Ukraine Defence and Security Report 2016
BMI View: The Ukraine-Russia conflict has become somewhat frozen with skirmishes between Ukrainianforces and pro-Russian separatists flaring up every so often despite the ceasefire. Although Russia'sattention has turned inwards and to de-escalation, we do not expect Ukraine to become complacent with itsdefence. As such, we forecast a continued uptick in defence spending throughout 2016 and over the mediumterm. We see President Poroshenko continuing to reform and invest in the country's out-of-date defenceindustry as well as develop greater international ties.
However, we caution that systemic corruption and oligarchy remain fully entrenched in Ukraine's politicallandscape creating an unfavourable operating environment for foreign investors. Furthermore, ifPoroshenko wishes to remain in popular seating, he will have to divert spending to other pressing areas ofthe economy over the medium to long term, especially as the conflict with Russia is unlikely to have adecisive end for the foreseeable future.
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