Business Ukraine 9/2017

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BUSINESS UKRAINE 09/2017: Building bilateral bridges across the Black Sea is this month’s theme as we focus on Turkish-Ukrainian ties. The strategic relationship between Ukraine and Turkey has gained considerable momentum in recent years with growing trade and common geopolitical interests driving closer cooperation between the two countries.

Laidback Lviv: time to rebrand Ukraine’s tourism capital Around ten years ago, Lviv became the first Ukrainian city to sell itself as a brand. The city’s funky multi-colored logo and “Open To The World” slogan perfectly captured Lviv’s burgeoning sense of self-confidence and rising international profile. It was innovative and inspirational at a time when the rest of Ukraine was still light years away from such thinking.

Since then, Lviv has grown considerably in stature and become a routine feature in the international travel and tourism media. In fact, the city has received so much exposure that it no longer qualifies as “off the beaten track” and cannot legitimately claim to be undiscovered. As if to illustrate the point, Britain’s Independent newspaper recently published a feature-length article entitled: “Why Lviv Makes the Best Weekend Break This Winter.” Such gushing international coverage has long since ceased to surprise.

With this in mind, it might be time to consider rebranding the city. Lviv is still very much “Open To The World”, but this slogan reflects a time when Lviv was an unknown quantity on the international stage seeking to introduce itself to outside audiences. That job is now done. Today’s Lviv is increasingly part of the East European tourism mainstream and no longer needs to portray itself as an exciting newcomer. Instead, it must find other ways to sell itself.

Many observers would no doubt point to Lviv’s wealth of UNESCO treasures and fascinating patchwork history as the city’s most obviously marketable selling points. However, in my opinion, Lviv’s intoxicatingly laidback ambience is its greatest asset. It is a cozy and intimate fairytale city where the hustle and bustle associated with many other regional capitals is almost entirely absent. This laidback theme is a perfect fit for Lviv’s bohemian cafe culture and chimes well with the city’s burgeoning reputation as a jazz capital. Indeed, Lviv’s rise as a venue for jazz festivals owes much to its relentlessly relaxed vibe.

Striking symbols of this borderline lazy atmosphere abound throughout Lviv. The city boasts a seated statue of liberty, shining her beacon of hope unto the nations from a casually reclining position that is quintessentially Leopolitan. Likewise, the nearby Boim Chapel is topped by a similarly seated Jesus Christ, who appears to have taken time out from the greatest story ever told in order to sit down and ponder the pedestrians ambling along the cobbled streets of the downtown district. Even Lviv’s famed lions are distinctly laidback. Monumental depictions of lions in other cities have typically tended to portray the king of the jungle in robust pose, but Lviv’s most celebrated lions can be found snoozing regally outside the city’s old arsenal building. Taken together, these seated statues and sleeping lions could serve as attractive poster boys for a future “Laidback Lviv” campaign.

Marketing Lviv as a haven of carefree contemplation and self-indulgent laziness may seem counterintuitive at a time when the city is seeking to portray itself as a dynamic destination for international investment.

However, as Lviv matures on the international stage, there may be room for more than one message. From the tourism point of view, rebranding Lviv as Europe’s most laidback city would carry obvious appeal. The modern world is an increasingly chaotic and flustered place. We suffer from information overload and face endless temptations from lifestyle marketing that penetrates virtually every aspect of our existence. Positioning Lviv as an oasis of escapism from all this may well prove an enticing prospect for potential visitors. It also neatly captures the essence of laidback life in Ukraine’s most unhurried and enchanting city.

About the author: Peter Dickinson is the publisher of Business Ukraine magazine and a nonresident fellow at the Atlantic Council

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The British Ukrainian Chamber of Commerce (BUCC) The British Ukrainian Chamber of Commerce (“BUCC”) brings together British, Ukrainian and international companies and individuals doing business in Ukraine or the UK, including in the City of London, the financial capital of Europe, the Middle-East and Africa. We provide in-depth information on business, commerce, trade and culture in Ukraine and the UK to assist our members and others interested in business opportunities in Ukraine and the UK, hold regular meeting with interesting speakers and conduct a wide variety of other activities, including those described below.

The BUCC also supports the Commonwealth of Nations, formerly known as the British Commonwealth.

SPECIAL EVENTS During the past year, we have held a number of special events, such as the following: Reception and Dinner for the Official Visit of President Poroshenko to the UK. This event was held last April at the Armourers Hall in London between the President and senior officials from his administration and members of the BUCC, at which the President gave an excellent review of Ukraine’s recent achievements to recover from the sharp economic decline resulting from the conflict in eastern Ukraine, resolve the banking crisis, lower inflation, solve the VAT problem, develop the army, etc. A number of potential major new projects for Ukraine were then discussed, which should significantly benefit the Ukrainian economy (please see photograph above from this event ).

Annual BUCC Luncheon in Lviv. The luncheon was held on 23 June this year to open the Lviv Alpha Jazz Festival, in the presence of the Mayor of Lviv,

Lviv City and Lviv Oblast officials, BUCC members and Lviv business leaders, at which the Ministry of Infrastructure made a presentation.

Receptions and Dinners with Professor James Rubin for the BUCC’s Tkachenko Art Project. Last month, the BUCC held exhibitions and receptions on the Ukrainian Impressionist artist Mykhailo Tkachenko, to begin with in Lviv, at the Lviv National Museum of Art followed by dinner at the Leopolis Hotel Dining Room, and then in Kyiv, at the Hyatt Hotel Ballroom followed by dinner in the Hyatt’s London Room. Professor James Rubin, one of the world’s leading experts on Impressionism and the author of the principal study of Manet and over 60 other important books and articles, spoke at these events as well as at three leading Ukrainian universities. The exhibition at the Hyatt’s Ballroom specially featured 20 paintings by Tkachenko that are privately held and are not otherwise generally available for public viewing. Professor Rubin is advising the BUCC on its proposed book on Tkachenko (with Korners Art) and on the BUCC’s proposed major exhibition of Tkachenko paintings to be shown in leading museums in Kyiv, London, Paris, New York, Chicago and Toronto (discussed further below under CSR). (Please see the photograph below from this event.)

when it is mid-month) at leading hotels, restaurants and other interesting venues, like the Hyatt, Fairmont and Hilton. Pictures and short press releases on all BUCC events can be found on the BUCC’s web site (www.bucc.com.ua) and Facebook page.

In 2018, we will also be holding regular meetings in London and Lviv, and later in 2018, in Odesa.

COMMITTEES AND PROJECTS The BUCC focuses on facilitating the development of major projects to address important needs for Ukraine, such as: (1) Brexit. The BUCC’s Brexit Committee is studying how best to react to Brexit (the exiting of the UK from the EU), so as to develop further trade between Great Britain and Ukraine when the DCFTA with the EU ceases to apply for the UK. The BUCC believes that because the UK imports more than half of its food, it should be in favor of expanding food imports from Ukraine, unlike the EU which severely restricted such imports in the DCFTA to protect EU farmers. Consequently, as a major food exporter and for other reasons, Ukraine should be a major beneficiary from Brexit.

MONTHLY NETWORKING RECEPTIONS

(2) Political/Conflict Risk Insurance. Ukraine needs greater availability of political/conflict risk insurance, so that such political/conflict risk does not continue to deter foreign investment into Ukraine. The BUCC’s proposal is based on increasing the level of political/conflict risk insurance available from the World Bank’s MIGA, just as has been done, for the same reason, for the West Bank and Gaza.

In Kyiv, the BUCC holds its Monthly Reception on the last Wednesday of each month (except in December,

(3) Legal/Judicial Ombudsman. For Ukraine’s judicial reform and anti-corruption programs

Ukrainian Week in London and Ukrainian IT Days in the UK. For 2018, the BUCC is organising Ukrainian Week in London and Ukrainian IT Days in the UK to promote trade, investment and cultural exchange between Ukraine and the UK.

to actually help protect UK and other foreign investors in Ukraine, Ukraine needs a Legal/Judicial Ombudsman, as was developed by Sweden when corruption in the Swedish courts was a problem in the early 1900s. The BUCC’s proposal would allow all litigants in Ukraine to take court decisions that constitute an abuse of justice to this Legal/Judicial Ombudsman for immediate review, as well as for the judges responsible for such abusive decisions to be investigated for presumed corruption (this would be different from lustration that is not based on the actual judicial misbehavior of judges).

(4) Port/Rail Container Traffic. The BUCC’s Transportation Committee is focused on its project to facilitate moving containers from Asia through Ukraine to Eastern Europe, the Baltics and Scandinavia. This was a principal focus of the discussions with the President at the BUCC’s dinner for his official visit to London last April.

(5) Irrigation Farming. The BUCC’s Agriculture Committee is focused on providing for greater irrigation to address the problem that crop yields in southern Ukraine are decreasing due to increasing drought from climate change, which is also making the Oleshky Sands, one of Europe’s largest deserts that is located in Kherson Oblast, even larger and risks damaging soil quality and yields throughout southern Ukraine. In connection with this, the BUCC is working on a proposal to exempt, from the current moratorium on the sale of agricultural land, those sales of land in designated drought destressed areas that are to farmers who commit to spending the required significant amounts on equipment to irrigate this land and which then do so.

(6) OSBB Project. The BUCC’s Real Estate Committee earlier obtained significant changes to the implementation of OSBB laws and regulations (please see our previous Kyiv Post article on this). We are now organizing an internet “clearing house” at our website so that (1) different OSBBs can compare their experiences managing their buildings, and (2) details on the relative performance of suppliers of services and goods for buildings and their apartments can be posted for all to see.

(7) Tourism Promotion. The BUCC’s Tourism Committee promotes tourism between the UK and Ukraine, and is presently aimed at obtaining UK destination tourism PR services for Ukraine and certain Ukrainian cities to show potential UK tourists the excellent sites, restaurants and hotels that Ukraine has to offer.

CORPORATE SOCIAL RESPONSIBILITY(“CSR”)PROGRAMME: The BUCC presently has the following CSR projects: 1. Law Reform. Our law reform/foreign investment protection project to improve Ukrainian legislation

is presently focused on (1) curing the problem due to special (and unnecessary) drafting requirements that makes over 60 per cent. of agricultural land leases currently invalid (the BUCC’s proposal to repeal the legislation that caused this problem starting in 2008 was adopted in 2016, so land leases executed since 2016 are valid, but the BUCC’s proposal to prevent land leases executed between 2008 and 2016 from being voided due to this problem still needs to be adopted); (2) curing problems due to certain Ukrainian Supreme Court rulings that a land lease registration can be voided for relatively minor problems (the relevant case law is inconsistent); and (3) correcting the currently proposed draft Limited Liability Law, for example to more appropriately protect minority investors from being coercively removed.

2. Anti-Corruption and Anti-Corporate Raiding Program. Following up on our previous conferences on the British Bribery Act, the Law of Ukraine “On the Prevention of Corruption”, the US FCPA and other anti-corruption laws and their application in Ukraine, we continue to hold meetings and distribute information on compliance with anti-corruption laws. In 2018, we will be holding conferences focused on changes in anti-corruption law compliance practices. We also continue to make proposals to combat corporate raiding, such as to oblige enforcement officials to provide advance notice of most enforcement actions and have prior judicial endorsement for most coercive measures, and to limit or regulate better such actions that may affect the ability of a business to continue its operations.

3. Education: (1) Bringing Foreign LLM Programs to Ukraine. The BUCC is endeavoring to attract UK and certain other foreign LLM programs to law schools at Ukrainian universities, so that more Ukrainian law students have an opportunity to study foreign and international private law relevant to international business transactions. This will help prepare Ukrainian lawyers for situations such as where a foreign law (e.g. English law) governs a cross-border contract, as is so often the case.

(2) Scholarships to the UK. We are developing a scholarship programme to send Ukrainian students to study at UK universities for graduate business and law studies. We are presently seeking sponsors to fund scholarships at Cambridge and Oxford.

exhibitions. However, after Ukraine was overrun by the Bolsheviks in 1921, he was forgotten by western art historians. The BUCC is leading the project to restore Tkachenko’s reputation as a leading Impressionist, which should thereby generally improve the recognition abroad of Ukrainian artists and of Ukraine.

5. Digitalization Project. We have a project to digitize ancient Ukrainian books held at foreign libraries, to make this part of Ukrainian culture generally accessible digitally to Ukrainians.

SPORTS We actively promote sports, including cricket and golf (with a programme with the Kyiv Golf Club, Kyiv’s leading golf course).

THE BUCC E-CARD for DISCOUNTS

The BUCC’s new membership E-Card system provides substantial (5% to 50%) discounts for our members at leading restaurants, hotels, shops and other establishments in Kyiv, London, Lviv, Odessa, Kharkiv and elsewhere. (Members should be able to more than cover their membership cost through these discounts.)

JOIN THE BUCC for 2018 To join the BUCC, please contact: Natalia Dobrovolska or Maria Atamanyuk at +38 (044) 4906000 or +38 (044) 278-1000, or by email to Bate Toms, Chairman, at buccukraine@bucc.com.ua.

4. Art Promotion / Ukrainian Impressionism.

As noted above, the BUCC is organizing for an exhibition of the paintings of the Ukrainian impressionist Michael Tkachenko to be shown in Kyiv and London, and then in New York, Paris, Chicago and Toronto. Tkachenko in the period 1890-1910 was considered to be one of the leading impressionists in Paris. He had, for example, major exhibitions at the Grand Palais in Paris, and his paintings received medals at major

1. The BUCC was originally established in 1997 by its founders under the auspices of the Ukrainian Embassy in London and the UK Department of Trade and Industry to promote trade and investment between the United Kingdom and Ukraine. Our founder members include AON Group Ltd., B.C. Toms & Co, British Petroleum plc, De La Rue plc, First Ukrainian International Bank, GlaxoSmithKline plc, Procter and Gamble, Shell International Ltd, Thomas and Adamson, Ukraine International Airlines and Unilever plc.

2. http://www.president.gov.ua/en/photos/oficijnij-vizit-prezidenta-ukrayini-do-velikoyi-britaniyi-998 (official photographs) 3. https://www.kyivpost.com/article/content/business-wire/the-developing-crisis-for-the-owners-of-multi-apartment-buildings-in-ukraine-due-to-the-1-july-2016-deadlinefor-their-building-management-arrangements-to-be-in-place-411617.html

turkey in ukraine

Turkey in Ukraine Turkey’s Ambassador to Ukraine sees a strengthening bilateral partnership driven by common interests and rooted in a shared past

About the author: Yönet C. Tezel is the Ambassador of the Republic of Turkey in Kyiv More of Turkey in Ukraine, more of Ukraine in Turkey. This is the motto of the Turkish Embassy in Kyiv. It rests on the view that increasing political, economic, social and cultural interaction between Turkey and Ukraine serves both nations. The comparative advantages of the two countries and their complementarity in many sectors create a rationale that is not limited to trade but also extends to multifaceted cooperation, joint ventures and joint production in different areas. Coincidentally, the same theme is evident in the symbolic bridge between Turkey and Ukraine depicted on the cover of this issue of Business Ukraine magazine.

Moving Beyond Potential

Admittedly, we have yet to work towards fulfilling this objective and reach the concrete results that our potential promises. We know this is a gradual process, but it is achievable and things are moving in the right direction. We are no longer content to talk of “potential, potential, 10

potential” alone. Some Turkish businesses in Ukraine, as our Embassy also recommends, are trying to explore possibilities to grow and to engage new sectors in Ukraine. We also encourage potential new Turkish investors to put Ukraine on their radars and come to see things on the ground.

Obviously, we try to avoid naïveté while encouraging them. Unfortunately, bad stories from the past, and some from the present day, cause understandable skepticism. Nevertheless, the broader truth is that Turkey believes in the future of relations with Ukraine. This future is promising across the board, encompassing trade, investments, agriculture, energy, defense, tourism, cultural contacts and much more. Ukrainian Prime Minister Volodymyr Groysman put it very aptly during his visit to Turkey in March 2017 when he said Turkey and Ukraine could cooperate in many fields, extending from the depths of underground mines all the way up into space. :

turkey in ukraine

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Political Partnership A key requirement for this positive vision is already in place: Turkey and Ukraine have the political will at the highest level to start doing justice to the potential they share between them. The yearly meeting between Turkish and Ukrainian Presidents (the High Level Strategic Council) took place on 9 October in Kyiv. President Erdogan came to the Ukrainian capital accompanied by 10 Cabinet Ministers from Turkey. Significant agreements were signed including the Protection and Promotion of Mutual Investments and Avoidance of Double Taxation.

One missing element in bilateral economic relations is the Free Trade Agreement (FTA) that is the subject of negotiations for several years now. Turkish businesses look at the FTA as an indication of Turkish government confidence in the prospects of doing business with Ukraine. Indeed, FTA means more than just trade. It is also very much about investments. Turkey has bought much more from Ukraine than it has sold in the last 15 years. Ukraine’s trade advantage might continue after the FTA becomes a reality, but if we can succeed in making the pie bigger, both sides will win. With the FTA, it will be much easier to reach the trade target announced by the two Presidents to bring volumes up from today’s USD 4 billion to USD 10 billion by 2023. This is quite achievable, since the bilateral trade volume was close to USD 8 billion in 2008.

Improving the Investment Climate

As Ukraine tries to attract investments, Turkish investors and businesspeople are watching. The negative image associated with “doing business in Ukraine” is now beginning to change. Indeed, Ukraine has started to find its own solutions to its problems. However, this is not happening fast enough or widely enough. Therefore, while encouraging greater Turkish engagement in Ukraine, we also need to be honest about continuing difficulties. As the Turkish saying goes, a true friend speaks the bitter truth.

The Ukrainian government is aware of these issues and trying to find solutions. Still, some past and present Turkish investors have yet to experience the positive change in Ukraine. Strange legal difficulties faced when trying to recover debts, repeated failures to pass legislation for a more competitive and fairer market, and problems associated with local partners and administrators who seem to stick to the ways of the past are common issues. These are not only costing engaged Turkish companies, but they are also keeping away a greater number of potential Turkish investors. From telecommunications to

air travel, Ukrainian consumers end up deprived of better, faster technology and higher quality services at more competitive prices.

Overall, we need Ukraine’s big businesses to be more confident and the business environment to become more competitive and fairer. We had similar problems in Turkey in the past and not all of them have been fully resolved. However, big business, as well as smaller business owners, eventually adapted. They became shareholders in the new vibrant and competitive domestic market while extending their reach beyond Turkey. Ukrainian businesses can do the same.

Business is also inevitably linked with international politics. For example, Ukraine is asking its Western partners to better comprehend the security implications for Europe of what Ukraine faces in Crimea and the Donbas. This is a strong and justifiable argument. However, it may be that most of Ukraine’s partners do not really need to be convinced about Ukraine’s geopolitical importance. Rather, they seem to be in need of convincing that the new Ukraine that is emerging is genuinely different and is reliable as far as business is concerned. Political support and business investments often go hand in hand. After all, issues like good governance, rule of law, and the fight against corruption will make Ukraine resilient to all challenges. This is how Ukraine can become an asset for the whole region.

Strategic Support

For its part, Turkey is clearly and strongly supportive of Ukraine. This is both a friendly, good-neighborly stance and a position that reflects Turkey’s own strategic goals. Turkish interests require a Ukraine that stands firmly on its feet. This means a free, independent and united Ukraine preserving its territorial integrity, including Crimea. Therefore, Turkey will continue to stand by Ukraine in multiple ways, with support ranging from the plight of the Crimean Tatars to the needs of Ukraine as it seeks to prevail in its reform process.

One area where Turkey’s experience may inspire Ukraine is the public-private-partnership (PPP) methodology Turkey utilizes with considerable success. Turkey has completed major infrastructure projects including metropolitan hospitals, bridges of impressive size, tunnels under the sea, and the world’s largest airports thanks to custom-designed PPP procedures. Experts from the Ministry of Economic Development and Trade are engaging their Turkish counterparts to see what is applicable in Ukraine.

Many Ukrainians have had the opportunity to observe the level of Turkish infrastructure and the quality of services for themselves :

“Turkish interests require a Ukraine that stands firmly on its feet. This means a free, independent and united Ukraine preserving its territorial integrity, including Crimea” 12

turkey in ukraine

Turkey’s President Erdogan and Ukraine’s President Poroshenko pictured during the annual High Level Strategic Council between the two countries that took place in Kyiv on 9 October

: while visiting Turkey. Last year more than a million Ukrainians visited

Turkey; this constituted an increase of 48% from the previous year. By the end of this year, we expect to register a further increase on top of last year’s record.

There are two major Turkish-Ukrainian business associations working actively in Ukraine, the Turkish-Ukrainian Business Association (TUID) and the Turkish-Ukrainian Industrialists and Entrepreneurs Union (TUSIB). They offer valuable guidance to their members and other Turkish businesspeople contemplating investment in Ukraine.

They also facilitate meetings bringing together businesspeople from both countries to explore joint endeavors. As reforms pick up pace in Ukraine, Turkish businesses, in cooperation with their Ukrainian partners, will increasingly deliver what they are best at, providing quality products and services at reasonable prices.

Connected by a Shared Past

The geopolitics of the twentieth century, for the most part, was unfair to Ukraine. Even in Turkey, just across the Black Sea, our intellectual memory of Ukraine weakened. We are now trying to remedy that. In the last few years, papers presented to scientific conferences organized jointly by Turkish and Ukrainian scholars reveal that Ottoman/ Turkish/Tatar – Ukrainian relations were not continuously rooted in conflict as many had previously assumed. The reality is actually far from this negative portrayal. Our shared history includes many peaceful years and joint positions along with political and military alliances.

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This has left behind a legacy of common historical and cultural heritage. Evidence of this shared inheritance can be seen in the sphere of language and the introduction of many words of Turkish origin into modern Ukrainian such as meydan, shapka, kilim, izum, torba, tutun, sandik, bazaar, ambar, kazan, divan, leleka, and kahve.

The newly opened Yunus Emre Turkish Cultural Center in downtown Kyiv will be a venue for fostering our cultural relations with Ukraine.

The Center will offer Turkish language courses and organize cultural events. Another positive link between Turkey and Ukraine is the work of TIKA (Turkish Agency for Cooperation and Coordination) which has been active in Ukraine since 1997. TIKA has completed over 400 projects in development assistance and humanitarian aid worth approximately USD 40 million.

Turkish-Ukrainian relations are also about empathy and respect. The prospects for closer relations and comprehensive cooperation benefit from this mutual understanding. At a time when a sense of disconnect seems to taint relations between many countries, Turkish-Ukrainian relations stand out as a positive story. I feel privileged to serve as an Ambassador in this state of affairs, but also feel challenged to move towards greater mutual gains.

Coming back to the Embassy’s motto, I also appreciate the active work in the same direction carried out by the Ukrainian Embassy in Ankara, led by the very dynamic Ambassador Andriy Sybiha. The rule of thumb for bilateral success for both sides seems to be “more of Turkey in Ukraine, more of Ukraine in Turkey.”

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Turkish company at forefront of Ukraine’s historic roads upgrade ONUR Company enjoys an enviable reputation in a Ukrainian industry plagued by public skepticism

The Ukrainian government is currently investing record sums in the construction and repair of what is one of Europe’s most extensive but poorly maintained road networks. This nationwide upgrade promises to transform Ukraine’s transportation potential and bring significant economic benefits by connecting different Ukrainian regions while building on the country’s vast transit potential. Turkey’s ONUR Company is at the forefront of these road improvement efforts, having already carried out many of Ukraine’s most successful and prominent road infrastructure projects of the past thirteen years.

ONUR Company is a globally active group with a portfolio including large-scale projects in Saudi Arabia, Croatia, Moldova, Turkmenistan, Tunisia and Turkey itself. The company has received a string of international awards and has ranked among

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the top 140 international contractors according to Engineering News Record magazine’s Global Best Project Awards in 2012, 2013 and 2014.

ONUR arrived in Ukraine in 2004 and first rose to public prominence thanks to a series of road, highway and infrastructure projects in Lviv and the surrounding region. The company currently employs over 2000 people in Ukraine and has an expanding portfolio of Ukrainian projects including sections of the Kyiv-Chop, Kyiv-Kharkiv-Dovzhanskiy, and Kyiv-Odesa highways.

The company credits its success in Ukraine to a number of factors including a wealth of international experience, a highly qualified team of local and international experts, and one of the largest machinery parks in the country. ONUR has also im-

www.bunews.com.ua

to minimize the number of traffic accidents across the country, Ukraine’s roads should be equipped with all the necessary features including safety barriers, illumination poles, traffic signs and visible road markings.

Meanwhile, to make sure the current spike in investment brings long-term gains, they also point to the need to provide continuous maintenance, either via the state road authorities or through reliable private sector companies with a record of performing such works. This long-term maintenance is also part of the ONUR portfolio in Ukraine and is particularly relevant given the country’s previous post-Soviet experience of road repairs that have all-too-often provided temporary improvements before deteriorating within a relatively short period.

As well as its core construction focus, ONUR is involved in a number of additional spheres in Ukraine. The company manufactures high-quality concrete and reinforced concrete structures, while providing raw materials such as limestone, sand and crushed aggregate from company quarries.

Officials also stress ONUR’s corporate social responsibility policies, which involve support for local community events throughout Ukraine along with provision of technical support for local institutions and investment into the development of social projects at the regional level.

turkey in ukraine

plemented unique asphalt production technologies in Ukraine developed to meet the specific seasonal demands of the country’s climatic conditions.

With Ukraine set to boost state funding for road construction and repair works in 2018 by 37% to around USD 1.7 billion, there is obvious scope for further expansion of ONUR’s activities in the country. The company is encouraged by the current commitment to road infrastructure investment demonstrated by the government, with ONUR officials identifying a number of key issues that could contribute to the long-term success of this ambitious upgrade. One important step is the clear classification of all Ukrainian roads, with the main national routes classified in the first category subject to appropriate standards and requirements. ONUR officials also point to issues relating to the delivery of construction materials, either from quarries or from stock areas. Delivery of these materials via railroad services is currently subject to complications due to state regulations limiting the number of railroad cars allocated for these purposes. Revision of these regulations could significantly expedite construction processes and help the overall development of the national road infrastructure.

As Ukraine looks to revitalize the country’s road transport network, ONUR officials also support renewed focus on traffic management and road safety issues. They argue that in order

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turkey in ukraine

Ukrainian insurance industry advice Top five tips for businesses looking to make the most of Ukraine’s insurance options risk profile, each of which needs to be assessed and put into industry-specific wordings and definitions. We believe that experts are required in order to cover your risk as effectively as possible. By working with qualified and experienced insurance brokers, you can make sure you experience a crystal-clear and understandable insurance purchasing process. In addition to this product purchasing clarity, insurance brokers can also use their negotiation skills and bargaining power with insurance companies in order to maximize your insurance indemnity and secure timely receipt of any due payments. In other words, if you want to get the best deal, let the experts do the work for you.

2. Study before you select

About the author: Orcun Gomec is Managing Partner of EUROP Insurance Brokers The Ukrainian insurance sector has been going through constant change and evolution since 1991, growing in parallel to the Ukrainian banking sector. There have been periods of heightened turbulence during financial and political crises, but overall penetration rates have been increasing more or less consistently throughout the past two and a half decades. International insurance companies are currently the largest players on the Ukrainian market, leading the sector in terms of the implementation of best practices from the world’s most developed markets.

Orcun Gomec is Managing Partner of EUROP Insurance Brokers. He is a Turkish civil engineer with a Dutch MBA degree and more than 10 years of insurance industry experience. Mr. Gomec has been advising existing and potential investors in Ukraine on insurance issues for the past decade. These are his top five tips for businesses in Ukraine looking to explore the insurance market.

1. Trust the experts

Insurance products are highly complex. They generally consist of promises given in the form of technical wording set out in lengthy documentation. Every client and every case has a different 18

According to the Ukrainian State Commission for the Regulation of Financial Services, there are more than 250 insurance companies licensed in Ukraine. This number is far too high for the size of the Ukrainian economy and is a reflection of the under-regulated market conditions that have prevailed since 1991. Consolidation of the market is now belatedly taking place. The number of licensed insurance companies is now in a downward trend that began in 2014, but this over-fragmented market situation nevertheless creates considerable ambiguity for businesses because almost 90% of licensed insurance companies do not comply with mature market industry standards. Investors should be very careful in selecting their insurers in order to make sure they do not end up frustrated by the results of future insurance claims.

In order to make sure you receive protection against future disappointment, the financial health and the key indicators of potential insurers should be the subject of careful study before making any decision. As per point one, this process should ideally be managed by your brokers.

3. Get political risk coverage

Events in eastern Ukraine since spring 2014 have shown how important it is for companies to protect their business against all kinds of unpredictable political violence risks. Risks such as terrorism, sabotage, riots, strikes, revolution, rebellion, civil war or war, currency inconvertibil-

ity and non-transfer, expropriation, nationalization, and confiscation are all insurable through political violence insurance programs. Political Violence insurance pays compensation for two types of losses: damage to covered tangible assets, and income losses resulting from damage to assets caused by political violence. We strongly recommend this coverage to corporate and institutionalized investors in Ukraine.

4. Insurance as HR tool

Every business owner would agree that your business is only as good as the people who work for you. Voluntary medical insurance is a very effective tool to foster employee retention and improve working conditions. We have noticed that in a diverse selection of industries ranging from IT to agriculture, companies that provide a comprehensive health insurance package tend to prove more successful in keeping employee turnover rates low. Among some top players in certain industries, voluntary medical insurance is now a “must have” element in all standard employee compensation packages.

In addition to medical insurance, there is also a rising trend towards corporate life insurance policies for employee retention purposes.

Ukraine is lagging far behind many of Europe’s more mature markets in life insurance penetration, but some best-in-class Ukrainian companies are now offering life insurance for all or some of their key employees as part of compensation packages.

5. Insurance innovation and tech tools

As in many other sectors, technology is rapidly changing the rules of the game in the insurance industry. New investors should regularly communicate with their brokers and insurance experts in order to remain fully informed about the latest possibilities created by the digital revolution that is taking place within the insurance industry. From smart mobile apps measuring client risk profiles to creative and convenient insurance purchase and usage platforms, the insurance industry has been redefining its standards in recent years and will continue to do so.

The productivity gains from these latest developments could create significant advantages for businesses and investors.

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Growing trade and untapped potential Turkey and Ukraine seek to build Black Sea business bridges as free trade talks continue via a joint venture. Pegasus Airlines also flies between the two countries.

Challenging Environment

About the author: Haydar Kocak is Commercial Counsellor at the Embassy of the Republic of Turkey in Kyiv As two neighboring countries located on opposite coasts of the Black Sea, Turkey and Ukraine have a rich history of bilateral economic cooperation that has helped to facilitate an increasingly dynamic and fruitful relationship in the last couple of years. We have now reached a level of strategic partnership that opens up new possibilities and brings our two countries much closer to each other.

According to current estimates, the total assets of Turkish businesses in Ukraine, including direct investments from Turkey and indirect flows through other countries as well as the assets of Turkish citizens residing in Ukraine, reached the USD 3 billion mark as of July 2017. More than 500 companies with Turkish capital are presently operating in Ukraine. Turkish investors, both big and small, are active throughout the Ukrainian economy including in the telecommunications, food, ready-to-wear garments, forestry products, mining, metals and construction materials industries.

Strong Turkish Presence

Turkish contractors have already been involved in many major projects across Ukraine. The total value of the contracts they have undertaken in Ukraine exceeds USD 6 billion. These projects include important infrastructure undertakings such as Kyiv’s Boryspil International Airport Terminal D and Darnitsa Bridge (Dogus Company), Shakhtar Donetsk’s Donbas Arena Stadium (Enka), road and bridge construction (Onur and Gulsan) and the extension of the Dnipro metro system (Limak).

Turkish company Turkcell, operating in Ukraine under the lifecell brand, acquired the first 3G license in Ukraine through a transparent and competitive tender and became the third biggest operator in the country.

Meanwhile, in the financial sector, Turkish banks Creditwest and Credit Europe provide services in Ukraine. Turkish Airlines, Turkey’s national carrier, has been operating here since the early years of Ukrainian independence. Currently, it has flights from six Ukrainian cities (Kyiv, Odesa, Kherson, Lviv, Kharkiv and Zaporizhia) to Istanbul. Another airline company from Turkey, Atlas Global, has entered the Ukrainian airline sector 20

The political and economic challenges Ukraine has faced since 2014 have inevitably had a negative impact on bilateral trade. According to the Ukrainian Statistics Service, in 2015 trade turnover between Ukraine and Turkey decreased by 25.4% in comparison with 2014 and amounted to USD 3.6 billion. Ukraine’s exports to Turkey decreased by 2% and amounted to USD 2.7 billion, while imports decreased by 34.5% and totaled USD 0.9 billion.

In 2016, Turkey’s exports to Ukraine increased by 26% and reached USD 1.1 billion, while imports from Ukraine decreased by 29% to a value of USD 2 billion, leading to a fall in overall trade volume to USD 3.1 billion. Very clearly, these figures do not reflect the full potential for trade between the two countries. Despite the difficulties of the day, Turkey will continue to aim towards more intensified commercial relations with Ukraine.

Free Trade Expectations

During the recent visit of President Erdogan to Ukraine on 9 October, an important issue on the agenda in the economic field was the TurkishUkrainian Free Trade Agreement (FTA). The FTA agreement between Turkey and Ukraine awaits finalization despite the fact that negotiations have been continuing since 2007. This agreement has the potential to attract Turkish capital in significant volumes to Ukraine in sectors such as textiles, food production and the automotive supply industry, in which Turkish SMEs have become quite successful. Turkish capital could play a major role for Ukraine in its efforts to attract foreign investment.

Turkish is also actively sharing the country’s extensive experience in public-private-partnership (PPP) projects with Ukraine. The first meeting of the Turkish-Ukrainian working group on PPP cooperation took place in July 2017 in Kyiv. As a follow-up to that meeting, a group of Ukrainian officials paid a visit to Turkey in September to gain first-hand information about Turkey’s PPP experience and observe projects in the field.

This exercise, which is just one example of Turkey’s support for Ukraine, can create additional value in the challenging reform process currently underway in the country. It also has an important social dimension when applied to the areas where most needed. For instance, PPP initiatives could be particularly effective in the sphere of healthcare or the renewal of ruined infrastructure in the east of Ukraine. In this regard, we believe that the intensity of interaction in this area should continue.

Creating a Competitive System

We believe Ukraine has immense potential. However, in order to tap into that potential, the country needs to demonstrate meaningful progress in structural reforms. It is fundamentally important to strengthen the basis for sustained, private sector-led growth. Unfortunately, investing in Ukraine still suffers from perceptions of high risks. To stimulate large-scale inflows of foreign direct investment, Ukraine requires a clear and stable legal framework, particularly with regard to the tax system, together with the implementation of clearly defined and enforced property rights and the creation of a competitive system through the privatization of industrial enterprises and the implementation of an effective competition policy.

turkey in ukraine

Five ways to boost Ukraine’s investor appeal Turkish business experience offers ideas to improve Ukraine’s international investment climate 2. Invest in Infrastructure

About the author: Burak Pehlivan is Chairman of the Board at the International Turkish-Ukrainian Business Association (TUID) One of the most significant gains for the international business community in Ukraine over the past year has been the establishment of the International Council of Business Associations and Chambers (ICBAC). This new organization brings together many of the business organizations operating in Ukraine, namely the Ukrainian Chamber of Commerce and Industry, the German-Ukrainian Chamber of Industry and Commerce, the International Turkish-Ukrainian Business Association, the US-Ukraine Business Council, the Chinese Business Association, and the French-Ukrainian Chamber of Industry and Commerce. It provides business communities representing different countries with a permanent corporate communications platform while offering opportunities to address common issues with a single voice and share opinions on ways to attract more foreign investment to the country with both the government and the public.

During a recent meeting of the ICBAC Board of Directors, we decided that each member association would prepare a report reflecting the views of their business community and highlight five key issues that can help create a better business environment in Ukraine for international investors. This will form the basis of a comprehensive report for the Ukrainian government and public. The Turkish-Ukrainian Business Association (TUID) has identified the following five issues that we believe can contribute significantly to the improvement of Ukraine’s investment climate.

1. Communication is Key

Over the past three and a half years, structural reforms have achieved more in Ukraine that in the previous twenty-three years of independence. However, due to image problems regarding corruption, rule of law and geopolitical risks, Ukraine has not yet witnessed the kind of growth in international investment that the country needs. To remedy this situation, the government should seek to improve communication with the business world. Ukraine needs to tell its story and highlight positive developments to potential investors. This is achievable in part by working more closely with existing investor communities and business associations. At TUID, we have engaged with potential investors at more than 30 different events in the past two years, including forums, panels and roundtables in both Turkey and Ukraine. Success stories of existing investors are a powerful tool readily available to the Ukrainian government.

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In terms of successful communication, deeds are just as important as words. The Ukrainian public is generally aware of the short-term challenges created by structural reforms. It is vital they also encounter positive changes in their daily lives in order to maintain support for the reform process. This means improving the quality of public services like healthcare and transport. Physical infrastructure such as hospitals, highways and airports should receive major upgrades. Given the limitations of the state budget, the current drive to pass a new concession law and create a framework for public-private-partnerships (PPPs) is particularly important. Turkey has used the PPP model to develop infrastructure investments totaling USD 150 billion over the past 15 years. Turkish companies can now contribute both knowhow and investment capital into Ukrainian PPP projects.

3. Free Trade Impetus

To attract more foreign capital, Ukraine requires catalysts. In this context, the proposed Turkish-Ukrainian Free Trade Agreement could be a major step towards multiplying the volume of Turkish capital in Ukraine, which currently amounts to USD 2.5 billion. The conclusion of this Free Trade Agreement, which has been at the negotiation stage since 2007, would increase green field investments from Turkey to Ukraine and play a catalytic role for the country to receive investment from third countries.

4. Profitable Privatization

Another catalytic factor is privatization. Turkey has generated income of USD 60 billion via privatizations since 2000. A well-structured privatization policy could provide income to the Ukrainian budget for new investments. Meanwhile, the increased productivity and improved governance standards of newly privatized firms could cancel out budget burdens created by loss-making public enterprises. Instead, rising tax revenues would provide inflows to the budget. According to a recent protocol signed with the IMF, Ukraine aims to privatize 900 public enterprises by 2020. This process has the potential to attract considerable foreign capital to the country if managed correctly.

5. Harnessing Ukraine’s Amazing Agricultural Appeal

The final factor on our shortlist of steps to attract more foreign capital to Ukraine is removal of the moratorium on agricultural land sales. Due to this moratorium, small-scale farmers cannot mortgage the agricultural land they possess and are unable to utilize credit from banks. This situation leads to monopolization in the sector. The moratorium policy also restricts international investment in Ukraine’s otherwise highly attractive agricultural sector. Ukraine boasts the most fertile soil in the world and possesses around one-third of the planet’s black earth resources. It is a European agricultural superpower in the making with vast investor appeal. If the agricultural land market is developed appropriately, it will pave the way for a wave of investments that could climb as high as USD 50 billion over the coming decade.

I am confident these steps can help Ukraine move towards sustainable GDP growth rates of 6-7% annually. Increasing foreign investment will also contribute to the development of the country’s legislative framework and the creation of a more stable political and economic environment.

Turkish telecoms giant leads

Ukraine’s digital revolution CEO of lifecell Ismet Yazici seeks to complete company’s strategic transformation to digital operator Telecoms executive Ismet Yazici has an engaging vision of a future Ukraine where nobody knows anybody else’s phone number. The CEO of lifecell sits in his twelfth floor Kyiv office overlooking the expanding panorama of the Ukrainian capital city and explains that individual phone numbers will be among the primary victims of a digital revolution that is fast changing the fundamentals of how we communicate. “It’s happening already,” he says with a wry smile. “I wanted to call my wife earlier today. She was not available on BiP messenger, so I decided to call her directly on the phone, but I realized I had forgotten her number! This actually made me happy. If it’s happening to me, it’s happening to everybody.”

From Mobile Phones to Digital Devices

The digital revolution in the communications sector certainly appears to be genuinely universal in scope and more profound than anything the world has seen since the original advent of mobile telephones in the late 1990s.

These changes are currently forcing telecoms companies to rethink their entire business models. It has pushed them to expand beyond the narrow confines of mobile telecommunications services and embrace a broader understanding that incorporates everything from payments and other financial services to a dizzying range of lifestyle tools. For many companies, this has meant developing in-house apps and platforms in order to prevent tech companies from monopolizing the monetization of initial investments made by the telecommunications providers themselves.

Mr. Yazici speaks passionately about the inexorable rise of The Internet of Things and explains it as something akin to an irresistible force driving the evolution of the telecoms industry. Since arriving in Ukraine in May 2017, has made it his goal to maintain lifecell’s position at the forefront of this process. This enthusiasm for innovation is particularly understandable when viewed from the perspective of Mr. Yazici’s role at the helm of a telecoms company seeking to overhaul a duopoly that has long dominated the vast but traditionally pedestrian Ukrainian telecoms market with still

unavailable MNP service.

He believes the growing everyday roles of social media, apps, and smartphone convenience will organically erode many of the inbuilt advantages enjoyed by Ukraine’s deeply entrenched telecoms industry market leaders, and argues that the digital revolution offers a challenger operator like lifecell unique opportunities to overcome regulatory roadblocks and gain access to a more level playing field. “I came here to complete the transfor-

mation of lifecell into a fully digital operator. Within three years, the whole world will connect to each other via social media platforms and nobody will be asking you for your phone number anymore. These technical innovations will allow us to move forward in ways that the existing Ukrainian regulatory framework cannot. The biggest advantage of Ukraine’s current market leaders is the phone number dependency that limits choice and discourages people from calling other operators due to things like artificially inflated rates. In a few years, none of this will apply.”

Coming Soon: 4G

The next major milestone on the horizon for the Ukrainian telecoms sector promises to be the launch of 4G services in early 2018. This development comes relatively soon after the long overdue unveiling of 3G services in summer 2015, a process that lifecell invested heavily in. The company’s 3G investment paid off, helping lifecell to cement its status at the forefront of the digital services segment. Unsurprisingly, Mr. Yazici plans a similarly prominent role for the company as 4G services roll out in Ukraine over two stages of planned tenders in early and mid-2018. “We are already the leader in data services for smartphone users in Ukraine. With the launch of 3G, we began to gain momentum as a company. We also began to offer subscribers our own products like BiP messenger, fizy music App, and lifebox cloud storage. With 4G, we will consolidate our leadership position in data technologies and products.”

He sees 4G as a platform for greater app penetration and further growth

“Since arriving in Kyiv, I have developed a sense of Ukraine as an open-minded society of benefit-seekers who are ready to embrace change” 24

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About the interviewee: Ismet Yazici is the CEO of lifecell in the functionality of smartphones, with potentially far-reaching implications for Ukrainian society as a whole. “The move from 3G to 4G will see dramatic increases in mobile speed, but for people who primarily use their handsets to read newspapers and watch videos, the impact will not be particularly revolutionary. The real changes will occur for business users. As a company, we want to make life easier for the Ukrainian public and introduce maximum convenience. This is where 4G technology can play a big role. For example, we plan to introduce new smartphone payment and financial transaction services in 2018. This can make a huge contribution to the speed of transactions and have a positive impact on the general development of the Ukrainian economy. It is a great example of how technology can fuel economic growth and speed up everyday life.”

Open and Innovative Ukraine

Mr. Yazici is only six months into his posting as lifecell CEO in Kyiv, but he arrived in Ukraine with regional insights garnered during a previous stint in Belarus. His time in Minsk provided some useful background to the general post-Soviet environment, but he argues that Ukraine stands out among the www.bunews.com.ua

nations of the former Soviet sphere. “The most striking difference I notice between Kyiv and Minsk is in the people. In Belarus and most other CIS countries, people tend to put some distance between one another, especially when it comes to foreigners. In Kyiv, I get a sense of openness and dynamism. There are traffic issues and so forth, but the most important thing for me is that I see people laughing and smiling on the streets of the city as they go about their daily business. I am a hyperactive person and the ambience of today’s Kyiv suits me. You could call it love at first sight. In the lexicon of my industry, I would prefer to say that I have found the right frequency.”

This Ukrainian appetite for new ideas gives the Turkish CEO cause for optimism as he seeks to introduce further innovations to the domestic telecoms market. “Since arriving in Kyiv, I have developed a sense of Ukraine as an open-minded society of benefit-seekers who are ready to embrace change. This makes things ten times easier as we look to embrace the new world of telecommunications. We are already on the right track and have the necessary corporate speed to maintain our competitive advantage.

When I look to the future, my confidence is increasing. As Ukrainian usage behavior changes, our time will come.”

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turkey in ukraine

Turkish Airlines enjoys benefits of Ukraine’s visa-free breakthrough Leading international carrier registers rising sales as Ukrainians gain visa-free EU access Turkish Airlines is one of the largest international carriers on the Ukrainian aviation market. The airline first launched its Ukrainian service in 1993 and currently offers more than 50 flights per week from six Ukrainian cities (Kyiv, Odesa, Kharkiv, Lviv, Zaporizhia and Kherson). It is the only foreign carrier operating from Kyiv on the wide-body A330 aircraft. Business Ukraine magazine spoke to Turkish Airlines General Manager for Kyiv Dincer Sayici about the airline’s expansion in Ukraine and the enhanced international travel opportunities presented by the advent of visa-free EU travel for Ukrainians.

Has the decision to introduce visa-free EU travel for Ukrainian citizens since June 2017 had any impact on the Turkish Airlines business in Ukraine?

Turkish Airlines is the number one airline in Europe in terms of flight destinations, so the arrival of visa-free EU travel has positively influenced demand for our services in Ukraine.

Moreover, in July we offered our new “Stopover in Istanbul” product to the Ukrainian market. This new service allows passengers to stay overnight in Istanbul for free while traveling from Ukraine via Istanbul to more than 50 countries worldwide including EU countries such as France, Germany, Italy, Holland, Spain and more.

Beyond Kyiv, which Turkish Airlines regional routes in Ukraine have proved the most popular?

As the county’s capital city, Kyiv is a very attractive destination for both businesmen and tourists. At the same time, each our Ukrainian destinations offers its own unique features and potential. For example, Lviv is well known for rich historical heritage and Odesa is famous for its summer tourism potential, while Kharkiv is a major student city. Therefore it is difficult to identify the most popular destinations. As an airline, we try to promote our Ukrainian destinations as much as possible, highlighting different activities via articles in our Skylife onboard

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About the interviewee: Dincer Sayici is General Manager of Turkish Airlines in Kyiv magazine while organizing press trips for foreign journalists and others.

What are your expansion priorities, both in terms of new Ukrainian destinations and the expansion of existing destinations?

With flights from six Ukrainian cities, we are currently the biggest foreign carrier in Ukraine in terms of the quantity of destinations. Despite the difficult situation in Ukraine during the last four years, we have launched a number of new routes including Kherson in 2014, Zaporizhia in 2015, and Kharkiv in 2017. Our main priority at present is to increase flight frequences from existing destinations, especially Kyiv, Odesa and Lviv in order to provide more global connections to our passengers to and from Ukraine within our international network.

Which global destinations are most popular among Ukrainian passengers flying via

the Turkish Airlines hub in Istanbul?

Istanbul is a “natural” hub that allows passengers to reach more than 80 destinations within just three hours. Ukrainian passengers choose Turkish Airlines not only for business reasons, but also for leisure. The popularity of each specific destination depends on the purpose of travel. Generally speaking, Turkish Airlines flights from Ukraine to the USA, Europe, Africa and Asia enjoy virtually the same levels of demand among our Ukrainian passengers.

As more international airlines enter the Ukrainian market, how do you plan to maintain your leading market position?

We are one of the longest established and most experienced foreign airlines on the Ukrainian market providing high quality service in combination with a flexible price policy. We are planning to maintain our leading market position by using the power of our wide and rapidly expanding flight network.

turkey in ukraine

Ukraine looks to Turkey for PPP inspiration

Photo: VikiPicture Ukraine’s Deputy Minister of Economic Development and Trade Mikhail Titarchuk marks one year in office at the end of 2017 having spent a significant portion of the past twelve months in Turkey as part of efforts to tap into Turkish public-privatepartnership (PPP) expertize and lay the foundations for similar success in Ukraine.He believes Turkey’s PPP achievements can help point the way towards an attractive public-private framework that can energize the Ukrainian investment environment.

Long Overdue Infrastructure Overhaul

Deputy Minister Titarchuk is one of the new generation of young Ukrainian officials in senior positions who are working to manage Ukraine’s ambitious transition away from more than two decades in the post-Soviet wilderness. At just 33 years of age, he is relatively new to government work. Titarchuk took on his first role in 2015 as a regional administration head in Bilhorod-Dnistrovskiy in Odesa Oblast, before accepting his first position in the Groysman government in June 2016 as deputy minister of the Cabinet of Ministers.

Titarchuk sees PPPs as an opportunity to improve the Ukraine’s investor appeal while providing the country with what is widely recognized as a long overdue infrastructure overhaul. Prior to entering government, the Deputy Minister worked extensively across Africa in UN missions and the mining industry. He concedes that aspects of Ukraine’s existing infrastructure lag behind parts of subSaharan Africa.

The Economy Ministry is currently working on a concession law with the support of First Deputy Prime Minister Kubiv and the EBRD that will form the backbone of Ukraine’s renewed PPP drive.

Titarchuk is optimistic the concession law will pass through parliament and gain official status in the second half of 2018. “This law will provide 28

new impetus to the entire Ukrainian economy,”

he says. In anticipation of the law’s successful passage, a number of pilot projects are currently at the development stage with a view to swift launches once the new legislative foundations are in place. These pilot PPP projects focus on key infrastructure elements including Kherson and Olvia seaports as well as Chornomorsk ferry terminal on the Black Sea.

Turkish PPP Knowhow

While a new concession law will certainly help to lay the groundwork for greater PPP activity in Ukraine, Titarchuk recognizes that it is only one piece of a larger jigsaw. Ukraine already has significant PPP legislation, but the country lacks the necessary knowhow to implement projects at the local level. “We are creating a new legislative framework but we still face the problem that there are no well-trained people on the ground to prepare PPP projects and manage implementation.”

This is where Turkish experience could prove so vital. Turkey is one of the world’s leading PPP countries and boasts a long list of major PPP projects numbering over 200 with a total value in excess of USD 120 billion. Flagship endeavors include the currently ongoing redevelopment of Istanbul International Airport, which comes with a USD 36 billion price tag, and the 5.4km Eurasia Tunnel. The PPP model has also helped Turkey to modernize the country’s healthcare industry and road networks.

Knowledge exchange in the PPP sphere is an important part of the evolving strategic relationship between Ukraine and Turkey. Presidents Poroshenko and Erdogan signed off on the creation of a PPP Commission in 2016, highlighting the sector’s importance to bilateral ties. Deputy Minister Titarchuk regards this Turkish support as a key element in the drive to access Ukraine’s untapped PPP potential. He has made numerous visits to Tur-

key and seen firsthand how effective a tool it has

proven for the Turkish economy. The Deputy Minister says the experience has left him amazed and impressed by the scale of Turkey’s PPP undertakings. “If you are going to study, then it makes sense to study from the best,” he quips. “As Turkish colleagues like to say, nothing beats learning by doing.”

Titarchuk has led a series of delegations to Turkey made up of senior managers drawn from across Ukraine’s government ministries. By engaging with a range of academics, members of the business community, and government counterparts in Ankara, the aim is to absorb the lessons of the Turkish experience across the PPP spectrum and create the basis for future implementation in Ukraine. However, Turkish-Ukrainian PPP cooperation is not limited to knowledge exchange.

The Deputy Minister expects to have a number of concrete PPP projects ready for consideration by the time the bilateral PPP Commission meets again in spring 2018, and sees Turkish companies as the most likely candidates to enter the Ukrainian PPP market once the new legislative framework is operational. “Turkish companies want to invest in Ukrainian PPP projects. I fully expect the first wave of PPP investment to come from Turkey.”

About the interviewee: Mikhail Titarchuk is Ukraine’s Deputy Minister of Economic Development and Trade

The Ukrainian lady who

changed Ottoman history Roxolana won the heart of Suleiman the Magnificent and rose to the pinnacle of imperial power

Ukrainian actor Olha Sumska first rose to national fame when she starred as Roxolana in a TV series focusing on the life of the sixteenth century Ukrainian who was destined to become one of the most remarkable women in world history

One of the most fascinating figures in Ottoman history is the Ukrainian girl who rose from harem slave status to become queen of the empire and wife of the most celebrated sultan of all, Suleiman the Magnificent. Known in Turkey as Hurrem Sultan and in Europe as Roxolana, her exact origins remain shrouded in mystery but historians generally agree that she came from rural western Ukraine, where she was born at the turn of the sixteenth century. Many accounts give her birthplace as the Ukrainian town of Rohatyn in Lviv Oblast, where a monument now stands in her honor.

Sixteenth Century Celebrity

Roxolana is perhaps most familiar to Ukrainian audiences thanks to the 1990s TV series featuring actress Olha Sumska in the lead role.

The immense popularity of the more recent Turkish TV series “The Magnificent Century” has since contributed to renewed international interest in the historical figure of Roxolana. “The Magnificent Century” was a huge international hit broadcast in 70 countries, 30

reaching an estimated audience of over 250 million people. However, these and other depictions of Roxolana rely largely on a combination of fantasy and guesswork. No one who wrote about her ever actually met her in person, except for Sultan Suleiman himself and his famous love letters. Historians do not believe she posed for any of the portraits the claim to carry her likeness. It is clear, however, that her unprecedented influence on Sultan Suleiman made her one of the most powerful women in Ottoman history and in the world at that time. Suleiman’s deep love for Roxolana is beyond dispute and made her remarkable story possible.

Rewriting the Royal Rulebook

After becoming Sultan Suleiman’s favorite, Roxolana succeeded in establishing herself as the Ottoman ruler’s only real wife, making her the first concubine ever to marry a sultan. Her hold on Suleiman was such that she was able to break convention after convention, rewriting the royal rulebook as she went. She gave birth to more than

Political Genius

What some historians see as Roxolana’s manipulative nature could be more generously interpreted as evidence of her political genius.

Authors like Galina Yermolenko have stressed her many strengths including intelligence, education, willpower and a host of other tal-

Author: Ave Brigader-Tezel

www.bunews.com.ua

ents that enabled her to emerge triumphant from the crowded and very competitive world of the imperial harem.

Roxolana had to fight for her own and for her children’s survival.

She was obviously more than able to compete with her male rivals in Suleiman’s court. She was a keen advisor to the sultan in political matters and transformed the imperial harem into an institution with political influence. She had political ambition and was determined to achieve as much power and independence as a woman of her era possibly could.

turkey in ukraine

one son, violating the longstanding Ottoman principle of “one concubine mother – one son”. She also became the first women to remain in the sultan’s court for the duration of her life, breaking with a tradition that should have seen her follow her sons to govern in faraway imperial provinces. Perhaps most scandalously, she moved out of the harem in the Old Palace and settled into the official administrative center of the entire empire, the Topkapi Palace. Prior to her arrival, no woman had ever previously won the right to reside in the same building as the seat of government.

Roxolana’s influence on affairs of state appears to have extended well beyond mere close physical proximity. Leslie Peirce in her recent book “Empress of the East” points out that together, the royal couple overturned one assumption after another. This ruling partnership made Roxolana an incredibly controversial figure in her own time. When she died in 1558, numerous charitable foundations and religious buildings in Istanbul and across the empire served as her legacy. This was another major break with tradition. She had earned the privilege to build in Istanbul and other important cities of the empire.

Inspirational Icon

Roxolana has long served as a source of artistic inspiration. She is the subject of many musical works including Joseph Haydn’s Symphony No. 63 “La Roxelane”. She has also inspired Ukrainian and Turkish composers, inspiring operas by Denys Sichynsky and Oleksandr Kostin and ballets by Dmitriy Akimov and Nevit Kodallı.

A particularly good source for the Ukrainian perspective on Roxolana is Oleksandra Shutko’s recent book “Roxolana: Myths and Realities”, which is available in both Ukrainian and Turkish.

Roxolana remains a legendary figure whose very illusiveness is part of her allure. Her incredible life story is in many ways stranger than fiction, but it is also an intriguing episode in Ottoman imperial history that serves to remind modern-day Ukraine and Turkey of the common past connecting the two countries.

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Turkish Banker Overseeing PrivatBank Transition One year on: exploring what the nationalization of PrivatBank means for Ukraine’s banking sector

About the interviewee: Engin Akcakoca is the Chairman of the Supervisory Board at PrivatBank The December 2016 nationalization of Ukraine’s largest commercial bank PrivatBank was one of the biggest business stories to emerge from the country since the 2014 Revolution of Dignity. Veteran Turkish banker Engin Akcakoca subsequently accepted an invitation from the Minister of Finance to Chair the PrivatBank Supervisory Board, which sets policies and strategies for the bank. Mr. Akcakoca is no stranger to Ukraine, having visited the country on numerous occasions while representing the IMF in 2009-2013. He spoke to Business Ukraine magazine about the prospects for the re-privatization of PrivatBank and the challenges of reducing the Ukrainian state’s stake in the country’s banking sector.

The Ukrainian state’s large stake in the country’s banking industry has raised eyebrows, while government officials often speak of the need to reduce this stake. What kind of timeframe can you envisage for the re-privatization of PrivatBank?

As a result of the PrivatBank nationalization, the state’s share in banking assets, deposits and loans rose to 56%, 53% and 38% respectively (prior to PrivatBank’s nationalization the figures had been 34%, 35% and 26%). State Owned Banks (SOBs) now own 60% of total branches and 75% of ATMs and active payment cards. This large state presence is unlikely to aid the development of the Ukrainian banking sector because such dominance will not leave enough room for the growth of private banks and will not assist the development of fair competition.

However, all stakeholders, including the state 32

itself, have recognized the potential dangers of this dominance. Privatizing Ukraine’s SOBs is currently one of the key strategic targets of the state.

The first concrete step taken on the path towards implementing this strategy was the appointment of an independent Supervisory Board for PrivatBank. The second important step is the preparation of a draft SOB law, introducing internationally accepted governance principles into the management of SOBs that will help to attract future foreign investors.

For me, the privatization of PrivatBank means

100% private ownership. However, I do not think that there will be any takeover demand from local or foreign investors in the next five years.

Therefore, in the short term the full privatization of PrivatBank is probably not realistic. However, some IFIs may acquire minority stakes in the bank, which would naturally be an improvement on the current situation.

The PrivatBank nationalization process has sparked widespread public debate with attention focusing on an estimated 97% of corporate loans to related parties resulting in losses totaling billions of dollars. Can Ukraine realistically hope to return any of this money?

All I can say is that some collection has been possible in similar cases in other countries in the past.

There should be no reason to think otherwise for Ukraine.

Prior to nationalization, many saw PrivatBank as “too big to fail”. Is there an argument for reducing the footprint of the bank or breaking it down into smaller component parts in order to manage this perceived risk?

I think the state should consider every strategic option for PrivatBank while formulating its future involvement in the banking sector. The ultimate targets should be minimal losses for the public, rapid and easy privatization, fairness to the rest of the banking sector, and the prevention of systemic risks in the market. I think the footprint of any “too big to fail” bank in any country deserves to be reduced by either splitting it, or subjecting it to purchase and assumption transactions, or by its piecemeal sale, provided that these measures are implemented at the right time.

As Chairman of the PrivatBank Supervisory Board, your responsibilities include making

sure the management of the bank avoids undue influence from political interests. This has proved challenging for other foreign appointees at state-owned structures. How would you characterize your interactions thus far with government bodies?

As the Supervisory Board Chair of PrivatBank, I can say that I feel comfortable in my relations with the shareholder. I have not yet faced challenges regarding political interference. However, as long as the management of any Ukrainian SOB has two parallel reporting lines, one of which is not to the Super-

visory Board, there is a danger that the influence of political and bureaucratic interests will prevail. Today, with a non-Ukrainian Supervisory Board Chair at PrivatBank, the system is trying to better approach the issue of political interference by either avoiding attempts or handling them properly. The ideal approach would be to find local professionals for these positions who could avoid political interference. For this to happen, deeply entrenched attitudes, culture and habits need to change.

The nationalization of PrivatBank was one of the most ambitious economic measures adopted by the Ukrainian government since the 2014 Revolution of Dignity. How successful was the execution of the decision to nationalize, and what lessons can be learned from the process?

There are numerous outcomes yet to be determined before we can offer any definitive judgment.

However, the biggest lesson we can all learn is the same lesson other countries have learnt from their own experiences in dealing with such big failing banks: the importance of flawless coordination between the institutions authorized to intervene, own and manage the bank.

The Ukrainian banking sector has undergone far-reaching reforms since 2014. What role can PrivatBank play in the continued evolution of the sector?

I am sure PrivatBank will boost the sector with its knowledge and experience of credit cards and IT banking. I also hope that the banking sector will develop a system to share ATMs and POSs under the leadership of the NBU and the association of banks.

Also, it is my ambition to make PrivatBank a force that will support the authorities’ efforts to bring the Ukrainian banking system up to international standards, including with respect to regulation and supervision.

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Record number of Ukrainian tourists choose Turkey Ukrainians make up seventh largest contingent in Turkey with over one million visitors in 2017 When I was a child in the 1980s, we usually spent our summer holidays at our grandparents’ summerhouse in a village close to Marmaris, which was then a small city on the Aegean coast of southwestern Turkey. After a twelve-hour car or bus ride, the only way to tell our relatives back in Ankara that we had arrived safely was to walk to the public telephone in the local post office. In order to reach the only disco in the area’s sole five-star hotel, we had to walk for half an hour along a dirt road. Before dining on the front balcony of the summerhouse, my grandmother would water the dirt road to avoid dust landing on our food. There was a nice beach on the other side of the road but it came without showers, changing cabins, sun loungers or umbrellas. We brought our meat with us in iceboxes, while fish came from a fishing boat that arrived once every week. Since tap water tasted a little salty, we preferred to get our water from the natural springs in the nearby mountains. We enjoyed wonderful nature but it was an environment underdeveloped for modern tourism.

Tourism Superpower

After realizing its huge potential in terms of location, climate, nature and heritage, in the mid-1980s Turkey began to invest heavily in the country’s tourism sector. Efforts to improve infrastructure, increase accommodation capacity, and develop Turkey’s human resources proved successful.

Key infrastructure investments included new airports and motorways, together with modernized water supplies. This transformed the coastal areas of the country into a Turkish Riviera. Tourism became a major industry, but one without factory chimneys. As the sector has expanded, incentives and subsidies developed by the Turkish Ministry of Culture and Tourism encouraged entrepreneurs to invest in the industry, fuelling further growth.

Thanks to these policies, the number of foreign tourists visiting Turkey increased from about 10 million in 2000 to almost 37 million in 2014.

Due to the worsening security situation in the region, in 2016 this figure decreased to 25 million. Ukrainian citizens were the only exception to this downward trend, with the number of Ukrainian visitors increasing by 48% last year. This rise is actually in line with broader developments that have seen the number of Ukrainians visiting Turkey more or less constantly growing since Ukraine achieved independence in 1991. According to the latest figures, almost 1.12 million Ukrainian tourists spent their holiday in Turkey in the first nine months of 2017, marking another record compared to the 1.04 million who visited during the same period in 2016.

This figure makes Ukrainians the seventh largest group of foreign tourists visiting Turkey.

Most Ukrainians visit Turkey for their summer holidays and purchase all-inclusive tours in big hotels on the Aegean or Mediterranean

coasts. These tours usually include charter flights and accommodation in four- or five-star hotels. In addition to traditional all-inclusive beach holidays, Ukrainians also visit Turkey each year for a variety of other reasons including sightseeing, international conventions, healthcare, sports events, and winter tourism. We are pleased to note the typically high levels of satisfaction expressed by the majority of our Ukrainian guests. Like many other visitors, Ukrainian tourists often wish to receive service in a language they understand. This preference leads Turkish hotels to employ Ukrainian staff during the tourism high season. Due to this demand, the Turkish Embassy in Kyiv receives up to 200 working visa applications daily between February and June every year.

In the last few years, we have occasionally heard of negative feelings between Ukrainian and Russian tourists due to recent tensions between the two countries. I believe avoiding unpleasant incidents is not a major challenge for the Turkish tourism sector. Should any of our Ukrainian guests feel uncomfortable with a certain resort, tour operators can easily suggest alternative hotels. The broader truth may be that Ukrainians generally do not have a problem with Russians, but with the actions of Moscow.

Such situations are not unique. Israeli and Arab tourists sometimes end up in the same hotels in Turkey too, but problems are very rare.

More Flights and Ferries

Ukrainian society is currently rediscovering its identity and history in the aftermath of the 2014 Revolution of Dignity. As part of this process, Ukrainians are finding that they have more and more in common with Turks.

This trend comes at a time when bilateral cooperation is benefiting from a range of new flights and ferry services connecting the two countries. The recent advent of passport-free access for both Ukrainian and Turkish travelers is also bringing Ukraine and Turkey closer together. Looking ahead, I anticipate that the Ukrainian market will continue to grow and will remain a major focus for the Turkish tourism sector in the years to come.

About the author: Ozgun Talu is Counsellor and Deputy Head of Mission at the Embassy of the Republic of Turkey in Ukraine

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TIKA: 20 YEARS IN UKRAINE

The Turkish Cooperation and Coordination Agency (TIKA) has been active in Ukraine since 1997. Over the past twenty years, TIKA has implemented over 400 projects across Ukraine in the fields of education, healthcare, reconstruction, sanitation, and infrastructure development with an overall budget of USD 40 million.

TIKA provides support for a wide range of projects in Ukraine. Since 2014, 20 healthcare institutions and 55 schools throughout Ukraine have undergone improvements courtesy of TIKA. Some of these projects reflect historic connections to the Turkish community. In the Rohatyn region of Ivano-Frankivsk Oblast, where local communities have tended to the graves of Turkish soldiers killed during WWI, TIKA has helped the Rohatyn municipal authorities to make the administrative switch to an electronic documentation system, while supporting upgrades of local social services infrastructure.

Work is also underway throughout Ukraine to improve accommodation and healthcare facilities for internally displaced persons, disabled Ukrainians and the elderly.

Support for young Ukrainians is central to the

TIKA ethos. Since 2012, TIKA has organized annual health camps for the Children of Chornobyl on the Black Sea coast. Key projects include support for Novooleksiyivka School in Kherson Oblast, where 60% of pupils are Crimean Tatars, and the improvement of technical and educational infrastructure at the Artek International Children’s Center, which resumed its activities in Ukraine after the occupation of the ARC. TIKA supports Crimea’s Taurida University, which relocated to Kyiv in 2016 due to the occupation of Crimea.

TIKA is currently supporting the development of the university’s Oriental Studies Department.

Meanwhile, TIKA has provided Kharkiv’s Financial Institute with two fully equipped computer classrooms as part of a strategic focus on strengthening Ukraine’s financial governance capacity. TIKA Program Coordinator Haci Bayram Bolat explains: “The financial system is the backbone of any state. Stability begins with the financial system. In this sense, cooperation with Ukrainian financial institutes is among our priorities. We have also implemented a similar project at the Odesa Financial Institute.”

Recent highlights include the official opening

of TIKA-backed facility within the Institute of Philology at Kyiv’s National Taras Shevchenko University. First Lady of the Republic of Turkey Emine Erdogan was guest of honor at the opening ceremony of the Ismail Gaspirali Chamber and smart classroom at the Institute of Philology and presented awards to Ukrainian undergraduates studying the Turkish language. Ismail Gaspirali was a prominent Crimean Tatar intellectual who played a key role in social and educational reform in Turkey. Emine Erdogan said that the establishment of the Ismail Gaspirali Chamber in Kyiv was a symbol of the common history linking Ukraine and Turkey. “Crimea has a very special place in our history and our hearts. Ismail Gaspirali is one of the most prominent intellectuals from the point of view of the modern Turkish language and in the context of our social journalism. The deeds of Gaspirali, who was born in Crimea, continue to guide us today.”

Deputy University Rector Petro Bekh thanked Emine Erdogan personally while also expressing his gratitude to the Republic of Turkey and to TIKA. No other country, he stressed, had provided as much support for the university as Turkey.

Rediscovering the shared past connecting Ukraine and Turkey Interaction stretching back centuries can help bring contemporary Ukraine and Turkey closer together Media coverage of today’s strategic partnership between Turkey and Ukraine tends to focus on the contemporary political aspects of the relationship, but it is also well worth noting the deep historical roots underpinning the strengthening bilateral ties between the two countries. This is a subject long overlooked and often subject to considerable distortion. Until recently, those who did dwell on the historical interaction between Turks and Ukrainians tended to emphasize clashes and focus almost exclusively on episodes of conflict. This is a misleadingly one-sided perspective that ignores the far more diverse and complex nature of a relationship that stretched across centuries and went far beyond the narrow confines of military engagements and border disputes.

While it is true to say that Turks and Ukrainians have often found themselves lining up on opposing sides of geopolitical struggles, they also have a long history of cooperation, interaction and alliance. For many years, official historical narratives taught in Tsarist and Soviet 36

Ukraine preferred to conceal the more positive aspects of the TurkishUkrainian relationship. However, this is now changing as Ukraine rediscovers previously suppressed aspects of the country’s history.

Growing awareness of Ukraine’s historical links to Turkey can now play a potentially positive role in the evolving relationship between the two countries, placing today’s political ties in a broader context while highlighting the long history of interaction at grassroots level. It is a story of retaining mutual interests in politics and neighborhood engagement that defies stereotyping and deserves far greater attention.

Mazepa and Khmelnitskiy

The most prominent period of interaction between Ukrainians and Turks came during the sixteenth and seventeenth centuries as Ukraine’s Cossacks evolved into a powerful regional force in their own right and began to develop statehood ambitions that brought them into direct confrontation with the dominant regional forces of the time, the Polish-

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turkey in ukraine

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turkey in ukraine

The Ottoman authorities provided shelter to Ukrainian Hetman Ivan Mazepa after he had seen his state-building dream shattered by defeat to the Russian Empire in the 1709 Battle of Poltava : Lithuanian Commonwealth and the Tsardom of Muscovy. This extended

period of Ukrainian struggle against outside domination from both east and west provided what many historians regard as the major impetus for the formation of an ethno-cultural Ukrainian national identity. It also saw the fledgling Ukrainian nation coming increasingly into contact with Turkish culture and political power.

Despite their own quarrels, both Muscovy and the Polish Kingdom tended to view Ukrainians as natural allies in their conflicts against the Crimean Khanate and, by extension, the Ottoman Empire. However, while some of the Cossack forces of the time did join campaigns against the Ottomans, there were numerous examples of UkrainianOttoman cooperation including several particularly celebrated occasions when Ukrainians sought the assistance of the Ottomans in order to withstand pressures coming from the east and west.

Perhaps most famously, the Ottoman authorities provided shelter to Ukrainian Hetman Ivan Mazepa after he had seen his state-building dream shattered by defeat to the Russian Empire in the 1709 Battle of Poltava. The Ottomans welcomed Mazepa and his ally the Swedish King Charles XII, known in Turkish histories as “The Iron Head”. This decision was the immediate cause of a new dispute between the Ottoman Empire and Muscovy, leading to the outbreak of war between the two powers and a decisive victory for the Ottomans in the subsequent Prut River Campaign.

Half a century before Hetman Mazepa sought sanctuary in the Ottoman domains, his predecessor as Ukrainian Cossack leader, Bohdan Khmelnitskiy, had also fostered a complex relationship with the Ottoman authorities and their Crimean Tatar vassals during a series of mid-seventeenth century campaigns that many regard as Ukraine’s first war of independence. Hetman Khmelnitskiy sought and secured Ottoman support as he maneuvered diplomatically and militarily to defend his Cossack state against encroachments by neighboring Poles and Muscovites.

Legendary Ladies of the Ottoman Court

There are also some prominent women occupying key positions in the Ukrainian-Turkish historical narrative alongside important male characters like Mazepa and Khmelnitskiy. The most revered is undoubtedly Roxolana, known in Turkey as Hurrem Sultan, who remains one of the most famous females in Turkish history. Then there is Nadia, better known as Hatice Turhan Sultan. Both were hugely influential figures in Ottoman palace politics. While the exact origins of these two ladies are

impossible to clarify, both are believed to have been Ukrainian. They stood out among the many wives and mothers of the Ottoman Sultans and made their mark not only in matters of court within the palace walls, but also in matters of state. Their legacies include numerous contributions to the daily life of the Ottoman Empire, not least through the construction of many healthcare and educational facilities.

Turkish Troops in WWI Ukraine

In the early twentieth century, Ottoman troops served alongside Ukrainians in western Ukraine during the First World War. Ottoman soldiers fought shoulder to shoulder with their Ukrainian brothers-in-arms on the Galician Front, with several thousand Ottoman soldiers of the Fifteenth Corps of the Ottoman Army making the ultimate sacrifice. Today, many still lie in six Ottoman cemeteries located in western Ukraine. Soon after the withdrawal of Ottoman troops from this sector of the Eastern Front, the first Ukrainian Republic declared independence in January 1918. The Ottoman authorities officially recognized Ukraine as an independent state without hesitation and assigned Ahmet Muhtar Bey as ambassador and Ahmet Ferit Bey as consul in Kyiv. Enver Pasha, who was the Commander-in-Chief of the Ottoman Army and Minister of War during WWI, was instrumental in fostering friendship between the two nations. It is interesting to note that Enver Pasha’s grandfather was a member of the Turkic Gagauz community from Odesa who had immigrated to Ottoman Turkey and converted to Islam decades earlier. In other words, Enver Pasha, who remains a towering figure in Ottoman political and military history, could claim Ukrainian-Turkic ancestry. In the aftermath of WWI, the founder of the Republic of Turkey, Mustafa Kemal Ataturk, also focused on bilateral ties.

Contemporary Context

As this brief glance into history illustrates, there are grounds to talk of a long fellowship between the Ukrainian and Turkish peoples. The two nations have much in common due to their political and cultural interaction over the centuries. Ukrainians and Turks did indeed come into conflict on numerous occasions, but they also formed alliances, cooperated and supported each other against rival powers. These shared aspects of Turkish-Ukrainian history now provide a basis for the strengthening of contemporary relations in many mutually rewarding directions. As Ukraine works to become an independent and influential actor in this critical region, remembering the long historical roots of Turkish-Ukrainian cooperation could prove particularly beneficial for both nations.

About the author: Ender Korkmaz is Director of the Yunus Emre Institute in Kyiv and has a PhD in History 38

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UDK Autoclaved Aerated Concrete (AAC) – warmth and durability

“UDK” LLC is the largest AAC producer in Eastern Ukraine. The “UDK” LLC plant is equipped with modern technological equipment by “Masa AG”, a renowned world leader in equipment for producing building materials. The raw material base for AAC production is crushed quartz sand, cement and unslaked lime, water and additions of gypsum and aluminum gasifier to create the porous structure of the material.

AAC is baked in forms and cut into blocks by special machines with wire strings. This makes it possible to obtain a product with precise dimensions with a tolerance of not more than ±1.5 mm, which allows for the laying of blocks on thin-layer glue like UDK TBM. After cutting, the blocks undergo autoclaving with temperatures of up to 195 °С and pressure of 12 atm. Hot air autoclaving provides several

advantages for AAC blocks in comparison to nonautoclaved blocks. AAC blocks have a higher class of strength and do not require additional holding before application.

“UDK” LLC AAC blocks are stored on wooden pallets and packed with special shrinkable film.

By providing outstanding thermal insulation, UDK wall blocks make a major contribution to environmental protection by dramatically reducing the energy needs (and cost) of heating and cooling in buildings. Furthermore, our blocks are easy to use and allow for accurate cutting that reduces the generation of solid waste during construction. UDK wall blocks do not need to be used in combination with insulation products that sharply increase the cost of construction and the environmental impact.

UDK Aerated Concrete is an artificial porous stone

material widely used in the construction industry as one of the most economical, energy-efficient and practical options. Due to its porous structure and low density, aerated concrete is an energysaving material. Thanks to autoclaved processing, it acquires higher strength in comparison to nonautoclaved cellular concrete.

AXOR INDUSTRY: European-class manufacturing plant in Ukraine Today, Ukraine is firmly on course towards the EU, which means not only European requirements for product quality but also European standards of living, including availability of jobs and decent wages.

The decision made by investors in 2011 to build a state-of-the-art window and door hardware manufacturing plant in Dnipro, Ukraine – AXOR INDUSTRY – was, essentially, an investment of money and effort into the development of the window manufacturing industry and the national economy in general.

Today, AXOR INDUSTRY provides work for more than 450 people. AXOR INDUSTRY products

are successful in the former CIS states, Central Asia, Baltic States, Eastern and Central Europe, proving that Ukrainian product quality can compete in the European market.

AXOR INDUSTRY: an eco-enterprise and the #1 hardware manufacturing plant in Ukraine AXOR INDUSTRY is the industry’s only full-cycle plant in Ukraine. All its production processes are fully automated and designed to ensure the safety of human life and the environment (featuring, for instance, a rational waste utilization and water “rehabilitation” system).

The quality of finished products is controlled

24 hours a day by the plant’s own certified laboratory, which boasts advanced equipment.

Reliable partnership as one of the key factors in

window with Ukrainian-made hardware can and must be of high quality and a quality window must come at a price that matches quality. This allows us to develop the window manufacturing market in general and contribute to the revival of

the national economy, and, as a result, improving the quality of life of every Ukrainian.

MIROPLAST: Strong Partner in the Window Business

MIROPLAST is one of the largest manufacturers of specialized PVC profiles for windows and doors in Ukraine MIROPLAST company focuses on meeting consumer needs for high quality and energy efficient windows and doors under the WDS brand.

The company constantly develops its production facilities with the latest equipment while carrying out strict raw materials controls and final product tests in its own certified laboratory as well as in European institutions. More than 400 highly qualified specialists guarantee a smooth production process along with steady company development, innovations and beneficial partnerships.

MIROPLAST: the most powerful PVC production in Ukraine Today, MIROPLAST has production capacities up to

4000 tons of PVC profile per month – around 50% of the Ukrainian PVC window market. Thanks to a wide product range of PVC profiles, MIROPLAST can provide window suppliers with all necessary goods and services to reach the best solution for window and door production. Even laminated window and door profiles are easily available.

MIROPLAST believes in development via the growth and success of its partners: window producers and construction companies. Together with reliable partners, the company improves the quality of Ukrainian living standards, bringing smart investments and comfortable living to their houses.

European countries as well as South America. The export of UPVC profiles and ready-made windows and doors are the company’s growth priorities. Our long-term business relationships with many leading building companies and window manufacturers guarantee affordable prices, rapid availability, and reliable supplies.

We perceive the export business as a major direction for the growth and development of MIROPLAST company. We are interested in partnership with architectural and building companies along with PVC window and doors manufacturers as we are ready to offer premier quality and good service.

MIROPLAST: open to new markets Located in Dnipro – the industrial center of Ukraine – MIROPLAST has established itself far beyond the borders of Ukraine in the CIS and

www.miroplast.com

promotion

the manufacture of quality Ukrainian products Thanks to a fruitful partnership with window manufacturers, AXOR INDUSTRY creates quality Ukrainian products. We have changed the consumer’s perception by realization that a

Doing Business Index 2018: How business-friendly is Ukraine?

Andy Hunder, President of the American Chamber of Commerce in Ukraine

with the business community has been working on implementation of much-needed reforms, which have contributed to the overall rise in the rating. The fact that Ukraine notched up four spots in the World Bank’s 2018 Ease of Doing Business Index is a sign of a slow but sure step forward. In assessing progress based on ten criteria, the World Bank has acknowledged that during 2017 Ukraine implemented positive reforms in 3 areas, in particular, in dealing with construction permits making it easier by reducing fees, and protecting minority investors by requiring detailed immediate public disclosure of related-party transactions.

The main breakthrough of this year is “paying taxes” indicator – Ukraine has jumped up by 41 positions. Ukraine made paying taxes easier by reducing the rate for the single social contribution tax. Still, the country performs poorly in such indicators as connecting to the electricity grid, trading across borders, and resolving insolvency. To boost these low rankings, it is essential to simplify procedures, reduce time and cost to getting electricity, increase effectiveness of the single window at customs, and ensure the rule of law through implementation of full-scale judicial reform.

20 positions up in three years

Doing Business is a debatable study, with zealous critics and devoted fans. Every year the World Bank publishes its Doing Business rating, one of the key ratings for investors all over the world that characterizes ease of doing business and influences decisions where to invest. The report is above all, a benchmark study of regulation. Doing Business serves as a tutorial for world governments as well. It explains what needs to be done in a particular country to ensure favorable business environment for companies’ operating in that jurisdiction. Ukraine has found it challenging over the years to show impressive results in the rating, but over the past 4 years it has shown stable progress, striving to be perceived as a more business-friendly country.

76th out of 190 – can do better

In Doing Business 2018 Ukraine is ranked 76th among 190 countries, rising in 4 positions, compared to 80th place ranked in 2017. Over the past year, the Ukrainian government together

Since 2015, Ukraine has improved its position – from 96th place in 2015 to 76th in 2018. Ukraine is progressing at an unhurried pace. The most significant improvements have been in the “paying taxes” indicator –65 positions up in 4 years, an increase of 57 positions in “getting electricity”. The situation with “trading across borders” and “dealing with construction permits” has also improved significantly – according to these indicators, Ukraine has risen by 35 positions in the past 4 years.

Ultimately, investors expect not only the increase of Ukraine’s position in Doing Business rating, but the improvement of overall business environment, growth of business activity in the country and new Foreign Direct Investment. Ukraine continues to offer opportunities in a broad range of sectors. In the words of Bill Gates – “It’s fine to celebrate success but it is more important to heed the lessons of failure”. Lessons learned, thus, business community and Ukraine’s Government have to further join efforts, as a lot still needs to be done to make Ukraine’s regulatory environment more business friendly. But the country seems to be on the right track.

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Ukrainian agribusinesses set to expand global horizons in 2018

Key 2018 agriculture sector focuses will be international export hubs and infrastructure expansion

They say that necessity is the mother of invention, and this has proved particularly true for the recent international expansion of Ukraine’s booming agribusiness sector.

The geopolitical necessities of the past four years have forced Ukrainian agribusinesses to look beyond the comfort zone of Russian export markets, fueling a drive towards greater global reach that looks set to pick up pace in 2018.

Asian and African Expansion

Larysa Bondarieva, Member of the Board at Credit Agricole Bank in Ukraine responsible for Corporate Business, SME and agri-agro, says Ukrainian agribusiness exports to markets in Africa and Asia have demonstrated the most attractive growth dynamics since 2014. She says that while media coverage focuses mostly on the export potential created by the free trade dimension of Ukraine’s Association Agreement with the European Union, African and Asian markets are becoming more enticing for Ukrainian agricultural exporters. This is driving efforts to establish a local presence in these key markets, with Ukrainian agribusiness leaders increasingly ready to invest in onthe-ground representations that will help to strengthen their position. “Naturally European markets are strategically interesting to Ukrainian agricultural exporters because they are logistically close and convenient.

At the same time, the EU market is still not easy to enter with quotas remaining in place,” she says.

In contrast, markets in Asia and Africa offer more easily navigable terms of entry while also representing long-term appeal thanks to fast-growing populations and challenging ecological conditions that make it difficult for domestic agricultural sectors to meet internal market demand. “The main export focuses at present for Ukrainian agricultural exporters are North Africa, the Middle East and Asian markets,” Ms. Bondarieva says. “More and more Ukrainian agricultural holdings are now establishing 54

About the interviewee: Larysa Bondarieva, Member of the Board at Credit Agricole Bank in Ukraine, responsible for Corporate Business, SME and agri-agro

Infrastructure Investment

As the geographical scope of Ukraine’s agricultural exports continues to expand, Ms. Bondarieva anticipates further investment in the kind of domestic infrastructure required to get Ukrainian crops to international markets more efficiently. She points to major recent international investments into Ukraine’s Black Sea ports and the country’s major breadbasket gateway city, Mykolaiv, and says 2018 will likely see further development of Ukraine’s river and seaport facilities.

Ukraine’s waterways will be a particular focus in the coming year as agricultural investors look to take advantage of the country’s currently underutilized but excellent river network. “The Dnipro River will definitely play a bigger role moving forward. It offers direct competition to road and rail options while enjoying considerable cost advantages. Road vehicles can be expensive to maintain, while during peak harvesting periods we regularly see that there are often not enough railway wagons to meet seasonal demand. Meanwhile, the Dnipro River has considerable untapped potential that the industry is not utilizing. Inevitably, this will become more of a focus for agricultural exporters.”

Ms. Bondarieva envisages a gradual expansion of the Dnipro River’s role as river port facilities undergo upgrades further and further inland. She likens it to a creeping process that began along Ukraine’s southern Black Sea coastline and is now steadily working its way northwards along the country’s main waterways. “Larger river fleets and the development of barge transportation are a genuine long-term alternative to traditional land routes.” www.bunews.com.ua

SMEs Gaining Confidence Beyond the ports themselves, large-scale agricultural infrastructure investment in 2018 will focus on key features like elevators, drying facilities and storage facilities. Meanwhile, at the Small and Medium-Sized Enterprise (SME) level, Ms. Bondarieva expects to see the recent trend towards greater investment in agricultural equipment including combine harvesters and tractors continue.

Strategic investments in equipment upgrades by small and medium-sized agricultural holdings largely froze following the crash of 201415, but over the past twelve months, there has been a noticeable return to this type of investment as agricultural SMEs begin to look beyond the short-term financial necessities of the current planting season and plan for the future. “Ukraine’s SME farmers tend to be quite conservative in nature and memories of 2014 remain all-too-vivid, so there has been a marked reluctance to take on any nonessential financial obligations. However, there are signs of a change in mood among SMEs. Every second request we receive is now for long-term financing, not just to cover seasonal expenses. SMEs in the agriculture sector appear to be realizing that it will take them a very long time to develop if they rely solely on their own financial resources.”

Brain Drain Challenges

With domestic and international investment into the agricultural sector likely to remain relatively high in 2018, the greatest challenge facing Ukrainian agribusinesses may well be the loss of skilled employees to neighboring EU nations. This has long been a factor in western Ukraine’s EU borderlands, but it is becoming increasingly noticeable across the country, creating shortages and forcing employers to increase salaries in order to remain competitive. “This is now an issue for the whole of Ukraine, including regions far from the EU border,” says Ms. Bondarieva. “I am hearing similar complaints from agribusinesses in places like Sumy Oblast and Zaporizhia Oblast who are observing an outflow of qualified specialists to Poland, Hungary and Slovakia. More and more recruiters from these countries are active in Ukraine, seeking to secure qualified workforces.”

She says the appeal is obvious on both sides of the equation: Ukrainians are attracted by significantly higher salaries that allow them to earn the equivalent of their annual salary via a few months of seasonal work.

Meanwhile, the recipient countries are able to replenish their own westward migrating workforces with Ukrainians whose cultural, religious and historic closeness helps them to assimilate and largely removes the threat of social tensions that often accompanies waves of economic migration. Ms. Bondarieva expects this trend to remain prominent in 2018, with indications already evident that it is expanding from short-term seasonal work towards longer-term migration. “Many of the countries seeking to recruit skilled Ukrainian agricultural workers are now putting infrastructure in place to allow Ukrainians to settle for longer periods. They are offering school places for children, family accommodation, and other social support.”

agriculture

trade hubs in countries like Egypt, Saudi Arabia, the United Arab Emirates, and China. This is an increasingly noticeable trend among Ukraine’s most significant agribusiness market participants. They are generally looking to establish a physical presence in order to develop local networks of contacts and to conduct negotiations while also carrying out market analysis and promotional work. This requires significant investment. So far, we are talking about pioneers leading what is the first wave of Ukrainian trade hubs in these regions.

However, I expect the trend to strengthen in 2018, becoming more structured and more organized.”

In-house IT

This increasingly competitive recruitment environment is creating HR headaches for Ukrainian agricultural concerns that have forced them to increase the salaries they offer in order to avoid losing key personnel.

As agribusiness employers look to recoup this loss to their margins, many will seek to embrace the industry’s growing enthusiasm for efficiency-enhancing IT solutions.

Ukraine’s agriculture and IT sectors have been the two big success stories of the past four years, leading the country’s economic recovery while highlighting the huge “Brains and Grains” potential Ukraine has to offer. In recent years, there has been a marked effort

by Ukraine’s agribusinesses to tap into the country’s IT talent pool in order to boost modernization and efficiency efforts.

This process has become a two-way street, with a growing number of Ukrainian IT companies also looking to focus on the kind of products that the agribusiness sector requires. Ms. Bondarieva says that in 2018 we are likely to see more agribusinesses expanding their own in-house IT capabilities as the importance of this segment continues to grow. “Many Ukrainian agribusinesses, especially the larger holdings, are now hiring IT specialists straight from university in order to develop special programs from scratch that meet the specific needs of the company. They tend to prefer this approach rather than opting for off the peg IT packages. Outsourcing IT tasks is still a relatively popular option, but the trend is now increasingly towards in-house solutions. This increases efficiency and also has the potential to reduce staffing requirements.”

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agriculture

Financing Ukraine’s booming breadbasket

Agriculture sector needs more medium-term financial tools in order to fuel further growth Ukraine’s agricultural sector has been one of the country’s top performers in recent years, picking up the slack created by a conflictdriven economic slump and powering the current economic recovery. This agribusiness boom has attracted considerable domestic and international investment to the sector, with many major projects focusing on upgrades of Ukraine’s agricultural infrastructure.

However, at the small and medium-sized enterprise level, Ukrainian farmers require additional access to medium-term finance in order to improve productivity.

Many Ukrainian farmers currently operate with old equipment that requires upgrading. The country’s agricultural machinery replacement needs for tractors and combine harvesters are estimated at anywhere between USD 2 and 8 billion per year. This represents a considerable investment that would also lead to increased yields and decreasing costs, but it is largely dependent on increased access to medium-term financing.

Search for Stability

Due to a combination of economic recession and political instability, Ukrainian banks have limited access to medium-term deposits. Meanwhile, the level of foreign direct investments in the country has also experienced a sharp decline since 2014. These conditions serve to generate currency volatility, creating a low-confidence economic environment where medium-term financing is in limited supply and often prohibitively expensive. Greater financial sector stability and predictability are crucial if the agriculture sector is to benefit from the levels of medium-term financing capable of meeting potential demand.

The Ukrainian banking industry appears to be moving towards this stability via a period of tumultuous reform that is succeeding in improving corporate governance throughout the sector. Increased stability in the Ukrainian financial sector now depends on the ability to maintain banking sector regulation while overseeing crisis management. As the main regulator of Ukraine’s banking sector, the National Bank of Ukraine (NBU) is introducing systemic reforms that are making the sector stronger. These measures include the removal of non-transparent and money-laundering banks from the market.

Financial monitoring of banks is becoming stronger, with capital requirements enforced and the ultimate beneficiary owners of banks disclosed. We are also moving closer towards the reality of a cashless economy, removing the corruption issues created by widespread reliance on cash.

These factors are all contributing to growing confidence in the banking sector, which should translate into larger volumes of medium-term deposits in the national currency.

This in turn can fuel medium-term lending to the agriculture sector.

In the developed world, private pension funds and life insurance companies represent

a major source of local currency medium-term financing. It is quite normal for the financial contribution of these groups to be greater than that of individual savings accounts. In order to secure access to this stream of funding, Ukraine much complete the ongoing process of pension reform. The current pension reform agenda has set a number of targets for 2020, including the creation of well-regulated and stable private pension funds. This has the potential to create a critical mass of medium-term hryvnia deposits, paving the way for greater access to medium-term capital for farmers.

Land Reform

Another factor capable to easing access to medium-term financing is agricultural land sales reform. Discussions on lifting the moratorium on agriculture land sales have currently stalled but will likely restart in 2018. This presents opportunities for banks looking to expand their financing to the agricultural sector. In many countries, the use of agriculture land as collateral or in mortgage financing to purchase land is a reliable and low-cost way to obtain financing. Lifting Ukraine’s moratorium on agricultural land sales could significantly contribute to agricultural sector development, provided there is medium-term financing available.

Any agricultural land reform could help solve bottlenecks for medium-term finance created by a lack of collateral among many smallerscale Ukrainian farmers. The broader issue of creditor rights also requires consideration if farmers are to receive better financing terms.

In light of perceived weak creditor rights in Ukraine, banks often currently require 150-200% collateral coverage. Banks use this excessive collateral to cover potential losses in Ukrainian courts. The enhancement of creditor rights, together with adoption of a quick and efficient collateral enforcement process, would allow banks to decrease the collateral coverage ratios they expect. By enhancing the rule of law, banks can reduce collateral and risk premiums, creating more affordable lending options for farmers.

Boosting the Breadbasket

In order to increase medium-term financing for farmers, Ukraine should seek to adopt a broad range of policies. These measures include ensuring greater financial sector stability, securing medium-term hryvnia deposits from private pension funds and life insurance companies, and strengthening creditor rights (including efficient collateral enforcement and foreclosure). The creation of a national state registry of all loans for legal entities would also help, together with the establishment of an open agricultural land market to provide farmers with powerful collateral. These steps will help to foster confidence and create the conditions for the expansion of medium-term financing to the benefit of Ukraine’s farmers.

About the authors: Leah Soroka is Program Manager of ECA Agricultural Financial Services at IFC. Petro Bogachevych is Agri-Banking Expert of ECA Agri-Finance Project at IFC

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legal

Registries and Raiders How the human factor in electronic accounting has added to the raider arsenal in Ukraine

If we now seek to integrate additional technology to correct these problems, then the process must take place on all sites (registries) as transparently as possible.

Changes in this area are already underway. At the Ministry of Justice of Ukraine, there is a special commission tasked with handling complaints in the field of state registration. The responsibilities of this commission include detection of false information and errors that occur when registering. This body was first introduced with the aim of eliminating violations that arise as a direct result of inappropriate actions by the state registrars – the officials whose job it is to deal with the electronic filling

About the author: Andriy Dovbenko is the Managing Partner at Evris law firm In legal practice, any inaccuracy can become the equivalent of a bomb going off in slow motion. A sad example of this reality is the situation with regard to corporate raiding in Ukraine. Fear of the potential seizure and loss of their business systematically perturbs all Ukrainian entrepreneurs. The fact is, the more successful a business becomes, the higher the risk of it becoming the target of a raider attack. One of the key reasons for this problem can be found in our imperfect legal framework and accounting systems.

Abusing Innovation

Interestingly, it is precisely the loopholes in Ukraine’s otherwise potentially effective and transparent electronic accounting standards that give rise to many of the unlawful actions tied to raider activities. According to current legislation, the information contained in registrars is reliable. By this, I mean the State Registrar of Real Property Rights to Real Estate and the Uniform State Registrar of Legal Entities, Individuals-Entrepreneurs, and Public Forms. In practical terms, the information these registers contain often differs from reality.

As a result, we see that a new tool has appeared in the arsenal of modern raiders: the illegal introduction of false data into electronic registries.

This allows third parties to formally and legitimately enter enterprises, establish their management, and actually manage the company, or, in the case of real estate, dispose of it and exert control over all transactions related to it.

Vulnerable to Manipulation

By drawing these conclusions, I do not seek to place the blame on technology. In principle, the available technology actually works well. The problems I have identified are a result of the human factor and the appearance of false information in registries due to manipulation and corruption. The current situation reflects what amounts to a half measure.

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of electronic registers.

I cannot say that the work of the commission has succeeded in eliminating all problems, but its existence should certainly not be overlooked. At the very least, it indicated awareness of the need to address the issue. In addition, the Ministry of Justice recently established a permanent working group to coordinate concerted action aimed at protecting the property rights of landowners and tenants. The task of the group is to stop raider attacks against owners and tenants of land plots. Nonprofessionals may say that this is too narrow a specialization. However, the scale of the problem is such that the existence of a commission is more likely to be mandatory.

The fact that the state does not close its eyes to these problems, but is instead looking for ways to resolve them, is definitely a good thing. At the same time, we now have a situation with two bodies effectively engaged in the elimination of the consequences of the problem rather than the search for its causes. It is clear that even in a market operating within an ideal legislative framework, there will be unscrupulous players looking for ways to carry out corporate raids. Nevertheless, this does not address the fact that it is already necessary to patch gaping holes in a system that is currently subject to abuse.

Obstacle to Investment

Raiding is a major problem that affects both Ukrainian businesspeople and foreign investors who are active in Ukraine or considering market entry. The possibility of losing their assets frightens away many potential international investors. It is routinely referenced as one of the key factors deterring greater FDI engagement. In real terms, the threat posed by raiders reduces the inflow of funds into the country’s economy.

If the state really wants to become a reliable European partner, it is necessary to act without further delay in order to minimize the likelihood of such raider attacks and to guarantee ownership rights. Such measures will stimulate the business community and encourage people to plan in a more long-term fashion rather than hurrying to liquidate investments due to the ubiquitous fear that they may lose assets at any moment via raider attacks.

The conclusion for the Ukrainian authorities is simple – when there are clearer and more reliable rules in place to protect businesses from raider threats, the business environment becomes more comfortable for all and the economy as a whole benefits. Electronic registries are theoretically a step forward for the Ukrainian business climate, but they also create new challenges and opportunities for raiders to abuse the system.

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real estate

How to get Ukrainian permanent residence by buying property Bureaucratic hurdles are no longer overwhelming for those with sufficient capital to invest Ukraine’s laws “On the legal status of foreign citizens and stateless persons” and “On immigration” state that a foreign citizen who invests the equivalent of at least USD 100,000 into the Ukrainian economy has the right to apply for permanent residence in Ukraine.

Yet despite this relatively low threshold for obtaining permanent residence in Ukraine, this approach remains one of the lesser used methods to apply for a permit. Perhaps this is because many expats who might otherwise use this approach also have local spouses and prefer to rely on their marriage when applying for their Ukrainian permanent residence. However, marriage to a Ukrainian is not necessarily applicable for many of the foreign investors who wish to reside in Ukraine permanently. Moreover, recently the procedure for obtaining permanent residence via investment has undergone significant simplification, making it a potentially appealing option.

This article discusses how to obtain permanent residence in Ukraine by buying property. It looks at the potential benefits of permanent residence, and things that foreign buyers should keep mind if they are considering this approach.

How to Apply

Previously, the process of using foreign investment to get a Ukrainian permanent residence permit (PRP) was much more difficult because a foreign investor was obliged to register his investment with the local executive authority. This step is no longer necessary and Ukraine’s current legislation stipulates that the main document that a foreign investor must submit to the State Migration Service Office is a certificate from his bank that confirms the inflow of foreign investment into the Ukrainian economy in foreign convertible currency totaling an amount not less than the equivalent of USD 100,000.

The procedure for obtaining a Ukrainian permanent residence permit through investment involves a series of steps. You must obtain a “no criminal record” certificate from the country of your current residence, along with an apostille. The next step you face is passing a local medical examination and getting a document that proves you are not addicted to drugs or alcohol and do not suffer from any infectious diseases. Then you will need to open a private investment bank account at a Ukrainian bank. Before doing so, you should obtain a Ukrainian Tax ID, which is a relatively simple process.

Next, transfer your money (not less than the equivalent of USD 100,000) from your private overseas account to your Ukrainian investment account and open a legal entity in Ukraine in your name. For the purposes of real estate investment, this should be a limited liability company (LLC). Transfer the money from your investment account to the LLC account in the form of a share capital contribution into the authorized capital of the LLC. After this stage, the amount of the investment will appear in the LLC bank account.

You can then obtain a certificate from your Ukrai-

nian bank confirming the inflow of your foreign investment into the Ukrainian economy. You are now ready to submit your application for an immigration permit and permanent residence, along with all the required personal and company documentation.

According to Ukrainian legislation, the procedure to obtain permanent residence may take up to one year, although in practice, many lawyers are able to complete this process in two to four months. To be able to stay in Ukraine legally for more than 90 days in a 180-day period, it is advisable for a foreign investor to apply for a work permit as the director of their Ukrainian LLC and then obtain a temporary residence permit while their permanent residence application is processed.

Benefits and Barriers

Permanent residence in Ukraine offers certain benefits. You will no longer need a work permit, can reside in Ukraine permanently, and are eligible for Ukraine’s relatively low personal income tax of 18%, which can be particularly advantageous for foreigners from “high tax” countries. For citizens from some countries, having Ukrainian permanent residence can also simplify the process for obtaining visas to EU countries.

If you plan to use foreign investment in real estate to apply for permanent residence in Ukraine, then you must use a Ukrainian limited liability company (LLC) to buy your property. You would need to open your LLC with charter capital that is of equal value to the target property, followed by acquisition of the property. Eventually, after you have obtained permanent residence, it is possible to liquidate your Ukrainian company and transfer the property to your name. The above steps for buying property through an LLC to obtain permanent residence in Ukraine may seem theoretically straightforward. However, in practice, very few foreigners currently use LLCs to buy property in Ukraine due to the country’s existing currency control regime and banking regulations.

Moreover, the vast majority of real estate transactions on Ukraine’s secondary market still tend to involve the exchange of “physical cash” between local buyers and local sellers, so relatively few local real estate agencies are capable of or interested in helping foreign buyers acquire property through foreign investment into an LLC via overseas bank transfer. Foreign investors looking at this option should therefore make sure to find out if their broker has experience with such transactions before engaging their services.

Special thanks to attorneys Vasyl Cherednichenko and Tetiana Yashchenko at the law firm ExpatPro for their contributions to this article.

Please note that this article is not intended to replace qualified legal advice, but rather to introduce readers to general strategies for foreigners wishing to invest in real estate in Ukraine. You should also bear in mind that your specific circumstances may differ from the assumptions used here.

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 investors and expats. Tim is a long-time expat with Ukrainian roots; he first came to Ukraine as an exchange student in 1993 and returned in 2008.

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reforms

Ukraine can become an open data innovator Recent reforms open the way for Ukraine to emerge as a global leader in the open data arena made huge strides in reforming the banking sector, this is only just starting to take effect.

Small businesses can find it hard to get loans.

This is part of the reason why Ukraine is still only ranked 85th on the World Economic Forum Global Competitiveness Rankings. The need for government to make progress on these measures is one of the reasons why the Transparency and Accountability in Public Administration and Services (TAPAS) project, funded by USAID and UK Aid, is so important.

It increases transparency in government pro-

About the author: Richard Stirling is CEO of Oxford Insights, Chair of the Open Data Charter and board member of Open North Last month, as I ran my familiar morning route past Saint Sophia’s Cathedral towards the Dnipro River, I realised that I hadd fallen in love with Kyiv. As an increasingly regular visitor, I love this city of contrasts, with its grand juxtaposition of Soviet era buildings, modern glassy structures, and the grandeur of an imperial past. And as a policy adviser and digital specialist, I am excited by its potential. Ukraine is a country ready for reform.

Much is already underway, and there is lots more to come.

Ukraine is making especially rapid progress in the use it makes of data, jumping from 62 to 44 in the Open Data Barometer rankings last year. Data is a fantastic resource. Just as human enterprise combined with natural resources drove the industrial revolution, human enterprise is combining with data to drive the digital revolution. Ukraine has enormous potential to be a centre of data-enabled businesses. It has one of the strongest developer bases in the world, especially in cyber security. Ukrainian businesses should be among the world’s leaders in helping turn data into the insights and tools that help people make better decisions.

Some major challenges stand in the way. First, access to capital can be hard for Ukrainian businesses, especially as banks recapitalise.

Although the National Bank of Ukraine has 62

curement through Prozorro. It provides support for Ukraine’s open data programme and it helps government to build the kinds of personalised and efficient services that citizens expect from the public sector.

I’ve already seen great examples of the kinds of ideas the TAPAS programme is inspiring in Ukraine through the entries to the Open Data Challenge. Fines UA, for example, helps Ukrainians to pay traffic fines, reducing their administrative burden. In doing this, it has collected a huge amount of very valuable data about where traffic accidents take place. To design safer driving routes, Fines UA will open their database to help create tools that drivers can use. Other ideas are based on encouraging government transparency to reduce the risk of corruption, or the appearance of corruption. For example, the secondplaced company, Court On Your Palm, places court decisions at your fingertips through an API and smart phone app. The winning idea, Open Coal Market, will bring transparency to the official markets for selling coal by entering all transactions into the blockchain. This will create a highly promising market for new entrants and also places Ukraine at the forefront of global technological developments.

What is the wider significance of this? Society is coming to a crossroads. Fuelled by Silicon Valley’s techno-futurists, people’s lives are becoming digitised. Everything is turning into data as companies profile individuals ostensibly to personalise the services offered to them. But there is a serious risk here of restricting data to walled gardens, only accessible to American corporations supported by the US state. We are facing a choice in Ukraine and abroad: accept this reality or do something about it.

As a society, we might decide that we want to build a collaborative digital ecosystem in which data is shared for the common good, supports national services, and where people’s privacy is respected to create a data infrastructure grounded in social democracy. Ukrainian businesses have a crucial role in this. Companies do not just need to live within the rules of society, but can help shape these norms too. If we are to move towards a social settlement that sees data infrastructure as a common platform for innovation and creating social value, then there are three ways in which business can help. Firstly, businesses can open up their data and contribute to the shared data commons. Secondly, they can treat their customers’ data responsibly by respecting their personal privacy, only collecting data that is needed for an organisation to run more efficiently and generate a better service for the customer. Thirdly, by partnering with smaller businesses, Ukrainian companies can help the country on the path towards a vibrant startup culture. The biggest winner in this future is the Ukrainian citizen. Through public services enhanced by private sector innovation, they will be able to run their lives more effectively, efficiently and enjoyably. Entrepreneurs, meanwhile, will be able to use Ukrainian open data as a raw material to solve new problems and create new jobs.

As I said at the start of this article, I love Kyiv. I love the people here and the sense of collective endeavour. There is a true sense that everyone is pulling together towards a strong, independent and resilient Ukraine. I can think of no other country in the world that can house more than a million dispossessed people in the way that Ukraine has done. If collaboration and a sense of common purpose are innate in this country, these are just the same values at work as in the open data movement.

Open data requires people to do things differently and occasionally accept a small sacrifice for the greater good. This comes naturally to Ukrainians. It is here in Ukraine, more than anywhere else, that the open data revolution can take root, transforming business and society through innovation, shared knowledge and collective action.

Turkish Republic Day in Kyiv The Embassy of the Turkish Republic welcomed guests from Ukraine’s political, diplomatic and international business communities to Kyiv’s Hilton Hotel in late October

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to mark the annual Republic Day of Turkey.

This holiday, traditionally held on 28-29 October, commemorates the proclamation of the Republic of Turkey in October 1923.

networking events

Celebrating Indian Cuisine at Ramada Encore International guests gathered at the Ramada Encore Kiev hotel in November for a special Gastronomic Evening with Mr. and Mrs. Rajeev and Renu Gupta.

The event, held in the Ukrainian capital’s largest hotel banquet hall, offered diners the opportunity to embark on a unique culinary voyage of discovery through the magic of the Indian subcontinent. The menu drew inspiration from Gupta family recipes, with some additional Ukrainian surprises offered up by Ramada Encore Kiev’s Executive Chef Aleksandr Kolesnik and his team.

www.bunews.com.ua

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Sax in the City: Stylish Belgian King’s Day Celebrations in Kyiv Did you know a Belgian invented the saxophone? The Embassy of Belgium in Ukraine very fittingly paid tribute to the musical legacy of illustrious compatriot Adolphe Sax to mark Belgian King’s Day on 15 November. An exquisite concert at Kyiv’s National Philharmonic featured an array of saxophone soloists accompanied by emerging talent from the chamber orchestra of the National Tchaikovsky Academy of Music. Special guests included multiple award-winning composer, conductor and pianist Piet Swerts along with Belgium’s most prolific saxophone ambassador Alain Crepin. (Photography: Vika Kuznetsova) 66

networking events

Level Up Ukraine 2017: SMEs & Investor Attraction November saw the second annual Level Up Ukraine business forum take place at Kyiv’s Parkovy Convention and Exhibition Center. The event, organized by the Association of Taxpayers of Ukraine and the international company ICF Legal Service, brought Ukrainian and international business representatives together with government officials to discuss tax reform, SME stimulation and investor attraction. The Head of the Association of Taxpayers of Ukraine Grigol Katamadze stressed the importance of greater support for the expansion of the country’s growing but undersized SME sector.

“There needs be an entirely new attitude towards SMEs. The share of GDP produced by small and medium-sized businesses should represent more than 50% of the Ukrainian economy. You will not find a successful country where the SME sector’s share of GDP is lower than 50%. In Ukraine at the moment this figure ranges from 10% to 15%.”

www.bunews.com.ua

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International Networking in Kyiv’s Riverside Podil District

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International networking events host Fryday Afterwork spent a late autumn evening with eccentric genius Dr. Winestein at his home in Podil, which recently opened to the public. With an impressive selection of wines starting from as little as USD 2 a glass and an equally democratically priced menu filled with delicious Moldavian and French inspired dishes, members of Ukraine’s international community wasted no time making themselves comfortable at this fun and original new Kyiv venue.

networking events

ArtAsters Presents Anatole Kolomayets Exhibition On 16 November, Ukrainian law firm Asters jointly with the U.S.-Ukraine Business Council hosted a reception to mark the opening of the “Return to the Homeland” exhibition of artworks by Ukrainian-American artist Anatole Kolomayets (1927-2014). At the opening ceremony of this latest ArtAsters event, Asters Senior Partner Armen Khachaturyan emphasized, “Anatole Kolomayets left Ukraine at a young age and all his life he continued working on images inspired by his homeland, its people, its nature, its history, its destiny. His works helped many in the Ukrainian diaspora to preserve a spiritual connection with their ancestral homeland. We are very happy to join the ef-

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forts of Anatole’s family to bring his name back to Ukraine together with his impressive artworks.” USUBC President Morgan Williams commented, “This year is the 25th anniversary of the establishment of diplomatic relations between the USA and Ukraine. It is rather symbolic that near the end of this eventful year, we have the opportunity to present an exhibition of an honored Ukrainian-American artist. The artwork in this exhibition has a very strong connection with Ukraine. Anatole Kolomayets was born in Ukraine in 1927 and arrived in the US in 1953. He always held onto the best and most valued features of his Ukrainian heritage.”

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How Putin Lost Young Ukraine

Emerging generation of young Ukrainians identifies Russia as aggressor and blames Kremlin for war Ukrainian society has undergone a series of unprecedented shocks in recent years, with the 2013-14 Euromaidan protests spiraling into the Revolution of Dignity, followed in quick succession by the Russian annexation of Crimea and the outbreak of war in the Donbas. The ongoing conflict has killed thousands of Ukrainians and left millions more displaced, while the entire country has struggled ever since early 2014 with wave after wave of social and economic turbulence.

Most observers agree that the historic events of the past four years have changed the way Ukrainians see themselves and relate to their country. Many talk about the birth of a political nation or portray the process in terms of a national awakening. However, existing analysis of these changes has tended to focus on regional differences rather than trying to assess how different generations of Ukrainians have responded. A new nationwide survey commissioned by the New Europe Center has sought to buck this trend and gauge the mood specifically among young Ukrainians. Based on polling conducted in recent months across Ukraine, the “Ukraine’s Youth 2017” survey provides much-needed insight into the opinions of the country’s emerging generation.

Generational Shift Underway

The results of the poll present a complex and nuanced picture of attitudes among Ukraine’s youth that challenges stereotypical simplifications of Ukraine and defies attempts to divide the country neatly into eastern pro-Russian and western pro-European camps. While numerous clear regional trends did emerge, they no longer appear stark enough to justify talk of insurmountable regional divides.

Indeed, the survey found significant evidence of growing common ground uniting young Ukrainians. This was particularly noticeable on the flashpoint issue of Russian aggression, with a majority consensus emerging on key points and very few respondents willing to adopt openly pro-Russian or anti-Ukrainian positions. These results suggest the divisions that have shaped the political map of post-Soviet Ukraine will become significantly less of an issue as young Ukrainians come of age and the last Soviet generation cedes its dominant role in all spheres of Ukraine’s national life.

The poll also strengthens arguments that the current conflict has been extremely damaging to perceptions of Russia among young Ukrainians. Despite inhabiting the same post-Soviet pop culture universe as their Russian peers, the survey indicates that today’s young Ukrainians take a more detached view of bilateral relations, marking a major departure from the formerly blurred national boundaries and sense of shared identity inherited from the Soviet past.

Instead, the survey identifies a strengthening sense of Ukrainian national identity and relatively high levels of support for European integration. Meanwhile, there was little evidence of enthusiasm for closer ties to Russia. Similar trends have also been evident in recent polls conducted among the wider Ukrainian population, but the fo-

cus on young Ukrainians in this poll led to even more pronounced results. This indicates that time is not on Russia’s side as it seeks to regain lost ground in Ukraine. On the contrary, the Kremlin will face an increasingly challenging environment as the new generation of young Ukrainians gains greater influence over the country’s affairs while embracing a stronger sense of Ukranian national identity and looking towards Europe and the wider world for inspiration.

Geopolitically Disorientated

The poll does offer some crumbs of comfort for the Kremlin. Analysis of the results indicates that Ukraine’s emerging generation is still in the process of forming opinions about today’s rapidly changing geopolitical landscape. Responses suggest that many young Ukrainians, particularly those in the country’s traditionally Russocentric southern and eastern regions, are still struggling to come to terms with the new realities of the confrontation with Russia. Respondents in southern and eastern Ukraine were often evasive in their answers to pollsters, with “hard to answer” or “cannot answer” repeatedly appearing as the most popular choices in both regions when it came to relations with Russia.

There are numerous ways to interpret this apparent inability to express a clear opinion on the current conflict. It could be due to fear of contradicting official Ukrainian state positions, or it may reflect profound distrust towards all politicians and media. Equally, it may be rooted in a deep-seated and emotionally driven reluctance to condemn Russia despite the traumatic events of recent years.

Ultimately, this preference for silence suggests the process of accepting the new geopolitical realities in the region is still very much underway. This is particularly true in Ukrainian regions with traditionally closer ties to Russia where younger generations are more likely to have encountered nostalgic attitudes towards the Soviet past. Nevertheless, the relative absence of overtly pro-Russian responses is one of the most striking aspects of the entire survey.

While many older Ukrainians still often voice their support for unambiguously pro-Russian positions, there is very little evidence of this trend among the post-Soviet generation. The process of psychological separation that began with the collapse of the Soviet Union in 1991 appears to have reached the point of no return.

The Conflict in Context

Kremlin efforts to depict the Donbas conflict as an exclusively internal Ukrainian affair have failed to convince a majority of young Ukrainians. The poll found that most young Ukrainians (65%) are confident Ukraine and Russia are at war. Nationwide, only 4% disagreed. The northern part of Ukraine demonstrated the highest levels of support for this statement (almost 80%), while in the east the figure was much lower at 35%. Eastern Ukraine also registered the highest number of young Ukrainians who disagreed, but even this 9% total was a mere quarter of those in the region who agreed.

This article is based on analysis provided by New Europe Center’s Kateryna Zarembo and Sergiy Solodkyy of the nationwide “Ukraine’s Youth 2017” poll conducted by the New Europe Center and Friedrich-Ebert-Stiftung in cooperation with GfK Ukraine.

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society

Despite much talk of Moscow’s information war successes, these results suggest that Russian narratives have gained little traction among young Ukranian audiences.

Unsurprisingly, an overwhelming majority of young Ukrainians do not support Russia’s annexation of Crimea. Nationally, 68% of respondents rejected the annexation, with the spread ranging from 43% in eastern Ukraine to 85% in the north of the country. Meanwhile, support for the annexation was in the low single digits nationwide. Interestingly, this was one of a number of Russia-related questions where northern Ukrainians expressed the strongest opinions, indicating that it may no longer be entirely accurate to talk of western Ukraine as the heartlands of Ukrainian national identity.

Who is to Blame?

Most young Ukrainians (61%) believe Russia is responsible for the current armed conflict in eastern Ukraine. Despite widespread expressions of distrust towards the Ukrainian authorities, a mere 5% of those polled blamed Ukraine for the conflict. However, this issue produced some of the most pronounced regional differences. While around 80% of respondents in northern and western Ukraine blamed Russia for the conflict, this figure dropped to 36% in the south and just 22% in the east. Nevertheless, there was also a marked reluctance in these regions to blame Ukraine, with just 6% of young southern Ukrainians and 13% of their peers in eastern Ukraine willing to do so. Instead, more than half of respondents in both southern and eastern Ukraine preferred to evade the question entirely.

It is not hard to understand why Russian responsibility for the war in eastern Ukraine is a particularly painful and complex theme for young Ukrainians. In many cases, recognizing Russia as the aggressor means revisiting all manner of cherished memories and longwww.bunews.com.ua

held beliefs. It causes tensions with Russian relatives and often leads to the breakup of extended families. In the circumstances, many young Ukrainians clearly prefer to avoid adopting a definitive position on the issue.

Strong Sanctions Support

A sense of injustice seems to have helped bolster support for antiRussian sanctions among young Ukrainians. For instance, every third young Ukrainian is convinced that sanctions against Russia should remain in place until Ukraine regains control over the Donbas and Crimea, while only a tiny minority of 2% expressed the opinion that “sanctions should have been lifted long ago”. Meanwhile, around 12% support the idea of lifting sanctions in line with adherence to the Minsk-mandated peace process, or as Russia complies with its obligations to withdraw from eastern Ukraine and return control of the international border to the Ukrainian authorities.

Glimpse of the Future

The “Ukraine’s Youth 2017” survey is a welcome addition to our understanding of opinion in a country undergoing historic change.

By focusing on young Ukrainians, this poll offers a glimpse of the attitudes that will shape Ukraine in the decades to come. While it is still far too early to draw any definitive conclusions, the survey paints a persuasive picture of an increasingly united generation of young Ukrainians who see their future in Europe and hold Russia responsible for bringing war to their country. It also underlines continuing regional differences of opinion and hints at worryingly high levels of distrust towards the Ukrainian authorities. These are major challenges that the country must confront in the coming years, but Russia’s ability to influence this process from the outside appears to be entering into a period of unprecedented decline.

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Ukraine’s Forgotten Icon of Impressionism

Kharkiv artist Mykhailo Tkachenko was whitewashed by the Bolsheviks but is finally being rediscovered When a leading authority on French Impressionism takes time to visit Ukraine to see the original works of a Ukrainian painter virtually forgotten until recently, you know something significant is happening in the art world. We are currently witnessing the rediscovery of the Kharkiv artist Mykhailo Tkachenko, and the process could play a meaningful role in helping Ukraine to reconnect with the European cultural mainstream.

Art and Politics

American art historian and critic James Rubin, who has taught at Harvard, Princeton and other prestigious universities, came to Ukraine in autumn 2017 to see and assess Tkachenko’s works for himself. At the end of a recent exploratory trip that took him to Kyiv, Lviv and Kharkiv, he exuded excitement and optimism. “Having now seen a considerable number of works by Tkachenko,” he says, “I believe that he is an artist of the very highest quality and that he certainly deserves to be rediscovered and to be admired not just by Ukrainians, but by Westerners in general.”

The irony, as Professor Rubin points out, is that Tkachenko was well known and appreciated at the end of the nineteenth century in both France 72

and the Russian Empire. However, he subsequently vanished from the art scene for many decades, only to resurface relatively recently. In essence, Tkachenko was a victim of changing political tides. He died at the relatively early age of 55 in 1916 as a respected member of the Impressionism movement. However, following the Bolshevik Revolution, the Soviet regime rejected the “decadent” art of the “bourgeois” world. This left the artistic legacy of Tkachenko consigned to oblivion. Meanwhile in Paris, Tkachenko’s works were absorbed into private collections and there were no follow-up exhibitions or publications to sustain his reputation.

Among the Icons of Impressionism

A painter of greater skill, Tkachenko was very versatile. His talent initially earned him a place at the Saint Petersburg Academy of Arts, where in 1888 he won the opportunity to study in the world’s artistic capital of that time – Paris. Having trained in the realist tradition while in the French capital, he soon embraced avant-garde Impressionism and gradually won recognition as a worthy colleague of French icons such as

Manet, Monet, and Pisarro. Tkachenko settled in Paris in the artistic quarter of Clichy, though he frequently returned home in order to carry out commissions for Russian patrons in the more traditional style. The French press regularly acclaimed his Impressionist artworks. He also won two gold medals for his artistic endeavors. Le Figaro, according to Rubin, hailed the Ukrainian artist as one of the best Impressionists of the day.

As the American specialist notes, there were two sides to Tkachenko’s career. Through his contacts in the Russian imperial capital, Tkachenko secured work as an official painter for the Russian Imperial Navy. He frequently returned to paint magnificent marine scenes, portraits of military vessels, and landscapes of the Crimean coastline. His reputation in official circles was such that when Tsar Nicholas II visited France in 1909, he brought two works by Tkachenko as presents for the French President.

Inspired by Ukraine

While brilliantly straddling the two artistic worlds of the Tsarist Empire and France, Tkachenko remained very committed to his native Ukraine. He drew inspiration from the beau-

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Reviving Interest in a Forgotten Master Thanks to a few specialized publications that have appeared in Ukraine since independence, together with the dedication of several museums and private collectors, the achievements of Tkachenko are gradually gaining recognition in this homeland.

The appearance in 2010 of Dmytro Holets’s pioneering album “Mikhail Stepanovych Tkachenko” was an important contribution to this process. The task now, as Professor Rubin explains, is restoring Tkachenko’s reputation worldwide while emphasizing his Ukrainian background.

Credit for beginning this work and engaging the American specialist goes to the indefatigable Bate C. Toms, doyen of the business and legal communities in Kyiv and President of the British Ukrainian Chamber of Commerce (BUCC). A friend of Rubin’s from student days, Toms persuaded the expert to come to Ukraine and judge Tkachenko’s work for himself. BUCC also organized a lecture by Rubin at the Hyatt Hotel in Kyiv, together with an improvised but illuminating mini-exhibition of Tkachenko’s works.

Efforts to raise the profile of Tkachenko internationally are now slowly beginning to gain momentum. Professor Rubin has agreed to assist with the production of an initial catalogue of the Kharkiv

artist’s works. The BUCC is also cooperating with leading Ukrainian Auction House “Korners” to produce, in cooperation with Professor Rubin and others, a second edition of the book by Holets on Tkachenko. This time, the publication will be in English and Ukrainian as well as Russian. Meanwhile, preliminary planning is underway for ambitious Tkachenko exhibitions in Kyiv, London, Paris, New York, Chicago and Toronto. At a time when Ukraine seeks to reengage with the European cultural mainstream, this forgotten figure from the Impressionist era could yet play an important role in the country’s cultural diplomacy.

culture

tiful landscapes and village scenes that figure so prominently in many of his Impressionistic works, while taking an active interest in Ukrainian history. According to Rubin, Tkachenko, “repeatedly returned to Ukraine in order to paint Ukrainian scenes, and to do them in the more progressive, novel style he had learned from the Impressionists. In other words, he brought Impressionism to Ukraine.”

Tkachenko also brought Ukraine to French Impressionism. As you look at the catalogues and reviews of the many exhibitions and works from his 20 years in Paris, it becomes clear that most of his art drew on Ukrainian themes. Art critics also noted this source of inspiration and routinely identified Tkachenko with Ukraine. As if to illustrate this connection, the two works for which he won gold medals in 1911-12 were entitled “In Ukraine” and “View of Poltava Province”.

Tkachenko was a close friend of another painter from the Kharkiv area, Serhiy Vasylkivsky, who achieved fame with his paintings of Ukrainian Cossacks. The Impressionist master shared Vasylkivsky’s passion for Ukraine’s past. On his yearly visits to eastern Ukraine, Tkachenko would hunt for Cossack memorabilia and bring prized items back to Paris. Ukraine, as Rubin observes, was clearly “close to Tkachenko’s heart.”

About the author: Bohdan Nahaylo is a British-Ukrainian journalist, historian and veteran Ukraine watcher

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last word

Ukraine is the World’s Hybrid War Laboratory Since the outbreak of hostilities in the Donbas in 2014, NATO’s military training missions to Ukraine have received considerable media attention. However, the process is actually much more of a two-way street than outside observers might initially appreciate. In many ways, Ukraine’s battle-hardened troops are actually in a better position than NATO forces to offer insights into the realities of twenty-first century hybrid warfare. While NATO nations have spent much of the past two decades engaged in counter-insurgency operations against paramilitaries and insurgents possessing limited arsenals, the Ukrainian soldiers currently undergoing training in the west of the country are typically fresh from the frontlines of a confrontation against hybrid Russian forces who are able to deploy the Kremlin’s most advanced military technologies. “Ukraine is a battle laboratory. If you want to understand hybrid warfare, you need to study Ukraine,” says LieutenantColonel Kristopher Reeves, the Canadian officer who serves as commander of Operation Unifier, Canada’s ongoing military training mission to Ukraine. “You can see the whole spectrum of hybrid warfare in action here.”

He cites numerous examples where Ukraine’s battlefield encounters have offered a window onto the tactics and capabilities that will shape the conflicts of the future, and highlights what he terms as the devastating impact of the electronic threat. “We’ve seen the implications of soldiers having smartphones on the frontlines, which is not something that had previously been a major issue. We have become aware of the enemy’s ability to send text messages to individual soldiers and to engage in other forms of psychological warfare.

Drones have been jammed as soon as they are launched, while communications systems have served to attract accurate enemy artillery fire.”

The Canadian believes the unique combat experience Ukrainians are able to bring to the table will help build closer ties with the country’s allies.

“This will make the relationship more of an actual

About the interviewee: Lieutenant-Colonel Kristopher Reeves is a Canadian Army officer and commander of Operation Unifier partnership. Ukraine is a window for the entire Western world onto the realities of modern military aggression.”

Lieutenant-Colonel Reeves arrived in Ukraine in early autumn 2017 as the latest commander of a Canadian training mission to the country that began in 2015. The mission involves a presence of around 200 Canadian military personnel in Ukraine, alongside additional support elements in Canada itself. The core focus of the training initiative is the development of Battle Group Training Centers that aim to aid Ukraine’s transition away from the Soviet model of massive military formations towards more mobile groups capable

of responding rapidly to combat realities on the ground. He speaks highly of the appetite for reform among the Ukrainian military, commenting that the willingness to adapt and improve he has encountered in Ukraine stands in contrast to the often ambiguous attitudes towards training during previous overseas deployments. “I’ve served in a lot of countries and have never seen such hunger for change and reform. Ukraine often comes in for criticism for not reforming fast enough, but the progress that has taken place in the military over the past two years is huge. Their attitude is nothing short of impressive and it helps to make this a very rewarding deployment.”

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