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Rejection of EU necessary for Yanukovych’s Survival Beyond 2015

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Is there anybody left in the Eurasia-watching community in the West that has not condemned Ukraine for suspending preparations for agreements that would have taken closer into the EU’s fold?

Until recently this community had expected Ukrainian president Viktor Yanukovych to enter history as “the man who has brought Ukraine into Europe” by signing the Association Agreement (AA) and Deep and Comprehensive Free Trade Agreement (DCFTA) at the two-day Eastern Partnership summit in Vilnius this week. But that was thwarted, as many Western experts have it, by “imperialist” Russia strong-arming Ukrainian President Viktor Yanukovych into an 11th hour about-face.

The decision has created a backlash in Ukraine, where the parliamentary opposition now wants Yanukovych impeached for state treason. Thousands of protesters have hit streets of Kiev in a pitch to force a change of mind in their president. As a recent poll shows, even 47 percent of supporters of Yanukovych’s Party of Regions support Ukraine’s association with EU.

So why would a leader up for re-election in less than 15 months from now balk at granting the wishes of his own constituents? Should he not at least have put this issue of tantamount importance to vote in a referendum?

The short answer is: It’s the economy, stupid.

Viktor Yanukovych Ukraine European Union

Photo: news.kievukraine.info

Russia imports more goods from Ukraine than the entirety of Europe, according to the Ukrainian government, while supplying almost two-thirds of gas that Ukraine consumes. Many of these goods are produced in eastern Ukraine, which together with Crimea, represents the power base for Yanukovych and his supporters.

Russia has already made it painfully clear that the billions that the Ukrainian economy has already lost because of recent trade restrictions introduced by Moscow will only be the beginning if Kiev signs the AA and DCFTA.

EU officials claim Russian officials told Ukraine that introducing EU requirements would have cost as much as $100 billion, while Russia cutting off trade and imposing other restrictions on Ukraine would have hurt the country to the tune $500 billion, Reuters has reported.

And even though the EU knows Russia would punish Ukraine economically, it has shied away from offering a comprehensive package to compensate for Kiev’s potential losses.

As former Clinton administration adviser Andrew Weiss has rightly put it, “What the EU has come up with is a kind of partnership on the cheap.”

But suppose Moscow didn’t act on its national interest in anchoring its post-Soviet neighbors. Let’s also imagine that Moscow would for some reason keep in place trade perks favoring Kiev, even though that would mean its producers being exposed to EU goods re-exported onto the Russian market through Ukraine.

Even then Ukraine could still not afford westward integration on the terms the EU is offering.

By Yanukovych’s assessment, Ukraine needs $160 billion to shift to European standards by 2017, as required by the proposed agreements with EU. Yanukovych is most probably exaggerating, but even if the cost was 10 times smaller, it would still be a hefty sum for a nation that is set to run a budget deficit of more than6.5 this year. On top of that, the IMF is reportedly refusing to issue the loan that Ukraine needs to prop up its economy, unless Kiev doubles gas prices for consumers.

One has to ask, would leaders in the EU double gas prices for their population and divert billions of dollars needed to pay pensioners and public servants to spend on reaching somebody else’s expectations only a little more than one year before an election?

Loss at the February 2015 presidential elections for Yanukovych would not just mean an end to his tenure, but also the loss of his and his allies’ business assets and possible jail time. After all, that’s what he has subjected former Prime Minister Yulia Tymoshenko to. Why should  the next leader of Ukraine treat him any differently?

If Yanukovych were to sign the EU agreements as they stand, the economy would suffer and he would probably lose to whichever rival candidate arch-foe Tymoshenko gives her backing in 2015.

Having lost part of his core supporters over the pain inflicted on Ukraine’s economy and budget by a combination of Russia’s punitive measures and costs incurred by bringing Ukraine’s standards in line with EU’s, the incumbent would still fail to win enough voters among the pro-Western crowd, who largely hate his guts.

In short, the Ukrainian president’s decision to suspend the EU drive is the rational choice of a politician concerned with his own survival.

In contrast, if Yanukovych were to enter Ukraine into the Russian-led Customs Union, he could at least count on enough loans and gas discounts from Russia to prop the economy up long enough to win the 2015 election.

And yet Yanukovych knows from experience that siding with Russia, which seeks to anchor Ukraine to itself, has its disadvantages. Upon his inauguration in February 2010, Yanukovych undertook a number of steps to accommodate Russia.

These included cancellation of his predecessor’s campaign for recognition of the Holodomor famine of the early 1930s, suspension of Ukraine’s drive for NATO membership and an agreement to extend the stay of Russia’s Black Sea fleet until 2042.

The overtures made to Russian leaders early in Yanukovych’s presidency  have achieved little, in the opinion of his aides, other than a modest discount for gas. The perceived failure to re-ignite the relationship prompted Ukraine’s deputy Prime Minister Valery Khroshkovsky to quip that “it all started as light flirtation, but ended in hardcore porn.”

Yanukovych is therefore most likely to continue balancing between EU and Russia – a policy his mentor and former president Leonid Kuchma described with the Russian saying about “a smart calf sucking milk from two cows.”

His hope for now must be that the trilateral talks between EU, Russia and Ukraine that he has proposed will allow him to somehow integrate into the Western European economic space while preserving the perks of trading with Russia.

Whether, however, EU and Russia will continue put up with Yanukovych playing them off one another is another matter.

First Appeared on: RIA Novosti, Republished following the terms of use.

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Simon Saradzhyan is a researcher at Harvard Kennedy School's Belfer Center. His research interests include international security, arms control, counter-terrorism as well as political affairs in post-Soviet states and their relations with major outside powers. Prior to joining the Belfer Center in 2008 Saradzhyan had worked as deputy editor of the Moscow Times and a consultant for the United Nations and World Bank. Saradzhyan holds a graduate degree from the Harvard University.

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Navigating legal matters in Spain

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Starting or expanding your business or investments into a new country can be daunting. The task of understanding and complying with legal obligations and tax commitments can be very difficult, especially when regulations are not in your first language, or you have little experience of the country you are expanding into.

Doing business in Spain can be incredibly rewarding, but it can be tough. Legal bureaucracy runs through every aspect of day to day life, and the smallest mistake can have far reaching consequences for your business. This is why you will need to decide carefully when choosing Legal services in Spain. You need the very best multilingual experts, that can advise and guide you through each task with professionalism and care. You need to look for a partner who can help establish and grow your business.

A one-stop shop for legal services

A business needs to be able to have absolute trust in their legal service provider and will not want to be working with multiple companies for different specialisms. Being compliant with the law is already hard enough without navigating through four or five different law firms.

This is why choosing a one-stop shop for legal services is the best options, especially if you are new to conducting business in Spain. By choosing someone who can advise on everything, you can be sure that you will not suffer the consequences of something being missed. Afterall, whether it is finance, tax, employment law or any other legal formality, you cannot manage each one in isolation, they are all key parts of running your business successfully.

Not only that you want a partner, who can help grow your business and maximise opportunities to do so. One that understands the complexity of the issues your business may face, and can give a sincere and honest opinion.

Get the formalities covered and spend more time doing what you do best

Nobody likes to spend their time struggling with paperwork,but it is a necessary evil with any business. By choosing an expert in legal services in Spain to cover the formalities, you can spend more time doing what you do best and running your business.

Whether it is registering your business successfully, trademarks and patent registration, opening of bank accounts, or managing the hiring and possible expatriation and visa applications of employees, by hiring an expert you can leave all these worries in very capable hands.

The only certainties in life are death and taxes

Tax is always tricky to manage. Not just ensuring you pay what is due, but also being able to make the right business choices that means you do not pay too much. Every business knows it needs specialists to advise  and assist with tax planning, VAT returns, financing and raising funds and mergers and acquisitions. But when starting out in a completely new country you need local experts who know the rules inside and out.

The last thing any business needs is an unexpected tax bill causing chaos with cash flow, especially in the early days.

There is always the challenge of day to day accounting and payroll to consider also. That is why using a service that not only understands the legalities but can actually manage your bookkeeping, payroll and invoicing for you will be worth its weight in gold.

Expert help with all aspects of law when you need it

No matter what area of law you need support with, a good legal service should be able to provide assistance with any aspect. You have the usual corporate law, with things like contract management, corporate compliance, bylaws and shareholder agreements, insolvency. But also commercial and employment law. You will likely also need assistance with real estate law and sometimes even more personal issues that family law and your own residency.

A good service will make it easy for you. They should look to gather a complete understanding of how your business operates. This should include detailed information gathering and design a plan on how to ensure compliance for your review and approval.

They will likely speak to many areas of the business to get a feel for business context and aims in order to properly assess where the business is now, and what recommended strategy should be deployed.

Communication with you and the key stakeholders of your business is paramount. On delivering the agreed actions for you there should be regular updates on progress and important decisions that are needed and clear reporting at the end of the review and delivery. This will give you the reassurance you need that the service is being delivered to suit your exact business model and concerns, leaving you safe and compliant.

One thing is for sure – do not try to go it alone, it could prove disastrous for your business and jeopardise your success. If you want to avoid costly mistakes, find a legal services partner you can trust, can provide a holistic service and is expert in all aspects of running and managing a business. The investment will prove its worth over and over.

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Brexit: Three Logistics Concerns for Businesses

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After the vote on 23rd June 2016, for many businesses, it seemed there was ample time to prepare for Brexit. However, the UK is now one year away from leaving the EU and naturally, many business owners are becoming increasingly concerned about its impact.

A recent study showed that 94% of UK SMEs feel that the government is failing to listen to their Brexit concerns. There are also fears that HMRC’s new customs system will not be ready by the Brexit deadline.

For businesses, it is clear that there remains a lot of uncertainty about Brexit, including what trades deals may be formed and how they will affect British businesses. This is particularly true for logistics, where these three concerns are growing.

Cost Implications

For many companies, their number one concern is cost. In order to offset, businesses facing an increase in operating and logistics costs may have to pass this onto their customers, resulting in higher product prices – this is especially worrying for logistics companies like Tuffnells. This could result in a lower sales volume, making a dent in their bottom line.

This additional spend could come from several areas, including:

  • Taxes and tariffs: after leaving the single market, exporting or importing goods may be subject to new charges and restrictions, which could result in higher logistics costs
  • Fuel: The exchange rate of the pound dropped after the Brexit vote and it could fluctuate further after the deadline, resulting in increased fuel and transport prices

Business Systems

Coming out of the EU’s single market – where British businesses currently trade tax-free – presents more issues than cost alone. This includes implementing new business systems.

While HMRC are putting their own customs systems in place, businesses also face the same challenge. Staff will require training on new tariffs and customs, logistics procedures will have to be revised, and businesses will have to find systems and methods to deal with these new processes. All of this will eat into business hours and cost companies further money.

Border Controls

The introduction of new border controls will have several affects on British businesses, including cost, delays and further administrative processes. But leaving the EU will limit companies in another way: freedom of movement.

Pre-Brexit, EU workers had the freedom to move and work in any member state, but this will no longer apply to the UK. This means hiring workers from within the EU could be more difficult, time-consuming and expensive. With many British companies hiring migrant drivers to cover the UK shortage, this could severely impact transport.

The announcement of Brexit brought about uncertainty among UK businesses. Unfortunately, only speculation is possible until all trade deals have been announced and Brexit takes effect in 2019. However, if businesses prepare in these areas, it could help to minimise impact.

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The Future of the UK Used Car Market

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It is an intriguing time in the UK auto market in 2018 with a range of political, economic and social factors influencing the industry. New car sales continue to fall for the 11th consecutive month with diesel taking the brunt of the slide. It is thought that this decline is due to the uncertainty over the Government’s clean air plans (including the 2040 ban on petrol and diesel), but also the economic climate and uncertainty over Brexit.

Sale of AFVs

Although new car sales continue to fall overall, there is evidence that the 2040 ban is influencing consumers with the sales of alternatively-fuelled vehicles (AFVs) rising steadily over the last 11 months, including a 7.2% rise in February compared to last year. Although this is unable to offset the free-falling diesel sector, it does show that motorists are beginning to prepare for the green car revolution. Motorists are also aware that there are many incentives for making the switch, plus there is now a wide range of excellent electric cars on the market.

Used Car Market

So, what does all this mean for used car dealerships? Sales have managed to maintain stability amidst the turbulence in the industry with a drop of just 1.1% in 2017 compared to 2016. This was largely thanks to the sale of used electric cars, which saw an increase of a staggering 77.1% in 2017. Hybrids were also up 22.2%. This goes to show that motorists are preparing for the future and still have the need to change automobiles, with the used car market being a much safer place to do this as it is a much smaller investment.

The Future

It is easy to see reputable used car dealerships like Shelbourne Motors performing well in 2018 and beyond as more and more second-hand electric cars become available. An increasing number of cities are imposing their own bans ahead of the 2040 ban, plus it is expected that there will be more clarity on the ban and the electric vehicle infrastructure will continue to grow. Additionally, the landscape of a post-Brexit UK will be clearer soon and this could encourage motorists to shop in the used car market.

The future of the used car market in the UK looks healthy despite the fact that there has been a great deal of uncertainty in the UK over the past year. Provided that dealerships are able to provide motorists with a range of second-hand electric automobiles, it is easy to see motorists opting to buy used as opposed to new as this can allow for big savings which is important in the current economic climate. The green car revolution is fully underway and this is what has managed to keep the used car market afloat during a challenging period.

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