Business Ukraine March 2016

March 2016

FRANCE UKRAINE IN

From finance, pharmaceuticals, cosmetics and construction to the annual French Spring cultural season - Ukraine’s love affair with all things Francais in focus

Also inside: Monthly American Chamber of Commerce in Ukraine Newsletter

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BUSINESS UKRAINE: MARCH 2016 France and Ukraine enjoy a relationship dating back to the eleventh century marriage of Anne of Kyiv to French King Henry I. Today, hundreds of French companies are active on the Ukrainian market, with the advent of the EU-Ukraine Association Agreement set to strengthen bilateral interaction further. This month Business Ukraine magazine offers a special focus on Franco-Ukrainian ties.

March 2016

FRANCE UKRAINE IN

From finance, pharmaceuticals, cosmetics and construction to the annual French Spring cultural season - Ukraine’s love affair with all things Francais in focus

Also inside: Monthly American Chamber of Commerce in Ukraine Newsletter

Ukraine needs a Risorgimento not mere reform Two years ago, the Kremlin launched a hybrid war in eastern Ukraine. Given the ease of Russia’s earlier Crimean conquest, few questioned Moscow’s ability to repeat the trick in mainland Ukraine. In Kyiv, the mood was fatalistic.

The only question was when the ‘little green men’ would finally appear on the streets of the capital. With Russian troops massed at the border just three hours away, we slept each night in the dragon’s mouth. Would we wake up to an army of occupation?

Then the strangest and most unexpected thing happened. Ukraine fought back.

A nation without an army took up arms. Volunteer battalions plugged the gaping holes in the country’s defences. Office clerks, mechanics, undergraduates and bank managers grabbed hunting rifles and donned hiking boots, creating one of the biggest grassroots fighting forces in world history. This was Ukraine at its finest – proud, resourceful, selfless and motivated. By early summer 2014, this ragtag force had managed to stop the Russian hybrid army in its tracks, limiting the Kremlin-occupied zone to a tiny portion of the lands originally identified by Putin as the future Novorossia (‘New Russia’). It was a staggering achievement and a definitive moment in modern Ukrainian history. After 23 years of post-Soviet pseudo-independence, Ukraine had finally come of age.

Like many of the best things about Ukraine, this miracle of volunteerism had almost nothing to do with official Ukraine. State structures and government bodies played relatively minor roles in the drama. Wherever they were prominent, the usual accusations of corruption, treason and venality soon followed.

This was all about ordinary Ukrainians demonstrating the decency of their values and their willingness to contribute to a better future. It was a militarized version of the civic volunteerism that fuelled the Euromaidan Revolution and the Orange Revolution before it. These movements confirmed the strong fundamentals underpinning Ukrainian society. They also exposed some uncomfortable truths about the nature of Ukrainian state structures. What is it about Ukraine that allows a thriving civil society to coexist alongside a completely rotMarch 2016

ten establishment? The answer lies in the immaturity of the country’s national institutions and the failure to break with the intrinsic dishonesty of the Soviet system. Modern Ukraine is still in many ways a colonial administration, albeit without a master. As a result, there is little sense of public service or accountability. Most regard state corruption as a victimless crime. Changing this situation will take generations. Former UK PM Gordon Brown once quipped, “When establishing the rule of law, the first five centuries are always the hardest.” He should know – it took the British hundreds of years to arrive at the imperfect democracy they have today. Ukraine may be able to shorten this transition period from centuries to decades, but it is foolish to expect radical institutional change overnight. Instead, it is crucial for Ukrainians and their international partners to recognize the sheer scale of the challenge ahead. Whole segments of the Ukrainian state demand total reconstruction. A completely clean slate is required if the cancer of institutionalized corruption is to be removed. This ‘clean slate’ approach is the reason why the specially recruited Patrol Police service has proved so successful, while more halfhearted reshuffles have fallen flat. Ukraine must now apply the same model to the courts, the prosecution service, and any number of other state bodies.

A new vocabulary is also required to reflect the Herculean nature of this task. We should probably stop talking about mere reforms. The very word ‘reform’ implies correcting faults and discrepancies within existing systems. This is intellectually dishonest. What Ukraine needs is nothing short of a Risorgimento similar to the nineteenth century rebirth of the Italian state. Civic Ukraine has proven itself capable of rising to the historic challenge. The country now requires state structures worthy of the society they represent.

Peter Dickinson, Business Ukraine magazine 5

Isn’t it time you turned the page?

ALL-NEW FORD MONDEO

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French Ambassador Isabelle Dumont says French experience can help Ukraine on road to reform What kind of impact do you expect the free trade dimension of the EUUkraine Association Agreement to have on bilateral commercial ties between France and Ukraine?

Firstly, it is important to note that the Deep and Comprehensive Free trade Agreement (DCFTA) creates a favourable environment for Ukrainian exporters to open up European markets for their exports. As a result, there will be new opportunities to develop trade links between our countries. Moreover, the implementation of the DCFTA will push Ukraine into adopting new EU regulations, new standards, and new certification schemes. This process will open many opportunities for consulting companies to provide Ukrainian operators with the knowledge and experience of European regulation to make a successful transition.

Secondly, the development of Ukrainian companies in line with DCFTA (including investments, upgrading, development of production capacities and logistical infrastructures in order to deliver goods to EU markets) will create a range of opportunities on the Ukrainian market for French suppliers who can provide Ukrainian companies and operators with the equipment and technical solutions they require. In general, business relations could be stimulated at all levels in response to increased EU-Ukraine free trade opportunities.

Which sectors of the Ukrainian economy are the most attractive for potential French investors?

French investors are genuinely interested in the Ukrainian market. Obviously, agriculture is one of the main sectors that has long been attractive and which is still appealing. Both Ukraine and France have important agricultural traditions and have a lot to learn from each other. Around 20 companies from the French agricultural sector are currently working in Ukraine, and a lot more want to join this promising market.

Another attractive and growing sector for French investors is information and communications technology (ICT), where Ukraine offers excellent opportunities, especially for young investors. French investors in the field of energy efficiency are also looking towards the Ukrainian market, as this issue is becoming more and more important in today’s Ukraine.

With the sad 30th anniversary of the Chornobyl nuclear disaster now on the horizon, it is impossible not to mention the nuclear sector. A number of French companies currently participate in the construction of the Chornobyl arch. There are also other opportunities at different Ukrainian power plants.

These sectors represent the main areas of the Ukrainian economy that are currently attracting the interest of French investors. Of course, there are many more opportunities in fields such as the fashion and health industries.

The Ukrainian market is full of perspectives for growth and investment.

Which areas of the Ukrainian reform process do you regard as strategically the most important in terms of the country’s European integration?

First of all, I would like to clarify that the reform process that is currently taking place in Ukraine is not only aimed at European rapprochement. Obviously, this is an important issue for Ukrainian people, as they showed on Maidan. As French Ambassador to Ukraine, I can only encourage Ukraine to move closer to Europe. But reforming a country is not only about what the rest of the world expects of it. The reform process is about changing things for the population in terms of their daily life. It is about making their lives March 2016

france in ukraine

France backs Ukraine’s reform efforts

About the interviewee: Isabelle Dumont is the French Ambassador to Ukraine easier and nicer. The Ukrainian reform process must and will serve the interests of the Ukrainian people, who asked for change two years ago.

Secondly, my role as ambassador is not to lecture or to teach the Ukrainian government how it should carry out these reforms. However, since you asked the question directly, in my view the main challenge now facing the country is the need to dramatically increase the fight against corruption. There are still far too many French companies telling me about very concrete issues they face in their everyday business activities. It is obviously not the easiest of issues to address, but it is crucial to deal with corruption in order to be able to reform all the other areas of Ukrainian society successfully. But once again, I would like to underline that the Ukrainian government will implement reforms in the way it sees fit, and France will continue providing all its support and expertise to Ukraine.

What are the most common concerns you hear from the French business community in relation to potential investment in Ukraine?

I regularly hear a range of different concerns expressed by French businesses and investors. As I have already mentioned, the main concern is corruption.

However, there are also other frequently encountered issues: I often hear comments regarding the harsh business climate resulting from the pressure produced by inspections related to fiscal and security procedures. Other comments focus on the poor functioning of the judicial system and its abuse to pressure foreign investors. Difficulties in receiving VAT refunds are also a common theme.

French investors and businesses have a number of structural and cyclical concerns such as the instability and weakness of the national currency, the hryvnia. The automatic conversion of foreign currencies into hryvnia is a burden for companies importing goods from abroad because it generates addi- : 9

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: tional costs. There are concerns over the current instability of the political en-

vironment and some uncertainties regarding the concrete implementation of expected reforms. The challenges of achieving stability and the sustainable development of the reform process are very concerning for businesses and investors in general.

It is true to say there are numerous common concerns for French investors and businesses active in Ukraine. Nevertheless, at this point it would be a mistake to focus exclusively on risks and ignore the great opportunities offered by the Ukrainian market. I would like to draw the attention of French companies to three points: the Ukrainian economy is already beginning to stabilize and could bounce back in the coming years. The Ukrainian government has introduced a number of courageous reforms, especially in order to cleanse the public finance and banking systems. These reforms should continue with determination. Additionally, Ukraine currently benefits from and will continue to enjoy international support. This is especially true in the finance field, where support is coming in order to help the country to modernize. All this translates into investment opportunities that will multiply.

Investors must try to seize these opportunities at the right moment.

What role can France play in support of the Ukrainian reform process?

As I mentioned earlier, the role of France is not to decide on the Ukrainian reform process. Naturally, we will continue to stand together with Ukraine whenever our help is needed. For example, experts in different fields such as decentralization and energy efficiency have been giving lectures and hosting conferences in Ukraine in order to share their experience with companies or with Ukrainian institutions. We are also leading the educational exchange process by sending young Ukrainians from a variety of different fields, especially from the political world, to France for training in specific areas. I would 10

say that the main role France can play in support of Ukraine is not to provide ready-to-use solutions, but to share our experience and expertise in order to help Ukraine become the modern European country it wants to be by itself.

How has your perception of the challenges facing today’s Ukraine evolved since your appointment as Ambassador?

I think we have already mentioned many of the challenges facing Ukraine in my responses to your earlier questions. I would like to underline one key point: while assessing where Ukraine is today, we must also think of what the situation would have been if the crisis had not been tackled at the very beginning. Without the reforms that have already been implemented, the current economic situation would probably be terrible. I would like to acknowledge the huge contributions made by Valeriya Gontareva at the National Bank of Ukraine, and by Finance Minister Natalie Jaresko and Economic Development Minister Aivaras Abromavicius, who have helped Ukraine at a time when the country found itself confronted by a huge economic crisis. Nevertheless, the situation in Ukraine remains fragile. As well as economic recovery, the second key challenge facing the country, in my opinion, is to improve its image abroad. Currently, Ukraine is generally viewed as a country with a high level of corruption and a very complicated business climate. It is important for Ukraine’s future to change these perceptions. Last but not least, Ukraine is still facing a third major challenge: the war in the Donbas. France is a participant in both the Normandy format talks and the Minsk agreement.

We stand alongside Ukraine in its efforts to find a way out of this crisis.

I am convinced that Ukraine as a country possesses all the necessary human capacities and resources to evolve towards the kind of reforms that would allow Ukraine to find its place in our globalized world. France is ready to support Ukraine along this path. www.bunews.com.ua

france in ukraine

French companies staying despite challenges Interview: Chambre de Commerce et d’Industrie Franco-Ukrainienne President Thomas Moreau The Ukrainian business environment is currently going through one its most challenging phases since independence in 1991, but the message from the country’s French chamber of commerce is clear – the French business community is going nowhere. “None of our member companies have left. They are all still active in Ukraine,” comments Thomas Moreau, who has served as President of the Chambre de Commerce et d’Industrie FrancoUkrainienne (CCIFU) for the past four years. He believes this staying power is down to a combination of faith in Ukraine’s future and the practicalities of existing investments already made into the economy of the country. “It would be stupid to leave now only to come back in five years’ time and start all over again,” he says. “French companies were originally attracted to Ukraine by the country’s vast potential. That potential remains.”

Raising Ukraine’s profile in France

Paris native Moreau believes one of the keys to finally realizing Ukraine’s fabled potential lies in improving the country’s image and raising awareness internationally. He advocates the creation of representative trade missions in EU countries capable of promoting Ukrainian import and export opportunities among local business communities, and laments the low profile the country has long suffered from in France. “Ukraine was relatively unknown in France until recently, so the first time many people learned about the country was when it hit the headlines as a result of the Crimea crisis and the conflict in east Ukraine,” he says. “This has inevitably created a negative image and has served to put off potential new investors.”

Moreau sees a role for the CCIFU in countering these negative perceptions, especially in terms of the exaggerated security concerns that international media coverage of the current conflict has generated. “Security is not a concern for those of us working in Ukraine. We live our lives perfectly normally here in Kyiv, which is a very safe and comfortable city. This is the message we have to get to our French colleagues.”

One of Ukraine’s largest business communities

The CCIFU has been active in Ukraine for twenty years and currently boasts over 100 member companies, making it one of Ukraine’s largest national chambers of commerce. It originally started out 12

About the interviewee: Thomas Moreau is the President of the Chambre de Commerce et d’Industrie Franco-Ukrainienne as an essentially social organization bringing together members of the fledgling French business community in Ukraine in the 1990s for informal gatherings. It has subsequently evolved into a more traditional chamber of commerce with a range of committees and a public service ethos. Moreau says the membership is currently comprised of approximately 70% multinational companies and 30% entrepreneurs. While there are noticeably fewer expats on the ground, he is encouraged by the continued commitment to Ukraine he has witnessed among CCIFU companies.

French investment in independent Ukraine began in the early 1990s before enjoying a sharp spike in the boom years of the mid-2000s. Moreau says this dynamic period gave way to more long-term investment by French companies after 2010. He believes we are now on the cusp of a new phase in the development of the French business community in Ukraine, with many French head offices currently asking their Ukrainian representatives to explore the possibilities presented by the EUUkraine Association Agreement for manufacturing and exporting into the EU from Ukraine.

Reform priorities

The fall of the Yanukovych government and the conflict in east Ukraine have presented international businesses in Ukraine with numerous immediate and pressing challenges. However, Moreau feels the future development of the French business community in Ukraine will ultimately depend on the country’s ability to pursue a com-

prehensive reform agenda capable of living up to the Euro-integration expectations underpinning the Euromaidan Revolution. “Investors want to see progress before they commit,” he comments.

Moreau is moderately upbeat about the steps taken so far, speaking enthusiastically about the progress made in the previously problematic sphere of VAT refunds. French businesses enjoy a prominent presence in Ukaine’s agriculture sector, and Moreau reports that CCIFU member companies have been broadly happy with the pace of the reform programme implemented by the country’s highly rated Agriculture Minister Oleksiy Pavlenko.

Wanted: stability and clarity

The most common concerns Moreau encounters among CCIFU members will be all-too-familiar to anyone with long-term experience of the Ukrainian business environment. He cites time-consuming bureaucracy, rule of law issues, and currency restrictions as among the key challenges facing French companies. Underpinning all these concerns is the central theme of stability. The current uncertainty over Ukraine’s future and the transitional nature of the country’s economy have created opportunities but also fueled the kind of ambiguity that scares many investors away. Moreau says greater clarity is required in order for existing French companies to expand and new market entrants to join them. “Uncertainty is a problem. We do not always know what to expect next and this makes planning difficult. Greater visibility would be a big plus,” he concludes. www.bunews.com.ua

france in ukraine

EU-Ukraine free trade is win-win for France and Ukraine

Association Agreement can help both France and Ukraine fulfil untapped potential of bilateral trade On 1 January 2016, the Association Agreement between the European Union and Ukraine fully entered into force. It includes the so-called ‘Deep and Comprehensive Free Trade Agreement’ (DCFTA) which, by progressively bringing tariffs to zero on both sides, and by foreseeing an approximation of EU internal market rules by Ukraine, will greatly facilitate trade between EU member states and Ukraine.

EU already Ukraine’s top export market

Trade relations between Ukraine and the EU are not starting from zero. In 2015, the EU was already Ukraine’s leading export partner, accounting for 33% of Ukrainian total exports. There are both positive and negative reasons for this: the EU already lowered import tariffs for Ukrainian exports in spring 2014 in advance of the DCFTA. Meanwhile, Russia has introduced various measures to restrict Ukrainian exports, thereby forcing Ukrainian companies to seek alternative export markets.

With almost 1.5 billion euros of goods exchanged in 2015, Ukraine and France are also already close trade partners. Ukraine currently exports approximately half a billion euros of goods to France annually, with imports from France valued at around one billion euros. However, when comparing with other countries, these statistics show that the full potential of bilateral French-Ukrainian trade is not yet being fully tapped. In 2015, France was only Ukraine’s twentieth largest export destination in the world, ranking ninth amongst EU member states. Even if France is doing better as an import partner (France currently ranks fifth behind Italy, Poland, Germany and Hungary), there is still room for improvement considering that France is the second largest economy in the EU. Interestingly, whereas Ukraine’s exports to the EU fell on average by 23% in 2015, notably because of the decline in the prices of commodities such as agricultural goods and iron, exports to France fell by only 7%.

Cooperation or competition?

When two large agricultural and industrial powers like France and Ukraine are concerned, could the Association Agreement represent a threat, rather than new opportunities? It would be a mistake to think so. In 1848, the French economist and politician Frederic Bastiat wrote in his ‘Economic Harmonies’, “By virtue of exchange, one man’s prosperity is beneficial to all others.” This statement remains very true for the two countries.

The agricultural sector is a perfect example of the existing and potential future benefits of closer cooperation between France and Ukraine. In terms of basic products like cereals or vegetable oils, France and Ukraine are already competing on worldwide markets, meaning that the agreement will not change the situation very much. Ukraine actually has everything to gain from taking advantage of French knowhow and investments in order to improve productivity, which is very much lagging behind European competitors, and to move upward in the value chain by focusing not only on raw agricultural goods but also on transformed products. Additionally,

when selling to French distributors present in Ukraine who often ‘export’ their quality requirements, Ukrainian producers already need to achieve the first step necessary to export to the EU. The trade agreement between the EU and Ukraine also protects geographical indications, both French and Ukrainian. The lion’s share of protected appellations is indeed France’s, meaning that Ukrainian companies that are copying French brands will not be allowed to do so anymore. In the short term, this might represent a constraint for Ukraine, but in the medium term, it creates incentives to develop higher quality products using Ukrainian identity for marketing, instead of making pale copies of foreign products. For French producers, having easier access to an emerging market of over 40 million customers, where French products are recognised and valued, is an opportunity not to be missed.

What is true for agriculture is equally true for other sectors. French and Ukrainian companies rarely compete in the same market segments in the industrial and service sectors. Let’s take an extreme example: no one can genuinely claim that Airbus and Antonov compete in the same markets. But Ukraine has an industrial history in aeronautics, skilled engineers, and cheaper labour costs than in the rest of Europe. There is a clear common interest in having French hi-tech companies in this area and in many others outsourcing part of their production, thus transferring technologies to Ukraine.

The same reasoning is valid for services: why would French companies outsource part of their production to India when they can cooperate with a country that has only a one-hour time difference, is culturally close, and has highly skilled IT engineers who can be recruited for equivalent salaries? It has often been said that France did not sufficiently use the opportunities offered by the enlargements of the EU in 2004 and 2007. Ukraine may represent an opportunity to catch up.

Of course, the success of the DCFTA in bringing Ukraine and EU member states closer together very much depends on the ability of the Ukrainian government to adopt and implement the reforms that it foresees: all the above mentioned changes can only take place if the business climate in Ukraine substantially improves. Cosmetic reforms will not fool businesses and only genuinely implemented ones will deliver the expected benefits to Ukraine. Otherwise, it will be a missed opportunity for all parties.

About the author: Jocelyn Guitton is First Secretary of the Trade and Economic Section at the Delegation of the EU to Ukraine

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france in ukraine

Time for investors to start considering Ukraine Gregoire Dattee of Mazars Ukraine: reforms are progressing, investors should think long-term International media coverage of Ukraine tends to emphasize negative aspects such as corruption and the conflict in east Ukraine. What role do these negative perceptions play in shaping the investment climate for Ukraine and how receptive are potential investors to alternative perspectives?

Obviously, outside perceptions of Ukraine shaped by the international media tend to differ from the vision of people with closer ties to the country. To my mind, despite legitimate concerns about the geographically limited conflict in the Donbas, the rest of Ukraine is absolutely safe. I would even say Kyiv is safer than Paris in terms of personal security.

The level of corruption in the country is still too high. We count on the continuation of the reform programme outlined by the Ukrainian authorities and international donors in order to tackle this problem. However, corruption has always been an issue in Ukraine, but this has not prevented important phases of significant economic growth in the past.

In reality, businesses already present in Ukraine are not leaving the market. Moreover, we see many foreign companies established in Ukraine developing new investments or planning new investments in the near future. On the other hand, I heard last week of a French businessman who refused to consider a project in Ukraine because he does not dare to come to Kyiv. In order to get a more realistic picture of this market and its opportunities, you really need to come to Ukraine and see for yourself.

You work with a number of long-term investors in Ukraine. In your experience, what characteristics do successful international investment projects in Ukraine tend to share?

No matter where you are investing, the formula for success is always a matter of subtle alchemy. However, in Ukraine I would highlight three unavoidable

points: investment in people, adaptation to the local specifics of doing business, and a great sense of ethics.

Beyond the financial part of any investment project, the importance of time invested by key people can easily be underestimated. The cultures at work in Ukraine, as well as the financial culture, are markedly different from those in many Western countries. Investing time and energy is important in order to have closer ties between the investor group and its Ukrainian activity via a significant presence of expatriates or a strong investment in local management with former experience within the group.

The process of adapting to local specifics can occur on two levels. It can mean adaptation to a fast-changing environment where pragmatism and quick decision-making processes are of great value. It can also mean adaptation to the ways of doing business – the importance of individual relationships and management style.

Great business ethics are crucial because solicitations can be numerous. This usually implies ‘resisting’ administrative organs that in many cases still put significant pressure on businesses. There is now much more support in this regard following the recent creation of two dedicated bodies, the National Anticorruption Bureau and the Business Ombudsman Office. There must be no compromises in regards to ethics.

What do you see as the most attractive investment opportunities in today’s Ukraine?

Firstly, it is important to note that the Ukrainian market benefits from a very well educated labour force with a great sense of adaptation and strong work ethic.

Due to the devaluation of the hryvnia, this workforce is now also highly competitive. As a result, producing in Ukraine for export is becoming a more attractive option.

In terms of specific sectors of the economy, there are a number of particularly attractive industries. Ukrainian agriculture has already attracted numerous major French investments. The IT industry is booming thanks to the country’s vast and highly skilled technology workforce. Energy and energy efficiency are exciting areas where much modernization work is required. Light in-

dustry is also appealing due to highly competitive production costs combined with Ukraine’s strategic geographical location, enabling cheaper and quicker deliveries.

What are the key risks facing potential investors considering Ukraine market entry?

Ukraine presents the usual risks that foreign investors face in all emerging markets. Top of the list is the absence of political stability. The economic situation has stabilized impressively over the past eighteen months, but economic fundamentals must still be confirmed and strengthened. Like many emerging markets, Ukraine suffers from a weak judicial system resulting in high levels of corruption.

There are a number of factors more specific to Ukraine, including, for the moment, an absence of developed hedging tools, in particular in regards to foreign exchange risks. Solutions exist. However, this point must be considered from the very beginning. It is also worth noting that notions of investment timeframe may differ in Ukraine – there are exceptions, but in most of the cases, investments should probably be viewed in the context of a mid- to long-term timeframe.

What do you regard as the most important reforms implemented since the 2013-14 Euromaidan Revolution?

As I mentioned earlier in this interview, international media coverage tends to emphasize negative points quicker than positive aspects. However, many important reforms have already been implemented. In other cases, the implementation process is at an advanced stage. This progress has already had a noticeable impact on the daily life of businesses in Ukraine. For example, there has been a significant cleanup of the banking system, with efforts ongoing. The taxation system has been revised. Tax rates are now competitive (Corporate Income Tax at 18%, VAT standard rate at 20%, Personal Income Tax at 18% single rate).

Ukraine’s main tax rules now tend to converge with European standards. The situation regarding VAT credit has also improved significantly. Labour costs have decreased too, with a single social contribution rate fixed at 22%, instead of an average rate of 41% previously.

About the interviewee: Gregoire Dattee is Managing Partner at Mazars Ukraine. He has been based in Kyiv since 2008 at Mazars Ukraine providing audit, accounting and tax advisory services

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Jeantet is one of France’s leading and oldest independent business law firms. We deliver customized services with added value. Our firm was established over 90 years ago. Today our team of 140 lawyers work from six different international offices, while our partner network spans 130 countries.

Jeantet opened in Ukraine in 2015. We offer the services of our excellent team of 10 lawyers led by Bertrand Barrier and Karl Hepp de Sevelinges. Our areas of expertise include Corporate and M&A, Banking & Finance, Foreign Investments, Private-Public Partnership, and Antitrust issues.

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Paris • Casablanca • Luxembourg • Geneva • Budapest • Kyiv

March 2016

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France and Ukraine share agricultural focus French farming experience can help Ukraine to make the most of increased EU market access France has a strong presence in the Ukrainian agricultural sector.

French companies have been significant investors in the sector, with numerous major French agricultural groups establishing presences in Ukraine over the past two decades in an effort to benefit from the enormous potential of the Ukrainian agri-food sector and support Ukrainian farmers in their efforts to modernize and improve both production quality and quantity. The level of French representation in the Ukrainian dairy sector is particularly remarkable, with companies such as Lactalis, Danone, Bel and Savencia having established major presences in the country. There is also a strong French representation in the seed sector (Maisadour, Euralis, Limagrain and more). French companies are prominently present in the Ukrainian grain processing trade (Soufflet, Malteurop and Louis Dreyfus), and the meat processing industry (LPU). Meanwhile, Credit Agricole is has established a strong reputation throughout Ukraine as a leading agricultural bank. Other French companies such as Est Expansion, Agritel, and Odaess provide advice and assistance. In addition to this strong corporate presence, numerous French investors manage farms in Ukraine.

Ukraine can learn from French farming experience

Ties between the French and Ukrainian agricultural sectors are already considerable. The two countries have much in common, including strong farming traditions and vast physical size. As the leading agricultural nation within the EU, France’s experience since WWII is particularly interesting in terms of the lessons it can provide for Ukraine. French agriculture has undergone a major transformation over the past seventy years. Before World War II, French farms were small and agriculture provided work for 35% of the French workforce. In those days, the priority was self-sufficiency. Today, thanks to the EU common agricultural policy and the creation of a new economic market, agriculture has undergone major changes.

According to the most recent French farm census in 2010, 970,000 people held regular employment on farms, representing 3.3% of French jobs.

There are 490,000 farms in metropolitan France and 24,800 in overseas regions. This represents a utilized agricultural area (UAA) of nearly 30 million hectares - more than half of all French territory. This overall area is split between three major focuses: 63% of cropland is dedicated to cereal and forage crops, 34% to grassland, and 3% to perennial crops, vineyards and orchards. In spite of a sharp decrease in recent years, 30% of French farms are cattle farms. France has the biggest utilized agricultural acreage (UAA) in the European Union and is the EU’s biggest producer of agricultural goods with an annual value of around EUR 116.3 billion. France is also first in bovine and poultry production, second in dairy production, and third in pork production.

More than a third of France’s UAA is devoted to cereals: mainly wheat, barley and corn. Pro-

duction of cereals is highly condensed in France. Just 23% of cultivators produce 64% of the country’s overall volume of cereals. Wheat, which represents 54% of French cereal yields and covers 12 million acres, is mostly located in the west of France and around the Parisian basin. Much like barley, corn represents 17% of the French production of cereals.

Vineyards cover 1.9 million acres. This industry includes over 85,000 individual French wine producers. The wine sector is also a very important economic sector with about 50 million hectolitres of production. It plays a major role in the identity of individual French regions thanks to the development of official origin status. This status can be either PDO (Protected Geographical Indication, the European quality symbol) or AOP (the French equivalent of PDO). France is also an important producer of fruits (3.3 million tonnes annually, with apples and nuts as the leading products) and vegetables (5.6 million tonnes annually excluding potatoes).

Livestock leader

France is world famous for the country’s livestock breeds. France has the largest livestock production in Europe with 19.1 million heads. It is the second largest producer of milk in Europe, with an annual output of 24 million tonnes. Almost 40% of French diary production is located in the west of the country.

Selected breeding animals are exported to a wide variety of countries. In the dairy sector, France is the birthplace of several specific breeds of cow such as Normande, Montbeliarde, Brune, Abondance, Tarentaise, Pie rouge des plaines, and many more. The Charolaise, Salers and Limousine are very famous beef breeds. In most cases, French breeds from the mountains spend the summer in pasture, while livestock raised in the west of France spends at least a part of the year in grasslands.

French has an ancient cheese tradition. In order to protect this heritage, the country tries to maintain a large number of dairy breeds, each one linked to a specific French cheese. This can involve cow, goat and sheep milk.

France is the third largest producer of pork meat in Europe, and about half of all French pigs come from Brittany. Besides the classic breeds that are well represented throughout Europe, six local breeds, including the Basque and the Gascon from southwest of France, continue to exist as formerly regional French breeds. As these breeds are now endangered, genetic programmes have been established to help preserve them.

France is the top producer of poultry among European countries. Chicken accounts for 1.2 million tonnes of French poultry meat, while turkey makes up 0.3 million tonnes, and duck represents 0.2 million tonnes of the annual total. 17 billion eggs and 52.1 million tonnes of rabbit are also produced annually.

About 2.3% of France’s able-bodied work age population are currently employed in the country’s food industry. 28% of these workers are employed in artisan businesses like bakeries and butcheries. 21% work in meat-related industries, and 10% in diary production. The food industry as a whole contributes 1.6% to France’s GDP. The global turnover created by the industry is roughly USD 165 billion.

About the author: Nicolas Perrin (nicolas.perrin@dgtresor.gouv.fr) is the agricultural advisor at the French Embassy in Ukraine

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The Ukrainian breadbasket and EU markets

Ukraine can feed Europe but rush to sell off fertile farmland may prove counterproductive Sixteen years ago in 2000, Ukraine returned to the global grain market. It was a development that few had anticipated, and it sent out a strong signal that Ukraine was ready to return to its past status as a major international grain producer – a status which had previously seen the country dubbed as the ‘breadbasket of Europe’.

The statistics connected to Ukrainian agriculture already demonstrate that Ukraine has the potential to become one of the world’s largest commodities providers. At present, Ukraine already ranks as the number three exporter of grains behind the US and Europe. It is globally the number one crop oil exporter, and the number one corn exporter to China. Despite this strong position, there is also agreement that Ukraine still has plenty of underexploited agricultural potential.

In 2015, in spite of rather unfavourable climatic conditions for agriculture, Ukraine harvested more than sixty million tonnes of grains and eleven million tonnes of sunflower seed. This impressive return provides evidence of the considerable improvements in knowledge, expertise and professionalism among the country’s agricultural managers in recent years. With roughly 40 million hectares of farmland, the theoretical potential yield of the country could be more than 160 million tonnes per year. In this context, the goal put forward by most experts of 100 million tonnes seems quite realistic and achievable, despite the still unstable political climate in the country.

Agriculture fuels the Ukrainian economy, accounting for a 17%20% share of the country’s GDP. More than 30% of total exports are agricultural, while the sector also leads the way in the acquisition of hard currency – a crucial contribution as Ukraine defends against the risk of further currency devaluation and inflation. Agriculture is also a major provider of employment. This is especially important in the Ukrainian countryside, which would be deserted if the agribusiness sector were not so active.

Ukraine’s celebrated black soil

Talk of Ukraine’s exceptional agronomic potential is nothing new.

When French literary legend Honore de Balzac came to the Ukrainian town of Berdychiv in the midnineteenth century to marry Countess Hanska, he wrote: ‘just after crossing the border with Poland, the (Ukrainian) land is so fertile that the peasants need only throw seeds to get a large harvest. Any crop grows naturally!’ The celebrated nineteenth century Russian geologist Vasily Dokuchaev, who laid the foundations for soil science and is regarded by many as the father of modern agronomy, did much to raise awareness of Ukraine’s unique fertility. Even with the limited scientific tools available in the late 1800s, Dokuchaev understood why soils

differ in potential and stability, leading to breakthroughs in how farmland should be managed and protected from erosion. He introduced his new concepts during a famous session at the French Academy of Agriculture in 1900. This led to many cooperation projects that continued despite the instability of twentieth century Europe and the onset of the Cold War. Echoes of this agricultural cooperation abound. For example, a large sample of Ukraine’s celebrated ‘chernozem’ or ‘black soil’ was once transported from Poltava to Paris for an international exhibition, and can still be found at the French Soil Service. The connections between French and Ukrainian agriculture may even stretch back into the mists of time. French soil surveys conducted on the rich loams of the so-called ‘Bassin Parisien’ – one of the most fertile agricultural areas in France – have identified particles that appear to have been carried by the wind all the way from the boundless eastern steppes on the other side of Europe.

The long rows of trees and drainage ditches delimitating geometrically large plots of land first promoted by Dokuchaev continue to play a key role in the fertility and stability of Ukraine’s black soil.

Any farmer coming to Ukraine from France is simply amazed when he sees for the first time fields of two hundred hectares of deep black soil, with mechanization used at the lowest cost levels and minerals naturally provided to cover the basic needs of the crops.

Large French presence in Ukrainian agriculture

Since 1991, France has been among the leading international investors in Ukrainian agriculture. Some French farmers have invested as shareholders in the AgroGeneration group that has recently merged with Harmelia group. Others have come to the country as a group of private family farmers in order to split their time between their French and Ukrainian farms. These French investment efforts have not always been successful – some have struggled to deal with challenging local conditions and have had to resign, sending negative signals to other potential investors. However, the French presence in the Ukrainian agricultural sector remains diverse and robust.

With an eye on the vast potential of Ukraine’s black soil and the huge room for growth in exports, a number of large French companies, mostly cooperatives, have invested in Ukrainian agriculture.

Ten years ago the French cooperative ‘Euralis’ entered the market.

‘Mais Adour’ followed withina few years, investing in the production of large modern plants focusing on seed production. This investment had the twin goals of developing local hybrid seeds and intensified Research and Development activity to adapt the next generation of seeds to Ukraine’s agro-climatic conditions. French agricultural groups including ‘Limagrain’, ‘Caussade’ and ‘RAGT’ are also very active in Ukraine.

The French seed industry is the world’s leading exporter, notably in the corn and sunflower segments. Industry representatives are

About the author: Jean-Jacques Herve is a Board Member for agricultural issues at Credit Agricole Bank in Ukraine. He is also Vice-President of the France-Ukraine Chamber of Commerce and Industry and a member of the French, Russian and Ukrainian Academies of Agriculture

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currently developing active partnerships with French bank Credit Agricole in Ukraine in order to provide Ukrainian agricultural companies with both high performance seeds and alternative financing tools that aim to be less expensive than regular credit.

French milk processing and dairy produce groups including Lactalis, Danone, Bel and Bongrain have also invested in Ukraine. They continue to play an important role in support of the modernization of milk production in the country. Many other French companies involved in sectors such as genetics and agricultural equipment would also probably be more active in Ukraine if it were more stable and predictable.

Ukraine can help feed the world

The growing global population demands that every hectare of farmland be cultivated. Nine billion human beings will soon require food at an acceptable price. The necessary quantities of food simply cannot be obtained if land resources are converted into roads and towns, and if yields are not considerably increased. Ukraine is one of the few countries capable of contributing positively to the world food balance. The country’s agriculture sector needs investment in order to move closer to its true potential, although the progress of the last twenty years demonstrates that impressive development is possible even in the absence of sufficient external financial resources.

Ukraine must now make a range of strategic decisions that will shape the future of the agriculture sector. Some experts are supporting a rapid new wave of privatisation with an emphasis on the sale of agricultural land. This would bring immediate returns in the March 2016

form of sales revenues, but it is difficult to see how it would support the longer-term development of the agriculture sector. Isn’t it paradoxical to call for farmland sales at a time when there is a lack of working capital? Who could realistically afford to pay 25% per year on a long-term credit loan to buy farmland without dramatically reducing capital available for the development and exploitation of the land itself ? There are also question marks over the need to own the land. In France, farmers typically only own half of their land. The regions where the net results are highest are actually those where the proportion of land ownership is under fifty percent. There is a strong argument for believing that Ukraine’s limited available investment capacities would be better employed if they were invested in logistics and the processing of commodities. Land lease revenues also represent several months of basic income for millions of residents of rural Ukraine. These revenues are a crucial element of the local economy and serve an important social function.

The Association Agreement between Ukraine and the European Union can probably open up all manner of opportunities for further agricultural cooperation. The top priority may perhaps not be increasing the tariff quotas. European countries are already importing more - in some cases much more - than the present quotas. I think the main topics for discussion should be vegetable proteins including peas and soya, and alternative sources of energy. Within the broader vision of a geographically united Europe, the black soils of Ukraine could offer a very substantial contribution to food security and biomass production, with important processing roles for both local consumption and export.

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Ukrainian decentralization and the French model Can French experience help Ukraine find right balance between central and regional authority?

France and Ukraine enjoy an ancient diplomatic connection dating back all the way to the Kyiv Rus and the time when Anne of Kyiv became Queen Consort of France after marrying King Henry I in the middle of the eleventh century. Since the advent of Ukrainian independence in 1991, Paris has maintained close ties with Kyiv and has often been among Ukraine’s most prominent European partners.

When the conflict in east Ukraine first broke out in spring 2014, Paris soon became involved in diplomatic efforts to resolve the crisis. France was one of four nations involved in the ‘Normandy Format’ of talks aimed at ending the conflict. The ‘Normandy Format’ took its name from the D-Day anniversary events held in France’s Normandy region in summer 2014, bringing together world leaders and creating the opportunity for the first round of talks on Ukraine. This then led to the subsequent adoption of the Minsk Agreements, with France once more participating.

As well as taking on a key role in the diplomatic efforts to bring peace to Ukraine, France has also been active in providing support for Ukraine’s ambitious reform process. This support has largely focused on providing Ukraine with access to French expertize, while sharing French experience on a number of key reform-related issues.

France can offer Ukraine decentralization experience

One of the main focuses of French support has been the issue of decentralization. The need to transfer power and responsibilities away from Kyiv and towards Ukraine’s regions was one of the main demands made by activists during the 2013-14 Euromaidan Revolution. Many argued that decentralization would lead to greater accountability at local levels of government while also reducing the risk of an overconcentration of power in a single individual as had happened under President Yanukovych. The immediate military threat in eastern Ukraine and the country’s critically important anti-corruption efforts both understandably take precedence among Ukraine’s current national priorities, but the decentralization drive initiated by the Euromaidan Revolution remains a core component of Ukraine’s reformist agenda.

As a European country similar in size to Ukraine and with a long history of efforts to pass power from Paris to regional capitals, France is equipped to play a constructive part in the process of determining an optimal decentralization strategy for Ukraine.

The French Constitution outlines the country’s decentralized destiny in unambiguous

terms. The document reads, ‘France shall be an indivisible, secular, democratic and social Republic. It shall be organized on a decentralized basis.’ In reality, France only achieved current levels of decentralization following a long process that began in 1982. At every stage of this process, successive governments have encountered numerous difficulties with the implementation of decentralization reforms. The process is still very much a work in progress, with a recent law on territorial organization the latest contribution to the legislative changes in France’s state structure.

France can therefore offer Ukraine the benefit of considerable experience in decentralization. Numerous individual French civil servants can call upon deep personal expertize in this field, while French regional and state administrators in general can draw from over thirty years of practical decentralization implementation. The end goal is to help Ukraine avoid the obstacles that slowed the process in France, while taking advantage of the successes achieved in France over the past three decades.

Administrative exchanges

France has initiated a number of channels to help pass on the country’s decentralization experience to Ukraine. One initiative has seen the two countries establish a programme of exchanges between their respective national schools of administration. Experts and teachers from the Ecole nationale d’administration (ENA) are currently training Ukrainian trainers in Kyiv as well as in the Ukrainian regions. This will allow a new generation of trainers to pass French decentralization knowhow on to future Ukrainian civil servants.

Numerous French experts are also currently providing advice to Ukrainian institutions on issues relating to the decentralization of power in Ukraine. For example, a major conference addressing decentralization was organized by the French Embassy and the Council of Europe in December 2015. The key theme of the conference was the role of prefects – in the French model of decentralization, these are the representatives of central government in the regions.

Regular exchanges of expertize are also taking place between members of parliament in France and Ukraine. In 2015, the President of the French Senate initiated a programme of cooperation for MPs. So far, this has resulted in two separate visits by French parliamentary experts to Ukraine. Meanwhile, a delegation of Ukrainian MPs drawn from the subcommittee on territorial reform paid a visit to France in summer 2015, including a field trip to a French region in order to see the results of France’s decentralization processes in action.

These ties of cooperation and experience exchange are likely to strengthen further in the coming months. Ukraine must still determine exactly what form of decentralized government it seeks to achieve, but as it explores the opportunities and obstacles, France will continue to share the lessons of its own progress towards a more decentralized state.

About the author: Julie Fort is the First Secretary at the French Embassy in Ukraine

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La société «Made in France» est un investissement Français appartenant et gérée par des Français, société spécialisée en autre dans le Conseil, avec une grande expérience et les connaissances locales et nationales pour assurer a votre entreprise ou a votre projet d’investissement en Ukraine, un résultat optimal en termes de viabilité, sécurité et rentabilité.

Notre équipe de professionnels parle Français, est intégrée parfaitement sur le territoire Ukrainien vous facilitera l’accès à un vaste réseau de contacts et d’opportunités d’affaires, ainsi que dans toutes les organisations et administrations d’état.

Nos compétences: • • • • • • •

Opportunités et contacts pour investir en Ukraine Services juridiques Français et Ukrainien Services de développement en investissement agricole et industriel Projets et investissements dans les énergies renouvelables Services liés à l’importation et à l’exportation Services pour les procédures douanières Services réglementaires locaux et administrations d’état

Pour plus d’informations ou conseils, vous pouvez nous contacter par mail ou téléphone.

Nous parlons Français, Anglais, Ukrainien et Russe.

Tel Directeur: +380638236453 (Michael Leclerc) Tel Responsable Juridique: +380977123959 (Marina Korzhak) Adresse email: Made-in-France@hotmail.com Bureau principal: 11 A Marina Roskovaya Street, office 617, 02002 Kiev, Ukraine

france in ukraine

French spring blossoms across Ukraine

Festival of contemporary French culture becomes highlight of Ukraine’s annual creative calendar

Twelve years ago, as Kyiv welcomed the first ever ‘French Spring’ cultural season, who could have imagined that we were witnessing the beginning of what would become one of the most popular annual events on the Ukrainian cultural calendar ? The original ‘French Spring’ was designed as a belated response to the ‘Glance on Ukrainian Culture’ season, which ran in France in the autumn of 1999.

The goal of the ‘French Spring’ initiative, as outlined by the French Ambassador to Ukraine at the time Philippe de Suremain, was, ‘to present the French artistic creation in its cultural wealth and diversity, and to continue the dialogue between French and Ukrainian artists.’ The initial season of events was such a success that it has since become an annual affair.

Ukraine’s annual feast of French culture

Since its creation in April 2004, the ‘French Spring’ cultural season 24

has grown to encompass events in an expanding range of regional capitals including Dnipropetrovsk, Donetsk, Kharkiv, Lviv and Odesa. The initiative has consistently enjoyed the support of the French Ministry of Foreign Affairs and the French Association of Artistic Action, as well as a number of French and Ukrainian cultural institutions and individual artists. While the emphasis has been on bringing French creativity to Ukrainian audiences, each year’s French Spring season also allows Ukrainian artists, authors and actors to interact with their French counterparts.

The range of cultural creations on offer has always been diverse – the first French Spring got off to a spectacular start in April 2004 with a stunning ‘light sculpture’ show of French and Ukrainian images projected onto the facade of Kyiv’s National Academy of Music on Independence Square. There was similar excitement in Kharkiv, Dnipropetrovsk and Lviv at the performances of the Kubilai Khan Inwww.bunews.com.ua

vestigations Company, which brought a highly contemporary mix of street dance, hip-hop, martial arts and electronic music to Ukraine’s regional capitals. The season also featured jazz from the Octovoice Ensemble, rock from Bikini Machine, and classical music from Pascal Rophe and Frederic Moreau. The inaugural French Spring was diverse, it was delightful, and it proved extremely popular.

Subsequent editions of this annual voyage through the French cultural kaleidoscope have remained true to the vibrancy and diversity of the initial offering. Street performance art has been a consistent theme, with highlights including the 2007 ‘First Installation’ courtesy of the Carabosse Company, and 2010’s ‘Angel Square’ performance by the Marseilles Circle Studio.

Exciting French Spring schedule for 2016

The 2016 French Spring season is set to be as entertaining as ever.

Thanks to the support of French companies active in Ukraine and the backing of the French Embassy and Alliances Francaises in Ukraine, events in 2016 will be taking place in Kyiv, Dnipropetrovsk, Kharkiv, Lviv, Rivne, Odesa and Zaporizhia. Highlights of the 2016 French Spring programme include a breathtaking nocturnal video mapping show on the facade of Ukrainian House on Kyiv’s European Square on the evening of 2 April.

There will also be a strong theatrical presence this year. A spectacle

by Marlene Bouniort about an incomprehensible little clown looks set to delight young and old alike. Elsewhere on the schedule, the Rapsodie Company will continue its crazy quest to combine classical and rap genres in order to reach a universal, beautiful and exciting musical balance. The visual arts will also form a prominent component part of this year’s French Spring programme. The photographic exhibition ‘Walls Between Men’ by Alexandra Novosseloff and Frank Neisse may well inspire visitors in Kharkiv to ponder on the destructive impulse within human societies to construct barriers between each other. Meanwhile, a photo exhibition focusing on dresses made from garbage and shot by Isabelle Tausch might lead the Dnipropetrovsk arts crowd to ask themselves profound questions about the nature of art and the wastefulness of modern consumer society. As always, there will be a selection of premieres punctuating this year’s French Spring schedule, along with a retrospective dedicated to the work of Jacques Audiard. The traditional night of short films is sure to prove popular among kino connoisseur Ukrainians – as it is every year.

Lactalis - 20 years in Ukraine Lactalis–Ukraine is part of the family-owned Group Lactalis (France) – a company with unique traditions, an excellent reputation, and more than 80year history of dairy product manufacturing. Attracted by the agricultural and industrial potential of Ukraine, Lactalis became the first international investor in the country’s dairy industry in 1996. Lactalis has invested funds in the complete technical and technological re-equipment of plants in Mykolaiv and Pavlograd. Both facilities meet European manufacturing standards and received EU approval for export.

Currently Lactalis Ukraine produces about 150 different products including well-known brands such as Président, Dolce, Lactonya, Lactel, Fanny, and LocoMoco. The company employs over 950 employees.

Thanks to their professionalism and hard work, Lactalis is the undisputed leader in a range of Ukrainian market segments. Michel Besnier, the son of the founder, owner and head of Lactalis, used to say: “It’s not possible to achieve leadership without quality.” This cornerstone principle has never changed. Lactalis will keep providing the best products for its Ukrainian customers and international markets.

WEST UKRAINE’S LIFESTYLE GUIDE №87/February 2016

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

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

Ramada Lviv Hotel

The best of Lviv since 2008 leave the rest to ussm

Author: Matthieu Ardin (matthieu.ardin@ifu.kiev.ua) is the Executive Director of the French Institute in Kyiv

March 2016

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

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Cooperation between French and Ukrainian universities

France has a long-standing interest in partnership with Ukrainian academic excellence FRENCH EDUCATION OPTIONS IN UKRAINE

The quality of education and research at Ukrainian universities and institutes is no secret.

This recognition has always included French academic circles. In a globalized environment, universities and laboratories need to find strong partners to cooperate on common themes. Over the past twenty years, French and Ukrainian universities have concluded around eighty agreements, creating an environment for the sharing of knowledge and student exchanges. The Campus France office in Kyiv allows Ukrainian students to prepare for studies in France, providing visa support and a range of practical information. Additional help comes via the French Institute and French Alliance in the regions of Ukraine.

Since 1991, numerous French and Ukrainian universities have combined to offer joint Masters Degrees and other courses. Lyon 2 University and Kharkiv Economic University offer combined PhD studies incorporating time in both countries. This relationship has helped to highlight the strength in depth that Ukraine boasts in terms of physics,

chemistry and economics students.

As well as offering the opportunity to secure French qualifications, ties between French and Ukrainian universities create a platform for valuable joint research initiatives. At present, there are twenty official research projects underway between Ukrainian and French institutes, but the real number of bilateral initiatives involving individual laboratories may actually be closer to one hundred.

One of the best examples of successful scientific cooperation between France and Ukraine is the LIA IDEATE initiative. This international collaboration brings together 17 laboratories, institutes and universities in France and Ukraine.

The agreement underpinning LIA IDEATE was signed by CNRS, CEA, Paris-Sud University, SFFR, the National Academy of Sciences of Ukraine, TSNUK, and KNU on June 24 2015, in the Ministry for Science and Education in Kyiv.

However, the roots of this cooperation stretch back further and actually date from 2007, when the initiative began via pedagogical and scientific cooperation. In 2016, LIA IDEATE projects gained new impetus with plans for the construction of major experimental platforms for R&D and training at the two major participating Ukrainian universities.

About the author: Sylvain Rigollet (sylvain.rigollet@diplomatie. gouv.fr) is the Attache at the French Embassy in Ukraine for University and Scientific Cooperation

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Ukraine currently has three schools offering French education. The Lycee Anne of Kiev was founded in 1994. It offers a French curriculum certified by the French Ministry of Education. The Lycee belongs to the Agency for French Education Abroad network that includes almost 500 schools in over 130 countries. The school has 26 French teachers and 11 Ukrainian teachers for more than 400 pupils of 20 different nationalities (50% Ukrainian, 34% French, and 18% from other nationalities). The number of children registered at the school has tripled over the past three years, reflecting the growing presence of French companies in Ukraine.

The French International School of Kiev was founded in 2005. It is a private school offering a bilingual curriculum in French and Ukrainian based on the official curriculums of both countries. In 2013, it was granted the status ‘LabelFrancEducation’ by the French Ministry of Foreign Affairs, which rewards foreign schools providing a high level of education and bilingual curriculum in French. The school is located on the periphery of the Kyiv in Pushcha Vodytsia, in a very green environment. It has 170 students, mostly Ukrainians.

The French teaching model is also present outside of the Ukrainian capital. The first French school opened in the Black Sea port city of Odesa in 2013. Odesa French Private School offers education in line with the official French school curriculum with advanced courses in Russian and English. It currently has four French teachers managing a nursery school and three primary school classes.

Meanwhile, some high school students take correspondence courses.

In total, about 50 pupils are registered at the school.

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Kyiv still underrated as a tourist destination InterContinental Kyiv General Manager Jean Baptiste Pigeon sees growth potential in hotel sector Ukraine’s expanding hotel industry has been particularly hard-hit by the turbulence of the past two and a half years. Business and leisure tourism numbers have dropped across the country as international media coverage of revolution in Kyiv, the Russian occupation of Crimea, and the conflict in east Ukraine have dissuaded many from visiting the country as a whole.

This setback has not changed the strong fundamentals underpinning Ukraine’s hotel industry, which continue to rest on a wealth of tourist attractions and business opportunities, strong national hospitality traditions, improving customer service culture, and close proximity to European markets. The Ukrainian hospitality sector had experienced years of growth and expansion prior to the Euromaidan protests of late 2013, and many industry insiders expect these positive trends to return along with greater economic and political stability in the country.

Business Ukraine magazine spoke to French hospitality sector executive Jean Baptiste Pigeon about the prospects for Ukraine’s hotel business. He has been General Manager of Kyiv’s InterContinental Hotel since January 2013, and has overseen operations at one of the Ukrainian capital’s flagship hotels during a historic period in the country’s post-Soviet evolution. Pigeon argues that Ukraine’s tourism and hospitality sectors have almost limitless growth potential and says he expects coming stabilisation to lead to market entry from additional international brand names.

You have managed one of Kyiv’s premier five-star hotels during a period of unprecedented turbulence in the country encompassing revolution, military conflict, and economic crisis. What lessons from this experience can you share with other hospitality executives who find themselves working in similarly challenging environments?

Despite all the negative aspects of the recent period, we have continued to keep Ukraine and Kyiv on the international tourism map. We have been actively promoting the destination on the international market through our global network. We have also worked hard to remain attractive to all segments of the hospitality business through active sales promotions, both within the country and internationally.

Within our organisation, we have taken advantage of these challenging times to concentrate more on our social responsibilities within the community.

This has included focusing on existing projects supporting members of the community in need such as the Ohmatdyt Hospital as well as orphanages, retirement houses and shelters involved in our support programmes.

We have also sought to invest in our work force and improve the already incredible quality of service they provide by offering more training and development opportunities. This investment will help the hotel to be ready for returning business when the sector takes off again in the near future.

Ukraine today is a very different place to the country you first arrived in back in 2013. What impact have the changes taking place in the country had on your business strategy?

All sectors of the Ukrainian economy have been adversely affected by the events of the past two and a half years. The hospitality business is no exception. The number of leisure and business travellers to Kyiv has fallen in comparison with pre-crisis years. However, we have not changed our overall strategic approach or our vision of how we see our business developing in Ukraine. Changes have been implemented in terms of our short-term goals and focuses in targeted 28

segments including business, communications and priorities.

Despite all the challenges, we are optimistic about the future and expect positive changes in the economic environment. All that is required for the development of the industry is peace and a stable environment. I am confident that Ukraine and Kyiv both remain very much underestimated in the context of Europe’s best travel destinations. The potential for growth is great.

The post-Soviet region was once notorious for poor service standards but Ukrainian customer care standards are now often favourably compared to EU norms. What has impressed you most about the Ukrainian hospitality?

I am proud to work in Ukraine. I am proud of our team and of the upscale services we are able to provide to every guest. We have achieved great results here in Kyiv in terms of guest satisfaction. At the end of 2015, InterContinental Kyiv was recognized with the prestigious ‘InterContinental Hotel of the Year’ award for consistently great results and the highest level of services provided to guests. In addition, InterContinental Kyiv also received the ‘Developing People Award’ for nurturing talents, and an award for the dedication of the team to delivering the best services to guests. This recognition is evidence that our colleagues constantly strive to exceed the expectations of our guests, making every stay at InterContinental Kyiv an outstanding and memorable experience.

Which segments of the Ukrainian hospitality industry and which regions of the country offer the greatest scope for further growth?

Any conversation about the potential growth and development of the Ukrainian hospitality business cannot ignore the political, economic and other factors that influence the market. Having said that, there is almost no limit to the scope for future development as we have all the necessary elements on site to make the sector a success story. These elements include history, heritage sites, gastronomy, and easy connections to Central and Western Europe. All we need is additional commitment from the Ukrainian authorities to develop the proper infrastructure to help and support further growth in the hospitality sector.

Ukrainians are by nature a very hospitable nation. The country’s exceptional location, with its Black Sea coastline and the Carpathian Mountains, are just a few factors that make Ukraine a tremendously exciting place to discover for both business and leisure travellers. Cities like Kyiv, Odesa, Lviv, Dnipropetrovsk, Kharkiv, Zaporizhia, and Kherson are also worth mentioning.

In the upcoming years, in line with the development of infrastructure and stabilization of the market, we expect to see more global hospitality brands entering the market and starting to conduct business in Ukraine. This will be true for both the leisure and business segments, as well as for B&B hotels and luxury resorts.

International media coverage of the conflict in east Ukraine has led to exaggerated fears regarding security risks in Kyiv and the rest of Ukraine.

How would you describe the current security situation in the Ukrainian capital city?

Despite the unstable situation in eastern Ukraine, life in Kyiv is fully back to normal. With the political and economic stabilization that we expect to witness in the short-term period, we hope that business will also return to previous levels. We are currently seeing slow growth in the number of guests www.bunews.com.ua

france in ukraine

About the interviewee: Jean Baptiste Pigeon is the General Manager at InterContinental Kyiv traveling to Kyiv for both business and leisure. Every day we host local and international events, conferences, and meetings.

The safety and security of our guests is always our top priority. The revolution of 2013-14 was certainly not an easy time for the hotel. However, the measures taken at the time received high praise from our partners and from guests.

How do you like to spend your free time in the Ukrainian capital?

Depending on the season, I like to walk a lot around the city and its surroundings. I also visit museums, go to the opera regularly and enjoy the diverse Kyiv restaurant scene.

How do you describe Kyiv to your friends, family and colleagues in France?

March 2016

I generally tell them that Kyiv is a great city break and weekend destination for three- to four-day visits. It has a lot to offer in terms of culture, architecture, history and the arts, as well as being the greenest capital city of Europe with beautiful parks and riverbanks.

2A Velyka Zhytomyrska Street, Kyiv Tel: +38 044 219 1919 hotel.kiev@ihg.com www.intercontinental.com/kiev 29

One Frenchman’s quest to support Ukraine’s EU ambitions Olivier Vedrine believes Europe’s future will be shaped by Ukraine’s pro-democracy revolution Olivier Vedrine does not come across as a typical revolutionary. The smartly dressed Frenchman has the kind of measured tones and scholarly style more readily associated with his background in academia and as a speaker for the European Commission. However, when the subject turns to Ukraine’s pro-democracy revolution and subsequent Russian military intervention, he is unable to conceal his emotional engagement. “The future of European values for the entire continent is at stake in Ukraine,” he says. “If Putin succeeds here, the political impact across the whole of Europe will be huge. It could mean the end of the European Union as we know it and the end of peace in Europe.”

Inspired by Euromaidan

Vedrine is currently best known to the Ukrainian public as the co-host of the weekly Englishlanguage TV talk show UA Tea Time, which airs on Ukraine’s national public broadcaster. He has also recently unveiled his latest initiative, the Continental European Union Club, which he hopes will serve as a platform in support of Ukraine’s Europeanization. Founding members of this informal club include a range of prominent Russians and Ukrainians such as former Ukrainian diplomat Oleksandr Khara and Russian State Duma member Ilya Ponomarev, who famously opposed the Kremlin annexation of Crimea in 2014. Vedrine sees the club as a way of supporting Ukraine’s democratic transition and believes it can also help to stimulate similar processes within Russia.

The Frenchman’s involvement in Ukraine’s geopolitical pivot is something of a departure from his original objectives in the country. Vedrine first came to Ukraine three years ago with the intention of setting up a business school. His plans changed rapidly in late 2013 when the Euromaidan protest movement erupted, captivating global audiences and initiating a chain of events that would lead to the fall of the Yanukovych government, the occupation of Crimea and the outbreak of a Russian hybrid war in eastern Ukraine. Vedrine says he felt compelled to become engaged in Ukraine’s struggle due to the common European values he recognized among the protesters and activists he encountered in Kyiv. “I am a pro-European activist so it was impossible for me to do nothing. These people were fighting for the same values I have always believed in.”

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Olivier Vedrine (centre) pictured with fellow founding members of the Continental European Union Club

Pro-Ukrainian Russophile Vedrine has ancestral ties to both Russia and Ukraine and formerly taught a course on European institutions as a visiting professor at Lomonosov Moscow State University. His support for Ukraine has cost him many friends in Russia, but he says that even those who disagree with his politics have privately expressed their admiration for his principled position.

The loss of Russian friendships has been particularly painful for the Frenchman, who is adamant that he remains a passionate fan of the country and its culture. Despite his outspoken opposition to the Kremlin’s actions in Ukraine, Vedrine rejects accusations that he is a Russophobe, instead claiming to be a champion of European values across the entire continent – including Ukraine and Russia. “We need to return to the founding principles of the European Union – peace, prosperity, democracy and human rights. The only European country that currently refuses to play by these rules is Russia,” he says.

Vedrine believes real change will only become possible in Russia when the economic consequences of the Kremlin’s aggressive foreign policy finally force ordinary Russians to reconsider their core political beliefs. “The famed Russian love of strong leaders will end when their fridges are empty,” he predicts. “They will stop believing the propaganda when they have nothing to eat.”

This potential watershed moment is still far over the horizon. Despite the economic difficulties facing Russia, few observers are predicting an im-

minent collapse. Instead, Vedrine’s immediate priority remains support for Ukraine’s ambitious European integration efforts. He appreciates the sense of ‘Ukraine fatigue’ felt by many of his former EU colleagues over the slow pace of reform in the country, but argues for greater understanding of the enormous challenges Ukraine faces. “Now is not the time to give up. On the contrary, what we need now is more EU engagement. We are talking about the entire Soviet inheritance plus 20 wasted years of post-Soviet corruption. Is it realistic to expect a complete change in just two years?”

Russian past vs European future

Vedrine says he has no regrets about the unexpected path his life has taken over the past three years and argues that the stakes could hardly be higher.

He is convinced the eventual outcome of Ukraine’s revolution will determine the fate of the entire region. If the country’s Europeanization and democratization efforts are successful, he believes the process will spread organically to Russia itself and to the rest of the former USSR. If Ukraine’s transformation fails, it could hamper democracy throughout the EU – especially in the formerly socialist EU member states of central and eastern Europe. “We must resist Russian revanchist efforts here in Kyiv otherwise they will spread beyond Ukraine’s borders and into the EU,” he says. “A successful Ukraine is the best way to defeat Putinism. Today’s Russia is stuck in the past. It is crucial for us to place the emphasis of the debate on the future.” www.bunews.com.ua

Nicolas Tacussel seeks to help Ukrainian victims of hybrid war find inner peace and renewed purpose

It is often said that Ukraine is currently fighting two wars – the war against Vladimir Putin’s proxy forces in east Ukraine, and the war against the culture of corruption that acts as a cancer throughout the country. Far away from these headline-grabbing themes, Ukraine is also waging a third war – a psychological struggle for a future free from the hatred and depression caused by the conflict.

This third war poses unique challenges for Ukraine. Ukrainian society has only the most rudimentary understanding of mental health issues. The Soviet-era abuse of psychiatry to punish dissidents has given rise to lingering feelings of suspicion towards mental health practitioners, while the macho culture of post-Soviet Ukraine makes it difficult for people to seek the professional psychological support they need. These social barriers must be confronted if the nation is to overcome a growing mental health crisis caused by a conflict that has left tens of thousands maimed or killed, while forcing millions to flee their homes.

Volunteer psychological support

With the Ukrainian authorities struggling to meet the most basic requirements of the country’s armed forces and refugee population, the burden of providing psychological support has fallen largely on the volunteer sector. French psychotherapist Nicolas Tacussel is one of a number of international mental health professionals who have volunteered their services. Tacussel is the founder and president of the Smile for Ukraine NGO, which he established in 2015. With a bare bones team of just ten volunteers, he provides psychotherapy support for wounded Ukrainian troops and children orphaned by the conflict. Over the past year, he has worked with 650 soldiers and over 700 children, while also running master classes for 250 Ukrainian psychologists. Tacussel’s approach, which incorporates elements of psychological leadership training, medical hypnosis and kinesiology, focuses on imbuing patients with a renewed sense of purpose and optimism amid the devastation of lost loved ones, missing limbs and disillusionment.

Tacussel’s efforts to provide mental health care for wounded veterans have forced him to confront many of the darkest aspects of the conflict. He speaks about growing numbers of broken homes and unreported suicides, and warns of terrible long-term consequences for Ukrainian society if the issue is not addressed. “The soldiers I encounter have often lost faith in everything and are very bitter.

They went to the frontlines to defend their families, but unless they March 2016

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Helping Ukraine to heal

can come to terms with their injuries, they will ultimately lose their families,” he says. One of the key goals of his work, he explains, is to bring light to the inner darkness created by the conflict. “Almost every soldier has a wife, children, and extended family. By helping individual soldiers, you have a positive impact on five or ten people.”

Ancestral ties to Ukraine

Nimes native Tacussel was first drawn to Ukraine by an ancestral connection. His grandfather was born in Mariupol and lived in the Ukrainian port city until moving to France when he was eight years old. The young Tacussel was fascinated by his grandfather’s tales of Ukraine and was struck by the enduring emotional attachment he felt for a country he’d left at such an early age. “Growing up, I always thought of Ukraine as a woman, and was surprised that my grandmother was not jealous,” he recalls.

Tacussel eventually came to Ukraine in January 2014 at the height of the Euromaidan protests. Frustrated by the often Kremlin-friendly tone of French TV coverage, he says his initial objective was to observe the upheavals firsthand. It was to prove the start of an emotionally exhausting odyssey. He has since become familiar with the rustbelt towns, hospitals and orphanages of east Ukraine’s conflict zone, providing psychological support while struggling against Ukrainian bureaucracy and international indifference. He says he finds continued motivation in the knowledge that his efforts can help shape the country’s future. This is particularly true when it comes to the psychotherapy work he does with children, many of whom have lost their parents in the conflict. “They will be the ones who build the future Ukraine and they desperately need psychological support. We try to help them find harmony and a sense of inner peace. If they grow up in an atmosphere of hatred, it will be a catastrophe for the entire country.”

Tacussel’s Smile for Ukraine NGO is largely self-funded – something made possible by his ongoing psychotherapy work in Paris and master classes across the EU. He is under no illusions regarding the scale of the mental health challenge in today’s Ukraine, and plans to continue working with victims of the conflict for at least the next three to four years. After that, he hopes to be able to pass on his experience to victims in other warzones. “I am planting a seed and I hope it will grow in the years to come,” he says. “There is too much hate in this world. We have a chance here to change people’s lives as long as they are ready to help themselves.”

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Image courtesy of Tatiana Shved of the ‘La Renaissance de la Mémoire de Marie Bashkirtseff’ Foundation

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Marie Bashkirtseff was a pioneering artist who deserves greater recognition in her native Ukraine

Image courtesy of Tatiana Shved of the ‘La Renaissance de la Mémoire de Marie Bashkirtseff’ Foundation

The short life of artist and diarist Marie Bashkirtseff, one of Ukraine’s most precocious daughters who died shortly before her twenty-sixth birthday, is a monument to intellect and ambition. An unbridled Slavic spirit directed by the dynamism and creativity of nineteenth-century France, the young Bashkirtseff made no secret of her three obsessions: her beauty, her own mortality, and her legacy – attaining glory at all cost.

A contemporary of Cezanne, Degas, Monet, Renoir, and Van Gogh, Ukraine-born Bashkirtseff was the first woman artist to have her work exhibited at the Louvre in Paris, but she died before her artistic career truly had time to develop. Today, as Ukraine reassesses Bashkirtseff ’s legacy and bids for greater cultural recognition on the international stage, a closer appreciation of her background reveals a unique synergy of Ukrainian and French culture.

Silver spoons and spa towns

Born in 1858 to a wealthy and influential noble family in Gavrontsi village of Poltava, a region immortalized in the works of Poltava native Gogol and Pushkin, Marie emigrated to France with her maternal relatives following her parents’ divorce. After a two-year tour of Europe, the family purchased a villa on the Quai Anglais in Nice, dividing their time between the French Alps and the French Riviera while also travelling frequently to Italy, Spain, and the spa towns of Germany. But the young Marie was not content to whittle away her time at the salons of the Russian-language circuit, poised in coquetry until a suitable marriage proposal came her way. Her ambition called to her above the din of the private comforts and distractions of the provincial upper crust. Marie never broke ties with her native Ukraine, and visited her father there on numerous occasions.

Portrait of the artist as a young woman

It was upon Marie’s insistence that the family moved to Paris so that she could enrol at the now-famous Academie Julian, immortalized in her genre-painting ‘The Studio’ (1881), which gave artistic instruction to young women. Despite her admirable work ethic, Marie’s earliest artistic endeavours were dismissed by some as little more than the whim of a pampered young aristocrat. Yet within the first eleven months of her studies, the pupil ‘Marie Constantin Russe’ received a medal in recognition of her achievements. In 1880, her ‘Young Woman Reading ‘The Question of Divorce’’ was displayed at the Salon to general acclaim, and her teacher at the Academie Julian was prompted to let her graduate in the third year of what was supposed to be a seven-year course.

Bashkirtseff was preoccupied with finding her unmistakable style and subjects, and finding them fast. Her works displayed a high level of skill as well as an uncanny talent for capturing the character of her subjects. Her paintings contained a profound yet subtle social critique in their accurate portrayal of the lives of many of the less fortunate members of late nineteenth century society. She brought March 2016

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Ukraine’s Artistic Ambassador to Nineteenth Century France

to the canvas the trials and tribulations of the growing urban working class, often focusing on child subjects, taking her cues from close artist friend and confidant Jules Bastien-Lepage. Marie was known to leave the house before dawn to sketch in the streets of the working districts of Paris. Today her most notable work, ‘The Meeting’ (1884), which was originally purchased by the French state for the Louvre, is on permanent display at the Musee d’Orsay in Paris. This monumental genre painting was executed in the high realist style of the nineteenth century Academy. It shows a group of boys from the Parisian slumps congregating illegally on a street corner. A little girl, shown in the distance, is seemingly relegated to the secondary role of lookout.

Lady of letters

Despite her prolific artistic output, Marie Bashkirtseff is probably better known today for her diaries, a monumental literary work compris33

A contemporary of Cezanne, Degas, Monet, Renoir, and Van Gogh, Ukraine-born Bashkirtseff was the first female artist to have her work exhibited at the Louvre ing 106 notebooks that is now held at the Bibliotheque nationale in Paris. British Prime Minister William Gladstone and George Bernard Shaw were among the first rave reviewers of her published diaries, while Leo Tolstoy and Anton Chekhov were far less impressed – possibly made uncomfortable by the precociousness of the ‘strikingly modern psychological self-portrait of a young, gifted mind’.

A complete English-language translation of her diaries was published relatively recently in two volumes as ‘I am the Most Interesting Book of All: The Diary of Marie Bashkirtseff ’ (1997) and ‘Lust for Glory’ (2013). Ironically, her diaries were her back-up plan in pursuit of glory. She saw them as something to offer the world should she fail to live long enough for her artistic career to take off.

In the early 1880s, Marie also emerged as an intellectual, corresponding with some of the leading writers and publicists of her age, including Guy de Maupassant and Alexandre Dumas fils, whose controversial book on divorce features in the 1880 painting of the same year. She made a brief foray into feminist writing with several articles for the newspaper ‘La Citoyenne’ under the name Pauline Orrel, and was an outspoken proponent of equal rights for women in her extensive correspondence. Her greatest act of defiance, however, was her resolve to pursue an artistic career in a society dominated by brilliant men. But her path was not without doubt or struggle, and the unmarried socialite longed fiercely to meet an equal. In one of her entries, she wrote: “It is a truly wonderful thing…. the total dissolution of woman within the superiority of the man whom she loves; this is perhaps the greatest pleasure of love that a woman of greatness could ever experience.” However, she was destined to die unmarried.

A short but brilliant life

The swift progress of Marie Bashkirtseff came at a high price. Marie’s preoccupation with her own mortality were not unfounded: she was cursed with ill health from an early age. A case of misdiagnosed tuberculosis in early childhood robbed her of her beautiful mezzo-soprano voice and damaged her hearing, making a career in music an impossibility. This early incident continued to plague her, with bouts of painful illness becoming a regular feature until her untimely death in the autumn of 1884. Aware of her likely end, the young woman was spurred on by a rare sense of urgency. She worked tirelessly even in her

final months when her pains often became unbearable, spending up to 14 hours daily at the easel. This remarkable work rate led to an admirable artistic legacy of over 230 paintings and pastel drawings.

Today elements of her artistic legacy reside in a dozen respected museum collections across Europe, including the Musee d’Orsay and the Petit-Palais in Paris, the Jules Cheret Fine Arts Museum in Nice, the Tretyakov Gallery and Russian State Museum in Russia, the Kharkiv and Dnipropetrovsk Art Museums in Ukraine, and many others. Marie Bashkirtseff ’s tomb in the Cimetiere de Passy in Paris is an iconic mausoleum designed by the architect Emil Bastien-Lepage, which recreates the artist’s studio, complete with palette and her unfinished work. This impressive monument is not only testament to the wealth and status that the Bashkirtseff family enjoyed, but to the love and recognition that she secured in her lifetime among her creative contemporaries. Poltava native Tatiana Shved, the founder and director of the ‘Renaissance de la Memoire de Marie Bashkirtseff ’ Foundation, continues her international campaign for a Marie Bashkirtseff Museum and the restoration of the landmark tomb, which has fallen into disrepair without state support.

Marie Bashkirtseff: an enduring legacy

Marie Bashkirtseff was a perfect sum of her parts: daughter of Ukraine, tortured artist, obsessive diarist, high-spirited feminist, noblewoman, socialite, and finally, tuberculosis victim, yet somehow she transcended all these markers through her dignity and resolve. Although Marie’s life was not one of material privation, she grappled with illness and fought against social bias. Perhaps it is this secure position that could have tempted a lesser mind to settle into a life of mediocrity and comfort. Yet owing to her willpower and the hard work that she invested to develop her already significant talent, Marie Bashkirtseff accomplished a degree of recognition in a short amount of time that few of her contemporaries, male or female, could boast.

The clandestine blaze of her ambition flares brighter every year as the significance of the creative legacy of this fierce young woman becomes more apparent. However, while her fame rightly grows, Bashkirtseff ’s associations with Ukraine remain relatively unknown both internationally and within Ukraine itself. This is an all-toofamiliar story - as one French ambassador to Ukraine noted in his valediction, ‘I leave this country having learnt the most important thing: that Degas’ ‘danseuses russes’ were in fact wearing Ukrainian traditional dress.’ The legacy of Marie Bashkirtseff belongs to the world, yet it is in Ukraine that this great talent first took breath.

About the author: Myroslava Hartmond is the owner of Triptych: Global Arts Workshop (www.t-gaw.com), Ukraine’s first private fine art gallery since 1988, and a Research Associate of the Centre for International Studies, University of Oxford, where she explores the role of cultural diplomacy in Ukraine

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www.bunews.com.ua

Image courtesy of Tatiana Shved of the ‘La Renaissance de la Mémoire de Marie Bashkirtseff’ Foundation

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Making Ukraine a Better Place for Your Business Andy Hunder, President of the American Chamber of Commerce in Ukraine

When hearing about Ukraine, some foreigners have a distorted perception of a grief-stricken, war-torn country struggling to make ends meet.

Ukraine is facing many challenges, deep-rooted problems and furious social enemies. With the beginning of a spring, however, we hope that the mood is changing. This joyful season is traditionally associated with a new beginning, revival and hope. Although Ukraine is not yet living its golden age, there are first humble signs of economic growth and financial stabilization. We are seeing a number of victories that will have a profound impact on Ukraine’s investment climate.

As a leading business association in Ukraine, the American Chamber of Commerce has always strived to create a favorable environment for open and highly productive dialogue between the government and active business community. Every day 12 specialized committees and 19 working groups at the Chamber, each dedicated to a specific industry or a problem, are making efforts to facilitate various business procedures, ease burdens as well as set fair and predictable rules for entrepreneurs in Ukraine.

Throughout 2015 the American Chamber of Commerce held more than 600 policy meetings, which were attended by over 8000 individuals. As a result, we have achieved 19 strategic wins and 23 policy progresses, which are already making a difference. Some of the victories are presented below:

Deregulation

Last year the Cabinet of Ministers of Ukraine adopted and published Resolution #42 “On Deregulation of Business Activity”. The American

2016 Chamber Official Service Providers:

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Chamber of Commerce in Ukraine advocated for a number of deregulation activities in energy, agriculture, food & beverage and HR sectors that were considered by the state bodies and incorporated into the paper.

The aforementioned Resolution significantly simplifies business procedures in Ukraine and contributes to the implementation of the UkraineEU Association Agreement. In the energy sector, mandatory geological monitoring of special conditions of subsoil use was cancelled. Companies working in agriculture now enjoy 24-hours’ time limit for issuing all phytosanitary documents. The paper averted unnecessary complication of state registration of baby products and dietary supplements. As for HR, the Chamber initiated amendments to the Resolution of the Cabinet of Ministers of Ukraine #437 “On Approval of the Procedure for Issuing, Extending and Terminating the Permits to Employ Foreign Citizens and Stateless Persons”. Due to our proactive approach, the following improvements have taken place: a list of assignees eligible for work permits application was clarified; a possibility to extend a work permit without paying the state fee was granted; and the timeline for consideration of the work permit applications was reduced.

Antimonopoly

The American Chamber of Commerce in Ukraine supported the Draft Law “On Increasing Transparency of the Antimonopoly Committee of Ukraine”, holding meetings with stakeholders. As a result, the draft law was adopted and now the AMCU publishes all its decisions, excluding only the parts which contain commercial secret.

Fiscal Policy

When it comes to taxation, the most important things for business are predictability, transparency and accuracy. The American Chamber of Commerce in Ukraine contributed to the improvement of electronic VAT administration. We also backed the initiative of reducing single social contribution, which has been cut to 22%. Another strategic win is the adoption of the Draft Law on Ratification of the WTO Trade Facilitation Agreement.

Apart from decisive action aimed at deregulating business activities, lessening tax burden on the country’s investors, introducing greater transparency as well as predictability into the tax administration and antimonopoly activity, the Chamber has achieved a number of progresses in the spheres of agriculture, anti-corruption, banking and finance, customs, energy, healthcare, ICT, seeds, logistics and transportation. We will continue to act as a unified voice of business community in front of the government to move on with the reforming process and further improve Ukraine’s investor attractiveness.

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Ukraine’s e-Government evangelist from Estonia Jaanika Merilo believes e-Government can help Ukraine cut corruption and be more competitive As Ukraine seeks to break away from the dysfunctional post-Soviet era and integrate into the European community, digital technologies are increasingly being viewed as a fast track to modernization. Many in the reformist camp regard the introduction of e-Government initiatives as a way of improving the Ukrainian economy and reducing the culture of corruption that prevents the nation’s development.

A range of e-Government initiatives are already being launched and implemented throughout Ukrainian state structures. The flagship project, the ProZorro digital government procurement system, has been widely hailed as the most successful reform of the post-Maidan period. ProZorro has grabbed the headlines, but it is by no means an isolated example. Many of the key anti-corruption initiatives have strong and open data dimensions.

Estonian-born financial sector and IT specialist Jaanika Merilo has been at the forefront of Ukraine’s efforts to embrace the digital revolution. Currently based on Lviv where she serves as the city’s Chief Innovation Officer, Merilo believes e-Government can play a key role in Ukraine’s transformation into a competitive economy and modern European society. She spoke to Business Ukraine magazine about the role of digital technologies in improving standards of living, reducing bureaucracy and cutting down on opportunities for corruption.

What first drew you towards Ukraine?

My father is Ukrainian so all of my life I have had a connection to Ukraine.

I grew up with three mother tongues: Ukrainan, Estonian and Russian. I communicated with my mother exclusively in Estonian. She spoke with my father in Russian, while my father and I would only speak Ukrainian to each other. In 2007, I started managing a private equity fund with assets of USD 350 million focused on investing in the Baltics, Russia and Ukraine. Since then I have been visiting Ukraine regularly in connection with my work. I have travelled to all the major cities of Ukraine. I am now assisting the shift towards e-government in six cities including Dnipropetrovsk, Mykolaiv, Kharkiv and Lviv, where I am currently based.

You have an international education and professional experience in a number of Western countries - what attracts you to work in Ukraine?

You don’t get many opportunities in life to really make an impact. My roots are in IT and I think all of us want to put technology to greater use for the benefit of society. We want to solve fundamental problems and improve life. Now is my personal ‘window of opportunity’ to drive certain changes in what I regard as one of my home countries.

You have been intricately involved in the promotion of electronic government in Ukraine at both the national and regional levels. What do you see as the role of this ‘digital revolution’ in the broader Ukrainian reform process?

I believe reforming a country is not possible without changing the system.

E-Government provides the tools for automation systems, making them more efficient and transparent. It also helps fight corruption. When you automatize the process and cut down the participation of civil servants, the possibilities for corruption gradually disappear. This fundamentally alters the approach to government-citizen interactions and leads to increasing levels of trust.

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The role of what the media calls ‘The Digital Revolution’ is to minimize interaction and the impact of the human factor, or civil servants, in order to make all interactions and government services faster, more transparent, and more efficient. For example, according to some estimates, Estonia saved 2% of GDP thanks to increasing efficiency from the implementation of digital signatures alone.

Some sections of the international financial media have dubbed you ‘the angel of the Ukrainian economy’. Does this high profile aid or hinder you in your work?

(Laughs) As far as I am concerned, it is still just me and I cannot see myself differently. But seriously, I would like to think there is more attention being given now to the digital movement and e-Government. Any additional attention can help to make sure people treat the issue of e-Government more seriously. It means I have more tools at my disposal to demand change and to implement changes. It becomes harder to ignore the issue.

As Chief Innovation Officer for Lviv, you work closely with the City Administration. How does this experience compare with your time as an adviser to central government at the Ukrainian Ministry of Economic Development in Kyiv?

I am not only working closely with the Lviv City Administration, I am practically part of it. I am truly grateful to Lviv Mayor Andriy Sadoviy who, after I had served for period as an advisor, asked me if I wanted to become more involved in practical execution. I hope to be able to justify that trust. I think Lviv is not a typical city administration - many of my colleagues are under 30 years old and are eager to implement genuine change. We focus on solving problems and try not to fight within our own organization. This helps us from becoming engaged in confrontations with ‘the old guard’ who resist change. Lviv is truly the Ukrainian capital of innovation with the most efficient city mayor. It is a place where everything is geared towards results not processes.

What lessons can Ukraine learn from the experiences of other former Soviet countries - particularly your native Estonia - in the implementation of electronic government and other innovative approaches to business administration?

Estonia actually invented the entire concept of e-Government. It decided straight away not to implement old legacy systems and solutions, but to approach the post-Soviet reform process differently and to implement the ‘ideal model’. Many e-Government concepts were invented in Estonia, including everything from X-road to e-elections.

At this point, Ukraine can simply copy-paste many solutions and approaches. Lviv has successfully piloted the implementation of a range of solutions by copying existing models like BankID, MobileID, ID-cards and computer literacy programs with the help of the Estonian government.

Legislation should now be simplified and European standards need to be quickly adopted. The Ukrainian government should make clear decision to implement reforms. Estonia is a good example of what can be achieved when a government has a clear strategy and goals, and if it acts in a united manner.

Which sectors of the Ukrainian economy do you think stand to benefit the most from the ‘digital revolution’? www.bunews.com.ua

it sector

There are definite benefits for government, citizens and business. The process of simplifying everyday life by speeding up and automatizing processes will have a fundamental impact on all sectors of society. In Estonia, you can establish a company in 20 minutes, file your tax declaration in three minutes, and sign any document with your mobile device or ID card in one minute.

Many analysts see Lviv as the city with the most to gain from the EUUkraine Association Agreement, thanks to its close proximity to the EU and strong SME and IT sectors. Can Lviv serve as a model for the rest of Ukraine?

Lviv is already the most advanced city in Ukraine in terms of cooperation with European markets and financial institutions. The EBRD has its only regional Ukrainian office in Lviv, while the city is already working with a range of different international financial institutions. In this sense, Lviv is a genuine role model, but we cannot simply repeat the ‘Lviv formula’ in every other Ukrainian city due to local factors. Geographical location also has a major impact, especially for long-term investments.

Lviv is regarded as an unofficial capital of Ukraine’s booming IT sector.

What needs to be done to foster further growth and protect the sector from undue pressures from state bodies?

I think it is very important to support and stimulate the creation of the right ecosystem. In this way, Estonia can again serve as a useful example. As the result of different government programs, 66% of startup entrepreneurs rate the support provided by the Estonian government positively. In Silicon Valley, the figure is 23%. Across the EU, only 20% in the startup sector are happy about government support efforts.

I think there are many things that the government, and in our case, the city authorities, can do. For example, we can encourage and develop communication and cooperation between universities, the startup community and IT clusters in order to pilot interesting projects that could turn into local or global business success stories. The city can also create a positive atmosphere by preventing unlawful raids or intrusion by government agencies. No unlawful actions against IT companies took place last year in Lviv, but six IT companies in Kharkiv reported experiencing violations of their rights. We have made a number of suggestions for legislative amendments to protect IT companies against unlawful raids, and to protect companies in cities where the local authorities are not so willing to fight for a better business climate.

In what ways can the digital revolution help improve the living standards of ordinary Ukrainians?

I believe that the better a government is, the less it is seen by the public. The system has to work efficiently and smoothly in a customer-oriented manner. It should not demand attention and be constantly resolving fresh crises via manual interventions. This is what e-Government can bring when it is implemented throughout the system – fully automated processes that exclude the human factor. The goal is to provide the fastest services in a manner required by citizens while minimizing the burden of government on ordinary people.

About the interviewee: Jaanika Merilo is Lviv’s Chief Innovation Officer and the Executive Director of the Ukrainan Venture Capital and Private Equity Association March 2016

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opinion

Putin cannot risk meeting Minsk obligations Minsk-mandated Russian retreat would spark nationalist backlash and reveal details of hybrid war The terms of the Minsk Peace Plan clearly stipulate the withdrawal of foreign (i.e. Russian) military forces from east Ukraine and the return of the international border to Ukrainian control. If the Kremlin meets both these conditions, most observers agree that Ukraine would be able to reassert control over the occupied east of the country within a matter of days. The international community would welcome this development, but it would spell doom for the current occupant of the Kremlin.

This reality makes Russian compliance with the Minsk Peace Plan extremely unlikely. Vladimir Putin currently finds himself effectively trapped in eastern Ukraine – unable to move forward due to Ukrainian resistance and international opposition, yet unable to withdraw for fear of sparking a nationalist uprising at home and exposing the evidence of his hybrid war.

The betrayal of Novorossia

Russian nationalists are already accusing the Kremlin of betraying the people of ‘Novorossia’ – the eight regions of Ukraine earmarked for conquest by Putin at the height of his spring 2014 imperialistic intoxication. Rather than claiming half Ukraine, the Kremlin has been restricted to a slither of border territory in the industrial south east of the country, which it has subsequently refused to annex.

This refusal has infuriated many on the increasingly crowded extremes of the Russian political spectrum, leading to accusations that Moscow has used the people of the Donbas as geopolitical pawns.

Simmering anger in nationalist circles would likely explode into social unrest if Russia went a step further and actually withdrew its forces and weapons from east Ukraine.

Nor would this sense of anger be restricted to extremists. For the past two years, the Kremlin has used the state-controlled Russian media to nurture nationalist sentiment among mainstream domestic audiences. The process has been hugely successful, sending Putin’s approval ratings to record highs and strengthening the regime despite plummeting economic fortunes and growing international isolation. This has proven possible by depicting Putin as a national hero defending Russia (and the ethnic Russians of Ukraine) against international threats. The material suffering of ordinary Russians has been justified as the product of this struggle, which has seen Russia ‘rise from its knees’ after years of post-Soviet humiliation.

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The majority of Russians have accepted this narrative, but their acceptance may be more fragile than many currently appreciate. If Russia ended its involvement in east Ukraine and returned the region to Ukrainian control, those beyond the nationalist camp would also begin to question the purpose of all the sacrifices they have made. Without the distraction of geopolitical grandstanding, these sacrifices would loom ever larger, leading to a spike in discontent. Putin’s approval ratings could crumble just as quickly as they shot up. As they surveyed the aftermath, ordinary Russians would see little but a crashing economy and international pariah status. The euphoria of the Crimea annexation would seem like ancient history.

Evidence of Putin’s hybrid war

Perhaps even more alarming than the domestic implications of a Russian retreat are the likely results on the international stage. The return of Ukrainian authority to the occupied regions of Luhansk and Donetsk oblasts would occasion the complete and irrefutable exposure of Putin’s long-denied hybrid war. Mountains of evidence would come to light overnight, providing detail about the scale of Russian military involvement and providing the basis for possible future war crimes prosecutions.

This evidence would take many forms. It is highly unlikely that the Kremlin would be able to remove all the military equipment shipped from Russia into occupied east Ukraine. The recent localized separatist withdrawal from Shyrokino highlighted

the problems Russia faces in this regard, with the discovery of various items of Russian military equipment left behind by retreating militant forces.

A large-scale withdrawal would inevitably leave behind vast quantities of Russian army kit.

Local witnesses would also be far more likely to share their knowledge of Russian involvement once the immediate threat of Russian retaliation had receded. Civilians living in the warzone would have much to tell, while a sense of betrayal may even encourage many former militants to expose the Kremlin’s duplicity.

Then there are the victims of Russian atrocities to consider. Hundreds if not thousands remain unaccounted for. Every town or city in the combat zone has basements converted into makeshift prisons and torture chambers. Accounts from survivors - together with evidence gathered from crime scenes - would lead directly to international war crimes prosecutions.

The graves of the dead would also have their story to tell. The Donbas is literally littered with the unmarked graves containing casualties of the conflict.

Many of them are believed to be Russian citizens, including serving Russian soldiers and Russian army men killed while ‘on vacation’ in Ukraine. It is unlikely that the Ukrainian authorities would exhume individual bodies for DNA testing, but such dramatic steps cannot be completely ruled out.

It is far more likely that we would witness the macabre spectacle of mourning Russian families flooding into the region in search of answers about their missing relatives. How did they die? Where are they buried? This process would be devastating for the Kremlin on a number of levels, highlighting the human cost of Putin’s imperialism while reminding Russian audiences of Moscow’s disregard for those who gave their lives.

Russia cannot risk meeting Minsk obligations

History is written by the winners. If Putin withdraws from east Ukraine, he will be denied this privilege. Instead, all the dirty secrets of the past two years will be hung out to dry. The only way he can avoid the complete and total exposure of his hybrid war - and the subsequent domestic and international problems this will entail - is to maintain a controlling influence in the occupied zones of east Ukraine. This inescapable reality makes it virtually impossible for Russia to fulfill its part of the Minsk Peace Plan. www.bunews.com.ua

legal

Making the most of Ukraine’s EU free trade breakthrough EU markets present Ukraine with vast opportunities but multiple regulatory hurdles remain The free trade aspect of the EU-Ukraine Association Agreement (EUAA) came into force on 1 January 2016, marking the start of a new era in commercial relations between Ukraine and the European Union. The free trade opportunities presented by the EUAA have been widely touted as a watershed moment in Ukraine’s longstanding European integration efforts. Nevertheless, in order to take advantage of these new opportunities, Ukrainian companies seeking to expand their trade ties with EU partners must first bring their operations into line with the terms and regulations set out in the EUAA. Many Ukrainian businesses are now focusing on meeting these requirements in order to acquire access to the world’s most lucrative marketplace, or to import EU goods into Ukraine under the new preferential terms.

All about origins

If a Ukrainian company intends to import goods into Ukraine under the terms of the new preferential agreement, they must demonstrate that the goods meet EU regulations governing origins. The EU’s rules of origin are a crucial component in the free trade dimension of the EUAA, serving to determine whether goods can be classified as originating in the exporting country and whether they therefore qualify for preferential terms. Formal confirmation of EU-approved origin of goods comes in the form of an EUR.1 movement certificate. The EUAA deals at length with the issue of which goods do and do not qualify for preferential trade terms.

Given the complexities of the globalized economy, how is the issue of product origin determined? Under the terms of the EUAA, goods are considered to originate in the EU or Ukraine based on a range of criteria including if they are wholly sourced within the EU or Ukraine – this category covers natural resources and goods made entirely from natural resources originating in Ukraine or the EU exporter nation. Goods that meet minimum requirements for sufficient processing or manufacturing within the EU or Ukraine also qualify.

Goods classified as based on locally obtained natural resources cannot contain non-local produce such as minerals or vegetable/livestock elements. The protocols included in the EUAA provide an exhaustive list of goods that do and do not meet the requirements to qualify as locally sourced in terms of the EU’s rules of origin.

The EUAA also offers detailed clarification on which kinds of goods meet EU standards for minimal local processing or manufacturing. Percentages and technological guidelines feature in the EUAA protocols, allowing exporters and importers to calculate whether they qualify for preferential terms.

Certification steps

In order to qualify for the preferential terms of the EUAA free trade regime, exporters need to obtain an EUR.1 movement certificate. Movement certificates are issued by the customs authorities of the exporting country in response to written applications by the exporters. In order to ob-

tain a movement certificate, the exporter has to provide documentation demonstrating the origins of the goods they seek to export. Applications are then considered by the relevant authorities, with a decision – regardless of whether it is positive or negative – being due within a period of three days following the registration of the application with the customs office. It should be noted that in certain exceptional cases (e.g. because of errors or involuntary omissions, or in cases when a movement certificate was not obtained at the moment of importation due to technical issues with the customs authorities), a movement certificate may be issued retrospectively.

Approved exporters and invoices

There are a number of options open to those exporting small volumes or engaged in regular repeat trade. In cases where the total value of the declared goods does not exceed EUR 6,000, an invoice declaration can be completed at the relevant customs office. This document, in addition to the EUR.1 movement certificate, serves to substantiate the preferential origin of the declared goods. The exporter submitting the invoice declaration should be ready to provide the customs office with all the necessary documents to demonstrate the origin of the goods. Invoice declarations can be filed either at the time of export, or retrospectively.

Any company that makes frequent shipments of goods under the free trade terms of the EUAA may apply to the relevant customs office for approved exporter status. Applicant companies must submit all the necessary guarantees and documentation to the customs authorities verifying the origins of the goods involved. The customs authorities have considerable leeway regarding issuing approved exporter status, making this an appealing but somewhat ambiguous option.

About the author: Tetyana Gryn is a lawyer at Asters Law Firm and a speaker at the ЕВА-Аsters Legal School (www.asterslaw.com/ls) - a unique, free-of-charge platform for Ukrainian legal practitioners to share their experience and best practices in legal support and business protection

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Investing in elite Kyiv apartments

Ukrainian luxury property remains a sound investment but market research is essential

In English-speaking countries we usually use the term ‘luxury apartments’ to describe exclusive and expensive flats. Here in Kyiv as in other parts of the former Soviet Union, ‘elite housing’ is the preferred expression among locals with money (and those who wish they had more of it). No matter which phrase we choose, both terms are commonly used by developers to promise high quality design and materials, deluxe amenities, comfort, and a prestigious address to would-be buyers. But how many new and recently-built luxury apartment projects in Kyiv deliver on this promise? Whether you’re unfamiliar with Kyiv’s housing market and considering buying a luxury-class investment property, or just curious about how Kyiv’s other half lives, here are some things you should know about this market.

Elite Kyiv apartments: home team rules

Unlike prime properties in London or New York, Kyiv’s elite apartments are bought as investments overwhelmingly by local buyers. This historical tendency has determined the types of housing products that get developed, how they are marketed, and their sale prices. Architectural styles, design and building materials have tended to reflect local tastes rather than global best practices. It is true that notions of luxury and quality are rising and that local buyers in Ukraine are becoming more sophisticated.

However, just a handful of elite developments in Kyiv utilize the services of foreign architects and global design firms. And despite their high sale prices, luxury apartments in Kyiv are often not well-marketed digitally. For example, many project websites can be primitive and don’t always have English versions. This may seem surprising in a country that is teeming with IT talent, but as we’ve written before,

real estate is the most trusted asset class among Ukrainians at all income levels, and this is especially true for the affluent and well-off. So word of mouth, adverts in glossy journals, and billboards are sufficient to reach local buyers.

Buy a shell, build a home

If you are unfamiliar with buying property in Ukraine, you should know almost all new apartments - even in elite complexes - are sold completely unrenovated as ‘shell and core.’ So a buyer is completely responsible for organizing design, materials and craftsmen to renovate his new flat. This also means that as a resident in a new building, you could be treated to the sounds of your neighbour’s renovations for several months or even a few years. In Ukraine, it’s not unheard of for a neighbour’s renovation to be left incomplete due to lack of funds for a few years. It is also not uncommon to find unrenovated ‘shell and core’ apartments in buildings several years after many residents have moved in. The unrenovated apartments were purchased as investments and they can be easier to sell in this condition.

We know of one luxury development in Kyiv that offers buyers the option to buy an elite apartment with ‘full fit-out’ in partnership with a famous local designer. This same project also offers ‘white box’ apartments - a buyer would need to lay down floors, paint walls, add lighting fixtures, and organize the full renovation of the kitchen and bathrooms. However, these options are rarely offered by developers on Ukraine’s market.

Luxury apartment complexes in Kyiv tend to include all of the standard features and amenities that we would associate with such properties in emerging markets, such as high-speed elevators, 24-hour concierge service and security, small fitness and spa areas, child care services, water filtration systems, and parking garages. Many newer elite properties also have independent heating systems so residents are not dependent on Kyiv’s central heating system. Most newer elite buildings now have adequate service elevators and entrances, but

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

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Neighborhoods and infrastrustructure

Most of Kyiv’s new and newer luxury high rises and low rises are located in the city’s central districts of Pechersk, Shevchenko, Podil, and Holosiiv. Some of these developments offer views of the city’s larger parks such Mariyinsky Park, Fomin Botanical Garden and Holosiivskiy Park, while others feature views of the Dnipro River. While Kyiv does feature some new and recently-built luxury complexes in prestigious neighborhoods such as Pechersky Lipky, it is worth noting that not all elite buildings have elite surroundings and locations. Some luxury apartment complexes sit on small lots and/or face less prestigious properties, especially at lower levels, where your windows can offer views of rather ordinary-looking Soviet-era buildings and apartment blocks.

While Kyiv’s best neighborhoods like Pechersky Lipki and parts of Shevchenko raion are close to fine restaurants and entertainment venues, they are not especially close to large supermarkets. And few elite buildings are located near top international schools, which tend to be outside Kyiv’s city centre. And as any Londoner or New Yorker could also probably tell you, when you buy a luxury apartment in Kyiv, you could find yourself with ‘interesting’ neighbours when it comes to the provenance of their wealth.

Prices and purchasing

Despite prices being lower than their peak in 2007-2008, demand for elite housing in Kyiv remains high and apartments in many new developments tend

to sell out relatively quickly. Compared with other housing segments in Kyiv, the elite segment certainly seems to be recovering faster. New luxury developments continue as sales prices remain well above construction costs, so it is no wonder that new projects seem to spring up like mushrooms after the rain. As we’ve noted in previous articles, Kyiv has a housing deficit - the city has less than half the average living space per person as the EU average. New housing developments in Kyiv usually rely upon pre-commission sales, not preconstruction sales for project financing. Bank financing does not play a large role for developers or homebuyers. So there’s very little risk that Kyiv will experience an Asian-style housing bubble any time soon.

In addition to new developments, many opportunities to buy exist in the fragmented secondary market for luxury apartments in Kyiv. Here individual sellers rarely opt to work with brokers on an exclusive basis, and you can find a huge range of asking prices and conflicting information that can confound locals and long-time expats, let alone someone who is new to this market. The trick is finding a motivated seller amidst all of the ‘noise’ on the market.

Because few developers of elite apartments in Kyiv offer full renovation by professional designers, the design of many renovated luxury apartments that are for sale on the secondary market may not appeal to foreign buyer tastes, and generally we recommend that a foreign buyer opt for a shell and core, which is often possible on the secondary market.

real estate

this is definitely worth checking when researching properties, especially if you are considering buying a unit in an older or less expensive building. While reserved parking spaces are often sold separately, not all elite buildings have sufficient parking for all building residents. Often these complexes have less than 1.5 spaces per unit, and for some complexes this figure is closer to 1.2 per unit.

Looking ahead

Can a foreign buyer find investment-grade luxury apartments in Kyiv? For sure.

However, the housing search, due diligence, and buying processes won’t be as straightforward as in the West or even as in many emerging markets - and you’ll find yourself sifting through a lot of information and misinformation and squishy price data before you find a worthwhile investment opportunity.

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March 2016

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Networking events

French Cuisine Goes Centre Stage The annual â&#x20AC;&#x2DC;Good Franceâ&#x20AC;&#x2122; gastronomic festival came to Ukraine in late March, with 14 restaurants across the country showcasing the latest innovations in French cuisine.

French Ambassador to Ukraine Isabelle Dumont welcomed guests to a gala dinner in Kyiv to mark the event.

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networking events

Burns Night 2016 in Kyiv The Hilton Hotel in the Ukrainian capital played host to the countryâ&#x20AC;&#x2122;s annual Burns Night celebrations on 19 March. Burns Night is traditionally the highlight of the annual expat social calendar in Ukraine, attracting hundreds of guests from throughout the Kyiv international community and raising significant sums for worthy Ukrainian causes. The 2016 edition more than lived up to expectations, raising over USD 80,000 for charity.

March 2016

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Spanish Art on Andriyivskiy Uzviz Kyivâ&#x20AC;&#x2122;s Triptych: Global Arts Workshop welcomed the arts and diplomatic communities in early spring for the opening of an exhibition of paintings and sculpture by Spanish artist Carlos Garcia Lajoz. Carlos has exhibited widely, and has created a number of sculptures in public spaces in Spain and Ukraine. Most recently, he installed a monument to Kazimir Malevich at Ukraineâ&#x20AC;&#x2122;s National Academy of Fine Arts.

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networking events

International Womenâ&#x20AC;&#x2122;s Day Festivities with Fryday Kyiv Kyivites and international guests of the Ukrainian capital celebrated Womenâ&#x20AC;&#x2122;s Day 2016 in style with a Fryday Afterwork networking party featuring special guests including British dancer, choreographer and TV host Sisco Gomez and world famous magician Spyros Melaris. Needless to say, female guests received red roses to mark the occasion.

March 2016

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Turning Kyiv into Europe’s mural capital Ukraine set to serve as epicenter of global street art initiative promoting world peace Over the past year or so, monumental murals have begun appearing throughout the Ukrainian capital. This welcome development has brought colour and contemporary character to the otherwise grey and dreary panorama of Kyiv’s Soviet-era architecture, creating a much-needed sense of vitality in a city aching for meaningful change. In large part, this street art explosion is the work of one man – Kyiv-born filmmaker and all-round Renaissance man Geo Leros. Buoyed by the broadly positive response to his mural mania, Geo now has his sights set on an even bigger project – transforming the Ukrainian capital into the focal point of a global initiative promoting world peace through public art.

Kyiv as giant canvas

Geo’s involvement in Kyiv street art began in early 2015, soon after he returned to the city from Los Angeles in order to shoot a film about the creation of Ukraine’s new Patrol Police service. The US is the global leader in mural art, with cities like Philadelphia and Miami boasting literally thousands of works, and his time in America had provided Geo with the necessary inspiration to promote the genre in Ukraine. Murals are an appealing art form because they are relatively inexpensive to create while providing artists with the chance to reach mass audiences on a daily basis. However, you cannot simply choose an empty wall and get to work. You must get permission.

Geo recalls how he initially sought contacts within the Kyiv City Administration. After failing to gain an audience with Mayor Klitschko via official channels, he decided to simply turn up at City Hall and try to bluff his way in. The diminutive hipster is not a particularly menacing figure, but this did not prevent City Hall guards from initially detaining and handcuffing him.

Luckily, he says, a member of Mayor Klitschko’s team was on hand to rescue him and accept his project presentation. Within a few weeks, he was back at the mayor’s office to receive the full backing of the Klitschko administration. The result was the CityArt project, which brought world-renowned artists to Kyiv throughout 2015 to create 20 giant mural paintings.

The support of Kyiv City Council has been vital to the success of Geo’s mural endeavors, but he is at pains to point out that no budget money has gone into his projects. Instead, city officials provide the necessary permits while private sponsors finance the actual painting process. Recruiting mural artists has proved surprisingly easy. “The first is the hardest. Once you’ve got one big name, the others are much more inclined to get involved,” Geo explains. In the semi-underground world of monumental mural painting, contemporary Kyiv has a certain fashionable appeal thanks to its associations with revolution and geopolitical upheaval, making it a relatively easy sell. Some of the biggest names in the global mural scene have been eager to add a Kyiv creation to their portfolios, receiving basic expenses and kudos in return for their efforts.

Kyiv street art goes global

Artists from Spain, Mexico, Australia, Italy and Argentina have already taken part in the CityArt project, but Geo now wants to take the Ukrainian mural movement to an entirely new level. His vision is for a massive global art project involving 200 murals in over 40 countries. Ukraine will be the centre of the project, with 80 murals planned for Kyiv over the next two years and a further 20 in regional cities such as Lviv, Odesa, Dnipropetrovsk, and 56

About the interviewee: Geo Leros (saygeoleros@gmail.com) is the creator of the CityArt and ArtUnitedUs mural initiatives Kharkiv. There is even talk of taking the initiative to the Ukrainian side of the Donbas frontlines, although Geo is tightlipped over exactly where.

These Ukrainian works of street art will be part of a broader global initiative dubbed ArtUnitedUs and involving dozens of countries. The link connecting all these murals will be the overriding theme of world peace.

Geo explains that while it is impossible to tell mural artists exactly what to paint, he usually provides general guidelines. For example, the works that made up the CityArt project in Kyiv sought to avoid politics, sex, violence and depressing themes. On the whole, the project succeeded in sticking within these guidelines – although Geo recalls one babushka who objected to the appearance of a giant Lesya Ukrainka on her building and demanded a portrait of Lenin instead.

Financing the project is challenging. Geo says over the past year he has been inundated with corporate sponsorship offers, but recognizes that adding logos and brand names to his monumental murals would undermine the essence of the entire project. Instead, he relies on contributions from people who want to give something back to Kyiv. A single mural costs around USD 3,000-4,000 to finance, making this a relatively cheap way to leave your mark on the city landscape. In return, sponsors receive recognition in the form of a small plaque on the mural they financed. “I see it as a present to the city,” he explains. “Personally, I want to do something that will resonate long into the future.” www.bunews.com.ua

review

Kyiv’s oldest nightclub still as hot as ever

The nightlife scene in the Ukrainian capital has undergone a dramatic transformation in recent years.

As Ukrainian cultural compasses have swung away from Moscow and towards Europe, the old postSoviet ambience of ostentatious oligarch chic has given way to bearded and tattooed pop-up appeal.

Despite the economic challenges facing the country, new venues appear in Kyiv on a weekly basis, imbuing the capital city with a vibrant and transient feel that fits well with the post-revolutionary mood dominating broader Ukrainian society.

Amid all this nightlife change, one thing remains the same. Kyiv’s Caribbean Club. The Caribbean, as the venue is affectionately known to regulars, has recently celebrated its eighteen birthday – a staggering landmark by Ukrainian standards.

This year’s colourful anniversary celebrations where overseen by club director Igor Ilyuk, who has been with the venue since the early days. He has witnessed, and initiated, significant development of the Caribbean Club since it first opened its doors in the second half of the 1990s. Back then, the Caribbean was a small, one-room affair relying largely on word

of mouth to pull in crowds of weekend revelers. It proved an instant hit, attracting an eclectic collection of diplomats, expats, international students, local party people and lovers of all things Latino.

At the time, nocturnal Kyiv was a place of extremely limited leisure options. Many nightlife venues were essentially either casinos or brothels, or combinations of the two. The Caribbean Club offered something completely different – a democratic environment where the expat and local crowds could rub shoulders without rubbing each other up the wrong way. It was a place where single girls could enjoy a night of dancing without having to face crude propositions, and where ethnic minorities did not have to worry about problems with racist thugs. Foreign football stars would shimmy alongside ambassadors and undergraduates.

Over the intervening eighteen years, the Caribbean has grown and expanded into a vast two-storey nightlife emporium that the venue’s early devotees would no longer recognize. Nevertheless, it has remained refreshingly true to its democratic roots. Today’s Caribbean now offers VIP dining and boasts an impressively large stage area for regular live music performances. In the original Caribbean, there was barely room for the DJ booth. The one

thing about the venue that has not changed is the unmistakable energy on the dance floor. Seasoned salsa enthusiasts and tango novices alike can find their feet at the Caribbean, with a non-judgmental approach to skill levels helping even the most awkward of performers lose their inhibitions. The club has attracted an array of twinkle-toed regulars over the years who love nothing better than to dazzle audiences with their perfectly polished dance moves, but newcomers will soon find that the Caribbean dance floor is not only for advanced performers.

This friendly vibe is one of the reasons for the Caribbean Club’s enduring success. It has helped the venue attract a loyal following and has made it a home from home for many in Kyiv’s international community. At a time when everything in the Ukrainian capital seems to be changing at a rapid pace, the Caribbean remains a fun and welcoming venue that proves some things never go out of style.

Caribbean Club 4 Petlyura Street Tel.: +38-067-224-4111 Open: 18:00 - 06:00 daily

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

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