Business Ukraine October 2016

October 2016

From preserving shared cultural heritage to supporting Ukraine in the EU: special focus on the strategic partnership between Poland and Ukraine Monthly American Chamber of Commerce in Ukraine Newsletter:

o f l d

En

c

ver c o s

e

D

i WORL THE D’

c

GEST RAM BIG

CO A EN RE AD

S

Ser r e vi

W

o

o

r

October 2016

BUSINESS UKRAINE OCTOBER 2016: This month Business Ukraine magazine explores the trade ties, strategic partnership and historic links between Poland and Ukraine. The cover page features a stained glass window from Lviv’s Armenian Cathedral. The window dates from the early 1900s and is the work of Polish artist Karol Zyndram Maszkowski. It was restored in 2006 by a team of Polish renovators – an example of contemporary efforts to preserve the shared multicultural heritage uniting the two nations.

(With special thanks to Bartosz Musialowicz of the Embassy of the Republic of Poland in Ukraine for his support in the preparation of this month’s Polish focus)

From preserving shared cultural heritage to supporting Ukraine in the EU: special focus on the strategic partnership between Poland and Ukraine Monthly American Chamber of Commerce in Ukraine Newsletter:

Pro-Russian Russians? Why the international media is losing Putin’s hybrid war When does a Russian warlord become a “pro-Russian separatist?” Newsrooms around the world may want to ask themselves this question following Russian militant leader Arsen ‘Motorola’ Pavlov’s assassination in Donetsk in mid-October. In the wake of the killing, one news report after another ran headlines referring to Pavlov as a pro-Russian separatist leader, creating the impression of a Russia-leaning local who was defending his democratic rights by force of arms.

In reality, Pavlov was much more than simply “pro-Russian.” He was an actual Russian. This is not a matter of mere semantics—it is the crux of the entire conflict. Pavlov was one of tens of thousands of Russian citizens who have traveled to neighboring Ukraine in order to wage war. The forces Russia has deployed for this purpose include a mixture of regular army troops without insignia (“little green men”), paramilitaries drawn from Russian army veterans, nationalists, common criminals, and local recruits. Together, they form a hybrid army of occupation that is larger than the armed forces of all but a handful of European states. Describing such people as “pro-Russian” is clearly absurd, and yet it continues. By almost any rational measure, Pavlov’s nationality should have been central to the international media coverage of his demise. Instead, in most reports it appeared as a mere footnote.

The media response to the death of Pavlov has highlighted the problems international reporters continue to face when covering events in Ukraine. Ever since the seizure of Crimea in early 2014, correspondents and editors have struggled to define the Ukraine conflict and accurately describe the various combatants.

These difficulties are no accident. Russia’s hybrid war tactics aim to create exactly this kind of ambiguity in order to paralyze international opinion and prevent an effective response.

Why have Russia’s tactics proved so effective? One of the key factors has been the ethical obligation among international news outlets to maintain objectivity and present “both sides of the story.” Unfortunately, journalists who adhere to it blindly at the expense of common sense are defenseless when confronted by an actor whose modus operandi includes disinformation designed specifically to exploit this commitment to journalistic balance.

There are also more practical reasons. Most media coverage of Ukraine still comes through Moscow bureaus, where a combination of local everyday influences and accreditation issues make unambiguous reporting unlikely. Journalists intending to travel to Occupied East Ukraine face even tougher challenges.

Leaked emails from the press departments of the self-styled separatist republics make it clear that any correspondent who fails to articulate the Kremlin narrative adequately, or who dares to probe too deeply into Russian involveOctober 2016

ment, will find their access promptly revoked. For journalists who rely on continued access in order to earn their living, this is something they literally cannot afford to ignore.

Perhaps the single biggest barrier to better Ukraine coverage is the lack of local knowledge and understanding of the contemporary Ukrainian context.

Sending correspondents down from Moscow to cover Ukraine is clearly asking for trouble, but it is still arguably better than inviting stringers with no prior foothold in the region to provide perceptive reportage. Ukraine has been off the international radar for most of the past twenty-five years and remains terra incognita for all but a tiny niche within a niche of post-Soviet journalists. This has resulted in levels of ignorance that, while perfectly understandable, have left uninformed reporters vulnerable to manipulation and dangerous generalizations.

Thankfully, the situation has improved since the many early 2014 attempts to depict Russian- and Ukrainian-speakers as rival tribes engaged in ethnic warfare. However, the spike in Ukraine coverage since the Euromaidan Revolution has only begun to fill the many gaping holes in what remains one of the most overlooked chapters in the European story. For the time being, much of the available literature on Ukraine still comes from Russian or Russo-centric sources, while many in the international media community continue to take Russian claims of exclusive historic hegemony over Ukraine at face value. In all probability, it will take decades of increased exposure before the outside world starts to understand Ukraine without viewing the country through a Russian prism.

The news is not all bad. The recently published findings of the Joint Investigation Team into the MH17 tragedy have served to expose the depths of Kremlin disinformation, while the Kremlin’s air-and-information war in Syria has had a similarly sobering effect. Nevertheless, ambiguous media coverage of the conflict in Ukraine is still a major problem. As long as the international press sees fit to refer to Russian nationals as “pro-Russians,” the realities of Russian President Vladimir Putin’s hybrid war in Ukraine will stay shrouded in a fog of confusion, and peace will remain elusive.

No conflict can expect to be resolved when the principle protagonist is permitted to pretend he is an innocent bystander.

Peter Dickinson, Business Ukraine magazine 5

DISCOVERY SPORT READY FOR ADVENTURE OF ANY SIZE www.landrover.ua

«Winner Imports Ukraine, Ltd», 20054535

poland in ukraine

Poland in Ukraine Polish Ambassador Jan Pieklo on Russian aggression, Volyn controversy and Ukrainians in Poland

About the interviewee: Jan Pieklo is the Polish Ambassador to Ukraine You began your diplomatic mission to Ukraine in late summer 2016.

What are your key priorities as you take on the role of Polish Ambassador to Ukraine during this decisive period in Ukraine’s post-Soviet history?

I would like to continue the mission of my predecessors and to build on the joint PL-UA declaration signed on 24 August 2016 by the presidents of both our countries during the official visit of President Andrzej Duda to Kyiv. All the major political groups in Poland agree on the importance of strategic partnership with Ukraine and on the urgent need to support Kyiv’s closer integration into EU and Euro-Atlantic structures. Poland was the first country to recognize Ukraine’s independence. Since then, our Eastern neighbours have been receiving our support. At the time of the Orange Revolution, then during the Revolution of Dignity and subsequent Russian aggression, Poles have been providing help, organizing humanitarian convoys and lobbying on behalf of Kyiv in various European and overseas capitals. Poland and Sweden worked together to create the original concept for the EU’s Eastern Partnership initiative. The result was Ukraine’s Association Agreement with the EU, which anchors Ukraine within the European community.

What impact has the Russian hybrid war in Ukraine had on Polish defence doctrine and how has it shaped attitudes in Warsaw towards Poland’s Ukrainian policy?

Poland shared the same experience of Soviet domination as Ukraine. This has resulted in a good mutual understanding of the Russian threat to the stability and security of our European region. Russian hybrid war, the an8

nexation of Crimea, and the dramatic developments in Eastern Ukraine all echo the tragic events of the past. Poland is now a member of NATO and the EU, but the Polish elite understands that Warsaw’s ongoing support for an independent and democratic Ukraine is the key to strengthening European security. History has taught us that good Polish-Ukrainian relations are crucial for our national interests. The results of the last NATO Summit in Warsaw proved that our allies also take the Russian security threat to Europe’s eastern flank seriously.

What practical role do you foresee for the Polish-Lithuanian-Ukrainian Brigade?

The Polish-Lithuanian-Ukrainian Brigade symbolizes the historical ties and cooperation between these three countries. At the same time, it is a useful instrument for multinational military collaboration between two NATO members and one neighbouring non-NATO country. It is a perfect tool for exchanging intelligence, providing training, organizing joint military drills, and preparing draft plans for strategic defence projects. The Brigade’s HQ is located in Lublin, Eastern Poland, close to the PL-UA border. As far as I am aware, a similar model of military cooperation is under consideration for Ukraine, Romania and Bulgaria.

Poland has long been Ukraine’s most vocal supporter within the EU. What practical steps can Poland offer to help facilitate greater Ukrainian integration into the European community of nations?

Poland’s assistance to Ukraine has a long history and operates on many levels. Throughout the past 25 years, Polish regions and municipalities : www.bunews.com.ua

High-flying comfort with LOT Kiev, Lviv, Odessa and Kharkiv directly to Warsaw and beyond

LOT.COM

poland in ukraine

: have established working contacts with their Ukrainian counterparts. Us-

ing regional and EU funds, they have organized study tours and training for Ukrainian local officials. With the help of US funding, the PAUCI (trilateral intergovernmental Polish-American-Ukrainian Cooperation Initiative) grant program helps aid the transfer of Polish transformation knowhow to Ukrainian partners. I had the honor to work as PAUCI director for many years. Every year, the Polish MFA secures funds for development projects in Ukraine. Some of the fields of interest include Polish administrative decentralization reform experience, anticorruption measures, municipal management, and SME development. The other important area of Polish support for Ukraine’s European integration is civic society partnership. Numerous Polish individuals actively supported the Orange Revolution and Revolution of Dignity through humanitarian convoys or collecting funds for Ukrainian civic activists. Warsaw can also share its European integration experience and assist in the implementation of the AA and DCFTA agenda.

Anti-EU sentiment has gained prominence in Poland in recent months, mirroring similar processes across the continent. Is Ukraine in danger of arriving at the party just as the drinks run out?

I cannot agree that anti-EU attitudes are gaining prominence in Poland, which is one of the bigger beneficiaries of EU funds. However, the truth is that the EU currently faces an unprecedented crisis. Warsaw, in partnership with the V4 nations (Slovakia, Czech Republic and Hungary), is interested in reforming and strengthening the EU, not weakening it. Warsaw also supports the prospect of Ukraine’s EU membership. We believe that a democratic and independent Ukraine will contribute to the stability and prosperity of our continent, so we have to work closely together in order to achieve our common goal.

The recent decision by the Polish parliament to recognize the Volyn massacres of the WWII period as an act of genocide against the Polish people has served to remind both nations of the darkest chapters of Ukraine and Poland’s shared history. Meanwhile, official veneration of nationalist leader Stepan Bandera in post-Maidan Ukraine has also been seen by many in both Kyiv and Warsaw as dangerously provocative. What challenges do these historic wounds pose for contemporary bilateral relations?

History is important, but it should not overshadow recent policy or the goals of our Polish-Ukrainian strategic partnership. The recently released film “Volyn” (a Polish-made movie depicting the WWII-era massacres that has sparked criticism by some in Ukraine – Ed.) is not a documentary, but rather represents the artistic vision of an individual movie director. It is not an attempt to determine historical truth. The establishment of the PolishUkrainian committee of historians was a step in the right direction allowing joint work on historic documents in the archives that will help us to reach shared conclusions. Emotions are generally not very good advisers. We should concentrate on the current dynamic of Polish-Ukrainian relations, which has looked particularly positive in the last couple of months – from Polish President Andrzej Duda’s visit to Kyiv, through to the visit of Polish Minister of Foreign Affairs Witold Waszczykowski and talks with Ukrainian Prime Minister Volodymyr Groysman at Krynica’s Economic Forum.

Poland’s transformation since 1991 is often cited as the ideal model for Ukraine to follow. What can Ukraine learn from the Polish experience, and how applicable are these lessons to the contemporary Ukrainian context?

The Polish transformation took place at quite a different time and in a dif10

ferent political, security and economic environment. The EU was then at the peak of its enlargement capacity. Russia didn’t pose any serious threat to the West. The European economy was doing fine. It is impossible to copy the Polish transformation patterns of the 1990s directly, but some elements like administrative reform, decentralization and anticorruption policy could be helpful for Ukraine. Russian aggression must also be taken into account, but this factor could actually work as a strong stimulator to speed up Ukrainian reforms.

Which areas of the Ukrainian economy offer the best prospects for Polish investors and Polish businesses?

Taking into account the geographical proximity of our two countries and the diversified structure of the Polish economy, combined with the economic situation in Ukraine (a decline in production and imports over the past two years coupled with under-investment) it is fair to say that almost all areas of the Ukrainian economy are potentially interesting for Polish investors. The potential for further cooperation is huge. Polish companies could be particularly interested in investing in sectors that currently dominate in the structure of Polish exports, like the electromechanical industry, agri-food, chemicals, and construction materials. I see great potential in the banking and finance sector (currently almost half of Polish investments in Ukrainie are located in this sector). There is also significant potential for cooperation and Polish engagement in Ukraine’s energy efficiency industry. Ukraine has huge demand for energy saving technologies, while many Polish companies have developed interesting, modern and competitively priced solutions for this sector.

Economic integration with the EU will expand the scope of cooperation to other sectors of the Ukrainian economy. The resumption of Ukraine’s cooperation with the IMF, and, consequently, the inflow of financial resources from other sources like the World Bank and EBRD, will undoubtedly contribute to the stabilization of the macroeconomic and financial situation in the country. In turn, this will boost confidence among foreign investors, including those from Poland. It should be noted, however, that any increase of foreign investments will ultimately depend on improvement in the Ukrainian business and investment climate.

The Ukrainian community in Poland has expanded rapidly over the past two years. What challenges does this growth pose for Polish society, and how is it shaping Polish attitudes towards Ukraine?

The presence of a large Ukrainian community has so far caused no serious internal disputes in Poland or problems in bilateral relations with Ukraine.

Moreover, Polish employers appreciate the role of their Ukrainian employees and constantly indicate the need to introduce further simplifications that would allow Ukrainians to work legally in Poland.

The presence of a large number of Ukrainian workers in Poland has become an important part of bilateral relations. The scale and dynamics of the phenomenon, as well as the attractiveness of the Polish labour market for citizens of Ukraine, is evident from the statistics. In 2008, the number of “declarations of intention to employ” citizens of Ukraine registered by Polish district labor offices amounted to less than 143,000, while the number of work permits for Ukrainians was just 5400. In the 2015, the number of “declarations of intention to employ” amounted to over 760,000 (or 97.5% of all registered declarations) and the number of work permits issued to Ukrainian citizens totaled over 50,000 (76.7% of all permits). Data for the first half of 2016 shows that these indicators have continued to grow rapidly. If the current dynamic remains stable, the number of Ukrainians working in Poland will significantly exceed one million by the end of the year. www.bunews.com.ua

POLSKA COME AND FIND YOUR STORY

Move Your Imagination

www.poland.travel

Ukraine yet to make most of Polish partnership potential Poland-Ukraine economic ties are robust but huge scope remains for greater bilateral trade and investment Over the past quarter of a century, Polish-Ukrainian economic relations have evolved to make Poland Ukraine’s most important EU trading partner and a major investor. Meanwhile, in recent years a new trend has emerged that has seen an unprecedented influx of Ukrainian workers into Poland. Despite the ever-strengthening nature of current bilateral economic ties, there remains huge scope for further improvements – particularly in the sphere of large infrastructure projects.

Challenging beginnings

Poland was the first country in the world to recognize Ukrainian independence. The establishment of political relations enabled the development of economic cooperation, although in the beginning the relationship was not marked by excessive optimism. In 1992, Polish-Ukrainian trade stood at USD 285.4 million. This figure grew rapidly, exceeding USD 1 billion by 1995. During the 1990s, the biggest obstacle to economic cooperation was the lack of synergies between the Polish and Ukrainian economies, with an absence of strategic goods. Instead, the focus was on SMEs, which emerged as the driving force of bilateral economic cooperation. Polish companies seeking to expand in Ukraine faced a number of all-too-familiar obstacles including legal instability, excessive bureaucracy and corruption. The 1998 financial crisis in nearby Russia led to a collapse in bilateral turnover, leaving trade at the turn of the millennium stuck at the levels of the mid-1990s.

Poland’s added EU appeal

Growth has returned since 2000, thanks in large part to Polish economic modernization, Poland’s economic integration into the EU, and the increasing attractiveness of Polish exports to Ukraine. Bilateral trade topped USD 2 billion in 2003 and peaked at nearly USD 8.8 billion in 2008. The global credit crunch slashed that figure virtually in half, but a return to dynamic growth saw the total climb back to almost USD 8 billion by 2013. The turmoil in Ukraine over the past three years has inevitably resulted in fresh setbacks, leading to a trade decline of around 20-30% per year. There has been a clear slowdown in this downward trend since the start of 2016, producing an increase of 13% in turnover over the first half of the year. This can be attributed to Ukraine’s tentative economic recovery and the entry into force of the country’s free trade agreement (DCFTA) with the EU. In terms of EU trade, Poland’s importance for the Ukrainian economy can hardly be overstated.

Poland is the largest single recipient of Ukrainian exports to the EU and the number two EU importer to Ukraine. Poland’s strategic importance makes it a key partner in Ukraine’s pivot towards European markets. In 2010, a quarter of Ukrainian exports went to EU markets. Following the full implementation of the DCFTA, this figure rose in Q1 2016 to 41.4%.

Investing in Ukraine

The post-1991 era has also witnessed the intensive development of capital investment. From the very beginning, Ukraine aroused strong interest among Polish small and medium-sized businesses. By 1994,

there were already approximately 700 Polish companies working in Ukraine, with investment commitments amounting to nearly USD 12 million. This figure grew to USD 60 million by 2000. The real breakthrough came along with Polish integration into the European Union. In 2005, Polish investments in Ukraine were close to USD 225 million. Over the next five years this growth continued, reaching a high of nearly USD 936 million in 2010. This figure has fallen in recent years in a steady but undramatic manner in response to the armed conflict and accompanying economic crisis in Ukraine. Poland currently ranks eleventh among Ukraine’s largest foreign investors. Poland is also unique in terms of the number of companies operating in Ukraine.

Official Ukrainian figures identify more than 2,900 businesses entities with Polish capital registered in the country, 2200-2500 of which are operational.

The largest share in Polish direct investment in Ukraine (45.3%) focuses on the finance and insurance sectors. Despite the challenging conditions in Ukraine’s banking industry, major Polish investors are doing extremely well.

Key investors include Kredobank and Getin Holding’s Idea Bank. In the latest ranking compiled by the Ukrainian edition of Forbes magazine, Kredobank took first place for profitability among Ukrainian banks for the second consecutive year. Meanwhile, in the insurance industry, Insurance TOP ranked Poland’s PZU Ukraine among the top ten leaders of the Ukrainian insurance market in several categories.

The next biggest focus of Polish investments is industry and the manufacturing (33.4%). Key companies include Barlinek (production of wooden floors), Cersanit (ceramics), Sanitec-Kolo (sanitary fittings), Can-Pack (packaging), Maspex- Wadowice (juice producer), Sobieski Group (alcohol), TZMO (hygiene products), Inter-Groclin (manufacturer of automobile equipment and accessories), and furniture companies BRW and Nowy Styl. Polish investments in wholesale and retail trade, as well as in vehicle repair, make up approximately 10.2% of total Polish investments in Ukraine, while the service sector accounts for 11.1%.

Ukrainian investment in Poland had reached USD 50 million by 2016, with the manufacturing sector attracting 20% of this total. Since 2015, there has been rising interest among SMEs - especially within the IT sector - towards relocation to Poland due to the prospect of economic stability and lower administrate-fiscal charges.

Cooperation is also developing in the fields of capital market finance and banking. Twelve Ukrainian companies have listed on the Warsaw Stock Exchange, although the recent crisis has caused the suspension of previously planned IPOs by Ukrainian companies.

Labour flows

The presence of a large Ukrainian workforce in Poland has long been an important element of broader bilateral relations, and this community has grown significantly in recent years. Whereas the Ukrainian presence on the Polish labour market had traditionally come largely from the western regions, today Ukrainians from across the country are seeking employment opportu-

About the authors: Bartosz Musialowicz is Head of the Trade and Investment Promotion Section at the Embassy of the Republic of Poland in Ukraine.

Slawomir Matuszak is Head of the Economic Section at the Embassy of the Republic of Poland in Ukraine.

12

www.bunews.com.ua

Future prospects

Any analysis of the past 25 years of the Polish-Ukrainian economic relationship will inevitably lead to the conclusion that far greater cooperation is possible. Taking into account the fact that the two countries are neighbours, and considering the sheer size of both domestic markets, the current bilateral turnover of around USD 5 billion can hardly be regarded as satisfactory. The same is true for investments. While Polish entrepreneurs have made a significant capital commitment to Ukraine, the level of investment could clearly be far higher when compared to the Polish presence in other regional markets.

A number of objective reasons have restricted the growth of Polish-Ukrai-

nian economic cooperation, including numerous financial crises and the ongoing military conflict in eastern Ukraine. However, there is no avoiding the fact that the greatest single obstacle to better results remains the unfavourable business climate in Ukraine. Since the changes of 2014, the Ukrainian authorities have implemented a number of measures aiming to address these issues, such as the reform of the public procurement system.

Nevertheless, much work still needs to be done in order to improve the Ukrainian investment climate. Polish entrepreneurs continue to report serious problems when trying to manage their Ukrainian businesses. Key issues include extensive bureaucracy and corruption, the instability of the legislative framework, and the weakness of the Ukrainian justice system.

We hope the continuing implementation of the trade component of the EUUkraine Association Agreement will serve as a catalyst for further positive changes in Ukraine, stimulating an acceleration of the reform process. Legal harmonization with EU norms will help to reduce corruption and improve the functioning of the Ukrainian legal system, leading to the development of a better business climate. The adoption of EU standards by Ukraine should also help eliminate a significant portion of the existing barriers to expanding bilateral trade cooperation.

Despite these challenges, the great potential for the further development of Polish-Ukrainian economic relations remains obvious. This is especially true in terms of large investment and infrastructure projects in the energy sector.

Major infrastructure projects of this kind could serve as successful business ventures in their own right, while also providing additional stimulus for the strengthening of strategic cooperation between two countries with common geopolitical interests and shared security concerns. As bilateral economic ties develop over the coming quarter of a century, this strategic component could become an increasingly important dimension of the relationship.

Kredobank: aiming for long-term success in strategic Ukrainian market

Kredobank is one of the oldest banks in Ukraine, with over 26 years of experience on the Ukrainian market. Since 2004, Poland’s biggest bank with state capital, PKO Bank Polski, has been the main shareholder of Kredobank with a 99.6% stake. Kredobank is one of the top 20 Ukrainian banks by assets. Damian Ragan, the deputy head of the Kredobank board, discusses the bank’s Ukraine operations.

Is Kredobank’s main shareholder PKO Bank Polski satisfied with the bank’s performance in Ukraine?

Our main shareholder carefully monitors Kredobank’s work and is happy with our progress. PKO Bank Polski sees Ukraine as a strategic region and thinks in terms of a long-term presence here.

What do you see as Kredobank’s key successes?

We are proud of the fact that Kredobank operates at a profit. Since 2015, the bank has increased its profitability: net profit for 2015 was UAH 112.4 million, while the net profit for the October 2016

first half of 2016 reached UAH 142.9 million.

The bank’s client base is also growing – Kredobank serves over 46,000 enterprises and more than 406,000 retail customers. The bank’s headquarters are located in Lviv, but we work across Ukraine with 110 branches in 23 oblasts.

How do you define the Kredobank strategy?

The key focuses of our strategy are specialization and concentration. We don’t aim to be the biggest bank in Ukraine. Kredobank is primarily a bank for retail customers and SMEs, but also for corporate customers. We have a moderate risk appetite: the bank has high demands for our borrowers. As a result, the level of overdue loans in Kredobank’s credit portfolio is minimal.

The bank’s Polish ties makes Kredobank attractive to customers who work or intend to work with Poland. What can Kredobank offer such clients?

We offer a “Złotówka” package for private accounts featuring a payment card denominated in Polish zlotys, which includes special low rates for money transfers from PKO Bank Pol-

ski branches in Poland, and low rates for ATM withdrawals in Poland. For Ukrainian businesses with Polish partners, we propose loans in Polish zlotys with rates from 9% per year, rapid bank transfers to and from Poland, and low tariffs for banking services.

poland in ukraine

nities in Poland. Statistics from recent years reflect the scale and dynamics of this growth, while testifying to the attractiveness of the Polish labour market for Ukrainians hit by domestic economic hardships. In 2008, the number of declarations of intention to employ Ukrainian citizens registered with district labour offices was below 143,000. In 2015, this figure rose to 760,000.

More than 600,000 declarations were registered in the first six months of 2016. Based on current trends, the number of Ukrainians working in Poland is set to exceed one million by the end of this year. This phenomenon is not well known elsewhere in Europe, but the scale of the Ukrainian influx into Poland is worthy of greater attention at a time when the EU as a whole is struggling to cope with migrant flows from Syria and the wider Middle East.

The growth of the Ukrainian community in Poland is essentially a success story. The rapidly expanding number of Ukrainians has not led to any serious internal social issues or problems in bilateral relations with Ukraine. On the contrary, Polish employers have been appreciative of the role played by Ukrainian staff and regularly indicate the need for further simplifications that would allow them to gain legal employment in Poland.

poland in ukraine

Polish insurance giant posts growth despite Ukrainian crisis conditions PZU reaps benefits of trust dividend as Ukrainians seek security in challenging economic environment

About the interviewee: Maciej Szyszko is the President and CEO of PZU in Ukraine Ukraine’s economy has been through a turbulent period over the past three years of revolution and war, but Polish insurance giant PZU is not merely surviving – the company is thriving thanks to a heightened desire among Ukrainian customers for greater financial security. Turnover is expected to reach UAH 1.3 billion in 2016, representing a 30% increase on 2015. PZU’s President and CEO in Ukraine Maciej Szyszko explains this robust performance as a reflection of the Ukrainian desire for greater reliability in troubled times. “The crisis actually helps us. The insurance business is all about trust,” he says, pointing out that PZU’s Ukrainian subsidiary experienced similar growth patterns among both private and corporate clientele at the height of the 2008 credit crunch crisis.

Ukraine’s maturing insurance industry

Maciej first took up his post in Kyiv ten years ago and has witnessed the growth of the Ukrainian insurance industry from fledgling status. He arrived soon after PZU established a presence in the country, and has overseen the company’s steady expansion from his base in the Ukrainian capital. PZU currently has a network of over 100 offices across Ukraine, employing more than 700 staff. “We arrived during the very early stages of the Ukrainian insurance industry. Ten years ago, only a few hundred people had home insurance. Today there are millions,” he reflects. Part of the challenge has been changing public attitudes towards insurance.

“It is important to explain that insurance is actually useful and not just something you must have in order show to the authorities. Step by step, we are building up trust in the insurance industry.”

Being part of one of Central and Eastern Europe’s leading insurance groups 14

certainly helps. PZU has a two hundred year corporate history, with annual turnover in Poland currently topping the EUR 5 billion mark. The company’s Ukrainian branch operates on a significantly more modest financial scale, but it is self-sufficient. “We are relatively small compared to PZU’s Polish presence, but we produce positive results,” says Mr. Szyszko.

Like many major Polish investments in Ukraine, PZU management see the company’s growing market presence in the Poland’s eastern neighbor as a strategic asset with attractive long-term potential. One area that could significantly boost this potential is pension reform. Maciej says this could serve to broaden the scope of PZU’s activities in Ukraine, enabling the company to expand pension and life insurance services, but he admits to frustrations over repeated delays in the process. “The government has been talking about pension reform for the past ten years. Now they say it will begin next year. But this has been the mantra for some time, and ‘next year’ never seems to arrive. Meanwhile, we continue to prepare for future changes and remain convinced that the idea is still very much alive. PZU prides itself on the company’s ability to address changes in the business environment and legislative framework in the best way possible way for all concerned. ”

Sophisticated tastes of Ukrainian consumers

Many economic analysts see Poland’s post-Cold War transition as the ideal model for today’s Ukraine to adopt, but Mr. Szyszko says he is cautious of any attempts to transplant the lessons of the early post-Soviet years directly into the contemporary Ukrainian environment. “2016 is completely different to the 1990s. The adoption of insurance culture is much faster today. Our Ukrainian customers are far better informed. They often have detailed knowledge of the industry and are very demanding consumers – often more so than in many mature West European markets. As a result, the quality of some of our products is actually higher in Ukraine than in Poland.”

In line with the majority of Western executives operating in Ukraine, Maciej identifies corruption as the single biggest barrier to further market growth, particularly in the business insurance sector. “Corruption keeps the market small,” he says. “It could be a big market but huge improvements are necessary. At present, it is not so much a risk-based market as a bribe-based market. That is the reality.” Nevertheless, Mr. Szyszko sees opportunities for growth in a range of sectors. “Cyber risk is a segment where Ukraine is already ahead of general market development trends.

The transportation, infrastructure, and agriculture sectors also offer potential for strong growth.”

The nature of PZU’s business necessarily means a long-term commitment to the Ukrainian market. After a decade of steady progress in Ukraine, Mr. Szyszko is undaunted by this long-term vision. His informed optimism is hardly surprisingly, given PZU’s ability to achieve growth during two of the most intense crises in the country’s independent history. “On a fundamental level, Ukraine has very positive perspectives,” he says. “Ultimately, it is all about the strong potential of the people. This applies equally to our company and our clients.” www.bunews.com.ua

Preserving Poland and Ukraine’s Common Heritage Ukraine a key focus as interest in the shared inheritance of the Polish-Lithuanian Commonwealth grows The Polish presence in today’s Ukraine stretches back many hundreds of years, creating an almost limitless repository of monuments reflecting the shared heritage that connects today’s Poland and Ukraine. According to rough estimates, there are over 45,000 examples of Polish heritage in Ukraine, including everything from houses of worship and fortresses to tombs, ornaments and paintings. In reality, there is no exhaustive information on the extent of Polish heritage in Ukraine because new information constantly comes to light as researchers and academics from both countries regularly uncover new treasures and forgotten chapters from the shared past.

Post-Soviet revival The history and culture of the eastern regions of the Polish-Lithuanian Commonwealth, including much of modern-day Ukraine, Belarus, Lithuania and Latvia, have always been a focus of attention in Polish academic and cultural circles. As an area of study, it has attracted everyone from historians and architects to archivists, musicologists, writers, artists and renovators. Prior to the collapse of the Soviet Union, accesses to the lands beyond Poland’s eastern borders was severely limited.

All this changed following 1991, with the end of Soviet restrictions ushering in a new era of scientific and academic research.

A succession of tomes have appeared over the past 25 years as part of efforts to create an authoritative inventory of the historic landmarks and artifacts located in the eastern lands of the Polish-Lithuanian Commonwealth. :

16

www.bunews.com.ua

Restoration works in the Dominican Church of St. Nicholas in Kamianets-Podilskyi (Photo: Krzysztof Hejke)

poland in ukraine

October 2016

17

The interior of the Museum of Joseph Conrad-Korzeniowski in Berdychiv (Photo: Adam Orlewicz)

: Polish scientists and students in the departments of history at a range of uni-

versities have succeeded in restoring the memory of hundreds of memorials.

In many cases, this has meant introducing the international academic community to examples of Commonwealth heritage for the very first time in the modern era. At present, the most voluminous part of these records consists of 23 tomes entitled: The Roman Catholic Churches and Monasteries of the Old Ruthenian Voivodeship (Krakow, 1993-2015), covering the lands of contemporary Ukraine.

The process of navigating this previously underexplored chapter of Eastern European history has attracted attention throughout contemporary Polish society.

Polish cultural institutions, museums, archives, libraries, art colleges, churches and religious associations, as well as non-governmental organizations, have all involved themselves in research projects. They have also become engaged in restoration works to repair and preserve historical monuments connected to Polish cultural heritage that are currently located beyond the borders of the country. A program initiated by Poland‘s Ministry of Culture and National Heritage seeks to support these restoration efforts and is currently administered by the Department of Cultural Heritage Abroad and Wartime Losses. It comes as no surprise to learn that restoration projects in today’s Ukraine have received the most financial support from the Polish Ministry of Culture. A wide range of projects have already been undertaken, with numerous initiatives of special significance in Lviv, made possible thanks to cooperation between the Polish authorities and the local municipal administration.

Treasures of Lviv

Lviv occupies a unique place in regional history. For centuries it has been 18

home to a diverse range of nationalities and faiths. Ukrainians, Poles, Jews, Armenians, Germans, Czechs, Tatars, Italians and many more have settled in this treasure trove of East European lore. Each nation and community has left traces of its presence inscribed on the fairytale facades and elegant architectural ensemble of the city. Polish heritage activities have paid particular attention to houses of worship of Lviv, with renovation and reconstruction works taking place around the city since the mid-1990s. One key focus has been Lviv’s ancient Armenian Church, where the colourful, decorative paintings of Jan Henryk Rosen have been restored. Similar efforts have helped improve the condition of the Latin Cathedral, the Franciscan Church, the Roman Catholic Church, and the Jesuit Church which now serves as the official church for the Lviv garrison of the Ukrainian Armed Forces.

Perhaps the most remarkable monument to Polish heritage in Lviv is Lychakiv Cemetery – a veritable city of the dead that is widely acknowledged as one of the most beautiful necropolises in Eastern Europe. This vast complex of tombs is located in the eastern part of the city and laid out in numerous avenues. It is the last resting place for a wide range of prominent individuals from the worlds of culture, science and politics. Many of the chapels and tombstones are regarded as historically important works of art in their own right, with the oldest dating back to the eighteenth century. Visitors will find sculptures created by an array of Polish masters, with many offering fascinating insights into the history of the city and the region. Joint teams of Polish and Ukrainian experts and artisans currently work together to manage maintenance efforts to preserve the tombs and gravestones, with a combined Polish-Ukrainian commission selecting the priorities for renovation efforts. : www.bunews.com.ua

Top: ‘The Battle of Vienna’ by Martin Altomonte (1684-1690) following restoration work in Poland (20072011) (Photo: Paweł Sadlej)

Right: Papar family tomb headstone by Anton Kurzawa. Lychakiv Cemetery in Lviv (Photo: Krzysztof Hejke) Bottom: Radziwillowska Collegiate Church of the Holy Trinity in Olyka (Photo: Krzysztof Hejke)

20

www.bunews.com.ua

Collegiate Church of St. Lawrence in Zhovkva (Photo: Radoslaw Sikora)

:

Recalling the saviour of Christendom The region surrounding Lviv is dotted with pearls of Polish heritage.

One of the focuses of renovation efforts over the past 25 years has been the Collegiate Church of St. Lawrence in the Lviv Oblast town of Zhovkva. Once one of the most important churches in the PolishLithuanian Commonwealth, it was built in the early seventeen century for the family of celebrated Polish military commander Stanislaw Żółkiewski and was designed by a team of Italian architects active at the time in the Lviv region. The church later enjoyed the patronage of Żółkiewski’s great-grandson King Jan III Sobieski, the legendary Polish monarch whose leading role in the decisive victory over the Ottoman armies during the 1683 Siege of Vienna saw him hailed by the Pope as the savior of Christendom. Associations with these two martial colossuses of Polish history transformed the church into a monument to the achievements of both men. Over the centuries, it went on to accumulate numerous memorials to the chivalrous past.

The advent of Soviet rule in Western Ukraine marked a sharp decline in the church’s fortunes. In line with Bolshevik practice, it was closed down as a house of worship and transformed into a warehouse. This led to extensive damage to the building itself and the dispersal of its priceless collection of artworks and furnishings. Thanks to the efforts of Polish and Ukrainian restorers, the church has now recaptured some of its former glory. The interior has been repaired and work continues on exteriors, including efforts to rescue unique fresoes.

The fate of the historic paintings that once adorned the church remains the subject of some contention. In the 1970s they were removed from Zhovkva and transferred to the Lviv National Gallery of Arts. For many years, the Polish Ministry of Culture and National Heritage worked to secure agreement for the paintings to undergo restoration works in Poland. The two largest works, depicting the Battle of Vienna and the Battle of Parkany, duly underwent restoration in Warsaw in 2007-2011. Poland would like to see both artworks returned to Zhovkva, where they had previously been displayed for 250 years. However, there is still no final decision on the issue from the Ukrainian authorities. At present, there are concerns that the current locations of the paintings at West Ukraine’s Zolochiv Castle and Olesko Castle are unsuitable, leading to fears of fresh damage.

October 2016

Churches and cathedrals are a natural focus of efforts to preserve Polish heritage in today’s Ukraine, but these religious buildings are only part of the bigger picture. Thanks to funding from the Polish Ministry of Culture and National Heritage, the family estate of celebrated Polish poet Juliusz Słowacki in Kremenets has undergone renovation and been transformed into a museum dedicated to the man known as one of the ‘Three Bards’ of Polish literature. The renovated venue is now a popular destination among both literature lovers and tourists, who can also enjoy stunning local landscapes topped by the imposing nineteenth century Kremenets Lyceum, once known as the ‘Volynian Athens’. Every year in early September on the anniversary of Słowacki’s birthday, Kremenets serves as the meeting point for the ‘Dialogue of Two Cultures’ initiative, which seeks to build cultural cooperation between artists and academics from Poland and Ukraine.

The work undertaken in Kremenets is not the only initiative to preserve the Ukrainian legacy of a Polish literary giant. In 2015, a museum dedicated to Joseph Conrad opened in the writer’s birthplace – the central Ukrainian town on Berdychiv. Located inside a former monastery, the museum is a modernist tribute to the author of such classics as ‘Heart of Darkness’ that recognizes the importance of this shared heritage and stands as an outstanding example of contemporary Polish-Ukrainian cooperation in the field of culture.

Interest in Poland and Ukraine’s shared cultural heritage is likely to increase as more information becomes available and greater understanding develops. In 2018, the one hundredth anniversary of the restoration of Polish independence is likely to lead to further attention towards Polish heritage beyond the country’s modern borders. This process is not restricted to Polish nationals or members of the Polish diaspora. In recent years, there has been a notable rise in public awareness of a shared inheritance among populations throughout the former lands of the PolishLithuanian Commonwealth, with people increasingly acknowledging the historic legacy derived from membership of this multinational and multicultural state. Better awareness of the past has helped strengthen perceptions of a common heritage that defies simplistic definition as foreign or undesirable.

poland in ukraine

Honouring literary legends

About the author: Dorota Janiszewska-Jakubiak is Deputy Director of the Department of Cultural Heritage Abroad and Wartime Losses at the Ministry of Culture and National Heritage of the Republic of Poland

21

poland in ukraine

Building business bridges between Poland and Ukraine Polish-Ukrainian Chamber offers members two decades of experience and regional network impressions about the realities of the situation in contemporary Poland and Ukraine among participating members of the media industry.

Creating platforms for dialogue

About the author: Svitlana Zavadska (info@pol-ukr.com) is the PR Coordinator at the Polish-Ukrainian Chamber of Commerce The Polish-Ukrainian Chamber of Commerce is one of the oldest bilateral business organisations in Poland. It has been connecting the business, industry and financial communities from both countries for over 20 years. The current Chamber Co-Chairs are both prominent economists with a wealth of experience in Polish-Ukrainian relations: former Polish Minister of Economy Jacek Piechota and former Ukrainian Minister of Economy and Minister of Finance Oleksandr Shlapak.

Regional network in Poland an Ukraine

The Polish-Ukrainian Chamber of Commerce prides itself on its developed institutional network both in Poland and in Ukraine. The Chamber currently has offices in Warsaw and Kyiv as well as branch offices in Katowice, Cracow, Lublin, Tarnów, Szczecin, Ivano-Frankivsk and Lviv. This bilateral structure enables the Chamber to represent the interests of its members effectively in both Poland and Ukraine. Chamber members are able to qualify for Reliable Business Partner certificates – a status recognised by many businesses in both countries designed to boost confidence in cross-border cooperation.

There are 14 committees active in the Polish-Ukrainian Chamber of Commerce.

These committees focus on cooperation in a range of sectors including law, tax issues, agriculture, migration and employment. Chamber initiatives have also led to the creation of a pair specialised of organisations: the Polish Business Center in Kyiv and the Ukrainian Business Center in Warsaw.

Keeping members informed

The organisation uses a wide range of communication methods to maintain close connections with its members and keep them informed about current events in Polish-Ukrainian commercial cooperation. The Chamber’s monthly publication, eDIALOG, covers a multitude of topics regarding the economy, finance, culture and society in both countries. Additionally, in order to provide up-to-date information about current affairs in Poland and Ukraine, the organisation also issues a weekly newsletter. Media ties are also an important part of the Chamber’s activities. For many years, a Polish-Ukrainian Press Club has been functioning alongside the Chamber. This organisation unites members of the media from both countries, providing a convenient platform for the exchange of ideas and information, as well as helping to develop informed 22

The Chamber hosts a series of regular events designed to play a key role in fostering commercial dialogue between the two countries. This annual calendar of events includes the “Polish-Ukrainian Border: Chance or Challenge?” Conference in Krasiczyn, symposiums on access to the Polish labour market and the issue of passenger traffic between Poland and Ukraine, “Polish Business Days in Kyiv” and “Ukrainian Business Days in Warsaw”. For the last eight years, the Chamber has co-organised the Baltic Business Forum International Conference for experts and representatives from the Baltic, Black and Adriatic Sea regions.

The Chamber also prides itself on organising presidential summits that take place alternately in Poland and Ukraine. These top table meetings provide a platform for constructive dialogue between the leaders of both states as well as representatives of government and commercial institutions.

Boosting bilateral business ties

In response to demand from Polish companies for greater support in Ukraine, the Chamber has launched a special initiative called Polish Business Center.

This company, incorporated in Kyiv under Ukrainian law, provides comprehensive services for Polish companies including representing them on the Ukrainian market without the need to employ local staff, rent an office, or establish a Ukrainian company. All Polish Business Center services are provided on the basis of an agreement with the Polish-Ukrainian Chamber of Commerce. This provides SMEs with the opportunity to explore Ukraine market opportunities without having to invest significant capital in the establishment of a representative office. Similarly, in order to meet the expectations of Ukrainian companies interested in the Polish market, the Polish-Ukrainian Chamber of Commerce has created a specialised structure in the form of the Ukrainian Business Center in Warsaw. This is an international consulting company operating in Poland.

The Ukrainian Business Center provides professional assistance to companies looking to enter the EU market and interested in developing a Polish presence.

Ukrainian students at Polish universities

Due to increasing demand among Ukrainian citizens for access to the Polish labour market since the outbreak of the Russian hybrid war in Crimea and East Ukraine, the Polish-Ukrainian Chamber of Commerce has founded a Migration and Employment Committee. The Chamber is currently intensifying efforts to provide effective assistance to Polish companies seeking to hire foreign employees. It is also working with government institutions and the authorities responsible for Polish labour policy to support Ukrainian citizens working in Poland or exploring employment possibilities.

Unprecedented numbers of young Ukrainians are currently studying at Polish higher education institutions. In order to create a forum for this increasing Ukrainian student population in Poland, the Chamber has recently decided to create an Association of Ukrainian Students in Poland. This organisation aims to integrate the Ukrainian student community and create optimal conditions for its social, cultural, educational and professional development. At the same time, the Association will help to foster communication between students from the Ukrainian and Polish academic communities, together with members of state bodies, the business community, and other institutions in both countries. www.bunews.com.ua

Advanced European Drink Can Producer in Ukraine

The Can-Pack Group (head office in Krakow, Poland) is one of the highest-capacity European producers of packaging for beverages. The group has been operating in Ukraine for more than 10 years. Can-Pack (Ukraine) LLC was founded in 2002 and is currently among the market leaders in its segment.

Can-Pack (Ukraine) is one of the most advanced producers of 50 cl, 33 cl and 33 FIT aluminum cans for beer, lowalcohol drinks, soft drinks, and energy beverages in Ukraine and Europe. The company’s powerful plant is an example of successful international cooperation and one of the largest Polish investments into the Ukrainian economy, with an output of up to one billion cans annually.

Can-Pack (Ukraine) LLC meets national and international standards including ISO 9001, ISO 22000, and BRC/IoP, as well as the principles and procedures of WORLD CLASS MANUFACTURING. The company’s product range is extremely wide. Highly qualified personnel guarantee production stability and the high quality of finished products. The plant employs more than 170 staff, with preliminary training provided in Poland. Strict fulfillment of contractual obligations combined with favorable and flexible terms for clients help secure success — the company’s products are in demand in Ukraine and exported to the EU and CIS. The average age of employees is 20 to 30 years. 47% of staff possess higher education, 41% have vocational education, and 12% have secondary education. Labor policy follows the best global practices, with stable salaries and financial incentives for professional qualifications. Can-Pack (Ukraine) is a substantial contributor to the Ukrainian state budget via taxes and duties.

Based on environmentally friendly initiatives on the Polish market, Can-Pack (Ukraine) plans to organize a recycling program for drink cans in Ukraine. Drink can recycling levels in Poland currently exceed 45%. This has helped make cans both effective packaging and safe for the environment. We aim to achieve similar results in Ukraine.

Since its foundation, the company has engaged in charitable activities. Can-Pack (Ukraine) focuses on environmental protection, while providing financial assistance to the district hospital and low-income people. Management and personnel also help in the reconstruction of historical and cultural monuments.

Can-Pack (Ukraine) 1 Karat Industrial Area 19 Sholudenka Street Vyshgorod, Kyiv region Ukraine 07300

Tel: +380 44 496-97-80 Fax: +38044 496-97-81 Email: office@canpack.com.ua Web: canpack.eu

poland in ukraine

Polish opportunities for Ukrainian business Poland is high on the list of EU options as Ukrainian companies seek new markets and partnerships With Ukrainian businesses and private investors seek new markets and opportunities within the EU, Poland is emerging as an attractive option.

As part of this month’s focus on Polish-Ukrainian ties, Business Ukraine magazine invited the Polish Information and Foreign Investment Agency to make the case for Ukrainian companies and entrepreneurs to consider investing in Poland.

Poland is a country of enterprising people with a proven crisis–resistant economy and a business-friendly investment environment. Thanks to a strong economy, broad range of investment incentives, and the comprehensive support of government agencies, Poland has become one of the most attractive investment destinations in the region and a place where economic returns on foreign capital are up to three times more likely than other European Union countries.

We built our good investment climate on solid foundations such as a stable economy, strategic location, large internal market, entrepreneurship and, above all, human capital. Due to its well-planned economic policy, Poland has proven to be the most crisis-resistant economy in the European Union. Poland was the only nation of the 28 EU member states to maintain positive GDP growth during the economic crisis that hit the world in 2008. This robust performance continues to shape positive perceptions of the Polish economy.

Location, location, location

Like neighbouring Ukraine, Poland enjoys a convenient location at the junction of Europe’s major East-West and North-South communication routes, makes the country a perfect investment destination for enterprises targeting all regions of the continent. The central location of Poland and its importance as a gateway to the European Union is a major advantage when it comes to attracting foreign companies – especially those aiming to cooperate with Eastern European markets.

Apart from location, we also have a large internal market that not only manufactures goods and generates services, but also offers a huge domestic customer base of Polish citizens. Poland is one of the biggest EU member states. It is the sixth most populated country in the European Union and the biggest market in the Central Europe region.

The country is also a fast-developing foreign trade player. According to data from the Polish Statistical Office, export volumes increased 8.3% year-on-year in 2015, while the country’s positive trade balance stood at PLN 9.8 billion.

Investment incentives

Poland’s investment attractiveness is a combination of economic and social factors, as well as the tailored investment incentives that are available on equal terms to both foreign and Polish investors. Investors can benefit from tax exemptions and cash grants for new investments and job creation. Special Economic Zones in Poland offer exemption from income tax. Investors can also apply for government grants and European funds covering the period up to 2020. Poland’s Special Economic Zones (SEZ) are designated areas in selected regions throughout the country providing a dedicated environment for business activities under preferential conditions. The original purpose behind the creation 24

of these privileged areas was to accelerate the economic development of particular regions by enhancing their attractiveness for new investments. However, over the 20 years of the SEZ programme, a process of industrial specialisation has evolved in many of the Polish zones. For instance, Legnica SEZ, Katowice SEZ and Wałbrzych SEZ all focus on the automotive industry. The Mielec SEZ has evolved into an Aviation Valley. A strong ICT cluster operates within the Pomeranian SEZ, while the Warmia & Mazury SEZ has become a focus for furniture companies.

There are currently 14 Special Economic Zones in Poland that will operate until 2026. These zones offer income tax exemption opportunities for entrepreneurs undertaking new investments. Entrepreneurs can also benefit from infrastructure that has been specially prepared for investment purposes. The minimal level of investment enabling a firm to utilise public aid in a SEZ is EUR 100,000. Tax exemption levels depend on the value of the investment, or on two years of labour costs resulting from the creation of new jobs.

Expanding options

Until recently, the Polish Information and Foreign Investment Agency had largely focused on assisting foreign investors. There is now increasing attention toward domestic investment. The maturing Polish economy has meant an increase of investment activity by Polish companies. The government is looking to bolster this trend by developing a range of programmes including support for Polish exporters. Many of the government’s expanding support programmes are carried out by the Polish Information and Foreign Investment Agency. The agency offers support schemes dedicated to helping companies enter specific - usually distant - markets where making the first step without the benefit of a “governmental umbrella” is traditionally a challenge.

Current programmes include Go China and Go Africa. Our short-term plans also include the launch of several additional programmes including Go Iran, Go ASEAN and Go India. We are also going to extend the range of pro-export instruments available to Polish companies all over the world. This includes Ukraine, which we recognize as a very important market for Polish entrepreneurs.

Cooperation with Ukraine

Poland and Ukraine are the two biggest and most populated countries of Central and Eastern Europe, making them obvious potential partners.

Both countries share a deep interest in developing cooperation. The opportunities for closer ties are rooted in our shared neighbourhood and in the existence of strong social ties between the two countries.

However, despite a range of complimentary interests, business communities in both countries have often experienced difficulties when trying to effectively develop relations and turn them into a genuine strategic partnership. There is still significant space for the development of mutual investments and bilateral trade. At present, bilateral business between Poland and Ukraine remains primarily represented by SMEs. This can serve as a good starting point. Today’s Poland seeks to position itself as a home for innovative companies from around world and a regional hub for change and development. Now is a good time for Ukrainian companies to explore the benefits of doing business in Poland. www.bunews.com.ua

“When I began my business in Ukraine in 1998, I built it in the honest and open manner I was taught by my partner Zbigniew Tulwin in Poland. This honesty and openness applies to all my business relationships with customers, suppliers, and employees.

These are the principles of transparent business that our company has followed for the past 18 years,” says Ireneush Derek, General Director of Plastics-Ukraine Ltd. Plastics-Ukraine Ltd is a major distributor of plastic materials for modern advertising, digital printing, facade and interior decoration, industrial use, building design, construction, and packaging.

It is a part of the ‘Plastics International’ group of companies with offices in Poland, Ukraine, Moldova, Georgia, Russia and the Baltic States.

Plastics-Ukraine Ltd delivers materials from 20 countries to the Ukrainian market. The range of materials is diverse. You can encounter them almost everywhere – from small souvenirs to major construction projects. These products are more than just plastic sheets, film reels or slabs. They are the realization of creative ideas, opening up new possibilities for customers.

“18 years ago, our main goal was to bring our successful Polish experience to the Ukrainian market. We wanted to demonstrate how to work with the best European and global manufacturers, how to develop these materials and technologies in Ukraine. We were the first to introduce hollow polycarbonate to the Ukrainian market, to explain what the material is and how to use it. Our business began with innovation – new materials, new technolo-

October 2016

promotion

Polish Plastics Pioneer Combines Innovation with Corporate Social Responsibility

gies, and a new approach to building relationships with customers,” says Ireneush.

Plastics-Ukraine Ltd is no longer only active as a distributor. The company is now a partner in a range of different social, cultural, educational and charity projects. This role fits well with the core Plastics-Ukraine Ltd values and the company’s approach to corporate social responsibility that places the emphasis firmly on people. The team at Plastics values honesty and this helps to attract likeminded people. This keeps us united in our diversity and underpins our success.

25

Central European Superpower For centuries much of today’s Ukraine was part of the historically overlooked but hugely important Polish-Lithuanian Commonwealth. Former Polish Ambassador to Ukraine Henryk Litwin explores the impact of this Central European superpower on the development of the region Students of Ukrainian history tend to be preoccupied with the Russian and Soviet roles in shaping today’s national fault lines and frontiers. However, while it remains fashionable to perceive contemporary Ukraine in exclusively post-Soviet terms, there is also a strong argument for adopting a far broader historical perspective that recognizes the influence exerted by a range of other states ranging from the Ottoman Turks 26

to Austrian Habsburgs. None of these influences has been so enduring as the hundreds of years much of Ukraine spent as part of the vast PolishLithuanian Commonwealth – Central Europe’s first multinational, multiethnic superpower of the modern era. Business Ukraine magazine invited former Polish Ambassador to Ukraine Henryk Litwin to explore the legacy of this remarkable and often overlooked epoch in European history.

The Polish–Lithuanian Commonwealth was a dualistic state bringing together the Kingdom of Poland and the Grand Duchy of Lithuania, incorporating much of present-day Ukraine and ruled by a common monarch. During the sixteenth and seventeenth centuries, it was one of the largest and most populous European states.

At its peak in the early seventeenth century, the Commonwealth spanned some one million www.bunews.com.ua

poland in ukraine

The Union of Lublin (Painting by Jan Matejko, 1869).

Photo: Piotr Maciuk/National Museum in Warsaw.

Painting currently exhibited at Lublin Museum

square kilometers, with a multiethnic population of about 11 million.

Unfair historical verdict

The Polish-Lithuanian Commonwealth has suffered from critical historical assessments for many years. This harsh treatment is due in large part to the fact that the history of the state ended with its partition. As a result, this October 2016

ignominious ending came to play a decisive role in the official historical narratives of both the partitioning countries and the victims of partition. When viewed from this perspective, the long history of the Commonwealth became primarily a series of events leading up to ultimate defeat. This viewpoint arose from political assumptions and impulses that are not justified by an objective study of the period. The

partitioning powers wanted to find justification for their aggression. The Poles themselves searched for reasons to explain their defeat that could help them regain their sovereignty. This made the task facing historians particularly problematic.

Broader European socio-political developments in the nineteenth and twentieth centuries added to these complications. The rise of : 27

Polish-Lithuanian Commonwealth in the mid-seventeenth century. Map by Nicolas Sanson d’Abbeville, Paris, 1655 (Collection of the National Library of Poland)

: the modern nation-state began to make itself

felt in Poland at the turn of the nineteenth century, significantly earlier than similar processes among Ukrainians, Belarusians and Lithuanians. Understandably, the Poles considered the Commonwealth as a core part of their own heritage, thus failing to take the then-dormant national aspirations of their neighbours and fellow Commonwealth members into consideration. When the Ukrainians, Belarusians and Lithuanians began to develop their own historical consciousness in the second half of the nineteenth century, they generally regarded the Commonwealth heritage as exclusively Polish and therefore foreign.

Given these complex considerations, it is not surprising that the histories of the Polish-Lithuanian Commonwealth have often seemed closer to political populism than academic study.

However, the story of the Commonwealth offers valuable insights into the development of a region that has been at the centre of global geopolitical tensions for the past 100 years, from WWI to the present day. In order to have

28

a greater understanding of the issues at stake in contemporary Ukraine, it is necessary to explore the historical realities of the Polish-Lithuanian Commonwealth.

Bastion of European stability

The Polish-Lithuanian Commonwealth came into existence with the 1569 the Union of Lublin between the Kingdom of Poland and the Grand Duchy of Lithuania. The political, administrative and social systems created by this union survived without significant changes until 1791 and the adoption of the Constitution of 3 May. In other words, the Commonwealth existed for 222 years. It is important to place this longevity within the appropriate historical context. The Spanish Empire of the Habsburgs lasted for 184 years (1516-1700), Bourbon France for 200 years (1589-1789), while Tudor and Stuart England existed for a little over 170 years. All of these state systems tend to receive admiring historical assessments, yet all ended amid spectacular calamities that were at least equal to the Partition of the Commonwealth.

More recently, the Soviet Union lasted just 70 years, while Hitler’s Third Reich disappeared within 12 years of foundation. Even the sole superpower of the modern world, the United States of America, only passed the Commonwealth’s 222-year mark in 1998. It is therefore reasonable to regard the Commonwealth as an important factor in the development of the European nation states of the modern epoch.

One of the stereotypes hampering a better historical understanding of the Commonwealth has been the belief that the relatively decentralized and democratic political system it employed was an anomaly that developed in isolation to, and in contrast with, the absolutism prevailing elsewhere in Europe at the time.

The Commonwealth’s alleged ‘otherness’ is often demonstrated by reference to its electoral throne and all-powerful parliament, which functioned according to the principle of unanimity (liberum veto). However, it is important not to forget that when the Polish-Lithuanian Commonwealth arose there were numerous other electoral thrones in Europe – in Germany, www.bunews.com.ua

The triumph of local authority

How is the essence of the Polish-Lithuanian Commonwealth’s political system best described? Different historians have focused on different elements of the system, including the perceived weakness of the executive body, the unusually wide powers held by the Sejm (the parliament), domination of the nobility over all other classes, the absence of a standing army, and the limitations placed on peasant freedoms.

However, the foundations of the system lie in the principle of local self-government. Within the Commonwealth, the final authority in all political and administrative issues was the Sejmik (the regional assembly). Each sejmik gathered together members of the local nobility to adopt political directives for the Sejm known as ‘sejmik instructions’. These instructions shaped the agenda in the Sejm. If the Sejm took decisions outside of the framework provided by local instructions (relating to taxation, for example) individual sejmiks could refuse to adopt them.

Sejmiks also managed conscription into military departments and elected tax collectors.

The Comonwealth system strengthened the sovereignty of local communities and allowed them to determine the allocation of locally collected state funds, with central government only receiving the remainder. These regional assemblies retained the authority to levy local taxes and oversee the election of local officials.

In peacetime, this system proved effective and provided the nobility with a sense of security.

However, in times of war it was often ineffectual and unable to cope with the demands for greater financial centralization.

This system evolved thanks largely to an emphasis on stability rather than territorial expansion. Indeed, the Polish nobility would often defy the offensive intentions of the central authorities, whether it was the Livonian plans of Sigismund Augustus, the Turkish War of Stefan Batory, the offensives against Moscow and Sweden of Sigismund III, the Moldavian expansion October 2016

of Jan III Sobieski, or the anti-Swedish objectives of Augustus the Strong. Territorial expansion generally came via widening the federation at the local level. Prior to the Union of Lublin, a range of lands had joined the Polish Crown with local nobles receiving the privileges of Crown nobility together with their own sejmiks and often featuring local differences in legislation and community structure. From the thirteenth to the sixteenth centuries, this process had embraced much of so-called Red Ruthenia, including parts of present-day Ukraine. Indeed, under the terms of the Union of Lublin, the Grand Duchy of Lithuania maintained a separate form of statehood with its own assets, army, administration, and a completely separate legal system.

The union included provisions for a common parliament and foreign policy, but in practice, the Grand Duchy of Lithuania often conducted its own separate international diplomacy. For example, a truce concluded between Lithuania and Sweden in 1626 allowed the latter to launch an attack on Poland.

The 1569 Union of Lublin also led to the socalled ‘incorporation’ of many regions of modern Ukraine that had previously been part of the Grand Duchy. The Kyiv, Volyn and Braclav regions (Voivodeships) received privileges guaranteeing their autonomy within the bounds of the crown, including recognition of noble selfrule, separate social structure and territorial inviolability. It would later become commonplace for Kyiv and Volyn nobles to speak of being ‘in the union’ but not ‘incorporated’.

elsewhere in Europe. The early modern period was the age of Europe’s great wars of religion, making the Commonwealth’s relative pluralism particularly striking. Calvinist Frenchman arrived in Poland, along with Dutch Mennonites.

Meanwhile, Scottish and Swedish Catholics crossed the continent in search of shelter from Protestant persecution, while Old Believers came from Moscow. This mosaic of confessions also featured an array of religious minorities including Armenians, Jews and Muslim Tatars.

The Commonwealth offered official freedom of conscience in religious affairs, with individual groups enjoying their own self-governing authorities and often having their own Crown appointees.

This was the nature of the Commonwealth created by its diverse membership of nationalities – Poles, Lithuanians, Ruthenians (Ukrainians), Prussians, Livonians and many more. The political and legal system derived its authority from the Crown and Kingdom of Poland, but the state relied on social agreement for its continued cohesion. Rather than relying on the unanswerable arguments of conquest, it emerged as an agreement of between ‘the free and the free’.

The impact this state had on European history in general, and Ukrainian history in particular, should not be underestimated.

poland in ukraine

Hungary, Denmark, Sweden and Transylvania, for example. The parliamentary principle of unanimity arose from the federal character of the state and was in many ways its natural consequence. Nor was it entirely exceptional – the States General of the Netherlands relied on a similar approach. Far from being out of step with European history, the Polish-Lithuanian Commonwealth actually played a key early role in developing the doctrine of the primacy of law that would ultimately triumph over absolutism in the nineteenth century.

Religious diversity

The Polish-Lithuanian Commonwealth was one of the most diverse multiethnic and multiconfessional states in the Europe of the early modern era. This led to frequent clashes between Catholics, Protestants, and Orthodox believers, but the multi-confessional character of the state remained a core feature throughout its existence. Among the nobility, the Catholics prevailed, but by the latter part of the seventeenth century, the number of Orthodox nobles was also on the rise. The single most prominent symbol of the religious diversity within the Commonwealth was the emergence of Greek Catholicism, which saved local traditions and language by combining elements of Orthodoxy and Catholicism while preserving regional identity. This would go on to play an instrumental role in the nation-building processes of both Ukraine and Belarus.

The Commonwealth also served as a sanctuary at a time of great religious persecution

About the author: Henryk Litwin is Ambassador ad personam at the Department for Cooperation with the Polish Diaspora and Poles Abroad within the Ministry of Foreign Affairs of the Republic of Poland. From 2011 to 2016, he served as Polish Ambassador to Ukraine.

29

Winged

Hussars “Their mien, the beauty of their weapons and horses and richness of their equipment surpassing by far anything that the authors tell us of the Greeks, Persians and ancient Romans, as well as anything that can be seen in Europe and in Asia.”

Image: Polish Winged Hussar (Photo source: ‘Winged Hussars’ by R. Sikora and R. Szleszynski.

ERICA, Warsaw 2014. Photography by Andrzej Wiktor) 30

www.bunews.com.ua

poland in ukraine

31

October 2016

Top left: Hussars in full flight Hussar re-enactors at the charge in Warsaw (Poland) during the 400th anniversary of the 1610 Battle of Klushino (Photo: Bartosz Musialowicz) Right: Hussars and Cossacks together Polish Hussar and Ukrainian Cossack re-enactors in front of the monument to the 1694 Battle of Hodov (Ukraine) (Photo: Dziennik Kijowski) Bottom: Remembering the saviours of Christendom Polish Hussar re-enactors in Vienna (Austria) during the 333rd anniversary of the 1683 Battle of Vienna (Photo: Ewelina Koziol)

32

www.bunews.com.ua

October 2016

poland in ukraine

The Winged Hussars were the pride and glory of the Polish-Lithuanian Commonwealth. For about two centuries, they spearheaded the armies of the Commonwealth, leading them from victory to victory against often overwhelming odds. These Hussars remain beyond doubt the most effective military force in the history of Poland. Many academics rank them among the best cavalry formations in the entire history of warfare. Modern Ukraine abounds in monuments and relics related to the Winged Hussars.

According to numerous contemporary seventeenth century accounts, the Winged Hussars were there best and the most beautiful cavalry in the world. Numerous admiring descriptions have survived. Philippe le Masson du Pont, a French engineer in the service of the Polish Crown, wrote in his late seventeenth century memoirs: “It is the elite of all the nobility. Their mien, the beauty of their weapons and horses and richness of their equipment surpassing by far anything that the authors tell us of the Greeks, Persians and ancient Romans, as well as anything that can be seen in Europe and in Asia.

I dare say that there is indeed no sight more fair or splendid than troops of hussars when on a beautiful day they are seen marching across a plain.” Meanwhile, the King of Sweden Carl X Gustav declared in 1655, “If I had some ten thousand of such soldiers, I would expect to easily conquer not only Turkey, but the entire world.”

The Hussar force existed in Poland and the Commonwealth for nearly three hundred years from the sixteenth to eighteenth centuries. They changed considerably in costume and composition over this period. The origins of this cavalry force can be traced to the turn of the 15th and 16th centuries. They have their roots in the Serbian cavalry formations that arrived in Poland following the defeat of the Serbians at the Battle of Kosovo in 1389. Initially, they operated as light cavalry. Gradually, the Hussars began to adopt protective armour and replace medieval lancers on the battlefield.

They became a staple Polish military formation during the reign of late sixteenth century reign of Poland’s King Stephen Bathory, who played a key role in their development. The successes the Hussars achieved under the warrior king Stephen Bathory paved the way for their period of greatest success in seventeenth century, culminating in a starring role at the head of the Christian coalition that relieved the Ottoman siege of Vienna in 1683.

The Hussars were heavy cavalry whose flexibility and durability made them unique among the European armies of the time. They combined contemporary Eastern and Western tactics, allowing them to draw benefits from both military schools. This gave them a range of advantages and made them effective against practically any adversary. Hussar forces proved themselves equally successful against Western European musketeers and pikemen, Turkish janissaries, roving Tatar raiders, and Muscovite cavalry. No rival force could muster such universal troops.

The legendary reputation of the Winged Hussars rests largely on the fact that most of their victories came in battles where they faced seemingly insurmountable odds. The second ingredient feeding their iconic status is their sheer longevity. For two centuries, they remained among the armed elite of continental Europe, making them one of very few military formations to have remained at the apex of battlefield power for so long.

What was the secret of this long-term success? It seems to have been a combination of horsemanship, weaponry, morale, individual training, and the ability to operate as a unit. Due to the technical

Tomb of Hetman Stanislaw Zolkiewski at the Collegiate Church of St. Lawrence in Zhovkva (Ukraine) (Photo: Radoslaw Szleszynski)

Winged Hussars: Most Memorable Engagements 1572 Moldavia 1581 Mogilev 1605 Kircholm 1610 Klushino 1621 Khotyn 1629 Trzciana 1683 Vienna 1694 Hodov

400 Hussars routed 1000 warriors of the elite Turkish cavalry 200 Hussars prevented a 30,000 strong Tatar/ Russian army from storming the city

3,800 Hussars routed a Swedish force three times larger Hussars routed a vastly larger Russian force and seized the Kremlin in Moscow Major battle featuring the largest assembly of Hussars in history (8,000 troops)

Swedish force under King Gustav II Adolf routed despite enjoying a two-to-one numerical advantage

Winged Hussars led decisive charge that saved Vienna from Ottoman capture 400 Hussars defended themselves against a vastly superior Tatar force

: 33

‘Hussars – The Charge’ painting by Miroslaw Szeib (2016)

: difficulty of the tactics employed by the Hussars, it was a profes-

sional formation attracting the best soldiers in the Commonwealth.

Many nobles had previously served in other types of national-class cavalry before graduating to elite service. Sebastiano Cefali, Italian secretary to the Polish King John II Casimir Vasa, wrote in 1665: “The Hussars deserve special attention both for their unparalleled bravery, and for personal dignity. The finer nobility enrolls in such units, as well as experienced officers who used to command Cossacks or other special regiments. They do not consider it detrimental to serve as simple soldiers among the Hussars.”

Unsurprisingly, fascination with the Hussars has long focused on their distinctive wings. This highly original element of their uniform lends these mounted troops an unforgettable appearance unlike any other cavalry units. There is now sufficient evidence to demonstrate that the wings were not merely ornamental additions used for parades and other official occasions. References to the military significance of Polish Hussar feathers appear in contemporary chronicles dating back as far as the first half of the sixteenth century. Although the specific wing designs seem to have evolved over many decades, they are a recurring feature throughout the history of the formation. The Hussars appear to have worn their wings into battle in order to awe and intimidate adversaries. Some have speculated the wings made a loud clattering noise during cavalry charges that could intimidate

enemy infantry and horses. Other explanations of their battlefield usefulness suggest a primary purpose of protecting the backs of Hussars or creating larger-than-life silhouettes. Whatever the original objective, these wings gave the Hussars an added iconic value that has stood the test of time.

Ukrainian territories played a significant role in the history of the Polish-Lithuanian Commonwealth, also producing many outstanding Hussars and Hussar commanders. As the course of history ebbed and flowed, Hussars sometimes went into battle against Ukrainian Cossack forces, but they also fought alongside each other in many campaigns against common enemies. Traces of the Winged Hussars can still be found at locations across present-day Ukraine. The Collegiate Church of St. Lawrence in Zhovkva (Lviv Oblast) houses the tomb of Stanislaw Zolkiewski, the Hussar commander and winner of the Battle of Klushino (1610) which resulted in the capture of Moscow by Polish forces and the election of Polish Prince Wladyslaw as a Grand Duke of Muscovy. Meanwhile, a monument erected on the orders of Polish King Jan III Sobieski in Hodov (Ternopil Oblast) commemorates a Hussar victory of 1694. It survived for 320 years and was the subject of a renovation initiative in 2014 by the MOSTY Foundation, in cooperation with numerous Polish institutions and private sponsors. There are many further monuments to the legacy of the Winged Hussars dotted around Ukraine, many of them waiting for renewal and salvation.

About the authors: Radoslaw Sikora is a Polish historian. Bartosz Musialowicz is the Head of Trade and Investment Promotion Section at the Embassy of the Republic of Poland in Ukraine.

34

www.bunews.com.ua

poland in ukraine

Poland prioritizes Ukraine for scientific cooperation Polish Academy of Sciences has just seven international representative offices – one of them is in Kyiv Since the Revolution of Dignity in 2014 and the beginning of the hybrid conflict with Russia, the difficulties in developing Ukraine’s science and education sectors have multiplied. The far-reaching consequences of external aggression have led to a significant reduction in the opportunities for the Ukrainian education system to progress.

In these challenging times, Poland continues to work in order to strengthen cooperation with Ukraine in all educational spheres including science, technology and academic exchange.

Polish Academy of Sciences in Kyiv

In spite of the complex international situation in the region and numerous challenges facing contemporary Ukraine, the Polish Academy of Sciences (PAN) opened a permanent representative office in Kyiv in 2013. The same year, PAN and the National Academy of Sciences of Ukraine signed a protocol on scientific cooperation covering the period 2015-2017. The inauguration of PAN’s mission in Ukraine was a major vote of confidence underlining the importance of bilateral academic ties. The academy has only established seven bureaus in total internationally, making the office in the Ukrainian capital a significant commitment that has allowed for an increase in the number of Polish-Ukrainian cooperation projects.

The work of the PAN representative office in Kyiv is coordinated by a Program Council that features representatives of the Polish academic community and diplomats who meet twice a year to assess the most suitable directions for further bilateral cooperation. In broad terms, the key goal is to bolster scientific cooperation and build up bilateral contacts via academic and student exchanges. Specific activities include organizing international conferences, developing dual diploma programs running

President of the National Academy of Sciences of Ukraine Professor Boris Paton and President of the Polish Academy of Sciences Professor Jerzy Duszynski after their official meeting in Kyiv in September 2015 concurrently at Polish and Ukrainian universities, translating academic works into Polish and Ukrainian, and writing mutual reviews for scientific publications.

Publishing in Poland

The Director of the PAN Representative Office, Professor Henryk Sobczuk from Lublin Polytechnic, stresses the importance for Ukrainian scientists of better contact with their counterparts in the European Union. Ukrainian researchers publish many valuable articles but struggle to gain international attention due to financial constraints. PAN has been able to present Ukrainian partners with the opportunity to publish English-language materials in Polish scientific magazines. This helps to enhance the professional reputation and audience reach of Ukrainian scientists. Polish magazines command respect for their high standards and for their record of cooperation with distinguished researchers from across Central and Eastern Europe. The increas-

ing exposure of Ukrainian scientific circles to the Western world helps universities and businesses on both sides engage in common projects. In the long-term, the economies of both Poland and Ukraine will benefit from this process due to the development and application of new technologies. This concrete dimension of academic cooperation is very important for the consolidation of broader bilateral ties and economic growth.

Today’s Ukraine has chosen the European model of integration. If it is to succeed, this requires practical engagement with EU partners. Poland is one of these partners. Since the opening of the PAN representative office in Kyiv in 2013, Poland has demonstrated a growing readiness to offer its support and apply the results of scientific cooperation in a practical and pragmatic manner. The cultural, historical and linguistic bonds that tie Ukraine and Poland create the ideal framework for greater scientific partnership. It is our challenge to make the most of these opportunities.

About the author: Professor Henryk Sobczuk is the Director of the Representative Office of the Polish Academy of Sciences in Kyiv and a member of its Program Council

36

www.bunews.com.ua

International Association of Polish Businessmen in Ukraine For over 18 years, the IAPBU has served as a platform where Poles who work in companies with Polish capital and international corporations in Ukraine can create an environment of mutual support.

Today, our organization has about 70 members representing the largest Polish companies. Companies and individuals seeking to build a network of professional support and strengthen the Polish lobby in Ukraine can be members of the Association.

Our desire is to utilize the experience and potential of both our Members and their business partners for mutual development and the development of Polish-Ukrainian economic relations. We offer training, conferences, and business missions to different regions of Ukraine while fostered contact between Polish, Ukrainian, and foreign business partners.

In addition to our business activities, we also actively promote Polish heritage in Ukraine:

We also support humanitarian projects for the benefit of Ukrainian society:

• Construction and opening ceremony of the monument dedicated to the participants of the January Uprising in the town of Ivnytsia (Zhytomyr region)

• The Heart to Heart charity fundraising event to purchase medical equipment for children’s hospitals

• Initiation of changing Kyiv street names to honour prominent Poles, such as Pope John Paul II, Janush Korchak, William Kotarbinsky, and the Idzikovskys family • Restoration and re-opening ceremony of the monument to Adam Mickievich in Zbarazh

• Aid for the House of St. Martin in Fastiv which cares for children with special needs • The War Disability project to finance rehabilitation of Ukrainian soldiers in Poland • Support for the Svitoch Youth Academic Choir from Nizhyn

• Restoration of the chapel dedicated to fallen Polish soldiers in the town of Zboriv

Our office and board are always ready to support Polish-Ukrainian initiatives aiming to develop good neighbourly relations.

We welcome proposals for cooperation!

International Association of Polish Businessmen in Ukraine 9/1 Reitarska St., Kyiv, Ukraine 01034 Phone/fax: +380-44-490-60-29, +380-44-331-68-60 www.msppu.org.ua

Cultural Cousins The Polish Institute in Kyiv brings Ukrainians and Poles together via everything from jazz to cinema Ukraine and Poland are two culturally close and complementary cultures with much to offer one another. Since the collapse of the Soviet Union, cultural ties between the two neighbours have strengthened significantly. The Polish Institute in Kyiv has been at the forefront of this process. The Institute is dedicated to nurturing and promoting cultural ties between Ukraine and Poland, both through Ukrainian exposure to Poland’s cultural achievements, and by introducing Polish artists and scholars to Ukrainian trends, institutions, and professional counterparts.

The primary function of the Polish Institute is to showcase contemporary Polish culture to Ukrainian audiences. Our programme covers the visual arts, film, theatre, music and literature. Over the course of the past sixteen years since the foundation of the Polish :

38

www.bunews.com.ua

October 2016

poland in ukraine

The International Bruno Schultz Festival in Drohobych (Photo: Polish Institute in Kyiv)

39

: Institute in Kyiv, we have organized about 2500 projects. The range

of cultural happenings is dizzyingly diverse and includes concerts of classical, jazz, contemporary, electronic and ethnic music, literary readings, publishing and translation projects, theatrical master classes and productions, theatre festivals, meetings with poets and writers, exhibitions and performance arts, educational projects, and interaction with Polish intellectuals as well as public figures.

In addition to these events, the Institute has also been involved in the production of a range of special issues and supplements for Ukrainian periodicals. We have supported historical projects, photo exhibitions, film festivals, and retrospectives of Polish cinema maestros, while also taking the time to promote Polish IT talent, architecture and designs.

At the beginning of 2015, we also begun promotion of Polish language studies, with courses hosted at the Institute and in other locations. We also have founded literary and artistic awards for Ukrainian culture figures: the Joseph Conrad Korzeniowski Literary Award (since 2007) and the Kazimir Malevich Artistic Awards (since 2008). To mark this month’s special Polish focus in Business Ukraine magazine, we offer an overview of the Polish Institute’s key activities and focuses in Ukraine.

The Gaude Polonia Scholarship

This is a program for young foreign cultural professionals with a background in Central and East European countries and organized by the Ministry of Culture and National Heritage of the Republic of Poland.

During a six-month stay in Poland, artists from neighbouring countries have the opportunity to learn more about Polish contemporary culture and to improve their skills under the direction of some of Poland’s most famous cultural professionals. In 2016, 43 artists from Ukraine took part in the program.

Kazimir Malevich Artistic Awards

Ukraine has one of the most vibrant contemporary arts scenes in Eastern Europe and this is something the Polish Institute wishes to support as much as possible. The Malevich Award is given once every two years to an artist below the age of 40 who was born in Ukraine (regardless of their current place of residence) for their contribution to the development of contemporary art. There are no limitations based on education or the nature of the artist’s portfolio. The award has previously been granted to Lada Nakonechna (2014), Zhanna Kadyrova (2012), Stas Voliazlovskyi (2010), and Alevtyna Kakhidze (2008).

International Bruno Schultz Festival in Drohobych

The seventh International Bruno Schultz Festival in Drohobych was held in June 2016 in the hometown of the iconic Polish writer. One of the most popular aspects of the festival this year was a conference entitled ‘Bruno Schultz and modern literary theory’. The program also included meetings with writers and translators, exhibitions, concerts and performances. Participants came from all over the world, including France, Taiwan, Macedonia, Russia, Austria, Serbia, Lithuania and the US. Poland was represented by brilliant writers and literary critics including Ryszard Nycz, Michał Markowski, Daniel Odija, Przemysław Czapliński, Marek Tomaszewski, Tomasz Dostatni, Ignacy Karpowicz and others.

Days of Polish Cinema

The Days of Polish Cinema in Ukraine is an annual showcase intro40

ducing Ukrainian audiences to Polish filmmaking talent. Over the past decade, almost sixty Polish films have featured. This year’s program includes the most interesting films of the past two years alongside documentaries. The festival is expanding its geographical horizons on an annual basis. In addition to Kyiv, this year’s festival will visit Kharkiv, Vinnytsia, Odesa, Mariupol, and Lutsk.

As well as contemporary kino, one of the most popular aspects of the festival is the screening of classic Polish cinema retrospectives by the likes of Andrzej Wajda, Roman Polanski, and Krzysztof Zanussi. At this year’s festival, audiences will have a chance to watch lesser-known films by Krzysztof Kieślowski including “The Double Life of Véronique”, filmed in France starring Irène Jacob, and “Blind Chance” starring Bogusław Linda, which has never been screened before in Ukraine. The Days of Polish Cinema will open with the new Janusz Majewski film “Eccentrics” and the director himself will be an honorary guest of the festival together with producer Włodzimierz Niderhaus.

Discovering Paderewski Festival in Lviv

The Polish Institute in Kyiv has been a co-organizer of the Discovering Paderewski international festival since this spectacular event first began. The festival seeks to promote Ignacy Jan Paderewski, an outstanding artist who united Polish and Ukrainian culture. Poland is often associated internationally with Chopin’s genius. Paderewski was one of the most prominent interpreters of the composer and a genius in his own right. The festival aims to show the diverse personality of Ignacy Jan Paderewski and highlight the importance of his creative legacy for both Ukraine and Poland. This year’s festival (November 11-14) will include a concert by well-known jazz musician Leszek Możdżer, a concert of Paderewski’s songs arranged by Krzesimir Dębski, and a presentation of Ignacy Jan Paderewski’s opera Manru, which has been given a modern interpretation by Polish composer and conductor Jerzy Maksymiuk.

The I, CULTURE Orchestra in Kyiv

Made up of 94 young musicians from Eastern Partnership countries, the I, CULTURE Orchestra (ICO) has members from Armenia, Azerbaijan, Belarus, Georgia, Moldavia, Poland and Ukraine. They all took to the stage in Kyiv on 24 August 2015 to mark Ukrainian Independence Day of Ukraine, performing at the Ukrainian National Opera House and then on the capital’s main square, Maidan Nezalezhnosti. The concert in Kyiv was entitled: The European Symphony of Ukrainian Independence. Kirill Karabits, the distinguished Ukrainian conductor, has been the orchestra’s artistic director for the past year.

Polish Bands at Jazz Bez Festival in Lviv

For the sixteenth year in a row, winter 2016 in Lviv will begin with the sounds of fine jazz music at the Polish-Ukrainian Jazz Bez festival. The Polish Institute in Kyiv initiated this jazz festival at a time when such events were relatively unknown in Lviv – long before the city gained a reputation as an international festival and live music hub. The idea immediately gained the support of Lviv’s creative focus Dzyga. For the Polish Institute in Kyiv, this festival has become more than just a tradition. It is one of the most popular annual events the Institute is involved in, attracting an audience that stretches beyond the narrow confines of the jazz world to embrace the general public and mainstream media. The festival continues to grow – to date, it has played host to over one thousand musicians. www.bunews.com.ua

Ukraine and Poland share a love of literature that often extends to a passion for the same borderland authors. The Polish Institute has long been a prominent proponent of literary exchange and an active participant in literary endeavors. At the sixth annual Book Arsenal festival in Kyiv in spring 2016, the Institute presented a collective stand representing the V4 group of nations and organized special exhibitions dedicated to Muftafa Dzhemiliev, Polish video games, and a special initiative titled: Polska. Architecture.

This focus on architecture provided the Institute with the opportunity to profile the numerous striking public buildings built in Poland in recent years. Museums and concert halls, sports facilities, and educational buildings have appeared as symbols of contemporary Poland. Financed by central and local government with additional support from the EU, these buildings are the work of outstanding architects chosen via public competition and represent the spirit of today’s Poland.

from Piotr Paziński, Grzegorz Jankowicz and Ryszard Kupidura, who shared their experience of literary festivals in Poland.

Joseph Conrad Korzeniowski Literary Award

Once every two years this prize is awarded to a Ukrainian author less than 40 years of age. The criteria include creative development, innovative form, breaking of stereotypes, and universality of message. In 2015, the Joseph Conrad Korzeniowski Literary Award went to Sofia Andrukhovych. Previous winners have included Taras Prochasko (2007), Serhii Zhadan (2009), Natalka Sniadanko (2011), and Tania Maliarchuk (2013). This is the only award of its kind given by a foreign institution to support Ukrainian literary creativity.

poland in ukraine

Book Arsenal International Festival in Kyiv

Intermezzo Short Story Festival

The Polish Institute took part in the second Intermezzo Short Story Festival in Vinnytsia in spring 2016. The focus of this year’s festival was the sea in literature. The festival celebrates Ukrainian writer and public figure Mykhailo Kotsiubynskyi. Much of this year’s festival was devoted to Crimea and the Crimean Tatars, including focuses on the problems of cultural identity on the occupied Ukrainian peninsula, the historical destiny of the Crimean people, and the theme of lost and rediscovered homelands. The Polish contribution came

About the author: Ewa Figel is the Director of the Polish Institute in Kyiv

The key to success: partnership between consultant, investor, exporter and importer Predicting and minimizing legal risks are the main goals of effective legal consulting and the keys to future client success. EUCON International Legal Center offers a professional approach based on a comprehensive analysis of client needs and the specific challenges they face. This is the philosophy of our team of scientific advisers, lawyers, auditors, tax consultants, compliance and anti-corruption specialists, accounting and tax accounting consultants, and experts in assessment of property and property rights. The united efforts of these professionals enable us to make sure our solutions not only effective but also creative.

Our team provides consulting services on complex tax issues, transfer pricing, corporate law, business restructuring, compliance, asset protection, commercialization of intellectual property objects and tax planning with the use of non-material assets, accounting and taxation, labor and migration law, criminal law and procedure (economic crimes and malfeasance).

EUCON is a law firm with offices in Kyiv and Warsaw. It ranks among the top 50 law firms in Ukraine. In 2013, the company became a partner of TPA Global, a network of independent experts in transfer pricing with headquarters in Amsterdam that provides services in 60 countries.

Contacts: Kyiv, Ukraine 33 Tarasa Shevchenko blvd, office 12, Kyiv 01032, Ukraine Tel. +380 44 238 09 44 office@eucon.ua www.eucon.ua

October 2016

EUCON is a regular winner of international and national awards: • The Legal 500 EMEA • World Tax • European Tax Awards • World Transfer Pricing • 50 Leading Law Firms in Ukraine • Legal Awards 2016: Law Firm of the Year in Transfer Pricing • European Tax Awards 2015: Ukraine Transfer Pricing Firm of the Year • Legal Awards 2014: Law Firm of the Year in Tax • Legal Awards 2013: Breakthrough Firm of the Year Yaroslav Romanchuk Attorney at Law, Managing partner of the International Legal Center EUCON, President of the Association of Ukrainian Business in Poland

Contacts: Warsaw, Poland 53 Emilii Plater, Warsaw 00-113, Poland Tel. +48 57 000 85 75 office@euconpl.eu www.eucon.ua 41

poland in ukraine

Polish community in Ukraine

Ancient Polish presence receives new lease of life as independent Ukraine rediscovers shared past tion. The collapse of the USSR finally allowed Polish locals to reemerge in public life.

A changing picture of Poles in Ukraine

About the author: Rafal Wolski is now Deputy Head of Mission at the Embassy of the Republic of Poland to Ukraine. He is a historian and previously served as Consul in Kyiv.

The Polish presence in Ukraine stretches back to the very earliest accounts of Polish statehood.

During the Kyiv Rus era, merchants from the Piast duchy settled in the ancient Ukrainian capital.

The gradual inclusion of Ukrainian lands into the Polish Kingdom and, later, the Polish-Lithuanian Commonwealth, led to a broad influx of Poles throughout Ukraine. This process was particularly intensive after the accessions of Kyiv and Braclav provinces to the Polish Crown following the Union of Lublin in 1569. As a result, many of the inhabitants of these eastern provinces adapted to the Polish way of life, adopting elements of culture, language, national dress and customs. This assimilation was a bilateral process. The Polish nobility often took on Cossack leadership roles leading to further changes on the religious and cultural levels.

Partition and persecution

The collapse of the Commonwealth and its subordination to Russia and the Habsburgs did not have a definitive influence on the Polish presence in the lands of today’s Ukraine, despite persecution and discrimination against Poles by the Tsarist regime and efforts to Russify the Ukrainian population. Until the 1830s, the legislative system used in RightBank Ukraine remained as it had been before the Partitions of Poland. Even at the turn of the twentieth century, Polish communities continued to play a leading role in the agriculture and food industries in the region. The Bolshevik Revolution brought a marked deterioration in the situation for Polish communities in Ukraine. Throughout the Soviet era, the Polish population in Ukraine faced persecu42

Today’s map of the Polish minority presence in Ukraine is ambiguous and constantly changing. According to the results of the last population census conducted in 2001, there should be approximately 144,000 Polish Ukrainians. This figure suggests a significant decrease in the size of the diaspora: the 1989 census identified 219,000 Poles. Furthermore, since the 2014 Revolution of Dignity, many ethnic Poles have moved to Poland for study or work. Nevertheless, the actual number of people in Ukraine who see themselves as part of the Polish diaspora could still number anywhere from several hundred thousand to over one million.

There is also no certainty over which Ukrainian regions are the most “Polish”. Data from the 2001 census found the biggest concentration of people of Polish origin in Zhytomyr region (49,000). Next came Khmelnytsky (29,000), followed by Lviv (18,000). This picture reflects the troubled twentieth century history of the Polish community in Ukraine. The overwhelming majority of Poles in Lviv, Ternopil, Volyn and Ivano-Frankivsk regions suffered forced resettlement after 1944. Those who lived in the pre-WWII Ukrainian Soviet Socialist Republic remained.

The Polish population in Sloboda Ukraine, southern Ukraine, the Donbas, and the industrial regions of the Dnipro basin dates back largely to influxes in the nineteenth and twentieth centuries. Some of these Poles are the descendants of political exiles forced to migrate by the Tsarist regime after the Polish uprisings of the nineteenth century, but there are also Poles who moved to these regions during the evacuations of WWI. Others arrived as part of Soviet resettlement policies, while some relocated for economic reasons.

Rebirth of Polish identity in Ukraine

The advent of Perestroika and the end of the Soviet era led to the rebirth of Polish identity in Ukrainian public life. Numerous Polish organizations emerged such as the Association of Polish Culture in the Lviv Region (1988). In Kyiv, the perestroikaera Polish Section of Culture and Education became the independent Polish Cultural and Educational Association in Ukraine (PSKO) in 1989. In 1991,

the Second Congress of Poles in Ukraine saw the organization transformed into the Union of Poles in Ukraine (ZPU), with a focus on the central and eastern regions of the country. Organizations formed in western Ukraine mostly joined the Federation of Polish Organizations in Ukraine (FOPnU) which was established in 1992 in Lviv. In subsequent years, both organizations expanded their influence across Ukraine, taking the form of umbrella associations. The end of the Soviet era also saw an increase in efforts to defend the rights of Polish minority interests, including the return of Roman Catholic churches. This process has been most visible in central and western Ukraine, despite opposition from nationalist groups.

Post-1991 Polish support

Poland was the first country to recognize Ukrainian independence in 1991. Ever since then, Poland has remained a staunch ally of independent Ukraine. This has included Polish support for the development of Ukrainian civil society and pro-democracy movements like the 2004 Orange Revolution. This backing intensified during the Revolution of Dignity, with large numbers of Ukrainian Poles taking part in protests. Countless volunteers from Poland, along with state structures, local administrations, and members of Polish civil society all provided help for Ukrainians during the toughest moments of Russian aggression in 2014. This support has helped build strong bonds between the two neighbouring nations while bolstering interest in Ukraine’s Polish community. It is no coincidence that Polish is the third most popular foreign language among Ukrainian students. Poland’s close ties with Ukraine have also helped awaken a sense of identity among many Ukrainians with mixed ancestry. This growing awareness is evident in the constantly increasing number of applications for Polish Cards.

The latest addition to the Ukrainian Polish population is the expat business community. Numbering in the thousands, these managers, professionals, entrepreneurs and academics have contributed to the restoration of Polish heritage in Ukraine and helped further raise awareness of Ukraine’s historic Polish connections. As if to demonstrate the growing recognition of Ukraine’s shared Polish heritage, a number of streets in Kyiv have recently been renamed in honour of famous Poles as part of ongoing decommunization efforts. www.bunews.com.ua

Photo 1

Photo 2

Photo 3

Global Brand Focusing on Social Responsibility Bella-Trade Ltd is a daughter company of Torunskie Zaklady Materialow Opatrunkowyсh (TZMO S.A.) - a leading European manufacturer and supplier of hygienic goods, cosmetics and medical devices to world markets.

TZMO SA is a company with entirely Polish capital. Over the past 20 years, it has expanded to become a global operation present in over 65 markets in Europe, Asia, Africa, America and Australia. TZMO Group brands BELLA, Bella Baby HAPPY, SENI, EVA NATURA, EVA SUN and MATOPAT are available in Ukraine and enjoy high annual sales growth. Bella-Trade was established in 2003 as a trading company and exclusive distributor of TZMO Group products. Bella-Trade is currently one of the biggest distributors of hygienic products in Ukraine, with a vast nationwide distributor chain in traditional and modern retail as well as in the pharmaceutical market. The company’s core values are innovation, social responsibility and professionalism.

In 2015, Bella-Trade won Ukraine’s ‘Choice of the Year’ International Festival in the hygienic products category.

Ukrainian customers and a jury of professional experts identified Bella Cotton Care products as the market leader (Photo 1).

Social responsibility is one of our key values. In cooperation with our partners, we organize a range of initiatives including the BELLA Cup Women’s Tennis Tournament, the SENI Cup International Football League for the Disabled, and much more. The company has also launched the ‘Together We Change the World’ charity foundation in Ukraine. The SENI Cup is a source of particular corporate pride, offering opportunities for sporting engagement to mentally disabled patients. Teams from across Ukraine take

part every year, with the winners going to Toruń to participate in the championship finals. This is a unique opportunity for participants to experience the thrill of team sports and live out their dreams while expanding their horizons (Photo 2). Bella-Trade plans to develop this competition in the coming years and welcomes interest from potential corporate partners.

Bella-Trade is also proud of the Ukrainian affiliate of the ‘Together We Change the World’ charity foundation, established in 2013. The foundation seeks to raise public awareness about disability while implementing programs addressing prevention and rehabilitation.

Together with Ukraine’s Ministry of Health, the foundation runs training programs for health personnel, social workers and volunteers in Odesa, Kharkiv, Chernihiv, Khmelnitskiy and Kyiv (Photo 3). Other foundation activities include participation in conferences together with the OKHMATDYT Association of Hospices and Palliative Care. In Korosten, the foundation has conducted educational lectures for employees of the central city hospital, hospice, and social protection center. The foundation has also participated in training courses for paramedics and doctors at Kyiv City Ambulance Station. This year the foundation aims to conduct training initiatives in 24 Ukrainian regions. By the end of 2016, nearly 1,200 people will have received training from foundation experts.

As a rapidly growing global company, we expect our social responsibility activities to continue expanding for the benefit of society. We are proud of our staff and partners in Ukraine. We would also like to thank our customers for the trust they have shown us for so many years.

poland in ukraine

Ukrainian students flock to Polish universities More than half of the international undergraduate community in Poland hails from Ukraine The number of foreign students enrolling at Polish universities continues to grow year-on-year and currently includes representatives of 157 countries. The largest single group comes from Ukraine and totals 30,589, representing 54% of the total number of foreign students currently studying in the country. This unprecedented growth in the Ukrainian undergraduate community is the product of the current domestic instability caused by Russia’s hybrid war in Crimea and eastern Ukraine, but it also stands as testament to the growing reputation of Polish institutes of higher education.

Beautiful Krakow is one of the student capitals of Poland and home to thousands of Ukrainian undergraduates

Polish academic pedigree

Polish academic traditions date back to the 14th century, when the Jagiellonian University of Kracow was established in 1364. This academic pedigree has produced some of the world’ greatest minds. Poland’s Nicholas Copernicus, who was born in Toruń, is widely acknowledged as a symbol of the scientific revolution that changed international perceptions of the world we live in and its place in the wider universe.

Polish universities are a fully integrated part of the European education space while offering studies at relatively low costs, making them an attractive option for an increasing number of young people from around the globe. All the leading Polish universities currently offer programmes taught in English covering disciplines including medicine, engineering, humanities, business and finance. Foreign students can also study in Polish – there are many ways to learn the language including yearly preparatory courses offered all over Poland.

Ukrainian students dominate international community

Poland’s foreign student contingent has been steadily expanding for the past decade. In 2006, the total figure was just over 10,000. This has now climbed to over 57,000 – or more than 4% of all students studying at Polish universities. Over half of these foreign students are from Ukraine, making them by far the dominant community among Poland’s international undergraduates.

While Ukrainians account for 54% of all foreign students, the next national group are Belarusian students, who make up just 8% of the international total. These figures represent a major increase in the number of Ukrainian students in recent years. In 2012, the largest contingents of international students came from Tajikistan (18.9%), Thailand (13.6%) and Egypt (7.7%).

At the time, Ukrainians made up just 4.8 percent of the overall international student community. The academic focuses of foreign students in Poland are management (12.25%), medicine (11%), international relations (8.81%), tourism and recreation (7.15%) and economics (6.24%).

Educational EU integration

The Polish education system allows for both state and private institutions of higher education. To qualify for admission, any applicant must hold a maturity certificate. Each individual institution determines its own detailed rules of admission autonomously. According to the Higher Education Act of 2005, syllabuses in all fields of study except law, pharmacy, psychology, veterinary

medicine, medicine, and dentistry are taught on a two-cycle basis.

The third cycle, doctoral studies, is only open to those who hold the academic title of Master (magister) or an equivalent title or degree.

Doctoral studies last four years but may be shortened or extended depending on the subject matter.

Poland takes an active part in the Bologna Process, which aims to foster a broader European Area of Higher Education. Thanks to the ECTS (European Credit Transfer System), students with Polish higher education can enjoy full European mobility and continue their education in other countries.

The goal of the Bologna Process is to simplify procedures for comparing educational qualifications from different participating countries in order to allow students to receive credit across borders and benefit from greater flexibility. Polish institutions of higher education are also engaged in the international exchange of students. Programs like SOCRATES/Erasmus, bilateral agreements, and the individual activities of schools all contribute to the development of contacts between Polish and foreign higher education institutions.

Polish Ministry of National Education regulations determine which foreign academic qualifications Polish institutions of higher education are able to recognize. On the webpage of the Bureau for Academic Recognition and International Exchange (www.buwiwm. edu.pl) you can find the legal regulations concerning validation of diplomas received abroad, including a list of countries with which Poland has signed agreements for the mutual recognition of diplomas. If a given diploma is covered by such an agreement, it is automatically validated in accordance with the content of the agreement. If a given diploma/certificate is not covered by an interstate agreement, or was issued in a country with which Poland has not signed an agreement regarding the mutual recognition of educational levels, then it becomes the subject of the Decree regarding the nostrification of diplomas acquired abroad. Diplomas falling into this category need to be presented at the local Ministry of Education Office (Kuratorium).

With thanks to the CRASP (Conference of Rectors of Academic Schools in Poland) and Perspektywy Education Foundation.

About the author: Emilia Jasiuk is the Head of Section for Cooperation in Science and Education at the Polish Embassy in Ukraine

44

www.bunews.com.ua

with a Ukrainian Soul In 2007, Ukraine’s Idea Bank (then known as Plus Bank) became part of Poland’s Getin Holding SA - one of the largest financial groups in Central and Eastern Europe. This change in ownership meant more than a corporate rebranding – it brought together the European experience of the parent company with the Ukrainian team’s knowledge of the local market. As a result, Idea Bank has been able to maintain a leading position in the retail segment of the Ukrainian banking sector, earning a reputation for stability despite the challenges currently facing the Ukrainian economy. Member of the Board of Idea Bank Ukraine Sławomir Ślak assesses the bank’s current progress.

In recent months, Idea Bank has been repeatedly identified as one of the most stable financial institutions on the Ukrainian market. In a recent survey conducted by ‘Financial Club’, Idea Bank featured as one of the Top 50 Banks in Ukraine in 2016. In addition to this, the deposit and loan products of the bank are widely recognized as among the best on the market.

According to the ‘Minfin’ stability rating, Idea Bank currently ranks among the top twenty most stable banks in Ukraine. Expert analysis states that our position is improving on a quarterly basis. This expert recognition reflects an appreciation of our funding structure, payment reputation, and banking history on the Ukrainian market.

Financial overview Current financial figures underline the successful trends driving the institution’s activities in Ukraine. In the first quarter of 2016, Idea Bank posted a profit of UAH 3.955 million, while the bank’s net interest income shot up 32.5 times compared to the first quarter of 2015 to a total of UAH 98.708 million. Meanwhile, the bank’s equity in the January-March 2016 period increased by 2.6% to UAH 153.886 million. In the first half of the year, Idea Bank’s income registered record growth, increasing by a factor of more than eight.

These results clearly demonstrate the stability and reliability of the bank – a status also confirmed by the bank’s long-term uaA credit rating. This performance is the result of a properly structured market strategy and the strong support provided to the bank by the parent group.

How does the parent structure support the Ukrainian bank?

The Getin Holding financial group has worked for the past eight years on the Ukrainian market and fully supports its Idea Bank subsidiary. In

practical terms, this means the transfer of technology and the introduction of new banking sector innovations, management consulting and training, and of course, financial resources. The Polish shareholders of Getin Holding regard the activity of their group on the Ukrainian market as strategically important and invest resources to strengthen the bank’s market position while developing new and promising business directions.

Last year, the bank had received capitalization amounting to UAH 100 million from the parent company, which made it possible to increase the bank’s authorized capital by almost 40%. This year shareholders also announced their intention to carry out an increase of Idea Bank authorized capital by placing an additional issue of shares with a value of more than UAH 50 million.

Today Idea Bank is one of the largest Polish investments in the Ukrainian economy. Poland’s investment in the bank’s equity is 99.5%. Our Polish investor sees considerable potential for the further development of both the Ukrainian financial services market in general, and our bank in particular. This capital increase will help to strengthen the sense of trust clients have in the bank. This paves the way for exciting possibilities.

The challenging current situation in the Ukrainian banking sector has created significant opportunities to occupy vacant niches in the market for banking services, while also improving existing positions.

Looking ahead: Idea Bank development strategy We have already launched a microcredit program for representatives of the business community, in which individual entrepreneurs can get loans of up to UAH 200,000 for terms of up to three years. This program is for individuals who already receive income from their business activity. As a rule, this tailored program is primarily for family businesses with up to 20 employees. At the same time, we do not intend to stop at this segment. We are developing loan products for legal entities in the medium-sized business segment with annual revenues of up to UAH 300 million.

The guiding principle of our work is to offer clients simple and clear products along with attractive financial conditions. When combined with the highest European standards and service experience, this produces the kind of results that help guarantee the continued growth of the bank’s client base.

promotion

A European Bank

Polish tourism in fashion A series of new direct flight services has brought the treasures of Poland closer for Ukrainian tourists The Polish tourist industry is experiencing a period of rapid growth as the country steadily enters the European tourism mainstream.

With five new flights linking Ukraine and Poland launched since March 2016, the numbers of Ukrainian visitors is also on the rise.

Record-breaking 2016 summer season The summer 2016 tourism high season in Poland broke all existing records. New highs were set for the number of nights in hotels and services such as spa treatments, with much of the business coming from domestic customers. Experts put this strong performance down to three factors: the immigrant crisis elsewhere in the EU, the high exchange rate of the euro currency, and the increasing popularity of ‘Brand Poland’.

According to online service tripsta.pl, during this year’s holiday season most Poles opted to stay away from many traditionally popular

46

international resorts and destinations. The top ten most popular places chosen by Polish tourists this season were Warsaw, Gdansk, Kyiv, Athens, Prague, Berlin, Zurich, Lisbon, Munich and Amsterdam.

It is striking that two Polish cities topped the ranking.

The summer season on the Baltic was also good, with experts predicting the positive trend in this region is set to continue. Interest in holidays on the Polish coast during summer 2016 exceeded all expectations. Owners of hotels and apartments are contentedly rubbing their hands because the bookings statistics are indeed impressive. “I compared the demand for hotels in Gdansk over one July weekend with that for hotels in Barcelona, Rome and Paris. Gdansk hotels were the most popular with more than 90% occupancy. It was the same situation in Sopot,” says Gdansk High School teacher Dominika Czechowska.

There were similar patterns of growing demand elsewhere. “Tradi-

www.bunews.com.ua

tionally, the tourist season in Mazur is over in the second half of August. This year in late August we had people telephoning and asking to reserve a room, but there was nothing to offer them because all the hotels were full, and all the boats and yachts were reserved,” says Zbigniew Jatkowski from the online portal mazury.info.pl. He adds that even in the autumn months, tourists from all over the country have continued to reserve rooms to stay near the lakes, especially at weekends.

Tourism as economic engine According to Poland’s Institute of Tourism and the country’s School of Tourism and Recreation, Poland annually attracts over 17 million tourists. The tourist industry currently generates more than 5% of Poland’s GDP - almost twice as much as agriculture. In recent years, the number of foreigners visiting Poland has steadily increased an-

October 2016

poland in ukraine

The Masurian Lakeland contains more than 2000 lakes (Photo: Foto Polska)

nually by 5-6%. Understandably, the record year was 2012, when the Euro 2012 football championship resulted in incredible growth.

Analysts claim the broader geopolitical situation in the region is working in Poland’s favour. International tourists are currently looking for safe destinations, while many of the more traditional tourism destinations around the Mediterranean have become associated with terror threats. “What attracts foreign travelers in Poland? Security is a major factor. One of the reasons behind the success of this year’s tourist season is the unstable international situation. When selecting a place to rest, most tourists choose security,” says Julia Lachowicz from National Geographic Polska. “Earlier, tourists from Europe did not have to worry about such things while having a traditional rest in Paris or Tunisia. They did not think about the dangers of terrorist attack or military conflict. Now they need to think carefully where to travel.” :

47

poland in ukraine

Zamosc Fortress is one of the largest in the former Polish-Lithuanian Commonwealth (Photo: W. Baranowski)

: Another secret behind Poland’s recent tourism success is the desire of

tourists to discover something new. Poland remains less well known than many classical tourist destinations and has yet it has its own coastline and mountain ranges. It can offer traditional summer and winter vacation options that combine excellent service with reasonable prices. As well as attractive geography, Poland also has specific attractions like modern spa hotels and amusement parks. Tourists love to feel enriched by heritage, and Poland can boast a wealth of UNESCO sites as well as a range of big cities brimming with history. Based on analysis of visitor numbers and tourist feedback, the Polish Tourist Organization compiled its own list of the country’s top tourist attractions. The five tourist favorites were the reenactment of the Battle of Grunwald, Tokarnia Ethno Park, Rogów-Rawa-Biała narrow gauge railroad, Białowieża Forest National Park, and the Museum of Folk Architecture at Sanok. According to a global survey into Poland’s top tourist attractions conducted by Trip Advisor online service, the top ten includes the Old Town of Krakow, the Oscar Schindler Factory Museum (Krakow), Wieliczka Salt Mine, St. Mary’s Basilica in Krakow, Wawel Cathedral, Wawel Royal Castle in Krakow, Krakow Cloth Hall, the Archcathedral in Gdansk, and the Warsaw Old Town.

Meanwhile, National Geographic Polska recently published the results of a poll to discover the Seven New Wonders of Poland. The vote ran for several months and came accompanied by an active online campaign promoting a range of attractions and destinations. The final list included the Planetarium in Lodz, the Hydropolis in Wroclaw, the Wooden Churches of Koziol Region (Lubusz Voivodeship), the Jordanki Cultural and Congress Centre in Torun, the “History of Śródka” mural in Poznan, Muskau Landscape Park, and the Geotourist Trailway. It is worth noting that there is very little crossover in these three cited surveys – a remarkable result that serves to highlight the breadth of Poland’s tourism appeal.

Another area where Poles have been making

significant improvements in recent years is service standards. Whereas the previous emphasis was often placed on facilities and product quality, there has been a marked shift in attention towards service standards. In today’s Polish tourist industry, competent professional service staff have become the rule rather than the exception. It has also become much easier to get to Poland. Almost every month new routes connecting Polish cities to new destinations appear. Five new services connecting Poland and Ukraine have launched since March 2016 alone. This trend towards better connectivity has helped fuel the growth of the tourism sector. The opening of the A4 motorway, which connects the eastern and western borders of Poland, also helped make the country’s internal travel infrastructure far more userfriendly.

Window of opportunity

For the past few years, Poland has regularly ranked in the top 30 global travel brands in some categories, climbing by as much as 20 positions.

Many industry experts believe Poland has reached a market peak that will last for at least the next five to seven years. Whether this period then gives way to stagnation depends on the ability of domestic tourism industry professionals to seize the opportunities presented by the country’s current popularity and take the sector to the next level. Areas that may offer the best returns on investment include health tourism and beauty services.

Another area where Poland has already achieved significant success is the concept known as information anchors, meaning eye-catching international events capable of drawing in large numbers of visitors. This year, events like World Youth Day in Krakow proved popular, while Wroclaw enjoyed the limelight as the designated European Cultural Capital. The spotlight these kinds of headline-grabbing events attract seems to have encouraged Lonely Planet to rank Poland as one of the most appealing countries in the world for travelers. The task for Poland’s tourism industry is to capitalize on the current advantageous market conditions and positive image in order to consolidate the gains of the past decade. Poland is currently in fashion, but it is crucial that it remains in style for the long-term.

About the author: Julia Kosynska is a journalist at the Polish Tourist Organisation

48

www.bunews.com.ua

Tomasik Jaworski, a Warsaw-based law firm specialized in healthcare, is leading a consortium of experts involved in a major consultancy project financed by the European Bank of Reconstruction and Development.

The project started in May 2016. Its aim is to assist the Ministry of Health of Ukraine to review and help improve pharmaceutical registration procedures. The ultimate goal is to bring the process into compliance with EU standards.

“Our job is not only about reviewing the law. We are talking to all players – state officials, local industry and foreign companies, to find out how things really stand,” says Tomasz Jaworski.

“We can already see that many problems are similar to what we had in Poland before EU accession in 2004,” adds Marcin Tomasik.

The project team includes Prof. Leszek Borkowski, former head of the Polish drug registration agency, local lawyers led by top pharma lawyer in Ukraine Borys Danevych, as well as several regulatory experts from Poland, Ukraine and Latvia.

Experts in action (left to right: Tomasz Jaworski, Leszek Borkowski, Agnieszka Buksowicz, Marcin Tomasik)

Contact details: Tomasz Jaworski tomasz.jaworski@tjsp.pl +48 22 625 10 81

LOT Polish Airlines: Connecting Ukraine to the world via Warsaw Ukraine plays an extremely important role in the future plans of LOT Polish Airlines. Season by season we have been pleased to observe increasing presence of passengers from Ukraine on board our planes and welcome their positive assessment of the high standards and quality of Poland’s most internationally recognized brand.

The current network of connections via Warsaw makes Poland a convenient gateway to destinations in North America and across Western and Central Europe for Ukrainian passengers. The modern hub in Warsaw offers short transfer times and allows passengers from Ukraine to reach destinations including New York City, Copenhagen, London, Brussels, Amsterdam, Paris, and Krakow.

Our range of Ukraine flight services is also expanding. In March, we launched a new direct service between Kharkiv and Warsaw, with flights five times per week. The number of flights from Kyiv and Lviv has also risen.

LOT aims to become the leading airline for the entire Eastern and Central Europe region by 2020, with an annual target of 10 million passengers. Within the next few years, the airline plans to double its fleet to approximately 70 aircraft. Acquisitions will include new narrow body Boeing 737 planes and 16 state-of-the-art Boeing 787 Dreamliners. This is good news for passengers travelling from Ukraine, who will benefit from more flights and greater convenience.

Recently announced new long-haul flights to North America will support increasing transatlantic Ukrainian tourism and business traffic.

The Warsaw-Newark route will launch on 28 April 2017, while the first direct flights from Warsaw to Los Angeles in California are set to begin on 4 April.

During the coming winter season, LOT plans to increase flights to existing North American destinations. LOT Dreamliners will fly daily to Chicago and New York City, while the frequency of services to Toronto will rise. The continued growth of LOT Polish Airlines anticipates expanding business, trade, and tourism ties between the Central and Eastern Europe region, Western Europe, and North America. Ukraine has an important part to the play in this process.

promotion

Polish pharma lawyers advise on reforms in Ukraine

A ship in port is safe, but that is not what ships are built for – Working on developing Ukraine’s sea transport Andy Hunder, President of the American Chamber of Commerce in Ukraine

Position of the American Chamber of Commerce A specialized Sea Ports Development Working Group, which operates within the American Chamber of Commerce in Ukraine for more than 5 years already, is actively researching the needs and expectations of the investment community dealing or interested to deal with the national maritime industry.

The first issue in question is the calculation of Port Tariffs and Fees. Chamber Members believe that the methodology proposed by Ukraine’s Ministry of Infrastructure requires improvement. One of the key suggestions of the business community is to avoid investment component in methodology of calculating port fees, as it can lead to rates’ increase and negatively affect the overall competitiveness of Ukraine’s sea ports.

“The importance of shipping in supporting and sustaining today’s global society makes it indispensable,” commented Ban Ki-moon, UN SecretaryGeneral, in his message for World Maritime Day on September 29th. The role of sea transport for economic development can hardly be overestimated - 90% of the world’s trade is carried by sea and it is the most cost-effective way to transfer goods and commodities around the globe.

Shipping has been at the forefront of international trade for over 5 000 years – no other industry has ever played such a fundamental part in economic voyages. Over the past fifty years shipping has become progressively safer, more efficient and environmentally-friendly. Sea transport is the ideal way to move large volumes of cargo. In comparison with air or road transportation, vessels are capable of carrying huge amounts of goods or commodities and are suitable for transporting gas, liquids as well as various types of hazardous freight.

Sea Transport in Ukraine Ukraine has access to the Black and Azov Seas, with a network of 13 seaports – it should use this competitive edge to its advantage.

According to the State Statistics Service, in 2015 the sea ports and berths processed 132 million tons of cargo, a 2.6% increase compared to 2014. To make sure Ukraine fully utilizes its vast potential in maritime transport, a number of steps need to be taken. The Strategy for Ukrainian Sea Ports Development recognizes the critical role of private investors, including the provision of cargo handling services.

Traditionally, seaports and infrastructure facilities have always been state-owned, but now government authorities recognize that given budgetary constraints in the public sector, large scale participation of private businesses is necessary to renovate and boost existing infrastructure capacity.

October 2016

Another important matter is the reorganization of sea ports administration. In 2016 the Ministry of Infrastructure initiated the establishment of the State Maritime Administration. The main objective of this new government institution will be the supervision of maritime security. Largely, experts of Chamber Member Companies support the abovementioned initiative. However, representatives of the business community also have five tangible proposals on how to improve it. Suggestions revolve around the following key ideas: 1) the State Maritime Administration should be able to constantly monitor changes introduced to the main conventions and make sure that Ukrainian laws are harmonized with international legislation regulating maritime affairs; 2) the newly established body should not be allowed to conduct investigations of accidents; 3) functions of maritime pilots’ training and certification should be delegated to the State Maritime Administration; 4) this institution should supervise maritime security but not be tactically engaged in its execution; and 5) functions of the State Maritime Administration should not overlap with roles performed by other state bodies, such as Ministry of Infrastructure of Ukraine, State Ecological Inspection and State Service for Transport Safety.

The Global Competitiveness Report 2016-2017, issued by the World Economic Forum, ranks the quality of Ukrainian port infrastructure 96th out of 138. This basically means that Ukraine, the biggest European country with access to two seas, is below average in terms of its sea transport development. This is a challenge that needs to be addressed by joint efforts of national government, civil society and business associations quickly and decisively. The American Chamber of Commerce in Ukraine is determined to make its tangible contribution to further advancement of the sector by acting as a platform for frank and open dialogue between state officials and business leaders.

49

reforms

Business-friendly Ukrainian competition law reforms Greater clarity and accessibility among key benefits of ongoing Anti-Monopoly Committee reform process

About the author: Alexey Pustovit is a partner at Asters Law Firm and a speaker at the ЕВААsters 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. The eighth season of the school started on 27 September 2016.

Over the past 15 months, Ukrainian competition law has appreciably improved and there are further progressive changes in the pipeline.

These reforms are good news for the Ukrainian business community, and could also make life easier for large international companies. Key benefits include simplification of competition legislation and greater accessibility to the state regulatory authority.

Business breakthrough

The first and the most important step was the change of the entire composition of the Anti-Monopoly Committee (AMC) Board in summer 2015. Although some of the newly appointed people have little experience in the public sector or with antitrust law, they have managed to increase efficiency and made the authority much more business-friendly. It is not a challenge anymore to arrange a meeting with the authority, even at a short notice if the issue is urgent or important. Furthermore, discussions with case-teams are now 58

more open and straightforward.

Another major achievement has been merger control reform. Merger control allows the AMC to monitor, authorize, block and request remedies in transactions like mergers, acquisitions and the like taking place in or outside Ukraine, which satisfy certain financial thresholds. In terms of legislation, merger control procedures have been simplified significantly. Parliament has increased the applicable merger control thresholds (effective from 18 May 2016). Before this reform, Ukrainian law covered many deals beyond Ukraine, with merger clearance required if either party had a turnover or asses in Ukraine of more than EUR 1 million. The reform has remodeled notifiability thresholds by introducing two alternative tests to monitor acquisitions by large companies of businesses that are present in Ukraine, and to monitor transactions between companies where each has a significant presence in Ukraine.

In August 2016, the AMC revised its procedural rules for merger filings. Companies with experience of merger notifications in Ukraine will appreciate the significantly reduced disclosure requirements: detailed information regarding affiliates and activities on non-relevant markets is no longer required. This removes a significant burden.

One year ago, in response to criticism over a lack of clarity regarding violations of antitrust law, the AMC issued recommendatory Guidelines for Fines. This document is very important for business and lawyers as a tool helping to evaluate potential sanctions. Although a significant level of discretion remains in terms of the AMC’s powers to increase or decrease fines based on aggravating or attenuating circumstances, the overall policy has become much clearer and more predictable. Another benefit of the Guidelines is that the document aims to remove, or at least minimize, arbitrary application of the rules – a problem that businesses have often encountered in the past. As the penalty system is further reformed, we can expected updated guidelines in the near future.

Increased openness

Another great improvement is evident in the regular interaction of the AMC with the public. Over the past year-and-a-half, the AMC has developed the tradition of publicly discussing

problematic issues and inviting third parties to share their views in specific cases. Thanks to this newfound openness, various business associations, NGOs and companies now have the possibility to influence the AMC’s enforcement practices.

Finally, it is also worth noting a drop in abuse of powers. In terms of investigatory and enforcement practice, the AMC is vested with very broad powers to inspect businesses and perform market research. According to market feedback regarding AMC investigations, these powers are no longer being used in an abusive way, for instance as an instrument to put pressure on businesses.

Problems remain

While there are clear improvements in the work of the AMC, old problems remain and new issues have arisen. The AMC had shed staff in line with state policy to cut expenses.

Remaining employees receive very low salaries. This is an obstacle to hiring new people and motivating existing team members. The level of expertise at junior and middle management is also often insufficient for the smooth operation of the authority. It will take time to resolve these issues. One year is insufficient to demonstrate concrete results in the fight against cartels and abusive monopolies.

Nevertheless, at this stage the AMC’s achievements in these spheres do not impress, save for bid-rigging cases in public tenders. On the other hand, cartel practices are notoriously difficult to prove. Complex cases overseen by European competition authorities often last more than 2 years, so it is still too early to judge Ukraine’s investigative efforts.

Apart from the AMC, the Ukrainian parliament - and a few MPs in particular - pay genuine attention to the development of antitrust policies and regulations. A major achievement was the passing an act in March 2016 aimed at increasing AMC enforcement transparency. Until 2016, most important AMC decisions were not available to be public, or published versions failed to include clarifications of the AMC position. Decisions are now published in full (save for strictly confidential information) and include detailed explanations of the factors that the authority have taken into account, thereby explaining how the law works and is being interpreted. www.bunews.com.ua

legal

Be prepared for an HR audit or risk a fine

Employers in Ukraine must familiarize themselves with new penalty policy for labour law irregularities Current practice shows that since the beginning of 2016, the Ukrainian state fiscal authorities have been paying particular attention to local company compliance with the requirements of Ukraine’s labour legislation. This focus applies to the widest possible spectrum of employment issues. It would therefore be wise for anyone with Ukrainian employees to check whether they are in breach of any regulations or run the risk of incurring a fine.

A survey of recent court proceedings demonstrates that in terms of fiscal proceedings, disputes between companies and the state authorities involving compliance with labour laws are both prominent and frequent. It is not a secret that until relatively recently most companies regarded the potential risk of running into difficulties over labour legislation as more theoretical than practical. This somewhat relaxed approach was due to the absence of a legislative framework clearly defining procedures and rules regarding the application of appropriate sanctions.

In broad terms, the general mandate for financial sanctions against employers for violations of labour legislation is contained in the Law of Ukraine “On Employment of Citizens”, and within the “Labour Code of Ukraine”. Nevertheless, until February 2016, there were no concrete procedures on how to apply these fines. Early this year, the ambiguity surrounding this issue was finally resolved. As result, from 10 February 2016, Ukraine has had comprehensive regulations for financial sanctions against employers for violations of the country’s labour legislation.

two steps: conclusion of an employment agreement and communication of the relevant information to the local tax authorities. Failure to inform the tax authorities would render employment in breach of labour legislation. This would lead to both financial fines and the relevant administrative penalties.

This dual approach has been criticized in some quarters as illogical. How can a failure to perform one process lead to the conclusion that both processes are in breach legislation? Fortunately, the Vinnitsia regional labour authorities and numerous individual court decisions have recently confirmed the illegal nature of the ‘dual’ approach.

Local fiscal authorities actually have wide grounds for the imposition of fines and penalties for the violation of Ukrainian labour law, even if the issues surrounding the application of dual regulations are not taken into

Companies in breach of Ukrainian labour legislation now face concrete financial penalties. The fines in question amount to anywhere between one and thirty minimum monthly salaries, depending on the nature of the violations.

One minimum monthly salary is currently UAH 1,450. From December 2016, this figure will rise to UAH 1,550.

Who is most likely to find themselves hit with financial sanctions, and what kind of offenses incur the most severe penalties? Current practice shows that maximum fines are imposed against employers who engage staff without the relevant employment agreement, use part-time employment loopholes, or are guilty of nonpayment of payroll-related taxes. Comparatively weighty fines of ten times the minimum monthly salary (UAH 14,500 or EUR 520) may apply for a failure to provide employees with the necessary legal guarantees and privileges, or noncompliance with minimum state guarantees on labour payments.

It is important for employers to note that these fines apply individually for each separate violation, and that the application of fines does not exempt the company from further administrative penalties that can be up to 1,000 nontaxable minimum incomes. With enforcement now possible and fine mechanisms in place, this makes compliance with employment legislation a strategically crucial issue for all companies operating on the Ukrainian market.

In the current climate, it would probably be wise and reasonable for every company and representative office in Ukraine to check their internal employment-related policies, instructions, procedures, and approaches regarding compliance with Ukrainian labour legislation. In addition, it may also be sensible to discuss existing procedures with employees prior to any visit from the state authorities, in order to consider how to address any inaccuracies or misunderstandings that you may have identified. Recent experience suggests that state authorities are mostly reliant on the available documentation and information received from employees when conducting their labour audit. It is certainly better to be properly prepared for a labour audit than to find yourself having to appeal against fines and administrative penalties afterwards.

How big a risk?

Dual dangers

One of the claims that has been widely used by the fiscal authorities relates to breaches of the so-called ‘dual’ requirements regarding employment. The Law presumes that no employee can be legally hired without the relevant employment agreement and the proper preliminary notification of the tax authorities. Given this ‘dual’ requirement, the state fiscal authorities have insisted that terms of employment are only in line with the law if they include 60

consideration. Fines and penalties for “noncompliance with minimum state guarantees regarding labour payments” provide particularly broad scope for interpretation. Minimum state guarantees include a rather widest spectrum of obligations including the payment of wages two times per month totaling an amount at least equal to the minimum rate for the period worked.

Other minimum guarantees include salary indexation in line with legislation, proper payment for work during holidays, non-working days and weekends, annual leave, and benefits for pregnant women and women with children under three years of age. These terms mean that many companies could find themselves in breach of wide-ranging legal responsibilities to employees.

Better safe than sorry

About the authors: Sven Henniger (s.henniger@hwc.com.ua) is Partner at Henniger Winkelmann Consulting in Kyiv. His areas of activity include outsourcing services as accounting, outsourcing and reporting, payroll & HR services, tax compliance & tax advisory, as well as market entry support and recruitment.

Dr. Thomas Winkelmann (t.winkelmann@ hwc.com.ua) is Partner at Henniger Winkelmann Consulting in Kyiv. His areas of activity include market analysis & research, business planning, strategy consulting, due diligence & transaction services, and restructuring.

www.bunews.com.ua

Know Your Risk #KnowYourRisk Because diabetes is a pandemic

Today, 415 million people worldwide have diabetes. By 2040, this number could increase to 642 million*.

The official statistics for 2015 give a figure of 1,223,607 people affected by diabetes in Ukraine** but according to some experts the real number may be 2 or even 3 times higher. The symptoms of diabetes type 2 are so slow to appear that they can go unnoticed. “193 million don’t know they have diabetes,” states the International Diabetes Federation.* Modern lifestyle choices such as poor diet and inactivity put you at a greater risk of diabetes type 2. When you #KnowYourRisk and get screened early, you can avoid serious and life-threatening complications such as blindness, heart disease and kidney failure.

The news is not all bad. In many cases, diabetes type 2 can be delayed and even prevented if you #KnowYourRisk (family history of diabetes, weight issues, unhealthy diet, physical inactivity and smoking) and:

• Eat healthily • Take regular exercise • Check blood glucose levels (at least once per year) Novo Nordisk is a global healthcare company with 90 years of innovation and leadership in diabetes care. Changing diabetes is our commitment to improving lives for people with diabetes.

Discover more about Novo Nordisk at www.novonordisk.ua and more about diabetes at www.diabet.org.ua

*International Diabetes Federation. IDF Atlas, 7th edn. Brussels, Belgium. International Diabetes Federation, 2015 **The key performance indicators endocrinology service of Ukraine, 2015.

UKR.DIA.24.10.2016

real estate

Tsarist real estate treasures and challenges What to know before buying and renovating an apartment in an historic Kyiv building Whether you’ve long been smitten by the romantic idea of buying and renovating an apartment in an historic building, or if you’re a steelyeyed value investor who anticipates an attractive return on such a purchase, buying into one of Kyiv’s Tsarist (pre-1917) buildings can present special challenges for your renovation project. This article provides advice on what you should know before buying and renovating an apartment in one of Kyiv’s older buildings, including how to choose an apartment, things to watch out for, how to estimate the scope of renovating a particular apartment, and specific factors that will affect your renovation budget.

Antique opportunities

When it comes to Tsarist buildings in Kyiv, you’ll find two types on offer - those that were partially reconstructed after WWII and those that were not. Apartments in non-reconstructed buildings will have old water and sewage lines, old heating systems, no ventilation, and floors with the original wooden floorboards. Apartments in partially reconstructed buildings will have concrete floors, partially updated heating, water and sewage systems, and no mechanical ventilation systems. Early in your property search, you should find out which type of Tsarist building you’re looking at. This way, you will have a better idea of the scope and cost of renovating your apartment.

If you are buying an apartment with old pipes, then your goal should be to go as deep and as far as possible in replacing the vertical “in” and “out” pipes for water, sewage and heating. You may also want to install a small water pump to improve the water pressure. Before proceeding with these upgrades, you will want to find out whether your neighbors have changed the pipes in their apartments. When replacing wooden floorboards with steel or concrete, this should be coordinated with your neighbors directly below your apartment. If you have a larger budget and are considering buying an apartment in one of Kyiv’s older buildings, then you could try to buy two apartments one above of the other in order to create a duplex and add modernized flooring complete with ventilation systems under one set of floors.

Modernizing heating and cooling systems in Kyiv’s older buildings can entail special challenges and restrictions that should be borne in mind. Your apartment will be connected to the city’s central heating system and you cannot install a meter to monitor your usage. This is because there isn’t a single entry point for the heating into your apartment. Instead, each of your radiators will be connected by a separate vertical pipe. You may want to consider augmenting the heating system to give you more climate control and lessen your dependence on Kyiv’s central heating system by adding insulation and installing electric heating.

Prior to installing an electric heating system, you will need to find out the load capacity of the elec-

tricity in your building, which could be a limitation if it is an older building that has not been renovated. Independent gas boilers can be another option for heating, but they aren’t as safe as electric heating and utilities pricing for gas is on the rise. If you have bought an apartment in an historic building, then you cannot install an air conditioning unit on the building’s façade. You will need to mount an A/C unit on a side of the building that does not face the street or on the roof of your building if you have access to it.

Top floor advantages

A top floor apartment in one of Kyiv’s older buildings is the most valuable for a few reasons. If you receive the consent of all your neighbors in the building (a process that is more art than science), you may “privatize” the attic space. This opens up several design possibilities such as adding a rooftop terrace, skylight windows to improve indoor lighting, or creating a mansard and/or split-level interior. Roof access would allow you to install an air conditioning unit and even the option of installing solar systems for heating and power. In planning such design projects, you should keep in mind that you are not allowed to radically reconstruct the roof in a way that alters the silhouette of the building. You should also make extra space in your renovation budget to modernize the roof itself to protect your investment.

While it may be a bit shocking to readers from Western Europe and North America, property owners in Kyiv generally have a free hand when renovating apartment interiors in Kyiv’s older buildings. Owners may not remove load-bearing walls, and they must preserve the color and the shape of the exterior of their windows. However, there are no requirements to retain interior design elements such as ornate plasterwork of apartments designated as “historical monument” buildings. Most rules on preservation of these buildings are limited to their exterior and common areas. Of course, many owners choose to buy into such buildings for their character and diversity, which includes a building’s location and facade as well as the original interior accents of their apartment, but they are not obligated to undertake an expensive restoration of these historic interiors.

While investor risks for buyers of individual apartments in Kyiv can sometimes be overblown, buyers should be cautious when they find apartments for sale in older buildings that seem too cheap to true.

There have been cases where owners of neglected buildings have used dubious means to get a building condemned, evict its residents, demolish the building, and replace it with a new, larger and less aesthetically pleasing building to take advantage of an older building’s prime downtown location. One good way for buyers to screen out risky buildings is to check that the local authorities are performing timely and adequate maintenance.

With special thanks to Kyiv architect Svetislav Grbich for his expert contribution to this article.

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

62

www.bunews.com.ua

CURRENT INVESTMENT OPPORTUNITIES Mineral water bottling plant

Sector: FMCG Region: Carpathian Mountains, Ukraine Stage: Operating company

Poultry farm

$1,500,000 (100% stake)

Description: Water has unique organoleptic properties Company produces own branded water, private-label bottled water, and sells water in bulk Production floor area amounts to 2,500 sq. m. set on 3 ha of land Transport fleet of 6 freight trucks Investment needed to update production line and expand sales to include EU markets

Sector: Poultry farming Region: Kiev Region, Ukraine Stage: Operating farm

Description: Land plot of 15ha 70 000 birds 5 poultry houses, new slaughter house, and fodder plant Existing contracts with major national retailers Full cycle of chicken meat production Established company logistics network across Ukraine

Charcoal production

Dairy plant

Sector: Woodworking Region: Western Ukraine $1,600,000 Stage: Launch of business operations with Dutch equipment producer (50% stake in JV)

Sector: Dairy farming Region: Western Ukraine Stage: Operating enterprise

Description: Dutch company contributing to the charter capital of the enterprise with Know-How and equipment Local woodworking enterprise is ready to supply raw materials Purchase contracts for entire annual production volumes are ready to be signed on behalf of the joint venture Ready to start working at full capacity within 4 months following investment

$3,000,000 (100% stake)

$2,000,000 (100% stake)

Description: Processing capacity of 150 tons of milk per day + staging area for receiving raw materials matching projected output volumes Products: milk, sour cream, kefir, fermented baked milk, yogurt, cottage cheese, butter, spreads, butter chocolate, hard cheeses, rennet cheeses (cheddar, suluguni, Xhosa, Cecilia, mozzarella), processed/smoked cheese, technical casein, and albumin cheese Buildings and production facilities of 3,750 sq.m. set on 2.26 ha of land. Additional assets include trucks, milk coolers, and private milk stores

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

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

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

Ukrainian retail real estate market goes local 2016 will go down as a year of grand openings and new names as Ukrainian brands step up mall presence The year is ending in Ukraine amid a sense of guarded optimism. While the economic outlook remains far from rosy, the current situation represents a miraculous recovery compared to the existential issues Ukraine faced during the dark days of early 2014, when the Russian hybrid attack threatened to crash the economy completely and partition the entire country. With the currency relatively stable and modest GDP growth confirmed, there is a sense that the worst is over and the time is now right for fresh forward planning. This renewed focus on future growth is evident across the Ukrainian retail real estate sector, where the stabilization of 2015 has gained further ground over the past 12 months despite the continued absence of many global retail brands. Much of this growth has come from local companies that have seized the opportunities presented by international exits in order to expand their presence at every level of the industry from construction to retail sales.

Growing Ukrainian presence

One symbol of the retail real estate’s revival is the reactivation of numerous construction projects placed in hold during the Euromaidan anti-government protest movement in 2013-14. At the time of the protests, many international developers decided to pause construction work or exit the market entirely. Almost half of the developers active at the time in the Ukrainian retail real estate market were from Russia. Understandably, there was significant hesitation among Russian investors to remain in the Ukrainian market in light of emerging geopolitical tensions. With the onset of the Russian hybrid attack in spring 2014, activity in the sector ground to a virtual halt.

There have been significant changes to the composition of the Ukrainian retail real estate segment since 2014. Today’s market is much more Ukrainian in character, with local development companies, local 64

management teams, and even local retailers increasingly dominating at every level. This local flavor has not dampened growth. In 2015, Ukraine welcomed six new shopping centers with a total volume of about 181,000 sqm. Notably, only 30,000 sqm of this new mall space was in Kyiv. The rest appeared in regional capitals Lviv, Chernihiv, Odesa, and Khmelnitskiy. The expected volume of new shopping space for 2016 is almost double the total for 2015. This year Ukraine will see more than 300,000 sqm of new retail real estate hit the market.

In summer, Kyiv welcomed the 22,000 sqm New Way shopping centre. Also in summer 2016, Dnipro saw the unveiling of the small but unique 3,5000 sqm Kubometer shopping centre, which is a hipster’s paradise made entirely from cargo containers.

Both these projects will be dwarfed by a series of anticipated autumnal arrivals on the Ukrainian retail market. Kyiv will soon see the opening of the vast Lavina Mall complex with 170,000 sqm of floor space, while Lviv will welcome Viktoria Gardens with 102,000 sqm of shopping space. These two openings will dramatically boost the annual figures for new retail real estate, but they will likely concede the headlines to TSUM, which is expected to open its doors to the public before the end of the year. TSUM is Ukraine’s most ionic department store and occupies one of the prime real estate locations in the country in the middle of central Kyiv’s Khreshchatyk Street. Renovation work on TSUM has continued for the past four years. The store was originally scheduled to reopen in time for Ukrainian Independence Day in August, but lastminute delays and recruitment issues have meant postponement until the autumn season.

Are there enough shoppers?

With new malls opening up on a regular basis, are there enough shoppers to meet the growing supply of retail space across Ukraine? Dewww.bunews.com.ua

‘Made in Ukraine’ becomes fashionable

Where are all these Ukrainian retail brands coming from? Many have grown over the past few years by capitalizing on the departure of international competitors, while others have emerged to meet growing demand for domestic produce. The expansion of Ukrainian brands in almost every single sector of the retail market has been one of the success stories of the past few years. In many cases, local producers have grouped together in order to share the costs of opening outlets.

This trend has been particularly pronounced in the Ukrainian fashion industry, with the latest addition to the growing ensemble of ‘Made in Ukraine’ designer retail options being the popular ‘Vsi. Svoi’ (‘All. Ours’) department store on Khreshchatyk Street. This three-floor megastore joins a host of similar – if smaller scale – fashion initiatives

bringing together large groups of Ukrainian fashion designers. Some individual designers have also branched out in recent years with their own chains - .a trend epitomized by the rise and rise of Kyiv designer Andre Tan. Arricano Real Estate CEO Mykhailo Merkulov believes the Ukrainian retail market is becoming more demanding than ever and says the increasing supply of malls means retail operators are now shopping around for the right option to help secure constant sales growth.

“They want to a sense of security that they are reaching their target audience. This requires a competent mix of tenants, properly conceived marketing programmes, mall brand loyalty, and active communication with visitors.”

NAI Ukraine Head Vitalii Boyko says all available market indicators point towards a continuation of the current positive trends over the coming year, particularly in Kyiv itself. “The Ukrainian capital continues to draw a lot of economically active people to it. We have now emerged from the peak period of the crisis, and incomes are rising. Perceptions have yet to catch up with this recovery, and many people continue to regard Ukraine as a dangerous market.

This makes it profitable to open a business in Kyiv. Shopping centre rents are currently half the rate they were two years ago, presenting retailers with opportunities to make significant returns on their investment.”

With special thanks to Ukrainian Real Estate Club (www.ureclub.com)

real estate

spite still low levels of Ukrainian consumer purchasing power, there is little sign that the retail market has reached supply saturation. Numerous Russian and international brands have exited Ukraine since 2014, but their places have rapidly been filled by local players. This has resulted in a low vacancy rate that JLL Ukraine assesses at just 4.6% as of Q3 2016. However, with the various new deliveries expected at the tail end of the calendar year, this figure may rise to as high as 11% in early 2017. Brokers have also identified rising rents in the retail sector, with increases of up to 8% taking sector maximums to USD 780 per sqm in Kyiv.

EASE YOUR MIND! AFFORDABLE HEALTH INSURANCE PLANS

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

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

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

www.amcenters.com

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

October 2016

65

real estate

Lviv leads Ukraine’s regional real estate recovery The capital of western Ukraine is thriving as the country continues along path towards EU integration Ukraine’s ongoing economic recovery is making itself felt in the real estate market throughout the country. However, the scale of this recovery differs significantly from region to region. Local factors ranging from the presence of reformist municipal authorities to the proximity of Russia’s hybrid war all play a role in determining the robustness of each regional real estate sector.

Beyond Kyiv itself, the real estate sectors in most Ukrainian cities continue to share a number of characteristics. Local developers and contractors tend to dominate, with one or two major companies generally accounting for around half of the local construction market. These entrenched positions are often due to close ties with the city authorities and long-established networks that in many cases date back to Soviet times.

Most of the current real estate activity in Ukraine’s regional capitals focuses on residential real estate, with a very limited number of retail and office development projects such as shopping centres in Dnipro, Lviv and Odesa. The regional balance is currently strongly in favour of western Ukraine, which is hardly surprising given continued Russian aggression in eastern Ukraine and the growing economic impetus on westward integration with the EU.

LVIV: Ukraine’s gateway to the EU

Lviv is Ukraine’s most quintessentially European city, both in terms of heritage and architecture.

It is also the city to have benefited most from the country’s EU pivot. Located just over 50 km from the European Union’s eastern border, Lviv has proved an appealing option for a growing number of international investors seeking to capitalize on Ukraine’s attractive combination of competitive costs and closeness to EU markets. These geopolitical benefits have added to the solid foundations laid by long-term city mayor Andriy Sadovyi, who is widely credited with creating an investmentfriendly environment while strategically targeting the IT industry and tourism sector as twin economic engines.

The Lviv real estate sector is currently by far the most robust of any regional Ukrainian market, with shopping centres, hotels, office complexes and other projects all reaching completion over the past 12 months alongside what is a booming residential market. Lviv currently has 214 residential projects on sale, both in the city and the surrounding suburbs. Many of these properties feature European66

style architecture and facilities, with prices that are close to those found in Kyiv. Clients for these properties range from locals seeking upgrades from Soviet-era accommodation to Ukrainian economic migrants earning money abroad with a view to purchasing a family home. There has also been a significant influx of Ukrainians from the Donbas conflict zone, although this market probably peaked in 2014 and early 2015.

Lviv’s tourism industry has become increasingly important for the regional economy, but while a steady flow of new cafes, bars, restaurants and souvenir stores has helped the city keep pace with the growing tourist trade, there is still a shortage of quality hotel and hostel options. This is likely to be one of the big growth areas in the coming five to ten years, with out-of-town leisure complex developments already proving popular options.

ODESA: Infrastructure obstacles

Odesa occupies second place among Ukrainian regional capitals in terms of residential real estate, with 116 new projects currently on the market. The Black Sea port city’s residential real estate sector is currently proving popular for speculative purchases, with clients looking to capitalize on the appetizing combination of a growing tourist trade alongside limited hotel capacity. Odesa has seen the number of tourists visiting the city rocket in recent years, thanks in large part to the Russian annexation of Crimea.

With the occupied Ukrainian peninsula effectively off-limits and the devaluation of the Ukrainian currency making trips abroad prohibitively expensive, many have opted for Odesa instead.

The city has thrived in the role of Ukraine’s summertime capital, but it still lacks the kind of inter-

national brand name hotels most people would associate with a major regional resort. This is partly down to infrastructure issues. The newly completed Odesa International Airport terminal building remains closed to the public and subject to endless delays, while the local roads are notorious bad, even by Ukrainian standards. If these issues are fixed, the real estate sector will experience a surge in investment.

KHARKIV: Underpriced investments?

The entire east of Ukraine has been hard-hit by the Russian hybrid war in the Donbas, with many regional development projects understandably put on hold in response to the conflict. Kharkiv has proved the most resilient market in the region. Located just a few dozen miles from the Russian border, Kharkiv was a key Kremlin objective in spring 2014, but a combination of local opposition and effective security counter-measures allowed the city to avoid the fate of Donetsk and Luhansk. Real estate activity in today’s Kharkiv is currently on a smaller scale than the development projects in Kyiv and western Ukraine, but there is nevertheless an active market that many analysts regard as significantly underpriced. There are currently 70 new residential real estate projects in the city, mostly falling within the economy segment. This is a particularly dynamic price range due to the arrival in Kharkiv region of hundreds of thousands of Ukrainians fleeing the fighting in the Donbas. If the military situation stabilizes in the Donbas, prices for Kharkiv real estate will likely increase accordingly.

With special thanks to Ukrainian Real Estate Club (www.ureclub.com) www.bunews.com.ua

Credit Agricole Bank Welcomes Top Clients at Annual Networking Event On 18 October, Credit Agricole Bank welcomed more than 170 clients to the InterContinental Hotel in historic downtown Kyiv for the bank’s traditional annual corporate

event: “Credit Agricole Group – economic outlook for Ukraine in 2016 – 2017”. This

year the event focused on the agro sector. Four speakers from Credit Agricole Group (France), Agritel company and Credit Agricole Bank (Ukraine) presented reports on agro issues in Ukraine, Europe and on global markets. “This annual event is a good opportunity to meet together in a more informal environment and share the expertise of Credit Agricole,” commented Jean-Paul Piotrowski, the CEO of Credit Agricole Bank.

68

www.bunews.com.ua

networking events

69

October 2016

networking events

German-Ukrainian Chamber of Industry and Commerce Opens in Kyiv In early October, Germany opened an official foreign economic cham-

ber representation – AHK - in Ukraine. To mark this historic event,

four German business associations and the Ukrainian Ministry for

Economic Development and Trade jointly organised the second Ukrainian-German Business Forum in Kyiv. With more than 400 par-

ticipants, this conference represented a major step forward in Ger-

man-Ukrainian business relations. In addition to five thematic panels

on Industry & Trade, Energy-Efficiency & Renewables, Transport & Infrastructure, IT & Digital Worlds, Food Processing & Agribusiness, three partner organisations from Kharkiv organised a b2b platform for direct cooperation talks between German and Ukrainian companies. All five event organisers expressed their gratitude to all event

sponsors, as well as to b2b platform partners “Fit for Partnership with Germany� alumni business association, Kharkiv German Center, and ILF Law Firm.

70

www.bunews.com.ua

Performance up. Consumption down.

The new MAN TGX. MAN kann.

We present you with our best tool against cost pressure on the road: the new MAN TGX. With drive tuned ideally for efficiency and performance, you can gain even more from every single drop of fuel: more distance, more torque and power, more reserves. Because we have invested no end of expertise in it and incorporated a whole range of improvements such as MAN EfficientCruiseÂŽ and MAN EfficientRoll, LED daytime driving lights, light and rain sensors and also a new infotainment system. Find out more about the best MAN TGX of all time at www.truck.man

MAN kann.

Kyiv Connoisseurs Celebrate Anniversary in Style The Ukrainian Connoisseurs Club (TUCC) began the autumn 2016 season with a well-attended

dinner at Kyiv’s fashionable CHI restaurant that marked both the 15th anniversary of the TUCC

and a quarter of a century of Pickard & Co. Ltd operations in Ukraine. Located within what was formerly fugitive Ukrainian President Viktor Yanukovych’s extravagant downtown heliport fa-

cility, the transformation of CHI into a stylish Asian fusion venue is a striking metaphor for post-

Euromaidan Kyiv’s democratic revival. Upon arrival, guests encountered rows of ancient Chinese terracotta soldiers lined up beneath the transparent floors of the entrance area. Master of

Ceremonies Terry Pickard welcomed guests with his now famous Connoisseur Club Bell, while venue General Manager Natalia Voloshina introduced the CHI chef and sommelier. A series of

delightful dishes and cleverly selected wines followed. Together with stunning views of the Dnipro River and entertaining company, this added up to another quality Kyiv dining experience.

72

www.bunews.com.ua

networking events

Kyiv Art Diplomacy Initiative Showcases United Colours of Ukraine Kyiv’s Triptych Global Arts Workshop welcomed an array of international

guests in late October for the opening of the ‘United’ art diplomacy project, featuring flags of the world reinvented in Ukraine’s yellow and blue national

colours. ‘United’ is the work of Luc Chenier, a Canada-born Kyiv expat with almost two decades of experience in the Ukrainian advertising, marketing,

and public relations industries. Chenier, who is currently CEO at the Kyiv Post,

says he was motivated by a desire to show how connected Ukraine was with

nations across the world. This was not Chenier’s first venture into the world of cultural diplomacy. As the founder of Titanium Presentations, he was be-

hind the much-publicized “Ukraine. Open for U” video, which has garnered several million online views since its summer 2015 launch and remains a feature of Ukraine’s international promotional efforts.

October 2016

73

Swiss Business Focus at Kyiv Networking Evening In October, Fryday Kyiv teamed up with the Embassy of Switzerland in Ukraine and a selection of leading Swiss companies. The result was an excellent evening of networking with a clear focus on develop-

ing Swiss-Ukrainian business relations. The evening was attended by a selection of top international

and Ukrainian business and diplomatic professionals who enjoyed an assortment of Swiss produce

and three exclusive speeches from top industry experts. The first speaker was Guillaume Scheurer, Switzerland’s Ambassador to Ukraine and Moldova, who spoke of ‘uniting Swiss and Ukrainian busi-

nesses’. Second to the stage was the Managing Director of Nestle Ukraine and Moldova, Ansgar Bor-

nemann who summarised his talk with the title ‘150 years of Nestle: success factors that apply to Ukraine’. The final speaker of the evening was Patricia Shmorhun-Hawrylyshyn, co-founder and part-

ner of the Porcelain Medical Group who told the audience of her journey as a Swiss entrepreneur in Ukraine. October’s Fryday W evening took place at Porcelain, a Swiss-Ukrainian medical group estab-

lished in Kyiv in 1995. Fryday W will return on 16 November with Christian Dons Christensen, Denmark’s Ambassador to Ukraine, Georgia and Armenia. For more information about upcoming events, please see ‘Fryday Kyiv’ on Facebook.

74

www.bunews.com.ua

networking events

75

October 2016

76

www.bunews.com.ua

Ukraine to succeed

geopolitics

Putin cannot allow

Russian political analyst Andriy Piontkovsky says Putinism will collapse if Kremlin retreats from Ukraine

Russia’s hybrid war in Ukraine is currently entering its third winter with no end in sight to a conflict that has already caused over 10,000 deaths and displaced millions. The war in Ukraine has escalated into the biggest international confrontation since the end of the Cold War, with the Western world imposing sanctions on Russia and Moscow responding by expanding its hybrid war tactics to North America and the heart of the EU. Tensions have mounted to such an extent that some commentators have felt justified in prophesizing the impending outbreak of World War III. Russian political commentator Andriy Piontkovsky says such interpretations are not entirely accurate. As far as he is concerned, the theorists in the Kremlin believe they are already engaged in fighting World War IV. Piontkovsky, who has a long record as a critic of the Putin regime, is currently living in exile in the US. He spoke to Business Ukraine magazine about the miscalculations behind Putin’s attack on Ukraine and explained why he believes reconciliation between the Ukrainian and Russian nations will have to wait until Putin is no longer in control of the Kremlin.

Russia appears to have abandoned its efforts to create ‘Novorossia’ in southeastern Ukraine and effectively partition the country. Do you think there is any danger of the Kremlin reviving these efforts?

Putin’s overriding objective is to prevent Ukraine from becoming a success story. He must stop the country from progressing along a European trajectory and developing a transparent political and economic system. I believe the Kremlin has finally concluded that there is no way to achieve the military conquest of Ukraine. This has meant abandoning the idea of creating ‘Novorossia’ by incorporating vast swathes of Ukraine including Kharkiv, Odesa, and Dnipropetrovsk Oblasts. They have reached this conclusion because earlier expectations that ethnic Russians in Ukraine would support the socalled ‘Russian World’ proved false. This represents a humiliating defeat for the Kremlin – I would even call it a metaphysical defeat – because the majority of ethnic Russians and Russian-speaking people stayed loyal to Ukraine and not Putin. Nevertheless, although the Kremlin has abandoned the idea of creating ‘Novorossia’, Putin will not stop trying to do as much harm as possible to Ukraine. He will continue to throw a spanner in the works at every opportunity.

The Kremlin’s new objective is to seduce President Poroshenko with promises to restore the territorial integrity of the country by taking the two separatist enclaves back into Ukraine. This would mean accepting all manner of Russian criminals and puppets into Ukrainian political life on the Kremlin’s terms. Putin hopes this maneuver will allow him to maintain control over the situation in the so-called DNR and LNR (unrecognized separatist republics in eastern Ukraine – Ed.) as well as the borders between Russian and Ukraine’s Donbas region. These regions would become a tool to block European-style reforms in Ukraine and undermine the country from within.

To achieve these goals, Putin has sought to use Western leaders. This ap-

October 2016

About the interviewee: Andrey Piontkovsky is a Russian political analyst and commentator proach has brought results. German Chancellor Angela Merkel, French President Francois Hollande and other key European players are all currently putting pressure on Ukraine. They are telling Kyiv to accelerate the implementation of the Minsk agreements and change the Ukrainian constitution to grant ‘special status’ to militant-controlled parts of east Ukraine. Maybe they expect to receive the Nobel Peace Prize. I don’t know what is motivating them, but the fact remains that these messages to Kyiv are all grist for Putin’s mill. Naturally, Ukraine can never accept these terms. This means the tug of war over the implementation of the Minsk agreements will continue for as long as Putin remains in power. He cannot simply step back and withdraw Russian troops from the Donbas, not mention the issue of returning Crimea.

Anything of that nature is politically impossible for Putin.

The Russian hybrid war in Ukraine has shattered the myth of ‘fraternal nations’ and left bilateral relations in ruins. However, history is full of examples when even the deadliest of international rivalries has eventually given way to reconciliation. How can reconciliation take place between Ukraine and Russia, and what kind of relationship do you see emerging in the decades to come?

I am afraid that the process of reconciliation between Ukraine and Russia will take a long time. If we look to European history for a guide, we know that the process of reconciliation between France and Germany took hundreds of years and involved a long series of wars. A more recent example would be the Serbs and the Croats, who continue to feel deep animosity towards each other. I still hold out hope that in the case of Russians and Ukrainians, there will not be too much hatred in the future relationship. However, nobody will : 77

: make pronouncements about brotherhood or fraternity anymore. Any talk

of reconciliation necessarily refers to the post-Putin era. While Putin remains in power, improvements in bilateral ties are impossible. Even if Putin leaves and Russia retreats from the Donbas, negotiations over the status of Crimea will likely last for decades. I can only assume that whoever comes to power in Russia after Putin, they will try to maintain control of Crimea for as long as possible. This will act as a long-term obstacle to any future thaw in bilateral relations.

You mention Germany and France. It is worth recalling that Germany was only able to establish friendly ties with France after suffering humiliating defeats in two world wars. This led to major democratic changes within Germany itself. Can you foresee similar processes taking place in Russia?

It is possible. In Russia, far-reaching changes only occur following a major defeat. This was the case after the Crimean War, the Russo-Japanese War, and the Cold War. Any retreat from Ukraine would symbolize Russia’s defeat in the current hybrid war that Putin’s theorists like to refer to as World War IV.

You were one of the few people to predict Russian aggression in Ukraine prior to the seizure of Crimea. Why do you think Putin was able to take the world by surprise so successfully?

That is quite easy to explain. As I have already said, Putin and his theorists see the current confrontation as World War IV. Why the fourth world war and not the third? They regard the Cold War as WWIII. There are clear parallels with post-Versailles Germany and Hitler’s attempts to take revenge for the German defeat in WWI. Putin’s so-called Crimea Speech to the Russian Duma in March 2014 was a more or less exact copy of Hitler’s Sudeten Speech. Putin’s adventurism is due to the same factors that made Hitler’s expansionist policies possible. After Hitler had signed the Munich Treaty with Britain and France in 1938, he said of Chamberlain and Daladier: “Our opponents are like little worms.” I am sure that following the 2008 Georgian War, when Western leaders tried to appease the Kremlin instead of taking a stand against military aggression, Putin and Medvedev referred to them in similar terms.

The lack of reaction from the West over Russian aggression against Georgia, not to mention the suppression of political freedom and all opposition within Russia itself, convinced Putin that he could act with complete impunity. This led him to make a mistake that is common to all dictators.

They allow themselves to believe they hold the advantage over the old democracies because it is easier for a dictator to brainwash and mobilize the population. This creates the illusion that they can continue to outperform and outmaneuver the West over a long-term period. Ultimately, such misadventures always end the same way. Putin will eventually meet the same fate as Hitler – although we can only pray that this does not involve the same number of casualties. There is hope that it will not reach that point, because Putin may well receive a blow to the temple from a golden snuffbox (reference to the assassination of Tsar Paul I – Ed.) before he manages to press the red button.

Contemporary Russia’s authoritarian model is often justified by claims that the country is un-

suited to European-style democracy. What would it mean for Russia if Ukraine manages to succeed in its bid to achieve democratic transition and European integration?

Putin started the current war specifically to prevent this from happening. Ukraine’s successful Euro-integration would mean the total collapse of Putinism. It would serve as an irresistible source of inspiration for the whole of Russian society. The kleptocrats would not be able to contain the momentum it would create. This is the real reason behind Putin’s policy in Ukraine: his main goal is not localized territorial acquisition but rather control over the whole of Ukraine, in order to prevent it from becoming an attractive example of reform for the Russian population.

How is the current conflict changing the way ordinary Russians perceive Ukraine?

Many ordinary Russians who watch State TV on a regular basis are zombified and brainwashed. They genuinely believe today’s Ukraine is occupied by fascists and cannibals. However, I do not think this way of thinking is inherent to the majority of the population. This represents another defeat for the system – this time inside Russia itself. Putin had expected the Russian population to serve as fuel for his ‘sacred’ war. He used the same excuses as Hitler did to start his wars – namely the protection of fellow nationals elsewhere, not only in Ukraine but also in Kazakhstan, the Baltic States, Belarus and beyond. It has not worked out exactly as planned. Despite the most unprecedented state propaganda campaign in history, the Russian people are not eager to fight and die for Putin, to put it mildly.

We should not allow ourselves to be fooled by Putin’s high approval ratings. Dictators like Gaddafi and Ceausescu enjoyed even higher official approval ratings, and we all know what eventually happened to them. Surveys of public opinion in any dictatorship are literally meaningless. There is no doubt that a large part of the Russian population approved of the annexation of Crimea. This approval was thanks to very high-quality media coverage and because the loss of Crimea had been regarded as a source of national trauma ever since the collapse of the Soviet Union. Even so, the next stage of the hybrid war in the Donbas led to casualties that most Russian people regarded as unacceptable despite all the propaganda and brainwashing.

This is evident from the fact that military casualties have now become the most classified data in modern Russia. They had to adopt a special law to classify this data as top secret because Russian public opinion does not accept the idea of war casualties, even in the name of an allegedly ‘sacred’ cause.

Herein lies the main difference between the Russians and the Serbs. The majority of the Serbian population was ready to wage war together with Slobodan Milosevic, but Russian society has proved far less willing to go to war than the Serbians. After the collapse of the Soviet Union, most Russians quietly accepted the new borders of the country. In contrast, when the old Yugoslavia began to disintegrate, the Serbs rushed into multiple bloody wars. Milosevic was by no means the only one driving this process. Putin’s great mistake was to try and act like Milosevic, despite the fact 25 years had passed since the fall of the Soviet Empire. To his great disappointment, he has discovered that there was simply not much support for such policies among the Russian population. This was bad news for Putin himself, but it may point to the basis for future reconciliation, which is likely to begin at the grassroots level between ordinary Russians and Ukrainians, rather than at the bilateral state level.

About the author: Fedor Klimenko is Editor of The Russian Monitor (rusmonitor.com) 78

www.bunews.com.ua

society

From Paralympic glory to everyday indifference Disability remains deeply stigmatized in Ukrainian society but success in Brazil could spark debate There was a cruel irony surrounding an October photo exhibition in the Ukrainian capital dedicated to the success of Ukraine’s athletes at the 2016 Rio Summer Paralympics. The exhibition venue was the Olympiyska metro station, one of Kyiv’s most inaccessible places for people with disabilities. In fairness, it would have been hard to find any venue that takes the needs of physically challenged Kyivites into consideration.

This photo exhibition was a fitting tribute to the Ukrainian team that claimed third place in Brazil. However, by aiming to spark a debate on disability, the exhibition also targets the low visibility of people with disabilities in Ukraine, a country where it took sporting glory for the issue to enter the national conversation. When it comes to general attitudes towards people with disabilities, Ukraine is still haunted by the Soviet past.

While post-Euromaidan Ukrainian society is increasingly giving voice to minority concerns, the interests of people with disabilities remain overlooked. In Kyiv itself, only 4% of infrastructure qualifies as “disability friendly”. A look around the streets of central Kyiv soon makes it abundantly clear how everyday life could be a struggle for anyone with a physical disability.

The footpaths and pavements are raised at least 15cm above the road surface and rarely have ramps. Many buildings are liftfree and accessible toilets are unusual. If you see a person with a visible disability, it usually means they are begging.

Countering Soviet stereotypes

People with physical disabilities in Ukraine continue to exist in a parallel reality. They are stigmatised through stereotypes as being inferior, deformed, and even contaminating.

These are attitudes that stem largely from Soviet-era policies towards people with disabilities, which fed rather than challenged negative

perceptions. People with visible disabilities were kept virtually as prisoners in their own homes, hidden from public view, therefore becoming seemingly invisible.

Under the Soviets, the invisibility of people with disabilities positioned them as a nonproblem for the regime.

Such stereotypes are difficult to break.

Nevertheless, this is exactly the goal of the exhibition organisers. The Sport for Peace NGO and the initiative’s financiers, crowdfunding platform The People’s Project, hope the success of Ukraine’s paralympians will act as a springboard for wider social awareness of people with disabilities.

The debate began in earnest even before the Paralympics were over when Ukraine briefly leapt ahead of the UK in the medal tally. Social activist Kateryna Avramchuk posted on Facebook: “Ukraine has already won 37 medals in the Paralympics, 12 of them are gold. We have more medals than wheelchair ramps in the average Ukrainian town.” Ukraine’s Deputy Prime Minister for European and Euro-Atlantic Integration Ivanna Klympush-Tsintsadze also weighed in on Facebook: “Let’s face it: it’s easier for Ukrainian paralympians to get a gold medal than to get to the store in Kyiv.”

People’s Project coordinator Maksim Ryabokon says the philosophy of the organisation is all about driving social change from the bottom up. “We hope that by catching the attention of ordinary commuters, society will become used to seeing people with disabilities in public transport. By making the link between Ukraine’s paralympians and people with disabilities in general, we hope to show

that disability is not a ‘tragedy’. In fact, these sporting glories demonstrate that people with physical disabilities can be productive and valuable members of society.”

No signs of improvement

Ukraine is committed to fully integrating people with disabilities into the community as required by article 19 of the UN Convention on the Rights of Persons with Disabilities, but the situation may actually be deteriorating. A three-year study released

by Disability Rights International (DRI) last year showed the numbers of children with disabilities in Ukraine condemned to life in orphanages and institutions was on the rise. DRI said its three-year investigation found Ukraine was expanding orphanages and children’s homes, going against the global trend toward helping people with disabilities to integrate into society.

The issue of rights for people with disabilities looks set to take on increasing urgency in Ukraine as Russia’s hybrid war has left thousands of people with physical disabilities including amputations.

Ukraine’s Paralympic champions often complain that they took up sport because it was the only opportunity for them to support themselves. The question remains whether the success of Ukraine’s paralympians will be enough to spark a rethink in the way society treats those with disability.

Will we have to wait four years for the next Paralympic Games before the issue of disability returns to the national agenda, or will there be a change in the way Ukrainian society relates to the disabled?

About the author: Jared Morgan is English content manager/editor at The People’s Project

80

www.bunews.com.ua

opinion

When did Ukraine’s revolution actually begin?

November in Ukraine will no doubt see a flurry of news reports and feature articles focusing on the third anniversary of the Euromaidan protest movement that led to Ukraine’s Revolution of Dignity.

But when did the revolution actually begin?

Conventional wisdom has usually traced the start of the revolution to a 21 November 2013 Facebook post by journalist Mustafa Nayyem, who called on Ukrainians to join him on Maidan Nezalezhnosti to protest President Yanukovych’s decision to reject a much-anticipated EU-Ukraine Association Agreement. Around a thousand people duly gathered that evening in downtown Kyiv. Few could have believed they were kick-starting a process that would lead within three months to the deaths of dozens of protesters, the fall of the government, and the outbreak of an undeclared war with Russia.

The sheer magnitude of subsequent events has lent considerable historic weight to the story of Nayyem’s Facebook post. It is undeniably a mediafriendly narrative tailor-made for the Digital Age, featuring an ethnic minority journalist using social media to fight back against an authoritarian regime. But was this really the starting point of Ukraine’s revolution? The crowds that gathered on Maidan on 21 November ebbed and flowed for the next week, peaking at tens of thousands over the weekend of 23-24 November. However, there was nothing particularly exceptional about protests of this size in a multi-million city like Kyiv. The situation changed dramatically in the early hours of 30 November, when for reasons best known to themselves, the authorities saw fit to send squads of Berkut riot police into central Kyiv to perform a brutal overnight cleanup of the few hundred protesters still loitering on Maidan. Most of the people trampled underfoot during repeated baton charges were young women and harmless students. The identities of the victims served to amplify the savagery of the act. When Ukraine woke up the next morning, footage of this attack sparked a wave of national revulsion. Personal freedoms had long been deteriorating under Yanukovych, but this

was a massive red line. The Ukrainian authorities had never before unleashed riot police against students. Such things happened in Russia and Belarus, but not in Ukraine. One popular online commentary summed up the public mood: “I went to bed in Kyiv and woke up in Moscow.”

The response was emphatic. On 1 December, more than half a million joined protests in downtown Kyiv. Some put the figure above one million. The key point is that this was the watershed moment.

While a relative handful of young idealists and activists had gathered to protest the rejection of the EU Association Agreement, this was now a national movement. At stake was not just the future political direction of the country, but the fundamental right of every Ukrainian to human dignity.

This distinction is crucial to understanding Ukraine’s revolution. If we view the protests ex-

clusively through the prism of the EU Association Agreement, Ukraine’s entire revolution takes on a predominantly geopolitical character. This is both misleading and unhelpful. It is misleading because it suggests the primary motivation for millions of protesting Ukrainians was an EU trade deal. It is unhelpful because it encourages outside observers to view Ukraine as a mere pawn in a far larger contest between Russia and the West.

While geopolitical factors played an important role in the evolution of the Euromaidan , the revolution was more about civilizational choices than international alliances. What had been a fairly forgettable series of political rallies only became a national uprising when riot police brutality made it an issue of fundamental human rights. Amid all the talk about spheres of influence and a new Cold War, it is crucial to recall where it all began – and why.

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

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

82

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

www.bunews.com.ua