ACTION UKRAINE REPORT (AUR)
An International Newsletter, The Latest, Up-To-Date
In-Depth Ukrainian News, Analysis and Commentary
Ukrainian History, Culture, Arts, Business, Religion, Economics,
Sports, Government, and Politics, in Ukraine and Around the World
UKRAINE'S ECONOMY IS HOSTAGE TO POLITICS
Whoever wins will face huge challenges, IMF, budget cuts. A flare-up in political
instability would hit Ukraine and investors hard. Investors will be watching closely.
(Article two)
"It is high time that the Ukrainian government join the private sector in making
Ukraine an attractive place for both Ukrainian and foreigner investors."
(Article eleven)
ACTION UKRAINE REPORT (AUR), Number 950
Mr. Morgan Williams, Publisher and Editor, SigmaBleyzer Emerging
Markets Private Equity Investment Group, www.SigmaBleyzer.com.
In cooperation with the U.S.-Ukraine Business Council, www.usubc.org.
WASHINGTON, D.C., TUESDAY, JANUARY 19, 2010
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. ECONOMIC POLICIES OF UKRAINE'S ELECTION FRONTRUNNERS
IMF, Currency Market, Fiscal Policy, Gas, Energy Security
Sabina Zawadzki, Reuters, Kiev, Ukraine, Mon, Jan 18, 2010
2. UKRAINE'S ECONOMY IS HOSTAGE TO POLITICS
Whoever wins will face huge challenges, IMF, budget cuts. A flare-up in political
instability would hit Ukraine and investors hard. Investors will be watching closely.
Heard on the Street: by Richard Barley, Dow Jones
The Wall Street Journal, New York, NY, Tue, Jan 19, 2010
3. YANUKOVYCH, TIMOSHENKO PREPARE FOR UKRAINE RUNOFF
Markets rise: dollar bonds due rose, PTFS stock index rose, hryvnia was stronger
By Daryna Krasnolutska and Kateryna Choursina, Bloomberg, Kiev, Ukraine, Mon, Jan 18, 2010
4. IMF’s STRAUSS-KAHN WARNS AGAINST EARLY STIMULUS EXIT
Strauss-Kahn reiterated that the fund is committed to helping Ukraine. “We expect
after the election to make it possible to resume our relationship,” he said.
By Aki Ito, Bloomberg, New York, NY, Mon, Jan 18, 2010
5. UKRAINE POLL LEADERS SET SIGHTS ON SWING VOTERS
Whoever wins will inherit an economy that shrank 15% last year and
have to persuade the IMB to resume a $16.4 billion bailout program
Europe News by James Marson, The Wall Street Journal, NY, NY, Tue, Jan 19, 2010
6. UKRAINE'S ECONOMY MINISTER PREDICTS GDP GROWTH OF 3-4%,
INFLATION OF 9.7%, INDUSTRIAL OUTPUT INCREASE OF 3% POSSIBLE IN 2010
Ukrainian News-on-line, Kyiv, Ukraine, Mon, January 18, 2010 (11:25)
7. "I CHOOSE ECONOMIC GROWTH, CREATION OF NEW JOBS AND FIGHT
AGAINST POVERTY" SAYS WEALTHY BUSINESSMAN RINAT AKHMETOV
I am sure that we are obliged to change life for the better," he said.
Interfax-Ukraine news agency, Kiev, Ukraine, in Russian, Sun, 17 Jan 10
BBC Monitoring Service, in English, Donetsk, Ukraine, Sun, Jan 17 2010
8. UKRAINE'S ELECTION FRONTRUNNER DEFENDS LINKS TO OLIGARCHS
By Stefan Wagstyl and Roman Olearchyk in Kiev
Financial Times, London, UK, Mon, January 18 2010
9. UKRAINE IS HEADED FOR NATIONAL BANKRUPTCY
Russia would be the natural partner to step in and help, but at considerable cost to Kiev's independence.
OPINION EUROPE by Christopher Granville, London
The Wall Street Journal, New York, NY, Mon, Jan 18, 2010
10. VIKTOR YUSHCHENKO'S LEGACY FOR UKRAINE? SMILING PEOPLE
Despite his humiliating rejection...history should just him kindly.
By Tony Halpin in Kiev, TimesOnline (UK), London, UK, Mon, 18 January 2010
11. UKRAINE: GOVERNMENT NEEDS A BETTER STRATEGY IF IT WANTS TO PLAY
A CONSTRUCTIVE ROLE IN HELPING UKRAINE OUT OF THE ECONOMIC CRISIS
"It is high time that the Ukrainian government join the private sector in making
Ukraine an attractive place for both Ukrainian and foreigner investors."
Analysis & Commentary by Andriy Ignatov, Kyiv Post, Kyiv, Ukraine, Fri, Jan 8, 2010
12. UKRAINE’S 2010 ELECTIONS: THE ANTI-REVOLUTION
Analysis & Commentary: John Marone, Columnist, Eurasian Home, Kyiv, Ukraine
Eurasian Home website, Moscow, Russia, Friday, January 15, 2010
13. HOLODOMOR: THE COURT RETURNED THE LEADERSHIP OF BOLSHEVIST
TOTALITARIAN REGIME GUILTY FOR GENEOCIDE IN UKRAINE IN 1932-1933
To: Morgan Williams, Washington, D.C.
From: Valentyn Nalyvaichenko, Head, SBU, Kyiv, Ukraine, Jan 14, 2010
14. STALIN GRANDSON DISPUTES GENOCIDE VERDICT
UPI, Kiev, Ukraine, Mon, Jan 18, 2010
15. A BIRD OVER THE DNIEPER
Commentary: by Igor Pomerantsev, Russian writer and poet
RFE/RL, Prague, Czech Republic, November 23, 2009
16. VIKTOR YUSHCHENKO'S PARTING GIFT
After five years of rhetoric and disillusionment,
Ukrainians are looking for a leader who can get things done.
Editorial by TOL (Transitions Online), Prague, Czech Republic, Fri, Jan 15, 2010
=======================================================================
1. ECONOMIC POLICIES OF UKRAINE'S ELECTION FRONTRUNNERS
IMF, Currency Market, Fiscal Policy, Gas, Energy Security
Sabina Zawadzki, Reuters, Kiev, Ukraine, Mon, Jan 18, 2010
KIEV - Ukrainian opposition leader Viktor Yanukovich and Prime Minister Yulia Tymoshenko will face each other in a run-off presidential election on February 7 and official results from Sunday's first round suggest a close contest ahead.
The election will define how Ukraine, a former Soviet republic of 46 million people wedged between the European Union and Russia, handles relations with its powerful neighbours, and may help unblock frozen IMF aid for its ailing economy. Despite fierce accusations and recriminations in the run-up to the vote, analysts say the differences between Tymoshenko's and Yanukovich's economic policies are few and nuanced.
Both say they aim to fight poverty and improve the lot of ordinary Ukrainians through a generous state safety-net first, putting emphasis on investment and modernisation second.
Yanukovich and Tymoshenko have sought to balance improved relations with Russia with closer economic integration with the European Union -- both potential lenders.
Whoever wins, their priority will be to bring the International Monetary Fund and its billions that have propped up state finances, helped stem the weakness of the hryvnia currency and provide funds for timely payments for Russian gas.
IMF
[1] Ukraine agreed to an unprecedented bailout programme of $16.4 billion (10 billion pounds) with the International Monetary Fund but on several fiscal and economic conditions.
[2] Although Yanukovich's supporters have demanded "vital" changes to the IMF programme, they have not detailed them and the majority of their criticism has been levelled at Tymoshenko's fulfilment of the conditions.
[3] Tymoshenko has promised to keep to the IMF programme -- she was against the minimum wage rises passed by parliament that led to the suspension of the bailout on grounds that it breached promises of keeping the budget deficit under control.
[4] But she has not fulfilled her highly unpopular promise of raising gas prices last year and this.
[5] The IMF is unlikely to change the conditions, whoever wins.
CURRENCY MARKET
[1] Tymoshenko has repeatedly attacked the central bank, accusing it of facilitating illegal speculation on the hryvnia currency and demanding that Central Bank chief Volodymyr Stelmakh step down.
[2] Stelmakh, as central bank chief nominated by the president, has held his position beyond the retirement age of 60 so is very likely to step down.
[3] "If Tymoshenko becomes president, then the banks will start selling the dollar. How many times has she promised to install her own central banker, (how many times) has she said that there is no chance the dollar will rise? She will start bringing it down artificially," a dealer said.
[4] "If Yanukovich, then it is not clear whom he will bring on as the head of the bank. But it could be that because there are export-driven producers amongst his circle who are interested in an expensive dollar ... they will insist on a high dollar rate."
FISCAL POLICY
[1] Both Tymoshenko and Yanukovich have promised lower taxation and increased minimum wages, pensions and social benefits.
[2] Yanukovich has said he wants to cut the Value Added Tax (VAT) to 17 percent by 2011 from 20 percent and corporate tax to 19 percent from 25 percent. He wants banks to offer mortgages with no more than 7 percent interest rates.
[3] Tymoshenko wants to cut the number of taxes by a third, simplifying the system. She wants to cut VAT and offer tax breaks to importers of new technologies as well as poor regions to boost investment. She has not mentioned any figures.
GAS...
[1] Tymoshenko struck a gas supply and pricing deal with Russia at the start of last year to end a three-week dispute that led to cut-offs to Europe. Ukraine paid European price at 20 percent discount in 2009 and this year the full market price.
[2] Moscow and gas export monopoly Gazprom have so far shown willingness to amend that deal, allowing Ukraine to import less as its demand plunged due to an economic recession and waiving for now fines for under-buying.
[3] Yanukovich says he had always been able to strike better pricing deals with Moscow and that he wants to renegotiate the 10-year contract.
[4] Tough negotiations on any new contract may cause another row, risking more supply cuts to Europe. But neither are there any signs that Russia would negotiate, nor that it will continue to be lax on enforcing the contract's conditions.
...AND ENERGY SECURITY
[1] Both Tymoshenko and Yanukovich believe Ukraine, site of the world's worst nuclear disaster at Chernobyl, could gain energy security through the development and construction of more nuclear power stations.
[2] Tymoshenko wants to speed up exploration and extraction of oil and gas on the Black Sea shelf, to shore up Ukraine's energy security, while Yanukovich wants to modernise the coal industry, that could fuel much of steel production -- key to the economy. (Editing by Stephen Nisbet)
----------------------------------------------------------------------------------------
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
2. UKRAINE'S ECONOMY IS HOSTAGE TO POLITICS
Whoever wins will face huge challenges, IMF, budget cuts. A flare-up in political
instability would hit Ukraine and investors hard. Investors will be watching closely.
Heard on the Street: by Richard Barley, Dow Jones
The Wall Street Journal, New York, NY, Tue, Jan 19, 2010
NEW YORK - The Orange Revolution of 2004 was supposed to usher in new hope for Ukraine. But at the start of 2010, investors are paying more to insure Ukraine's debt over one year than for any other country, even though default seems virtually impossible with just $400 million of foreign debt falling due this year and $26.5 billion in reserves.
Political risk continues to hold the economy in limbo. Sunday's presidential election brings resolution one step closer; but the risk remains that even February's run-off vote between Prime Minister Yulia Tymoshenko and Viktor Yanukovych, whose victory in 2004 was overturned after street protests, may not generate much-needed political stability.
WHOEVER WINS WILL FACE HUGE CHALLENGES
Whoever wins will face huge challenges. The priority is to persuade the International Monetary Fund to resume payments under a $16.4 billion program.
The IMF halted payments ahead of the election when the government failed to push through agreed rises in domestic gas prices and Parliament adopted a budget-busting rise in wages and pensions that could boost the budget deficit by 7% of gross domestic product.
Without IMF funds, Ukraine has had to use foreign-exchange reserves to pay its bills, including for Russian gas. Relations with international creditors have suffered.
The economy has been hit hard: GDP shrank 14% in 2009 and will grow only 2.7% in 2010, according to the IMF. IMF support will reassure markets that reserves can be preserved, easing pressure on the hryvnia, which has fallen 60% against the dollar from its pre-crisis levels, and averting more trouble in the banking sector.
NEED TO PUSH THROUGH AUSTERITY MEASURES
But the new president will need political support to push through austerity measures. If Ms. Tymoshenko wins, she should be able to consolidate power relatively quickly; if Mr. Yanukovych wins, he may push for early parliamentary elections to shore up his support, extending the electoral cycle. A contested result or one which, like 2004's vote, is subject to allegations of fraud will prolong the instability.
Investors will be watching closely. With one-year credit-default swaps at 13 full percentage points, or $1.3 million per $10 million of debt insured, and bonds due 2011 yielding more than 11%, the potential returns are attractive, particularly as risk appetite has reduced yields elsewhere in emerging-market debt. But a flare-up in political instability would hit Ukraine and investors hard.
Write to Richard Barley at richard.barley@dowjones.com.
LINK: http://online.wsj.com/article/SB10001424052748704541004575010950792233106.html
----------------------------------------------------------------------------------------
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
U.S.-Ukraine Business Council (USUBC): http://www.usubc.org
From 22 to over 100 Members in Two Years, Join Today
========================================================
3. YANUKOVYCH, TIMOSHENKO PREPARE FOR UKRAINE RUNOFF
Markets rise: dollar bonds due rose, PTFS stock index rose, hryvnia was stronger
By Daryna Krasnolutska and Kateryna Choursina, Bloomberg, Kiev, Ukraine, Mon, Jan 18, 2010
KIEV - Ukrainian opposition leader Viktor Yanukovych and Premier Yulia Timoshenko, who topped yesterday’s first-round presidential election, will face each other in a runoff vote in three weeks.
Yanukovych, 59, won 35.36 percent of the vote after 89.76 percent of ballots were counted, the Central Electoral Commission said, short of an outright victory. Timoshenko got 24.96 percent and will meet Yanukovych in the Feb. 7 second round. Incumbent Viktor Viktor Yushchenko lost his re-election bid with 5.43 percent.
The election ends Yushchenko’s dream of leading Ukraine into the European Union and NATO five years after he beat Moscow-backed Yanukovych during the Orange Revolution. Yesterday’s result may lead to a Timoshenko victory as voters who backed eliminated candidates may turn to the premier, who stood with Yushchenko during the demonstrations, analysts said.
“Timoshenko has the chance to win the runoff as people who supported candidates linked to the Orange Revolution such as incumbent Viktor Yushchenko are potential voters for her,” said Yuriy Yakymenko, an analyst at the Kiev-based Razumkov Center for Economic and Political Studies.
Markets Rise
Ukraine’s dollar bonds due 2013 rose to 92.33 cents on the dollar at 10:15 a.m. in Kiev, from 92.1 cents on Jan. 15, according to prices on Bloomberg. The PFTS stock index rose 0.6 percent to 628.54 at 10:53 a.m. in Kiev, heading for the highest close in two months. The hryvnia was 0.3 percent stronger versus the dollar, rising to 8.0842 per dollar from 8.0864 on Jan. 15.
“In the near term, a Timoshenko victory would provide more stability for investors because she would be able to consolidate power more quickly and start enacting reforms,” said Jathan Tucker, the head of trading at BG Capital investment bank in Kiev. “Parliamentary elections would probably follow a Yanukovych victory, prolonging uncertainty from the elections.”
Monitors from the Organization for Security and Cooperation in Europe were stationed at polling sites and election centers across the country. The International Election Observation Mission has more than 800 observers from 47 countries, according to the OSCE’s Web site.
‘Positive Impression’
Alcee Hastings, the deputy head of the election observation mission in Kiev, said in a phone interview yesterday that he “had positive impression from the election” and doesn’t expect “major problems.”
Yanukovych and Timoshenko both promise closer trade ties with the EU and improved relations with Russia.
Exit poll results by the Kiev-based Democratic Initiatives Foundation, the Razumkov Center for Economic and Political Studies and the Kiev International Institute of Sociology “show that Ukraine has not changed its road, which we started in 2004,” Timoshenko said yesterday at a press conference. “There is no chance for Yanukovych.”
Another exit poll, conducted by Ukrainian TV channel ICTV together with London-based GFK NOP, gave Yanukovych 35.06 percent, while Timoshenko was backed by 25.72 percent.
The Orange Revolution team “got their grade from voters and it was fair,” Yanukovych said yesterday. “Timoshenko will find her place” in the opposition, he added.
Under Yushchenko, Ukraine attracted $36 billion in foreign direct investment from the start of his presidency through November 2009. FDI totaled $5.7 billion between 1999 and 2004.
The country also won membership in the World Trade Organization and the EU declared Ukraine a market economy. Unemployment fell to 6.9 percent in 2008 from 9.2 percent in 2004, using International Labor Organization standards, Ukrainian state data shows.
Bickering
Bickering between Yushchenko and Timoshenko several months after the 2004 revolution disappointed voters, clearing the way for Yanukovych’s party to win parliamentary elections in 2006.
Yanukovych took the post of prime minister, though disputes with Yushchenko led to early elections in 2007, allowing Orange allies to reunite. Timoshenko became premier again in December 2007. Since then, the country has been locked in a political stalemate because of disputes between the three politicians.
Political instability complicated Ukraine’s fight with the global credit crunch.
The country faces its worst recession in at least 15 years, with gross domestic product plummeting a record 20.3 percent in the first quarter of 2009, 17.8 percent in the second and 15.9 percent in the third.
IMF Aid
Ukraine was forced to line up a $16.4 billion International Monetary Fund bailout loan in late 2008 as the global credit crisis cut demand for its exports and dried up investment. Its cooperation with the Washington-based lender is now stalled because of political infighting and the government’s failure to cut spending.
Ukraine’s relations with Russia deteriorated after 2004 as it officially backed Yanukovych then and opposed Yushchenko’s plan to join the North Atlantic Treaty Organization. Russia cut off gas supplies to Ukraine twice since 2006 because of price disputes, affecting the EU. Ukraine depends on Russia for more than 50 percent of its gas needs, while it ships 80 percent of Russian fuel to Europe.
Ukraine one-year credit-default swaps, the highest worldwide, will probably fall as the Yushchenko era ends and the prospects grow about improved relations with Russia and the IMF, Commerzbank AG said in a research note on Jan. 15.
NOTE: To contact the reporters on this story: Daryna Krasnolutska in Kiev at dkrasnolutsk@bloomberg.net; Kateryna Choursina in Kiev at kchoursina@bloomberg.net
LINK: http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aN3n3eX_uhHs
----------------------------------------------------------------------------------------
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
4. IMF’s STRAUSS-KAHN WARNS AGAINST EARLY STIMULUS EXIT
Strauss-Kahn reiterated that the fund is committed to helping Ukraine. “We expect
after the election to make it possible to resume our relationship,” he said.
By Aki Ito, Bloomberg, New York, NY, Mon, Jan 18, 2010
TOKYO - International Monetary Fund Managing Director Dominique Strauss-Kahn said it’s too early for policy makers to withdraw stimulus that’s driving the global recovery. “The global economy is recovering, even if its recovery is fragile,” Strauss-Kahn said in a speech at Tokyo University in Japan’s capital today.
A plan to withdraw emergency measures “should be designed today” yet not “implemented” because world economies are still dependent on government support and private demand remains weak, he said.
Strauss-Kahn had said earlier this month that the world’s economic recovery is occurring “sooner and stronger” than anticipated. More than $2 trillion in government spending around the world has spurred growth, pulling economies out of a recession spurred by a meltdown in the U.S. housing market.
Government measures “should be focused more on what is likely to fight unemployment,” he said today.
Strauss-Kahn said countries haven’t done enough to tighten regulation in the wake of the global financial crisis. “The root of the crisis” was “a failing of regulation and supervision of the financial sector in the U.S,” he said. “A lot has already been done, but it’s not enough.”
He urged nations to consider having companies in the financial sector financially help solve the problems they created. U.S. President Barack Obama’s proposed levy on the country’s banks is “very welcome” and “a good idea,” Strauss-Kahn said.
Taxpayer Money
Obama is proposing a tax on the country’s largest financial firms to get back taxpayer money that bailed out those companies during the worst recession since the 1930s. The fee would apply to financial companies with assets of more than $50 billion such as Citigroup Inc., American International Group Inc. and Bank of America Corp.
Non-financial companies which also got bail-out aid including General Motors Co. and Chrysler Group LLC would be exempt from the levy.
IMF COMMITTED TO HELPING UKRAINE
Strauss-Kahn reiterated that the fund is committed to helping Ukraine even after suspending a part of a $3.4 billion aid program because the government failed to meet conditions for spending cuts.
“We expect after the election to make it possible to resume our relationship,” he said. Ukraine had a presidential ballot yesterday and a runoff vote is scheduled for Feb. 7. [To contact the reporter on this story: Aki Ito in Tokyo at aito16@bloomberg.net.]
LINK: http://www.bloomberg.com/apps/news?pid=20601086&sid=aYrhU7TBPoT4
----------------------------------------------------------------------------------------
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
U.S.-Ukraine Business Council (USUBC): http://www.usubc.org
Promoting U.S.-Ukraine business relations & investment since 1995.
========================================================
5. UKRAINE POLL LEADERS SET SIGHTS ON SWING VOTERS
Whoever wins will inherit an economy that shrank 15% last year and
have to persuade the IMB to resume a $16.4 billion bailout program
Europe News by James Marson, The Wall Street Journal, NY, NY, Tue, Jan 19, 2010
KIEV - Opposition leader Viktor Yanukovych and Prime Minister Yulia Tymoshenko, bitter foes since Ukraine's 2004 Orange Revolution, began a three-week scramble for new support Monday after first-round voting in the country's presidential election thrust them into a runoff.
Near-complete returns from the Central Election Commission gave 35.3% of Sunday's vote to Mr. Yanukovych, the dour but resilient politician whose tainted victory in the 2004 race was overturned after massive street protests against alleged fraud.
His margin over Ms. Tymoshenko, who polled 25%, wasn't wide enough to make him the runoff's clear favorite, political analysts said. Ms. Tymoshenko, a former natural-gas tycoon known for her sharp tongue and crown of braided hair, is considered the more charismatic and aggressive campaigner.
But she shares the burden of the political and economic turmoil that has stymied the country under the pro-Western Orange Revolution and its principal leader, President Viktor Yushchenko, who finished fifth among 18 contenders with 5.5% of Sunday's vote.
With 40% of the first-round vote up for grabs, the question is whether Ms. Tymoshenko can persuade swing voters who are ideologically closer to her to overlook her part in the leadership's failures and support her in the Feb. 7 runoff.
Staking out her battle line, she assailed her opponent, a former prime minister, as a tool of corrupt oligarchs. She called on "democratic forces" to help her keep Ukraine on a path toward integration with Europe. "To vote for Yanukovych is to choose the Stone Age," she said in televised remarks late Sunday.
Mr. Yanukovych declared Monday that Ukrainians had turned against their leaders. His rival, he said, "has not learned to accept her mistakes and correct them. People sense that, and don't trust her."
Ms. Tymoshenko got most of her support in the nationally minded, pro-European west and center of Ukraine. Mr. Yanukovych polled heavily in the eastern and southern regions culturally close to Russia.
The geopolitical tone of the 2004 race, in which Russia backed Mr. Yanukovych and was humiliated by the outcome, is largely absent this time. Both major candidates have vowed to repair ties with Russia while pursuing European Union membership. The economy and corruption mattered more to voters.
Nor did allegations of fraud and voter intimidation weigh on Sunday's results as they did in 2004. Western electionobservers reported that the voting generally met international standards, despite some confusion over who was eligible to vote from home.
Supporters of banking millionaire Serhiy Tihipko and former parliament speaker Arseniy Yatsenyuk could hold the key to the runoff outcome. They finished third and fourth, respectively, polling about 20% between them on similar reform messages branding Ukraine's traditional politicians as ineffective and corrupt. Messrs. Tihipko and Yatsenyuk said they will support neither candidate in the runoff.
"Tymoshenko needs to convince voters for Tihipko and Yatsenyuk to come out, and she needs to persuade them ...that the alternative represented by Yanukovych is much worse," said David J. Kramer, a Senior Transatlantic Fellow at the German Marshall Fund in Washington, who observed the election.
"That's going to be hard...A lot of Ukrainians voted for those candidates because they are not Tymoshenko."
Mr. Yanukovych hopes to pick up votes from Mr. Tihipko, who scored well in the front-runner's strongholds. But some who voted for Mr. Tihipko said they couldn't abide Mr. Yanukovych, a former factory manager who served jail time for assault and robbery in his youth and gained attention for declaring himself a "proffesor"—misspelling the word in Ukrainian—in his 2004 presidential declaration.
"I will never vote for an illiterate leader. I would be embarrassed to have him as president," said Olha Kovalchuk of Kiev, who voted for Mr. Tihipko in the first round and now supports Ms. Tymoshenko.
Both candidates sprang into action Monday after an explosion caused by oxygen tanks killed at least seven people at a hospital in the eastern town of Luhansk. Ms. Tymoshenko rushed there in her capacity as prime minister. Mr. Yanukovych promised his Party of Regions party would give $3,000 to the families of each victim.
Whoever wins the runoff will inherit an economy that shrank 15% last year, according to the World Bank. The new president will have to persuade the International Monetary Fund to resume a $16.4 billion bailout program, suspended after Mr. Yushchenko signed wage and pension increases into law in October.
Getting parliament to pass the required austerity measures will be difficult. Mr. Yanukovych has said that if he wins he might call parliamentary elections this year to secure a legislative majority.
LINK: http://online.wsj.com/article/SB10001424052748704541004575010390901914042.html ?mod=WSJ_hpp_MIDDLTopStories
----------------------------------------------------------------------------------------
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
6. UKRAINE'S ECONOMY MINISTER PREDICTS GDP GROWTH OF 3-4%,
INFLATION OF 9.7%, INDUSTRIAL OUTPUT INCREASE OF 3% POSSIBLE IN 2010
Ukrainian News-on-line, Kyiv, Ukraine, Mon, January 18, 2010 (11:25)
KYIV - Economy Minister Bohdan Danylyshyn considers that the gross domestic product growth of 3-4%, inflation of 9.7%, and industrial output increase of 3% possible in 2010, he told the InvestGazeta publication.
The economy minister believes that 2010 will become the year of recovery for Ukrainian economy and expects the growth of export in all sectors via the favourable foreign economic situation.
At the same time, Danylyshyn said that the increase of competitiveness of the internal producer will stimulate the production and constrain the consumer import growth. Moderate policy of regulation of social standards will assist in the growth of real wages. As Ukrainian News earlier reported, the Cabinet of Ministers expects the GDP growth of 3.7% in 2010 and inflation of 9.7% in 2010.
----------------------------------------------------------------------------------------
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
7. "I CHOOSE ECONOMIC GROWTH, CREATION OF NEW JOBS AND FIGHT
AGAINST POVERTY" SAYS WEALTHY BUSINESSMAN RINAT AKHMETOV
I am sure that we are obliged to change life for the better," he said.
Interfax-Ukraine news agency, Kiev, Ukraine, in Russian, Sun, 17 Jan 10
BBC Monitoring Service, in English, Donetsk, Ukraine, Sun, Jan 17 2010
DONETSK, Ukraine - Only the authorities can falsify results of the presidential election in Ukraine, Party of Regions MP [and Ukraine's wealthiest businessman] Rinat Akhmetov has said.
"This is a test of democracy for the authorities. The authorities alone can falsify results of the election and this is a test of democracy for the authorities. I would very much like this election to be fair and free," he told journalists after casting his ballot in Donetsk.
"I choose economic growth, creation of new jobs and fight against poverty. I am sure that we are obliged to change life for the better," he said.
[Passage omitted: minor details]
----------------------------------------------------------------------------------------
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
Send in a letter-to-the-editor today. Let us hear from you.
========================================================
8. UKRAINE'S ELECTION FRONTRUNNER DEFENDS LINKS TO OLIGARCHS
By Stefan Wagstyl and Roman Olearchyk in Kiev
Financial Times, London, UK, Mon, January 18 2010
LONDON/KIEV - Viktor Yanukovich, the frontrunner in Ukraine’s presidential election, defended his connections with the country’s oligarchs on Monday as he prepared to take on Yulia Tymoshenko, the prime minister, in the election run-off in early February.
Mr Yanukovich spoke to the Financial Times after his clear victory in Sunday’s first round election, with 35 per cent of the vote against Ms Tymoshenko’s 25 per cent, in a ballot that international monitors judged free and fair.
The result represents a reversal of fortune for Mr Yanukovich, who was the villain of the disputed 2004 election that triggered the Orange Revolution and paved the way for one of his arch-rivals to take office.
The Ukrainian opposition leader, who is backed by Rinat Akhmetov, Ukraine’s richest man, and other billionaire businessmen, said he represented the interests of all voters, “but I am used to working with all people who influence the economy of Ukraine including big business,” he said.
“Big business is a good partner for the state ... But it should keep its side of the bargain ... Such mutually beneficial relations should provide good results.”
Mr Yanukovich’s comments follow repeated attacks from Ms Tymoshenko over the alleged connections between business, politics and organised crime and her claims that big business has delayed Ukraine’s integration with the European Union by blocking laws that might harm their interests.
Mr Yanukovich pledged to support Ukraine’s EU integration, including a planned free trade agreement, while maintaining good relations with Russia.
He insisted his plans to join a Moscow-led customs union “did not contradict” Kiev’s EU integration as long as it was done “within the framework of the World Trade Organisation”. He added: “Ukraine should be a reliable bridge between the west and Russia.”
LINK: ttp://www.ft.com/cms/s/0/e2001d40-047b-11df-8603-00144feabdc0.html
---------------------------------------------------------------------------------------
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
9. UKRAINE IS HEADED FOR NATIONAL BANKRUPTCY
Russia would be the natural partner to step in and help, but at considerable cost to Kiev's independence.
OPINION EUROPE By Christopher Granville, London
The Wall Street Journal, New York, NY, Mon, Jan 18, 2010
Ukraine's presidential election yesterday- which appears headed to a second round run-off on Feb. 7 between the two leading candidates, Viktor Yanukovych and Yulia Tymoshenko - unfolds against the background of financial ruin.
It has long been obvious that the defeat of the incumbent, Viktor Yushchenko, who has painted himself into the anti-Russian nationalist corner, would produce a political rapprochement between Ukraine and Russia.
Mr. Yanukovych is committed to non-alignment (meaning no application for NATO membership) while Ms. Tymoshenko promises to submit to popular referendum any decision to join a military alliance (in practice ruling out NATO membership, which, as revealed by a long series of opinion polls, is opposed by a solid majority of Ukrainians).
What seems much less widely appreciated is the prospect of this geopolitical shift being magnified by Ukraine's imminent national bankruptcy—casting Russia in the role of "Abu Dhabi" to Ukraine's "Dubai" in the sense of easing the financial distress of a closely related neighbor.
In October 2009, the IMF suspended the latest planned disbursement of $3.8 billion (€2.6 billion) from its $17 billion rescue loan to Ukraine, citing the need to wait for the presidential election campaign to run its course before the Ukrainian authorities would be in a position to pursue responsible economic policies.
In the meantime, the IMF has quietly helped keep Ukraine's funding crisis at bay by a series of expedients, culminating in approval for a drawdown of $2 billion of the Ukrainian central bank's foreign-exchange reserves to meet this month's $900 million payment for imported Russian gas.
From now on, however, the cupboard is bare. Total austerity will be the only way to preserve Ukraine's reserves and prevent another run on the currency—which would be ruinous, given the mountain of public and private debt denominated in foreign currency (exceeding 100% of GDP at the start of the crisis).
The newly elected president, and whatever government emerges from the presidential election, will have to abandon their election promises by slashing public spending (the budget deficit reached around 12% of GDP in 2009, largely financed by printing money) and passing on higher energy costs to domestic consumers. Failure to cut spending will lead to widespread defaults.
Already, the state-owned energy and railway companies (Naftohaz and UkrZaliznytsya) have been unable to meet their contractual obligations on foreign loans and entered into restructuring negotiations with their creditors.
This would be a daunting task even for a leader elected on a tide of national unity and with a popular mandate to face up to the crisis. But no such political capital can be generated by Ukraine's presidential election.
The reason for this goes deeper than the country's well-known East-West divisions. A no less fundamental problem is the lack of functional institutions.
As things stand, control over the executive is divided between the president and the legislature. This is the real cause of Ukraine's chronic political chaos—not the personal rivalries of the leading politicians and the business groups that finance them.
The only solution is radical constitutional reform to cement the supremacy of the parliament as the sole institution in which the country's deep internal divisions can be accommodated and managed. Amending the constitution requires two-thirds parliamentary majorities, which could only result from a coalition of the main political forces based in the center and east of the country (and now led, respectively, by Ms. Tymoshenko and Mr. Yanukovych).
But after slugging out the battle for the presidency, those two leaders will transfer their struggle to the parliament—quite likely precipitating an early parliamentary election. This is not exactly the ideal environment for getting the IMF program back on track and staving off financial collapse.
Yet this analysis still does not capture the full extent of Ukraine's plight. Let's assume, for the sake of argument, that the country miraculously escapes its political trap with the emergence in the next few weeks of a strong leader in control of both the presidency and the parliament, and hence able to take decisive policy action.
Even then, with IMF loan disbursements renewed and with some recovery in battered investor confidence, Ukraine would face massive external financing gaps. A recovery in the price of Ukraine's exports (mainly ferrous metals and bulk chemicals) would be offset by the closely correlated moves in the prices of its (energy) imports—and any temporary decoupling of those prices is unlikely to be in Ukraine's favor, given the surge in Chinese steel production.
Above all, Ukraine has $37 billion in external debt falling due in 2010. Even assuming, in this miracle scenario, that half of that could be refinanced (despite the bitter taste left by recent defaults), the financing gap would remain above $10 billion in 2010—rising to $15-$24 billion in 2012-13 as the IMF disbursements first cease and then themselves start falling due for repayment.
The only plausible way to plug these gaps is to tap the huge savings of the Russian government. Will Ukraine ask for such assistance from Russia and, if it did, how would Russia respond?
Fears for Ukraine's sovereignty mean that a Russian bailout will always be regarded by Ukraine's mainstream political class as a last resort. But a national insolvency would be seen as an even greater threat to sovereignty than being bailed out by Russia and, most important of all, would jeopardize the power and wealth of Ukraine's entire political and business establishment.
Mindful of its humiliation in Ukraine's 2004 Orange Revolution, the Russian leadership will respond cautiously. Nevertheless, Russia will now be sucked into the Ukrainian crisis - motivated by potential geopolitical gains and asset-acquisition opportunities on the one hand, and, on the other hand, a natural interest in doing what it can to prevent a financial and economic debacle in Ukraine, for the sake of regional stability and given the importance of bilateral trade and still strong economic links between the two countries.
Is this prospect a good thing or a bad thing? There will be strong views on either side, with much crowing and hand-wringing. One way or another, Russia bailing out Ukraine should be seen as a natural development - as natural as, for example, the response of the U.S. to the Mexican peso crisis in 1994.
NOTE: Mr. Granville is managing director of Trusted Sources, an emerging-markets research company, London, www.trustedsources.com.uk.
LINK: http://online.wsj.com/article/SB10001424052748703569004575008990183229012 .html?mod=googlenews_wsj
FOOTNOTE: Most of the economists polled by the U.S.-Ukraine Business Council (USUBC), www.usubc.org, do not agree that Ukraine is in financial ruin and thus headed at this time for national bankruptcy. Most economists agree that Ukraine has a very tough and difficult economic situation and needs to work seriously, productively and quickly on a whole series of key economic issues. This can best be done if there is some stability very soon in the government. Most economists believe there is a strong probability Ukraine will move in the right direction in 2010 and will not need to be bailed out by the leadership of Russia.
---------------------------------------------------------------------------------------
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
10. VIKTOR YUSHCHENKO'S LEGACY FOR UKRAINE? SMILING PEOPLE
Despite his humiliating rejection...history should just him kindly.
By Tony Halpin in Kiev, TimesOnline (UK), London, UK, Mon, 18 January 2010
KIEV - Viktor Yushchenko, Ukraine’s outgoing president, has tasted a heavy defeat at the polls. But despite his humiliating rejection by all but 6 per cent of the electorate, history should judge him kindly.
For all the political and economic turbulence of the past five years, Ukraine has been transformed under his presidency from just another ugly post-Soviet basket case into a country with real hopes of success as a democratic civil society.
One has only to compare political life in neighbouring Belarus and Russia to the vibrancy of the contest in Ukraine to see the effect the Orange Revolution has had.
Voters enjoyed a genuine choice of candidates reflecting a full spectrum of political opinions. Campaigns were conducted without fear that the ruling regime would send in riot police to break up election meetings and arrest opposition activists. Vigorous debates were available on every television channel, while street billboards were a riot of posters from competing candidates.
Mr Yushchenko and his former Orange ally Yuliya Tymoshenko, the Prime Minister, did not use the infamous “administrative resources” so often wheeled out in Russia to rig results.
One of the most remarkable aspects of the first round of voting was the absence of any serious complaints from candidates about ballot-rigging, given the massive fraud that prompted the Orange revolt in 2004.
Ukraine still has many problems, particularly with corruption, and none of these achievements is irreversible. But people freely speak their minds here and the fear that so stifles public life in other former Soviet republics has gone.
Which is why Ukraine matters and why the West has a big stake in the outcome of this election. The Kremlin keenly portrays its neighbour to domestic audiences as being in a state of constant chaos since the revolution because it fears the example of a thriving open society on Russia’s border. A Ukraine that works is a direct challenge to the former KGB spooks and shadowy apparatchiks who control politics in Moscow.
A trend has developed in recent years for Russians to travel to Kiev for the weekend to enjoy the more relaxed atmosphere of Ukraine’s capital, where police keep a lower profile than their counterparts in Moscow. They see that people smile more easily, service in restaurants and stores is more cheerful, that the tension they sense at home is absent in human relations.
In short, they see that Ukrainians have a stake in their society and can influence its future, and that this affects the public mood. The average Russian has no such opportunity and feels a sense of sullen resentment towards the authorities that leaves the Kremlin constantly fearful of political upheaval.
This election will determine whether the Ukrainian experiment continues or starts to degrade. It is tempting for the United States and the European Union collectively to wring their hands at the bickering that soured the Orange dream but Mr Yushchenko has left a legacy worth defending and they should be far more vigorous in saying so.
LINK: http://www.timesonline.co.uk/tol/news/world/world_agenda/article6992465.ece
----------------------------------------------------------------------------------------
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
U.S.-Ukraine Business Council (USUBC): http://www.usubc.org
Promoting U.S.-Ukraine business relations & investment since 1995.
========================================================
11. UKRAINE: GOVERNMENT NEEDS A BETTER STRATEGY
IF IT WANTS TO PLAY A CONSTRUCTIVE ROLE IN HELPING
UKRAINE OUT OF THE ECONOMIC CRISIS
"It is high time that the Ukrainian government join the private sector in making
Ukraine an attractive place for both Ukrainian and foreigner investors."
Analysis & Commentary by Andriy Ignatov, Kyiv Post, Kyiv, Ukraine, Fri, Jan 8, 2010
If the government wants to play a constructive role in helping Ukraine out of the economic crisis, it should develop a better strategy than the current one. It should create a world-class business environment for both domestic and foreign investors.
In October, the Cabinet of Ministers approved a series of investment projects that the government thinks are strategically important to Ukraine’s economy.
The idea behind this is that government experts are capable of selecting priority investment projects, whose business plans would then be approved by the Cabinet of Ministers, and marketed to international investors by a special government agency, UkrZovnishInvest. By doing so, the government hopes to raise $7 billion, or roughly 60 percent of the $11 billion in foreign investment anticipated in 2010.
Specifically, the government plans to market its “priority” projects by means of conducting road shows in “42 global financial centers” (Dzerkalo Tyzhnia, Dec. 25, 2009.) The goal is set to attract as much as $5 billion in foreign direct investment in 2010.
They also plan to create a government-run “investment-project exchange,” where investors could select from among 5,000 projects. Finally, the Cabinet of Ministers plans to create a special monitoring service, to guide foreign investors through Ukraine’s bureaucracy. The service is called “the single window.”
GOVERNMENT'S PLANS ARE NAIVE
These plans are naive. They are based on the assumption that, should the government try just a bit harder, foreign investment would flood in. The planners lack any understanding as to how and why investors would renew investing in Ukraine.
In fact, once the global financial crisis is over, the rules for credit and investment in emerging markets are expected to be much tougher than in the past. To attract capital, the government will have to make fundamental improvements to make Ukraine a globally-competitive place for doing business.
According to Vladyslav Kaskiv, a senior economic advisor to the prime minister, Ukraine has “reached a precipice, where trying to fix problems makes no sense.” It has a destroyed and depreciated political, legal, military, transport, and academic infrastructure.” (Dzerkalo Tyzhnia, Dec. 25, 2009.) He adds that, in 2010, Ukraine “will not have any systemic improvement in the investment climate.”
However, there are numerous opportunities for the government to roll up its sleeves and start cleaning up the Ukrainian business environment, beginning with basic government services – a job that does not require any legislative action, political support or additional funding. For example, the government might start with improving basic government services, such as customer service at tax-collecting centers.
PAYING TAXES IS A DIFFICULT ENDEAVOR
In modern Ukraine, paying taxes is a difficult endeavor. If you pass by a local tax administration building on the 20th of any month - a reporting deadline - you would see a swarm of busy people standing outside the premises. These are accountants and finance directors of Ukrainian companies, a large portion of whose work deals with figuring out the logistics of filing their many tax reports with numerous government agencies.
If you entered the building, you could see a line of accountants preparing “an electronic file,” since all company representatives are required to manually input their report data themselves on a floppy diskette first, and only then submit the diskette along with their printed tax report. The lines are everywhere. Tax administrations’ premises are usually small, crowded, unventilated, cold in winter and hot in summer.
Other tax-collecting government agencies, the state funds, do not have customer service counters at all. For example, in Kyiv’s Holosiyeve district, the state fund for insurance against temporary disabilities of employees is located in an unventilated 30 square meter room, where both the fund’s officers and each of the fund’s 30,000 corporate clients jam into every month.
The fact is that the more difficult it is to pay taxes, the less willing are Ukrainian businesses to pay them.
Ukraine does have expertise in world-class customer service. In the private sector, tens of thousands of trained customer service professionals make their businesses and products a success every day.
There is no justification for why Ukraine’s tax collection should not run their customer service as well as McDonald’s does: quickly, efficiently, and with a smile.
I was part of a team that brought first McDonald’s restaurants to the Ukrainian market. There was a lot of skepticism then about whether a friendly quick-service dining practice would ever take root in Ukraine. Some argued that Ukrainian employees would never adopt a serious attitude to customer service. A decade later, the country has thousands of companies with great customer service across many sectors: retail, telecommunications, trade, industrial, and even municipal services, to name a few.
As in the past, many skeptics still believe that the government can only provide window dressing. They might be surprised how the country could change to the better, should the political leadership bring the right people in to take on the hard work.
Attracting investment is not only about business plans, presentations and promotional clips placed on international channel networks. It is also about making the country truly attractive for both foreign and internal investment.
The problem with the quality of customer service provided by the government is just one of the critical drawbacks that hurt the investment climate. The government should also be providing Ukrainian and foreign businesses and investors with more and better information, and developing more efficient and more competitive markets for capital and goods.
The government should help the private sector implement better accounting and reporting standards, and make presently scarce information about Ukraine’s public companies more comprehensive and more accessible. The government should also require public companies to make full disclosure according to international financial reporting standards.
These disclosures should come in the annual and quarterly reports filed with the Ukrainian Commission on Securities and Exchanges. Presently, such reports are available irregularly and are vague. They also lack the proper detail desired by investors.
UKRAINE SHOULD HAVE SOPHISTICATED COMMODITY EXCHANGES
The government should help the private sector in creating and maintaining competitive capital and commodity markets. As one of the world’s largest producers and exporter of agricultural and basic industrial products, Ukraine should have sophisticated commodity exchanges, which should be transparent and fair and which should partner or fully integrate with one or several of the world’s most efficient commodity exchanges.
Likewise, the government should force Ukraine’s security exchanges to become more efficient. The trading volumes at Ukraine’s leading exchanges, such as PFTS, are insufficient to make those exchanges meaningful operations.
The state could enforce stricter and more transparent trading rules, with the goal to bring more quality assets and more competent traders to the market, and decrease trading margins. The government should also make it easy for participating institutional traders to integrate Ukraine’s security exchanges into the global infrastructure for capital flows.
International investors are very smart. When investing, they are seeking a proper business environment and the highest-quality financial products for their investments.
It is high time that the Ukrainian government join the private sector in making Ukraine an attractive place for both Ukrainian and foreigner investors. It should start with reforming basic government services.
NOTE: Andriy Ignatov is vice president of the ProInvest Association, a Ukrainian national association of professionals in investment promotion at
www.proinvest.in.ua, and can be reached at ignatov@proinvest.in.ua.
LINK: http://www.kyivpost.com:80/news/opinion/op_ed/detail/56585/
----------------------------------------------------------------------------------------
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
12. UKRAINE’S 2010 ELECTIONS: THE ANTI-REVOLUTION
Analysis & Commentary: John Marone, Columnist, Eurasian Home, Kyiv, Ukraine
Eurasian Home website, Moscow, Russia, Friday, January 15, 2010
Ukraine first surfaced on the modern world map in the autumn of 2004, during the country’s euphoric Orange Revolution. The streets of Kyiv became a stage of democratic heroism for international television crews. Fear of a real revolution gradually subsided, as the old guard of journalist-killing, all-powerful fat cats seemed to sink into the soiled woodwork of the nation’s dark recent past.
But even then, in December 2005, as top-notch foreign envoys negotiated a settlement in the capital’s halls of power, as the country’s courts finally began acting like judicial institutions, the seeds of an anti-revolution were being sowed.
The hero of the Orange Revolution, Viktor Yushchenko, was already demonstrating his tragic flaw – a serious lack of backbone – by yielding to last minute constitutional changes that would compromise the very presidency that he and his supporters had fought so hard to invest.
Over the next five years of his troubled presidency, Mr. Yushchenko would go on to yield much more: dozens of political allies, the standing of his once powerful party, his own personal reputation and future legacy, and – most tragically – the future of a democratic Ukraine. Ironically, Mr. Yushchenko has truly embodied the spirit of the Orange Revolution, which promised everything, sacrificed little and delivered even less.
Ukraine is now freer than possibly ever before in its volatile history as a nation, but this freedom is closer to anarchy, a temporary free-for-all, always threatening to end in another lengthy period of foreign subjugation.
The heroine of the Orange Revolution was current Prime Minister Yulia Tymoshenko. Where Yushchenko was a victim (of poison, etc.), she went on the attack; where Yushchenko gave in, she gave hell (not least in refusing to change the Constitution in December 2004), and where he remained in power, Tymoshenko went back into opposition – against him.
To a large extent, Yushchenko and Tymoshenko represent the two sides of the Orange Revolution: its stated ideals and its unfulfilled struggle for power.
As it turns out, the Orange forces never obtained real power.
For one thing, it now appears more than likely that Yushchenko, as well as his countless supporters never really wanted to overturn the existing system. Yushchenko himself was a product and member of that system, a man who once said his roundly disgraced predecessor Leonid Kuchma was like a father to him.
The businessmen and top officials who supported Yushchenko also must have realized his penchant for indecision and hesitation, and decided that this would give them the freedom of action unattainable under Kuchma or, for that matter, unattainable in any democratic state.
Lastly, the Ukrainian people themselves seemed all too ready to proclaim Yushchenko “a messiah”, as if the man’s readiness to suffer indignation at the hands of his enemies would make him a good leader.
Tymoshenko soon galvanized the real revolutionaries behind the revolution, fighting pitched battles with gas barons and the Kremlin, and returning to head the government despite Yushchenko’s rapprochement with his enemies. She was and still is leader better suited to revolution than stable office.
These enemies, who rigged the 2004 elections, murdered vocal opponents, stole state enterprises with impunity and called black white from the screens and pages of all the media that they continue to control, were never punished by Mr. Yushchenko.
Instead, they adapted to the new democratic environment, incompletely embraced by an increasingly divided Orange team, itself proving more and more vulnerable to the lure of corruption.
They hired Western PR gurus and borrowed money on European exchanges. Instead of killing journalists, they bought them or sued them in London courts. In Ukrainian courts, they continued to steal assets, now under the new name of “corporate raiders”.
Victor Yanukovych, a two–time felon, whose fraud-filled bid for the presidency was overturned to unanimous approval by all but the Kremlin and base supporters in Donbass, also underwent change.
In 2006, he returned as a democratically-elected premier, unrepentant of his role as the villain of the Orange Revolution and contemptuous of Yushchenko’s flaccid executive authority.
Even though he was unable to capitalize on his comeback, he has survived to run for president again, five years later, with polls predicting his ultimate victory.
DRAMA HAS BEEN TIRING, DISAPPOINTING, POINTLESS
For most Ukrainian voters, and for that matter foreign governments and international investors, the whole drama has been tiring, disappointing and apparently pointless.
Ukraine is not joining Europe any time soon, and it can no longer expect any favors from Russian either. The economy has picked up, but so have personal debt and prices. There is also more freedom, but attained at the price of greater instability, uncertainty and corruption.
Now, five years later, you don’t see any rallies on the streets of the capital. The political drama is now being played out almost exclusively on TV screens.
Almost all the main characters from 2004 are the same, only Yushchenko is now president, Yulia Tymoshenko heads the government and Yanukovych is in the opposition. Yanukovych’s campaign leader from 2004, Serhiy Tyhypko, is now a candidate in his own right, while career technocrat Arseny Yatsenyuk started out strong but lost steam somewhere during the past year’s campaign season.
A NEW ANTI-REVOLUTION IS BREWING
The deflating drama of the past five years is however, deceptive. Beneath the surface of the country’s fabric, a new anti-revolution is brewing.
While in 2004 the problem was no foreign investment or fair competition, now Ukrainian industry and commerce are crippled by hard currency debt accumulated to fuel their expansion. A sell-off is in progress, and if the dark forces that failed to get their way in 2004 return to power, it’s going to be a fire sale for Kremlin-backed oligarchs and their well-connected local counterparts.
The geopolitical considerations of East versus West are also at stake but subdued in the public conscience. With state gas company Naftogaz on the verge of bankruptcy and Europe sick of shut-offs, Gazprom has proven to be the anecdote to the scourge of color revolutions that had threatened Moscow’s control over the post-Soviet space. As for NATO, it did little to back up Georgia in 2008.
Ukraine’s anti-revolution is not being covered by international television crews but by business reports; the heroes are now in retreat before an enemy with a new face; and this time change is likely to be carried out by leaders with more backbone but a lot less democratic ideals.
LINK: http://www.eurasianhome.org/xml/t/opinion.xml?lang=en&nic=opinion&pid=1508
----------------------------------------------------------------------------------------
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
13. HOLODOMOR: THE COURT RETURNED THE LEADERSHIP
OF BOLSHEVIST TOTALITARIAN REGIME GUILTY FOR
GENOCIDE IN UKRAINE IN 1932-1933
To: Morgan Williams, Washington, D.C.
From: Valentyn Nalyvaichenko, Head, SBU, Kyiv, Ukraine, January 14, 2010
This is to inform you that the Kyiv Court of Appeal has concluded the criminal case on Holodomor-Genocide in Ukraine in 1932-1933, which was launched and investigated by the Security Service of Ukraine upon the fact of mass extermination of the Ukrainian people by artificially created famine. The Court acknowledged the fact of Genocide and named the perpetrators of the crime. (See detailed information attached hereto).
We consider this a significant turning point for Ukraine and its people, since all further discussions on Holodomor will be shifted from political to juridical sphere, where the only arguments could be the facts.
Yours faithfully,
Valentyn Nalyvaichenko
---------------------------------------------------------------------------------------------------
HOLODOMOR: THE COURT RETURNED THE LEADERSHIP OF BOLSHEVIST
TOTALITARIAN REGIME GUILTY FOR GENOCIDE IN UKRAINE IN 1932-1933
Kyiv, Ukraine, January 14, 2010
On January 13, 2010 Kyiv Court of Appeal tried a criminal case and made a ruling on the grounds laid out in part I, of article 442 (genocide) of the Criminal Code of Ukraine. The case was investigated by the Security Service of Ukraine upon the fact of mass extermination by famine of millions of Ukrainian peasants on the territory of the Ukrainian SSR in 1932-1933 organised by the leadership of bolshevist totalitarian regime.
The court acknowledged the fact of Genocide, unveiled the mechanisms used for mass murder of peasants, and named the perpetrators of the crime – Joseph Stalin, Vyacheslav Molotov, Lazar Kaganovych, Pavel Postyshev, Stanislav Kosior, Vlas Chubar and Mendel Hataevych.
They, chasing the goal to suppress national liberation movement in Ukraine and avoid the creation and formation of the independent state of Ukraine, in the period of 1932-1933 artificially created living conditions aimed at partial physical extermination of the Ukrainian population, i.e. deliberately organised this crime as to the part of the Ukrainian national group.
The cumulative losses of Ukraine due to the Holodomor come up to 10 million 63 thousand people (3,941 thousand – dead, and 6,122 thousand – unborn).
The court also proclaimed that there was no reason for rehabilitating Stalin, Molotov, Kaganovych, Postyshev, Kosior, Chubar, Hataevych since the pre-trial investigation proved that they had committed the crime determined under part I, of article 442 of the Criminal Code of Ukraine.
The Court confirmed that the investigation of the case was conducted fully and thoroughly, as a result of which was adopted an objective and legitimate decision on forwarding the case to the Kyiv Court of Appeal.
Taking into account the fact that the mentioned above people are already dead, the court closed the criminal case on the grounds laid out in part 1, of article 6 of the Criminal Code of Ukraine, i.e. unrehabilitative circumstances.
In compliance with the national and international legislation in force the court found guilty the aforementioned people for committing a crime against humanity. This crime according to the UN Convention “On the Non-Applicability of Statutory Limitations to War Crimes and Crimes against Humanity” of November 26, 1968 (ratified by Ukraine on March 25, 1969) does not have time limitation.
Thus, by the decision of the competent court in accordance with the UN Convention “On the Prevention and Punishment of the Crime of Genocide” of December 9, 1948 the state of Ukraine fulfilled its international obligations as to taking measures on prevention of genocide and punishment for its conducting.
Note: within 7-day-period the court’s decision is subject to cassational complaints, and the prosecutor has the right to submit cassation to the Supreme Court of Ukraine.
----------------------------------------------------------------------------------------
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
14. STALIN GRANDSON DISPUTES GENOCIDE VERDICT
UPI, Kiev, Ukraine, Mon, Jan 18, 2010
KIEV, Ukraine - The grandson of former Soviet dictator Joseph Stalin says he wants a probe of a Ukrainian court that found the ruler guilty of genocide.
Yevgeny Dzhugashvili sent a letter to Ukraine's prosecutor general urging him to investigate the Kiev court that last week found Stalin (born Joseph Dzhugashvili) and other Bolshevik leaders guilty of genocide against Ukrainians during the 1932-1933 Holodomor famine, RIA Novosti reported.
The news service said Dzhugashvili is well-known for filing court cases in Russia to protect his grandfather's honor. In the latest filing, he claimed genocide has only been listed as a criminal offense in Ukraine since the 1990s and so cannot be applied retroactively as in Stalin's case.
RIA Novosti noted that a Moscow court in December rejected for the second time a libel suit brought by Dzhugashvili against the Russian newspaper Novaya Gazeta for an article calling Stalin a "criminal." He was seeking a retraction and $326,000 in compensation for damages to his honor.
LINK: http://www.upi.com/Top_News/International/2010/01/18/Stalin-grandson-disputes-genocide-verdict/UPI-70881263828141
---------------------------------------------------------------------------------------
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
Ukraine Macroeconomic Report From SigmaBleyzer:
http://www.sigmableyzer.com/index.php?action=publications
========================================================
15. A BIRD OVER THE DNIEPER
Commentary: by Igor Pomerantsev, Russian writer and poet
RFE/RL, Prague, Czech Republic, November 23, 2009
Elias Canetti, one of the last great Austrians, lived in London and wrote in German. In his study "Masse und Macht" (Crowds and Power, 1960), he wrote: "It is pointless to say there is no difference between nations and peoples."
Canetti adduced the following image for England: "How strong is the connection between English individualism and the attitude to the sea? An Englishman sees himself as the captain of his ship. Alongside the captain is a small crew, and all around the boundless sea. He is almost alone. The sea must be tamed. On the infinite surface of the sea, ships are as isolated as people."
Whether light- or heavy-handedly, Gogol provided us with the picture of Russia as a troika. The metaphor wraps up with a grandiose, "Before it, peoples and states step aside." It's not entirely clear, however, why they should step aside. You can step aside from a royal cortege, or alternatively when confronted by a thug brandishing a knife.
It was Gogol I turned to in my search for an image of Ukraine: "[I]t's a rare bird that can fly to the middle of the Dnieper." The Dnieper is the river of time, and a bird which has flown as far as the middle of the Dnieper hangs in the air and doesn't know what to do next. It's confused; it's at a loss. Where are we -- in transit or trapped by the status quo? That kind of Gogolesque image.
Ukraine is a tabula rasa. This is both an advantage and a weakness.
On the one hand, there is no historical foundation, no historical background as a state. On the other, the genes are still fresh and unspoiled. In contrast to the Russian big brother, its brains are not polio-stricken, so that maybe the bird will be able to make it to the far side. Everything is not quite fully articulated, coherent, finished. Nobody can carry anything through to its logical conclusion.
The plotters didn't quite manage to poison the president. And the journalist Heorhiy Gongadze was killed because, I think, no such order was given: the order was not to kill him, but to scare him. Whatever we look at, we see it is crumbling, haphazard, amorphous. A stone loosed from a catapult should be aimed at the head. Instead, if it does fly, it goes into a void.
In a dictionary of international law you will find the term "displaced person." This referred, primarily, to the dispossessed who wandered around Europe in the closing months of the Second World War and its aftermath. The untold numbers of displaced persons is one of the tragedies of the 20th century. But if you apply this concept to history as a whole, then one has to speak of displaced peoples: Jews, Irish, Armenians, and so on.
For me, Ukrainians, too, belong to the category of displaced peoples. All, or most, of what has been accomplished by Ukrainians was done outside Ukraine, at least from the 17th to the 20th centuries. I mean Ukrainians who were only able to fully realize their talent and purpose outside Ukraine. They made their contribution to other cultures. This was the fate of the Ukrainian people.
Nikolai (Mykola) Gogol was a displaced person twice over. His father, Vasyl, wrote in Ukrainian. Nikolay (Mykola) first transferred to Russian linguistic territory -- St. Petersburg, where he developed a loathing for the city and its people, then moved to Italy for eight years, during which time he wrote the first full-blooded Russian novel about Russia and gave it the eloquent title of "Dead Souls."
The Kyiv-born artist and sculptor Aleksandr Arkhipenko became a modernist classic in America.
Those are just two examples. And then at the end of the 20th century, Ukrainians had the chance to stop being a displaced people, or displaced persons, and to link their destiny with Ukraine. Are contemporary Ukrainians making use of this opportunity? I hope that no Ukrainian poet will ever again have to write, as Taras Shevchenko did, "on our not native soil." But if they're not making use of it, they will have no one to blame but themselves.
NOTE: Igor Pomerantsev is a Russian writer and poet who has worked for more than 20 years as a broadcaster with RFE/RL. The views expressed in this commentary, which was translated from Russian by Frank Williams, are his own, and do not necessarily reflect those of RFE/RL
LINK: http://www.rferl.org/content/A_Bird_Over_The_Dnieper/1885942.html
----------------------------------------------------------------------------------------
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
16. VIKTOR YUSHCHENKO'S PARTING GIFT
After five years of rhetoric and disillusionment,
Ukrainians are looking for a leader who can get things done.
EDITORIAL by TOL (Transitions OnLine), Prague, Czech Republic, Fri, Jan 15, 2010
The story was so easy to understand five years ago, with clear cut villains and heroes. In the cold of November 2004, Viktor Yushchenko, his face badly disfigured from an apparent poisoning, rallied his fellow Ukrainians against a fraudulent election and a corrupt, authoritarian regime, backed by a menacing Russia. After the courts declared the election should be re-run, Yushchenko triumphed, and an epic battle between East and West was won.
This weekend, as Ukrainians prepare to head for the polls in the first presidential elections since the Orange Revolution, the choice is no longer so simple nor the distinction between East and West so clear – despite Yushchenko’s insistence that this is again a battle between good and evil, between “pro-European” and “anti-European” forces.
The president has repeatedly insisted that he is the only candidate who can bring Ukraine into Europe, speaking sometimes in almost messianic tones. (“Today an alternative to President Yushchenko doesn’t exist,” he told The Wall Street Journal).
Yet Yushchenko has also been far from the “Western” leader that the West and his backers had hoped for, and his supposed “pro-Russian” rivals far more ambiguous in their orientations than that simple label would indicate.
Yushchenko has made naked power grabs and disputed judicial decisions. He has alienated Russian speakers through his attempts at nationalist nation-building. And late last year, he approved hikes in public wages and pensions, a populist pre-election move that prompted the IMF to freeze a crucial loan agreement.
Most importantly, under Yushchenko’s leadership, remarkably little has been done in terms of instituting the long-needed reforms that could help create a modern and European society (to ensure the independence of the judiciary, for example, or to fight pervasive corruption).
Instead, his unrealistic optimism (some might say “self-deception”) about an association agreement and other signs of closer EU ties have likely dampened the enthusiasm for the EU of many of his countrymen. Back in 2004 and throughout this presidency, he has raised Ukrainians’ hopes unjustifiably high and then accomplished little to make them come true.
A case in point: One of Yushchenko’s electoral slogans is essentially “free visas to the EU are on their way.” But the Ukrainian authorities, under the president’s watch, have done almost nothing to implement the necessary reforms (legislative, border management, fight against falsification of documents, etc.) that could bring the promise of a visa-free regime remotely close to reality.
Contrast that with Balkan countries such as Serbia and Macedonia that have taken the necessary steps to adopt their legislation to EU standards and push through the corresponding reforms.
RETURN TO REALITY
As of 17 January, the day of the elections, Yushchenko’s European aspirations will matter little. His public support at record low levels and polling at less than 5 percent, the best he can do at this stage is graciously step aside and oversee the transfer of powers to one of his eternal rivals: Viktor Yanukovych, who lost the re-run elections back in 2004, or Yulia Tymoshenko, the president’s erstwhile ally of Orange Revolution days.
The predicted runoff between Yanukovych and Tymoshenko, however, likewise does not resemble a battle between a stodgy “pro-Russian” stooge, as Yanukovych was portrayed back in 2004, and a glamorous “pro-Western” heroine, Tymoshenko’s then-persona in the international media.
In those days, Tymoshenko was facing an international arrest warrant, filed by Russian prosecutors who had accused her of bribing Russian defense officials when she ran Ukraine’s main gas distributor. She claimed that the charges were politically motivated and called them “groundless repression” designed to sully the Ukrainian opposition before the presidential elections.
This week, Tymoshenko pledged to bring Ukraine into the EU within five years, trying to distinguish herself from Yanukovych. But she is no longer an enemy of the Russians. On the contrary, Tymoshenko has an apparently warm working relationship with Russian Prime Minister Vladimir Putin and has become a Kremlin favorite.
She sat down with Putin in November to agree on new conditions for the gas deal struck in January 2009 (which ended the infamous gas wars of that winter that saw part of Europe without heat).
The two even had some fun together, as Putin lampooned Yushchenko and Georgian President Mikheil Saakashvili, who were meeting in Kyiv at the same time, and Tymoshenko apparently giggled along. On top of that, one of her top patrons and advisors, billionaire Vitaliy Hayduk, recently sold a stake in a key industrial group, the Industrial Union of Donbass, to the Russian state bank, Vnesheconombank. The chairman of the bank’s supervisory board? Vladimir Putin.
Yanukovych, on the other hand, reprimanded Tymoshenko for bending too far in Russia’s direction and closing a deal unfavorable for Ukraine (high prices for gas and low transit tariffs). Pledging to revise the January 2009 agreement, he suggested that the current conditions suited Putin well because they would make Ukrainian businesses less competitive than their Russian counterparts.
In terms of EU relations, it was Yanukovych’s government that managed to give a fresh impetus to EU-Ukraine relations in 2006 through launching negotiations on a new agreement. By all accounts, his political backers (chiefly the oligarchs) are pragmatically interested in access to EU markets and continuing on a path to make that happen, even if it takes years.
The obvious interference from Moscow in the 2004 election also appears a thing of the past, especially since the one candidate that the Kremlin despises, Yushchenko, has no chance of winning. With the others, Russia has been careful and avoided playing a clear favorite, apparently content to create conditions and set up a framework, in key sectors such as energy and gas, aimed at limiting the options of whoever wins.
Stability is also the best bet for Ukraine’s European aspirations. Rhetoric will matter little. For the country to be considered for EU membership or simply important steps such as more economic cooperation or visa-free travel, reform finally has to take place.
In that regard, some even believe that Yanukovych, more predictable and less opportunistic than Tymoshenko, might be a better bet to actually get things done. That would be the height of irony: the supposedly “pro-Russian” loser of 2004 bringing Ukraine closer to Europe.
LINK: http://www.tol.org:80/client/article/21078-yushchenkos-parting-gift.html
----------------------------------------------------------------------------------------
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
AUR ARCHIVE, 2003-2009: http://www.usubc.org/AUR/
========================================================
If you are receiving more than one copy of the AUR please contact us.
Please contact us if you no longer wish to receive the AUR.
You are welcome to send us names for the AUR distribution list.
If you are missing some issues of the AUR please let us know.
========================================================
ACTION UKRAINE REPORT - AUR
Working to Secure & Enhance Ukraine's Democratic Future
A Free, Private, Not-For-Profit, Independent, Public Service Newsletter
With major support from The Bleyzer Foundation
Articles are Distributed For Information, Research, Education, Academic,
Discussion and Personal Purposes Only. Additional Readers are Welcome.
AUR ARCHIVE, 2003-2009: http://www.usubc.org/AUR/
Over 900 issues of the Action Ukraine Report (AUR)
====================================================
SigmaBleyzer/The Bleyzer Foundation Economic Reports
"SigmaBleyzer - Where Opportunities Emerge"
The SigmaBleyzer Emerging Markets Private Equity Investment Group and The Bleyzer Foundation offers a comprehensive collection of documents,
reports and presentations published by its business units and organizations.
All publications are grouped by categories: Marketing; Economic Country Reports; Presentations; Ukrainian Equity Guide; Monthly Macroeconomic
Situation Reports (Romania, Bulgaria, Ukraine).
LINK: http://www.sigmableyzer.com/index.php?action=publications
"UKRAINE - A COUNTRY OF NEW OPPORTUNITIES"
=========================================================
ACTION UKRAINE PROGRAM - SPONSORS
Action Ukraine Report (AUR), "Holodomor: Through The Eyes of Ukrainian Artists" and the "Faces of the Gulag: Through the Eyes of Ukrainian Artists" program.
1. THE BLEYZER FOUNDATION, Dr. Edilberto Segura, Chairman; Oleg Ustenko, Executive Director, Kyiv, Ukraine; Washington, D.C., http://www.bleyzerfoundation.com.
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, E-mail: david@kau.kiev.ua
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/
6. U.S.-UKRAINE BUSINESS COUNCIL (USUBC), Washington, D.C., For information about USUBC please write to mwilliams@usubc.org, USUBC website: http://www.usubc.org.
7. UKRAINIAN ORTHODOX CHURCH OF THE USA, Archbishop Antony, South Bound Brook, New Jersey, http://www.uocofusa.org
8. U.S.-UKRAINE FOUNDATION (USUF), Nadia Komarnyckyj McConnell, President; John Kun, Vice President/COO; Markian Bilynskyj, VP/Director of Field Operations; Kyiv, Ukraine. Web: http://www.USUkraine.org
9. WJ GROUP of Ag Companies, Kyiv, Ukraine, David Holpert, Chief Financial Officer, Chicago, IL; http://www.wjgrain.com/en/links/index.html
10. 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.
11. SWIFT FOUNDATION, San Luis Obispo, California
12. DAAR FOUNDATION, Houston, Texas, Kyiv, Ukraine. http://www.DaarFoundation.org/home.htm.
13. ArtUkraine.com; www.ArtUkraine.com, to purchase Ukrainian magazines, books, etc. write to ArtUkraine@voliacable.com.
14. DUNWOODIE TRAVEL BUREAU, Specializing in Ukraine travel, Alesia Kozicky, Owner/Travel Agent, http://www.DunwoodieTravel.com;
Dunwoodie@vacation.com
15. LAND OF DILEMMAS, Would You Risk Your Life To Save Your Enemy? Documentary by Olha Onyshko & Sarah Farhat, www.LandOfDilemmas.org.
===========================================================
TO BE ON OR OFF THE FREE AUR DISTRIBUTION LIST
If you would like to read the ACTION UKRAINE REPORT- AUR, several times a month, please send your name, country of residence, and e-mail contact information to morganw@patriot.net. Information about your occupation and your interest in Ukraine is also appreciated.
If you do not wish to read the ACTION UKRAINE REPORT please contact us immediately by e-mail to morganw@patriot.net. If you are receiving more than one copy please let us know so this can be corrected.
========================================================
PUBLISHER AND EDITOR - AUR
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)
1701 K Street, NW, Suite 903, Washington, D.C. 20006
Tel: 202 437 4707; Fax 202 223 1224
mwilliams@SigmaBleyzer.com; www.SigmaBleyzer.com
mwilliams@usubc.org; www.usubc.org
Needed: 'Vice Presidents in Charge of Revolution'
To move the power & spirit of the 'Orange Revolution' forward
Power Corrupts & Absolute Power Corrupts Absolutely.
========================================================
return to index [Action Ukraine Report (AUR) Monitoring Service]
========================================================