Investment agreement with China and aid for IDPs

08 July 2021
Investment agreement with China and aid for IDPs
Home > Monitoring > Investment agreement with China and aid for IDPs

This week Ukrainian MPs work with their voters and President Volodymyr Zelensky is on an official visit to Lithuania. For the moment, neither the Parliament nor the President made decisions that could influence the balance of power or have a significant impact on citizens’ lives.

The Government, on the other hand, did make some important decisions at its session and publicly announced the information about the international agreement it signed with China a week ago. After that, Prime Minister Denys Shmyhal joined the President on a visit to Lithuania.

Intergovernmental agreement with the People’s Republic of China signed

Decision-makers: Minister of Infrastructure of Ukraine Oleksandr Kurbakov and Minister of Commerce of China Wang Wentao.

Who is affected: the Cabinet, government bodies, and Ukrainian citizens.

Summary of the agreement: according to the Ministry of Infrastructure, the agreement extends and intensifies the cooperation between Ukraine and China on joint projects on infrastructure development. In particular:

  • encourages the active participation of companies and financial organizations in infrastructure development
  • strengthens economic ties between the countries, in particular, it envisages mutual help and oversight over joint projects.

What else: according to the former Deputy Minister of Infrastructure Viktor Dovhan:

  • negotiations on the agreement lasted for three years
  • Ukraine got the opportunity to borrow loans from Eximbank of China at a 2% annual interest rate for 15 years
  • the M22 bridge near Kremenchuk and the first phase of orbital road М05—М06 around Kyiv will be the first projects funded under the agreement
  • half of the project is supposed to be implemented by domestic companies.

The agreement was signed on June 30 but an official announcement was made only on July 6.

What is right:

  • thanks to Chinese assistance, Ukraine will have funding for road infrastructure development, bridge and railways construction projects, etc.
  • Ukraine establishes diplomatic relations with China.

What is wrong:

  • agreements with the People’s Republic of China endanger Ukraine’s relations with our strategic partners — the European Union and the United States of America
  • Ukraine should take a close look at the experience of Montenegro that signed a similar agreement. This Balkan state has borrowed a billion dollars from China and now cannot pay it back. If it does not find the money, Montenegro will be obliged to give the Asian hegemon control over a considerable amount of lands and assets
  • Chinese media highlight the fact that the agreement with the Ukrainian Government was signed after the scandal with the U.N. resolution to investigate alleged infringement of human rights in Xinjiang, a region in China where Muslim Uyghurs are allegedly abused. The Ukrainian delegation at first has signed the resolution but later recalled its signature. Such actions damage Ukrainian reputation in the diplomatic community
  • it is probable that the Chinese Government put pressure on Ukraine and threatened to suspend the delivery of COVID-19 vaccines. However, it is also possible that the agreement in question also was used as leverage to make Kyiv recall its signature.

Background information: the head of Servant of the People faction Davyd Arakhamia announced that Zelensky’s party wants to learn from the Communist Party of China how to manage the economy and proceed with state-building. He also said that there are many similarities between the principles of ruling parties in Ukraine and China.


Funding to fight the consequences of the armed conflict allocated

Decision-maker: the Cabinet.

Who is affected: the Cabinet, ministries, local governments, members of territorial communities that will receive extra funding, and internally displaced persons.

Summary of the ordinance: ₴18 mln were allocated to assist territorial communities that suffered from the war in Eastern Ukraine and spend extra to support internally displaced persons. In particular:

  • for Kherson territorial community — ₴4.618 mln
  • for Bucha territorial community — ₴3.468 mln
  • for Odesa territorial community — ₴2.857 mln
  • for Avdiivka territorial community — ₴1.645 mln
  • for Bakhmut territorial community — ₴945 mln
  • for Andrushivka territorial community — ₴7 mln.

What is right: funds allocated from the government budget are supposed to be spent on buying houses for internally displaced persons, providing them with accommodation, and other assistance.

What’s next: the distribution of funds proposed by the Ministry for Reintegration of the Temporarily occupied territories has to be approved by the dedicated committee of the Verkhovna Rada.

Additional information: the subvention from the government budget-2021 on assistance to the territorial communities helping IDPs is ₴125 mln.