Summary view:
The macro economy has stabilised, helped by an IMF programme which seems to be working, plus the valiant efforts of the dream team reform crew. This newfound stability and potential for upside surprises to growth are now seriously under threat by populist forces in parliament and by foot- dragging by oligarchic interests which are threatening to recapture political power in the country.
Imposition of the rule of law is now the number one issue/challenge for reformers but resistance is intense and limited progress is being made.
The risks of no agreement over a tax code and budget for 2016 are significant, and this could see resignations from the reform team, with frustrations building over the lack of high level support for the IMF programme and rule of law reforms.
Visiting U.S. Vice President Joe Biden might have to read the riot act, but rather than address rule of law issues, oligarchic interests might prefer an IMF-free path.
This would be acutely dangerous and might well end in further macro destabilisation.
Russia at present appears happy to stand by the sidelines, assuming that Ukraine’s political elites will inevitably self destruct, as in the past, but still waiting to bring Ukraine back within its sphere of influence.
However, popular opposition to such an outcome remains strong and will be resisted fiercely at the civil society and grassroots levels.
The risk of revanchist or populist forces emerging are nevertheless not insignificant and leaving room for unpredictable outcomes. Strong Western reform leadership and direction both within and without the country is now needed more than ever.
Introduction: I visited Kyiv this week to participate in the Kyiv Post Tiger conference and used this as an opportunity to meet the usual Kyiv political/policy “community” to better gauge the overall story. In the text below I present a review of key thoughts and impressions which will hopefully help investors better understand the investment environment.
Perhaps the easiest story to tell is the macro, which has significantly stabilised, helped by the orthodox reform agenda successfully rolled out of the National Bank of Ukraine and the Ministry of Finance.
But to understand just how far Ukraine has come (and achieved), it is worth perhaps going back and setting the scene a bit first.
Just casting our minds back six months, the economy then was on the brink of collapse, running twin deficits, as a result facing rising indebtedness, dwindling foreign exchange reserves, and the risk of uncontrollable default, currency and banking collapse and a deep and prolonged recession with hyperinflation.
The annexation of Crimea, and the Russian military intervention in Donbas accentuated these problems, carving off 8-10 percent of gross domestic product, destroying and disrupting basic infrastructure, and acting as a distraction and shocking the policy elite into inaction and paralysis on the economic policy reform front.
Peak to trough real GDP had collapsed by up to 20 percent, the hryvnia had lost two-thirds of its value, U.S. dollar GDP dropped from $178 billion in 2003 to perhaps $85 billion on an annualised basis, and inflation had risen quickly to around 60 percent.
Non-performing loans exploded in the banking sector (~50-60%), wiping out much of the capital base, and imposing hefty costs on the sovereign balance sheet where it was forced to step in to recapitalise state-owned banks and systemically important privately owned banks. Recession, and energy sector deficits, boosted the quasi-fiscal deficit to 10-11 percent of GDP in 2014, and bank recapitalisation needs, plus FX depreciation boosted the public sector debt/GDP ratio to ~90% of GDP, and gross external debt to GDP to 140% plus.
The situation was clearly not sustainable, and eventually the government and international community were forced to bite the bullet, agreeing in April 2014 to a new $17 billion IMF anchored support programme for Ukraine, with total official support totalling close to $25 billion.
Since then there has been signs of meaningful and positive change:
(+) Fiscal policy has been tightened, with caps on public sector wage/pension hikes, rationalisation across the public sector, and spending held below inflation which has brought a marked improvement in the fiscal position – the deficit target (4.2%) for 2015 might be undershot, and the 3.7% target for 2016 seems “doable” if the new tax code is finally approved. Note that fiscal outperformance in 2015 has been driven by the inflation tax, NBU profit transfers (again), delayed capital spending and also outperformance at local government level with some fiscal decentralisation and reflecting the electoral cycle locally (local governments were simply not in place/able to spend). All this means the single Treasury account of the MOF is now relatively “flush” with around USD2bn in monies on account;
(+) Recession, the deflation of domestic demand, a huge nominal and real effective FX depreciation, and energy conservation has shrunk the CAD, from ~10% of GDP to ~ 1% of GDP at present, and this looks set to be the ball park outcome for 2016, all other things being equal (which of course they might not be on the political and policy front – see below);
(+) The UAH has been stabilised, partly by administered means, but this has also enabled FX reserves to rise from USD4-5bn at the lows earlier this year, to perhaps $13.1 billion at present.The PSI has cut $12-13 billion in external financing needs over the period of the IMF EFF, albeit debt sustainability issues have not been adequately addressed in my view, and the VRIs are still a ticking time bomb for future governments.
(+) Energy sector reform is being rolled out, rationalising pricing, introducing targeted subsidies and this process is cutting consumption, imports and subsidies, with clear benefits for the balance of payments and the budget. In terms of gas, Russian gas imports halved this year to 6.5bcm, and assuming an average/mild winter, with around 18 billion cubic meters of gas in storage, Ukraine should be able to survive the winter and then source gas import needs from the European market. Dependency (vulnerability) on Russia is hence reducing.
(+) Institutional reform of the NBU has been advanced, significantly enhancing its credibility both to manage monetary policy but also to drive through with banking sector reforms. Reforms of the banking sector have been advanced, with stress tests of the largest banks conducted and a strategy and plan for cleaning up the banking sector rolled out, banks are being recapitalised where need be, and where owners have the means, and otherwise closed (>40 banks closed, so around one quarter). Unless there is another bout of further macro weakness, the sector no longer seems to threaten systemic risks to the broader economy, albeit it is still not in a position to assume it’s normal function in supporting growth and development in the economy.
(+) There are real signs now that the economy has bottomed, that the worst of the recession might be over, and that from a low base that the economy might move into a growth trajectory in 2016, with inflation also now on a downward path. Indeed, the official 2% real GDP growth assumption could prove overly cautious in my view, and assuming no deterioration of the security situation in the East, and that reform momentum continues we could be surprised to the upside (i.e. 3-4% growth).
In summary the tentative signs are that macro stabilisation has been achieved, albeit it remains fragile. But importantly, the base is now there for upside surprises on the growth front.
In making this assertion I would highlight the following positives:
(+) Low base, with real GDP down 20% from the peak, and dollar GDP halving;
(+) Very cheap and skilled labour pool, $100-200 PCM wage costs;
(+) Large population and potential domestic market;
(+) Chernozem black earth land with huge potential in agro-food sector – Ukraine could easily double grain production over the next decade to 100mt;
(+) Strong skill sets in IT, service sector, and easy wins in the energy sector;
(+) Reform orientated technocrats in the MOF/NBU – the dream team, assuming that is they remain and are sufficiently supported in their efforts by the political leadership (not a given at present);
(+) The population is hungry for reform and change, plus the external threat provides no excuse but to reform (albeit some might now argue that elites are using it as an excuse not to reform);
(+) Strong official financing support from official creditors, over $25 billion, and given the now small size of the economy, this support can go a long way.
I strongly believe that with peace in the east, with Western support and the maintenance of an ambitious reform agenda, Ukraine can be the next Poland in a decade from now.
The bad news
That’s the good news, but less encouraging it is now clear to me that huge pressures and risks are building on the domestic political and policy front. And in particular, while tentative macro stabilisation has been achieved, the number one reform question/priority, which runs through almost every element of the reform agenda, is THE RULE OF LAW, which still some two years after the start of the Maydan protests is still sadly LACKING, with little, if any, sign of progress or improvement.
To put this into perspective, at the Kyiv Post Tiger conference we ran a survey (I chaired the economy session) asking what are the key constraints to economic development in Ukraine, and therein 93% of respondents (admittedly a narrow cross section of society comprising mainly the business community and civil society). Concerns over the rule of law, or the lack of it, outscored the tax system by four times, which underscores its importance. Therein individuals I met argued that the level of taxes in Ukraine is not the problem (the 20% basic rate is not high) but it is the administration of taxes that is the problem and therein the rule of law and corruption are the main problems. True, the current tax reform planned by the MOF, reducing a myriad of taxes to a dozen or so, will hopefully reduce scope for graft in the tax administration, but there also needs to be a cultural shift. In does not help that the MOF appears to have limited real control over the tax administration that, de facto, appears to have its strings being pulled by higher forces in politics.
The foreign official sector, civil society, and the reform dream team, are very vocal in support of the need to impose the rule of law, root out corruption and graft, but there is a strong sense that vested interests in Ukraine’s oligarchic and political elite are still blocking reforms including reforming the judiciary, the prosecutor’s office, et al. A common complaint I heard is that two years on from the Maydan, and few, if anyone has gone to jail for corruption or for the alleged sins of the former regime.
How is this possible and why is no progress seemingly being made on rule of law issues?
From the interviews I conducted during the trip it is clear that 24 years of warped development, with oligarchic capture of the political, judicial and governmental process in Ukraine, has left corruption endemic and ingrained. As a result there is a total lack of confidence in government/public administration on the part of the population, and in the way it conducts its business – public service is not undertaken efficiently or fairly, and hence the population feel no compulsion to fulfil their part of the social contract by paying taxes. Tax avoidance is hence widespread and prevalent and the informal sector is huge – actually this might be currently providing a fair degree of insulation in the currently difficult economic times.
Other societies have faced similar problems/challenges, and the experiences of countries as diverse as Georgia and Romania, are that there has to be a cultural shift, but it can occur, if examples are made/given that justice applies at all levels, extending right to the top – e.g Romania where former prime ministers have been indicted and even jailed for corruption, and where the drive to root out corruption has been sold to the population as some kind of patriotic act/campaign to ensure the very survival of the state, e.g. on this latter score with the Saakashvilli administration in Georgia after the Russo-Georgian conflict in 2008. Georgia and Romania proved what can be achieved and there is nothing to suggest that this cannot also occur in Ukraine, as the conditions are there, but there has to be the political will to address the problem head on and make examples throughout the social strata to demonstrate that no one is above the law, which should apply equally to all. On this latter note I would tend to argue that the Euromaydan protest was more about the equal application of the rule of law, and rolling back selective justice, than it was about EU accession, but that’s perhaps a different discussion.
So why no progress in Ukraine?
I guess a logical conclusion is that there is not yet the political will at the highest levels to address issues related to the rule of law, and in particular to apply the laws as is to those at the highest echelons, and to make examples of high profile individuals.
Why is the political will lacking?
Well some might argue that Ukraine’s top political elites have had the focus elsewhere in fighting the war in the east, and needed to rely on the support of oligarchic interests both to fight that war and ensure that centrifugal forces did not see the collapse of Ukraine, to the advantage of Ukraine’s external foes. Oligarchs were hence co-opted into leadership roles in the regions, even organising private armies in effect to support the work of the Ukrainian military proper.
But the conflict in the east has now subsided significantly, so why is the time now not right to refocus on fighting corruption and the rule of law?
Well some still argue that the conflict in the east is still bubbling away, the risks of a Russian invasion remain and oligarchs need to be kept on side. So according to this logic the time is still not right for such a campaign which would likely be disruptive and highly divisive. Others argue that these are all excuses meant to protect vested interests, and really just reflective of the oligarchic capture of significant elements of the political class, and in the Verkhovna Rada, in Ukraine.
Along this latter line I constantly heard that the Euromaydan has not changed very much still in terms of where power really lies in Ukraine, and the country’s political system is still dominated in effect by 10-15 oligarchic families. Now it might be easy to talk about making examples of any one of these individuals or families – take your pick in terms of the names – for alleged past misdemeanours. However, the case was made that all likely have “kompromat” on each other, and each is likely wary as to what information the other might possess, and hence it becomes a kind of alter ego version of the three musketeers, i.e,. “all for one, one for all”. Breaking this underlying allegiance/code (the traditional kum, or godfather, code here in Ukrainian tradition might play a part) between the oligarchs will be devilishly difficult, and potentially costly both in terms of the legal costs but also likely disruption to economic activity – the reality is that the oligarchs in Ukraine still control some of the strategic heights of the economy, providing jobs, many still owning banks, covering a large share of the country’s exports. Any such legal assault on the oligarchs, perhaps with efforts to retake control of assets could be very costly and disruptive to the economy – some would argue not acting will have a much higher long run cost.
The bigger and most pressing concern perhaps is that in trying to head off a meaningful campaign to root out graft and corruption, and “punish” and bring those responsible to account, the broader economic reform effort and macro stabilisation noted above will be derailed.
There might already be evidence of the above, if you believe the conspiracy theorists, in the on-going battle over a new tax code and the budget for 2016. To recap, the MOF has proposed a radical but realistic reform of the tax code, moderately cutting rates, but importantly simplifying the process, reducing the number of taxes, and exemptions and hence presumably offering the hope of improving the tax administration, reducing scope for graft thereby increasing the tax take.
The new tax code has been costed as suggesting Hr 60 billion in revenue losses, but countervailing spending cuts have been detailed so as to keep the overall deficit at just 3.7% of GDP, and apparently signed off by the IMF.
Now perhaps remarkably, the head of the Verkhovna Rad tax committee has tabled an alternative tax reform proposal which cuts tax rates across the board to 10%, but keeps an array of taxes and exemptions, and which has been costed at Hr 200 billion (9-10% of GDP).
Little, if any detail, has been provided as to how this potential revenue loss will be covered in the budget to ensure the deficit is held in check.
What is particularly alarming is that the above IMF-programme smashing tax plan has been proposed by members of President Petro Poroshenko’s own block in parliament, the Block Petro Poroshenko (BPP).
Further they have even been enthusiastically backed by the leader of the BPP (Yuri Lutsenko), and his deputy leader, Igor Kononenko. The fear is that they somehow have the nod of the president, and would put the BPP at odds with ministers nominated by the president and BPP itself, Natalie Jaresko, et al. What is the motivation, given that these proposals, if implemented, threaten to derail the IMF programme? Further, they risk stalling agreement on a budget for 2016, which is IMF compliant, meaning a delay in critical IMF credit disbursements, and other official financing totalling $4 billion due to be disbursed before year end.
We heard different lines as to explain this new twist:
One line is that in the VR there is now a growing constituency amongst groups controlled by oligarchs that Ukraine’s macro stabilisation is now such that Ukraine can survive without the IMF money, and that an ambitious pro growth tax cutting agenda can spur growth and recovery, and popular support for the administration. And rather that the IMF fiscally restrained agenda will do the opposite, i.e. kill off recovery and cause social hardship and unrest. I
I think the assumption herein is that oligarchs know better, they have the business acumen to turn the economy around, and that they just get an overly critical press.
Critically though, stalling on the IMF conditionality will enable difficult decisions over the rule of law to be put off.
Perhaps even there is an assumption that the West will be soft anyway in terms of conditionality, and eventually roll over by providing financing even if the budget is bloated, and rule of law reforms stalled, simply because Ukraine can again play its geopolitical card over Russia – to keep Ukraine in the West’s geopolitical orbit.
Perhaps there also also memories of the early Viktor Yanukovych era when the market was willing to finance Ukraine, even though it was consistently off track with IMF programmes, and with scant pressure from bondholders for the application of conditionality on economic reform. With Ukrainian bonds back to yielding 8.5-9% it is indeed not impossible now to imagine market access – moral hazard anyone?
A second line is similar somewhat, but runs along the lines that this is all a negotiation, and the same elements within the administration, and perhaps with ultimate power, think that they can negotiate softer conditionality with the IMF, but ultimately will agree a reasonably IMF compliant tax/budget deal at the last minute, and perhaps even by year end.
The latter would be a relatively positive spin, albeit there is still little willingness still to address rule of law issues. This might still suggest that 2016 could see growth surprise on the upside, but that Ukraine would then quickly return to sub-part and another great opportunity for radical and transformational reform has been missed.
Meanwhile, The concern in all this is that the rise of alternative, unorthodox voices in the Bloc of Petro Poroshenko, and elsewhere in the Verkhovna Rada, which seem to have some political backing at some of the highest levels in the political establishment, is un-nerving elements of the current dream reform team in the administration (NBU/MOF and elsewhere) and my sense is that the team of reformers must now be questioning whether they still have the mandate and political capital to deliver on the IMF reform agenda.
In this scenario, and if it comes to a choice between compromising their own reform policies, and agreeing to policies that take the country off track with the IMF programme, and resigning on principle – and already having delivered so much – I think they could just opt to resign en masse.
This clearly now presents very clear risks – failure to agree an IMF compliant tax code, and no budget means no official credit disbursements, which will likely put extreme pressure on the UAH, dwindling FX reserves (the NBU is unlikely to waste FX reserves defending the currency in this scenario), which will put the macro assumptions underlying the IMF EFF at risk – particularly those relating to debt sustainability. Things could turn very difficult very quickly – the hope then is that the administration returns to the orthodox course gain, albeit the damage might well have then been done in terms of debt sustainability, and the existing PSI might prove inadequate.
Returning to the idea of how elites are persuaded to back the rule of law agenda, and in a process that is not too disruptive to the economy and economic recovery, I still keep coming back to some kind of “truth and reconciliation” process.
Under such a process, everyone in Ukraine is asked to declare any ill-gotten gains from before some cut off date, which are perhaps then taxed at a windfall rate (10-20%) but with the understanding that fully declared past misdemeanours will never be prosecuted, albeit if subsequently it is discovered any such misdemeanours were left UN declared that hefty prison terms would be applied and total asset confiscation by the state would be likely.
Zero tolerance will then be applied to future such financial misdemeanours again with firm penalties applied. But importantly, a line will be drawn in the sand and Ukraine can move on. Such an amnesty in effect would only extend to financial gains, and not other criminal activity. Such a scheme would limit the disruption to the economy, and likely would yield substantial tax windfalls to the state, helping bolster state salaries, and thereby reducing the allure of corrupt practices. It sounds obvious, but I am sure that excuses can be found not to roll out such a scheme
But the choice is between this and facing down an entrenched and very well resourced oligarchic and political elite (likely still having much greater financial resources to deploy legal counter-measures than the state at this stage) which will continue to resist the imposition of the rule of law and the waste of state resources trying to build cases against offenders, likely only to see these eventually blocked by oligarchic power interests in politics. But once the the rule of law is established, and fairly and rigorously enforced all should then have an interest in seeing it upheld, including the oligarchs who will surely them have an interest in ensuring the protection of property rights in particular.
Risk of coalition changes/early elections
The one year anniversary of the formation of the current government, which falls due on Dec. 11, leaves the cabinet vulnerable to a no confidence motion being tabled in the VR after this date. Indeed, we expect this to happen – likely backed by Tymoshenko’s Batkivshchyna faction (which has already called for early elections in March 2016), the Opposition Bloc nd likely Oleh Lyashko’s Popular Party. Our sense though is that the coalition between the BPP and Yatseniuk’s Peoples Front will endure, i.e. survive any such motion just yet, and for a number of reasons.
First, support for Prime Minister Arseniy Yatsenyuk has collapsed in the country, with the People’s Front polling low single digits from the 20-odd percent poll topping position in last year’s parliamentary elections. The position of the party was so bad that Yatseniuk opted to pull the party out of local elections held in October, instead putting his support behind the BPP. Yatseniuk now needs BPP and the support of Poroshenko, or he risks being politically eclipsed in early elections. Given that messaging seems to be that cooperation and relations between Poroshenko and Yatseniuk have improved in recent times (perhaps driven by recognition that they now need each other – helped perhaps by the reemergence Tymoshenko as a major political threat) – the two have a common interest in avoiding early elections, with an uncertain outcome (well perhaps less uncertain for Yatseniuk at least).
Second, for Poroshenko also the problem is that none of the main opposition blocks or Batkivchyna present particularly palatable coalition options/partners, or that do not come with their own risks. In particular, a deal with the Opposition party would likely be very badly received by the Euromaydan activists who would see this as marking a return to power for the former ruling Regions.
It has been suggested that Tymoshenko might return as PM, in coalition with BPP, but Poroshenko and Tymoshenko have a torrid track record of cooperation from the Yushchenko era, and the former prime minister likely would receive mixed support from the foreign official community, especially given her currently unorthodox and decidedly populist economic policy orientation. That said, I wonder if she might be persuaded to head a government in a scenario where elements in BPP opt to go “off piste” on the IMF front.
The other problem/risk to the current BPP-People’s Front coalition is unity within the BPP, or rather the noticeable lack of it. For example, will we see defections from the BPP during any potential confidence vote, and especially given the lack of unity currently shown with respect to the IMF programme?
Perhaps of some significant to risks to the current coalition we see strong US backing still for Yatseniuk as prime minister, which is expected to be further affirmed during the visit of US VP, Joe Biden to Kyiv this week. Some significance can also perhaps be attached to the offer extended to PM Yatseniuk to visit a US aircraft carrier in the Mediterranean. Likely this was partially also intended to send a signal to Moscow of continuing US support for Ukraine – and to deflect from US embarrassment over reports that much of the non-lethal military kit supplied to the Ukrainian military has been sub-standard.
What about the Russian strategy now towards Ukraine?
There has been a noticeable and quite marked step down in the level of the conflict in the Donbas since the September 1 ceasefire agreement called under the auspices of the Minsk II deal agreed in February. There are still daily live fire incidents (many still using relatively high calibre weapons, I.e. up to 100mm), but these are much reduced from earlier year high points. That said there are still continuing casualties to the Ukrainian side, of typically a handful of military deaths per week, and a score or so of wounded also per week. The conflict still seems to be hot/warm, albeit Moscow seems to have diverted its attention to activities in Syria and also now Turkey, perhaps putting Ukraine on the back burner for the time being.
Perhaps what we are seeing is a tactical pause in military activities in Ukraine, looking to see what leverage can be extracted from developments in Syria, to be used to ensure longer term strategic objectives are still delivered in Ukraine. On this latter note I think the longer term strategic objectives are fairly clear and have not changed much, i.e. over the longer term to bring Ukraine back under Russia’s sphere of influence, and in the short term and as a transitory move to wrest Ukraine back out of its current Western orbit. Therein I sense that Moscow is still keeping all options open but recognising that the military options risk significant costs which Russia appears unwilling to bear. Further there appears to be a new willingness in Moscow to let domestic politics run their course in Ukraine, on the assumption that the current pro-western reform coalition will inevitably unwind, and oligarchic interests will eventually and inevitably come to the fore which can then be exploited by Moscow again towards delivery on its longer term strategic objectives.
The recent power shortages in Crimea have perhaps provided the best indication of Russia’s reluctance now to resort to military options in Ukraine. The fact that electricity supplies to Crimea were cut, causing huge embarrassment to Moscow, and yet no military action was taken or threatened is perhaps instructive as I think only six months or so ago many would have seen this as risking a pretext for a further Russian military incursion in southern Ukraine to create the much talked about land bridge to Crimea. But the fact that there was little military response to the cutting of electricity supplies to Crimea, again indicates fairly clearly that military options are off the table for the time being for Russia.
What about the future of the Russian $3 billion December 15s?
It seems pretty clear that there has been little meaningful discussion – if any – between the Russian and Ukrainian MOFs over the Russian 1+1+1 proposal made at the G20 summit in Antalya to extend the maturity of the issue. Indeed, there seems to be a great deal of scepticism in Western official circles, and obviously in Ukraine, as to whether this offer was genuine, or rather an effort simply to stall the looming IMF policy discussion and likely decision on changing the lending into official arrears policy. There seems to be no appetite/willingness on the part of the authorities in Kyiv to pay the bond as per the original schedule, but the offer as is remains the same as for the recently agreed broader private sector restructuring offer.
Meanwhile, there seems now to be a strong willingness on the part of the Western official community to support Ukraine over this issue by moving to change IMF policy over lending into official arrears – effectively to allow this. We expect the IMF board to meet over this issue in the first half of December 2015, and well before the December 20 date by which the Russia bond matures. The USD3bn will then not be paid, leaving Russia with the option of then trying to call Ukraine into official default, and pursuing Ukraine in the courts. Net-net we do not expect this issue to be a significant issue for holders of new restructured Eurobonds, given the lack of cross default clauses. Instead the issue is likely to be pushed over the horizon and to remain one of the now numerous long running legal battles between Russia and Ukraine, e.g. over gas pricing/ supply, and reparations for the annexation of Crimea. Essentially Russia’s bluff over the $3 billion issue will have been called.
Will the DCFTA finally go into force on January 1, 2016?
Yes. There seems to be a clear determination now from the EC/EU to finally put this into force, already after a long delay. Russia’s recent efforts to raise concerns and to ask for some form of trilateral agreement, to agree on an essentially bilateral trade arrangement, is generally not viewed as realistic or even “constructive.”
The threats of further Russian trade sanctions/countermeasures are viewed as real, and indeed likely, but note therein that with the collapse of Russian/Ukrainian trade over the past 2-3 years, i.e. with turnover dropping from around one third of the total for Ukraine to perhaps 10-11% at present, the impact is seen as limited, and indeed if anything further damaging pro-Russian interests in the east of the country, and Russia itself.
There seems to be a willingness in Ukraine to take the pain to at least close one long-running chapter – remember Yanukovych’s decision not to sign the AA/DCFTA at the Vilnius summit in November 2013 was the spark for the Euromaydan protests.
