 Good afternoon, everyone. I'm Andrew Weiss. Thank you all so much for joining us here today at the Carnegie Endowment. We're delighted to see such a large turnout for our two very interesting speakers, and I'm going to turn to them in just a moment. Before I do that, let me just put a couple ground rules on the table. This discussion is being live streamed, so I'd appreciate if people would just make sure that your cell phones are turned to mute. And then we're going to have brief presentations by our two speakers, and I'll ask a few questions, then I'll turn things over to the audience for what I hope will be a very interesting exchange. I only ask that when we begin that part of the discussion that people wait for the microphone so that we can make sure that what you say is heard by the people who are tuning in on the Internet. Again, welcome to Carnegie. I'm Andrew Weiss, I'm Vice President for Studies here. It's a great, exciting time for us here at Carnegie. We've just hit the one-year anniversary of our Ukraine Reform Monitor project. The most recent issue was released yesterday. I would encourage everyone to take a look at that. We've been tweeting about it and sending it out through email over the last 24 hours. And we're delighted that the person who's the original idea of this project was Balaziarbeck, a visiting scholar at the Carnegie Endowment, who's joined us today visiting from Europe, and one of the key team members, Mikhail Monakov, who's a professor at the Kyiv-Nihila Academy, and a long time very prominent Ukrainian analyst and political player has joined us as well. So anyways, we're going to talk at the beginning, I think we'll turn to Mikhail first, about the challenges that Ukraine faces during this period of considerable domestic uncertainty in light of the new government that took power just a few weeks ago, and then to Balazs and then begin a conversation. So anyways, welcome to Carnegie, both of you, Mikhail, Flora and George. Thank you. Thank you for your interest to Ukraine. And I will do my best to speak like a scholar, but I'm also a proud citizen of my country. And if I self-censored myself, you can always then raise a question and ask me. So I'm very glad to report today that our political crisis has ended. It's been going on since December, and for a country that just have began, just have started its reform process, this delay with the crisis and the solution of the crisis was too expensive for us. But in the end of the political crisis, now that we resolved it, what we currently have is that Petro Poroshenko, our current president, have increased his control over the cabinet. So the Prime Minister and the majority of ministers represent Poroshenko's bloc and his supporters. However, he lessened control over Parliament. So Parliament is now presided by a National Front MP, and we kind of have rebalancing in Ukraine. At the same time, ex-Prime Minister Arseniy Yatsenyuk is now in the shadow of the politics. He kind of took some time to stay away and criticize probably this current government. But at the same time, we definitely see his impact through his party on real politics in Ukraine. So it's not, his era is not finished. And we definitely see another big change in Ukraine that current opposition is probably the majority in Parliament. So basically, the possibilities for current cabinet to make reforms, to implement reforms and to create new laws is very limited. There is, well, at least formally, there are no majority votes behind the two factions, the Poroshenko faction and Yatsenyuk faction that created a new coalition. But there's an ad hoc majority. And the role of small groups, MP groups, parliamentary groups that are controlled by old oligarchs or young oligarchic groups, or young oligarchic groups is increasing. So basically, we will see that the role of these rent seekers, big or small, is probably increasing. The price that our leaders paid for the very long crisis is also resembled in the lack of support to current leaders. So basically today, President Poroshenko has very small rating of support. It's only 2% of Ukrainians who strongly support and 15 just partially support of what he's doing. His negative rating is about 58%. Prime Minister Yatsenyuk, ex-Prime Minister Yatsenyuk, had only one support of those who really thought that he's doing the right way. And 6% were partially supporting him. And his negative rating, joint negative rating is minus 82%. Parliament has paid probably the biggest price in losing the trust of citizens. There are no, basically, 0% of those who endorses the behavior of parliament. And what's this? 5% of those who partially approve the work of parliament. So you see that there's this lack of support to key political institutions. And if I would talk about, for example, support to justice system, it's even worse. So basically, we are back again to the huge demand, the huge hunger of Ukrainians for a new wave of reforms and inability or limited ability of current cabinet to respond to it. So probably we will see another political crisis pretty soon. I think this resolution was very partial, limited, and the new political season in the fall will be very hot. And before I, before I stop, I would pay attention to opposition issue and the mass media issue. Opposition today, the most popular figures, like Andriy Sadovi, leader of some of Pommage Party, Mihail Sakashvili, and these two figures, they have about 35% of support. Although none of them directly calls himself as a candidate for future president, but these two figures with 35 positive rating behind them, they are very important figures in in opposition. Also, but Kivshina and the Julius Timoshenko's party and opposition block, they become more and more popular as political forces. And one of my advice is, advises that the West would pay attention to these two groups and probably establish some additional communication with them just to, if there is a future new cabinet with these two groups as a future coalition, then the West would have at least some contacts with future Ukrainian cabinet. At the same time, Ukraine needs support from the West also, as in times of Yanukovych in terms of support to mass media and pro-democracy NGOs. I think we are coming to the moment when presidential power has increased to the level, when it's very easy for the presidential vertical to abuse its power and to put a pressure on media. We definitely see in the recent six to five months that the media situation, the freedom media situation is not that good, it's deteriorating and Western support to mass media is important. Also, we have a group of vibrant and strong civil society organizations and coalitions, and they have necessary support from the West, but I look forward for continuation of this support. With the pressure from civil society, government cannot misbehave to the level it used to quite easily. I think I will stop now and I'm eager to respond to your questions. So part of what we've been doing for the past year, and Balash has been leading this, has been trying to look at Ukrainian reform through the lens of four or five key baskets and to actually assess is progress being made and then also get a little more of a sense of how complicated the politics of reform is and that each of these major reform requires going after vested interests and what we've seen and I think the paper which I hope folks picked up in front that Balash and Mikhail published on Friday talks about how in the collapse of state institutions new players are filling the vacuum and part of what's in this paper that they wrote last week about the hybrid state and the idea that enemies have captured the state is that we're seeing people who are not the old oligarchic groups, the Akhmetovs and the Kolomoisky's, but regional groups that have basically taken advantage of the collapse of state authority. I'm just sort of curious Balash, if you could sort of describe that argument a little bit for people here and then dig deeper on the impact that has on reform and understanding what Parshenko is doing as the leader. Because it's different, I think, than the narrative of there's this reform and anti-reform or there's this war, those have been the two main lenses. Understandably, the people apply to Ukraine because we have a lot of history and a lot of historical memory, but something great dynamic is happening actually that doesn't get captured by that. Thank you and first of all thanks for hosting and having us here, we have been spending a week in DC talking to various government agencies as well as NGOs and implementers working in Ukraine. I think I kind of was surprised that there is a huge interest still towards Ukraine because people were telling me, oh, you know, like there's gonna be a Ukrainian fatigue and fading interest, but I see the interest is huge, but the frustration is perhaps even bigger. So the combination of the two, what I would characterize both how the United States government as well as other American stakeholders are looking at Ukraine and this is very much correspond how is the situation in Ukraine, as Misha Minyakova was talking about, the trust and reason why we think that this frustration and the reform processes, although ongoing, it doesn't have the necessary impact, is a kind of misunderstanding or a different context. What exactly the mind on was and what happened after. We have this kind of basic understanding that this was mostly geopolitical, this was a geopolitical choice between Russia and the EU, and this is part of it, but at the same time, you know, what we also have seen of 25 years of frenzy and corruption has brought down at the Maidan, the collapse of the central authority of the essence of the state was also collapsing in the Maidan over the clashes. And after the Russian aggression, this, you know, the focus has been not turned obviously on reforms, but much more on the war and the Donbas. And this is also hijacked Western audience understanding of what's going on locally. In Kiev, we wanted to see Ukraine as united and Ukraine was united when it comes to the Russian aggression. At the same time, very much fragmented, simply because the state is still captured. And what we try to show that the state is not only captured by the old oligarchs and how much essentially those oligarchy groups, there's a lot of competition, there's a lot of new ones. There is a lot of criminal ones now, since corruption, the criminality is very high and illegal activity just like amber instruction in Western Ukraine, cigarette smuggling, which is by the way $2 billion a year income for someone toward Western Europe. The amber is alone, is estimated for about a half a billion dollar annually. So we're talking about a huge money in a country which has been experiencing increased and very high poverty rates, now it's 80%. And the reform efforts from our reading from the very beginning supposed to be A, rebuilding the social contract and B, rebuilding state institutions, which would be, let's not be idealistic, gonna be less captured at least, gonna be serving more the interest of the public instead of the vested interest around them. Now, this has been a huge task or would have been even without Russia steps. And now obviously in this kind of geopolitical situation, it is even harder, I believe, simply because our focus is, and you know, I kind of describing that I have been engaged in the past 15 years on the European side to try to change the vast focus on the Russia first policy toward the region in between the European Union and Russia. And now it's, I find very unfortunate that we again, returning to focusing on Ukraine because of the Russian aggression. The same time this focus essentially decreasing our focus and attention on what's going on in Ukraine. And there's a lot going on and kind of reducing also the Western pressure, which is often very personalized. We have been received questions, oh, we should keep our backs into the same basket. Well, this exactly what we did in Moldova. And our pro European partners were stealing much more than the Communist Party or go figure. So, you know, this kind of more detailed attention toward what is happening inside of Ukraine, where these financial political groups are the big reality. They are in the parliament. It's one of the reason why the new government coalition gonna have tremendously hard time to move forward reforms in the parliament. And I think one of the reason why we can whatever you like it or not forget about the means of making presentation, simply because it's not gonna be possible to get at the 300 necessary votes for any constitutional changes within the circumstances. So, this is the kind of the context which I would like to put you crying, because I think this is a realistic one. And we hope at Carnegie with these products, what we do essentially raising the attention at the necessary level with that detail, which is happening. So, a few words about the new government. I personally think based on a lot of local analysis, I have been reading that the technical competence of the new government is essentially high or even higher than the previous one. I see Yatsenyuk, dismissal or essential failure as a good news simply because he was failed mostly on the reform side. He was considered as one of the limits of the reforms and also considered because we cannot really prove as a new leader of a new financial political group because his real interest was not necessarily pushing reforms. He was pushing that line in the West. Excellent English speaker. We loved him for that. At the same time, according to certain anecdotal evidence, he's also getting very rich at the same time. And now he has his own kind of financial political groups around him. And that is what he is going to continue from the background, right? So this government a few months ago wouldn't have been possible. Essentially, it's a big victory for Poroshenko because he managed to put a protege of his, Ladimir Grosman, who is considered a very good manager. He was twice elected Vinica, mayor. Vinica is a big central Ukrainian town, south central Ukrainian town. One of the best managed town in the country. Clean, good services. So essentially he has the credentials obviously from the regional level. And, you know, he's considered to be loyal. So it is going to be a central, a centralized authority or central authority, if you like. So if Poroshenko and this Fox, main interest is going to be reforms, with the technical competence, they can move reforms forward. And it's a big if I don't want to go into speculations whether it's going to be happening or not. This is what we're going to watch. But both the technical competence and the loyalty and the central, the vertical, right, as they call it, in Ukraine, is going to be there. Now that raises something else though, that Poroshenko still didn't move from the position of being an oligarch himself. He is representing not only public interest, but he representing his own vested interest by himself. And, you know, and I always kind of believed in watching him from essentially 99 when he entered politics, I also entered Ukraine. So, you know, for me, these are very familiar names based on the track record. A lot of people, institutional memories, we are lacking, I think, in the West. So, Poroshenko is kind of modelist, the Kuchma Ukraine, where he was able to be an arbiter of these oligarchy groups. But Kuchma did not become ever an oligarchy himself. One of the reasons why his status as a judge or arbiter as a president and the presidential office could be raised into the point was exactly that. The second caveat is that Kuchma was considered authoritarian president. And this is, I believe, and I'm afraid we are moving with the Poroshenko government as well. Naturally, by default, because we're talking about the collapse and the rebuild of the central authority, it will have been more authoritarian. And Misha was talking about the, we already have press freedom issues. A Polish journalist was banned yesterday for five years to enter Ukraine, obviously for a different opinion, right? We're going to see more and more of these kind of things. Centralizing the authority, centralizing the opinion, and trying to centralize reforms as well, which this particularly later thing may not be a bad thing actually to move to move those forward. I'm finishing up. I think the key trend and the key issue in 2016 are going to be privatization. When we have been discussing World Bank, EBRD lately, we've been in London last week, you know, there is a lot of discussion whether this should happen because Ukraine is not ready. Well, the news is I have a good news for bad news for you. You can choose this is going to be happening. So the issue is not whether it should be happening because it will be. The issue is in what kind of conditions it should be happening. What is the role of the state and the transparency accountability, making sure that both foreign companies and the local financial political groups are going to competing by equal conditions. There's going to be transparency. So it's essentially going to be the state called first are going to be enriched and not the local regards. Why privatization is important? Because the biggest source of the rent seekers are the state enterprises which are captured by these oligarch groups. Ukur Transnav- Ukur- Ukurnavta, the Kolomoiskyi controlled, he has a 25% share, 50% of the state, and he Kolomoiskyi controlling the management doesn't pay dividends to the state. Now it's 20 billion Grivna if I'm, if, and by despite Poroshenko's best effort, this money is still not flowing to the government. So privatization, it could be a solution if the Ukrainian government is not able to clean and so far in the past two years the Ukrainian government, despite its try, was not able to clean of these state enterprises. I think I'm going to stop here. There is one last point, the parliament, which has been the big troublemaker now, right? And it's nothing going to change until there's going to be a new election while the civil society is pushing for. So if it's not going to be a proportional, a much more transparent, which they're suggesting, it's not going to be changing, unfortunately, and everybody is the bad guy who is competing, and you know, again, everybody has vested interest. Now the parliament has zero percent of trust in Kiev, in the chemical. And the biggest lingering issue beyond the privatization here is the legitimacy of the Ukrainian government. There's something which very much overlooked. We think if Victoria Neumann goes to support the post-mindown government, essentially it's going to increase the legitimacy. It's zero percent in Kiev, the parliament legitimacy. So I think that's one of the reasons why I do want to support Mikhail on we need to keep, because it's a democratic country, we need to keep in contact with everyone. We want to make sure it's one of the reason how we contain the authoritarian tendency is exactly keeping not all the X in one basket, but all because it's a democratic basket, X in every basket, to make sure that Ukraine is not going to be mobile. Mikhail, did you want to... I was talking mostly about formal institutions, and you were dealing with informal institutions, but now I would like to finish, to show the bigger picture, joining the both perspectives. Our political development was defined by two competing political agendas. Since 2014. One was Euromaidan agenda, democratic, pro-european. The other one was war agenda, that demanded, you know, discipline society, disciplined economy, that is directed to fight the enemy. And in the clash of these two agendas, we basically see how the clans, oligarchy clans, and the smaller financial political groups, reemerged and increased their power. But today, two years after these two agendas were formulated and started clashing with each other, we have the emerging third agenda. And it's the needs of citizens in the regions. These needs are so much unaddressed, in the front zone and on the border with the EU. But everywhere, the lack of response from the central government was so so so big. So for so long we didn't look at Ukrainian regions from Kiev, that I think that's the hot time for Groysman and for President Poroshenko to address them. And I really start worrying about situation in Herzogno oblast. We definitely see very worrying news from Odessa and Kharkiv. We definitely see how the northern oblasts like Valinia are out of order more and more and we cannot control even by deploying big military or police forces there. And also the so-called cigarette republics in Transcarpathia and the Chernovci, they are just becoming too and too visible as problems for for the political class at all. And the issue of legitimacy is returning now with Kiev as a capital has to reinforce its legitimacy by addressing and dealing with the economic and social problems we have now. But could you just just so folks understand what's going on in Herzogno, just take that example. Explain why it's become so instead. Exactly, you probably all heard about these explosions of the electric lines to Crimea. And this international level was actually hiding what is going on on the Ukrainian side. There's three regions in the southern part of Herzogno oblast. Herzogno oblast is the borderline with Crimea today. And there we have Ukrainian army deployed in several volunteer battalions. Crimean volunteers, Ukrainian volunteers and probably allegedly, yeah, that are volunteers. They allegedly they were dealing with these explosions and the local populations was deprived from electricity and water supplies because of the explosions and anti-Russian activity of these battalions. These days we see more and more and hear more and more demands from local authorities to deploy more force, police force, in order to control the situation. Local population versus battalions, local population versus this strange situation with explosions. And this is just one of the examples of how Kiev is not actually delivering to Ukrainian citizens right now in the regions. Or another issue could be what kind of security our rural populations have even in central Ukraine. We have police reform and we had a very important visible step with patrol police. But it's major, it was done in big cities. At the same time we didn't make next necessary steps, changing the investigation and the rural police. And huge parts of Ukrainian population are now just lacking the basic security in everyday life. And Vinnitsa Oblast, the Oblast of our president, is in critical situation today because of the rising banditism and criminality in rural areas. So these small things they are not visible in outside Ukraine. But for us, for citizens, it's probably the best proof of existence of government that they can provide us with basic security. So let me let me ask question about citizen security along the line of contact. And the mood seems to be hardening somewhat in Kiev about basically let's wall off Dombos and you know we'll pay lip service to Minsk and our obligations on the Minsk. But there is no political will or set of activities that would suggest a pathway for reintegrating the East, even if the best case scenario were to be chose. Can you talk a little bit about the politics of that and the reality along the line? Yeah, I mean just also putting it into a into a broader context, you know Poroshenko was elected in a peace ticket when he won a landslide two years ago, actually almost exactly two years ago. I'm going to be two years ago now. And because people wanted him to make sure that this Dombos insurgency whatever ends, right? And you know that time even the first when sorry even the second Minsk agreement was signed, 35, 36 percent of the population supported. Now it's down to 14. You know it's clear resistance again since the since the grenade attack after the first constitutional vote last August, you know the society although wants peace they really because of the because of the information they're receiving they really think the Minsk agreement is essentially a Russian tool and it cannot be implemented otherwise. This is a Russian ultimatum which Ukraine or independent Ukraine cannot cannot implement. So what is happening is there's essentially no willingness, political willingness in Kiev to reintegrate the Dombos based on the Minsk agreement. Now whether we agree that this is a Russian tool or not, you know this without this political will of reintegrating Dombos there is going to be a security situation in the border. That's number one. Number two what we also see I think because you know this is not really based on information since I haven't been there neither most of the journalists now have no access to. There is a consolidation on the so-called PNR and LNR of these republics of a kind of developing a kind of stalemate. Also six rebel leaders were killed in the past year. Over 10 were pulled back convinced to go away they did. You know this is not the work of the Ukrainian counter-intelligence you know I guess you know who is doing it. This is ongoing consolidation which I believe the reason why all the humanitarian organizations and all this were banned. So this work essentially can be can be done without witnesses. Now on the contact line it is over 60,000 almost 70,000 Ukrainian soldiers with some battalions who are clearly not formally under integrated into the army but clearly if just based on the OC SMM monitoring reports are not under command. At the same time there is 35 38,000 rebel slash Russian or Russian supported rebel soldiers so it's an end with a lot of weapons on both sides. So it's a very critical situation a critical mass of soldiers not everybody is under command neither on the Russian side neither on the Ukrainian side and that's one of the reason why we're seeing these increased violations of the ceasefire. Now this is 80% based on the OC monitoring reports are coming from the rebel side my interpretation of this is that they're trying to convince Russia to support them they're trying to resist the consolidation right and trying to make sure that they're going to be remaining in charge essentially this is for the current leadership of these so-called republics it's a life or death situation. So that's why we see so much resistance but again until there is no political will to implement the Minsk agreement that security situation will remain and the Minsk agreement in my reading was always about ceasefire it was not acceptable for it is not acceptable for the current Ukraine elite and I don't think any elections essentially would would change there is no reconciliation mode there is a lot of resistance in the society there's a lot of fighting and at this stage there is no one who would represent politically a reconciliation or integration so I don't think it's going to change I think our best hope is the is keeping and making sure that the ceasefire is cemented there is a demilitarization which is by the way the first two points of the Minsk agreement I think this is where we need to return to first and and the last pressure on Ukraine is a bit counterproductive because it it doesn't take into account the fragile state the internal frictions the regional problems of Ukraine right so you know like by pushing the Ukrainians it's almost like it's rocking the boat you know but the Ukrainian boat may not turn as we wish but simply sink on that optimistic note let's let's open things up for discussion and as I said before please wait for the microphone and please make sure that when you ask a question that there's a question mark at the end please you sir and if you can keep it brief as well so that as many people as possible get to speak could you please elaborate what's going on with the media maybe if you speak a little slower could you please elaborate what's going on with the media Savik Schuster case this Polish journalist who is doing this why do they do this what does it mean in the future so the question for folks who couldn't hear it is if if the panelists could explain the recent pressures on press freedom there was a a visa ban on Savik Schuster the popular television journalist last week or earlier this week and the Polish journalist case that Polish man should be mischievous do you want to well I think this Savik Schuster issue that a was an anchor man of a very popular talk show where who was once very important figure for the rise of Poroshenko and today he is like the public enemy of Poroshenko today his program is hosted from all big channels and he created his own channel to deliver this show and all the key opposition figures go there to speak up but basically it's like a ghetto for opposition opposition leaders but also for populists in a way and Savik Schuster himself is a very mixed figure with very mixed reputation but whichever reputation there is behind journalists for us the lesson that we learned in post-Soviet Ukraine that whenever there's a pressure against any kind of journalist it's the pressure that should be responded by civil society by all opposition and political figures to not to let it happen it's and the Schuster case is what was like the last week big issue but in reality what's happening underneath these scandalous things is much more worrying there was a wave of certain how to say a compromise between journalists themselves how to describe the situation in Crimea how to describe situation in Donbas on both sides how to address the issue of IDPs later this compromise was making impact on how critical an open Ukrainian media wore about processes in Ukrainian politics you you definitely see that there is some sort of self-censorship happen and here no one can make an impact it's social issue but then since since October and December last year I was personally receiving mixed messages from editors-in-chief saying that they receive the so-called family the list of topics from government or from presidential administration every time I received this message from them I asked them to show me in paper so that I could represent it also to me I'm not afraid to speak it up well but I never received this evidence so there's words of editors said to me of the records but I cannot prove them like again there's also this new and stronger impact of the committee on TV and radio on the content of many programs and here we definitely see more and more intrusion into the matter of remedial freedom of speech so it goes on slowly you know I forgot who said this but we usually lose freedoms in very small steps slowly and this is what I was noticing but not only me reporters without borders they also raised many issues in their recent reports Freedom House is putting us into not into the camp into the family of free nations you know so the situation is also monitored by external players so with the freedom of media we definitely have worsening situation but it's manageable still we can improve it but also with the help of our Western thank you Michael Kuzig retired economist from the Department of Agriculture so I'm interested in the figure that you quoted 80 percent poverty in the country could you put a human figure on that how many people are we talking about number one and the second question is how are the people surviving whether it's the food situation resources are there any jobs and it seems to me years ago we saw that Ukraine is the breadbasket of Russia is it now turned into a basket case quite the opposite side here so a little bit more on how the people are surviving under these circumstances thank you yeah the 80 percent is an official data from the UN the UN measure it's five dollars a day and that's the level which you know a much of this obviously and not that I you know the situation is really dire for a lot of people and but also this is you know like we're counting in dollars and with a huge depreciation of the of the value of the local currency so there is a lot of adaptation possibilities still for the locals but you know just like a lot of people and you know when there was a scandal from the previous government and the foreign minister economic minister Abramovich was left or another one people Varsky they said we cannot live 200 on 250 dollar salary right and you know I just seen an announcement of a great reform finally they selected the top state enterprises which are not going to be sold like the post office and couple of the railway you know there's a very transparent selection of the director they're going to make over 10, 12,000 dollars right and the announcement was made by the deputy minister of economy who is making 280 like you know how how we imagine to fight corruption within these circumstances right so so this is a serious issue the other things that the Ukrainians you know are surviving because everybody has either a cow a little parcel they're growing their own things that is a that is a natural long traditional way of surviving but you know it's also like my feeling is especially particularly if you're going to the region or you're just going to the sleeping realm so-called sleeping variants of fear that people's patients are not the team it's as soon as not going to be you know kind of it's it's going to be must be an eruption I think the government also kind of see that and you know the at the same time what the government will do is I think they will try to renegotiate the IMF to tame the austerity and not necessarily clean the coffers and making enormous subsidies policy you know transparent you know and so on when it comes to the agriculture and the bread basket I you know I think was a lot of hope that connected to the DCFDA to the European Union deep treat free agreement and you know unfortunately this hope but not based on your numbers or real situation I have to say that for me I we made a special kind of effort through to all the documents at least on the EU side the EU certainly didn't do the calculations right Ukrainian government may have do the calculations I haven't seen all the documents and the Ukrainian civil society calculations very optimistic connected to that and here comes you know there are 76 Ukrainian agriculture companies who are using the no trade sorry no tariff policy to import right two-third of it are honey makers now the first three months they already filled the quota for the whole year because one thing is the is the tariffs the other thing is the quota and the EU is not going to let Ukrainian agriculture producers to have too much quota simply because this would be a big fight to the French the Polish you know the Hungarian and so on and so on farmers because these are the members of the European Union so there is a lot of these details which unfortunately was not taken into consideration I personally think that Ukrainian economy is going to remain crippled unless it's going to have access to the Russian market and it's not geopolitics it's geography if we look taking a look at the map it is as simple as it is and you know and particularly also what they produce you know and so on and so on and particularly this is important for the southeast part of the region you know like you just talk about it the world from Mariupol which is 20 kilometers from the front line and to the Russian border is different like let's say from even Kiev but they certainly not looking at Slovakia as an example right or the market but they're looking teleconomy just on the border on the other side and this is unfortunately is helping and this polarization which is so far not visible because yes again the Ukrainians are united when it comes to the Russian aggression no nobody wants to live according to the so-called republics right but at the same time you know these are common sense things and the current and this here comes the media the current media environment is so much polarizing so much you have to accept this the centralized the central line right that it's essentially taming these normal common sense issues as well in many ways just like like who we should trade and where we can sell so anyway so unless there is unless there is or you know like unless there is a marshal plan which the Ukrainians like to talk about but this is just not you know like to reindustrialization of those areas like the Donbas and so on you know Ukraine economy kind of going to be the main a limbo and that's kind of going to fuel you know polarized politics and the poverty obviously is going to not helping to to raise political legitimacy you know and support for reforms and so on and so on so that is the social economic situation is going to be a main issue of this year at the privatization of the lessons the only footnote I'd put on that is you know historically Ukraine has been a commodity exporting country particularly with steel global steel markets depressed and so you just can't see and the environment ran where the demand for a lot of Ukraine's most competitive exports is going to be there but but anyways maybe we just oh you want to just want to hop in okay also there's a reaction of society like shadow economy so according to the recent assessment of World Bank shadow economy is 56 58 58 percent which helps thing that helps the survival yeah it means that in the village there are no money anymore my parents still live in a small village near Zaporizhia and how how do we react we survived 90s so we will survive 2016 as well but it means that we will plant more potato more onion and we'll survive but this survival will also will come with a price to political class and in Kyiv the reason attempt to address this issue we have decentralization started it's now it's now in the stalemate but there was a very important steps already made in terms of financial sustainability of regions and we were we are constantly addressing it in our reform assessment we show how we make this decentralization happen and this possibility at the local level to address the most important issues almost there regretfully we we stopped in December in doing reforms but in December there was already the moment when we one more step and we would probably could create in my village another pipeline a new pipeline it's now broken since Soviet times so there was one step from the parliament in need and we didn't make it so I I expect this year probably a small steps will be done and it will help us to survive as well so I I love you just one more thing that there's a lot of things that agriculture of you know the Bradbasket and this is gonna be Ukraine future this country makes the best engines for rockets even now even now they making this is the third biggest airplane making country in the world unfortunately IT market is growing you know this is I mean this is and where is it south east Ukraine the south east not on the west the southeast part so the tremendous industrial educational potential of these unfortunately we're not gonna buy Antonov's because we have the bearings and you know there's not competitive that this who is gonna buy Antonov's the rest so it is you know like this although the geopolitical orientation is very important politically you know I you know like if Ukraine will only remain connected to the European market or the western market it's not good for the country economically Wayne Mary the American foreign policy council you've mentioned the DCFTA but would you assess also the impact of the association agreement in general thus far on the reform process okay I I can start okay it well the the association agreement has this political and economic parts in terms of economic part it will remain probably the same even after the Netherlands referendum with the political part we don't know what will happen it's still kind of in making in process reconsideration the economic part doesn't flourish when I asked my colleagues from economic analytical centers they say well we use as much as we can but of course the loss of Russian market makes a tremendous negative impact that is not covered by the FTA but the political part was extremely important and here were my competencies and I was definitely following how implementation of those of those anti-corruption for them anti-corruption demands or conditions that were part of this agreement they were changing our political our polity our political system in two ways we already created several new anti-corruption institutions very important step and if they function properly they will make a very positive impact on society on government and also on economics and economy but there's also this rule if there is an opportunity to misuse some political institution it can be misused they are all in the line of reporting to president and I don't know if these institutions will work properly this year but definitely this year they will be used to control power elites and there's one figure who can control this all the power elites Yanukovych Kuchma they never had this strong institutions at hand so in a way it's a new situation that association agreement unexpectedly created in our political system so I I'm trying to to pay very close attention how they function if there is any evidence so far the risk is there but there's no evidence that it's misused so in in our monitor we constantly pay attention to this so if there's an evidence we will immediately report about that I'm conscious of our time and I we have about 10-15 minutes left and a bunch of people with their hands up so why don't we take those remaining questions and then we'll come back to Mikhail and Balash please see you sir Yes, Bohdan Futei there was a mention about Minsk proposals or Minsk discussions by the way the last time I was in Ukraine and I was discussing this with members of parliament when I mentioned the word Minsk agreements they were were all were very critical of me because there is no agreement they're just discussions so just for the benefit of everyone the other thing and the question that I have is there an alternative to the Minsk discussions at the present time proposed by any political party or group in Ukraine so that's that's my first question my second question would be on the existence of the present coalition now there is a new law that has been signed by President Poroshenko basically which allows the head of the party to fire or to dismiss members deputies if they do not go along or they're critical of the party and that law already is being challenged by 49 deputies with the constitutional court if the constitutional court does not support this aspect what would be the outcome of the coalition or whether new elections are in order and the third one I have I just read today I think there are there are a lot of people waiting okay but it's very simple Reusman has asked the minister of justice to review the decisions of the various courts what do you think the outcome of that will be sir please okay thank you very much George Dennis really Georgetown University I abstain from the comments and consideration and just like focus on questions first one has this Panama Papers which implicates it very directly Poroshenko has any public discourse and either political outcome and the ripple effect which actually confirms the fact that Poroshenko remains oligarch and the second so enumerating these political groups we haven't mentioned for this pravi sector is this still a presence in the Ukrainian politics and what is the chances of it's like a revival and it's fortunes thank you then I saw one more please Michael McCarthy my question is how would you characterize the reform efforts in the defense sector to date what are the prospects for the future and how can us and the West help we've got about six questions on the table maybe we can start with the political ones could you talk a little bit I know in your article you mentioned this idea of the party unity and the button pushing could you talk a little bit about the impact of that and then maybe connect it to the question about the role of the far right how important they are and the first one you wanted first no, if you look at the button pushing and the far right oh okay political prospects maybe you could take those too that would be great yeah well there's honorable fatigue I really respect your input here because it tackles very important part of what's going on with Ukrainian political system right now in 2014 the existing political do you hear me the existing political system party system was ruined and the new parties emerged and they are very fragile and new structures usually it's one bigger parties very populistic and parliament and the leaders of factions and the parties have forced the parliament and president or president himself is very interested to introduce this new very communist party Soviet communist party experienced discipline into new parties and it's really dangerous because from within parties are not the place for any kind of discussion and parliament under a horseman wasn't the place for discussion either so we expect with the change of the of the speaker probably parliament will again be the very important place for national dialogue and for discussions so far you're right it's it was for very long time excluded for policy making parliament was not a place for discussions almost as in as in duma was it grizzlov probably says yeah grizzlov coined that duma is not the place for discussions in the parliament these discussions instead of this fruitful discussion leading to some policy for relation they were since there's lots of blocks and obstacles for dialogue then they definitely had to use radical politics and bombing in in august was part of the absence of the dialogue in the parliament so now the situation has worsened and i do not expect from constitutional court any independent behavior in recent five months constitutional court in ukraine has proved to be very loyal poslushny to obedient to president and they were the decisions that were made we've just published marina stomnić you can i an article showing these inventions unprecedented inventions of constitutional court in terms of their decisions and immediately after the voting for some very strange decisions this constitutional court the members of the court go out with their personal opinions and yeah well not not always everybody but sometimes it's majority and you cannot just say how could you guys then vote for for these strange decisions so we have definitely we lost our constitutional reform i i didn't say it in the beginning but constitutional reform is so much delegitimized because of the pressure from one side from presidential office that we probably need to restart entire reform once again and uh here the the independence of constitutional court would be a very important play well would be very important but we don't have it so probably parliament will have to reinitiate it and here the west should probably support us in reconstruct restarting the constitutional reform i know that there are many tactical and near ends that are very important but if we lose constitutional reform if we will not be able to reconstruct our political system and rebalance the branches of power i think the fragility of ukraine will increase tremendously by the end of this year okay pravi sector yes yes and the far right maybe yeah uh let me just see the figures once again pravi sector is not as you know it's not a very popular political force but it has i mean when we have elections pravi sector is usually not getting more than two percent of votes there are several right sector activists who became mayors in small towns and we receive very strange information from those social experiments that's happening there but i saw that in western media it's covered dmitro yarash the the ex-leader of of uh pravi sector has left the park the the the core group he's now independent person with 18 percent of positive rating according to recent polls but yarash is now more mp parliamentary figure with some radical flavor and who is more involved well allegedly allegedly into coordination of procolomoisky mps rather than radical politics so you know sometimes corruption political corruption tames even the most radical figures sorry for the cynical joke but looks like that Ukrainian way but yeah yes radically corrupt but there's also some data showing that the former socialist specialist party now swoboda party is regaining its popularity and they may return to parliament but again the issue of corruption proved to work on this party very well as well okay so maybe bosh can you you spoke a little bit about Minsk before and that remains at least in this town something that everyone talks about and looks to the next round of high-level discussions and then the question of the sequencing of elections and how representative the elections can be of the citizen security to come vote for the IDPs media access and the amnesty rules and the languishing decentralization barriers it's it's obviously a very complicated package but people are still working on and so I'm just sort of is it something that is an exercise that will lead to anything or is it is it has it exhausted its potential well you know like you hear two things that the Minsk agreement is the only game in town that's the western officials are saying and you hearing in Kiev that you know we don't want to discuss it even and that's you know kind of the in between two and there is a lot of resistance you know beyond the rhetorics and I and again I just going to repeat myself I don't see any any possibility that Kiev would agree to implement the Minsk Minsk agreement and one of the reason is actually the nationalist lingering influence because they're not going to accept and the pravi sector and all these nationalists far right but battalions real strength is not in the parliament but in the weapons now they fully armed they're part of the army they're part of this but they clearly they're making press releases that we're not going to accept any command which we don't like right so there is a question of integrity of these things two days ago the one of the battalions as of an oh when another one went to destroy you know a soviet monument about the police did nothing this is not it's just when they destroyed you know so you know this is kind of undermining the legal institutions and I fully agree here the constitution essentially no longer exists in a crime right and I just think about that the second constitutional vote which according to the constitution must be happening in the following parliament was changed by a procedural vote how how a constitutional vote which requests constitutional majority was essentially was postponed or cancelled by a procedural vote with a simple majority I'm not a lawyer but I just doesn't kind of right and this we didn't comment on it everything was fine we find a solution that Ukrainian said how to avoid the Minsk implementation and nothing it's still 300 and nothing it still needs 300 but still they just they just postponed they just postponed it and that's it there's a lot of there's a lot of these kind of things and and unfortunately this is also showing that the presidential administration is growing strong and essentially you know can deliver the results the loyalty is the key word when it comes to Poroshenko's governance and this loyalty what they're seeking and that's gonna you know what they're gonna use the use loyalty for is a question that are more reforms or further undermining the you know but going back to Minsk we essentially propose an alternative and start restart the new constitutional process go to referendum ask the people you know Ukraine can ask ask it's international partners wait for a minute this is we need to figure out what kind of country we want to be otherwise otherwise is going to be a lot of resistance we're very fragile people are not going to accept this kind of you know background backroom deals which would essentially the Minsk agreement was right so so Ukraine can come up with an initiative but instead of this putting out fires this you know trying to avoid it and that's what increasing the western frustration because the vast doesn't see the details or not necessarily seeing the details so we might want to take into consideration these details which is going to be worsening the relationship you know sooner or later or it's already like worsening the western Ukraine relationship so so there is a way out it's just Ukraine has to come up with a solution with a initiative to move out instead of just a reactionary avoidance of of the Minsk agreement so there was one more question about the defense sect the defense that I actually want to address I think we just gave a what I found a very balanced assessment short assessment on the defense reform but just to you know there is there is certainly when it comes to the number of troops when it comes to the equipment when it comes to the battle readiness when it comes to the you know the mobilization and all this there is a lot of progress in the reform when it comes again equipment there is one thing which I think it's not the integrity of the troops is a big question for me remaining question and the management and you know one thing which you know we were kind of joking sometimes and when there was a big debate and it shouldn't be a joke it was a big debate about whether the U.S. should give weapons to Ukraine which is one of the biggest weapon producer country in the world was that okay well pick up your battalion which way you want to give it to and there is one particular case to which I would raise your attention is the the raiders which the U.S. essentially provided and what happened with the three raiders only one exist one was destroyed by the Ukrainian army and the third was captured by the rebels that is the question of integrity and that is the question of management because Poroshenko Poroshenko just named a new head of chief army chief of staff of the army and is the guy who helped to kind of cover the debauchery losses he's loyal to Poroshenko that's the reason he's and by the way he was he was engaged into corruption cases in Kosovo and Iraq with the Ukrainian company that doesn't matter merit doesn't matter loyalty what matters whether he is going to do what Poroshenko wants him to do so that undermining the you know the army integrity and the management which is you know if you're going to talk to soldiers this is what they're going to say these generals are essentially useless this is not you know there are so there's a lot of protest and a lot of resistance against so the integrity and the management are the two things which we can help with but at the same time this is what ultimately the main focus of the reforms should be and not only in the in the defense sector so I have a last question for Mikhail which is the mood in this town has become as you were alluding to just tired or impatient and a sense that the ideal moment has passed and we're now disappointed do you think that assessment's wrong or that people are missing something well I think there was an too high expectations from Ukraine if you look at the history of Ukraine neither Moscow nor Washington nor Brussels would push us to do something that we didn't want to well it's simply it's a mystery because we are interested in Russian market in European market we are interested to be part of European Union and in spite of that interest somehow power elites take it over and use usually for the just another cycle of self-isolation it's very cozy for them to self-isolate so my advice to the West first of all please do not expect fast change with us our power elites are very volatile the we exist mostly as a setup as a system of informal institutions and don't expect our parliament to be parliament or constitutional court to be constitutional court so maybe some realism in terms of dealing with us is very important and involvement of opposition is critical just because we are very fast changing our rulers please make sure that the next rulers the next group of rulers are friends of the West for me as a liberal it's very important that the next generation of those who rule Ukraine will also look at the West as friends well on that optimistic note I thank you Mikhail and Bosch