Mustafa Nayyem will chair Ukraine Reconstruction agency
Full-scale business deregulation is underway
American technologies for Ukrainian nuclear power plants
Results of the EU-Ukraine Summit
Political asylum for war criminals?
Deepening cooperation between China and Russia
SECURITY SITUATION UPDATE
Ukrainian Defence Minister Oleksiy Reznikov has stated that Ukraine expects a possible major Russian offensive this month, but Kyiv still has sufficient reserves to hold back Moscow’s forces even though the latest western military supplies will not all arrive in time. Russia could launch the new attack for “symbolic” reasons around the first anniversary of its invasion, but its resources are not ready from a military point of view, Reznikov told journalists at the press conference on 5 February.
The Russian Armed Forces (RAF) have been making incremental advances in the east as Moscow tries to capture the embattled city of Bakhmut and revive its faltering invasion after a string of battlefield setbacks in the second half of last year. Reznikov said the offensive would probably be launched in the east or the south, where Russia wants to widen its land corridor to the occupied peninsula of Crimea. He estimated that Russia had 12,000 troops in Belarusian military bases, a number that would not be enough to launch a significant attack from Belarus into Ukraine’s north, reopening a new front.
The enemy intensified attempts to challenge the Ukrainian air defense system, under cover of training flights in Belarus. Current developments demonstrate that the RAF ground groupings' likely preparation for further actions will require support and cover from the air. The withdrawal of the remnants of the "Wagner" PMC detachments from under Bakhmut is underway. The RAF have intensified combat operations in the section of the front between Siversk and Bakhmut. In the coming week, intensification of hostilities is expected in the Vuhledar area. The operation's main goal is to establish control over the Donbas-Crimea railway, as the enemy's preparation for an offensive requires concentration of supplies which is only possible by using the railways. For a large-scale campaign, Russia needs to accumulate additional resources and restructure itself logistically.
UKRAINE TO CHANGE DEFENCE MINISTER
At the end of January, Ukrainian Military Intelligence claimed that the Russian special services prepared a wide information and psychological special operation for the near future to discredit a number of representatives within the Ukrainian military-political leadership, including Vasyl Maliuk - Head of the Security Service of Ukraine, Oleksiy Reznikov - Defence Minister of Ukraine, Andriy Yermak - Head of the President's Office, Ivan Vyhovskyi - Acting Head of the National Police, and others. Within weeks, several media reports of alleged corruption in the Ministry of Defence appeared, leading to the dismissal of various Defence Ministry officials, including the deputy Minister for procurement Viacheslav Shapovalov, and Oleksandr Liyev - the acting director in charge of developing the country's armament capabilities and procuring weapons. The latter was accused by the leading country’s investigative media Ukrainska Pravda, of holding a Russian passport. This information was not confirmed, but Liyev lost his post.
Accumulating media scandals prompted talks about the resignation of Ukraine’s Defence Minister Oleksiy Reznikov. In the press conference organized on 5 February, he personally addressed speculation surrounding his future, saying he was ready to step down if President Zelenskyy ordered his dismissal. Journalists, however, continued to quote government and military sources saying that Reznikov was likely to be dismissed from his ministerial post next week, and be offered the post of Minister for Strategic Industries. According to the media, the likely replacement for him is Kyrylo Budanov, the head of Ukraine’s military intelligence department. MP Mariana Bezuhla also announced on Sunday evening, 5 February, that the Parliamentary Committee would be interviewing the nominee for Defence Minister post next week, and that the decision on Reznikov’s dismissal had already been taken. However, the next morning Bezuhla, as well as the head of the pro-Presidential faction David Arakhamia, claimed that no voting for the Defence Minister replacement was expected in the coming weeks. This was allegedly so as not to disrupt preparations for the Ramstein-format Ukrainian Task Force meeting (planned for 14 February), as well as not to destabilize wider preparations for the anticipated Russian offensive.
Speculation surrounding the possible resignation of Oleksiy Reznikov appeared amidst several corruption scandals which hit the Ministry of Defence and were triggered by the media. Ukrainian law enforcement services reacted immediately, launching investigations into the officials allegedly linked to those reports. Reznikov himself took part in the parliamentary committee on security, defence, and intelligence hearings to provide explanations and respond to questions related to the reports. However, despite his openness and earned reputation, his dismissal was seen in the Presidential Office as inevitable, to meet public expectations,experts believe. His possible successor, Kyrylo Budanov, is one of the most public military intelligence chiefs, who gained his political capital through insightful public forecasts on the war’s developments. His appointment, however, would violate the principle of civilian control, which is one of the key criteria for further Euro-Atlantic integration, as he holds a Major General rank. The delay of the Minister’s dismissal despite large media campaigns is related by observers to the alleged reactions of Ukraine’s partners. Observers relate the delay, despite the large media campaigns, of the Minister’s dismissal, to some partner reactions Ukraine allegedly received. Minister Reznikov, according to insights, received most of the information related to his resignation from the media and was ready to reject the offer of the post of Minister of Strategic Industries, as it had not been consulted with him prior to public messaging. The current situation illustrates the weakness of internal strategic communications within the country and is likely to produce complications for defence management in the wake of emerging reports of an expected large-scale offensive by Russia.
MUSTAFA NAYYEM WILL CHAIR UKRAINE RECONSTRUCTION AGENCY
The government established the State Agency for Restoration and Infrastructure Development of Ukraine. During the Government session on 13 January 2023, Denys Shmyhal announced that the new structure will be created from two existing organizations: the State Agency of Motor Roads (Ukravtodor) of Ukraine and the State Agency for Infrastructure Projects (Ukrinfraproekt). The new agency will be responsible for implementing reconstruction projects and will be chaired by Mustafa Nayyem, former deputy minister of infrastructure.
This happened amidst a number of corruption scandals, including in the Ministry of Communities, and the resignation of Kyrylo Tymoshenko, deputy head of the Office of President responsible for reconstruction from the OPU side.
The new reconstruction agency will be responsible for the following tracks: launching first recovery projects; setting up cooperation with international donors of Ukraine reconstruction; and coordinating regional requests over priority recovery projects.
One of the tasks would be to set up communication with another newly established body, the Multi-Agency Donor Coordination Platform for Ukraine reconstruction jointly set up by the EU, G7, and the Government of Ukraine. Technically the new agency will be created from two older institutions: Ukravtodor and Ukrinfraproekt. The same procedure was followed for merging the Ministry of Communities and the Ministry of Infrastructure recently. The logic behind this decision is grounded in the importance of transparency and building trust with international donors. Former Ukravtodor is said to be the first Ukrainian government organization to receive Anti-bribery management system certification ISO:37001 and certification on public procurement (CIPS). However, in the past Ukravtodor was involved in a number of corruption scandals. This is also one of the reasons why, according to reconstruction experts, it is important to establish the framework of public participation and oversight during project appraisal within the new agency not only by international donors but also by civil society representatives and local authorities.
Another concern regarding the new agency comes from the community of architects. The new agency will be responsible not only for the reconstruction of roads and infrastructure but also for housing and perhaps urban reconstruction in the future, which will be new spheres for this Agency. Mustafa Nayyem mentioned that he wants to cooperate with civil society in this regard. However, Nayyem has been advocating for the controversial urban planning reform law #5655, which was criticized by architects and civil society. Our analysis of urban planning reform law is available here. Nayyem took part in a meeting on this law with ambassadors of G7 countries while the government totally ignored dialogue with local government associations and architects who offered constructive criticism of this law. After the scandal between the deputy head of the “Sluha Narodu” party Olena Shuliak and the wounded soldier whom she visited after his critical social media post regarding this law, Mustafa’s brother Masi, himself a war veteran, even published a post calling the wounded warrior to support the law, which he later deleted.
Involvement of professional personnel as well as ensuring public participation and oversight will be among the challenges ahead for the new reconstruction agency.
FULL-SCALE BUSINESS DEREGULATION IS UNDERWAY
The Cabinet of Ministers might lift 50% of business regulations. As a result of the first meeting, the intergovernmental working group, chaired by Minister of Economy Yuliia Svyrydenko, recommended the government to lift 47 regulatory provisions within the competency of the Ministry of Economy. The first changes will concern imports and exports of goods, norms on investment activity, technical regulation, and intellectual property. At the next meeting, the deregulation working group will consider environmental norms and regulations.
As the government expects the huge role of the public sector in Ukraine’s recovery and reconstruction, the goal of the proposed optimizations is to reduce the administrative burden on business and simplify conditions for starting and doing business in Ukraine. Indeed, the lack of economic development in Ukraine has long been associated with the lack of economic freedoms. Ukraine ranks 130th (out of 177 countries) in the Index of Economic Freedom being qualified by Heritage Foundation as a “mostly unfree country”. The think-tank also notes that Ukraine’s “regulatory decisions are characterized by a high degree of arbitrariness and favoritism”. Lifting these selective regulations that benefit certain businesses while creating burdens for others would be a big step forward for Ukraine.
While deregulation of the Ukrainian economy is desperately needed, it is important to do it right. The draft law on deregulation proposed in parliament in the autumn of last year demonstrated certain flaws and corruption risks, according to the conclusion of the anti-corruption examination by the National Agency on Corruption Prevention. Civil society expects the new wave in this process to be transparent and inclusive. As the next meeting will be on environmental deregulation, environmental NGOs should be invited to take part. Environmental NGOs are concerned that lifting environmental norms would be harmful for forest and soil protection, sustainable waste management, and wildlife protection. At the same time, civil society is expecting the adoption of the law on environmental control which is aimed at the approximation of Ukrainian environmental legislation to EU acquis.
Deregulation of business activity is necessary for Ukraine’s recovery and modernization. The government must approach this process by considering Ukraine’s future EU integration and environmental protection.
AMERICAN TECHNOLOGIES FOR UKRAINIAN NUCLEAR POWER PLANTS
At the end of January, the Ukrainian government adopted a decree on measures for the construction of two new units (blocs n.5 and n.6) of the Khmelnytskyi Nuclear Power Plant (KhNPP). According to the Minister of Energy of Ukraine Herman Halushchenko, the Soviet era of nuclear generation has come to an end. Ukraine plans to build two Westinghouse AP1000 reactors. The expected completion date is 2030-2032. The cost of one unit is approx. $5 billion. The operator will be the state enterprise Energoatom (which currently operates four Ukrainian NPPs).
Energoatom and Westinghouse will extend their cooperation also in the spheres of nuclear fuel supplies and storage of spent nuclear fuel. These spheres were in the past dominated by Russia. Currently, four Ukrainian NPPs with 15 units generate 13.8 GW - more than half of the country's electricity.
Cooperation between Moscow and Kyiv in the nuclear sphere was interrupted in 2014, following Russia's annexation of Crimea.
Westinghouse's AP1000 reactor is a proven Gen III+ reactor, which has significant advantages compared to the Soviet analogue, especially in terms of safety, but also regarding technical and economic indicators. Already in 2021 Energoatom and Westinghouse signed a memorandum on the joint construction of five units in Ukraine with a total cost of about $30 billion.
The world's nuclear power industry is approaching an important stage - a mass replacement of old reactors. According to the IAEA, two-thirds of power units in the world have been operating for more than 30 years and will need to be decommissioned soon. In Ukraine, from 2030 to 2040, 12 out of 15 units (a total of 11 GW) will be shut down as they reach their 30-years design and 20-years beyond-design service life.
Ukraine doesn’t have sufficient financial resources for dismantling old and building new blocks. Without the replacement of existing nuclear infrastructure, the country will be facing a threat of deindustrialization. That is the reason why the issue of building the two units at KhNPP was raised. The construction of blocks n.3 and n.4 at KhNPP began in 1985. Following the accident at the Chornobyl NPP, and due to other safety concerns, the construction work was suspended in 1990 when the readiness of unit n.3 was 75%, and unit n.4 15%. These two unfinished units were not properly preserved. For more than 30 years they were exposed to external influence and their condition raises serious security doubts. After the accident at Fukushima-1, new requirements for the safety of nuclear power plants were adopted. For that reason, brand new blocks (n.5 and n.6) will be built.
Before Russia’s full-scale invasion of Ukraine, all units at the Rivne and Khmelnytskyi NPPs, two at the Zaporizhzhia NPP, and one at the South Ukrainian station ran on Russian (TVEL) nuclear fuel. The other six reactors were supplied by Westinghouse. The first contract between Energoatom and Westinghouse was signed in 2008 and in 2018 was extended until 2025. After 24 February 2022, Ukraine refused to purchase additional Russian nuclear fuel. Ukraine still has two-year supplies of Russian nuclear fuel. An agreement was reached with Westinghouse to expand production over these two years to completely eliminate the need for Russian nuclear fuel. Westinghouse produces fuel assembly of higher quality than TVEL which allows more efficient use of reactors.
There are two types of reactors in Ukraine — VVER 1000 and the less powerful VVER 440. The second type is only at Rivne NPP (RNPP). Currently, Energoatom uses Westinghouse fuel only for VVR 1000. In June 2021, representatives of Energoatom and Westinghouse Electric Sweden AB signed a contract for the development and provision of license documentation for VVER 440 fuel assemblies for power unit #2 of the RNPP. Energoatom has a year and a half to finalize the adaptation of the VVER 440 power units at RNPP for the use of Westinghouse fuel assembly. The first experimental batch of fuel assemblies (12 pieces) produced by Westinghouse will be loaded into the active zone of the power unit #2 of RNPP in 2024. The total volume of supply under the contract provides for at least 1,056 fuel assemblies.
However, complete dependence on one supplier, whichever it is, does not meet energy security requirements. The current shift of supplies of nuclear fuel to a single supplier is out of necessity (caused by Russia’s war against Ukraine) and not sustainable in a long-term perspective. According to Energoatom, Ukraine plans to launch its own production of nuclear fuel assemblies (based on Westinghouse technologies) and thus decrease the dependence on one supplier in the future. Ukraine has significant uranium deposits which can be used for domestic purposes.
Spent nuclear fuel:
Ukraine used to return the spent nuclear fuel back to Russia and pay more than $200 million a year for its disposal.
In 2021 Energoatom stated beginning from 2021 it no longer uses the services of Russian radiochemical enterprises. It finally abandoned the export of spent nuclear fuel from Ukrainian NPPs to the Russian Federation for processing and temporary storage.
In April 2022, Energoatom received permission to put into operation the Centralized Storage of Spent Nuclear Fuel. This was expected earlier but was postponed due to the war and the presence of RAF in the Chornobyl Exclusion Zone, where the repository is located. This is an autonomous nuclear installation designed for long-term storage of spent nuclear fuel from the South Ukrainian NPP, KhNPP, and RNPP. The design life of the storage facility is at least 100 years. Its construction was carried out by the American company Holtec International. A year before, the construction of a 43-kilometer connecting railway track was also completed.
In the spring of 2021, another nuclear installation "Spent Nuclear Fuel Storage" at the Chornobyl NPP was granted a license for its operation. This storage of spent nuclear fuel of the "dry" type is intended for the proper handling of spent nuclear fuel. It is an integral part of the nuclear fuel cycle (reception, preparation for storage, and direct storage for 100 years of spent heat-separating assemblies) of the Chornobyl NPP. This repository will receive for long-term storage spent nuclear fuel from the old repository in the amount of about 22,000 fuel assemblies, which have accumulated during the period of electricity generation from 1977 to 2020. The work was financed from the international nuclear safety account of the European Bank for Reconstruction and Development, with a total project cost of €448.2 million.
RESULTS OF THE EU-UKRAINE SUMMIT
On 3 February, the EU-Ukraine Summit was held in Kyiv. This historic event brought together the Presidents of Ukraine, the European Commission (EC), and the European Council, as well as 15 European Commissioners. The summit's main topics were the acceleration of military and political support for Ukraine and the next steps in Ukraine’s European integration. The summit ended with Ukraine and the EU signing a Joint Statement that fixed the parties' positions, further directions of cooperation outlining obligations, and areas of mutual cooperation. In addition, EU leaders presented an analytical report on Ukraine's implementation of EU laws, which will become the basis for preparing a national plan to adapt Ukrainian legislation to European. Volodymyr Zelenskyy stated that Ukraine seeks to enter into negotiations on joining the EU as soon as possible and is waiting for relevant decisions from the EC and the European Council. In turn, the President of the European Council, Charles Michel, assured that the EU would not stop supporting Kyiv despite the Kremlin's threats and that Ukraine will become a member of the EU. Meanwhile, EU leaders declared further military and financial support for Kyiv. The President of the EC, Ursula von der Leyen, announced the allocation of €1 billion under the Fast Recovery Plan. She also informed about a new sanction package against the Russian Federation with restrictions of €10 billion, which will be implemented in the EU by 24 February. Volodymyr Zelenskyy thanked the EU for the current tranche within the framework of the European Peace Fund and the further work of the EU military mission in training Ukrainian soldiers. A day before the summit, on 2 February, a joint meeting of the EC and the Government of Ukraine took place. As a result of the consultations, the parties concluded an Agreement on Ukraine's participation in the EU Single Market Programme (with a budget of €4.2 billion) and signed a Memorandum on a strategic partnership on renewable hydrogen. On the same day, the European Parliament adopted a resolution calling the EU to "start working on accession negotiations and support a road map" for Ukraine.
The 24th Ukraine-EU Summit became an unprecedented event radically different from previous high-level meetings and had a much broader significance than a purely bilateral partnership dialogue. This was demonstrated clearly by the time and location of the event. Initially, the summit was planned for the end of December 2022 in Brussels. But the meeting took place in the capital of the warring country a few weeks before the anniversary of Russia's invasion of Ukraine, and against the backdrop of reports from Western and Ukrainian intelligence about new Russian offensive plans. EU leaders demonstrated solidarity with Ukraine and sent a clear signal to the Kremlin that the West is united and will continue to support Kyiv with money, training, and weapons. In addition, millions of Ukrainians (86% support EU membership) got assurances that they will become members of the European family in the foreseeable future. At the same time, the Ukrainian Government was reasonably explained that without the implementation of the reforms, the accession negotiations would not begin. This means the full implementation of all seven of the EC’s recommendations. In a joint statement, the EU noted two areas where reforms have been most successful - the anti-corruption sector and media legislation. At the same time, the document emphasizes two areas that need improvement - judicial reform and the reform of the Constitutional Court.
Kyiv is expecting a quick start of accession negotiations. However, Brussels is not ready to talk about specific terms. Ursula von der Leyen stressed that the EC will adhere to its decision that the interim assessment of Kyiv's compliance with EU criteria will be carried out in the form of an "oral update of the enlargement report" in spring and that only in the autumn will Brussels be ready to issue a written report on this issue. In turn, Prime Minister of Ukraine Denys Shmyhal emphasized that Ukraine "will raise the question of starting negotiations with the EU in autumn."
In addition to ambitious political statements, signing the Single Market agreement was an important achievement of the negotiations. "We approved the priority actions plan for 2023-2024. Its implementation will make Ukraine a de facto member of the European Union at the level of economic sectors: industry, agricultural sector, energy, digital services, transport, the financial sphere, customs," Zelenskyy said. Abolishing all customs duties for Ukraine will also contribute to progress in this direction. Ursula von der Leyen announced that she would initiate the extension of this exceptional regime for at least another year. Free entry of Ukrainian cargo carriers to the EU will be extended for a year. Further liberalization also will concern the cancellation of roaming charges between Ukraine and the EU and the export of Ukrainian meat products to European countries.
The two-day "European Integration Ramstein" in Kyiv gave a clear signal that Ukraine's accession to the EU has moved one step closer, and the support of Western allies will continue.
POLITICAL ASYLUM FOR WAR CRIMINALS?
Over the past six months, news about Russian soldiers seeking political asylum in European countries has emerged. All these soldiers are asking for asylum in Europe in exchange for testifying about the crimes of the Russian army, which they witnessed. Pavel Filatyev is one of them. He took an active part in the occupation of Ukraine and was involved in hostilities against Ukrainians. At the end of August, he was granted permission by the French authorities to apply for political asylum.
Another serviceman of the RAF, Nikita Chibrin, was granted asylum in Spain. His brigade was involved in the occupation and atrocities in Bucha, Kyiv region.
Firstly, one must assume that these people were also involved in crimes even if they claim they didn’t participate in the atrocities against Ukrainians. Only a thorough investigation can prove the opposite. Secondly, they must fully cooperate with Ukrainian law enforcement agencies and provide detailed information which will be later used e.g., for the future war crimes tribunal. But an example of Filatyev, who after being granted asylum, refused to cooperate with the Ministry of Internal Affairs of Ukraine and avoided any responsibility for his actions, demonstrates that there is no such approach. Now Filatyev is enjoying his life in an EU country despite his participation in Russian aggression against Ukraine.
Another case concerns Andrei Medvedev, a former PMC Wagner mercenary, who is seeking asylum in Norway. He voluntarily joined the ranks of the PMC Wagner in July 2022 (four months into the full-scale war!). He promises to testify against Yevgeny Prigozhin. He admits, however, that he does not know any names and does not possess any personal information. It is unlikely that this person will be able to provide any new hard evidence which would not be known to the international and Ukrainian investigators. In addition, he fits the definition of a mercenary as described in the International Convention against the Recruitment, Use, Financing, and Training of Mercenaries. Norwegian and Ukrainian law enforcement officers should jointly investigate and determine the possibility of Medvedev's extradition in the future. So far, the Prosecutor General's Office of Ukraine issued a vague comment without providing any details.
The democratic world needs to obtain maximum testimonies about Russian war crimes in Ukraine. In addition, these actions provoke other representatives of the occupying army of the Russian Federation to take advantage of such an opportunity. This can be useful for a detailed investigation of the Russians' crimes. Ukrainian law enforcement agencies must have a leading role in this process, and have the full support of their international partners. We can expect more cases like Filatyev’s or Medvedev’s. Not all deserting Russian soldiers and mercenaries possess valuable information. Without hard evidence, the testimonies of these people will have only a minimal impact on the results of future war crimes tribunal against Putin’s regime. Obviously, these people are only trying to avoid punishment and start a new life in democratic countries. Every single one must be a subject of an investigation into their role in the war against Ukraine and their possible involvement in war crimes. Full or partial exemption from liability should be proportionate to the degree of guilt and the usefulness of the information they can provide.
DEEPENING COOPERATION BETWEEN CHINA AND RUSSIA
The US recently imposed sanctions against the Chinese company Spacety China. The Office of Foreign Assets Control of the US Department of the Treasury reported thatthis company transferred satellite pictures of Ukraine to Russian company Terra Tech. These images were obtained to assist the PMC Wagner in its combat operations. It is not the first time that "neutral" China is been suspected of helping Russia. An investigation of the Dutch media NOS proved that a group of Chinese companies is exporting Dutch microchips to the aggressor country through intermediaries to bypass sanctions.
Chinese companies are closely tied with the PRC’s government. The above-mentioned activities of private companies must therefore be in line with the Chinese Communist Party’s (CCP) policy. Experts have long talked about the possibility that Beijing is helping Moscow informationally and technologically. The recent cases only confirm this cooperation between PRC and Russia.
Since the start of the full-scale invasion, the PRC has refused to criticize Russia's violation of Ukraine's sovereignty and territorial integrity and instead accused the US and NATO of instigating the war. At the official level, Beijing talks about its neutrality. A more accurate label would be "pro-Russian neutrality." The PRC is balancing between cooperation with Western countries and Russia. This is unlikely to change in the near future because the PRC has become a significant importer of discounted Russian oil and gas. In turn, the PRC now accounts for the majority of Russia’s imports of goods. The country also systematically supports Russia in the political field: it opposes the exclusion of the Russian Federation from international organizations and participates in joint events, meetings, military drills, etc.
According to recent investigations, China is actively exporting goods to Russia that can be used in the military industry (spare parts for fighter jets, helicopters, drones, etc.). This is done not only by private companies but by state companies too. Sanctions hinder the Russian army's production of new and repaired old weapons. They depend on foreign supplies. With China's help, Russia can continue equipping its army with modern weapons to continue fighting.
While maintaining its declared formal neutrality, the PRC is in fact assisting Russia, strengthening its resilience in the face of Western sanctions. The country rejects any accusations of helping the aggressor and blames the US for the "crisis in Ukraine". Beijing’s siding with the aggressor state must be kept in mind by officials in Kyiv. Such hostile policy must prevent Ukraine from considering the PRC as a potential (or even strategic) partner in the process of reconstruction of Ukraine or as a potential mediator in negotiations with Russia.