Ukraine in Free Fall: One Year after Maidan Oksana Melikhova AAEM, March 26, 2015

What means the agreement between EU and Ukraine for Ukrainians?

What means the agreement between EU and Ukraine for Ukrainians? 1. It is salaries and pensions that 5 times more then now in Ukraine

What means the agreement between EU and Ukraine for Ukrainians? 1. It is salaries and pensions that 5 times more then now in Ukraine 2. It is a modern medicine which is affordable to everybody

What means the agreement between EU and Ukraine for Ukrainians? 1. It is salaries and pensions that 5 times more then now in Ukraine 2. It is a modern medicine which is affordable to everybody 3. It is new technologies,

What means the agreement between EU and Ukraine for Ukrainians? 1. It is salaries and pensions that 5 times more then now in Ukraine 2. It is a modern medicine which is affordable to everybody 3. It is new technologies, 4. …significant investments,

What means the agreement between EU and Ukraine for Ukrainians? 1. It is salaries and pensions that 5 times more then now in Ukraine 2. It is a modern medicine which is affordable to everybody 3. It is new technologies, 4. …significant investments, 5. …a big market,

What means the agreement between EU and Ukraine for Ukrainians? 1. It is salaries and pensions that 5 times more then now in Ukraine 2. It is a modern medicine which is affordable to everybody 3. It is new technologies, 4. …significant investments, 5. …a big market, 6. …cheap credits,

What means the agreement between EU and Ukraine for Ukrainians? 1. It is salaries and pensions that 5 times more then now in Ukraine 2. It is a modern medicine which is affordable to everybody 3. It is new technologies, 4. …significant investments, 5. …a big market, 6. …cheap credits, 7. …new jobs.

What means the agreement between EU and Ukraine for Ukrainians? 1. It is salaries and pensions that 5 times more then now in Ukraine 2. It is a modern medicine which is affordable to everybody 3. It is new technologies, 4. …significant investments, 5. …a big market, 6. …cheap credits, 7. …new jobs. 8. It is the right of every Ukrainian to travel freely in Europe without visas and borders.

What means the agreement between EU and Ukraine for Ukrainians? 1. It is salaries and pensions that 5 times more then now in Ukraine 2. It is a modern medicine which is affordable to everybody 3. It is new technologies, 4. …significant investments, 5. …a big market, 6. …cheap credits, 7. …new jobs. 8. It is the right of every Ukrainian to travel freely in Europe without visas and borders. 9. It is a plan how to make Europe in the Ukraine which benefits everybody.

What means the agreement between EU and Ukraine for Ukrainians? 1. It is salaries and pensions that 5 times more then now in Ukraine 2. It is a modern medicine which is affordable to everybody 3. It is new technologies, 4. …significant investments, 5. …a big market, 6. …cheap credits, 7. …new jobs. 8. It is the right of every Ukrainian to travel freely in Europe without visas and borders. 9. It is a plan how to make Europe in the Ukraine which benefits everybody. Source: 2013 A. Yatsenuk ( the current prime minister of Ukraine)

EU-Ukraine Association Agreement (the complete texts 3395 pages) Preamble (11 pages) Title I: General Principles (1 page) Title II: Political Dialogue and Reform, Political Association, Cooperation and Convergence in the Field of Foreign and Security Policy (9 pages) Title III: Justice, Freedom and Security (10 pages) Title IV: Trade and Trade-related Matters (356 pages) Title V: Economic and Sector Cooperation (68 pages) Title VI: Financial Cooperation, with Anti-fraud Provisions (3 pages) Title VII: Institutional, General and Final Provisions (20 pages) ANNEXES to the Agreement (2670 pages) PROTOCOLS to the Agreement (247 pages) Source: War effect

At the signing of the EU-Ukraine Association Agreement was postponed. Why? Source: "Ukraine at a crossroad. Notes of the Prime Minister / Nikolay Azarov “, 2015 ISBN

At the signing of the EU-Ukraine Association Agreement was postponed. Why? 1. Russia was “concerned that the creation of a free trade zone Ukraine and the EU, under the action of a similar zone between Ukraine and Russia, could lead to significant financial losses of the Russian budget.” Ukraine “proposed the creation of a tripartite commission EU - Ukraine - Russia to settle a disagreement.” The EU “asked to choose "either-or". [...] With 40% of turnover in the free trade zone in the CIS and 30% in the free trade zone in the EU, we could not choose "either-or". Source: "Ukraine at a crossroad. Notes of the Prime Minister / Nikolay Azarov “, 2015 ISBN

At the signing of the EU-Ukraine Association Agreement was postponed. Why? 1. Russia was “concerned that the creation of a free trade zone Ukraine and the EU, under the action of a similar zone between Ukraine and Russia, could lead to significant financial losses of the Russian budget.” Ukraine “proposed the creation of a tripartite commission EU - Ukraine - Russia to settle a disagreement.” The EU “asked to choose "either-or". [...] With 40% of turnover in the free trade zone in the CIS and 30% in the free trade zone in the EU, we could not choose "either-or". 2. “[...] generally positive process of modernization of Ukrainian industry by European standards [...] would require [...] at least 10 years and at least 160 billion euros.’’ Source: "Ukraine at a crossroad. Notes of the Prime Minister / Nikolay Azarov “, 2015 ISBN

At the signing of the EU-Ukraine Association Agreement was postponed. Why? 1. Russia was “concerned that the creation of a free trade zone Ukraine and the EU, under the action of a similar zone between Ukraine and Russia, could lead to significant financial losses of the Russian budget.” Ukraine “proposed the creation of a tripartite commission EU - Ukraine - Russia to settle a disagreement.” The EU “asked to choose "either-or". [...] With 40% of turnover in the free trade zone in the CIS and 30% in the free trade zone in the EU, we could not choose "either-or". 2. “[...] generally positive process of modernization of Ukrainian industry by European standards [...] would require [...] at least 10 years and at least 160 billion euros.’’ 3. “a complete ban on the production of fuel containing lead [...] in Ukraine there is no more or less significant enterprise producing automotive and other fuels that meet European standards” Source: "Ukraine at a crossroad. Notes of the Prime Minister / Nikolay Azarov “, 2015 ISBN

At the signing of the EU-Ukraine Association Agreement was postponed. Why? 1. Russia was “concerned that the creation of a free trade zone Ukraine and the EU, under the action of a similar zone between Ukraine and Russia, could lead to significant financial losses of the Russian budget.” Ukraine “proposed the creation of a tripartite commission EU - Ukraine - Russia to settle a disagreement.” The EU “asked to choose "either-or". [...] With 40% of turnover in the free trade zone in the CIS and 30% in the free trade zone in the EU, we could not choose "either-or". 2. “[...] generally positive process of modernization of Ukrainian industry by European standards [...] would require [...] at least 10 years and at least 160 billion euros.’’ 3. “a complete ban on the production of fuel containing lead [...] in Ukraine there is no more or less significant enterprise producing automotive and other fuels that meet European standards” 4. “[...] a quota for wheat in 1 million tons per year, quotas for poultry ( tons per year ), beef ( tons per year ) and pork ( tons per year ) [...] appear on the scale of our production ridiculous and does not solve the problem of export.” Source: "Ukraine at a crossroad. Notes of the Prime Minister / Nikolay Azarov “, 2015 ISBN

An alternative path of development: Source: "Ukraine at a crossroad. Notes of the Prime Minister / Nikolay Azarov “, 2015 ISBN

An alternative path of development: 1. Development of the domestic market. Source: "Ukraine at a crossroad. Notes of the Prime Minister / Nikolay Azarov “, 2015 ISBN

An alternative path of development: 1. Development of the domestic market. 2. Increase the purchasing power of the population. Source: "Ukraine at a crossroad. Notes of the Prime Minister / Nikolay Azarov “, 2015 ISBN

An alternative path of development: 1. Development of the domestic market. 2. Increase the purchasing power of the population. 3. Close the domestic market from non-critical imports for the period of closure of foreign markets. Source: "Ukraine at a crossroad. Notes of the Prime Minister / Nikolay Azarov “, 2015 ISBN

An alternative path of development: 1. Development of the domestic market. 2. Increase the purchasing power of the population. 3. Close the domestic market from non-critical imports for the period of closure of foreign markets. 4. Implement the incentives in the field of import substitution, including major program of state support (guarantee cheaper loans, direct government support). Source: "Ukraine at a crossroad. Notes of the Prime Minister / Nikolay Azarov “, 2015 ISBN

An alternative path of development: 1. Development of the domestic market. 2. Increase the purchasing power of the population. 3. Close the domestic market from non-critical imports for the period of closure of foreign markets. 4. Implement the incentives in the field of import substitution, including major program of state support (guarantee cheaper loans, direct government support). 5. Monitor the growth of incomes of the population, so that it is clearly coordinated with the growth of domestic supply of goods, products and services. Source: "Ukraine at a crossroad. Notes of the Prime Minister / Nikolay Azarov “, 2015 ISBN

An alternative path of development: 1. Development of the domestic market. 2. Increase the purchasing power of the population. 3. Close the domestic market from non-critical imports for the period of closure of foreign markets. 4. Implement the incentives in the field of import substitution, including major program of state support (guarantee cheaper loans, direct government support). 5. Monitor the growth of incomes of the population, so that it is clearly coordinated with the growth of domestic supply of goods, products and services. 6. Coordinated monetary and fiscal policy on increase the volume of the domestic market. Source: "Ukraine at a crossroad. Notes of the Prime Minister / Nikolay Azarov “, 2015 ISBN

An alternative path of development: 1. Development of the domestic market. 2. Increase the purchasing power of the population. 3. Close the domestic market from non-critical imports for the period of closure of foreign markets. 4. Implement the incentives in the field of import substitution, including major program of state support (guarantee cheaper loans, direct government support). 5. Monitor the growth of incomes of the population, so that it is clearly coordinated with the growth of domestic supply of goods, products and services. 6. Coordinated monetary and fiscal policy on increase the volume of the domestic market. 7. Implement the infrastructure programs that use mostly domestic goods and services. Source: "Ukraine at a crossroad. Notes of the Prime Minister / Nikolay Azarov “, 2015 ISBN

An alternative path of development: 1. Development of the domestic market. 2. Increase the purchasing power of the population. 3. Close the domestic market from non-critical imports for the period of closure of foreign markets. 4. Implement the incentives in the field of import substitution, including major program of state support (guarantee cheaper loans, direct government support). 5. Monitor the growth of incomes of the population, so that it is clearly coordinated with the growth of domestic supply of goods, products and services. 6. Coordinated monetary and fiscal policy on increase the volume of the domestic market. 7. Implement the infrastructure programs that use mostly domestic goods and services. 8. Lobbying and securing foreign markets (targeted diplomacy, foreign contacts etc.) Source: "Ukraine at a crossroad. Notes of the Prime Minister / Nikolay Azarov “, 2015 ISBN

An alternative path of development: 1. Development of the domestic market. 2. Increase the purchasing power of the population. 3. Close the domestic market from non-critical imports for the period of closure of foreign markets. 4. Implement the incentives in the field of import substitution, including major program of state support (guarantee cheaper loans, direct government support). 5. Monitor the growth of incomes of the population, so that it is clearly coordinated with the growth of domestic supply of goods, products and services. 6. Coordinated monetary and fiscal policy on increase the volume of the domestic market. 7. Implement the infrastructure programs that use mostly domestic goods and services. 8. Lobbying and securing foreign markets (targeted diplomacy, foreign contacts etc.) 9. Moderate inflation due to loose monetary policy coordinated with the fiscal policy. Source: "Ukraine at a crossroad. Notes of the Prime Minister / Nikolay Azarov “, 2015 ISBN

An alternative path of development: 1. Development of the domestic market. 2. Increase the purchasing power of the population. 3. Close the domestic market from non-critical imports for the period of closure of foreign markets. 4. Implement the incentives in the field of import substitution, including major program of state support (guarantee cheaper loans, direct government support). 5. Monitor the growth of incomes of the population, so that it is clearly coordinated with the growth of domestic supply of goods, products and services. 6. Coordinated monetary and fiscal policy on increase the volume of the domestic market. 7. Implement the infrastructure programs that use mostly domestic goods and services. 8. Lobbying and securing foreign markets (targeted diplomacy, foreign contacts etc.) 9. Moderate inflation due to loose monetary policy coordinated with the fiscal policy. 10. Work with the business, the management of large state-owned monopolies and enterprises. The tariffs for gas, electricity, transportation, services in ports; prices for diesel fuel, fertilizer; the amount of the tax burden; market environment - all under government regulation. Source: "Ukraine at a crossroad. Notes of the Prime Minister / Nikolay Azarov “, 2015 ISBN

An alternative path of development: “STATE PROGRAM of intensification of economic development for ” approved by Cabinet of Ministers of Ukraine, 27 February 2013 (p. № 187) Additional financing: Russia (17 December 2013): - reduced price for gas USD per 1000 m 3 (saves about US$4 billion per year) - loans, investment funds (~ US$ 20 billion) China (December 2013): - agreement to build coal-to-gas plants (US$ 3 billion) - investment fund on construction of social housing (US$ 15 billion) - intergovernmental agreement on the construction of the Kerch port (US$ 3.5 billion) - agreement on construction of ring road around Kiev (US$ 1.5 billion) - Export of grain to China (10 million tons annually, advance payment of US$ 1.5 billion) Source: "Ukraine at a crossroad. Notes of the Prime Minister / Nikolay Azarov “, 2015 ISBN Web-portal of Ukrainian government

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WHETHER CIVIL WAR THREATENS UKRAINE % to the questioned In January 2014 a larger part of residents of oblast centers of Ukraine noticed a high level of danger of the beginning of civil war in Ukraine – on opinion of 8% of the questioned it will definitely happen, and 32% of respondents noticed that there is a real danger of civil war. One third of residents of oblast centers (31%) noticed a possibility of civil war. Only every fifth resident of oblast center (20%) absolutely does not believe in possibility of civil war in Ukraine. Source:

Source: World Development Indicators (WDI) database

Source: National Bank of Ukraine

Source: State Statistics service of Ukraine

Source: National Bank of Ukraine

Source: National Bank of Ukraine

Source: National Bank of Ukraine State Statistics service of Ukraine

Source:

Source: National Bank of Ukraine

Source: National Bank of Ukraine Web-portal of Ukrainian government Real GDP ( % change) Unemployment CPI ( % change) Real monthly wages ( % change) General government balance (% of GDP) (incl. Naftogaz operational deficit) Public debt (% GDP) External debt ( % of GDP) Exports (annual volume change %) Imports (annual volume change %) Gross reserves (billions of U.S. $) FDI ( % change) Hryvnia per U.S. dollar

Source: National Bank of Ukraine Web-portal of Ukrainian government IMF Program Request Apr2014 Real GDP ( % change) Unemployment CPI ( % change) Real monthly wages ( % change) General government balance (% of GDP) (incl. Naftogaz operational deficit) Public debt (% GDP) External debt ( % of GDP) Exports (annual volume change %) Imports (annual volume change %) Gross reserves (billions of U.S. $) FDI ( % change) Hryvnia per U.S. dollar devaluation

Source: National Bank of Ukraine Web-portal of Ukrainian government IMF Program Request Apr2014 “War effect” Real GDP ( % change) Unemployment CPI ( % change) Real monthly wages ( % change) General government balance (% of GDP) (incl. Naftogaz operational deficit) Public debt (% GDP) External debt ( % of GDP) Exports (annual volume change %) Imports (annual volume change %) Gross reserves (billions of U.S. $) FDI ( % change) Hryvnia per U.S. dollar devaluation

Source: National Bank of Ukraine Web-portal of Ukrainian government IMF Program Request Apr2014 “War effect” State program p. № Est. Real GDP ( % change) Unemployment jobs CPI ( % change) Real monthly wages ( % change) General government balance (% of GDP) (incl. Naftogaz operational deficit) (excl. Naftogaz ) Public debt (% GDP) External debt ( % of GDP) Exports (annual volume change %) Imports (annual volume change %) <0 Gross reserves (billions of U.S. $) FDI ( % change) Hryvnia per U.S. dollar devaluation8.3

Source: National Bank of Ukraine Web-portal of Ukrainian government IMF Program Request Apr2014 “War effect” State program p. № Est. IMF Program Prog Real GDP ( % change) Unemployment jobs 11.5 CPI ( % change) Real monthly wages ( % change) General government balance (% of GDP) (incl. Naftogaz operational deficit) (excl. Naftogaz ) -7.4 Public debt (% GDP) External debt ( % of GDP) Exports (annual volume change %) Imports (annual volume change %) < Gross reserves (billions of U.S. $) FDI ( % change) Hryvnia per U.S. dollar devaluation