Business Ukraine February 2017 by Business Ukraine magazine

TOP 50

February 2017

FIRMS

BUSINESS UKRAINE MAGAZINE/FEBRUARY 2017: This month Business Ukraine magazine is partnering with Yuridicheskaya Practika to publish the English-language version of the annual TOP 50 ranking of Ukrainian law firms. This annual ranking is the long-running survey of the Ukrainian legal services industry and is currently in its twentieth year. The magazine also features the monthly Newsletter from the American Chamber of Commerce in Ukraine.

TOP 50

February 2017

FIRMS

Putin is learning the hard way that Crimean crime does not pay Ever since the stunning Russian takeover of Crimea in early 2014, it has become popular to regard Vladimir Putin as some kind of geopolitical genius. The international media regularly depicts him as a James Bond-style supervillain, always a few steps ahead of his hapless Western opponents as he determines the fate of the world from the depths of his impenetrable Kremlin lair. It is easy to imagine Putin taking personal pleasure in such hyperbole, seeing it as a reflection of Russia’s resurgence and his own prominent place in history. If he is honest with himself, however, there must also be moments when he reflects on the mounting costs of his Crimean conquest and regrets ever having given the fateful order to invade. At first glance, Putin’s recent achievements would appear to justify the hype. Over the past three years, he has been widely credited with invading mainland Ukraine, turning the tide of the Syrian conflict, undermining the EU, and putting Donald Trump in the White House. These bold gambits have made Putin the most talked-about personality in world politics and pushed Russia back to the top of the global agenda. The real question is whether any of this has actually served Moscow’s interests. Economically, the answer is a resounding ‘no’. The Russian economy, once a magnet for international investment and the engine behind Putin’s soaring domestic popularity, has been badly mauled by the aftershocks of his foreign policy adventures. Russians are significantly poorer today than they were three years ago. To add insult to injury, they must watch increasingly limited state resources diverted from basic public services towards the military. Putin’s foreign policy exploits have certainly succeeded in transforming the geopolitical conversation, but there is little evidence to suggest Russia has benefitted from this changing tone. Crucially, the attack on Ukraine has reinvigorated the Kremlin’s traditional nemesis, NATO. The military alliance is currently enjoying a new lease of life after a quarter of a century in search of a coherent post-Cold War role. There is now an increased NATO presence close to Russia’s borders, while individual member states are boosting their military spending. Putin’s imperialism has also served as a wonderful NATO recruitment tool. Montenegro’s impending NATO membership represents a huge strategic shift in a region once considered Russia’s Balkan backyard. Even arch-advocates of neutrality like Sweden and Finland are now actively debating the merits of NATO membership. If the invasion of Crimea aimed to thwart NATO, it has backfired spectacularly. The Russian leader’s revanchist foreign policy has proven equally self-defeating elsewhere. Across the EU, escalating Kremlin cyber warfare and hack atFebruary 2017

tacks have forced governments that would much prefer a policy of business as usual to reluctantly acknowledge the growing Russian threat. Likewise, Putin was widely credited with helping to sway Britain’s EU referendum, but this success has failed to produce the desired results. Post-Brexit London has shown no signs of softening its stance on Russian sanctions. On the contrary, UK leaders have gone out of their way to demonstrate their continued support for Ukraine and resolve with regard to Russia. The election victory of Donald Trump has been similarly anticlimactic. The exact role Russia played in Trump’s triumph is still the subject of heated debate, but there can be no mistaking the Kremlin’s undisguised glee at his success. This enthusiasm now looks to have been hopelessly misplaced. Trump has already dropped one key advisor over Russia ties, and appears to be rapidly distancing himself from earlier talk of “grand bargains” with Putin. No wonder Kremlin TV channels have abruptly ended their love affair with all things Trump. Closer to home, the seizure of Crimea has spread panic throughout the former Soviet sphere and left Putin’s Eurasian Union dream in tatters. Instead of embracing the concept of ever-closer union with Russia, most of the former Soviet republics are now nervously looking to put as much distance as possible between themselves and the Kremlin. The recent war of words with formerly pliant Belarus is an indication of just how far things have deteriorated. The biggest setback of all has come in Ukraine itself. Putin’s hybrid war sought to destroy the Ukrainian state. Instead, he succeeded in consolidating Ukrainian national identity in ways few would have thought possible prior to 2014, while creating a formidable military bulwark against further imperial adventures. This loss of influence in Ukraine is a genuinely historic blow to Russian interests that will echo for generations. None of this was inevitable. If Putin had not invaded Crimea, relations with post-Maidan Ukraine would have eventually stabilized and pragmatic compromises could have been reacted. Russia would still be a G8 nation and a welcome partner at the top table of world affairs. Instead, Putin will mark the third anniversary of his Crimean crime with no end in sight to an escalating geopolitical confrontation that is entirely of his own making. Peter Dickinson Business Ukraine magazine 5

legal industry focus

Ukrainian law firms see specialization

as way to conquer crisis conditions Ukrainian legal sector has yet to return to 2013 levels but niche sectors offer road to recovery The past year has been steady but unspectacular for the Ukrainian legal industry. There was no explosive growth in the legal sector, but none was expected. Some firms saw revenues increase considerably, but in overall terms, the market remained well below pre-crisis levels. For most law firms, 2016 was a year of resource redeployment in anticipation of future market growth. The exact trajectory of this hoped-for future growth is yet to be determined. Reforms in the judicial sector remain a crucial consideration for all Ukrainian law firms, with no clear evaluation at this stage of what the possible influence on the market these reforms may have.

Emphasis on specialization

Lack of demand and a relative absence of solvent customers are still dominant market trends. This has inevitably resulted in increased competition, especially in the field of dispute resolution. Unsurprisingly, 2016 saw litigation law firms posting some of the best dynamics. Another prominent trend in the current crisis market is increasing specialization — even at full-cycle law firms, only three to five key practices were reliably income-generating in 2016. In this challenging climate, dispute resolution is the present market-leading practice. Defending businesses and individuals in criminal proceedings is also in demand, though this does not apply to many of the most lucrative practices. In light of market conditions, corporate law practice results in 2016 (including a handful of M&A transactions) qualify as quite impressive.

Distressed assets and debt restructuring

Legal sector business trends in 2016 reflected the broader ailments of the Ukrainian economy. Perhaps unsurprisingly, there was a noticeable increase in the scope of work with distressed assets. In 2016, bankruptcy practice contributed 4.6% to the total earnings of Ukraine’s top 50 law firms, while debt restructuring accounted for 4.5%. Meanwhile, corporate law practice accounted for the third-highest level of income (7.3%). Even during the crisis period, there is clearly still significant demand for both corporate-wide consulting and high-level industry expertise. The land and real estate practice witnessed some interesting developments over the past year. Despite some stagnation in this area, 58% of market participants continued to post profits – albeit with small margins of less than 5%. The resilient profitability of this sector might be due to the fact law firms continue to provide legal support for a number of long-term projects. The employment and labor law practice experienced rapid development in 2016, and is widely tipped to have good prospects going forward due to an extensive list of labor-related is-

sues emerging on Ukrainian business landscape. Dynamic sectors such as the IT industry will stimulate further demand for law firms in this field. Another area expected to offer attractive prospects is international trade practice. Many industry experts anticipate further active development in line with deepening trade relations with the EU.

Banking sector leads client queue

Who is paying for Ukraine’s legal services? The banking sector emerged as the principal employer of legal services in 2016, accounting for 18.9%. Second place went to the agriculture and food industry (10.9%), while the real estate and construction sector was ranked third (8.4%), closely followed by energy and natural resources (8.3%). The pharmaceuticals and cosmetics sector was the last of the top five ranked employers of Ukrainian law firms in 2016, accounting for 6.8% of the overall market. How much are they paying? Legal services pricing policy is currently under review on a global scale and this process is underway at the local Ukrainian level. In Ukraine, the economic crisis and the devaluation of the national currency have amplified this trend. There is no standard approach among Ukrainian law firms, with the previously popular hourly rate now increasingly seen as, at best, a guideline or base figure. The bottom line for most companies in 2016 appears to have been flexibility alongside a desire to maximize value. While most of the companies who participated in the TOP-50 ranking classified their fees as confidential, available data did highlight some interesting trends. The most striking was the differentials between service rates among regional law firms, with five-fold gaps between minimum and maximum rates in certain regional markets.

New brands and personnel switches

The Ukrainian legal services sector continues to attract international interest. The recent arrival of international brand Kinstellar was an indication that global appeal remains despite challenging current conditions. Konstantin Likarchuk is heading up the Kinstellar Kyiv office while handling the firm’s regional dispute settlement practice. Numerous Ukrainian lawyers were also on the move in 2016, either switching law firms or receiving promotions. Juscutum was particularly active in team reinforcement and development of new practices. The firm strengthened its tax practice, led by Partner Nataliya Radchenko who joined Juscutum together with the team from Legal House law firm. Yuriy Kotlyarov, a specialist with a 19-year record whose previous experience includes eight years as head of the legal department at Ukrtelecom, became head of the firm’s newly created telecommunications practice. Moving in the other direction was Dmitriy Gadomskiy, who founded new IT boutique firm Axon Partners with a group of fellow former Juscutum IT lawyers. :

About the author: Oleksiy Nasadyuk is the Head of Yuridicheskaya Practika’s “50 Leading Law Firms of Ukraine” annual research program (www.top50.com.ua)

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legal industry focus

: Spenser & Kauffmann was one of the most active players in the brain

market. The firm doubled the number of partners and advisors over the year. This advisor status is decidedly temporary, it would seem. According to Managing Partner Valentyn Zagariya, “A lawyer has advisor status for a year and then becomes a partner or falls into oblivion”. Banking and financial law advisor Nicholas Likhachyov joined the firm at the end of 2015. IT and anti-trust specialist Tatiana Kharebava has since joined him. Meanwhile, Volodymyr Yaremko became head of the firm’s cross-border litigation & arbitration practice, and Tatiana Ivanovich took on the role of head of private client practice, and Maryna Tomash became responsible for tax practice. Arzinger appointed three new partners in 2016 in the shape of company advisors Katerina Gupalo, Andriy Selyutin and Oleksander Plotnikov. Among this trio, Mr. Selyutin had previously served as head of Arzinger’s southern Ukraine branch office. Compared to previous years, Integrites law firm was relatively inactive in terms of personnel changes, with just two high-level appointments at the Kyiv office. Svyatoslav Sheremeta became a partner and head of corporate law and M&A practice, while Serhiy Shershun became an antitrust law practice advisor. At the same time, significant changes took place within the Integrites management team: Dr. Oleksiy Feliv became Kyiv office Managing Partner and Nika Avayan became Chief Executive Officer. Other key industry promotions in 2016 included the appointment of Oleksandr Voznyuk as Partner at Asters. Asters also promoted Tetiana Vovk to the position of firm advisor for competition and antitrust law. Artem Naumov became a partner at ILF, where he will specialize in IT and agriculture.

Rallying to the reformist agenda

Since 2014, the Ukrainian legal industry has provided many of the per-

sonnel charged with managing Ukraine’s ambitious post-Euromaidan reform process. The past year has seen this process continue, with some of the earlier intake now returning from government service to legal practice. Oleksandra Pavlenko, who occupied the position of the First Deputy Health Minister of Ukraine for a year and a half, returned to private practice. Baker McKenzie Kyiv office Partner Olyana Gordienko became a member of National Securities and Stock Market Commission via presidential decree. The most high-profile switch to state service was that of Daniel Bilak, Managing Partner at the Kyiv office of CMS Cameron McKenna, who took up a one-year post in November 2016 as Director of Ukraine Invest, the Investment Promotion Office of Ukraine. The experienced Canadian will now focus on helping Ukraine to sell itself to international investors until December 2017.

Analysis of market players

The release of the annual TOP-50 ranking also allows us to observe key trends within the individual firms making up the legal industry, and lets us take a detailed look at the composition of the country’s leading legal services companies. The picture that emerges is one of an indus- :

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White Collar Crime

legal industry focus 12

: try enjoying a renewed sense of relative stability without being overly

bullish about short-term market growth. In general, demand for legal personnel is lower than supply. Law firms are reluctant to increase the number of employees they have on their teams. Instead, most appear to be taking a rather pragmatic position towards their anticipated legal workload in 2017. The results of this year’s survey indicate that the average top 50 Ukrainian law firm employs slightly over 30 lawyers, with at least five or six partners. According to the ranking findings, two thirds of Ukraine’s top lawyers have over five years of work experience. The average career length of employees at leading law firms is five to ten years, accounting for some 30% of the total. A further 21.1% of lawyers boast ten to fifteen years of legal sector experience, with just 12% of lawyers with more than fifteen years of practice on their CVs. There is a striking sense of loyalty to law firms, with 58% of lawyers working at their current law firm for more than three years. Almost a quarter (24%) have five to ten years of continuous service at their current law firm, while for another 14%, the period is over ten years. Many have been with their present employers since the company was established. The law firms included in the TOP-50 ranking have an average of five to six partners. The largest number of partners (14) is at Asters. Integrites occupies second place with 12 partners. Baker McKenzie have ten partners. The average ratio of partners to salaried lawyers is around 1 to 4.5. This is close to optimal, with conventional wisdom dictating the ideal number of partners being 15% to 20% of all lawyers in a mid-sized law firm. Ukraine’s top 50 law firms fit this model closely. The ratio of lawyers (including partners) and administrative personnel at Ukrainian law firms is also of interest. At top 50 law firms, the average ratio of lawyers to other employees is virtually equal at 2 to 2:1. At international

and larger Ukrainian law firms, this number of non-lawyers is somewhat higher — with a ratio of 1 to 1.6. It should be noted, however, that different law firms employ different approaches when it comes to classifying certain positions as “lawyers” and “service personnel”. For example, at some law firms, paralegals (assistants) are considered administrative personnel, while at the others they might be classified as junior lawyers.

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Top 50 Ukrainian Law Firms

ASTERS

SAYENKO KHARENKO

BAKER MCKENZIE

ILYASHEV & PARTNERS

ARZINGER

AEQUO

INTEGRITES

VASIL KISIL & PARTNERS

Managing Partner: Oleksiy Didkovskiy Senior Partner: Armen Khachaturyan

Partner: Michael Kharenko

Managing Partners: Serhiy Chorny, Serhiy Piontkovsky

Managing Partner: Mikhail Ilyashev

Managing Partner: Timur Bondaryev

Managing Partner: Denis Lysenko

Managing Partner: Oleksiy Feliv

Managing Partner: Andriy Stelmashchuk

NUMBER OF LAWYERS

LAW FIRM

ESTABLISHED

RANKING

English-language version of annual rating covering 2016 produced by Business Ukraine magazine in partnership with Yuridicheskaya Practika

1995

2004

1992

1997

2002

2014

2005

1992

PRACTICE AREAS

LANGUAGES

Litigation, competition, corporate, M&A, banking & finance, tax, debt restructuring, criminal law, intellectual property, aviation, international arbitration, bankruptcy, business protection, real estate and land, family law, private clients, labor & employment, PPP and GR, international trade and WTO rules, capital markets, compliance, mediation

Ukrainian, Russian, English

CONTACT DETAILS

19-21 Bohdana Khmelnytskoho Street, Kyiv, 01030, Ukraine Tel.: (044) 230-60-00 Fax: (044) 230-60-01 www.asterslaw.com info@asterslaw.com

Banking & finance, corporate, M&A, litigation, international arbitration, criminal, intellectual property, compliance, labor & employment, debt restructuring, mediation, energy, private clients, tax, land and real estate, competition, bankruptcy, business protection, international trade and WTO rules, capital markets, PPP and GR

Ukrainian, Russian, English, French

10 Muzeyny Provulok, Kyiv, 01001, Ukraine Tel.: (044) 499-60-00 Fax: (044) 499-62-50 www.sk.ua, info@sk.ua

Banking & finance, M&A, intellectual property, tax, land and real estate, competition, litigation, labor, corporate, compliance, debt restructuring, international arbitration, international trade and WTO rules, capital markets, PPP and GR

Ukrainian, Russian, English

Litigation, banking & finance, bankruptcy, corporate, M&A, criminal law, intellectual property, compliance, labor, debt restructuring, international arbitration, mediation, family law, private clients, tax, land and real estate, competition, business protection, international trade and WTO rules, capital markets, aviation, PPP and GR

Ukrainian, Russian, English

24 Bulvarno-Kudriavska Street, Kyiv, 01601, Ukraine Tel.: (044) 590-01-01 Fax: (044) 590-01-10 www.bakermckenzie.com kyiv@bakermckenzie.com

International arbitration, intellectual property, banking & finance, M&A, competition, litigation, debt restructuring, tax, corporate, labor, real estate and land

Ukrainian, Russian, English

Litigation, competition, banking & finance, M&A, debt restructuring, international arbitration, corporate, criminal law, intellectual property, compliance, labor, tax, real estate and land, bankruptcy, business protection, international trade and WTO rules, PPP and GR

Ukrainian, Russian, English, French, German, Polish

Litigation, international arbitration, banking & finance, real estate and land, corporate, M&A, tax, competition, bankruptcy, criminal, intellectual property, compliance, labor, debt restructuring, mediation, private clients, capital markets, PPP and GR

Ukrainian, Russian, English, German, Spanish, Dutch, Kazakh

Litigation, banking & finance, criminal, labor, tax, real estate and land, competition, corporate, M&A, intellectual property, debt restructuring, international arbitration, family law, private clients, bankruptcy

Ukrainian, Russian, English, French, German, Turkish, Polish, Swedish

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11 Kudryavska Street, Kyiv, 04053, Ukraine Tel.: (044) 494-19-19 Fax: (044) 494-19-99 www.attorneys.ua office@attorneys.com.ua

75 Zhylyanska Street, Kyiv, 01032, Ukraine Tel.: (044) 390-55-33 Fax: (044) 390-55-40 www.arzinger.ua mail@arzinger.ua 52 Bohdana Khmelnytskogo Street, Kyiv, 01030, Ukraine Tel.: (044) 490-91-00 Fax: (044) 490-91-02 www.aequo.ua office@aequo.com.ua 1 Dobrovolchykh Batalioniv Street, Kyiv, 01015, Ukraine Tel.: (044) 391-38-53 Fax: (044) 391-38-54 www.integrites.com info@integrites.com

17/52A Bohdana Khmelnytskoho Street, Kyiv, 01030, Ukraine Tel.: (044) 581-77-77 Fax: (044) 581-77-70 www.vkp.ua vkp@vkp.ua

ESTABLISHED

NUMBER OF LAWYERS

Corporate, M&A, banking & finance, debt restructuring, tax, private clients, litigation, labor, international arbitration, land and real estate, competition, capital markets

Ukrainian, Russian, English

2003

Litigation, tax, banking & finance, corporate, criminal business defense, M&A, compliance, labor, private clients, land and real estate, bankruptcy

Ukrainian, Russian, English, German

2009

Litigation, banking & finance, debt restructuring, bankruptcy, corporate

CMS-KYIV (CMS Cameron McKenna LLC and ะกMS Reich-Rohrwig Hainz)

2006

Litigation, banking & finance, corporate, M&A, land and real estate, competition, intellectual property, compliance, labor, international arbitration, tax

Ukrainian, Russian, English, German, French

FCLEX

2002

Litigation, bankruptcy, business protection, criminal, banking & finance, debt restructuring, real estate and land

Ukrainian, Russian, English

LAVRYNOVYCH & PARTNERS

2004

Ukrainian, Russian, English, Italian, German

1994

Litigation, banking & finance, investments, corporate, tax, land and real estate, M&A, intellectual property, compliance, debt restructuring, bankruptcy, business protection, private clients, competition, international trade and WTO rules, capital markets, PPP and GR, labor, international arbitration, mediation, family law Litigation, banking & finance, corporate, criminal, labor, tax, business protection

Ukrainian, Russian, English, German, Polish

1997

Litigation, corporate, M&A, business protection, international arbitration, criminal, banking & finance, intellectual property

2016

Litigation, international arbitration, tax, corporate, M&A, intellectual property, banking & finance, family law, bankruptcy, criminal, business protection, PPP and GR

Ukrainian, Russian, English, German, Polish, etc

1998

Litigation, real estate and land, corporate, tax, business protection, banking & finance, compliance, bankruptcy, international trade and WTO rules

RANKING

AVELLUM

GOLAW

LCF

Managing Partner: Mykola Stetsenko

Managing Partner: Valentyn Gvozdiy

Managing Partner: Anna Ogrenchuk

Acting Managing Partner: Graham Conlon Managing Partner: Johannes Trenkwalder

Senior Partner: Viktor Barsuk

Managing Partner: Maksym Lavrynovych 15

ILF

EGOROV PUGINSKY AFANASIEV & PARTNERS

Managing Partner: Tetyana Gavrysh

Managing Partner: Serhii Sviriba 17

ETERNA LAW

GRAMATSKIY & PARTNERS

Board of partners

President: Ernest Gramatskiy

February 2017

PRACTICE AREAS

LANGUAGES

Ukrainian, Russian, English, French, Lettish, Italian, Polish, German, Spanish

Ukrainian, Russian, English, German

CONTACT DETAILS

38 Volodymyrska Street, Kyiv, 01030, Ukraine Tel: (044) 591-33-55 Fax: (044) 591-33-55 www.avellum.com info@avellum.com

legal industry focus

2009

LAW FIRM

19B Instytutska Street, Suite 26, 29, 30, Kyiv, 01021, Ukraine Tel.: (044) 581-12-20/21 Fax: (044) 581-12-22 www.golaw.ua info@golaw.ua

47 Volodymyrska Street, Office 3, Kyiv, 01001, Ukraine Tel./Fax: (044) 455-88-87 www.lcf.ua info@lcf.ua

38 Volodymyrska Street, 6 Floor, Kyiv, 01034, Ukraine Tel.: (044) 391-33-77 Fax: (044) 391-33-88 www.cms-cmck.com kyivoffice@cms-cmck.com 14D Bekhterivsky Lane, Kyiv, 04053, Ukraine Tel.: (044) 238-64-20 Fax: (044) 238-64-20 www.fclex.com info@fclex.com

41 Saksaganskogo Street, Kyiv, 01033, Ukraine Tel.: (044) 494-27-27 Fax: (044) 492-99-97 www.lp.ua office@lp.ua

22 Shovkovychna Street, Suite 3, Kyiv, 01024, Ukraine Tะตl/Fax: (044) 390-77-77 www.ilf-ua.com office@ilf-ua.com 38 Volodymyrska Street, Kyiv, 01030, Ukraine Tel.: (044) 492-82-82 Fax: (044) 492-82-72 www.epap.ua Kyiv_office@epap.ua 6 Rylskiy prov., Kyiv, 01601, Ukraine Tel: (044) 490-70-01 Fax: (044) 490-70-02 www.eterna.law office.kyiv@eterna.law

16 Mikhaylovskaya Street, Kyiv, 01001, Ukraine Tel./Fax: (044) 581-15-51 www.gramatskiy.com office@gramatskiy.com

SALKOM

AVER LEX

INTERNATIONAL LEGAL CENTER EUCON

President: Evgen Kubko

Managing Partner: Olga Prosyanyuk

NUMBER OF LAWYERS

ESTABLISHED

RANKING

LAW FIRM

1990

Corporate, contract law, litigation, banking & finance, competition, criminal, labor

Ukrainian, Russian, English

2012

Criminal practice, litigation, business protection, tax, compliance

Ukrainian, Russian, English

2006

Tax, litigation, corporate, criminal, compliance, land and real estate, business protection, labor

Ukrainian, Russian, English, Polish

2005

Banking & finance, corporate, M&A, intellectual property, labor, debt restructuring, tax, land and real estate, competition, bankruptcy

1992

77A Velyka Vasilkivska Street, Kyiv, 03150, Ukraine Tel: (044) 490-95-75 Fax: (044) 490-95-77 www.dlapiper.com/en/ukraine ukraine@dlapiper.com

2005

Banking & finance, corporate, M&A, debt restructuring, intellectual property, land and real estate, litigation, international arbitration, labor, compliance, tax, competition, bankruptcy, international trade and WTO rules, capital markets, PPP and GR

Ukrainian, Russian, English, German, French

Litigation, banking & finance, bankruptcy, criminal, debt restructuring, corporate, family law, private clients, tax, land and real estate, business protection

Ukrainian, Russian, English

2004

Litigation, banking & finance, corporate, tax, competition

Ukrainian, Russian, English, German

11 Shota Rustaveli Street, Kyiv, 01001, Ukraine Tel./Fax: (044) 235-88-77 www.abp.kiev.ua office@abp.kiev.ua

2003

Tax, litigation, intellectual property, land and real estate, media, IT

Ukrainian, Russian, English

2006

2015

Litigation, debt restructuring, land and real estate, banking & finance, corporate, international arbitration, labor, M&A, intellectual property, private clients, family law, compliance, business protection, tax, criminal, competition, bankruptcy, insurance

Ukrainian, Russian, English, French, German, Polish, Czech

2010

Litigation, international arbitration, land, real estate, competition, corporate, energy saving, energy, subsoil use

Ukrainian, Russian, English

Managing Partner: Yaroslav Romanchuk 22

DLA PIPER UKRAINE

DENTONS

ALEKSEEV, BOYARCHUKOV & PARTNERS

Managing Partner: Margarita Karpenko

Managing Partner: Oleg Batyuk

Managing Partner: Sergey Boyarchukov

MORIS GROUP

Managing Partner: Andriy Romanchuk

JURIMEX

SPENSER & KAUFFMANN

Honorary President: Danylo Getmantsev

Managing Partner: Valentyn Zagariya

PWC LEGAL

ANTIKA LAW FIRM

Managing Partner: Andrey Pronchenko

Managing Partner: Alexey Kot

PRACTICE AREAS

LANGUAGES

Litigation, corporate, PPP and GR, banking & finance, debt restructuring, criminal, intellectual property, compliance, labor

Ukrainian, Russian, English, French

Ukrainian, Russian, English

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CONTACT DETAILS

12 Khreschatyk Street, Kyiv, 01001, Ukraine Tel.: (044) 591-31-00 Fax: (044) 591-31-15 www.salkom.ua salkom@salkom.kiev.ua 2 Khrestovyi Alley, Kyiv, 01010, Ukraine Tel.: (044) 300-11-51 Fax: (044) 300-11-53 www.averlex.com info@averlex.com.ua

33 T. Shevchenka Blvd. Office 12, Kyiv, 01032, Ukraine Tel.: (044) 238-09-44 Fax: (044) 238-04-13 www.eucon.ua office@eucon.ua

49A Volodymyrska Street, Kyiv, 01001, Ukraine Tel: (044) 494- 47-74 www.dentons.com kyiv@dentons.com

8b Moskovskaya Street, Kyiv, 01010, Ukraine Tel.: (044) 359-03-05 Fax: (044) 359-03-06 www.moris.com.ua info@moris.com.ua

9/2 Velyka Vasilkivska Str., Kyiv, 01004, Ukraine Tel.: (044) 500-79-71 www.jurimex.ua 7 Klovsky Uzviz, Kyiv, 01021, Ukraine Tel.: (044) 288-83-83 Fax: (044) 351-21-53 www.sklaw.com.ua office@sklaw.com.ua 75 Zhilyanska Street, Kyiv, 01032, Ukraine Tel.: (044) 354-04-04 Fax: (044) 354-07-90 www.pwc.com/ua legal@ua.pwc.com

12 Khreschatyk Street, Kyiv, 01001, Ukraine Tel.: (044) 390-09-20 Fax: (044) 390-09-21 www.antikalaw.com.ua office@antikalaw.com.ua

PAKHARENKO & PARTNERS

REDCLIFFE PARTNERS

KONNOV & SOZANOVSKY

KM PARTNERS

DOUBINSKY & OSHAROVA

EVERLEGAL

JUSCUTUM

KPMG-UKRAINE

DYNASTY

Senior Partner: Mykola Kovalchuk Senior Partner: Artur Megerya

Managing Partner: Antonina Pakharenko-Anderson

Managing Partner: Olexiy Soshenko

Managing Partner: Alexey Ivanov

Managing Partner: Alexander Minin

Partner: Albert Sych

Managing Partner: Michael Doubinsky

Managing Partner: Yevheniy Deyneko

Managing Partner: Artem Afian

Partner: Sergey Popov President: Denys Myrgorodsky

February 2017

NUMBER OF LAWYERS

L.I. GROUP

ESTABLISHED

RANKING 30

2002

Litigation, corporate

1993

Intellectual property, mediation, competition

2015

Banking & finance, debt restructuring, international arbitration, corporate, M&A, compliance, litigation, criminal, competition, bankruptcy, capital markets, PPP and GR

Ukrainian, Russian, English, German

1992

Corporate, business protection, intellectual property, tax, land, real estate, M&A, international arbitration

Ukrainian, Russian, English, French

1999

Tax, litigation criminal law, corporate, land, real estate, competition, M&A, intellectual property, labor, international arbitration, international trade and WTO rules

Ukrainian, Russian, English

1991

Tax, corporate, M&A, litigation, labor, private clients, PPP and GR, intellectual property, competition

Ukrainian, Russian, English

2000

Intellectual property, litigation, corporate, criminal law, competition

2015

Litigation, M&A, competition, business protection, international arbitration, banking & finance, corporate, private clients, tax, land and real estate, intellectual property, debt restructuring

Ukrainian, Russian, English, German, Polish

2008

Ukrainian, Russian, English

1992

Business protection, litigation, tax, corporate, intellectual property, criminal, M&A, international trade and WTO rules, compliance, IT & media, telecommunications

2000

Litigation, banking & finance, M&A, tax, criminal, land and real estate, debt restructuring, labor, international arbitration, private clients, competition, bankruptcy, corporate, business protection

Ukrainian, Russian, English, German, French

PRACTICE AREAS

bankruptcy,

banking

litigation,

LANGUAGES

finance,

Ukrainian, Russian, English, German

corporate,

Ukrainian, Russian, English, German, French, Spanish

Tax, litigation, corporate, M&A, compliance

Ukrainian, Russian, English

CONTACT DETAILS

36D Eugene Konovaltsya Str., Office 4, Kyiv, 01133, Ukraine Tel.: (044) 227-05-14 Fax: (044) 359-03-61 www.ligroup.com.ua lawyer@ligroup.com.ua

legal industry focus

LAW FIRM

72 Bolshaya Vasilkovskaya Street, Kyiv, 03150, Ukraine Tel.: (044) 593-96-93 Fax: (044) 451-40-48 www.pakharenko.com pakharenko@pakharenko.сom.ua

75 Zhylyanska Street, Kyiv, 01032, Ukraine Tel: (044) 390 -58-85 Fax: (044) 390- 58-86 www.redcliffe-partners.com office@redcliffe-partners.com

23 Shota Rustaveli Str., Suite 3, Kyiv, 01033, Ukraine Tеl.: (044) 490-54-00 Fax: (044) 490-54-90 www.konnov.com info@konnov.com 5 Pankivska Street, Kyiv, 01033, Ukraine Tel.: (044) 490-71-97 Fax: (044) 492-88-59 www.kmp.ua admin@kmp.ua

19A Khreschatyk Street, Kyiv, 01001, Ukraine Tel.: (044) 490-30-00 Fax: (044) 490-30-00 www.ey.com/ukraine kyiv@ua.ey.com

37 Zhilyanska Street, 3 Floor, Kyiv, 01033, Ukraine Tel.: (044) 490-54-54 Fax: (044) 490-54-60 www.iplaw.com.ua info@iplaw.com.ua 40-X Hlybochytska Street, Kyiv, 04050, Ukraine Tel.: (044) 337-70-07 Fax: (044) 337-70-08 www.everlegal.ua deyneko@everlegal.ua

27A Taras Shevchenko Ave, Kyiv, 01032, Ukraine Tel.: (044) 359-08-96 www. juscutum.com pr@juscutum.com 32/2 Moskovska Street, Kyiv, 01010, Ukraine Tel.; (044) 490-55-07 www. kpmg.ua

2 Glinky Street, MOST-City Center, Office 503, Dnipro, 49000, Ukraine Tel.: (056) 371-30-30 Fax: (056) 375-30-30 www.dynasty.dp.ua оffice@dynasty.dp.ua

SOKOLOVSKIY & PARTNERS

TRUSTED ADVISORS

ICF LEGAL SERVICE

KIBENKO, ONIKA & PARTNERS

Managing Partner: Vladyslav Sokolovskyi

Managing Partner: Ivan Mishchenko

Managing Partner: Nataliya Ulyanova

NUMBER OF LAWYERS

ESTABLISHED

RANKING

LAW FIRM

2005

Litigation, tax, criminal, business protection, debt restructuring, bankruptcy, corporate, M&A, intellectual property, compliance, labor, family law

2014

Litigation, bankruptcy, debt restructuring, corporate, business protection, criminal, international arbitration

2005

2011

1994

2008

2016

Managing Partner: Olena Kibenko 45

JURLINE

PAVLENKO LEGAL GROUP

KINSTELLAR

ALEXANDROV & PARTNERS

VB PARTNERS

INTERLEGAL

Managing Partner: Volodymyr Zubar

Managing Partner: Oleksandra Pavlenko

Partner: Kostiantyn Likarchuk

Managing Partner: Dmytro Alexandrov

Director and Partner: Volodymyr Vashchenko

Partner: Arthur Nitsevych

PRACTICE AREAS

LANGUAGES

CONTACT DETAILS

Ukrainian, Russian, English, German

25 Klinichna Street, Office 7, Kyiv, 03141, Ukraine Tel.: (044) 495-19-28 Fax: (044) 275-67-99 www.splf.ua, pravo@splf.ua

Tax, banking & finance, corporate, private clients, business protection, international trade and WTO rules, M&A, intellectual property

Ukrainian, Russian, English

Litigation, M&A, criminal, banking & finance, corporate, intellectual property, business protection, debt restructuring, family law, tax, land and real estate, bankruptcy, capital markets, PPP and GR, compliance

Ukrainian, Russian, English

10 Muzeynyi Lane, Office: 101 – 102, Kyiv, 01001, Ukraine Tel.: (044) 338-12-53 Fax: (044) 338-12-53 www.icf.ua info@icf.ua

Litigation, business protection, PPP, GR, corporate, tax, aviation, banking & finance, M&A, criminal law, intellectual property, mediation., family, law, private clients, land, real estate, competition, compliance, labor, debt restructuring, bankruptcy

Ukrainian, Russian, English

Ukrainian, Russian, English, French

Litigation, corporate, maritime law, criminal law, international arbitration, intellectual property, family law, private clients, tax, land, real estate, competition, wine- making

Ukrainian, Russian, English

banking & finance, tax, land and real estate, business protection

Ukrainian, Russian, English

2002

Land, real estate, litigation, M&A, bankruptcy, business protection, corporate, intellectual property, family law

Ukrainian, Russian, English

2005

Litigation, criminal law, tax, business protection, compliance, land and real estate

Ukrainian, Russian, English

1995

Maritime law, international arbitration, international trade and WTO rules

Ukrainian, Russian, English, German, Spanish, French

40/85 Saksaganskogo Street, Office 501, Kyiv, 01033, Ukraine Tel.: (044) 359-06-64 Fax: (044) 359-06-64 www.trustedadvisors.ua info@trustedadvisors.com.ua

7/9 Ivanova Street, Office 9-06, Kharkiv, 61002, Ukraine Tel./Fax: (057) 717-79-79 www.kopartners.com.ua office@kopartners.com.ua

11/13 Uspenskaya Street, Odesa, 65014, Ukraine Tel./Fax: (048) 738-08-93 www.jurline.com.ua office@jurline.com.ua 23A Zlatoustovskaya Street, Kyiv, 01135, Ukraine Tel.: (044) 281-06-00 Fax: (044) 281-06-01 www.plglaw.ua office@plglaw.ua

1-А Sportyvna Square, 16th Floor, Gulliver Business Center, Kyiv, 01601, Ukraine Tel.: (044) 394-90-40 www.kinstellar.com kyiv.reception@kinstellar.com

58 Poliova Street, Sofiivska Borshchahivka, Kyiv Region, 08131, Ukraine Tel.: (044) 501-20-64 Fax: (044) 583-08-72 www.lawyers.com.ua office@lawyers.com.ua 22 Rybalska Street, Office 13, Kyiv, 01011, Ukraine Tel./Fax: (044) 581-16-33 www.vbpartners.kiev.ua office@vbpartners.kiev.ua 24V Genuezska Street, Odesa, 65009, Ukraine Tel.: (0482) 33-75-28 Fax: (0482) 33-75-29 www.interlegal.com.ua kiev@interlegal.com.ua

NOTE: Featured law firms rated according to several general criteria: 12-month income (QIV of 2015 and QI–III of 2016), number of lawyers, financial efficiency, major transactions, reputation, and expert assessment. (ND = not disclosed)

www.bunews.com.ua

50 Leading Law Firms of Ukraine

Methodology of the Annual Ranking The annual “50 Leading Law Firms of Ukraine” ranking is currently celebrating its twentieth anniversary, making it the longrunning and most authoritative survey of the Ukrainian legal sector. The ranking is produced using research conducted by leading Ukrainian legal industry publishing house Yuridicheskaya Practika and aims to provide a comprehensive picture of the development of the Ukrainian legal services market. This is the first year in which the ranking has been published in English in partnership with Business Ukraine magazine. Over course of the past two decades, the methodology underpinning the ranking has been adapted and fine-tuned to reflect changes in the Ukrainian legal industry. The ranking includes a number of established criteria: the number of lawyers, profitability, complexity of transactions and lawsuits handled, and finan-

cial efficiency. The professional reputation of each individual law firm is an important additional factor. The analytical team that produces the annual ranking is receptive to the strict requirements of confidentiality regarding information provided by law firms for the purposes of the ranking. The research period for the current ranking covers the fourth quarter of 2015 and the first to third quarters of 2016. Once all data is calculated and the preliminary ranking is calculated, a panel of legal industry experts assess the ranking and provides their own input. Participating legal experts provide their feedback in isolation, and are not aware of other expert recommendations until following the final publication of the ranking. This approach has been developed to guarantee maximum objectivity and accuracy.

Jeantet is one of France’s leading and oldest independent business law firms. We deliver customized services with added value. Our firm was established over 90 years ago. Today our team of 180 lawyers work from seven different international offices, while our partner network spans 130 countries. We offer the services of our excellent team of seasoned Ukrainian lawyers led by Bertrand Barrier and Karl Hepp de Sevelinges. Our areas of expertise include Corporate and M&A, Banking & Finance, Foreign Investments, Private-Public Partnership, and Antitrust issues.

www.jeantet.fr • bbarier@jeantet.org

Paris • Casablanca •

4 Volodymyrska Street, Kyiv, 01001, Ukraine +380-44-2060980

Luxembourg • Geneva • Budapest • Kyiv • Moscow

legal industry focus

Lviv legal sector benefits from rising regional profile Capital city of western Ukraine is attracting increasing investor interest leading to legal industry expansion Lviv has long enjoyed a reputation as Ukraine’s EU gateway region and one of the country’s most attractive investment options. Location is not all Lviv has to offer – the region boasts qualified employees and competitive salaries, a wealth of local resources, and available land. Examples of successful investment over the past decade include Nestle (Switzerland), Carlsberg (Denmark), Leoni Wiring Systems (Germany), Kredobank (Poland), FAKRO Lviv (Poland), Danish Textiles (Denmark), AVE (Czech Republic), HalychynaZakhid (Denmark), Landkom (Great Britain), Discovery drilling equipment (Great Britain), King Cross Leopolis (Italy), Siemens (Germany), Henkel (Germany), Volksbank (Austria), GlobalLogic (USA), Austrian Airlines Group (Austria), and many others.

Economic rollercoaster ride

Since the turn of the millennium, Lviv has been home to one of Ukraine’s most dynamic regional economies. The period from 2004 to 2007 saw rapid growth in M&A and RE transactions. Sectors including agriculture, light industry and machinery, leisure, and food production developed dramatically. Legal advisors will remember this period as a time of booming investments that transformed the Lviv legal market. Local law firms focusing on litigation and corporate consulting ceded the limelight to legal advisors specializing in international law and boasting experience of cooperation with foreign clients. Leading Ukrainian law firms opened branch offices in Lviv to meet this demand, while joint ventures between local and foreign consultants appeared, headed by lawyers with a foreign education and experience in international law firms. These developments helped to improve service standards throughout the Lviv legal sector. The 2008 global credit crunch hit Ukraine particularly hard and brought this period of progress to an abrupt halt. Law firms had to switch their focus away from investment projects and towards bankruptcy, litigation, and a growing number of distressed asset transactions. The recovery began in 2010 and continued until 2013, albeit without ever returning to the levels of the boom years in the early 2000s. The historic events that rocked Ukraine in late 2013 and early 2014 derailed this revival. Law firms found themselves forced to focus on market exits, investment withdrawal, downsizing, tax litigation, debt collections, corporate disputes and other types of commercial litigation, while also addressing the problems of banks in liquidation. Most investors switched to survival mode or sought to sell businesses with minimal losses.

Robust recovery

Since 2015, the Lviv market has witnessed a relative stabilization followed by a return to growth as companies with foreign investment that survived the crisis look to consolidate their positions and new investors steadily enter the west Ukrainian market. This process has benefited from investment-friendly measures implemented by the municipal and regional authorities. Lviv region boasted an international

trade turnover exceeding USD 2.65 billion in 2015. Prominent recent investment projects in Lviv include the opening of new production facilities by Fujikura (Japan), Nexans (France), and Bader (Germany), together with the construction of a modern business park by European developer CTP. Manufacturing is one of the key trends fueling the growth of international investment in the Lviv region. It is not hard to see why – the region is on the EU’s doorstep while also offering a range of advantages including resources, land, raw materials, cost-effective human resource opportunities, and attractive logistics. The devaluation of the Ukrainian currency, the hryvnia, has created a unique opportunity to secure new market niches and gain revenues in a short-term perspective. In addition to manufacturing, other sectors of the Lviv economy regarded as most promising by investors include IT, agriculture, infrastructure development, tourism, and hospitality.

Legal sector adapts to investor needs

The robust recovery of the Lviv investment climate has had a significant impact on the west Ukrainian legal market. Interest continues to grow in services related to a wide range of fields. Key services include Corporate and M&A, focusing on the establishment of companies, corporate and transaction structuring, and advising on a whole range of corporate governance matters. Advising on corporate taxation in Ukraine as well as the application of international double taxation treaties is also becoming more popular. There is rising demand for finance and currency control services. Many firms see growing interest in real estate due diligence and support in the acquisition of properties and land plots, construction, and leasing. Many clients seek advice on labour-related documents including internal policies, contracts, schedules, the employment of foreigners, and labour disputes. Others are increasingly seeking antitrust and competition services. Trade is a growing area for the entire west Ukrainian legal sector, with clients seeking consultations on all trade-related and customs issues, while requiring advice on the implication of international treaties. With more and more international companies looking to establish themselves in Lviv region, regulatory services are very much in demand, coving the full scope of legal support to obtain the necessary licenses and permits required to operate in Ukraine. Finally, this is also fresh interest in dispute resolution services, particularly in relation to client representation in national and international arbitration.

Rising international profile

The positive trends driving Lviv’s investment appeal look set to continue in the coming few years as the Ukrainian economic recovery gains momentum and trade ties with the nearby EU strengthen. Lviv is already very much in the international shop window. The city regularly features in the international media as an up-and-coming European business and leisure destination, and already hosts a range of business events including a popular annual International Economic Forum, IT conferences, and the West Ukrainian Legal Forum. Then there are a range of more informal networking events such as the Alfa Jazz Fest, which attracts a wide range of national and international corporate players to the city. As the investment climate improves, this will lead to additional demand for legal services from international companies entering the west Ukrainian market.

About the author: Markian Malskyy is a Partner at Arzinger law firm and Head of the West Ukrainian Branch. His is also Honorary Consul of the Austrian Republic in Lviv.

www.bunews.com.ua

legal industry focus

Ukrainian banking reform prosecution trends

Analysis of the most common charges leveled against Ukrainian banking sector executives During the period 2014-2016, a total of 86 Ukrainian banks have been withdrawn from the market as part of efforts to reform the sector. This process has resulted in a large number of criminal proceedings. Many of the people who find themselves facing charges are high-profile financial sector professionals, often with extensive international experience. The scale of the ongoing investigations into banking sector irregularities is extensive. In 2016 alone, pre-trial investigation authorities have carried out more than 135 document seizures at the National Bank of Ukraine. The Deposit Guarantee Fund has filed 3,835 applications for the disclosure of violations totaling more than UAH 295.50 billion. According to Fund officials, the individuals responsible for the largest losses are bank owners and management, accounting for 403 applications totaling UAH 184.32 billion. As a result of these probes, at least ten top bank managers and bank owners have been identified as suspects in financial criminal cases. Some are currently in jail, while others have been placed on international wanted lists. Analysis of the Register of Judgments (covering searches, seizures, detention, and asset seizures) provides for a wide field of study and presents an overview of the most common charges applied in the banking sector. This provides insight into the charges leveled against Ukrainian financial sector executives, many of whom until recently adorned the pages of the Forbes Rich List.

Extending loans to related entities

Probably the most common charges are tied to the practice of extending loans to related entities (parties). The key aspect in such cases is evidence of any relationship between the bank and the borrower, followed by violations of the procedure for receiving the loan and the additional use of loaned funds. In most investigations, the directors of companies receiving the loan are the main target of the probe. Inves-

tigators seek to demonstrate the fictitious nature of these companies. They often try to persuade directors of loan recipient companies to cooperate with investigators in order to mount a case against the bank’s top management or shareholders. For example, one investigation claimed that during the period 2005-2009, a shareholder of VAB Bank had abused his official position to move UAH 1 billion in loans to 13 companies that he also controlled. These funds were subsequently transferred to additional enterprises also allegedly owned by the same shareholder. In a similar case, the Prosecutor General’s Office is currently investigating the removal of UAH 19 billion granted as refunding to Privatbank. According to investigators, bank officials granted loans to 42 companies associated with the bank, using the proprietary rights to goods as security. The recipients of the loans made 100% prepayment to nonresident accounts for the goods in question, but these goods have not yet been supplied. Auditors have also expressed concerns over the practice of transactions involving related parties. In its report into the insolvency of Nadra Bank, KPMG highlighted the issue of outstanding loans to potentially related parties as a key risk that needed to be addressed prior to the introduction of an interim administration. Concerns over transactions involving related parties also applies to transfer discounts. Mykhailovskyi Bank has been accused of assigning its loan portfolio, including 111,000 loan agreements valued at more than UAH 682 million, to two financial companies. According to the Deposit Guarantee Fund, these financial companies were affiliated to the bank’s shareholders.

Games with pledged property

Another common charge involves collateral (pledged property). Typical schemes feature the withdrawal of collateral from securities or the granting of secured loans at inflated rates. For example, criminal proceedings are currently underway over loans extended by officials at Ukrgasbank and secured against significantly overvalued assets. Investigators at the State Security Service of Ukraine are probing a manager of Kyivska Rus Bank over the sale of two office buildings held by the bank as security. The sale allegedly took place

at a heavily reduced price on the day before the introduction of an interim administration. The National Police of Ukraine are also pursuing criminal proceedings related to the alleged removal of collateral by officials at Stolychnyi Bank totaling around UAH 11.5 million. According to the Deposit Guarantee Fund, more than 80% of the assets of insolvent banks are actually “junk” securities and the loan portfolios of related parties.

Alpine Banks

The Ukrainian media has often reported on such European banks as Meinl Bank AG, Winter Bank, Frick Bank and East-West. This quartet gained particular prominence in the Ukrainian information space as banks where at least 18 different Ukrainian banks had opened correspondent accounts. Prosecutors allege that in the case of Finance and Credit Bank, the scheme involved the bank placing funds in correspondent accounts with Meinl Bank AG. An offshore company then opened a USD 100 million loan facility with the bank, secured against the correspondent account of the Ukrainian bank. The offshore company did not repay the loan, and Meinl Bank allegedly wrote off debts worth USD 53 million from the correspondent account of the Ukrainian bank.

Artificial balances

Another common charge levelled against Ukrainian banks is the accusation of entering into intra-transactions between accounts in order to create artificially positive account balances. Numerous investigations have concluded that the available figures in the financial statements of some banks actually bore no relation to the real financial situation.

Transactions without a permit

Entering into banking transactions when restrictions on certain categories of transactions are in place is a regular feature of current prosecutions against Ukrainian banks. Investigations consider such transactions as theft. For example, The Ukrainian Financial World Bank stands accused of conducting transactions with a total value of UAH 335 million and USD 8.4 million, despite facing specific prohibitions and restrictions after being officially classified as problematic.

About the author: Denys Bugay (d.bugay@vbpartners.ua) is a Partner and the Head of the white-collar crime practice at VB PARTNERS law firm. He also serves as President of the Ukrainian Bar Association.

www.bunews.com.ua

Ulf Schneider Founder and Managing Partner

We provide our international clients with the back office services they need to expand their business into or within Ukraine, Russia, Kazakhstan, Belarus, Poland and Germany. Our services include market entry support, accounting outsourcing, tax consulting, import, ERP systems and support in legal matters with a focus on migration, labor and corporate law. Contact us to receive your individual offer.

www.schneider-group.com

Contact person | Kateryna Kotenko +380 / 44 / 490 55 28 | kyiv@schneider-group.com

legal industry focus

Steps towards anti-corruption compliance in Ukraine Companies should make sure they are in step with Ukraine’s expanding anti-corruption policies Corruption has always been a delicate issue for foreign investors operating in Ukraine. According to the Transparency International Corruption Perceptions Index 2016, Ukraine currently ranks 131 out of 176 countries. Even though in the last three years Ukraine has somewhat improved its position (moving up four places in the ranking), corruption remains one of the main constraints for foreign investors looking to enter the Ukrainian market. Anti-corruption measures have been central to the broad-based reform efforts introduced in Ukraine following the 2013-14 Euromaidan Revolution. In line with a series of GRECO recommendations, Ukraine adopted a batch of fundamental laws in 2014 designed to help combat corruption (Anti-Corruption Laws). The same year saw the creation of the National Anti-Corruption Bureau, a body that aims to ensure implementation of the country’s Anti-Corruption Laws and to lead the fight against corruption in Ukraine. Progress, albeit on a very small scale, is evident in the fight against corruption. In practical terms, it is important to note that business requirements are changing at a much faster pace than other aspects of the country’s anti-corruption efforts. The need to avoid breaching anti-corruption regulations is self-evident. Indeed, many major international groups have had expensive lessons in the importance of anti-corruption compliance thanks to the likes of the US Foreign Corrupt Practice Act (FCPA) and the UK Bribery Act. In the current climate, foreign investors need to be extra-confident that their Ukrainian projects will not expose them or their wider business interests to any anti-corruption risks. Businesses looking to improve their anti-corruption compliance in Ukraine can take a number of practical steps.

troduction of a two-tier monitoring system. In practical terms, this means one system for managers and a separate policy for other employees. This approach allows companies to structure a more independent and impartial reporting mechanism. Any system developed specifically for managers can cover specific cases of gross violation that could then serve as grounds for their dismissal. The introduction of corresponding provisions into employment agreements will also be beneficial for the company as a device for safeguarding against corrupt practices. Another important anti-corruption theme for companies operating in Ukraine is gift policy. Unlike most European countries, it is still common in today’s Ukraine to give holiday gifts to professional contacts or offer presents on a variety of other occasions. For large companies with wide networks of local offices and agents, it is extremely important to have clear rules with regard to gifts and other hospitality expenses. Such practices may well be innocuous, but clear guidelines are an important tool to help avoid misunderstandings.

It is common for international investors and multinationals to have anti-corruption policies at the Group level, whereas in Ukraine having anti-corruption policies is more of an exception than a rule. It is worth noting that according to Ukraine’s Anti-Corruption Laws, the obligation to have anti-corruption policies only applies to certain categories of companies. This includes state and municipal enterprises, companies with an average number of more than 50 employees throughout the year and gross income of more than UAH 70 million, and companies where state owns more than 50% of the capital. Companies participating in public tenders with a value exceeding UAH 20 million are also obliged to introduce anti-corruption policies. For most private-owned companies in Ukraine, having an anti-corruption policy in place is merely a recommendation and not obligatory. Existing anti-corruption laws do not prohibit the application of international anti-corruption policies within Ukrainian companies. However, in order to implement existing international measures, such policies must be in line with Ukraine’s Anti-Corruption Laws. They should be translated into the Ukrainian language and approved as the internal policies of the Ukrainian companies in question. If a company operating in Ukraine is looking to adopt an anti-corruption policy, it is well worth considering the in-

It is vital to appoint responsible persons to oversee compliance with anti-corruption rules. Ideally, there should be a compliance officer at the Group level controlling the managers, and a local officer dealing with other employees and reporting directly to the Group Compliance Department. In many cases, companies have either a compliance officer at the Group level or a local person. However, in the former case, a foreign officer will not be able to supervise local employees, check Ukrainian language documents, and appreciate local nuances. In the latter case, there is a risk that the local compliance officer will be overly dependent on local managers.

Step 1: Compliance Policies

Step 2: Training Employees

Practice shows that the existence of well-crafted anti-corruption policies does not ensure that all employees will follow the approved rules and regulations. Some breaches are due to simple negligence. In most cases, infringements result from a lack of knowledge or poor understanding of negative consequences. This makes it even more important to conduct regular anti-corruption training sessions to educate employees.

Step 3: Compliance Officer

Step 4. Anti-Corruption Due Diligence

Companies operating in Ukraine should carefully choose their contractors, consultants, suppliers, service providers and other partners. This verification process may vary from a simple reputation check on the market to more comprehensive third party due diligence. The exact type of audit depends on the preliminary estimation of the risks involved. For example, the risk level is much higher for a contractor providing construction services than for a taxi company. Compliance with anti-corruption regulation is an important element of doing business in Ukraine for both local players and international groups. For Ukrainian businesses, it is important to understand the benefits compliance brings. This is particularly true when it comes to dealing with international partners and financial institutions. For international groups, it is important to adapt global policies to local peculiarities in order to ensure their proper implementation in Ukraine.

About the author: Illya Tkachuk is a Counsel with Jeantet Ukraine. He advises clients on corporate and M&A issues.

www.bunews.com.ua

Securitisation as the optimal solution to Ukraine’s non-performing loans problem Addressing the growth of non-performing loans is a challenging issue for Ukrainian banking system turn for government securities. The bad bank then manages the NPL portfolio by selling the NPLs on via transparent/competitive auctions or it realizes what income it can from the NPLs on its books through enforcement etc. The private sale model does not require the formation of special institutions and instead sees banks sell their NPLs directly to investors. In many cases, sales are negotiated on a bilateral basis and do not involve a competitive bidding process. Both models transfer the ownership of the NPLs and therefore the responsibility for their collection. However, both models also require investors to have a certain level of comfort with the relevant market. Achieving the required level of comfort could be a problem for Ukraine given the portrayal of the country in the press. Clearly, what is needed is a structure that achieves the necessary disposals while at the same time insulating potential investors from Ukraine’s perceived image. Securitization may present an alternative to the above models for dealing with NPLs in the Ukrainian context.

Multipronged approach

About the author: Petr Malecek (p.malecek@sklaw.com.ua) is Counsel and Head of the Central European Desk at Spenser & Kauffmann Non-performing loans (NPLs) are an issue for the Ukrainian economy as they are becoming an increasing percentage of bank balance sheets. NPLs have risen in a steady upward trend from a low of 3.88% in 2008 to more than 30% of gross loans in 2016 according to statistics released by the World Bank. A clear resolution of the situation has so far been elusive. The most common methods used for addressing NPLs across Europe are the bad bank model and the private sale model.

Bad banks and private sales

The bad bank model involves the use of a state sponsored bad bank structure. Examples of bad banks are SAREB in Spain, the CKA in the Czech Republic, and NAMA in Ireland. In short, banks sell/transfer their NPLs to the bad bank in re-

Securitization has gained a bad reputation as the mechanism that allowed for the inflation of bank balance sheets that, in turn, caused the unrestrained lending that culminated in the 2008 financial crisis. While the unchecked use of securitisation may indeed have adverse consequences, it is our view that the same structures can be used as part of a multipronged approach to help solve the NPL problem in Ukraine. The players in the securitisation structure are as follows: the Originator, the Issuer, the Servicer and the Investor. The Originator is the lender of record or holder of the loan. The Originator sells (at a discounted value) the NPLs to the Issuer. The Issuer is a vehicle that is unrelated to the Originator and, as such, the sale is a “true sale” meaning that there is no “look through” back to the Originator. The purchase of the NPLs is funded by the issue and sale of debt securities (Notes) by the Issuer and purchased by the Investor(s). The Servicer manages the portfolio of the NPLs on behalf of the Issuer with a view to maximizing cash flow. Cash flow generated by the Servicer is used to meet interest payments and principal payments owed to the Investors.

“Non-performing loans are an issue for the entire Ukrainian economy having risen in a steady upward trend from a low of 3.88% in 2008 to more than 30% of gross loans in 2016 according to statistics released by the World Bank”

www.bunews.com.ua

Secured and unsecured loans

NPLs can be divided into two categories: secured and unsecured loans. Secured NPLs are the more attractive. They can be subdivided into corporate secured loans and residential secured loans, each of which present their own particular challenges. The ability to recover in both cases depends greatly on the quality of the asset the NPL is secured against, and the rights granted to the holder of the security in the relevant jurisdiction. The ability to recover unsecured loans is strictly a function of the ability of the debtor to pay and the legal recourse granted to the holder of the debt. The age, or “staleness”, of the NPL is important since both the ability of a debtor to make payments and the value of real estate may vary with time. This is particularly true with commercial assets where troubled debtors may be unable, unwilling, or indeed incapable of managing the relevant asset properly, with the result that assets fall into disrepair and thus lose value. Since time is a factor, the speed with which a transfer is agreed/price negotiated is critical when dealing with NPLs. This involves a balance being struck by both the Issuer and the Originator that involves price, representation and warranties and due diligence when agreeing the transfer of the NPLs to the Issuer. A key component to the success of the NPL securitisation model is the quality of the Servicer. By quality we refer to the track record and experience of the Servicer with similar transactions. The reputation of a Servicer is key to miti-

February 2017

gating the reputational risks that may be associated with the relevant NPLs. It is of course up to the Servicer to retain advisors with the expertise needed to deal with the NPL portfolio and meet the challenges presented by the legal environment. The servicing agreement between the Issuer (and ultimately the Investors) and the Servicer must balance the Servicer’s need for latitude with adequate oversight that, together with the Servicer’s reputation, can help build confidence and, in turn, create Investor demand for the Notes. The Servicer does not act out of charity. As such, adequate remuneration and performance incentives must be agreed. Another key factor in the success of the securitization model is the legal environment /governing law of the NPLs and (more importantly) the security. By this, we mean both the rights granted to creditors to compel debtors to pay recognised debts or enforce against security, and the ability of debtors to frustrate enforcement.

legal industry focus

Hedging and other credit enhancement mechanisms can be employed to mitigate risk associated with the NPL portfolio and decrease the risk profile of the Notes. A key feature of the structure is the fact that the Servicer must take an active role in the resolution/collection of the NPLs. Funds raised by the sale of the Notes by the Issuer at the outset are used (at least in part) to pay the Originator(s) for the NPLs.

Best available option

While we recognize that NPLs are a complex asset class, particularly within the context of Ukraine’s current position, we also see that the securitization model has certain advantages over the bad bank and private sale models. A Servicer with sufficient international/market standing can use its reputation to (at least in part) mitigate some of the reputational risk associated with Ukrainian NPLs, and thereby generate Investor interest in the Notes that, in turn, provides the fuel for the structure. Furthermore, the structure is private and as such does not require the formation of specialist semi-state institutions such as “bad banks”, thus avoiding delays that could worsen the quality of the NPLs. While many considerations remain, we think that serious thought should be given to the use of securitisation as part of an overall strategy to deal with Ukraine’s NPL problem.

Growing regional demand for IT industry legal services IT clusters are creating new markets for regional law firms struggling with sluggish business climate

generates a plentiful supply of clients, meaning there is lots of work for everyone. This includes international corporate structuring specialists, tax lawyers, intellectual property law experts, and, of course, experts in IT contract law. As a result, most law firms and legal practitioners are eager to include IT business support in their service portfolio,” says Andriy Hrynchuk, Chief Executive of Lviv’s Hrynchuk & Partners Law Firm. The Lviv building boom has also been good for the city’s law firms.

About the author: Khrystyna Posheliuzhna is a correspondent for Yuridicheskaya Practika The legal market in Ukraine’s regions broadly mirrored trends in the country’s capital in 2016, with the most striking development being the growth in demand for IT-related services. Regional capitals including Lviv, Kharkiv, and Odesa are home to some of the country’s most dynamic IT clusters, making this one of the most attractive sectors for legal services.

Judges in short supply

Understaffing issues are a particular issue for the court system in Ukraine’s regions, where the lack of sufficient judiciary personnel grew more pronounced during 2016. There are currently more than 200 courts in Ukraine operating without the services of 50% of judges. This shortage is due to a number of reasons including the conclusion of fiveyear terms and failure to replace judges who have reached the retirement age of 65. The most critical situation is in Vinnytsia region, where 17 courts have fewer than 50% of judges available for work. Dnipropetrovsk Oblast (16 problem courts) and Donetsk Oblast (15 problem courts) are close behind. This lack of judges has a negative impact on the justice system and regional legal markets across the country. It leads to expanded time limits for individual cases and inevitably results in poorer handling of cases.

Lviv’s IT engine

In recent years, the capital of west Ukraine has emerged as one of the country’s IT hubs, with new IT companies appearing at a rapid rate to meet growing local and international demand. This has had a positive effect on the broader Lviv economy – including the legal industry. “In Lviv, the IT sector plays a role in both economic and image terms. The growth of the sector is widely welcomed by Lviv law firms because it 28

Mr. Hrynchuk identifies construction and real estate as particularly dynamic sectors of the Lviv legal market. “Over the past 12 months, increased construction and real estate sector activity has ensured sufficient volumes of work for legal professionals specializing in this practice area. It seems that many domestic investors have grown tired of “sitting on their money” and have come to terms with the risks created by Russian aggression. They have proceeded to pursue traditional investment strategies in real estate, creating fresh demand for legal advisers.” The current challenging economic environment has reduced client numbers across Ukraine, while remaining customers have often sought out the cheapest possible options, sometimes leading to a drop in service quality. Volodymyr Kostiuk, who serves as Chief Executive at Lex Consulting in Ivano-Frankivsk, says this shortage of demand has encouraged dumping practices among regional law firms as they scramble for an ever-decreasing pool of potential clients. “In the current environment, all businesses are forced to optimize their costs, including for legal services. The quality they recent often leaves much to be desired,” he comments.

Odesa lawyers broaden their horizons

Over the past year, lawyers in the Ukrainian Black Sea port city of Odesa have increasingly been turning their gaze towards the horizon as they seek to expand internationally. This is the assessment of Volodymyr Zubar, Managing Partner at Yurline law firm. “In order to survive in the current difficult market, one of the most popular strategic options for larger Odesa law firms is the establishment of relations with foreign law firms. This allows the Odesa law firms to work on international projects,” says Mr. Zubar. “Odesa lawyers are already engaged in providing legal support for cases at the London courts of arbitration, and this is increasingly becoming the norm.” He says that some of his own employees spent more than 100 workdays in 2016 on business trips outside Ukraine, and sees international arbitration and transport law as key growth sectors for the current year.

Surging demand from Dnipro startups

In 2016, the industrial city of Dnipropetrovsk was renamed Dnipro. This was the biggest single renaming event in Ukraine’s nationwide decommunization process, but it had little impact on the legal market, beyond creating the need to address some registration issues. The main : www.bunews.com.ua

Broadening Black Sea horizons: in 2016, many Odesa law firms sought to develop international partnerships as a way of capitalizing on the growing trading activity

: complicating factor in Dnipro was the city’s closeness to the Russian

hybrid war in the nearby Donbas region. “The overall economic situation in the region continues to be affected by its proximity to the conflict zone,” says Yevheniy Smirnov, Managing Partner at the Lawyers Union “Smirnov, Tarasevich & Partners”. The economic troubles in the region have hurt the local steel industry, which has traditionally played a key role as an engine of progress for Dnipro as a whole. However, Mr. Smirnov identifies tangible growth in demand for legal services from the agricultural sector – a trend that reflects growing international investor interest. Ukraine has historically enjoyed a reputation as Europe’s breadbasket, and Mr. Smirnov confirms that the grain market is currently attracting the most attention. Fellow Dnipro legal sector executive Aleksey Savchuk identifies growing IT sector demand as one of the key dynamics shaping the city’s legal services market in 2016. Mr. Savchuk, who serves as Chief Executive at Dnipro’s Assyria law firm, has noted more and more IT companies looking for help as they mature and seek to develop a greater international presence. This is a trend identified throughout Ukraine’s regions, reflecting the explosive (and lucrative) expansion of the country’s IT industry. “There has been a marked increase in the number of requests from startups and IT companies requiring legal support as they attempt to enter the European and American markets,” he says. Mr. Savchuk also believes law enforcement reforms and personnel changes have had the knock-on effect of encouraging companies to seek legal representation. “Customers are now more willing to pay for legal assistance,” he confirms. “While I would like to think otherwise, I do not believe this development reflects a growing sense of civic responsibility. It is all about economic efficiency. Due to frequent personnel changes

in the law enforcement system, nobody can guarantee that closed or pending criminal cases will remain so.” Given this uncertainty, he argues, growing numbers of clients have reached the conclusion that legal methods are objectively cheaper.

Kharkiv IT industry fuels growth

Ukraine’s second city and former capital Kharkiv witnessed growing demand for legal services in 2016 according to Vileon law firm Managing Partner Yuriy Vyshnevetskiy. He identifies criminal law as one of the most popular practices of the past year, and attributes this to the government’s ongoing anti-corruption efforts. “This trend is due to the establishment of new law enforcement agencies and the intensified activities of state bodies seeking to counter corruption. This has meant criminal prosecution of officials and attempts to criminalize transactions that would previously have been considered legal.” In line with Ukraine’s other regional capitals, Kharkiv’s legal industry has also witnessed a spike in demand for IT sector services. With more institutes of higher education that virtually any other East European city and a long tradition of technological innovation, Kharkiv is a natural breeding ground for IT excellence. Unsurprisingly, it has emerged in recent years as home to one of the most dynamic IT clusters in the country. This has opened up new avenues for the Kharkiv legal sector. “With the expansion of the regional IT market, demand for legal services from IT business has also increased,” says Mr. Vyshnevetskiy. “The most popular legal services in the field of information technology include consulting on the choice of IT business model, development of strategies to protect intellectual property rights and trade secrets, drafting contracts, and assisting in the general business activities of local IT companies,” he comments. www.bunews.com.ua

NUMBER OF LAWYERS

POSITION

LAW FIRM, CEO

PRACTICE AREAS

CONTACT DETAILS

Kharkiv 1

ILF

Kibenko, Onika & Partners

Shkrebets & Partners

Mikhailyuk, Sorokolat & Partners

Managing Partner: Tetyana Gavrysh Managing Partner: Olena Kibenko

Managing Partner: Evgeniy Shkrebets Managing Partner: Vadim Mikhailyuk

Litigation, banking & finance, corporate, criminal, labor, tax, business protection

14A Skrypnyka Str., Kharkiv, 61057 Tel.: (057) 728-00-00 www.ilf-ua.com, office@ilf-ua.com

Litigation, tax, criminal law, bankruptcy, energy

8 Melnikova Street, Office 6, Kharkiv, 61002 Tel.: (057) 715-76-42 shkrebets.com, office@shkrebets.com

Litigation, M&A, criminal, banking & finance, corporate, intellectual property, business protection, debt restructuring

Intellectual property

Odesa 1

Jurline

Interlegal

ANK

3 4

Managing Partner: Volodymyr Zubar Partner: Arthur Nitsevych Chairman of Executive Board: Alexander Kifak

Sergeyevs’ Law Office Director: Svetlana Sergeyeva

Dnipro 1

Dynasty

Absolute

Smirnov, Tarasevich & Partners

Lviv

President: Denys Myrgorodsky Director: Alexander Gladiy

Partner: Nikolay Okhrimenko

Nexum

Managing Partner: Sergey Zhukov

Litigation, corporate, tax, land and real estate, maritime law

9 Lanzheronovskaya Street , Office 17, Odesa, 65026 Tel.: (0482) 34-87-16 www.ank.odessa.ua, office@ank.odessa.ua

Maritime law, Litigation, corporate, labor & employment

Litigation, criminal law, land and real estate, corporate, bankruptcy

1а Pysarzhevskogo Street, , Office 521, Dnipro Tel. (056) 236-73-77 info@st-partners.com.ua

Bankruptcy, Litigation, corporate, criminal law, land and real estate, tax, M&A, intellectual property, debt restructuring

11 Chernyshevskogo Street, Dnipro, 49005 Tel.: (056) 372-56-16

Dispute resolution, real estate and construction, corporate, M&A, antitrust, banking and finance

6 General Chuprynka Str., Office 1, Lviv, 79013 Tel.: (032) 242-96-96

122 Antonovycha Street, , 1 Floor, Lviv, 79057 Tel.: (032) 244-55-96 www.kozakov-partners.com hornitskyy@kozakov-partners.com

Pavlenko & Partners

Kozakov & Partners

Litigation, corporate, M&A, land and real estate, bankruptcy, tax, labor & employment

Hrynchuk & Partners

Litigation, tax, corporate, private clients, land and real estate, intellectual property, labor & employment

Managing Partner: Andriy Hrynchuk

2 Ekaterinoslavskiy Blvd., Office 610, Dnipro, 49044 Tel.: (056) 732 38 63 absolute.com.ua, absolute@absolute.com.ua

Litigation, commercial, administrative law

Partner: Sergiy Gornitskiy

11/b.6 Armeyskaya Street, Office 2a, Odessa, 65058 Tel.: (048) 737-72-28 www.srgv.com, office@srgv.com

2 Glinky Street, MOST-City Center, Office 503, Dnipro, 49000 Tel.: (056) 371-30-30 www.dynasty.dp.ua, оffice@dynasty.dp.ua

24V Genuezska Street, Odesa, 65009 Tel.: (0482) 33-75-28 www.interlegal.com.ua, kiev@interlegal.com.ua

Litigation, banking & finance, M&A, tax, criminal, land and real estate, debt restructuring, labor, international arbitration

Arzinger

CEO: Yuriy Melnik

1 Bannyi Lane, Office 7, Kharkiv, 61003 Tel.: (057) 717-74-72 www.msp-patent.com.ua, office@msp.ua

11/13 Uspenskaya Street, Odesa, 65014 Tel./Fax: (048) 738-08-93 www.jurline.com.ua, office@jurline.com.ua

Partner: Markian Malskyy

7/9 Ivanova Street, Office 9-06, Kharkiv, 61002 Tel./Fax: (057) 717-79-79 www.kopartners.com.ua office@kopartners.com.ua

Litigation, corporate, maritime law, criminal law, international arbitration, intellectual property, family law Maritime law, international arbitration, international trade and WTO rules

Litigation, corporate, tax, land and real estate, criminal law, compliance, debt restructuring, bankruptcy

legal industry focus

LEADING REGIONAL LAW FIRMS OF UKRAINE

32А Efremova Street, Lviv, 79013 Tel.: (032) 298-97-97 office@pavlenkopartners.com

12 Vynnychenka Street, Lviv, 79008 Tel.: (032) 242-24-80 law-hnp.com, office@law-hnp.com

NOTE: Regional law firms are rated on the basis of overall ranking according to several general criteria including 12-month income (Q4 of 2015 and Q1–Q3 of 2016), number of lawyers, financial efficiency, and number of major transactions (ND = not disclosed) February 2017

Make Ukraine Green Again Andy Hunder, President of the American Chamber of Commerce in Ukraine

It is clear that the tax approach to resolve waste management issues, which is currently being promoted by some members of Parliament, does not solve the problem. On the contrary, it worsens the existing problems with the recycling of municipal and packaging waste as well as separate collection in Ukraine. A new tax on waste approach would lead to higher food prices and may have a negative impact on prices of socially significant food products, creates corruption risks, and does not do any favors to the investment attractiveness of the country.

Handing significant responsibility to the producers

Waste management is a key environmental concern across Europe with many countries witnessing a significant increase of the amount of rubbish produced. The situation in Ukraine has already proven to be critical in some cities and towns due to a lack of proper waste collection, sorting and recycling.

Public demand calling for the closure of landfills, fueled by a lack of public awareness and understanding of the importance of waste management further complicate the already dire situation. Few businesses have an integrated approach to waste recycling. Outdated and ineffective waste management systems and the threat to businesses now coming from Parliament proposing new legislative initiatives on waste management are contrary to the interests of investors operating in Ukraine.

A European Waste Management Strategy for Ukraine

The American Chamber of Commerce in Ukraine actively supports Ukraine’s choice of a European approach in packaging and waste disposal. Ukraine’s Government is currently working on developing a National Waste Management Strategy, which will serve as a basis for regulatory framework in the sphere of waste management. Chamber Member companies have managed to escalate the issues of waste management to the Government’s agenda. The Chamber’s Working Group on Post-Consumer Waste Recycling has already provided input to the draft Strategy by always highlighting the necessity to create an eco-friendly Ukraine, based on positive experience and best practices of other countries. February 2017

The Chamber is advocating that the Extended Producer Responsibility (EPR) approach is the way to deal with the waste management issue in Ukraine, under which producers are given significant responsibility – financial and/or physical – for the treatment or disposal of post-consumer products. This approach shifts responsibility upstream toward the producer and away from the municipalities. Furthermore, it encompasses a provision of incentives for producers to take into account environmental considerations when designing their products. The current waste management practices in Ukraine are resource-inefficient. The absence of tradition to collect waste separately in Ukraine remains a key obstacle to successful reform. Thus, the implementation of educational projects and other measures for shaping public culture of separate waste collection are crucial.

Leading by example, we at the Chamber have introduced in our Kyiv office a Green Office Initiative, which consists of separate collection of waste in special cardboard boxes and its further recycling in an eco-friendly way. We highly recommend it for everyone that supports Ukraine in its green modernization process.

We believe that we can resolve the current waste management issues by: • ensuring a progressive waste management regulatory and legal framework; • adopting of the necessary draft laws and without delay approving the National Waste Management Strategy; • introducing separate collection of waste combined with its proper recycling; • implementing Extended Producer Responsibility (EPR). All things considered, only by uniting the efforts of Ukrainian Government, business community and civil society we will make Ukraine green again.

Hybrid War for Healthcare

Ukraine’s US-born Acting Minister of Health Dr. Ulana Suprun is attempting to transform the country’s notoriously corrupt medical services – and not everyone is happy about it Healthcare is widely acknowledged as one of the key battlegrounds in the fight to end endemic corruption in Ukraine’s state institutions, but the sector is proving highly reform-resistant. As if to illustrate the point, the start of 2017 witnessed a concerted publicity campaign designed to discredit the Health Ministry’s latest anti-corruption initiatives. In the first few weeks of January, numerous political figures issued statements accusing the ministry’s reform efforts of putting patient lives at risk, while members of the Ukrainian parliament’s Healthcare Committee tried – and failed – to oust the acting minister. Meanwhile, numerous mainstream media platforms ran with a slurry of negative stories about the healthcare situation in the country. Many of these information attacks directly targeted the Acting Health Minister herself, US-born doctor of Ukrainian descent Ulana Suprun. Accusations levelled against Dr. Suprun everything from concealing international medical procurement details to faking her own medical qualifications. When she sat down with Business Ukraine magazine in early February in a cozy café close to Kyiv’s government quarter, Dr. Suprun seemed unfazed by the ongoing campaign to blacken her reputation. Quite the opposite, in fact. She sees the personal nature of the efforts to discredit her as tacit acknowledgement that her reform efforts are moving in the right direction. “I’m experiencing a lot personal attacks rather than criticism of the work we are actually doing. I see these personal attacks as an indication that our opponents do not have any ammunition to use, because what we are doing is the right thing to do.”

Confronting the corrupt old system The 53-year-old radiologist from New York says her skin is more than thick enough to shrug off the recent smear campaigns against her, but she recognizes that she is now engaged in a head-on confrontation with powerful forces who stand to suffer substantial losses if her reform drive proves successful. The initial salvos of this fight for the future of Ukrainian healthcare have given Dr. Suprun an indication of what to expect in the months ahead. “Just as there is a hybrid war in east Ukraine, there is a kind of hybrid war taking place here too,” she says. Whom does she regarded as her opponents in this conflict? “We’re up against representatives of the corrupt system that has been in place for years, the old system that used the healthcare industry for its own advantage instead of the benefit of the Ukrainian people.” Many of Dr. Suprun’s most prominent critics are indeed politicians tied to the former government of Viktor Yanukovych, together with healthcare professionals who have built lucrative careers within the existing system. These associations create huge question marks over the credibility of their criticisms, but the anti-reform forces opposing Dr. Suprun also have the weight of Ukraine’s oligarch-owned mass media behind them. An early January survey conducted by the Anti-Corruption Action Center into Ukrainian TV reporting on healthcare reforms identified 82% of coverage as negative in character. Dr. Suprun is well aware of the problem. “It is difficult to create :

www.bunews.com.ua

interview

February 2017

www.bunews.com.ua

media such as national TV channels,” she says. “The owners of the television stations are not proponents of the reforms we are conducting. This is a real problem as around half of all Ukrainians continue to get their news from TV sources.” This communications challenge is significantly complicating Dr. Suprun’s reform efforts, which focus on greater transparency in the procurement of medical supplies and a more market-based approach to the government funding of medical services. She aims to counter the lack of TV exposure by boosting the Ministry’s social media presence and reaching out to regional audiences during weekly trips to oblast centers around Ukraine. Social advertising campaigns are also in the pipeline.

Clear consensus for change

While she must contend with hostility from much of the Ukrainian media along with sections of the medical industry and parliament, Dr. Suprun feels she has all the backing she needs to succeed. Crucially, both President Poroshenko and Prime Minister Groysman publicly rallied to her side during the spate of early 2017 attacks. She sees no reason for this support to weaken, as long as the reforms she pursues are reasonable and demonstrably bring about positive change. ““Everyone accepts the general idea that Ukraine’s medical system needs to change,” she says. This is something of an understatement. The quality of Ukraine’s healthcare services is currently dire, a fact reflected in abysmal life expectancy figures and a plummeting population. Ukrainian males can expect to live for around a decade less than their counterparts elsewhere in Europe, while the entire healthcare system is riddled with everyday corruption. This state of affairs is particularly galling given that Ukraine has long been a focus of healthcare excellence. Thousands of international students continue to enroll at Ukrainian medical universities every year, while the country’s medical tourism industry is fast emerging as one of the most competitive in the region. Dr. Suprun believes this disconnect between Ukraine’s potential and current healthcare realities is eminently fixable. She rejects notions that there is simply not enough money, pointing instead to the debilitating effects of endemic corruption. “Everybody working in the healthcare industry would get paid decent wages and everybody would receive decent treatment if we used the available resources and funding in an effective and honest manner. At present, we do not use the money honestly. There is a lot more funding available than you might imagine. This financing does not currently go where it needs to go. If we can focus that financing on our real needs, there is more than enough.” In addition to top-level political backing, Dr. Suprun also enjoys considerable support from the international community. For example, UNDP, UNICEF and Crown Agents all play key roles in the international medicine procurement initiative that has caused such consternation among critics of the current Ukrainian healthcare reform agenda. All sides see this international involvement as a temporary measure until Dr. Suprun and her team can oversee the creation of a Ukrainian state body capable of handling procurement issues effectively, but given the scale of corruption in the sphere of medicine purchases, this international involvement has been vital.

From Maidan to the east Ukraine frontlines

Another key support base for Dr. Suprun’s reform agenda is Ukraine’s civil society. Since the Euromaidan Revolution, Ukraine’s NGO sector has played a remarkably prominent role in the country’s reform efforts. Civil society actors have repeatedly managed to push through initiatives and overcome the inertia of Ukraine’s often cumbersome and obstructionist state apparatus. “What has really impressed me is the support we are receiving for our February 2017

reforms from civil society,” she reflects. “Many of the people we encounter in different civil society positions are the same people who were active on Maidan (during the 2013-14 Euromaidan Revolution – Ed.). They understand that what we are trying to do at the Health Ministry is a continuation of the demands voiced on Maidan. At present, the system exists to perpetuate the system. Financing goes to healthcare institutions and not to patients. We want to change the system so that the patient is the center of attention.” The idea that Dr. Suprun’s reforms are a continuation of the Euromaidan Revolution has proved popular, earning her public sympathy and highprofile endorsements from some of the country’s most credible reformers. Her cause has also benefitted from the fact that some of Dr. Suprun’s biggest critics are notorious for their connections to fugitive former Ukrainian President Viktor Yanukovych and Russian President Vladimir Putin. Many otherwise uninformed observers have assumed that with enemies like these, she must be doing something right. For Dr. Suprun herself, the Maidan connection is particularly meaningful.

interview

: a good communications strategy when you don’t have access to the mass

Brought up in a Ukrainian-American family and married to a fellow member of the Ukrainian Diaspora, Dr. Suprun made her first trip to Ukraine in the 1970s and has been a regular visitor ever since. She and her husband long dreamed of moving permanently to Ukraine, only to have their plans put on hold for a variety of family reasons. Eventually, in autumn 2013 they prepared to make the switch to Kyiv. As they relaxed in London during a stop-off on the way to Ukraine, the Euromaidan Revolution erupted. “We arrived in Kyiv on the morning after the Berkut (riot police) attack on the students and went straight to Maidan,” she recalls. Dr. Suprun was soon active providing medical services for protesters. Her experience during the winter of civil unrest in Kyiv – including the death of a protester who she was unable to save due to lack of medical kit – was to prove the catalyst for a larger role in east Ukraine as the Russian hybrid invasion unfolded in the spring and summer of 2014. Dr. Suprun initially ran an initiative that helped provide first aid supplies and training for poorly equipped Ukrainian frontline troops. As she become increasingly familiar with the shortcomings at the front and the deaths of soldiers due to insufficient medical equipment and training, her involvement expanded to include working with casualties beyond the battlefield. She helped doctors to acquire the skills needed to treat wounded soldiers in hospital, and was behind efforts to establish a school of rehabilitation medicine. This systematic approach, along with the many lives her efforts helped to save, brought Dr. Suprun to the attention of the Ukrainian authorities, leading to her current appointment. Can she now replicate her frontline reform successes on the national stage? After just over half a year at the Ministry of Health, she remains optimistic, but also stresses the need for realistic expectations and a long-term vision. “The problem with reforms in Ukraine is that everyone tends to look at small pieces of the puzzle and not the bigger picture. Reform is doable, as long as you have a clear concept in place. You also need patience. It is not realistic to expect everything to change overnight. In reality, it is going to take years.” This hunger for immediate results is one of the core problems facing Ukraine’s current crop of reformers. They are trying to change a deeply flawed system that is also deeply entrenched, yet they must demonstrate rapid results in order to generate popular support for what are often painful transitions. With many of the country’s most powerful vested interests lining up to block Dr. Suprun’s ambitious healthcare reform agenda, much may now depend on her ability to maintain the support of the country’s political leaders, civil society, and international partners in the months ahead.

Award-winning agricultural innovation helps Ukraine’s farmers plan for future Adama Ukraine claims global prize for initiative to protect farmers from crop price fluctuations

Ukraine’s burgeoning agriculture sector is fast emerging as the most important engine of the post-Euromaidan national economy. Growing yields and the country’s expanding export reach mean Ukraine’s farmers already account for a large slice of national foreign currency earnings. Consolidating the gains of the past few years will require the kind of long-term thinking across the industry that is often difficult in what remains primarily a spot market for agricultural commodities. This transition towards a forward market would help Ukraine’s agribusiness sector move to the next stage in its development, allowing for greater financial stability and more structured investment. Adama Ukraine, the Ukrainian branch of Israeli-based agribusiness multinational ADAMA, is among those working to promote elements of a forward market in the country.

International award

The Adama Ukraine bid to introduce forward commodities contracts began with a pilot project in 2016 and has already received international 44

recognition. Adama Ukraine won the multinational’s annual global “Make It Simple” corporate award earlier this year for its forward contracts initiative, beating out rival entries from over forty other Adama companies. This was the first time Adama Ukraine had entered the “Make It Simple” contest, making the company’s debut success even more gratifying. “It was important for us to win something like this. The award represents international approval for our future strategy,” explains Adama Ukraine Managing Director and CEO Dmytro Kashpor. He argues that this kind of recognition also reflects growing awareness of Ukraine’s importance on global agricultural markets. “There is always an element of politics in such corporate contests. We have doubled our Ukrainian turnover in dollar terms since 2014, and this has put us on the map, earning Ukraine recognition as a key driver of the Adama North European cluster.” Adama Ukraine’s recent ‘Make It Simple” victory was at least partly due to the novel presentation the company staged at the Adama General Assembly. Mr. Kashpor outlined the company’s forward contracts policy in a businesslike manner while Adama Ukraine CFO Nadia Utkina, dressed in www.bunews.com.ua

Offering insurance against crop price drops

Adama Ukraine’s forward contract policy, called a “Magic Option for Farmers”, allows Ukrainian agribusinesses to enter into an agreement with Adama Ukraine at the start of the agricultural season establishing a minimum commodity price, with the option of selling at this rate or not once crops have reached harvest. Mr. Kashpor likens the initiative to car insurance and calls it, “a security measure against bad times when commodity prices are down. It is a rainy day insurance policy.” He says the goal is to introduce elements of stability and predictability into the Ukrainian agribusiness sector, allowing Adama Ukraine’s customers to invest and broaden their operations. For Mr. Kashpor’s team, this means also expanding beyond the boundaries of Adama’s traditional focus on crop protection products. “We need to offer the kind of services that address the core concerns of our customers. If they are successful, we are successful,” says Mr. Kashpor. He believes providing the security of fixed commodity prices will open up a range of opportunities for deepening cooperation with existing clients, and is currently active in promoting the initiative throughout Ukraine via roundtables with the management of small and medium-sized agricultural enterprises. Initial responses have been encouraging, with more than ten companies signing up for the 2016 pilot project involving forward contracts for corn. However, not every Ukrainian agribusiness executive recognizes the value of fixed commodities rates. Some would rather sit on their commodity supplies and wait for prices to rise, despite the missed opportunities and cost of money this would involve in terms of lost revenues and business dynamic. “It is not always easy to explain to customers exactly what this initiative offers and why it is beneficial,” says Mr. Kashpor. “The big holdings generally understand, but medium and small-sized farms do not always get it. We are now active in raising awareness around the country. We have set ourselves the task of moving from a spot market to a forward market. This is the route to a bright future for Ukrainian agriculture as a whole. As soon as you move from the spot market to the following crop market, you solve so many problems.”

each other. On a fundamental level, this trust is the key difference between a spot market and a forward market. Without trust, the whole model is at risk. Once trust is established, the way is open to all sorts of innovation.”

Land reform expectations

agriculture

a traditional Ukrainian vyshyvanka blouse, offered a more theatrical fairytale presentation of the business challenges facing Ukrainian farmers. This engaging performance won over assembled voters and jury members alike, but the substance of the initiative also caught the imagination.

Despite the recent progress made with initiatives like Adama Ukraine’s forward crop contracts, Mr. Kashpor continues to see land reform as the decisive issue for the medium-term development of the Ukrainian agricultural sector as a whole. “The big question now is when land reform will take place. That will be the trigger for massive growth in the agriculture market,” Mr. Kashpor predicts. He expects a hybrid model of land reform to be adopted later this year, keeping some restrictions in place while providing greater protection for investors. Mr. Kashpor is convinced land reform will produce a major boom in the Ukrainian agribusiness sector that will have knock-on effects for the entire economy, unlocking investment and fostering long-term expansion. “There are currently plenty of gaps in Ukraine’s agricultural infrastructure. We can grow much more than we are doing now, but the infrastructure is not ready,” he says. “The railway network is a disaster. Warehousing is also an issue. Once the land issue is resolved, longer-term investment will support growth in the agriculture sector. This will bring other industries forward. The construction sector will become overloaded with orders from the agriculture industry for the next five to six years as companies invest in infrastructure improvements. There will also be significant benefits for metals, transportation, manufacturing and a range of other industries.” This bullish outlook reflects the growing sentiment across the industry that Ukraine is finally beginning to occupy its rightful place on global agricultural markets. Mr. Kashpor regards this as a natural progression. “Ukraine is an agricultural nation and always has been,” he says. “We are now recovering from the short-termism of the post-Soviet period and are back among the global market leaders. There is definitely much more to come.”

From casino culture to predictability

Mr. Kashpor sees this transition to a forward market as a gateway to greater agribusiness stability and reliability – both key factors whose absence has acted as a barrier to Ukraine’s agricultural evolution. “We currently lose a lot due to the lack of stability on the Ukrainian agricultural market, which is still a spot market,” he argues. “It is basically a casino. You do not know what you are going to get for your crop, so you are effectively engaged in gambling. As a farmer, you should not have to gamble. You should be able to focus on doing what you do best – which is growing crops.” Adama Ukraine’s efforts are part of the broader transition of the Ukrainian agribusiness towards best international practices as the industry seeks to carve out a larger share of global markets. “As you step into the Champions League you need to adopt a different attitude. You need greater reliability,” says Mr. Kashpor. “I think people have started to realize that cheating is simply too expensive, because it will ruin your reputation in a market where everybody knows everybody else. Instead, Ukrainian market participants are becoming more open to innovation and are building up trust in February 2017

About the interviewee: Dmytro Kashpor is the Managing Director and CEO of Adama Ukraine

opinion

Ukrainian neutrality would not stop Russian aggression The Institute of World Policy believes a neutral Ukraine would only encourage further Kremlin attacks For the past 25 years, independent Ukraine has struggled to define its place in the international community. Unsuccessful attempts to strike the right balance between ties with Russia and relations with the Western world have led directly to two popular revolutions, and lie at the core of the current conflict in the country’s industrial east. The horrors of the Russian hybrid war in eastern Ukraine have inevitably provoked renewed calls for a policy of geopolitical neutrality that would allegedly ease Russian concerns over Ukraine’s independent development. Advocates of this approach argue that both Russia and the EU would welcome a neutral Ukraine. They believe a geopolitically neutral Ukraine could serve as a commercial, cultural, and diplomatic bridge between the West and the Moscow-led nations of the former Soviet empire. Critics of this argument believe any Ukrainian commitment to neutrality would only serve to encourage Russian encroachment without offering any practical benefits. They claim Russian objections to Ukrainian independence run far deeper than mere concerns over European integration, and contend that Moscow views Ukraine’s democratic evolution as an existential threat to the Kremlin’s own authoritarian model. The Institute of World Policy has produced a point-by-point critique of the case against neutrality that highlights the practical shortcomings of this theoretically appealing policy. 1. No guarantee Russia would observe Ukrainian neutrality In light of the numerous violations of bilateral and multilateral commitments given to Ukraine by Russia, it is highly probable that any future hypothetical proclamations of neutrality would face the same fate as the 1994 Budapest Memorandum. In practice, any new declaration on the neutral status of Ukraine would help Russia to avoid responsibility for its current aggression while helping Moscow regain access to Western resources. It would also decrease Western focus on Ukraine-related issues and create all the necessary preconditions for the resumption of Russian aggression.

2. Neutral status has no widespread support among Ukrainians Surveys indicate that only around 25% of Ukrainians support the idea of neutrality or non-alignment. Any attempt to impose a policy of neutrality could lead to serious social unrest. This, in turn, would cause a deterioration in the domestic security situation. 3. Non-alignment did not prevent today’s Russian aggression At the time of Russia’s February 2014 invasion, Ukraine was officially a nonaligned state. The Kremlin had enormous leverage in the shape of a longterm lease of Sevastopol port – a condition that actually made a nonsense of Ukraine’s publicly declared neutral status. This did not prevent Russian military aggression – on the contrary, it created favorable conditions for Kremlin intervention.

4. Neutrality will not satisfy Russian objectives in Ukraine Russia’s objectives in Ukraine are not limited to preventing the country from joining rival political and military alliances. Moscow seeks to maintain a dominant position over Kyiv’s decision-making abilities. The Kremlin is interested primarily in mechanisms to guarantee its predominant status in Ukraine – namely the preservation of de facto or de jure control over Occupied Crimea and the Donbas, and through them, over the rest of Ukraine. Therefore, the scenario “territorial integrity in exchange for neutral 46

This satirical map posted by Canadian officials in 2014 sought to shame the Kremlin over claims that Russian soldiers captured in Ukraine had simply “lost their way”. The incident served to highlight Russian disregard for Ukrainian sovereignty – something many believe policies of selfimposed neutrality would only encourage rather than deter. status” (following the example of the Austrian Declaration of Neutrality of 1955) is highly unlikely. Moreover, it is crucial to appreciate that by February 2014, the Kremlin had exhausted all available non-military instruments of influence over Kyiv. This is why Moscow resorted to aggression as the only way to preserve control over Ukraine. This has led to the further militarization of Russian foreign policy, including the creation of military infrastructure along the border with Ukraine, together with the further militarization of Crimea and the occupied regions of Donetsk and Lugansk oblasts. Besides, the example of Moldova suggests that official neutrality can neither prevent nor help a country cope with the consequences of Russian aggression. Moldova unilaterally declared neutrality and introduced this provision into its constitution in a bid to persuade Russia to withdraw its forces from Occupied Transnistria. The Kremlin, however, continues to violate the sovereignty of Moldova. 5. Neutrality could prevent international support Ukraine is one of the largest recipients of foreign aid for defense purposes from the United States. During the first two years following the start of Russian aggression, Ukraine received USD 760 million for security and defense programs. Adoption of neutral status would block further assistance of this nature from international partners. 6. History tells us neutrality offers no protection The neutral status of Belgium, Denmark, the Netherlands, and Norway during the Second World War did not help them to avoid Nazi aggression. Finland and Sweden appear to have recognized this reality. Both have both intensified cooperation with NATO in the wake of Russian aggression against Ukraine.

7. Neutrality is only effective when it suits the revisionist state This assertion is confirmed by the experience of Sweden during World War II, and countries such as Finland and Austria during the Cold War. Crucially, control over Ukraine is the number one priority of Russian foreign policy. While Russia continues to view Ukraine as a country within its “sphere of influence”, adoption of a neutrality model by Ukraine would lead not to normalization of relations with Russia, but to the loss of Ukraine’s international subjectivity. www.bunews.com.ua

Lviv becomes Ukraine’s

real estate boomtown West Ukraine’s capital city is experiencing a construction spike as the local economy surges ahead Despite being only Ukraine’s seventh largest city (with an estimated population of 728,000 in 2016), a valid case could be made for Lviv as the country’s second most important city after Kyiv. When it comes to real estate in Lviv, prices in many segments such as new homes and year-round rentals are second only to Kyiv. To some observers this ph enomenon can be a bit head scratching. “Where is the money and demand coming from?” they may ask themselves. But if we want understand any real estate market, then it helps to look at the interplay of various macroeconomic factors and cultural influences for that market.

Quantity and quality of new Lviv housing My cousin in western Ukraine likes to tell me, “They’re building in Lviv like never before.” A quick look at the data from the State Statistics Administration for Lviv supports his statement. Total commissioned residential real estate in Lviv in square meters for the first 9 months of 2016, 2015, and 2014 was at least double the amount of newly commissioned living space for the corresponding period during the boom year of 2008. While this data include figures for single-family homes as well as apartment complexes, and some renovations are included, the strong upward trend is quite clear.

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February 2017

the suburban village of Pustomyty with 110 two-level buildings. Once again, they come fully equipped. The developer has two additional land plots for future real estate projects.

Real estate boom attracts diverse participation

real estate

What about the quality of this new housing in Lviv? In 2017, there are lots of offerings for the “economy” segment. Inevitably, some developers are cutting corners to serve price-sensitive buyers. Indeed, if you take a quick look online you’ll see non-renovated “core and shell” units in new complexes in Lviv that are being offered for as low as UAH 11,000 per square meter (about USD 400). In recent months, I have heard anecdotal accounts of buyers forced to replace the windows of their new apartments due to lack of quality. However, there are also new market players who are changing the quality and variety of properties offered on the Lviv market. At present, TPF Ukraine is the only major residential real estate developer in Lviv owned and operated by Western investors. Their first project was Belgian Village, a complex of 9 “comfort class” buildings with 312 apartments on manicured grounds with a prime location about 300 meters from the new Forum Lviv shopping center and about a kilometer from the city’s downtown Opera House. The units are sold as turn-key properties with full renovations, something that is relatively rare in Ukraine. Seven of the nine buildings have already been commissioned and more than 95% of units have been sold. Current prices for remaining units range from UAH 25,000 up to UAH 32,000 per square meter (about USD 920-USD 1,175) depending on unit size, building and floor. TPF recently began sales on its newest project, a townhouse development in

Lviv’s real estate boom is attracting all manner of players to the market. The Lviv IT Cluster is a non-profit that brings together IT companies, universities, and local authorities for the development of the IT industry. It is one of many groups to become engaged in real estate development. This organization is a unique participant in Lviv’s real estate market. As a non-profit, it cannot and does not seek to make a big profit on its projects. Instead, it must reinvest proceeds back into the fund. However, it enjoys a special status by virtue of its close relationship with many of the key players in Lviv’s most dynamic and profitable business sector, along with strong support from local government. The group’s first real estate project, “IT House”, is a 72-unit building located on land granted by the city. The project’s goal is to provide high quality and affordable housing to employees of Lviv’s IT industry. Non-renovated “core and shell” units are currently on sale at USD 555 per square meter, with commissioning planned for the first half of 2017. IT House is a pilot project for the Cluster and interested buyers can register for future IT House projects online – this helps :

: the Cluster estimate interest in new developments, such as the next project,

IT Village, with 20 premium cottages. Each project holds a separate tender for designers, architects, and building companies. With its focus on quality design and affordability, the IT Cluster is hoping to “disrupt” Lviv’s housing market to spur other developers to improve the overall quality of their offerings. Lviv’s IT Cluster has even received requests for IT Houses from other regional cities such as Ivano-Frankivsk.

Lviv tourism trade

If the 2012 UEFA European Championship was a catalyst for Lviv’s tourism industry, leading to the opening of several new hotels, restaurants, and a modern airport, then the devaluation of the hryvnia in recent years has been a windfall for Lviv’s tourist trade. The drop in value of the national currency has led to a surge in domestic tourists. Nearly five years after Euro 2012, new restaurants, cafes, and shops continue to sprout up like mushrooms after a rainstorm. As a result, commercial rents in Lviv’s historic core/Market Square area can be quite high and are highly sensitive to the volume of foot traffic they can command. Yet despite opening a sparkling new airport almost five years ago, Europe’s major budget carriers have yet to begin flights to Lviv. For the present, Lviv’s vacation rentals market largely still caters to local tourists, often with lower budgets. As a result, the renovation level and service quality of Lviv vacation rentals have not been raised to meet the needs of tourists from EU countries, who have yet to arrive en masse. Lviv’s daily rentals market will rapidly develop in the future when budget flights to Lviv begin from EU destinations. In anticipation of future demand, Lviv’s hotel sector is looking to add significant quantities of new hotel rooms over the next three to four years. Numerous international chains are on record as looking to open Lviv hotels. According to hotel expert Ivan Loun, plans exist to add about 1,000 new hotel rooms in the 3- and 4-star hotel categories in Lviv. However, he sees many of these projects as 50/50 propositions under their current ownership structures. Indeed, while some of these owners are interested in attracting international operators, several may lack the resources or experience to meet the demands of operating under an international brand. Many of these projects are still in their early stages of development and it is likely that several owners may look to attract equity investors or to sell their entire stakes. Lviv even has plans to attract business tourists for conferences by opening a 2,000-3,000 person convention center. To work on this project, the city has formed a Convention Bureau. It possible this project could be completed under a Public Private Partnership or similar structure, but so far, it is still in the early planning stages.

Lviv IT industry as key growth driver

According to recent reports, Ukraine’s IT industry employed about 100,000 people in 2016 – around 12% higher than the previous year. The size of Lviv’s IT industry is rapidly approaching that of the country’s number two regional IT market in Kharkiv, Ukraine’s second largest city with a 1.4 million population, making it rough twice the size of Lviv. This growing army of Lviv IT employees are all potential real estate consumers. There was a time when IT outsourcing to Ukraine was all about lower costs via labor arbitrage. While IT salaries in Ukraine are still lower

than in the West, they are rising rapidly, especially when one takes into account actual “take-home pay”. Many Ukrainian IT workers are comfortably middle class, while local owners and directors of these companies can be affluent. Some estimate the total number of IT workers in Lviv to be as high as 20,000 or even 30,000 people. That is a lot of potential homebuyers and real estate investors for a regional market like Lviv. Some IT companies in Lviv are growing so fast that they can even be difficult tenants for commercial landlords, because these companies quickly outgrow their offices and move out for larger spaces. Landlords renting to IT companies should plan ahead and include several months of advance notification for early termination of leases. To keep up with demand for office space and to provide a foundation for the sustainable long-term growth of Lviv’s IT industry, the Lviv IT Cluster is spearheading an ambitious project dubbed “The Innovation District IT Park”. This project envisions commercial space for 10,000 IT workers, an “IT university” with innovation labs featuring participation from Lviv’s universities, which are important sources of human capital. There will also be a kindergarten, restaurants, and a 100-room hotel, all located on a prime location near Striyskiy Park and the city’s Tax Authority building. The IT Park will be investor-funded, and about 30% of available space has received commitments (Letters of Intent from IT companies that wish to have their own stand-alone buildings). Pending financing, construction of the IT Park could begin in late 2017. Assuming a 15-month construction period, stage 1 could be complete as early as late 2018/early 2019. In the meantime, fast-growing IT companies in Lviv will continue to need office space, and not all of them can wait for the opening of the IT Park.

Manufacturing and service sectors

Boasting a large population of well-educated students and recent graduates, together with lower salaries compared to neighboring Poland and Slovakia, Lviv should be fertile ground for Business Process Outsourcing (“BPO”). However, when compared with Lviv’s IT industry, the development of BPO in Lviv has been a mild disappointment. A beachhead has been established by Nestle with its Shared Services Center. This has been followed recently by Vimpelcom, with a few small call centers. But Lviv is a long way away from the progress of nearby Krakow, which has at least 20-25 large Shared Services Centers. If you are a young person in Lviv with foreign language skills and not interested in working in the local IT industry, then you have relatively few attractive options available. Generally, entry-level jobs in the hospitality industry tend to be

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

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land permanently. This will act as a drain on human resources in Lviv itself, which will have a knock-on effect for the real estate market.

The future of Lviv real estate

So what is the future of Lviv real estate? Where will future economic growth and demand come from? Where should investors be looking? Expect today’s prosperity in Lviv’s Old Town to continue to spread outward from the Market Square area. (Even if Schengen visa policy is liberalized, the hryvnia would have to strengthen substantially before domestic tourism to Lviv could be threatened.) Once major budget airlines open flights to Lviv, yields on vacation rental apartments downtown should increase, as should occupancy rates in hotels. Growth in IT services shows no sign of cooling off. This will continue to drive demand for office space, but demand could be much higher if Lviv succeeds in attracting more companies to open Shared Services Centers for business process outsourcing. Real estate in Lviv, like elsewhere in Ukraine, is the preferred asset class for savings, and this phenomenon provides a “floor” for prices. But if Lviv wants to raise the “ceiling” on real estate, then it must meet the challenges of building a broadly diversified economy that is more than just IT and tourism, by wooing investors, stemming the outflow of labor, and attracting talented workers from other parts of Ukraine.

real estate

lower-wage and offer less room for professional development when compared with relocating to Kyiv to work at a multinational country office, for example. Wages in the BPO sector are not as high as those in IT, but are much better than most other currently available options in Lviv. BPO may not be as “sexy” as IT outsourcing, but with further development, it could become an important tool for Lviv to retain recent graduates, attract foreign investment, and stimulate demand for large commercial office spaces. Light manufacturing is often cited as another sector that could potentially flourish in Lviv and Lviv Oblast. It is not hard to see why - manufacturing wages in Lviv are currently lower than some coastal cities in China. With proximity to the EU 1-2 days by road, versus a month or more for container from China, logistics are especially favorable for things like apparel and footwear manufacturers. Today there are already a number of existing manufacturing projects in Lviv and Lviv Oblast, and in mid-2015, a subsidiary of major Dutch company CTP was selected to build Ryasne-2 industrial park that could house 20-30 companies and produce up to 3,000 jobs. However, today there is a growing shortage of land plots for factories within Lviv’s city limits. Many potential investors in new manufacturing projects (especially larger ones) will need to look to Lviv’s suburbs or move further out into other parts of Lviv Oblast. Lviv’s proximity to the EU can also present challenges when it comes to finding employees for unskilled and low-skilled work. Neighboring Poland’s economy has cooled off in recent years, but remains attractive for Ukrainians, offering much higher wages. In recent years, Poland has issued several hundred thousand residency permits to Ukrainians, and about three-quarters of migrant workers in Poland are from western Ukraine, including Lviv. Over 70% of Ukrainian temporary workers, who participated in a recent survey by Polish staffing company OTTO, indicated that they are considering remaining in Po-

For their contributions to this article special thanks to: Olga Syvak, Chief Investment Officer, Lviv City Council; Markian Malskyy, Head of the Western Ukrainian Branch/Partner at Arzinger; Stepan Veselovskyi, CEO, Lviv IT Cluster; Ivan Loun, Consultant, PKF Hotel Experts; and Lars Vestbjerg, GM of Sika Footwear and President of the Danish Business Association.

4th International B2B Software Days 25-26 April 2017 / Vienna / Austria Use your unique chance: Get updated about Trends, Visions and Strategies in ICT Face to Face meetings with potential Clients & Partners at the B2B section Be visible at the Ukraine Stand and the Ukraine Night Event at the 26 of April Meet around 600 IT professionals from more than 20 countries Learn how to convince clients to invest in your products & services Get an overview about financing possiblities to support your growth projects More details:

February 2017

www.itp-ua.com info@itp-ua.com

Banking giant targets growing

Lviv corporate client market

Credit Agricole opens corporate office in West Ukraine to service growing international investment

Banking sector heavyweight Credit Agricole has become the latest international business brand to bolster its presence in Lviv as the west Ukrainian capital continues to lead Ukraine’s post-Euromaidan economy revival. In January 2017, the bank opened an MNC Desk in historic downtown Lviv. The new specialist branch aims to serve the region’s expanding multinational corporate business segment.

Close to Lviv’s growing corporate community

The choice of Lviv for the bank’s first regional corporate business branch in Ukraine is the latest vote of confidence for a city that has been attracting growing interest from international investors over the past few years. Credit Agricole Ukraine Board Member Larysa Bondarieva says the decision to select Lviv came following consultations with the bank’s clients and analysis of the Ukrainian business environment. “We always strive to be close to our clients, and many of our corporate customers are already active in the region. Our analysis of the geographical breakdown of investment also identified western Ukraine as a clear leader. The whole region, including Lviv, Volyn, Ivano-Frankivsk and Zakarpattia, is becoming more competitive. Investors are establishing production and manufacturing facilities that employ thousands of people. We expect this dynamic to increase in the coming years.”

On the EU’s doorstep Lviv’s ability to attract international investment has received growing levels of attention over the past eighteen months as increasing numbers have entered the local market. Eye-catching investments have come from the likes of Japan’s Fujikura, which opened a major automobile component production facility in Lviv Oblast in spring 2016 – one of a number of international facilities in the region drawn by the availability of competitively priced and highly skilled labor coupled with close proximity to EU markets. Ms. Bondarieva believes these selling points will continue to generate corporate interest for as long as the region remains competitive compared to the alternatives across the border inside the EU. She sees the new MNC Desk as a way to service this expanding corporate market by providing a combination of local knowledge and international financial standards while maintaining a personal approach. “Credit Agricole is moving towards digitalization for the standard banking needs of our customers, but when it comes to the sophisticated requirements of our corporate clients, there is no substitute for direct contact and personal relationships. It is impossible to develop the right tailored solutions without hands-on knowledge. Our

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banking

team in Lviv can provide this for clients throughout the region.” While geographical location is Lviv’s most obvious selling point, the region’s recruitment appeal is already a sign of west Ukraine’s recent success. Ms. Bondarieva says many of the bank’s clients have cited mounting levels of competition for employees, due to the increasing numbers of multinational investors arriving to the region. At the same time, well-qualified professionals also enjoy employment opportunities abroad. This process may drive up salaries and eventually attract recruits from elsewhere in Ukraine. However, it is unlikely to undermine west Ukraine’s competitive edge in the medium-term.

Building business bridges with Poland

Lviv’s EU-friendly location is a two-way street. The MNC Desk will provide corporate services for clients throughout the eight oblasts (administrative regions) of western Ukraine, while also seeking to serve as a business bridge for companies looking to expand across the border into the EU. “We are seeing more and more interest from our Ukrainian clients in expansion into Poland and other neighboring EU markets. The majority of inquiries are coming from companies based in western Ukraine. We see the MNC Desk as a way to help build bridges with other markets, working in conjunction with our colleagues in Poland. Representatives from Credit Agri-

February 2017

cole Bank Polska attended the opening of the MNC Desk in Lviv, reflecting the potential and readiness for greater cross-border cooperation,” Ms. Bondarieva says.

Untapped potential of Ukraine’s regions

The Lviv MNC Desk is Credit Agricole’s first foray into international corporate services in Ukraine’s regions, but Ms. Bondarieva confirms it is part of a broader expansion strategy. The bank recognizes the need to consolidate its presence in Ukraine’s regions – a strategy mirrored across the business sector as international investors look beyond the traditional Kyiv focus. Ms. Bondarieva identifies million-plus cities as those of greatest potential interest, arguing that there are huge unrealized opportunities beyond the bright lights of the Ukrainian capital. “We need to do more to promote investment opportunities in Ukraine’s regions. There is a lot of information available and plenty of well-attended business events taking place in Kyiv, but what we are currently lacking is an active dialogue with companies and business communities in the regions,” she says. “There is certainly room for improvement. Lviv is in a good position due to its close proximity to EU border and human resources, but other regions also have much to offer. It is too early to say where we plan to develop future MNC Desks, but we do believe Lviv is just the beginning.”

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networking events

Ukrainian Banking Sector Executives Gather to Assess 2017 Industry Prospects

Leading figures from the Ukrainian banking, finance, and legal sectors gathered at the Premier Palace Hotel in down Kyiv on 21 February for the third Legal Banking Forum. The event, organised by Yuridicheskaya Practika together with Financial Club, drew over 300 participants to discuss the latest developments in the Ukrainian banking sector, which has been at the center of the countryâ&#x20AC;&#x2122;s reform process in recent years. February 2017

Australian Aboriginal Art Exhibition Comes to Ukraine

The Australian Embassy in Ukraine kicked off the 2017 Kyiv cultural calendar by bringing a highly original indigenous art exhibition to the Ukrainian capital. The exhibition, held with the support of the Australian Department of Foreign Affairs and Trade and the National Museum of Australia together with local partner Triptych: Global Arts Workshop, featured outstanding artworks from some of the finest Australian Indigenous artists of the twentieth century. Bark painting is one of the great traditions of world art, which has been practised by Aboriginal artists of Arnhem Land (Northern Territory, Australia) for millennia. This event was part of a programme throughout 2017 to celebrate 25 years of diplomatic relations between Australia and Ukraine, as well as marking 70 years of Ukrainian settlement in Australia. “We are delighted to introduce Ukrainian audiences to this collection of remarkable and stunning images – examples of a traditional art form produced by the world’s oldest continuing culture,” said Bruce Edwards, Chargé d’Affaires at the Australian Embassy in Ukraine. The exhibition will continue its Ukraine tour over the coming months. www.bunews.com.ua

networking events

February 2017

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networking events

2017 Networking Season Underway in Ukrainian Capital

Kyivâ&#x20AC;&#x2122;s most popular networking community Fryday enjoyed a great night out in late winter at popular new venue Mozgi Bar. This social spot is the latest creation courtesy of restaurateur Maxim Radutskiy and famous Ukrainian rapper and producer Potap. The event was enjoyed by several hundred international and local professionals who collectively celebrated the start of the 2017 business calendar in style. February 2017

TUCC Diners Play With Fire at “Gra Z Vognem”

The Ukrainian Connoisseurs Club ended the winter season with a flaming feast on a freezing night at Kyiv’s Gra Z Vognem (“Playing With Fire”) restaurant. The venue greeted guests with arguably the perfect compliment for a winter’s evening - a warm glass of mulled wine served with an amis bouche, a croquet ball with a duck’s heart at its centre. Connoisseurs enjoyed a choice of main courses, with grilled fillet mignon and tasty grilled tongue on the menu. The top-scoring dish of the evening was the Carpathian tiramasu, which was given 5 stars by every single diner. TUCC President Terry Pickard thanks all Connoisseur Club participants and partners for their support over the past year and looks forward to further dining delights in 2017 as Kyiv’s dynamic restaurant scene continues to expand and innovate.

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Premier Hotel Lybid in the heart of the Ukrainian capital Premier Hotels and Resorts is the market leader in the Ukrainian hotel services industry, offering a distinct range of unique products, European quality, and respect for local culture. One of Kyiv’s most iconic hotels recently joined the portfolio of the hotel operator – Premier Hotel Lybid. Joining the Premier Hotels and Resorts portfolio means offering the high service standards and branding associated with the chain. At the same time, every effort has been made to maintain the unique atmosphere and history of this latest addition. Premier Hotels and Resorts General Manager Irina Sidletska outlines the changes guests can expect at the new-look Premier Hotel Lybid. Premier Hotel Lybid joined the Premier Hotels and Resorts chain in 2016. What changes has this meant for the hotel? Premier Hotel Lybid is now part of Premier Hotels and Resorts, and we guarantee professional service and business convenience. New standards mean Premier Hotel Lybid now meets the requirements of demanding guests who value their time and comfort. Premier Hotel Lybid boasts a convenient location in the centre of Kyiv. The hotel has 274 comfortable rooms. It offers all the right conditions for business events and is ideal for meetings thanks to good infrastructure and the hotel’s professional approach to event management. Reconstruction works continue to gain momentum. The renovation of the hotel façade is worthy of particular attention – the hotel has now become a nocturnal Kyiv attraction thanks to stylish new lighting. What specific steps have been taken to improve Premier Hotel Lybid’s facilities? After all, the hotel was built over 40 years ago and the hospitality industry has evolved significantly in the meantime. A lot has changed in the hospitality sector in recent years, covering everything from rooms and public areas to the quality of services provided. Nowadays, we focus on contemporary travelers who appreciate the dynamism and ease of world-class services. The business services market is also becoming more important. Premier Hotel Lybid is currently in the process of restructuring. The hotel has a new conference room, “Galician”, which can seat up to 160 people in accordance with the Ideal Meeting concept. The hotel’s “Slavic” conference room has also received considerable attention, with wooden murals restored and new furniture and textiles added. Hotel guests have round-the-clock access to business services and free highquality Wi-Fi. The ceiling has been completely replaced in the lobby and lobbybar, and the marble floor polished. The hotel’s “Lybid” Restaurant has also been refreshed. It now offers a “self-service buffet” breakfast with a wider range of fresh products due to the introduction of the “Fresh Organic Traditional” concept during breakfast, guests can try dishes made from a range of Ukrainian natural farm produce. Online booking has become incredibly convenient and fast for guests due to a new network site (www.phnr.com) offering advanced booking options, the most competitive prices, and special offers. For even greater convenience, the categorization of rooms has been simplified.

Loyalty to hospitality brands does not just depend on the facilities and technologies on offer. How will Premier Hotel Lybid stand out? We are focusing on the modernization of facilities including hotel rooms, public areas, the facade, etc. At the same time, we have begun to fill the hotel with positive emotions and introduce the corporate service style found in all Premier Hotels and Resorts venues. In particular, we offer business guests the chance to attend cultural events by providing them with a weekly event guide. As part of the chain’s Art Corner project, a permanent exhibition of Ukrainian artists transforms the lobby into a creative and inspirational space. This year, we will also be offering guests the opportunity to order things to their room that may not be convenient to travel with, or things that they may not have the time to use at home, such as phone chargers or joysticks for computer games. High-level service should not be intrusive but should create warm emotions associated with your stay at the hotel. This might mean a warm smile, exquisite cuisine, or sincere care. Such small but important details can make all the difference. We plan to continue improving the facilities and ambience at Premier Hotel Lybid. In order to add to our full-service event management options, an additional conference room and completely new banquet hall that can seat up to 400 guests will open. Our vision for the hotel also includes the reconstruction of rooms and the renewal of guest zones. Premier Hotel Lybid has changed for the better over the past six months, and this new lease of life will continue!

Premier Hotel Lybid Address: 1 Peremogy sq., Kyiv, Ukraine Central Reservations: +38 (044) 597 90 07 www.phnr.com

For your reference

Lybid Hotel was built in 1970 and completely renovated in 1998–2002. The authors of the project were architects Chmutin, Onishchenko, Stukalov, and Chekanyuk. Today, Premier Hotel Lybid is one of the best three-star hotels in the Ukrainian capital. It is a comfortable and affordable hotel in the heart of Kyiv with convenient transport connections. It offers 274 bright and comfortable rooms in different categories with panoramic views of the city centre; 3 conference halls – Galician A (160 persons), Galician B (216 persons), and Slavic (200 persons); Lybid Restaurant (254 sq. m.) with modern European and Ukrainian cuisine, a summer terrace and a lobby bar.

culture

Ukraine’s movie industry sheds post-Soviet shadows

More and more filmmakers are discovering Ukraine but it remains a challenging location choice

About the author: Eric Ross Gilliatt is a Kyiv-based American dramatic actor, director and producer. He also holds an MBA from the University of Phoenix. He is Managing Director of film production company “UFI Production” at the Ukrainian Film Institute. When the Soviet Union collapsed in 1991, Ukraine inherited what was then a state-of-the-art Dovshenko film studio facility located in Kyiv. Perhaps not as elaborate and technologically capable as Hollywood’s many famous studios, it was nevertheless a very large and impressive facility that had produced some of the USSR’s finest movies over the decades of its operation. For years, independent Ukraine failed to build on this legacy. However, there are indications that the future for Ukrainian filmmaking is finally getting brighter.

Expanding industry

In recent years, we have seen the development of a very capable film studio with sound stages built by the FilmUA group in Kyiv. Film and television production groups like Star Media have also emerged along with various smaller post-production studios and production equipment rental companies like Patriot. These companies and facilities are all capable of working together and bringing high-quality feature length films to life if given the opportunity. Ukraine is also developing the highly advanced art of digital character creations, or Virtual Reality project work. These are exciting times for what was once seen as an industry in terminal decline. There are a number of English-language film projects being planned for Kyiv using prominent Hollywood stars that, when accomplished, will bring the city, and the country, into focus as a world-class film-making location. There are also cooperation projects underway involving the Ukrainian Film Institute and UFI Productions together with leading technology companies like Samsung to develop highly advanced Virtual Reality venues. These could even lead to such amazing things as interactive VR that would be similar to the “‘holodecks” seen on the science fiction series, “Star Trek, The Next Generation”.

Absence of English-language actors

One of the biggest obstacles to Ukraine entering the global film marketplace 62

has long been language. Films produced in Kyiv have always been almost exclusively in either the Russian or the Ukrainian language. Films did not receive distribution outside of Ukraine and Russian-speaking countries, even with appropriate language subtitles. This has meant film profit potentials were severely limited since revenues from local theater screenings were small, as were those from regional television licensing. Only one feature-length product about Ukraine has made it onto the Oscars shortlist in recent times. “Winter on Fire,” a documentary about Ukraine’s “Revolution of Dignity,” was sold to US film giant Netflix who also promoted it for the Academy Awards. The lack of a credible business model in the Ukrainian movie industry over the past 25 years has helped fuel the habit of syphoning money away from project production budgets – a practice that has made access to outside financing even more challenging. Many of the biggest projects undertaken by the Ukrainian film industry since 1991 have been big-budget television serials designed for Ukrainian and Russian domestic audiences. Given the limited TV advertising market potential in both countries, such projects have had little chance of recouping their initial investment. Because of language barriers, no plans were made to try to bring these serials to the EU or the US, where Pay per View, Video on Demand, and regular television broadcast licensing options offer the promise of significant profits. As a result, it became commonplace to misuse investor funds allocated to cover production costs.

Casting agencies go global

Today the language problem is being gradually addressed and the Ukraine film industry is beginning to change in ways that are making it increasingly competitive internationally. With more young Ukrainian actors now learning English, even up to the native-speaking level, coupled with the very attractive low location and production costs the country can offer, more and more international English-language film projects are now starting to be planned, shot, and produced in Ukraine. Acting schools like ProEnglish Theatre are already focusing on teaching actors the English language, while newcomers with similar approaches like Study Academy continue to emerge. This, along with an influx of new native-speaking actors to Kyiv, has begun to change the employment landscape for foreign producers. Local casting agencies like ABA Studio are working to expand their networks into the EU, allowing them to offer good English-speaking actors.

Beating bureaucracy

What does the future hold for the Ukrainian film industry and what problems prevent the country from capitalizing on its obvious advantages of cost-efficiency, human resources wealth, and excellent locations? Corruption within the film industry remains as big an obstacle as it does elsewhere in the Ukrainian economy. Current perceptions of corruption feed a residual sense of caution among foreign producers, directors, and movie industry investors. This relates to government involvement as much as private sector players. In addition to the fiscal aspects of producing a movie in Ukraine, the bureaucracy required for all the necessary permits and approvals are leftovers from the USSR and require painful amounts of time. That will have to be addressed directly if progress in getting more film work into Kyiv can be accomplished. The potential benefits make this an attractive cause. A more movie-friendly environment could eventually lead to multimillion-dollar international productions in Ukraine, bringing a significant financial boost to the wider economy while helping to put the country on the international radar. www.bunews.com.ua

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culture

Holodomor meets

Hollywood Blockbuster movie about 1930s Ukrainian famine draws mixed reviews but succeeds in introducing international audiences to horrors of often overlooked Stalin-era genocide

February 2017

: The hotly anticipated Canadian-produced Holodomor blockbuster “Bitter Har-

vest” opened to decidedly mixed reviews in late February. The movie is the first internationally released movie to address the subject of the famine engineered by the Soviet authorities in early 1930s Ukraine, giving it added historical importance and geopolitical relevance. The plot centers around a Ukrainian love story, with the film’s main characters Yuri (Max Irons) and Natalka (Samantha Barks) caught up in an increasingly apocalyptic environment as Stalin’s efforts to destroy Ukraine’s independence movement spiral downwards towards outright genocide. Not everybody was convinced by the film’s ambitious portrayal of one of the twentieth century’s most brutal yet underreported crimes. Variety’s Chief Film Critic Peter Debruge captured the essence of numerous negative appraisals by noting, “while ‘Bitter Harvest’ will undoubtedly serve to raise awareness, there can be no doubt that the events deserve a more compelling and responsible treatment than this.”

Spotlight on Stalin’s crimes

For Ukrainian audiences, the film’s ability to introduce international audiences to Stalin’s genocide will arguably prove more important than any perceived cinematic shortcomings. In this sense, it is a long overdue contribution. For decades, moviegoers around the world have been more than familiar with the image of dastardly Nazis perpetrating crimes against humanity, but the atrocities of the Soviet regime have rarely appeared on the silver screen. This absence has real-world implications. Relatively few people outside of specialist circles and survivor families appreciate the scale of the Soviet Union’s crimes against humanity, leading to a degree of tolerance towards modern-day revisionism and Soviet apologetics that would spark mass revulsion if directed towards Adolf Hitler’s National Socialist regime. “Bitter Harvest” goes to considerable lengths to highlight the industrial-scale inhumanity of the Soviet authorities. The movie co-stars a suitably sinister Communist commissar (played by Tamer Hassan) who takes thinly veiled pleasure in the campaign of Kremlin terror he coordinates in the Ukrainian vil-

lage that serves as the film’s primary focus. Stalin himself makes regular cameos, calling for increasingly savage measures to crush Ukrainian resistance. Audiences see mass executions taking place in Kyiv and witness the ghoulish results of Moscow’s starvation policy, with corpses littering the streets and piling up in rural ravines. Many of the most notorious images associated with the famine also make it into the film. Starving peasants appear like ghostly apparitions at railway carriage windows. A journalist is bundled away and brutally beaten for speaking openly about the unfolding catastrophe. Red Army troops confiscate sacks of grain at gunpoint as forlorn villagers look on. For anyone familiar with surviving first-hand accounts of the genocide, these scenes will prove particularly harrowing, creating the impression of a previously hazy nightmare imbued with all the clarity and power of twenty-first century cinematography. Audience members who see the film without any prior knowledge of the Holodomor will leave wondering why they had never heard of the Ukrainian famine before.

Holodomor and hybrid war

“Bitter Harvest” comes with plenty of contemporary political baggage. Russia’s 2014 occupation of Crimea and ongoing hybrid war in eastern Ukraine have made the subject of Soviet atrocities in twentieth century Ukraine particularly potent. Moscow has always downplayed the famine – in Soviet times, the Kremlin opted for blanket denials followed by attempts to portray it as a natural disaster. More recently, Russia has sought to depict the mass starvation as part of a Soviet Union-wide agricultural collectivization campaign, while accusing Ukraine of attempting to politicize a shared tragedy. Ukraine is one of more than a dozen countries to recognize the Holodomor as an act of genocide against the Ukrainian nation. The official Ukrainian narrative characterizes the famine as a deliberate attempt to wipe out entire agricultural communities in rural Ukraine, thus extinguishing the smoldering embers of Ukraine’s 1917-21 independence bid. The release of

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“Bitter Harvest” will likely reignite the debate over the nature of the famine. The case for genocide enjoys powerful posthumous endorsement from Raphael Lemkin – the man who originally coined the term ‘genocide’. Lemkin wrote at length about what he termed as “the Soviet genocide in Ukraine”. He argued that Soviet policies in 1920s and 1930s Ukraine were a textbook case of genocide encompassing the Holodomor itself as well as additional campaigns against Ukrainian elites and the deliberate displacement of the Ukrainian population by Russian immigrants. Inevitably, many observers will interpret the appearance of “Bitter Harvest” at this particular moment as the latest salvo in the information war currently raging around Ukraine. In fact, the timing of the movie is pure coincidence. Work on the film actually began prior to the 2013 outbreak of the Euromaidan Revolution, with preparations stretching back many years. “Bitter Harvest” co-author Richard Bachynsky-Hoover first had the idea for the movie while in Ukraine during the heady days of the 2004 Orange Revolution. The son of second-generation Ukrainian immigrants, Ontario-born Bachynsky-Hoover has a background in TV acting work and an artist’s eye for a good story. However, he had never written a screenplay before becoming inspired to explore the Holodomor theme while in witnessing Ukraine’s first post-Soviet people power uprising. “I was inspired to write the script by my experiences of travelling around Ukraine. I wanted to echo the pain I sensed on so many elderly faces, as if there were deep stories locked up inside each line on their faces and behind the eyes that peered at me in villages and cafes and buses and trains,” he tells Business Ukraine magazine.

Educating international audiences

The untold story of Ukraine’s 1930s terror-famine was an obvious focus for a feature-length treatment. It would take years before Bachynsky-Hoover finally completed his screenplay, and even longer until he was able to find supporters willing to take on the project. The Canadian readily admits that

February 2017

many of his friends and family doubted whether the film would ever appear in cinemas, and says his belief in the significance of the project helped him to persevere. “It is of paramount importance for the global community to learn about the famine in Ukraine. I would estimate that around 98% of international audiences are not even familiar with the term “Holodomor”. For over eighty years, the truth has been covered up.” Bachynsky-Hoover is not the only member of the “Bitter Harvest” team with an emotional stake in raising awareness of the Soviet genocide in Ukraine. The film’s Director George Mendeluk and Producer Ian Ihnatowycz both hail from Ukrainian immigrant backgrounds. Many of the leads in the movie had no prior knowledge of the Holodomor, but with filming taking place on location in Ukraine, this allowed Ukrainian extras and crew to share tales of the famine with them that had been handed down from generation to generation. The use of Ukrainian backdrops adds a touch of authenticity to “Bitter Harvest”, with scenes shot at Kyiv’s military hospital, the city’s splendid central railway station, and a number of other well-known locations in the Ukrainian capital. However, the most powerful moments take place in the Ukrainian countryside – the key focus of Stalin’s terror famine and the traditional repository of Ukrainian national culture and identity. The overall visual impact is strong, with plenty of striking scenes highlighting the majesty of rural Ukraine and the more colorful aspects of Ukrainian folk traditions. The vibrancy of this Ukrainian agricultural idyll only serves to heighten the horror of the encroaching famine. This is the film’s overriding message – a land of immeasurable natural wealth left deliberately destitute by totalitarian terror. The plot and dialogue in “Bitter Harvest” may not be to everybody’s liking, but the powerful aesthetics of the movie should be enough to generate renewed interest in the Holodomor itself, while also encouraging other filmmakers to explore this relatively unexplored chapter of twentieth century history. “Bitter Harvest” is a groundbreaking genocide movie in its own right. It may also end up becoming a trendsetter.

Afro-Ukrainian Icon Olympic wrestling star Zhan Belenik on his role model status within the Afro-Ukrainian community What does it mean to you to be a role model for Afro-Ukrainians? I find it inspiring but also immensely challenging. I am conscious of the need to set a good example in everything I do and am very aware of the public’s attention. On the other hand, it is a huge privilege and a source of enormous satisfaction. I have worked very hard to get where I am today, and this role model status is an indication of the recognition I have achieved. There have been lots of sleepless nights and endless training days behind my public success. Life is unforgiving and it is a case of the survival of the fittest, regardless of your profession. I always thank God for my achievements because I am a Christian and take great comfort from my faith. It helps me to remain optimistic and patient in my personal life. Have you been contacted by many AfroUkrainians since becoming an Olympic hero? I have met many Afro-Ukrainians since my Olympic success but not in any official capacity. Afro-Ukrainian friends like singer Gaitana and TV star Gabriella Massanga congratulated me personally. It meant a lot to me to receive their support.

Many people believe the Euromaidan Revolution has changed attitudes towards Ukrainian identity. They argue that a sense of civic identity has replaced the old ethnic and linguistic definitions. Do you agree that today’s Ukrainian society is more ready to accept non-Slavic people as Ukrainians? These are historic times and there are definitely greater levels of mutual respect in today’s Ukraine. The broader changes taking place in Ukrainian society have helped to teach people that character and behavior are much more important factors than things like ethnicity. Ukrainians are increasingly recognizing that we are all the same, no matter what our ancestries may be. We all have the same red blood running through our veins. I have always felt Ukraine was fundamentally a tolerant society, and this is even more so following Euromaidan. 68

What was your experience of racism while growing up in 1990s Ukraine? How have attitudes towards race changed since you were a child? During my childhood, I had many bitter encounters with everyday racism. As a mixed race child living in Kyiv, I sometimes experienced both verbal and physical abuse from ignorant people. I refused to let it get me down, and used to tell myself that every society has its fair share of bad people. On the contrary, I drew strength from the idea that I was a child of two worlds. This made me more determined to succeed and helped me to focus on my goals. I have always regarded racists who dehumanize and degrade others because of the color of their skin as messed up and irrational personalities. Ukrainian attitudes towards ethnicity have undergone tremendous changes since those early post-Soviet years. This is partly a result of the more inclusive thinking fostered by pro-democracy events like Euromaidan. It is

also thanks to greater exposure to the wider world. In the 1990s, very few Ukrainians had travelled outside the former USSR. Today, millions of Ukrainians have travelled all over the world and experienced a wide range of multicultural societies. This has helped to transform attitudes to ethnicity. Travelling broadens the mind, and this is very much the case in terms of contemporary Ukraine. Casual racism is no longer quite so acceptable, while international standards of tolerance are increasingly the norm. How big a role did your African ancestry play in your sense of identity when you were growing up? It had a huge influence on my self-image. Looking back, I think it helped me to be physically and mentally strong and conditioned me to cope with the difficulties of life. My childhood was particularly difficult because I grew up without knowing my father (Zhan’s Rwandan father was www.bunews.com.ua

You have received numerous financially attractive offers to represent other countries as an international wrestler. What made you decide to remain loyal to Ukraine throughout your wrestling career? I am a Ukrainian patriot, plain and simple. I love my country and am grateful for all the support Ukraine has given me – especially when I first set on my journey to become a successful international wrestler. This country has offered me so much. I feel it

is right to play my part in society, joining hands with other well-meaning Ukrainians to build a better country. I have always felt that showing appreciation is a crucial aspect of life. Ukraine is my home and it has played a vital role in my career. It would not be morally acceptable in my eyes to abandon Ukraine at this stage in my career just because the material benefits might be greater elsewhere.

At 26 years of age, you are already a veteran in wrestling terms. What are your plans for the future once you retire from competition? I have no immediate plans to retire but this is something every sportsman must contemplate. I expect to continue training for the rest of my life, as I believe this will help guarantee my mental as well as physical wellbeing. I also plan to enroll in English classes to improve my knowledge of the English language and boost my communication skills. English is the global language in today’s world. A certain level of fluency

is essential if you are looking to interact with people internationally. I want to join the conversation.

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killed during the Rwandan genocide in the early 1990s – Ed.). The absence of my dad played a big role in shaping my personality because I realized at an early age that I would need to be strong, calm, and patient, taking good care of myself while also building solid relationships with people from all walks of life. Being a member of an ethnic minority community has led to some difficulties but at the same time, it has made me more open to others and given me a balanced view on life. It has also helped me to develop a great sense of humor.

You are the first Afro-Ukrainian to represent Ukraine on the global sporting stage. In many Western countries, ethnic minority sports stars have played an important role in breaking down racial barriers in society. Do you hope to play a similar role in Ukraine? I think I am already playing this role, simply by being me. It is something I welcome. I will not turn a blind eye to incidents of racism if I encounter them in Ukrainian society. Racism is a destructive force. My ultimate goal is to help bring peace and progress to Ukrainian society. We need to build a social model that accommodates all Ukrainians, regardless of ethnic or religious background, and recognizes our equal worth. Ukraine’s minorities need to have a sense that they belong.

About the author: Cosmos Ojukwu is a Kyiv-based Nigerian journalist who has been covering Ukrainian affairs for more than a decade

February 2017

Ukraineâ&#x20AC;&#x2122;s National

Identity Debate

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February 2017

endless disputes over interpretations of Ukraineâ&#x20AC;&#x2122;s troubled and tumultuous past. Twenty-five years since the collapse of the USSR, this national identity debate is a key factor fuelling the current hybrid war in eastern Ukraine. What is the best solution for the future of the country? This month, Business Ukraine magazine Chief Editor Peter Dickinson outlines the advantages of embracing Ukraineâ&#x20AC;&#x2122;s unsung multicultural heritage, while Ivan Lozowy argues the case for a more Ukrainian Ukraine.

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Ever since achieving independence in 1991, Ukraine has struggled to foster a sense of national identity capable of uniting the nation. Advocates of an ancestral Ukrainian identity rooted in traditional elements of language and culture have faced opposition from supporters of alternative visions that accommodate Soviet notions of the Ukrainian national community. The struggle to determine a definitive sense of post-Soviet Ukrainian national identity has repeatedly spilled over into the political arena and been played out in

Multiculturalism is the answer to Ukraine’s identity crisis Celebrating diversity: that’s the official theme of the 2017 Eurovision Song Contest, which will take place in Kyiv this May. This is an inspired choice; Ukraine has been one of Europe’s most diverse and multicultural lands for centuries. Since the Soviet collapse, this organic multiculturalism has played a disappointingly minor role in Ukraine’s nation-building efforts. However, it is perfectly in tune with the new and inclusive sense of national identity that has flourished in Ukraine thanks to the Euromaidan Revolution and Vladimir Putin’s hybrid war. By officially embracing the country’s demographic diversity at Eurovision, Ukraine can begin to consolidate the national identity gains of the past few years. With a global audience numbering in the hundreds of millions, the song contest is the perfect platform for redefining what it means to be a modern Ukrainian.

Diverse historical heritage

Ukraine’s historic diversity may come as a surprise to anyone without firsthand experience of the country. After all, the Kremlin has spent the past three years working hard to present outside audiences with a vision of Ukraine as a hotbed of nationalistic intolerance. This xenophobia narrative has proven surprisingly persuasive, particularly among outside observers unaware of the colonial context underpinning Ukraine’s long road to statehood and subsequent post-Maidan national awakening. For hundreds of years prior to 1991, the territory of today’s Ukraine lay divided among rival neighboring powers that ranged from Mongols and Ottomans to Poles, Habsburgs, Russian tsars and Soviet commissars. Throughout this pre-independence epoch, Ukraine was a crossroads of empires where borders ebbed and flowed and cosmopolitan interaction was the norm. It was home to thriving communities of Greeks, Tatars, Georgians, Jews, Poles, Russians, Germans, Turks, Hungarians, and Swedes, to name a few. It is no exaggeration to say that it was probably the most diverse place in Europe. These centuries of foreign rule prevented the emergence of an all-embracing Ukrainian national identity capable of binding the country’s many communities together. Instead, most people came to understand Ukrainian identity along purely ethnic and ancestral lines. In this patchwork context, a picture emerged of an ethnically Ukrainian community within a broader mosaic of ethnic, religious, and national groups, all residing in what would eventually become independent Ukraine. Unsurprisingly, many of those who acquired Ukrainian citizenship in 1991 did not necessarily regard themselves as Ukrainians at all.

An inclusive Ukrainian identity

This makes the transformations of the past few years all the more noteworthy. Since 2014, Ukraine has witnessed an unprecedented outpouring of patriotic fervor of a self-consciously inclusive nature that is totally at odds with the anti-immigration nativism currently on display elsewhere in Europe and across the Atlantic in President Donald Trump’s America. Popular perceptions of Ukrainian identity have moved beyond the narrow confines of language and ethnicity to embrace members of the country’s ethnic and religious minorities. This burgeoning sense of civic identity has been in evidence across Ukraine. Russian-speaking Ukrainians from the south and east of the country have responded to the existential challenge of Putin’s hybrid war by overwhelmingly siding with Ukraine. Muslim Crimean Tatars have become some the 72

country’s most vocal patriots. Jewish community leaders have repeatedly debunked Kremlin attempts to portray post-Maidan Ukraine as an antiSemitic menace, while numerous other national minorities have publicly rejected Russian efforts to stoke separatist sentiment. The irony of this situation must be painfully evident to the Kremlin. Moscow had expected Ukraine to collapse under the weight of its internal divisions once subjected to outside attack. Russian aggression has actually had the opposite effect, uniting diverse communities in the face of a common enemy and creating an overarching sense of identity that might otherwise have taken decades to emerge. An increased emphasis on Ukraine’s historic diversity is also the perfect antidote to the kind of toxic ethno-nationalism championed by many on the country’s nationalist fringe. Ukrainian election results since 2014 reflect the low levels of public support these nationalist groups currently enjoy; none has managed to rise beyond a few percentage points in national polls. Nevertheless, the absence of a competing multicultural narrative has long allowed nationalist actors to play a disproportionally prominent role in Ukraine’s ongoing national identity debate. Over the past three years, nationalist groups have repeatedly embarrassed Ukraine on the global stage and provided Kremlin propagandists with priceless new material. Despite claiming to be arch-patriots, they have done more to damage Ukraine’s international image than the most insidious of the country’s pro-Russian politicians. It is time for the moderate, multicultural majority to reclaim the narrative. The 2017 Eurovision Song Contest in Kyiv, with its apt slogan of celebrating diversity, is a timely opportunity to shift the debate. There will be hundreds of international correspondents in the Ukrainian capital for the song contest. They will all be eager to file additional coverage on Ukraine that provides insight into this relatively unexplored but important corner of Europe. Ukraine should grab this chance to portray itself as diverse rather than divided. Ukraine’s national identity discussion needs to continue long after the Eurovision bandwagon has left Kyiv. Celebrating the nation’s diversity will help consolidate a civic sense of identity that Ukrainians of all backgrounds can embrace. This process is already well underway at the grassroots level, where it has played a key role in upsetting Russia’s imperial ambitions. It might also be the best way of immunizing the country against future Kremlin attempts to exploit minority groups and turn Ukrainians against one another. www.bunews.com.ua

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Towards a Ukrainian Ukraine rope is a negative tendency that is on the rise in recent times. But these are almost always fringe groups and they do not present a real danger to societies in general. As for anti-immigrant populism in Europe, which at times lends harbor to racists, this phenomenon is a natural response to aggressive and expansive immigration policies. This is not to say that Ukraine should shut itself off from immigration completely in the manner of countries like Japan. A constant inflow and outflow of citizens is not only natural – it is desirable. Yet for a country such as Ukraine, deprived of its own state for hundreds of years, the starting point should be a revival of the Ukrainian language, culture, and historical awareness. This is precisely what is happening today. The omnipresent salutes of “Glory to Ukraine,” hugely popular since the 2014 Euromaidan Revolution, are encouraging signs that, as Ukrainians,

The answer to Ukraine’s identity crisis is not the dilution of Ukrainian identity via artificial or enforced multiculturalism, but its revival and rebirth.

Holodomor as ethnic cleansing

Ukraine is neither very culturally nor ethnically diverse. Its 78% ethnic Ukrainian population puts it on a par with countries such as Lithuania, Turkey, and Israel - hardly hotbeds of ethnic diversity. Subtracting the Russian minority in Ukraine, which was artificially buttressed during the hundreds of years during which Russia occupied Ukraine (large numbers of Russians were shipped into Ukraine after the artificial Holodomor famine wiped out entire Ukrainian villages in the 1930s, for example) would, of course, yield a far more monolithic cultural and ethnic map. Richness and diversity in the world depend on nation states that serve as fertile grounds for the organic development of local languages, customs, and culture. Artificial efforts or accidental processes consisting of large immigration influxes have often yielded bad results. Examples include the riots among immigrant communities in France. Violent race clashes have periodically taken place in Great Britain and other EU countries. This should hardly be unexpected. People naturally form local communities, often over the course of centuries, building a common culture and identity. Disrupting this communal zeitgeist leads to conflict. Diversifying local populations creates potentially negative consequences. The United States, a country of immigrants, is an excellent case in point of the dynamics involved. Although practically every American is an immigrant, sufficient time has elapsed for an American identity to take shape. As a result, the continued and intense policy of US immigration, particularly as per the consequences of NAFTA, has riled many Americans. Their dissatisfaction helped to form the basis for presidential candidate Donald Trump’s 2016 electoral success.

Revival of Ukrainian culture

Some people tend to go overboard in practically any situation. The same holds true for advocates of monoculturalism. The rise of neo-Nazis in Eu-

we are well on our way to recovering our identity. The Ukrainian language, still overshadowed in many areas by Russian, is undergoing a revival, particularly since the war with Russia in eastern Ukraine. The dream of many Ukrainians is a “Ukrainian Ukraine” where Ukrainians, in the first instance, feel comfortable. The only thing that many Ukrainians want is what any country with an indigenous population wants – namely the opportunity to develop ourselves as distinctly Ukrainian. This is essential because Ukraine is the only place in the world where the Ukrainian language and culture can thrive. As Ukrainians, we want the same opportunities and cultural context enjoyed by practically every nation in the world. The French envelope themselves in their own sense of Frenchness and are even very interested in exporting it. No one questions the primacy of the German language in Germany. Every nation has the right to its own place under the sun. This is not, sadly, the case in today’s Ukraine. For example, a look at any typical magazine stand across most of the country shows that at least 90% of publications are still in the Russian language.

A grassroots national rebirth

Over the past 25 years of independence, the push for a Ukrainian rebirth has come almost exclusively from the bottom up. Unfortunately, the state has largely ignored this important aspect of rebuilding society. The consequences have been disastrous. In Crimea, a staunchly pro-Russian ethnic minority was able to aid the Kremlin in the easy, albeit illegal, annexation of the peninsula. On the other hand, across most of Ukraine, Ukrainians are now more interested than ever in their heritage. There are many popular Ukrainian pop artists. The Ukrainian national costume, the vyshyvanky, is now a regular feature on city streets. Ukraine’s parliament has passed a law requiring old, communist-era nomenclature to be replaced. The replacements are often the names of historical Ukrainian heroes. This is all good. Because only after fully recovering our own identity can Ukrainians be responsible for developing our country as a modern, tolerant and developed society. Slava Ukrayini!

About the author: Ivan Lozowy is a writer, policy analyst and civic activist. Born in the US he came to live permanently in Ukraine in early 1991 and adopted Ukrainian citizenship in 1997. February 2017

and finally...

Time to reevaluate the Orange Revolution It has long been accepted wisdom that Ukraine’s 2004 Orange Revolution was a failure. However, the passage of time is rendering this verdict less and less convincing. While the immediate political objectives of the revolution were destined to go almost completely unfulfilled (the popular revolutionary slogan “bandits to jail” springs to mind), the broader impact of the uprising may have been underestimated. Indeed, when viewed from the perspective of the current global confrontation with Putin’s Russia, it becomes clear that the Orange Revolution marked a turning point in the entire post-Soviet era, while also playing an important part in Ukraine’s nation-building process. From a Russian perspective, the Orange Revolution was a watershed moment that convinced Moscow of the need to adopt a confrontational stance towards the West. Even today, it continues to haunt the collective consciousness of the Kremlin. The lingering popularity among Russia’s ruling classes of the term “colour revolution” reflects the historic importance they still attach to Ukraine’s uprising as a symbol of Western perfidy. At the time of the Orange Revolution, Vladimir Putin was attempting to portray himself as a reliable partner and ally of the democratic world. The revolution in Ukraine changed all that, casting him in the role of pantomime villain for the first time. Putin’s hubristic visit to Kyiv on the eve of Ukraine’s autumn 2014 presidential election helped ignite the revolution and lent a personal aspect to Russia’s humiliation that changed his entire worldview. It fostered a sense of resentment and betrayal that has poisoned Russia’s relations with the Western world ever since. Russia’s reactionary response to events in Ukraine set the country on the path towards the instinctively adversarial position it currently finds itself in. In the aftermath of the Orange Revolution, Putin launched a far-reaching crackdown on Russian civil society and other “foreign agents”. The Kremlin established patriotic pro-Putin youth groups to prevent young Russians from copying the pro-democracy students of Ukraine. In a defiant response to the orange ribbons of Maidan, Russians were soon being encouraged to wear orangeand-black St. George’s ribbons symbolizing pride in the Red Army’s defeat of Nazism. Westerners replaced Chechens and Islamic fundamentalists as the Kremlin’s enemies of choice, while the blame for Ukraine’s rejection of a Russian reunion was placed solely on “fascists” and “Russophobic extremists”. The enthusiastic international media coverage of Ukraine’s 2004 revolution also persuaded Russia of the need to launch its own global information offensive. Russia Today would begin broadcasting in December 2005 – less than a year after the Orange Revolution. Although nobody knew it at the time, the road lay open to the hybrid war that would erupt a decade later. Closer to home, the Orange Revolution changed Ukrainian society in a number of fundamental ways. Prior to the 2004 protests, the Presidential Administration of Leonid Kuchma had controlled the Ukrainian media in much the same way the Kremlin dictates to the contemporary Russian media. The rejection of state censorship was one of the great turning points of the Orange

Revolution, with a host of national TV channels publicly rebelling against government propaganda. Ukraine’s media has remained relatively free ever since. Even four years of President Yanukovych’s rule proved insufficient to put the genie back into the bottle. It is an imperfect and often deeply corrupt media environment, but it stands out among its post-Soviet peers due to the absence of direct state control. The Orange Revolution helped to erode perceptions of Ukraine as part of the Russian world. Until 2004, many in Ukraine remained trapped in a Soviet mindset that inextricably linked the country’s future fate to that of the Russian Federation. The Orange Revolution shattered these illusions, encouraging millions of Ukrainians to regard their country as an independent geopolitical player for the first time. After 2004, Ukrainians also began to view domestic politics in a different light. The revolution inspired a new generation of politicians and provided a huge boost to civil society. Many of the country’s current reformist MPs underwent their political baptism of fire as activists and journalists during the Orange Revolution. Throughout Ukraine, the fatalistic passivity of the early post-Soviet years gave way to a culture of engagement that survived the political disappointments of the subsequent years and helped make the Euromaidan Revolution possible. Likewise, the miraculous volunteerism that saved Ukraine in 2014 would have been inconceivable without the earlier impulse provided by the Orange Revolution. The enduring importance of events is not always immediately apparent, but the developments of the past three years underline just how significant Ukraine’s people power protests of winter 2004 really were. If the Euromaidan Revolution represents the rebirth of the Ukrainian nation, then the Orange Revolution was the moment of conception. It may not have achieved its immediate goals, but Ukraine’s 2004 revolution succeeded in changing the entire geopolitical landscape of Eastern Europe and is deserving of a more prominent place in regional history.

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