Analytical review of the week No. 146 of 30.01.2022.

Авторы публикации

Аналитический обзор недели №146 от 30.01.2022г.

ANALYTICAL REVIEW OF THE MAJOR DOMESTIC, FOREIGN POLITICAL AND ECONOMIC EVENTS OF THE WEEK

24.01.- 30.01.2022

CONTENT:

SUMMARY AND MAIN TRENDS.

DOMESTIC POLICY.

1. D. Razumkov presented NGO "Team Razumkov".

2. The process of completing the territorial defense and the political games around it.

3. FLP protests near the Verkhovna Rada.

4. NABU detained MP Sergei Kuzminykh from the Servant of the People party while receiving a bribe.

5. Sociology.

FOREIGN POLICY.

1. The United States provided Russia with a written response to the requirements for security guarantees.

2. Meeting of advisers to heads of state in the Normandy format.

3. Statements by Russian parliamentarians on the possibility of arms supplies to Donbass.

4. Telephone conversation between V. Zelensky and D. Biden.

ECONOMY.

1. Rising gas prices lead to production shutdowns. The government is feverishly trying to change the situation.

2. The sale of OGCC was postponed until spring.

3. Mandatory use of PPO FLP from January 1, 2022 "is lagging".

4. The NBU issued an inflation report.

5. The Ministry of Finance non-publicly redeemed about 5% of GDP warrants last year

SUMMARY AND MAIN TRENDS.

Summing up the results of the past week, we note that:

Firstly , in the internal politics of the country this week there was a trend towards the structural formation of the opposition camp. Ex-Speaker of Parliament Dmitry Razumkov presented his public organization "Razumkov's Team", which should become the basis for launching a new party. At the same time, D. Razumkov's MFI "Reasonable Politics", as a group of internal opposition within the framework of the Servant of the People parliamentary faction, in fact, it deprives the power of the mono-majority in parliament.

Secondly , the strengthening of the power of the Office of the President at the regional level continues. In accordance with the changes made to the law on national resistance, the entire vertical of actively emerging territorial defense units is now closed to the President.

Thirdly , as part of a protest against the policy of total fiscalization pursued by the authorities, mass protests of individual entrepreneurs took place this week demanding that they postpone the introduction of cash registers for them.

Fourthly , the main trend in international politics, which manifested itself in the outgoing week, is the continuation of the geopolitical confrontation between the US and the Russian Federation. Washington expectedly refused to provide Moscow with the security guarantees it demanded. Now the ball in the geopolitical game is on the side of Russia. A new round of escalation associated with the “military and military-technical” measures of the Russian Federation is becoming almost inevitable.

Fifthly , this week the disagreements between the Ukrainian authorities and Western partners from the US and Britain on the issue of “probable Russian invasion” finally took shape and were made public. The Office of the President believes that by evacuating their diplomats from Kiev and whipping up military hysteria in the media, Washington and London provoked problems in the Ukrainian economy. This opinion is completely true. In the wake of war rumors, businesses have already withdrawn $12.5 billion from Ukraine. However, despite the requests of the Ukrainian authorities to stop the escalation of panic, the Americans do not intend to do this. In this regard, we should expect even greater economic problems for Ukraine.

Sixth , the rise in gas prices triggers a chain reaction of destructive processes throughout the Ukrainian economy, where market players are trying to shift the burden of losses on each other. For example, milk processors are trying to partially pass on the losses to peasants and farmers who sell milk to milk processing enterprises. Glass production is also under threat. The authorities, having promised the IMF not to regulate gas prices, end up resorting to quasi-market methods, such as forcing gas suppliers to participate in special tenders so that they sell gas to socially important enterprises, such as bakeries. Thus, the government still regulates gas prices, despite its obligation to the IMF, fearing the shutdown of bakeries and the subsequent social explosion.

DOMESTIC POLICY.

Briefly :

In the domestic policy of the country this week, there was a tendency for the structural formation of the opposition camp. Ex-Speaker of Parliament Dmitry Razumkov presented his public organization "Razumkov's Team", which should become the basis for launching a new party. At the same time, D. Razumkov's MFI "Reasonable Politics", as a group of internal opposition within the framework of the Servant of the People parliamentary faction, in fact, it deprives the power of the mono-majority in parliament.

The strengthening of the power of the Office of the President at the regional level continues. In accordance with the changes made to the law on national resistance, the entire vertical of actively emerging territorial defense units is now closed to the President.

It is expected that the detention while receiving a bribe of a people's deputy from the "Servant of the People" S. Kuzminykh as a whole will negatively affect the reputation of the pro-government team and the President in particular. Considering that NABU is a structure focused on Western partners, it is possible that the case arose as a continuation of the general wave of discredit against the pro-government team from the West.

As part of the protest against the policy of total fiscalization pursued by the authorities, mass protests of individual entrepreneurs took place this week demanding that they postpone the introduction of cash registers for them.

1. D. Razumkov presented NGO "Team Razumkov".

On January 24, ex-Speaker of Parliament Dmitry Razumkov presented his public organization "Razumkov's Team", which will become the base for launching a new political force. He said that today about 7 thousand people have already joined him [1].

D. Razumkov plans to form his own political party within a few months. At the same time, there are prospects for the development of the inter-factional association (IFI) "Reasonable Politics". The rating of the conditional party "Reasonable Politics" is now in the range of 7% -8%. At the same time, the ex-speaker expressed his intention to take part in both the presidential and parliamentary elections.

D. Razumkov is sure that the mono-majority of Servant of the People in the parliament will not last long. " There will still be enough people's deputies from the Servant of the People faction who will join the Rational Politics association ," he said. de facto, power lost its mono-majority in parliament.

The beginning of a new plenary week in Parliament demonstrated that in order to make the necessary decisions it is increasingly difficult for a pro-government team to gain votes. The deputies failed a number of important votes for the OP. The bill on strengthening responsibility for counterfeiting covid certificates did not win votes, it was not possible to dismiss the head of the State Property Fund, did not support the idea of creating a temporary commission of inquiry (VSK) of the parliament to check the activities of the Commissioner of the Rada for Human Rights L. Denisova. Also, the presidential bills on dual citizenship and an economic passport were not included in the agenda of the Rada [2]. Formally, the work of the parliament was postponed due to the outbreak of coronavirus among people's deputies.

But it is possible that the mono-majority of Servant of the People, even together with the deputy groups For the Future and Trust, simply does not always work. Not the last role in this process is also played by the MFO "Reasonable Politics". Many deputies from the Servant of the People understand that they may not get into the next convocation with this political force, which makes them look at other party projects.

It should be noted that against the background of the total disappointment of the Ukrainian society with the current government, there is a request for a new political force, but the voter does not yet perceive the figure of D. Razumkov himself as a potential leader. The latest sociological study by KIIS showed that D. Razumkov's rating has dipped by 3% since December 2021 (from 8% to 5%) and is now lower than that of his conditional party. This situation may indicate the "fading" of his political start, provided that D. Razumkov does not radically change the strategy of his actions. It is unlikely that a positive copy of Zelensky-Goloborodko performed by D. Razumkov will work, as in 2019.

2. The process of completing the territorial defense and the political games around it.

On January 27, in the second reading, bill No. 6302 was adopted, which amends the law on national resistance [3], which entered into force on January 1, 2022. In particular, the law allowed the use of additional weapons by territorial defense units, classified the methods and means of performing tasks within the framework of the movement and public procurement for resistance. The powers of the military command and control bodies of the Armed Forces of Ukraine and the powers of the government are also specified (the issues of monetary remuneration to persons undergoing military service during the special period are settled). In particular, the wording in the law allows the territorial defense units to be assigned any tasks that the Cabinet of Ministers determines.

It is worth noting that the entire volunteer vertical is now closed to the President. And V. Zelensky formally has the opportunity to create his own personal "armies" at the regional level.

The changes introduced eliminated the situation in which the commanders of volunteer detachments of territorial communities had to be coordinated with local governments. Thus, the mistake with the original prescription in the law of the dualism of power in the matter of the formation of volunteer detachments of therodefense was corrected. Now the duties of appointing the commanders of volunteer detachments have been assigned to the Commander-in-Chief of the Armed Forces on the proposal of the Commander of the Territorial Defense Forces Yuri Galushkin, appointed to this position by V. Zelensky.

The changes introduced are connected with the attempts of V. Klitschko and other mayors to lead the formation of territorial defense units. Against the backdrop of hysteria about the "Russian invasion", the regional elites began to seize the initiative in this matter from the central government. The likelihood of the formation of an armed militia focused on local authorities, which can additionally become an armed support regional elites, caused strong discontent in the Office of the President. In this regard, the example of Kiev, headed by V. Klitschko, a potential rival of V. Zelensky, is the most dangerous for the OP. With this in mind, the above-described changes were made to the law on national resistance.

3. FLP protests near the Verkhovna Rada.

This week, large-scale rallies of individual entrepreneurs took place, which were accompanied by an attempt to storm the building of the Verkhovna Rada and clashes with the police. The SaveFOP organization announced an open-ended protest action. The protesters demanded to support bills No. 5866 and 5866-1, designed to protect the simplified taxation system. Recall that from January 1, 2022, all entrepreneurs, including sole proprietors, will have to use cash registers. Additional expenses for a PPO and an accountant will cost, on average, 10-15 thousand per month, which may cause the closure of a part of a small business. As we wrote earlier, the authorities will continue the trend towards total fiscalization, which is caused by the desire to cover the budget deficit and repay foreign loans at the expense of ordinary citizens. Therefore, one should hardly expect any concessions in this matter.

4. NABU detained MP Sergei Kuzminykh from the Servant of the People party while receiving a bribe.

On January 28, the National Anti-Corruption Bureau of Ukraine (NABU) detained a UAH 558,000 bribe. People's Deputy from the party "Servant of the People" Sergei Kuzminykh [4]. According to the investigation, the deputy received funds for assistance in concluding contracts between private companies and a hospital in the Zhytomyr region. NABU will turn to the Prosecutor General to sign the suspicion.

S. Kuzminykh was elected in the 67th constituency (Zhytomyr region) as a non-partisan.

It is expected that the detention while receiving a bribe from the "Servant of the People" in general will negatively affect the reputation of the ruling party and the President in particular. Given that NABU is a structure oriented towards Western partners, it is possible that the case of S. Kuzmins arose as a continuation of the general wave of discrediting the current Ukrainian government from the West , where lately they have been dissatisfied with the policies of V. Zelensky and the sabotage of reforms. In addition, there is a point of view according to which this kind of pressure is used against representatives of the Ukrainian authorities and with the aim of forcing them to comply with the Minsk agreements. We consider such a scenario unlikely, but it was necessary to mention it, among others.

5. Sociology.

On January 24, the Kiev International Institute of Sociology (KIIS) [5]published a study according to which V. Zelensky continues to lead in the presidential rating - 23.5% of respondents. Compared to the poll conducted by KIIS in December 2021, the president's rating has decreased by 2.7%; was 26.2%. Followed by:

P. Poroshenko - 20.9% (+4.2%)
Y. Tymoshenko - 11.8% (+1%)
I. Smeshko - 9.6% (+2.8)
Y. Boyko - 9.3% (+1.5%)
E. Muraev - 6.8% (+0.7%)
D. Razumkov - 5% (-3.1%)
V. Groysman - 4.3% (-1.3%)

European Solidarity leads the parliamentary ranking with 18.9% (+3.5%) compared to December 2021. The following are:

• Servant of the People - 13.7%, compared to December 2021, the party's rating decreased by 2.7%.

• Batkivshchyna - 13.3% (+1.8%)

• HLE - 11.6% (-1%)

• D. Razumkov's "Reasonable Politics" party - 7.6% (unchanged).

• Strength and Honor - 7.4% (+1%)

• "OUR" - 5.5% (-0.6%)

In total, 7 parties enter the parliament. The rest do not overcome the 5% barrier.

The results of the above-mentioned KIIS study, along with other sociological studies, indicate the presence of an upward trend in the ratings of P. Poroshenko and his European Solidarity party, against the backdrop of a continued decline in the ratings of Volodymyr Zelensky and the Servant of the People.

The results of KIIS research show that since December 2021, the ratings of V. Zelensky and Servant of the People have fallen by almost 3%. Party leadership with a margin of 5% from the "Servant of the People" is now occupied by the "EU".

At the same time, if compared with the results of February 2021 (the peak of the decline in the ratings of power), then the President had 22.7% (now 23.5%) - the difference is within the statistical error. The rating of the pro-government party was then higher - 15.5% (now 13.7%). At that time, there was also a rapid increase in ratings for the "EU" and its leader - P. Poroshenko (from 2.5% to 5%). But the gap between V. Zelensky and P. Poroshenko then was somewhat larger than now - 4.4% (now 2.6%).

FOREIGN POLICY.

Briefly:

The main trend of international politics, which manifested itself in the outgoing week, is the continuation of the geopolitical confrontation between the US and the Russian Federation. Washington expectedly refused to provide Moscow with the security guarantees it demanded. Now the ball in the geopolitical game is on the side of Russia. A new round of escalation associated with the “military and military-technical” measures of the Russian Federation is becoming almost inevitable.

This week, the disagreements between the Ukrainian authorities and Western partners from the US and Britain on the issue of a “probable Russian invasion” finally took shape and were made public. The Office of the President believes that by evacuating their diplomats from Kiev and whipping up military hysteria in the media, Washington and London provoked problems in the Ukrainian economy. This opinion is completely true. In the wake of war rumors, businesses have already withdrawn $12.5 billion from Ukraine. However, despite the requests of the Ukrainian authorities to stop the escalation of panic, the Americans do not intend to do this. In this regard, we should expect even greater economic problems for Ukraine.

1. The United States provided Russia with a written response to the requirements for security guarantees.

On January 26, the US Ambassador to Moscow submitted a written response to Russia's demands for security guarantees to the Russian Foreign Ministry [6].

As follows from the statements of the United States Secretary of State Anthony Blinken, Washington refused Moscow to satisfy the main demands of Russia, namely, the non-expansion of NATO to the East and the withdrawal of American troops in Europe to the positions they occupied in 1997.

The US leadership is ready to negotiate with Russia only on regulating the deployment of medium and shorter range missiles.

After receiving an official response from Washington, the ball ended up on the side of Moscow. The fact that the Russian leadership previously announced its intention to take “military and military-technical” measures in the event that the American side refuses its demands makes further escalation in Russian-American relations almost inevitable. To remain silent in this situation for the Russian Federation would mean dropping its authority.

No one knows exactly what Moscow's actions will be. However, in our opinion, they may consist in the deployment of Russian intermediate-range and shorter-range missiles in regions from where they could threaten the United States or its main NATO allies.

Probably, "military-technical measures" from Moscow should be expected in the next month or two.

2. Meeting of advisers to heads of state in the Normandy format.

On January 26, a meeting of advisers to the heads of state in the Normandy format took place in Paris [7].

Following its results, Andriy Yermak, head of the Office of the President, said that the joint communiqué of the parties was the first since December 2019, which was agreed upon by all four parties.

In addition, the main topic for discussion, according to him, was the observance of the ceasefire in Donbas, adopted in July 2020. The parties agreed that it is necessary to monitor the observance of the "silence regime", in particular, through the OSCE mechanism.

As A. Yermak stated, although there are many contradictions between the parties on the interpretation of the Minsk agreements, they agreed to negotiate further.

Dmitry Kozak, in turn, said that, according to the Russian delegation, Ukraine should conduct a direct dialogue with representatives of the "DNR" and "LNR". According to the Russian side, it was precisely to resolve the issue of the possibility or impossibility of starting such a dialogue that the parties took a two-week pause until the next meeting.

It should be noted that the last meeting of advisers in the Normandy format did not bring any diplomatic breakthroughs. Kiev does not intend to go into direct negotiations with representatives of the uncontrolled territories, which the Minister of Foreign Affairs of Ukraine Dmitry Kuleba said the next day after the meeting. The strategy of the Ukrainian authorities regarding the Minsk agreements also remains unchanged: they do not intend to implement them in their current form.

As a result, we have a situation in which the only thing that can be agreed upon in the Normandy format is the resuscitation of the ceasefire.

It should also be said that the summit of advisers was convened on the initiative of the French and Ukrainian sides. Paris and Berlin saw the goal of his organization as their participation in the de-escalation of the military-political situation in Eastern Europe, which had escalated due to the military-political confrontation between the Russian Federation and the United States.

In turn, Kiev saw the main task of this summit as a demonstration of its own subjectivity for the electorate. Against the backdrop of Russian-American negotiations, the opinion has strengthened in the country that the fate of Ukraine is being decided without Ukraine. For this reason, the President's Office willingly accepted the proposal of the Europeans to organize a summit of advisers in the Normandy format.

3. Statements by Russian parliamentarians on the possibility of arms supplies to Donbass.

On January 26, Andrey Turchak, deputy head of the Russian Federation Council, said that the Russian Federation should provide support to the "DPR" and "LPR" in the form of the supply of certain types of weapons [8]. On the same day, the United Russia faction in the State Duma asked the Russian authorities to help the "DPR" and "LPR" with military supplies and take "all measures to ensure the safety of their citizens." This was stated by the head of the faction Vladimir Vasiliev [9].

These statements of the Russian side were made against the backdrop of the Normandy Format summit of advisers to the heads of state on the issues of a peaceful settlement in Donbass in Paris.

According to our estimates, they indicate that Moscow intends to continue the process of creeping integration of uncontrolled territories with Russia, and, against the backdrop of a high degree of confrontation in Russian-American relations and Kiev's actual refusal to comply with the Minsk agreements, they may decide to start official supplies weapons to the Donbass.

4. Telephone conversation between V. Zelensky and D. Biden.

On January 27, a telephone conversation took place between US and Ukrainian Presidents Joseph Biden and Volodymyr Zelensky [10].

According to the official version of both sides, they talked about coordinating de-escalation efforts, arms supplies and the possibility of financial assistance to Ukraine.

However, the Ukrainian president probably also expressed to Joe Biden his dissatisfaction with the fact that, due to the military hysteria being whipped up by the Western media, business representatives have already withdrawn $12.5 billion from Ukraine.

In recent weeks, the displeasure of the Ukrainian leadership that the American and British media are fanning a panic that leads to economic losses has grown stronger. The president and deputies from the ruling Servant of the People party are no longer shy about publicly declaring that all military hysteria is caused by deliberate inflating and replicating fakes. In fact, these are direct accusations against the United States and Britain, which the Ukrainian leadership did not allow itself to do before.

We predict that in the near future, the disagreements between the Ukrainian authorities and the Anglo-Saxon partners on the issue of a “probable Russian invasion” will only intensify.

ECONOMY

Briefly:

Rising gas prices trigger a chain reaction of destructive processes throughout the Ukrainian economy, where market players are trying to shift the burden of losses on each other. For example, milk processors are trying to partially pass on the losses to peasants and farmers who sell milk to milk processing enterprises. Glass production is also under threat. The authorities, having promised the IMF not to regulate gas prices, end up resorting to quasi-market methods, such as forcing gas suppliers to participate in special tenders so that they sell gas to socially important enterprises, such as bakeries. Thus, the government still regulates gas prices, despite its obligation to the IMF, fearing the shutdown of bakeries and the subsequent social explosion.

D. Getmantsev’s promise to register a bill according to which FLPs will not be fined for improper use of cash registers in 2022, provided that cash registers are registered before February 1, is another “carrot”, forcing entrepreneurs to come out of the shadows.

The NBU predicts a further increase in prices for sunflower oil, sugar, bread and greenhouse vegetables in its January inflation report due to rising energy prices.

The authorities are trying to gradually buy out GDP warrants so as not to pay the “economic growth tax”, that is, unlimited interest after 2025 under the terms of the 2015 public debt restructuring by Minister N. Yaresko.

1. Rising gas prices lead to production shutdowns. The government is feverishly trying to change the situation .

On December 29, the Dairy Alliance company (trademarks Yagotinskoye, Piryatin, Slavia, Zlatokray) announced a possible halt in production due to too high gas prices [11]. Over the year, the price of gas increased 10 times, electricity - 2.5 times, packaging material - by 42%, raw milk - by 25%. Ultimately, businesses try to cut losses by lowering the purchase price of milk supplied by private farms.

On December 29-30, 24 largest milk processing plants in Ukraine began mass mailing notifications to milk suppliers about a unilateral decision to reduce purchase prices for milk [12]. And without this, the total volume of milk produced in 2021 decreased by 6% compared to 2020, according to the State Statistics Service [13].

On January 18, a message appeared on the official website of the Association of Glass Producers of Ukraine “Glass of Ukraine” about the shutdown of three factories for the production of glass products due to too high gas prices [14]. 12,000 jobs are at risk. In 2021, greenhouses for growing vegetables and fruits were the first to sound the alarm. So, in mid-November 2021, Ukraine for the first time in its history began to import pickled cucumbers from Russia [15].

Following in the wake of the priority of cooperation between the IMF and Ukraine and the obligation of the latter to cancel any regulation of gas prices for the population, not to mention business, the authorities are looking for a “compromise” solution - namely, to shift the burden of unprofitable prices on private gas producers by bringing them to special auctions, to provide gas for socially important production, such as the production of bread. Only a third of all private gas producers registered for the first auction out of [16]three . That is, the authorities are trying to circumvent their own promise to the IMF not to regulate gas prices through a quasi-market approach - organizing special auctions for private gas producers, who naturally do not want to sell gas at prices below market prices. I. Kolomoisky’s Ukrnaftobureniye enterprise ignored all three auctions for the sale of gas for the production of socially significant goods in January 2022 . As a result, the deregulation of the Ukrainian gas market ended with the “hand-twisting” of private gas producers, except for the enterprise of I. Kolomoisky. Instead of honest regulation, it turned out to be shadow regulation of gas prices. Something similar is happening with the growth of utility tariffs for the population, as one of the methods of shadow taxation of citizens.

2. The sale of OGCC was postponed until spring.

On January 26, the head of the State Property Fund, D. Sennichenko, who had already resigned, gave an interview to the business portal Mind.ua, where he spoke about plans to put OGCC for sale for the fourth time in the spring of 2022 [17]. In December 2021, another auction for the sale of the enterprise failed, despite an attempt by the authorities to stimulate potential participants in the auction with additional guarantees. No major investor would invest in such large enterprises as OGCC in a warring country, let alone settle for anything close to the market price. Ukraine will be able to return to the practice of privatizing large enterprises only after the settlement of the conflict in Donbas and the actual cessation of the war.

3. Mandatory use of PPO FLP from January 1, 2022 "slips".

On January 24, D. Getmantsev, on his personal Telegram channel, announced about 300,000 installed registrars of settlement operations (CRO) FOP throughout Ukraine [18]. On January 26, he nevertheless announced plans to register a bill that would exempt FLP from fines for not using cash registers until the end of 2022 [19]. The only condition is to establish cash registers before February 1, 2022.

4. The NBU issued an inflation report.

On January 20, the NBU Board decided to approve the inflation report [20]. The National Bank of Ukraine predicts an increase in prices for sunflower oil, sugar, bread and greenhouse vegetables - any products that depend on energy prices [21].

5. The Ministry of Finance non-publicly redeemed about 5% of GDP warrants last year

According to the State Treasury Service of Ukraine , at the end of December 2021, the cost of servicing warrants increased by UAH 1.15 billion. – from UAH 5.6 to 6.75 billion [22]. This indicates that the Ministry of Finance bought back 5% of GDP warrants. The authorities have already done this in 2019, buying back 10% of the warrants. This is to reduce future payouts as warrant payouts will not be capped after 2025. Until 2025, warrant payments cannot exceed 1% of GDP. The 2015 debt restructuring led to a situation where a “tax on economic growth” was imposed on Ukraine. If the Ukrainian economy grows by 3-4%, the country pays 15% of this percentage. If the economy grows by more than 4% - Ukraine pays 40% of the amount.

Edited by:

Ruslan Bortnik,

Daniil Bogatyrev.

Authors:

Daniel Bogatyrev,

Oksana Krasovskaya,

Andrey Timchenko

[1] https://vlada.segodnya.ua/vlada/sobytiya/takogo-davno-ne-delali-v-ukraine-razumkov-raskryl-plany-na-partiyu-1598134.html

[2] https://strana.best/news/373377-verkhovnaja-rada-soprotivljalas-prezidentu-v-den-eho-rozhdenija-25-janvarja.html

[3] https://news.depo.ua/rus/news/verkhovna-rada-utochnila-zavdannya-natsionalnogo-sprotivu-202201271417429

[4]https://ua.interfax.com.ua/news/general/794828.html

[5] https://www.kiis.com.ua/?lang=ukr&cat=reports