YouTube link here.
By Mark Hollingsworth, UnHerd, 11/15/24
Tanks. Howitzers. Missiles. Since Russia’s invasion of Ukraine, the West has delivered a mountain of aid to the beleaguered Kyiv government. The Pentagon alone is estimated to have sent over £50 billion in military support, even as tiny Luxembourg managed to organise bullets and bulletproof vests. That bounty is echoed at the civilian level too, from Albanian ambulances to Belgian sleeping bags to Irish pickup trucks. All told, some 41 countries have committed something to the Zelensky government, which by March 2024 encompassed over $380 billion.
Yet amid this bonanza, Volodymyr Zelensky faces a looming threat: the prospect of paying out millions of pounds in damages to companies and individuals who argue their assets were illegally nationalised by the Ukrainian government. More than that, opposition lawmakers worry that, unless corruption is addressed, the money of generous Western donors risks being syphoned off and diverted by officials.
Even before the war began, in February 2022, corruption had long been a problem in Ukraine. Yet the situation has arguably worsened since then: earlier this year, to give one example, evidence emerged of a $40 million corruption scheme involving the purchase of arms by the military. Funds earmarked to buy weapons were allegedly stolen by officials and company executives, with some of the proceeds transferred to foreign accounts. Not least given the importance of foreign aid to Ukraine, procurement fraud is a sensitive issue: wartime profiteering could present an obstacle for future funding by the USA and EU.
Yet these accusations pale next to the seizure of commercial assets by the state. At least 17 Ukrainian companies and 1,611 citizens have been sanctioned by Zelensky’s administration, after the Kyiv government invoked special military laws allowing it to take control of private firms. The fear among Ukrainian businesspeople is that this is being carried out as a ploy to nationalise their assets without compensation.
“Nobody is safe,” says Julia Kiryanova, CEO of Smart Holdings, an investment conglomerate, which has been targeted and subjected to police raids and seizure of assets. Kiryanova claims sanctions are being used to force fire sales of profitable banks and firms, which will then be exploited by politically connected Ukrainian businessmen to enrich themselves. Certainly, the alleged redistribution of corporate assets — under the guise of sanctions, and absent the rule of law — is eerily reminiscent of the notorious privatisation of state assets in Russia in the Nineties.
Nor are Ukrainians the only ones to suffer here. As UnHerd can reveal, last month Zelensky received a letter from a Dutch finance company, accusing him of violating international law and claiming it had lost its vast investment in Ukraine’s biggest bank. The letter, a request for arbitration by a Dutch financial company called EMIS Finance BV, suggests the Zelensky government breached a bilateral investment agreement. The treaty supposedly protects Dutch investors in Ukraine — but in 2023, the Kyiv government nationalised Sense Bank without offering any compensation.
In particular, EMIS Finance claims it lost £420 million in non-performing loans to ABH Ukraine Ltd, the majority shareholder of Sense Bank. Thanks to these indirect investments, EMIS Finance argues it has the status of a protected investor.
A spokesperson for the Ukrainian Ministry of Justice confirmed the government had received EMIS Finance’s letter about commencing proceedings. “In accordance with the standard practice of the Ministry of Justice,” a spokesperson said, “we do not comment on pending or potential legal matters which may affect the interests of Ukraine.”
The state takeover of Sense Bank can be traced back to October 2022, when the Ukrainian parliament passed legislation allowing the government to nationalise insolvent banks. But that left a hitch: Sense Bank was solvent. Even the National Bank of Ukraine (NBU) admitted as much, stating that despite losses and outflows, the institution was healthy. As Katerina Rozhkov, the chairperson of the NBU noted in January 2023, there were “no factors” that threatened the bank’s solvency.
Not to be dissuaded, the Kyiv government promptly changed the law, last May passing new legislation allowing banks to be declared insolvent if some of its shareholders were sanctioned. In the case of Sense Bank, three of its indirect shareholders had indeed faced sanctions from both the UK and Ukraine, with the latter imposed by a body called the National Security and Defence Council. That, in turn, meant the bank could be declared insolvent, despite the state of its accounts and the positive noises from regulators.
A month later, on 5 June 2023, President Zelensky duly signed a bill authorising the sale of 100% of Sense Bank’s stock to the Ukrainian Ministry of Finance — with no compensation for shareholders. It was now officially owned by the state, and a few days later the Economic Security Bureau seized hundreds of assets belonging to Sense Bank, encompassing everything from shopping centres to apartment blocks. A new CEO and board of directors were swiftly installed too, with the transformed Sense Bank due to be reprivitised next year. The IMF, for its part, is currently choosing an internationally recognised financial advisor to prepare the bank for sale.
Not that the alleged victims here are quietly accepting their fate. Beyond EMIS Finance’s letter to Zelensky, ABH Holdings, the Luxembourg-registered former owner of Sense Bank, has filed a $1 billion lawsuit against Ukraine in the international arbitration court. Based on the bilateral investment treaty between Ukraine and Luxembourg, ABH Holdings seeks compensation for what a spokesperson calls the “illegal expropriation of Sense Bank by the authorities through enforced nationalisation done in an arbitrary, disproportionate, and discriminatory manner. By combining methods of corporate raiding and war profiteering, the Ukrainian authorities have unlawfully taken the bank from its rightful owners”.
Once the case is heard in court, Zelensky’s role will likely become clearer. The president, after all, is also head of the very National Security and Defence Council that enacted sanctions against key Sense Bank shareholders. Zelensky also nominated the National Bank of Ukraine’s governor, who strongly supported the nationalisation of Sense Bank and rejected a proposal to sell the institution to independent non-sanctioned investors.
This lawsuit is progressing, but the Ukrainian government is anxious for the court hearings to be held in secret, and for the evidence to remain confidential. ABH Holdings rejected this suggestion, insisting that Ukraine abides by the international arbitration rules stating that “confidentiality is neither agreed nor envisaged”.
In the meantime, the EMIS lawsuit against Ukraine is proceeding — nor do experts expect the legal cases against illegal nationalisation to end there. “This conflict has one primary consequence,” argues Baiju Vasani, a UK barrister who specialises in Ukrainian investor state cases. “It increases the number of arbitration cases against Ukraine brought under international investment treaties for breaching international law. I expect these cases to pile up in the next few years, as foreign nationals and companies seek billions of pounds in damages for their stolen property.”
Together with the latest news from across the Atlantic — with Donald Trump potentially poised to cut off aid to Kyiv and even impose a peace treaty on the country — the next few months could be rocky indeed for President Zelensky. For the moment, though, Sense Bank belongs to his government.
***
RT: Pentagon warns Ukraine about corruption
Corruption will be the “primary impediment” to Ukraine’s post-conflict recovery, the Pentagon’s inspector general has warned in a new report, which identified the country’s defense ministry as “a key player in many corruption scandals.”
In a quarterly report to Congress published this week, Inspector General Robert Storch noted that “corruption continues to complicate Ukraine’s efforts to achieve its EU and NATO aspirations.”
“Judges, politicians, and officials have been charged with corruption and the Ministry of Defense has been a key player in many corruption scandals,” the report stated, citing information from the US State Department and media outlets.
Earlier this year, the Security Service of Ukraine (SBU) announced the discovery of a major embezzlement ring at the country’s defense ministry. According to the SBU, five suspects attempted to steal 1.5 billion hryvnia (around $39.6 million) in state funds intended for the purchase of mortar shells…
Read full article here.
YouTube link here.
By Simplicius, Substack, 11/13/24
Just a day after we wrote about the ‘rumored’ new plan for the US to hold Ukrainian elections next year to give intransigent Zelensky the boot, The Economist made it semi-official by acknowledging that, ‘suddenly’, Zelensky is facing a ‘power struggle’ at home:
https://www.economist.com/europe/2024/11/12/volodymyr-zelensky-faces-a-power-struggle-in-2025
It’s in line with how Biden’s advanced dementia was just “abruptly” discovered by figures and organs of the establishment, only after becoming convenient and politically expedient enough for them to make it public. Similarly here, as soon as the memo-from-above’s arrival, The Economist sprang into pre-conditioning the ground to sell the narrative that Zelensky’s regime is now on uncertain footing; they would have never been allowed to even suggest that Zelensky faced danger at home until it became necessary to do so.
The article opens up with the admission that funeral ceremonies for soldiers in Kiev have “become more frequent” after the recent ramp-up of Russia’s offensives, a testament to the AFU’s own mounting death toll at a time when they’re desperately trying to sell the opposing claim about ‘astronomical Russian casualties’.
“For now, there are two dates on Kyiv politicos’ lips: January 20th 2025, the date of Mr Trump’s inauguration, the first moment for any possible ceasefire and lifting of military law, and May 25th, the earliest mooted date for an election.”
An election during pinnacle of wartime seems unthinkable, they write, but:
“Still, some groundwork appears to have begun. Regional election headquarters are mobilising, and work on candidate lists is beginning. The representatives of one likely presidential rival to Volodymyr Zelensky say that Ukraine needs elections; but they worry about making a public statement to this effect, fearing a fierce backlash from the presidential office.”
Then, of course, comes the obligatory backstab:
Not only did Economist now roll out some “internal polling” that seemingly didn’t exist before, but the big kicker is the predictable insertion of Zaluzhny as new heir to the throne. That’s not to mention the suggestive lay out of their preferred outcome:
“But a former colleague of the president says his best move might be to step aside regardless, and keep to his original promise only to serve one term. ‘Zelensky has only one way out to get out with an intact reputation,’ this source says. ‘That is to run elections [without him] and go down in history as the man who united the nation in war.’ The alternative is to risk being associated with a military collapse or an incomplete peace.”
Ah, so a ‘dignified bow out’ just like the same establishment forces asked of Zelensky’s fateful partner-in-crime Joe Biden. Remember, it’s either the “easy way” or the “hard way”, as Pelosi said; the same stands for Zelensky. Take your free trip to Tel Aviv or we can begin raising the level of ‘encouragement’. After all, recall Zaluzhny was directed to step down from his role as general for a long time, and it was only after his direct subordinates began to be assassinated did he heed the warning and do as he was told.
The other excerpt from the article which went viral today was the following:
“The army is censoring the most negative news to avoid fanning flames back home, he says. A senior military official agrees. Even Mr Zelensky is being shielded from the truth. ‘It’s not even that he’s being kept in a warm bath,’ the source says, using a local idiom to suggest the president was being cocooned by his top officials. ‘He’s being kept in a sauna.’”
Well, now, would you look at that? So maybe when Zelensky spouts off those ridiculous numbers about Russian losses, he’s not exactly the most trustworthy source? As preposterous as it may sound, given the above, it may even be the case that Zelensky actually believes the figures that only 30,000 or so AFU troops have died. He could very well think he’s winning the war based on his info-cocoon; scary thought.
The article ends with an interesting affirmation that Russia intends to capture the capital of Zaporozhye province, i.e. Zaporozhye city itself:
“In Kurakhove, Russian forces are outnumbering Ukrainian forces by at least six to one, and a Ukrainian retreat seems inevitable soon. Ukraine is on the back foot in the Kursk region it in turn occupies, where Russia is trying to push its soldiers out with the assistance of thousands of North Korean troops. Fighting is also beginning in Zaporizhia province for what Ukrainian intelligence believes will be an assault on the provincial capital, an important industrial hub.”
If that is indeed one of the main targets of the new coming offensive, it would seem to sketch a potential Putin plan for ending the war: one can theorize that Putin could “make it easy” on Zelensky, or whoever’s in power at the time, by taking the decision to give up Zaporozhye out of their hands. If Russian forces can capture Zaporozhye city and most of the province itself, then that would already be a major point of Russia’s negotiations demands accomplished. Given that Zaporozhye is much bigger and more consequential than Kherson, it represents a much bigger roadblock to Ukraine acceding to Russia’s terms….
By Anatol Lieven, Responsible Statecraft, 11/21/24
The UK has apparently given the greenlight for Kyiv to use its Storm Shadow missiles for attacking inside Russia. While the British government has not commented publicly, the Ukrainian military used the missiles to strike Russia for the first time on Wednesday.
In keeping with most British military “decisions,” its actions Wednesday followed the Biden Administration’s approval to allow Ukraine to use its own long-range ATACMS in the same way.
The British government seems to have forgotten that two months from now, the Biden administration will no longer be in office and the Trump White House may not take kindly to what some of its future members see as British support for a preemptive Biden attempt to wreck Trump’s peace agenda in Ukraine.
From the point of view of Britain’s own security interests (which do not appear to play any part in British establishment thinking about Ukraine), British citizens just have to hope that after January the Russian government does not retaliate against the UK — for if it does, they may not receive much sympathy from Washington.
The official argument for the ATACMS and Storms Shadows decision is to put Ukraine in a stronger position before peace talks are initiated by Trump. Russia seems certain to try to gain as much territory as possible before these talks begin, and the Ukrainian armed forces are in serious danger of collapse.
This is a dangerous gamble, because the missiles (which are guided to their targets by U.S. personnel) risk infuriating Russia without giving really critical help to Ukraine. It is especially dangerous for the UK, because if Putin feels impelled to live up to its promises to retaliate without attacking U.S. interests and alienating Trump, he could well feel that the UK makes a safertarget — it is at least a gamble based on rational calculations.
This is not exactly what the government and the British security establishment have beensaying. Like some East European governments, and influential political voices in Western Europe, the British government is still talking of helping Ukraine “win” — not to achieve a better compromise.
Like the Biden administration, British and NATO language of the “irreversibility” of Ukrainian NATO membership, and the necessity of Russia leaving the Ukrainian territory it has occupied suggest opposition to any conceivable peace settlement that Trump could seek to achieve. If the UK is seen by Trump to be deliberately sabotaging his peace agenda, this will be hugely damaging to the American-British relationship, and put Britain in an extremely exposed position.
Such an interpretation by Trump is likely to be encouraged by the talk in Washington, London and European capitals about “Trump-proofing” aid to Ukraine, and suggestions by European analysts that Europe both should and can support Ukraine in continuing to fight even if the Trump administration withdraws U.S. support.
At ameeting in Warsaw this week, European foreign ministers pledged (without giving any details) to increase aid to Ukraine. Furthermore – in words, which if meant seriously, would make peace impossible —declared:
“(that we) remain steadfast in our support for a just and lasting peace for Ukraine, based on the UN Charter, reaffirming that peace can only be negotiated with Ukraine, with European, American and G7 partners by its side, and in making sure that the aggressor will bear consequences, also financial ones, of its illegal acts that violate rules set out in the UN Charter.”
This is lunacy. It is not even likely that Europe will be able to sustain present levels of economic aid to Ukraine for long. Budgets all over Europe are under intense strain, leading to bitter politicalstruggles. The German coalition government has just collapsed due to a fight between its constituent parties over how to pay simultaneously for support to Ukraine, German re-armament, German industrial regeneration and social welfare.
Berlin had already announced radical cuts to its bilateral aid to Ukraine. For the European Union to take up the full burden of existing European aid — let alone replace that of the U.S. — would almost certainly require acceptance of EU control over collective European debt, through a huge issue of “Defense Eurobonds.”
This would, however, likely be opposed by dominant elements in the German Christian Democratic Union (CDU), which seems certain to be the dominant partner in a new coalition after elections now due in February. Their opposition stems not only from their own convictions, but also from the fear that ceding German economic sovereignty in this way would deeply anger many Germans and give a strong boost to support for populist opposition parties of the Right and Left.
As to Europe replacing the U.S. in terms of military support for Ukraine, this looks absurd. In critical areas like air defense systems, European military industries are not remotely capable even of providing for their own countries’ defense, let alone of providing what Ukraine needs.
Earlier this year, European governments rebuffed Ukraine’s appeal for more air defense weapons. These shortages extend across the board. Almost unbelievably, the British government’s decision on Storm Shadows occurred simultaneously with an announcement of further deep cuts to the UK armed forces, including its last amphibious assault ships and a large proportion of its transport helicopters.
Europe can of course buy from the U.S. — but only if Washington is capable of supplying systems for Ukraine and for Israel and adequately supplying America’s own forces for possible war with China. Is it likely that a Trump administration angered by Ukrainian and European rejection of a peace deal would prioritize weapons for Ukraine, even if the Europeans were paying for them?
The utterly confused state of British and European thinking about the military realities of the Ukraine conflict and Europe’s role is in large part due to the pitiful ignorance of military matters on the part of politicians — and therefore governments — who with the rarest of exceptions have never served in the military themselves, or bothered to study military issues, or devoted serious study to any foreign country.
This makes them completely dependent on advice from their foreign and security establishments; and for decades now, these establishments have outsourced to Washington not just responsibility for their national security, but thinking about it.
If you ask most members of European think tanks to define the specifically British, or French, or Danish interests in the Ukraine War, they are not merely incapable of answering, they clearly regard the very question as somehow illegitimate and disloyal to the U.S.-mandated “rules-based order.”
But the America to which these Europeans are loyal is the old U.S. foreign and security establishment — not the America of Trump, which they do not understand and deeply hate and fear (just as they do their own populist oppositions). Indeed, until a very few months ago the great majority of European politicians and experts simply refused to believe that Trump could possibly win the elections.
Many have now lost their heads entirely, and are just running around in circles. Others, like the Poles and Balts, have their heads firmly screwed on, but back to front.
As to the British government and security establishment, since the U.S. elections they have resembled their predecessor King Charles I, who according to legend went on talking for half an hour after his head had been cut off. Perhaps given time they can grow a new head of their very own. But in the meantime, for people in this embarrassing position, a period of silent inaction would seem to be the wise course to adopt.