Ukraine crisis hurting business hundreds of kilometers away from the action


Photo courtesy of TripAdvisor

By Samuel Greenfield

Time is running out for Ukrainian businessman Artem Tymoshenko. The violence and political unrest that has gripped Ukraine has had a crippling effect on his youth hostel business in the western Ukrainian city of Lviv .

Tens of thousands of Russian soldiers are massed on the eastern border of Ukraine and the fear of invasion hovers ominously. Images of gun-toting men in military fatigues are not the best tourism ads.

“It’s dead. It’s like a critical point. Totally. We’re trying to be positive, but to tell the truth, it’s going really bad,” says 27-year-old Tymoshenko who runs the business with two other partners.

It’s the first Friday of April and we’re drinking tea in the Soviet Home Hostel, one of four themed hostels the three entrepreneurs run in Lviv.

The sitting room is full of Soviet era paraphernalia: books, cameras and a couple of old couches. On the ceiling are flags from the old Soviet republics. And a huge banner on the wall features a cosmonaut and a proletariat-looking man with a rifle.

A patch of peeling paint on the wall is enclosed by an empty picture frame with a piece of paper below that reads: “Authentic Soviet Spot”.

“That was the cheapest solution.”, says Tymoshenko, laughing. But there is little humour for Tymoshenko’s business model.

If things don’t pick up soon, the situation is grim. “Everybody now is looking for some other job,” says Tymoshenko of his business partners.

“I think we will start to close [hostels] one by one, looking [to see] how it will go,” says Tymoshenko. “Foreigners, they’re afraid of going to Ukraine because there is, like, ‘war’, and it doesn’t matter that Crimea is 1000 kilometers from here.”

The historic centre of Lviv is as charming as old European cities come – church spires, cobbled streets and a breathtaking legacy of architecture, much of it dating from when the city was in the orbit of Poland and later Austria.

But the old city’s enchanting appearance belies the frustrating business climate entrepreneurs face in Ukraine. Businessmen have had to navigate an economy dominated by oligarchs and muddled by unclear laws and corruption. And now the political crisis which is severely jeopardizing the city’s tourism industry.

“You open your business and then you start to make documents,” says Tymoshenko. “So we just started it without any documents…everybody does [it] like this because if you start making documents it will take you forever and you won’t open your business.”

Before going into business, Tymoshenko had traveled a lot, living in Europe and staying in youth hostels. Lviv, he says, had no youth hostels at the time. Their first hostel, Old Ukrainian Home Hostel, was opened in 2009 while Tymoshenko was still a student.

“It was really problematic because it was a new thing and there was no definition for hostel in Ukrainian laws,” Tymoshenko explains. He says that starting a business in Ukraine is tricky and that the laws can be interpreted in different ways, leading to potential problems for entrepreneurs.

“…The laws are built not to make business,” says Tymoshenko. “I don’t know why because I think that the government would earn much more if everything was clear.”

And while their earnings were not huge, business was okay, says Tymoshenko, explaining that they would have losses in the winter but the summer would compensate.

Dmytro Symovonyk, director of Citadel Capital in Lviv, explains how not having solid rule of law is holding Ukraine back. Citadel Capital provides services for foreign investors and helps domestic firms find financial partners. Symovonyk claims the black market accounts for half of Ukraine’s economy.

“The system itself was made so that you can put in jail anybody, from the Soviet times, and therefore you are able to press the people,” says Symovonyk. “Because of these unclear rules it was always possible to find something which you did wrong. And even if you didn’t do anything wrong you had [a] judge who is afraid to lose his job.”

But even before the Yanukovych government was overthrown there were signs that things were improving. According to the World Bank’s Doing Business index, Ukraine jumped from place 140 on the “ease of doing” business ranking in 2013 to place 112 in 2014. Canada, by contrast, ranked 19 for 2014.

“We expect that we will see more reforms. We don’t want to see more bureaucracy happening…we want to have less people working directly in the government,” says Symovnyk who would like to have a more liberal laws than EU. And Tymoshenko believes that if Ukraine gets closer ties with the EU, business will improve.

The Ukrainian currency, the Hyrvnia, has shed more than 20 per cent of its value to the USD since the beginning of 2014. This makes it more inexpensive for western tourists… but it was already a cheap destination.

But while there may not be many western tourists in Lviv, there were still exceptions. Brendan Skov, an American tourist staying in Tymochenko’s Hostel Coffee Home came to Ukraine to visit Chernobyl.

“When I watch the news I only see the bad parts of Ukraine and there are so many good parts as well….being here I see hardly any of the bad things that are mentioned,” says Skov. It helps that Lviv is hundreds of kilometers away from the turbulent parts of eastern Ukraine.

But on the weekend it seems like business is picking up. On Saturday there are no more dorm rooms available in the Coffee Home hostel. 

Three weeks later I spoke with Tymoshenko again. He’s still open for business – but the uncertainty about the future remains and they’ve had to borrow money from friends to keep afloat. They’re not paying rent for the buildings their hostels are in, but he says earnings are enough revenue to cover off half their expenses. A surge in visitors during Easter helped, but occupancy was still less than last Easter.

As Tymoshenko puts it, they’ve had a 100 per cent drop in foreign tourists and a 40 per cent drop in domestic visitors. “Look,” he says. “Now they have started already to close restaurants and cafes.” He says that on average one of his youth hostels has been closed for business.

Meanwhile, the situation in eastern in Ukraine has gotten worse since early April. Pro-Russian demonstrators and gunmen occupy government buildings, journalists have been abducted and the Ukrainian military has been deployed in an attempt to assert Kiev’s control over the region and several gunmen have already been killed.

As Tymoshenko said in early April: “I would like to, you know, believe that everything would be good but I’m not sure til the end, cuz if Russia comes, then that will be in the end.”

 

 

 

 

 

 

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The Ukrainian army: Fingers crossed with mismatched uniforms

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On the way to Volnovakha the little gears in my mind were struggling to turn. Sleep is the lubricant that keeps the brain from seizing and I was working on about four hours worth last Monday morning.

Volnovahka is small city with less than 30,000 inhabitants in eastern Ukraine’s Donetsk Oblast. An old train engine set up on display is a giveaway to the city’s main industry: producing rail cars and servicing trains.

But I don’t have any particular fetish for railways or even the typically Soviet-era park in the city centre. Somewhere within striking distance of Volnovakha was a Ukrainian military camp with all that kind of stuff journalists do have a hankering for: photo-ops with tanks and stoic looking troopers wielding Kalashnikov rifles.

Our contact was a city politician, 32-year-old Dimitri Lubinets, from Batkivshchyna, the All-Ukrainian Union or “Fatherland” party, which holds 3 of 36 seats on something like the city council of Volnovakha.

Trying to actually connect with Lubinets felt like meeting up to buy drugs. There was something about a licence plate number and a white van, and some waiting around.

When we at last connected with him he took us into a building near the train engine monument and up a set of steps and into a large room that appeared to serve as an office for his party.

Our driver, Vlad, stayed behind. The three of us – Max, our interpreter, another journalist from Holland, and myself – sat down on a row of seats against the wall and Lubinets sat at a table some strange distance away and the interview began.

The situation with the military in Ukraine is grim. Years of neglect have left it ill-equipped and in no position to resist the superior Russian forces which would likely steam-roll it in short order.

Lubinets says that on March 14 a military convoy trying to pass through the area en route to reinforcing the border was blocked by flag-waving activists, including those from the so-called People’s Militia of Donbass. Some managed to get through, some did not, he said.

Last week the Ukrainian Security Service (SBU) detained the leader of the People’s Militia of Donbass. But it’s not clear if there is any connection to the March 14 incident.

There is a groundswell of support for Russia in this region that cannot be dismissed as a few hired hands from across the border. These people are vocal and not afraid to get loud in the street. And this is something Western readers have to grasp.

There are also many people here in favour of a united Ukraine and I’ve met some of them. But the aggressive show of support for Russia seems to intimidate this side into almost complete silence.

According to Lubinets, some of the locals are actually very supportive of the military – bringing soldiers food and juices. Lubinets said he saw one old man use the last 50 Hyrvnia ($5) from his pension to buy food for the military.

Businessmen, he said, are even buying uniforms and optics for the soldiers’ weapons and medicine was being sent from Maidan in Kiev. We finally got escorted to the military encampment and Lubinets and a compatriot of his brought two air filters for the military vehicles, as if to demonstrate why the armed forces have supposedly become known by the moniker of the “people’s army”.

The military encampment looks like a battle map from a video game. A barren and rugged looking piece of the earth by an abandoned gravel pit with some rusting piece of industrial equipment in the background.

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As birds chirp incessantly in the background, the 28-year-old captain of a communications brigade, Sergei Pischal, told us the army is growing and explained to us that the army needs better equipment.

A radio tower to connect the military HQ with the border brigades is set up behind him and a couple of men are digging holes in the earth. Yet for a communications brigade, they’re ironically in the dark. The Captain Pischal says they have no access to information from the mass media.

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He seems to lack the commanding air you expect from a military officer and seems almost timid but he confirmed that there is a lot of moral-building assistance from the local population.

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Last year Ukraine ended mandatory military service and salaries for contract staff were supposed to double in 2014. Yet despite any attempts to improve the forces, it still looks like this lot wouldn’t last half an hour were the Russian army to come rolling through the nearby village.

Supposedly some members of the armed forces have had to buy their own uniforms and the soldiers that we saw did not even all have matching outfits. One soldier was even wearing a surplus German military uniform. Still, Captain Pischal puts on a brave show and sarcastically wishes the Russians “good luck” should they try and invade Ukraine.

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This is what the Ukrainian military looks like

It’s been a while! You’ll have to forgive my online absence. I went through a bit of a writing drought and came down with a bit of a cold, but more material will be coming!

On Monday I traveled with a Dutch journalist and two local Donetsk lads to check out a Ukrainian military position/camp in eastern Ukraine.

I’m planning on doing a more thorough write-up on this experience, but for now here is what it looks like on the ground.

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The Ukrainian-Russian border at Novoazovs’k: when reporting doesn’t work out

By Samuel Greenfield

Beer bottles and an abandoned jacket lie in a ditch littered with garbage beside a wind-swept section of road leading up to the checkpoint at the Ukrainian-Russian border near Novoazovs’k.

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Signs of excavation at the border – Ukraine’s new defensive trench?

A bit closer are anti-tank obstacles, stray dogs lingering on the road, and a few small commercial enterprises serving by-passers and boarder guards. Then comes the red and white traffic barrier and the Ukrainian border guard with his Kalashnikov slung over his shoulder.

Beyond this point we cannot pass. Tough out of luck. We had just made a grueling journey by bus to Novoazovs’k and then finally by taxi to the border. Our goal was to see the defensive trench that Ukraine has dug to defend itself from any potential invasion. Across the field near the checkpoint we can see a mound of earth that almost certainly is a tell-tale sign of our subject matter.

There are no Ukrainian soldiers here. No tanks, artillery pieces just a trickle of vehicles and pedestrians passing through. The border is still open and business must go on.

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We’ve already been rebuffed at the gate but two more uniformed men step out of one of the shops – possibly a bar – so I go up and give it a shot. One of them is the commander and he speaks relatively fluent English. He pulls out his cell phone and calls a superior.

Everyone under the age of 50 here has a cell phone – not a break-the-bank smart phone like everyone runs around with in Canada, but at least one of their more basic and slender cousins that feed a market constrained  by a GDP per capita of  $3,867 USD.

The answer comes back negative. Without accreditation we can’t pass the traffic barrier. Our only consolation is that we are allowed to take photos outside the restricted zone, but it’s not what we came for. IMG_1188

One of the stray dogs can saunter off into the restricted zone without difficulty. Whether this should be signified as a compliment or an insult to our human presence is debatable.

Igor, the commander, tells us they have stopped more than 100 people at this border crossing whom they suspected were heading into Ukraine to take part of protests.

It’s claimed by some that pro-Russian participants in the sometimes violent clashes here in eastern Ukraine are coming in from across the border.

We take a taxi back to the bus terminal in Novoazovs’k. The terminal appears to have been frozen in time during the Soviet era yet without any significant maintenance to stop the degeneration that comes with decades of wear.

On my first time through the building, whilst holding a cup, I managed to stumble over a water pipe running along the floor just inside the entrance and slop coffee on the ground. The bathrooms feature squat toilets and reek of urine.

This is pro-Russian territory and soon we’ve struck up a conversation with a couple of locals outside of a small general store near the terminal building. It’s difficult though. Roman, the French journalist in our small troupe, is the only person who can lay claim to a Russian vocabulary larger than 30 words.

The younger of the two locals had a small English vocabulary which he would attempt to render useful in the conversation with great difficulty.

We are joined by another man, an older fellow in a black leather jacket suffering from an obvious case of afternoon intoxication. At one point he produces a nearly empty clear glass bottle and proceeds to drain the remainder of its contents in one go.

When the first two men leave, the drunk man won’t let us out of his sight. He follows us into the store. We try to lose him by circling around the building and by entering a side door. He totters after us. It’s going to be a long wait for the bus back to Donetsk.

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AFP via Yahoo: Ukrainian soldiers in Crimea authorized to use arms in self defense after one soldier killed

Here.

FROM AFP via Yahoo  “For their self defence and protection of their lives, Ukrainian servicemen… deployed in the Autonomous Republic of Crimea are allowed to use arms,” the Ukrainian defence ministry said in a statement.

And for a live blog of news for the Ukrainian crisis visit here.

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More pictures from Crimea

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Reuters: Ukraine digs four-meter wide defensive trench to protect Donetsk region

According to this article from Reuters, Ukraine has dug a four-meter wide defensive trench in eastern Ukraine at the border with Russia to protect the Donetsk region.

From Reuters via GMA News Online:

Taruta, appointed by the central government like all regional governors, said the aim of the trench project was to protect the 150 km (90 miles) of Donetsk region’s border with Russia, particularly between established crossing points.The trench, he said, was 4 metres (12 ft 6 in) wide, 2.5 metres deep and backed up by a dike 2 metres high.
 
“We have done this on our own and dug a trench practically the entire length of the border. In particularly dangerous places, concrete blocks standing on four legs have been put in place,” Taruta told a news conference.
 
“Our border is not a castle. But it is equipped so that vehicles cannot cross it in either direction. This is not based on one or another scenario, but rather intended to maintain a solid border.
 
Pictures posted on various Internet sites showed servicemen on patrol in the trench, with the large dike looming above them.
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