ISSUE 10
05. - 18. 09. 2022
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- Security situation update
- Ukrainian position on negotiations with Russia
- A new concept of security guarantees for Ukraine
- Putin is losing the gas war against Europe
- The first decision to confiscate the property of a Russian oligarch in Ukraine
- Closed registers vs. public control
- The failure of Kremlin propaganda
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SECURITY SITUATION UPDATE |
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In September, the Armed Forces of Ukraine (AFU) successfully reclaimed control over large territories of Kharkiv region, including the strategically important cities of Izium, Balakliya and Kupiansk, occupied by the Russian Armed Forces (RAF) since March-April. Ukrainian officials report that the AFU have retaken around 6,000 square kilometres during the north-eastern counteroffensive, which started on 6 September, and which is continuing to recapture territory along the border with Russia in several areas. Russia continued to depict the pullback of its forces as a pre-planned move, but hundreds of Russian soldiers were captured and stockpiles of mines, grenades, portable rockets and even heavy weapons were left behind. In response to Ukraine’s operation, Russia significantly intensified missile strikes, including using Kalibr, X-47 Kinzhal, S-300, MLRS on civilian infrastructure in Central and Southern Ukraine. In the de-occupied territories, ample evidence of war crimes was exposed, including a mass grave with more than 400 bodies at the outskirts of Izium. The exhumation is still ongoing. Preliminary findings show that most of the bodies were civilians who died during the occupation of Izium by the RAF. A mass grave with the bodies of 17 Ukrainian soldiers was also discovered. Ukraine’s counteroffensive in the Southern regions continues, though fewer gains have been reported there.
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Ukraine’s successful counteroffensive was made possible mostly due to the acquired weapons and military equipment provided by the allies. Ukrainians exploited the fact that Russia did not have a tiered defence in the Kharkiv direction. Over 250,000 Russian troops are deployed along the 1,300 km-long frontline, concentrating currently on creating the defence lines in the Southern regions and attacking in Donetsk region. Ukraine conducted classic manoeuvre war, the aim of which is not to capture settlements but to quickly reach a frontier to cut off logistic communications. The Russian response demonstrated that in the next stage of the war further heavy missile attacks on the civilian infrastructure are more likely than massive land operations, though the threat of the further invasion from the Belarus territory remains as Belarus has again prolonged military exercises on its territory, now planned until 24 September.
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UKRAINIAN POSITION ON NEGOTIATIONS WITH RUSSIA |
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Against the background of the recent successful counteroffensive of the AFU in the South and East of Ukraine, the possibility of resuming negotiations between Ukraine and Russia is being discussed once again.
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Official groups for negotiations between Ukraine and Russia were formed shortly after the start of the full-scale invasion. They met in Istanbul and Minsk. In addition to the cessation of hostilities, the main demand of Ukraine was to return to the borders as they were on 24 February. But communication was stopped after the liberation of Kyiv region, where the Russians carried out mass murder of the civilian population. In early September, the US Secretary of State Anthony Blinken visited Kyiv. According to a number of Ukrainian media, Blinken conveyed to Zelenskyy the wishes of Joe Biden about the need to start negotiations with Putin. On 10 September, President Zelenskyy stated that negotiations with the Russians regarding the end of the war are impossible today, as they cannot even formulate their own position, and more importantly keep their promises. Minister of Defence Oleksiy Reznikov and Minister of Foreign Affairs Dmytro Kuleba clarified his words. Reznikov emphasized that there is no question of “returning to the borders as of February 24. Kyiv’s new position is the border as of 1 December, 1991.” Kuleba confirmed that Ukraine’s goal is the complete liberation of Donetsk and Luhansk regions and the return of Crimea. He added the dialogue is currently being conducted “on the battlefield”, although it is possible that it could be resumed at the table “when Russia is ready for it”. Kuleba claims that international partners have yet to see confirmation that Russia seeks such communication.
In response to this, Russian Foreign Minister Sergey Lavrov said that “Russia is not giving up on negotiations”, but they must be conducted on Russia’s terms. Moreover, the deputy head of the Security Council of the Russian Federation, Dmitriy Medvedev, emphasized that Russia, as before, demands “total surrender” of Ukraine.
All these statements were made even before the mass graves of civilians and soldiers of the AFU, tortured by the Russians, were found near the liberated Izium. The events in Izium have the effect of a “second Bucha”, after which Kyiv official contacts with Russian counterparts ceased. Current communication between Ukraine and Russia are limited to the exchange of prisoners of war (POWs). Since mid-May, more than two thousand Azovstal defenders have been in Russian captivity. More than 50 of them died as a result of the terrorist attack in the prison in Olenivka where they were held.
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A NEW CONCEPT OF SECURITY GUARANTEES FOR UKRAINE |
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On 13 September, the Office of the President of Ukraine presented the concept of security guarantees for Ukraine. It was developed by international advisers’ group co-chaired by the former NATO Secretary General Anders Fogh Rasmussen and the head of the Presidential Office Andriy Yermak. The recommendations call for the creation of the Kyiv Security Compact (KSC), a joint strategic partnership document bringing together the guarantor countries with Ukraine, which will be framed based on a multi-tiered approach. A core group of allies shall provide strong commitments to support the AFU and a broader group is expected to provide non-military guarantees, built around sanctions. The package of guarantees includes military, financial, infrastructural, technical and informational preventive measures (deterrence), as well as measures to be taken immediately in case of a new encroachment on the sovereignty and territorial integrity of Ukraine. In addition, the structure of the KSC includes a fully-fledged sanctions package against the aggressor state, and may also include additional components, such as agreements on providing Ukraine with modern air defence/anti-missile systems, regional agreements on security in the Black Sea and others. The KSC shall bring a core group of allied countries together with Ukraine. According to the authors of the document, these could include the US, UK, Canada, Poland, Italy, Germany, France, Australia, Turkey, Nordic, Baltic and Central European countries. The Presidential Office of Ukraine expects that the main body of the agreements can be finalized already by the end of 2022.
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The document is shaped better than previous versions presented by Ukraine in March-April. It does not contain proposals that were most unacceptable to Western partners, e.g. China was removed from the list of potential guarantors of Ukraine. All the guarantor states are NATO members, with Australia as the only exception. But significant issues about it remain unanswered, including the specifics of obligations of the guarantor states. The KSC is a framework document of a declarative nature. Authors did not call it a memorandum so as to avoid association with the Budapest memorandum, but admitted that absence of the legally binding commitments is one of the most significant vulnerabilities of the document, which is to be compensated through a number of bilateral agreements and treaties. The document says nothing about how many tanks, planes, artillery pieces or shells guarantors will provide, nor does it spell out the desired size of the AFU. Another dubious provision - the KSC guarantees Ukraine protection only in the event of an attack by Russia, which may turn out to be complicated once the aggressive eastern neighbour of Ukraine changes the label of the aggression, or attacks under a false flag operation. On the positive side, experts highlight that in the presented version Ukraine abandoned unrealistic hopes of obtaining guarantees “stronger than NATO,” returning to the goal of joining the Alliance. The purpose of the KSC is to provide temporary security guarantees for Ukraine until its accession to NATO. But certain positions of the agreement will remain in force even after its accession.
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PUTIN IS LOSING THE GAS WAR AGAINST EUROPE |
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There is restrained optimism on the gas market. Gas prices in Europe have gone down after reaching an all-time high. Having reached $3,500 per thousand cubic meters (tcm) at the end of August, they gradually rolled down and fell to $1,573 per tcm on 16 September. The reason is simple: underground gas storage facilities (UGS) in EU countries are almost 85% full - much more than planned. In total the UGS of the EU now has almost 92 billion cubic meters (bcm). Of the 18 EU countries with UGS, 13 have exceeded the target of 80% set in Europe after an unprecedented jump in gas prices.
Russia’s gas blackmail doesn’t look so scary anymore. And although the head of the European Commission, Ursula von der Leyen, believes that “this is good, but not enough”, it is an obvious success achieved thanks to high-quality and quickly thought out measures. These steps are only the beginning of a significant decline in energy dependence on Russia.
Gazprom’s gas production from 1 January to 15 September 2022 fell by 15% to 300 bcm (16% less than in 2021). At the same time, the demand for gas on the domestic market decreased by 3%, and exports by almost 40%. According to Gazprom’s forecasts, gas exports to the EU in 2022 will decrease by 50 bcm. And even though there are reports on the growth of exports to China and Turkey, and of Gazprom’s burning gas so as not to supply it to the EU, the Kremlin makes it clear to the world that Putin has bent the stick of his blackmail and that there is no going back. He is losing the EU markets just as he lost the Ukrainian market a long time ago.
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Russia is once again reducing gas supplies to prevent EU countries from preparing sufficient reserves for the winter. There is an obvious pattern - the worse the military situation for the RAF in Ukraine is, the less gas flows to Europe. Recently, Russian officials began to make statements that the launch of Nord Stream 2 would increase the supply of Russian gas to the EU. Such statements will lead to another increase of pressure of German business on its government.
Facing the threat of termination of Russian gas supplies, Europe is actively looking for alternatives and is taking emergency measures to develop its gas transport infrastructure. Which measures taken by the EU countries have already had an effect, and which ones are yet to come?
First, supplies of liquefied natural gas (LNG) to the region increased significantly. The EU imported 75 bcm of LNG between January and August (62% year-to-year increase). In addition to the US, the EU also plans to increase the volume of gas purchases from other countries including Israel, Qatar and Nigeria. Norway now also plays a leading role in supplying the EU with gas.
Secondly, new gas infrastructure is being built. A new 166km-long interconnector between Slovakia and Poland now connects two gas transportation systems and opens the way for gas to other Eastern European countries. Norwegian gas and LNG from the Baltic terminals will now flow through this corridor. At the end of September, another gas pipeline is planned to be put into operation in Poland - the Baltic Pipe which goes from Norway. Its capacity is 10 bcm a year. This completely replaces the volumes Poland received from Gazprom. In July, the Interconnector Greece-Bulgaria (IGB) was certified for commercial operation. The construction of a new interconnector from Spain to France and further to other European countries is also being discussed. Spain has the continent’s largest fleet of LNG regasification terminals but there is not yet sufficient pipeline infrastructure to ship the gas to other EU countries.
Thirdly, almost all countries are carrying out planned measures to fill gas storages. The only country that is still lagging behind schedule is Latvia. Its gas storage facilities are important for the entire Baltic region, as neither Lithuania nor Estonia have functioning storage facilities. The commissioning of the “Poland-Lithuania Interconnector” may improve the situation, as it provides an opportunity to receive gas from other regions of the EU. The countries of the region seek to reduce their dependence on Russian gas. For example, Estonia is completing the construction of a LNG import terminal, and Lithuania had built the new LNG terminal even before the war began.
Fourthly, works on the transition to green energy is being accelerated. For instance, Germany and Denmark agreed on the construction of the wind energy hub “Bornholm Energy Island” in the Baltic Sea. The hub will connect several wind farms and provide electricity for the two countries.
In the short term, this transition period will not be easy for EU member states. The international rating agency Fitch Ratings has raised its forecasts for natural gas prices for 2022-2025, taking into account the absence of Russian gas supplies to the EU. Fitch analysts consider it unlikely that the EU gas market will be balanced this winter.
Will Europe freeze? Definitely not. Existing reserves are already sufficient to supply gas to households, hospitals and critical infrastructure. But it is worth expecting regulation of supplies for certain groups of consumers, primarily industry during the winter period. The EU’s plan to save gas by 15% is a realistic goal. In many regions, this goal was achieved even without an action plan from the European Commission. The current rise in gas prices motivates saving even without any regulations.
What are the next steps of the EU? The European Commission is intensifying contacts with EU energy ministers regarding the price restrictions of gas imports from Russia. During the discussion of the price cap on 9 September, the ministers could not overcome their differences and come to an agreement. Instead of capping the price of only Russian pipeline gas, most member states are pushing for a broader cap on all gas imports regardless of their geographic origin. However, the ministers approved four out of five draft measures: a pan-European plan to save electricity during peak hours; limiting the revenues received by power plants that use sources cheaper than gas; a “solidarity mechanism” for profits received by fossil fuel companies; and a state aid program for energy-generating enterprises.
So far, the Russian Federation has managed to avoid serious losses - though supplies are sharply falling, at the same time prices are sharply rising. Based on this, Gazprom so far manages to compensate for its losses in terms of volumes. However, this situation is not sustainable. Russia’s war against Ukraine and gas blackmail has dealt a huge blow to Russia’s oil and gas industries. This trend cannot be corrected by any means. Financial losses will be enormous and in the near future this will translate into tens of thousands of jobs being lost. Putin is neither an economist nor a politician. He is a KGB operative, and in this sense his thinking differs even from the logic of Soviet leaders. They were careful not to blackmail Europe with gas. Putin does not care about human or economic losses to achieve his goals.
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THE FINAL DECISION TO CONFISCATE THE PROPERTY OF A RUSSIAN OLIGARCH IN UKRAINE |
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On 24 August, Ukraine’s Independence Day, the Ministry of Justice filed the first lawsuit with the High Anti-Corruption Court (HACC) regarding confiscation of the property of those who participated in or contributed to the war against Ukraine. The first defendant was Vladimir Yevtushenkov, one of Russia’s wealthiest people with a fortune of about $3.4 billion USD. He is also the owner of a company that manufactures equipment for the Russian army.
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This is the first such lawsuit since the introduction of the law on simplifying the procedure for confiscating the property of Russians and Belarusians who contribute to the war. The court session was held on 31 August, and the final decision of HACC was made on 1 September. The court needed only one day to decide the case for which the lawsuit contained 500 pages with appendices. Within the framework of the Ukrainian judicial system, such speed is almost unique. This testifies to Ukraine’s determination to receive compensation from Russia by confiscating property. The ministry insisted on a closed hearing, so the details of the proceedings are not publicly available. The court satisfied the lawsuit of the Ministry of Justice and confiscated the oligarch’s assets in Ukraine. These are numerous real estate objects and shares in several Ukrainian companies. Yevtushenkov still has the opportunity to appeal this decision in international courts, citing a number of obstacles that prevented him from being present at the hearing. Regardless, such a decision is a positive signal for Ukrainian society about Ukraine’s readiness to use the legislation on the confiscation of Russian assets and for international partners, who have frozen Russian assets worth $300 billion since February.
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CLOSED REGISTERS VS. PUBLIC CONTROL |
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Before Russia’s full-scale invasion of Ukraine began, an extensive open data system was operating in Ukraine. These registers gave citizens access to monitor the state’s activities at various levels, except for the defence sphere. However, since 24 February, most registers have been closed to protect personal data. On 29 July, the Ministry of Digital Transformation published a draft of amendments to Resolution No. 835 of the Cabinet of Ministers of Ukraine. This resolution proposes to keep more than 140 open data registries closed.
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Openness and transparency allow the interaction of civil society with authorities in the formation and implementation of state policy, influence the decisions and activities of these authorities, and access to complete, objective, reliable information about their activities. This is an important component of the country’s anti-corruption policy. Closed registers in the process of rebuilding the country and on the condition of receiving financial assistance from international partners create opportunities for committing corruption crimes. For example, in 2021, proceedings regarding the confiscation of EUR 34,000 in illegal profits of ex-deputy Illia Kyva were completed. This case was the first in which the civil forfeiture procedure was applied and started thanks to a journalistic investigation. This demonstrates the need for journalists and public organizations to access open data.
Most of the registers the authorities want to keep closed do not contain information that would harm Ukraine’s security. However, such concealment will help corrupt officials to continue their illicit activities and avoid public condemnation. One of the registers that remains closed is the Unified state register of persons who have committed corruption or corruption-related offenses. It is unclear how the closure of information about corrupt persons can harm the state’s interests.
It is necessary to leave closed registers that function in temporarily occupied territories or where active hostilities occur. Hiding information from the public in other areas of Ukraine will harm the implementation of anti-corruption measures, which are essential for receiving help from partners and continuing European integration. Anti-corruption NGOs sent their appeals to the Ministry of Digital Transformation to review the controversial provisions of this resolution. After all, such norms will contribute to the spread of corruption schemes and prevent businesses from working safely due to the impossibility of checking counterparties. With such actions, Ukraine risks returning to the culture of secrecy of information that existed during the presidency of V. Yanukovych and harming the international cooperation it now critically needs. Restrictive wartime measures need to maintain a balance between state security and public interest.
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THE FAILURE OF KREMLIN PROPAGANDA |
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A lightning counteroffensive of the AFU forced the RAF out of the Kharkiv region, which had been “liberated” by Russia for the past six and a half months. This scenario has been catastrophic for Russian propaganda. The Ministry of Defence of the Russian Federation (MORF) remained silent about the defeat of its army for several days. Instead, the information gap was filled by military bloggers who published the real losses of the Russian army, criticizing the MORF and the political leadership of the country. After a few days, MORF explained the retreat as a decision to “regroup” its troops, although a day earlier, it had stated that the army was going to strengthen its defensive positions in the region. Kremlin puppet Ramzan Kadyrov threatened to “explain the state of play” to the country’s leadership. Another wave of criticism and anger was provoked by the celebration of Moscow Day on 10 September during the peak of AFU’s offensive. In Russia’s largest cities, local deputies claimed that Putin’s actions were detrimental to their country and called for his resignation. In response, one municipals council was threatened to be dissolved. For the first time, State Duma deputies labelled the so-called “special military operation” a war and called for general mobilization and strengthening of Russian borders.
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For many years, Russian propaganda has built the image of the “second most powerful army of the world,” which is “capable of resisting NATO” and “will seize Kyiv in three days.” However, the AFU’s successful counteroffensive forced Russian soldiers to flee the battlefield and inflicted a crushing blow to Kremlin propagandists. During the week of the information crisis, the Kremlin tried three response tactics: first - discrediting Ukraine’s counteroffensive; second – maintaining silence about the retreat of RAF and its actual losses; and third - a return to the classic mass lies. Such inconsistency and chaotic behaviour are explained by its inability to control information flows. To divert attention from their failure, propagandists actively promote the message of “confronting the whole West,” creating new fake news: “black people in Kupiansk shoot everyone with machine guns”, “NATO throws Leopard 2A4 on the Kherson front”, “NATO troops are fighting in big masses in Ukraine,” etc. In this way, Russian propagandists are trying to discredit not only Ukraine but also the Alliance.
Despite the titanic efforts of the pro-government media, the truth could not be hidden. The world of illusion and lies began to collapse, causing panic, frustration, and aggression not only among ordinary Russians but also among the mouthpieces – the “information troops” - of the Russian Federation (RF). The Kremlin controls television broadcasts in Russia and has blocked access to Instagram and Facebook, but Telegram remains freely available. For the first time, military bloggers with huge audiences, who until recently had glorified the “special operation”, criticized not only the military leadership of the Russian Federation but also Putin directly. This means that ideological propaganda has got out of control and has turned on the regime. A change in rhetoric will affect both the moods of the Russian elite and the citizens of the RF.
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CZK: Transparent account
AN: 2300405420/2010
VS: 2022
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