ACTION UKRAINE REPORT - AUR
An International Newsletter, The Latest, Up-To-Date
In-Depth Ukrainian News, Analysis and Commentary
In-Depth Ukrainian News, Analysis and Commentary
Ukrainian History, Culture, Arts, Business, Religion, Economics,
Sports, Government, and Politics, in Ukraine and Around the World
ACTION UKRAINE REPORT - AUR - Number 927
Mr. Morgan Williams, Publisher and Editor, SigmaBleyzer Emerging
Markets Private Equity Investment Group, www.SigmaBleyzer.com
WASHINGTON, D.C., MONDAY, FEBRUARY 09, 2009
INDEX OF ARTICLES ------
Clicking on the title of any article takes you directly to the article.
Return to Index by clicking on Return to Index at the end of each article
1. UKRAINE PUSHES FOR LOANS TO MEET SHORTFALL
By Roman Olearchyk in Kiev, Financial Times, London, UK,, Sun, Feb 8 2009
2. EU PRESSURED BY BANKS FOR AID FOR UKRAINE AND ROMANIA
By Meera Louis in Brussels & Zoe Schneeweiss in Vienna
Bloomberg News, New York, NY, Friday, February 6, 2009
3. STATEMENT ISSUED BY THE HEAD OF IMF MISSION TO UKRAINE
IMF Press Release No. 09/25, Wash, D.C., Fri, February 6, 2009
IMF Press Release No. 09/25, Wash, D.C., Fri, February 6, 2009
By Laura Cochrane in London, Bloomberg News, New York, NY, Thu, Feb 5, 2009
5. UKRAINIAN HRYVNIA'S PLUNGE TO HELP ECONOMY RECOVER, EXPERT SAYS
Hryvnia trading at 8.1250 per dollar on Friday in Kyiv
By Daryna Krasnolutska, Bloomberg, New York, NY, Fri, Feb 6, 2009
Hryvnia trading at 8.1250 per dollar on Friday in Kyiv
By Daryna Krasnolutska, Bloomberg, New York, NY, Fri, Feb 6, 2009
6. RIVALRY DEEPENS UKRAINE ECONOMIC WOE
By Alan Cullison, The Wall Street Journal, New York, NY, Fri, Feb 6, 2009
By Alan Cullison, The Wall Street Journal, New York, NY, Fri, Feb 6, 2009
7. GLOBAL DOWNTURN HAMMERS UKRAINE'S ECONOMY
Ukrainians are hurting as gas prices soar, unemployment rises, and currency value plummets.
By Fred Weir, Correspondent, The Christian Science Monitor, Boston, MA, Fri, Feb 6, 2009
Ukrainians are hurting as gas prices soar, unemployment rises, and currency value plummets.
By Fred Weir, Correspondent, The Christian Science Monitor, Boston, MA, Fri, Feb 6, 2009
Tom Lasseter, Washington Bureau, McClatchy Newspapers, Thu Feb 5, 2009
9. "DISCOVER UKRAINE..THE UNEXPECTED" EXHIBIT AT NYC TRAVEL SHOW
Organized by U.S.-Ukraine Foundation (USUF), co-sponsored by U.S.-Ukraine Business
Organized by U.S.-Ukraine Foundation (USUF), co-sponsored by U.S.-Ukraine Business
Council (USUBC), AeroSvit Ukrainian Airlines, and the Embassy of Ukraine in the U.S.
U.S.-Ukraine Business Council (USUBC), Washington, D.C., Fri, Feb 6, 2009
U.S.-Ukraine Business Council (USUBC), Washington, D.C., Fri, Feb 6, 2009
Treasures of Ukraine from the PLATAR Collection and Ukrainian Icons and Religious
Objects from the National Kyiv-Perchersk (Lavra) Historic and Cultural Preserve
U.S.-Ukraine Business Council (USUBC), Washington, D.C., Fri, Feb 6, 2009
11. UKRAINE'S SECURITY COUNCIL CHIEF BOHATYRIOVA AND
11. UKRAINE'S SECURITY COUNCIL CHIEF BOHATYRIOVA AND
Interfax Ukraine, Kyiv, Ukraine, Saturday, February 7, 2009
12. U.S. VP BIDEN SAID TO HAVE PRAISED TYMOSHENKO'S ROLE IN GAS TALKS
Interfax Ukraine, Kyiv, Ukraine, Saturday, February 7, 2009
13. ZURICH JOINS THE U.S.-UKRAINE BUSINESS COUNCIL (USUBC)
One of the world's largest providers of political risk & trade credit insurance, member 101
U.S.-Ukraine Business Council (USUBC), Washington, D.C., Monday, February 2, 2009
14. UKRAINIAN CUSTOMS AUTHORITIES ISSUED NEW CLARIFICATION
REGARDING IMPORT DUTY EXEMPTION FOR FOREIGN INVESTMENTS
One of the world's largest providers of political risk & trade credit insurance, member 101
U.S.-Ukraine Business Council (USUBC), Washington, D.C., Monday, February 2, 2009
14. UKRAINIAN CUSTOMS AUTHORITIES ISSUED NEW CLARIFICATION
REGARDING IMPORT DUTY EXEMPTION FOR FOREIGN INVESTMENTS
DLA Piper Ukraine law firm, Kyiv, Ukraine, Wed, Feb 4, 2009
businessneweurope (bne), Berlin, Germany, Thu, February 5, 2009
RIA Novosti, Moscow, Russia, Sat, February 7, 2009
17. UKRAINIAN PREMIER, WORLD BANK PRESIDENT DISCUSS
17. UKRAINIAN PREMIER, WORLD BANK PRESIDENT DISCUSS
Interfax Ukraine, Kyiv, Ukraine, Saturday, February 7, 2009
Russian lenders fish in crisis-hit neighbours despite their own woes
EIU Finance-News Analysis, NY, NY, Wed, February 4, 2009
Legal Alert: Baker & McKenzie-CIS Limited, Kyiv, Ukraine, Sat, Feb 7, 2009
20. MAGISTERS LAW FIRM OPENS OFFICE IN MINSK, BELARUS
Magisters completes merger with Belarus law firm BelJurbureau
Magisters law firm, Kyiv, Ukraine, Tue, February 3, 2009
20. MAGISTERS LAW FIRM OPENS OFFICE IN MINSK, BELARUS
Magisters completes merger with Belarus law firm BelJurbureau
Magisters law firm, Kyiv, Ukraine, Tue, February 3, 2009
21. STATUS OF CRIMEA HANGS OVER RUSSIA, UKRAINE
Moscow's fleet deployed in Black Sea territory
By Joshua Kucera, The Washington Times, Wash, DC., Mon, Feb 9, 2009
Moscow's fleet deployed in Black Sea territory
By Joshua Kucera, The Washington Times, Wash, DC., Mon, Feb 9, 2009
22. ENDING THE ANNUAL GAS CRISIS
Analysis & Commentary: By Andrew Wilson,
Senior Policy Fellow European Council on Foreign Relations,
Wall Street Journal Europe, NY, NY, Tuesday, Jan 27, 2009
Analysis & Commentary: By Andrew Wilson,
Senior Policy Fellow European Council on Foreign Relations,
Wall Street Journal Europe, NY, NY, Tuesday, Jan 27, 2009
23. GEORGIA AND UKRAINE: AN ALTERNATIVE TO NATO MEMBERSHIP
Analysis & Commentary: By Karl Kaiser, Adjunct Professor at
Harvard University and Director of its program on Trans-Atlantic Relations
International Herald Tribune, Paris, France, Thu, February 5, 2009
Analysis & Commentary: By Karl Kaiser, Adjunct Professor at
Harvard University and Director of its program on Trans-Atlantic Relations
International Herald Tribune, Paris, France, Thu, February 5, 2009
24. CATHOLIC PRIEST UNCOVERING BEGINNINGS OF FINAL SOLUTION
In Ukraine, Belarus and Russia, New Book: "The Holocaust By Bullets"
By Maria Danilova and Randy Herschaft, Associated Press (AP)
Kiev, Ukraine, Saturday, January 31, 2009
In Ukraine, Belarus and Russia, New Book: "The Holocaust By Bullets"
By Maria Danilova and Randy Herschaft, Associated Press (AP)
Kiev, Ukraine, Saturday, January 31, 2009
25. PRESIDENT OF POLAND SAYS SEVENTY-FIVE YEARS AGO, THE COMMUNIST
REGIME COMMITTED A MASS MURDER AGAINST UKRAINIANS, POLAND
RECOGIZES THAT MURDER AS IT WAS, THAT MURDER WAS A GENOCIDE
Office of the President of Poland, Warsaw, Poland, Sat, Nov 22, 2008
REGIME COMMITTED A MASS MURDER AGAINST UKRAINIANS, POLAND
RECOGIZES THAT MURDER AS IT WAS, THAT MURDER WAS A GENOCIDE
Office of the President of Poland, Warsaw, Poland, Sat, Nov 22, 2008
Russia’s embrace of the dictator shows Ukraine is going down a better path
Analysis & Commentary: by Taras Kuzio, Special to Kyiv Post
Kyiv Post, Kyiv, Ukraine, Thursday, December 18, 2008
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1. UKRAINE PUSHES FOR LOANS TO MEET SHORTFALL
By Roman Olearchyk in Kiev, Financial Times, London, UK,, Sun, Feb 8 2009
KIEV - Ukraine has appealed for emergency loans from the world’s richest countries to help support its economy, which has been battered by the global financial crisis. Yulia Tymoshenko, prime minister of Ukraine, said her government had sent letters to the US, Russia, China, Japan and the European Union asking for loans to fill a shortfall in budget revenues for this year.
“We have already received a positive response from some countries, including Russia,” Ms Tymoshenko said at the Munich Security Conference at the weekend. “Russia is ready to sign such loan agreements.” She did not clarify how much Kiev was seeking to borrow but reports in Ukraine suggested Russia could lend $5bn (euro 3.9bn, £3.4bn).
Ms Tymoshenko said Ukraine was keen to harmonise relations with Moscow, soured after last month’s gas prices dispute. She insisted Kiev would stick to a western integration agenda that included efforts to join the European Union and Nato.
News that Ukraine was seeking emergency loans amid frozen credit markets comes days after a senior International Monetary Fund delegation warned of “serious problems” brewing in Ukraine’s economy.
The fund delegation ended its one-week visit to Kiev last week but provided no clear signal on whether it would grant further disbursements from a $16.5bn standby facility agreed last year.
Ukraine received a first tranche of $4.5bn last November. Future disbursements depend on the implementation of tough conditions and are needed to keep Ukraine’s currency, the hryvnia, stable. It lost nearly 40 per cent of its value in 2008.
The IMF’s concerns centre on Kiev’s 2009 budget, which has a 3 per cent deficit in spite of a fund stipulation it be deficit-free. It also seeks a freeze on social spending at a time when more than 1m out of a population of 46m have lost their jobs.
Ukraine’s gross domestic product is expected to contract by around 5 per cent this , thus curbing budget revenues, complicating the state’s ability to rescue shaky banks and to provide unemployment benefits.
Ukraine is struggling to tame annual inflation of more than 20 per cent and to adjust to a fourth stiff price rise on natural gas imports from Russia in as many years. The US and other western nations are keen to stabilise Ukraine for geopolitical as well as economic purposes, given its important position in Eastern Europe as a neighbour of Russia.
1. UKRAINE PUSHES FOR LOANS TO MEET SHORTFALL
By Roman Olearchyk in Kiev, Financial Times, London, UK,, Sun, Feb 8 2009
KIEV - Ukraine has appealed for emergency loans from the world’s richest countries to help support its economy, which has been battered by the global financial crisis. Yulia Tymoshenko, prime minister of Ukraine, said her government had sent letters to the US, Russia, China, Japan and the European Union asking for loans to fill a shortfall in budget revenues for this year.
“We have already received a positive response from some countries, including Russia,” Ms Tymoshenko said at the Munich Security Conference at the weekend. “Russia is ready to sign such loan agreements.” She did not clarify how much Kiev was seeking to borrow but reports in Ukraine suggested Russia could lend $5bn (euro 3.9bn, £3.4bn).
Ms Tymoshenko said Ukraine was keen to harmonise relations with Moscow, soured after last month’s gas prices dispute. She insisted Kiev would stick to a western integration agenda that included efforts to join the European Union and Nato.
News that Ukraine was seeking emergency loans amid frozen credit markets comes days after a senior International Monetary Fund delegation warned of “serious problems” brewing in Ukraine’s economy.
The fund delegation ended its one-week visit to Kiev last week but provided no clear signal on whether it would grant further disbursements from a $16.5bn standby facility agreed last year.
Ukraine received a first tranche of $4.5bn last November. Future disbursements depend on the implementation of tough conditions and are needed to keep Ukraine’s currency, the hryvnia, stable. It lost nearly 40 per cent of its value in 2008.
The IMF’s concerns centre on Kiev’s 2009 budget, which has a 3 per cent deficit in spite of a fund stipulation it be deficit-free. It also seeks a freeze on social spending at a time when more than 1m out of a population of 46m have lost their jobs.
Ukraine’s gross domestic product is expected to contract by around 5 per cent this , thus curbing budget revenues, complicating the state’s ability to rescue shaky banks and to provide unemployment benefits.
Ukraine is struggling to tame annual inflation of more than 20 per cent and to adjust to a fourth stiff price rise on natural gas imports from Russia in as many years. The US and other western nations are keen to stabilise Ukraine for geopolitical as well as economic purposes, given its important position in Eastern Europe as a neighbour of Russia.
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[return to index] [Action Ukraine Report (AUR) Monitoring Service]
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2. EU PRESSURED BY SIX BANKS FOR AID FOR UKRAINE AND ROMANIA
By Meera Louis in Brussels & Zoe Schneeweiss in Vienna
2. EU PRESSURED BY SIX BANKS FOR AID FOR UKRAINE AND ROMANIA
By Meera Louis in Brussels & Zoe Schneeweiss in Vienna
Bloomberg News, New York, NY, Friday, February 6, 2009
BRUSSELS/VIENNA - A group of six banks, including Italy’s UniCredit SpA and Austria’s Raiffeisen International Bank Holding AG, have pressed the European Union to organize financial aid for countries on its eastern fringes like Romania and Ukraine.
The banks, which have operations in central and eastern Europe, requested a 12-point assistance program for the region ranging from U.S. dollar and euro-denominated loans for banks to guarantees for customer deposits from organizations such as the European Bank for Reconstruction and Development, according to a Dec. 1 letter sent to the European Commission. The program may also include help to bolster capital ratios at regional lenders.
The requests are a “positive move” for central and eastern Europe, said Neil Shearing, an emerging markets analyst at London- based Capital Economics Ltd. “If western banks continue to operate in the region, that provides a lifeline of capital. If they pull out en masse, the whole thing becomes a mess.”
Officials at the EBRD in London said in a statement that they’re in discussions with financial institutions and government officials to address banks’ concerns.
In addition to Milan-based UniCredit and Raiffeisen in Vienna, the banks that sent the letter to the commission, the EU’s executive arm, are Italy’s Intesa SanPaolo SpA, Austria’s Erste Group Bank AG, Societe Generale SA of France and KBC Groep NV in Belgium.
PREDICTED RECESSION
UniCredit owns banks in Poland, Bulgaria and the Czech Republic; Erste has lenders in the Czech Republic, Slovakia and Romania; Intesa holds a bank in Serbia; KBC has lenders in Hungary and the Czech Republic; and Raiffeisen ranks among the largest foreign lenders in Russia and Ukraine.
The International Monetary Fund said Jan. 28 that “several banking systems in western Europe remain highly exposed to a deterioration in asset quality in emerging Europe.” The region will have a recession this year as exports collapse, the IMF said.
Austrian banks alone have made 230 billion euros ($294 billion) of loans in the region, equal to about 80 percent of the country’s gross domestic product, according to data compiled by the Bank for International Settlements.
The Austrian government said Jan. 27 it will seek support for an EU initiative to rescue the region’s banking system. The plan would include funds from the European Investment Bank, the European Central Bank and the EU Cohesion Fund. That received support from Germany’s Chancellor Angela Merkel Jan. 28, who backed the use of “current instruments” like the IMF.
‘SHARED RESPONSIBILITY’
Asked about the Austrian initiative, Amelia Torres, the spokeswoman for EU Monetary Affairs Commissioner Joaquin Almunia, told reporters Jan. 29 that there is a “shared responsibility by the banks and the home countries in ensuring financial stability in the countries where those banks have acquired and now have subsidiaries.” She declined to comment this week on the letter from the six banks.
The companies say in the letter, a copy of which has been seen by Bloomberg News, that a strong banking system is needed to “limit the negative impact of the global downturn” on the region. The document, signed by chief executive officers, also was addressed to French Finance Minister Christine Lagarde, whose country held the EU presidency until December.
Erste spokesman Michael Mauritz, Raiffeisen International spokesman Peter Klopf, UniCredit spokesman Marcello Berni, Societe Generale spokeswoman Laura Schalk and a spokeswoman for Intesa declined to comment on the letter when called yesterday.
‘SIGNAL OF SOLIDARITY’
KBC spokeswoman Viviane Huybrecht said the Belgium-based bank signed the letter “as a signal of solidarity with our peers” in central and eastern Europe. Both KBC and Societe Generale said they had subsequently joined an initiate organized by the Institute for International Finance. The International Herald Tribune reported Feb. 4 that the IIF will lobby governments on eastern Europe ahead of April’s Group of 20 summit in London.
Western banks have enjoyed years of success in the region and “it is crucial that they uphold their commitments to emerging Europe,” EBRD President Thomas Mirow wrote in an article published Jan. 25 in the Financial Times.
Governments in central and eastern Europe increased deposit guarantees after the EU decided in October to raise protections for the 27-member group to 50,000 euros from 20,000 euros.
New EU-member states, including Romania, Poland and Latvia, have also boosted bank deposit guarantees to 50,000 euros. Lithuania upped the limit to 100,000 euros, while Slovakia, Slovenia and Hungary offered unlimited protection. Ukraine, which isn’t an EU member, raised the guarantee on deposits to 150,000 hryvnias ($18,400) on Oct. 31.
NOTE: To contact the reporters on this story: Meera Louis in Brussels at mlouis1@bloomberg.net; Zoe Schneeweiss in Vienna at zschneeweiss@bloomberg.net. LINK: http://www.bloomberg.com/apps/news?pid=newsarchive&sid=ak9HPc3B9XoI
BRUSSELS/VIENNA - A group of six banks, including Italy’s UniCredit SpA and Austria’s Raiffeisen International Bank Holding AG, have pressed the European Union to organize financial aid for countries on its eastern fringes like Romania and Ukraine.
The banks, which have operations in central and eastern Europe, requested a 12-point assistance program for the region ranging from U.S. dollar and euro-denominated loans for banks to guarantees for customer deposits from organizations such as the European Bank for Reconstruction and Development, according to a Dec. 1 letter sent to the European Commission. The program may also include help to bolster capital ratios at regional lenders.
The requests are a “positive move” for central and eastern Europe, said Neil Shearing, an emerging markets analyst at London- based Capital Economics Ltd. “If western banks continue to operate in the region, that provides a lifeline of capital. If they pull out en masse, the whole thing becomes a mess.”
Officials at the EBRD in London said in a statement that they’re in discussions with financial institutions and government officials to address banks’ concerns.
In addition to Milan-based UniCredit and Raiffeisen in Vienna, the banks that sent the letter to the commission, the EU’s executive arm, are Italy’s Intesa SanPaolo SpA, Austria’s Erste Group Bank AG, Societe Generale SA of France and KBC Groep NV in Belgium.
PREDICTED RECESSION
UniCredit owns banks in Poland, Bulgaria and the Czech Republic; Erste has lenders in the Czech Republic, Slovakia and Romania; Intesa holds a bank in Serbia; KBC has lenders in Hungary and the Czech Republic; and Raiffeisen ranks among the largest foreign lenders in Russia and Ukraine.
The International Monetary Fund said Jan. 28 that “several banking systems in western Europe remain highly exposed to a deterioration in asset quality in emerging Europe.” The region will have a recession this year as exports collapse, the IMF said.
Austrian banks alone have made 230 billion euros ($294 billion) of loans in the region, equal to about 80 percent of the country’s gross domestic product, according to data compiled by the Bank for International Settlements.
The Austrian government said Jan. 27 it will seek support for an EU initiative to rescue the region’s banking system. The plan would include funds from the European Investment Bank, the European Central Bank and the EU Cohesion Fund. That received support from Germany’s Chancellor Angela Merkel Jan. 28, who backed the use of “current instruments” like the IMF.
‘SHARED RESPONSIBILITY’
Asked about the Austrian initiative, Amelia Torres, the spokeswoman for EU Monetary Affairs Commissioner Joaquin Almunia, told reporters Jan. 29 that there is a “shared responsibility by the banks and the home countries in ensuring financial stability in the countries where those banks have acquired and now have subsidiaries.” She declined to comment this week on the letter from the six banks.
The companies say in the letter, a copy of which has been seen by Bloomberg News, that a strong banking system is needed to “limit the negative impact of the global downturn” on the region. The document, signed by chief executive officers, also was addressed to French Finance Minister Christine Lagarde, whose country held the EU presidency until December.
Erste spokesman Michael Mauritz, Raiffeisen International spokesman Peter Klopf, UniCredit spokesman Marcello Berni, Societe Generale spokeswoman Laura Schalk and a spokeswoman for Intesa declined to comment on the letter when called yesterday.
‘SIGNAL OF SOLIDARITY’
KBC spokeswoman Viviane Huybrecht said the Belgium-based bank signed the letter “as a signal of solidarity with our peers” in central and eastern Europe. Both KBC and Societe Generale said they had subsequently joined an initiate organized by the Institute for International Finance. The International Herald Tribune reported Feb. 4 that the IIF will lobby governments on eastern Europe ahead of April’s Group of 20 summit in London.
Western banks have enjoyed years of success in the region and “it is crucial that they uphold their commitments to emerging Europe,” EBRD President Thomas Mirow wrote in an article published Jan. 25 in the Financial Times.
Governments in central and eastern Europe increased deposit guarantees after the EU decided in October to raise protections for the 27-member group to 50,000 euros from 20,000 euros.
New EU-member states, including Romania, Poland and Latvia, have also boosted bank deposit guarantees to 50,000 euros. Lithuania upped the limit to 100,000 euros, while Slovakia, Slovenia and Hungary offered unlimited protection. Ukraine, which isn’t an EU member, raised the guarantee on deposits to 150,000 hryvnias ($18,400) on Oct. 31.
NOTE: To contact the reporters on this story: Meera Louis in Brussels at mlouis1@bloomberg.net; Zoe Schneeweiss in Vienna at zschneeweiss@bloomberg.net. LINK: http://www.bloomberg.com/apps/news?pid=newsarchive&sid=ak9HPc3B9XoI
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[return to index] [Action Ukraine Report (AUR) Monitoring Service]
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3. STATEMENT ISSUED BY THE HEAD OF IMF MISSION TO UKRAINE
IMF Press Release No. 09/25, Wash, D.C., Fri, February 6, 2009
WASHINGTON - A mission from the International Monetary Fund (IMF) headed by Ms. Ceyla Pazarbasioglu has been holding discussions with the Ukrainian authorities regarding the first review of Ukraine's Stand-By Arrangement with the Fund.
Ms. Pazarbasioglu issued the following statement today on the status of discussions:
"Since the adoption of the IMF supported program, the global economic environment has deteriorated markedly. Ukraine's economy has not been excluded from this process. The economic situation remains difficult associated with decline in demand for steel products and the sharply reduced access to international capital markets. While the economic outlook for Ukraine has become more uncertain, the underlying dynamism of the economy and a consistent implementation of sound policies should allow a gradual resumption of growth.
"The authorities have responded to these challenges. The currency has undergone a large adjustment, which has improved the outlook for Ukraine's export industries. The current account deficit has started to narrow and, despite the currency depreciation, inflation has continued to decline. The diagnostic phase of the bank recapitalization program has been completed, and its effective implementation should help restore confidence in the banking system.
"The sharper-than-expected contraction in economic activity requires a recalibration of economic policies. In particular, the IMF team and the authorities have discussed potential revisions to the program's balanced budget target for 2009, taking into account the availability of financing. The ongoing discussions are focusing on appropriate fiscal measures, monetary and exchange rate policies, and measures to strengthen confidence in the banking system.
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3. STATEMENT ISSUED BY THE HEAD OF IMF MISSION TO UKRAINE
IMF Press Release No. 09/25, Wash, D.C., Fri, February 6, 2009
WASHINGTON - A mission from the International Monetary Fund (IMF) headed by Ms. Ceyla Pazarbasioglu has been holding discussions with the Ukrainian authorities regarding the first review of Ukraine's Stand-By Arrangement with the Fund.
Ms. Pazarbasioglu issued the following statement today on the status of discussions:
"Since the adoption of the IMF supported program, the global economic environment has deteriorated markedly. Ukraine's economy has not been excluded from this process. The economic situation remains difficult associated with decline in demand for steel products and the sharply reduced access to international capital markets. While the economic outlook for Ukraine has become more uncertain, the underlying dynamism of the economy and a consistent implementation of sound policies should allow a gradual resumption of growth.
"The authorities have responded to these challenges. The currency has undergone a large adjustment, which has improved the outlook for Ukraine's export industries. The current account deficit has started to narrow and, despite the currency depreciation, inflation has continued to decline. The diagnostic phase of the bank recapitalization program has been completed, and its effective implementation should help restore confidence in the banking system.
"The sharper-than-expected contraction in economic activity requires a recalibration of economic policies. In particular, the IMF team and the authorities have discussed potential revisions to the program's balanced budget target for 2009, taking into account the availability of financing. The ongoing discussions are focusing on appropriate fiscal measures, monetary and exchange rate policies, and measures to strengthen confidence in the banking system.
"Significant progress has been made in discussions on fiscal, monetary, and exchange rate policies, and on measures to strengthen confidence in the banking system, but a few issues remain outstanding. Discussions between the Ukrainian authorities and Fund staff on these issues will continue in the coming weeks, and we expect the mission to return soon to complete discussions."
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[return to index] [Action Ukraine Report (AUR) Monitoring Service]
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
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4. UKRAINE'S HRYVNIA WEAKENS ON CONCERN NATION'S POLITICAL
4. UKRAINE'S HRYVNIA WEAKENS ON CONCERN NATION'S POLITICAL
TURMOIL WILL DERAIL THE IMF $16.4 BILLION LOAN AGREEMENT
By Laura Cochrane in London, Bloomberg News, New York, NY, Thu, Feb 5, 2009
LONDON - Ukraine’s hryvnia depreciated by the most in more than three weeks against the dollar on concern the nation’s political turmoil will derail a $16.4 billion loan agreement with the International Monetary Fund.
The hryvnia lost as much as 5.3 percent to 8.1500, the biggest drop since Jan. 12, from 7.7450 yesterday. It was 3.85 percent weaker at 8.0550 at 3:01 p.m. in Kiev. The currency also slipped versus the euro, dropping 3.66 percent to 10.3327.
The IMF’s mission to Ukraine warned that its loan to Ukraine “doesn’t make sense” if the nation’s budget deficit is wider than the government’s goal of 31.1 billion hryvnias ($4 billion), Delo newspaper reported today, citing an unidentified person in Ukraine’s central bank.
“There is uncertainty whether the IMF will continue to see the point of the loan given the loose fiscal stance implemented by the Ukraine’s government,” said Dmitry Gourov, an analyst at Unicredit SpA in Vienna.
The IMF has extended its visit to the former Soviet state to the end of the week to decide on the delivery of the second tranche of the IMF loan, said Gourov. The country received the first $4.5 billion tranche in November. Iryna Bohun, a spokeswoman for the IMF in Kiev, declined to comment on the report.
President Viktor Yushchenko said yesterday he is prepared to present parliament with his own version of a balanced 2009 state budget. The government of Prime Minister Yulia Timoshenko says the budget needs no revision and is being fulfilled as planned. Timoshenko’s government survived a no-confidence vote in Parliament today, the second since July.
THREE-WAY STRUGGLE
The nation’s political system is locked in a three-way struggle for power. Timoshenko and Yushchenko, who stood side-by- side in the 2004 Orange Revolution, are now battling over economy, budget and inflation policies, while opposition leader Viktor Yanukovych says the two top leaders are guilty of letting the economy fail.
The nation’s political system is locked in a three-way struggle for power. Timoshenko and Yushchenko, who stood side-by- side in the 2004 Orange Revolution, are now battling over economy, budget and inflation policies, while opposition leader Viktor Yanukovych says the two top leaders are guilty of letting the economy fail.
Yushchenko met with Marek Belka, director of the IMF European Department, to review the loan yesterday in Kiev. The visit was “an indication of serious problems in the Ukrainian economy and in how our joint program is being implemented,” Belka said, according to a statement on the president’s Web site.
Ukraine’s central bank is “regularly” buying and selling foreign currency to control the hryvnia, Serhiy Kruhlik, the Natsionalnyi Bank Ukrainy’s head of external relations, said today in a telephone interview.
‘STILL INTERVENING’
“We are still intervening and holding auctions on a regular basis. We are just trying to get the currency closer to the market price,” he said. The rate of the majority of deals in the market fell yesterday to 7.97 to 8.05 per dollar, from 7.93 to 7.97 per dollar on Tuesday, ING said in the report.
This compares with the official closing price yesterday of 7.7450. The hryvnia is unlikely to return to levels around 9 and 10 per dollar while the central bank is active on the market, Kruhlik said.
NOTE: To contact the reporter on this story: Laura Cochrane in London at lcochrane3@bloomberg.net.
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[return to index] [Action Ukraine Report (AUR) Monitoring Service]
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U.S.-Ukraine Business Council (USUBC): http://www.usubc.org
Promoting U.S.-Ukraine business relations & investment since 1995.
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5. UKRAINIAN HRYVNIA'S PLUNGE TO HELP ECONOMY RECOVER, EXPERT SAYS
Hryvnia trading at 8.1250 per dollar on Friday in Kyiv
By Daryna Krasnolutska, Bloomberg, New York, NY, Fri, Feb 6, 2009
KIEV - The Ukrainian hryvnia, the third-worst performer against the dollar last year, will help the economy rebound by bolstering exports, said Andrey
Bespyatov, the head of research at Dragon Capital, Ukraine’s biggest brokerage. The hryvnia lost more than 38 percent against the dollar in 2008. It was trading at 8.1250 per dollar as of 2:07 p.m. in the Ukrainian capital Kiev today, compared with 7.7450 yesterday.
“On the one hand, the hryvnia’s depreciation is bad for some sectors of economy,” Bespyatov said in an interview. “But on the other hand, it gives
opportunities for others, and all in all, Ukraine should benefit from it.”
Ukraine’s economy and other emerging markets are being shaken by the global financial crisis, which caused a lack of credit and currencies around eastern Europe to weaken. The economy, which expanded an average 7 percent between 2000 and 2007, will probably shrink 5 percent this year, the International Monetary Fund forecast. Exports account for 56 percent of Ukraine’s gross domestic product, according to the Economy Ministry.
Dragon Capital expects the contraction to bottom out by June, when the economy will begin recovering, said Bespyatov. The contraction will probably be 8 percent in the third quarter, compared with an estimated 12 percent drop in the second quarter, Bespyatov said. Dragon forecasts the economy will shrink 6 percent in 2009 and grow 4 percent in 2010.
EXPORT-DRIVEN RECOVERY
The recovery will be driven by export-oriented industries, primarily steel and chemicals, Bespyatov said. “We already see some recovery in the steel sector, which started exports to China, India, North Africa and Middle East,” said Bespyatov. Agriculture companies, including sunflower-oil
exporters, are also benefiting from the hryvnia’s decline, said Bespyatov.
Ukraine, one of the world’s top three sunflower seed and oil exporters, has had a record harvest of sunflower seeds in 2008 because of favorable weather, according to the state statistics office. The country reaped 6.52 million metric tons of sunflower seeds last year, compared with 4.174 million a year ago.
“We have an advantage over competitors because of the weaker currency,” said Bespyatov. “The companies are getting more profit if their costs are mainly
in hryvnia and this is a good stimulus for development.”
WEAK HRYVNIA
The cheaper hryvnia will also help Ukraine curb imports, which surged 38.4 percent to $83.6 billion in 2008, Bespyatov said. “Ukraine has depended on
imports in the past several years, which ballooned the current-account deficit and the trade gap,” he said. “Such a situation would have been negative in the long- term perspective for the country.” Exports outstripped imports in January, deputy central bank Governor Anatoliy Shapovalov said on Jan. 28.
While the hryvnia will remain volatile in the first six months, it will probably trade at 8.5 to the dollar at the end of the year. A stable hryvnia will draw investors’ interest to Ukrainian Eurobonds, said Bespyatov.
Ukraine is the least creditworthy of economies worldwide, as measured by the cost of credit-default swaps that protect bondholders against default.
Contracts on Ukraine’s debt are traded at 3263.20 basis points, compared with 2687.90 for Argentina and 2612.80 for Venezuela, according prices from
CMA Datavision in London.
Bespyatov doesn’t expect Ukraine to default as its government debt is around 11 percent of GDP. He recommends investors buy government-offered Eurobonds to avoid hryvnia risks. NOTE: To contact the reporter on this story: Daryna Krasnolutska in Kiev at dkrasnolutsk@bloomberg.net.
LINK: http://www.bloomberg.com/apps/news?pid=newsarchive&sid=amKGsGI.KWz4
5. UKRAINIAN HRYVNIA'S PLUNGE TO HELP ECONOMY RECOVER, EXPERT SAYS
Hryvnia trading at 8.1250 per dollar on Friday in Kyiv
By Daryna Krasnolutska, Bloomberg, New York, NY, Fri, Feb 6, 2009
KIEV - The Ukrainian hryvnia, the third-worst performer against the dollar last year, will help the economy rebound by bolstering exports, said Andrey
Bespyatov, the head of research at Dragon Capital, Ukraine’s biggest brokerage. The hryvnia lost more than 38 percent against the dollar in 2008. It was trading at 8.1250 per dollar as of 2:07 p.m. in the Ukrainian capital Kiev today, compared with 7.7450 yesterday.
“On the one hand, the hryvnia’s depreciation is bad for some sectors of economy,” Bespyatov said in an interview. “But on the other hand, it gives
opportunities for others, and all in all, Ukraine should benefit from it.”
Ukraine’s economy and other emerging markets are being shaken by the global financial crisis, which caused a lack of credit and currencies around eastern Europe to weaken. The economy, which expanded an average 7 percent between 2000 and 2007, will probably shrink 5 percent this year, the International Monetary Fund forecast. Exports account for 56 percent of Ukraine’s gross domestic product, according to the Economy Ministry.
Dragon Capital expects the contraction to bottom out by June, when the economy will begin recovering, said Bespyatov. The contraction will probably be 8 percent in the third quarter, compared with an estimated 12 percent drop in the second quarter, Bespyatov said. Dragon forecasts the economy will shrink 6 percent in 2009 and grow 4 percent in 2010.
EXPORT-DRIVEN RECOVERY
The recovery will be driven by export-oriented industries, primarily steel and chemicals, Bespyatov said. “We already see some recovery in the steel sector, which started exports to China, India, North Africa and Middle East,” said Bespyatov. Agriculture companies, including sunflower-oil
exporters, are also benefiting from the hryvnia’s decline, said Bespyatov.
Ukraine, one of the world’s top three sunflower seed and oil exporters, has had a record harvest of sunflower seeds in 2008 because of favorable weather, according to the state statistics office. The country reaped 6.52 million metric tons of sunflower seeds last year, compared with 4.174 million a year ago.
“We have an advantage over competitors because of the weaker currency,” said Bespyatov. “The companies are getting more profit if their costs are mainly
in hryvnia and this is a good stimulus for development.”
WEAK HRYVNIA
The cheaper hryvnia will also help Ukraine curb imports, which surged 38.4 percent to $83.6 billion in 2008, Bespyatov said. “Ukraine has depended on
imports in the past several years, which ballooned the current-account deficit and the trade gap,” he said. “Such a situation would have been negative in the long- term perspective for the country.” Exports outstripped imports in January, deputy central bank Governor Anatoliy Shapovalov said on Jan. 28.
While the hryvnia will remain volatile in the first six months, it will probably trade at 8.5 to the dollar at the end of the year. A stable hryvnia will draw investors’ interest to Ukrainian Eurobonds, said Bespyatov.
Ukraine is the least creditworthy of economies worldwide, as measured by the cost of credit-default swaps that protect bondholders against default.
Contracts on Ukraine’s debt are traded at 3263.20 basis points, compared with 2687.90 for Argentina and 2612.80 for Venezuela, according prices from
CMA Datavision in London.
Bespyatov doesn’t expect Ukraine to default as its government debt is around 11 percent of GDP. He recommends investors buy government-offered Eurobonds to avoid hryvnia risks. NOTE: To contact the reporter on this story: Daryna Krasnolutska in Kiev at dkrasnolutsk@bloomberg.net.
LINK: http://www.bloomberg.com/apps/news?pid=newsarchive&sid=amKGsGI.KWz4
--------------------------------------------------------------------------------
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
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6. RIVALRY DEEPENS UKRAINE ECONOMIC WOE
By Alan Cullison, The Wall Street Journal, New York, NY, Fri, Feb 6, 2009
KIEV -- Ukraine's prime minister survived a no-confidence vote in parliament, but a deepening economic slump and political bickering spell trouble for the country's Western-leaning leaders.
The move by pro-Russian factions to undermine Prime Minister Yulia Tymoshenko came as she and her onetime ally, President Viktor Yushchenko, have seen their images dented by personal rivalry.
With the approach of presidential elections in the next year, each has turned to blaming the other for a botched response to the economic crisis. Millions of layoffs are expected in Ukraine's heavy industries in the coming months, and unemployment is expected to hit levels unseen since the fall of the Soviet Union.
The disarray threatens Western hopes that this nation -- geographically slightly smaller than the state of Texas -- on Russia's border could become a beachhead for democratic values in the former Soviet Union.
Diplomats say Mr. Yushchenko and Ms. Tymoshenko have all but given up governing, and their rivalry is jeopardizing Ukraine's ability to meet criteria of the International Monetary Fund, which extended to Ukraine a $16.5 billion rescue package last year.
In parliament, Ms. Tymoshenko stuck by her budget's forecast for growth in the economy, despite analyst projections that it could shrink by as much as 10% this year. "It is simply too easy to become reconciled to a fall," she said. "I believe Ukraine is strong, with resources and reserves, and if the proper actions are taken at this difficult time, we can achieve this indicator as planned."
Ukraine has been hit hard by the economic crisis and the collapse in prices of metals and fertilizers, its main exports. Ukraine's industrial production fell by 26% in December from a year earlier and its currency has lost a third of its value since the summer.
Moscow has been using the economic crisis to strengthen its hand in the region, and last month forced Ukraine to agree to sharply higher prices for natural gas after a standoff in which it cut off shipments. The increased cost to Ukraine's gas-hungry industries is expected to pummel the economy further.
Mr. Yushchenko and Ms. Tymoshenko have often feuded since the so-called Orange Revolution that swept them to power in 2004, and the approach of
presidential elections has worsened matters.
Mr. Yuschenko's administration has labeled Ms. Tymoshenko a populist and spendthrift who is misleading the country with budgets and promises she
can't fulfill.
Ms. Tymoshenko in turn accused the president of spreading "a mix of untruths, panic and hysteria." She has been trying to fire the head of Ukraine's central bank, an appointee of Mr. Yushchenko, accusing him of favoritism and corruption.
The leaders managed to cobble together enough legislation to secure the help of the IMF, but Ukrainian debt trades at default levels amid fears government spending is out of control. An IMF mission has been in Kiev for the past two weeks to determine whether to release the second tranche of its loan. IMF officials have made no statements on the government's plans.
Mr. Yushchenko's approval ratings have crept to the low single digits in recent months. Ms. Tymoshenko's ratings, though higher, are also softening amid signs voters want new faces.
Former parliament speaker Arseny Yatsenyuk, 34 years old, saw his ratings rise after he was sacked by parliament in November, and has been taking
support from both Mr. Yushchenko and Ms. Tymoshenko.
The fracture of the government has also benefited a figure who has been mostly locked out of power in recent years -- Viktor Yanukovych, the pro-Russian candidate in the 2004 vote that sparked the Orange Revolution. Mr. Yanukovych, who pushed for the no-confidence vote, has predicted that this year marks Ukraine's "last Orange winter." [Write to Alan Cullison at alan.cullison@wsj.com]
LINK: http://online.wsj.com/article/SB123387574604054371.html
===================================================
6. RIVALRY DEEPENS UKRAINE ECONOMIC WOE
By Alan Cullison, The Wall Street Journal, New York, NY, Fri, Feb 6, 2009
KIEV -- Ukraine's prime minister survived a no-confidence vote in parliament, but a deepening economic slump and political bickering spell trouble for the country's Western-leaning leaders.
The move by pro-Russian factions to undermine Prime Minister Yulia Tymoshenko came as she and her onetime ally, President Viktor Yushchenko, have seen their images dented by personal rivalry.
With the approach of presidential elections in the next year, each has turned to blaming the other for a botched response to the economic crisis. Millions of layoffs are expected in Ukraine's heavy industries in the coming months, and unemployment is expected to hit levels unseen since the fall of the Soviet Union.
The disarray threatens Western hopes that this nation -- geographically slightly smaller than the state of Texas -- on Russia's border could become a beachhead for democratic values in the former Soviet Union.
Diplomats say Mr. Yushchenko and Ms. Tymoshenko have all but given up governing, and their rivalry is jeopardizing Ukraine's ability to meet criteria of the International Monetary Fund, which extended to Ukraine a $16.5 billion rescue package last year.
In parliament, Ms. Tymoshenko stuck by her budget's forecast for growth in the economy, despite analyst projections that it could shrink by as much as 10% this year. "It is simply too easy to become reconciled to a fall," she said. "I believe Ukraine is strong, with resources and reserves, and if the proper actions are taken at this difficult time, we can achieve this indicator as planned."
Ukraine has been hit hard by the economic crisis and the collapse in prices of metals and fertilizers, its main exports. Ukraine's industrial production fell by 26% in December from a year earlier and its currency has lost a third of its value since the summer.
Moscow has been using the economic crisis to strengthen its hand in the region, and last month forced Ukraine to agree to sharply higher prices for natural gas after a standoff in which it cut off shipments. The increased cost to Ukraine's gas-hungry industries is expected to pummel the economy further.
Mr. Yushchenko and Ms. Tymoshenko have often feuded since the so-called Orange Revolution that swept them to power in 2004, and the approach of
presidential elections has worsened matters.
Mr. Yuschenko's administration has labeled Ms. Tymoshenko a populist and spendthrift who is misleading the country with budgets and promises she
can't fulfill.
Ms. Tymoshenko in turn accused the president of spreading "a mix of untruths, panic and hysteria." She has been trying to fire the head of Ukraine's central bank, an appointee of Mr. Yushchenko, accusing him of favoritism and corruption.
The leaders managed to cobble together enough legislation to secure the help of the IMF, but Ukrainian debt trades at default levels amid fears government spending is out of control. An IMF mission has been in Kiev for the past two weeks to determine whether to release the second tranche of its loan. IMF officials have made no statements on the government's plans.
Mr. Yushchenko's approval ratings have crept to the low single digits in recent months. Ms. Tymoshenko's ratings, though higher, are also softening amid signs voters want new faces.
Former parliament speaker Arseny Yatsenyuk, 34 years old, saw his ratings rise after he was sacked by parliament in November, and has been taking
support from both Mr. Yushchenko and Ms. Tymoshenko.
The fracture of the government has also benefited a figure who has been mostly locked out of power in recent years -- Viktor Yanukovych, the pro-Russian candidate in the 2004 vote that sparked the Orange Revolution. Mr. Yanukovych, who pushed for the no-confidence vote, has predicted that this year marks Ukraine's "last Orange winter." [Write to Alan Cullison at alan.cullison@wsj.com]
LINK: http://online.wsj.com/article/SB123387574604054371.html
--------------------------------------------------------------------------------
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
===================================================
7. GLOBAL DOWNTURN HAMMERS UKRAINE'S ECONOMY
Ukrainians are hurting as gas prices soar, unemployment rises, and currency value plummets.
By Fred Weir, Correspondent, The Christian Science Monitor, Boston, MA, Fri, Feb 6, 2009
GOSTOMEL, Ukraine - The yard of the Vetropack factory in this small provincial town is piled high with unsold production. None of the plant's 750 workers has been laid off yet, mainly because management is reluctant to take the costly decision to shut down any of the three glass furnaces that churn out tens of thousands of bottles each day. But space on the factory grounds is running out – and Ukraine's economic crisis just looks to be getting worse.
"Some of our best customers are unable to pay, and demand is dropping off sharply," says Alexander Petrov, information manager of the Swiss-owned company, one of Ukraine's biggest glass producers. "We've been hit by a double whammy, because of rising gas prices and the sharp devaluation of the Ukrainian hryvna."
The fact that even Vetropack – an ultramodern facility with a much-needed product – is facing serious challenges speaks volumes about the perilous state of Ukraine's economy.
The global downturn is hammering the export-oriented Soviet-era steel and chemical industries that account for 30 percent of Ukraine's gross domestic product. Its financial system is in chaos and, some experts warn, facing imminent default. The bank accounts of millions of Ukrainians have been frozen, unemployment is spiraling, the hryvna has lost half its value since last summer, and the price the country has to pay for its main energy source, Russian gas, has just doubled.
Perhaps worst of all, the political system is paralyzed, with the populist Prime Minister Yulia Tymoshenko locked in a bureaucratic war with liberal President Viktor Yushchenko.
"The situation is deteriorating very badly, and it's quite possible that people could be taking to the streets in mass protests by spring if something doesn't change for the better soon," says Oleksiy Kolomiyets, president of the independent Center for European and Transatlantic Studies in Kiev.
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
===================================================
7. GLOBAL DOWNTURN HAMMERS UKRAINE'S ECONOMY
Ukrainians are hurting as gas prices soar, unemployment rises, and currency value plummets.
By Fred Weir, Correspondent, The Christian Science Monitor, Boston, MA, Fri, Feb 6, 2009
GOSTOMEL, Ukraine - The yard of the Vetropack factory in this small provincial town is piled high with unsold production. None of the plant's 750 workers has been laid off yet, mainly because management is reluctant to take the costly decision to shut down any of the three glass furnaces that churn out tens of thousands of bottles each day. But space on the factory grounds is running out – and Ukraine's economic crisis just looks to be getting worse.
"Some of our best customers are unable to pay, and demand is dropping off sharply," says Alexander Petrov, information manager of the Swiss-owned company, one of Ukraine's biggest glass producers. "We've been hit by a double whammy, because of rising gas prices and the sharp devaluation of the Ukrainian hryvna."
The fact that even Vetropack – an ultramodern facility with a much-needed product – is facing serious challenges speaks volumes about the perilous state of Ukraine's economy.
The global downturn is hammering the export-oriented Soviet-era steel and chemical industries that account for 30 percent of Ukraine's gross domestic product. Its financial system is in chaos and, some experts warn, facing imminent default. The bank accounts of millions of Ukrainians have been frozen, unemployment is spiraling, the hryvna has lost half its value since last summer, and the price the country has to pay for its main energy source, Russian gas, has just doubled.
Perhaps worst of all, the political system is paralyzed, with the populist Prime Minister Yulia Tymoshenko locked in a bureaucratic war with liberal President Viktor Yushchenko.
"The situation is deteriorating very badly, and it's quite possible that people could be taking to the streets in mass protests by spring if something doesn't change for the better soon," says Oleksiy Kolomiyets, president of the independent Center for European and Transatlantic Studies in Kiev.
"With the sharp increases in the price of gas, following the recent conflict with Russia, it might be impossible for many of our industries to survive. Worst of all, the politicians are blaming each other instead of working together to find a way out of the crisis."
According to a deal signed last month between Ms. Tymoshenko and Russian Prime Minister Vladimir Putin, Ukraine will pay $360 per thousand cubic meters of Russian gas in the first quarter of 2009, up from an average of $180 last year. Even before that blow, Ukraine's energy-intensive steel industry reported a 53 percent slump in exports in the second half of 2008.
According to a deal signed last month between Ms. Tymoshenko and Russian Prime Minister Vladimir Putin, Ukraine will pay $360 per thousand cubic meters of Russian gas in the first quarter of 2009, up from an average of $180 last year. Even before that blow, Ukraine's energy-intensive steel industry reported a 53 percent slump in exports in the second half of 2008.
Most of the country's chemical plants were reporting major slowdowns and 80 percent of construction projects in Kiev, Ukraine's formerly prosperous capital, have ground to a halt, according to the English-language Kyiv Post.
The accord has been challenged by Mr. Yushchenko, whose spokesman said that Kiev will seek to renegotiate the contract, but will not renew the gas war with Moscow, which left 18 European nations without gas for two weeks.
"This crisis has touched almost everyone already," says Yury Danilenko, a worker in Vetropack's mold shop. Though he's happy he's still working, he says his wife recently lost her job as a service worker, the family's bank account is frozen, and many neighbors are unemployed. "I'm really worried about the future. We haven't seen anything like this before," he says.
Officially, unemployment is around 5 percent. But that greatly understates the problem, says Volodymyr Gryshchenko, head of the Federation of Employers, whose members employ about a third of the country's workforce. "Employers are trying to find ways to avoid firing workers outright, and so they're cutting hours or sending workers on unpaid leave," which doesn't show on official unemployment rolls, he says.
Ukraine's chemical industry, which employs hundreds of thousands, continues working even though orders have fallen drastically because, he says, "if you shut down a chemical plant it is extremely difficult and expensive to restart it." But if gas prices remain high, he adds, "our chemical enterprises will no longer be competitive."
In December, amid the collapse of some of the country's leading banks, Ukraine's central bank ordered all savings deposits frozen in a bid to prevent a panic. That move may have been successful, but many citizens watching the hryvna dive and unable to get at their money are crying foul.
Those hit the hardest are the country's fledgling middle class, whose political ideals tend to be liberal and who were quickest to adopt modern economic habits, such as trusting banks and taking out consumer loans, says Viktor Nebozhenko, director of Ukrainian Barometer, an independent Kiev think tank.
He adds that he sometimes wishes he'd stuck to the Soviet-era habit of keeping his cash in a mattress. "Middle-class disillusionment is very dangerous, because these are the people most capable of self-organization," he says. "Everyone is suffering from this banking crisis, and some are getting very angry."
"As long as the factory is working, I can keep up with my loan payments for house and car," says Yelena Brexler, who works near a mechanized glass blower that spins out hundreds of red-hot bottles per hour at Vetropack. "But banks are raising loan costs, things are getting harder, and we're all very concerned."
Some experts warn that Ukraine, which has already received $16.5 billion in emergency funding from the International Monetary Fund, could default on its national debt, which could have catastrophic political consequences.
"We are in a pre-default situation, and it looks like Ukraine has already lost its chances to reform its economy and industry," says Vadim Karasyov, director of the independent Global Strategies Institute in Kiev. "The worst thing is, people are starting to feel disillusionment in the idea of democracy itself. The demand for a strong hand, to fix this mess, is growing."
LINK: http://www.csmonitor.com/2009/0206/p07s03-woeu.html
The accord has been challenged by Mr. Yushchenko, whose spokesman said that Kiev will seek to renegotiate the contract, but will not renew the gas war with Moscow, which left 18 European nations without gas for two weeks.
"This crisis has touched almost everyone already," says Yury Danilenko, a worker in Vetropack's mold shop. Though he's happy he's still working, he says his wife recently lost her job as a service worker, the family's bank account is frozen, and many neighbors are unemployed. "I'm really worried about the future. We haven't seen anything like this before," he says.
Officially, unemployment is around 5 percent. But that greatly understates the problem, says Volodymyr Gryshchenko, head of the Federation of Employers, whose members employ about a third of the country's workforce. "Employers are trying to find ways to avoid firing workers outright, and so they're cutting hours or sending workers on unpaid leave," which doesn't show on official unemployment rolls, he says.
Ukraine's chemical industry, which employs hundreds of thousands, continues working even though orders have fallen drastically because, he says, "if you shut down a chemical plant it is extremely difficult and expensive to restart it." But if gas prices remain high, he adds, "our chemical enterprises will no longer be competitive."
In December, amid the collapse of some of the country's leading banks, Ukraine's central bank ordered all savings deposits frozen in a bid to prevent a panic. That move may have been successful, but many citizens watching the hryvna dive and unable to get at their money are crying foul.
Those hit the hardest are the country's fledgling middle class, whose political ideals tend to be liberal and who were quickest to adopt modern economic habits, such as trusting banks and taking out consumer loans, says Viktor Nebozhenko, director of Ukrainian Barometer, an independent Kiev think tank.
He adds that he sometimes wishes he'd stuck to the Soviet-era habit of keeping his cash in a mattress. "Middle-class disillusionment is very dangerous, because these are the people most capable of self-organization," he says. "Everyone is suffering from this banking crisis, and some are getting very angry."
"As long as the factory is working, I can keep up with my loan payments for house and car," says Yelena Brexler, who works near a mechanized glass blower that spins out hundreds of red-hot bottles per hour at Vetropack. "But banks are raising loan costs, things are getting harder, and we're all very concerned."
Some experts warn that Ukraine, which has already received $16.5 billion in emergency funding from the International Monetary Fund, could default on its national debt, which could have catastrophic political consequences.
"We are in a pre-default situation, and it looks like Ukraine has already lost its chances to reform its economy and industry," says Vadim Karasyov, director of the independent Global Strategies Institute in Kiev. "The worst thing is, people are starting to feel disillusionment in the idea of democracy itself. The demand for a strong hand, to fix this mess, is growing."
LINK: http://www.csmonitor.com/2009/0206/p07s03-woeu.html
--------------------------------------------------------------------------------
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
============================================================
NOTE: Send in a letter-to-the-editor today. Let us hear from you.
============================================================
8. WILL UKRAINE FOLLOW ICELAND INTO FINANCIAL MELTDOWN?
In the third quarter of last year, Ukraine's imports of goods and services totaled $29.4 billion, according to official statistics. Foreign currency reserves at the end of the quarter were $31.9 billion, dangerously close to not being able to pay for those three months of imports, a redline minimum for a nation's economy.
Ukraine's dwindling currency reserves - less than one-tenth of Russia's - are mixed in a toxic cocktail of soaring debt. Ukraine's gross external debt, from government and private sectors, was about $29 billion in late 2004. By last year, it skyrocketed to $105.4 billion. Much of that increase came from Ukraine's banks, whose debt increased more than 17-fold during those four years, from about $2.4 billion to more than $42 billion, roughly $10 billion more than the national reserves.
"This is the first economic crisis Ukraine has faced as a market economy, and the foundations of our market economy are weak," said Kseniya Lyapina, a
parliament member from President Viktor Yushchenko's party.
The level of distrust in the competence of local and national leaders is hard to overstate. Yushchenko's approval rating is in the single digits, and
poll numbers for the two main contenders to replace him in elections early next year are slipping.
Kiev Mayor Leonid Chernovetsky - a highly visible politician - had difficulty answering even the most basic questions about the capital's financial problems at a recent news conference. Asked about shortages of gas to schools, city doctors who hadn't been paid for months and a threatened strike by local bus drivers, Chernovetsky responded with mumbles and stream-of-consciousness riffs about the local zoo and his affection for elephants, the need for more trees and flowers in the city, his propensity to dry off naked on a balcony after showering and the importance of the Bible.
"They cannot take the country out of the crisis because they are unprofessional; they are in politics just to make money," said Tatiana Rusinova, a retired physicist and now part-time worker for a medical supply company who was window-shopping at a downtown mall. "They created a small country for themselves, and the rest of us have to live outside of it."
Beyond the issue of official incompetence, an allegation made by many observers and politicians in the country, analysts say that the Ukrainian leadership has relatively few tools to effect large-scale economic change.
"There is this combination of economic instability and political instability; it is not good for Ukraine at the moment," said Olena Bilan, a senior analyst at Dragon Capital, a leading investment company in Kiev. "But the government doesn't have much room to do something" such as a large stimulus package.
Bilan said that her firm - which forecasts the gross domestic product declining by 6 percent this year, after growth of more than 7 percent in 2006 and 2007 - was hoping for an upturn or at least a flatter trend line later in the year if steel rebounded.
However, higher steel prices probably would be part of resurgent commodities prices in general, Bilan said, a mixed blessing for Ukraine. Its new gas
contract with Russia requires market prices pegged to the cost of oil and signifies the end of decades of heavy subsidy. Ukraine will pay about $360 per 1,000 cubic meters of gas through March, compared with $179.5 last year, a price that it struggled to meet.
Ukrainian Prime Minister Yulia Tymoshenko, who brokered the deal, has said that prices this year will average around $230. President Yushchenko, who's
feuded with her for years, disputes that, saying that prices will be much higher and the new contract is a "defeat" for the country. Whatever the prices in the near term, the bigger threat is that if the cost of oil spikes again, taking gas with it, Ukraine won't be able to pay its bill.
Despite the turmoil, Lyapina, the Yushchenko party parliament member, said that there could be a silver lining to the fiscal pain: The country's industrial base and labor market - still hampered by Soviet-era inefficiencies in some quarters, such as work forces at some factories that are too big by a third - will be forced to become leaner.
"Thinking long-term, it's better for our country, because mentally people are not used to competition," she said. "Now they will have to adjust to the market economy." That, she allowed, might include some problems along the way. How big those problems will be, and how close Ukraine may come to default, is still very much in question.
LINK: http://www.mcclatchydc.com/world/story/61606.html
============================================================
NOTE: Send in a letter-to-the-editor today. Let us hear from you.
============================================================
8. WILL UKRAINE FOLLOW ICELAND INTO FINANCIAL MELTDOWN?
Tom Lasseter, Washington Bureau, McClatchy Newspapers, Thu Feb 5, 2009
KIEV, Ukraine - Standing outside the railway station on a cold winter morning, a group of laborers tried to duck the bitter wind as they waited for someone to offer them work unloading trucks or swinging a hammer. As usual, no one came.
"We'll go a week without a job," said Vitaly, who didn't give his last name because the police sometimes round up the workers. "It's probably going to
get worse. It's going to get bad."
Vitaly is from the east Ukrainian town of Kryvyi Rih, where many steelworkers have been sent home. The global collapse of steel sales, which make up 40 percent of Ukraine's exports, is just one of the punches that the country has taken lately, and there are fears that the economy could completely implode.
The United Nations said in a January report that the probability that Ukraine would default on its foreign debt more than quintupled from late 2007 through late 2008, putting it almost in the same league as Iceland, whose economy melted down last year. The International Monetary Fund announced an emergency $16.4 billion bailout for Ukraine last October.
In Iceland, with a population of 300,000, the crisis toppled the government amid street protests and fiscal calamity. In Ukraine, with some 46 million
people sandwiched between the European Union and Russia, widespread instability would be far more damaging.
"There's no hope," said Petro Romanuk, a minibus driver, who said that the number of passengers coming to the city and looking for work had plummeted
in the past few months as people had given up. "The politicians don't care about us. Each day it gets worse; each day we trust them less and less. There may be another revolution."
While no one predicts an immediate default, the numbers are alarming. The national currency plunged 59 percent against the dollar during the past six months. A new gas contract negotiated with Russia last month will end subsidies and expose Ukraine to far higher gas prices.
Credit lines have dried up and steel prices are half what they were. Steel production in Ukraine fell some 13.4 percent last year, the biggest amount
of any large global supplier.
"Ukraine has been virtually shut out of the international capital markets," said Pingfan Hong, the chief of global economic monitoring in the U.N.
department that produced the January report. "The economic outlook has further deteriorated recently . . . risks of a deeper recession in 2009 have increased," Hong said in an e-mail to McClatchy.
KIEV, Ukraine - Standing outside the railway station on a cold winter morning, a group of laborers tried to duck the bitter wind as they waited for someone to offer them work unloading trucks or swinging a hammer. As usual, no one came.
"We'll go a week without a job," said Vitaly, who didn't give his last name because the police sometimes round up the workers. "It's probably going to
get worse. It's going to get bad."
Vitaly is from the east Ukrainian town of Kryvyi Rih, where many steelworkers have been sent home. The global collapse of steel sales, which make up 40 percent of Ukraine's exports, is just one of the punches that the country has taken lately, and there are fears that the economy could completely implode.
The United Nations said in a January report that the probability that Ukraine would default on its foreign debt more than quintupled from late 2007 through late 2008, putting it almost in the same league as Iceland, whose economy melted down last year. The International Monetary Fund announced an emergency $16.4 billion bailout for Ukraine last October.
In Iceland, with a population of 300,000, the crisis toppled the government amid street protests and fiscal calamity. In Ukraine, with some 46 million
people sandwiched between the European Union and Russia, widespread instability would be far more damaging.
"There's no hope," said Petro Romanuk, a minibus driver, who said that the number of passengers coming to the city and looking for work had plummeted
in the past few months as people had given up. "The politicians don't care about us. Each day it gets worse; each day we trust them less and less. There may be another revolution."
While no one predicts an immediate default, the numbers are alarming. The national currency plunged 59 percent against the dollar during the past six months. A new gas contract negotiated with Russia last month will end subsidies and expose Ukraine to far higher gas prices.
Credit lines have dried up and steel prices are half what they were. Steel production in Ukraine fell some 13.4 percent last year, the biggest amount
of any large global supplier.
"Ukraine has been virtually shut out of the international capital markets," said Pingfan Hong, the chief of global economic monitoring in the U.N.
department that produced the January report. "The economic outlook has further deteriorated recently . . . risks of a deeper recession in 2009 have increased," Hong said in an e-mail to McClatchy.
In the third quarter of last year, Ukraine's imports of goods and services totaled $29.4 billion, according to official statistics. Foreign currency reserves at the end of the quarter were $31.9 billion, dangerously close to not being able to pay for those three months of imports, a redline minimum for a nation's economy.
Ukraine's dwindling currency reserves - less than one-tenth of Russia's - are mixed in a toxic cocktail of soaring debt. Ukraine's gross external debt, from government and private sectors, was about $29 billion in late 2004. By last year, it skyrocketed to $105.4 billion. Much of that increase came from Ukraine's banks, whose debt increased more than 17-fold during those four years, from about $2.4 billion to more than $42 billion, roughly $10 billion more than the national reserves.
"This is the first economic crisis Ukraine has faced as a market economy, and the foundations of our market economy are weak," said Kseniya Lyapina, a
parliament member from President Viktor Yushchenko's party.
The level of distrust in the competence of local and national leaders is hard to overstate. Yushchenko's approval rating is in the single digits, and
poll numbers for the two main contenders to replace him in elections early next year are slipping.
Kiev Mayor Leonid Chernovetsky - a highly visible politician - had difficulty answering even the most basic questions about the capital's financial problems at a recent news conference. Asked about shortages of gas to schools, city doctors who hadn't been paid for months and a threatened strike by local bus drivers, Chernovetsky responded with mumbles and stream-of-consciousness riffs about the local zoo and his affection for elephants, the need for more trees and flowers in the city, his propensity to dry off naked on a balcony after showering and the importance of the Bible.
"They cannot take the country out of the crisis because they are unprofessional; they are in politics just to make money," said Tatiana Rusinova, a retired physicist and now part-time worker for a medical supply company who was window-shopping at a downtown mall. "They created a small country for themselves, and the rest of us have to live outside of it."
Beyond the issue of official incompetence, an allegation made by many observers and politicians in the country, analysts say that the Ukrainian leadership has relatively few tools to effect large-scale economic change.
"There is this combination of economic instability and political instability; it is not good for Ukraine at the moment," said Olena Bilan, a senior analyst at Dragon Capital, a leading investment company in Kiev. "But the government doesn't have much room to do something" such as a large stimulus package.
Bilan said that her firm - which forecasts the gross domestic product declining by 6 percent this year, after growth of more than 7 percent in 2006 and 2007 - was hoping for an upturn or at least a flatter trend line later in the year if steel rebounded.
However, higher steel prices probably would be part of resurgent commodities prices in general, Bilan said, a mixed blessing for Ukraine. Its new gas
contract with Russia requires market prices pegged to the cost of oil and signifies the end of decades of heavy subsidy. Ukraine will pay about $360 per 1,000 cubic meters of gas through March, compared with $179.5 last year, a price that it struggled to meet.
Ukrainian Prime Minister Yulia Tymoshenko, who brokered the deal, has said that prices this year will average around $230. President Yushchenko, who's
feuded with her for years, disputes that, saying that prices will be much higher and the new contract is a "defeat" for the country. Whatever the prices in the near term, the bigger threat is that if the cost of oil spikes again, taking gas with it, Ukraine won't be able to pay its bill.
Despite the turmoil, Lyapina, the Yushchenko party parliament member, said that there could be a silver lining to the fiscal pain: The country's industrial base and labor market - still hampered by Soviet-era inefficiencies in some quarters, such as work forces at some factories that are too big by a third - will be forced to become leaner.
"Thinking long-term, it's better for our country, because mentally people are not used to competition," she said. "Now they will have to adjust to the market economy." That, she allowed, might include some problems along the way. How big those problems will be, and how close Ukraine may come to default, is still very much in question.
LINK: http://www.mcclatchydc.com/world/story/61606.html
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9. "DISCOVER UKRAINE..THE UNEXPECTED" EXHIBIT AT NYC TRAVEL SHOW
Organized by U.S.-Ukraine Foundation (USUF), co-sponsored by U.S.-Ukraine Business
9. "DISCOVER UKRAINE..THE UNEXPECTED" EXHIBIT AT NYC TRAVEL SHOW
Organized by U.S.-Ukraine Foundation (USUF), co-sponsored by U.S.-Ukraine Business
Council (USUBC), AeroSvit Ukrainian Airlines, and the Embassy of Ukraine in the U.S.
U.S.-Ukraine Business Council (USUBC), Washington, D.C., Fri, Feb 6, 2009
WASHINGTON, D.C. - For the first time ever, Ukraine will be represented at the sixth annual New York Times Travel Show being held at the Jacob K. Javits Convention Center in New York City, NY, Friday-Sunday, February 6-8, 2009.
U.S.-Ukraine Business Council (USUBC), Washington, D.C., Fri, Feb 6, 2009
WASHINGTON, D.C. - For the first time ever, Ukraine will be represented at the sixth annual New York Times Travel Show being held at the Jacob K. Javits Convention Center in New York City, NY, Friday-Sunday, February 6-8, 2009.
The "DISCOVER UKRAINE...THE UNEXPECTED" travel exhibit, created by the U.S.-Ukraine Foundation (USUF) especially for this travel show, will be on display. The exhibit is part of an ongoing program the U.S.-Ukraine Foundation (USUF), Washington, D.C., (www.usukraine.org), and the Government of Ukraine have started recently to increase the promotion of travel to Ukraine. USUF has been promoting travel to Ukraine for sometime as part of its ongoing program and created the TRAVEL TO UKRAINE website, www.TravelToUkraine.org website.
THREE MAJOR CO-SPONSORS
There are three major co-sponsors of the Ukraine travel exhibit at The New York Times Travel Show. They are the U.S.-Ukraine Business Council (USUBC), Washington, D.C. (www.usubc.org); AeroSvit Ukrainian Airlines, Kyiv, Ukraine with a sales office in New York City, (http://www.aerosvit.ca/e_us.html); and the Embassy of Ukraine in the U.S., Washington, D.C. (http://www.mfa.gov.ua/usa/en).
In the Ukraine exhibit created by USUF there are three large beautiful color panels showing many outstanding tourism scenes from Ukraine. The theme of the exhibit is DISCOVER UKRAINE...THE UNEXPECTED:
FIND yourself in a most remarkable historically rich-place - the cradle of civilization dating back to the Typillian era of 5,000-2750 B. C.
REDISCOVER the crossroads the ancients traveled through this beautiful and diverse land.
ENJOY the hospitality of the people of Ukraine ready to share their rich culture.
EXPERIENCE the vitality of modern Ukraine on the panorama of history.
DO THE UNEXPECTED......Discover Ukraine!
FIND YOURSELF THERE!
A 24 page Travel to Ukraine booklet will be passed out along with a special DISCOVER UKRAINE brochure. A Ukraine tourism video will also be shown. Nadia K. McConnell, president of USUF; Andrew Evans, author of "Ukraine, 2nd, The Brant Travel Guide" (http://www.amazon.com/Ukraine-2nd-Bradt-Travel-Guide/dp/1841621811); Oleksiy Synelnychenko, creator of the USUF sponsored website TRAVEL TO UKRAINE, www.traveltoukraine.org, John Kun, USUF Vice President/COO and others will be on hand to greet visitors to the Ukraine exhibit.
LARGEST CONSUMER AND TRADE TRAVEL EVENT OF ITS KIND IN THE U.S.
The New York Times Travel show is the largest consumer and trade travel event of its kind in the U.S. featuring different regions of the world including Africa, Asia, Australia/South Pacific, Canada, the Caribbean, Central America, Europe, Mexico, South America and the United States.
The Travel Show will feature nearly 500 exhibitors representing over 100 countries and will focus on travel destinations, packages and special offers, as well as tour operators, cruise lines and live entertainment for the whole family, visit http://www.nytimes.com/travelshow.
The event showcases the variety of travel and vacation opportunities for consumers of all types: those traveling solo, as a couple, without children or taking the whole family; those looking for budget vs. luxury trips; and those looking for relaxation and wellness trips or for adventure travel.
USUBC MEMBER TRAVEL SERVICES TO UKRAINE
In addition to U.S.-Ukraine Business Council (USUBC) members, the U.S.-Ukraine Foundation (USUF) and AeroSvit Ukrainian Airlines, two additional USUBC members promote and provide travel services to Ukraine, according to Morgan Williams, SigmaBleyzer Private Equity Investment Group (www.SigmaBleyzer.com), who serves as President of USUBC.
"They are the Ukrainian International Airlines (UIA), Kyiv, Ukraine, with offices in the USA, (http://www.flyuia.com) and the Dunwoodie Travel Bureau (www.DunwoodieTravel.com), Alesia Kozicky, Owner/Travel Agent. Yonkers, N.Y. USUBC and its over 100 corporate and organizational members are proud to support the Travel-To-Ukraine program and the special exhibit in NYC, " Williams said, "The present travel exhibit in NYC is just the first of several more Ukraine travel projects planned during 2009."
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10. TWO "TREASURES OF UKRAINE" EXHIBITIONS TO THE USA
U.S.-Ukraine Business Council (USUBC), Washington, D.C., Fri, Feb 6, 2009
WASHINGTON, D.C. - The Foundation for International Arts and Education (FIAE), in cooperation with the U.S.-Ukraine Business Council (USUBC), and with the support of the Embassy of Ukraine in the U.S., will be presenting two outstanding Ukrainian exhibitions featuring historic 'TREASURES OF UKRAINE' in a number of American museums during the period from 2010 to 2012.
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10. TWO "TREASURES OF UKRAINE" EXHIBITIONS TO THE USA
Treasures of Ukraine from the PLATAR Collection and Ukrainian Icons and Religious
Objects from the National Kyiv-Perchersk (Lavra) Historic and Cultural Preserve
U.S.-Ukraine Business Council (USUBC), Washington, D.C., Fri, Feb 6, 2009
WASHINGTON, D.C. - The Foundation for International Arts and Education (FIAE), in cooperation with the U.S.-Ukraine Business Council (USUBC), and with the support of the Embassy of Ukraine in the U.S., will be presenting two outstanding Ukrainian exhibitions featuring historic 'TREASURES OF UKRAINE' in a number of American museums during the period from 2010 to 2012.
Dr. Gregory Guroff, President of The Foundation for International Arts and Education (FIAE), Bethesda, MD, (www.FIAE.org), Dr. Oleh Shamshur,
Ambassador of Ukraine to the USA, Washington, D.C. (http://www.mfa.gov.ua/usa/en), and Morgan Williams, SigmaBleyzer Private Equity Investment Group, who serves as President of the U.S.-Ukraine Business Council (USUBC), Washington, D.C.(www.usubc.org), have been working on this project for over nine months.
Ambassador of Ukraine to the USA, Washington, D.C. (http://www.mfa.gov.ua/usa/en), and Morgan Williams, SigmaBleyzer Private Equity Investment Group, who serves as President of the U.S.-Ukraine Business Council (USUBC), Washington, D.C.(www.usubc.org), have been working on this project for over nine months.
FIAE, USUBC and the Embassy of Ukraine are pleased that the PLATAR Foundation, Kyiv, Ukraine, has agreed to cooperate in the production of the two major Ukrainian exhibitions in the USA. The following letter has been received by Dr. Gregory Guroff, President of FIAE, from the PLATAR Foundation in Kyiv, Ukraine:
MUSEUM OF NATIONAL CULTURAL HERITAGE
PLATAR
January 27, 2009
Gregory Guroff, President
The Foundation for Arts & Education
4630 Montgomery Avenue, Suite 210
Bethesda, MD 20814, USA
This letter is to confirm our understanding that the PLATAR Foundation has an exclusive agreement to with FIAE to produce two major Ukrainian exhibitions: Ukraine to the World (Treasures of Ukraine from the PLATAR Collection), Ukrainian Icons and Religious Objects from the Kyiv-Pecherska Lavra (National Kyiv - Perchersk (Lavra) Historic and Cultural Preserve) and other collections, XI-XIX centuries. The two parties plan to present these
Exhibits in a number of American museums between 2010 and 2012.
M. Zhlukto, Director General
Museum of National Cultural Heritage, PLATAR
Kyiv, Ukraine
Dr. Gregory Guroff and representatives of several major U.S. museums will travel to Ukraine the last week of March to meet with representatives of the PLATAR Foundation and the Kyiv-Pecherska Lavra. They will view many of the historic treasures of Ukraine that are being proposed for the two exhibitions in the USA.
MUSEUM OF NATIONAL CULTURAL HERITAGE
PLATAR
January 27, 2009
Gregory Guroff, President
The Foundation for Arts & Education
4630 Montgomery Avenue, Suite 210
Bethesda, MD 20814, USA
This letter is to confirm our understanding that the PLATAR Foundation has an exclusive agreement to with FIAE to produce two major Ukrainian exhibitions: Ukraine to the World (Treasures of Ukraine from the PLATAR Collection), Ukrainian Icons and Religious Objects from the Kyiv-Pecherska Lavra (National Kyiv - Perchersk (Lavra) Historic and Cultural Preserve) and other collections, XI-XIX centuries. The two parties plan to present these
Exhibits in a number of American museums between 2010 and 2012.
M. Zhlukto, Director General
Museum of National Cultural Heritage, PLATAR
Kyiv, Ukraine
Dr. Gregory Guroff and representatives of several major U.S. museums will travel to Ukraine the last week of March to meet with representatives of the PLATAR Foundation and the Kyiv-Pecherska Lavra. They will view many of the historic treasures of Ukraine that are being proposed for the two exhibitions in the USA.
Dr. Deborah Taylor, wife of U.S. Ambassador to Ukraine, William Taylor, who is an outstanding scholar in religious history and an expert in religious objects and art, has been assisting with this cultural and arts exhibition program. Additional information about the FIAE Ukrainian Icons and Religious Objects program can be found at: http://www.fiae.org/Ukrainian%20Icons.html.
UKRAINE IN POLAND: UKRAINIAN TREASURE-TROVE
Historical items from the PLATAR collection in Ukraine were on exhibition in Warsaw, Poland in 2008. The Warsaw Voice newspaper wrote this about the exhibition on May 14, 2008:
Historical items from the PLATAR collection in Ukraine were on exhibition in Warsaw, Poland in 2008. The Warsaw Voice newspaper wrote this about the exhibition on May 14, 2008:
"WARSAW - The National Museum in Warsaw is hosting an exhibition until June 29 devoted to the fascinating archeological past of Ukraine. The exhibition is entitled "From Ukraine to the World: Ukrainian Treasures from the Platar Collection," and its patrons are the presidents of Poland and Ukraine, Lech Kaczyński and Viktor Yushchenko.
The exhibition consists of outstanding works of art from a private collection of around 400 artifacts dating from between the fourth millennium B.C. and the 12th century. This is the first time they are being shown outside Ukraine.
Research shows that 8,000 years ago, a unique culture developed in what is Ukraine today. The exhibition documents all major periods of the history of Ukraine, from the early Neolithic to magnificent works of art that resulted from close relations between Kiev Ruthenia and the Byzantine Empire.
Since the Scythian Gold exhibition from the Hermitage Museum in 1976, visitors to the National Museum have not seen such an extensive display of the accomplishments of the most famous ancient goldsmiths." (Link: http://www.warsawvoice.pl/view/17843).
Articles from the Welcome to Ukraine magazine about the PLATAR collection can be read at; http://www.wumag.kiev.ua/index2.php?param=pgs20053/36
The exhibition consists of outstanding works of art from a private collection of around 400 artifacts dating from between the fourth millennium B.C. and the 12th century. This is the first time they are being shown outside Ukraine.
Research shows that 8,000 years ago, a unique culture developed in what is Ukraine today. The exhibition documents all major periods of the history of Ukraine, from the early Neolithic to magnificent works of art that resulted from close relations between Kiev Ruthenia and the Byzantine Empire.
Since the Scythian Gold exhibition from the Hermitage Museum in 1976, visitors to the National Museum have not seen such an extensive display of the accomplishments of the most famous ancient goldsmiths." (Link: http://www.warsawvoice.pl/view/17843).
Articles from the Welcome to Ukraine magazine about the PLATAR collection can be read at; http://www.wumag.kiev.ua/index2.php?param=pgs20053/36
THE FOUNDATION FOR INTERNATIONAL ARTS & EDUCATION
The Foundation for International Arts & Education (FIAE) is a non-profit, 501(c)(3) organization. Headquartered in Bethesda, Maryland, the Foundation was created to help protect and preserve the historical and cultural legacy of the countries of the former Soviet Union.
Through its Arts & Exhibitions Program, the Foundation organizes and manages art exhibitions at venues throughout the United States. A portion of the proceeds of these exhibitions goes to foreign lending museums in order to directly contribute to the preservation of these priceless world treasures.
The Foundation for International Arts & Education (FIAE) was created with a set of very explicit goals and principles:
Preservation and protection of artistic and cultural legacies;
Presentation of first-rate art exhibitions;
Adherence to the highest artistic standards in determining the contents and themes of these exhibitions;
Protection of the dignity and reputation of the institutions whose artifacts are presented;
Involvement of the local host communities in all aspects of planning exhibitions, cultural events and research projects;
Assurance that quality educational programs are developed and presented throughout the exhibition’s showing in each US community;
Support of substantive research and analysis; and
Development and creation of long-term professional relations.
The Foundation's Board of Directors is chaired by Ambassador Arthur Hartman, former Ambassador to France and to the Soviet Union. FIAE's President is Dr. Greg Guroff, university professor, diplomat, and former Director of the President's U.S.-Soviet Exchange Initiative. FIAI'S board of directors includes:
Ambassador Arthur Hartman, Chairman; David Kenney, Treasurer; Sarah Carey, Edward C. Chow, Thomas G. Gherardi, Michael Johnson, Montgomery Lewis, Nikita Lobanov-Rostovsky, Elizabeth Malott Pohle, Ambassador Joseph A. Presel and Marilyn Pfeifer Swezey. (www.fiae.org)
Through its Arts & Exhibitions Program, the Foundation organizes and manages art exhibitions at venues throughout the United States. A portion of the proceeds of these exhibitions goes to foreign lending museums in order to directly contribute to the preservation of these priceless world treasures.
The Foundation for International Arts & Education (FIAE) was created with a set of very explicit goals and principles:
Preservation and protection of artistic and cultural legacies;
Presentation of first-rate art exhibitions;
Adherence to the highest artistic standards in determining the contents and themes of these exhibitions;
Protection of the dignity and reputation of the institutions whose artifacts are presented;
Involvement of the local host communities in all aspects of planning exhibitions, cultural events and research projects;
Assurance that quality educational programs are developed and presented throughout the exhibition’s showing in each US community;
Support of substantive research and analysis; and
Development and creation of long-term professional relations.
The Foundation's Board of Directors is chaired by Ambassador Arthur Hartman, former Ambassador to France and to the Soviet Union. FIAE's President is Dr. Greg Guroff, university professor, diplomat, and former Director of the President's U.S.-Soviet Exchange Initiative. FIAI'S board of directors includes:
Ambassador Arthur Hartman, Chairman; David Kenney, Treasurer; Sarah Carey, Edward C. Chow, Thomas G. Gherardi, Michael Johnson, Montgomery Lewis, Nikita Lobanov-Rostovsky, Elizabeth Malott Pohle, Ambassador Joseph A. Presel and Marilyn Pfeifer Swezey. (www.fiae.org)
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U.S.-Ukraine Business Council (USUBC) www.usubc.org.
Promoting U.S.-Ukraine business & investment relations since 1995.
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11. UKRAINE'S SECURITY COUNCIL CHIEF BOHATYRIOVA,
U.S. AMBASSADOR TAYLOR DISCUSS NUCLEAR SECURITY
Interfax Ukraine, Kyiv, Ukraine, Saturday, February 7, 2009
KYIV - National Security and Defense Council Secretary Raisa Bohatyriova and U.S. Ambassador to Ukraine William Taylor have discussed the cooperation in the frames of the Global Threat Reduction Initiative (GTRI) aimed at reduction of nuclear and radiological materials' use for producing weapons of mass destruction.
The U.S. ambassador said that this initiative is among priorities of new U.S. President Barack Obama, the NSDC's press service reported on Saturday.
Bohatyriova assured Taylor that Ukraine has been and will be its consistent partner in this mission and is taking every effort to prevent the acquisition of Ukraine-owned radioactive materials for use in nuclear weapons.
Bohatyriova and Taylor also exchanged opinions on the prospects for cooperation between Ukraine and the U.S. in nuclear energy use.
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12. U.S. VP BIDEN SAID TO HAVE PRAISED TYMOSHENKO'S ROLE IN GAS TALKS
12. U.S. VP BIDEN SAID TO HAVE PRAISED TYMOSHENKO'S ROLE IN GAS TALKS
Interfax Ukraine, Kyiv, Ukraine, Saturday, February 7, 2009
MUNICH - Ukrainian Prime Minister Yulia Tymoshenko and U.S. Vice President Joe Biden, at a meeting in Munich on Saturday, discussed the outlook for Ukrainian-American relations and regional security problems, Tymoshenko's spokeswoman, Maryna Soroka, told reporters.
During the meeting, held on the fringes of the 45th annual Munich Security Conference, Tymoshenko offered congratulations on Barack Obama's "brilliant victory" at the presidential election and said his presidency meant "new opportunities for closer partnership with Ukraine."
Biden said he had considered it essential to meet with the Ukrainian premier during what is his first visit to Europe in his vice-presidential capacity. He credited Ukraine with successes and development prospects that largely determine the region's future. He also commended Tymoshenko's role in settling the Ukrainian-Russian gas row and invited Tymoshenko to visit the United States.
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13. ZURICH JOINS THE U.S.-UKRAINE BUSINESS COUNCIL (USUBC)
One of the world's largest providers of political risk & trade credit insurance, USUBC member 101
U.S.-Ukraine Business Council (USUBC), Washington, D.C., Monday, February 2, 2009
WASHINGTON, D.C. - Zurich Surety, Credit & Political Risk, a member of the Zurich Financial Services group, has been approved as the 101st member of the U.S.-Ukraine Business Council (USUBC), the USUBC Executive Committee announced today, on behalf of the entire USUBC membership. Zurich Surety, Credit & Political Risk is the first new member in 2009 and USUBC member 101.
Zurich is an insurance-based financial services provider. Founded in 1872, Zurich has a global network of subsidiaries and offices in North America,
Europe, Asia Pacific, Latin America and other markets. Their over 60,000 employees serve customers in more than 170 countries. Zurich is headquartered in Zurich, Switzerland.
SURETY, CREDIT & POLITICAL RISK GROUP
Zurich North America’s Surety, Credit & Political Risk group, headquartered in Washington, DC, is a leading provider of contract and commercial surety,
trade credit and political risk insurance products worldwide.
Surety, Credit & Political Risk serves customers through underwriting offices located in 35 cities throughout North America, as well as Barcelona, Beijing, Frankfurt, Hong Kong, London, Paris, Singapore, Sao Paulo, Sydney, Tokyo and Zurich.
They provide surety bonds, political risk and trade credit insurance for financial institutions, multinational corporations, investors, exporters, contractors and infrastructure developers in North America and emerging markets.
WASHINGTON, D.C. MAIN OFFICE FOR UKRAINE POLITICAL RISK INSURANCE
The Zurich Surety, Credit & Political Risk office in Washington, D.C. is the main office that works on political risk insurance for Ukraine and has been quite active in the Ukrainian market for some time with a large number of clients.
USUBC has been working closely with Todd J. Lynady, Manager of Business Development, and with Mathew Albrecht, Underwriter, Credit and Political Risk in the Zurich Surety, Credit & Political Risk Washington, D.C. office. Todd and Mathew have participated in USUBC meetings in Washington the past few months. Todd J. Lynady will represent Zurich Surety, Credit & Political Risk on the USUBC board of directors.
ZURICH'S GENERAL INSURANCE: GLOBAL LIFE AND FARMERS
Zurich's General Insurance segment serves individuals, small and medium-sized businesses, commercial enterprises and major multinational corporations.
Global Life offers a broad range of life insurance, investments, savings and pension propositions to individuals and groups. Global Life is managed globally and focused on local customer and distributor needs. Farmers, the third-largest personal property and casualty insurer in the United States, is Zurich's main market brand for personal insurance in that market.
Move information about Zurich Financial Services Group can been found at http://www.zurich.com/main/home/welcome.htm.
"USUBC is very pleased to have Zurich Surety, Credit & Political Risk as a new member" said Morgan Williams, SigmaBleyzer Emerging Markets Private Equity Group, who serves as president of USUBC. "USUBC has grown very rapidly during the past 24 months and now has a membership base which allows USUBC to provide its members such as Zurich with a full-time operation and a significantly expanded program of work," according to president Williams.
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14. UKRAINIAN CUSTOMS AUTHORITIES ISSUED NEW CLARIFICATION
REGARDING IMPORT DUTY EXEMPTION FOR FOREIGN INVESTMENTS
DLA Piper Ukraine law firm, Kyiv, Ukraine, Wed, Feb 4, 2009
KYIV - As you might know under the effective Ukrainian law any assets imported into Ukraine and invested by a foreign investor in the charter capital of Ukrainian enterprise (except assets that are intended for sale or consumption) are exempted from the customs duty. However, if the enterprise sells or otherwise alienates these assets within three years, the customs duty exemption is reversed.
On 20 January 2009 the State Customs Service of Ukraine ("SCSU") has issued a Generalizing Tax Clarification No. 31 ("Clarification No. 31") which
illustrates a new fiscal approach towards the customs duty exemption for foreign investments.
The SCSU believes that alienation of shares in the Ukrainian enterprise by a foreign investor is equivalent to alienation of assets by such enterprise itself. Based on such controversial conclusion SCSU is of the opinion that the customs duty becomes payable if the relevant foreign investor disposes of its shares in the Ukrainian enterprise prior to expiry of three years from the date of investment.
Please note that under Ukrainian law tax clarifications, including generalized tax clarifications, are not deemed legislative acts, however they represent an official understanding of tax rules and laws by relevant state authorities which they will use during audits and within the administrative appeal procedures. Courts are not bound by the tax clarifications.
The customs authorities are likely to apply the new approach retroactively. This may affect the companies that applied the exemption in the past and later were acquired by new investors or went through a group reorganization. The statute of limitations for tax and customs reassessments is three years and may be extended in some cases.
Yet, Clarification No. 31 contains some good news too.
The SCSU points out that if the share of a foreign investor is diluted below 10 percent, such entity loses the status of "an enterprise with foreign investments". However, according to the SCSU, such a situation does not trigger an obligation to pay the customs duty for assets which were exempted from such duty at the time when the investment was made. Please do not hesitate to contact us should you have any questions on the above.
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14. UKRAINIAN CUSTOMS AUTHORITIES ISSUED NEW CLARIFICATION
REGARDING IMPORT DUTY EXEMPTION FOR FOREIGN INVESTMENTS
DLA Piper Ukraine law firm, Kyiv, Ukraine, Wed, Feb 4, 2009
KYIV - As you might know under the effective Ukrainian law any assets imported into Ukraine and invested by a foreign investor in the charter capital of Ukrainian enterprise (except assets that are intended for sale or consumption) are exempted from the customs duty. However, if the enterprise sells or otherwise alienates these assets within three years, the customs duty exemption is reversed.
On 20 January 2009 the State Customs Service of Ukraine ("SCSU") has issued a Generalizing Tax Clarification No. 31 ("Clarification No. 31") which
illustrates a new fiscal approach towards the customs duty exemption for foreign investments.
The SCSU believes that alienation of shares in the Ukrainian enterprise by a foreign investor is equivalent to alienation of assets by such enterprise itself. Based on such controversial conclusion SCSU is of the opinion that the customs duty becomes payable if the relevant foreign investor disposes of its shares in the Ukrainian enterprise prior to expiry of three years from the date of investment.
In our view, nothing in the law serves to support this conclusion.
Please note that under Ukrainian law tax clarifications, including generalized tax clarifications, are not deemed legislative acts, however they represent an official understanding of tax rules and laws by relevant state authorities which they will use during audits and within the administrative appeal procedures. Courts are not bound by the tax clarifications.
The customs authorities are likely to apply the new approach retroactively. This may affect the companies that applied the exemption in the past and later were acquired by new investors or went through a group reorganization. The statute of limitations for tax and customs reassessments is three years and may be extended in some cases.
Yet, Clarification No. 31 contains some good news too.
The SCSU points out that if the share of a foreign investor is diluted below 10 percent, such entity loses the status of "an enterprise with foreign investments". However, according to the SCSU, such a situation does not trigger an obligation to pay the customs duty for assets which were exempted from such duty at the time when the investment was made. Please do not hesitate to contact us should you have any questions on the above.
DLA PIPER UKRAINE – TAX TEAM:
[1] Svitlana Musienko, Legal Director, Head of Tax, T +380 44 490 9564; E svitlana.musienko@dlapiper.com
[1] Svitlana Musienko, Legal Director, Head of Tax, T +380 44 490 9564; E svitlana.musienko@dlapiper.com
[2] Yulia Logunova, Senior Associate, T +380 44 495 1787; E yulia.logunova@dlapiper.com
[3] Illya Sverdlov, Senior Associate, T +380 44 490 9575; illya.sverdlov@dlapiper.com
[4] Dmytro Donets, Associate, T +380 44 490 9575; E dmytro.donets@dlapiper.com
[5] Lilia Sylvestrova, Associate, T +380 44 490 9575; E lilia.sylvestrova@dlapiper.com
[3] Illya Sverdlov, Senior Associate, T +380 44 490 9575; illya.sverdlov@dlapiper.com
[4] Dmytro Donets, Associate, T +380 44 490 9575; E dmytro.donets@dlapiper.com
[5] Lilia Sylvestrova, Associate, T +380 44 490 9575; E lilia.sylvestrova@dlapiper.com
DLA Piper Ukraine LLC is part of DLA Piper, a global legal services organisation. International Law Firm of the Year 2008 in Ukraine Kyiv switchboard: +380 44 490 9575. The matters covered in this newsletter are intended as a general overview. This newsletter is not intended, and should not be used, as a substitute for taking legal advice in any specific situation. DLA Piper Ukraine LLC will accept no responsibility for any actions taken or not taken on the basis of this newsletter. If you would like further advice, please contact Tax Team at +380 44 490 9575. DLA Piper Ukraine LLC.
NOTE: DLA Piper Ukraine LLC is a member of the U.S.-Ukraine Business Council (USUBC), Washington, D.C., www.usubc.org.
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15. UKRETELECOM COULD BE PRIVATIZED BY MAY-JUNE
businessneweurope (bne), Berlin, Germany, Thu, February 5, 2009
KYIV - According to government officials, including Transportation and Communications Minister Yosyp Vinsky, acting State Property Fund head Dmitri Parfenenko and Prime Minister Yulia Tymoshenko, a controlling stake in fixed line operator Ukrtelecom could be privatized as early as February/March.
The Minister of Transport confirmed that the conditions for auctioning off a 67.79% controlling stake in Ukrtelecom have been finalized and they may be published as early as next week if parliament votes for the new head of the State Property Fund. The tender could then take place in May-June 2009 (75 days after publication of conditions, according to the minister).
The expected selling price, according to the Vinsky, should exceed UAH 25 bln, ($3 bln). Prime Minister Yulia Tymoshenko commented that Ukrtelecom's privatization will take place at "decent" prices in a well ordered process and with no hurry.
Tymoshenko's also named two further conditions that significantly narrow the field of potential bidders: that only private companies with a global brand will be considered. Previous attempts to privatize Ukrtelecom have excluded companies from bidding with over 25% state ownership, which rules out European majors such as Telenor, Telecom France, TeliaSonera and Telekom Austria. The 'global brand' requirement would also seem to rule out purely Ukrainian telecom companies.
In 2008, System Capital Management (SCM), Turkcell (Life, together with SCM), Sistema (MTS and Comstar_UTS), and Telecominvest (MegaFon) expressed interest in Ukrtelecom's privatization. Analysts also name Vodafone, VimpelCom and Telefonica as potential strategic investors.
The blocking stake in Ukrtelecom, which constitutes 25%+1 share, will remain in state hands. The SPF also wants to privatize blocking stakes in five energy distributing companies (oblenergos).
According to Galt & Taggart's Danylo Spolsky "owing to worrying budgetary shortfalls in January the latest attempt to privatize government stakes in Ukrtelecom and the five DisCos holds a higher measure of credence than past, failed attempts. Add to that the recent, but disputed, change in SPF leadership, and the unconfirmed report even verges on believability."
Spolsky however notes that President Viktor Yushchenko may seek to boost his ratings by blocking efforts to pad the state coffers at the expense of Tymoshenko.
Dragon's Andriy Bespyatov writes, "the current market capitalization of Ukrtelecom, at $609m, is also down 85% y-o-y. We think chances to privatize Ukrtelecom are very low as the government may require an unreasonably high valuation."
Troika sees " significant political risk that could delay or even halt the now_resumed process that aims to privatize Ukrtelecom in 2Q09. However, it is now supported by the current economic situation with tough budget constraints and the IMF's recommendation to resume the privatization process."
According to Troika, Ukrtelecom's target equity value as close to $1.1 bln ($0.058 per share), and with a control premium of assumed 30%, its value could even reach $1.4 bln ($0.075 per share).
Concorde's Aleksandr Paraschiy says, "we consider the probability of a successful privatization as low - first, President Yushchenko is likely to ban the privatization, as he did in 2008; second, it seems like it will be difficult to find an investor for the company today."
According to Paraschiy, "Vinsky's price looks too high for a company that will report losses for FY2008. We believe the price for the stake will not exceed UAH 15 bln. The only thing that raises the chance of privatization this year is need to fill the stabilization fund of the state budget, which is planned to be UAH 20 bln: Ukrtelecom's sale could raise up to 60% of that amount. Given this, the government may agree to lower the starting price."
Prior to the privatization of Ukrtelecom, the SPF is expected to sell controlling stakes in electricity DisCos, Chernihiv-, Sumy-, Prykarpattya-, Lviv- Odessa-, and Poltavaoblenergo.
Paraschiy also sees difficulties here: "Actual privatization of these companies looks problematic this year. First of all, the tenders are sure to be banned by the President, as he did twice in 2008. Second, we believe the main candidates to buy the companies (Kolomoiskiy, Grigoryshyn and VS Energy) are not ready to spend money now to raise their stakes in the Oblenergos."
Dragon's Bespyatov estimates the asking price for the discos at $130m, much lower than their 2008 valuation of $500m.
KYIV - According to government officials, including Transportation and Communications Minister Yosyp Vinsky, acting State Property Fund head Dmitri Parfenenko and Prime Minister Yulia Tymoshenko, a controlling stake in fixed line operator Ukrtelecom could be privatized as early as February/March.
The Minister of Transport confirmed that the conditions for auctioning off a 67.79% controlling stake in Ukrtelecom have been finalized and they may be published as early as next week if parliament votes for the new head of the State Property Fund. The tender could then take place in May-June 2009 (75 days after publication of conditions, according to the minister).
The expected selling price, according to the Vinsky, should exceed UAH 25 bln, ($3 bln). Prime Minister Yulia Tymoshenko commented that Ukrtelecom's privatization will take place at "decent" prices in a well ordered process and with no hurry.
Tymoshenko's also named two further conditions that significantly narrow the field of potential bidders: that only private companies with a global brand will be considered. Previous attempts to privatize Ukrtelecom have excluded companies from bidding with over 25% state ownership, which rules out European majors such as Telenor, Telecom France, TeliaSonera and Telekom Austria. The 'global brand' requirement would also seem to rule out purely Ukrainian telecom companies.
In 2008, System Capital Management (SCM), Turkcell (Life, together with SCM), Sistema (MTS and Comstar_UTS), and Telecominvest (MegaFon) expressed interest in Ukrtelecom's privatization. Analysts also name Vodafone, VimpelCom and Telefonica as potential strategic investors.
The blocking stake in Ukrtelecom, which constitutes 25%+1 share, will remain in state hands. The SPF also wants to privatize blocking stakes in five energy distributing companies (oblenergos).
According to Galt & Taggart's Danylo Spolsky "owing to worrying budgetary shortfalls in January the latest attempt to privatize government stakes in Ukrtelecom and the five DisCos holds a higher measure of credence than past, failed attempts. Add to that the recent, but disputed, change in SPF leadership, and the unconfirmed report even verges on believability."
Spolsky however notes that President Viktor Yushchenko may seek to boost his ratings by blocking efforts to pad the state coffers at the expense of Tymoshenko.
Dragon's Andriy Bespyatov writes, "the current market capitalization of Ukrtelecom, at $609m, is also down 85% y-o-y. We think chances to privatize Ukrtelecom are very low as the government may require an unreasonably high valuation."
Troika sees " significant political risk that could delay or even halt the now_resumed process that aims to privatize Ukrtelecom in 2Q09. However, it is now supported by the current economic situation with tough budget constraints and the IMF's recommendation to resume the privatization process."
According to Troika, Ukrtelecom's target equity value as close to $1.1 bln ($0.058 per share), and with a control premium of assumed 30%, its value could even reach $1.4 bln ($0.075 per share).
Concorde's Aleksandr Paraschiy says, "we consider the probability of a successful privatization as low - first, President Yushchenko is likely to ban the privatization, as he did in 2008; second, it seems like it will be difficult to find an investor for the company today."
According to Paraschiy, "Vinsky's price looks too high for a company that will report losses for FY2008. We believe the price for the stake will not exceed UAH 15 bln. The only thing that raises the chance of privatization this year is need to fill the stabilization fund of the state budget, which is planned to be UAH 20 bln: Ukrtelecom's sale could raise up to 60% of that amount. Given this, the government may agree to lower the starting price."
Prior to the privatization of Ukrtelecom, the SPF is expected to sell controlling stakes in electricity DisCos, Chernihiv-, Sumy-, Prykarpattya-, Lviv- Odessa-, and Poltavaoblenergo.
Paraschiy also sees difficulties here: "Actual privatization of these companies looks problematic this year. First of all, the tenders are sure to be banned by the President, as he did twice in 2008. Second, we believe the main candidates to buy the companies (Kolomoiskiy, Grigoryshyn and VS Energy) are not ready to spend money now to raise their stakes in the Oblenergos."
Dragon's Bespyatov estimates the asking price for the discos at $130m, much lower than their 2008 valuation of $500m.
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16. UKRAINIAN PM SPEAKS OUT AGAINST PIPELINES BYPASSING UKRAINE
Europe has renewed interest in diversifying its gas imports since a dispute between Russia and Ukraine in January left around 20 countries short of gas. Deliveries via Ukraine resumed on January 20. "I would like to stress once again - Ukraine did not begin the [gas] crisis, but settled it," Tymoshenko said.
Tymoshenko also called on Russia to join Ukraine in "constructive, mutually acceptable avenues of cooperation." There are currently several projects of alternative gas supply routes to Europe.
The Nord Stream pipeline, which will pump gas from Siberia to Europe under the Baltic Sea, bypassing East European transit countries, is being built jointly by Gazprom, Germany's E.ON and BASF, and Dutch gas transportation firm Gasunie at an estimated cost of $12 billion.
The South Stream pipeline is designed to annually pump 31 billion cubic meters of Central Asian and Russian gas to the Balkans and on to other European countries, but its capacity could be increased by a further 16 billion cu m. The project involves Bulgaria, Serbia, Hungary, Italy and Greece.
The Nabucco pipeline is viewed as a rival to the South Stream project and is designed to link energy-rich Central Asia to Europe through Turkey, Bulgaria, Romania, Hungary and Austria, bypassing Russia and Ukraine.
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16. UKRAINIAN PM SPEAKS OUT AGAINST PIPELINES BYPASSING UKRAINE
RIA Novosti, Moscow, Russia, Sat, February 7, 2009
MUNICH - Ukrainian Prime Minister Yulia Tymoshenko said on Saturday Ukraine was a reliable gas transit country and urged that projects for gas pipelines bypassing Ukraine be abandoned. "Ukraine is a superb transit country and raising the question of bypassing it by some alternative gas pipelines is a crazy idea," Tymoshenko told the 45th Munich Security Conference.
MUNICH - Ukrainian Prime Minister Yulia Tymoshenko said on Saturday Ukraine was a reliable gas transit country and urged that projects for gas pipelines bypassing Ukraine be abandoned. "Ukraine is a superb transit country and raising the question of bypassing it by some alternative gas pipelines is a crazy idea," Tymoshenko told the 45th Munich Security Conference.
Europe has renewed interest in diversifying its gas imports since a dispute between Russia and Ukraine in January left around 20 countries short of gas. Deliveries via Ukraine resumed on January 20. "I would like to stress once again - Ukraine did not begin the [gas] crisis, but settled it," Tymoshenko said.
Tymoshenko also called on Russia to join Ukraine in "constructive, mutually acceptable avenues of cooperation." There are currently several projects of alternative gas supply routes to Europe.
The Nord Stream pipeline, which will pump gas from Siberia to Europe under the Baltic Sea, bypassing East European transit countries, is being built jointly by Gazprom, Germany's E.ON and BASF, and Dutch gas transportation firm Gasunie at an estimated cost of $12 billion.
The South Stream pipeline is designed to annually pump 31 billion cubic meters of Central Asian and Russian gas to the Balkans and on to other European countries, but its capacity could be increased by a further 16 billion cu m. The project involves Bulgaria, Serbia, Hungary, Italy and Greece.
The Nabucco pipeline is viewed as a rival to the South Stream project and is designed to link energy-rich Central Asia to Europe through Turkey, Bulgaria, Romania, Hungary and Austria, bypassing Russia and Ukraine.
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17. UKRAINIAN PREMIER, WORLD BANK PRESIDENT DISCUSS
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17. UKRAINIAN PREMIER, WORLD BANK PRESIDENT DISCUSS
RESTRUCTURING OF UKRAINE'S BANKING SECTOR
Interfax Ukraine, Kyiv, Ukraine, Saturday, February 7, 2009
MUNICH - Ukrainian Prime Minister Yulia Tymoshenko and World Bank President Robert Zoellick discussed the restructuring of the Ukrainian banking sector and financial support for infrastructural projects.
The two officials were a meeting in the frames of sidelines of the Munich Security Conference on Friday evening, the Ukrainian premier's press secretary Maryna Soroka reported on Saturday.
Tymoshenko and Zoellick discussed Ukraine's cooperation with the World Bank, particularly the issuance of a development loan to Ukraine, Soroka said.
The World Bank president congratulated the Ukrainian premier on winning a vote of confidence from the parliament recently. Tymoshenko invited Zoellick to visit Ukraine, and the World Bank president accepted the invitation.
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18. RUSSIAN BANKS ANGLE FOR ACQUISITIONS IN UKRAINE & KAZAKHSTAN
KAZAKH CATCH
The Kazakh government effectively nationalised BTA Bank on February 2nd, following a ruling by the country’s Financial Supervisory Agency (FSA). It ordered the removal of the bank’s chairman, Mukhtar Ablyazov, as well as his deputy, and the issuance of new shares to recapitalise its balance sheet. The state-run Samruk-Kazyna, also known as the national welfare fund, promptly bought the new shares for Tenge251bn (US$2.1bn) and received a 78% stake in the locally listed lender.
The Kazakh authorities moved immediately to resell the newly acquired stake. Karim Masimov, the country’s prime minister, told a cabinet meeting that same day that the government was in talks with Sberbank, according to Reuters.
Suspicion of political motivations quickly surrounded the seizure of BTA Bank. Mr Ablyazov, a former energy minister and opposition party leader who was jailed earlier this decade before receiving a pardon in return for abandoning politics, condemned the move. He has not apparently engaged in political activity in recent years.
BTA Bank, like the rest of the Kazakh banking sector, appears to be in poor conditions. Samruk-Kazyna was also considering on February 2nd the injection of capital into Alliance Bank, the country’s fourth largest lender which has a London share listing.
UKRAINIAN UNDERTOW
VEB made a similarly opportunistic purchase when it bought a 75% stake in Ukraine’s Prominvestbank on January 15th. VEB -- whose chairman is Vladimir Putin, the Russian prime minister and former president -- said that it paid HRN1.3bn (US$165.5m) for the controlling stake, and pledged to increase the bank’s capital by HRN7bn.
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18. RUSSIAN BANKS ANGLE FOR ACQUISITIONS IN UKRAINE & KAZAKHSTAN
Russian lenders fish in crisis-hit neighbours despite their own woes
EIU Finance-News Analysis, NY, NY, Wed, February 4, 2009
Barely hours after the Kazakh authorities took over BTA Bank on February 2nd, officials from Sberbank arrived in Astana, the capital, seeking a stake in Kazakhstan’s largest lender.
Barely hours after the Kazakh authorities took over BTA Bank on February 2nd, officials from Sberbank arrived in Astana, the capital, seeking a stake in Kazakhstan’s largest lender.
A takeover of BTA by Russia’s dominant, state-controlled savings bank would mark Moscow’s second important foray in recent weeks into its neighbours’ financial sectors. Vnesheconombank (VEB), Russia’s development bank, earlier bought a majority stake in Prominvestbank, the Ukraine’s sixth largest lender by assets, in mid-January.
Such large bank takeovers appear ominous for the host states, as a greater Russian economic footprint in Kazakhstan and Ukraine would threaten their ability to act independently of Russia. Both states have sought Western and (in Kazakhstan's case Chinese) investment to balance Russian influence and so give the state room for manoeuvre.
The bank takeovers have the potential to upset this balance, both by themselves and by opening the door to further acquisitions of distressed industrial assets, particularly in Ukraine.
Russia’s biggest banks, all of which are controlled by the Kremlin, appear eager to extend their reach as the global financial crisis spreads to the former Soviet Union. However, Russian banks, and their state sponsor, also appear vulnerable to the crisis. It is not clear that they can sustain an expansion drive, or have the resources to integrate troubled new acquisitions.
KAZAKH CATCH
The Kazakh government effectively nationalised BTA Bank on February 2nd, following a ruling by the country’s Financial Supervisory Agency (FSA). It ordered the removal of the bank’s chairman, Mukhtar Ablyazov, as well as his deputy, and the issuance of new shares to recapitalise its balance sheet. The state-run Samruk-Kazyna, also known as the national welfare fund, promptly bought the new shares for Tenge251bn (US$2.1bn) and received a 78% stake in the locally listed lender.
The Kazakh authorities moved immediately to resell the newly acquired stake. Karim Masimov, the country’s prime minister, told a cabinet meeting that same day that the government was in talks with Sberbank, according to Reuters.
A Kazakh official also told reporters that a sale to Sberbank would be mutually advantageous given BTA’s significant assets in Russia, according to Bloomberg. Sberbank -- currently run by German Gref, a reforming former Russian economy minister -- opened its own subsidiary in Kazakhstan last year.
Suspicion of political motivations quickly surrounded the seizure of BTA Bank. Mr Ablyazov, a former energy minister and opposition party leader who was jailed earlier this decade before receiving a pardon in return for abandoning politics, condemned the move. He has not apparently engaged in political activity in recent years.
Although the details are not yet known, the authorities acted with reasonable transparency. The FSA published its findings about the bank, alleging that it had failed to make several payment orders, and that it had been unable to raise loan-loss provisions to required levels. New management at BTA promptly published information on the takeover on the bank’s website.
BTA Bank, like the rest of the Kazakh banking sector, appears to be in poor conditions. Samruk-Kazyna was also considering on February 2nd the injection of capital into Alliance Bank, the country’s fourth largest lender which has a London share listing.
The bank’s controlling shareholder, Seimar Alliance Financial Corp, was reportedly offering the fund a majority stake in the struggling bank for a nominal sum. Samruk-Kazyna also injected funds into Kazkommertsbank and Halyk Savings Bank, the third and fourth ranked banks by assets, on January 29th.
UKRAINIAN UNDERTOW
VEB made a similarly opportunistic purchase when it bought a 75% stake in Ukraine’s Prominvestbank on January 15th. VEB -- whose chairman is Vladimir Putin, the Russian prime minister and former president -- said that it paid HRN1.3bn (US$165.5m) for the controlling stake, and pledged to increase the bank’s capital by HRN7bn.
It moved after two local businessmen -- Andriy and Serhiy Klyuev, brothers and both members of Ukraine’s parliament -- failed to purchase the troubled lender. They had reached an agreement to purchase a 68% stake in Prominvestbank but twice failed to meet deadlines to raise the bank’s capital.
Prominvestbank operates a network of over 800 branches across the country. Ukraine’s central bank took control of the lender in October 2008 after a run on its deposits and has already injected HRN7bn into the bank. The government had previously considered plans to nationalise the bank, according to reports.
DOUBTS ON RUSSIAN BANKS
Despite their opportunistic moves in recent weeks, it’s not clear that Russian banks have the financial strength for expansion. Sberbank, which has a stockmarket listing with the state owning a majority stake, reported strong quarterly results on January 26th, with profits up 29% from a year earlier.
Despite their opportunistic moves in recent weeks, it’s not clear that Russian banks have the financial strength for expansion. Sberbank, which has a stockmarket listing with the state owning a majority stake, reported strong quarterly results on January 26th, with profits up 29% from a year earlier.
The trouble, however, is the bank’s financial statements were for the period to end-September 2008, when financial market conditions were growing sharply worse both in Russia and around the world. Since then the bank has surely suffered from Russia’s sharp currency devaluation and mounting wave of corporate defaults.
Sberbank’s published results reveal growing weakness. Its profits in the third quarter were weaker than in any of the previous three reporting periods. Although still respectable, the bank’s returns on assets and on equity slipped below their year-earlier levels. Bad loans, which still stood at only 1.52% of the credit portfolio, have now certainly risen.
Figures from Sberbank’s smaller rival VTB likely show how conditions will continue to sour. The bank revealed on January 22nd that it suffered losses in the third quarter of 2008, following its profitable performance in earlier quarters. Although similar to Sberbank in being a state-controlled listed bank, VTB is more reliant on corporate borrowers. It said it took heavy loan-loss provisions and suffered writedowns on its securities holdings. It also indicated that it expected a sharp increase in its levels of bad loans.
The Russian state controls and stands behind Sberbank, VTB and VEB. However, its resources are now strained as well. International reserves fell to US$386.5bn on January 23rd, down from a peak of nearly US$600bn in July of last year, according to the Russian Central Bank. The authorities have spent hundreds of billions of dollars in the past half year supporting the rouble, which has nevertheless lost 34.4% of its value against the US dollar over that period.
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19. UKRAINIAN PARLIAMENT ADOPTS AMENDMENTS ON CONCESSIONS
The Law introduces the following significant changes with respect to the construction (reconstruction, and repair) and the operation of general-purpose motor roads on terms of concessions.
1) The Law now establishes that decisions regarding the construction (reconstruction, and repair) and/or operation of general-purpose motor roads on terms of concessions, as well as regarding concession agreements, should be made by the State Service for Motor Roads of Ukraine (Ukravtodor);
2) The Law now provides for a two-stage concession tender. On the first stage the bidders' qualifications are verified and on the second stage the bidders' proposals are evaluated. According to the Law, the procedure for the concession tender will be adopted by the Cabinet of Ministers of Ukraine;
3) The Law now provides for the right of Ukravtodor to participate in the construction (reconstruction, and repair) of the object of the concession and to share the profits realized from the operation thereof;
4) The Law now specifies that concessioners of low-profit or unprofitable objects of concession have the right to state compensation which should be provided to them in accordance with the procedure adopted by the Cabinet of Ministers of Ukraine.
It is expected that these amendments introduced by the Law will facilitate the attraction of foreign investors to Ukrainian projects related to the construction, reconstruction, and repair of general-purpose motor roads.
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19. UKRAINIAN PARLIAMENT ADOPTS AMENDMENTS ON CONCESSIONS
FOR CONSTRUCTION AND OPERATION OF MOTOR ROADS
LEGAL ALERT: Baker & McKenzie-CIS Limited, Kyiv, Ukraine, Sat, Feb 7, 2009
KYIV - On 15 January 2009, the Ukrainian Parliament adopted Law of Ukraine No. 891-VI "On Amendments to the Law of Ukraine "On Concessions for the Construction and Operation of Motor Roads" (the "Law") which completely restates the earlier Law. The Law was officially published on 31 January 2009, and it became effective as of the date of its official publication.
KYIV - On 15 January 2009, the Ukrainian Parliament adopted Law of Ukraine No. 891-VI "On Amendments to the Law of Ukraine "On Concessions for the Construction and Operation of Motor Roads" (the "Law") which completely restates the earlier Law. The Law was officially published on 31 January 2009, and it became effective as of the date of its official publication.
The Law introduces the following significant changes with respect to the construction (reconstruction, and repair) and the operation of general-purpose motor roads on terms of concessions.
1) The Law now establishes that decisions regarding the construction (reconstruction, and repair) and/or operation of general-purpose motor roads on terms of concessions, as well as regarding concession agreements, should be made by the State Service for Motor Roads of Ukraine (Ukravtodor);
2) The Law now provides for a two-stage concession tender. On the first stage the bidders' qualifications are verified and on the second stage the bidders' proposals are evaluated. According to the Law, the procedure for the concession tender will be adopted by the Cabinet of Ministers of Ukraine;
3) The Law now provides for the right of Ukravtodor to participate in the construction (reconstruction, and repair) of the object of the concession and to share the profits realized from the operation thereof;
4) The Law now specifies that concessioners of low-profit or unprofitable objects of concession have the right to state compensation which should be provided to them in accordance with the procedure adopted by the Cabinet of Ministers of Ukraine.
It is expected that these amendments introduced by the Law will facilitate the attraction of foreign investors to Ukrainian projects related to the construction, reconstruction, and repair of general-purpose motor roads.
NOTES: For further information on the topic please contact Serhiy Piontkovsky, Partner at the Kyiv Office of Baker & McKenzie, by telephone (380 44 590 0101), facsimile (380 44 590 0110), or e-mail (kyiv_info@bakernet.com). Baker & McKenzie - CIS, Limited. Renaissance Business Center, 24 Vorovskoho St., Kyiv 01054, Ukraine, Link: www.bakernet.com. LINK: http://bakerxchange.com/ve/ZZm8029Myj71y71R86
Baker & McKenzie - CIS, Limited is a member of the U.S.-Ukraine Business Council (USUBC), Washington, D.C., www.usubc.org.
The LEGAL ALERT is issued to inform Baker & McKenzie clients and other interested parties of time-sensitive legal developments that may affect or otherwise be of special interest to them. The comments above do not constitute legal advice or opinion, and should not be regarded as a substitute for detailed advice in individual cases.
NOTE: Baker & McKenzie is a member of the U.S.-Ukraine Business Council (USUBC), Washington, D.C., www.usubc.org.
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20. MAGISTERS LAW FIRM OPENS OFFICE IN MINSK, BELARUS
Magisters completes merger with Belarus law firm BelJurbureau
Magisters law firm, Kyiv, Ukraine, Tue, February 3, 2009
KYIV - Magisters, leading CIS-based international law firm, opens formally its new office in Minsk following completion of the merger with Belarus law firm BelJurbureau.
Magisters’ office in Minsk will provide legal advice in M&A and Corporate Law, Banking & Finance, Real Estate and Construction, Tax, Dispute Resolution and Intellectual Property.
Belarus Partners Dennis Turovets and Anna Rusetskaya will lead the team on the ground with support from the other offices of the firm.
Dennis Turovets, Managing Partner of Magisters in Minsk, commented: "Prior to the merger with Magisters, BelJurbureau was well established as a leading law firm in Belarus. As a result of the merger we have combined strong local expertise of BelJurbureau with Magisters’ global reach and international experience.
"This is the first merger of an international firm with a leading local firm in the market. This move is especially welcomed by international clients of Magisters in light of the announced privatization plans and considerable investment potential of Belarus".
Oleg Riabokon, Managing Partner of Magisters, added: "With our presence in Belarus we are now ideally positioned to offer solid local expertise in four major post-Soviet countries such as Russia, Ukraine, Belarus and Kazakhstan, which make up a sizable market of 200 million people.
"In addition to Magisters’ own offices, our network of ‘of counsel’ relationships in Armenia, Azerbaijan, Georgia, Kirgizstan, Moldova, Turkmenistan and Uzbekistan gives us competitive advantage in the region compared to any other international law firm. Our London representative office will specifically focus on clients with CIS-wide legal needs”.
ABOUT MAGISTERS
Magisters (previously Magister & Partners) is a full-service international law firm advising clients in the CIS and worldwide. Magisters currently employs over 230 people, 130 of whom are lawyers, including 13 partners. Magisters is a recognized leader in banking and finance, corporate and commercial law, dispute resolution, international trade, real estate, and tax law. Magisters has offices in Astana, Kyiv, Minsk and Moscow, and the representative office in London. More information about the firm can be found at www.magisters.com.
For further information, please contact: Stephen Finch, Associate Director at Weber Shandwick Financial, SFinch@webershandwick.com +44 20 7067 0707, or Anna Silina, Communications Manager, Magisters, +38 044 492 8282, asilina@magisters.com. Magisters, 38 Volodymyrska St., Kyiv, 01034, Ukraine.
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20. MAGISTERS LAW FIRM OPENS OFFICE IN MINSK, BELARUS
Magisters completes merger with Belarus law firm BelJurbureau
Magisters law firm, Kyiv, Ukraine, Tue, February 3, 2009
KYIV - Magisters, leading CIS-based international law firm, opens formally its new office in Minsk following completion of the merger with Belarus law firm BelJurbureau.
Magisters’ office in Minsk will provide legal advice in M&A and Corporate Law, Banking & Finance, Real Estate and Construction, Tax, Dispute Resolution and Intellectual Property.
Belarus Partners Dennis Turovets and Anna Rusetskaya will lead the team on the ground with support from the other offices of the firm.
Dennis Turovets, Managing Partner of Magisters in Minsk, commented: "Prior to the merger with Magisters, BelJurbureau was well established as a leading law firm in Belarus. As a result of the merger we have combined strong local expertise of BelJurbureau with Magisters’ global reach and international experience.
"This is the first merger of an international firm with a leading local firm in the market. This move is especially welcomed by international clients of Magisters in light of the announced privatization plans and considerable investment potential of Belarus".
Oleg Riabokon, Managing Partner of Magisters, added: "With our presence in Belarus we are now ideally positioned to offer solid local expertise in four major post-Soviet countries such as Russia, Ukraine, Belarus and Kazakhstan, which make up a sizable market of 200 million people.
"In addition to Magisters’ own offices, our network of ‘of counsel’ relationships in Armenia, Azerbaijan, Georgia, Kirgizstan, Moldova, Turkmenistan and Uzbekistan gives us competitive advantage in the region compared to any other international law firm. Our London representative office will specifically focus on clients with CIS-wide legal needs”.
ABOUT MAGISTERS
Magisters (previously Magister & Partners) is a full-service international law firm advising clients in the CIS and worldwide. Magisters currently employs over 230 people, 130 of whom are lawyers, including 13 partners. Magisters is a recognized leader in banking and finance, corporate and commercial law, dispute resolution, international trade, real estate, and tax law. Magisters has offices in Astana, Kyiv, Minsk and Moscow, and the representative office in London. More information about the firm can be found at www.magisters.com.
For further information, please contact: Stephen Finch, Associate Director at Weber Shandwick Financial, SFinch@webershandwick.com +44 20 7067 0707, or Anna Silina, Communications Manager, Magisters, +38 044 492 8282, asilina@magisters.com. Magisters, 38 Volodymyrska St., Kyiv, 01034, Ukraine.
NOTE: Magisters law firm is a member of the U.S.-Ukraine Business Council, Washington, D.C., www.usubc.org.
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21. STATUS OF CRIMEA HANGS OVER RUSSIA, UKRAINE
Moscow's fleet deployed in Black Sea territory
By Joshua Kucera, The Washington Times, Wash, DC., Mon, Feb 9, 2009
SEVASTOPOL, Ukraine - A marble plaque on the wall of the Russian Sailors' Club, one of the city's trademark white granite neoclassical buildings, reads: "TIME CAPSULE: To be opened by service members of the Russian Black Sea Fleet and citizens of the 'hero city' of Sevastopol, 22/2/2021."
There is a hitch, however. The Ukrainian government says Russia and its fleet have to be out of Sevastopol by 2017.
While the recently resolved Russian-Ukrainian dispute over natural gas has garnered more headlines, the status of Crimea could carry more long-term potential for conflict between the two post-Soviet states.
This bit of Ukraine sticks into the Black Sea and has a majority ethnic Russian population as well as a major Russian naval base. Worries about its status resurfaced in the aftermath of the August war between Georgia and Russia. Like Georgia, Ukraine has drawn Russia's ire for its friendly relations with the West and desire to join NATO.
Like South Ossetia - the former Georgian territory whose "independence" has been recognized by Russia - Crimea favors closer ties with Russia and Russia encourages this, in part to tweak the pro-Western government in Kiev.
During the Georgia-Russia war, Ukrainian President Viktor Yushchenko traveled to Georgia to publicly offer his support, and Ukraine sold arms to Georgia. Ukraine accused the Russian Consulate in Simferopol, Crimea's capital, of passing out Russian passports to residents of Crimea; Russia had done the same in South Ossetia over the past several years, and then said that its intervention there was to defend the rights of its citizens.
On Jan. 26, Russia announced plans to build a new naval base in another breakaway Georgian region, Abkhazia, the Associated Press reported, perhaps as insurance for a loss of Sevastopol.
Polls show that 47 percent of Ukrainians felt less secure as a result of the Georgia war, said Boris Tarasyuk, Ukraine's first foreign minister after the Orange Revolution that brought pro-Western leaders to power in 2004. Ukraine moved troops stationed across the country toward Crimea during the war, and the defense minister has called for dramatically increasing spending on the military since the war.
"What happened in Georgia convinced many people in Ukraine, especially those in charge, to pay adequate attention to the quality of its armed forces and the necessity to allocate adequate funding for making the armed forces modern, well-equipped and ready," Mr. Tarasyuk told The Washington Times.
While no one is predicting imminent conflict in Crimea, there are troubling signs that the peninsula could be a source of tension for years to come. Russian is spoken everywhere in Crimea, except in government-mandated Ukrainian-language TV and radio ads. Graffiti in Sevastopol reads "Sevastopol is Russian" and "Crimea is Russian."
"Russia can use the fleet, depending on what they want, to turn up or turn down the pressure in Crimea whenever they want," said a Western diplomat in Kiev, who spoke on the condition of anonymity.
The current agreement governing the fleet's presence in Sevastopol expires in 2017, and Mr. Yushchenko declared last year that the lease would not be extended. But Russian officials have said they will not discuss moving the fleet until then - even though it would take several years to redeploy it - and Russian officials in Sevastopol said they will never accept its departure.
"I don't know what would happen if the fleet had to leave in 2017. I think what happened in South Ossetia would look mild in comparison," said Vladimir Solovyev, a former intelligence chief of the Black Sea Fleet who is now the head of the local office of the Institute of Countries of the Commonwealth of Independent States, a Moscow-based activist group.
The Ukrainian government has done its part to raise tensions, as well, by imposing new language laws. Foreign films must now be dubbed into Ukrainian, though they are subtitled in Russian, and local television is increasingly being broadcast in Ukrainian, much to the consternation of Sevastopol's residents.
"We're being deprived of our right to speak Russian," said Raisa Teliatnikova, the head of the local office of the Russian Community of Crimea, another Moscow-funded Russian rights group.
She said Kiev's language policies are doomed to fail because of the historical links between Russia and Ukraine. "It's impossible to separate Ukraine from Russia, no matter how hard they try to join NATO or the West, deep down they know they can't survive without Russia," she said.
Last year, two new monuments were erected on the peninsula, one to Catherine the Great and the other to Petro Konashevych-Sahaidachny, a 17th-century Ukrainian hero. But the monument to Catherine is in prime real estate, in the city center across from the Black Sea Fleet museum, while the Ukrainian statue is in a distant suburb.
"You can see the attitude of the people through these two monuments," Mr. Solovyev said. "At Catherine the Great, you can always see fresh beautiful flowers, while at Sahaidachny, you just see old artificial flowers."
Shortly after it was erected, though, the Catherine the Great statue was splashed with blue and yellow paint, the colors of the Ukrainian flag. The culprit was never caught, and one city official, who asked not to be identified, said "both sides could gain" from the defacing of the monument. Now, small groups of pro-Russia volunteers stand by the monument to protect it against further mischief.
21. STATUS OF CRIMEA HANGS OVER RUSSIA, UKRAINE
Moscow's fleet deployed in Black Sea territory
By Joshua Kucera, The Washington Times, Wash, DC., Mon, Feb 9, 2009
SEVASTOPOL, Ukraine - A marble plaque on the wall of the Russian Sailors' Club, one of the city's trademark white granite neoclassical buildings, reads: "TIME CAPSULE: To be opened by service members of the Russian Black Sea Fleet and citizens of the 'hero city' of Sevastopol, 22/2/2021."
There is a hitch, however. The Ukrainian government says Russia and its fleet have to be out of Sevastopol by 2017.
While the recently resolved Russian-Ukrainian dispute over natural gas has garnered more headlines, the status of Crimea could carry more long-term potential for conflict between the two post-Soviet states.
This bit of Ukraine sticks into the Black Sea and has a majority ethnic Russian population as well as a major Russian naval base. Worries about its status resurfaced in the aftermath of the August war between Georgia and Russia. Like Georgia, Ukraine has drawn Russia's ire for its friendly relations with the West and desire to join NATO.
Like South Ossetia - the former Georgian territory whose "independence" has been recognized by Russia - Crimea favors closer ties with Russia and Russia encourages this, in part to tweak the pro-Western government in Kiev.
During the Georgia-Russia war, Ukrainian President Viktor Yushchenko traveled to Georgia to publicly offer his support, and Ukraine sold arms to Georgia. Ukraine accused the Russian Consulate in Simferopol, Crimea's capital, of passing out Russian passports to residents of Crimea; Russia had done the same in South Ossetia over the past several years, and then said that its intervention there was to defend the rights of its citizens.
On Jan. 26, Russia announced plans to build a new naval base in another breakaway Georgian region, Abkhazia, the Associated Press reported, perhaps as insurance for a loss of Sevastopol.
Polls show that 47 percent of Ukrainians felt less secure as a result of the Georgia war, said Boris Tarasyuk, Ukraine's first foreign minister after the Orange Revolution that brought pro-Western leaders to power in 2004. Ukraine moved troops stationed across the country toward Crimea during the war, and the defense minister has called for dramatically increasing spending on the military since the war.
"What happened in Georgia convinced many people in Ukraine, especially those in charge, to pay adequate attention to the quality of its armed forces and the necessity to allocate adequate funding for making the armed forces modern, well-equipped and ready," Mr. Tarasyuk told The Washington Times.
While no one is predicting imminent conflict in Crimea, there are troubling signs that the peninsula could be a source of tension for years to come. Russian is spoken everywhere in Crimea, except in government-mandated Ukrainian-language TV and radio ads. Graffiti in Sevastopol reads "Sevastopol is Russian" and "Crimea is Russian."
That Crimea is part of Ukraine today is a historical quirk. Russian Empress Catherine the Great founded Sevastopol as a naval base, and Crimea was part of Russia until 1954, when Soviet Premier Nikita Khrushchev made it part of the Ukrainian Soviet Socialist Republic. The move had little import until the Soviet Union collapsed, leaving Crimea's majority Russian population and the headquarters for the Black Sea Fleet in Ukraine.
During the era of Russian leader Vladimir Putin, Russian nationalist politicians, in particular Moscow Mayor Yuri Luzhkov, have made Crimea into a Russian cause celebre. Mr. Luzhkov used to make frequent visits to Sevastopol, during which he would argue that the city should be part of Russia, until he was declared persona non grata by Ukraine last year.
Mr. Luzhkov has funded barracks for sailors of the Black Sea Fleet and built a branch of Moscow State University in Sevastopol. Mr. Luzhkov and other Russian officials also pay for a variety of citizens groups that promote Russian interests in Crimea.
The Black Sea Fleet is both the emotional heart and the strategic crux of the dispute. In Soviet times, the fleet had nearly 600 ships and 100,000 sailors and support staff. But during Russia's financial collapse of the 1990s, the fleet fell into disrepair, and now numbers only about 60 operational ships.
Ukraine inherited some of the Soviet fleet, as well, but its ships are in an even worse state, and military analysts estimate that it only has about six operational ships.
Russia sees its fleet as the protagonist of many of the nation's finest moments, including the epic defenses of Sevastopol during the Crimean War and World War II. "The Black Sea Fleet doesn't have much military significance - its significance is economic and especially political," said Sergey Kulik, the head of a Ukrainian government think tank in Sevastopol.
Russia sees its fleet as the protagonist of many of the nation's finest moments, including the epic defenses of Sevastopol during the Crimean War and World War II. "The Black Sea Fleet doesn't have much military significance - its significance is economic and especially political," said Sergey Kulik, the head of a Ukrainian government think tank in Sevastopol.
"Russia can use the fleet, depending on what they want, to turn up or turn down the pressure in Crimea whenever they want," said a Western diplomat in Kiev, who spoke on the condition of anonymity.
The current agreement governing the fleet's presence in Sevastopol expires in 2017, and Mr. Yushchenko declared last year that the lease would not be extended. But Russian officials have said they will not discuss moving the fleet until then - even though it would take several years to redeploy it - and Russian officials in Sevastopol said they will never accept its departure.
"I don't know what would happen if the fleet had to leave in 2017. I think what happened in South Ossetia would look mild in comparison," said Vladimir Solovyev, a former intelligence chief of the Black Sea Fleet who is now the head of the local office of the Institute of Countries of the Commonwealth of Independent States, a Moscow-based activist group.
The Ukrainian government has done its part to raise tensions, as well, by imposing new language laws. Foreign films must now be dubbed into Ukrainian, though they are subtitled in Russian, and local television is increasingly being broadcast in Ukrainian, much to the consternation of Sevastopol's residents.
"We're being deprived of our right to speak Russian," said Raisa Teliatnikova, the head of the local office of the Russian Community of Crimea, another Moscow-funded Russian rights group.
She said Kiev's language policies are doomed to fail because of the historical links between Russia and Ukraine. "It's impossible to separate Ukraine from Russia, no matter how hard they try to join NATO or the West, deep down they know they can't survive without Russia," she said.
Last year, two new monuments were erected on the peninsula, one to Catherine the Great and the other to Petro Konashevych-Sahaidachny, a 17th-century Ukrainian hero. But the monument to Catherine is in prime real estate, in the city center across from the Black Sea Fleet museum, while the Ukrainian statue is in a distant suburb.
"You can see the attitude of the people through these two monuments," Mr. Solovyev said. "At Catherine the Great, you can always see fresh beautiful flowers, while at Sahaidachny, you just see old artificial flowers."
Shortly after it was erected, though, the Catherine the Great statue was splashed with blue and yellow paint, the colors of the Ukrainian flag. The culprit was never caught, and one city official, who asked not to be identified, said "both sides could gain" from the defacing of the monument. Now, small groups of pro-Russia volunteers stand by the monument to protect it against further mischief.
--------------------------------------------------------------------------------
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
===================================================
22. ENDING THE ANNUAL GAS CRISIS
ANALYSIS & COMMENTARY: By Andrew Wilson,
Senior Policy Fellow European Council on Foreign Relations,
Wall Street Journal Europe, NY, NY, Tuesday, Jan 27, 2009
Now that the gas is flowing again, what should be done to stop the same thing from happening next winter? Gas crises like the one this month that saw Russia shut off deliveries to Europe via Ukraine have been an annual event since January 2006. Only in 2007 did Russia provide some variety by arguing with Belarus rather than Ukraine.
The European Union, Ukraine and Russia all need to act. Fortunately it will be easiest for the EU to put its own house in order first. Brussels should set a new standard of "energy security" for member states. Some will need to invest in conservation, others in storage, others in reserve supply. All have different requirements. But Hungary, where the local company E.ON Földgáz has built up at least two months of reserves since 2006, shows that a lot can be done if the political will is there, even by next January.
On the other hand, "energy solidarity" should mean sharing the burden between Brussels and national budgets by using structural funds. Bulgaria, for example, is connected only to the Ukrainian gas network and could not receive supplies from its EU neighbors.
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
===================================================
22. ENDING THE ANNUAL GAS CRISIS
ANALYSIS & COMMENTARY: By Andrew Wilson,
Senior Policy Fellow European Council on Foreign Relations,
Wall Street Journal Europe, NY, NY, Tuesday, Jan 27, 2009
Now that the gas is flowing again, what should be done to stop the same thing from happening next winter? Gas crises like the one this month that saw Russia shut off deliveries to Europe via Ukraine have been an annual event since January 2006. Only in 2007 did Russia provide some variety by arguing with Belarus rather than Ukraine.
The European Union, Ukraine and Russia all need to act. Fortunately it will be easiest for the EU to put its own house in order first. Brussels should set a new standard of "energy security" for member states. Some will need to invest in conservation, others in storage, others in reserve supply. All have different requirements. But Hungary, where the local company E.ON Földgáz has built up at least two months of reserves since 2006, shows that a lot can be done if the political will is there, even by next January.
On the other hand, "energy solidarity" should mean sharing the burden between Brussels and national budgets by using structural funds. Bulgaria, for example, is connected only to the Ukrainian gas network and could not receive supplies from its EU neighbors.
So it and other isolated countries need more so-called interconnectors that would link them to more networks, allowing gas to flow as it would in a true market next time there is a supply shock. A temporary price spike would help redistribute supply more quickly next time, including out of underground storage and in a reverse flow from west to east.
In the longer term, however, the EU must help break the "Mexican standoff" that currently exists between Russia and Ukraine. In every crisis to date, the two have only made a deal when one side thought it was losing the PR war. Neither country has enough material leverage over the other to force a deal: Russia controls production and transit from Central Asia, while Ukraine controls transit to Europe.
The only way to break the deadlock is to change the balance of power. Russia's proposal to set up a new consortium among Gazprom and Gazprom-friendly companies like Germany's E.ON Ruhrgas or Italy's ENI will not do this. The Ukrainians would see themselves outnumbered.
A more feasible alternative is for Ukraine to retain ownership of the pipeline, but for a genuinely tripartite consortium to run it on the basis of a long-term lease (30 years or more) and an international treaty establishing clear rules of transparency, longer-term price deals, supply reliability and dispute settlement.
The gains for European customers from such an arrangement are clear. Ukraine could be brought to the table with promises of a broader program of assistance in energy reform: more link-up to Europe's electricity grid, the unlocking of domestic production potential, and a serious conservation drive. The EU might also link the creation of a consortium to the new Association Agreement it promised Ukraine in September.
Here, the EU will need both sticks and carrots. The crisis has already weakened Ukraine's European ambitions by sowing distrust among the member states that found themselves without gas for more than a week earlier this month. But if the negotiations go well, the EU could help compensate for some of Ukraine's declining NATO prospects and consequent security weaknesses.
An EU mission to Ukraine's most vulnerable trouble spot in the Crimea would be a good start. The peninsula is the one Ukrainian region with an ethnic Russian majority, and is home to the Russian Black Sea Fleet at Sevastopol on a lease that is due to run out in 2017. A highly visible EU program should help diversify the peninsula's economy and boost its trading potential.
Russia would gain, too. There would be no more risk of gas theft, its customers downstream could relax, and there would be fewer political obstacles to its alternative pipeline schemes. Russia also needs urgent relief from a quadruple economic crisis. Its stock market has taken one of the biggest hits in the world over the last 12 months, with the RTS index down more than 70% from its 2008 peak.
The slide started with Vladimir Putin's July attack on mining company Mechel for allegedly evading taxes and selling its coal more cheaply abroad, then continued with the war in Georgia, before the global economic crisis even hit.
Second, Russia has structural problems that go far beyond the falling oil price and the gas price that will soon follow it down. One result of Mr. Putin's policy of creating state-backed "national champions" is $480 billion of commercial debt, as Western banks lent too much money to Russian firms that ostensibly could not fail.
Third, Russia is facing an energy production crisis. Its national champions are champion profiteers, but they do not invest as they should. Russia simply cannot get enough gas out of the ground to supply everybody. Energy is still incredibly cheap in the inefficient domestic market, and the Kremlin will not risk social protest by putting up prices to discourage usage. Then it has to supply the Ukrainian pipeline, alternatives like Nord Stream and South Stream, and other distribution routes.
Fourth, when there is a choice between modernization and mobilization, Russia prefers to manufacture crises and enemies rather than real solutions. Whoever started the present crisis, Russia has exploited it to play triple divide-and-rule: widening splits between Ukraine and Europe, within the EU, and within Ukraine itself. A depoliticized and strictly commercial pipeline system through Ukraine will slowly leverage change throughout the Russian system.
Ukraine has plenty of accumulated problems, too. Its property boom has crashed, and its steel and chemical industries are almost at standstill. But it mainly needs relief from the political problems that have accumulated since the Orange Revolution in 2004. Corruption in the gas industry is the factor most responsible for driving the revolution off track.
The notorious intermediary RosUkrEnergo made a publicly stated profit of $795 million in 2007, but its payment in kind, 20% of gas deliveries to Ukraine, was worth more like $4.35 billion. That kind of money buys influence and fuels the constant gridlock in Ukrainian politics.
Prime Minister Yulia Tymoshenko has long campaigned in public against RosUkrEnergo, but the key agreement with Mr. Putin this month was made behind closed doors. The company may diversify into the domestic market, where it now controls 75% of distribution. But removing the cancer of gas corruption is a necessary precondition for cleaning up the political system in Ukraine.
No one has emerged well from the current crisis. But all will benefit if it prompts a serious search for a radical solution.
LINK: http://online.wsj.com/article/SB123309642721821517.html
--------------------------------------------------------------------------------
In the longer term, however, the EU must help break the "Mexican standoff" that currently exists between Russia and Ukraine. In every crisis to date, the two have only made a deal when one side thought it was losing the PR war. Neither country has enough material leverage over the other to force a deal: Russia controls production and transit from Central Asia, while Ukraine controls transit to Europe.
The only way to break the deadlock is to change the balance of power. Russia's proposal to set up a new consortium among Gazprom and Gazprom-friendly companies like Germany's E.ON Ruhrgas or Italy's ENI will not do this. The Ukrainians would see themselves outnumbered.
A more feasible alternative is for Ukraine to retain ownership of the pipeline, but for a genuinely tripartite consortium to run it on the basis of a long-term lease (30 years or more) and an international treaty establishing clear rules of transparency, longer-term price deals, supply reliability and dispute settlement.
The gains for European customers from such an arrangement are clear. Ukraine could be brought to the table with promises of a broader program of assistance in energy reform: more link-up to Europe's electricity grid, the unlocking of domestic production potential, and a serious conservation drive. The EU might also link the creation of a consortium to the new Association Agreement it promised Ukraine in September.
Here, the EU will need both sticks and carrots. The crisis has already weakened Ukraine's European ambitions by sowing distrust among the member states that found themselves without gas for more than a week earlier this month. But if the negotiations go well, the EU could help compensate for some of Ukraine's declining NATO prospects and consequent security weaknesses.
An EU mission to Ukraine's most vulnerable trouble spot in the Crimea would be a good start. The peninsula is the one Ukrainian region with an ethnic Russian majority, and is home to the Russian Black Sea Fleet at Sevastopol on a lease that is due to run out in 2017. A highly visible EU program should help diversify the peninsula's economy and boost its trading potential.
Russia would gain, too. There would be no more risk of gas theft, its customers downstream could relax, and there would be fewer political obstacles to its alternative pipeline schemes. Russia also needs urgent relief from a quadruple economic crisis. Its stock market has taken one of the biggest hits in the world over the last 12 months, with the RTS index down more than 70% from its 2008 peak.
The slide started with Vladimir Putin's July attack on mining company Mechel for allegedly evading taxes and selling its coal more cheaply abroad, then continued with the war in Georgia, before the global economic crisis even hit.
Second, Russia has structural problems that go far beyond the falling oil price and the gas price that will soon follow it down. One result of Mr. Putin's policy of creating state-backed "national champions" is $480 billion of commercial debt, as Western banks lent too much money to Russian firms that ostensibly could not fail.
Third, Russia is facing an energy production crisis. Its national champions are champion profiteers, but they do not invest as they should. Russia simply cannot get enough gas out of the ground to supply everybody. Energy is still incredibly cheap in the inefficient domestic market, and the Kremlin will not risk social protest by putting up prices to discourage usage. Then it has to supply the Ukrainian pipeline, alternatives like Nord Stream and South Stream, and other distribution routes.
Fourth, when there is a choice between modernization and mobilization, Russia prefers to manufacture crises and enemies rather than real solutions. Whoever started the present crisis, Russia has exploited it to play triple divide-and-rule: widening splits between Ukraine and Europe, within the EU, and within Ukraine itself. A depoliticized and strictly commercial pipeline system through Ukraine will slowly leverage change throughout the Russian system.
Ukraine has plenty of accumulated problems, too. Its property boom has crashed, and its steel and chemical industries are almost at standstill. But it mainly needs relief from the political problems that have accumulated since the Orange Revolution in 2004. Corruption in the gas industry is the factor most responsible for driving the revolution off track.
The notorious intermediary RosUkrEnergo made a publicly stated profit of $795 million in 2007, but its payment in kind, 20% of gas deliveries to Ukraine, was worth more like $4.35 billion. That kind of money buys influence and fuels the constant gridlock in Ukrainian politics.
Prime Minister Yulia Tymoshenko has long campaigned in public against RosUkrEnergo, but the key agreement with Mr. Putin this month was made behind closed doors. The company may diversify into the domestic market, where it now controls 75% of distribution. But removing the cancer of gas corruption is a necessary precondition for cleaning up the political system in Ukraine.
No one has emerged well from the current crisis. But all will benefit if it prompts a serious search for a radical solution.
LINK: http://online.wsj.com/article/SB123309642721821517.html
--------------------------------------------------------------------------------
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
=========================================================
=========================================================
U.S.-Ukraine Business Council (USUBC): http://www.usubc.org
Promoting U.S.-Ukraine business investments since 1995.
=========================================================
23. GEORGIA AND UKRAINE: AN ALTERNATIVE TO NATO MEMBERSHIP
ANALYSIS & COMMENTARY: By Karl Kaiser, Adjunct Professor at
Harvard University and Director of its program on Trans-Atlantic Relations
International Herald Tribune, Paris, France, Thu, February 5, 2009
NATO membership for Georgia and Ukraine is not a realistic possibility, no matter what the Atlantic alliance may say about their potential in principle, as it did at the last two summit meetings. That alternative has been closed, not because some NATO members - notably France and Germany - fractiously opposed an unpopular Bush administration in its enlargement drive, but for deeper structural reasons.
[1] First, domestic conditions speak against membership. The reckless engagement with a superior Russian military by Georgia's president, Mikheil Saakashvili, although he had been thoroughly briefed by the United States about the Russian potential, demonstrated to NATO how bad leadership in combination with a very old conflict can drag the Atlantic alliance into a war it does not want.
In Ukraine there is no majority support for membership among the general population; indeed, in the eastern part of the country there is strong opposition. If ever the leadership were to force this issue it would risk a deep split, with potentially disastrous consequences for the integrity of Ukraine.
[2] Second, contrary to the expectations at the end of the Cold War, large-scale conventional warfare in Europe has reappeared as a threatening possibility.
ANALYSIS & COMMENTARY: By Karl Kaiser, Adjunct Professor at
Harvard University and Director of its program on Trans-Atlantic Relations
International Herald Tribune, Paris, France, Thu, February 5, 2009
NATO membership for Georgia and Ukraine is not a realistic possibility, no matter what the Atlantic alliance may say about their potential in principle, as it did at the last two summit meetings. That alternative has been closed, not because some NATO members - notably France and Germany - fractiously opposed an unpopular Bush administration in its enlargement drive, but for deeper structural reasons.
[1] First, domestic conditions speak against membership. The reckless engagement with a superior Russian military by Georgia's president, Mikheil Saakashvili, although he had been thoroughly briefed by the United States about the Russian potential, demonstrated to NATO how bad leadership in combination with a very old conflict can drag the Atlantic alliance into a war it does not want.
In Ukraine there is no majority support for membership among the general population; indeed, in the eastern part of the country there is strong opposition. If ever the leadership were to force this issue it would risk a deep split, with potentially disastrous consequences for the integrity of Ukraine.
[2] Second, contrary to the expectations at the end of the Cold War, large-scale conventional warfare in Europe has reappeared as a threatening possibility.
The worst possible scenario for NATO would be that the alliance would be unable to defend an ally under Article V because of lack of political will (even now the majority of people in some NATO countries do not support going to war over Central European members), or for military reasons - as would be the case for Georgia and Ukraine under the present circumstances. This would expose NATO as a paper tiger and cause it to loose the essence of its credibility and meaning.
[3] Third, Russia's relations with the West have reached their lowest point since the end of the Cold War. The enlargement of NATO, the breakdown of strategic and conventional arms control, the installment of missile defenses in Central Europe, and the West's failure to consult Russia on issues it considers vital to its interests, have created a concoction of resentment and perceptions of not being treated as a major power.
Georgian and Ukrainian membership in NATO represents a red line that gives them disproportionate significance. The West has to take this into account if it wants to improve the situation in Europe and regain Russia as a partner in global affairs.
Georgia and Ukraine deserve and will get substantial aid from NATO and the European Union. But it makes little sense to address their long-term security problems separately since they are part of the necessary overhaul of the West's Russia policy that the Obama administration has promised and the European Allies eagerly await. Such an overhaul would have to include, among other things, strategic arms control, a nonproliferation policy and missile defense.
As far as Georgia and Ukraine are concerned, two items are central to the alleviation of their problems. First, a general dialogue between the West and Russia is necessary in order to review the problems of European security and develop approaches that could improve the overall situation. Presidents Dmitri Medvedev of Russia and Nicolas Sarkozy of France have supported such an idea with the quiet and explicit approval of many European governments.
Second, the military security of both countries can be addressed by reviving the Treaty on Conventional Forces in Europe. The treaty was concluded in 1990 and adapted to changed circumstances with an additional agreement in 1999. It has the advantage of providing for upper limits to conventional forces in geographic zones, for the destruction of equipment, for inspections, and rules for stationing foreign troops.
To be sure, the treaty is now blocked by linked conditionality of NATO and Russia and has been suspended by Russia, and is, of course, no panacea.
[3] Third, Russia's relations with the West have reached their lowest point since the end of the Cold War. The enlargement of NATO, the breakdown of strategic and conventional arms control, the installment of missile defenses in Central Europe, and the West's failure to consult Russia on issues it considers vital to its interests, have created a concoction of resentment and perceptions of not being treated as a major power.
Georgian and Ukrainian membership in NATO represents a red line that gives them disproportionate significance. The West has to take this into account if it wants to improve the situation in Europe and regain Russia as a partner in global affairs.
Georgia and Ukraine deserve and will get substantial aid from NATO and the European Union. But it makes little sense to address their long-term security problems separately since they are part of the necessary overhaul of the West's Russia policy that the Obama administration has promised and the European Allies eagerly await. Such an overhaul would have to include, among other things, strategic arms control, a nonproliferation policy and missile defense.
As far as Georgia and Ukraine are concerned, two items are central to the alleviation of their problems. First, a general dialogue between the West and Russia is necessary in order to review the problems of European security and develop approaches that could improve the overall situation. Presidents Dmitri Medvedev of Russia and Nicolas Sarkozy of France have supported such an idea with the quiet and explicit approval of many European governments.
Second, the military security of both countries can be addressed by reviving the Treaty on Conventional Forces in Europe. The treaty was concluded in 1990 and adapted to changed circumstances with an additional agreement in 1999. It has the advantage of providing for upper limits to conventional forces in geographic zones, for the destruction of equipment, for inspections, and rules for stationing foreign troops.
To be sure, the treaty is now blocked by linked conditionality of NATO and Russia and has been suspended by Russia, and is, of course, no panacea.
Problems left to themselves for two decades must be dealt with. But reopening conventional arms control in Europe offers a chance to address the concrete security problems of Georgia and Ukraine (as well as of other European countries) and become part of a hopefully constructive redefinition of the West's relationship with Russia.
LINK: http://www.iht.com/articles/2009/02/05/opinion/edkaiser.1-423784.php
LINK: http://www.iht.com/articles/2009/02/05/opinion/edkaiser.1-423784.php
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[return to index] [Action Ukraine Report (AUR) Monitoring Service]
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24. CATHOLIC PRIEST UNCOVERING BEGINNINGS OF FINAL SOLUTION
In Ukraine, Belarus and Russia, New Book: "The Holocaust By Bullets"
By Maria Danilova and Randy Herschaft, Associated Press (AP)
Kiev, Ukraine, Saturday, January 31, 2009
KIEV, Ukraine - The Holocaust has a landscape engraved in the mind's eye: barbed-wire fences, gas chambers, furnaces. Less known is the "Holocaust by Bullets," in which over 2 million Jews were gunned down in towns and villages across Ukraine, Belarus and Russia. Their part in the Nazis' Final Solution has been under-researched, their bodies left unidentified in unmarked mass graves.
"Shoah," French filmmaker Claude Lanzmann's documentary, stands as the 20th century's epic visual record of the Holocaust. Now another Frenchman, a
Catholic priest named Patrick Desbois, is filling in a different part of the picture.
Desbois says he has interviewed more than 800 eyewitnesses and pinpointed hundreds of mass graves strewn around dusty fields in the former Soviet Union. The result is a book, "The Holocaust by Bullets," and an exhibition through March 15 at New York's Museum of Jewish Heritage.
Brought to Ukraine by a twist of fate, Desbois has spent seven years trying to document the truth, honor the dead, relieve witnesses of their pain and guilt and prevent future acts of genocide.
Some 1.4 million of Soviet Ukraine's 2.4 million Jews were executed, starved to death or died of disease during the war. Another 550,000-650,000 Soviet
Jews were killed in Belarus and up to 140,000 in Russia, according to the U.S. Holocaust Memorial Museum. Most of the victims were women, children and the elderly.
Begun after Germany invaded the Soviet Union in June 1941, the slaughter by bullets was the opening phase of what became the Nazis' Final Solution with its factories of death operating in Auschwitz and other camps, all in Nazi-occupied Poland.
Desbois devotes his 233-page book, published by Palgrave Macmillan in August, to his work in Ukraine, where he says he has uncovered over 800 mass extermination sites, more than two-thirds of them previously unknown.
Since the book was written, he has expanded his search for mass graves into Belarus and plans to look early this year in areas of Russia that were occupied by the Germans.
Sometimes bursting into tears, old men and women from poor Ukrainian villages recount to Desbois how women, children and elders were marched or carted in from neighboring towns to be shot, burned to death or buried alive by German troops, Romanian forces, squads of local Ukrainian collaborators and local ethnic German volunteers.
Even then, it was methodical, Desbois' research shows. First, Germans would arrive in a town or village and gather intelligence on how best to transport the victims to extermination sites, where to execute them and how to dispose of their bodies.
"It was done as systematically as it was done elsewhere," said John Paul Himka, an expert on the Holocaust and Ukraine at the University of Alberta in Canada, who is not connected to Desbois' work. "You can read as they're figuring out best way to do this, the best way to shoot ... it's absolutely systematic, no accident here."
Desbois' interviews and grave-hunting tie in to millions of pages of Soviet archives, heightening their credibility, says Paul Shapiro, of the U.S. Holocaust Memorial Museum who wrote the foreword to Desbois' book.
Father Desbois' work is also having an impact on efforts to preserve Holocaust sites. In December, the 26-nation International Task Force on the Holocaust called on European governments to ensure the protection of locations such as the mass graves Desbois is uncovering, according to Shapiro, who helped draft the resolution.
Among Desbois' key findings is the widespread use of local children to help bury the dead, wait on the German soldiers during meals and remove gold teeth and other valuables from the bodies. His work has also yielded evidence that the killings were most frequently carried out in the open, in daylight and in a variety of ways — shooting victims, throwing them alive into bonfires, walling up a group of Jews in a cellar that wasn't opened until 12 years later.
Desbois' witnesses are mostly Orthodox Christian, and he comes to them as a priest, dressed in black and wearing a clerical collar, taking in their pain and trying to ease their suffering. Many have never before talked about their experiences.
In the village of Ternivka, some 200 miles south of Kiev where 2,300 Jews were killed, a frail, elderly woman, who identified herself only as Petrivna, revealed the unbearable task the Nazis imposed on her.
The young schoolgirl saw her Jewish neighbors thrown into a large pit, many still alive and convulsing in agony. Her task was to trample on them barefoot to make space for more. One of those she had to tread on was a classmate.
"You know, we were very poor, we didn't have shoes," Petrivna told Desbois in a single breath, her body twitching in pain, Desbois writes in his book. "You see, it is not easy to walk on bodies."
Desbois, 53, a short, soft-spoken man with dark, thinning hair, says the stories give him nightmares. The most difficult is "to bear the horrors that the witnesses tell me, because often the people are simple, very kind and want to tell me everything," Desbois said in a phone interview while on a trip to western Ukraine.
"You have to be able to listen, to accept, to bear this horror," said Desbois. "I am not here to judge the people's guilt, we are here to know what happened."
Desbois' small team includes a translator, a researcher, a mapping expert, a ballistics specialist and a video and photo crew. He often joins his witnesses in their homes, leaving his shoes outside. He tends to a peasant's cow while the man tells his story.
Desbois has deep personal roots in his project, dating to 2002, when he first visited Ukraine to see the place where his grandfather was interned as a French prisoner in World War II.
When he arrived, the locals told him of a stream of blood that had run from the site where the Jews were executed and of a dismembered woman hanging from a tree after the Nazis threw a grenade in a pit full of people. When he was offered a visit to more villages, he did not hesitate.
"I am in a hurry to find all the bones, to establish the truth and justice so that the world can know what happened and that the Germans never left a tiny village in Ukraine, Belarus and Russia without killing Jews there."
The Holocaust is a divisive topic here because some Ukrainians collaborated with the Nazis. Jewish groups are grateful for Desbois' efforts and lament the lack of government support for his and other Holocaust research and education programs.
"As a Ukrainian citizen and a Ukrainian historian it pains me ... that there is no policy of national remembrance," said Anatoly Podolsky, head of the Ukrainian Center for Holocaust Studies. "We are not responsible for the past but we are responsible for remembering."
Desbois leads a French association, Yahad-In Unum (the Hebrew and Latin words for "together"), which was founded by Catholics and Jews to heal the wounds between the two faiths. He believes that as a Catholic priest talking to Orthodox believers about the killing of their Jewish neighbors his work advances that healing mission.
"The book is meant so that people know ... that a genocide is simply people killing people," Desbois said. "My book is also an act of prevention of future acts of genocide." [Randy Herschaft reported from New York.
ON THE NET:
The Holocaust by Bullets book site: http://us.macmillan.com/theholocaustbybullets
In Ukraine, Belarus and Russia, New Book: "The Holocaust By Bullets"
By Maria Danilova and Randy Herschaft, Associated Press (AP)
Kiev, Ukraine, Saturday, January 31, 2009
KIEV, Ukraine - The Holocaust has a landscape engraved in the mind's eye: barbed-wire fences, gas chambers, furnaces. Less known is the "Holocaust by Bullets," in which over 2 million Jews were gunned down in towns and villages across Ukraine, Belarus and Russia. Their part in the Nazis' Final Solution has been under-researched, their bodies left unidentified in unmarked mass graves.
"Shoah," French filmmaker Claude Lanzmann's documentary, stands as the 20th century's epic visual record of the Holocaust. Now another Frenchman, a
Catholic priest named Patrick Desbois, is filling in a different part of the picture.
Desbois says he has interviewed more than 800 eyewitnesses and pinpointed hundreds of mass graves strewn around dusty fields in the former Soviet Union. The result is a book, "The Holocaust by Bullets," and an exhibition through March 15 at New York's Museum of Jewish Heritage.
Brought to Ukraine by a twist of fate, Desbois has spent seven years trying to document the truth, honor the dead, relieve witnesses of their pain and guilt and prevent future acts of genocide.
Some 1.4 million of Soviet Ukraine's 2.4 million Jews were executed, starved to death or died of disease during the war. Another 550,000-650,000 Soviet
Jews were killed in Belarus and up to 140,000 in Russia, according to the U.S. Holocaust Memorial Museum. Most of the victims were women, children and the elderly.
Begun after Germany invaded the Soviet Union in June 1941, the slaughter by bullets was the opening phase of what became the Nazis' Final Solution with its factories of death operating in Auschwitz and other camps, all in Nazi-occupied Poland.
Desbois devotes his 233-page book, published by Palgrave Macmillan in August, to his work in Ukraine, where he says he has uncovered over 800 mass extermination sites, more than two-thirds of them previously unknown.
Since the book was written, he has expanded his search for mass graves into Belarus and plans to look early this year in areas of Russia that were occupied by the Germans.
Sometimes bursting into tears, old men and women from poor Ukrainian villages recount to Desbois how women, children and elders were marched or carted in from neighboring towns to be shot, burned to death or buried alive by German troops, Romanian forces, squads of local Ukrainian collaborators and local ethnic German volunteers.
Even then, it was methodical, Desbois' research shows. First, Germans would arrive in a town or village and gather intelligence on how best to transport the victims to extermination sites, where to execute them and how to dispose of their bodies.
"It was done as systematically as it was done elsewhere," said John Paul Himka, an expert on the Holocaust and Ukraine at the University of Alberta in Canada, who is not connected to Desbois' work. "You can read as they're figuring out best way to do this, the best way to shoot ... it's absolutely systematic, no accident here."
Desbois' interviews and grave-hunting tie in to millions of pages of Soviet archives, heightening their credibility, says Paul Shapiro, of the U.S. Holocaust Memorial Museum who wrote the foreword to Desbois' book.
Father Desbois' work is also having an impact on efforts to preserve Holocaust sites. In December, the 26-nation International Task Force on the Holocaust called on European governments to ensure the protection of locations such as the mass graves Desbois is uncovering, according to Shapiro, who helped draft the resolution.
Among Desbois' key findings is the widespread use of local children to help bury the dead, wait on the German soldiers during meals and remove gold teeth and other valuables from the bodies. His work has also yielded evidence that the killings were most frequently carried out in the open, in daylight and in a variety of ways — shooting victims, throwing them alive into bonfires, walling up a group of Jews in a cellar that wasn't opened until 12 years later.
Desbois' witnesses are mostly Orthodox Christian, and he comes to them as a priest, dressed in black and wearing a clerical collar, taking in their pain and trying to ease their suffering. Many have never before talked about their experiences.
In the village of Ternivka, some 200 miles south of Kiev where 2,300 Jews were killed, a frail, elderly woman, who identified herself only as Petrivna, revealed the unbearable task the Nazis imposed on her.
The young schoolgirl saw her Jewish neighbors thrown into a large pit, many still alive and convulsing in agony. Her task was to trample on them barefoot to make space for more. One of those she had to tread on was a classmate.
"You know, we were very poor, we didn't have shoes," Petrivna told Desbois in a single breath, her body twitching in pain, Desbois writes in his book. "You see, it is not easy to walk on bodies."
Desbois, 53, a short, soft-spoken man with dark, thinning hair, says the stories give him nightmares. The most difficult is "to bear the horrors that the witnesses tell me, because often the people are simple, very kind and want to tell me everything," Desbois said in a phone interview while on a trip to western Ukraine.
"You have to be able to listen, to accept, to bear this horror," said Desbois. "I am not here to judge the people's guilt, we are here to know what happened."
Desbois' small team includes a translator, a researcher, a mapping expert, a ballistics specialist and a video and photo crew. He often joins his witnesses in their homes, leaving his shoes outside. He tends to a peasant's cow while the man tells his story.
Desbois has deep personal roots in his project, dating to 2002, when he first visited Ukraine to see the place where his grandfather was interned as a French prisoner in World War II.
When he arrived, the locals told him of a stream of blood that had run from the site where the Jews were executed and of a dismembered woman hanging from a tree after the Nazis threw a grenade in a pit full of people. When he was offered a visit to more villages, he did not hesitate.
"I am in a hurry to find all the bones, to establish the truth and justice so that the world can know what happened and that the Germans never left a tiny village in Ukraine, Belarus and Russia without killing Jews there."
The Holocaust is a divisive topic here because some Ukrainians collaborated with the Nazis. Jewish groups are grateful for Desbois' efforts and lament the lack of government support for his and other Holocaust research and education programs.
"As a Ukrainian citizen and a Ukrainian historian it pains me ... that there is no policy of national remembrance," said Anatoly Podolsky, head of the Ukrainian Center for Holocaust Studies. "We are not responsible for the past but we are responsible for remembering."
Desbois leads a French association, Yahad-In Unum (the Hebrew and Latin words for "together"), which was founded by Catholics and Jews to heal the wounds between the two faiths. He believes that as a Catholic priest talking to Orthodox believers about the killing of their Jewish neighbors his work advances that healing mission.
"The book is meant so that people know ... that a genocide is simply people killing people," Desbois said. "My book is also an act of prevention of future acts of genocide." [Randy Herschaft reported from New York.
ON THE NET:
The Holocaust by Bullets book site: http://us.macmillan.com/theholocaustbybullets
Yahad-In Unum: http://www.yahadinunum.org/index.en.html
Museum of Jewish Heritage: http://www.mjhnyc.org
United States Holocaust Memorial Museum: http://www.ushmm.org
--------------------------------------------------------------------------------
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
===================================================
25. PRESIDENT OF POLAND SAYS SEVENTY-FIVE YEARS AGO, THE COMMUNIST
REGIME COMMITTED A MASS MURDER AGAINST UKRAINIANS, POLAND
RECOGNIZES THAT MURDER AS IT WAS, THAT MURDER WAS A GENOCIDE
Office of the President of Poland, Warsaw, Poland, Sat, Nov 22, 2008
WARSAW - On 22 November 2008, the President of the Republic of Poland, Lech Kaczynski, paid a visit to Kyiv to attend the commemorations of the 75th
anniversary of the Great Famine in Ukraine. The Polish President was accompanied by Secretary of State at the Presidential Chancellery, Michal
Kaminski, and Undersecretary of State at the Presidential Chancellery, Mariusz Handzlik.
President Lech Kaczynski went to the National Opera House to take part, together with the other guests, in the International Forum 'Ukraine
Remembers - The World Acknowledges'.
During the ceremony, the President of Poland said the following:
"Seventy five years ago, the communist regime committed a mass murder. I represent one of the countries which recognize the reality as it was: that murder was a genocide. Resolutions in this regard were adopted equally by the Senate and by the Sejm of the Republic of Poland in 2006.
But the fight for the preservation of memory, also the memory about those murdered continues to be one of the most pressing tasks for the countries
which have shed communism.
It is not only because in 1932-1933 particularly cruel acts were pretreated in Ukraine, cruel even in categories of genocide. Starvation is a particularly cruel kind of death which befell millions of people, including Poles and Kazakhs inhabiting Ukraine, in particular in the vicinity of Zhytomyr, and also representatives of other nationalities, as President Yushchenko rightly pointed out.
The fight for the preservation of memory is also crucial since communism was capable of perpetrating mass murders on the greatest scale and was very
dexterous in concealing them.
The other totalitarianism of the 20th century: Hitlerism and Nazism which took the toll of so many lives among my compatriots as well as Ukrainians,
Lithuanians and Latvians, as a matter of fact did not seek to conceal its crimes.
Chauvinism, violence, these were the slogans openly preached. Anti-Semitism stretched as far as genocide was not hidden, either, even if the very acts of genocide were kept secret. Whereas, as we all who lived back then remember well, communism sought to present itself as an idea or ideology or science which was almost humanist.
It was shown as a necessary stage in historical development and it was meant to be means of achievement of universal happiness. Such a fallacy was
readily adopted, one could even say "bought", by the considerable part of elites, especially in Western Europe.
Nowadays, admittedly, this fallacy is being removed but it has not yet been entirely done away with. The truth about the genocide in Ukraine in 1932-1933, the truth about other crimes of genocide perpetrated before and after, is forcing its way through only with a great difficulty.
And this is precisely why I would like to express here my great respect and acknowledgement to the authorities of Ukraine and Mr President Yushchenko
personally for their commitment in the fight to restore memory. Also the memory of this genocide.
The Ukrainian nation is choosing its own way and indeed has the right to do so. It is our profound conviction that this road will be leading to the
West. But if it be so, if Ukraine's history just as much as my own country's history is to become part and parcel of the history of Europe, then all the
truths contained therein must be made known.
The history of Ukraine is just as much a European history as the history of France, for instance. And what is happening right now, all those efforts in the international arena, in the United Nations, UNESCO, in the European Parliament go in this very direction. Their relevance is confined to the present-day since unfortunately, we are helpless in the face of the tragedy of those people who perished 75-76 years ago.
The only thing that we can give them back is memory, eternal memory. And our today's ceremony is a proof of that memory which will not fade away, which
will become a part of our common European awareness. And this is precisely the way it should be, in the name of what President Adamkus invoked in his
address a moment ago.
So that totalitarianism does not stand a chance on this soil ever again. For the sake of the future of our children and our grandchildren."
LINK: http://www.president.pl/x.node?id=2011993&eventId=24527858
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
===================================================
25. PRESIDENT OF POLAND SAYS SEVENTY-FIVE YEARS AGO, THE COMMUNIST
REGIME COMMITTED A MASS MURDER AGAINST UKRAINIANS, POLAND
RECOGNIZES THAT MURDER AS IT WAS, THAT MURDER WAS A GENOCIDE
Office of the President of Poland, Warsaw, Poland, Sat, Nov 22, 2008
WARSAW - On 22 November 2008, the President of the Republic of Poland, Lech Kaczynski, paid a visit to Kyiv to attend the commemorations of the 75th
anniversary of the Great Famine in Ukraine. The Polish President was accompanied by Secretary of State at the Presidential Chancellery, Michal
Kaminski, and Undersecretary of State at the Presidential Chancellery, Mariusz Handzlik.
President Lech Kaczynski went to the National Opera House to take part, together with the other guests, in the International Forum 'Ukraine
Remembers - The World Acknowledges'.
During the ceremony, the President of Poland said the following:
"Seventy five years ago, the communist regime committed a mass murder. I represent one of the countries which recognize the reality as it was: that murder was a genocide. Resolutions in this regard were adopted equally by the Senate and by the Sejm of the Republic of Poland in 2006.
But the fight for the preservation of memory, also the memory about those murdered continues to be one of the most pressing tasks for the countries
which have shed communism.
It is not only because in 1932-1933 particularly cruel acts were pretreated in Ukraine, cruel even in categories of genocide. Starvation is a particularly cruel kind of death which befell millions of people, including Poles and Kazakhs inhabiting Ukraine, in particular in the vicinity of Zhytomyr, and also representatives of other nationalities, as President Yushchenko rightly pointed out.
The fight for the preservation of memory is also crucial since communism was capable of perpetrating mass murders on the greatest scale and was very
dexterous in concealing them.
The other totalitarianism of the 20th century: Hitlerism and Nazism which took the toll of so many lives among my compatriots as well as Ukrainians,
Lithuanians and Latvians, as a matter of fact did not seek to conceal its crimes.
Chauvinism, violence, these were the slogans openly preached. Anti-Semitism stretched as far as genocide was not hidden, either, even if the very acts of genocide were kept secret. Whereas, as we all who lived back then remember well, communism sought to present itself as an idea or ideology or science which was almost humanist.
It was shown as a necessary stage in historical development and it was meant to be means of achievement of universal happiness. Such a fallacy was
readily adopted, one could even say "bought", by the considerable part of elites, especially in Western Europe.
Nowadays, admittedly, this fallacy is being removed but it has not yet been entirely done away with. The truth about the genocide in Ukraine in 1932-1933, the truth about other crimes of genocide perpetrated before and after, is forcing its way through only with a great difficulty.
And this is precisely why I would like to express here my great respect and acknowledgement to the authorities of Ukraine and Mr President Yushchenko
personally for their commitment in the fight to restore memory. Also the memory of this genocide.
The Ukrainian nation is choosing its own way and indeed has the right to do so. It is our profound conviction that this road will be leading to the
West. But if it be so, if Ukraine's history just as much as my own country's history is to become part and parcel of the history of Europe, then all the
truths contained therein must be made known.
The history of Ukraine is just as much a European history as the history of France, for instance. And what is happening right now, all those efforts in the international arena, in the United Nations, UNESCO, in the European Parliament go in this very direction. Their relevance is confined to the present-day since unfortunately, we are helpless in the face of the tragedy of those people who perished 75-76 years ago.
The only thing that we can give them back is memory, eternal memory. And our today's ceremony is a proof of that memory which will not fade away, which
will become a part of our common European awareness. And this is precisely the way it should be, in the name of what President Adamkus invoked in his
address a moment ago.
So that totalitarianism does not stand a chance on this soil ever again. For the sake of the future of our children and our grandchildren."
LINK: http://www.president.pl/x.node?id=2011993&eventId=24527858
--------------------------------------------------------------------------------
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
===================================================
26. REVIVAL OF STALINISM IN RUSSIA SHOWS GAP BETWEEN NEIGHBORS
Russia’s rehabilitation of Stalinism that began under Vladimir Putin precluded an official Russian presence and President Dmitry Medvedev refused to attend the commemoration. Anger over President Victor Yushchenko’s criticism of Medvedev’s snub has probably led to a new gas war and exposed sensitivities over the past. Yushchenko called upon Russia to follow Ukraine’s path in denouncing Stalinist crimes committed on Russian territory.
Medvedev’s refusal to attend Ukraine’s famine commemoration contributed to the daily war of words between both countries. Ukraine’s image in Russia is now the worst it has ever been since the disintegration of the Soviet Union.
How a country relates to its past is a mirror image of what kind of regime it is building. And here, Ukraine’s condemnation and Russia’s rehabilitation of Stalinism are indicative of the growing divergence. Think of the alarms that would have gone off if, two decades after the defeat of Nazism, Germany conducted a state-sanctioned rehabilitation of Adolf Hitler and the country was led by a former Gestapo officer?
Yushchenko has taken personal leadership in reviving the historical memory of famine as a crime against humanity, both inside Ukraine and internationally.
In the 1980s, the United States established a government commission headed by James Mace to study the famine. The well-known historian of Soviet crimes, Robert Conquest, authored the book “Harvest of Sorrow.” Later in the 1980s, Ukrainian intellectuals took up the process of reviving historical memory during Soviet leader Mikhail Gorbachev’s perestroika.
Russia’s refusal to heed Yushchenko’s call for a mutual recognition of the famine as genocide says a lot about the rehabilitation of Stalinism under Putin. Russia supported calls five years ago by President Leonid Kuchma to recognize the famine as genocide. Ukraine’s position on Soviet crimes has, therefore, not changed. Under Putin, Russia has moved from condemnation to celebration of Stalinism.
In the first decade after the fall of Soviet communism, President Boris Yeltsin continued the denunciation of Stalinism that had begun under Gorbachev. Putin radically reversed Russian attitudes towards the “greatest tragedy of the 20th century,” as he defined the collapse of the U.S.S.R. Next came a complete rewriting of Soviet history. Crimes against humanity were studiously ignored. Stalin was praised as the Soviet leader who transformed the U.S.S.R. into a respected and feared superpower.
Most telling is the different treatment of history in school textbooks. For the last two decades, Ukraine’s textbooks have taught new generations of schoolchildren about the horrors of Soviet crimes against humanity. Opinion polls show that this educational work has reinforced negative attitudes towards extremism and totalitarianism. Young Ukrainians overwhelmingly are pro-Western, wish to see their country inside NATO and supported the Orange Revolution.
In Russia, school textbooks were rewritten under Putin to ignore Soviet crimes in the 1930s and instead focus on Stalin as the great leader of the 1940s. The result has been that a new generation of Russians has accepted the rehabilitation of the U.S.S.R. and Stalin. Young Russians will become Russian leaders in the not-so-distant future, taking with them their neo-Soviet attitudes and a view of Russia as a great power.
Ukraine and Russia’s diverging paths began before the Orange Revolution, but have deepened after Yushchenko’s ascent to power four years ago. Russia’s rehabilitation of Stalinism stands in stark contrast to Ukraine’s condemnation of Soviet crimes against humanity.
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
===================================================
26. REVIVAL OF STALINISM IN RUSSIA SHOWS GAP BETWEEN NEIGHBORS
Russia’s embrace of the dictator shows Ukraine is going down a better path
Analysis & Commentary: by Taras Kuzio, Special to Kyiv Post
Kyiv Post, Kyiv, Ukraine, Thursday, December 18, 2008
In November, Ukraine commemorated the 75th anniversary of an artificial famine that claimed more than four million lives. The official commemoration – timed to coincide with Liberty Day, a holiday established four years ago to celebrate the Orange Revolution – was attended by 44 foreign delegations, including four European leaders.
In November, Ukraine commemorated the 75th anniversary of an artificial famine that claimed more than four million lives. The official commemoration – timed to coincide with Liberty Day, a holiday established four years ago to celebrate the Orange Revolution – was attended by 44 foreign delegations, including four European leaders.
Russia’s rehabilitation of Stalinism that began under Vladimir Putin precluded an official Russian presence and President Dmitry Medvedev refused to attend the commemoration. Anger over President Victor Yushchenko’s criticism of Medvedev’s snub has probably led to a new gas war and exposed sensitivities over the past. Yushchenko called upon Russia to follow Ukraine’s path in denouncing Stalinist crimes committed on Russian territory.
Medvedev’s refusal to attend Ukraine’s famine commemoration contributed to the daily war of words between both countries. Ukraine’s image in Russia is now the worst it has ever been since the disintegration of the Soviet Union.
Diverging attitudes towards Soviet crimes against humanity have expanded the list of the more commonly known areas of conflict between Ukraine and Russia, such as NATO membership, energy, the Crimea, the Russian Black Sea Fleet and the status of the Russian language.
How a country relates to its past is a mirror image of what kind of regime it is building. And here, Ukraine’s condemnation and Russia’s rehabilitation of Stalinism are indicative of the growing divergence. Think of the alarms that would have gone off if, two decades after the defeat of Nazism, Germany conducted a state-sanctioned rehabilitation of Adolf Hitler and the country was led by a former Gestapo officer?
In Russia, in the second decade after the fall of communism, the country is led by a former KGB officer, while the U.S.S.R. and Josef Stalin are back in vogue.
Yushchenko has taken personal leadership in reviving the historical memory of famine as a crime against humanity, both inside Ukraine and internationally.
But it would be wrong to believe that the famine issue is only promoted by Ukrainian nationalists. The famine issue has been consistently raised by all three Ukrainian presidents who had already laid the groundwork in denouncing Soviet crimes and the famine. Yushchenko is, therefore, no more of a nationalist on the famine question than his two predecessors.
Yushchenko’s greater determination to revive memories about Soviet crimes committed in Ukraine builds on a long-established process. Ukrainian diaspora began the process of setting the record straight and reviving historical memory on the 50th anniversary, in 1983, at a time when the Soviet Union was historically revisionist in claiming there had never been a famine.
Yushchenko’s greater determination to revive memories about Soviet crimes committed in Ukraine builds on a long-established process. Ukrainian diaspora began the process of setting the record straight and reviving historical memory on the 50th anniversary, in 1983, at a time when the Soviet Union was historically revisionist in claiming there had never been a famine.
In the 1980s, the United States established a government commission headed by James Mace to study the famine. The well-known historian of Soviet crimes, Robert Conquest, authored the book “Harvest of Sorrow.” Later in the 1980s, Ukrainian intellectuals took up the process of reviving historical memory during Soviet leader Mikhail Gorbachev’s perestroika.
Russia’s refusal to heed Yushchenko’s call for a mutual recognition of the famine as genocide says a lot about the rehabilitation of Stalinism under Putin. Russia supported calls five years ago by President Leonid Kuchma to recognize the famine as genocide. Ukraine’s position on Soviet crimes has, therefore, not changed. Under Putin, Russia has moved from condemnation to celebration of Stalinism.
In the first decade after the fall of Soviet communism, President Boris Yeltsin continued the denunciation of Stalinism that had begun under Gorbachev. Putin radically reversed Russian attitudes towards the “greatest tragedy of the 20th century,” as he defined the collapse of the U.S.S.R. Next came a complete rewriting of Soviet history. Crimes against humanity were studiously ignored. Stalin was praised as the Soviet leader who transformed the U.S.S.R. into a respected and feared superpower.
Most telling is the different treatment of history in school textbooks. For the last two decades, Ukraine’s textbooks have taught new generations of schoolchildren about the horrors of Soviet crimes against humanity. Opinion polls show that this educational work has reinforced negative attitudes towards extremism and totalitarianism. Young Ukrainians overwhelmingly are pro-Western, wish to see their country inside NATO and supported the Orange Revolution.
In Russia, school textbooks were rewritten under Putin to ignore Soviet crimes in the 1930s and instead focus on Stalin as the great leader of the 1940s. The result has been that a new generation of Russians has accepted the rehabilitation of the U.S.S.R. and Stalin. Young Russians will become Russian leaders in the not-so-distant future, taking with them their neo-Soviet attitudes and a view of Russia as a great power.
Young Russians flock to nationalist youth groups such as Nashi and hold negative views about the Orange Revolution as a U.S.-backed conspiracy against Russia. It is little wonder that a majority of young Russians hold anti-American views or that an overwhelming majority of Russians supported the invasion of Georgia. Young Ukrainians do not hold anti-American views and did not support the invasion.
Ukraine and Russia’s diverging paths began before the Orange Revolution, but have deepened after Yushchenko’s ascent to power four years ago. Russia’s rehabilitation of Stalinism stands in stark contrast to Ukraine’s condemnation of Soviet crimes against humanity.
This shows the difference between an authoritarian, neo-Soviet Russia and a still young and imperfect – but nevertheless democratic – Ukraine. Ukraine has taken the right path by following post-war Germany in repudiating totalitarianism.
NOTE: Check out the UKRAINE ANALYST, a bimonthly publication, Dr. Taras Kuzio, Editor. The publication focuses on Ukraine: current politics, international affairs, energy, business and trade. Link: www.taraskuzio.net.
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ACTION UKRAINE PROGRAM - SPONSORS
"Working to Secure & Enhance Ukraine's Democratic Future"
1. THE BLEYZER FOUNDATION, Dr. Edilberto Segura,
Chairman; Victor Gekker, Executive Director, Kyiv, Ukraine;
Washington, D.C., http://www.bleyzerfoundation.com.
Additional supporting sponsors for the Action Ukraine Program are:
2. UKRAINIAN FEDERATION OF AMERICA (UFA), Zenia Chernyk,
Vera M. Andryczyk, Huntingdon Valley, Pennsylvania
3. KIEV-ATLANTIC GROUP, David and Tamara Sweere, Daniel
Sweere, Kyiv and Myronivka, Ukraine, kau@ukrnet.net
4. RULG - UKRAINIAN LEGAL GROUP, Irina Paliashvili,
2. UKRAINIAN FEDERATION OF AMERICA (UFA), Zenia Chernyk,
Vera M. Andryczyk, Huntingdon Valley, Pennsylvania
3. KIEV-ATLANTIC GROUP, David and Tamara Sweere, Daniel
Sweere, Kyiv and Myronivka, Ukraine, kau@ukrnet.net
4. RULG - UKRAINIAN LEGAL GROUP, Irina Paliashvili,
President; Kyiv and Washington, general@rulg.com, www.rulg.com.
5. VOLIA SOFTWARE, Software to Fit Your Business, Source your
IT work in Ukraine. Contact: Yuriy Sivitsky, Vice President, Marketing,
Kyiv, Ukraine, yuriy.sivitsky@softline.kiev.ua; Volia Software website:
http://www.volia-software.com/.
5. VOLIA SOFTWARE, Software to Fit Your Business, Source your
IT work in Ukraine. Contact: Yuriy Sivitsky, Vice President, Marketing,
Kyiv, Ukraine, yuriy.sivitsky@softline.kiev.ua; Volia Software website:
http://www.volia-software.com/.
6. U.S.-UKRAINE BUSINESS COUNCIL (USUBC), Washington,
D.C., Promoting U.S.-Ukraine business investments since 1995.
Join USUBC Today....LINK: http://www.usubc.org
7. UKRAINIAN ORTHODOX CHURCH OF THE USA, Archbishop
Antony, South Bound Brook, New Jersey, http://www.uocofusa.org
8. WJ GROUP of Ag Companies, Kyiv, Ukraine, David Holpert, Chief
Financial Officer, Chicago, IL; http://www.wjgrain.com/en/links/index.html
9. EUGENIA SAKEVYCH DALLAS, Author, "One Woman, Five
Lives, Five Countries," 'Her life's journey begins with the 1932-1933
genocidal famine in Ukraine.' Hollywood, CA, www.eugeniadallas.com.
10. ALEX AND HELEN WOSKOB, College Station, Pennsylvania
11. SWIFT FOUNDATION, San Luis Obispo, California
12. DAAR FOUNDATION, Houston, Texas, Kyiv, Ukraine.
13. ArtUkraine.com; www.ArtUkraine.com, to purchase Ukrainian
magazines and books write to ArtUkraine@voliacable.com.
14. DUNWOODIE TRAVEL BUREAU, Specializing in Ukraine travel,
Alesia Kozicky, Owner/Travel Agent, http://www.DunwoodieTravel.com;
15. bne, businessneweurope, Berlin, Ben Aris, Editor-In-Chief.
16. UKRAINE ANALYST, Dr. Taras Kuzio, Editor
PUBLISHER AND EDITOR - AUR
Mr. E. Morgan Williams, Director, Government Affairs
Washington Office, SigmaBleyzer, The Bleyzer Foundation
Mr. E. Morgan Williams, Director, Government Affairs
Washington Office, SigmaBleyzer, The Bleyzer Foundation
Emerging Markets Private Equity Investment Group;
President, U.S.-Ukraine Business Council (USUBC)
Trustee, "Holodomor: Through The Eyes of Ukrainian Artists"
1701 K Street, NW, Suite 903, Washington, D.C. 20006
Tel: 202 437 4707; Fax 202 223 1224
Needed: 'Vice Presidents in Charge of Revolution'
To keep the power and spirit of the Orange Revolution alive and well
Power Corrupts and Absolute Power Corrupts Absolutely.
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