Saturday, October 31, 2009

Ukraine Bans Big Crowds To Combat Swine Flu

MOSCOW, Russia -- The Ukrainian government is taking some of the sternest measures in the world against the spread of the swine flu virus, ordering schools nationwide to close for three weeks, banning public gatherings and imposing restrictions on travel.

Newlyweds in Lviv, Ukraine, on Saturday. The government has ordered an anti-flu crackdown.

Prime Minister Yulia V. Tymoshenko announced the measures on Friday in response to rising fears about swine flu, especially in western Ukraine. Federal health officials said 33 people had died from the flu across the country, although there was conflicting information about which type of the virus was to blame.

The situation in Ukraine “has reached the epidemic threshold,” Ms. Tymoshenko said. The ban on public gatherings, she said, would apply to “all large-scale events, concerts, movie showings and any other gatherings of people for the next three weeks.”

The World Health Organization said it would send a team to Ukraine to assist the authorities there.

News reports from western part of the country said there were long lines at pharmacies as people sought medication and masks.

With all rallies canceled, the anti-flu measures were expected to have an immediate impact on the campaign for Ukraine’s presidency. The election is on Jan. 17, and Ms. Tymoshenko formally registered as a candidate on Saturday. She said she did not expect that the voting would have to be postponed.

The virus is spreading across Eastern Europe, but it was not clear why Ms. Tymoshenko chose to undertake stronger moves, like closing schools nationwide, than her counterparts in Russia and Poland.

There were indications, however, that the government’s response was being influenced by electoral politics. Ms. Tymoshenko, one of the leading candidates, and her bitter rival, President Viktor A. Yushchenko, who is far behind in opinion polls in his bid for re-election, both sought to make clear that they were aggressively addressing the outbreak.

On Friday, Mr. Yushchenko criticized Ms. Tymoshenko, saying that he had ordered an inquiry into why the country was not, in his opinion, prepared.

“We will have an assessment of the issues that arose — why this has turned out to be so acute,” he said.

Source: The New York Times

Ukraine's Swine Flu Death Toll Rises To 34

KIEV, Ukraine -- The death toll from a swine flu outbreak in Ukraine rose to 34 on Saturday, as the government announced new measures to control the spread of the virus.

The participants of the Ministers' Cabinet session wear masks as they listen to Ukraine's Prime Minister Yulia Tymoshenko in Ternopil in western Ukraine October 30, 2009.

Two of the victims were infants, Health Minister Vasyl Kniazevych told Channel 5 television.

As of Saturday morning, the flu was thought still to be limited in to the country's western provinces, but because of the number of suspected cases, a spread was likely, he said.

'The country must prepare for a wider outbreak,' Kniazevych said. 'Its direction of movement is towards central Ukraine.'

More than 80,000 people in the swine flu outbreak area were registered with authorities as displaying possible flu symptoms, but because of the similarity of swine flu symptoms to those of common flu, health workers were struggling to estimate the extent of the swine flu's spread, Kniazevych said.

'We had a problem with identifying the (swine flu) antibody in flu sufferers,' he said. 'There is a mass of work we have to do.'

Panic purchasing of flu remedies, surgical masks, and even citrus fruits took place in most major cities in the former Soviet republic, 1+1 television reported.

The swine flu deaths thus far have been limited to the nine western provinces, most along the borders with Slovakia, Poland, and Romania.

Shortages of over-the-counter medicines used to treat the common flu were reported as far away as the eastern city Zaporizhia, some 900 kilometres from the epicentre of the outbreak.

Prime Minister Yulia Tymoshenko was scheduled to hold an emergency meeting with regional health officials Saturday, to discuss new disease control measures.

Invoking a rarely-used law allowing the state to take temporary control of private property, Tymoshenko declared all health-related organizations in the country, including privately-owned health clinics and hospitals, to be 'directly subordinate' to the government, effective immediately.

The government would pay particular attention to medical supply retailers, to head off artificial goods shortages and price gouging, she said, in comments reported by the Unian news agency.

Retail price spikes of as much as 300 per cent for cold and flu remedies have taken place in recent years in Ukraine, during avian flu outbreaks.

Tymoshenko claimed privately-operated chemists in the country were 'absolutely supplied in full volume with all necessary medical supplies,' contradicting spot reports of shortages.

Trains operated by the national railroad Ukrzhelesnitsiya were running according to schedule, but staff were ordered to wear surgical masks, and instructed to report passengers who appear to have flu symptoms.

Medical personnel aboard 'every passenger train' were available to provide first aid to potential flu sufferers, and would report people treated to the Health Ministry, according to statement on the Ukrzhelesnitsiya website.

Traffic in Ukrainian airports and intercity highways meanwhile appeared to be at normal levels despite a call by Tymoshenko for Ukrainians to avoid long-distance travel if possible.

Traffic police and airport security personnel have been briefed to screen travellers visually, Tymoshenko said.

All schools, kindergartens, and universities were closed for a three-week period on Friday. A ban on massed gatherings - forcing the wholesale cancellation of concerts and political rallies - was also in effect.

Ukraine's national security council on Friday approved the equivalent of 55 million dollars in emergency funding, for swine flu control.

President Viktor Yushchenko on Friday put the number of deaths from swine flu at 11 and said the country was 'in serious need' of foreign assistance.

Source: DPA

Ukraine Shuts Schools, Halts Campaigning Over H1N1

KIEV, Ukraine -- Ukraine closed schools and banned public meetings including election rallies and restricted travel on Friday for a three-week period after confirming its first death from H1N1 flu.

A couple wearing masks walk along a street in Kiev, October 30, 2009.

Prime Minister Yulia Tymoshenko announced the measures, saying the virus had reached epidemic levels in three parts of western Ukraine, where there has been an outbreak of respiratory illness since mid-October.

The epidemic coincides with the start of campaigning for a presidential election on January 17. Tymoshenko, herself a front-runner, said the emergency would affect campaign rallies.

"All our pre-election events have been canceled. They will not be held until the situation has stabilized," she said in a televised statement.

President Viktor Yushchenko, a bitter rival of Tymoshenko's, himself called off a public meeting in Kiev where he had been due to roll out his election program.

He told journalists that 11 people had died of H1N1, also called swine flu, contradicting a Health Ministry report of only one death. An aide and a ministry official said Yushchenko may have made a mistake.

The government allotted 500 million hryvnias ($63 million) for medical supplies to fight the virus, agencies said.

Yushchenko said Ukraine, already suffering the effects of a severe economic downturn, would turn to international institutions and foreign partners for help if the situation developed beyond Ukraine's capacity to handle it.

SCHOOL HOLIDAY

"All educational institutions without exception ... will be put on a three-week holiday period," Tymoshenko said. She indicated this could be extended if necessary.

"Apart from this, we will cancel all mass meetings ... for three weeks," she told an emergency government session. "We will introduce a special system to stop unnecessary travel from one region to another."

She said Ukraine was in touch with international football authorities to discuss whether the measures would have any effect on two international fixtures scheduled for November.

Ukraine is scheduled to host a UEFA Champions' League soccer clash between Dynamo Kiev and Inter Milan on November 4 and a World Cup qualifying play-off between Ukraine and Greece on November 18.

"We are considering (imposing) a quarantine not only in the west but also across the country, because the virus is spreading very fast," Health Minister Vasyl Knyazevych told reporters.

In Lviv, the main town in one of the affected regions and normally bustling on a Friday, there were significantly fewer people on the streets. Those who were wore handkerchiefs and scarves across the lower part of their faces.

"There is nothing in the pharmacies. What can I say? There is no medicine at all?" said one woman, Maria Shalyazhinska, queuing outside a pharmacy.

"How come nobody knew this epidemic was coming? Children are sick. The elderly are sick. There are no masks. People are queuing and waiting for supplies to come but nobody knows if they will come or not."

Source: Guardian UK

Friday, October 30, 2009

Ukraine Shuts Schools, Cancels Public Events Due H1N1

KIEV, Ukraine -- Ukraine on Friday closed schools, banned all public events and imposed restrictions on people's movements around the country for a three-week period after confirming its first death from H1N1 swine flu.


"All educational institutions without exception ... will be switched on to a three-week holiday period," Prime Minister Yulia Tymoshenko announced. She indicated this period could be extended if it was deemed necessary.

"Apart from this, we will take the decision to cancel all mass meetings ... for three weeks," she said at an emergency government session.

"We will introduce a special system to stop unnecessary travel by people from one region to another," she added.

Earlier, the health ministry confirmed that one of 30 deaths in western Ukraine since mid-October which had been attributed to flu and pneumonia had been caused by the H1N1 strain, commonly known as swine flu.

"So far, not all the dead were tested (for H1N1)," a health ministry spokeswoman said. "However, tests on one dead (person) proved positive."

"We are considering (imposing) a quarantine not only in the west, but also across the country because the virus is spreading very fast," Health Minister Vasyl Knyazevych told a news conference, without giving details.

Source: Radio Free Europe

Ukraine Still Risks Losing Euro 2012

FLORENCE, Italy -- Ukraine still risks being excluded from hosting games at the 2012 European Championship if it doesn't get the necessary infrastructure in shape.

UEFA general secretary Gianni Infantino.

"Nothing can be excluded at this stage, but the Ukrainians know what they have to do in order that this possibility doesn't occur," UEFA general secretary Gianni Infantino told The Associated Press on Thursday. "We want to work together with the Ukrainians very hard and we are working very hard with them to make it happen in Ukraine."

Speaking at a European Professional Football Leagues meeting, Infantino said Ukraine has until the end of November to provide UEFA with the necessary guarantees. UEFA's executive committee will then make the final decisions at its meeting in Portugal on Dec. 9-11.

Ukraine is slated to co-host the championship with Poland, with each country featuring four cities. Kiev is slated to host the final. The other cities are Donetsk and Kharkiv in eastern Ukraine, and Lviv in the west.

In September, UEFA president Michel Platini insisted Ukraine will be allowed to host games, but that the number of host cities were still undecided. A week later, Euro 2012 chief operating officer Martin Kallen said Ukraine had made some progress, but that more work is needed in building hotels, stadiums and airports.

"There is still quite some work to do," Infantino said. "There are some promising signals, but there is still some hard work to be done."

Things are looking brighter for Euro 2016, with individual bids from France, Italy and Turkey and a joint proposal from Sweden-Norway.

"2016 looks quite promising," Infantino said. "Some are more advanced than others, but in general we think we'll have some quite competitive bids."

The 2016 candidates must prepare a bid dossier by Feb. 15, then UEFA's executive committee will choose the host in May 2010. The timetable gives the 2016 host six years to prepare for the tournament -- one more year than Poland and Ukraine have been granted in their troubled buildup to Euro 2012.

The 2016 tournament will feature 24 teams after UEFA decided last year to increase the field from 16.

Italian football federation president Giancarlo Abete said Italy's bid needs to get moving on the stadium front.

Juventus is building a new stadium in Turin, while clubs in Rome, Milan and other cities have only expressed an intention to construct new stadiums.

"Other nations have modernized quicker," Abete told The AP. "We've got to make these wishes that so many clubs have expressed into concrete substance. Juve's project is moving along, but several other clubs need to get going."

Italy's other problem is fan violence and security.

"We realize the spirit of the European Championship involves stadiums without barriers," Abete said. "But look at Poland and Ukraine. They've made progress on the stadiums, but they've had problems at the infrastructure level. There are a lot of variables to work on."

Source: AP

Thursday, October 29, 2009

Ukraine Govt Clashes With President On Wage Move

KIEV, Ukraine -- Ukrainian ministers warned President Viktor Yushchenko on Thursday the government cannot afford to raise minimum wages and would go to court if he approves a motion to do this passed by parliament last week.

Ukraine's political "odd couple", Yushchenko (L) and Tymoshenko.

Yushchenko indicated his support for the bill, local agencies reported, despite calls by the International Monetary Fund for the measures to be vetoed if it is to decide on releasing funds worth $3.8 billion by the end of the year.

But analysts say the money, vital to cover the budget gap, have become a political football ahead of a presidential election in which Yushchenko, Prime Minister Yulia Tymoshenko and former premier Viktor Yanukovich are all expected to run.

Yushchenko and Tymoshenko have been embroiled in fierce rivalry for 18 months that has blocked privatisation, delayed policy-making and twice put the IMF programme in jeopardy.

As they fought, the former Soviet state has slumped deep into recession -- the IMF expects the economy to contract by up to 15 percent this year after steel exports plunged, the hryvnia currency plummeted and banks struggle to survive.

"If the president has taken such a decision (to support the bill), then he knows where to get the money for it. Unfortunately the finance ministry has not been informed about that and for now we see no such possibility," Acting Finance Minister Ihor Umansky told journalists on Thursday.

Employment Minister Ludmila Denysova said the government would take the issue to the Constitutional Court should Yushchenko sign.

The government has said raising the minimum wage by over 20 percent by the end of next year, as the bill foresees, would ost it an extra $10 billion. The IMF's fourth tranche is part of a $16.4 billion bailout programme.

"These levels (of wages) have obviously been raised because of the political situation, but raised by whom? By the political force that is not part of the majority and parliament accepted such a law," agencies cited Yushchenko as saying late on Wednesday.

"I agree with parliament," he said.

GAMEPLAN

RBS head of CEEMEA Research Tim Ash said there was a tendency for Yushchenko to block anything which Tymoshenko tried to do.

"Indeed Yushchenko's game plan would likely be to use the issue to undermine Tymoshenko's position in the run-up to the presidential election," Ash said.

"Yushchenko's riding to the rescue of public sector employees and pensioners against the prime minister may well play well with the electorate and into the hands of Tymoshenko's opponents," he added.

But other analysts have noted Yushchenko may be pressured to veto the bill by his own previous criticism of the IMF's leniency toward the government.

Polls show he would not pass the Jan. 17 vote into a second round. Tymoshenko and Yanukovich, whose party initiated the wage bill, are likely to face off in the final February vote.

Finance ministry data on the budget showed how necessary the IMF funds are for Ukraine. The budget deficit widened by 47 percent in September alone to 24 billion hryvnias ($3 billion) since the start of the year from 16.4 billion in Jan-Aug.

Budget revenues have fallen sharply, yet spending on benefits has been maintained. Ironically, more strain has materialised through the increase in steel production and exports -- this industry receives Value Added Tax (VAT) rebates from the budget.

Source: Forexyard

Ukrainian Economy Suffers Sharp Fall In 2009

KIEV, Ukraine -- Five years after the “Orange Revolution,” which brought Ukrainian politician Viktor Yushchenko to power in January 2005, the Ukrainian economy is in the deepest crisis since the post-Soviet economic and social implosion of the 1990s.

Viktor Yushchenko, the hero of the "Orange Revolution" has current ratings in the single digits.

Yushchenko’s bid for office, and his subsequent campaign to overturn the declared electoral victory of the more pro-Russian candidate Viktor Yanukovich, were financed and politically supported by the United States. Washington saw Yushchenko as a means of weakening Russian influence in the country and opening up its markets to transnational companies and global finance capital.

Yushchenko had earned his support from Washington during his tenure as the head of the central bank of Ukraine, where he oversaw the privatisation of Ukrainian state assets in the 1990s. While prime minister under President Leonid Kuchma from 1999 to 2001, he also campaigned in favour of economic “liberalisation.”

Following his ascendancy to the presidency, Yushchenko was universally praised in the Western corporate media as a reformer who could usher in a new era of prosperity and democracy in the former Soviet republic.

Washington’s man in Kiev is today a despised figure whose pursuit of unpopular “free-market” economic policies and a pro-NATO foreign policy has left him with polling figures in the single digits. Having campaigned in 2004 as an anti-corruption candidate, Yushchenko has presided over a regime every bit as corrupt and in thrall to oligarchic business interests as that of Kuchma.

Economic and social conditions for Ukrainian workers are worse now than when Yushchenko came to office, and remain lower than what they were under the Soviet Union. The Ukrainian economy only recorded its first year of post-Soviet GDP growth in 2000. Largely driven by strong global demand for the country’s main exports of steel and steel products, the economy grew rapidly over the next six years, recording growth rates of nearly 10 percent in 2003 and more than 7 percent in 2006 and 2007.

Foreign direct investment (FDI) in the country increased over the past decade, especially after the Orange Revolution, as international big businesses and financial companies sought to buy up industrial facilities and other commercial real estate.

The country’s economy was badly hit by the 2008 financial crisis and the ensuing global recession. Ukrainian industrial exports plummeted as global demand fell, while the country’s financial system faced default. The state was saved from bankruptcy by an emergency loan from the International Monetary Fund (IMF) of US$16.5 billion, which has come with demands from the fund that Kiev restructure its economy to cut public spending and further enforce the demands of global capital.

The problems of the worldwide recession were particularly deeply expressed in the economies of Ukraine’s neighbors and main trading partners in eastern Europe, Turkey and the former Soviet Union. After a decade of growth brought on by high commodity prices and the movement of western European factories eastwards in order to take advantage of cheaper labour, the region has suffered from a collapse of FDI as well as property and financial bubbles.

Traditionally, Ukraine has had a close economic relationship with Russia, with the two former Soviet republics having a high level of economic integration under the USSR, many vestiges of which remain to this day. Russia has been very hard hit by the economic crisis, with revenue from its main exports of oil, gas and minerals plummeting from highs in 2007, while its financial sector was among the worst affected in the world.

Compounding these problems, the strained relations between Kiev and Moscow since the US-sponsored Orange Revolution have damaged commerce between the two neighbours, especially in the transit of Russian natural gas across Ukraine en route to the West. In January of this year, Russia’s Gazprom shut off natural gas supplies to Ukraine—and thus to much of the rest of Europe—in a dispute over payments. Gas prices have since gone up, deepening the pain of recession for ordinary Ukrainians.

Ukrainian gross domestic product (GDP) fell by 20 percent in the first quarter of 2009, with industrial production falling year-on-year by a third in the same period. The economy suffered another steep fall in the second quarter, with GDP dropping 18 percent. The World Bank expects Ukraine’s GDP to shrink by 15 percent over the whole of 2009.

The official unemployment rate is predicted to reach 9 percent by the end of the year, while the real employment problem is far worse, with many people having given up looking for work or been forced to accept part-time jobs.

Volodymyr Gryshchenko, chairman of the Federation of Employers, whose members employ about a third of the Ukrainian workforce, stated that the official unemployment rate underestimated the scale of cutbacks: “Employers are trying to find ways to avoid firing workers outright, and so they’re cutting hours or sending workers on unpaid leave.”

Inflation stands at more than 16 percent, and the currency, the hryvnia, has sunk badly against the euro and the dollar. Earlier this year, the Ukrainian Central Bank froze savings deposits in the country’s banks to prevent mass withdrawals amid public fears of a banking and/or currency collapse. The move angered millions of working class savers, especially retirees, whose modest savings were locked up in precarious financial institutions to suffer depreciation from rampant inflation.

Former Ukrainian finance minister Viktor Pynzenyk stated in July that he believed the economic decline since 2008 had pushed the size of the country’s economy back to its level in 2003. Pynzenyk and several economic commentators, as well as the Ukrainian government and the World Bank, expect the country’s economy to grow by around 1 percent in 2010—if the world demand for Ukraine’s exports improves and the financial sector is not rocked by a new crisis.

Even if this modest predicted growth occurs, the scale of Ukraine’s public debts will ensure that whichever candidate wins the presidency in January’s election will form a government of austerity that will force workers to pay for the crisis through cuts in welfare and services. Meanwhile, employers will use mass unemployment to drive down wages in a bid to make them more competitive on the world market.

Despite a period of economic growth from 2000 to 2007, some economists have calculated that the standard of living for the average Ukrainian has fallen by 50 percent since the liquidation of the USSR, largely as a result of high inflation rates in the 1990s and again in recent years, combined with cuts in social welfare and a large increase in the number of unemployed and working poor.

In 1999, the Ukrainian economy was less than half of its size when it declared independence from the USSR in 1991. The liquidation of the Soviet Union by the Stalinist bureaucrats ushered in a decade of economic chaos and social disaster in Ukraine and across the former Eastern bloc, as the economic “shock therapy” of privatisations, mass lay-offs and welfare cuts destroyed vast swathes of Soviet social and economic infrastructure.

All the while, a new ruling elite, largely made up of ex-bureaucrats, looted the economy to amass enormous personal fortunes. Among this nouveau riche in Ukraine are the two leading figures fighting for power in the upcoming presidential election, Yulia Tymoshenko, a former Comsomol (Communist youth organisation) leader whose fortune was made in the privatised gas transit industry in the 1990s, and Viktor Yanukovich, a Soviet-era factory manager who became the main political representative of the eastern Ukrainian oligarchs.

The candidates standing in January’s presidential election offer nothing to the working people, unemployed and youth of Ukraine. Yushchenko’s main rivals, Tymoshenko and Yanukovich, despite some populist phrases, are committed to securing the fortunes of their rival political cliques while carrying out the IMF-dictated “reforms” designed to cut taxes and social spending in favor of international finance capital and big business.

Arseniy Yatsenyuk, a former parliamentary speaker and foreign minister, who at 35 years old only just qualifies to stand for president, is another presidential candidate. Currently projected to win over 10 percent of the vote, Yatsenyuk was a longstanding Yushchenko acolyte who only formed his own political party in 2008.

Considered a political clone of Yushchenko, Yatsenyuk is widely understood to be a sort of political hedge bet for the presidential camp. There is speculation that Yushchenko, faced with the prospect of a humiliatingly low vote in the election, may pull out of the race and back Yatsenyuk or at least agree not to campaign against him. Dmytriy Firtash, the billionaire owner of energy trading company RosUkrEnergo and the principal domestic backer of Yushchenko, has given some support from his television station, Inter, to Yatsenyuk.

Faced with the decimation of their living standards, working people in Ukraine will draw conclusions, not only about the phony “Orange Revolution” that saw one clique of oligarchs take over from another, but about the entire post-Soviet experience.

Source: World Socialist

Wednesday, October 28, 2009

Opposition: Kiev Is Deep In Debt

KIEV, Ukraine -- One of the opposition leaders in the city council Dmytro Andriyevsky warned on Oct. 28 that municipal debts are growing with a catastrophic speed.

Kiev city council Dmytro Andriyevsky (L) and Kiev Mayor Leonid Chernovetsky.

“The income part of the budget is short of nearly Hr 6 billion, and the situation is worsening by the day,” said Andriyevsky.

He said Kiev has so far failed to collect Hr 1.244 billion in income taxes, Hr 1.07 in planned proceeds from the sale of land and other assets, and what the budget refers to as “other incomes” worth Hr 2.1 billion.

“The fantastic budget projects and promises of Mayor Leonid Chernovetsky, as we had warned, turned out to be soap bubbles,” Andriyevsky said. “By today, the city finances are short of every third hryvnia planed for spending.”

He said none of the mayor’s novelty ideas for filling the budget, including expensive dinners with city officials businessmen are supposed to pay, the sale of city-owned cars, increases in parking fees and introduction of new fees for various municipal services have brought no income to the budget.

As a result, the city’s development projects are under-financed by Hr 875 million, while social expenditures are Hr 677 million short of target, and city medicine is Hr 204 million short. Moreover, the city owes Hr 2 billion to the state.

“Budget predictions for the fourth quarter are unfavorable. Kiev, with Chernovetsky’s effort, is flying into a debt pit,” Andriyevsky told Ukrayinska Pravda.

Source: Kyiv Post

Tuesday, October 27, 2009

China, Ukraine Agree To Enhance Cooperation

KIEV, Ukraine -- Chinese Vice Premier Zhang Dejiang and Ukrainian Prime Minister Yulia Tymoshenko agreed to enhance cooperation between the two countries during talks on Monday. Zhang, leading a Chinese delegation, was on an official visit to Ukraine.

Chinese Vice Premier Zhang Dejiang (L) meets with Ukrainian Prime Minister Yulia Tymoshenko in Kiev, capital of Ukraine.

During the meeting, Zhang said that, since the two countries established diplomatic ties 17 years ago, China and Ukraine have seen healthy growth in bilateral relations, frequent high-level visits and enhanced mutual political trust.

The two sides have offered support on major issues concerning each other's interests and sustained efficient coordination in international and regional affairs, he said.

China values its ties with Ukraine and views it as a trusted and reliable partner, Zhang said, adding that it is in the fundamental interests of both sides to cement and enhance mutually benefitial cooperation.

China is willing to work with the Ukrainian side to further strengthen mutual political trust and deepen mutually benefitial cooperation to promote the all-round China-Ukraine partnership, hesaid.

He also expressed thanks to Ukraine for its support on issues concerning Taiwan, Tibet, Xinjiang and Falun Gong.

Speaking highly of China's fast development, Tymoshenko said her government values its ties with China and is ready to work with China to expand and deepen pragmatic cooperation in various fields.

Ukraine and China are complementary to each other and needed to continuously tap their great potential for cooperation, she said.

Tymoshenko extended a welcome to Chinese entrepreneurs in the delegation and said she hoped that Chinese enterprises will carry out more cooperation with the Ukrainian side in fields of strategic importance, such as energy, car and plane manufacture, sports and road equipment, and agriculture.

Ukraine is the first leg of official visits by Zhang to three European nations. He will also visit Albania and Estonia.

Source: Xinhua

Ukraine Warns Gazprom Of Potential Gas Payment Problems

KIEV, Ukraine -- Ukraine's national energy company Naftogaz has warned Gazprom of possible difficulties with payment for October natural gas deliveries, a source in the Ukrainian company said on Monday.


Naftogaz CEO Oleh Dubyna said at a meeting with Gazprom head Alexei Miller on Thursday that it was increasingly difficult for the Ukrainian energy company to make gas payments and it could be problematic for it to pay for natural gas supplied in October, the source said.

Naftogaz paid for Russian natural gas deliveries in September on time and in full, largely using borrowed funds.

According to the source, the Russian side insists that Naftogaz comply with contractual obligations in terms of natural gas purchase volumes and prices.

Ukraine is currently negotiating with Gazprom on a reduction in supplies to 33 billion cubic meters a year.

Miller has said that under the contract, Ukraine must buy at least 52 billion cubic meters of gas per year, but Ukrainian Prime Minister Yulia Tymoshenko said that "Ukraine has the right to order the volume that it needs."

She said the contract provides for 20% fluctuations in the level of consumption, and that "aggressive statements" on mandatory purchase levels should be ignored.

Russia, which supplies around one fifth of Europe's gas, briefly shut down supplies via Ukraine's pipeline system at the start of the year during a dispute with Kiev over unpaid debt.

The conflict was resolved in January, when Russian Prime Minister Vladimir Putin and his Ukrainian counterpart, Tymoshenko, agreed deals on deliveries to and gas transit through Ukraine for 2009.

Source: RIA Novosti

Police Prevent Attempt To Establish Network Of Muslim Extremist Group In Ukraine

SIMFEROPOL, Ukraine -- Ukrainian Interior Minister Yuriy Lutsenko has announced police officers last Friday arrested representatives of a terrorist organization who, covering with the ideas of Islamic fundamentalism, planned to establish a network of al-Takf


He said at a press conference in Simferopol on Monday that the extremists planned to pass death sentences on the leader of the Mejlis of the Crimean Tatar People, MP Mustafa Jemilev, and on his supporters, and plotted a number of terrorist attacks in Ukraine.

Lutsenko said, according to latest reports, the police had launched an investigation into revealing representatives of extremist terrorist organizations. Three people have been arrested in Crimea so far, and one of them started to cooperate with investigators and provided law enforcers with valuable information, he said.

As a result, seven response groups, including police officers and Security Service of Ukraine (SBU) forces, particularly Alfa paramilitary units, conducted a special operation in Crimea on October 23, at the request of Hennadiy Moskal, the deputy interior minister and chief of the Ukrainian Interior Ministry’s main police office in Crimea, he said.

Lutsenko also said that authorized searches had been conducted at the seven places of residence of extremists. TNT blocks with detonators, daggers and a large amount of extremist literature were seized at one address in Simferopol.

Source: Kyiv Post

Monday, October 26, 2009

Ukraine Detains Three Suspected Islamic Militants

SIMFEROPOL, Ukraine -- Ukraine has detained three men suspected of belonging to an international Islamic militant group after special forces found a cache of explosive materials and detonators, the interior minister said on Monday.

Ukraine's Interior Minister Yuri Lutsenko.

Yuri Lutsenko said the men, Ukrainian citizens from the southern Crimean peninsula, were suspected of belonging to al-Takfir wal-Hijra, which originated in Egypt and is linked with activities in North Africa.

Lutsenko said explosive materials, detonators, a Kalashnikov rifle and cartridges, firearms instruction manuals, and propaganda material propagating extreme Islam were found in seven places.

Pamphlets also linked the men to Hizb-ut-Tahrir, a group that has said it wants to establish a global Islamic caliphate by peaceful means and is well known in Central Asia.

"A network of the extreme Islamic movement al-Takfir wal-Hijra, which is banned by many countries in the world, is spreading in the Crimean territory of Ukraine," Lutsenko told journalists.

"I find it strange that "Revival", a gazette published by Hizb-ut-Tahrir, which is also an Islamic extremist organisation banned by the majority of the world's countries, is printed freely, especially in Crimea," he added.

He said the authorities had information that the group had condemned to death the leader of the Crimean Tatars -- a Muslim Turkic ethnic group which forms a large minority in the region.

The Crimean Tatars, who centuries ago ruled the powerful Crimean Khanate, were deported en masse to Central Asia, mostly Uzbekistan, by Soviet dictator Josef Stalin in 1944 for their perceived disloyalty to Moscow during the Second World War.

Since Ukraine's independence in 1991, hundreds of thousands of Tatars have returned to Crimea from Central Asia.

Lutsenko linked the authorities' focus on militant Islamists in Ukraine to Uzbekistan's fight against Hizb-ut-Tahrir and other groups. Uzbek extremists fought alongside the Taliban in Afghanistan before and during the U.S.-backed war there in 2001.

"Many of the supporters of these organisations are trying to find refuge in other countries, including Ukraine," he said.

Source: AlertNet

Sunday, October 25, 2009

IMF Demands Ukraine Veto New Wage, Pension Law

WASHINGTON, DC -- The International Monetary Fund demanded on Sunday that Ukraine's government veto a wage and pension law passed this week by the country's parliament, saying it was at odds with an IMF support programme.

International Monetary Fund (IMF) envoy Ceyla Pazarbasioglu shakes hands with Ukrainian President Viktor Yushchenko prior to talks in Kiev.

The IMF said Ukraine's economic and financial situation was "stabilizing" under the support program, but "corrective actions" were needed in some areas.

The IMF assessment followed a visit to Kiev by an IMF mission that held talks with the finance ministry and the national bank, and secured an agreement with them on the corrective actions that would be needed.

"The mission is now awaiting endorsement of the agreed policy package from the signatories to the program -- the president, the prime minister, the minister of finance, and the governor of the National Bank -- including assurances that the wage and pension law approved by Ukraine's parliament, the Rada, this week, which is at odds with the objectives of the authorities' program, will be vetoed," the IMF said.

Ukraine, one of the hardest hit European countries by the global economic crisis, faces a 15 percent contraction of its economy this year.

But the World Bank earlier this month forecast that it will grow 2.5 percent next year on the strength of a global economic recovery.

"The mission found that the economic and financial situation in Ukraine is stabilizing as a result of policies under this program," the IMF said.

"Preserving these gains will require policy discipline and corrective actions in some areas," it said.

Source: AFP

Friday, October 23, 2009

Ukraine - People’s Assembly Supports Tymoshenko For President

KIEV, Ukraine -- On October 22, the All-Ukrainian People’s Assembly took place in Kiev with the participation of 1,960 delegates from all oblasts of Ukraine, AR Crimea, and the cities of Kyiv and Sevastopol. They represent 3,720 national, regional and municipal organizations, civic associations, political parties, charitable foundations and artist groups.

Prime Minister Yulia Tymoshenko

The delegates passed a unanimous decision to support Yulia Tymoshenko’s candidacy for president of Ukraine.

"The All-Ukrainian People’s Assembly agrees that the only person that can lead Ukraine out of the crisis and defend it national interests is Yulia Tymoshenko. And that’s why the Ukrainian public supports Tymoshenko’s nomination for president of Ukraine," said the head of the forum’s coordinating council Serhiy Sobolyev.

Tymoshenko thanked the delegates for their support. "The elections will take place and I believe that together we can make Ukraine better…and I have believed this since the moment I came to power," she said.

"We will build a true civil society if we can establish reliable communication that is not ephemeral and declarative, but that actually works, starting with local government officials up to the Verkhovna Rada," she said.

According to Tymoshenko, the first step that needs to be made is for NGOs to delegate their leaders to government posts, starting with local government and up to the parliament. "Starting with local government elections, there need to be open lists that allow anyone to make it onto this list. And I believe this is the answer," Tymoshenko said.

She proposed introducing a system of open lists for regional elections that "will work locally even without relevant legislation because today it will be difficult to secure such legislation."

Finally, Tymoshenko suggested a new principle for forming the government. She believes that following the presidential elections, a new government should be formed on the basis of public discussions,

"Before appointing each minister we need to gather the professional and public organizations working in this field and selected the smartest minister through a vote," she said.

Tymoshenko assured that "The first thing we will do after the presidential elections is appoint a new cabinet and I think it will be the most honest appointment ever in Ukraine."

Source: ISRIA

Ukraine Opposition Leader Launches Comeback Bid

KIEV, Ukraine -- Ukraine's opposition leader Viktor Yanukovich, ousted in 2005 after mass protests against a rigged presidential poll, launched a comeback bid on Friday with a pledge to end the "chaos" caused by the "Orange revolution" leaders.

Opposition Regions Party leader Viktor Yanukovich greets his supporters during a congress of the Regions Party in Kiev October 23, 2009.

Yanukovich, 59, seen as a front-runner for the January 17 election for the presidency, focused on the bitter rivalry that has sprung up between President Viktor Yushchenko and his erstwhile "Orange" ally, Prime Minister Yulia Tymoshenko, since the pro-Western leadership took over.

Opinion polls suggest Yanukovich and Tymoshenko are likely to face-off in a second round showdown in early February. Yushchenko has low ratings and is expected to drop out in the first round.

Victory would be sweet revenge for Yanukovich who was humiliated in 2004 by Yushchenko in what was known as the fight of the two Viktors.

The Supreme Court quashed Yanukovich's victory in the rigged 2004 poll after pro-Yushchenko mass protests against electoral fraud. Yushchenko went on to win a re-run ballot in early 2005.

"Only the unity of power and the people will be the guarantee that Ukraine will be freed from the evil created by the war between the Orange leaders," Yanukovich told a congress of his Party of the Regions where he declared himself candidate for the election.

"Due to the unprofessional ... Orange authorities, the state of Ukraine has been led into bankruptcy, deep division and compromised in the eyes of the world," he said,.

"I can take Ukraine out of chaos, lawlessness and economic ruin only with the support of millions of our compatriots," Yanukovich, a former prime minister, declared.

Five years of in-fighting between Yushchenko, Tymoshenko and parliament has paralyzed decision-making and frustrated reform in one of Europe's worst performing economies.

Yanukovich, who has strongholds in the Russian-speaking east and south and had the backing of the Kremlin when he ran in the rigged 2004 poll, said his foreign policy priority, if elected, would be to renew "a fully-fledged partnership with Russia."

Ukraine would also seek to develop a mutually advantageous partnership with the United States, the European Union and key members of the G20, he said.

MOSCOW ANGER

Under Yushchenko's pro-Western leadership, relations with Ukraine's former Soviet master Russia have sharply deteriorated.

Moscow has been angered by Yushchenko 's push to take his country into NATO and Russian President Dmitry Medvedev has publicly attacked him as anti-Russian.

The two powers have been involved in disputes over the pricing and supply of Russian natural gas across Ukrainian territory to Europe. The Russian Black Sea fleet based in the Ukrainian port of Sevastopol could become a flashpoint.

With three months still to go to voting day, the fight for the presidency in Ukraine is squaring up to be a dirty one.

When official campaigning opened on October 19, Yanukovich's supporters called for a probe into reports that members of Tymoshenko's BYuT bloc were involved in a sex scandal at a Black Sea children's camp.

Tymoshenko loyalists hit back with accusations that Yanukovich was involved in the beating and rape of a woman when a member of a youth gang. His camp have dismissed this accusation as a lie.

During his youth, Yanukovich was imprisoned twice for theft and assault. His aides said the charges were struck from the record and no documents are available on the issue.

Source: WXXI

Sailors Ask Ukrainian President To Help Free Crew Of Ariana

MOSCOW, Russia -- Head of the Russian Sailors Trade Union Igor Pavlov has asked Ukrainian President Viktor Yuschenko to take all of the necessary measures to help free the crew of the Ariana, a Ukrainian vessel seized by Somali pirates on May 2, 2009.

Ukrainian ship MV Ariana that was seized by Somali pirates on May 2, 2009.

“The ship has run out of water and food, fuel will soon be finished, and there are no medicines. One of two women on board the vessel had a miscarriage in the fifth month of pregnancy and she needs professional medical assistance urgently,” he said in a statement posted on the union’s Web site.

Pavlov said that all of the 24 crew members need help as the situation is critical.

“Pirates threaten to kill everyone when fuel runs out and the electrical generators stop operating,” he said.

“The state should not leave its citizens in trouble. We ask to give sailors a chance to return home safe and sound, as soon as possible, and to take all of the necessary measures to speed up the negotiation process,” Pavlov said.

Somali pirates seized the Ariana, a Maltese-flagged ship operated by Greece's Alloceans Shipping Cо. Ltd, in the Gulf of Aden on May 2, 2009. All of the 24 crew members are citizens of Ukraine.

Source: Interfax-Ukraine

Thursday, October 22, 2009

Ukrainian Tycoon Returns To Government As Foreign Minister

KIEV, Ukraine -- On October 9 the Ukrainian parliament appointed the candy and automobile tycoon Petro Poroshenko as the foreign minister. His nomination, submitted by President Viktor Yushchenko, was backed by 240 deputies in the 450-seat body.

Elected foreign minister Petro Poroshenko.

All caucuses voted in his favor except the opposition Party of Regions (PRU) and the communists. Poroshenko’s appointment is a compromise between Yushchenko and Prime Minister Yulia Tymoshenko. He might improve relations with Russia where he has business interests.

European integration and border issues are also among his priorities, while NATO membership and relations with the U.S. are apparently not among them.

Poroshenko was a former key ally of Yushchenko, but he has recently drifted towards Tymoshenko. He joined Yushchenko while he was in the opposition in 2002. Very ambitious, he was considered as a potential candidate for prime minister several times, but was outplayed by rival candidates; Tymoshenko in 2005 and PRU leader Viktor Yanukovych in 2006.

Poroshenko served as the Secretary of the National Security Council in 2005, but resigned amid accusations of corruption from Tymoshenko's camp, which were never proven. At some point Poroshenko tried to dominate Yushchenko’s party but was demoted to rank and file after Yushchenko purged the party of businessmen, and in 2007 he even failed to secure a seat in parliament.

Since 2007 Poroshenko has been chairing the central bank council – not an influential position, since the bank is run by the board and not the council.

The appointment of Poroshenko represents the only major personnel choice for several months over which Yushchenko and Tymoshenko have not disagreed. It was suggested in the press that Tymoshenko did not object to Poroshenko’s nomination because she expects his support for her presidential election bid in January 2010 from Kanal 5, an influential television news station owned by Poroshenko.

Andry Kozhemyakin, the deputy head of Tymoshenko’s caucus in parliament, expressed the hope that Poroshenko would seek to improve relations with Russia.

Poroshenko’s predecessor Volodymyr Ohryzko was fired by parliament in March primarily because relations with Russia had reached their nadir under him. While NATO integration and relations with the U.S. were priorities under Ohryzko, these two directions will not be high on Poroshenko’s agenda.

Zerkalo Nedeli noted on October 17 that Poroshenko omitted any mention of NATO in his speech to Ukrainian diplomats on October 13. Also, within hours after his appointment, he rejected the suggestion made by the U.S. Assistant Secretary of Defense Alexander Vershbow that U.S. early warning systems could be stationed in Ukraine. Poroshenko said that this would violate Ukrainian laws.

Addressing Ukrainian diplomats, Poroshenko stressed that the Russian direction will be a priority of his foreign policy. Relations with Russia should be “less emotional, more pragmatic and equal,” he said.

These relations were emotional under Ohryzko whose very dismissal was prompted by his threat to expel the Russian Ambassador Viktor Chernomyrdin for speaking disparagingly of Yushchenko in a newspaper interview.

Improving relations with Russia is also in Poroshenko’s personal interests. Russia is the key market for his Bogdan automotive corporation and Ukrprominvest confectioneries and he also owns a confectionery in Lipetsk. In 2006 Poroshenko announced an ambitious project to build a factory to assemble automobiles in Nizhny Novgorod, but bad relations with Russia apparently affected his plans.

As an ally of Yushchenko, whom the Kremlin holds responsible for spoiling bilateral relations, Poroshenko was blacklisted by the Russian authorities and denied entry to Russia in 2007. Recently, the government of Nizhny Novgorod warned Poroshenko that he would lose the land reserved for his factory if construction work did not start soon.

However, among his other priorities Poroshenko listed E.U. accession and “the eastern direction,” in particular relations with China, India and the Arab states. Yushchenko instructed him to do everything possible to sign an association agreement with the E.U. at the Ukraine-E.U. summit scheduled for December 4.

This task is probably too ambitious and the Ukrainian envoy to the E.U. Andry Veselovsky predicted that the agreement would not be signed this year. The agreement should include a free trade zone clause, which will not be ready for signing because of the disagreements over many issues ranging from visa-free travel to sanitary norms in agriculture. The E.U. is opposed to signing the agreement without a free trade clause.

Poroshenko is also expected to make progress in relations with other neighbors such as Belarus, which has failed to ratify a border agreement with Ukraine, and Moldova whose shared border has not been demarcated. Consistent with these priorities, Poroshenko paid his first visits to Moldova, Belarus and Sweden which took over the E.U. rotating presidency in July.

He is scheduled to visit Moscow on October 23, where he will likely try to address Russian concerns over U.S. missile defense plans. Poroshenko also plans to visit the United States according to Ukraine’s Ambassador to the U.S. Oleg Shamshur.

Source: Eurasia Daily Monitor

Tuesday, October 20, 2009

Child Molestation, Rape Claims Mark Ukraine Vote Campaign

KIEV, Ukraine -- Rival political camps in Ukraine have fired the first shots in what seems set to be a dirty fight for the presidency, trading accusations of high-level involvement in a child sex scandal and a years-old rape case.

Pro-Moscow Regions Party chief Viktor Yanukovich (L) delivering a speech to the Council of Europe in Strasbourg and Prime Minister of Ukraine Yulia Tymoshenko answering a question during an interview with the foreign media in Kiev.

Supporters of former premier Viktor Yanukovich, front-runner for the Jan. 17 election, called for a probe into reports that members of Prime Minister Yulia Tymoshenko's BYuT bloc were involved in a sex scandal at a children's holiday camp.

One of the deputies named wrote on his blog last week that he had not been down to Crimea, where the camp is located, in recent years. A second deputy told journalists the same.

Tymoshenko loyalists hit back with accusations that Yanukovich, 59, was involved in the beating and rape of a woman when a member of a youth gang.

In a debate in parliament on Tuesday, Prosecutor General Oleksander Medvedko confirmed three members of BYuT had been named as perpetrators in a case of depraved actions committed against two children.

He said the case had first come to light in April when the mother of the children accused the father of depraved actions while they stayed at the Artek camp — the most famous Black Sea resort for young communists during the Soviet days.

"As for the involvement of the parliamentarians in these events — this fact became known to the general prosecutors on Oct. 13," Medvedko told parliament.

"Until then, neither the mother or the children said anything about the involvement of the parliamentarians in the events to police officials."

He said the children had picked out the three BYuT members' from photographs — two have been questioned and the third would be on Wednesday. The prosecutors will then decide whether to proceed with a criminal case.

Both the Regions Party and BYuT bloc accuse each other of political smears timed for Monday's formal start of campaigning.

"The 2010 elections will be a fight to the end," said political analyst Oleksey Golobutsky. "If the campaign starts with such harsh information warfare, just imagine what can be expected by the end of the electoral race."

Opinion polls show Tymoshenko as the strongest opponent of Yanukovich in the poll and they are expected to face off in a February head-to-head showdown. President Viktor Yushchenko has very low ratings and is expected to drop out in the first round.

RAPE CLAIM

Tymoshenko's supporters have gone on the offensive, taking direct aim at Yanukovich.

BYuT deputy Sergiy Sobolev, in a statement on the bloc's website, said accusations that Yanukovich and a gang raped and beat a woman in his home town of Enakieve in the 1970s had been brought to the attention of the prosecutors several years ago.

Sobelev, speaking later in parliament, asked the prosecutor general why the case had not been taken up. The Prosecutor General said he was not in office at the time and had no knowledge of the matter.

The rape accusation was originally made by Hryhory Omelchenko, the same parliamentarian who last week said three BYuT deputies were involved in the child molestation case, Sobolev said. Serhiy Lyovochkin, deputy head of Yanukovich's Regions party, dismissed the accusation.

"Today's statement . . . is a lie which the Yulia Tymoshenko bloc is trying to use to divert attention from the violence against children. They have started their campaign in their usual style which does not surprise me."

During his youth, Yanukovich was imprisoned twice for theft and assault. His aides said the charges were struck from the record and no documents are available on the issue.

The last presidential election led to the "Orange Revolution" of 2004, catapulting Yushchenko to power after he beat Moscow-backed Yanukovich in a re-run of a rigged vote.

Apart from mass voting fraud, the run-up to that poll was marked by violence including the murder of a prominent journalist, the suicide of an interior minister and the poisoning of Yushchenko which has left his face badly scarred.

Source: Calgary Herald

The US-Russia-Ukraine Triangle

WASHINGTON, DC -- With the possible exception of Georgia-US-Russia, no US relationship in the former Soviet region is more fraught today than the US-Russia-Ukraine triangle.


At a time when Washington and Moscow have variously committed to a relationship reset, a new operating system, and a rerun of the Clinton-Yeltsin strategic partnership, it is disappointing how little substance has followed rhetoric.

Meanwhile, Central and Eastern Europe are still reeling from the US Administration’s abrupt and ill-timed reversal on missile defense deployment, and Team Obama is eager for opportunities to demonstrate its commitment to the new Europe, which received no shortage of love from the Bush Administration.

Enter the prospect of US-Ukraine cooperation on missile defense. According to Ukraine’s Ambassador to the US, the two countries have begun working discussions on sharing data from Ukrainian radar for use with a revised US-led missile defense system in Southeastern Europe.

The Ukrainians may be overreaching here, trying to manufacture a moment of decision that the US Administration prefers to avoid, however there is no doubt that missile defense cooperation with Central and Eastern Europe remains very much on the table, even after the Bush plan was scrapped last month.

And while the Obama Administration insists any radar-interceptor system is still intended primarily to defend against a rogue missile launch by Iran, Moscow has renewed its objection that missile defense based in former Warsaw Pact territory is a threat to its nuclear deterrent, an absolute red line for an ex-superpower whose conventional forces are not up to the task of defending its sprawling borders.

All of this makes perfect sense in the context of an increasingly zero sum US-Russian relationship: If the possibility of US-Ukraine missile defense cooperation reassures Kiev (and Warsaw and Prague) that the US is still fully engaged in the region, it should be no surprise that Russia is as upset over this as it was over the Bush Administration’s plans for a Polish and the Czech system–perhaps more so because some of the radars at issue are in Crimea, a Russian majority region of Ukraine where Moscow could exploit ethnic tension to empower a pro-Russian separatist movement.

Ironically, during the month between Obama’s cancellation of the original missile defense plan and now, Moscow had refused to acknowledge the importance of the US concession, latching onto the system’s technical shortcomings to dismiss it as destined for failure from the outset.

In turn, Congressional hawks have argued that Russia’s offer to cut its deployed nuclear arsenal by about a quarter is hollow, since most of those weapons are unreliable antiques.

The bigger picture: If it can’t have close ties with both Russia and the West, Ukraine’s best bet is security through NATO membership, and prosperity through EU membership. Both are threatened by Russia’s plans to build the Nord Stream pipeline, which will cut Ukraine out of the gas trade, and Moscow’s ambition to control a sphere of influence, which will, at a minimum, extend to borderlands with large Russian populations.

The Ukrainian Presidential election in January will reshuffle Kiev’s cast of players, but is unlikely to effect a permanent reorientation toward Moscow over Brussels and Washington.

For the US, opening a dialogue on potential cooperation with Ukraine signals that the missile defense reversal in September was not the beginning of the end of US engagement in the region.

Source: Partnership for a Secure America

AP Interview: Rising Star In Ukraine Vows Reform

KIEV, Ukraine -- Ukraine's youngest leading presidential hopeful says he flies economy class, vows not to take advice from either Moscow or Washington and promises to fight corruption with "a truncheon in my hands."

Arseniy Yatsenyuk, speaks during interview with the Associated Press in Kiev, Ukraine.

Arseniy Yatsenyuk, a 35-year-old millionaire banker, is trailing in third place in opinion polls ahead of Ukraine's January 17 presidential contest, which kicked off Monday.

But he told The Associated Press in an interview that he believes he can win because the public is fed up with official corruption and a government polarized by infighting.

"They are taking the country for idiots," he said of the current political leaders.

Bristling with energy and sarcastic humor, Yatsenyuk positions himself as a new-generation reformer who will break with Ukraine's Soviet past while building better relations with both Moscow and the West.

A recent opinion poll showed Yatsenyuk garnering just 9 percent support, behind former Prime Minister Viktor Yanukovych who had 30 percent and enjoyed the open support of Moscow when he ran for president five years ago.

Prime Minster Yulia Tymoshenko, heroine of the Orange Revolution, the 2004 street protests that ushered in a pro-Western government, was second with 19 percent in the October poll by Research and Branding group.

The study surveyed 3,119 people nationwide with a margin of error of 2.2 percent. President Viktor Yushchenko, who is running for a second term, has 3 percent support.

But both Washington and Moscow seem to recognize Yatsenyuk as a rising political star.

Russia's state-controlled media has given Yatsenyuk extensive coverage. Meanwhile U.S. Vice President Joe Biden met with him, as well as Yanukovych and Tymoshenko, during a July trip to Kiev, in what was seen as an effort to size up potential future presidents of Ukraine.

"The support that Yatsenyuk has suggests that there are people looking for an alternative," said Alex Brideau, a Ukraine analyst at Eurasia Group, a U.S.-based firm that advises on geopolitical risks.

Yatsenyuk portrays himself as more independent than the leading candidates. "I don't need dictation either from Washington, Brussels or the Kremlin," said Yatsenyuk, a former central banker, foreign minister and speaker of parliament. "We don't want to be a middleman, we want to be a player."

In a shot at his former mentor, Yushchenko, Yatsenyuk says he will stop "begging" to be invited to join NATO and the European Union. Instead, he would strengthen trade ties with the EU while continuing the current level of cooperation with the Western military alliance.

Yatsenyuk also wants good relations with Moscow, proposing cooperation in energy and agriculture.

He painted Ukraine as an essential ally and trading partner for Moscow, saying that given the current global financial crisis, Russia needs to maintain its ties with its neighbor or face its economy being dominated by Beijing.

If Russia turns down trade cooperation with countries such as Ukraine, "in 10 years they will have everything 'made in China,'" he said.

Yatsenyuk has avoided taking sides on bitterly divisive topics, such as the country's painful history under the Soviet Union. Some political analysts therefore see him as an unknown quantity.

"We don't see a clear political face, we still don't have answers to many questions, his ideology is still unclear," said analyst Oleksiy Haran.

A lawyer by training, Yatsenyuk was a first-year college student in the western Ukrainian city of Chernivtsi when he set up a law firm helping transfer state companies into private hands.

That eventually landed him a job as a top manager at a leading Kiev bank. He went on to become Ukraine's economic minister, then foreign minister and finally speaker of parliament.

He resigned from that post last year to form his own political movement, Front of Change.

He promises action in a country long gripped by political paralysis.

"I will not succeed without a truncheon in my hands," he told voters in western Ukraine on a recent campaign trip. "Unless about a dozen (officials) are put in jail in Ukraine, so that millions would see that violating the law leads to punishment, there will be no order in the state."

Yatsenyuk says his campaign contributions come from small businessmen, denying allegations that he has received heavy support from Ukraine's notorious oligarchs.

He acknowledged, though, that a foundation he runs promoting the rights of the disabled has been supported by Viktor Pinchuk, a billionaire steel magnate and political power broker.

Source: AP

Monday, October 19, 2009

Constitutional Court May Rule On Election

KIEV, Ukraine -- Ukraine’s presidential election campaign is set to begin on Monday, but reports suggest the Constitutional Court is about to rule to demand changes to controversial legislation governing the election.

Ukraine Constitutional Court

The launch of the 90-day campaign allows candidates to start registration with the Central Election Commission and to begin nation-wide advertising ahead of the January 17 2010 vote.

But the Constitutional Court, asked by President Viktor Yushchenko last month, is about to rule deeming unconstitutional several clauses of the election legislation, Dzerkalo Tyzhnia weekly reported Saturday.

“According to preliminary information, five clauses of the legislation will be ruled to be unconstitutional,” the weekly reported, citing a person familiar with deliberations.

The ruling, which is supposed to be announced later this week, will put pressure on lawmakers to quickly adopt the changes to the legislation as the presidential campaign is already underway.

The changes must be agreed with Yushchenko in order to make sure the election runs smoothly and the new bills do not face a veto from the president, analysts said.

The legislation was twice rejected by Yushchenko, but has been eventually signed into law by Parliamentary Speaker Volodymyr Lytvyn, who later admitted that parts of the legislation will probably be rejected by the court.

Yushchenko appealed the legislation on Sept. 14.

The legislation gives Tymoshenko and Yanukovych parties – as opposed to public organizations - more power in crucial issues, such as vote counting.

The legislation also makes it extremely difficult to vote by Ukrainians living overseas and allows adding new people to voter lists on the day of the vote, which some analysts said may lead to fraud.

Analysts said the legislation de-facto favors the strongest parties, such as those run by Tymoshenko and Yanukovych, while putting at a disadvantage other candidates, such as Arseniy Yatseniuk, who does not have a strong party behind him.

The Constitutional Court is likely to reject five controversial clauses, including restrictions on voting by Ukrainians living overseas, Dzerkalo Tyzhnia reported.

Also, the court is likely to reject restrictions on participation in local election commissions as well as allowing the Central Election Commission and courts review complains on the day of the vote, according to the newspaper.

The candidates must be registered by the Central Election Commission before November 9, according to the legislation.

The next day after the registration, a candidate may start campaigning and advertising and may continue to do so through the end of January 15, 2010.

Source: Ukrainian Journal

Sunday, October 18, 2009

Ukraine Opens Election Campaign, Orange Dream Faded

KIEV, Ukraine -- Whatever happened to Ukraine's Orange Revolution? As the country starts its first presidential election campaign since that popular movement in 2004 broke the grip of the post-Soviet establishment, its leader, President Viktor Yushchenko, stares a painful reality in the face.

Polls predict that pro-Moscow Viktor Yanukovych will win and go into a run-off vote in 2010.

Opinion polls point to Viktor Yanukovich, his disgraced Moscow-backed opponent back then, getting easily through a January 17 election to go into a run-off vote.

Just as bitter for Yushchenko -- his erstwhile "Orange" ally but now rival, Prime Minister Yulia Tymoshenko, is almost certain to be the other player in the second-round showdown, analysts say.

The 55-year-old president has ratings so low that none but his most loyal supporters see a chance of re-election.

Most Ukrainians hope the vote, for which official campaigning begins Monday, will end five years of political in-fighting that has paralyzed decision-making and frustrated reform in one of Europe's worst performing economies.

It will also decide the extent to which the ex-Soviet state of 47 million will stick to Yushchenko's pro-western blueprint or toe a more compliant line toward its old master, Russia.

No matter who triumphs, most analysts expect renewed efforts to improve frosty ties with Russia -- including pushing the pursuit of NATO membership firmly on to the back-burner -- without abandoning the democratic strides Ukraine has made.

The two have been involved in disputes over the pricing and supply of Russian natural gas across Ukrainian territory to Europe. The Russian Black Sea fleet based in the Ukrainian port of Sevastopol could become a serious source of friction.

But both Yanukovich, a former prime minister from the hard school of eastern Ukraine politics, and Tymoshenko will fend off competition from Russian big business and attempts to tug Ukraine back into Moscow's sphere of influence, analysts say.

"The course for integration into the European Union and NATO will be pushed back for at least five years," said Vadym Karasev, director of the Institute for Global Strategies.

"The country will be suspended between the post-Soviet world of yesterday and the European one of tomorrow."

POLITICAL RATINGS

A poll this month put Yanukovich, whose power base is in Russian-speaking regions of the country, in front with 28.7 per cent. Tymoshenko had 19 percent, according to the SOCIS survey.

The challenge from former parliament speaker Arseniy Yatsenyuk, 35, who had been seen as a rival for Tymoshenko's vote, has leveled off. Support for him was at 8.2 per cent.

But these ratings may hold good only for the first round.

Tymoshenko, 48, a firebrand who sports a peasant hair-plait, can quickly find the pulse of a crowd as she showed in 2004 with electrifying performances during the Orange street protests.

Pro-Tymoshenko advertising in Kiev proclaims: "She works!." Her campaign will focus on her energy and decisiveness.

Yanukovich, 59, a towering man who heads the pro-business Party of the Regions, seems sure to champion Russian-language rights, oppose NATO membership and emphasize what he has denounced as the "chaos" of the Yushchenko years, analysts say.

"Yanukovich will not be a puppet of Moscow, but the degree of influence of Moscow on Yanukovich will be greater than that on Tymoshenko," said political analyst Volodymyr Fesenko.

But in a run-off, Yanukovich may find it hard to strike a chord in central Ukraine -- a key battleground -- or make inroads in the Ukrainian-speaking west.

On balance, most analysts believe Tymoshenko will outperform the sometimes clumsy Yanukovich in a head-to-head clash in February. But, as steward of the economy, Tymoshenko might still see her ratings take a knock if there is more bad economic news.

Ukrainians have seen the national currency, the hryvnia, lose more than a third of its value against the dollar -- hard for the many who purchased big on dollar credit and are now facing rising pay-back terms.

A lot too depends on Ukraine's business billionaires, who have no qualms about putting their money behind a candidate -- though they switch sides easily.

A turnaround in Yushchenko's fortunes seems unlikely.

He ousted Yanukovich in 2004 after a rigged election was quashed by the Supreme Court and he went on to win a re-run.

But he has been an indecisive leader. His nationalistic and other policies have won little broad support. His incessant sniping at Tymoshenko has also backfired on him, many say.

But others say he has not been given the credit for a significant pro-democracy shift in society during his rule.

"This is a pluralistic society. There is a free press. The economy is in a mess but Ukraine is the freest country in the Commonwealth of Independent States," said one foreign observer.

Source: The New York Times

Ukraine Sees $3.4 Billion IMF Payment In November

KIEV, Ukraine -- Ukraine expects the International Monetary Fund to release a $3.4 billion payment under the agency’s $16.4 billion lending program to the country, Economy Minister Bohdan Danylyshyn said.

IMF headquarters in Washington, DC.

“This will help sustain the economy and, to a certain extent, help cover the budget deficit,” Danylyshyn said today in an interview at Ukraine’s Consulate in New York. “It’s a pretty complicated situation in Ukraine, that’s why we expect (a) budget deficit this year and next.”

Ukraine is relying on the IMF loan program to stay afloat after the credit crisis undermined demand for its raw materials, including steel exports. The country has received $10.6 billion in loans to date.

The IMF team, led by Ceyla Pazarbasioglu, arrived in Kiev earlier this week to assess whether Ukraine meets the terms of the loans. Ukraine is at “serious risk” of veering off track ahead of the country’s next review in November, Fitch Ratings said in a statement on Oct. 14.

“It would be politically right to support the government’s measures aimed at stabilizing the situation,” Danylyshyn said. “That would also be a very good signal for investors.”

No Higher Tariffs

The government of Prime Minister Yulia Timoshenko “abandoned” commitments made at the second review of the country’s program with the IMF, including a failure to increase prices for natural gas paid by households and utilities, Fitch Ratings said the statement.

“I think, we have succeeded in trying to explain the situation to the IMF: If we hike the tariffs, people would simply stop paying,” Danylyshyn said. “This issue is not on time. We can get back to it as soon as in July 2010.”

Timoshenko said last week there will be no increase in natural gas rates this year.

Lower gas prices add to the country’s budget deficit, estimated this year by the IMF at 8.6 percent of gross domestic product, excluding bank restructuring costs. Fitch forecasts the deficit at 8.5 percent of GDP, or 11.1 percent including the deficit of Nak Naftogaz Ukrainy, a supplier of gas.

The deficit will shrink to about 3.8 percent next year, Danylyshyn said, adding that this year it may fall to 6 percent.

The IMF and Ukraine’s cooperation stalled earlier this year for three months while the government struggled to reach a deficit agreement.

Economic Outlook

Ukraine’s economy, while recovering from the worst global financial crisis in seven decades, may decline as much as 12 percent this year and grow 3.7 percent next year, Danylyshyn said, adding that the average prices for ferrous metals, Ukraine’s major export, may increase 5 to 8 percent next year.

The economy of the former Soviet state contracted at an annual rate of 17.8 percent in the second quarter, after shrinking 20.3 percent in the previous period.

Ukraine’s exports may rise 9.5 percent next year, while imports may be 6 percent higher, he said. The hryvnia is expected to trade between 8.2 and 8.5 to the U.S. dollar, Danylyshyn said.

The annual inflation rate for consumers may reach 12.5 percent in December, compared with earlier expectations of 9.5 percent, Danylyshyn said. Inflation may fall to 9.7 percent by December 2010, he said.

Direct Investment

The country expects to get $20 billion in foreign direct investment between next year and 2012 to help it diversify the economy away from exports of raw materials, such as steel and grains, and modernize existing facilities, Danylyshyn said.

The government plans to bolster exports by increased trade with Middle East, Asia and Africa, he said. Ukraine expects the U.S. will end import taxes on Ukraine’s metals and chemicals by the second quarter of next year, Danylyshyn said.

Ukraine’s trade deficit may narrow to $77 million, compared with $3.76 billion in the first eight months of the year, he said. The country’s trade surplus next year may reach $1.8 billion, he said.

Source: Bloomberg

Saturday, October 17, 2009

Ukraine In Talks With Airbus, Boeing Over Plane Production

NEW YORK, USA -- Ukraine is in talks with Airbus SAS and Boeing Co. about building aircraft in the country, Ukraine’s economy minister Bohdan Danylyshyn said today.


Danylyshyn, speaking in an interview at Ukraine’s Consulate in New York, declined to comment on any of the specifics of the talks or on their progress.

Ukraine’s Antonov OKB, Aviaremontnyi Zavod 410 and VAT Motor Sich produce plane and engine parts, though the country must order plane bodies from Russia, he said.

Danylyshyn said the government wants a partner so it can handle all phases of airline construction in the nation. It might take as long as four years and $5 billion in investments by a partner such as Airbus or Boeing if they agreed to such a venture, he said.

Source: Bloomberg

Ukraine Pre-Election Update

WASHINGTON, DC -- On October 19, Ukraine’s presidential election campaign will officially begin, in advance of the first round of elections on January 17.


The campaign is set to take place during Ukraine’s worst economic crisis since the mid-1990s, amid an atmosphere of cynicism and increasing apathy. Nevertheless, a recent poll suggests that a majority of Ukrainians plan to vote in the election.

The Kyiv-based Research and Branding Group found 60% of those polled said they were likely to vote, while 23% may vote. In 2004, the Central Election Commission recorded an approximate 75% turnout in the first-round of the election. However, given questions raised by monitors about the entire election process in 2004, it is likely that this figure is inflated.

The bad news for the current leadership is that they continue to trail in the polls behind nominal opposition leader Viktor Yanukovych. Mr. Yanukovych will forever be known as the man who was named president during the 2004 fraudulent election, but saw his “victory” overturned by massive street protests and the country’s Supreme Court. There is every possibility that he could also become known as Ukraine’s next president.

This month’s Research and Branding poll gives Yanukovych 30.2% support, with Prime Minister Yulia Tymoshenko garnering 18.5% and upstart Arseniy Yantsenyuk earning 8.9%. President Viktor Yushchenko barely rates on the chart. The President - blamed for not fulfilling most reforms demanded during the 2004 protests that led to his election – is supported by just 3.1%.

The poll shows a slight lengthening of Yanukovych’s lead over Tymoshenko. In an August poll by the same company, Yanukovych was supported by 26% of those asked, while Tymoshenko earned 16.5%. Yatsenyuk at that time could count on 12.5%.

Yanukovych appears to have benefited from the continuing economic crisis, a number of unproven corruption charges from opponents against Tymoshenko, and Yanukovych’s loud but financially untenable demands to raise pensions and minimum wages.

In response, Tymoshenko, who is known as a highly effective personal campaigner, is pushing her Bloc of Yulia Tymoshenko hard, with her most important allies focusing on the election issue. It is possible that she is spurred by the knowledge that her bloc is dangerously close to splintering, held loosely together only by her personal power and prestige.

The Russia-tilting ProUA.com recently reported a back-door conversation with a Party of Regions (Yanukovych) deputy, suggesting that if Tymoshenko loses the presidency, they have assurances of the defection of a large number of her current allies.

All is not rosy for Yanukovych, however. ProUA also reported that support for him personally – and of more importance, financially – is weak within his own party. He also is an inferior campaigner to Tymoshenko, although he has improved in recent years. And there is trepidation within Yanukovych's Party of Regions over past polling numbers for Tymoshenko that proved to be up to 10 points less than actual results.

The biggest loser since August clearly is Arseniy Yatsenyuk, however, whose campaign staff, advertisements and message have been confused and muddled. While it is too soon to count out the former parliamentary speaker, all signs point to a two-horse race heading into the January poll. Should a second round be necessary, a prospect which is almost guaranteed, it will likely take place on or around 21 February.

Source: Jamestown Foundation

Friday, October 16, 2009

Wanted! Bankers Flee Amid Scandal

KIEV, Ukraine -- Embezzlement investigation at Ukraine’s most-troubled bank finally gains momentum, but is it too late? By the time Ukraine’s notoriously slow-footed law enforcers got around to issuing an arrest warrant, former Nadra Bank chairman Igor Gilenko was nowhere to be found – and possibly up to $1 billion was missing.

Former Nadra Bank chairman Igor Gilenko has dissapeared along with $1 billion of the Bank's funds.

It took Ukraine’s General Prosecutor Oleksandr Medvedko until Oct. 9 to announce that an arrest warrant on embezzlement charges had been issued against the former Nadra Bank chairman and president. Medvedko also said other former top bank managers are also being sought as accomplices. However, Medvedko didn’t name them. He also would not say how many were involved or what role they are suspected to have played in the fraud.

The warning signs of Nadra Bank’s financial collapse came as early as last fall and accusations of wrongdoing came soon after. Nonetheless, despite the bank’s opaque ownership structure and hints of shady dealings, the National Bank of Ukraine lent Nadra Bank Hr 7.2 billion (nearly $1 billion) from October through December 2008.

The NBU’s $13 billion bank refinancing program was made possible, in part, by some $11 billion in loans from the International Monetary Fund. That, of course, means that Ukraine’s beleaguered taxpayers will ultimately have to cover the cost of whatever money was embezzled.

The whole sordid chain of events raises many unanswered questions: Why does the IMF lend money to a nation whose leadership cannot properly manage it? Why did the NBU ignore the red flags and lend Nadra Bank money? Why did it take so long for law enforcers to issue an arrest warrant? Who is in on the alleged scam with Gilenko? Top government or central bank officials? Who truly owned Nadra Bank? How many more fraudulent Nadras or crooked bankers are out there?

“We are looking at documents and other records which can be used as evidence,” Medvedko said.

Gilenko, a Russian citizen, chaired Nadra Bank from July 1997 until Feb. 10, when the NBU took over and placed the bank under a temporary administrator.

Nadra Bank received $214 million in refinancing from the NBU in October to pay foreign creditors, an amount that would eventually rise to roughly $1 billion by December, after billionaire Dmytro Firtash on Nov. 18 guaranteed Hr 4 billion in collateral on bank loans. Firtash expressed interest in buying the ailing bank, but backed out earlier this year and the extent of his current involvement is unclear.

“I gave a personal guarantee for Hr 5 billion [for Nadra Bank to receive NBU],” Firtash said on Jan. 17, during an appearance on Inter TV, the nation’s most-watched television channel. “Bank Nadra has four million account holders. If the bank had failed, the country’s entire banking system would have frozen up.”

The bank used more than half of the NBU money to buy hard currency at the official lower rate and re-sell it on the commercial exchange at a higher rate. The remainder went to making new loans (Hr 2.1 billion) and paying off creditors (Hr 700 million).

Those new loans are viewed with suspicion and are part of the criminal investigation into embezzlement. Two criminal cases were opened in August involving companies which obtained Nadra Bank loans on the basis of inflated collateral.

KLO Ltd. received Hr 173 million for the construction of a cottage town in Kyiv’s Makariv district. Collateral for the loan included 36 plots of land on 57 hectares, listed as 10 times more than it was worth, investigators said. A second company, Nait, borrowed Hr 211 million backed by collateral with six to seven times its true worth.

Gilenko and Nadra vice president Olena Logoshnyak approved the loans. Both companies, reportedly controlled by businessman and former lawmaker Ihor Yeremeyev, were liquidated by Dnipropetrovsk Economic Court on May 14 without repayment of the loans. Law enforcement is investigating dozens of similar loan schemes at Nadra and other commercial banks.

If Gilenko and his accomplices are caught and convicted, they could face up to 12 years in prison. The chances of catching Gilenko are slim. The 43-year- old banker and his former colleagues have not been seen in Ukraine this year.

The NBU-appointed administrator of the bank, Valentyna Zhukovska, said on Sept. 29 that Nadra had turned over all documents relating to NBU refinancing to police investigators, prosecutors and the State Security Service. “There is nothing about the bank not known to law-enforcement agencies,” Zhukovska said in June.

Nadra Bank was regarded as one of Ukraine’s most successful banks in September 2008. It was the nation’s sixth-largest bank then, with total assets of Hr 26 billion, Hr 10 billion in individual deposits and Hr 6 billion in corporate deposits. The bank, which in 2007 spent $50 million on rebranding, employed 9,000 people with 700 branches nationwide.

Bank owners as of Sept. 1, 2008, included Gilenko (33.4 percent), Serhiy Lagur (33.7 percent), Vadim Pyatov (19.6 percent), investment funds (7.8 percent) and bank employees (5.1 percent). Lagur and Pyatov are reportedly proxy owners for Yeremeyev and businessman Vadim Segal, respectively. The Kyiv Post contacted both Yeremeyev and Segal, who refused comment, as did the DF Group. The Kyiv Post was not able to contact Pyatov or Lagur.

Ukraine’s Accounting Chamber, the Association of Ukrainian Banks, and an ad hoc parliament investigative committee have all criticized how the NBU injected liquidity into some of the nation’s 170 commercial banks, many tottering from bad loans.

As early as Dec. 18, Prime Minister Yulia Tymoshenko had seen enough and started blowing the whistle.

“A handful of people under the protection of the president [Victor Yushchenko], the NBU chairman [Volodymyr Stelmakh] and artificial banks are making fortunes worth billions,” Tymoshenko said then. “Nearly one fifth of the [NBU] money was channeled to a bankrupt bank [Nadra].”

Yushchenko, Stelmakh and the central bank have denied wrongdoing and accuse Tymoshenko of destabilizing the bank sector by spreading false accusations.

Tymoshenko wants to nationalize Nadra Bank by year’s end, but the government is facing a multi-billion dollar price tag to clean up the mess. Nadra has a $2.6 billion loan portfolio, a big chunk of which may be fraudulent and never recovered; it has $1 billion in external debt; and it owes depositors $1 billion. Moreover, the NBU says the bank needs an additional $1 billion.

In an unprecedented and bizarre twist to the scandal, Nadra Bank on Oct. 8 published a list of all individuals and corporate entities who allegedly owe the bank money. The bank defended the posting of these debtors on its official website, but customers denounced the move as an illegal invasion of privacy.

The list includes thousands of individuals and 286 corporate clients. Individual account holders owe the bank Hr 1.5 billion, while businesses owe Hr 658 million and big corporate clients owe Hr 6.4 billion, according to the list.

According to Nadra, the largest group of corporate debtors, some 22 companies, are associated with Segal’s brother, Ilya. Next are 11 companies which the bank linked to Yeremeyev. The list also includes the Lutsk-based Femida-Inter company, which produces and exports juices, canned vegetables and fruits to Western European countries.

Femida-Inter deputy director Yuriy Pyrozhkov told the Kyiv Post on Oct. 15 that Nadra Bank has failed to abide by the conditions of its 13 million euro loan agreement, which was to have been paid in tranches. “We received two tranches of the loan. And then nothing,” Pyrozhkov said. “Nadra called on New Year’s Eve and said we could receive the 3rd 300,000 euro tranche in January, but they failed to pay.”

Pyrozhkov said Kyiv’s Economic Court ruled that his company has to repay Hr 72 million it received over the next two years. He added that listing his company among Nadra’s debtors on its official website is a violation of banking confidentiality laws. Lyubomyr Drozdovskiy, lawyer at D&U Partners law firm, told the Kyiv Post on Oct. 12 that Nadra Bank has no legal basis for its action.

“Making public information about clients is a violation of banking secrecy laws,” Drozdovskiy said. Credit histories can be made public only after receiving the written agreement. I expect individuals and companies appearing on the list will sue Nadra Bank.”

Yaroslav Stetsin, a financial expert at Astrum Investment Management, told the Kyiv Post on Oct. 15 that he wasn’t surprised by Nadra Bank’s collapse into disgrace and insolvency despite the nearly $1 billion in NBU assistance.

“The problem is that no one at the NBU tracked how Nadra spent the refinancing money,” Stetsin said. “There was no follow-up until it was too late.”

Source: Kyiv Post

Thursday, October 15, 2009

Russia Upset At U.S.-Ukraine Missile Defense Talks

MOSCOW, Russia -- Russia said on Thursday it was worried about U.S. talks on the use of Ukrainian radar stations as part of a revised missile defense shield, a step that could hinder efforts to reset ties between the two Cold War foes.

Early-warning radar station at Mukachevo, Ukraine.

Russia, which is extremely sensitive to any hint of U.S. cooperation with former Soviet republics, initially welcomed President Barack Obama's scrapping of Bush-era plans for a missile defense system in central Europe.

But Moscow has been irked by a U.S. statement that countries like Ukraine could contribute early warning information as part of the revised shield plan and reports that talks between the U.S. and Ukraine on the issue had already begun.

"We feel concerned," Russian Deputy Foreign Minister Sergei Ryabkov was quoted by RIA news agency as saying when asked about the possible use of Ukrainian radars by the United States.

"To say we are encouraged about the information we are getting about contacts on this subject would be, to put it mildly, an exaggeration," Itar-Tass quoted Ryabkov as saying.

The comments indicate a further setback in efforts to reset ties between the two Cold War foes after rows in recent years over the 2008 war in Georgia, NATO enlargement toward Russia's borders and missile defense.

Since Obama's revision of the Bush-era missile plans, Moscow has said the system now being proposed leaves many questions unanswered and the Kremlin has refused to publicly support Washington's stance on Iran.

RADAR STATIONS

The administration of former U.S. President George W. Bush had planned to deploy interceptor missiles in Poland and a radar in the Czech Republic to repel potential attacks from Iran.

The plans were deeply opposed by Moscow as Russian generals said the system could have been used to neutralize Russia's vast nuclear deterrent. They brushed aside U.S. assurances that the plans were not aimed at Russia.

Under Obama's new plans, sea and land-based missile interceptors would be deployed in Europe and the system would not require one large fixed radar center in Europe.

Ukraine's ambassador to the United States, Oleh Shamshur, was quoted by Russian news agencies as saying that talks with Washington on the use of radar stations had already begun.

"This issue is in the process of working discussions. It is still at a beginning stage," Interfax cited Shamshur as saying. He added that previous Ukrainian leaders had backed this idea.

Shamshur suggested Russia had missed its chance to use information from Ukrainian radars.

"We are also talking about the question of using our defense radars across Ukraine's territory, which, as you all know, Russia has declined to use," Shamshur was quoted as saying.

Shamshur's comments appeared to relate to possible use by Washington of two Soviet-era early alert stations at Mukachevo in western Ukraine and one near the Black Sea port city of Sevastopol. Ukraine's foreign ministry declined to comment.

President Viktor Yushchenko was in Brussels on Thursday and his office had no immediate comment on Shamshur's remarks.

But on October 12 Yushchenko said at a meeting of Commonwealth of Independent States leaders in Moldova that Ukraine was ready to contribute these two facilities to a collective world and European security system.

Source: The Washington Post