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  • German Politicians Oppose Nord Stream II
  • Kyiv Court Ruling Threatens to Unravel PrivatBank Nationalization
  • Gov’t Approves Road Map for Cutting State Ownership of Banks
  • Key Interest Rate to stay at 6% this Year
  • One Third of Kyiv Metro Riders Stay Above Ground

Political pressure is mounting on German Chancellor Angela Merkel to freeze or drop the Russia-Germany Nord Stream II pipeline project, according to  Bloomberg and The Financial Times reports from Berlin. The game changer was a report by a German military laboratory Tuesday that said Russian opposition leader Alexei Navalny was poisoned Aug. 20 by Novichok, the same restricted use, military-grade nerve agent used by Russian agents in Britain in 2018.

At stake is a $9.5 billion, 1,222 km, trans-Baltic pipeline designed to take gas directly from Russia to Germany. Capable of carrying 55 billion cubic meters of gas a year, this is designed to end Russia’s dependence on Ukraine’s Gas Transportation System. From 2021 to 2024, Gazprom is contracted send 40 bcm year through Ukraine, earning Ukraine about $1.5 billion a year.

With Navalny lying in an induced coma in Berlin’s Charité Hospital, a 10-minute walk from the Bundestag, the mood inside Germany’s parliament building has turned sharply against the Kremlin.

The EU should jointly decide to stop Nord Stream,” tweeted Norbert Roettgen, Head of the Bundestag’s Foreign Affairs Committee and a candidate to head Merkel’s Christian Democratic party. “The only language that Putin understands is the language of natural gas.”

Nils Schmid, foreign policy spokesman for the SPD, a junior partner in the Merkel coalition, said: “We need to make it clear that all talk of a strategic partnership with Russia is now over.”

Christian Lindner, leader of the liberal FDP party, said: “A regime that organizes murders by poisoning is no partner for big cooperative projects — and that includes pipeline projects.”

Katrin Göring-Eckardt, leader of the Greens in parliament, said: “Nord Stream 2 is no longer something we, together with Russia, can press ahead with.”


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In Ukraine, Germany’s Ambassador Anka Feldhusen joined her G-7 counterparts to lobby Prime Minister Shmygal to defend PrivatBank against attempts to reverse the 2016 nationalization of the Ukraine’s largest bank. With EU and IMF support, $5.5 billion was injected into the bank in 2017, filling a hole left by what forensic auditors have called an orgy of insider lending and theft.

A Kyiv court ruled that PrivatBank should pay $350 million – principal and interest – for deposits of six British companies owned by Ihor and Hryhoriy Surkis, two brothers who were business associates of PrivatBank’s former owners, Ihor Kolomoisky and Gennadiy Boholyubov.  PrivatBank lawyers said they will appeal, arguing that the brothers were related parties to the mismanagement of the bank. The Surkis and other depositors have filed hundreds of lawsuits suing for $1.2 billion.

We will challenge this decision,” Petr Krumphanzl, a Czech banker who is Board Chairman of PrivatBank, told Ukrinform. „We will continue to seek justice for PrivatBank and Ukrainian taxpayers who are the bank’s ultimate shareholders.”

 “One of the biggest transgressions in the history of the judicial power of Ukraine took place,” Justice Minister Denis Malyuska wrote on Facebook. Noting that the judge’s name Vovk, also means ‘wolf’, he illustrated his complaint with a cartoon of a gray wolf happily carrying away a big bag of loot.

Alexander Danilyuk, Finance Minister at the time of the nationalization, warned on Facebook: “This is the beginning of the collapse of the results of the nationalization of PrivatBank.” He warned that if the lawsuits are not stopped, they could cost Ukraine’s government billions of dollars.

The Cabinet of Ministers has approved a strategy for steadily reducing the state share in Ukrainian banking, from 60% today, to below 25% in 2025. By the end of next year, all four state banks are to draw up road maps for the sale of public shares.

  • Ukrgasbank is to reach an agreement with the World Bank’s International Finance Corporation next month about converting last year’s €30 million loan into shares. Ukrgasbank will probably be the first state bank to be privatized.
  •  Oschadbank should be privatized by 2025.
  • PrivatBank is to gradually shed government ownership.
  • Ukreximbank is to be matched with a minority investor, chosen by the Finance Ministry, with the long-term goal of privatization.

The Finance Ministry reported that Ukraine’s state-owned banks wrote off $1 billion worth of non-performing loans at the expense of reserves during the first half of this year. For state banks, non-performing loans account for 63% of their loan portfolios. As of July 1, there are 57,000 outstanding claims by state banks in courts to reclaim $1.4 billion in assets.

Almost overlooked in the furor of the Surkis case, Ukraine’s central bank met expectations and kept the prime lending rate at 6%. Dmitry Sologub, a deputy governor of the National Bank of Ukraine, predicted to reporters: “We expect the interest rate to remain at 6% by the end of the year.” Two months ago, when President Zelenskiy installed his candidate, Kyrylo Shevchenko, a central bank governor, many analysts thought the shakeup was made to lower interest rates this fall.

Now, Tim Ash and others are having second thoughts. He writes from London: “The reality is dawning that pressure to make management changes at the NBU was never really about monetary and exchange rate policy, but rather the durability of banking reform. The real battleground remains Privatbank. I think we got another hard lesson in that last night with the Surkis ruling.”

The central bank “expects an IMF [review] mission in the near future and plans to receive more money from the IMF by the end of the year,” Shevchenko, the Bank Governor told reporters. Ash reacted: “Very optimistic in my view given backtracking on banking reform and anti-corruption agenda. I cannot see an IMF mission before local elections in October.”

The Finance Ministry sold the Hryvnia equivalent of $102 million in bonds at this week’s auction – three times the borrowings of last week. The only bill that sold – a 13-month bond – went with a weighted average interest rate of 9.29%.

Three months after the end of Kyiv’s full corona lockdown, daily metro ridership is about one million, down by one third from the pre-lockdown volume 1.5 million. Normally, the Kyiv’s subway system earns $10 million a month. Due to the spring lockdown and today’s week ridership, the Metro may run out of money to pay salaries next month, the transit system reports in an appeal to the Kyiv City Council for more money.

 

  • Russian Gas Transit Volumes Dwindle
  • Greece, Romania, Turkey: New Gas Sources for Ukraine
  • Turkey, Ukraine Create Alliance for Defense Production
  • Glencore Buys Sunflower Oil Tank Farm and Terminal in Mykolaiv
  • Hot Weather Makes the Case for Irrigation in Kherson and Odesa

Signaling the end of an era, the volume of Russian gas crossing Ukraine on the Soviet-era pipeline system is down 42% compared to the same January-August period last year. Under the Dec. 30 contract, Russia’s Gazprom committed to shipping 65 billion cubic meters across Ukraine, down from the 2019 level of 89.6 bcm. Gazprom is paying full freight, but it is only shipping 80% of booked capacity. Under the contract, Gazprom will ship even less starting next year – 40 bcm annually through 2024. For the last 30 years, Ukraine’s gas transmission system has been a big money earner – about $3 billion a year in fees.

The biggest drops this year are on Ukraine’s southern route to Moldova and Romania. On this ‘trans-Balkan route,’ gas shipments are down 73%, to 2.3 bcm for the first eight months. The game changer was the Jan. 8 opening of Turkish Stream. This line brings Russian gas up from the south, skirting Ukraine.

As Europe’s pipelines become increasingly inter-connected, ERU Trading, an American company, sent a test gas shipment in July from Revithoussa, Greece’s LNG terminal, on the Aegean Sea, through Romania to Ukraine. Hailing the possibilities of “the new gas transmission corridor Greece-Romania-Ukraine,” Yaroslav Mudryymanaging partner of ERU Trading, said: “Traditionally, gas and oil are exported from the East to the West, but our partners are interested in a new, unconventional approach.”

As part of this newly liberalized market, 72 traders – a mix of European and Ukrainian companies – parked a total of 8.2 bcm of gas in Ukrainian reservoirs this summer, waiting for the annual rise in prices in the fall. With 65% of gas coming into western Ukraine this summer going into storage for further transit, Serhiy Makogon, general director of Ukraine’s Gas Transit System Operator, said: “This means that Ukraine is geopolitically and economically an interesting and profitable partner for Europe. Therefore, the GTS Operator will continue to work on the business development of its capabilities, including the direction of creating a European gas hub in Ukraine.”

Well prepared for the winter heating season, Naftogaz has stored 25.6 bcm of its own gas, 39% more than this time last year. By the Nov. 1 start of the heating season, Naftogaz may have a record 28 bcm in storage, 29% more than last year, Nafotgaz CEO Andriy Kobolev said on Ukraina 24 TV. In last winter’s 4-month heating season, Ukraine consumed only 6 bcm.

President Zelenskiy has called Turkish President Recep Tayyip Erdogan to congratulate him on the discovery of a large natural gas field in Turkish waters off the Black Sea coast. Erdogan estimates the field at 320 bcm. This is the equivalent of 10 years of Turkey’s gas imports and 30 years of Ukraine’s imports. After the Turkish drilling ship, Fatih, made the discovery last month, Erdogan promised to start developing the field immediately.

Turkey and Ukraine are creating “a strategic alliance” for defense production, Oleh Urusky, Ukraine’s Strategic Industries Minister, tells Ukrinform. In late August, Urusky led a group that toured Turkish defense factories, met with defense industry leaders and met with Turkish President Recep Tayyip Erdogan. “We are actively moving towards a strategic alliance – aircraft construction, armor production, missile construction, electronic warfare, instrument making (opto-electronics) and engine building,” Urusky told Ukraine’s state-owned news agency. One project could be joint development of a strike drone fighter, with a Ukrainian turbojet engine. Turkey, a NATO nation, has a 430-year rivalry with Russia for control of the Black Sea.

Glencore, the agricultural commodities giant, has bought Everi, one of Ukraine’s largest vegetable oil export terminals. Built a decade ago in Mykolaiv, Everi was expanded in 2018 to have tanks capable of holding 160,000 tons and a pumping capacity of 1.5 million tons of oil into seagoing ships for export. From the Netherlands, Glencore Agriculture Limited CEO David Mattiske said of the purchase from Orexim: “This acquisition reinforces our long term commitment to the agriculture sector in Ukraine.”

Qatar’s sovereign wealth fund, the Qatar Investment Authority is the biggest shareholder in Glencore. Two weeks ago, QTerminals, Qatar’s multinational port operator, signed a concession agreement to run Mykolaiv’s Olvia port, 15 km down river from the Everi terminal. Qatar Investment Authority is not a shareholder in QTerminals.

Dry weather and drought, especially in southern Ukraine, will cut this year’s grain harvest by 7 million tons, or 9% below last year’s bumper harvest of 75 million tons, Prime Minister Shmygal told the Cabinet. The ongoing corn harvest is coming in 1 million tons short. With corn expected to fall to 35 million tons, the Ukrainian Grain Association forecasts the nation’s total grain and oilseeds harvest will be 95.6 million tons, the second largest in Ukraine’s history. Exports will be 56 million tons.

Next year the government plans to channel “Big Construction” spending into “the creation of irrigation systems in the southern regions of Ukraine,” Prime Minister Shmygal told the Cabinet. “Such systems should increase yields and protect farmers from adverse weather conditions.” With temperatures rising in southern Ukraine, President Zelenskiy has called for rebuilding Soviet-era irrigation systems and creating new ones. The government estimates the drought cost Odesa farmers $235 million in lost crop receipts.

Starting this month, up to €120 million in loan money for rural infrastructure, including irrigation, is available for small and medium farmers in southern Kherson region. The money is part of a larger, €400 million rural lending facility extended to the area by the European Investment Bank, reports Stefan Rosenow, team leader for the project. Separately, the EBRD is working with the Ministry of Ecology and Natural Resources to modernize irrigation systems of the lower Dniester in Odesa region.

The National Bank of Ukraine is likely to keep the prime interest rate at the current level of 6%, indicate separate polls of economists and bankers by Reuters and Interfax Ukraine. With a 5.9% increase in the minimum wage approved by the Rada, analysts predict annual inflation will double, to 4.9% in December. Many forecasts “point to a significant acceleration of inflation over the horizon of 6-9 months,” Oleksiy Blinov of Alfa-Bank Ukraine tells Reuters. “This indicates a high probability of completion of the stage of reducing the discount rate in Ukraine.” From a recent high of 18% in April 2019, the prime rate steadily dropped, hitting 6% last June.

 

  • Ryanair Cuts Most Flights Between EU and Ukraine
  • PM Sees 50% Jump in Ukraine Corona Cases
  • Antonov-Turkey Talks on JV for Cargo Jet
  • Pro-Russia MP’s Want Court to Turn Back the Clock
  • Honcharuk: Washington Think Tanker – Volker: Kyiv Train Engineer

Ryanair, Europe’s largest low cost carrier, has canceled almost all its flights to Ukraine for the second half of September, the airline’s booking system shows, reports Evropeiska Pravda. With 52 routes from Ukraine to EU cities, Ryanair is moving preemptively ahead of EU regulations that require full repayment for tickets for flight cancelled within two weeks of travel dates. Ryanair’s booking system shows only a handful of flights between Kyiv Boryspil and Cyprus, Spain and the UK. There are no flights from the four other Ukrainian cities previously served by Ryanair: Kharkiv, Kherson, Lviv and Odesa.

UIA, Ukraine’s largest carrier, has cancelled or reduced frequencies for a long list of flights. Signaling that it believes that the ban on most foreign visitors will last until the Oct. 25 local elections, UIA is cutting its flight program through Oct. 24. Compared to the planned schedule, UIA seem to cut about half of its seats in and out of Ukraine this fall.

Kyiv hotel owners and tour guides protested outside the Cabinet of Ministers saying the new one-month ban on most foreigners entering Ukraine is a heavy blow to tourism, an industry which has struggled since the first Covid lockdown in mid-March. One Kyiv hotel owner told the UBN that he knows of three business groups that cancelled their trips to Ukraine this month. Inside the government building, a senior official said that legitimate business people arriving at Boryspil this month will be admitted.

Prime Minister Shmygal expects that within one month Ukraine’s Covid-19 cases will be 50% higher than today. “Today we have from 2,000 to 2,500 new cases of the disease every day,” he told 1+1 television channel. “By the end of September and early October, this figure will rise to 3,000 patients every day. This will load hospitals by more than 80%.” Government officials are talking about test trials for a vaccine in November and mass vaccinations in March. It is unclear where this vaccine will come from.

Ducking the issue: Ukraine’s Antimonopoly Committee has declined to consider an application by Kharkiv’s DCH Group to purchase Motor Sich shares from China’s Skyrizon to run the Zaporizhia aircraft engine factory as a Chinese-Ukraine joint venture. The decision was made public last week, five days after US Secretary of State Michael Pompeo called President Zelenskiy and warned about “malign” Chinese investment. DCH, which also makes tractors, complained that the Committee’s requested information “not related to the core business” of the jet engine maker. DCH asked: Can Motor Sich “potato planters, potato diggers, harrows, plows, cultivators, mounted rotary mowers” be attached to DCH tractors?

Concorde Capital’s Alexander Paraschiy writes: The Antimonopoly Committee has been trying to avoid any decision on the Skyrizon / Motor Sich deal for about three years, and its latest move indicates it is trying to continue postponing the solution for as long as possible…such uncertainty might be harmful for Motor Sich’s future as a going concern.”

Kyiv’s Antonov is negotiating joint production with Turkey of its short range An-178 military cargo jets, reports Turkey’s Daily Sabah, a pro-government daily. Oleksandr Los, Antonov’s new CEO, visited Turkey last month for talks. Ukraine’s Foreign Minister Dmytro Kuleba tells CNN Türk that both governments “want to start more daring projects. Projects where Turkish and Ukrainian technologies are used together. These will be competitive projects in the global sense.”

Turkey’s new import tariffs on 115 goods are spurring Turkey and Ukraine to restart talks for a Free Trade Agreement. The two economy ministers, Ruhsar Pekcan for Turkey, and Igor Petrashko, for Ukraine talked week. Taras Kachka, deputy economy minister, writes on Facebook that he will travel to Ankara in coming days to advance talks. Two weeks ago, Turkey hiked tariffs by 15 to 20% for the goods that are non-EU.

In a key anti-corruption case watched by the IMF, Artem Sytnyk insists he is still director of the National Anticorruption Bureau, NABU. Last Thursday, days after NABU released audio recordings where judges appeared to discuss corruption plots involving including rulings Constitutional Court rulings, the Court ruled that President Poroshenko violated the Constitution five years ago, when he appointed Sytnyk as NABU director. Although President Zelenskiy now calls Sytnyk ‘acting director,’ legal experts say Sytnyk can only be removed by a Rada vote.

Concorde Capital’s Alexander Paraschiy writes: “It looks like there is a high chance for Sytnyk to remain at his position till the end of his seven-year term, which expires in spring 2022.”

The Constitutional Court acted in response to a petition by 51 MPs, many of the same pro-Kremlin or pro-Kolomoiskiy Rada members, who successfully asked the Court to open five proceedings aimed at Ukrainian anti-corruption legislation, Tetiana Shevchuk, legal counsel at Ukraine’s Anti-Corruption Action Center, writes in a new Atlantic Council essay: “Pro-Kremlin MPs and Oligarchs Wage Lawfare on Ukraine’s Reform Agenda.” She writes of the Court decision on NABU’d director: “Anti-corruption activists fear the decision could now pave the way for a host of similar legal verdicts with the potential to undermine Ukraine’s Euro-Atlantic integration and reverse the progress made since the country’s 2014 Revolution of Dignity.”

Bonanza for TV stations and billboard owners: The Central Election Commission announces that campaigns for mayors and city councils officially started last Saturday. With the coronavirus pandemic ruling out large gatherings, advertising is expected to play a central role in campaigning leading up the Oct. 25 vote.

On the Move:

Former Prime Minister Oleksiy Honcharuk joins the Atlantic Council’s Eurasia Center as a distinguished fellow, the Washington-based organization tweets. The youngest prime minister in Ukraine’s history, Honcharuk, then aged 35, led the government during the first six months of President Zelenskiy’s five-year term. Zelenskiy dropped Honcharuk on March 4 as part of a wider purge of the cabinet.

Kurt Volker, who served until last September as the State Department’s Special Representative for Ukraine Negotiations, joined BGS Rail as an independent board member of the Kyiv-based car leasing company. Volker also will advise the chairman and board of directors of BGS’ parent company, Avia Solutions Group, a company of Lithuanian origins. In Ukraine, BGS, or Baltic Ground Services, has 3,000 wagons for transporting coal, iron ore and grain. Volker said in an Avia press release: “By working with Avia Solutions Group in its development of BGS Rail, I see an opportunity to strengthen Ukraine’s economy, build world-class services, and create jobs for Ukrainian citizens.”

 

  • Covid Collateral Damage: Food Shortages and Hunger
  • For Ukraine: Higher Producer Prices, Better Logistics
  • Coming Down the Tracks: Private Locomotives
  • 4G Mobile Now Covers Half of Kyiv’s Metro
  • All Flights to Hungary Are Cancelled

Due to jammed logistics and falling consumer buying power, Covid-19 will cause more people around the world to die each day from hunger than from virus infections, forecasts a Bloomberg story: Covid Threatens Bigger Death Toll From Starvation Than Infection.” With supply chains broken, food spoils in fields, ships and supermarkets, raising prices and forcing an extra 132 million people to go hungry, Bloomberg reports. “This year’s [hunger] gain may be more than triple any increase this century,” reports the article, the work of nine reporters around the world. “What makes the situation unmatched is that it’s happening at a time of enormous global food surpluses.”

For a major corn, wheat and cooking oil producer like Ukraine, the short-term impact may be higher producer prices. The long term may be greater investment in rail and port infrastructure. Bloomberg reports that the UN’s World Food Program needs a record $13 billion for this year to deliver food in 83 countries. Concerned about political instability provoked by rising food prices, political leaders may prioritize food supplies over pandemic controls that throw people out of work, Bloomberg predicts.

Ukrainian sunflower oil prices surged 8% last week to their highest level in five years, Agricensus reports in an analysis: “Ukraine’s sunoil market is on fire but will it last?” Ukraine is the world’s largest exporter of sunflower oil. The three main importers – China, India and the EU – are nervous about reports that hot, dry weather in southern Ukraine is reducing the oil content of harvested seeds. One crusher tells Agricensus reporter Vika Blazhko: “The first sun seeds that are going into crushing plants are of a small size and are very dry with low oil content.”

Ukraine’s wheat export prices rose $5 per ton over the last week due to higher demand from importers, APK-Inform said. Wheat with 11.5 protein content rose to $203-206 per ton. Ukraine is the world’s fourth-largest wheat exporter. Last year, Ukraine harvested a record 75 million tons of all grains. This year, the grain harvest is to drop to 70 million tons, largely due to drought in the south.

Ukraine has displaced Russia to become the world’s third largest potato producer. Agronews.ua reports that last year’s crop levels were: China – 93 million tons; India – 51 million tons; and Ukraine – 23 million. The next two countries were Russia and the US.

Cargill Corporation has won the green light to control Neptune grain terminal which opened last November in Pivdennyi. Ukraine’s Antimonopoly Committee agreed that Cargill can take control of the terminal it built with MV Cargo. Cargill, a privately held American food conglomerate, had invested $100 million in construction of the terminal.

The first private locomotives will haul freight trains on Ukrzaliznytsia tracks in a pilot project this fall. The state railroad selected Ukrainian Locomotive Company, a private company run by Volodomyr Krot, an UZ alumnus. Reflecting big interest in private freight trains, 10 companies applied to be chosen for the pilot project. To minimize chances of accidents, the private trains will not run on main lines used by express passenger trains. Krot has 14 2M62 diesel locomotives, models built Luganskteplovoz until Russia’s occupied the plant in 2014. If the pilot project goes well, Krot tells the Center for Transportation Strategies, his company could buy “up to 50 electric locomotives.”

The year-long inquiry into Rotterdam+ appears to have hit a dead end. Prosecutors alleged that DTEK thermal power plants gouged consumers for $750 million by tying coal prices to import prices from Rotterdam. In reality, the coal was imported from Russia. The Specialized Anti-Corruption Prosecutor’s Office dropped the case last week after the State Security Service concluded that damages from are impossible to calculate, reports censor.net.

Concorde Capital’s Alexander Paraschiy writes: “Proving losses in the Rotterdam plus case has become an impossible task for Ukraine’s power brokers. Such a task would have required both enormous intellectual work and political will to complete the case, with both factors seeming to be lacking in the entourage of the Ukrainian president…All in all, this looks like an ultimate victory for DTEK in this case, with some tiny chance that this story will go on. This won’t have any effect on the reputation of DTEK Energy (DTEKUA), the key beneficiary of the Rotterdam plus initiative.”

Mobile operators have extended fast 4G mobile service to 22 of the 46 stations in Kyiv’s Metro system. The latest seven stations, and the connecting tunnels are in central Kyiv: Khreshchatyk, Ploscha Lva Tolstoho, Palats Sportu, Palats Ukraina, Olympiiska, Klovska and Pecherska. The target is to extend 4G to the entire 69 km system by the end of this year.

Wizz Air cancels all its flights from Hungary, its home base, to Ukraine. The cancellation is due to Hungary closing its borders for the month of September to most foreigners. Depending on the evolution of the corona pandemic in Hungary, flights will resume in early October between Budapest and Kyiv Sikorsky, Kharkiv, Lviv, Odesa and Zaporizhia.

From Austria, Austrian Airlines has resumed flights between Vienna and Lviv. Flights between Vienna and Kyiv Boryspil resumed June 23.

From Belarus, Belavia announces that it is maintaining flights from Minsk to Kyiv, Kharkiv, Lviv, and Odesa. A large portion of Belavia’s passengers are Ukrainians or married to Ukrainians – categories unaffected by Ukraine’s 1-month ban on foreigners entering the country. Due to the police violence in Belarus, Ukrainian border guards have been instructed to allow most Belarusians to enter Ukraine.

In Ukraine, Covid hospitalizations are growing faster than testing, Health Minister Maksym Stepanov told reporters. Compared to the week of May 18-24, the week of Aug. 17-23 saw 2.5 times more testing, but almost four times more hospitalizations, he said. In the May week, 749 people were hospitalized. Three months later, in the August week, there were 2,829 new hospitalizations.

Concorde Capital’s James Hydzik writes: “The election campaign season will start with anything but the lightest and most localized restrictions…For those not willing to risk voter popularity with harsher measures, the period before the Oct 25. vote becomes a race against time.”

 

  • Aside From Banning Foreign Visitors, No Lockdown Expected Before Oct. 25 Elections
  • This Fall: Shakeup of Economic Ministries?
  • China and Ukraine Cuddle; Pompeo Pouts

Although infection rates are double the level of April, when the country was under tight lockdown, life in most of Ukraine is largely normal. Kyiv’s first opera concert in six months, drew about 2,500 people to Sofia Square. About 1,500 sat on chairs spaced for distancing. The rest listened standing, some wearing masks, some not.

The Government will not consider imposing a second hard lockdown to combat coronavirus, Prime Minister Denys Shmygal told the European Business Association in a video conference. Instead, health officials will seek to localize outbreaks and stamp them out with local quarantines.

Adamant Capital writes: “Although Ukraine is currently displaying the highest amount of new cases on record, it seems unlikely that restrictions similar to those that have been introduced at the start of the pandemic are going to be reinstalled any time soon. Reasons for these are a few as lethality has significantly declined globally. Spain in so far reporting deaths per million at just 0.7, a far cry from 18.5 back at the beginning of April.  The 2Q20 real GDP figure (-11.4% YoY) has demonstrated quite clearly the cost of an even relatively light lockdown and suggests that repeating the same scenario may be politically unaffordable unless the health crisis becomes dire.”

Foreign business travelers flying to Ukraine should carry a letter clearly attesting to the business purposes of their visits, listing local contacts. Until the one-month ban is lifted September 28, entry is up to the discretion of border control officers at Ukraine’s airports and land entry points.

Separately, hundreds of Hasidic Jewish pilgrims ignored requests by Israel and Ukraine and flew to Ukraine for their annual Jewish New Year celebration, in mid-September. Israel has the world’s 7th highest rate for corona virus infection – 231/100,000 people. This is four times higher than Ukraine’s rate of 55/100,000 people.

Coronavirus money is being spent on building roads to avoid borrowing money for this year’s $3 billion road building program, David Arakhamia, head of the ruling Servant of the People faction in the Rada, tells Ukraina 24 TV. Noting that the government plans to repair or rebuild 4,200 km of roads this year, he implied roadbuilding is more popular than virus fighting. Elections for mayors and city councils will be held Oct. 25.

With economic ministries targeted, two to three Cabinet ministers may lose their jobs this fall, Arakhamia tells Ukraina 24. “By the fall there may definitely be some rotations in individual ministries – two or three ministries,” he predicts. “Our people are most of all dissatisfied with the economic bloc. We need people who, besides having a vision and programs, could quickly implement them.” Six months ago, President Zelenskiy fired two thirds of his cabinet.

China and Ukraine have agreed to increase bilateral trade and to identify joint projects in farming, infrastructure, energy, and energy conservation, reports the press service of Ukraine’s Ministry of Economic Development, Trade and Agriculture. Noting that China is now Ukraine’s top trading partner, China’s Deputy International Trade Representative Yu Jianhua and Ukraine’s Trade Representative Taras Kachka talked by video conference.

In coming weeks, the Kharkiv Metro is to sign a contract with China’s CRRC Tangshan for 40 new rail cars, a 13% percent increase in the fleet of Ukraine’s second largest subway system. With the new cars, the Metro will have eight one-piece ‘tube trains,’ without partitions between the five cars, reports the Center for Transportation Strategies.

US Secretary of State Michael Pompeo warned President Zelenskiy about “malign” Chinese investment in Ukraine, including Beijing’s efforts to acquire the Motor Sich aircraft engine maker. The warning came in a telephone call Wednesday with President Zelenskiy, State spokeswoman Morgan Ortagus said in a statement. For a year, the US has sought to block a Chinese takeover of the jet engine maker. After US investors failed to materialize, Kharkiv business man Alexander Yaroslavky filed an application in early August to buy the engine building company in partnership with Beijing Skyrizon.

Ukraine has frozen diplomatic contacts with Belarus and joined the EU in condemning the recent presidential election as not free or fair, Foreign Minister Dmytro Kuleba told reporters, Reuters reports. “We put all contacts on pause until the situation in Belarus stabilizes,” Kuleba said. He noted that Ukraine had earlier recalled its ambassador to Belarus for negotiations. Belarus is Ukraine’s fourth largest trading partner.

ON THE MOVE:

The EBA has moved from its longtime office in Kyiv’s Podil neighborhood to the new Creative State of Arsenal coworking center on Moskovska 8, building 7, a five-minute walk from the Arsenalna Metro station on the Red Line. After 15 years in a building that grew to have workplaces for 70 employees, the EBA says it has moved to a smaller workspace that features hot desking and “modern infrastructure for meetings and negotiations.” Executive Director Anna Derevyanka notes: “Mobility and flexibility have become a new trend of today…We are changing to become even more flexible, fast, and modern in order to create maximum opportunities for all EBA member companies.”

After opening the 4,100 square meter Creative State of Arsenal in May, Ilya Kenigstein, founder of the coworking space network, says work is starting this fall on a second 3,100 square meter phase. The two recycled brick buildings will be connected by a bridge and will share parking, an event hall, and open area with art installations. Added to existing spaces in Gulliver and Senator business centers, Creative States will have 15,000 square meters in Kyiv.

Kyiv Post moves into a spacious new, 455-square meter space provided by publisher Adnan Kivan, owner of KADORR Group, the Odesa-based real estate development company. The Post trades its cramped space of the last eight years, on Pushkinska, for a glass-walled, open space in a largely residential building, at 68 Zhylianska, between Pankivska and Tarasivka. Post editor Brian Bonner writes: “While much of the Kyiv Post workforce is still working remotely, the era of the office is far from dead.” The new newsroom will have 48 work spaces and a video studio. The only downside will be the 20-minute walk to the nearest metro station.

The original English version is from our partner UBN – Ukraine Business News. For more information and news archive, go to: www.ubn.news.

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