Wednesday, December 31, 2008

Russia Says It Will Halt Delivery Of Natural Gas To Ukraine

MOSCOW, Russia -- Russia said Wednesday night that it planned to suspend delivery of natural gas to Ukraine on Thursday morning after negotiations to resolve a politically tinged dispute over prices collapsed without an agreement.

Alexei Miller, chief executive of Gazprom.

A cutoff of fuel shipments to Ukraine could have a ripple effect across Europe, because Russia supplies a quarter of the gas that the continent uses, and most of it is delivered through Ukrainian pipelines.

Russia briefly followed through on a similar threat in 2006. Fuel shortages resulted as far away as Italy, and concerns grew about Europe's dependence on energy controlled by the Kremlin.

The current dispute centers on Russia's desire to charge higher prices for gas next year and collect more than $2 billion in debts run up by Ukraine for gas this winter. But as in previous years, the commercial issues have been complicated by Moscow's tense relations with Ukraine's fractured, pro-Western government.

Alexei Miller, chief executive of Gazprom, Russia's state-controlled gas monopoly, announced the collapse of talks and said the company planned to halt supplies for Ukraine at 10:00AM (2:00AM New York time).

"All responsibility for the situation rests on the Ukrainian side," he said.

Gazprom warned two weeks ago that it would suspend gas supplies if Ukraine failed to pay off its debts and sign a contract for next year's deliveries by midnight Wednesday. As the deadline approached, Miller said Ukraine had met neither requirement.

Russia stopped sending gas to Ukraine for three days in January 2006, but the current standoff could be more severe because the global financial crisis has left both countries more desperate for funds. Ukraine is struggling to avoid an economic meltdown, and Russia has been hit hard by falling energy prices.

In a news conference before the talks unraveled, Gazprom officials accused Ukraine of trying to "blackmail" Russia and the European Union, saying its state energy firm had threatened to confiscate gas intended for European customers if a contract with Russia could not be drawn.

Russian Prime Minister Vladimir Putin warned on state television of "quite serious consequences" for Ukraine's relations with Russia if Ukraine acted on that threat. He said that Ukraine signed a deal last year to deliver Russian gas to Europe and that the agreement remained in force until December 2010.

"We can recommend only one thing to our Ukrainian partners," said Russian President Dmitry Medvedev. "To make a reasonable decision quickly instead of dooming their own citizens to very great trouble."

The Ukrainian government, which says it has enough reserves to meet domestic demand for three months and has repeatedly promised safe transit for gas to Europe, denied it was trying to blackmail Russia. President Viktor Yushchenko "is calling for every effort to be made for the earliest possible signature of an agreement with Russia," said Bohdan Sokolovsky, the president's energy security representative.

Yushchenko issued a statement Tuesday saying that Ukraine had paid $1.5 billion to an intermediary firm and that the payment covered the cost of all gas deliveries in 2008. But Gazprom said it had not received the money and added that Ukraine owed $600 million more in late fees.

The two sides also appeared far from agreeing on a 2009 price for gas. Gazprom had demanded that Ukraine pay as much as $418 per 1,000 cubic meters of gas, more than double the $180 Gazprom charged this year. On Wednesday, it offered a contract with a price set at $250, which Putin described as a subsidized rate and a "humanitarian" gesture to a neighbor.

But Ukraine said the price was still too high, given declining energy prices around the world. Sokolovsky said Ukraine could accept the 40 percent price increase only if Russia also agreed to increase what it pays to use Ukraine's pipelines.

Some Ukrainian politicians have accused the Kremlin of trying to use the gas dispute to exploit Ukraine's economic crisis and weaken its Western-leaning government, which is seeking NATO membership and backed Georgia in its August war with Russia.

The gas standoff has contributed to a widening rift between Yushchenko and Prime Minister Yulia Tymoshenko, his former ally in the 2004 street protests known as the Orange Revolution. The two are expected to compete for the presidency next year, and each has accused the other of mishandling the dispute.

Tymoshenko has sought to position herself as the candidate better able to negotiate with Russia, and she struck a gas deal with Putin in October that she said would remove the influence of "corrupt" middlemen with ties to the president. Analysts say Moscow may be taking a harder line in negotiations in an attempt to undermine Yushchenko further.

Source: Washington Post

Tuesday, December 30, 2008

Ukraine Will Pay Its $2 Billion Russian Gas Bill

MOSCOW, Russia -- In what is becoming an unpleasant New Year tradition, Russia again threatened to cut off Ukraine's gas supplies if the struggling post-Soviet state failed to pay off at least $2 billion in arrears by Dec. 31.

A worker at a gas compressor station in Boyarka, Ukraine, checks a pressure gauge. Europe depends on Russia for some 40 percent of its natural gas consumption, most of which flows through Ukraine pipelines.

By Tuesday evening, Ukraine appeared to have averted a cutoff by borrowing money from the country's two biggest state banks. A spokesman from Russia's state gas monopoly, Gazprom, said that no money has been received yet.

Even if the immediate crisis is resolved, the underlying tensions between Russia and Ukraine remain – and could result in another standoff later.

Ukraine is floundering amid financial paralysis and is racked by political conflict between President Viktor Yushchenko and Prime Minister Yulia Tymoshenko. Europeans are watching developments closely, worried that any extended cutoff of the main energy artery between Russia and the West could leave them facing serious disruptions this winter.

Europe depends on Russia for some 40 percent of its natural-gas consumption, and most of that arrives via a Soviet-era pipeline through Ukraine.

Gazprom, itself requesting a government bailout, insists that the Ukraine dispute is purely commercial, and has appealed to Europeans for "understanding." Some Ukrainians, however, claim there is a political subtext to Russia's demands and warn that the Kremlin's real target is their government's aspirations to join NATO and draw Ukraine closer to the European Union.

"The Kremlin is showing that we can be rewarded for good geopolitical choices, and punished for bad ones," says Alexei Kolomiyets, president of the independent Institute of Euro-Atlantic Integration in Ukraine's capital, Kiev. "Energy supplies are the main instrument of pressure upon us, and we are left with very few options. It's quite possible that there can be interruptions in the gas supply to Europe in coming weeks."

Mr. Kolomiyets points to Belarus, a Russian ally granted a significant price cut this week on its already subsidized rates for Russian gas, as an example of how some are rewarded for making the "right" choices. "We hear that the Belarussian Parliament will recognize the [Russian-sponsored] republics of South Ossetia and Abkhazia in Georgia," in return for being given a favorable gas deal, he says. "This is an obvious object lesson for others."

But Russian experts allege it's Ukraine that's complicating the issue, by pursuing anti-Moscow policies while enjoying subsidized Russian gas. "Russia doesn't want to influence Ukrainian politics," Kremlin-connected analyst Gleb Pavlovsky told the independent Interfax news agency Monday. "The Russian position is simple: Get the money, step back, and leave Ukraine to its own devices."

Prices for Russian gas spiked this year to some $500 per thousand cubic meters, although Ukraine, which depends on Russia for 75 percent of its gas, has until now paid less than half the European price. Russia's point of view is that Ukraine needs to clear its arrears and begin paying market rates. The Kremlin says Ukraine, which received an emergency $16.5 billion loan from the International Monetary Fund this fall, ought to be able to cover its debt to Moscow.

"The problem is aggravated this year by several factors," says Konstantin Zatullin, deputy chair of the State Duma's commission on the Commonwealth of Independent States. "First, Ukraine really lacks the means to pay. Second, the Ukrainian political system is on the verge of collapse. And the Ukrainians seem to be in no mood to hold constructive talks on ways to resolve the problem."

In the short term, Russia has few alternatives. If Gazprom attempts to halt Ukraine's gas supplies, it faces the likelihood that Ukraine's state energy firm Naftogaz will start siphoning gas from the pipeline as soon as its stored [and unpaid-for] reserves of Russian gas run out, which could happen as early as mid-January. When this occurred in previous years, the shortfall was passed on to downstream European customers. Another option being discussed in Moscow is a total halt in gas supplies through the line, which would punish Ukraine but face Europe with crippling shortages.

"Gazprom has attempted to explain things to the Europeans, and to seek their understanding, but these efforts haven't been very successful so far," says Valery Nesterov, an energy expert with Troika Dialog, a Moscow investment bank. "Europe is egoistic. They're interested in receiving stable deliveries of gas, and if they don't they'll blame the supplier. This is Russia's dilemma."

In the longer perspective, Russia is sponsoring two new pipelines to Europe that will bypass potential problem countries such as Ukraine, Poland, and the ex-Soviet Baltic states. Nord Stream, an undersea Baltic route promoted by both Russia and Germany, is due to open in 2011. South Stream, under the Black Sea, will eventually deliver Russian gas directly to southern Europe.

Moscow may also hope that a new OPEC-style natural gas cartel, launched at a forum of gas-exporting countries in Moscow last week, will be able to decouple the price of gas from that of crude oil, which has plunged by two-thirds in recent months.

Since most gas supplies are delivered via expensive dedicated infrastructure and under long-term contracts, it's uncertain how effective the group, which includes Iran, Qatar, Libya, and Venezuela, might be in any short-term efforts to control the market.

But Russian Prime Minister Vladimir Putin made Russia's intentions clear.

"The expenses necessary for developing fields are rising sharply," he told the forum. "This means that despite the current problems in finances, the era of cheap energy resources, of cheap gas, is of course coming to an end."

Source: Christian Science Monitor

Monday, December 29, 2008

Ukraine, Russia Still At Odds In Gas Standoff: Putin

MOSCOW, Russia -- Prime Minister Vladimir Putin said Monday that Russia and Ukraine had failed to break the deadlock in their dispute over gas debts, as the clock ticked down to a New Year deadline to settle the dispute.

Russian Prime Minister Vladimir Putin.

"We have not agreed so far," Putin said Monday, after what he said was an hour-long telephone conversation with Ukrainian President Viktor Yushchenko.

Asked why the two sides had still failed to reach an agreement, Putin replied succinctly: "Because they (Ukraine) do not want to pay."

Putin's comments came as Russia ramps up pressure on Ukraine to pay off two billion dollars in gas debts in full or face a cut in gas supplies from January 1.

Moscow and Kiev are locked in a price dispute, the fourth in as many years, and Gazprom has said it will cut supplies to Ukraine if it does not pay off its gas debt in full by January 1 so a new contract can be signed.

Also Monday, the CEO of Russian energy giant Gazprom Alexei Miller and the head of Ukraine state gas company Naftogaz Oleh Dubyna were meeting in Moscow but the meeting has not yielded any result so far, a Gazprom spokeswoman said.

"Unfortunately, nothing is happening so far," she told AFP. "Everything changes every hour."

Gazprom deputy CEO Alexander Medvedev expressed hope in a televised interview that the countries would find a solution within the next three days.

"We very much hope that the proposals that we are tirelessly putting forward will be accepted by the Ukrainian side, which will allow us to enter the new year with the signed contracts and reassure the people in Europe, in Russia and Ukraine," he told Vesti television channel.

Medvedev reiterated that Gazprom had taken steps to keep its European partners informed of progress in the gas dispute.

The company has even launched an English-language website, to give its side of the dispute.

Earlier Monday, Gazprom's board of directors met for an extraordinary meeting, the sole item on the agenda being the situation concerning the Ukrainian gas debts, the spokeswoman said.

Gazprom said in a statement the board meeting had agreed to "continue work" with Ukraine over payment arrears but did not elaborate.

The statement added that Gazprom would carry out its obligations towards the European gas consumers "in full", indicating any possible gas cuts would not disrupt supplies to Europe.

The Gazprom spokeswoman said company specialists were being told to be at work over the New Year's night if the company management decided to cut gas to Ukraine.

The Russian gas giant maintains that Naftogaz owes it more than two billion dollars for gas delivered in November and December and fines for late payment.

Source: AFP

Clock Ticks Down To New Russia-Ukraine Gas Conflict

MOSCOW, Russia -- Time is running out for Russia and Ukraine to reach a last minute deal by midnight at New Year to prevent a Russian cut of gas deliveries to its neighbour and a possible bitter diplomatic conflict.

The newly built Bobrovnytska gas compressor and holding station is pictured near Kiev.

Instead of awaiting the traditional champagne toasts for New Year, Russian and Ukrainian gas executives have cancelled their holiday plans as the sides try to strike a deal over Kiev's two billion dollars of unpaid gas debts.

Russian energy giant Gazprom has warned it will cut off supplies to Ukraine if the debt is not settled, saying that a new contract needs to be signed by January 1 and no deal can be inked without the money being paid.

Gazprom's board of directors, which is chaired by Russian Deputy Prime Minister Viktor Zubkov, is to hold an extraordinary meeting on Monday to discuss the situation.

"I think it's 50-50," Gazprom spokesman Sergei Kupriyanov said in an radio interview Saturday when asked if Russia would cut gas deliveries or if the two sides would clinch a last minute deal.

A cut in deliveries could even hit west European consumers, who receive Russian gas that transits across Ukraine and were affected by a similar conflict in January 2006.

Such a move would intensify tensions between Moscow and Ukraine's pro-Western government already inflamed by Ukrainian support for Georgia in its August war with Russia.

Russia found the sight of Ukrainian President Viktor Yushchenko visiting Tbilisi to give his support during the war hard to swallow and the gas standoff is the consequence, said Russian analyst Alexei Malashenko.

"Putting pressure on Ukraine over gas has become an obsession of Russian politicians," said Malashenko of the Carnegie Centre in Moscow.

According to Kupriyanov, the Ukrainian side has already made clear it cannot pay the debts comprising 805 million dollars for November, 862 million dollars for December and 450 million dollars in penalties for late payment.

He said the two sides would use the last days to find a non-monetary solution to the conflict, possibly involving the money that Russia pays for the transit of gas across Ukraine.

"I hope that in the remaining days we will succeed in doing this," said Kupriyanov.

In a stark warning, Russian President Dmitry Medvedev told Ukraine's government last week to pay up to the "last ruble" or face gas cuts or even sanctions against its wider economy.

"If Ukraine does not pay we will use a whole arsenal of possibilities and it is completely clear that there can be no illusions there," Medvedev said in an interview with Russian television.

"We cannot carry on like this. They should just pay up."

The negotiations are further complicated by Gazprom's desire to raise prices for Ukraine closer to those paid by western European customers.

Ukraine currently pays Russia 179.5 dollars for 1,000 cubic metres of gas but Gazprom has warned that price could rise to 400 dollars for 1,000 cubic metres from next year.

Gazprom has vowed to fulfil its obligations to Europe but has also warned it cannot rule out disruptions to west European supplies if Ukraine siphons off transit gas during a crisis.

"Russia is carrying out a psychological war to force Ukraine to sign the contract under its conditions," said Ukrainian political analyst Volodymyr Fesenko.

"Gazprom could make European consumers suffer from the crisis so that Europe puts pressure on Ukraine," he added.

Ukraine, which has tense relations with Moscow, is expected by analysts to plunge into recession next year as a result of the economic crisis and suffers from political turmoil amid a feud between its president and prime minister.

Source: AFP

U.S. - Ukraine Charter

WASHINGTON, DC -- The United States and Ukraine have signed a charter on strategic partnership and security. "We have long believed," said U.S. Secretary of State Condoleezza Rice, "that Ukraine's independence, its democracy, is essential to a Europe whole and free and at peace."

U.S. Secretary of State Condoleezza Rice.

To that end, the charter outlines enhanced cooperation in the areas of defense, security, economics and trade, energy security, democracy, and cultural exchanges.

Ukraine has shown a commitment to international security and peacekeeping. It is the only non-NATO country participating in all NATO operations. The NATO summit declaration in Bucharest affirmed that Ukraine will become a member of NATO when it meets certain requirements.

"The United States," said Secretary Rice, "supports Ukraine's integration into the Euro-Atlantic structures." The Charter expresses the United States' continued commitment to help Ukraine meet the requirements for NATO membership. The United States plans to help Ukraine increase its interoperability with NATO forces, including via training and equipment for Ukrainian armed forces.

The U.S. and Ukraine intend to expand economic growth through reform and liberalization, developing a business climate that supports trade and investment. It is also critical to improve market access for goods and services. The U.S. will help Ukraine in efforts to protect intellectual property and investor rights.

Recognizing the importance of an efficient energy sector, the U.S. plans to work with Ukraine to rehabilitate and modernize the capacity of Ukraine's gas transit infrastructure and secure Ukraine's sources of nuclear fuel.

Under the Charter on Strategic Partnership, the U.S. plans to help Ukraine increase the professionalism, transparency, and independence of its judiciary. Both countries will address common criminal threats including terrorism, organized crime, and trafficking in persons.

In an effort to further promote democratic values, the United States and Ukraine intend to encourage cultural and social exchanges through initiatives including the Fulbright program and Future Leaders Exchange Program.

The U.S.-Ukraine Charter on Strategic Partnership lays the foundation for Ukraine's long-term democratic development and security needs.

Source: Voice of America

Sunday, December 28, 2008

Gazprom Says Ukraine Has Non-Cash Options To Pay

MOSCOW, Russia -- Crisis-stricken Ukraine may count its $2 billion debt for Russian gas deliveries against future fees for Russian gas transit to European customers, a Gazprom spokesman said on Saturday.

Sergei Kupriyanov

Russia and Ukraine are locked in a gas dispute, the fourth in four years, and Kupriyanov said there was a 50 percent chance Moscow could cut supplies to Kiev from next year if Ukraine does not pay the debt.

“We are looking for ways to do it (avoid a supply cut), including prepayment for transit,” Gazprom spokesman Sergei Kupriyanov told Echo Moskvy radio station. “I hope we will be able to do it (negotiate a settlement) in the remaining days.”

Ukraine previously declined to accept the proposal. Ukraine currently pays $1.7 to transit 1,000 cubic metres for 100 kilometres.

Kupriyanov said another option for Ukraine to pay its debt would be to hand back gas it had stockpiled in underground gas storages to help it live through the winter in the event Gazprom turns off the gas taps.

Ukraine’s state firm Naftogaz says it has 17 billion cubic metres in storage, 22 percent of Ukraine’s annual consumption.

Ukraine has been forced to accept International Monetary Fund assistance as the global financial crisis bites.

Kupriyanov’s suggestion marked some softening of the line expressed by President Dmitry Medvedev, who chaired Gazprom’s board during previous disputes. Medvedev said Ukraine should pay the debt “to the last rouble” and threatened it with sanctions.

European countries are watching the dispute nervously. A previous dispute in 2006 briefly disrupted Russian gas supplies to the entire continent in the middle of winter, when Ukraine suspended transit to Europe, sending up spot gas prices.

Gazprom’s Chief Executive Officer Alexei Miller wrote a letter to the firm’s European customers warning them of possible supply disruptions because of the debt row.

Kupriyanov declined to reveal any details of the negotiations or say how much Gazprom wants Ukraine to pay for gas from next year but said the price will be higher than $179.5 per 1,000 cubic metres Ukraine is paying now.

Kupriyanov said Gazprom is ready to dump an intermediary firm RosUkrEnergo and move over to direct supplies once the debt is fully paid.

Moscow and Kiev are trading accusations daily in the latest gas clash. Both countries feel the dire effects of the global financial crisis on their markets and economies and continue to argue over the size of the debt and payment deadlines.

Kupriyanov said Gazprom, which employs 400,000 people plans no major job cuts next year because of the crisis and added that its $32.5 billion investment will help create new jobs.

Source: Khaleej Times

Top 10 Uncovered Bribes By Law Enforcement

KIEV, Ukraine -- In 2008, more Ukrainian officials than ever got their fingers caught in the cookie jar. This year went down as a record-breaking year in the annals of bribes uncovered by law enforcement.

Mykola Konev, seen here handcuffed and flanked by special Internal Ministry forces at Kyiv's Pechersk District Court, allegedly accepted a $5.2 million bribe.

Given Ukraine’s reputation for corruption, one has to wonder how many bribes escaped the short arm of the law here. Some 1,500 public servants took bribes in 2008, totaling Hr 91.1 million, the Ministry of Interior Affairs announced on Dec. 19, almost triple last year’s totals. These are the top 10 bribes we found, mostly in the public service and real estate sectors:

(1) - Law enforcement officials said they uncovered the all-time whopper – a $42 million bribe. The corruption bust came earlier in December when Mykola Didenko, a district council chairman in the Kyiv Oblast city of Brovary, along with two subordinates, were allegedly caught taking Hr 11 million “up-front” money from foreign investors wishing to build cottages on two plots of land totaling 76 hectares in a deal worth $42 million. At a news conference, Interior Affairs Minister Yuriy Lutsenko said that people along “[President Victor] Yushchenko’s vertical chain of command ‘covered’ for Didenko.” Yushchenko dismissed the Brovary official in February 2008 amid a land scandal, which critics said involved hundreds of hectares of land distribution worth $2 billion. Nevertheless, Didenko was reinstated as Brovary district chair in March 2008. News reports have speculated that Victor Baloha, head of the presidential secretariat, stands behind Didenko.

(2) - The second on the list allegedly took place outside of Alushta in Crimea, where a township council member, Mykola Konev, elicited a $5.2 million bribe in return for leasing 17 hectares of land in the first half of 2008. “The overall sum of bribes is increasing dramatically,” said Leonid Skalozub, head of the economic crime unit of the Ministry of Interior Affairs, during a news conference in June.

(3) - The next million-dollar land deal labeled as corrupt came in Kyiv Oblast’s Novi Petrivtsiv where Oleksiy Yankovskiy, the village council chair, was suspected of demanding $1.3 million for allocating land.

(4) - More land deals made the news when Dnipropetrovsk City Council Chair Ivan Kulichenko and his aide allegedly were caught with $600,000 payoff in a land deal.

(5) - Many bribes ranged from $20,000 to $200,000. For example, a district council chair in Cherkasy Oblast was nabbed for accepting $200,000 in exchange for doling out 2.6 hectares for development.

(6) - A village council chair in Bakhchysarai district of Crimea was nabbed for accepting a $140,000 bribe in order to allocate two hectares of land in a recreational zone.

(7) - The Security Service of Ukraine detained a Ministry of Interior police officer early in December while taking a $120,000 bribe for unspecified reasons. Subsequently, the Pechersk District Court of Kyiv dropped the case but prosecutors have appealed the case on grounds that the ruling was unlawful.

(8) - In another case that further undermined respect for the country’s corrupt judicial system came when the former Lviv Appellate Court judge, Ihor Zvarych, was allegedly caught red-handed accepting a $100,000 bribe in the ex-governor's office early in December 2008. A search of his house later found large sums of hryvnia and more than $1 million in cash, which Zvarych explained as a "hourse warming." Zvarych was later released on bail and went missing on Dec. 12.

(9) - Fraud is common in the banking system, especially in credit unions where loans were issued by employees to people who never repaid the money they borrowed. This particular incident is exemplary: A young loan officer issued nine loans ranging from Hr 20 to Hr 100,000 and received more than $20,000 for her “services.”

(10) - To further diversify the scope of bribes, the director of the Department of Spirits, Alcoholic Drinks and Tobacco Goods at the State Tax Service was detained in August for taking $20,000 in return for issuing a license for the sale of alcoholic beverages to a private entrepreneur.

Source: Kyiv Post

Saturday, December 27, 2008

German Expert Alexander Rahr: Ukraine Might Steal Gas Bound For Europe

MOSCOW, Russia -- There is a risk that, if Kyiv and Moscow do not settle their dispute over Ukraine's debt for natural gas imported from Russia by the end of 2008, Ukraine might start siphoning off gas from the transit pipeline running further to Western Europe, said Alexander Rahr, the Russia/Eurasia program director at the German Council on Foreign Relations (DGAP).

Alexander Rahr

"There are concerns that, while it is unclear who actually controls the transit pipeline in Ukraine, some forces there could illegally siphon off transit gas for domestic needs. Such a risk does exist," Rahr told Interfax.

"Ukraine should understand what political risks it could face if gas supplies to Europe stop," Rahr said.

"If it resorts to this, then, in addition to harming Russia, it will also harm itself and its image as a reliable country transiting Russian energy to the West," he said.

As regards Europe's attitude toward the gas dispute between Russia and Ukraine, "Europe is very egoistic in this respect," he said.

"Europe believes that what matters above all is to receive its gas, and it is not inclined to look into the essence of this conflict to see whether Ukraine steals the gas, who is to blame, and why Russia cuts off gas supplies to Ukraine. Europe is demanding what it is entitled to, and if it doesn't get it, it would always begin to blame the one from whom it expects to receive gas, namely Russia, without getting into the situation, for which Ukraine is actually responsible," he said.

Some political forces in Ukraine could make use of certain political nuances to destabilize the situation, he said.

"For the sake of promoting Ukraine's integration into NATO and the European Union, some Ukrainian forces would manipulate this situation, steal transit gas, and accuse Russia of the lack of gas supplies to Europe in order to artificially unleash a conflict," he said.

"This is how Ukraine is acting these days, and this is how the Baltic states are acting," he said.

"This is a silent war that Eastern European countries are now waging against Russia," he said.

Source: Interfax

Top Events Of 2008

KIEV, Ukraine -- In 2008, yellow currency boards agitated Ukrainians the way waving flags bother bulls. Fluctuating rates flattened many champagne drinks this holiday season.

The Klitschko brothers are one belt away from having a monopoly on the world’s most prestigious boxing titles.

To bring the fizz back, the Kyiv Post presents the Top 10 “feel-good” stories of the year. Maybe 2009 will bring calm and patience. After all, most humans are luckier than bulls, who only see the world in two colors: black and white.

1. Vitaliy and Volodymyr (Wladimir) Klitschko

“They feel good, we knew that they would” is the Post’s slight remake of James Brown’s signature song “I feel good.” The Klitschko brothers’ boxing victories inspired Ukrainians to be proud of their country, if not to keep fit themselves.

Vitaliy Klitschko, also known as Dr. Iron Fist, returned to the ring after a three-year break and quickly reclaimed his World Boxing Council heavyweight champion title.

He beat the much younger Samuel Peter, nicknamed the “Nigerian Nightmare,” in the eighth round in October.

Volodymyr, his brother, currently holds the International Boxing Federation, World Boxing Organization and International Boxing Organization world heavyweight titles. Beating Russian Sultan Ibragimov in February, he made Ukrainians roar in his honor. Held in New York, the bout had a special meaning for immigrants from the Soviet Union.

The victory overwhelmed Ukrainians in the Big Apple who still remember traditional rivalries among ex-Soviet republics.

2. Dasha Astafieva

Staying with James Brown’s immortal “I feel good,” Dasha Astafieva feels nice, like sugar and spice. Ask Hugh Hefner for details. The man about town in his 82 years of age undressed her for the American version of his world-famous Playboy Magazine.

He also announced the 23-year-old Ukrainian model and pop singer as January 2009’s Playmate of the Month. If that was not enough, she is also Playboy’s 55th Anniversary Playmate.

To cause more scandal, Astafieva pulled off her underwear in front of the cameras on the red carpet before the ceremony. Despite some ranking it as bad publicity for Ukraine, she put a smile on many faces around the world.

3. Ani Lorak

Ukrainian pop singer Ani Lorak did not wear much either at the 2008 Eurovision Song Contest. Hardly anyone, however, can dispute her strong vocals and stage presence. She took second place with the song “Shady Lady,” defeated by Dima Bilan from Russia.

Repeatedly named the most beautiful woman in Ukraine and the best singer by various magazines and music awards, she got engaged to a Turkish man this year.

4. Olympics

Against all odds, Ukraine’s Olympic team finished 10th in the total medal count of 81 countries at the Summer Olympics in Beijing.

Neither aging Soviet facilities, nor lack of financing could stop Ukraine from winning 27 medals. The team bested their Athens performance by four medals. Ukraine’s strongest side was in archery, boxing, athletics, canoe/kayak, shooting and fencing.

Ukraine’s Paralympics athletes stood an impressive fourth place this September with an impressive 74 medals among 78 competitors.

5. Chess

If chess was a part of the Olympic Games, Ukraine may have scored even better. This brainy game, however, has a separate competition. At the Chess Olympiad in Germany this November, the Ukrainian team edged other nations in combined men’s and women’s results.

On the way home with a precious cup, they had a nerve-wracking adventure with damaged luggage. Their prize reached Kyiv broken and missing a few golden parts. Luckily, the trophy was insured. The team received more publicity for their part.

6. Anatoliy Tymoshchuk

Many foreigners admit that one of the toughest things about Ukraine is its surnames - Yushchenko, Tymoshenko, or indigestible Chernovetsky. But apparently difficult names do not always mean difficult times.

Bavaria football club is interested in Ukrainian national team’s player Anatoliy Tymoshchuk. Korrespondent, the Kyiv Post sister publication, named him the Personality of the Year in the eponymous category to honor his victories.

Currently playing for Russian Zenit, he claimed victory in Union of European Football Association’s Cup, UEFA Super Cup and Russian Super Cup.

Tymoshchuk is considered one of the most sought-after players in Eastern Europe.

7. Olga Kurylenko

This girl had to learn how to fly to land on this list. Olga Kurylenko, the Ukrainian-born top model-turned-actress, shook hands with the British royal family this year and kissed Daniel Craig (aka James Bond) after a world premier of the 22nd Bond film in London.

Playing the secret agent’s friend, rather than girlfriend, Kurylenko performed most of her tricks herself. Fearlessly crossing continents and fighting villains in the movie, she confessed that her own life reminded that of her character, Camille.

8. National Symphony Orchestra of Ukraine

The Symphony Orchestra of Ukraine secured the Grammy Awards nomination in Best Classical Performance category. It is considered the highest music honor, the United States’ record industry equivalent to the Oscars. The ceremony will take place in February. The Ukrainians will present a violin concert they recorded with American soloist Elmar Oliveira. It is their second Grammy nomination.

9. Bohdan Stupka

He has the courage of Mongolia’s historic leader Genghis Khan, the wit of Goethe’s Faust and the leadership of hetman Bohdan Khmelnytsky, a historic Kozak leader. Possibly the most famous living actor in Ukraine, Bohdan Stupka conquered Rome this year. At the III Rome International Film Festival, he won Best Actor award for the film “With a Warm Heart.”

Stupka played a mentally and physically ill Polish aristocrat in a joint Polish-Ukrainian production. At the same ceremony, Al Pacino collected a lifetime achievement award.

10. Viewdle

Ukraine has a room with the Viewdle – a start-up company with facial recognition technology for online video. At the largest web event in the world, LeWeb, they collected gold for the most successful start-up.

Viewdle beat 30 other companies from Europe and a few from the U.S. What started in the ex-military university laboratory in Kyiv has turned into a lifeline technology for major media companies, like Reuters. Thanks to Viewdle, video recognition is no longer an exclusive spy tool.

So there, despite a recession, good news still happens.

Source: Kyiv Post

Friday, December 26, 2008

Ukraine's Parliament Urges Top Banker's Dismissal

KIEV, Ukraine -- The Ukrainian parliament on Friday demanded the central bank chief be dismissed over the collapse of the national currency, accusing him of corruption and incompetence.

Volodymyr Stelmakh

National Bank chief Volodymyr Stelmakh has denied having any hand in the exchange market speculations that caused the hryvna to lose half its value against the dollar last week.

President Viktor Yushchenko is expected to ignore the nonbinding motion for Stelmakh to be fired. The motion was spearheaded by Yushchenko's rival, Prime Minister Yulia Tymoshenko, who has accused the central banker of conspiring with banks over the currency speculations and pocketing profits.

Yushchenko has said the country needs the expertise of Stelmakh, his longtime associate, to weather the current financial crisis. The currency devaluation coincided with a drastic fall in steel exports, leading to a foreign currency squeeze.

In the meantime, the Ukrainian currency has recovered some of last week's losses, which took it to 9.6 to the U.S. dollar from its September rate of 4.9 to the dollar.

At the close of trading Friday, the hryvna was listed at 7.6 to the dollar, thanks to the National Bank's efforts to prop up the rate by selling hard currency.

Tymoshenko has claimed Yushchenko was involved in the alleged corruption schemes.

The president has dismissed the allegation, and his top aide this week accused Tymoshenko of seeking to take control of the National Bank for personal gains.

Ukraine is sinking into a deep recession, with the economy expected to shrink up to 10 percent early next year, according to Yushchenko's estimates.

Industrial output has fallen nearly 30 percent, as global demand for steel, the heart of the economy, halved.

Source: International Herald Tribune

Need A Ride? President Gives Archrival A Lift

SIMFEROPOL, Ukraine -- Feuding rivals President Viktor Yushchenko and Prime Minister Yulia Tymoshenko of Ukraine put their differences aside on Thursday to share a car to visit the scene of a deadly explosion.

Ukraine's Prime Minister Yulia Tymoshenko (L) and President Viktor Yushchenko sit in a car as they visit the shattered five-storey block in the Black Sea resort of Yevpatoria in the Crimea peninsula.

Both leaders, who have quarrelled incessantly over the last few weeks, travelled to the southern region of Crimea to visit the scene of the blast at an apartment block that killed 27 people in the resort town of Yevpatoria.

Tymoshenko arrived in Crimea before Yushchenko but then decided to wait for the president to visit the scene of the incident together.

They then shared the same car to Yevpatoria before going back to Crimea's main airport in a vehicle personally driven by the president and leaving on the same plane, an AFP correspondent on the scene reported.

The pair were accompanied by national security chief Raisa Bogatyriova, a Yushchenko confidant.

Simferopol airport is 70 kilometres east of Yevpatoria, so the pair would have had ample time to either clear the air or sit in silent tension.

Yushchenko and Tymoshenko were allies in the Orange Revolution of 2004 that swept them to power, but they have fallen out spectacularly in recent months, exchanging repeated accusations over Ukraine's economic crisis.

It remains to be seen whether their car-sharing heralds a thaw in their relationship.

Tymoshenko had on Wednesday accused Yushchenko of personally provoking the plunge of Ukraine's currency to enrich himself and weaken her government.

Yushchenko then did not mince his words in biting back: "She's just an adventurer in politics, who is going to drown us all because she only needs one thing: unlimited power."

Source: AFP

Thursday, December 25, 2008

Apartment Explosion Kills 19 In Ukraine

YEVPATORIA, Ukraine -- Ukrainian authorities say 19 people, including two children, are dead and at least 24 are missing after an explosion at an apartment building in the Crimean resort town of Yevpatoria.

Ukraine's President Viktor Yushchenko (R) and Prime Minister Yulia Tymoshenko visit a shattered five-storey block in the Black Sea resort of Yevpatoria in the Crimea peninsula, December 25, 2008. An explosion ripped through the apartment building in southern Ukraine, killing 19 people, including two children, officials said on Thursday.

Rescue teams are digging through rubble Thursday to find survivors from the blast that tore through the five-story building late Wednesday.

They say 21 people have been rescued so far.

Ukraine's Prime Minister Yulia Tymoshenko and President Viktor Yushchenko headed to Yevpatoria Thursday to meet with rescue officials.

Russian President Dmitri Medvedev has offered to send naval personnel from Russia's Black Sea fleet to help with the search efforts.

Authorities are working to establish the cause of the explosion. Preliminary reports say it could have been caused by oxygen or acetylene cylinders that may have been stored in the building's basement.

Gas explosions are common in Ukrainian apartment buildings, especially during the winter when residents turn up the heat.

Source: Voice of America

China's Hainan Airlines Announces New Route To Ukraine

KIEV, Ukraine -- China's Hainan Airlines announced here Wednesday that it would launch a new route from Beijing to Ukraine's capital of Kiev at the beginning of next year.

Chinese Hainan Airlines

Zhang Ning, the company's representative in Kiev, told a news briefing that passengers would be able to take a flight between the two cities on Tuesday and Saturday since Feb. 10, 2009.

"Flight frequency would be increased later," he said.

Zhou Li, the Chinese ambassador to Ukraine, said that the opening of the new route will play a positive role in deepening mutual understanding and trust between the two countries and promote bilateral economic cooperation.

The airline would use Airbus A330-200 aircraft, which has 222 seats with 36 business-class seats.

Source: Xinhua

Medvedev Threatens Sanctions Against Ukraine

MOSCOW, Russia -- Russian President Dimitri Medvedev says Ukraine will face retaliatory sanctions unless it pays up every ruble it owes energy giant Gazprom.

Russia President Dimitri Medvedev.

Speaking in a televised end-of-the-year interview, Medvedev didn't specify what those sanctions might be.

His statement came after Gazprom threatened to cut off gas deliveries to Ukraine on January 1, unless a new contract for 2009 is signed by then.

Gazprom and Ukraine's state energy firm Naftogaz have failed to resolve a dispute over unpaid debts.

Gazprom says Naftogaz owes it almost two billion euros.

A bilateral dispute almost four years ago led to a brief disruption of gas supplies to several European Union countries.

This time Gazprom has pledged to ensure that there is no disruption to the flow of gas to EU customers.

Source: Deutsche Welle

Tuesday, December 23, 2008

'Tis The Season To Blame Ukraine

MOSCOW, Russia -- Gazprom tries to rally Russian workers' support for its case, saying Ukrainian gas debts could hurt the Russian economy and employment.

Gas flares behind the Gazprom logo and the sign of the Yuzhno-Russkoye gas field in northern Russia, just below the Arctic Circle. Russia has raised the spectre of gas cuts to Europe over the winter, warning that it did not rule out supply disruptions as a result of the dispute with Ukraine over non-payment of debts.

Russia's spat with Ukraine over unpaid gas bills is widening; Moscow is now portraying its own citizens as victims of the disagreement.

Russian state-run energy giant Gazprom said Tuesday that the $2.0 billion debt that Ukraine still owed it was hurting the Russian economy. "Since the majority of the goods imported from Ukraine are also made in Russia, non-payments for gas damage those sectors where Ukrainian goods compete on Russia's domestic markets," Gazprom spokesman Sergei Kupriyanov said. "This cannot but affect the industries and the people who work in them."

Gazprom had warned Monday that its European customers could face a disruption of gas supply due if its dispute with Ukraine led the Kremlin to stop the supply of gas to the former Soviet satellite. Russia provides about a quarter of Europe's gas, and 80.0% of its exports transit through Ukraine.

Now Gazprom is highlighting that Russia's 6.6% unemployment could rise further, and Kupriyanov on Tuesday listed potentially vulnerable industrial cities and factories by name.

Gazprom's tactical line of argument could help deflect Russian workers' collective anger about worsening unemployment and the economic slowdown toward Ukraine and away from the Kremlin.

Shares of Gazprom were up by 2.1%, at $3.88, on Tuesday morning in Moscow, having risen 4.1% on Monday. Gazprom's shares have fallen 73.0% since the start of 2008, when they were trading at $14.38.

Gazprom maintains that Ukraine's state gas company Naftogaz owes it up to $2.4 billion (1.8 billion euros), and it has warned of delivery cuts to the company if its outstanding debt is not cleared.

The companies have until Jan. 1 to sign a new contract, and Russia is pushing for higher prices. Russia has warned that gas prices for Ukraine could rise to $400.00 per 1,000 cubic meters, from the current $179.50.

There is a whiff of familiarity in all this. A similar dispute in January 2006 saw Russia turn off the gas taps to Ukraine, a key transit country for Russian gas exports, and disrupt gas supplies destined for the European Union for several days.

On Dec. 19, President Viktor Yushchenko of Ukraine said his government had paid $1.0 billion to Gazprom for gas pumped in September and October.

Both countries face difficult economic times. The Kremlin spent up to $2.5 billion supporting the ruble on Monday, according to, marking the sixth time it has had to do so in December alone.

Capital flight from Russia has meanwhile compelled the country's billionaire oligarchs to ask for loans from the government in exchange for portions of their assets (often companies).

Ukraine's economic downturn is also being exacerbated by a sliding currency: the hryvnia has halved in the past six months, making imports far more expensive, not to mention the country's debt to Gazprom.

Its central bank had to raise interest rates to 22.0%, from 18.0% last week, in a bid to boost the currency, and a perennially unstable political situation is not helping matters.

Ukraine received a $16.5 billion loan from the International Monetary Fund in October, and Russia expressed "bewilderment" in an official statement that Ukraine had been unable to repay the debts in spite of that assistance.

Source: Forbes

Serial Killer In Ukraine Sentenced To Life In Prison

DNIPROPETROVSK, Ukraine -- A serial killer in the eastern Ukrainian city of Dnipropetrovsk has been sentenced to life in prison, RFE/RL's Ukrainian Service reports.

Serhiy Tkach in the dock during his trial in Dnipropetrovsk.

Serhiy Tkach was arrested in 2005. He had been found guilty of almost 80 rapes and murders. His victims were girls and young women.

Tkach, who used to be a professional criminal investigator, has been able to conceal his crimes skillfully for more than 20 years.

Nine people had been erroneously convicted for some of the rapes and murders committed by Tkach.

Source: Radio Free Europe

Monday, December 22, 2008

Ukrainians Protest Financial Crisis

KIEV, Ukraine -- Thousands of car drivers in the Ukrainian capital angrily blew their horns for several minutes Monday, protesting what they call incompetent and corrupt government policies that led to a devastating financial crisis.

A pregnant woman begs for money in central Kiev.

The Ukrainian currency has lost some 40 percent of its value since September as a fall in the export of steel, the heart of the economy, led to a shortage of foreign currency. That was coupled with a loss of confidence in the hryvna and the banking system.

Monday's protests branded "Enough" and organized mainly through the Internet were a sign of growing anger and opposition to the government which experts say could boil over into mass protests in the coming months.

Many Ukrainians think that their leaders, brought to power on a wave of the 2004 pro-democracy protests known as the Orange Revolution, have betrayed their promises of turning Ukraine into a prosperous European nation.

Instead, the government has been paralyzed by infighting and failed to deal efficiently to deal with the financial meltdown even after receiving several billion dollars on a loan from the International Monetary Fund.

"We've had enough of the authorities," said one protester, Ihor Ratushny.

Prime Minister Yulia Tymoshenko has accused the National Bank officials of making huge profits on the shocking devaluation of the hryvna by allowing speculation on the foreign currency exchange.

The National Bank denies the accusations, which were seen by some analysts as aimed at Tymoshenko's arch-rival, President Viktor Yushchenko.

Ukraine is sinking into a deep depression. Yushchenko has forecast that the economy will contract by up to 10 percent in the first quarter of next year. Tens of thousands of workers face layoffs as steel and other plants across the country freeze.

Industrial output shrank nearly to 30 percent in November, from a year earlier, the sharpest drop in a decade.

On top of the crisis, Ukraine is facing Russia's threat to cut natural gas supplies on Jan.1 over its debt for the past supplies.

Source: AP

Batman: Part-Time Job For A European President

KIEV, Ukraine -- Ukrainian president Viktor Yushchenko could be accused of inconsistency in everything he does politically, but not in his love for wildlife. Amid financial and political instability, it seems the passionate beekeeper is the only one who cares about bats.

This week President Yushchenko propositioned the Parliament to adopt an amendment to the Agreement on the Conservation of Populations of European Bats.

The agreement of 1991 has been ratified by 30 countries and has been effective in Ukraine since 1999. No information as to what particular changes should be made, however, has been released to the media.

There is no doubt the endangered species both needs, and is worth, protection, but it seems few in Ukraine are concerned about their fate.

Immediately after the proposal to parliament, Viktor Yushchenko came under fire from both his sarcastic political opponents and ordinary Ukrainians, who simply could not figure the importance of the move, or its timing.

The Ukrainian president might have felt offended with such an inadequate response to his animal protection efforts but did not show it.

He explained with patience that the initiative is “one of the steps Ukraine is undertaking in joining a series of international documents in the context of the country’s integration into Europe.”

A statement from the Presidential press service said that since the beginning of the year the president has submitted to the parliament 17 draft laws of this kind, including those concerning Ukraine’s accession to the WTO and the ratification of the European convention about transborder television.

Ukrainians already unhappy with Yushchenko were not placated by these moves.

Their perceived obstinacy and ingratitude upset their leader so much that he even cancelled his annual media conference.

Indeed, what can he respond to thousands of people who asked him online “Dear Mr. President, could you please tell us, how much do we (the simple people) have to pay you so that you – together with your parliamentarians, ministers and officials – leave the country?”

How can he justify to the Ukrainian people, fearing to be without gas or heating this winter that bats will lead Ukraine towards a bright European future? It could be a future with no malicious Russia by its side, threatening to cut energy supplies for a $2.4 billion debt.

In this perfect Ukraine, abundant in bats and covered with beehives, Prime Minister Yulia Timoshenko will forget her political and power ambitions or at least won’t be contradicting him on every issue possible - and President Yushchenko won’t have to dissolve Parliament every time the deputies fail to form a governing coalition.

The country’s corporate and state debt of $105 billion could somehow be repaid and the national currency, the hryvnia, which has devalued by 50 per cent since June, will regain its value… if integration ever comes about.

So, thanks to the President’s environmental awareness and love for all living creatures his move could propel Ukraine in the right direction, but it seems that Yushchenko’s initiative has not been appreciated for its true value.

Whether or not this happens one day, one thing is clear: at least the bats will be grateful.

Source: Russia Today

Sunday, December 21, 2008

Ukraine's President Blasts Premier

KIEV, Ukraine -- Ukrainian President Viktor Yushchenko accuses Prime Minister Yulia Tymoshenko for lack of management over the country's economic crisis.

Ukrainian President Viktor Yushchenko (L) and Prime Minister Yulia Tymoshenko continue to accuse each other.

"Without a doubt, the prime minister lost control of the situation a long time ago," said Yushchenko in a statement aired Sunday and blamed Tymoshenko for the rise in Ukraine's inflation rate to 22 percent during the current year.

Ukraine's prime minister had called earlier on the country's president to resign as she raised corruption allegations against him.

"I believe the president of this country, who works according to the (principle)...that whatever is worse for the country is better for me, who makes money out of the misery of people, must step down tomorrow together with the head of the central bank," Yulia Tymoshenko had said on Friday.

But Yushchenko emphasized that according to the country's constitution, it is only the government that is responsible for creating an independent economic and financial policy.

"I am sure the prime minister is unable to assess the economic and social processes today," he said. "She put herself in opposition to the Ukrainian people and the state with her last accusations".

Tymoshenko and Yushchenko known as political allies in Ukraine, have also been criticizing each other in recent months over issues such as a gas dispute with Russia and Russia's war with Georgia in August.

Source: Press TV

Food-Poor Countries Seek Farmland

MOSCOW, Russia -- Wearing flowing red robes and pitching his own trademark desert tent, Libyan leader Moammar Qaddafi paid a visit to Ukraine last month in search of a remarkable deal to help feed his oil-rich but soil-poor people.

Libyan leader Col. Moammar Qaddafi.

Under a proposed agreement with Kiev, Libya would lease 247,000 acres of Ukraine's rich black land to grow wheat. The harvest would then be shipped back to Libya, giving the desert nation a more secure supply of food in the face of predictions about higher food prices and potential shortages in decades to come.

Ukraine, in turn, would get access to Libyan oil fields, helping free it from dependence on Russia for its energy needs.

Around the world, food-poor but cash-rich countries, spooked by last season's high food prices, are racing to snap up rights to farmland in developing countries and breadbasket nations.

• South Korea's Daewoo Logistics announced last month that it has signed a 99-year lease on 3.2 million acres of land in Madagascar, which it will use to produce corn and palm oil for shipment home.

• China, which already farms more than 100,000 acres of land in Australia, is buying or leasing huge swaths of farmland in the Philippines, Laos, Kazakhstan, Myanmar, Cameroon and Uganda, according to Grain, a sustainable-agriculture group based in Spain.

• Gulf nations -- Saudi Arabia, the United Arab Emirates, Bahrain and others -- also have locked up millions of acres in Indonesia, Pakistan, Sudan and Egypt.

In the United States, a similar buy-up occurred in the late 1980s, when Japan purchased more than half a million acres of farmland in California, Montana, Colorado and Florida.

In contrast to the latest rush, however, the main purpose was to raise cattle for Japan's beef appetite, rather than grain.

"It's literally all over" that rich countries and corporations have been looking for land, said Carl Atkin, head of research for Bidwells Agribusiness.

The rush to buy or enter long-term leases on land has been fueled in part by the low levels of world grain stocks, despite record harvests this year.

Source: Chicago Tribune

Prime Minister Calls For Probe Into Ukrainian Currency Collapse

KIEV, Ukraine -- Ukrainian Prime Minister Yulia Tymoshenko called Saturday on prosecutors and a corruption watchdog to probe the plunge in the country's currency, which she has blamed on her political rival, President Viktor Yushchenko.

Prime Minister of Ukraine Yulia Tymoshenko.

She told a press conference she had sent a report to the Global Witness group, which campaigns against corruption, and the state prosecutor and the national security service, while expressing doubts about their honesty.

Tymoshenko, who is in open conflict with Yushchenko, said Friday that the president should resign for "making money on people's grief."

Earlier in the week she accused the president of provoking the plunge of the hryvnia's value, with the support of the national bank, to boost his personal fortune and weaken her government.

"They are pushing the country toward bankruptcy," added Tymoshenko, who is likely to challenge Yushchenko for the presidency in elections due late 2009 or early 2010.

Yushchenko for his part has accused Tymoshenko of populism, saying this was one of the causes for the national currency's collapse.

The hryvnia has lost nearly half its value against the dollar over the last six months amid global financial turmoil, sending Ukrainians rushing to swap local money for dollars and euros in scenes that have recalled the chaotic 1990s.

Tymoshenko and Yushchenko are allies turned bitter rivals who have regularly denounced each other in recent months over topics including a gas dispute with Russia and Russia's war with Georgia in August.

Source: AFP

Saturday, December 20, 2008

Russia And Ukraine Again Face New Year Gas Showdown

MOSCOW, Russia -- Russia is heading towards another New Year's showdown with the embattled Ukrainian government over its failure to pay off gas debts amid apparent deadlock in negotiations, analysts say.

Talks between Russian gas monopoly Gazprom and Ukraine's Naftogaz have failed to reach any breakthrough and Gazprom has warned it has no obligation to pump the gas if the debts are not settled.

A source close to the talks refused to rule out a repeat of a scenario similar to the 2005-2006 gas row where Russia cut off supplies to Ukraine, triggering a supply crisis in Europe

"Everything can happen," the source, who asked not to be named, told AFP.

The significance of the looming standoff is not lost on Ukraine, whose economy has been battered by the economic crisis and whose currency has lost half its value in six months

A high-ranking official within the Ukrainian presidential administration told AFP he could not make any plans because of the unsettled debts.

"Well, I have not taken a vacation during the New Year's, just in case," he said on condition of anonymity.

Yevgeny Minchenko, director of Moscow-based International Institute for Political Expertise said he had been informed that top management at Gazprom had also cancelled holidays in case the pricing dispute flares up.

"The Ukrainian side is blatantly refusing to pay the debts," he said.

Ukraine over the last week repaid one billion dollars of debt to Gazprom for gas pumped in September and October. But for Gazprom, this is far from being enough.

Gazprom maintains that Naftogaz owes a total of 2.4 billion dollars (1.8 billion euros), not to mention fines imposed for late payment.

"If the debt is not reimbursed by January 1 and if other solutions are not found, we cannot sign a new contract and we will have no legal basis to supply gas to Ukrainian consumers," Gazprom spokesman Sergei Kupriyanov said.

The complexity of negotiations is exacerbated by Gazprom's desire to charge Kiev more under a new contract, something Ukraine is reluctant to agree amid the financial crisis.

Ukraine currently pays Russia 179.5 dollars for 1,000 cubic metres of gas but Gazprom has warned that price could rise to 400 dollars for 1,000 cubic meters from next year.

The stakes are raised even higher by the strained diplomatic relations between Moscow and Kiev following the war in Georgia.

"The situation is certainly extraordinary and is being exacerbated by the financial crisis," said Valery Nesterov, an oil and gas analyst with Troika Dialog investment bank.

"The absence of a long term contract and a price formula make this an easy task," said Dmytro Naumenko, energy analyst from Institute for Economic Research and Policy Consulting in Kiev.

"This is psychological warfare in its concrete financial aspect."

Despite the highly opaque nature of the gas talks, analysts say Russia may still try this year to prevent the repeat of the gas cuts, if just to prevent a diplomatically costly row with Europe.

Gazprom supplies a quarter of the European Union's gas, mostly via Ukraine.

The European Commission said Friday it had received assurances from Russia and Ukraine that European customers will not be affected by the latest row over Russian gas supplies.

"Waging a pricing war with Ukraine does not make any sense", said Vycheslav Bunkov, an oil and gas analyst at Aton, a Russian investment bank.

Western officials also increasingly realize both countries will have to shoulder the blame if they fail to find a solution, analysts say.

"The first time gas was turned off in 2005 the matter was settled somehow. Every time we pulled through -- in 2006, in 2007. Now the year 2008 is coming to an end," said Russia's ambassador to Ukraine, Viktor Chernomyrdin.

"If Ukraine pays all its cash debts to Gazprom, all questions will be settled," added the former prime minister.

Minchenko predicted: "This time pressure will most likely not go down in the pipes."

"The companies will likely sign an agreement at the last minute to the chime of bells and champagne corks popping on the New Year's night."

Source: AFP

Ukraine Journalist Hurls Shoes At Politician In NATO Protest

ODESSA, Ukraine -- A Ukrainian journalist hurled a shoe at a local politician Friday to protest against remarks concerning NATO. The reporter in southern Ukraine's Odessa tossed his footwear at Oleh Soskin, an official presiding at the opening of a NATO information centre in the Black Sea port, the Interfax news agency reported.

Dr. Oleh Soskin

Odessa-based Revizor, a website devoted to controversial regional news, reported the incident took place at the city's Ushansky University, where Soskin reportedly was giving a speech on the need for Ukraine to join NATO.

ATV television news reporter Ihor Dmitriv reportedly took exception to Soskin's assertion during a speech that Ukrainian women were the more intelligent members of the Ukrainian population, and so would be more inclined to join NATO than men.

Dmitriv, according to the report, questioned Soskin's sexual orientation and hurled a single shoe, striking but not injuring the lecturer.

Soskin and Dmitriv, according to a witness, then exchanged insults, but members of the predominantly female audience separated the pair before blows were thrown. Neither Soskin nor Dmitriv was injured, according to the reports.

Soskin is a member of a nationalist political party supporting close Ukrainian relations with Europe, and an antogonistic relations with Russia.

Dmitriv subsequently told fellow Odessa reporters he threw his shoe at Soskin as Ukraine's senior political leaders "were crazy about NATO," and the only means of changing their minds was by hurling objects at them.

"A shoe is going to become a leading means (for common people) to influence their leaders," Dmitriv predicted.

The attack closely paralleled a Sunday incident when Iraqi television reporter Muntadhar al-Zaidi threw a pair of loafers at US President George Bush during a Bagdad press conference.

The population of the former Soviet republic Ukraine strongly opposes joining NATO, partly because of lingering loyalties to Moscow, but also because most Ukrainians consider NATO military operations in Serbia and Afghanistan unjustified invasions.

Ukraine's pro-West leadership nonetheless heavily favours early Ukrainian membership in NATO because of fears of increasing Russian military power, and hopes that a pro-NATO Ukrainian government would have increased chances of foreign aid to deal with the effects of the world financial crisis.

Source: DPA

Friday, December 19, 2008

US, Ukraine, Sign Partnership Charter

WASHINGTON, DC -- The United States and Ukraine Friday signed what was termed a Charter of Strategic Partnership calling for cooperation in defense, energy, trade and other areas. The United State will set up a diplomatic mission in Ukraine's Crimean region.

Ukranian Foreign Minister Volodymyr Ohryzko, left, and Secretary of State Condoleezza Rice, right, take part in a joint signing ceremony for the U.S. - Ukraine Charter on Strategic Partnership at the State Department, Friday, Dec. 19, 2008, in Washington.

State Department officials said the terms of the partnership accord are not unlike those of agreements the United States has with many other countries. But the signing comes at a politically-sensitive time, in the aftermath of the Georgia crisis, and officials said it is a signal to Moscow of U.S.-Ukraine solidarity.

Following Russian intervention in Georgia and its recognition of two breakaway Georgian regions, there has been concern about increased Russian pressure on Ukraine and that it might try to foster a separatist movement in the Crimea, which has a large ethnic-Russian population.

Friday's signing of the U.S.-Ukraine charter coincided with confirmation that the Bush administration intends to set up a small but symbolically-important diplomatic post in the Crimean regional capital, Simferopol.

At the signing ceremony with Ukrainian Foreign Minister Volodymyr Ohryzko, Secretary of State Condoleezza Rice said the United States has long believed that Ukraine's independence and democracy are essential to a peaceful Europe, and that Washington holds to its support for that country's membership in NATO:

"The United States supports Ukraine's integration into Euro-Atlantic structures. And I want to assure you that the declaration at Bucharest which foresees that Ukraine will be member of NATO when it can meet those standards is very much at the center of our policy. We look forward to helping you execute the decisions of Brussels to intensify the work of the Ukraine-NATO commission toward the fulfillment of the Bucharest declaration", she said.

At last April's NATO summit in Bucharest, leaders supported eventual alliance membership for Ukraine and Georgia but could not reach a consensus to offer them a formal membership action plan.

Meeting earlier this month in Brussels, alliance foreign ministers said they would work for membership for the two states through existing structures like the NATO-Ukraine commission.

At the signing ceremony, Ukrainian Foreign Minister Ohryzko said the charter agreement gives added stimulus to a rapidly expanding bilateral relationship. He was heard through an interpreter:

"This is a very important document because it summarizes our efforts during the past year, but it also has a very important dimension for our future. I would like to call your attention to the areas in this document that address defense, security, the economy, human rights, increased importance to cultural and people-to-people contacts and also the presence of the United States in Ukraine, in particular the Crimea," he said.

State Department Spokesman Sean McCormack said the administration plans to set up a so-called American Presence Post in the Crimean capital, which would include one or two U.S. diplomats and engage in a wide range of political and cultural activities. Currently the U.S. embassy in Kyiv is the only American diplomatic mission in the country.

A majority of Crimea's two million residents are ethnic Russians, and Russia has a lease on the Soviet era naval base at Sevastapol which expires in 2017, and which Ukraine says will not be renewed. Russia denies any intention to undermine Ukrainian sovereignty in Crimea or elsewhere.

Source: Voice of America

Tymoshenko Demands Yushchenko's Resignation

KIEV, Ukraine -- Ukrainian Prime Minister Yulia Tymoshenko called on the country's president to resign on Friday, accusing him of putting personal ambition above the country's interests.

Prime Minister Yulia Tymoshenko and President Viktor Yushchenko in friendlier times.

Massive corporate debt, a tumbling currency, a Russian threat to cut off gas supplies and feuding between state institutions have prompted some analysts to say Ukraine could be the next big casualty of the global downturn.

Tymoshenko has long been at odds with her former ally, President Viktor Yushcheko. But her direct call for his resignation suggested a serious worsening of political tensions ahead of a cabinet meeting on Saturday.

"I believe the president of this country, who works according to the (principle)...that whatever is worse for the country is better for me, who makes money out of the misery of people, must step down tomorrow together with the head of the central bank," Tymoshenko told an evening television talk show.

Ukraine's central bank said on Friday the government had run out of money to pay wages and meet its financial obligations.

Central bank moves, including a 4-5 percent rise in overnight refinancing rates, helped drive the hryvnia up for the first time in two weeks to 8.6 to the dollar from about 9/$ on Thursday, when the currency touched 10/$ at one point.

But trade in the currency looked to be drying up on Friday and the hryvnia has lost roughly half of its value since June, raising the prospect that heavily-leveraged companies could fail to pay off maturing dollar-denominated debt.

The central bank's attack on the government was the latest salvo in a feud which flared on Thursday when Prime Minister Tymoshenko called for the bank's chairman to resign over the fall in the hryvnia.

"The government's inept policies in running the economy... led to a situation in December in which the country could find itself in internal default," the central bank said in a statement.

"The government now has no funds to pay salaries, pensions and social benefits or to cover its domestic and external obligations."

In the first 10 months of this year the budget has been in surplus. The finance ministry said late last month Ukraine will reach its budget revenues target for the year, despite a sharp fall in industrial output.


In another challenge to Ukraine's battered economy, Russian gas giant Gazprom is threatening to cut off supplies unless Kiev pays $2 billion the Russian firm is demanding in arrears for gas supplies.

Yushchenko issued a statement on Friday challenging suggestions from Russian officials that Ukraine next year should pay $250-$300 per 1,000 cubic meters of gas.

A price of about $100 would better reflect world prices, the statement said. Negotiations over 2009 prices could have a bearing on the debt dispute.

European countries are watching the dispute closely because a brief cut-off of supplies to Ukraine in 2006 over a similar dispute had a knock-on effect on gas deliveries to Europe, which relies on Russia for a quarter of its gas needs.

Mud-slinging between institutions whose job it is to manage the economic crisis -- including a feud between Tymoshenko and President Yushchenko -- has helped undermine many investors' faith in the Ukrainian economy.

Hours after the central bank's statement, Yushchenko told it to secure "total control" over banks' purchases of dollars and issued a deadline for it to stabilize the currency market.

"There are no economic reasons for not having a stable rate. In 10 days' time we should organize the market in such a way that maximizes dollar supply," Yushchenko said at a meeting with central bank and commercial bank officials.


Tymoshenko and Yushchenko have traded increasingly personal insults since September when a coalition of their parties in parliament fell apart, after months of squabbling.

Although the coalition has since been reinstated, there are few signs that the two have resolved their differences a year before a presidential election.

The economy sank 14 percent in November compared to the same month last year as industrial output fell 30 percent. Inflation, which peaked at 31 percent in May, remains high at 22 percent.

The central bank has begun imposing what some analysts have called capital controls to stem the hryvnia's losses, limiting sales of its dollars only to importers and clients needing to service their foreign debt in December.

It has also moved to defend the currency by raising the overnight refinancing rate to 22 percent from 18 percent on secured deposits and to 25 percent from 20 percent on unsecured deposits.

Deputy Chairman Anatoly Shapovalov said the central bank sold $180 million on Thursday and would intervene next week.

But dealers, frustrated for weeks with the central bank's lack of clear communication, complex intervention procedures and limits on dollar sales, said the hryvnia could have risen higher had the bank not unexpectedly offered to buy dollars.

"Until the central bank announced (a buy rate of) 8.65 hryvnias, the rates were 8.1/8.2-8.4," one dealer said.

"The central bank didn't allow for the hryvnia to rise as strongly at it could have. We could have finished the day at 8/$...The actions of the central bank are such that there are simply no words for criticism."

Analysts at Ukrgazbank said the hryvnia's rate next week depended entirely on subjective factors. "As a consequence, next week the hryvnia-dollar rate could be 6/$ or 12/$. There are no clear parameters for the market."

Source: Kyiv Post

Tymoshenko Accuses President Of Covering Up Illicit Banking Ops

KIEV, Ukraine -- Ukraine's Prime Minister Yulia Tymoshenko, a former ally of President Viktor Yushchenko who has turned into his staunch critic, on Thursday accused him of covering up wildcat operations of the National Bank.

Yulia Tymoshenko at a press conference on December 18, 2008.

"These people understand they are losing the remainders of state power and that's why they are acting along the principle of "the worst is the best" so as to rip off billion-size profits from this crisis and the Ukrainian people's problems," she said at a news briefing.

Tymoshenko said she has the materials on this gathered by the state commission for financial monitoring and the Finance Ministry.

"They will be submitted to a special interim investigating commission of the Verkhovna Rada, the national parliament, that must bring all that disgrace out into the open," she said.

Tymoshenko asked the Prosecutor General's Office and the Accounting Chamber to inspect the operations of the Kiev-based Nadra Banka bank and a number of other large commercial banks that have been involved in foreign currency speculations with the National Bank's assistance.

"I ask President Viktor Yushchenko to put an end to the speculations that derail the exchange rates of the hryvnia, the national currency," she said.

Unless the National Bank takes a decision to revert the hryvnia to the previous exchange rate corridor, materials gathered by the financial monitoring commission and the Finance Ministry will be submitted to international organizations that investigate machinations.

"All the compromises go away as of this minute and we'll act in an absolutely legitimate and transparent way," Tymoshenko said.

Earlier in the day, she accused the National Bank of currency speculations and the fall of the hryvnia and demanded that Yushchenko present to parliament a request to dismiss the National Bank President, Vladimir Stelmakh, and members of the bank's board of governors.

"The slide of the hryvnia was a prearranged operation that was supported by the National Bank," Tymoshenko claimed. "There are no objective reasons in this country for the hryvnia's fall versus the U.S. dollar."

She also warned that the Yulia Tymoshenko bloc's faction in the Verkhovna Rada will not take part in considering any issues until Stelmakh is dismissed.

"The President, Viktor Yushchenko, who appoints and dismisses the presidents of the National Bank, bears the full brunt of responsibility for the situation with the exchange rate," Tymoshenko said.


Thursday, December 18, 2008

MOSCOW, Russia -- Russian gas giant Gazprom warned Thursday that it had no obligation to deliver gas to Ukraine from January 1 if Kiev failed to pay its debts, raising the spectre of cuts to downstream customers in Europe.

A gas pressure-gauge and the valve of the main gas-pipe outside Kiev. Russian gas giant Gazprom warned Thursday that it had no obligation to deliver gas to Ukraine from January 1 if Kiev failed to pay its debts, raising the spectre of cuts to downstream customers in Europe.

"If the debt is not reimbursed by January 1 and if other solutions are not found, we cannot sign a new contract and we will have no legal basis to supply gas to Ukrainian consumers," Gazprom spokesman Sergei Kupriyanov said.

Kupriyanov did not explicitly say that Gazprom would cut off gas to Ukraine if the debt remained unpaid. But his comments represented a clear warning of the consequences if the debt were not cleared.

Ukrainian President Viktor Yushchenko said in Kiev that 800 million dollars' worth of debt had been repaid to Gazprom on Wednesday, promising that an additional 200 million dollars would be paid in the near future.

"We must not have debts," the Interfax news agency quoted him as saying at a briefing.

Kupriyanov confirmed that Ukraine had paid 800 million dollars (544 million euros) of its debt to Gazprom but said this left an outstanding sum of roughly two billion dollars which he did not expect Kiev to pay soon.

"The other piece of news is that they are they are not going to pay more before the New Year. In other words they have paid back the debt for October, but not for November and December.

"We are not going to see this sum before the New Year and if they do not propose any timetable for repayment, the problem of January 1 is going to be aggravated.

"It is evident that we cannot go onto a new contract while leaving behind a debt of two billion dollars," he told reporters at a news conference broadcast live on state television.

Gazprom maintains that Ukraine's state gas company Naftogaz owes it 2.4 billion dollars (1.8 billion euros) and Russian officials have warned of steep price rises or delivery cuts if the outstanding debt is not cleared.

Meanwhile a Ukrainian delegation left for London to discuss the dispute with European Energy Commissioner Andris Piebalgs, officials in Kiev said.

The delegation -- consisting of Naftogaz chief Oleg Dubina, one of his deputies and a representative of Yushchenko -- will "carry out consultations in the context of regulating" the dispute, the presidency said in a statement.

They are to meet with Piebalgs, who is currently in London, a source close to the delegation told AFP under condition of anonymity.

"Efforts are being undertaken to ensure the timely payment of bills for November and December," the presidency's statement said, before taking a dig at Yushchenko's political archrival, Prime Minister Yulia Tymoshenko.

"Today the president's actions aim to settle the problems provoked by the systemic mistakes and inaction of the head of government," Yushchenko's top official for energy, Bogdan Sokolovsky, said in the statement.

Ukrainian Energy Minister Yuri Prodan denied that Ukraine was going to stop paying off its debts, saying that it would continue to negotiate with Gazprom.

The two sides are also at odds over fines imposed by Gazprom on Ukraine for late payment. The method of payment is also an issue as Naftogaz currently pays through an intermediary.

The new contract is a crucial issue as Gazprom wants to gradually increase the price Ukraine pays for gas to bring it closer to the price paid by European Union countries.

Ukraine currently pays Russia 179.5 dollars for 1,000 cubic metres of gas, less than half what some EU countries pay. A sharp rise would cripple Ukraine's economy, already ravaged by the global financial crisis.

Analysts have warned that any cut in supplies could have knock-on effects elsewhere in Europe, as Ukraine is a major transit country for Russian gas exports to the EU.

An earlier dispute between Russia and Ukraine over gas prices led to a brief interruption of gas supplies in several European countries in January 2006.

Source: AFP

Basic Human Rights Not Advancing In Ukraine Despite Country’s Formal, Signatory Commitment

KIEV, Ukraine -- Taboo during the Soviet era, the Universal Declaration of Human Rights is available for anyone to read at

Adopted by the United Nations General Assembly on Dec. 10, 1948, the declaration arose from the tragedies of World War II and became the first to globally recognize the “inherent dignity, equal and inalienable rights of all members of the human family.”

Ukraine, however, celebrated the 60th anniversary still mired in official corruption and other human wrongs. The Kyiv Post asked Ukrainian Ombudsman Nina Karpacheva for a progress report.

“Disregard for human rights is a norm of modern life in Ukraine. The country is drawn into brutal legal nihilism. Ukraine has joined 220 U.N. human rights conventions, but mechanisms for their realization are not working as any official at any level ignores court decisions,” Karpacheva said.

“Respect for human dignity can not appear out of nowhere, it has to be cultivated. We must realize that rights are inherently entitled and not given by the state. Next year we’re issuing a manual for human rights protection for children. Our human rights start with the rights of our kids. The text of the declaration has to be on every Ukrainian desk, as it is the constitution of mankind.”

Karpacheva also summarized progress in the following areas:

Violence: “Measures [to stop] mass police tortures must be found. Domestic violence is another huge problem. Thousands of women, children and elderly people need to be protected. Years ago, when I started fighting against abuse of inmates’ rights, many were asking me ‘Don’t we have other problems than those of inmates?’ I never grew tired of repeating that the wall between penitentiary establishments and society is relative.”

Freedom of speech: “PR took over vital social issues. Persecutions and intimidation of journalists still exist. In 2005, there were 16 cases of journalist harassments [beatings, assaults, intimidation], 33 in 2006 and 22 in 2007. None of the crimes was solved. Even if they get to court, they fade out in their infancy. Until the head of Georgiy Gongadze is found, Ukraine will remain the ‘headless rider.’ ”

Discrimination: “There is brutal disrespect towards foreigners, persons without citizenship and refugees. Ukraine must create more efficient laws against xenophobia, racism and intolerance, as there were five murders of foreign citizens and 76 attempted murders during the year.”

Rights of defendants: “For 10 years, parliament has not adopted a law about free legal assistance. More than 70 percent of Ukrainians appeared below the poverty line and are unable to afford a private lawyer.”

Human trafficking: “In 1999, all U.N. conventions concerning human trafficking were efficiently included in a single article [of the Criminal Code], covering men, women, children and organ trafficking. Parliament successfully tore the article into pieces and scattered it among others. Now it’s almost impossible to institute criminal proceedings for human trafficking.”

Adoption: “The Hague Convention on Inter-country Adoption ... contradicts our national interests, clearing the way for masked trafficking of orphans.”

Rights of sailors: “Our sailors wander around the world under foreign flags, unprotected. We initiated the ratification of U.N. Convention on the Law of the Sea and parliament ratified it. This convention gives the opportunity and mechanism for protection of sailors’ rights. Nobody uses it. Nobody cares.”

Source: Kyiv Post

Wednesday, December 17, 2008

Ukraine’s President Cancels Annual Online Q&A Session For Flimsy Reason

KIEV, Ukraine -- The president chickened out. He was afraid to face questions from the nation that elected him and stood up for him, and canceled his Internet conference.

The president chickened out...

On Dec. 16, Victor Yushchenko was supposed to have an Internet chat through three of the largest news portals on the Ukrainian web.

The growing Internet community was holding its breath, hoping to get answers to thousands of questions they had been posting on participating web sites for more than a week.

But the president’s aides announced on Dec. 12 that the session would be canceled. They said the president scheduled “an emergency meeting” instead to deal with cutoffs of heating and hot water in Kyiv.

Some of the questions, they said, the president might take during his annual press conference summarizing this year’s performance. Maybe. If the president has enough time.

Obviously, the "emergency meeting" is the lamest of excuses.

The president, who has plenty of time to fly abroad and grant interviews to foreign journalists, has no time for those in his own nation.

By the time the “emergency meeting” took place, Kyiv residents would have been freezing for nearly a week.

The real reason for refusal is, of course, Yushchenko’s fear of facing tough questions.

The most popular question asked on the Internet was:

“Dear Mr. President, Can you tell us (the simple people) how much do we have to pay you so that, together with parliament deputies, ministers and government members, you leave for abroad and do not hinder Ukraine’s normal development?” This question received over 72,000 votes from the audience of, where it had been posted.

Nearly 13,000 questions were posted altogether on all three participating websites, and none of them was easy.

Many questions called for his resignation, asked for accountability involving crimes and election promises, and asked for help and advice on how to survive in times of crisis.

Many personal questions were asked, including why the Ukrainian president’s young children study in an English-language school and why his oldest son is an idle and rich “golden boy.”

So, now the nation will have to wait for the annual press conference to hear answers to some of these questions. Maybe. If the president has enough time.

Source: Kyiv Post