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This program was recorded in one, 60-minute segment .
This description contains material not included in the original program.
Introduction: In FTR #824 , we noted the decisive role played by the Ukrainian diaspora in the events unfolding in Eastern Europe. Dating to policies implemented by the Austro-Hungarian Empire and perpetuated during the rise of fascism, the Second World War and the Cold War, the Ukrainian diaspora has driven the course of events there and in countries contributing to the crisis.
(We have covered the ascension of the OUN/B heirs in the Ukraine in a number of programs: FTR #‘s 777 , 778 , 779 , 780 , 781 , 782 , 783 , 784 , 794 , 800 , 803 , 804 , 808 , 811 , 817 , 818 , 824 .)
Individuals and institutions are returning to Ukraine from abroad, with president Petro Poroshenko implementing a legal gambit to permit foreign nationals  to assume cabinet positions in his new government. In particular, Poroshenko expressed the desire to incorporate citizens of the U.S., Georgia and Lithuania in Ukraine’s government.
In short order, Ukrainian/American State Department Officer Natalie Jaresko , Lithuanian-born U.S. citizen Airvas Abramovicius and Georgian Aleksandre Kvitashvili  assumed the posts of finance minister, economic and development and trade minister and health minister respectively. All three were educated in the United States.
Poroshenko also wanted foreign nationals to staff the Ukrainian federal police –the equivalent of our FBI. In that context, it is interesting and alarming that he is granting citizenship  to members of the Nazi Azov Battalion. Will they help to staff the Ukrainian federal police?
People from the “punisher” battalions–Azov is one of them–are in Washington D.C. lobbying Congress  for military aid. They are being assisted in this effort by the UCCA, the largest OUN/B front organization in the United States. (The day this program was recorded, the bill passed Congress .)
This comes amidst calls by some of the punisher battalion commanders to openly invade Russian territory.
The Ukrainian lobbyists have intitmated that Americans should be willing to “die for Ukraine.” Azov commander and member of parliament Andrei Biletsky is pushing for Ukraine to develop nuclear weapons.
At the same time that this is going on, an adviser to the head of the SBU (Ukraine’s federal intelligence service) has admitted that there are no Russian combat units  in Ukraine.
The program concludes with discussion of a new “Ministry of Information Policy,”  run by Yuriy Stets, a producer on a TV station owned by Poroshenko. Critics have labeled it “The Ministry of Truth,” after the state run propaganda bureau in George Orwell’s 1984. Stets has served as the PR person for Ukraine’s National Guard, to which the punisher battalions belong!
It appears that accurate information about Ukraine will be even harder to come by in the future. (We highlighted the Orwellian coverage of Ukraine being disseminated in the U.S., comparing our media  and those of Ukraine  with Orwell’s Ministry of Truth.)
Program Highlights Include: Natalie Jaresko’s close connections to the US Agency for International Development (which is very close to U.S. intelligence); Jaresko’s apparently corrupt behavior  at a fund she managed; allegations of forced prostitution within the Ukrainian military; Petro Poroshenko’s role as an advocate for privatization of state assets while serving as Victor Yanukovich’s Economy Minister  (the corruption and economic incompetence of the Yanukovich government was the ostensible cause of the Maidan coup); Natalie Jaresko’s efforts on behalf of the Yuschenko government, which was instrumental  in bringing the OUN/B Ukrainian diaspora back home.
1a. Supplementing information in FTR #824 , we note that the Ukrainian diaspora is returning home, BIG TIME! Petro Poroshenko has wasted no time in the inclusion of Ukrainains from abroad into his cabinet. Former U.S. State Department officer and Ukrainian-American Natalie Jaresko has been appointed as the Minister of Finance.
She oversaw a U.S. Agency for International Development-linked fund prior to her appointment. (U.S. AID has strong links to U.S. intelligence.)
Ukraine’s new Finance Minister Natalie Jaresko, a former U.S. State Department officer who was granted Ukrainian citizenship only this week, headed a U.S. government-funded investment project for Ukraine that involved substantial insider dealings, including $1 million-plus fees to a management company that she also controlled.
Jaresko served as president and chief executive officer of Western NIS Enterprise Fund (WNISEF), which was created by the U.S. Agency for International Development (U.S. AID) with $150 million to spur business activity in Ukraine. She also was cofounder and managing partner of Horizon Capital which managed WNISEF’s investments at a rate of 2 to 2.5 percent of committed capital, fees exceeding $1 million in recent years, according to WNISEF’s 2012 annual report .
The growth of that insider dealing at the U.S.-taxpayer-funded WNISEF is further underscored by the number of paragraphs committed to listing the “related party transactions,” i.e., potential conflicts of interest, between an early annual report from 2003  and the one a decade later.
In the 2003 report, the “related party transactions” were summed up in two paragraphs, with the major item a $189,700 payment to a struggling computer management company where WNISEF had an investment.
In the 2012 report, the section on “related party transactions” covered some two pages and included not only the management fees to Jaresko’s Horizon Capital ($1,037,603 in 2011 and $1,023,689 in 2012) but also WNISEF’s co-investments in projects with the Emerging Europe Growth Fund [EEGF], where Jaresko was founding partner and chief executive officer . Jaresko’s Horizon Capital also managed EEGF.
From 2007 to 2011, WNISEF co-invested $4.25 million with EEGF in Kerameya LLC, a Ukrainian brick manufacturer, and WNISEF sold EEGF 15.63 percent of Moldova’s Fincombank for $5 million, the report said. It also listed extensive exchanges of personnel and equipment between WNISEF and Horizon Capital.
Though it’s difficult for an outsider to ascertain the relative merits of these insider deals, they could reflect negatively on Jaresko’s role as Ukraine’s new finance minister given the country’s reputation for corruption and cronyism, a principal argument for the U.S.-backed “regime change” that ousted elected President Viktor Yanukovych last February.
Based on the data from WNISEF’s 2012 annual report, it also appeared that the U.S. taxpayers had lost about one-third of their investment in WNISEF, with the fund’s balance at $98,074,030, compared to the initial U.S. government grant of $150 million.
Given the collapsing Ukrainian economy since the Feb. 22 coup, the value of the fund is likely to have slipped even further. (Efforts to get more recent data from WNISEF’s and Horizon Capital’s Web sites were impossible Friday because the sites were down.)
Beyond the long list of “related party transactions” in the annual report, there also have been vague allegations of improprieties involving Jaresko from one company insider, her ex-husband, Ihor Figlus. But his whistle-blowing was shut down by a court order issued at Jaresko’s insistence.
John Helmer, a longtime foreign correspondent in Russia, disclosed the outlines of this dispute in an article  examining Jaresko’s history as a recipient of U.S. AID’s largesse and how it enabled her to become an investment banker via WNISEF, Horizon Capital and Emerging Europe Growth Fund.
Helmer wrote: “Exactly what happened when Jaresko left the State Department to go into her government-paid business in Ukraine has been spelled out by her ex-husband in papers  filed in the Chancery Court of Delaware in 2012 and 2013. …
“Without Figlus and without the US Government, Jaresko would not have had an investment business in Ukraine. The money to finance the business, and their partnership stakes, turns out to have been loaned to Figlus and Jaresko from Washington.”
According to Helmer’s article, Figlus had reviewed company records in 2011 and concluded that some loans were “improper,” but he lacked the money to investigate so he turned to Mark Rachkevych, a reporter for the Kyiv Post, and gave him information to investigate the propriety of the loans.
“When Jaresko realized the beans were spilling, she sent Figlus a reminder that he had signed a non-disclosure agreement” and secured a temporary injunction in Delaware on behalf of Horizon Capital and EEGF to prevent Figlus from further revealing company secrets, Helmer wrote.
“It hasn’t been rare for American spouses to go into the asset management business in the former Soviet Union, and make profits underwritten by the US Government with information supplied from their US Government positions or contacts,” Helmer continued. “It is exceptional for them to fall out over the loot.”
Jaresko, who served in the U.S. Embassy in Kiev after the collapse of the Soviet Union, has said  that Western NIS Enterprise Fund was “funded by the U.S. government to invest in small and medium-sized businesses in Ukraine and Moldova – in essence, to ‘kick-start’ the private equity industry in the region.”
While the ultimate success of that U.S.-funded endeavor may still be unknown, it is clear that the U.S. AID money did “kick-start” Jaresko’s career in equity investments and put her on the path that has now taken her to the job of Ukraine’s new finance minister. Ukrainian President Petro Poroshenko cited her experience in these investment fields to explain his unusual decision to bring in an American to run Ukraine’s finances and grant her citizenship.
A Big Investment
The substantial U.S. government sum invested in Jaresko’s WNISEF-based equity fund also sheds new light on how it was possible for Assistant Secretary of State for European Affairs Victoria Nuland to tally up U.S. spending on Ukraine since it became independent in 1991 and reach the astounding figure of “more than $5 billion,” which she announced to a meeting of U.S.-Ukrainian business leaders last December as she was pushing for “regime change” in Kiev.
The figure was so high that it surprised some of Nuland’s State Department colleagues. Several months later – after a U.S.-backed coup had overthrown Yanukovych and pitched Ukraine into a nasty civil war – Under Secretary of State for Public Affairs Richard Stengel cited the $5 billion figure as “ludicrous” Russian disinformation after hearing the number on Russia’s RT network.
Stengel, a former Time magazine editor, didn’t seem to know  that the figure had come from a fellow senior State Department official.
Nuland’s “more than $5 billion” figure did seem high, even if one counted the many millions of dollars spent over the past couple of decades by U.S. AID (which puts its contributions to Ukraine at $1.8 billion) and the U.S.-funded National Endowment for Democracy, which has financed hundreds of projects for supporting Ukrainian political activists, media operatives and non-governmental organizations.
But if one looks at the $150 million largesse bestowed on Natalie Jaresko, you can begin to understand the old adage that a hundred million dollars here and a hundred million dollars there soon adds up to real money.
Those payments over more than two decades to various people and entities in Ukraine also constitute a major investment in Ukrainian operatives who are now inclined to do the U.S. government’s bidding.
1b. More about Natalie Jaresko:
She oversaw a U.S. Agency for International Development-linked fund prior to her appointment. (U.S. AID has strong links to U.S. intelligence.) Note, as well, that she was part of Viktor Yuschenko’s team when he married OUN/B operative Ykaterina Chumachenko. As discussed in FTR #781 , Yuschenko whitewashed Ukraine’s World War II history, tricking out the Bandera forces as heroes.
The new finance minister of Ukraine, Natalie Jaresko, may have replaced her US citizenship with Ukrainian at the start of this week, but her employer continued to be the US Government, long after she claims she left the State Department. US court and other records reveal that Jaresko has been the co-owner of a management company and Ukrainian investment funds registered in the state of Delaware, dependent for her salary and for investment funds on a $150 million grant from the US Agency for International Development. The US records reveal that according to Jaresko’s former husband, she is culpable in financial misconduct.
Natalie Jaresko was appointed on Monday, and approved by a vote of the Verkhovna Rada on Tuesday  evening. A presidential tweet  and an announcement from the office of President Petro Poroshenko say a decree  has been signed granting Jaresko Ukrainian citizenship to qualify her to take office. The legality of the decree was challenged today by the head of Poroshenko’s bloc in parliament, Yury Lutsenko .
For the record of Jaresko’s predecessor at the Finance Ministry in Kiev, Alexander Shlapak, click .
On Tuesday at the State Department, spokesman Marie Harf was asked : “apparently a U.S. national has been appointed finance minister. Has Washington something to do with this appointment?” Harf replied: “No, this is a choice for the Ukrainian people and their elect [sic] representatives. This is their decision. Certainly, I don’t think we had anything to do with it at all… the Ukrainian people and their representatives are able to pick whoever they want to be part of their government. That’s the beauty of how this process works.”
Jaresko was born into the Ukrainian émigré community of Chicago , taking her name from her father John Jaresko. Her brother, also named John, has been active in Ukrainian movements and received  a medal in 2010 from then President Victor Yushchenko. At the time, sister Natalie was an appointee of Yushchenko’s Foreign Investors Advisory Council and the Advisory Board of the Ukrainian Center for Promotion of Foreign Investment. Yushchenko had given her the St. Olga medal in 2003.
Older sister, Katherine , married a Ukrainian, as did Natalie, who is 49. In 1989 Natalie Jaresko married Ihor Figlus, and took his name until their marriage ended in divorce in 2010.
For a study of the influence in Kiev of Kateryna Chumachenko and other Ukrainian-American women employed by the State Department, including Jaresko, read this . Chumachenko (below 2nd from left, with President George Bush in 2005) is the second wife of Victor Yushchenko, the Ukrainian President between 2005 and 2010.
Figlus was at the US Embassy in Kiev, when Natalie was posted there.
Figlus went on to run the American Chamber of Commerce in Ukraine. He then took charge of the Western NIS Enterprise Fund (WNISEF). According to the career resume Natalie has issued , she was “a cofounder of Horizon Capital and has served as its Managing Partner since March 2006, simultaneously serving as President and CEO of Western NIS Enterprise Fund (WNISEF), a position she has held since February 2001. Prior to joining WNISEF, Jaresko worked at the U.S. Department of State. From 1992 to 1995, she served as the First Chief of the Economic Section of the U.S. Embassy in Ukraine, and before that, she served in various economic positions at the State Department in Washington, DC.”
Since Jareshko and Figlus divorced, he has been airbrushed out of the business history she has portrayed as the basis of her experience, and of her prepping to be the new finance minister of Ukraine. Horizon Capital’s website  lists as its founders Jaresko, two Americans (with Harvard degrees and Chicago backgrounds like Jaresko; below 1 and 2) and a Canadian-Ukrainian (3).
According to a recent Ukrainian community paper from Chicago , “Jaresko has worked more than 20 years in Ukraine as a venture capitalist, bringing countless foreign investments to Ukraine.” Counting the countless, Jaresko has disclosed  that the kickoff fund WNISEF was “funded by the U.S. government to invest in small and medium-sized businesses in Ukraine and Moldova – in essence, to “kick-start” the private equity industry in the region. We began investing in this region in 1995, and have invested $122 million over the past 12 years in 30 businesses in a wide variety of sectors. Based on our team’s ability to successfully navigate this business environment, our track record, and Ukraine’s promising economic environment, we founded Horizon Capital in 2006.”
The US Government money has come from the US Agency for International Development (USAID). Reports promised  by the website on the impact of its funding operations in Ukraine and Moldova between 1997 and 2005 are missing. The financial report  for WNISEF for 2003, the first publicly available, reveals that a USAID grant to the fund amounted to $150 million, with a letter of credit commitment of $141.7 million; $113.6 million had been disbursed by the end of 2003. Asset value was dropping that year, while management salaries, business travel and other expenses were rising. The fund was lossmaking — $4.3 million in the red in 2002, $5.1 million lost in 2003.
The latest available report from WNISEF is for 2012. It can be read here . Invested asset value in 2012, though up on 2003, was falling from the year before, 2011. Investment income for 2012 came to $1.2 million, down 43% on the previous year. The management kept helping itself to more pay, but cut business travel. Still, the bottom line was a loss of $6.4 million, compared to a gain in 2011 of $401,662.
Horizon Capital says WNISEF was “the cornerstone limited partner in EEGF” – that’s Emerging Europe Growth Fund, LP. Its portfolio is reported here . Emerging Europe Growth Fund II, L.P. is what Jaresko’s group calls “a follow-on fund expanding on the success of Emerging Europe Growth Fund, L.P. (EEGF), a $132 million fund raised in 2006 with a similar investment strategy. Investors include European and U.S. fund-of-funds, banks, private pension funds, university endowments, family offices, and high net worth individuals. EEGF II typically invests $15–40 million in each of its portfolio companies, including expansion, buy-out and selective early stage opportunities.” Tinkoff Credit Systems of Russia is (maybe was) its lead  portfolio asset.
The success Horizon Capital claims for its funds appears not to have been reported in the lossmaking years, 2003, 2004, 2005, 2006, 2008, 2009, 2010, and 2012. In the only two years which Jaresko managed in the black, 2007 and 2011, the net gains reported were $1.8 million and $401,662, respectively. On the asset side the annual reports are dominated by USAID’s outlay of $150 million. If other investors subscribed funds, they appear to have lost them.
When Jaresko was asked about the investment performance, she has said: “we are very pleased with both the investment pipeline and the exit environment, and believe 2006 will be a very good vintage for our investors.” The audited report  for 2006 indicates there was a net investment loss of $5.3 million.
According to remarks published  in Kiev by Timothy Ash, an analyst at Standard Chartered bank London, Jaresko is “very well-prepared, highly experienced and tough as nails, she brings with her the unique ability to pick up the phone and reach virtually any decision maker in Washington without any introduction necessary; they know her – and they trust her.” Ash also says: “she fits the bill as an international expert, clean, and likely to be a radical thinker – able to think outside the box in terms of ideas. Ukrainian speaker, and has been resident in Ukraine for years so knows how things work, or rather don’t work.”
Interviewed by telephone, Ash said he did not know the US Government was financing Jaresko’s investment fund. “The US does do that”, he conceded. Asked for what he knows of the success of her investment portfolio and experience, Ash said he lacked details. “She’s been in the country [Ukraine] for twenty years… I don’t know anything about the success [of the investment firm].” To be a finance minister, Ash added, “you don’t necessarily have to be a finance ministry person.”
“She is extremely well qualified for this position – no doubt at all and any reasonable person reading this CV would say the same. Did a career in politics, not finance, make UK Chancellor George Osborne qualified for his position, or even Gordon Brown before him.” Asked what Ash means by characterizing Jaresko as “clean”, and what he knows about her links to the Ukrainian oligarchs, he said: “I don’t think she’s aligned with any oligarch.”
What exposure does his bank have to Ukraine at the moment? Ash replies: “given UK regulatory requirements I do not have access to that information…perhaps you would like to be aware that I have ‘Underweight’ recommendations on both Ukraine and Russia – so if you are trying to imply something inappropriate there, I would not bother.”
The one link to a Ukrainian oligarch in Jaresko’s public record is with Victor Pinchuk, for whom she has been a regular participant at his Yalta European Strategy (YES) meetings and speaker at other functions Pinchuk has sponsored .
What Jaresko has had to say publicly this year is not much. In May 2014, speaking  to the German Marshall Fund of Washington she talked up “competitiveness” and “infrastructure” in Ukraine, but omitted to identify the impact of civil war on the investment case. The following month, in June 2014, speaking  in Stockholm, Jaresko said “what you see in the newspapers is a small, small part of the reality, the reality is much richer, the opportunities much greater, the real change much deeper than anyone could read about in the newspaper.” Again, no mention of civil war.
For details of the performance of Horizon Capital’s funds in 2013, Tatiana Bega, the firm’s investment relations spokesman in Kiev, was asked to clarify whether the registered ownership of Horizon Capital is Ukrainian; what the value is of the funds currently under management; how profitable the firm is currently; and what “portfolio investments you have made which you consider to have been successful”. There has been no reply. In January of this year Jaresko placed an authorized version of her career success in the Ukraine edition of Forbes, which can be read here . The reporter, Yelena Shkarlova, omitted to check Jaresko’s audited reports to verify what she was told.
Exactly what happened when Jaresko left the State Department to go into her government-paid business in Ukraine has been spelled out by her ex-husband in papers filed in the Chancery Court of Delaware in 2012 and 2013. A judgement by Vice Chancellor Donald Parsons, confirming the facts, can be read here . Without Figlus and without the US Government, Jaresko would not have had an investment business in Ukraine. The money to finance the business,and their partnership stakes, turns out to have been loaned to Figlus and Jaresko from Washington.
According to the judge, “Plaintiff Emerging Europe Growth Fund, L.P. (“EEGF”or the “Partnership”) is a Delaware limited partnership formed to make equity and debt financing investments in privately held companies in Ukraine and Moldova. Plaintiff Horizon Capital GP, LLC (“HCG” or the “General Partner”, and collectively with EEGF, “Plaintiffs”) is a Delaware limited liability company and the general partner of EEGF. Defendant Ihor Figlus (“Figlus” or “Defendant”) is a limited partner of EEGF. Figlus previously was married to non-party Natalie A. Jaresko. Jaresko is a co-founder of HCG and is the chief executive officer of EEGF….Figlus and Jaresko married in 1989. In February 2006, the couple jointly invested $150,000 in EEGF. Later that year, in September, they invested an additional $1.1 million in EEGF. Figlus and Jaresko divorced in 2010. They currently hold their interests in EEGF jointly, pending a settlement of their assets.”
The court has found that in January 2011, after the divorce, Figlus discovered he owed money as a co-signatory with Jaresko of loan agreements with which their positions in the funds had been financed. Judge Parsons’s narrative: “He requested information regarding EEGF and several loans Figlus and Jaresko had secured from HCG affiliate Horizon Capital Associates, LLC (“HCA”) to finance the couple‘s investment commitments to EEGF (the “loans”).”
By September of 2011, after Figlus (right) has testified that he had read the documents provided by his wife’s associates, he concluded that the loans were “ improper”. That allegation he was unable to resolve with Jaresko, so Figlus turned to the Kyiv Post, a local English-language newspaper, and its reporter, Mark Rachkevych. According to the court record, “because he had no money to investigate the Loans, Figlus decided to inform Rachkevych of his suspicions and have Rachkevych investigate the propriety of the Loans. Over the next five months, Figlus and Rachkevych engaged in video conversations regarding EEGF.”
When Jaresko realized the beans were spilling, she sent Figlus a reminder that he had signed a non-disclosure agreement. Jaresko then enforced this with “a cease and desist letter to Figlus on behalf of EEGF demanding that he immediately discontinue disclosing confidential information regarding EEGF.” Because Figlus wasn’t deterred, Jaresko went to court in Delaware in October 2012, and got a temporary injunction prohibiting Figlus from disclosing any more.
Jaresko’s purpose, he now alleges, was not only to silence Figlus, but to strip him of his stake in their business partnership. “The record should be clear,” according to the judge, “that the parties to the agreement in question truly were sophisticated and operated on a level playing field. In this case, we have the unusual circumstance that a divorce settlement is proceeding contemporaneously with this lawsuit. Figlus‘s ex-wife is a founder of the Partnership and an officer of the General Partner, both Plaintiffs in this action. Figlus avers that he offered to resolve the case and to strictly comply with the Confidentiality Provision but that Plaintiffs insisted on pursuing the action at his expense to dispossess him of his interest in the Partnership to the benefit of his ex-wife. At this stage, of course, these are merely allegations and I express no opinion as to the truth of any of Defendant‘s allegations.”
The newspaper in Kiev was silenced, and there is no sign in its archive that Rachkevych, still a reporter for the Post, has recovered his investigative interest in Figlus, Jaresko, or Horizon Capital. . . .
2. As Anders Aslund of the pro-austerity Peterson Institute suggested in the Wall Street Journal recently, privatizing Ukraine’s assets is, itself, one of the cures for corruption. So are cuts in public spending and deregulation.
The Petetrson Institute is basically a mouthpiece for the international oligarchs that want to see a world run by finance and billionaires. It’s going to be important to keep in mind that gutting the Ukrainian public sector, slashing public spending, deregulating business, and generally selling off the state assets to the oligarchs and international investors is probably going to be the template for the official “anti-corruption” campaigns going forard. Are corrupt oligarchs corrupting your government? Why not sell off state assets to them to end the corruption.
External threats to Ukraine from Russia have dominated the news for months, but as that situation starts to stabilize the country will need to confront an old, internal enemy: corruption. Transparency International ranks Ukraine 144 out of 177 countries on its corruption-perception index. Corruption was at the heart of popular discontent with the deposed regime of Viktor Yanukovych, and widespread graft helps explain why the economy stalled in 2012 and 2013. Kiev must tackle this problem urgently, even as its leaders confront Russia’s territorial ambitions.
The scale of the graft under the previous administration, if the allegations turn out to be true, is breathtaking. Prime Minister Arseniy Yatsenyuk has accused the Yanukovych regime of stealing $37 billion from the state—equal to one-fifth of Ukraine’s GDP in 2013—during its four years in power.
This corruption is said to have taken several forms. The Yanukovych administration was allegedly able to buy natural gas at low, state-controlled prices and then resell it at market prices that could be as much as eight times higher. Volodymyr Groysman, Ukraine’s current deputy prime minister, has said that gas worth $2.5 billion was sold this way.
Infrastructure projects have also come under suspicion. In August 2008, for example, the city of Lviv was accepting tenders for a football stadium to host the 2012 European championships. Alpine, an Austrian company, placed a bid at $191 million, according to company records, but it was rejected since the request was for proposals of up to $116 million. In the end, the construction of the stadium was awarded to Donetsk-based Altkom, according to the Ukrainska Pravda. The total cost came in at $370 million, according to government documents. The European Investment Bank, which had intended to contribute to the financing of the stadium, withdrew in protest.
Cleansing Ukraine of its corruption will require several interrelated measures. In this regard, Estonia and Georgia have shown the way.To begin with, the state needs to limit its regulatory role by abolishing or merging many state agencies. Minimizing state interference in the economy—whether by privatizing state-owned assets or cutting regulations—reduces opportunities for corruption in the first place.
The government should also cut public expenditures, and corrupted subsidies must be eliminated. The deregulation of gas and electricity prices in this case must be seen as a matter of combating corruption, not as a social issue. The poor can be given targeted cash compensation instead. The tax system also needs to be simplified and the tax police abolished, to shield taxpayers from lawless persecution. Ukraine has recently adopted a law on public procurement requiring open public tenders, and voters should demand their leaders follow that law to the letter.
Officials also must focus on delivering reliable rule of law. This should entail the creation of an independent commission scrutinizing all the top judges and prosecutors in Ukraine and dismissing those found to have engaged in graft.
By signing the Association Agreement with the European Union, Ukraine has committed itself to adopting hundreds of reform laws, while the EU has committed itself to providing substantial technical assistance in drawing up new laws and reorganizing state agencies. That deal is on hold for now, but Brussels and Kiev can still find ways to move forward. Those parts of the agreement that target corruption, for example, should be a priority; as should building a strong and independent judicial system.
The Ukrainian people have made a choice for Europe. If they stick with it and pursue reform with determination, they will have their best chance to clean out the Augean stables of a long-corrupt system.
3a. So is privatization, gutting state spending, and deregulation (the ol’ economic shock doctine) the kind of “radical” “outside the box” thinking we should expect?
Consider that this was the same plan Petro Poroshenko had back in 2012 when he was Victor Yanukovich’s economic minister:
The Ukrainian government has drafted a law that paves the way for the privatization of hundreds of state-owned companies previously considered strategic, Kommersant-Ukraine newspaper reported on Wednesday citing a leaked draft document.
Ukrainian Economy Minister Petro Poroshenko said this week the government planned to remove about 1,200 enterprises from the list of strategic assets that cannot be privatized, Ukrainian media reported, but did not name any.
According to Kommersant, the draft law lifts the ban on privatizing numerous coal mines, oil and gas pipelines, grain silos and other industrial assets.
The sell-off could provide extra budget revenues for the cash-strapped former Soviet republic and also harks back to 1990s moves that freed up business and drove development of the European Union’s eastern member states.
“Should the new list pass through the Rada (parliament), it might pave the way for a new round of massive privatization in Ukraine,” VTB Capital said in a note on Wednesday.
“Carrying out the process in a transparent and competitive way would provide a significant boost to the state budget in the coming years, and to the overall financial position.”
But, since President Viktor Yanukovich’s election in early 2010, many privatization auctions have been won by his campaign’s main financial backers, industrialists Rinat Akhmetov and Dmytro Firtash.
Companies close to Akhmetov, in particular, have purchased stakes in a number of electric power companies while Firtash’s group has won most auctions for regional gas distribution companies.
“...Examples of privatization in Ukraine suggest that such (transparent and competitive) conditions are not always met in a way that maximizes the benefits for the state,” VTB Capital said.
3b. To the surprise of no one aware of Ukraine’s dire economic straits, Ukraine is at the brink of financial collapse. It is altogether unlikely that the privatization/slash spending catechism will avert this.
The International Monetary Fund has identified a $15bn shortfall in its bailout for war-torn Ukraine and warned western governments the gap will need to be filled within weeks to avoid financial collapse.
The IMF’s calculations lay bare the perilous state of Ukraine’s economy and hint at the financial burden of propping up Kiev as it battles Russian-backed separatist rebels in its eastern regions.
The additional cash needed would come on top of the $17bn IMF rescue announced in April and due to last until 2016. Senior western officials involved in the talks said there is only tepid support for such a sizeable increase at a time Kiev has dragged its feet over the economic and administrative reforms required by the programme.
“It’s not going to be easy,” said one official involved in the talks. “There’s not that much money out there.”
Without additional aid, Kiev would have to massively slash its budget or be forced to default on its sovereign debt obligations. Since the bailout programme began in April, Ukraine has received $8.2bn in funding from the IMF and other international creditors.
Pierre Moscovici, the EU economics chief, said the European Commission was weighing a third rescue programme on top of the €1.6bn ($2bn) it has already committed to Kiev; the Ukrainian government has requested an additional €2bn from Brussels.
But Pier Carlo Padoan, the Italian finance minister who chaired a discussion of Ukraine’s financial situation at a meeting of his EU counterparts on Tuesday, said EU resources should only be mobilised if Kiev made a “stronger effort” towards implementing reforms.
At a meeting of his cabinet in Kiev, Ukraine’s prime minister, Arseniy Yatseniuk, insisted his government was prepared to put in place unpopular measures, including deep cuts in spending, a crackdown on the massive shadow economy and moves to deregulate the country’s uncompetitive economy.
Under IMF rules, the fund cannot distribute aid unless it has certainty a donor country can meet its financing obligations for the next 12 months, meaning the fund is unlikely to be able to send any additional cash to Kiev until the $15bn gap is closed.
The scale of the problem became clearer last week after Ukraine’s central bank revealed its foreign currency reserves had dropped from $16.3bn in May to just $9bn in November. The data also showed the value of its gold reserves had dropped by nearly half over the same period. A person with direct knowledge of the central bank’s policy said part of the drop had been due to large-scale gold sales.
According to two people who attended the EU meeting, concern over Ukrainian finances has become so severe that Wolfgang Schäuble, the German finance minister, said he had called his Russian counterpart, Anton Siluanov, to ask him to roll over a $3bn loan the Kremlin made to Kiev last year.
George Osborne, the UK finance minister, expressed surprise at the request, attendees said, saying the EU was now asking for help from Russia at the same time it was sanctioning the Kremlin for its actions in Ukraine.
. . . . Aivaras Abromavicius, economic development and trade minister
Aivaras Abromavicius is a Lithuanian-born specialist in emerging markets investment. He graduated from Concordia University in Wisconsin, USA, with a BA in international business.
In 1996, Mr Abromavicius started his career at Hansabank, a major bank operating in the Baltic states, which then became part of the Swedbank group, where he was appointed head of equities in 1998. He then worked for three years as head of trading at Brunswick Emerging Markets, a consultancy.
In 2002, he joined East Capital, a global investment fund which specializes in emerging markets. There, he was part of a portfolio management team for Eastern Europe.
Aleksandre Kvitashvili, health minister
Aleksandre Kvitashvili is an experienced health official from Georgia. He studied history at Tbilisi State University and in 1993 received a masters degree in public management from the Robert Wagner Graduate School of Public Service in New York. After briefly working in the US, he returned to Georgia. There, he worked for the UN Development Program and several healthcare-related organizations.
In 2008-10, he was minister of labour, health and social protection under President Saakashvili. In August 2010, Mr Kvitashvili resigned to become rector of Tbilisi State University, a post which he held until August 2013.
“I’ve been working on reforms in Ukraine for the past three months, but my love for this country has a much longer history,” he said after his appointment on 2 December. . . .
5. Nazi members of the Azov Battalion are being granted citizenship by Poroshenko.
When people are risking, often sacrificing, their lives for their country, quibbles about questionable neo-Nazi views may be out of place. This is not the case where they are fighting for another country, and Ukrainian President Petro Poroshenko’s decision to grant Sergei Korotkykh, a fairly notorious Russian/Belarusian neo-Nazi, Ukrainian citizenship cannot fail to raise eyebrows.
The President’s website informs  that on Dec 5 Poroshenko handed an internal passport “to Belarusian Sergei Korotkykh who has been fighting in the Azov battalion since it was created and is the commander of reconnaissance. The President thanked Sergei Korotkykh for his courageous, dedicated service”. He also announced that the Defence Ministry, together with the Interior Ministry, is preparing a number of submissions to grant Ukrainian citizenship to fighters “who selflessly defend the country’s sovereignty and territorial integrity”.
The courage and commitment of volunteer fighters of the Azov battalion have been demonstrated in military action over recent months and in their defence of Mariupol, and gratitude and recognition of their bravery are certainly warranted. The battalion, however, is known just as much because of the pronounced neo-Nazi views of its commanders and at least some of its members.
Those views are shared by the foreign nationals who have joined Azov, including Sergei Korotkykh.
According to an original report  on the UNIAN website, Korotkykh [known as ‘Malyuta’] is a Belarusian far-right radical with a formidable neo-Nazi background. He was formerly on the political council of the National-Socialist Society, many of whose members were later convicted of racially or politically motivated murders. . . .
6. Commanders of some of the “Punisher Battalions” are among the Ukrainians lobbying the Senate for aid, including military aid. Some of them are also threatening to invade Russian territory and suggesting that Americans should be ready to die for Ukraine.
Within a few days the Senate Foreign Relations Committee is going to meet with Ukraine’s best and brightest. They are coming to ask for money, weapons, and start lobbying for direct intervention. The thought that the halls of the US Congress can be sullied with this kind of people treading on its floors is beyond my imagination. You don’t need to care about Ukraine on this issue. American moral authority and the well being (electability) of some good Congressmen that only hear the propaganda might be at stake. Please take the time to read through and if this is not acceptable tell your Senator why.
A few days ago Vadim Troyan, a Battalion Azov deputy commander was appointed Kiev Oblast(Region) Police Chief.  Azov Battalion is one of the punisher battalions responsible for rape, kidnapping, and murder of civilians across Donbass. Vadim Troyan has earned some of Ukraine’s highest medals in the process.
At their base city of Mariupol just during the month of October 2014 the police department had to report over 200 rapes committed by Azov and the Ukrainian National Guard in a public meeting held at the city police department. According to local residents in Mariupol which is a city of over 500,000; people are constantly going missing.
Young girls are being dragged away in broad daylight and some are never seen again. Azov battalion is taking men off the street that are never returned. In the last week of October twenty people were reported missing.
Andrey Biletsky is also Arseni Yatsenyuk’s choice as a parliamentarian in Ukraine’s National Rada (Senate). In fact, all the supposedly democratic Euro-Maidan leaders have chosen radical neo nazi  representatives for Senate seats. Biletsky has sworn he will drive a vote on Ukraine’s nuclear status. If successful, Ukraine will strive to develop nuclear arms. Sergey Melnichuk (battalion commander Aydar) was Oleg Lyashko’s choice for a Rada seat.
In the interview with Foreign Policy, the Azov commander Biletsky (now Ukrainian Senator) states:
“Unfortunately, among the Ukrainian people today there are a lot of ‘Russians’ (by their mentality, not their blood), ‘kikes,’ ‘Americans,’ ‘Europeans’ (of the democratic-liberal European Union), ‘Arabs,’ ‘Chinese’ and so forth, but there is not much specifically Ukrainian...It’s unclear how much time and effort will be needed to eradicate these dangerous viruses from our people.”
The battalion’s political platform supports the system of government devised by the Ukrainian nationalists of the 1930s and 1940s.
Really look at the description of a “Russian” and see if there is anything familiar here. American democracy is no different to them than Donbas people. This point needs to hit home in light of what they are doing.
Andrey Teteruk the Commander of Myrotvorets (peacemaker) is also one of Yatsenyuks choices that is taking a Senate seat.
Andrei Teteruk who ran for lawmaker on People’s Front election list plans to attend parliamentary plenary meetings with weapons.  “I hope I will not use it,” Teteruk said.
Myrotvorets (peacemaker battalion) is another punisher battalion. In Teteruk’s own words “Peacemaker” is a police battalion. “Our task is to restore order in liberated settlements, clean from criminals, weapons. We did a good job in Dzerzhinsk; performed police functions, investigated, who supported separatists in the city.”
“I’m against solving problems by using weapons. With all that I’m a military man, run a military unit, but I was in Kosovo and saw the conflicts that were solved with weapons, it led to the fact that entire villages were cut out, from the oldest to the youngest. The war makes dirty both sides.”
Although honesty is a respectable quality every person in Donbass has been branded a separatist. Teteruk’s job as a punisher battalion commander is no different than the last part of his quote- to destroy entire villages from the oldest to the youngest.
Yuri Bereza is the Commander of Ihor Kolomoisky’s Dneipr 1. You guessed it Yuri Bereza is also now a Senator. What makes this clown a great pick for Maidan leaders to get behind is:
“Today, we are ready not just to defend [Ukraine], but to invade the Russian Federation , break into it with reconnaissance detachments and sabotage groups,” said Bereza.
Although I didn’t mention him by name I wrote about Bereza’s most notable accomplishment to date. In a hacked correspondence reacting to the remains of 37 civilians found in Dnipropetrovsk, Ukrainian Rada, Deputy Oleg Pankevich questions Igor Kolomoisky’s sanity. Kolomoisky, one of the leading Jewish leaders in Europe, has his own Dnipr Battalion in the Donbass war.
According to Kolimoisky’s assistant Boris Filatov, they are just Neo-nazi animals. Kolomoisky’s Dnipr battalion is replete with swastikas and Neo-nazi mercenaries from Ukraine  and other countries. Among his more notable accomplishments, Kolimoisky funded and planned  the Odessa Trade House Massacre last spring. Kolomoisky has a new Nazi problem . Of the 37 civilians that were found tortured, mutilated and killed in this instance, 19 were Jewish. Thats why Pankevich called it a mini-holocaust.
Yuri Bereza is a new Ukrainian Senator who now has medals for torture and murder of innocent people.
I have written extensively about Sementchenko’s Donbass Battalion. Sementchenko is also a new Ukrainian Senator. His battalion accused him of running when the fighting started. When they were under attack he refused to deliver weapons his men did not have. He told his deputy commander to leave because” they are just meat anyway.” Semenchenko’s battalion has been responsible for a lot of horror done to civilians in Donbass. This man is an animal.
The ultra-nationalist Ukrainian Congressional Committee of America (UCCA) has been lobbying the US Congress to give weapons to Ukraine. The men listed above are the representatives the Diaspora community chose as representative of their ideal of a Ukrainian nationalist in the mold of Stepan Bandera.
The United Nations (UN) recently released a report on the human rights situation in Ukraine, accusing the volunteer battalions of violating international humanitarian laws .
The date they chose falls on Ukraine Day celebrations to insure they get the turnout needed to show the Senate Foreign Relations Committee that these men deserve American dollars, weapons, and training.
This excerpt is from nationalist volunteer effort:
“As I’m sure you know, these three Magi  are not only our lovely commanders of the volunteer battalions Donbas, Myrotvorets, and Dnipro‑1, they are also newly-baked parliamentarians from Samopomich and Narodny Front. And they are in DC this week to meet with congressmen and military officials and talk about how to defend Ukraine. At this very moment, Russia is training a 30 000 army in the occupied eastern territories and stuffing the region with its weapons, and Semenchenko asks for OUR HELP!”
“Remember, Ukraine is not only defending itself, but also peace in Europe, and the alliance between the US and its biggest friend, Europe, as well as international law.”
Considering that they want the US to attack Russia, should we thank them now or later?
What else does the Ukrainian emigres want from the US Congress?
Former Ukrainian Foreign Minister Voldymyr Ogrizko on Shuster Live (largest Ukrainian talk show): “ ‘Americans must be willing to die for Ukraine, because the former Soviet republic, fighting with Russia, defends the values of the Western world. And they are willing to die in Iraq or Afghanistan? If they are really talking about their values, they must be willing to die in Ukraine. Today we protect their valuables. This and our values. We protect their lives and their blood ‚( He is talking about America )’ — said Ogryzko. He expressed the hope that the results of the elections in the US will bring Ukraine support.”
What Else Should the Senate Foreign Relations Committee Know?
Recently on the Ukrainian investigative program Groshi. which I was shocked to learn was still on the air after the coup did a program on prostitution in the Ukrainian army.
At first blush, I would agree that doesn’t sound like much except the commanders are forcing conscripts to act as prostitutes. The commanders are collecting 600 hryvna per outing and supposedly giving the conscript the equivalent of $4. Bear in mind that the conscript cannot refuse the order.
The conscript age in Ukraine is now 16 years old. Other soldiers or officers have their choice between a boy or a girl, man or woman. How is this not sanctioned rape within the armed forces? Will the US Congress support this? . . . .
7. An adviser to the head of the Ukrainian intelligence service has admitted that there are no Russian units in Ukraine.
In an interview with Gromadske.TV, Markian Lubkivsky, the adviser to the head of the SBU (the Ukrainian version of the CIA) stated there are NO RUSSIAN TROOPS ON UKRANIAN SOIL! This unexpected announcement came as he fumbled with reporters’ questions on the subject. According to his statement, he said the SBU counted about 5000 Russian nationals, but not Russian soldiers in Donetsk and Lugansk Peoples Republics.
He further clarified that there were no organized Russian units in Donbass. The SBU thinks there are representatives of the Russian FSB (Russian CIA) and mentors who provide training and organization that grew the Novorussia army quickly in its fight with Ukraine.
He went on further to state that the SBU estimates the armies of Donetsk and Lugansk Peoples Republics are about 20–25 thousand strong.
This confession will sting the Kiev government, that has repeatedly told its allies that Russia is attacking. Daily on Ukrainian news, official stories declare that Ukrainian security forces are fighting Russian armed forces. As part of the propaganda, Ukrainians are told that the Ukrainian army is defeating companies of Russian paratroopers, Spetz Natz Group Alpha (the Russian version of Navy SEALS), and all sorts of special forces. If you were an average Ukrainian what would you think?
The reporter doing the interview, ultra-nationalist Natasha Stanko may not survive the line of questioning she started. Earlier I reported on her tweet celebrating the punisher battalion Aydar murdering Ukrainian troops that refused to kill civilians. She thought that was funny. . . .
8. As though the situation in Ukraine wasn’t Orwellian enough, Poroshenko has created a federal ministry critics are comparing to “The Ministry of Truth” from George Orwell’s 1984. Note that the ministry will be headed by Yuriy Stets, the former PR person for the Ukrainian National Guard, to which the punisher battalions belong! Stets is a former employee of a TV station owned by Poroshenko.
The Ukraine government has established a department that critics are calling the “Ministry of Truth” — borrowing a term from George Orwell’s classic dystopian novel 1984.
Officially called the Ministry of Information Policy, the new office will be headed by Yuriy Stets, head of the Information Security Department of the National Guard of Ukraine. A close ally to President Petro Poroshenko, Stets was formerly chief producer of the TV channel that Poroshenko sill owns.
While its main objective appears to be confronting Russia’s formidable propaganda machine, the Ministry is likely to also restrict free speech and inhibit journalists’ work — particularly in war-torn eastern Ukraine, according to observers.
At a demonstration outside parliament, Ukrainian journalists decried the new ministry, which deputies approved in the Verkhovna Rada late on Tuesday, along with the rest of the country’s Cabinet of Ministers.
About 40 journalists and activists from Ukrainian watchdog groups Chesno (Honest) and Stop Censorship! held posters that read “Hello, Big Brother.” They urged lawmakers entering the parliament ahead of Tuesday’s session to vote against appointing Stets as its head.
The creation of the ministry comes on the heels of critical reports from journalists and rights groups about its use of controversial weapons in eastern Ukraine, as well as possible war crimes committed by its armed forces.
Ukraine’s government is clearly frustrated with by its lack of success in disseminating its messages. “You must understand, we are being killed by [Russian] guns as well as their propaganda,” a top security official told Mashable when explaining why he supported the creation of the ministry.
A report released last month by The Interpreter website describes just how Russian propaganda works, and how effectively it is being used as a weapon of the Kremlin. The report outlines a “hybrid war” that combines disinformation “to sow confusion via conspiracy theories and proliferate falsehoods” with “covert and small-scale military operations.”
Still, there are some in the government who do not endorse the ministry. A senior official in the Presidential Administration, who spoke anonymously because he feared repercussions from officials for talking to a journalist, said he was “very concerned” about the ministry and how it would be used.
“Honestly, I’m not sure such a ministry is needed,” the official said, adding that others inside the administration have also questioned the move.
“The way to fight Russian propaganda is with honestly and transparency, not trying to beat Russia at its own game.”
The Ministry of Information Policy was pushed through with little notice and even less debate on the parliament floor. That could be because the president himself pushed the concept on members of his party, the largest faction in parliament, and has great sway over the ruling coalition.
Deputies whom Mashable spoke with ahead of the parliament session on Tuesday said Poroshenko personally urged them to support the ministry in a tense last-minute meeting called late Monday night.
Former investigative journalist turned lawmaker Serhiy Leshchenko, who was elected in last month’s vote on the ticket of the president’s party, was present at the meeting. He says Poroshenko “was very serious” about confirming Stets the following day in parliament.
Oksana Romaniuk, director of local media watchdog Institute of Mass Information and Ukraine representative for Reporters Without Borders, toldMashable that “the government wants to control the media’s messages first, and second, they want to control access to the messages.”
Details on how the ministry will operate are murky. No documents were made available to the public or deputies, and Stets did not reply to Mashable’s requests for comment. But Romaniuk fears the government has given itself “carte blanche.”
Reporters Without Borders said it “firmly opposes” the information ministry. “Putting the government in charge of ‘information policy’ would be major retrograde step that would open the way to grave excesses,” said Christophe Deloire, the watchdog organization’s secretary-general.
“Dear team Poroshenko, the pursuit of absolute power in this country means a final career,” Tatyana Nikolaenko, chief editor at Ukraine’s Insider magazine, wrote on Facebook . “If you create this ‘Ministry of Truth’ the president’s rating will collapse as quickly as it rose in the winter of this year.”
She added: “You can not win the information war [against Russia] with it, because with the creation of the Ministry you’ll give Russian propaganda endless references to [Nazi Minister of Propaganda Joseph] Goebbels and Orwell.”
But Kiev sees the creation of the ministry as a necessary move to fight Russia’s incessant propaganda, which has been particularly successful over the course of the ongoing crisis.
The concept was first floated on Sunday, when Interior Ministry advisor Anton Herashchenko mentioned it in a post on Facebook. In it, he mentioned the need to counter the Russian message.
“There is an idea to create the structure of the Cabinet of Ministers Ministry of Information Policy, whose main task is the protection of Ukraine’s information space of the Russian propaganda and counter-propaganda in Russia, in the temporarily occupied territories of Crimea and [eastern Ukraine]. This issue is long overdue and I would even say too late,” Herashchenko wrote.
Stets relayed his thoughts on the new ministry in his own Facebook post on Monday.
“I see it this way: different states with different historical and cultural experiences in times of crisis came to need to create a body of executive power that would control and manage the information security of the country,” Stets wrote.
According to Stets, none of the current state structures could efficiently handle those tasks.
“The information and communications space remain uncoordinated now, full of contradictions and influence of foreign agents, and under conditions of geopolitical wars becomes a weak part of the country, a subject of enemy attacks,” he added.
9. The day this program was recorded, Congress rewarded the UCCA and their punisher battalion lobbyists by giving the green light to lethal military aid to Ukraine. Note that two members of the Nazi Azov Battalion were killed the very day the bill passed Congress.
Ukraine on Friday welcomed a US bill that would allow Washington to provide lethal military assistance to the embattled country, but Russia expressed outrage at the “openly
The bill — passed late on Thursday and due to get final approval in Congress on Friday before being sent to US President Barack Obama — opens the way for up to $350 million (280 million euros’) worth of US military hardware to be sent to Ukraine, which has been fighting an eight-month war against Kremlin-backed separatists in its east.
It also threatens fresh sanctions against Russia, whose economy is crumbling under previous rounds of Western sanctions and a collapse in oil prices.
Russia’s foreign ministry said the new US legislation put a “powerful bomb” under US-Russia bilateral ties.
“The openly confrontational nature of the Ukraine Freedom Support Act approved by both houses of the US Congress without debate and proper voting cannot cause anything but deep regret,” said ministry spokesman Alexander Lukashevich.
“US legislators are following in the footsteps of the Barack Obama administration by showing great zeal in destroying the framework of cooperation,” he said.
Kiev lawmakers, though, hailed the US move as a “historic decision”. They have long been pressing the West to provide military support to their beleaguered army, but have so far received only non-lethal equipment. . . .
. . . . US lawmakers, however, appeared determined to force Obama’s hand against Russia. Senators added a clause in the bill that would grant “major non-NATO ally” status to Ukraine, along with pro-Western Georgia and Moldova.
Russia is concerned at what it sees as NATO’s creeping umbrella along its western borders.
Ukraine and the West accuse Russia of sending regular troops to back separatists in eastern Ukraine in a conflict that has claimed more than 4,300 lives since it broke out in April. . . .
. . . . Underlining his [Poroshenko’s] concerns, there were reports on Friday that two volunteer fighters with the pro-Kiev “Azov regiment” and two rebels were killed in Pavlopil, 70 kilometres (45 miles) south of the main rebel stronghold of Donetsk.
“They were ambushed. Their car was blown up by a landmine,” Azov spokesman Oleksandr Alferov told AFP. He added that the two rebels were killed in an ensuing firefight. . . .