adaptation of contents, logos, titles or designs is permitted in any manner without the prior written consent of the publisher. The opinions expressed by individual authors and contributors each month in Business Ukraine magazine do not necessarily reflect the position of the publishers. The publishers of Business Ukraine do not accept legal responsibility for the goods and services advertised within the publication.

www.bunews.com.ua