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KIEV Ukraine's central bank said on Tuesday it was likely to recommend the introduction of sanctions on the local subsidiary of Sberbank over the Russian lender's decision to recognize passports issued by separatists in eastern Ukraine.

On Tuesday, Kremlin-owned Sberbank said it would comply with an order from President Vladimir Putin in February for Russian authorities to recognize identity documents issued in the separatist-held regions of Donetsk and Luhansk in east Ukraine.

"If this information is confirmed, the central bank will raise with the National Security and Defence Council the question of introducing sanctions on the subsidiary of Russia's Sberbank in Ukraine," the Ukrainian central bank said in a statement.

It did not say what form sanctions would take or if restrictions would be applied to other Kremlin-owned banks operating in Ukraine.

Five Russian state-owned banks are present in Ukraine, including three in the top 20, and they hold a combined market share of 8.6 percent.

The central bank has sought to cut that following a breakdown in bilateral relations in 2014 due to Moscow's annexation of Crimea and support for the pro-Russian separatists.

Following Putin's order, Sberbank said in emailed comments on Tuesday that it "is currently prepared to provide services in all affiliated branches to individuals with passports from the DNR and LNR," referring to the so-called Donetsk and Luhansk separatist republics in eastern Ukraine.

It is not yet clear how the other Kremlin-owned banks operating in Ukraine are handling Putin's order.

(Reporting by Natalia Zinets; Additional reporting Alexander Winning in Moscow; Writing by Alessandra Prentice; editing by David Stamp)

KABUL Gunmen dressed as doctors attacked a military hospital close to the U.S. embassy in the Afghan capital, Kabul, on Wednesday and were engaging security forces inside the building, officials and witnesses said.

BEIRUT A U.S. Navy ship changed course in the Hormuz Strait on Saturday toward Iranian Revolutionary Guard vessels, a guards commander was quoted as saying on Tuesday while issuing a warning.

SEOUL A man claiming to be the son of the slain, estranged half brother of North Korea's leader said he was lying low with his mother and sister, in a video posted online by a group that said it helped rescue them following the murder a month ago.

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Ukraine eyes sanctions on subsidiary of Russia's Sberbank - Reuters

The first major legal test of the Ukrainian government's commitment to fightcorruption is playing out in a courtroom in Kyiv, where the 38-year-oldhead of the country's tax and customs servicehas been accused of embezzlingmore than $99 million Cdn in public funds.

So far, it's not going well.

Roman Nasirovwasarrested on Friday by a new anti-corruption institution in Ukraine called the National Anti-Corruption Bureau (NABU). Not long after the arrest, Nasirov'steam issued a statement claiming the young official had suffered a heart attack. He was wheeled into the courthouse on a stretcher, surrounded by both lawyers and medical professionals.

But for some, the illness lookedlike a stalling tactic. As the clock ticked down on a 72-hour time limit on Nasirov's detention, itbecame increasingly clear to Ukrainians that no judge would hear the case over the weekend.

Ukrainian investigative journalistKristina Berdynskykh said it was less than surprising to see the judicial system fail to act.

"Judicial reform has not worked,"she said, "so courts may be the biggest obstacle to anti-corruption bodies. Not all the judges are corrupt, but there are fewer honest judges than dishonest ones."

Ukrainian civil society ultimately took matters into their own hands.

On Sunday night, they blockaded the courthouse, essentially sealingNasirovinside, so that he had no chance toleavewhen the anti-corruption bureau'sdetention period expired at midnight.

People gather outside a court building to prevent the release of head of Ukraine's tax and customs service, who is under investigation over the suspected embezzlement. (Valentyn Ogirenko/Reuters)

Hundreds of protesters stood outside the courthouse well into Monday morning. Finally, a judge was found to hear the case. The hearing has been ongoing throughout the day, and a decision is expected tonight.

If the judge drops the charges and releasesNasirov, it's likely that protesters will once again block the courthouse and prevent the accused official from leaving.

It's not yet clear how the case will unfold.

But Daria Kaleniuk,executive director of the anti-corruption action centre in Ukraine, said she understands fromNABUand the prosecutors "that they want bail set at the estimated amount of losses, which stands around $2 billion Ukrainian hryvnias."

That converts tomore than $99 million Cdn.

Throughout the period of independence after the breakup of the Soviet Union, Ukrainians have faced years of broken promises, dysfunction, and a plague of government corruption. The corruption, especially, was everywhere. In every official office, every bureaucratic decision, every business transaction, there was the likelihood of graft.

Ukraine's battle with corruption took a monumental leap in 2013, when Ukrainian journalist Mustafa Nayyem wrote a Facebook post that sparked a small group of Ukrainian citizens to take to the streets. At that time, they were protesting against their government's backtracking on an association agreement with the EU. That long-promised agreement was scrapped in favor of closer ties with Russia by the government of President Viktor Yanukovych.

Nasirov and his attorney attend a court hearing on Monday. At first lawyers said Nasirov had a heart attack, but medical documents later confirmed he hadn't had a heart attack. (Valentyn Ogirenko/Reuters)

The 2013 protests soon became something much greater, drawing over a million people to Kyiv, and culminating in the ouster of the country's president in 2014.

It's been three years since the former president fled the country, and in that time, the anti-corruption ideals of the revolution have faced their fair share of tests. Civil society's attention and resources were drawn away when the country's southern region of Crimea was annexed by Russia, and then combined Russian-separatist forces waged war in the country's eastern regions. Since then, nearly 10,000 people have died according to the UN, and 1.8 million have been displaced.

Yet three years on from that historic event, perhaps the greatest test that the anti-corruption movement has faced is from its own government. The country still ranks 131st out of 176 countries in Transparency International's corruption index.

Citizens across the country feel that little, if any, progress has been made in cracking down on corrupt officials or reforming the government since the revolution. If the events of the past weekend gain traction,they could be seen as a watershed moment in Ukrainian civil society's fight against corruption.

Once again, Mustafa Nayyem, now a member of Ukraine's parliament, was instrumental in the call to action. A Facebook post from the young MPon Sunday inspired citizens to block access to and from thecourthouse where Nasirov was being held.

"The arrest of Nasirov was the first arrest of a serving high-ranking official in Ukraine's 25-year history," said Kaleniuk, the executive director of the anti-corruption action center in Ukraine. "It finally shows Ukrainians that there's a light at the end of the tunnel when it comes to getting rid of corruption."

In Ukraine,many people consider this casea line in the sand. Either it's used to build trust in the system, or possibly erode what little is left.

"If he's charged, it shows that those who are known to be untouchable also have to face justice," saidKaleniuk. "It shows that politicians and officials who are sitting at the top positions will be held responsible."

Originally posted here:
Protesters block courthouse after Ukrainian tax boss accused of embezzling millions - CBC.ca

CC BY-NC-ND / ICRC

This week, ICRC president Peter Maurer is in Ukraine, his second visit to the country since the conflict broke out almost three years ago. In this diary, he will share some impressions of the people he has met and places he's been.

Follow Peter Maurer on Twitter: @PMaurerICRC

When I last came to Kiev, in February of 2015, I arrived in a very different city. That city was still getting to grips with the new reality of the armed conflict, which had broken out in the east the year before.

The battle for the town of Debaltsevo one of the fiercest and bloodiest battles of the conflict since it began had just come to an end, and civilians in the region were left reeling. It was also a time of intense diplomatic activity and negotiation: the second Minsk agreement had just been struck by the leaders of Ukraine, Russia, France and Germany.

For the ICRC, too, it was a time of intense pressure, to try to provide basic assistance to the displaced, the elderly, the sick and all the other vulnerable people living in severely straightened circumstances because of the conflict.

Today, we are still very much absorbed with providing basic services only this week, for example, our teams have been bringing in emergency supplies of water to people in Avdiivka after the water supply was cut.

However, two years later, as people here have come to know us better, their expectations have increased as they should. But what is especially striking is the way the ICRC's role as a neutral humanitarian intermediary, laid down in the Geneva Conventions, is now more widely recognized and solicited. This can take many forms. For example, in October, with the water supply to some 600,000 people under threat in the Lugansk region due to a lack of agreement between the sides, we exceptionally stepped in to pay electricity bills for a period of two months in order to resume the water supply to people had been cut off owing to unpaid electricity bills.

This is in addition to the basic services that our team now comprised of some 500 people works every day to provide.

When I last visited, candles were still lit in Kiev's streets and squares. Two years later, the candles are still there, but while the pain that they represent is less visible at first glance, it is no less deeply felt.

Instead, in almost every interaction I have had, what came out is the frustration that people feel, of being faced with an increasingly protracted conflict and no clear way out. On the surface, life in the city resembles something close to normal once again. But in all my discussions with politicians, senior officials and our staff in Ukraine, it became clear just how deep a division the conflict has riven through society. No-one is left untouched.

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Diary ICRC President Peter Maurer in Ukraine - ICRC (press release)

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March 6, 2017, 6:00 PM EST March 7, 2017, 4:05 AM EST

In a world of ever-tighter borders, an epic labor migration into Poland has it asking for more of the same.

Not even a million Ukrainians whove come to the nation of 38 million since a pro-Russian insurgency erupted in their country three years ago have been enough to sate a labor market stretched by record-low unemployment and economic growth on track to top 3 percent in 2017.

The unprecedented numbers have already helped keep a lid on wage growth while stabilizing an economy that stumbled last year. As policy makers review borrowing costs this week, the arrivals have also meant a boon for a central bank thats prized stability in interest rates. On pause since March 2015, the 10-member Monetary Policy Council will leave its benchmark at a historical low of 1.5 percent again on Wednesday, according to all 30 analysts surveyed by Bloomberg.

The entry of one million Ukrainians implies that demography is not destiny, Tomasz Wieladek, an economist at Barclays Plc, said in a report. The disinflationary pressure in the labor market will likely contribute to low core CPI inflation and hence allow lower interest rates for longer. The mitigation of population aging from migration will likely contribute to higher long-run growth.

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Russian President Vladimir Putins annexation of Crimea in 2014, followed by a separatist conflict and a two-year recession, sent more Ukrainians to neighboring Poland in search of better lives. Close cultural and linguistic ties, as well as convenient bus transit across the border, made Poland an obvious destination. While the wave of migration into the European Union is largely fueled by those escaping armed conflicts in Syria and North Africa, Ukrainians are drawn to Poland by higher wages and relative ease of access to its job market. The number of Ukrainians absorbed by Poland is comparable to the total of migrants that came to Germany -- a country about double the size -- in 2015-2016, according to official estimates. Its clearly up to a combination of not only economic but also political reasons that the size of Ukrainian immigration has become exceptionally huge, saidJakub Binkowski, an immigration expert at the Polish Union of Entrepreneurs and Employers.

QuickTake: Ukraine's Uncertain Future

Although the number of Ukrainian workers in Poland already topped a record 1.3 million last year, almost half of employers sought out Ukrainians because no local hires were available, according to a surveyof 300 companies in January. Almost 40 percent of firms in sales and services rely on Ukrainians, said Work Service SA, a recruiting and human resources company in Warsaw that conducted the study.

The immigration wave from Ukraine has effectively delayed the graying of Polands population by five years, according to PKO Bank Polski SA. Thats no small feat for one of the fastest-aging and lowest-fertility nations in Europe.

National Bank of Poland Governor Adam Glapinski has already warned that the country is facing a deficit of workers, saying unemployment is below its natural level. Members of the rate-setting council expressed concern that wage growth might quicken substantiallyin the coming quarters as joblessness declines, according to minutes of the central banks February meeting.

Some measures proposed by the government, such as a plan to lower the retirement age, may only compound Polands woes by shrinking labor supply. The jobless rate in Poland has been at the lowest since the data series started in 1992. It was 5.5 percent last quarter, compared with 5.9 percent in the prior three months.

Growth in average gross wages accelerated to 4.3 percent from a year earlier in January, the fastest in five months, after averaging about 4 percent in 2016. Without easing the strains on the labor market, higher salaries could put even more pressure on inflation, which in January already reached the central banks target range for the first time in four years.

Forward-rate agreements, derivatives used to bet on interest rate levels, reveal expectations that Polands next policy move with be to increase borrowing costs in 2018.

Poland needs an additional 5 million workers within the next 20 years to keep up economic growth, according to the Polish Union of Entrepreneurs and Employers. Its set to receive about 100 billion euros ($106 billion) in EU development funds over the next five years, and the country risks spinning its wheels if the labor supply is thinning.

Poland is just about to set in motion major investment projects and needs to speed up work on their completion, said Maciej Witucki, head ofWork Service. Without workers from Ukraine, the risk that companies will miss their plans becomes more and more realistic.

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Poland Can't Get Enough of Ukrainian Migrants - Bloomberg

To the surprise of many analysts, protests have broken out in politically torpid Belarus. The protests are nominally over the so-called "parasite tax" that must be paid by people who are neither formally employed or registered as officially unemployed.

The stakes, however, are actually greater than they may first appear. The tax that is drawing the ire of protesters is actually just one of several policies that the regime of President Alexander Lukashenka uses to keep its citizens in line.

By outward appearances, Belarus does not appear to be a dictatorship. Official political prisoners don't exist and there are no posters of the strongman lording over the streets of Belarusian cities.

But this is deceptive. Lukashenka prefers to employ a system of economic coercion to dissuade people from engaging in political activity that may shake his rule. Most Belarusians work for state-owned enterprises or for the government itself. Services such as healthcare, universities and railroads are all managed by the state. There is some private enterprise, mostly in the tech industry.

Belarusians who work for a state-run enterprise must sign an employment contract that can be either renewed or terminated after just one year. This gives employers the enormous power to coerce employees to engage in pro-Lukashenka political activities or to take part in elections work where they can be made to falsify results.

Also, should an employee stat gathering signatures for an anti-Lukashenka candidate, his boss can just send him out of town on business trips for a few weeks until the candidate filing deadline ends. The anti-parasite laws are meant to make it difficult for citizens to escape this coercive power of the state.

The system, however, is currently showing cracks. The Belarusian economy is sputtering with rising inflation and rising energy prices as Russia has been putting the squeeze on the country to keep it in the Russian political orbit. Some industries, such as dairy and food processing, fertilizers, chemicals, and tractors, continue to be competitive globally. However, Soviet-style inefficiency in other sectors and high debt burdens on industry continue to hobble the country economically.

Belarus's economy has contracted over the past two years and household income contracted by 7.5 percent in 2016 alone. The only real way the struggling state enterprises can be modernized and reshaped is for Belarus to open up its economy to the West and reform its government accordingly.

For now, the government is taking some small measures. Recently, the government made it possible for citizens of 39 countries to travel to Belarus for brief periods without a visa in an attempt to lure tourists and their hard currency. But even this modest move angered Russia, which began erecting checkpoints on its border with Belarus in response.

As the economy slides more and more, Belarusians are finding it more financially rewarding to become self-employed. This is especially true for those with certain intellectual skills, such as translators, writers, editors, some software developers, artists, designers and musicians. Additionally, Belarusian workers who may have previously gone to Russia for seasonal employment are now finding that those options are drying up due to sanctions on Russia and declining Russian salaries.

However, the tax, which amounts to roughly $250 per year in a country where the official average income is $4,000 per year, comes into play. Becoming officially unemployed means performing community service work at a rate of only $10 per month. The tax also applies to spouses who are caregivers. Even citizens who may sell produce from their gardens are subject to the tax. Belarusians working overseas also have to pay the tax.

The tax serves as a way to essentially punish people for their independence. It also punishes the very entrepreneurship that Belarus needs. Nevertheless, anti-Lukashenka activists often purposely take informal jobs in order to avoid being financially dependent on the state.

The Lukashenka government now faces a dilemma: It must either loosen its economic and political grip on the populace in order to increase productivity and improve economic growth, or it continues its current economic slide.

Pursuing reforms, though, risks incurring the wrath of Moscow, whose propaganda organs are already talking of a new "Maidan" in Belarus and menacingly warning against a tilt to the West. Notably, the joint military exercises that are about to take place with Russia are considerably larger on the Russian side this year than they have been in previous years.

For now, the Belarusian government is mostly ignoring the protesters, but if the movement grows in a serious way, the state will either have to reform, employ violence or be toppled. Even the threat of toppling may result in intervention on Moscow's part.

So, while Belarus may not currently rank high on the list of potential foreign policy crises, it may very well be the Trump administration's first big test in Russian relations.

Mitchell Polman, a consultant who specializes in the post-Soviet space, is a veteran international election observer who has observed Belarusian parliamentary elections. His work has appeared in The New Republic, The Daily Beast and other outlets.

The views of contributors are their own and not the views of The Hill.

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Facing protests and a nervous Russia, is Belarus the next Ukraine? - The Hill (blog)