Ukraine: Constitutional changes rejected by separatists

Ukrainian President Petro Poroshenko unveiled several changes to the Constitution to Parliament on July 1, and has since been barraged by criticism and outright rejection from belligerent separatists still occupying vast swathes of the eastern part of the country. The changes largely amount to a decrease in overall presidential authority, granting local towns the significant provision of seeing how tax revenue will be spent. However, largely omitted was the one stipulation that separatist leaders have demanded since the beginning of the Minsk peace process, namely that they be granted “semi-autonomous” status indefinitely. As it stands, the changes only allow for the provinces to maintain their semi-autonomous authority for three years, calling it an “interim period.”

Poroshenko’s televised address said that “decentralization” remains a major key initiative of his policy work. Kremlin spokespeople announced their “deep concern” over the changes, stating that the most important stipulation of the Minsk II Peace Accords of February 2015, namely that separatist leaders be consulted over any constitutional changes, was not implemented. Separatist leaders of Donetsk (Zakharchenko) and Luhansk (Plotnitsky) both complained that neither of them were consulted on the changes either, amounting to what seems to be a fully unilateral action by Kiev to undermine the accords.

On the other hand, things seem to be looking up for Kiev for the time being. With Ukraine’s next interest payment on its substantial sovereign debts amounting to a total of some $19 billion on July 24, Finance Minister Natalie Jaresko agreed to talk to private creditholders privately, greatly reducing the likelihood that Kiev will make good on its passed legislation of last month to issue a moratorium on debt payments and drive the country into a default. The key concession agreed to was a haircut on the total principal of privately-held debt, although the total size of such a reduction has yet to be agreed.

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News Briefs:

  • Mongolian Prime Minister Saikhanbileg Chimed, fresh off the heels of a major agreement to end disruptions at the Oyu Tolgoi copper mine, has moved on to promise that the current issues with the Tavan Tolgoi coal deposit, namely its lack of development, will be tackled in the near future. What is at stake is possibly the future economic development of Mongolia – and while the developer of the TT deposit has already been awarded to a joint Sumitomo-Shenhua venture, issues with the transportation of coal to its end markets utilizing Chinese and Russian firms has been in an impasse. Chimed announced the creation of the “Steppe Road” project, a $50 billion electrified railway from China to Russia that was proposed during the last meeting of the Shanghai Cooperation Organization last month.
  • The Afghan government is taking aim at US Defense Contractors over allegations that they owe millions or billions of dollars in back taxes, threatening to freeze bank accounts and refusing to renew contracts at year’s end. The US government has stepped in to say that contractors working with specifically ISAF forces or international governments at the time were exempt from such taxes, and further that these fines cannot be paid ex post facto. The defense firms targeted include Raytheon (primarily a weapon systems manufacturer), Dyncorp (a defense and aerospace services contractor), and the Supreme Group. Only Supreme Group announced it will be pulling out of its contract at the close of this year.
  • Indian Prime Minister Narendra Modi is now the first prime minister in the history of the Indian government to visit all five ‘stans, visiting Uzbekistan and Kazakhstan on his way to Russia, and then Turkmenistan, Kyrgyzstan, and Tajikistan on his way back. Modi’s top concern as relayed by press release advertising the trip, was the expansion of Islamic fundamentalist groups into Central Asia, which, while it is considered a backwater to much of the world, is considered the new front for expansion by large groups like the Islamic State. Additionally main topics included economic exchange in the form of energy and expansion of transportation corridors, as well as spillover of violence from Afghanistan.
  • The head of the UN nuclear watchdog agency, the International Atomic Energy Agency (IAEA) arrived in Tehran earlier in the week to begin oversight into the military research and development of the program, and to provide a last-ditch review opportunity for the Iran deal before it is signed and sanctions begin to be lifted. While Tehran denies its nuclear program seeks to create a weapon, many analysts point to the fact that the enormous number of active centrifuges recorded since monitoring began belies their intentions to enrich enough uranium for a fissile weapon. However, most sides appear to be optimistic for the prospect of a deal, but the latest deadline on June 30 has come and gone without any resolution.
  • Russia’s Constitutional Courts have ok’d early State Duma elections, bringing forward the election dates by roughly three months. The bill for early elections has strong support from all three major Russian political parties, including United Russia, A Just Russia, and the Liberal Democratic party. It is speculated that the purpose for these early elections is to stave off the impact on voter dissatisfaction with the current recessionary economic environment, discouraging voter participation and allowing for a minimal impact. Likely, the Kremlin wants to avoid the circumstances of the last Duma elections in 2012 where protests went on weeks at Bolotnaya in Moscow and caused a great deal of political disruption.
  • Russian deputy foreign minister Sergei Ryabkov said he is very optimistic about the prospects for Iran’s nuclear deal to proceed, telling TASS that “all parties are of the opinion that this matter will be resolved in the coming days.” He also praised the visit to Tehran of the chief of the IAEA as an important step in reassuring all concerned members of the P5+1 coalition of a lack of any military R&D nuclear enrichment program. The new deadline, as it stands, is July 7. Even formerly discontented French Foreign Minister Laurent Fabius was hesitantly optimistic, stating “things have advanced, but we have not quite reached the end.”
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