BELGIUM IN UKRAINE
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BUSINESS UKRAINE 08/2017: This month we focus on bilateral ties between Belgium and Ukraine. Highlights include a report on the impressive but previously overlooked lead role played by Belgian businesses in the Tsarist era industrialization of Ukraine. (Cover photo: Georgii Goloverda. Waffles courtesy of Gofre)
Why Putin Cannot Risk Peace in Ukraine Imagine the scene: a patch of overgrown wasteland on the outskirts of a nondescript east Ukrainian rust belt town. It is a damp and overcast early autumn day. Emergency services personnel are methodically excavating a large plot of muddy earth while a huddle of journalists and aid workers look on in silence, silhouetted against the empty sky. The date is October 2019. Another mass grave has just been uncovered. This grim but all-too-conceivable scenario is perhaps the most compelling reason why Vladimir Putin’s recent UN peacekeeper posturing over Ukraine should be taken with a large pinch of salt. The Russian leader may privately wish to extricate himself from the Ukrainian quagmire he has created, but it is difficult to see how he could do so without courting disaster. Any Russian retreat from the Donbas would open up a veritable Pandora’s Box of revelations that would prove equally problematic for Putin at home and abroad. The Kremlin’s general involvement in eastern Ukraine has long been the world’s worst kept secret, but details of Russia’s exact role on the ground remain clouded in hearsay and subject to furious denial. This would change dramatically as soon as the Kremlin removed its military presence. An intricate and irrefutable picture of Putin’s secret war would soon emerge, leaving the Russian leader hopelessly exposed and facing demands from all sides to answer for both the loss of life and his endless lies. This process would likely begin with initial hesitation as residents of eastern Ukraine recovered from the trauma of the conflict and convinced themselves it was now safe to talk. However, as more and more local witnesses came forward, the floodgates would inevitably open. Physical evidence would help to corroborate these eyewitness accounts. Armies of journalists and civil society activists are already poised to comb the entire region just as soon as they receive access. Alongside them will be forlorn families from both sides of the conflict searching for signs of missing loved ones.
Even the most ancient of battlefields is still capable of yielding clues, so it is reasonable to assume evidence of Russian war crimes currently litters the towns and cities of the Donbas. We have already had a foretaste of what to expect thanks to the steady trickle of MH17-related photos and videos to emerge out of eastern Ukraine since 2014. This information has proved crucial in identifying the Russian army unit responsible for downing the civilian airliner, but it is merely the tip of the iceberg. The only way Russia can hope to keep its hybrid war secrets from leaking out is by maintaining de facto control over Occupied East Ukraine. As long as the Kremlin holds the whip hand in the Donbas, it can manage the flow of information and prevent foreign journalists or international observers from making life too uncomfortable. If this control is lost, the Kremlin risks a smaller scale repeat of the late Soviet era, when the perestroika thaw allowed the long-suppressed crimes of the Communist authorities to resurface and seal the fate of the dying empire. Putin has spent much of the past seventeen years repairing this damage and rebuilding Russia’s battered sense of national pride. He is unlikely to invite an encore. With Russia seemingly stuck in the Donbas, any talk of Minsk-mandated local elections or a return to Ukrainian sovereignty is hopelessly optimistic. Ukraine should instead focus on the practicalities of frontline de-escalation while working to strengthen the country’s defenses. Meanwhile, the current cycle of car bombings, cyber-attacks and frontline skirmishes looks set to continue. Putin has become entangled in his own web of deceit and simply dare not risk the revelations that peace would bring.
About the author: Peter Dickinson is the publisher of Business Ukraine magazine and a nonresident fellow at the Atlantic Council
belgium in ukraine
Belgium in Ukraine Belgian Ambassador Luc Jacobs believes EU and Ukraine are both playing catchup as they seek to forge closer ties while overcoming misconceptions and knowledge gaps
About the interviewee: Luc Jacobs is the Belgian Ambassador to Ukraine It is standard practice in the diplomatic service for future ambassadors to have a preparatory period between appointment and arrival at a new post, but few diplomats have experienced the rollercoaster of emotions that awaited Belgian Ambassador to Ukraine Luc Jacobs as he prepared for his time in Kyiv. Ambassador Jacobs learned of his posting to Ukraine in January 2014, just as street protests against the Yanukovych government in the Ukrainian capital were turning deadly. By the time he arrived in Kyiv in late July 2014, Ukraine’s protest movement had become a revolution and Russia had responded by annexing Crimea and sparking war in the Donbas. “I saw it as a professional challenge, but I cannot 8
hide the fact that there were tense moments as I watched events unfolding. It was shocking to witness the brutality with which Crimea was taken,” he recalls.
Benefiting from European Experience
Prior to his posting in Ukraine, many of Ambassador Jacobs’s previous roles had been within Belgium’s Permanent Representation to EU structures in Brussels. He regards this as having been in many ways the ideal preparation for his work in Kyiv at a time when Ukraine seeks to take its relationship with the European Union to an entirely new strategic level. “You could say I have a :
MELEXIS IN UKRAINE
Did you know that a grain of sand can ultimately help you to drive more smoothly, safely and sustainably? This tiniest of materials is the start of semiconductor technology. At Melexis, we are all about inspired engineering to design, develop and deliver innovative micro-electronic solutions. Our passion for technology has made us one of the five world leaders in automotive semiconductors sensors, as well as the leading player in the integrated circuits (IC) for motor driving, car networking and wireless communication. Automotive is our largest market, and today we are in the vanguard of technological advancement in the sector. We make cars, trucks and off-road equipment safer, more comfortable and more energy-efficient. Each new car produced today, wherever in the world, contains an average 8 Melexis chips. Our products and systems improve safety, raise efficiency, support sustainability and enhance comfort in your daily life. We strongly believe in engineering with a purpose. Since the birth of the company in Belgium in 1988, we have grown to over 1200 employees in 14 countries.
Before we produce chips, we need to design them. Melexis has 10 R&D centers located worldwide. Since 2000, “Melexis-Ukraine” in Kyiv has been part of this global team, offering a well-matched team of experienced engineers. The Kyiv office specializes in the development of analog-digital circuits, the development of firmware for microcircuits and systems for testing microcircuits for industrial production, conducting qualification tests of developed microchips, checking their quality and preparing for transfer to production. Ukraine plays an important role in developing new products. Only the Kyiv R&D team can support the complete Melexis product lifecycle, supporting other Melexis locations. There are currently more than 100 employees at the Kyiv office, of which about 20% are students or young graduates. The company continues to grow in Ukraine, and we are constantly looking for experienced specialists to join the Melexis team. Melexis offers Ukrainian students internships and training in analog and the digital design of microchips in the laboratory at NTUU “KPI”.
belgium in ukraine
Belgian Ambassador to Ukraine Luc Jacobs examines relics of Belgium’s vast Tsarist era contribution to Ukraine’s industrialization
: European professional profile and this is where the heart of Europe
beats right now. What we are doing in Ukraine is quintessentially European so I feel quite comfortable in this context,” he reflects. This extensive insider experience of the EU provides Ambassador Jacobs with an informed vantage point from which to assess Ukraine’s progress on the road towards greater European integration, while also offering a broader perspective colored by first-hand knowledge of the 28-nation European Union’s own evolution. He is quick to recognize the scale of the task facing today’s Ukraine, but argues the country is making considerable progress and could actually benefit from following the EU’s already well-worn legislative pathway. “Ukraine has a lot of ground to make up but the country also enjoys all the natural advantages of the latecomer. Kyiv is now in a position where it can take advantage of the end product without going through five decades of progress in order to get there.” At this stage, he believes there is no reason to be overly downbeat about the pace of the integration process. “An enormous amount of work has already been done in what is an extraordinarily short space of time. Ukraine rightly boasts about the more than one hundred pieces of legislation the country passed in order to secure visa-free EU travel. This shows the potential when the requisite political will is in place. The big challenge now is to make sure changes that occur on paper are fully implemented and there is no backsliding.”
Evolving EU-Ukraine Understanding Ambassador Jacobs sees the two sides of the EU-Ukraine relationship as both being on something of a learning curve. While media attention tends to focus on Ukraine’s efforts to adapt to the expectations emanating out of Brussels, he acknowledges that Ukraine’s EU partners are also entering relatively uncharted territory. “It is a learning experience on all sides. Europeans are in many ways playing catchup when it comes to understanding who Ukrainians are and what the Ukrainian nation is. There are so many blank spots in our knowledge when it comes to Ukrainian history and Ukrainian statehood. The key point to understand is that the story does not begin in 1991. There is a constant nation-building thread that stretches back for centuries.” Greater EU appreciation of Ukraine’s position must primarily come from Ukraine itself, he argues. “This is why it is so important for Ukraine to tell its own story to the outside world. It is an uphill battle against all sorts of negative news, fake news, and distorted news. Ukraine must resist the temptation to engage in counterpropaganda, but it currently has a number of factors in its favor as it seeks to get its message out. Ukraine is now on the EU radar more than at any other time in the country’s history. The tragedy and drama of the past four years have been regular features in the European media, but Ukraine is also starting to appear in a more positive light. The success of the Eurovision Song Contest in Kyiv :
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: in May 2017 was a particularly striking example of how Ukraine
has the tools to present itself to international audiences. Other potentially attractive public diplomacy assets include Ukraine’s rich culture and wonderful gastronomy.”
Rediscovering Ukraine’s Belgian Industrial Inheritance
When it comes to public diplomacy, Ambassador Jacobs has had his own positive experiences in Ukraine based on rising levels of awareness about the previously little known role played by Belgium in the industrialization of Tsarist era Ukraine. In the late nineteenth and early twentieth centuries, Belgian industrialists
and investors were among the most prominent groups active in Ukraine at a time when it was fast emerging as the industrial engine of the Tsarist Empire. At the time, most of Ukraine’s major cities had a significant Belgian presence, a fact that was evident in the presence of eight Belgian consulates across the country. The Bolsheviks almost completely whitewashed this Belgian legacy, with the Communist authorities later claiming Ukraine’s industrial strength as a largely Soviet achievement. However, in recent years, Ukrainian historians and local researchers have begun piecing together Ukraine’s Tsarist era Belgian connections. The scale of the resulting picture has surprised many and provided Ambassador Jacobs with some very welcome talking points. “This part of Ukraine’s history was largely unknown until relatively recently, but there is no doubt that greater awareness has helped to put Belgium on the map among Ukrainian audiences. What we are discovering now flatly contradicts the accepted wisdom that Stalin was responsible for industrializing Ukraine. Instead, the Belgian role is becoming more widely acknowledged. Ukraine was the Eldorado for European industrials at that time. They laid the foundations for today’s Ukrainian heavy industries, and Belgian involvement was central to the entire process.” Interest in the era is now a common feature of ambassadorial visits to destinations throughout Ukraine. Ambassador Jacobs says that wherever he goes in the country he now encounters people who want to share tales of local Belgian involvement or take him to visit surviving sites. While this is an interesting and engaging part of his diplomatic duties, Ambassador Jacobs is keen to point out that Victorian era industrialists were not necessarily models of philanthropy. Nevertheless, he sees the story of Belgium’s participation in Ukraine’s industrialization as a welcome counterweight to Soviet mythmaking and a valuable point of reference for the country as it seeks to integrate economically once again with the rest of Europe. “The period should certainly not be idealized,” he says. “It may not have been the wildest or harshest period in the development of capitalism, but we should be careful about romanticizing this industrialization process. However, it is encouraging to observe greater interest in the subject and to note the growing recognition of Ukraine’s historic ties to Belgium and the rest of Europe. The fact that Ukrainians have begun to explore this previously forgotten theme with such enthusiasm has been my most exhilarating experience in public diplomacy.”
“Europeans are in many ways playing catchup when it comes to understanding who Ukrainians are and what the Ukrainian nation is. There are so many blank spots in our knowledge when it comes to Ukrainian history and Ukrainian statehood”
belgium in ukraine
Growing Belgian-Ukrainian trade highlights opportunities Bilateral economic ties are strengthening as Ukraineâ€™s EU pivot offers hope for further expansion Since 1991, Belgium-Ukrainian relations in general and commercial relations in particular have been steadily developing to the mutual benefit of both countries. Occasionally trade and investment trends have been influenced by negative macroeconomic trends and, inevitably, by the more challenging geopolitical and security context of the past years.
Return to Growth
In the most recent period, macroeconomic winds have started to blow favorably again. In 2016, Belgian trade with Ukraine registered strong growth with a 16.2% increase of bilateral trade turnover. Last year, Belgium exported goods worth EUR 556.9 million to Ukraine and imported goods worth EUR 315.2 million. Now that the Deep and Comprehensive Free Trade Agreement aspect of the Association Agreement between Ukraine and the European Union is fully functioning, we expect trade between the two countries to further increase. Belgian statistics support this positive expectation, showing that no less than 2152 Belgian companies already export to Ukraine and another 2692 companies are interested in the Ukrainian market. Belgium exports to Ukraine in 2016 mainly consisted of chemical products (30%), machinery and equipment (22.3%), and transport equipment (15.4%). Ukraineâ€™s top exports to Belgium were vegetable products (46.4%) and base metals (16.3%), as well as textiles (9%) and wood (6.7%). To be more precise, Belgian exports to Ukraine focus on pharmaceutical products, herbicides, tractors and cars.
Meanwhile, Ukrainian exports to Belgium are concentrated on maize and colza seeds along with clothing and iron and steel. Besides direct trade, there is a steady flow of foreign direct investment coming from Belgium to Ukraine. At present, the Belgian business community in Ukraine includes around 100 companies, ranging from international groups to SMEs. Belgian companies have established production plants and product development centers as well as representational or sales offices in the country. They are active in a variety of economic sectors, but mainly in food processing, beer brewing, agriculture, construction, public lighting, mining, chemicals, IT solutions, microelectronics, and logistics.
Most Belgian investors stayed in Ukraine in spite of the more challenging environment since 2014. Some are currently in the process of expanding their business presence, while newcomers are entering the market. There is inevitably still a lot of caution. Businesses expect stability and security. Transparent markets and a solid legal framework guaranteeing a level playing field and protection of property, together with the availability of quality infrastructure and reliable public utilities, remain the key conditions to attract foreign investment and boost trade. In order to deepen their bilateral economic relationship, Belgium and Ukraine have established a Joint Economic Commission that meets on a regular basis. The Commission last met in Kyiv in September :
Belgian exports to Ukraine by principle commodities in 2016 (Figures provided by the Belgian Foreign Trade Agency)
29.8% - Chemicals 22.3% - Machinery & equipment 15.4% - Transport equipment 8.5% - Foodstuffs 6.3% - Textiles 5.9% - Plastics 2.7% - Mineral products 2.2% - Base metals 1.8% - Optical instruments 5.1% - Other product groups
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belgium in ukraine
Belgian imports from Ukraine by principle commodities in 2016 (Figures provided by the Belgian Foreign Trade Agency)
46.4% - Vegetable products 16.3% - Base metals 9.1% - Textiles 6.7% - Wood 4.4% - Miscellaneous articles 3.5% - Foodstuffs 2.6% - Fats and oils 2.2% - Mineral products 2.2% - Chemicals 6.6% - Other product groups
: 2016 to take stock of the latest trends in trade and investment
and to highlight a number of success stories, as well as addressing some trade irritants or obstacles to investment. On that occasion, a successful trade mission also took place and a Belgium-Ukraine Business Forum was organised in partnership with the European Business Association. As a matter of fact, the flow of incoming Belgian trade missions to Ukraine has remained uninterrupted. Indeed, it is encouraging to see how the number of participants is steadily growing. In the best of BENELUX traditions, Belgian, Dutch and Luxembourg companies also team up together in the BENELUX-Ukraine Business Club (BUBC), an informal but useful networking instrument and platform for dialogue with Ukrainian decision makers.
There is a welcome readiness from the authorities to listen and to try to assist in dealing with the concerns of the Belgian business community on subjects like cases of administrative arbitrariness involving customs, taxation, and inspections of all sorts. In other cases, Belgian investors sometimes face ‘raider’ attacks or are victims of questionable business ethics from their business “partners”, but lack the necessary protection from law enforcement bodies and cannot obtain justice in the courts. Fighting corruption and implementing the rule of law are essential in this respect. A new Ukraine has embarked on a truly Herculean task since 2014, and nobody underestimates the “blood, sweat and tears” it takes, nor the resistance the country can expect from
vested interests. Nevertheless, Ukraine has adopted an impressive new set of laws and created new institutions in order to strengthen the rule of law and tackle the root causes of corruption through smart deregulation and de-monopolization. There is now no room for complacency. Success is largely dependent on the will of the authorities to bring about a profound mentality change and exercise effective authority over all layers of administration and law enforcement, in the center and on the periphery of the country. This is the only way to create realistic expectations regarding the effective implementation of overdue reforms and their positive effects on the ground.
The overall positive and hopefully irreversible trends of recent years create a renewed sense of confidence that Belgian-Ukrainian business relations will further grow and diversify in a transparent and business-friendly climate. Ukraine is an interesting market with growing purchasing power that is increasingly turning westwards in diversifying its suppliers and approximating its standards and norms to European and international practices. Ukraine can boast huge resources, both human and material, in the agricultural and energy spheres, in the manufacturing industry, and in the IT and service sectors. A new generation of well-trained young professionals speaking foreign languages is emerging. These new entrepreneurs are proving themselves to be reliable and trustworthy business partners and giving more cause for optimism, creating great opportunities for bilateral business development in Ukraine.
About the authors: Luc Jacobs is Belgian Ambassador to Ukraine and Michel Versailles is Minister-Counsellor at the Belgian Embassy in Ukraine 16
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Bringing Belgian waffle culture to Ukraine Waffle producer Gofre prepares to open Kyiv cafe as Ukrainians embrace traditional Belgian delicacy
Belgium is internationally associated with waffles, but this culinary delight remained largely unknown in Ukraine until just under a decade ago. All that changed in 2008 with the launch of Gofre, a Belgian-backed Ukrainian waffle company using a combination of Ukrainian and Belgian ingredients to produce the kind of authentic waffles you would more typically find in Antwerp, Brussels or Liege. “We basically created the Ukrainian waffle market from scratch,” says Gofre Director Anastasiya Preobrazhenska. “It was initially a challenge to get people to try what was still a novelty for most Ukrainians, but once they tasted our waffles for the first time, they were soon coming back for more.” The co-founders of the Kyiv-based company are Belgian nationals Etienne Vauthier and Miguel Irabarren, who identified a gap in the Ukrainian market for their most famous national snack. Gofre has expanded nationally and internationally since foundation in 2008, with exports to fellow former Soviet states and a network of sales points and franchises across Ukraine. Gofre waffles are also widely available in Ukrainian stores and cafes. The company has its own production facilities in Kyiv and offers either ready waffles of waffle mix. Gofre chefs use Ukrainian flour, eggs, milk, salt and yeast, but the magic ingredient is pearl sugar specially imported from Belgium. The past few years have proved challenging for the company, with the loss of the formerly lucrative Russian export market leading to a sharp drop in demand. International exports now focus on Georgia and Belarus, while Gofre’s 18
domestic reach has received a recent boost thanks to an agreement with Shell to sell Belgian waffles at petrol stations across Ukraine. In addition to this Shell partnership and an extensive Kyiv distribution network, the company’s waffles are also available in Dnipro, Poltava, Cherkassy and Odesa. Despite the economic turbulence in Ukraine since 2014, Ms. Preobrazhenska stresses that the company has resisted the temptation to cut costs or reduce the quality of ingredients. “We would rather maintain our standards than cut corners. Our reputation is worth more to the company than high profit margins.” The consistency of this quality commitment is regularly tested. Gofre co-founders Mr. Vauthier and Mr. Irabarren like to pay regular unannounced visits to Kyiv in order to check up on the product, often turning up incognito at sales points across the city in order to sample the current batch of waffles. “The first thing I know about these visits is a message or a photo commenting on everything from the quality of the waffles to the friendliness of the service,” says Ms. Preobrazhenska with a smile. The next step for the development of the Gofre brand in Ukraine will be the opening of a dedicated café in Kyiv’s Metrograd shopping center in the final weeks of 2017. The menu will feature both sweet and savory waffles along with Belgian “Pelican Rouge” coffee. “We’re trying to create a 100% authentic Belgian café experience,” says Ms. Preobrazhenska. “The best Belgian waffles and Belgian coffee in the heart of Kyiv. What more could you ask for?”
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Timeless Belgian Design
in the Historic Heart of Kyiv
Pavilion Flamant store offers Ukrainians access to full range of European design and interior solutions
In the middle of Kyiv’s historic old town is a corner of quintessentially European elegance. The Pavilion Flamant store close to Golden Gate on Volodymyrska Street offers a window on Belgian interior design, presenting Ukrainians with a vision of style that never goes out of fashion. The store is the creation of Kyiv architect Iryna Bilenchuk, who views it as her contribution to the evolution of Ukrainian tastes from the dark days of post-Soviet ostentation to today’s more sophisticated aesthetics. “I wanted to make a positive
contribution to the development of my country,” she reflects. “By creating this store in the historic center of Kyiv, I hoped to inspire and educate Kyivites.”
Inspired in Austria
When the Pavilion Flamant store first opened in Kyiv in autumn 2009, the Ukrainian capital was a very different place to today’s increasingly self-confident hipster capital. The city was struggling with the aftershocks of the global credit crunch while remaining deeply entrenched
in the post-Soviet ambience. Few except Ms. Bilenchuk were thinking of European interior design innovations, but she was motivated to open the store after coming across a similar Flamant store in Vienna. “I was simply overwhelmed by what I saw in Vienna and knew immediately that I wanted to bring that same aesthetic to Kyiv,” she recalls. Ms. Bilenchuk was able to contact Flamant brand founder Alex Flamant and persuade him to enter the Ukrainian market. Within a matter of months, the Volodymyr Street :
belgium in ukraine
: Pavilion Flamant store was unveiled to the
public. “After the opening, Alex confided to me that he had experienced doubts over the wisdom of launching in Ukraine until he set finally foot in the store itself. Then he immediately felt right at home,” she recalls. An architect by trade, Ms. Bilenchuk designed the store interiors herself. She continues to implement regular design changes in line with Flamant’s own seasonal collection updates, and says the venue has become a popular spot among Ukrainian designers looking for fresh stimulation. “We’ve been ahead of the curve ever since we opened and remain market leaders in terms of Ukrainian interior design,” she offers. “People working in the design industry visit all the time and tell me they come in search of inspiration. They are looking for something new and they often find it.”
Coffee, Flowers, Architecture, Flamant
The Flamant brand itself dates back to the late 1970s and enjoys a royal warrant from the Court of Belgium dating from 2007. This royal warrant was renewed in 2014 with the succession to the throne of King Philippe, reflecting Flamant’s high standing in royal circles. The brand is most closely associated with furniture and accessories, but the full range of products and design services on offer in Kyiv is far wider, including everything from complete interior design projects to gifts, flowers and a special coffee brew that regularly draws customers and friends to the store. “It is all about good taste and lifestyle choices. I like to talk collectively in terms of coffee, flowers, architecture, and Flamant,” says Ms. Bilenchuk. “We are selling a way of life that is more and more in line with contemporary Ukrainian tastes.” These changing tastes are a popular subject of conversion with Ms. Bilenchuk. She believes Ukraine is currently going through a cultural renaissance that fits well with the lifestyle options she is offering. This process of social change is traceable to the past three years of revolution and armed conflict, and is visible in almost every aspect of everyday life, she says. The result is a belated shift away from the post-Soviet cultural 22
belgium in ukraine
context, where the overriding priority was often to demonstrate wealth or celebrate excess. “The social constraints inherited from the Soviet period are losing their grip on the Ukrainian imagination,” she says. “More Ukrainians are now recognizing that individuality is something to embrace and does not have to be expressed in terms of gold and glitter. They are no longer worried about being different or standing out from the crowd. The things we surround ourselves with say a lot about who we are as people. They also have the power to influence our mood. For many of our clients, the emphasis is now very much on originality and style. They want things that will reflect them as individuals.”
The Flamant client list currently includes a range of A-list Ukrainian showbiz stars and members of the Kyiv financial and legal communities. Ms. Bilenchuk says politicians are not particularly prominent among Flamant’s clientele, but mentions that those who do visit the store tend to be from the younger generation of Ukrainian politicians who took office since 2014. As local tastes evolve, so does the brand’s Ukrainian client base. Ms. Bilenchuk says the Kyiv store initially occupied a relatively narrow niche but the brand is now connecting with far wider audiences. “Ukrainians are becoming much more open, ambitious and creative,” she says. “As we travel more, our approaches to local issues increasingly reflect our expanding international experience. Visa-free travel will only accelerate this process. In my opinion, this is the biggest single breakthrough since 1991. The increased exposure to different cultures and communities thanks to visa-free EU travel will have a profound impact on the way Ukrainians see themselves.” Ms. Bilenchuk states that her primary goal has always been to bring ‘a little piece of Europe to Kyiv’, but also is also keep to stress the importance of embracing Ukraine’s own uniqueness and aesthetical inheritance. “We are in a position to take the best of Europe and the best of Ukrainian design traditions,” she says. “It is a recipe for greater creativity and individuality. That’s the kind of lifestyle choice I’d like to see Ukrainians embracing.” www.bunews.com.ua
How Belgium Industrialized Ukraine Forgotten history debunks Soviet myths and offers context for Ukraine’s Euro-integration ambitions
One of the most persistent myths to have survived the Soviet era is the idea that the Bolsheviks industrialized the former empire of the Russian tsars. The Communist regime may have been criminally savage, the cliché runs, but it did succeed in dragging the backward Russian realm into the Industrial Age. In reality, the industrialization of today’s Ukraine preceded the Soviet era by many decades and was largely the work of international investors, with Belgians playing a lead role. Southeastern Ukraine’s emergence as the industrial heart of the Tsarist Empire began to gain pace in the second half of the nineteenth century following the discovery of significant iron ore deposits in the region. This sparked a rush of industrial expansion and international investment that many at the time likened to the “gold fever” which drew millions of immigrants to California three decades earlier. The region became a magnet for major industrialists and opportunist entrepreneurs from across Europe.
From Brussels to the Donbas
From the very beginning, Belgians played a prominent role in this process. When viewed from a contemporary perspective, the scale of the Belgian presence is remarkable. In the early years of the twentieth century, there were eleven Belgian coal-mining companies operating in Tsarist Ukraine, while 24 individual coalmines belonged to Belgian entrepreneurs. Belgians also led the way in the development of the Ukrainian metallurgical industry. The Dniprovskiy Steel Plant, which was 90% Belgian-owned, was one of 24
the largest in the region and a showpiece of Tsarist industrial achievement from the moment of its foundation in 1886. Much of the most intensive industrial activity in the region centered on Dnipro, at the time known as Ekaterinoslav. Dnipro’s convenient location on the mighty river that gives the city its name, along with its position close to Ukraine’s ore deposits and coalfields, made it a natural hub for Ukraine’s industrial development. The first metallurgical plant in Dnipro opened in 1887 and relied heavily on financing from French bank Societe Generale. This initial French investment attracted additional French industrialists to the city, leading to the appearance of a range of French-run machinebuilding factories. A prominent Belgian contingent soon joined this French community. A pair of brothers from the Belgian city of Liege, Charles and George Chaudoir, established a joint stock company in 1889 and rapidly developed three large metallurgical plants in the city. Six years later, a metallurgical society appeared in Brussels to funnel further investment into Tsarist Ukraine. The Belgian capital city soon emerged as a focal point for European investment into the emerging Ukrainian industrial powerhouse.
Belgian Trams in Ukraine
The Belgian connection to Ukraine grew stronger in 1897 with the creation of the Ekaterinoslav City Railroad joint stock company, which was behind the installation of Dnipro’s first electric tram services. This tram route was a huge novelty at the time and remains a central element of the city’s public transport network today. Belgian companies would
also be responsible for tram services in many Ukrainian towns and cities including Kyiv, Kremenchuk, Sevastopol and Odesa. This helped create a legacy that in many cases is still evident today. The tram business eventually grew to be the second most profitable for Belgian companies in Ukraine after metallurgy. It was by far the most publicly prominent aspect of Ukraine’s Belgian ties, with low costs allowing passengers from all backgrounds to take advantage of this affordable and convenient form of public transport. As the Belgian presence grew, a railway connection was established offering passage from Brussels to Dnipro. This continental route, known at the time as “The Nord Express”, entered service in 1896 and involved a change of trains in Warsaw. The total journey time was 65 hours, but Belgian industrialists could travel in style without leaving their wagons. There was certainly no shortage of potential passengers. The sheer scale of the Belgian presence in Tsarist Ukraine is visible in the number of diplomatic missions established in the country. Prior to the outbreak of WWI in 1914, there were a total of eight Belgian consulates in today’s Ukraine located in Kyiv, Kharkiv, Berdyansk, Dnipro, Mykolaiv, Mariupol, Odesa, and Sevastopol.
For almost a century, official histories tended to overlook the remarkable tale of Belgium’s role in Ukraine’s industrialization. A new generation of Ukrainians are now finally shedding light on this forgotten chapter of Ukraine history as they seek to gain a better understanding of the complex and cosmopolitan origins of the country’s industrial riches. One of the leading lights in this trend is researcher Dmytro Pirkl. Born and raised in the Dnipro region that once served as the hub of Belgian activities in Ukraine, he says his interest was first aroused when he accidentally came across an old stock certificate for an industrial plant in Tsarist Ukraine while browsing in a Parisian flea market during the mid-2000s. He has since amassed an impressive collection of artifacts related to the era and is the co-author of a book on the subject entitled “Steel on the Steppe – the View from Ukraine”, scheduled for publication in French and Ukrainian at the end of 2017. “After the Bolsheviks seized power, information about the Belgian role in Ukraine’s earlier industrialization was whitewashed and became something of a taboo. The Kremlin claimed Ukraine’s industrial achievements for itself and created a conveniently proletarian account that suited the Communist ideology of the time,” he explains. Mr. Pirkl sees his research as part of a far broader rediscovery process currently underway as modern Ukrainians reclaim their history. He
belgium in ukraine
“After the Bolsheviks seized power, information about the Belgian role in Ukraine’s earlier industrialization was whitewashed and became something of a taboo” argues that this is an important element of today’s nation-building efforts and says it can help to undo the damage caused by decades of Soviet propaganda that typically portrayed Ukraine in a Russian context while rejecting efforts to establish a separate narrative. “We are only now beginning to discover our own historical narrative, not only in terms political and military history, but also when it comes to culture and the roots of today’s Ukrainian economy. It is important for young Ukrainians to be aware of this industrial heritage, especially given the current focus on European integration. Strong economic ties with Western Europe are actually nothing new for Ukraine.”
Over past ten years, Mr. Pirkl has collected hundreds of documents and photographic evidence of Ukraine’s Belgian industrial heritage. He has worked with Valentyna Lazebnik and Nadia Kapustina of the Dnipro History Museum to present this history to the public, and has been active travelling round the former sites of Belgian industrial activity in the hunt for grassroots relics to add to his collection. He says that while most Ukrainians are still unfamiliar with the extent of Belgian involvement in Ukraine’s early industrial economy, personal recollections from the period have often by passed down from generation to generation. “People are initially surprised when they hear of how active Belgian industrialists were in Ukraine over one hundred years ago, but when I explain the details of the era it often helps to jog memories. Some members of older generations have recalled how their babushkas used to tell them stories of the time when the Belgians lived in their city, for example.” As part of his efforts to revive interest in the international character of Ukraine’s Tsarist era industrialization, Mr. Pirkl is currently working on a major photo exhibition scheduled to take place at the European Parliament in Brussels in May 2018. He hopes this can contribute to wider recognition of Ukraine’s historic ties to the rest of Europe. “We want people to see the scale of European involvement in our country and its industrial development,” he offers. “Hopefully it will help EU officials to gain a broader understanding of Ukraine’s past and present.”
About the interviewee: Dmytro Pirkl is co-author of the book “Steel on the Steppe – the View from Ukraine” www.bunews.com.ua
Belgian filmmaker brings blockbusters to Ukraine Olias Barco has already made one movie in Ukraine and plans to transform entire film industry
About the interviewee: Olias Barco is a film director and producer. He is pictured here in action alongside the stars of his film “Polina” Jean Reno and Ukraine’s Polina Pechenenko Ukraine has recently emerged as a popular destination for international music videos and adverts, prompting a flurry of debate over the country’s potential as a filming location. One Belgium-based filmmaker wants to go even further and has visions of transforming Ukraine into a regional movie industry powerhouse capable of attracting big budget Hollywood blockbusters.
Olias Barco has every reason to be optimistic about Ukraine’s Hollywood credentials. He has already completed shooting of “Polina”, a family fantasy film that is billed as Ukraine’s first international movie, and is one of the driving forces behind “The Last Step”, an action thriller starring Jean Reno of “Leon” fame that is set to begin filming in the Ukrainian Carpathians in the final weeks of 2017. This new Jean Reno vehicle is a potentially important stepping-stone for Ukraine’s fledgling international film industry. It is a co-production bringing together France’s Lagardere Studio and East West Productions, the production company established by Mr. Barco and his partner Oleg German in order to further the Belgian’s ambitious plans to establish Ukraine on the international filmmaking map. Chatting over coffee at the East West Productions offices in Kyiv’s elegant riverside Podil district, Mr. Barco shares his obvious excitement about the coming filming of “The Last Step”. “This is a first for Ukraine and it could really open the door,” he says. “A movie like this can lay the foundations for the future and help to attract the global film industry to Ukraine.”
From Odesa to Kyiv
His own first-hand experiences in Ukraine have convinced Mr. Barco that the country can make a name for itself in the movie business. Ukraine first appeared on the filmmaker’s radar in 2011 when his acclaimed black comedy “Kill Me Please” won the Best Director prize at the Odessa International Film Festival. The following year, he accepted an invitation to serve on the festival jury and returned to the Ukrainian Black Sea. Spending time in Odesa proved an engaging experience for Mr. Barco, and he subsequently began spending his summer holidays in the Carpathian Mountains with his new Ukrainian friends. However, it was not until 2015 that the filmmaker hit on the idea of actually making movies in Ukraine. At the time, he had spent the previous three years fruitlessly searching for the right place to film a fantasy movie about a young girl transported though the silver screen into a world of adventure. Eventually, he decided to give Kyiv a try. This gamble resulted in “Polina”, a feature film 26
currently in post-production that was shot entirely in the Ukrainian capital at the Film UA studios. The film features an international cast but the crew were all Ukrainian except for Director of Photography Thierry Arbogast, a veteran of numerous collaborations with Luc Besson. Mr. Barco raves about the quality of the Ukrainian team who worked with him on “Polina” in Kyiv. “As a filmmaker, you can do whatever you want here thanks to the professionalism of the crews. The result is Hollywood standards at budget prices.”
Ukrainian State Support
The Ukrainian authorities appear to share Mr. Barco’s vision for the country as a globally competitive movie location. This has helped him secure the support of the Ukrainian State Film Agency for both “Polina” and the upcoming “The Last Step”. He names Ukrainian State Film Agency head Philip Illienko as one of his key collaborators, and is generous in his praise for the Ministry of Culture, which he says has been extremely accommodating. Mr. Barco believes new Ukrainian legislation offering tax rebates for film production will help make Ukraine more attractive to international production companies once it comes into force in 2018, and says this move reflects the country’s general readiness to sell itself on the global marketplace. “The officials I meet have the energy to make it happen,” he says. “Everything is coming together to make the country genuinely competitive against the likes of Bulgaria and Romania.”
From Soviet Chic to Perfect Palaces
In addition to low costs, tax incentives and skilled film crews, Mr. Barco identifies the sheer range of locations on offer as one of Ukraine’s greatest advantages. “You can find everything here and unlike in many other European countries, it is usually possible to arrange a shoot without too much trouble. Ukraine has castles, palaces, iconic Soviet architecture, all manner of urban landscapes and stunning nature. You can film on the beach or up in the mountains.” He will be spending plenty of time in Ukraine’s mountains over the coming months, working with Jean Reno as filming of “The Last Step” gets underway. Veteran British movie company Goldcrest Films has already concluded a deal to sell the worldwide rights to the action thriller, suggesting that Mr. Barco may well be onto something. However, his dream of bringing the international film industry to Ukraine will not come true overnight and will require the kind of faith in against-all-odds success stories more commonly found in the Hollywood blockbusters he hopes to entice.
Посольство Королівства Бельгія в Україні презентує концерт з нагоди Дня Короля
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Design of theme parks
: ART Stepanov
Belgians in Revolutionary Ukraine
The unlikely epic of the WWI Belgian troops who found themselves caught up in Ukraine’s early twentieth century independence bid country, sparking outcry across Europe and providing an indignant Britain with justification to enter the fast expanding continental conflict. World War I had begun. The Belgian army finally retreated to the coastal region behind the Yser River, with Belgian troops facing the Germans in opposing trenches. By this point, the first Belgian armoured cars had already seen action in raids behind enemy lines.
About the author: August Thiry is a writer and lecturer at Thomas More University College Mechelen As Ukraine marks the centenary of the country’s WWI-era independence bid, many Ukrainians are becoming acquainted for the first time with the story of this tumultuous period. Throughout the Soviet epoch, all talk of Ukraine’s brief statehood experience was strictly taboo. Even now, relatively few Ukrainians have a detailed grasp of the chaotic events surrounding the attempts to establish an independent Ukraine amid the wreckage of the Tsarist Empire. With historians now at liberty to delve into this relatively unexplored chapter of European history, a clearer picture of Ukraine’s independence struggle is beginning to emerge. This is helping to place today’s hybrid war with Russia in a far broader historical context, while also bringing to light forgotten episodes of a struggle that has been crowded out of official histories by the global implications of the Bolshevik triumph. One of the more curious footnotes to surface in recent years involves a group of Belgian soldiers who found themselves caught up in the turmoil of the Bolshevik revolution and Ukraine’s independence bid after arriving on the eastern front at the height of WWI. This is their unlikely story.
“Plucky Little Belgium”
In August 1914, Germany declared war on Belgium and German troops invaded the 28
Later on in 1914, Major Collon, the Belgian Military Attache in Paris, created an autonomous unit of ten armoured cars, assisted by armed cyclists and motorcycle riders. Major Collon was the first commander of this new unit, known by the acronym ACM (Autos-Canons-Mitrailleuses) and counting about 400 members. These volunteer troops were young Belgians, many well educated and drawn from noble Belgian families. All of them were determined to keep on fighting the German invaders of their homeland. During the first months of 1915, they received training around Paris and paraded along the main boulevards of the French capital. In the late spring of 1915, the ACM troops moved up to the frontlines on the FrenchBelgian border. However, due to the nature of the trench warfare on the Belgian Front, the unit could not play any military role. The ACM unit stayed in the rear, where its armoured cars caught the eye of the Russian Military Representative posted with the Belgian army general staff. He informed Belgium’s King Albert I, who had taken command of the Belgian army, that the ACM unit might prove useful on the more mobile eastern front. The Russian military command agreed with this view and after negotiations with the Belgian government, the latter decided to send the ACM to the Russian Empire. The unit was thus effectively a gift from the Kingdom of Belgium to Imperial Russia.
Journey to Ukraine
The ACM men made the journey to the Tsar’s empire on board of an old British cargo ship. It was an exhausting passage marked by heavy storms and a lack of food. By midOctober 1915, they disembarked at the
port of Arkhangelsk before finally arriving in Saint Petersburg. The highlight of their stay was a parade at the imperial residence in Tsarskoye Selo. On that occasion, the last Russian Tsar Nicholas II climbed into a Belgian armoured car to get a closer look at it from the inside. In January 1916, the ACM unit travelled by train to Galicia, in those days an eastern border region of the Austrian Empire
and now part of western Ukraine. The Belgians spent the winter in the Galician town of Zbarazh. Meanwhile, the ACM unit experienced a change in command, with founder Major Collon replaced by Major Semet. The unit’s new commander began preparing his men for action with tough military drill. In those days, the Galician Front ran north to south along the River Seret in today’s western Ukraine, with Austrian troops on its west bank and the Russian Imperial army on the eastern side. The Ukrainian city of Ternopil was the most important town behind the Russian lines. By mid-1916, the Russian army under General Brusilov was preparing for a major summer offensive in which the ACM Belgians were set to take part. In the summer of 1916, untold thousands of ill-armed Tsarist Imperial troops died on the battlefield as Brusilov’s massive attack unfolded. Although the Belgians enjoyed better protection in their armoured cars, some also died in what was one of the largest and most devastating offensives of the entire war. The first victim was soldier Jacques de Becker, the son of a Belgian baron and senator. He was shot in the head as he attached a cable to an ACM vehicle that had become bogged down on the battlefield. Jacques de Becker received a military funeral in Ternopil. There would soon be other Belgian graves in Ternopil cemetery. In August 1916, the ACM unit spearheaded a fresh Tsarist attack and Belgian armoured cars beat off an Austrian counterattack at Zboriv railway station in today’s Ternopil Oblast. The ACM unit spent the winter of 1916-17 in the Ternopil region. The picture of a lonely :
belgium in ukraine Belgian troops on Kyiv's Volodymyrska Street in 1918 Belgian troops feeling the chill in Siberia
belgium in ukraine
: Belgian soldier, standing amid barbed wire
and looking out over a desolate landscape covered up in snow, perfectly illustrates the feelings of many homesick ACM men at this time. Some filed applications asking for repatriation, but these requests did not meet with approval. Instead, the Belgians had to endure shabby barracks, a lack of fresh food, and endless isolation.
Revolution and Retreat
Early spring of 1917 brought exciting news. Revolution had broken out in Russia with the Tsarist regime replaced by a provisional government. The Belgians now found themselves confronted with revolutionary changes: Tsarist soldiers refusing to fight any longer and Bolshevik agitators urging them to turn their weapons against the ruling classes. “The red obsession has begun,” an ACM officer noted down in his diary. For the time being, the war against the Austrian and German armies continued with plans for another summer offensive in Galicia. New Russian leader Alexander Kerensky visited the front in the late spring of 1917. When he met the ACM men, he praised them as soldiers of the small Belgian nation that continued the fight against the German enemy. An ACM officer wrote scathingly in his diary, “Magnificent words. But they will soon be forgotten.” The Kerensky Offensive in the summer of 1917 was a complete failure. At the start of July, the ACM Belgians advanced against the enemy. However, disaster soon struck. One group of Belgian armoured cars came under fire from Austrian artillery in the village of Konyukhy, leaving the crew killed or badly wounded. Zigzagging along the collapsing Tsarist lines, another armoured ACM group ran into Cossacks engaged in attacks on Jewish villages and brutal executions of traitors. With the Russian imperial army on the run, Ternopil fell to the Germans. The survivors of the ACM unit retreated to new positions in villages east of the western Ukrainian town of Zbarazh. For a few autumn weeks, the Belgians were able to enjoy the picturesque surroundings and take photos of the local population. All this changed drastically when Red October dawned and the Bolsheviks seized power in Petrograd. At this point, the Belgian government finally decided to get the ACM unit out of the revolutionary chaos and the Belgians retreated to Kyiv. 30
Chaotic Capital of Independent Ukraine The Belgian troops arrived in the Ukrainian capital at a time when it was experiencing the first big upheavals of the country’s independence movement. They would stay in Kyiv until the end of February 1918, witnessing many of the early clashes of an armed struggle for control of Ukraine that would last for several years and see the city change hands more than a dozen times. While in Kyiv, the Belgians took up residence at a barracks in Svyatoshyn district and at the Myhailivskiy Monastery in the heart of the ancient city. They soon ran out of provisions. The Belgians found a novel solution to this problem: they started producing vodka with improvised equipment and selling it to the local population in exchange for basic supplies. When the Belgians first arrived in the Ukrainian capital, it was in Ukrainian hands. However, the Central Rada of the Ukrainian independence movement had to cope with a revolt of red workers at Kyiv’s Arsenal Factory while confronting Bolshevik Red Guards approaching from outside the city. The ACM men found themselves caught in the crossfire. They initially took care of civilians who have found shelter at the Mihailivskiy monastery, but when red forces eventually occupied Kyiv, the Belgians move to evacuate. They managed to secure a train from the Bolsheviks and left Kyiv at the end of February. The Bolsheviks had wanted the ACM armoured cars in exchange for passage out of the city, but the Belgians were able to dismantle their vehicles before departing.
Long Road Home
The train initially headed north to Moscow but the Belgians became stuck in the neighbourhood of Vologda. Rumours spread that German forces had cut off the northern route to Arkhangelsk. When the ACM staff pushed for this shorter route out of revolutionary Russia, a mutiny broke out. ACM troops refused to head north and instead began negotiating with local Bolsheviks. This dangerous revolt ended when the ACM commander gave in and decided to take the Trans-Siberian Railway to the Far East. It would be a difficult journey. The Siberian winter caught the
train and its Belgian passengers in an ice-cold grip, while local Bolsheviks tried to disarm them. They had to force free passage in Omsk and east of Lake Baikal. At the end of March 1918, the ACM Belgians finally crossed the Russian-Chinese border. They spent a month on leave in the Manchurian town of Harbin. Some young Belgians indulged in erotic adventures; a few others deserted the ACM and joined the anti-Bolshevik White Cossacks in Manchuria and Siberia. By April 1918, the remainder of the ACM unit arrived in Vladivostok, where they boarded an American steamer bound for California. However, their adventure was not yet over. Belgian and American diplomats had decided that the ACM men would make excellent material for war propaganda. These Belgian warriors showed the fighting spirit of “Brave Little Belgium” and thus set a good example for the US public as America sought to bolster its own war effort. Large crowds cheered the ACM men as they marched on parade through various American cities. This military tour began in San Francisco and ended some weeks later in New York. In order to increase the effect of the parade in New York, an impressive American military band was dressed in Belgian uniforms. This band led the march of the ACM Belgians along Fifth Avenue. This military spectacle had the desired effect, with the New York Times reporting: “Vive la Belgique was the cry that greeted the marching Belgians. These brave Belgians looked less like foreign troops than any other allied veterans that have appeared before the American public.”
In mid-June 1918, the ACM unit crossed the Atlantic to France. The unit disbanded in July 1918 following one final parade in Bordeaux. Veterans of the ACM unit continued to reunite for annual meetings in Belgium long after the war. Those who died in 1916-17 at the Galician Front remained buried in Ternopil, their simple graves marked by wooden crosses. The story of Belgium’s ACM unit is not a tale of heroic warriors. These were simple soldiers on an epic journey set against a vast historical backdrop. It is the story of young Belgians who wanted to fight against the invaders of their fatherland, but ended up crossing the globe instead.
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Ukraine deserves a better legal system Andy Hunder, President of the American Chamber of Commerce in Ukraine
of respondents see a problem in the heavy-handed activities of law enforcement agencies.
Corporate Agreements and Squeeze-Out
The lack of a fair judicial system in Ukraine has always been a longstanding concern for investors eyeing Ukraine for potential investments. Ensuring the rule of law through implementation of judicial reform and elimination of corruption is a key priority for the American Chamber of Commerce and an indisputable condition for creating an attractive investment climate in Ukraine. Thanks to joint efforts of the business community and Ukraine’s Government, 2017 was eventful in terms of positive steps towards amelioration and modernization of the legal framework.
The end of unlawful pressure on business? September 14th may go down as a landmark day for the business community: on that day a meeting took place with President Poroshenko, Prime Minister Groysman, Prosecutor General Yuri Lutsenko and representatives of law enforcement agencies, together with 300 key business leaders. During this meeting I asked for an immediate stop to unauthorized heavyhanded raids by law enforcement officers in balaclavas and machine guns breaking down the doors of a business in search for a tax document receipt. I used the words of George Orwell – “Imagine a boot stamping on a human face.” 3 weeks later, Ukraine’s Chief Prosecutor signed a letter in a ceremony that I attended together with colleagues from the local Ukrainian and European Business Association where he promised to stop all violations of the rights of business entities. A tangible result in the B2G dialogue. But still, plenty needs to be done: according to a latest American Chamber survey on Investment Climate, 75%
Aristotle once said: “Law is order, and good law is good order”. In 2017 the business community benefited from changes in corporate legislation, when parliament adopted draft laws on Corporate Agreements and Procedure of Squeeze-Out. The first Draft Law previews the mechanisms that facilitate the settlement of disputes between owners of limited liability companies or shareholders, ensuring validity and effective application of corporate agreements in practice. The second focuses on the introduction of the mechanism of squeeze-out, which ensures simplifying procedure for buy-out of minority stocks aimed at alignment of Ukrainian legislation with international standards. Thus, to ensure favorable legal conditions for doing business in Ukraine, a gradual contribution of the business and the Government to further development of modern corporate legislation is vital.
Saying NO to corruption
Despite all efforts of the Government’s anti-corruption bodies, according to our latest survey on investment climate, corruption still remains the #1 challenge for business in Ukraine. Nevertheless, in 2017 the National Agency for Prevention of Corruption approved an anti-corruption program for legal entities. The document, which corresponds to international standards, will ensure better adherence to integrity not only by international companies, but also local ones and, most importantly, state-owned enterprises.
Keep it legal
Understanding the need of a platform that brings together leading experts in the legal sphere, the American Chamber of Commerce in Ukraine launched a Legal Committee 3 years ago. Year in, year out, the Committee is becoming more formidable and it is currently functioning as a successful platform for B2G dialogue, promoting business integrity and addressing issues in judicial, anti-monopoly, and anti-corruption spheres. We look forward to further modernization of legal framework for business activities, eliminating corruption, and ensuring fullscale judicial reform.
Oschadbank aims to help nurture new generation of Ukrainian SMEs State-owned bank sees SME support as central to commercialization and cooperation with EBRD September saw the launch of a major new Oschadbank program focusing on support for the Ukrainian Small and Medium-Sized Enterprises (SME) sector. The state-owned bank’s “Buduy Svoe!” (literally “Build Your Own!”) SME initiative aims to foster the growth of the country’s entrepreneurial class while contributing to the bank’s further modernization and commercialization. It is an important component part within the broader roadmap of cooperation between Oschadbank and the European Bank of Reconstruction and Development (EBRD), which foresees technical cooperation with a view to future privatization and possible partial acquisition of Oschadbank by EBRD. Business Ukraine magazine spoke to Chairman of the Oschadbank Management Board Andriy Pyshnyy and EBRD Director for Ukraine Sevki Acuner about the importance of the SME sector for the broader Ukrainian economy, and the role this new SME focus can play in the ongoing postMaidan transformation of Oschadbank.
Oschadbank’s current cooperation with the EBRD was formalized in a November 2016 Memorandum of Understanding signed between the bank and the international financial institution together with Ukraine’s Ministry of Finance, creating a roadmap towards improved Oschadbank corporate governance and commercialization of the bank. The process of comprehensive modernization began in 2014 in the months following a major overhaul of the bank’s management that came in the wake of the Euromaidan Revolution. Mr. Pyshnyy recalls how his first international visit as Chairman of the Oschadbank Management Board was to EBRD headquarters in London in September 2014, paving the way for the strategic cooperation that is currently developing. “I went with a readiness to address the modernization of Oschadbank in line with the best European practices. It was clear that we needed a reliable international partner. Cooperation with the EBRD allows us to move to a new level of corporate governance and benefit from the technical assistance they can provide.”
SME Sector Growth Potential
One of the central Key Performance Indicators (KPIs) of this strategic partnership is Oschadbank’s ability to establish itself among the top three Ukrainian banks in the SME sector – a segment of the Ukrainian economy where the bank had previously been absent. In 2015, Oschadbank formed a dedicated SME team and began laying the groundwork for the recently launched “Buduy Svoe!” program. In doing so, Oschadbank is far from the only bank in Ukraine to focus its attentions on the SME sector. Small and medium-sized businesses are currently the hot ticket among Ukrainian banks looking to return to larger scale lending following an extended lull since the lows of 2014-15. There is clearly significant room for growth in the segment, with the number of SMEs currently active in Ukraine representing a far lower proportion of the overall economy than in neighboring European 44
countries. “If we look at the official statistics for Ukraine, they tell us 64% of GDP is generated by the SME sector. However, in reality, the figure is not more than 15%. The rest represents large businesses using SME tools for tax optimization purposes. What we really need as a country is a genuine entrepreneurial class,” offers Mr. Pyshnyy. He talks about providing a complex program to create two million new Ukrainian entrepreneurs and points to the Polish experience for inspiration. Neighboring Poland has a robust SME sector of over three and a half million entrepreneurs from a population of 37 million. This helped the country to avoid recession and maintain modest growth in 2008 despite a global crash that hit the rest of the European Union hard. “Today, Poland has a GDP of USD 470 billion compared to Ukraine’s USD 90 billion. In 1991, the figure for Poland was lower than for Ukraine,” says Mr. Pyshnyy.
Sustainable Economic Development
EBRD Ukraine Director Sevki Acuner shares Mr. Pyshnyy’s conviction that bolstering the SME sector is crucial to Ukraine’s broader economic development and sees Oschadbank’s focus on the segment as a key component of its transformation. “When you look at the Ukrainian banking system at present with a USD 20 billion loan book, 50% of which is to the top 20 business groups, it tells you that the remainder of the Ukrainian economy has to live on USD 10 billion of credit, which is totally inadequate,” says Mr. Acuner. “By reorienting itself towards the SME sector, Oschadbank is trying to demonstrate that it wants to be a bank for Ukraine, for the millions of people of Ukraine. This shift is essential for the sustainable economic development of Ukraine. Without a strong SME sector, the benefits of economic growth will not accrue to the broader population of the country.” Mr. Acuner also sees SME sector expansion playing a wider role in Ukraine’s shift towards a more contemporary European social model. “In many ways, SME initiatives are very supportive of the democratic process. A stronger SME sector can help people to feel committed to free enterprise and European values as they become more prosperous and economically independent.” This is a sentiment shared by Mr. Pyshnyy, who regards the expansion of Ukraine’s entrepreneurial class as essential for the country’s political evolution. “Ukraine needs two million entrepreneurs who can collectively form an entirely new political class bringing new values to the national debate. This class will be relatively immune to the appeal of populism. Instead, they will have a pragmatic and informed dialogue with the authorities on issues such as taxation, deregulation, the judicial system, and how to make the most of things like free trade deals and the Association Agreement with the EU.”
Developing services for new segments is part of the post-Maidan Oschadbank management team’s DNA. The bank entered the online :
banking Promoting SME sector growth: Oschadbank Management Board Chairman Andriy Pyshnyy with Ukraine’s First Deputy Minister of Economic Development and Trade Maxim Nefyodov at the recent “Get Business Festival” in Kyiv www.bunews.com.ua
: banking market for private individuals just a few years ago, and
has already grown its client base from around 13,000 to 2.3 million customers, making it the number two bank nationally in this segment. It has begun offering premium banking services and has implemented the well-received governmental “warm loans” initiative to provide financing for households looking to invest in energy efficiency, warmth retention of houses, and decreasing natural gas consumption. Oschadbank granted two-thirds of all loans by volume within the framework of this program. As Oschadbank now seeks to expand its footprint in the SME sector, it faces competition from the significant number of Ukrainian banks that have also identified the sector as a potential growth engine. Mr. Pyshnyy acknowledges the inevitable challenges this crowded marketplace creates but believes Oschadbank’s multipronged approach will prove sufficiently appealing to help the bank achieve its stated objective of entering the national top three in the SME sector. The “Buduy Svoe!” program offers a range of benefits beginning with a starting package that allows entrepreneurs to begin operations quickly and conveniently. The brand for the program features a beaver mascot, something Mr. Pyshnyy says is characteristic of the diligent and dynamic mood the bank wishes to convey to the public. The starting package that entrepreneurs receive is significantly simplified. It looks similar to the kind of package offered by mobile operators. Entrepreneurs receive a small crafted box containing a banking card, hardware with a digital signature, and what was formerly a 32-page contractual agreement reduced to just a single double-sided sheet of A4. A mere two signatures are required in order to activate the account. The entire process of activating an account takes one hour. In addition to the starting package, clients of the bank also benefit from access to a range of services by partner companies of Oschadbank on the kind of advantageous terms usually reserved only for large-scale corporate partners. Oschadbank has already concluded cooperation agreements with Kyivstar, Microsoft, Google and Nova Poshta, with a number of further tie-ins currently at the negotiation stage. “Our mission is to simplify the life of the Ukrainian entrepreneur from the very outset of their business activities,” says Mr. Pyshnyy. To join the bank’s educational portal (buduysvoe.com) users require only a willingness to participate and complete the online registration process. Online education, free consultancy and variety of useful articles for businesses are available to entrepreneurs following registration. For example, users can take a detailed 60-question test to analyze their entrepreneurial strengths and weaknesses. In addition, after receiving their results, they can then apply for individual information. A pool of thirty mentors, who are already listed on the portal, are available online to offer free and personalized entrepreneurial guidance on a case-by-case basis, while there are also online training courses covering themes such as common legal and tax issues. Mr. Pyshnyy stresses that the range of online services available via the portal will continue to expand in
the coming months in an organic manner as the bank receives feedback from the SME community, with the program’s Facebook page set to serve as a key platform for two-way dialogue.
One of Oschadbank’s built-in competitive advantages in the SME sector is the bank’s unrivalled regional reach. With thousands of branches situated throughout Ukraine, Oschadbank is able to work directly with local business communities and regional authorities. Bank officials hope this will allow them to make the most of the increased regional municipal budgets created by Ukraine’s decentralization reforms. Part of this process involves encouraging regional authorities to reenergize existing but currently underutilized municipal SME support programs. “This is a classic win-win situation for local entrepreneurs and regional authorities,” explains Mr. Pyshnyy. “Whenever I visit regional centers, I always ask entrepreneurs if they are aware of SME support programs in their region. The response is always negative, but such programs do exist. The challenge is to reboot these programs and make them more practical by reducing the present high levels of bureaucracy. Oschadbank’s SME focus can contribute to this process and everyone could end up benefitting. Local authorities will see tax revenues grow while entrepreneurs will enjoy greater support and better relations with their municipal authorities.” Not all local authorities have been eager to embrace this new line of activity. In order to provide a persuasive model for greater SME cooperation at the regional level, Oschadbank is currently developing a pilot project with the local authorities in the city of Vinnitsa, whereby the authorities would partially cover the cost of SME loans depending on tax paid by the entrepreneur. “The goal is to establish a new paradigm of cooperation between the SME business community and the municipality,” explains Mr. Pyshnyy.
Oschadbank has also launched a comprehensive information campaign to promote entrepreneurship as an idea to embrace on the national scale. Twenty-six TV commercials feature so far in the campaign, with each advert providing a short but concise message through a story about a specific entrepreneur who has been brave enough to launch their own business. The idea is to focus on the importance of the SME sector for the Ukrainian economy as a whole. The EBRD’s Mr. Acuner regards this communications strategy as another indication of the changing corporate culture at Oschadbank and a key component of the bank’s ongoing transition. “It is encouraging to see a comprehensive change in attitudes within the bank and a new institutional orientation towards customer service,” he says. “It is very important that the communications strategy is one that conveys these fundamental values, so the public is aware that Oschadbank is first and foremost a bank for ordinary Ukrainians.”
About the interviewees: Andriy Pyshnyy is the Chairman of the Management Board of Oschadbank (Photo: Aliona Vladyka, Ekonomika+). Sevki Acuner is the EBRD Director for Ukraine
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Ukrainian macroeconomic forecast for 2018 Credit Agricole CEO in Ukraine Jean-Paul Piotrowski says the Ukrainian economy is recovering but attracting investments remains a great challenge and key economic driver for the coming years
About the interviewee: Jean-Paul Piotrowski is the CEO of Credit Agricole in Ukraine On 18 October, Credit Agricole Ukraine organized its annual “Macroeconomic Review: Summary and Trends” event, inviting its top corporate and premium customers to an official presentation. This traditional autumn conference aims to share the bank’s vision and forecasts, providing analysis of the current global and Ukrainian economic situations while also looking ahead to the coming year. The macroeconomic review presented during the event offers a number of reasons for guarded optimism, with Ukraine’s key economic indicators pointing towards a continued recovery following the lows of 2014-15. However, significant challenges remain as the country seeks to attract much-needed international investment while maintaining strategically crucial cooperation with international financial institutions and taking into account the upcoming elections. Credit Agricole CEO in Ukraine Jean-Paul Piotrowski shared his perspective on what to expect in 2018 with Business Ukraine magazine. 48
What are the key current trends in the Ukrainian economy identified during Credit Agricole’s annual macroeconomic review event? The Ukrainian economy is currently recovering on the back of a range of fundamental factors such as GDP growth and rising consumer demand. According to the recent NBU forecast, GDP growth is set to reach 2.2% this year, with further acceleration to 3.2% expected in 2018, climbing to above 4% in 2019. The country has managed to maintain this recovery trajectory despite a number of economic shocks over the past years including the trade blockage of the Donbas conflict zone. This recovery process comes in tandem with tight cooperation between Ukraine and international financial organizations. The Ukrainian government continues to follow the path of reforms prescribed by the IMF, although this process is not always as rapid as might be anticipated. In any case, the government is trying to create a more favorable investment climate in order to attract investments from abroad. I see the recent USD
Based on the results of Credit Agricole’s research, what do you anticipate as the key macroeconomic issues facing Ukraine in 2018? The stability of the relationship with the IMF and World Bank will remain a necessary factor for the country’s development during 2018. The Consumer Price Index (CPI) will also be key, with the government facing considerable challenges to reduce inflation and contain a number of inflationary factors including rising salaries and utilities tariffs. Positive Foreign Direct Investment (FDI) dynamics will depend on the development of favourable investment conditions. The country needs to show progress on judicial sector reform as well as the anticorruption fight, since both are likely to hamper the attraction of FDI in greater volumes. With a fresh election cycle already looming increasingly large on the horizon, reform momentum may slow, making it potentially more difficult to pass legislation aimed at improving the business climate. Targeted GDP growth of 3.2% will remain a challenge. It is worth bearing in mind that for countries in Ukraine’s current position, GDP growth of above 6% would be closer to the norm. If Ukraine seeks to secure further ratings agency upgrades, 4% GDP growth must be the minimum objective.
How do you see developments in the broader Ukrainian economy affecting the country’s banking sector in 2018? Investment will remain the key driver for the domestic economy over the coming year. The monetary easing policies of the NBU witnessed in 2017 have already initiated a recovery in lending activity in the banking sector. As this trend develops, we can expect limitations and challenges emerging in this area over the coming year due to banking capital requirements. In order to support further growth, multinational companies will need to increase cross-border funding. Private consumption will remain the second most important factor fueling the Ukrainian economic recovery in 2018, with increased banking sector lending to this segment
capable of supporting this dynamic. In terms of domestic financing, 2018 could see a significant focus on the retail segment.
What are the key challenges facing the Ukrainian banking industry in 2018? We have already witnessed much-needed steps to improve the quality of the Ukrainian banking sector, resulting in the cleanup of the sector and a reduction in the number of banks from 180 to 88. These actions have brought about a deep structural transformation of the banking sector but challenges remain. In order to boost confidence in the Ukrainian banking sector, we need additional measures. The share of state-owned banks has risen to 55% of total banking assets. An important part of the challenge would be a step-by-step re-privatization of state banks to decrease the share of state banks progressively. Western banks now make up 19% of the market, with the share of Russian and private banks visibly decreasing. The ratio of Nonperforming Loans (NPLs) remains extremely high and is presently 57% on average for the Ukrainian banking sector as a whole. This calls for enhanced NPL resolution mechanisms. Greater protection of creditor’s rights is required as this issue currently prevents banks from lending more. The domestic banking system will likely remain focused on the quality of its assets while working to follow regulatory requirements (including those related to capital) and improving liquidity and risk policies. Other key challenges include the implementation of IFRS 9 (International Financial Reporting Standards) alongside harmonization with Basel recommendations and EU directives. We can also expect to see attention focus on the NBU’s new supervision model, together with further consolidation of the banking sector as a whole.
3 billion Eurobond issue and upgrade of the country’s sovereign rating by Moody’s as supporting our view. The growing integration of Ukraine’s foreign trade activity into the Eurozone is one of the visible and important trends in this process, and is clear in recent figures. Inflation targeting by Ukraine’s Central Bank (NBU) is another key pillar for continued smooth but stable GDP growth. This year’s annual inflation rate is likely to be over 12%, which is higher than the 9% target but still below 2016 levels and a significant improvement on 2015.
How might global economic trends shape the development of the Ukrainian banking sector in 2018? We should not expect to see any specific or direct impact on the banking system in Ukraine as long as the domestic banking sector remains isolated from global markets by regulatory measures. Banks in Ukraine are mostly limited to servicing the foreign trade activity of their customers. However, the situation on global commodities markets could result in a number of indirect impacts. This is particularly the case in terms of grain traders, together with global demand for steel and developments in the energy sector. Current trends in these areas are broadly positive for Ukraine and we can expect to see higher demand in 2018 for different types of financing including trade finance, together with more appetite for investment services.
“Targeted GDP growth of 3.2% in 2018 will remain a challenge. It is worth bearing in mind that for countries in Ukraine’s current position, GDP growth of above 6% would be closer to the norm”
Ukraine’s YOD Design Studio receives international honor for Shade Burger res-taurant interior Europe’s most stylish restaurant interior is located in Ukraine! Perhaps even more surprisingly, the award-winning restaurant in question is not located in the heart of booming Kyiv or on the elegant boulevards of cosmopolitan Lviv and Odesa, but in relatively provincial Poltava. Poltava restaurant Shade Burger emerged as winner in the “Europe Restaurant” category at the 2017 Restaurant and Design Awards in London on 5 October. The Restaurant and Bar Design Awards, now in its ninth year, is a globally recognised competition dedicated to the design of food and beverage spaces. It covers every imaginable space, from ships to airports, museums to burger vans, and from
Michelin-starred establishments to the fleeting fancies of pop-up street food culture. This prestigious award has shone the international spotlight on Ukraine’s increasingly innovative and impressive design industry. It highlights the grassroots shift currently underway in the country as Ukraine distances itself from post-Soviet ostentation and increasingly integrates into the contemporary European cultural community. The Poltava restaurant interior that caught the attention of the London jury features minimalist post-industrial concrete aesthetics and funky lighting solutions with a democratic seating ensemble. All this is a long way away from the traditional post-Soviet
Poltava Burger Bar Wins Top European Design Award
as home to tasteless vulgarity and crude displays of material wealth. The award-winning Shade Burger interior design is the work of Ukraine’s YOD Design Studio. Founded in 2004, YOD Design Studio currently has 16 employees with a central office in Kyiv and an additional branch in Kharkiv. The studio focuses primarily on the hospitality sector. YOD designers have worked on many of the new generation of Ukrainian venues that are helping set the tone as the country builds itself a reputation as one of New Europe’s most vibrant and innovative design scenes. Business Ukraine magazine caught up with YOD director and founder Volodymyr Nepyivoda to discuss the studio’s recent international recognition and explore how dynamic design can help build the new Ukraine. What was your reaction when you learned your Poltava Shade Burger interior design work had taken first place in the European Restaurant category at the 2017 Restaurant and Design Awards? At first, it was a case of frantic emotions! At the same time, it took a little while for me to believe that we had really won. What do you think impressed the judges most about your interior work in Poltava? I cannot really answer this question because the composition of judging panel is very cosmopolitan. There are 32 jury members from all over the world and they made the decision collectively, so it is impossible to say what specifically won them over.
How did you celebrate your success - with burgers or something stronger? Well, I cannot provide details but I can confirm that following the awards ceremony, all of the nominees received invitations to a private after-party! A decade or so ago, the Ukrainian restaurant design scene was dominated by ostentation and excess with an emphasis on glitz and mirrors. How are contemporary Ukrainian tastes changing? Ukrainians have begun to travel more around the world and to encounter different contemporary styles. They now have a much better understanding of modern design concepts that is increasingly free from all the artsy-crafty elements and pretensions that used to dominate the Ukrainian scene. What would be your dream interior design job in Ukraine? I dream about design without design. When the essence and temper of the institution does not interfere with its focus and quality.
Which Ukrainian public buildings are most urgently in need of a complete interior design overhaul? There are many such buildings. However, the main question is who will remodel them? In practice, the investor’s purse tends to dictate design priorities to corrupt architects, and many are all too glad to perform the dirty work. When you ask them why they do not refuse to carry out tasteless projects, the answer is typically: “if we don’t do it, then somebody else will do it instead.”
I think the majority of Soviet architecture that Kyiv inherited is much better and more modern than most of the so-called modern buildings constructed since 1991 from materials like drywall and alucobond. In Soviet times, the human role was perhaps more important, so everything was designed with user comfort and convenience in mind. Unfortunately, modern business centers and “elite” housing complexes tend to disregard these norms and ignore basic quality of life issues. These trends are evident in things like small halls, to say nothing of considerations for people with disabilities. Everything focuses on efforts to “squeeze” as much as possible out a project and make it more expensive to sell. If we want to talk about specific Soviet era buildings that need a full contemporary redesign, I would immediately point to the socalled flying saucer building on Lybidska Square. You can also add Salut Hotel in Perchersk and Slavutych Hotel on Kyiv’s Left Bank to this list. Looking back to the pre-Soviet era, Besarabka Market in central Kyiv needs to adopt a more civilized and all-in-one design concept that would be in line with the kind of formats now popular for similarly historic market buildings in many other European countries. Kyiv has huge numbers of historic buildings that could potentially benefit from a complete redesign. The most important thing is to avoid damaging or losing what we already have. It might be worthwhile to study how our foreign colleagues are able to protect the historic identity of buildings and preserve their unique character while giving the structure new life and new functions.
: emphasis on extravagance and excess that saw Ukraine stereotyped
Ukraine is emerging as a popular international filming location with many video producers and filmmakers attracted by the kitsch appeal of the country’s Soviet architecture. Are there any useful lessons that contemporary Ukrainian designers can learn from the Soviet school? Yes, there is a lot to learn! Soviet architectural designs focused on people and centered on the convenience of all forms of communication and interaction in public places. Soviet architects also tended to attach great importance to qualities like proportion and the underlying rhythm of architecture, which often made the results they produced quite modern in style. By looking at the dynamics of the world and using minimal solutions, architecture can enjoy an entirely new lease of life. What is next on the agenda for YOD Studio? We plan to develop and deepen the process of creating new design concepts across the full extent of the hospitality sector. We are certainly looking towards American and Asian market entry. At the same time, we also remain fully committed to expanding our presence throughout all the regions of our native Ukraine.
About the interviewee: Volodymyr Nepyivoda is the director and founder of YOD Design Studio www.bunews.com.ua
Reforming the way Ukraine’s courts function Ukraine’s new judicial procedural codes aim to make the country’s law courts more user-friendly and only court of cassation, consisting of a Great Chamber (21 of a total 200 judges considering the most resonant and complex cases) and four cassation courts (covering commercial, civil, criminal and administrative cases respectively). This new-look Supreme Court will have the power to establish legal precedents by delivering one-sizefits-all judgments for similar cases. This could help to address the issue of hundreds of tax and civil cases that have remained pending for years. In a bid to rid court registries of endless queues, the reforms introduce the concept of electronic courts. This will theoretically allow digital submission of all claims, motions and decisions through a special website. On one hand, this is definitely better than the existing over-
About the author: Anton Molchanov is a Senior Associate and head of insolvency at Arzinger law firm The long anticipated package of new procedural codes adopted by the Ukrainian parliament on 3 October 2017 can potentially lead to crucial changes for the country’s rule of law. Reform of the judiciary is widely cited as the key to Ukraine’s broader post-Maidan transformation. The subject enjoys vocal support from Ukraine’s international partners including the IMF, World Bank, Council of Europe and EU authorities with many observers highlighting it as one of the most striking shortcomings of the current government. Most media attention remains focused on the headline-grabbing demands for the creation of an entirely new anti-corruption court, but the recently adopted changes to procedural codes also merit scrutiny. There is certainly enough small print to create surprises further down the road. The package passed by MPs in early October included an unprecedented number of amendments, with around 4000 added to the initial draft law introduced to parliament by President Poroshenko. Are the new procedural codes enough to lay the groundwork for fairer trials and a more level rule of law playing field, or are critics right in suggesting that the new package is another example of Ukraine’s authorities imitating reform processes while keeping existing structures in place?
On paper at least, the adopted package of procedural codes will inevitably alter a number of key points in the way the Ukrainian justice system functions. The Supreme Court will become the one 54
bureaucratized paper model. On the other hand, this innovation will be of little use to the significant minority of Ukrainians who are still unfamiliar with the internet and could prevent them from enjoying the benefits of electronic court innovations. There will be changes to the system of court writ proceedings. In both civil and commercial matters, small cases (e.g. debts not exceeding UAH 60 000) may be considered on their merits for just 15 days. Should a court find for the claimant, an immediately enforceable court writ will be issued. Pre-trial settlement policy will also change. Courts may now call on parties to negotiate a pre-trial settlement with the judge acting as a mediator to prevent the case from becoming a fullscale legal battle. However, details of these settlement proceedings remain shrouded in a degree of mystery. One of the most discussed provisions of the reforms is the wide scale of fines that courts can now impose for procedural misuses. From motions to withdraw judges to the submission of manifestly frivolous claims, the new codes identify more than 15 situations where a party could face fines of up to UAH 30,000. As this amount is more than five times higher than the average Ukrainian monthly salary, such measures could have a significant negative impact on both attorneys and their clients.
A Step in the Right Direction?
Despite a significant number of controversies and criticism, both Ukrainian and foreign businesses can realistically expect a lot from the country’s brand new procedural codes. Advantages should include more convenience in small debt recovery with no excessive fees demanded, more certainty in monitoring cases and submitting e-evidence from abroad, and solid remedies to prevent attorneys from delaying cases using well-worn stalling tactics. These are only a few of the more obvious and tangible benefits that should help to make the experience of pursuing cases through the Ukrainian courts easier. As the code package comes as part of a far broader judicial reforms drive that also includes elements such as new admission and compliance standards for judges, many of the more heavily criticized aspects of the package may prove to be only temporary. Subsequent reforms could end up resolving these issues in due course. At this stage, the jury is still out. Nevertheless, there is reason to believe that the changes introduced will help to make Ukraine’s court system more effective and user-friendly in a number of ways.
Positive economic indicators fuel renewed construction but investors remain wary of business climate
This November, real estate industry professionals from across the region will converge on Kyiv for the third annual Eastern Europe Real Estate Forum and Project Awards. Ahead of the forum, industry experts Olga Solovei and Craig Smith offer their thoughts on the current investment appeal of the real estate sector in Ukraine. Any discussion of Ukraine’s investment appeal inevitably involves comparison with alternative options in the neighborhood. In this context, Ukraine continues to lag behind many of its regional neighbors, but it also enjoys some strategic advantages. In terms of direct role models for international investment attraction, the obvious candidate country is Poland. The Ukrainian and Polish domestic markets are similar in size. Despite economic disparities that have expanded rapidly over the past two decades, the two countries continue to bear comparison. It is worth noting that if Ukraine had received the same levels of annual EU funding as Poland since the 1990s, Ukraine’s infrastructure would look completely different. Once we remove these EU funds from the equation, the basic indicators for Poland are not that much better than Ukraine. However, in terms of risk assessment, today’s Poland is far more interesting for institutional investors and is widely perceived as a safe haven for newcomers. Meanwhile, Ukraine remains primarily appealing to opportunistic investors as a high-risk market that is closer in character to Belarus or Moldova. In addition, the Ukrainian real estate market suffers from a lack of transparency that it shares with fellow former Soviet markets like Kazakhstan or Azerbaijan. Nevertheless, many market analysts see 2017 www.bunews.com.ua
as a potential milestone in Ukraine’s emergence as a real estate investment destination with a number of factors converging to boost its international appeal. Compared to figures for 2013 (the last year prior to the Euromaidan Revolution and subsequent hybrid war with Russia), the Ukrainian construction and real estate industries are currently undergoing a period of rapid growth in terms of volumes. According to Ukraine’s Office of National Statistics, Kyiv, Kyiv Oblast, and Kharkiv Oblast are the key drivers of this nationwide growth trend. However, while the country’s two largest cities (Kyiv and Kharkiv) are traditional real estate market leaders, growth is also evident in smaller regional capitals such as Kirovograd, Zhitomir and Zaporizhia. There are also indications of growing demand
Ukraine still seen as risky real estate investment option for all types of real estate across the country. This is a positive dynamic set against a backdrop of extended inertia. Over the previous three years of economic malaise, Ukraine witnessed the commissioning of only a handful of major commercial real estate projects, while the majority of large-scale projects went into deep freeze. The positive economic performance of the past twelve months has reenergized the sector to a significant degree, with construction recovering accordingly. One of the key challenges facing the residential real estate sector is the lack of mortgage lending. There can be no serious doubt that this constraints the development of the market, reducing its attractiveness to major international developers and investors. Due to this shortcoming, the major market players are still largely local companies. Some of these companies are able to finance projects via assets that are unrelated to the real estate industry, while most residential real estate developments receive financing from private capital or the investments of future apartment owners. Nevertheless, most residential real estate developers remain optimistic about the future growth prospects of the sector. The overriding concern for many international investors remains Ukraine’s poor business climate. Corruption is still a common feature of the real estate and construction markets, a factor that deters many otherwise interested parties. At present, the largest non-Ukrainian market participants are Turkish and Israeli companies.
About the authors: Olga Solovei is Managing Partner at URE Club. Craig Smith is CEO at Europaproperty.com
State-sanctioned raiders and reform resistance Ukraine struggles to create financial anti-corruption agency despite repeated political commitments
About the author: Olena Prokopenko is Head of International Relations at Reanimation Package of Reforms, Ukraine’s largest civil society coalition uniting 81 NGOs and over 300 experts Ukraine’s political leaders have recently pledged to prevent intrusive searches and other harassment of businesses by state bodies investigating alleged financial crimes, but reform of the country’s financial law enforcement structures remains stalled. Indeed, with Ukraine’s entire reform agenda facing mounting resistance, it is becoming increasingly difficult to implement large-scale initiatives in the strategically crucial financial sector. This makes it virtually impossible to untangle corruption schemes and break up long-established informal empires. Most observers acknowledge that Ukraine’s most significant post-Maidan reform achievement is the creation of the National Anti-Corruption Bureau of Ukraine (NABU), which has demonstrated a willingness to investigate top-level corruption among the country’s previously untouchable political elites. Despite this recognition of NABU’s effectiveness, there has been little progress towards the planned establishment of a Financial Investigation Service (FIS), or “financial NABU”, capable of investigating economic crimes in a transparent and apolitical manner.
Long Overdue Reform
The proposed FIS would be a much-needed replacement for the notorious tax militia. The parliament officially abolished this state authority in late December 2016 but it remains operational and stands accused of committing unlawful actions while receiving budget funding. Originally created as a specialized law enforcement agency to counter financial abuses, the tax militia is widely 56
accused of serving as a full-fledged state raider and one of the country’s most corrupt institutions. In addition to longstanding corruption allegations, the tax militia is also hugely ineffective, with the budget revenues it generates failing to even cover the costs of its own upkeep. Given Ukraine’s oft-stated democratic aspirations, the de facto retention of the tainted tax militia is hard to justify. If established, a future FIS would avoid any repeats of the tax militia experience by shifting the focus from punitive to analytical functions. The new service would have fewer
staff (around 3,500 compared to the tax militia’s 10,000). Recruitment would take place via open competition from outside the current law enforcement system, with higher salaries to deter corruption. Crucially, the service would not have the power to conduct inspections of businesses. Equally importantly, the FIS, as experts envision it, would be subordinate to the Ministry of Finance rather than the Interior Ministry.
Support and Opposition
The push to create a Financial Investigation Service has received support from many of Ukraine’s most traditionally progressive forces including the expert community and leading business associations like the American Chamber of Commerce and European Business Association. It has the backing of pro-reform MPs and Ukraine’s international partners, serving as one of the structural benchmarks in the March 2017 IMF-Ukraine Cooperation Memorandum. Meanwhile, the EBRD have stressed the urgency of the issue, calling for an end to “corrupt raids”. Opposition to the FIS initiative is equally fierce. For opponents, the key threat it represents is the redistribution of investigative powers away from the Security Service of Ukraine (SBU) and the National Police. This helps to explain why we have already seen two attempts to resurrect the tax militia as well as efforts to dilute the impact of the future FIS by including responsibility for minor economic offenses. Despite heavy resistance, a commitment to create a Financial Investigation Service featured in the parliamentary coalition agreement of November 2014 and was included in legislation to improve the investment climate passed in late December 2016. A specialized FIS draft law secured government approval in March 2017 and is now awaiting approval by the National Reform Council,
a presidential advisory body. Despite President Poroshenko’s public statements in support of a Financial Investigation Service, the draft law has yet to receive consideration from his National Reform Council. In other words, an advisory body with no formal role in the legislative process has successfully blocked a strategic government project for over half a year. Meanwhile, events on the ground demonstrate that there is no time to waste. The technically abolished tax militia is not only alive and well; it is busy expanding its horizons from corporate harassment to pressure on civil society actors. Among the most alarming recent cases is one against the Anticorruption Action Center (AntAC).
Despite strong opposition from within government, there is hope that the FIS draft law could still make progress. After waiting six months for the National Reform Council to consider the draft, in early October Prime Minister Volodymyr Groysman instructed the Ministry of Finance to consult with the main Parliamentary Committee and refine the document in order to submit it to the Cabinet once more for a second consideration. At present, the institutional gap between the technically abolished tax militia and the yetto-be established FIS remains. If the FIS law does not pass by the end of 2017 (as Finance Minister Danylyuk has said he expects), it will be increasingly tempting for forces opposing the FIS to argue the necessity of officially reviving the tax militia. To prevent this scenario, the Ministry of Finance should ensure rapid reconsideration of the FIS draft law by the Cabinet of Ministers and its submission to parliament. Parliament, and particularly the Tax and Customs Policy Committee, should demonstrate the highest levels of cooperation and prevent any further delays in finalizing and adopting this critical legislation. It is also essential to keep the business community and Ukraine’s international partners united on the FIS issue. Much will depend on the ability of supporters to push this reform through towards full implementation. Without the final abolition of the tax militia and the creation of a transparent law enforcement agency for the economic sector, decisive anti-corruption and tax reforms will remain impossible.
World community can never accept Putin’s Crimean crime Politicians who seek thaw in ties with Russia must consider precedent they would be setting
Time after time, the issue of Crimea appeared during the course of the recent parliamentary election campaign in Austria. In light of regular calls by some Austrian politicians to accept the Russian occupation of Crimea, it seems like an appropriate time to remind global audiences of some basic facts. First, Crimea is just as Russian today under Putin as Austria was German under Hitler. The annexation was an obvious and clear breach of fundamental international law. Primarily, this means it was in direct violation of all bilateral treaties and agreements signed between Ukraine and Russia, beginning with the 1994 Budapest Memorandum, under which Russia (in exchange for Ukraine surrendering what was at the time one of the world’s latest arsenals of nuclear weapons) vowed to respect the inviolability of Ukraine’s territorial borders. Second, we must reject claims that nobody’s individual rights were violated. The annexation of Crimea was an unprovoked land grab in line with the worst traditions of the twentieth century’s darkest totalitarian chapters. It was caused solely by the Kremlin’s imperial greed and violated the rights of individual Crimean residents and all Ukrainian citizens. Third, there is no way to make an illegal Anschluss legal. The euphoric faces of some local Crimean residents prove nothing 58
in this regard. Europe, and in particular Austria, know this better than anyone due to their own historical experience. The socalled “referendum” vote itself in Crimea was a travesty, observed solely by those who need observation themselves. No recognized international bodies were able to monitor the ballot or confirm the result. Fourth, the notion that “Crimea was always Russian” does not hold water. Crimea was part of the Russian Empire and then part of the Russian Soviet Federal Republic from 1784 until 1954, but it was under Crimean Tatar and Ottoman Empire rule for considerably longer, not to mention the Byzantine and even earlier periods in Crimea’s multi-millennial recorded history. In terms of historic claims, Kyiv was also part of the Russian and Soviet empires from 1654 until 1991. By this logic, is the Kremlin entitled to proclaim Kyiv as “eternally Russian” and occupy it too? Can any European politician afford to condone such logic? If so, the entire European continent would quickly become subject to border disputes and competing historical claims to territory. Fifth, the 2014 Crimean Anschluss was not bloodless as is often alleged. The most striking example is the fate of 39-year-old Reshat Ametov, who was tortured and shot in the eye just for holding a piece of paper that said: “No to the occupation!” This happened
on 3 March 2014, at the very outset of the annexation. An ocean of hate had not yet emerged at that point to separate Ukraine from Russia. Ukrainians were watching the occupation unfold in a state akin to collective paralysis, unable to imagine that a “Ukrainian-Russian War” was even a vague possibility. The Kremlin obviously did not have any such qualms about the use of force. It came, it killed, and it took away Ukrainian land. Dozens more ethnic Ukrainians and Crimean Tatars have vanished during the occupation. Political prisoners like Oleg Sentsov, Oleksandr Kolchenko and Hennady Afanasyev have been tortured with electric cables and plastic bags. I cannot help but wonder: do Putin’s friends in Europe have any idea what an electric cable feels like when applied to human skin? Do they know what it is like to have a plastic bag suddenly thrust over their head? This is how Russia came to Crimea – like a plastic bag over the head. Via broken international treaties, the unthinkable suffering of some – and yes, the happy, almost sadistic tears of some others. Does this not bring to mind the rising tide of expansionist evil in late 1930s Europe? It is particularly hard not to think back to those dark days when confronted by Putin’s Crimean crime, and when witnessing the apparent eagerness of so many European politicians to turn a blind eye.
About the author: Olexander Scherba is the Ambassador of Ukraine to Austria
Ukraine can learn from Ireland’s diaspora engagement initiatives and FDI successes Ireland’s history shares many similarities with Ukraine. We have also had our famines, foreign imperial rule, struggles for independence, and violent conflict zones. Like Ukraine, Ireland also has a long history of mass emigration. The reversal of this trend in the 1990s helped build Ireland’s famed “Celtic Tiger” economy. As Ukraine seeks ways to stem the flow of citizens seeking opportunities abroad, Ireland’s experience may offer useful insights that could help reverse the current brain drain threatening Ukraine’s future prosperity. The Republic of Ireland today has a population of 4.6 million, a GDP of USD 294 billion, and Europe’s fastest growing economy. It is the fifth most competitive country in the OECD, and number one in the Eurozone. From an innovation perspective, Ireland has a strong national research ecosystem, with 14 designated priority areas for government funding in research and investment. Ireland ranks tenth out of 127 countries in the 2017 Global Innovation Index. Ukraine can learn from Ireland’s success in a number of areas.
Celebrate Your Culture
Ireland consistently ranks in the top ten globally for Foreign Direct Investment (FDI). Some analysts point to Ireland’s low corporate tax rate of 12.5% as its primary means to attract investment. Yet, our value proposition goes far beyond this single factor. Long known as “the land of one hundred thousand welcomes”, Ireland leverages its friendliness and the welcoming nature of its people to woo foreign investors. Ukraine’s own impressive hospitality traditions can play a similar role. Our reputation for having a good time, whether on St Patricks Day, over a pint of Guinness, or with a glass of Jameson Whiskey, also translates into business success. Ireland ranks first in the annual IMD World Competitiveness Yearbook for the national culture most open to foreign ideas. Through “Enterprise Ireland”, a dedicated startup fund exists to attract foreign start-ups to Ireland. Measured on a per capita basis, Ireland has more venture funding available than in any other country in Europe. Over EUR 800 million is available through seed, venture and angel capital firms.
Irish experience can help reverse Ukraine’s brain drain modernise commercial research within Ukraine’s academic institutions while also helping encourage members of the Ukrainian diaspora to return home to pursue their ambitions.
Engaging with the Diaspora
Investing in Innovation A critical factor in developing Ireland’s economy was to create quality investment and employment opportunities beyond the capital city and largest population hubs. Ireland has the youngest workforce in Europe. Around 35% of employees are under 25 years of age. Ireland’s investment in education typically far exceeds EU averages. European Commission studies have cited Ireland as producing “the most highly employable graduates in the world”. Over the past generation, “Institutes of Technology” have appeared in regional towns across the country. Enterprise Ireland promotes 15 so-called “Technology Gateways” within these technology institutes, which combine academic capability with commercial research to serve the needs of local industry. These Technology Gateways focus on a specific niche or speciality, thereby helping strategic regional economic clusters to take shape, allowing talent and investment to flourish. Another key feature of these Institutes of Technology is the modest size of the cities in which they reside. Cork City, with a population of 126,000 people, is the hotbed for Ireland’s EUR 30 billion pharmaceutical export sector. Galway, with less than eighty thousand people, is the hub for a EUR 2 billion medical device manufacturing sector. Tralee, with less than twenty five thousand people, hosts Ireland’s dedicated electronic and mechanical technology, along with an IoT and data analytics innovation research centre. Since 2013, these 15 Technology Gateways have helped 900 Irish companies to complete more than 2,000 innovation-based projects. Ireland’s Technology Gateways operate independently within existing state-owned Technical Institutes. Their example could act as a template to help
The island of Ireland has a total population just over 6.5 million people, yet the global Irish diaspora numbers 70 million with communities found all over the world. Irish pubs are omnipresent globally. Close on half of all USA presidents claim some degree of Irish ancestry. Even Odesa’s famous Deribaskivska Street is named after a man of Irish heritage. Ireland leveraged its diaspora and emigrant communities during the 1990s to help create its legendary “Celtic Tiger” economy. The government actively encouraged those Irish and their ancestors who had left Ireland to return home to build a new innovation-led economy. Ireland uses tourism, festivals, and international conferences as a means to showcase the country to investors. Ireland also has a dedicated Minister of State with Responsibility for the Diaspora and International Development. Ukraine’s multimillion diaspora could potentially play a similarly important role in Ukraine’s development. One weakness recognised by our new Prime Minister Leo Varadkar is Ireland’s lack of a global diplomatic footprint. He aims to double Ireland’s global diplomatic footprint by 2025. Ironically, Ireland as one of the strongest advocates of the European model, does not currently have an embassy in Ukraine. In the meantime, small steps are already being taken to build upon mutually beneficial trade opportunities and friendship between Ireland and Ukraine. In November, Daniel Bilak, director of the Ukraine investment promotion office, UkraineInvest, has been invited to Ireland to speak at a major economic conference. On behalf of the Irish export promotion agency, Enterprise Ireland, I am happy to engage with Ukrainian businesses interested in Ireland’s Agri-Food, Technology, Cleantech, and Healthcare sectors.
About the author: Tom O’Callaghan (email@example.com) is the Enterprise Ireland Pathfinder in Ukraine. For more information please visit www.enterprise-ireland.com www.bunews.com.ua
US expat inspired by Ukraine’s American footballers Alfonsine Williams has experienced an unlikely epiphany as an American football coach in Ukraine As an expat, you often need to let things go for the sake of your own sanity. This is especially true for American expats in Eastern Europe. We Americans-in-exile tend to miss the things that we have always taken for granted back home, such as high levels of service, widespread availability of consumer goods, community spirit, and perhaps most importantly, the specifically American sports that often hold those communities together. Three years ago, a chance encounter on the streets of Kyiv led me to 60
rediscover something I thought had been lost forever. Football, or American football as I have become accustomed to saying, came back into my life when I least expected it. This happened to me while I was walking down Kyiv’s central Khreshatyk Street. To my great surprise, I saw what appeared to be a local American football team dressed in their uniforms throwing around a football. I was immediately intrigued. The next thing I knew, I was attending a football game on the fourth of July at Kyiv’s Spartak Stadium. This old Soviet-era
Photo Credit: Richard Liu
sports arena is an underwhelming venue nestled in one of the less exclusive districts of the city, but it has become a special place to me.
American football has been at the very center of US culture for over one hundred years. Our fathers and their fathers have all played or cheered on their favorite team. Most Americans can at least empathize with the elation and utter heartbreak that fans experience when following their team. I played American football or was around the sport for most of my life prior to becoming an expat. My father had played professionally and football was always part of our relationship until he passed away. I made it as far as university level and that proved to be the peak of my football career. It was over www.bunews.com.ua
before I knew it, but that is the nature of the game. The sheer scale of the passions aroused by American football in the US may be hard for outsiders to comprehend. Small towns throughout the country often shut down completely to watch high school games, while universities have multi-million dollar TV deals. The NFL itself has long since supplanted major league baseball as Americaâ€™s favorite pastime.
Glory Hunters Need Not Apply
Unsurprisingly, the American football scene in Ukraine is a long way away from the all-consuming glitz and glamor found in the US. It is a completely different story altogether, but also compelling in its own way. Somehow, the love of the game has made its way over the Atlantic : 61
Photo Credit: Zoya Shu
: and across Europe to take root in Ukraine. After my initial encounter
in downtown Kyiv, I was surprised to learn that there are nearly 20 American football teams currently active in Ukraine, with seven in the capital city alone. I now coach the Kyiv Patriots, but there are also teams with names like the Bandits, Bulldogs, Jokers, and, of course, the Slavs. Players range in age from 16 to pushing 50. Some have over a decade of experience behind them, while others are only just starting out. All are welcome. It is common to encounter Ukrainians who are just beginning to learn the basics of the sport despite being older than the typical retirement age for American pro players. To me, American football is all about sacrifice and effort. You give everything you have in order to accomplish a single goal, and you sacrifice individual glory for the greater good of the team. These Ukrainians sacrifice more than glory, because they play a sport where there is no glory on offer, at least in the traditional sense. There are no multi-million dollar contracts, no endorsement deals, no pension plans or adoring masses. The sportâ€™s Ukrainian fan base is loyal and vocal, but they could not possibly fill out an entire stadium. The issues do not stop there. Due to a lack of interest from the government, there are practically no fields suitable for American football in Kyiv. Those that exist are all for hire, and cost more than most teams can comfortably afford. We should also not forget that American football equipment is not cheap. So most of the players involved in Ukraineâ€™s American football scene have to pay to play a sport that many in the country are not even aware exists. Why do they do it? I have struggled with this question since I began coaching American football here. Why risk your body for a sport that offers you virtually nothing in return? Why spend your time and
money paying to play a sport in a country where the average citizen lives off less than USD 300 per month? Some enthusiasts clearly find the mythology of American football fascinating. For others, it is just another sport to learn. After all, this is a society where sport plays an important part in many peopleâ€™s lives from an early age. Others are athletes who may not be at the top of their selected sport any longer, but are not ready to put their competitive days behind them. For quite a few, the biggest draw seems to be the comradery that the game brings.
All Walks of Life
The players I have encountered in Ukraine come from a wide range of professional backgrounds. My hard-hitting middle linebacker is an accountant. My center works in IT security, while my left tackle is a lawyer. My craziest player is a cornerback who simply loves to hit. When he is not deflecting passes or delivering blows, he is an engineer for a Ukrainian airline. They come from all over as well. I coach the Kyiv Patriots and we have players from Kyiv, Kharkiv, Dnipro, Donetsk, Crimea and numerous other locations throughout the country that I could not even pronounce, let alone spell. American football is just about as Western a sport as one could play in Eastern Europe. At first, I thought many played just because it was cool. There are many great photographers in Kyiv and my players never waste an opportunity to jump in front of the camera. They look like warriors and the cheerleaders all look like catwalk models. Sometimes it can be quite a spectacle. Over time, however, I learned that the sport means more to them then meets the eye. Ukrainians have learned to live with political turmoil, corruption,
how to use profanity quite efficiently thanks to my players. Inevitably, there are funding issues. Finding sponsors can be difficult. On top of everything else, the game itself is hard enough to teach and play. However, I have no doubts that it has all been worth it. When my father passed away, I never thought that I would be so close to the game again. The players I have encountered in Ukraine, along with their dedication and their passion, is what brings me closer to him. It has brought me closer to the community I live in, and in some ways, it has also brought me closer to America.
and the instability of successive revolutions. While the system seems to be slowly moving towards reform, the average Ukrainian often struggles to identify any tangible signs of progress. Instead, political clans constantly fight to hold onto influence, power, and the corrupt system that gave them their wealth and status. Life is hard and can seem intrinsically unfair. It is not difficult to see why many Ukrainians feel they are at the mercy of the authorities. Football, on the other hand, is much closer to a genuine meritocracy. If you work hard, respect yourself and your teammates, you will receive rewards for your efforts. In a country that has suffered more than most from political divisions, American football also offers a sense of coherent identity. Players is no longer from Kyiv or Donetsk, Lugansk or Lviv. They are Patriots, Bulldogs, Lions, Pirates, or Rockets. Most importantly, they are family.
Inspiration and Adversity
I sometimes feel like I have travelled the world in search of the American dream only to find it in Ukraine’s American football scene. Every weekend on small and poorly managed fields, with little to no training equipment, I see the essence of the American dream take shape. Hard times are nothing new for these players. I have watched students struggling to find their place and guys that have to choose between paying for practice or eating. I have encountered players battling against things like gambling addiction. Along the way, there have been many success stories. These Ukrainian players represent the game in all its glory and play it the way they live: with grit, sweat and love. It has been an honor to be a part of it. There are challenges. Language barriers remain, but I have learned
About the author: Alfonsine Williams is a Kyiv-based American expat. He is head coach of the Ukrainian National American Football Team and the Kyiv Patriots, and director of business development at Ukraine-based IT firm Mobilunity
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Turkish Business Association Opens Zaporizhia Office Turkish-Ukrainian Business Association TUID unveiled a new representative office in Zaporizhia in October, further expanding the association’s regional footprint in Ukraine. This latest addition to the TUID network joins existing regional offices in Kharkiv, Kherson, Odesa, Lviv and Vinnitsia along with the TUID national head office in Kyiv and representative office in Istanbul. Representatives from Ukraine’s vibrant Turkish business community gathered in Zaporizhia for the official opening alongside local municipal officials and members of the Zaporizhia business community. Guest of honor was Turkish Ambassador to Ukraine Yonet Can Tezel, who welcomed the new TUID office as a further sign of deepening Turkish-Ukrainian trade ties.
The official opening of this latest TUID regional representative office took place in parallel with Zaporizhia’s biggest annual international investment forum, which saw TUID President Burak Pehlivan sign a memorandum of understanding with Zaporizhia Chamber of Commerce and Industry President Vladimir Shamilov. TUID President Pehlivan told guests at the Zaporizhia office opening that the city’s industrial potential was difficult to overestimate and offered considerable regional opportunities for Turkish businesses. Founded in 2004, TUID has over 200 members. TUID member companies currently generate a collective annual turnover of more than USD 2.5 billion.
Credit Agricole Bank Looks Ahead to 2018 On 18 October, Credit Agricole Bank held its traditional autumn event “Macroeconomic review: summary and trends”. The event took place at Kyiv’s InterContinental hotel and was attended by around 200 corporate and premium customers of the bank. The focus of the event is the annual review and discussion of the latest macroeconomic trends in Ukraine and worldwide, together with sharing experiences and networking. “Our bank is organizing this annual event for the third time in a row. We are happy to see more and more guests interested in the expertise provided by Credit Agricole and that our traditional economic review generates so much interest. This is a great opportunity to meet in an 66
informal atmosphere and share the experience of Credit Agricole with our customers,” Jean-Paul Piotrowski, the Chairman of the Management Board, commented. “In the coming year, we will continue to support our MNC in partnership with Credit Agricole Group and will focus on the promotion of our local corporate clients outside Ukraine. We will also increase our contribution to the local economy by financing the middle corporate and SME segments. In parallel, we have decided to accelerate the implementation of our investment plan in different areas such as the digital transformation of the bank and the reconfiguration of our network to better service our clients.”
Oschadbank and Delo.ua Support SME Sector with Festival The “Get Business Festival” took place at Kyiv’s Olympic Stadium Complex on 20 October with support from Delo.ua and Oschadbank. This innovative forum focused on Ukraine’s fast-growing SME sector, offering a range of educational opportunities including master classes, lectures, and mentoring sessions. Some of Ukraine’s most successful
business personalities shared their experience with thousands of attendees, providing insights into a range of areas such as marketing, finance, sales, strategy and IT. The festival began with an appearance from Oschadbank CEO Andriy Pyshnyy, who presented the bank’s new SME support program entitled “Buduy Svoe!” (“Build Your Own!”).
Kyiv’s First Internationally Certified Organic Business Center Kyiv’s picturesque riverside district Podil welcomed the opening of the Ukrainian capital’s first internationally certified ecologically sustainable office complex in late October. ASTARTA Organic Business Centre is among the biggest business complexes in Kyiv and, fittingly for a project tied to one of Ukraine’s largest agricultural holdings, comes complete with its very own park. Developed by Energoinvest and based on architectural design work by Britain’s SCG International, the ASTARTA complex includes three wings covering 62,500 square meters that will house a combination of 70
office space and retail outlets. It is the first commercial complex in Ukraine to receive the prestigious BREEAM certification, the world’s longest established method of assessing, rating and certifying the sustainability of buildings. This certification came via an independent international audit in summer 2016 and reflects the use of ecologically safe materials and a wide range of green design innovations. Initial tenants of ASTARTA Organic Business Centre include Siemens, Raiffeisen Bank Aval, Sigma Software, Creative Quarter, SBTech, and Travel Hub.
Ukraine Launches Network Promoting Ethical Business The Ukrainian Network of Integrity and Compliance (UNIC) officially launched its operations in Ukraine on 9 October 2017 with a ceremony attended by Ukrainian Prime Minister Volodymyr Groysman. The network brings together responsible businesses throughout Ukraine and promotes the idea of doing business ethically. UNIC currently comprises 42 Ukrainian and international companies. The initiative is nationwide and aims at bringing together businesses showcasing integrity in Ukraine regardless of size and region. Ukraineâ€™s Business Ombudsman Algirdas Semeta initiated the Network with the support of the European Bank for Reconstruction and Development and the Organization for Economic Cooperation and Development. Applications to join UNIC are welcome. Prospective member companies should favor a high standard of integrity and compliance in doing business.
Ukraineâ€™s Economic and Reform Prospects in Focus In mid-October, the Fryday network of professionals assembled expert panelists at Kyivâ€™s Radisson Blu Hotel for an educational evening focused on economy and reform in Ukraine. The roundtable format featured advisor to Ukrainian presidents Alexander Paskhaver, former Deputy Head of the National Bank of Ukraine and President of the International Institute of Business Oleksander Savchenko, and seasoned journalist and television personality Mykola Veresen, with international lawyer Alex Frishberg moderating. The evening was enjoyed by over one hundred diplomats and international business figures. Follow Fryday on social media for the latest news on forthcoming events.
Art auction provides platform for Ukraine’s post-Maidan generation
Post-Maidan Ukraine is currently experiencing something akin to a national artistic awakening and yet there are precious few platforms for young artists to bolster their credentials or sell their works. This is the thinking behind November’s ambitious “From Red to Yellow and Blue” art auction at TSUM department store in downtown Kyiv. The auction is the work of prominent Ukrainian arts scene personality Ludmila Bereznitska, who remains perhaps best known as the former owner of L-Art Gallery, one of the Ukrainian capital’s primary artistic focuses from 1996 until its closure in 2006. “Many of our young artists are hungry, literally,” she quips. ‘They are leaving the art world for other professions.” Ms. Bereznitska says the contemporary art scene in today’s Ukraine is a paradoxical place that enjoys an abundance of exciting young talent while at the same time suffering from a lack of commercial credibility. The economic realities of the past few years have seen many galleries close, while the number of Ukrainian collectors ready to purchase emerging art has also plummeted. The upcoming auction is part of her bid to raise the profile of young Ukrainian artists among domestic audiences. Only then, she believes, will they be able to enter Western art markets and establish global reputations. “Until we learn to love our own art and to buy it ourselves, others will not follow suit,” she argues. Like many in the Kyiv cultural world, Ms. Bereznitska takes inspiration
from the Ukrainian capital’s recent hipster reinvention, but she would like to see Ukrainian artists receiving more of the media spotlight alongside the city’s many fashion designers and IT innovators. Ultimately, she dreams of establishing Kyiv as an arts hub for the whole of Eastern Europe. “Kyiv currently has a great window of opportunity to become a focal point for artists from across the region. It is in the perfect position both culturally and geographically, and has the necessary stature as one of Eastern Europe’s largest cities.” Indeed, the only thing missing is an arts market capable of attracting ambitious young artists looking to make a name for themselves and sell their works. Ms. Bereznitska hopes her coming art auction will be a small step toward rectifying this shortcoming.
“From Red to Yellow and Blue” Charity Art Auction by Kupava Auction House TSUM Department Store (seventh floor) 38 Khreschatyk Street Open viewing: 19-24 November Auction: 25 November at 13:00 Tel.: +380-73-1015593 Email: firstname.lastname@example.org
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Published on Nov 8, 2017