Ukraine: Coronavirus, Conflict, and Corruption

EVENT TRANSCRIPT: Ukraine: Coronavirus, Conflict, and Corruption

DATE: 28 May, 3pm – 4pm

VENUE: Online

SPEAKERS:  Orysia Lutsevych, Vadislav Davidzon, Adrian Karatnycky



Andrew Foxall  00:47

Well, good afternoon everybody, or at least good afternoon from London. Welcome to this afternoon’s discussion. This afternoon’s event, with the title ‘Ukraine Coronavirus, conflict and corruption’. I’m delighted that we have three eminent speakers who are going to share their views on this topic with us today. I’ll say or rather, I’ll introduce them in the order in which they’ll speak. Before I do that, however, I’ll just reflect perhaps on why this event is, I think, timely and topical. Ukraine, as many of us will know is, of course, unfortunately, very used to fighting crises. It’s fought a number of them over recent years and continues to fight a number of them today. The three that we’re focusing on today are important ones that the country has, relatively speaking, few numbers of Coronavirus or COVID-19 in a population of 42 million. Indeed, however, there are certain obstacles, I think to Ukraine’s fighting of Coronavirus that relate to the nature of its transition during the post- Soviet period, and that nature feeds into the other crises which we’ll discuss. The healthcare system in particular is dilapidated after years, if not decades of underfunding. However, if dealing with the localized impacts of a global pandemic weren’t enough. Russia’s war in the Donbass continues. Currently more than 13,000 people have been killed as a result of the war that Russia started in 2014. The war is now one of the longest running in Europe in the best part of the century and is also one of the most deadly in Europe in the best part of the century. And on top of that, of course, President Volodymyr Zelensky, just out of his first year in office we meet or Today’s event is a one year and eight days since he took office since his inauguration. And while president Zelensky has attempted to overhaul his GM and indeed have overhauled his government on a number of occasions, the age old issue remains of endemic corruption. Now, that’s not of course to argue that the corruption is as currently endemic as it was during previous government, that clearly is not the case. But it is to argue that this remains a problem. As I say, we have with us three speakers who are eminently qualified to talk about these topics. In speaking order, the first is Adrian Karatnycky, who is a member of the board of directors of the Ukrainian Jewish in counter initiative. He’s also senior fellow at the Atlantic Council in Washington DC, where he joins us for today. For the 20 years between 1983 and 2003, Adrian was also the president of Freedom House and oversaw director of  their benchmark survey ‘Freedom in the World’. Our second speaker is Orysia Lutsevych. Orysia is manager of the Ukraine Free Forum at Chatham House, which is of course part of the Russia and Eurasia program at Chatham House. Orysia is author of a number of publications both for Jeremiah’s and for elsewhere, most notably, I suppose, the major and arguably landmark chatter nice publication from 2017 in the struggle for Ukraine. And our third and final speaker is Vladislav Davidzon, co-founder and editor in chief of the Odessa Review, and he is also the Tablet magazine’s European cultural critic, his writings have appeared in publications as varied as book for the American interest, the New York Observer foreign policy, and he’s also written for the Atlantic Council as well. Many of you who are joining us, rather, for many of you who are joining us, this will not be your first webinar. So I shouldn’t need to say, but I will say that the Q&A function is available at the bottom of your screens, as when you wish to ask a question, please just type them into that function. And as the discussion progresses, I will keep note of them. And then when we go to the Q&A, I will come to individuals in turn. So much like many Henry Jackson Society events’ format: our three speakers will speak in turn for between 7, 8, 9, 10 minutes, there will then be a degree of discussion between them, and then we’ll open it into the Q&A. Without any further ado, our three speakers, I’m most grateful for you’re joining us today. So Adrian, I’ll pass over to you please, if I may.

Adrian Karatnycky  06:10

Thank you. So maybe have a little bit of scene setting, Ukraine’s destiny today and in the foreseeable future is intimately linked to the role of its president. Now Ukraine has a presidential parliamentary system —— a mixed system of authority. But because presidents Alinsky was swept into power on a wave of, I would say, populist and expansive promises but with a huge mandate, he was then able to take to win an election and gain initially a comfortable majority in parliament, shape his own government nominate —— his own speaker of the Parliament. He really has preeminent power. And so it’s essential to think about presidents (inaudible), as we think about Ukraine facing the challenges of Coronavirus, the challenges of security and the Russia aggression and occupation, as well as the questions of corruption which I would shape even more broadly, which is a question of economic growth. The reason corruption remains an issue, a topical issue, apart from you know, the desire for justice at an end to community, is its economic drag on the Ukrainian economy, which is considerable but should not be over exaggerated. But let’s go back to the fundamentals, Mr Zelensky, and I will start with perhaps invoking a Scottish ballad. I know where I’m going, and I know who’s going with me. The problem is that Mr Zelensky, does not know where he’s going. And he does not even know who is going with him. He constantly rejiggered the parliament and changed allies. The only circle around him of continuity are entertainment lawyers and people who are part of his production team when he produced a series of extremely popular satirical and entertainment content, which dominated the airwaves of primetime on Ukraine’s then most popular back TV. That is not a strong basis, that kind of experience and those kinds of relationships with intimates to help him cope with this set of very large challenges. So let’s begin a little bit not on the negative side. He has accomplished some things I think Orysia would savage, my friend and colleague will address them in a more comprehensive way. But just in general, I think Ukraine coped well with Coronavirus. They went into a huge immediate shutdown, public transportation, almost all workplaces except very minimally essential services. And you know today the National Academy of Sciences said that the virus had peaked at about a point where Ukraine only had 660 fatalities and it’s on a downward spiral. So kudos to the team for the lockdown and for the kind of radical actions reinforced with vigour, I would say by Ukraine’s interior minister, our sin, our sandbox. On the plus side, you know, there were privatizations, a decision to privatized the land market. Ukraine is one of the few countries which did not allow private ownership of land, but it has been, as some people have referred to it out and arise and is reduced to 100 hectare units, not more. Your units and also foreign ownership of land in Ukraine will be prohibited. Nevertheless, this breaks a taboo and is a step forward. And it passed an important banking law reform which would prevent former, I would say questionable, practices which resulted in receivership of Ukrainian banks, including one by a patron of President Alinsky is the oligarch, Igor Kolomoisky, to claw back and regain control over his the former bank, which was alleged to have engaged in insider trading and in a sense, money laundering, to that defrauded allegedly Ukrainian state of five and a half billion dollars, which were part of the national banks refinancing to the oligarchs’ private bank. So there have been, I would say some, accomplishments. But Ukraine, even before this crisis showed growth, dropping from about 4% in the last few years of the Poroshenko administration, and in the first months, where the momentum carried over into the lens skis tenure, showed growth dropping in the last quarter of the year to one and a half percent in the first several months of 2020 to negative territory, even before Coronavirus. So Ukraine faces serious challenges. It’s a poor country. And moreover, Mr Zelensky promised to wipe out corruption, too stupid to sense to cut a deal with Putin to end the bloodshed and to promote growth, which his former Prime Minister touted at phenomenal rates of 40% over the next five years. So for Ukraine now that was not a promise Mr Zelensky made but (inaudible) gigantic economic growth and rapid economic expansion which and foreign direct investment, none of which has been occurring. It’s very important. Therefore, whether he, because he faces these challenges, and including on the security side where a low-level, low intensity conflict continues, but there is no indication that Mr. Putin wants any serious dialogue. It’s very important for the President to have a clear understanding of how to operate, what are the core values of his governance, and so on. And I think, again, he does not know where he’s going. And he is more importantly, doesn’t know who’s going with him because he trusts no one other than a very inexperienced inner circle, he has no gurus, he has no guiding, I would even say, philosophical principles of governance. His only basic principle which is not a bad one and Ukrainians like him for it, is that: ‘I’m an honest guy, I’m going to try to help the country, I’m not going to take money, I’m not going to tolerate corruption.’ And you know, so far, I think there’s pretty good evidence that he is not enriching himself at the public trough. He’s not engaged in, I would say, financially beneficial operations for himself and Ukrainians like that. But the problem is that the individual comportment of a president is not enough. For example, his party has numerous factions and the way they were selected was very haphazard. He has representatives of a lobby of oligarchs interests, which represent probably 20 or 30. Deputies linked to his former backer, the oligarch, Mr Kolomoisky, who are no longer loyal to him. His majority in parliament has, in a sense, evaporated on some security issues. Members of his party are critical to the accommodationist gestures that he has made towards Mr. Putin. And the problem in all of this is that Ukraine cannot miss Mr Zelensky. He has no circle around which he can, you know, advance on the learning curve and develop a philosophy. So when his party held a convention several months ago, it positioned itself as on the basis of its video while ideologists, key physiologist was the Deputy Speaker of the Parliament, as a libertarian and a Liberal Party. At their convention, they said that they were a union of libertarian and social democratic ideas. And I think that this is just a kind of a stew of confusion that rains think perhaps imminently in the head of President Zelensky. And I do believe that over time, he needs to shape up a coherent approach to the economy. He replaced the more libertarian leaning group of ministers, with ministers with roots in traditional businesses in Ukraine and traditional lobbies in Ukraine, which raises questions. He didn’t choose the best and the brightest. Initially, the government they chose were the best and the brightest, but he panicked, in a sense because he didn’t see rapid growth, he had unrealistic expectations, perhaps as unrealistic as those of the electorate that put him into office. So that’s the sort of general framing of where we are. And I don’t see at the moment, anything on the horizon, that would suggest that his operating style will shift to more, I would say, consistent policies, more realistic policies in the case of assessing the threat from Russia and the prospects for peace. So in a sense, he is still operating in his communications with the public on a populist platform, which has sort of haphazard messages of hope, potential growth, and so on. But I think there is an erosion, personally popular, personally still able to be re-elected. But the polling data shows that at the local level, his party is losing substantial support, the new government he put into place, even without a honeymoon, is already unpopular. And other parties are eroding his own party’s popularity. So I think that if he called new elections to rejigger things, they would not be in his favour. My own view and we can potentially discuss this later in terms of remedies is that Mr Zelensky, came with the belief that he was in the, you know, Trumpian sense, he was going to clean the swamp. The problem is that not the entire Ukrainian state or government in the past was a swamp, not the entire Ukrainian business community was a swamp. It may have started as a swamp, which was the Soviet and post-Soviet legacy but many normal processes began to develop. And I think the President isn’t able properly to distinguish between what was, I wouldn’t say virtuous, with what was effective in the Ukrainian state and in the Ukrainian economy, and what was dangerous, corrosive and locked, I think I’ll conclude with that.

Andrew Foxall  18:01

Thank you, Adrian, some excellent remarks to kick off the discussion. I certainly don’t want to click away to obstruct the discussion any more. If I may, Orysia, we will come straight here with you now.

Orysia Lutsevych  18:18

Thank you, Andrew. Good afternoon, ladies and gentlemen, welcome to this discussion. I think that it’s definitely been a rollercoaster year for the landscape. If you put it in the context again, it she had to run elections, which she did quite successfully with getting a strong majority first time ever uni-party government that he managed to shape after parliamentary elections in 2019. But then they came impeachment and the whole Trump affair. And it followed with Iran downing of the Ukrainian airplane. He had no time, you know, for training to be the president addressing all these crisises and now Coronavirus. So as somebody who is being an old novice who came to politics without a political team, without any kind of clear program or ideology value base, he had to figure out things on the go. And this is what we’ve heard from people who interact with the Lansky that he’s been quite good at figuring out on the go. And overall, if you look at a big picture of these things happening around Ukraine, in Ukraine, perhaps an optimistic conclusion could be he hasn’t made a big mistake in his first year dealing with this crisis. But you know, my analysis overall will be a bit more nuanced. And I think that countries in disruption such as Ukraine is for quite some time and especially now with COVID. When we look the way Ukraine has dealt with it with this epidemic, they tend to revert so called to type, you know, they really highlighted the features that make Ukraine in itself. And what is it really? I mean, we’ve seen that the Lansky had to deal with very inefficient and paralyzed system of governance. Of course, he didn’t help himself by reshuffling the government and making in a way wrong appointment, especially as the Ministry of Health, which shows a poor human resource management and judgment on the part. And in a way, this system was so rigid and paralyzed the way it is because there are so many vested interests. And instead of working for the end goal result for delivering the services, there are a lot of groups who are trying to in a way rig the state rent seeking maintains and despite having a very modern digital procurement system, we saw how newly act now minister was not able to release any funding because he was pushing some politically connected people for some of the public health agencies. And it’s unfortunate, but this is, you know, the legacies that Zelensky has to resolve if Ukrainians are supposed to get fast services in public health in education in a local government. So within that kind of inefficient system, what I see as a problem is that throughout this year, Zelensky managed to push away people who had a reputation of reformers and there aren’t that many you know, if you want. In Ukraine, as we say, there’s a problem with human capital. So people who were the reputation in setting up Minister of Finance, Newfield who was setting up (inaudible) or you can go on and on, Firsov who was in charge of the environmental service. They all in a way now out of the reform pool. And Ukraine is losing or not having people talented like that capable with good management skills, leading reforms. And of course, I think if you look at the system that Ukraine has specifically dealing with Coronavirus, I mean, Ukraine, Ukrainian officials and Zelensky including, have no accurate information. This is the problem. If you look at the outdated systems of managing, you know, health, public health information reporting on death rates, I mean, they are a little bit working blindfolded and guess working. Of course, right now, the lockdown is releasing a bit, but there will be a spike in the virus for sure. I mean, and the approximation of that is Ukraine commonly was doing lockdown for flu epidemics in winter, and whenever the lockdown was over, the flu was spiking up. Of course, flu is different because there was vaccine. But the challenge of how Zelensky will deal with it so far, I think is even too early to say that he dealt with it well, because it’s too early. And also, he in a way copied the common practice in the West. Secondly, I want to say that what happened during this time, we saw Zelensky again reverting to the aid of big financial groups, so called oligarchs, tycoons, whatever you want to call them, to help Ukraine. And a lot of people were concerned about this move, of course, it’s good to have solidarity across different groups when the country is in crisis. But instead of in a way reaching out to small and medium enterprises, volunteer groups, even you know, public health officials, mayor’s who are determined, who are mobilizing at the regional level to help Ukraine, his main priority was to go for, you know, Big Bang. Turn around and these groups, they in a way donated about 25 million for different PHP kits for the testing and ventilators. But they did help. I don’t want to diminish their contribution. But it does sound it No, this number doesn’t sound impressive. If you look at the number of resources, the amount of resources that they were, they were draining. And this is exactly the same system that Zelensky came to break. This was his word, I came here to break the system. So if you look at his track record today, I would argue that there’s not much evidence that he is really here to break the system. He is rather trying to run Ukraine, if you want Kuchma style, who was trying to balance different interest groups between themselves and to offset Kolomoisky influence as he’s patron who you know he owes a lot. He’s trying to make a format of stronger in a way and if you look at the some of the favours that his group in particular is getting on the energy and electricity market, it’s quite interesting. It’s quite telling where their rates for electricity in Ukraine increased almost 40% which in the crisis like that it was in addition to Coronavirus Difficulties will be putting a big strain on Ukraine’s economy. So in a way, there was a lot of conversation about the matter of and Rotterdam plus during production costs times. But electricity market right now is similar to Rotterdam plus, but a resilience key moment. So you don’t see much difference here and Ukrainian see it, because if you look at the number of people who say Ukraine is moving in the right direction, it actually flipped from year ago 55% said it was going in the right direction. Today, 55% say is going in the wrong direction. So this is quite strong assessment of Zelensky policy. And I think that if you see in the public space, he was arguing that he’s still the most popular politician, he would be re-elected, if there were elections. This is partially true, because there’s no strong opposition leader and opposition is quite fractured in Ukraine. And there is nobody who stands out to, in a way, offer any alternative routes that would even stronger emphasize reform. In addition, I think that Zelensky lost a lot of his political efforts are invested in trying to solve the conflict in Donbass, it was his promise, very difficult promise to deliver. He, he really, I think, genuinely wants to bring peace, he wants to elevate suffering of millions. But it was naive, it was naive to expect that this would be a possibility. And I think in a way this could play against him, especially in the local elections in the East where people, voters who traditionally supported more opposition bloc, the ex, kind of the remnants of Yanukovych party will turn to them in a way of expecting some of these promises. And I think this is risky moment also for the Lansky, to tell truth to people and I think it’s very dangerous for him to continue the kind of game of delusion. And I think that the first year for him, if you sum up, was a real boot camp, it was not easy. I think he managed to avoid some of the mistakes, whether it was by default or by design, you know, is the question and we can discuss. And I think that he Ukraine has to, you know, the role of the leader is to lead, it’s not just to follow public opinion. And one of the things that Ukraine would like, and I think must hear from its leaders is that it needs to prepare for this protracted struggle, that there was no be quick fixes neither within the system internally, nor with the conflicts in the West. And if you ask me, what are the tools ,resources of resilience, one is hope and the other one is purpose. So if you look at hope, Ukrainians are, despite all the trouble are quite hopeful, where 70% believe that they could overcome difficulties in a midterm or in in the short term or in a meter. So there’s this resilience capital that Zelensky could galvanize, and used to mobilize Ukrainians around his reform agenda. But the purpose, this is something that I think we the nation is missing from Zelensky, whether it’s because of his values and ideology that also fluffy because he’s eclectic team in the, in the government in the parliament, or he himself, they’re destroying, you know, and perhaps to sit on two chairs, at the same time :be populist and libertarian paternalistic and pro-European at the same time. So to sustain national cohesion and this movement that Ukraine started with ex-President Poroshenko. And the legacy that Zelensky received, gave him a good ground to continue reforms. But he has to unveil a more powerful vision for Ukraine, because at the moment, it remains quite foggy. This is how where I would stop.

Andrew Foxall  29:18

Thank you, Orysia. For those of you who haven’t read it, I would encourage you all to read Orysia’s recent comment piece for the Chatham House website, which is entitled ‘Fighting COVID-19 the Ukrainian way’. It really is an excellent read. Last but not least, flood this live word. We’ll come to Paris to hear your thoughts.

Vadislav Davidzon  29:39

Thank you so much. Thanks for having me, Andrew. So I agree very much for both my good friend Adrian and my colleague, both are incredible experts and I’ve learned a lot from talking to both of them. I’m a bit less critical than Adrian is of the direction that things have taken on. I would also maybe just to be a little contrary and also backup or risky on saying, you know, he’s had a really, really, really difficult first year. I mean, he comes in with a tremendous mandate on unheard of in the 30 years of existence of Ukrainian state for president to come in with that kind of mandate 73% plus an overall overriding majority supermajority almost in the parliament. But you know, the difficulties that he’s seen in his first year, with the Russian interlocutors being totally uninterested in giving him gestures of continued interest, rapid ratcheting up in the negotiations, with somehow becoming the centre of historical impeachment of the United States President, he really stopped wanted nothing to do with being in that situation, and paying them. Every time I or any other journalist or any other expert would start a conversation with him about that. It really, they just, they, anytime I spoke with a member of Zelensky administration, where I talked about the impeachment situation with him, they just had a pained look on their face, right. And I think that ate up a lot of credibility, it ate up a lot of foreign interest and a lot of foreign capital from friends in Ottawa, and Washington and Brussels and Paris in London. Speaking of which, they’re actually not as interested in expertise and good advice from us outsiders, they’re not as interested or enthusiastic at all in the way that Poroshenko government was, with input from outsiders. This is a very interesting, very interesting, psychological part of the way he structures his team in the way he runs his policy shop. They’re much, much, much less enthused about outside help, and outside opinions. I mean, it’s a very inward looking thing and in some ways, right. So you know, with that said, let’s get this character a year ago, or a year and a month ago, I had the great privilege, actually historical privilege. I set up within a system to the campaign Mr. Danylyuk could become essentially the national security adviser, a meeting with the candidate Zelensky day before the first round of elections. So I was with my friend, the philosopher Bernard Levy, and another prominent French intellectual. And because it was three of us and we were coming in for a private conversation. They set up a meeting of three in a private restaurant the day before the election for two hours, with Zelensky, Danylyuk and the man who become his Prosecutor ,General Riaboshapka. So it was three men on one side, me, Bernard, and another French person, whose name will not go on said on the other side, it was ever Fatca Smolensky. And Danylyuk and Riaboshapka, of course, got big jobs in this government and are no longer in it, and are both bitterly criticizing the president in their policy conversation now. So we spent about two hours and when I got what I thought was a really good sense of his personality in those two hours. And the insights that I got into his character, you know, they were not dissimilar from the way things panned out. He’s fiercely independent. He’s much more macho, and strong physically, psychologically, then people gave him credit for it. He’s a slight guy, very slim, with tremendous shoulders, from the Russian speaking, very tough, southeast part of Ukraine. He comes from a very, very, very rough part of Ukraine and probably had a rough background. He’s psychologically very tough. He’s comfortable with other men. He’s comfortable in a macho environment. He’s comfortable with a duelling environment he is comfortable with. You know, as you’ve seen him, yell at soldiers on the contact line when he needed them to treat and wasn’t apparent that they would retreat unless the president told him to on video, he’s very comfortable using force. Now, this is neither a good thing nor a bad thing, but if this is characterological and it’s interesting. He is very, very, very sure of himself. And he is emotionally very shrewd. I think he picks up on emotional needs and cues and people’s psychological structures very, very, very well. I think he picks up on people’s psychological you know, in this way, it’s very much like Donald Trump or other people who come in with that wave of, let’s say, right wing, but he’s not right wing populist. He is someone who’s shrewd about people’s character, and he picks up on what they need in negotiation and what you can do and how far you can go. So this is something that gives them a great deal of strength in negotiations, a certain psychological acuity which goes with being an actor, right, especially with a kind of actor, but he was a stand-up comedian, where is a back and forth between the audience where he feeds off and understands what the audience psychological tropes are. So it connected to this also the fact that he never really thought about financial, ideological or political issues until he’s 40. Probably, he’s not particularly political person who’s into making money making people laugh, and into making money in the sense that he’s a businessman. We shouldn’t forget that he comes out of the show business, but he’s very much a businessman. And even Kolomoisky said, he’s really hard in his negotiation. And Kolomoisky is, of course, an impossible person to negotiate according to interlocutors. So there’s is very much a strong personality, that should not be a, you know, you shouldn’t under value what the strength of his personality and how easy it is for him to negotiate. And without that said, there’s also a kind of brutal, brittleness there and he’s got it, he’s got a very short fuse. He is not an angry guy, but he’s a proud man, and he will snap at you if he doesn’t like what you’re saying. So I think these characteristics are very interesting when you look at them in tandem, he is a guy who will negotiate very hard. I don’t think he’s particularly interested in the opinions of outsiders, certainly not us, American ex-foreign policy experts. I think it doesn’t even care about anything more than 10 or eight people close to him, who he trusts on what they think. So let’s start with that. The other thing is, I lived in Odessa for two years in 2015 and 2016, when Governor Saakashvili was making trouble: they’re bringing back Saakashvili, even though he was not able to put him into the cabinet to give them a job, which allows like a surely to God on television and make trouble. I don’t understand this. I don’t understand where he didn’t understand how bad a job or how mediocre a job or how little the results of Saakashvili his tenure were in Odessa, or whether he’s just a man who likes grand theatrical gestures and he thought bringing Saakashvili back which would be a kind of low effort way to demonstrate that he’s different from his predecessors, because I was, you know, watching this from very close and having written about it in various Western newspapers and magazines. I was very, very, very much enthused when Saakashvili came to power in Odessa. And I was equally disappointed when you left, you can ask my friend Adrian about how Coronavirus just to save very things very quickly. We have to look at the situation of Coronavirus in Ukraine, in tandem with the response in the rest of Eastern Central Europe, Eastern and Central European democracies all reacted in the same way, which is to say, almost historically, in putting down the quarantine, which is the right way to go. They did that because they saw what happened to Italy and they knew very well about their health systems. we’re nowhere near with the French or the British Italians have and they would crumble and would be really bad. The fact that only a couple of 100 people(I think it’s 400-500 people less than that). How many people don’t know now a remarkably small amount of victims for 40 million plus people (37 plus million living in government controlled territory). The fact that every sixth victim is a nurse or a doctor, shows that the Ukrainians: a, did everything to keep the population from getting sick, b, have a crumbling health system, c, did not have enough PPE and gear, and d, they did everything. They did everything they could. Well, I, in fact myself, was very sick in February and I got tested in in March. I was one of the very first people to get tested in in Ukraine. It’s still not apparent whether I had Coronavirus or bronchitis. But it was easy enough for me to get tested. I got tested on the 13th of March. It later came out that the kit that I took was one of the fake ones from the ones that the Chinese sold them. So only a 30% chance that the test that I took was a reliable but I personally have a personal experience of going to a clinic number two, in Kiev, I also got tested in Odessa. When they told me I had bronchitis, my personal experience of getting tested in Ukraine, which is a real experience was that they were doing very well and the doctors were very competent and there was a test and nothing bad happened. So, let’s give them a, on the American system, ‘b plus’ or even a ‘minus’ on the way that they handled Coronavirus. It couldn’t have been. It couldn’t have been better based on the situation historically, how good the economic the healthcare system was set up. We were talking a lot. There’s a lot to be said about Mr Kolomoisky’s erstwhile patron, and then the fact that they are now in conflict even now, even though the president is not interested in total war with his erstwhile partner because that’s not good. But there’s also something very interesting to say about the cultural situation we were talking about with you before. Before our participants came along, I wrote a very big piece which was published yesterday in tablet magazine about the Babyn Yar Memorial. Several of the billionaires which were funding the Babyn Yar Memorial Center, which is supposed to be built, put in this tremendously capricious character a Russian filmmaker by the name of electrician Offski to be the artistic director had previously been known for making a 13-year gesamtkunstwerk all-encompassing film cycle about Stalinism, which premiered in the in the Berlinale this year right before Coronavirus, struck. There was an immense amount of controversy around this guy and his projects. You can read my piece in the tablet yesterday about electrician Offski. Ukraine is in the middle of a Coronavirus crisis, but it’s also in the midst of a cultural crunch on several fronts with cultural institutions, which need to be supported and need to be building a Ukrainian political nation having tremendous problems. So a president of Jewish descent like Mr Zelensky now has this very difficult situation with the bobbin yard Memorial centre. And these Russian billionaires putting in a Russian trickster to run the centre. Maybe we’ll talk about a little bit more in the Q&A. Maybe that’s enough for now.

Andrew Foxall  42:40

Thank you. Thank you Vlad for your comments. There are quite a few questions that have come in while the three panellists have been speaking. So rather than use the chairs prerogative, I think what I’ll do is just go straight to the Q&A. The first question that we have is from Yuri Bender, Yuri, let’s try this. Are you able to unmute yourself in order to ask your question?

Yuri Bender  43:14

Thank you very much for some inspiring comments from our panellists today. And I’d like to ask you a couple of questions actually, how do you assess the Zelensky administration’s cooperation with oligarchs? I know Vladislav mentioned Mr Kolomoisky, too, but the general cooperation with the oligarchical clans during the coronavirus crisis within the authority strategy to maintain economic stability across the regions we saw what happened in 2014 when the country was carved up into fiefdoms and centres of influence with Kolomoisky, Taruta others, given the particular fiefdoms has a similar accommodation been made in the Coronavirus crisis, and also the current energy market dynamics. How will those affect Mr. Putin’s willingness to come to some kind of settlement with Mr Zelensky, on the future of the occupied territories in Donbass?

Andrew Foxall  44:24

Thank you Yuri, just by way of context. For those who aren’t aware of that I’m not sure if he was asking his question in a professional or personal capacity, Yuri is a journalist at the Financial Times. Who would like to respond to your questions?

Adrian Karatnycky  44:41

Maybe I can take the first shot at it. And I would kind of reverse it. I would say that Ukraine over the last five or six years has weaned itself away from excessive dependency on Russian energy sources and that I think was in remains a fundamental aim of the country to reorient its trade relations, which occurred very drastically when the war began, and the Russian aggression began. But to find new markets to expand it to have a more diversified economy, including under Mr. Poroshenko, the integration into a, you know, free trade agreement with the European Union, but also to search out Asian markets and international markets. And I think there’s always a lot of talk about and the invocation of the term ‘oligarchs’, and it’s very true that there’s a lot of rent seeking there. And there is perhaps in some cases, corruption and their efforts, some of them on the part of some of them to exert influence through the typical bribery, that the emoluments and so on, but the real power of the oligarchs is their media, their media resources, and I think Mr Zelensky, although he came out of television is incredibly weak in the media sphere. He, previous presidents had a partnership relation with either media that they or their allies owned, or themselves. Ministry of coverage had the backing of one of Ukraine’s major TV stations, then TRK Ukraine and Inter so we had two of them. Mr. Poroshenko had his own media and Mr. Kuchma had media of his son in law who owns three major TV outlet. Mr Zelensky is absent of this and social media are, of course important, and the internet and so on. But television remains an extremely important part of communicating with your electorate. And these TV stations also come with their own websites and their own alternative, you know, all their online media. So in a sense, it’s very hard to govern, to go to war with all these forces. And I feel a certain understanding of the sympathy that he is, in a sense, repeating what Mr. Poroshenko did, which is waging a kind of a rolling conflict with one or another oligarch, rather than trying to take them on. At the same time. I’m not as convinced that the accommodations that have been made with Ukraine’s richest man, Mr Akhmetov are that purely driven by, you know, a trade off of favourable coverage and support and so on in return for higher electricity rates. It’s also the question of where, where you derive energy. Mr Kolomoisky, who has some lobbies in the parliament, was also trying through those lobbies to get into the market of importing energy from Russia. And so again, I think it’s a little more confused, the most important thing to look at is what Ukraine is doing to be independent of Russian pressure. And Ukraine today is exploring closer relationships, because of the changes in the global gas market, and the dropping prices to be more dependent on LNG. It is now talking about a closer relationship with Turkey. And interestingly enough, Turkey itself now derives much of its gas flow from the LNG market. So I think there’s a quiet and those things are to be supported. So in general, I would say, just viewing this as a binary thing, bad oligarchs and dependency on them. Well, in a sense, oligarchs are a lot an important part of the Ukrainian economy, at dealing with the oligarchs and not necessarily attacking some gestures in their behalf, maybe driven by more the desire not to be dependent on you know, Russian sources. So I think it’s a multi denominated, it’s a multi-dimensional puzzle that we are looking at, I would say, he is not a person who has been captured by oligarchic interests. I think he is a person who is made trade-offs and deals with them. And ironically, he is in these compromises. And in these trade-offs, he is replicating what, what the person that he denounced, so vehemently Mr. Poroshenko did in his previous administration, and an offense all Ukrainian presidents have done over the 30 years of the country’s existence.

Orysia Lutsevych  49:39

If I may just add a little on because I think Adrian covered quite well the conundrum that the Lansky has, in a way. It’s not just a couple of people who are very influential and have these media assets. It’s the whole system that is built exactly to shield and protect their cash flows and assets. So it’s if you take it out of Ukraine, there’s, you know, frankly very little will be left. So you need to replace social engineering, new institutions that will gradually replace the way Ukraine is run by these informal or, you know, vested interests are corrupt schemes and systems. So you have to be very cautious not to unravel Ukraine, the country that is in conflict, of course, that is, you know, now what he will be hit by Coronavirus. But I think it is some of the markers that perhaps for, you know, for the audience to watch is how do we know that Zelensky is going in the direction of weakening this system or not. And some of it, it could be about the state-owned enterprises reform, not just privatization, but also the way the boards the way these companies are governed. Another market to watch is, of course, media ownership, media reform, because this is something that if MPs, including some coming from media, markets, such as Kharchenko started, but they never push through some of the reform in the media. But again, these are just the tools, media is just a tool to protect these core interests. And Ukraine should look at these core interests, including courts. I mean, this is something that so far, we all should be watching with the reshuffle of the Prosecutor General with the whether the, you know, systemic reform of courts will proceed, because this is a backbone, both for the functional land market and for foreign direct investors. And there was a question on Russia. And I think you remember, from what I understood where the Putin will have incentives with the dropping oil price to find solution to Ukraine, my quick answer is ‘no’, I don’t think that’s enough for Putin to budge on Ukraine. I think actually, he is afraid of the Lenski effect in the region. And this is something we hear from, you know, away from Kazakhstan, from Russia, from Belarus, give inspired by Smolinsky in the region, they’re curious about it, which and doesn’t like it. So I think you put as much pressure as you can for Zelensky to fail. And the fact that Kozocky was appointed on the Kremlin sides to now negotiate the solution is not a very good sign. It means that they will be pushing for further realisation for kind of a Transnistria solution at best frozen conflict. But we are even not there. There is no ceasefire.

Andrew Foxall  53:03

Vlad, I don’t know if you want to say anything in response. But what I’m going to do is actually just to stop you. It just in order to bring in another question as I’m aware of what the time is no fear that we may not have time for too many more questions. The next question I’d like to bring in is from Volodymyr Dubovyk, who’s joining us from Odessa.

Volodymyr Dubovyk  53:35

Thank you, Andy. Great panel, excellent panel, thank you so much. Good to see you all. I mean, I know all of you on the panel. So I’m not surprised, frankly, on the quality on this panel. So my question is, with regard to your use all the panellists, in terms of a role for Ukraine’s friends in the West, in this situation, when you described it so perfectly, then the last is to record his performance in the first year? It’s pretty much mixed back. You know, historically, if you look in the past, it’s often been the case that Ukraine needed a gentle friendly push, or sometimes not even gentle to go in the right direction. Do you feel this? Now that it’s time already for our friends in the west to help keep Zelensky on the right track. Thank you.

Andrew Foxall  54:23

Thank you, Volodymyr, Vlad over to you.

Vadislav Davidzon  54:27

Thank you, first of all, to my honourable friend from a just congratulations on you’re being given that honourable doctorate yesterday. The honourable gentleman was given an honourable doctorate from the Odessa University yesterday for his years of contribution to all the things that we work on. So congratulations. So during the Poroshenko administration, we Western powers I mean, we’re not in government to the front of the three of us, but Ukraine. His friends in the West became very, very, very good at figuring out where the line was where Ukraine needed to be pushed, but shouldn’t be pushed too hard, but it would fall over, especially the Poroshenko. Government, I would say, and I think others would say here, but that the Poroshenko administration did need a little bit of friendly pushing to do the things that they wanted to do, or knew that they should do but weren’t always quite ready to do as quickly as they should have been doing. In the last year, we’ve had a honeymoon for this young president and, and we have given him the leeway, especially with a tremendous mandate that he had to try to do things his own way. It’s not that he screwed up, and he’s put in a good effort. None of us here would say that he’s badly intentioned. We all do believe it is well intentioned, but some things have not been moving as quickly as possible there the, the badly timed and certainly badly structured reshuffle the cabinet shows that he was impatient and was not willing to give it a year or two. And he made a bad decision in that case, and really the worst possible time You should have seen any good politician should have seen Coronavirus, coming having a major Cabinet reshuffle in early March was not bright, let’s say or politically wasn’t bright. Is it time to push this administration in the middle of Coronavirus are five months left on the clock before the American presidential elections which will decide how much support Ukraine has. And in January of 2021, I wouldn’t yet, not yet. That’s just me.

Adrian Karatnycky  56:46

Can I take the question more broadly, which is how Western friends of Ukraine should comport themselves. On the one hand, I think it’s essential to try to help build movements and support the building of movements and institutions inside Ukraine that will propel reform. I always argue that there is no liberal or free market party in Ukraine, there is only the IMF, it acts as a kind of a goad, with its incentives to push governments, consecutive governments in the right direction. It’s time for Ukraine to have some kind of a cohesive political force, whether it comes from within, from the evolution of thinking of a person who doesn’t do much thinking about governance and values, like Mr Zelensky and his team. That’s one thing, but I do think that Ukraine needs. The second issue is how do we comport ourselves? If we see mistakes, I think we should always understand the fundamental issues. In Ukraine, yes, corruption is one of them. But the fundamental identity of Ukraine is its desire to be part of the Western democratic world and preserve its democratic institutions. And the second thing is to preserve itself from the Russian grasp and to develop its own identity. I think Western advocates should remind Western policymakers that Ukrainian people are in a sense, on the front line of resisting a revisionist state, which likes to use its military power, and its disruptive power against the West, and that Ukraine, and its people are willing to take on the burden of resisting that, and have shown tremendous courage and tremendous support of democratic institutions and democratic values while they’re fighting this hard battle. They’re tolerant. And I think that is the way that we can comport ourselves and present Ukraine to the outside world, while at the same time pushing and trying to push Ukraine and Ukraine’s leaders through argument, and through an exchange views towards the development of more comprehensive ways of reforming countries.

Orysia Lutsevych  59:05

But I would like to add, I think it’s crucial for Western policymakers, European Union, United States, Canada, Japan, to remain the G7 group to remain vigilant and to, you know, remain engaged with Ukraine. Because, in a way, if you want the leverage that this you know, the Ukraine’s friends and international coalition has is much bigger than key of then in Moscow. And in the end, we all know that this struggle between the rule based society and autocracy on Ukraine’s border, will be one if Ukraine becomes rule based, prosperous country, so it is in the interest of global security. And so what I want to say actually slightly disagree with Adrian that the only Liberal Party is the IMF. I think this would be great. If you look at how many people think that they want a rule-based order, it’s 51%. It’s just that they’re not shaped in a political way or not, not so vocal in a way to be able to influence and lobby, although you could argue that in a way, small and medium farmers manage, but also to log with the land reform that was beneficial to this sector rather than big agriculture. There are some examples where this middle class is trying to be more organized. What I would like to say is that conditionality works. And in the last year, we saw together IMF program, Ukraine did pass the land reform Ukraine did pass the banking law. And in the broader sense, Euro Ukraine wants to belong to the European family of nations. This was one of the questions in the chat. There’s overwhelming majority supporting European integration, large majority supporting NATO, it means that the European and Western partners should give a response to that. That is not adequate to the moment. And I think the partnership and cooperation within the European Association Agreement should expand, Eastern Partnership should grow. And then Ukraine deserves it, because it has proven that it can persevere and defend its borders and the borders of Europe.

Andrew Foxall  1:01:22

Thank you, Orysia. One thing that that I think joined your comments together with Adrian and Vlad at the end, there was, in a sense, this call or this reminder of the importance of vigilance, the importance of not being in a sense distracted by Coronavirus, and therefore not losing sight of the importance of Ukraine both in its own right and of course, the contribution that it makes to broader European security and defence. We are past the hour. So it falls to me unfortunately, to stop the discussion seemingly when it was just getting going unfortunately. Adrian, Orysia, Vlad, it’s been a pleasure as always having you with us. Thank you very much for your comments and your insights which were hugely valuable as always thank you to our audience, there will be additional Henry Jackson Society webinars. So please do keep an eye out for those as and when they are advertised. But wherever you joined us from do enjoy the rest of your day. And we all hope to see you soon. Take care.


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