Digest of Economy & Markets, International Support, Politics & Culture

Welcome to our 20th edition of "Ukraine Through My Eyes."

20 weeks ago, Michaela MACHARIK , Tetiana Babych, PhD and I launched our newsletter project, and we’re grateful for your continued interest and support. As we mark this milestone, it’s important to remember that the full-scale aggression by russian terrorists began 130 weeks ago, while Ukraine has proudly maintained its independence for about 1,720 weeks.

The road ahead may still be long, but the steady growth of our newsletter, with more readers joining us each week, shows that interest in Ukraine is still rising. Thank you for staying informed, engaged, and supportive!

In this week’s Topic of the Week: As Ukraine celebrates 33 years of independence, we honor the resilience and vision of figures like Mykola Mikhnovsky, whose ideals continue to inspire the nation's fight for freedom. ?????

We have compiled 15 topics that we believe will capture your interest:

Please enjoy this edition! Your feedback is invaluable to us. We look forward to hearing your thoughts and suggestions.

Wishing everyone a safe and peaceful start to the new week!

Слава Укра?н? - Разом сильн?ш? - до перемоги!

??? Yours sincerely, Markus Ciupek

by Tetiana Babych, PhD

З? статт? Миколи М?хновського ?До укра?нського народу?

?Перед ясним ?деалом самост?йно? Укра?ни най згинуть ус? свари, уся ворожнеча, усе безладдя укра?нц?в; хай ус? стежки, ус? шляхи ведуть до не?; хай ус?м борцям за щастя, за визволення свого народу св?тить сонце самост?йно? Укра?ни?.

"To the Ukrainian People" by Mykola Mikhnovsky

"Before the clear ideal of an independent Ukraine, all the quarrels, all the enmity, all the disorder among Ukrainians will perish; let all paths, all roads lead to her; let the sun of an independent Ukraine shine on all fighters for happiness, for the liberation of their people."

Ukraine is celebrating the 33rd year of its independence. Yes, it is celebrating. Even in times of war, even when they try to tame and subjugate us again. And we not only stand, but also promote innovations, demonstrate examples of world-class leadership, and win gold medals.

In our letter this week, we want to remember the people without whom there would be no historical tradition, those who shaped and fought for our authenticity. Because all those who dare to fight against a much stronger enemy and not give up are their proud descendants.

This year in March, we celebrated the 151st anniversary of the birth of Mykola Mikhnovsky, a public and political figure, a participant in the struggle for the independence of Ukraine in the 20th century, the founder of the Ukrainian independence movement, and the ideologist of Ukrainian state independence. He was the author of "Credo of a Young Ukrainian" and "Independent Ukraine." He was born in 1873 in the village of Turivka (then in the Prylutsky district of the Poltava province, now in the Zgurivka territorial community of the Brovary district of the Kyiv region). He was a descendant of an ancient Cossack family. Personal circumstances forced Mikhnovsky to leave Kyiv and move to Kharkiv. On February 26, 1900, in Kharkiv, Mykola Mikhnovsky delivered the famous "Independent Ukraine" text.

With all his might, he tried to convey his ideas to the people: he printed articles in the press, published small-format books, and delivered keynote speeches at the trials of Ukrainian activists. In addition, he founded many Ukrainian magazines: "Independent Ukraine" (1905), "Hliborob" (1905), "Zaporizhia" (1906), "Slobozhanshchyna" (1906), and "Snip" (1912–1913). In 1924, he returned to Kyiv, where he settled in the apartment of his friend, Volodymyr Shemet, on Zhilyanska Street. He was arrested by the Chekists, but after several days of interrogation, they released him on the condition of cooperation. The day after his release, on May 3, 1924, Mykola Mikhnovsky was found hanged in the garden of his friend Volodymyr Shemet's estate. Most contemporaries leaned toward the version of suicide and wrote in their memoirs about the death note, in which Mikhnovsky expressed something like this: "I am better than them, I am myself." He ended his life like many other Ukrainian heroes who chose death standing up rather than a life of slavery on their knees.

Дяку?мо Силам оборони, нашим героям й кожному, хто сто?ть за нашу свободу.

We thank the Defense Forces, our heroes, and everyone who stands for our freedom.

Two new business centers were opened in Kyiv in 2024.

According to a CBRE Ukraine survey, 29,300 square meters of new office space were added in Kyiv in the first half of the year. Among them are two B-class business centers: Heritage (13,300 square meters) and tw12ve (16,000 square meters). Ukraine's total office space now amounts to 2.25 million square meters, with an additional 7,200 square meters scheduled to open in the second half of the year. As of the end of June, the average office vacancy rate was 24.3%. In Kyiv, 70,000 square meters of office space were leased, a 13% increase compared to the first half of the previous year. The monthly effective rental rate decreased to $19 per square meter, a 5% drop. Although analysts do not expect further declines, this is the lowest rate in the past ten years. However, due to the need for additional development projects and the limited number of new offices expected to open in the medium term, experts predict that prices should rise in the near future.

Source: CBRE Ukraine, 19/08/2024

The Verkhovna Rada will not have time to raise taxes starting in September but plans to increase VAT.

Instead of a 1% turnover tax for legal entities, the bill proposes an increase in VAT by 3-4 percentage points to 23-24%. The government's version also includes an advance tax of UAH 4,000 per cubic meter of fuel storage capacity, with gas stations paying a fixed fee for each location. The working proposal suggests a minimum payment of UAH 60,000 per gas station per month. The increase in the military levy for individuals and non-profit organizations remains unchanged. The Rada will not be able to adopt the tax changes by September, so the new taxes are expected to take effect on October 1. The Cabinet of Ministers has approved and submitted a draft law on amendments to the Tax Code, proposing a total tax increase of 140 billion hryvnias by the end of the year. Additional tax revenues are expected to amount to UAH 16.9 billion, including UAH 3.3 billion from the introduction of an excise tax on sweet drinks and UAH 121.8 billion from the military levy and other revenues. The state budget for 2024 proposes an increase in expenditures on defense and security forces by UAH 495.3 billion. The Ministry of Finance plans to finance this need through additional revenues from government bonds (OVDP), savings on service expenses and national debt repayment, and UAH 75.8 billion due to the over-execution of state budget revenue targets in the first half of 2024.

Source: The Verkhovna Rada site, 19/08/2024

Animal feed manufacturer Kormotech has entered the Egyptian market, the third largest in Africa.

Kormotech, the largest Ukrainian producer of cat and dog food, has become the first pet food company from Ukraine to export to the Egyptian market. Since mid-August, their brand Club 4 Paws has been available in pet stores across Egypt. Kormotech has already shipped 80 tons of pet food, with an additional 78 tons being prepared for shipment, bringing the total to 158 tons. Vasyl Yatsyshyn, Director of Mass Market Brand Management at Kormotech, highlighted that Egypt, as the third largest and most dynamic economy in Africa, offers significant business development opportunities. He also emphasized that the company took into account the specific requirements of the Egyptian market, such as the need for Halal certification for cat and dog food. Kormotech is a global family-owned company with Ukrainian roots, established in 2003. With a turnover of $152 million, the company increased its share of international sales to 31% in 2023. The most dynamic growth of Kormotech brands was observed in Romania, Poland, and Moldova. In 2024, Kormotech also expanded into the South Korean market with its premium brands Optimeal and Club 4 Paws.

Source: Kormotech site, 20/08/2024

The EU has reinstated customs duties on Ukrainian honey due to exceeding import quotas.

A new tariff quota of 18,507.32 tons will be introduced from January 1, 2025, until June 5, 2025. The current duty-free trade regulation allows Ukraine an "emergency braking" mechanism for seven Ukrainian products, which is triggered automatically if the volume of imports reaches the average annual imports between July 1, 2021, and December 31, 2023. Ukrainian honey imports since 2024 have already exceeded these volumes. The EU has also reinstated customs duties on Ukrainian oats, sugar, and eggs due to exceeding quotas.

Source: Agriculture and Rural Development, European Commission, 20/08/2024

The redirection of export flows to Black Sea ports has triggered a crisis in Ukraine’s river transport market.

In response to this crisis, the Ukrainian Danube Shipping Company (UDP) is reducing working hours and optimizing its personnel, currently numbering over 1,000 employees. The primary reason for this decision is the need for more support for the Danube export route. Danube ports could potentially compete with Odesa ports for Ukrainian agricultural exports, but cost savings on rail transit to Izmail are necessary. Additionally, excessive heat and river shallowing have made it impossible for barge caravans to navigate the Middle Danube. In August, some shipping clients halted their shipments due to these risks. Crop losses caused by the heat have further reduced the volume of agricultural goods. UDP has begun cutting costs not through payroll reductions but by discontinuing all investment projects except for modernization. As previously reported, freight rates at Danube ports have dropped significantly due to the diversion of export flows to Black Sea ports, leading to the suspension of numerous investment projects.

Source: UBN, 20/08/2024

Damage to Ukraine’s environment due to Russian aggression exceeds $60 billion.

The environmental harm caused by Russian aggression against Ukraine is estimated to be around $60 billion, according to Ruslan Strilets, the Minister of Environmental Protection. “There are currently over 5,500 instances of hostile crimes against the Ukrainian environment. The total losses have now surpassed $60 billion, and unfortunately, they are still rising,” stated Strilets. The minister also noted that the consequences of these environmental crimes extend to other countries, including Moldova and Romania. He cited a massive fire at one of the ports in the Odesa area caused by a missile attack, which led to smoke pollution across Moldova.

"This is a cross-border impact, and it carries a completely different level of responsibility. Considering such losses, I believe that not only Ukraine but also other affected countries will be entitled to compensation as a result of armed aggression in the future," added Strilets.

Source: Ruslan Strilets, Minister of Environmental Protection, 19/08/2024

The Cabinet of Ministers has launched a 10% cashback program for the purchase of Ukrainian goods.

The Ukrainian Cabinet of Ministers has introduced a 10% cashback program for the purchase of domestically produced goods, which can also be used for services, donations to the Armed Forces, or military bonds. The program, set to become operational on September 2, will provide monetary assistance to Ukrainians, with a maximum cashback of UAH 3,000 per month. The state has previously implemented similar programs during COVID-19, where over 10 million Ukrainians opened bank cards to receive funds, spending over UAH 3.5 billion on various items. Cashback will be provided for Ukrainian-made goods, excluding excise goods. Participation is voluntary, and buyers, producers, and sellers must open a special account, obtain a virtual or physical card from a bank or application, agree to transaction data transfer, and select "National Cashback" in Diia.

Source: The Ministry of Economy of Ukraine, 20/08/2024

A state portal for international bus routes has been launched in Ukraine.

Ukraine has launched a state portal for international bus routes, autobus.gov.ua, to improve the quality and safety of international transportation. The portal allows users to purchase tickets for 1,235 routes to and from Ukraine and provides information on checkpoints and border queues. The portal began testing in May of this year and has since expanded to include several hundred licensed carriers, including foreign companies. Launched as part of the bus transport reform, the portal aims to enhance passenger service quality. The first stage involved verifying all international routes and creating an updated list, which led to the closure of at least 280 bus routes.

Source: Ministry of Development of Communities, Territories, and Infrastructure, 20/08/2024

Ukraine’s top 1,000 largest companies earned almost 7.2 trillion UAH (€182 billion) last year.

In 2023, the 1,000 largest Ukrainian firms achieved over 7.2 trillion UAH (€182 billion) in net profits, an increase of 19.4% from the previous year. These enterprises accounted for 54% of Ukraine's total output volume (up from 52% in 2022). In 2023, 23% of the companies on the top 1,000 list changed from the previous year, with 233 businesses dropping off the list due to a decrease in revenue, insolvency, or destruction. The food industry had the most representatives (139), followed by the oil and gas industry (115), the electric power industry (104), and agriculture (97). The oil industry had the highest overall income, generating 1.2 trillion UAH (€30.3 billion), or 16.8% of the total. The energy sector accounted for 15.9%, followed by retail commerce at 10.6%. Kyiv is home to the majority of Ukrainian businesses, with 412 firms contributing about 52% of total revenue. The most recent additions to the list include companies in gaming and lotteries, architecture and engineering, power, oil and gas, and the hotel and restaurant industry.

Source: UBN, 21/08/2024

The President of the Czech Republic supports Ukraine's NATO membership even while partially occupied.

Czech President Petr Pavel believes that Ukraine's admission to the North Atlantic Alliance should not be contingent on the restoration of complete sovereignty over its entire territory. He made this statement in a joint interview with the Czech newspapers Novinky and Právo. Pavel argues that the restoration of Ukrainian authority over its entire area should not be a "must condition" for NATO membership. "If there is a demarcation, even an administrative border, we can accept this border as temporary and admit Ukraine into NATO on the territory it controls at that time," stated Petr Pavel. The Czech President cited Germany as an example, noting that it joined the Alliance in 1955 despite having part of its territory occupied by the Soviet Union until 1990. "Therefore, I believe there is a solution, both technical and legal, to allow Ukraine to join NATO without involving NATO in a conflict with the Russian Federation," Pavel noted, adding that this would be possible only after the start of negotiations between Kyiv and Moscow.

He emphasized that democratic countries should view Russia's occupation of Ukrainian territory as merely temporary.

Source: Novinky, 19/08/2024

Germany handed over a new package of military aid to Ukraine.

Germany has confirmed the delivery of a new military aid package to Ukraine, which includes an additional IRIS-T SLS air defense system, 155mm projectiles, and surface and reconnaissance drones. As a result, Germany ranks second in military aid provided to Ukraine, following the USA. President Volodymyr Zelenskyy requested additional air defense supplies in response to Russia's massive shelling of energy facilities. The package includes one IRIS-T SLS air defense system, 14,000 155mm rounds, 10 unmanned surface drones, and 26 VECTOR reconnaissance drones with spare parts. Ukraine also received six highly mobile engineering excavators and a Bergepanzer 2 armored recovery vehicle with spare parts. Additionally, the package includes 55,000 first-aid kits, 700 MK 556 assault rifles, 10 HLR 338 high-precision rifles with 240,000 rounds of ammunition, and 50 CR 308 rifles. Since the beginning of the Russian invasion in February 2022, Germany has provided aid to Ukraine from the reserves of the Federal Armed Forces totaling approximately €5.2 billion.

Source: The Federal Government, 19/08/2024

Norway will finance the production of 155mm shells in Ukraine.

The Norwegian company Nammo has finalized an agreement to establish licensed production of artillery shells by a Ukrainian defense company, funded by Norway. “Norway is currently contributing by transferring ammunition from its stocks and directly from industry. Now Nammo wants to share its expertise with Ukraine. This means that Ukrainian forces can receive supplies faster," said Defense Minister Bjorn Arild Gram. According to Minister of Foreign Affairs Espen Bart Eide, it is absolutely crucial for Ukraine and its security that Norway continues to support Ukraine's defense efforts.

Source: Norway's government portal, 24/08/2024

The number exempt from mobilization approaches 1 million.

Currently, 930,000 conscripted Ukrainians are exempt from mobilization, with the number expected to surpass 1 million within a week. Deputy Minister of Defense Ivan Gavryliuk announced this during a round table on legislative approaches to the reservation of employees at enterprises. He emphasized that mobilization does not fully meet the needs of the army, as a mobilized person is not immediately a fighter and requires 3-6 months of training. He stressed that an effective defense structure relies on some people fighting while others work to support the defense. He also noted that the economy should be shifted to a wartime footing, but currently, many enterprises in Ukraine are operating in three shifts. Meanwhile, support from international partners is not increasing, and Russia's presence in the occupied territories of Ukraine is not diminishing. Russian troops in the occupied territories numbered 440,000 at the beginning of the year, have now grown to around 600,000, and are expected to increase to 800,000 by the end of the year.

Source: Deputy Minister of Defense Ivan Gavryliuk, 19/08/2024

Ukraine and India have agreed on four documents of cooperation.

Agreements on cooperation between Ukraine and India in the medical, agricultural, humanitarian, and cultural spheres were finalized during the visit of Indian Prime Minister Narendra Modi to Ukraine. According to President Zelensky, a joint statement "on building a strategic partnership between our countries, enhancing trade, and military-technical cooperation" has also been prepared. "All of this should be strengthened," Zelensky emphasized. On August 23, Prime Minister Narendra Modi arrived in Ukraine, marking the first official visit of an Indian Prime Minister to Ukraine since its independence.

Source: Interfax Ukraine, 23/08/2024

Zelensky Signed the Law Banning the Russian Orthodox Church

Volodymyr Zelenskyy, the President of Ukraine, signed Law No. 8371, which prohibits the activities of the Russian Orthodox Church (ROC) in Ukraine. According to the Verkhovna Rada website, the document with the President's signature was returned on August 24. In an address commemorating Ukraine's Independence Day, Zelenskyy emphasized the spiritual freedom of the Ukrainian people, stating, "Ukrainian Orthodoxy today is taking a step towards liberation from the Moscow devils." The law signed by the President will take effect 30 days after its publication.

Source: Chairman of the Verkhovna Rada of Ukraine, Ruslan Stefanchuk, 24/08/2024