Politically promising... From: Timothy Ash (STANDARD BANK PLC) Date: Tue, Nov 4, 2014 at 9:05 AM Subject: Ukraine update, November 4, 2014 All eyes today in Ukraine will be on the meeting of the National Security Council called by President Petro Poroshenko in an address to the nation yesterday. This follows elections in LPR and DPR whose legitimacy was challenged by the government in Kyiv, the US, the EU and the UN, but importantly accepted by Moscow. Poroshenko argued last night that the elections went counter to the Minsk ceasefire agreement from September 5, which had allowed for local elections in Donbas in December but under the auspices of Ukraine. The fact that the DPR and LPR in effect held their own presidential and parliamentary elections seems to have been a further and direct challenge to the authority of Kyiv. Poroshenko is suggesting that the Special Status Law extended to Donbas, and backed by a bill in the Verkovna Rada which was part and parcel of the Minsk Protocol will be rescinded. Not exactly sure what this means, but presumably it will make government of LPR and DPR illegitimate in Ukrainian law, albeit de facto unless Ukraine can militarily retake the regions controlled by rebels, the impact will be limited in terms of events on the ground. Poroshenko also promised that the NSC will also discuss military preparedness, albeit it is very unlikely that he will sanction new offensive action given the still weak state of the Ukrainian military (heavily defeated in the battle for Illovaisk in early September) and the still large number of Russian troops thought to be amassed in and around Donbas. Thus any offensive action by Ukraine at this stage would likely just provide a pretext for further Russian military incursions into Ukraine. In Kyiv the mood has turned notably sour again in recent days, with locals appearing nervous again about the prospects of the September 5 ceasefire breaking more substantially - close to 400 people have been killed since the ceasefire was called in intermittent fighting since - and perhaps of further Russian intervention in Ukraine. Poroshenko has also indicated that a new coalition agreement will be concluded this week, to include the five major pro-Western parties which secured representation in Ukrainian parliamentary elections on October 26. This will include the presidents own For Petro Poroshenko Party, PM Yatseniuks Peoples Front, Tymoshenkos Batkivchyna Party, Oleh Lyashkos Radical Party and the liberal Mayor of Lviv Andriy Sadoviys Self Reliance Party. Together the five coalition parties are thought likely to have over 300 seats in parliament, i.e. a constitutional majority. The Central Electoral Commission is expected to confirm the results of the parliamentary elections on November 10 and a parliamentary vote is then expected to be held in the third week of November to confirm the new coalition government in office. Poroshenko has conceded as the price of cutting a coalition agreement that incumbent prime minister, Arseniy Yatseniuk will remain in position (standing down his bid to get his ally and deputy PM Volodymyr Hroisman promoted to the position) given that the Popular Front topped the popular vote. The three smaller parties in the coalition have seemingly agreed to forgo claims to cabinet postings as part of the coalition deal - Self Reliance is pushing the idea that portfolios should be allocated on professional competency. The Popular Front seems to be demanding that the party retains control over the Finance and Justice ministries, in addition to keeping the post of prime minister for Yatseniuk. Poroshenko is though demanding a thorough overhaul of government and ministries reflective of the recent Lustration Bill approved in parliament. This should see a significant number of new faces assume cabinet postings. ------------------------------------------------------------------------------- The above commentary represents a personal view, is not investment advice or Standard Bank research, but may contain extracts from published research.
Posted on: Tue, 04 Nov 2014 12:11:02 +0000
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