Saturday, April 27, 2013

Sea-Breeze Ukraine: the Change of Popular Perceptions Over Time

The annual Sea Breeze exercise is the largest naval, air, and land multinational military exercise hosted by Ukraine since 1997 and held in the Black Sea region in collaboration with the U.S. Navy. The purpose of the Sea Breeze exercise is to address a number of maritime security issues including counter-piracy, humanitarian relief operations, search and rescue, live fire, among other tasks. The results of media analysis of popular perception of the Sea Breeze exercise in Ukraine, based on a sample of five Ukrainian regional and national newspaper publications from 2001 until 2013, uncover several underlying themes describing the nature of public resistance to these exercises. The study affirms that Ukraine is not a uniform country, and any kind of successful public information campaign regarding the Euro-Atlantic prospects of Ukraine would have to address multiple security and non-security issues, as well as the region-specific concerns.
         When examining the change of the public perception over time, it turns out that although the generally negative public perception of foreign military exercises on Ukrainian territory did not change significantly, the reporting of the issue in the Southern and Eastern regional newspapers became more moderate after the change of the post-Orange Revolution government. More in-depth content analysis of particular newspaper publications offers some insights regarding the changes in public perception. Thus, President Victor Yuschenko made foreign policy one of his top priorities in office, attempting to bring Ukraine closer to the Euro-Atlantic community, foster the process of Ukraine’s accession to NATO, and pursue a larger pro-European Union agenda. At the level of public perceptions, however, such an assertive pro-western foreign policy agenda was not well-received by the public, especially in relation to NATO. As the example of the Sea Breeze exercises demonstrate, since the Ukrainian public was not adequately prepared for the presence of foreign military forces on its territory, the Sea Breeze exercises caused massive protests in Crimea and other regions of Ukraine. In fact, during the post-Orange Revolution period, most of the governmental critique about Sea Breeze in local papers is directed against the President himself and his policies. Hence, the  perceived assertive pro-western objectives of the Sea Breeze exercise resulted in the greater public resistance against  this training, particularly in the Southern and Eastern regions of Ukraine.  
 Yuschenko’s successor President Victor Yanukovych employed a more moderate position that included re-framing Ukraine’s military doctrine and adopting a non-alignment policy towards NATO.  He has attempted to redevelop and improve relations with Russia, and to establish Ukraine as a neutral country with many friends rather than one main strategic ally. Consequently, although this more moderate governmental policy slowed Ukraine several steps back on its Euro-Atlantic path, it also reduced many of the common public fears associated with NATO and, in some ways, created a more conducive environment for the Sea Breeze exercises. Although anti-Sea Breeze protests did not stop completely and the public did not change their overall views, people became more accepting of this training, and media reporting became more constructive and more factual, as illustrated by the following quotes:
           "Only the toughest optimists believed that the end of the “orange” period in the new Ukrainian history will immediately make things better. In reality, not everything changed for better, and not everything changed immediately. We already learned that… The Parliament Deputies all together supported conducting in Crimea those sadly remembered drills “Sea Breeze”. As if there was no large-scale Crimean public protests against the presence of the American military in the Peninsular, and there was no appeal of the Crimean Parliament to their national colleagues and the President asking, to cancel the drills right in the middle of a tourism season. Now, the new government, similar to Yuschenko and Tymoschenko, is in a hurry to make an agreement with Crimean Tatar radicals… trying to gain their loyalty in the land issues"…Krymskaia pravda,  No. 89, May  22, 2010
          "As part of the preparation for the international educational exercises “Sea Breeze”, the navy forces of the border patrol unit of the Military-Naval Complex of Ukraine have completed their training in the Western Crimea and are heading to the main area to continue the drills… The military equipment and personnel are stationed on the ships “Konstantin Olshanskyy” and “Kirovohrad”. The series of civil tactical exercises preceded the main training program. Today the ships with the soldiers will arrive to the final training destination". Krymskaia pravda,  No. 121, July  09, 2010
 One lesson that could be drawn from this is that pursuing a one-sided and foreign policy agenda in a geopolitically divided country like Ukraine might not be the right path to achieving the desired outcome. The Sea Breeze lessons are applicable to other important foreign policy issues, including Ukraine’s relations with NATO. The example of Sea Breeze demonstrates that before the question of NATO membership reaches the point of a national referendum, a much more serious and long-term public information campaign needs to be conducted in Ukraine, to raise the level of public awareness regarding NATO and collaborative international security in general. Perhaps, such a campaign could also address the issues of military and institutional reform, and popularize the idea of  transparent and effective public institutions and the value of international collaboration more generally, thus informing the Ukrainian public about the broader implications of the Euro-Atlantic path.

Monday, April 22, 2013

Enforcement of judicial awards in russia

When disputes between shareholders and other business partners do arise, the Russian judicial system may not always be the most effective venue to resolve the matter.[i] The development of corporate law has been a recent development in the country and as a civil law system, courts are bound to rely solely on the Civil code for direction.[ii] This has caused unpredictable results because different courts have interpreted the law in varying ways, further contributing to an unstable investor market.[iii] This has been particularly concerning in regards to shareholder agreements, typically used to protect minority shareholder interests.  The reluctances of enforcement of stockholder agreements was exemplified by the 2006 West-Siberian District Commercial Court’s appellant holding in the Megafon case where the Court invalidated an agreement that anointed Swedish law as controlling.[iv] Russia’s Ministry of Economic Development realized this issue and responded by drafting the 2009 amendment to the Law on Joint Stock Companies.[v] This law recognized shareholder agreements and eliminated the possibility that courts would invalidate such agreements statutory grounds. Though the statutes expressly authorized shareholder agreements it failed to explain whether choice-of-law provisions were applicable to shareholder agreements.[vi] This lack of appreciation for freedom of contract provisions have discouraged many foreign investors and has been the rationale for Russian courts who have invalidated investor agreements.[vii] The 2010 Verny Zank case is one of the more recent examples of judicial reluctance to recognize shareholder agreements.[viii] There, the court found that the agreement violated required provisions of current legislation.[ix]
            The development of corporate law has been a rather recent development in Russian law. Moreover, the country is apart of the civil law tradition which requires courts to apply the law exclusively through their statutory interpretation. While this seems like it may provide for a simple result the opposite has generally been true. Courts interpret statues in a fashion that they deem fit, this creates a general lack of uniformity in the application of the law, discouraging investors from entering the market. Russian leadership has recently been advocating the promotion of measure that will increase investor confidence when investing in the country. Ensuring consistent and uniform judicial rulings will go a long was to luring foreign investment into the country.      

[i]. Glusker, supra note 49, at 598.  
[ii]. Karina L. Pulec, Legal Restraints on the Use of Shareholders’ Agreements for Structuring Foreign Investment Deals in Russia, 45 Cornell Int’l L.J. 487, 488 (2012).  
[iii] Id. at 509.
[iv] Id. at 503.
[v] Federal’ nyi Zakon RF o vnesenii izmenenii v Federal’ nyi zakon “Ob aktsionernikh obshchestvakh” I Stat’iu 30 federal’ nago zakon “O rynke tsennikh bumag” [ Federal Law of the Russian Federation on amendments to the Federal Law “On Joint Stock Companies” and Article 30 of the Federal Law “On the Securities Market”], Rossiiskaia Gazeta [Ros. Gaz.], June 10, 2009, available at [hereinafter 2009 Amendment].
[vi]. See Oda, Supra note 65(Check at the end), at 360.
[vii]. Id. at 361.
[viii]. See Postanovlenie FAS Moskovskogo Okruga “Verniy Znak” ît 25 maia 2011, No. À40-140918/09-132-894 [Resolution of the Moscow District Commercial Court of the case “Verniy Znak” on May 25, 2011, No. À40-140918/09-132-894], available at 20postanovlenija.pdf [hereinafter Verniy Znak Case].
[ix]. Pulec, supra note 68, at 512.

Tuesday, April 9, 2013

Ukraine’s Navy Modernization: Challenges and Prospects (originally published on 21 February 2013 in OE Watch )

           According to its defense doctrine, the main purpose of the Ukrainian Navy is to be able to restrain, identify, and neutralize military conflicts, as well as to defend the country against military aggression on the sea, either on its own or in cooperation with other Ukrainian military forces. Questions have risen, however, whether the current state of the Ukrainian Navy is sufficient to perform this primary mission. As the excerpt from the adjacent article reveals, Ukraine’s Navy is suffering from many systemic problems that are not likely to be overcome in the near future. 

Officially, the Ukrainian Navy possesses 25 combat ships and corvettes, more than 50 service ships, and about 30 naval aircraft. Most are old Soviet vessels whose seaworthiness is questionable.  Only three of these ships are less than 20 years old, and the remainder are in urgent need of modernization.  The article refers to an embarrassing incident when the Ukrainian ship “Kakhovka” failed to block the Russian ship “Mirazh” after the former broke down during the armed conflict between Russia and Georgia in 2008.

         In an attempt to change the situation, in 2012 the Ukrainian government allocated 170 million hryvnya ($21 million) for repairing 20 military and technical ships. The objective was to have ten ships fully capable of performing defensive military operations in the Black Sea region, as opposed to maintaining a large but ineffective fleet.  However, merely repairing and modernizing the remaining fleet will have little impact if training and operations are neglected.  As the excerpt points out, the few serviceable vessels in the naval inventory have deployed for but brief periods during the past couple of years.   

         Most security experts on the Black Sea region are generally skeptical of the immediate prospects for modernizing the Ukrainian Navy.  There are a number of contributing factors, to include a weak economy, corruption, poor planning, and domestic political instability. At the same time, however, there is some positive evidence.  Along with the above-mentioned decision to focus on modernizing the newer ships, the navy has started regular patrol missions in the Black Sea.  Ukraine is planning to finalize the restoration of the main core of its fleet by mid-Spring 2013, which would allow an increase in the number of ships participating in Black Sea patrols. Therefore, despite serious financial constraints, with sufficient political will the Ukrainian Navy could begin partial modernization.

Monday, April 8, 2013

Russia’s reliance upon oil and natural gas

             Russia’s oil sectors date back to the 1960’s when major oil reserves were discovered in Western Siberia. During the Soviet era, oil production peaked in 1987 with the extraction of about 12 million barrels every day. Following the demise of Soviet Union the oil industry collapsed to about half of its previous output, mostly a consequence of under investment and uncertainty about property rights.[1] Privatization and the implementation of modern technology have reversed this trend and propelled Russia to become the world largest producer of oil.[2] The influx of petrodollars have also allowed Russia to grow at an average rate of 9% GDP per year over the last fifteen years, making the country the world’s ninth largest economy.[3] Yet this has caused the government to become overly reliant upon its natural resources and places the nations in a vulnerable position. What is particularly alarming is that the energy sectors accounts for roughly 75% of its exports, 30% of its GDP and almost half of the Federal Government’s budget.[4] This excessive reliance and lack of diversity in other economic sectors leaves Russia at the mercy of global commodity prices. This unhealthy reliance upon oil prices was never more evident than during the 2008 world economic crises, when the price of Brent Crude collapses to below $40.[5] During that same year Russia economy contracted by more than 9%. [6]  
            The rise in commodity prices over the past few years has propelled Russia growth but the Kremlin has also staked future growth of Russia on the expectation that oil prices will continue to grow. Russian growth for 2010 and 2011 was strong at around 4% GDP yet without diversification; continued growth at these levels will be unsustainable. The nation’s budget for the 2012 fiscal year was predicated on the expectation the price of Brent Crude would hold at $120 a barrel.[7] Furthermore, Sergei Alekasahenk, a former deputy central bank governor, has stated that oil prices would need to continue to grow at about $10 to $15 for the national budget to be sustainable. Other analysis’s at Russia’s Higher School of Economics warn that if oil prices fall below $80 per barrel the government will quickly expend its $60 billion emergency fund to meet its budgetary obligations.[8]   
            Excessive reliance on commodities has also resulted in Russia showing symptoms of “Dutch disease”. This economic phenomenon occurs when a there is a dramatic appreciation of a nation’s currency because of a nations reliance on its natural resources. When natural resource are exported the value of the exporting nations currency rises because they hold a greater supply of foreign cash reserves. This drives up prices and costs domestically, discouraging private sector investment and making manufacturing uncompetitive.[9] This makes it more difficult for Russia to diversify its economy and move away extractive industries into manufacturing and financial services. The countries extended reliance on oil and natural resources has resulted in the glaring weakness of its non-commodity sectors and great volatility in the nation’s economic growth.[10]     

[1] IMF Report country report 12/217
[2] ID
[3] Doing Business in Russia 2012, Barker & McKenzie
[4] Sharples
[5] Oil dependency remains a fundamental weakness, Neil Buckley, Financial times 
[6] World Bank report- Spring 2013
[7] Oil dependency remains a fundamental weakness, Neil Buckley, Financial times
[8] ID
[9] Strategic protectionism, George Washington law review, Spring 2011
[10] ID