Sunday, February 28, 2010

Where The West And Russia Clash

BRUSSELS, Belgium -- It is not the issues most in the news - Iran or Afghanistan. It is Europe's contested region: the countries between the eastern border of NATO and the EU and the western border of Russia.

Friendship monument, in Kiev, honoring the unification of Russia and Ukraine.

While the West and Russia still talk the talk of co-operative security in Europe, the geopolitical competition for influence has been renewed in the region.

Russia openly lays claim to a sphere of interest in its borderlands, in contradiction to commitments made under the Helsinki process. It has embraced policies and a military doctrine that sees the NATO military alliance as a threat, and justifies the right to intervene in these countries if they are attacked.

While packaged in smooth diplomatic speech, Russian President Dmitri Medvedev's proposal for European security has the goal of stopping and rolling back Western influence.

With the Obama administration focused on Afghanistan and Iran, Moscow hopes the West, which needs its co-operation, will acquiesce to its demands.

And it is not only words. Eighteen months ago, a war took place in Europe between Russia and Georgia. It was a small war, but one that raised big questions.

It was not fought over the future status of Georgia's Russian-backed breakaway regions of Abkhazia and South Ossetia (although that conflict was a real one). The war's root cause was Georgia's desire to align itself with the West, and Russia's determination to stop it.

Many Western diplomats would prefer to forget the Russo-Georgian war or sweep it under the carpet, but none of the underlying tensions are resolved. There is no stable solution in sight for Abkhazia and South Ossetia. Russia has not abandoned the goal of breaking Georgia's desire to go with the West. Instability and separatism are growing in the northern Caucasus, making the region more volatile.

In late January, the Obama administration issued its first unequivocal reaffirmation of the strategy of democratic enlargement that has guided Western thinking since the collapse of the Iron Curtain two decades ago.

Speaking in Paris, US Secretary of State Hillary Clinton said the enlargement of NATO and the EU had created unprecedented stability and security in the eastern half of the continent, Russia had benefited from this stability and it was critical Europe's doors remained open to further enlargement.

Mrs Clinton rejected Mr Medvedev's call to remake European security arrangements. And NATO has started engaging in defence planning and other forms of strategic reassurance for its allies in central and eastern Europe, which are unsettled by Russia's new assertiveness.

But what about the countries in between nations such as Ukraine and Georgia and the southern Caucasus? Ukraine has just elected as its president Viktor Yanukovich, who is unlikely to follow NATO's integration agenda, and if he follows through on his commitment to join a customs union with Russia, Belarus and Kazakhstan, membership of the EU would be precluded.

But that does not mean tensions with Russia will disappear. Mr Yanukovich's victory notwithstanding, Ukraine is a country that is becoming more European and gradually moving out of Russia's orbit in its own chaotic way. And regardless of whether Georgians like or dislike their President Mikhail Saakashvilli, they want to go West too.

So Russia's attempts to bring these countries to heel are likely to continue and remain a source of contention and conflict. It is time for the West to debate what its strategy is and what it is not. Two decades ago, the West rejected "spheres of influence" because Europe's bloody history had taught us that compelling nations to align themselves with others against their will was wrong and a recipe for future conflict.

If we still believe that today, we need an updated moral and strategic vision for such countries, and to back it up with a real strategy. We need to be clear that Russia has a right to security, but that it does not have the right to interfere in the affairs of its neighbours, to topple their governments or deny their foreign policy aspirations.

Barack Obama is right to try to reset relations with Russia and engage a revisionist Moscow. As the US and Russia close in on a new arms control treaty, it is time to face the question of how we deal with Europe's contested regions.

Source: The Australian

EU Woos Ukraine's New President

KIEV, Ukraine -- When Victor Yanukovych officially took over the president’s office on Feb. 25 almost right away, the European Parliament decided to give Ukraine a chance to apply for E.U. membership.

Political analysts are speculating that Brussels made the offer as a preemptive move because of Yanukovych’s clear orientation toward Russia. The EU does not want Ukraine to join the existing free-trade agreement between Russia, Belorussia, and Kazakhstan.

Hints about his pro-Russia stance were in his inauguration speech last Thursday in which he said that he was going to introduce to Parliament an initiative to become a “nonaligned” state.

Opposition parliamentarians are against the proposal.

“Now Ukraine will be viewed as a country of the third order because we ourselves are claiming that we would be a grey zone; we would be a bridge between NATO and Russia,” said Christian Democratic Party representative, Volodymyr Stretovych.

“In actuality, when such a thing is declared—it means that Ukraine does not want to be a member of the European Union,” said Vice Prime Minister Hryhoriy Nemyria, in political commentary program on TV Inter.

However, Petro Poroshenko, foreign affairs minister, said on the same program that he already had a meeting with the president where they talked about EU membership. According to Poroshenko, Yanukovych does support joining the Union.

Poroshenko says that officials need to start speaking in one voice outside the country.

European Parliament President Jerzy Buzek told The Epoch Times that they would expect Ukraine to implement reforms around which opponents and supporters could join together.

“Then the coordination between the EU and Ukraine will be easy,” he said.

“Political balance is very important in any country,” Buzek added.

Further developments are expected this coming week when Yanukovych travels to both Brussels and Moscow.

Precisely what will be discussed is not clear, but with Brussels it is expected that to speed up Ukraine’s integration into the EU, talks will include introducing a simplified visa regime.

In the meantime, the Parliament plans to raise the issue of EU membership on Tuesday to give the president a clear signal on what further steps to take.

Source: The Epoch Times

Ukraine's Yanukovych Heads West But Looks East

KIEV, Ukraine -- Ukrainian President Viktor Yanukovych makes his first foreign trip to Brussels on Monday, but the gesture of goodwill toward Europe may ring hollow days later when he goes to strike concrete deals with the Kremlin.

Ukraine's President Viktor Yanukovych holds a Bulava, a historical symbol of power, after he taking oath in the parliament in Kiev, Ukraine, Thursday, Feb. 25, 2010.

Soon after Yanukovych's inauguration last week, his critics dismissed the significance of the Brussels visit, in part because the EU flag was removed from Kiev's European Square for the first time in five years.

But Anna German, his deputy chief of staff, told The Associated Press that Yanukovych would pursue a balanced foreign policy, and would dedicate his first week in office to making Ukraine "a bridge between East and West."

"We will begin building that bridge in Brussels and finish it in Moscow," she said.

This marks a drastic shift away from Yanukovych's predecessor, Viktor Yushchenko, who had broken ties with Russia to seek membership in the European Union and NATO, in both cases without success.

"Our policy is dictated by the crisis situation in our economy," German said. "We are in need of support from our friends both in the West and the East."

The Brussels visit, she said, will involve general discussions about energy security and a possible deal on visa-free travel, while the talks in Moscow on Friday are expected to be more substantive.

"From the Moscow visit we expect concrete agreements," German said. "This is not just a cordial visit, but a very pragmantic visit."

Supporters of Prime Minister Yulia Tymoshenko lament what they see as an effort to turn Ukraine into a Kremlin vassal state. Tymoshenko lost the presidential election to Yanukovych and remains his political enemy.

"The EU flag was taken down, and that is a bad sign," the deputy head of her political party, Sergei Sobolev, told the AP.

The flag was placed there after the 2004 Orange Revolution, a series of pro-democracy protests that managed to overturn Yanukovych's election victory that year. Yushchenko, who led the protests, won the presidency in a revote after campaigning for European integration and freedom from Kremlin influence.

Tymoshenko was the charismatic face of those demonstrations and became the prime minister under Yushchenko. But the two soon fell out, causing gridlock in the government and helping Yanukovych to make a comeback in this year's ballot.

Now analysts say the links to Europe painstakingly built under the Orange leadership will take a back seat to renewed ties with Russia.

"The Russian vector will be the dominant one in Yanukovych's policies," said Vadim Karasyov, director of the Institute of Global Strategies, a Kiev think tank. "The Western vector will be used for Yanukovych's image-making and to calm his critics."

The gravest concerns have surrounded energy policy. Russia has long sought to re-establish control over the pipelines that carry 80 percent of its gas sales to Europe and account for a fifth of Europe's supply.

Yanukovych has invited Russia to take part in a consortium along with Western Europe to jointly operate Ukraine's pipeline network, offering a level of interdependence with Moscow that the Orange leadership had fought to remove.

Source: AP

Election Leaves Ukraine With A Cloudy Future

KIEV, Ukraine -- Ukraine - a country that is central to the security of Europe - has returned to the Kremlin fold.

A divided Ukraine.

The Ukrainian presidential election runoff earlier this month between Ukrainian Prime Minister Yulia Tymoshenko and Viktor Yanukovich has brought the pro-Kremlin opposition leader to power, thus sealing the country's fate.

En route to joining Europe after bringing down a corrupt, pro-Kremlin regime in a bloodless Orange Revolution five years ago, the Ukrainians have this time chosen a pro-Russia ex-felon over a presentable pro-Western prime minister.

The electorate's options were simple and so was the choice.

Forced by the Kremlin to choose between the prospect that Russia will repeat its practice of disrupting natural gas supplies in the middle of winter and voting down a pro-Western presidential candidate, Ukrainians took the latter option.

Their decision has shamed those of the more ardent critics of the efforts of Russian President-turned-Prime Minister Vladimir Putin to manipulate the Ukrainians.

Those critics had jumped the gun by proclaiming that the use of energy as a weapon had proven to be a disaster for Russia as it attempts to rebuild its empire.

There is little doubt that the pro-Russian president will help open his country's major companies to hostile takeovers by Russian monopolists and restore Ukraine as Russia's vassal.

Unfortunately, there is little the United States and its European allies can do to reclaim Ukraine.

The economic levers - such as Russia's long-delayed membership in the World Trade Organization or a veiled reluctance to treat Russia as an equal partner in the G-8 - are so old and tired that the Kremlin has learned to live with them.

Conversely, Russia has gained political clout by threatening to use its spoilsport card anytime the United States needs its cooperation.

Examples include Russia's threat to veto Iranian sanctions in the U.N. Security Council and Russia's threat to deploy medium-range missiles allegedly to counter the U.S.-led European missile shield that the Kremlin likes to cast as a military threat.

There is also Russia's role in Central Asia near Afghanistan, where the Kremlin pretends to support the U.S. anti-terror effort while actually resisting American influence in the region.

The Ukrainians will likely be left to their own devices in their dealings with Russia, at least for a few years to come.

Optimists in the West have given President Yanukovich the benefit of the doubt. What they are saying is that he may choose a path more independent from Moscow now that he is the president. The assumption is that he would do that simply to make it easier for himself to win the next presidential election.

Such a premise unduly dismisses the role of Prime Minister Tymoshenko and about half the country that supports her.

The fact remains that Ukraine is still a highly divided nation, with about half the population - mainly the southwest of the country - leaning toward Europe, democracy, and wary of Russia. The other half - including the ethnic Russians in the coal-mining northeast of the country - are pro-Russian.

This division is likely to continue. And it will continue to be exploited by the highly ambitious Ms. Tymoshenko and the equally ambitious Mr. Yanukovich.

The latter therefore is unlikely to refuse the help Russia is bound to offer him and probably will become the Kremlin's puppet. Unfortunately, that means that Ukraine's future is no longer pretty.

Source: Toledo Blade

ANALYSIS: Yanukovych's First Aim Is To Build Loyal Ukrainian Cabinet

KIEV, Ukraine -- Ukraine's new President Viktor Yanukovych campaigned on promises of responsible government staffed by skilled professionals, but observers say that loyalty is likely to be the key qualification for members of his new cabinet.

Ukraine's Cabinet of Ministers

So far Yanukovych has avoided saying who he would name to a new governmnent, but three top contenders have emerged for the prime minister's post.

Political observers are widely predicting Ukraine's present government, led by the February 7 election loser, Yulia Tymoshenko, will lose a motion of no confidence by mid-March, to be replaced by officials nominated by Yanukovych.

"Yanukovych's first step will be to create a (ruling) coalition in parliament that can give him the cabinet he needs," wrote political observer Dmitro Korotkov, in the Segodnya newspaper. "Already...he controls a factual majority in parliament."

The base of Yanukovych's political strength and his election victory is the Party of Regions, which currently controls 175 seats in Ukraine's 450-member legislature.

Talks of a new ruling coalition built on Regions, defectors from Tymoshenko's own party, and MPs linked to former President Viktor Yushchenko are well-advanced, according to reports in Segodnya and the Ukrainska Pravda website.

Yanukovych has avoided naming names for a future cabinet. Asked in late January whom he might select as prime minister to replace Tymoshenko, he told an ICTV television audience he was "considering several candidates...with personal competence the key criteria."

But Mykola Azarov, 63, who has served in various government posts, is widely considered the top candidate.

Willingness to do Yanukovych's bidding, rather than administrative skill, is most likely the critical qualification needed for the successful candidate, observers agreed. And Azarov, for the most part, meets that test, said Ihor Ustashenko, a Kiev-based political scientist.

"Mykola Azarov is a Regions Ukraine man through and through, but more than that he is an old-school technocrat, a guy who believes central government should and can solve all problems," Ustashenko said. "And as far as anyone can tell, he has no political ambitions of his own."

In a varied career, Azarov has been the country's head tax inspector, finance minister and caretaker prime minister. He has long enjoyed the reputation of being willing to offend almost anyone in the name of central government, in no small part because of a 2002-2005 campaign he launched to extract more tax revenues from business.

Former Ukrainian president Leonid Kravchiuk said in a Unian news agency interview that Azarov was the most likely candidate, noting that "Yanukovych is very inclined towards loyal and tested men."

Critics of Azarov's chances point to wealthy figures in the ranks of the Regions leadership whose corporate bank accounts suffered substantial damage from Azarov's tax-raising efforts.

Azarov's reliance on Russian in public discourse, and his unwillingness or inability to speak Ukrainian in public, could also reduce his chances of getting the prime minister job, the English-language Kyiv Post newspaper said in an editorial.

By contrast, virtually all top Ukrainian officials - including Yanukovych - use Ukrainian in some or all of their public statements.

Two younger politicians are widely reported as the other contenders with Azarov for the position.

Both are, at least by their own self-descriptions, reformers with little political baggage dating back to the Soviet Union and the Ukrainian Communist Party, making them of a different generation than that of Yanukovych and Azarov.

Yanukovych was a Communist Party member in 1980 and a protoge of politically connected cosmonaut Georgi Beregovoi, who like Yanukovych, hails from Ukraine's eastern Donbass region.

Azarov's first links to power came from association with former Ukrainian president Leonid Kuchma during the same period, while Kuchma headed up a top-secret missile factory in Dnipropetrovsk.

Former parliamentary speaker Arseny Yatseniuk, 37, is considered the long-shot because of his relative youth and pro-Western, free- market orientation - positions that conflict with Regions' emphasis on good relations with Russia and government assistance to big business.

"(Yatsenyuk) is extremely ambitious...and could have an excellent political future," Kravchiuk said. "But he is young for such a post."

The most frequently mentioned alternative to Azarov is Serhy Tihipko, 50, a banking tycoon and former national bank head who took a surprise third place in the recent presidential vote.

His good showing was due to a heavily financed election campaign and a political platform calling for market reforms enforced by effective, modern government.

Before his election, Yanukovych election singled out Tihipko as "the type of politician we could work we could build a Ukraine together."

Tihipko said that he would be willing to take on the job if Yanukovych would agree to substantial reforms, but since the election, Regions staff has made no move to contact him.

"They didn't invite me to the inauguration, there have been no consultations," Tihipko told Kommersant-Ukraine newpaper. "I have maybe a 10-per-cent chance."

Source: DPA

The Ukrainian ‘W’

MOSCOW, Russia -- Ukrainian President Viktor Yanukovych bears a striking resemblance to former President George W. Bush. Although Bush was born rich and Yanukovych poor, both were rowdy as youths, with the former drinking and carousing and the latter serving two jail terms for hooliganism.

Eventually both became serious, went into politics and became governors of large and economically important states — Texas and Donetsk — that served as springboards for their presidential ambitions. Both are — or claim to be — deeply religious: Bush a born-again Christian, Yanukovych an Orthodox Christian, and both love to hunt.

Like Bush, Yanukovych has an embarrassing proclivity to get his facts wrong. He has confused poet Anna Akhmatova with his billionaire backer Rinat Akhmetov, the Jewish writer Isaac Babel with the German socialist August Bebel, Slovenia with Slovakia and genocide with genetics. He has called playwright Anton Chekhov a Ukrainian poet and the Helsinki Treaty the Stockholm Treaty.

Yanukovych’s best-known gaffe was to have misspelled “proFFessor” back in 2004 — a mistake that is doubly embarrassing inasmuch as he claims to have two degrees, a master’s of international law and a doctorate of economic sciences.

Bush only has an MBA from Harvard University, but his academic record was respectable and the degree is real. Yanukovych, in contrast, somehow managed to acquire both degrees and write a dissertation while serving as full-time deputy governor and then governor of Donetsk.

Both rose to power with the support of a regionally concentrated and ideologically focused base. Bush’s was in the red states in the middle of the United States and among Christian fundamentalists.

Yanukovych’s was in the east and south of Ukraine and among pro-Soviet and anti-Western fundamentalists. Both also had the support of powerful billionaires who helped propel them to power.

Unsurprisingly, educated elites looked down on both men as crude, simplistic, dull-witted and undiplomatic. Although the two claimed to be unconcerned with such criticism, they quickly made adjustments in their image, polished their language and brushed up on their knowledge of the world. They also both relied heavily on U.S. public-relations and campaign consultants.

Like Bush’s victory over candidate Al Gore in the 2000 presidential vote, Yanukovych’s narrow victory over Yulia Tymoshenko on Feb. 7 produced several weeks of legal contestation and political maneuvering that was resolved only after the intervention of higher courts.

There is one final point of similarity. Both men promised to unify a deeply divided country. Bush failed to do so in his first term because he adopted a polarizing rhetoric and pursued partisan politics that alienated half the country. His attempts to rectify the situation in his second term came too late to save his reputation.

Yanukovych now faces a choice. He can pander to his base in Donetsk, divide Ukraine and be first-term Bush. Or he can appeal to the whole country, alienate some of his base and be second-term Bush.

If Yanukovych does the latter, he’ll succeed as president, and Ukraine will in all likelihood emerge from its current economic and political crisis. If he does the former, the Ukrainian “Dubya” will go down in history as an ignominious failure.

Source: The Moscow Times

Saturday, February 27, 2010

Ukraine May Become World's Sixth Biggest Arms Trader

KIEV, Ukraine -- The output of Ukrainian defense plants grew by 58% in 2009, which would unable Ukraine to rank as the world's sixth largest arms trader, the Ukrainian Industrial Policy Ministry's Defense Sector Agency said.

There are contracts to modernize Antonov An-32 military cargo planes for India.

The largest growth was reported by aircraft builders (77%), shipbuilders (71%) and producers of armaments and military hardware (16%).

Ukraine signed a record number of large contracts last year, representatives of the Army, Conversion and Disarmament Studies Center said in an interview published by the Saturday issue of the Tyzhnia (Mirror Weekly) newspaper.

"The portfolio of orders of Ukrspetsexport and subsidiaries ensures a substantial growth of annual arms exports for the next two or three years. There are contracts to modernize Antonov An-32 military cargo planes for India [with the cost exceeding $400 million], to deliver a batch of Zubr small air-cushion landing ships to China [$315 million], to supply six Antonov An-32 [about $100 million) and 420 BTR-4 armored personnel carriers to Iraq, and to bring a large number of armored personnel carriers to Thailand," the experts said.

"There are large deliveries of Zorya Mashproyekt gas-turbines to the Indian Navy [for Russian-made frigates and national destroyers of Projects R15A and R15B supplied earlier] and the delivery of 100 AI-20 5 engines to the Indian Air Force [about $110 million]," the experts said.

The contracts upgraded the Ukrainian position. It may become the world's sixth biggest arms seller after the United States, Russia, France, Germany and Israel.

Source: Interfax-Ukraine

Friday, February 26, 2010

Yanukovych Seeks New, EU-Friendly Image With Brussels Trip

KIEV, Ukraine -- Ukraine's new president, Viktor Yanukovych, will make his first foreign trip Monday, visiting Brussels in a bid to reshape his image as a Kremlin stooge and cast himself as a champion of EU integration.

Viktor Yanukovych (L) meeting with Jose Manuel Barroso on September 21, 2006.

Yanukovych, who was inaugurated Thursday, will meet European Union president Herman Van Rompuy as well as the European Commission chief Jose Manuel Barroso and EU foreign affairs chief Catherine Ashton.

By making his first foreign trip to Brussels rather than to Moscow, where he is due March 5, Yanukovych is aiming to soften his pro-Russian image and reassure Europeans of his intentions, analysts said.

"He needs to demonstrate that he is not a Russian stooge," said Amanda Paul, an analyst at the European Policy Centre in Brussels.

Russia had been hoping for warmer relations with Ukraine under a Yanukovych presidency after years of confrontation with the country's last president, the fervently pro-Western Viktor Yushchenko.

Yanukovych's trip could even "provoke a jealous reaction in Moscow," said Dmitriy Vydrin, an independent political analyst in Kiev.

Russia has suggested Ukraine could join a customs union it is creating along with Belarus and Kazakhstan, a prospect that a Ukrainian lawmaker close to Yanukovych, Olexander Yefremov, has said he "did not rule out."

On Friday, Russian foreign ministry spokesman Andrei Nesterenko said he saw "no legal obstacle to Ukraine joining the customs union between Russia, Belarus and Kazakhstan."

Any move by Kiev to join the customs union would irritate the EU, which is holding talks with Ukraine on creating a free-trade zone and is keen to keep the country from falling into Russia's sphere of influence.

Brussels will need to demonstrate its support for Ukraine, a former Soviet republic of 46 million people strategically located between Russia and the EU, after years of failed bids for closer EU-Ukraine integration.

"The EU should use this opportunity to strengthen relations with Ukraine, pushing for reforms, but offering assistance," said Paul. "The EU should send a strong message that it sees (Yanukovych) as being pro-European."

Yanukovych's trip is hotly anticipated, a Ukrainian diplomatic source said, telling AFP that "no other trip has been organised with so much interest" from the European side.

Brussels will seek warm ties with Kiev, since it is alarmed by the prospect of Ukraine joining the Russian customs union -- which would be "a revival of the Soviet Union, a complete change of Europe's geopolitical map," the source said.

At the same time Brussels is hoping Yanukovych will implement badly needed economic reforms that have been blocked by the recent years of political instability in Ukraine, the diplomatic source said.

"They are tired of the mess and hope that under Yanukovych the state will start functioning better and that the promises will be kept from now on."

Another hot topic will be supplies of Russian natural gas that transit via Ukraine. The EU will want reassurances that there will be no repetition of the Russia-Ukraine gas disputes of recent years, including the one in January 2009 that disrupted supplies to over a dozen European countries.

Yanukovych will want to discuss the creation of a consortium between Russian energy giant Gazprom and European countries to upgrade Ukraine's pipelines, said Nico Lange of the Konrad Adenauer Foundation in Kiev.

Under Yushchenko, the participation of Russia in such a consortium would have been unthinkable.

Source: EU Business

Russia Welcomes Chance Of Ukraine Joining Customs Union

MOSCOW, Russia -- There are no real legal obstacles to prevent Ukraine from joining the Customs Union of Russia, Belarus and Kazakhstan, a Russian Foreign Ministry spokesman said on Friday.

Andrei Nesterenko

"We think that this issue should be considered very closely," Andrei Nesterenko said.

"The Russian side doesn't see any legal obstacles to Ukraine's entry into the Customs Union, which began operating on January 1."

"Of course, this will need the consent of the EurAsEC member-states at the first stage and of the Customs Union member-states at the second stage," he added.

The statement comes after reports that new Ukrainian President Viktor Yanukovych is willing to start talks on the country's entry into the Customs Union.

The possibility of joining the group drew criticism from Prime Minister Yulia Tymoshenko, Yanukovych's defeated opponent in the February 7 presidential runoff, who has not recognized the president's victory in the election.

Yanukovych has said his administration would not continue with former President Viktor Yushchenko's bid to take Ukraine into NATO, and would prioritize long-established relations with Russia and other CIS countries.

Many experts believe Ukraine's accession to the Customs Union would trigger a massive slump in exports, aggravating the country's difficult economic situation still further.

Furthermore, Ukraine's bid is likely to complicate Moscow's position at talks on energy issues inside the union, as Russia and Belarus entered a bitter dispute at the start of the year over duty-free oil supplies to Belarus that threatened crude deliveries to Europe.

Russia, Kazakhstan and Belarus signed in late November 2009 an agreement to create a customs union, paving the way for a single economic space. The agreement came into force on January 1, when the three countries introduced common foreign trade tariffs.

Ukraine's accession to the union could be further complicated by its membership of the World Trade Organization.

In June 2009, Russia, Kazakhstan and Belarus notified the WTO of their intention to join the world trade club as a customs union, but four months later the three former Soviet republics announced they would resume talks on accession separately, but working from synchronized positions.

Source: RIA Novosti

New Ukraine Leader Set For EU Parliament Visit

KIEV, Ukraine -- Viktor Yanukovych, the opposition leader who won Ukraine's recent election, will visit the EU parliament next week, it has been revealed.

EU parliament's president Jerzy Buzek

Yanukovych, who was inaugurated as the country's new president on Thursday, will hold meetings with parliament's president Jerzy Buzek and appear at a news conference on Monday.

He accepted an invitation from Buzek who was in Kiev for his inauguration.

The fact that the pro-Russian leader has chosen Brussels, rather than Moscow for his first overseas visit will be seen as symbolically important.

A parliament source said, "It's a feather in the cap for parliament and the EU."

His electoral opponent, prime minister Yulia Tymoshenko, says Yanukovych won through fraud and refuses to recognise his victory.

Both Tymoshenko and the outgoing president, Viktor Yushchenko, did not attend the ceremony.

International observers have said the February poll was conducted fairly.

Yanukovych beat Tymoshenko in the run-off by 3.5 per cent. He won the support of only about a third of Ukraine's 37 million eligible voters.

He is the first Ukrainian president to have been backed by fewer than 50 per cent of those who voted.

Meanwhile, a resolution adopted by parliament on Thursday calls for closer ties with Ukraine.

The EPP motion said the EU "must respond with clear signals welcoming" Ukraine's EU aspirations.

Inese Vaidere, the MEP who observed the election, said, "It is important the president manages to bring together the country's leading political forces."

Source: The Parliament

New Ukraine President Pledges Neutrality

KIEV, Ukraine -- Viktor Yanukovych was sworn in as Ukraine's new president Thursday, vowing to follow a path of neutrality in a switch from the strongly pro-Western stance of the defeated Orange Revolution leaders.

Ukraine's Army Commander-in-chief Ivan Svyda (R) salutes newly-elected Ukrainian President Viktor Yanukovych during his arrival at the presidential office in Kiev.

Yanukovych took his oath in a ceremony in parliament attended by a host of international dignitaries but conspicuously boycotted by his election rival, Prime Minister Yulia Tymoshenko, and her supporters.

"I, Viktor Yanukovych, elected president of Ukraine by the will of the people, swear the oath of loyalty to Ukraine," he said, placing his right hand on a 16th-century Ukrainianlanguage gospel and a copy of the constitution.

"I vow to defend through my actions the sovereignty and independence of Ukraine and the rights and freedoms of its citizens," he said.

Yanukovych is expected to return his country of 46 million bridging Russia and the European Union to a more Moscow-friendly course, a reversal of the policies of his predecessor Viktor Yushchenko.

In an immediate statement of his foreign policy priorities, Yanukovych indicated he would not seek membership in NATO -- a major goal of the Yushchenko presidency -- or Russian-led military alliances.

"The challenges that the international community face mean we have to join together in a larger format. We are ready to participate in this process as a European, non-aligned state," he said.

He described Ukraine as a "bridge between East and West" and said it would have relations as equal partners with the European Union, Russia and the United States.

In a bid to prove he does not want to abandon EU integration, Yanukovych has chosen the European Union's headquarters in Brussels for his first foreign trip on Monday.

One of his leading aides, Anna German, said his visit to Russia would take place on March 5.

International officials attending the inauguration included EU foreign affairs chief Catherine Ashton, U.S. national security adviser James Jones and speaker of the Russian parliament Boris Gryzlov.

But rows of empty benches in the parliament, the Verkhovna Rada, signalled the absence of Tymoshenko and her party and showed that Ukraine remains far from much-needed political stability.

Yanukovych has called on Tymoshenko to resign gracefully after her defeat by a margin of some 3.5 per cent in the Feb. 7 presidential elections, but the charismatic prime minister has so far refused to budge, claiming to have sufficient support in parliament.

She has refused to recognize Yanukovych as president and alleged the elections were marred by widespread fraud, even though they were praised by international observers.

Of all Ukraine's past presidents, only the 1994-2005 ruler Leonid Kuchma was present.

Source: The Edmonton Journal

Thursday, February 25, 2010

Ukraine’s ‘Dysfunctional Democracy’ May Linger For Half A Year

KIEV, Ukraine -- Newly inaugurated Ukrainian President Viktor Yanukovych may be forced to share power with rival Yulia Tymoshenko for as long as six months as he searches for the votes to oust her as premier or calls new parliamentary elections.

Viktor Yanukovych (L) may be forced to share power with rival Yulia Tymoshenko.

The president’s lack of a ruling majority in the 450-seat parliament threatens to deprive the former Soviet republic of the stability needed to combat Europe’s deepest recession and revive investor confidence.

Ukraine, whose debt is the third-most expensive to insure in the world, can’t gain access to an international bailout and pay Russia for gas to Europe without a government capable of winning approval for this year’s budget.

“There is going to be a lot of uncertainty for some time,” said Nick Day, London-based chief executive officer of the security and intelligence research group Diligence Inc. “Clearly Yanukovych has not got an overwhelming majority and needs to get a lot of people on his side in order to push through any meaningful changes within the economy. People will swap sides and it will become a dysfunctional democracy.”

A prolonged battle may deepen Ukraine’s economic decay and delay the resumption of a $16.4 billion emergency loan from the International Monetary Fund that has been frozen since November.

The IMF is demanding spending cuts that narrow the budget deficit by about a third from its 2009 level of about 13 percent of output, a reduction of energy subsidies and a consolidated banking industry. Lawmakers have yet to approve a 2010 budget.

Won’t Leave Voluntarily

Tymoshenko has said she won’t leave her post voluntarily, setting Yanukovych, who took office yesterday, the challenge of overturning her majority in the parliament. She is supported by a coalition of 244 lawmakers that includes her party, former President Viktor Yushchenko’s group and parliamentary speaker Volodymyr Lytvyn’s supporters.

Yanukovych’s Party of Regions has 171 seats, and he needs to secure 27 seats from the Communists and lure 20 followers from Lytvyn’s party and at least eight from the Tymoshenko or Yushchenko ranks to oust her.

If he fails, early parliamentary elections can’t be held until autumn, according to Yuriy Yakymenko, head of legal and political studies at the Kiev-based Razumkov Center. “The situation is very difficult and hard to predict,” he said.

Olexiy Haran, a professor of comparative politics at the Kiev-Mohyla Academy, said elections may be possible in June “though the Party of Regions will try to avoid it” because of concern about potential election fatigue among the electorate and because of possible delays to the budget passage that would stall the disbursement of the next IMF loan installment.

It will take the new president “some time” to form a coalition, said Nigel Rendell, senior emerging-market economist at RBC Capital Markets in London, by telephone.

Difficult Consensus

“There’s a lot of disagreement between the politicians, the economy is in a recession and the IMF loan is still up in the air,” he said. “To get a consensus that can govern is going to be quite difficult.”

And the stalemate could persist, leaving the IMF without a functioning government to negotiate with over the loan resumption, Rendell said.

“It would be a very bad-case scenario,” he said. “But it’s possible.”

Day said Tymosheno’s “strong and dedicated following” will force Yanukovych to seek compromises on legislation that is important to him.

“Everything is going to be a great struggle overshadowed by the horse-trading and political infighting,” said Day.

Yanukovych may be hampered in such maneuvering by his campaign promises to increase wages and social payments, said Yakymenko.

Limited Finances

“They understand already that the state finances do not make it possible,” Yakymenko said. “It is going to work against Yanukovych.”

Yanukovych defeated Tymoshenko in a Feb. 7 presidential election that was certified as legitimate by international observers. Tymoshenko has refused to concede defeat and tried to challenge the outcome in the courts.

Investors have lost patience. The hryvnia has lost 41 percent against the dollar since September 2008 and was the world’s second worst performer after the Venezuelan bolivar.

The yield on Ukraine’s 2016 Eurobond fell 18 basis points to 10.07 percent. The credit default swap spread on the country’s five-year debt narrowed to 936 basis points on Feb. 24 from 944 the previous day, Bloomberg data show. A narrower spread signals improved investor perceptions of credit risk.

“A country like Ukraine needs to put so many things right,” said Day. “They need to get some real fiscal discipline into their country to attract foreign investment and to do that they need to push through strong reform.”

Source: BusinessWeek

New Ukraine President Gives Right Investor Signals

KIEV, Ukraine -- Ukrainian President Viktor Yanukovich sent positive signals to foreign investors in his inaugural speech on Thursday, but whether the ex-Soviet company manager succeeds in bringing them back remains to be seen.

Ukraine's President Viktor Yanukovych holds his hand on the bible as he takes an oath in the parliament in Kiev, Ukraine, Thursday, Feb. 25, 2010. Viktor Yanukovych has been inaugurated as Ukraine's President, five years after his first bid failed amid massive protests over vote fraud.

Yanukovich was sworn in on Thursday after a bitter campaign against his election rival, Prime Minister Yulia Tymoshenko, and faces the tough task of consolidating his power to produce a stable government that can bring back vital IMF lending.

In his first speech as president, he said Ukraine faced "colossal debts, poverty, a collapsing economy, corruption", and vowed to win the trust of investors.

"What is needed for investors and international financial institutions to renew their trust in Ukraine is securing internal stability, overcoming corruption, restoring clear, and most importantly, constant rules of relations between the state and business," Yanukovich said.

He said his aim was not to strengthen the state's role in the economy "but the government's participation in the creation of effective market mechanisms".

"I am certain that direct interference by the state in the economy -- its manual control -- is a road to nowhere," he said.

Although managing the economy is not the remit of the president, investors hope Yanukovich's victory ushers in a period of political stability that would allow the government to focus on shoring up the state's finances and economic growth.

The International Monetary Fund suspended its $16.4 billion bailout at the end of last year in the wake of fierce political rows and broken spending promises. About $10.5 billion has been disbursed to date.

The finance ministry said a technical mission from the IMF is due to arrive in April 7. These missions are usually a prelude to a full-blown visit, after which a decision on resuming lending could be made.

Yanukovich's Regions party instigated rises in the minimum wage, passed by parliament, that were the last straw for the IMF. The government had already reneged on a promise to raise domestic gas prices, which would have helped the state's finances.

"(Yanukovich's) statements point clearly in the direction of more stability, obviously a positive, as this is something that foreign investors have lost sight of in the past years," said Simon Quijano-Evans of brokerage Chevreux.

The Regions party is now trying to form a new coalition to oust that of Tymoshenko. If it does, and succeeds in forming a new government, talks with the IMF could resume.

"He will have to make some difficult decisions early in his regime, in particular on gas price hikes and reining in pension/wage promises, to bring the IMF program back on track," said Tim Ash, head of CEEMEA research at Royal Bank of Scotland. "This will be a key short-term test of his willingness to bite the bullet."

Source: Guardian UK

Yanukovich Sworn In As Ukraine's President

KIEV, Ukraine -- Viktor Yanukovich has been sworn in as President of Ukraine today. President Yanukovich was elected 7 February.

Ukraine's president-elect Viktor Yanukovich attends a service at Kievo-Pecherskaya Lavra cathedral in Kiev officiated by the Moscow Patriarch Kirill.

When sworn in Mr Yanukovich defended the sovereignty and independence of the country.

Viktor Yanukovich, 59, is expected to tilt Ukraine back towards its former Soviet master Russia while also moving it towards European integration.

Ukrainian Prime Minister Yulia Tymoshenko launched a legal challenge against the election of Mr Yanukovich, who beat her in a 7 February run-off, after alleging widespread fraud by the rival camp.

Mr Yanukovich, denied any vote-rigging by his side. He beat Ms Tymoshenko by 3.5% in the election.

Ms Tymoshenko withdrew her legal case against his election because the court had refused to study the evidence of fraudulence that she had placed before it.

Prime Minister Tymoshenkohad presented the court with nine volumes of evidence, which it said supported allegations of fraud in about 1,200 polling stations.

Ms Tymoshenko had been pressing for a new presidential election as took place in the 2004 Orange Revolution, which ended with President Viktor Yushchenko being elected.

Mr Yanukovich was denied the top job then by the protests against electoral fraud.

Source: RTE News

Wednesday, February 24, 2010

Ukraine's New President Charts His Course

KIEV, Ukraine -- Victor Yanukovych, to be anointed president of Ukraine on Thursday, is promising to change the country by creating a new effective coalition in Parliament and then make a range of global staffing changes.

Businessman Sergei Tigipko

However, there's an area where change may be more of a challenge—Ukraine’s foreign policy—despite the calls of the opposition and Western countries.

“With the coming of a new president, in Ukraine’s foreign policy there is almost a blank sheet. For six months, our country will be watched by Europe and the U.S., and we are expected to take action,” said Sergei Tigipko, head of the Strong Ukraine Party and former presidential candidate who finished third and was thus eliminated in the first round of the elections.

“If after six months there are not any reforms, any real modernization of the country, Brussels and Washington will not be interested enough in us.”

There are fears that Yanukovych will not bring the much needed political reforms that would qualify Ukraine for EU or NATO admission, a reality the new president appears to be aware of.

“If we listen to the new president’s program and his public messages, he clearly and repeatedly said that the ultimate goal of his foreign policy was obtaining full membership in the European Union,” said Oleg Rybachuk, head of the Ukraine-European Union expert council and former deputy prime minister.

“He emphasized a willingness to cooperate with the NATO. He also said that due to domestic politics, it would be impossible to join NATO, something all Ukrainians are aware of," said Rybachuk.

Neither the EU nor NATO is ready to accept Ukraine into their community, principally because of the lack of agreement between different branches of power in the country.

“We need a stable Ukraine with a working government that has a good relationship with the president,” said French Ambassador to Ukraine Jacques Faure. “And, of course, we are not very interested in seeing the continuation of a situation where the government says A, the president says B, and Parliament may say a third version. It does not give anyone results.”

Last year, Ukraine did not manage to sign an association agreement with the E.U. because of a failure to implement promised economic and legal reforms—a necessary step toward EU membership.

This situation is due to the current political crisis that has seen constant accusations fly between the president and the government, and between the government and the opposition party. This split has continued for the past two years.

With the arrival of a new president, Brussels and the West have expressed full readiness to cooperate with him.

A former country of the Soviet Union, Ukraine has had difficulty in making progress toward more westernized norms of governance, in comparison with its western neighbors, Poland, Slovakia, and Hungary.

In addition to strengthening cooperation with NATO and the EU, political observers forecast a deepening cooperation with Russia. Moscow is satisfied with the change of power in Ukraine.

Last year, the Kremlin was unhappy to deal with the policy of departing President Yushchenko who, among other issues of contention, wanted the Russian Navy to leave the Crimea, an autonomous Ukrainian Republic where Russia still has naval bases.

Source: Epoch Times

US Seeks Cooperation With New Ukraine President

WASHINGTON, DC -- Secretary of State Hillary Rodham Clinton says that the United States is looking for cooperation with Ukraine's President-elect Viktor Yanukovych.

Secretary of State Hillary Rodham Clinton.

Yanukovych was viewed as a pro-Moscow candidate in Washington, but the US administration has praised the election as credible.

Yanukovych narrowly defeated Yulia Tymoshenko in elections this month.

Tymoshenko claims there was election fraud.

But last week she dropped a court challenge to the results.

Clinton said in a US Senate hearing Wednesday that the United States will be watching the new government to see "what their attitudes may be."

Source: AP

Unloved But Unbowed, Ukraine's Viktor Yushchenko Leaves Office

KIEV, Ukraine -- Five years ago, hundreds of thousands of Ukrainians chanted Viktor Yushchenko's name on Kyiv's Independence Square during mass protests prompted by widespread anger over his defeat in a rigged presidential election. Braving snow and temperatures well below freezing, the demonstrators set up tents, sang, and waved the orange campaign flags that gave their movement its name.

President Yushchenko (L) after he installed Viktor Yanukovych as prime minister in 2006.

Onstage, rock bands gave concerts and opposition leaders rallied the crowds. Tensions between the opposition and the authorities ran high, overshadowed by the possibility of a violent police crackdown.

Yushchenko promised to ensure the law would prevail and the election results would be overturned. As their struggle played out on television screens around the world, the protesters stayed out day after day, giving the opposition crucial momentum.

It was Yushchenko's biggest triumph. The Supreme Court annulled the victory of Viktor Yanukovych, the pro-Moscow prime minister and chosen successor of hard-line President Leonid Kuchma, under whose regime opposition figures and journalists were assassinated. Yushchenko went on to seal the Orange camp's victory by winning a new election.

But the man who overcame great odds to lead Ukraine during a pivotal time in its history leaves a deeply contradictory legacy. Due to step down on February 25, Yushchenko exits the presidency with Ukraine in economic crisis and paralyzed by a bitter political standoff that has Ukrainians disillusioned and wondering what the Orange Revolution was all about.

Life-And-Death Struggle

Yushchenko's Orange Revolution victory was a breathtaking achievement in a former Soviet republic whose neighbors had slid back toward authoritarianism. Russia had campaigned hard for Yanukovych, but the odds against pro-Western Yushchenko were far more than merely political.

He was fighting for his life and in terrible physical pain, his handsome face grotesquely disfigured by a massive dose of dioxin poison he accused Moscow-backed government agents of administering. At times, Yushchenko was able to appear in public only because Austrian doctors had threaded a tube under the skin of his back to deliver a constant flow of painkillers.

Oleh Rybachuk ran Yushchenko's campaign and later became his presidential chief of staff. He says Yushchenko's pain was "unbearable."

"He was begging doctors just to let him die," Rybachuk says. "The doctors implanted the strongest painkiller in his back, but at some level they were hesitating. They were afraid that his heart would stop. Therefore they were really balancing on the edge of life and death."

With Yushchenko physically unable to travel, it was his main ally, Yulia Tymoshenko, who did most of the campaigning. The fiery orator adopted her now-familiar image, dressing in glamorous white outfits and wearing her newly blonde hair in a fairy-tale braid crown. Her impassioned appearances catapulted her to political stardom, but they also helped ensure Yushchenko victory.

The new president continued to suffer searing pain for years. Rybachuk says in addition to the enormous damage Yushchenko's poisoning caused his nervous system, it had a tremendous psychological effect on a man with Hollywood good looks.

"He said many times in public that when he woke up in the morning, every time, for years after that," he says, "he couldn't put up with the thought that the reflection he was seeing was actually himself. For anyone -- forget about a public figure or candidate for the presidency -- it might totally destroy your identity, your personality. It affected him very seriously."

'First Real President'

But the man whose pockmarked face became the symbol of the fight against authoritarianism wasn't always fated to become an opposition leader. As head of Ukraine's central bank in the 1990s, Yushchenko was known as a centrist -- loyal to then-President Kuchma -- who ushered in a national currency and other reforms that drew praise in the West.

After his unexpected appointment as prime minister in 1999, the former collective-farm accountant rebuffed attempts by some of the country's fractured opposition to become their leader.

But Yushchenko changed his mind after he was removed from office amid bitter opposition to his government's reforms from powerful business oligarchs.

After winning the presidency, Yushchenko called himself Ukraine's "first real president."

"We were independent for 14 years, but not free," he said at the time.

The new leader vowed to attack rampant corruption, arrest criminals, and put Ukraine on a path toward Europe. He urged Ukrainians to "roll up our sleeves and work honestly from morning until night for this country."

But Yushchenko himself spent most of his first year in office traveling around European capitals receiving awards. Warmly welcomed in the United States, which had quietly backed him during the Orange Revolution, he was given the rare honor of addressing a joint session of Congress.

Back at home, Yushchenko cultivated the image of a patrician, a man who dressed impeccably -- his tie always matching his pocket square -- but who remained connected to the land. He kept bees at his dacha and was known to leave ministers waiting on important matters of state while he watered the plants in his office.

Rybachuk, who later became Yushchenko's chief of staff, says the president could have used his great popularity to carry out desperately needed reforms.

"He could have done anything," Rybachuk says. "He could have changed the constitution, called for early parliamentary elections if he had used that peak of his popularity for the top priorities for the country. But what actually happened was that the best time of his presidency was almost wasted."

Tymoshenko Obsession

Almost immediately after his election, Yushchenko became mired in infighting with Tymoshenko, whom he had named prime minister. He fired her in September 2005, after she had set price caps on basic goods and demanded the re-privatization of state assets, which prompted accusations of populism and authoritarianism.

The first public clash between Yushchenko and his most important ally ushered in a bitter five-year standoff. Rybachuk says it also ended Yushchenko's vital political role of a uniter who'd brought Ukraine's fractious opposition together. No longer allied with the woman Ukrainians saw as an integral part of the Orange duo, Yushchenko saw his popularity plummet.

Rybachuk says he soon developed an obsession with undermining Tymoshenko that bordered on the "paranoiac."

"Tymoshenko became his only subject," Rybachuk says.

But Yushchenko's criticism only added to Tymoshenko's popularity. It also helped open the way for Yanukovych, the villain of the Orange Revolution, to emerge from political exile to take up the role of opposition leader.

After parliamentary elections in 2006 gave Tymoshenko's political bloc far more votes than Yushchenko's party, he restored Yanukovych as prime minister, joining forces with his old foe rather than seeing Tymoshenko return to power. That, too, backfired.

Yushchenko dismissed Yanukovych only months later, accusing him of trying to usurp power.

Tymoshenko made even greater advances in the next round of snap elections, this time leaving Yushchenko with no option but to agree to join her in a new Orange coalition. Still, he objected.

Dmitry Vydrin, then a close adviser to Tymoshenko, says Yushchenko disappeared during the negotiations.

"Tymoshenko was calling him every five minutes," Vydrin says. "It turns out he was at his dacha with his mobile phone switched off, turning over mint leaves drying in the sun. That was more important for him than the coalition."

"Mint represents the eternal for Yushchenko, the soul," Vydrin says. "The coalition was just temporary."

Anger In Moscow

By then, Yushchenko had lost a large amount of power to constitutional reforms he'd accepted during negotiations to settle the political crisis of 2004. But he maintained control over foreign policy, and with it Ukraine's drive to join NATO.

Most Ukrainians opposed the NATO effort, especially in the industrial, Russian-speaking east of the country that had backed Yanukovych and wanted closer ties with Russia.

Moscow also vehemently objected to policies it saw as giving the West influence over former Soviet territory in its own backyard. The Kremlin feared the Orange Revolution would provide a model to those Russians chafing under its own authoritarian rule.

Russia had awarded Ukraine a five-year, highly subsidized natural gas contract in 2004 meant to boost then-Prime Minister Yanukovych's presidential bid. But after the pro-Western opposition came to power, Moscow issued a fourfold price increase.

When Kyiv balked and last-minute negotiations broke down, Russia cut off supplies during a bitterly cold winter. A second shutoff last year lasted three weeks, disrupting supplies to millions in other European countries.

Yushchenko's championing of the Ukrainian language and historical revisionism further taxed Ukraine's deeply strained relations with its centuries-long former imperial master.

Chief among controversial topics was a calamitous 1932 famine that Ukrainians call Holodomor -- partly brought on by Soviet dictator Josef Stalin's collectivization of agriculture across the USSR -- that Yushchenko called a genocide against Ukrainians.

Sociologist Iryna Bekeshkina says Yushchenko believes Ukrainians' most important task is to learn values from their own history.

"He believes nation-building is the main thing, the formation of the Ukrainian nation based on the past," Bekeshkina says. "But most people haven't accepted that, they want to live for today and tomorrow."

Nationalism Controversy

Yushchenko stirred controversy again last month by bestowing the title Hero of Ukraine on an insurgent army leader who fought against the Soviets before his assassination by the KGB in Munich in 1959.

But many in eastern Ukraine denounce Stepan Bandera for collaborating with the Nazis during World War II. The Simon Wiesenthal Center, a U.S. Jewish human rights group, criticized Yushchenko, saying Bandera's followers were linked to the deaths of thousands of Jews.

Yushchenko's move also caused an outcry in Poland, which has done much to repair traditionally antagonistic relations with Kyiv. Polish President Lech Kaczynski, who says Bandera is responsible for the mass killing of Poles, criticized Yushchenko for putting "current political interests" over "historical truth."

Yushchenko dismisses the criticism against him. In a characteristically unbending assessment last month, he defended his presidency in an interview with RFE/RL's Ukrainian Service.

"I'll never bow my head and say I failed in some way during these past five years," he said. "I gave this nation what it needs. If it can understand that, it will be its salvation. If it can't, we'll have to spend another 15 to 20 years under Yanukovyches and Tymoshenkos, under a Kremlin project, just like under Kuchma."

Orange Revolution Repudiation

It was one of Yushchenko's final decisions in office that his burgeoning number of critics say drove the final nail into the coffin of his moribund reputation as a reformer.

Eliminated from Ukraine's presidential election after winning just 5 percent of the vote in the first round last month, Yushchenko signed a law changing the voting rules three days before a runoff between Tymoshenko and Yanukovych.

The new rules, initiated by Yanukovych's Party of Regions, scrapped the requirement for a quorum of observers from all sides to approve counts at each polling station. Tymoshenko called the legislation a "death warrant" for Ukrainian democracy.

It was one of several last-minute moves that were seen to hurt Tymoshenko's chances and that prompted rumors Yushchenko had forged a secret agreement with Yanukovych to undermine Tymoshenko at any cost.

But it was Yushchenko's instruction to his supporters to vote "against all" instead of for Tymoshenko that many believe tipped the election to Yanukovych, who won by less than 4 percent.

However expected, Yanukovych's victory was a jarring repudiation of the pro-Western movement Yushchenko once led, exposing a country fundamentally split between its east and west.

Few in Kyiv can explain the apparently self-defeating actions of a politician who carried off his previous roles as prime minister and opposition leader with aplomb. There are rumors, none proven, of an affair with Tymoshenko that ended badly.

Others say Yushchenko was motivated simply by the envy of a man who couldn't stomach being bested in politics by a strong woman.

Oleh Rybachuk, Yushchenko's former aide, says he and others told Yushchenko that fighting with Tymoshenko would surely end his political career. He also says the president's family members and others in his inner circle contributed to a "vicious circle" of rumors that Tymoshenko was plotting against him.

Disillusioned Ukrainians

Yushchenko leaves office with corruption booming, Ukrainians suffering the effects of a devastating economic crisis, and the political leadership still in deadlock. Yanukovych is set to be inaugurated on February 25 with Tymoshenko accusing him of stealing the election and vowing to fight his promise to remove her as prime minister.

The state of affairs has left many Ukrainians disillusioned, saying they have almost no trust in politicians or their government and don't believe the Orange Revolution did much beyond offer broken promises.

Even in the western Ukrainian city of Lviv -- one Yushchenko's biggest support bases -- resident Pavel Tereshchuk echoes common opinion, saying he's been severely disappointed by the man he supported in 2004.

"Yushchenko's ideas and intentions were good, but he wasn't able to accomplish anything," Tereshchuk says. "Most important, he wasn't able to unite the country and create effective authority. Now there's conflict and complete chaos in Ukraine."

Uncertain Future

What place will Yushchenko occupy in Ukrainian history? Rybachuk says his legacy was to temporarily unite the opposition and "break down the wall" of the old Kuchma administration.

"He was probably the only chance for us to break down that wall," Rybachuk says, "because if the result [of the Orange Revolution] were to have been the opposite, we would already be cemented in a Belarusian type of country."

But Rybachuk says Yushchenko failed to replace the old administration with a new model.

Yanukovych plans to visit Brussels next month on his first foreign trip as president, a signal he wants to continue improving relations with the European Union. But Rybachuk says Yushchenko's presidency has left Ukraine further from achieving his major promise of European integration than it stood immediately after the Orange Revolution.

For his part, Yushchenko -- who during the election appeared to be doing everything possible to make sure Tymoshenko lost -- bitterly complained after casting his ballot in the runoff that Ukrainians would regret any outcome without him as leader.

"I think Ukrainians will be ashamed of their choice," Yushchenko said, "but that's also democracy."

The president made a quick exit from the ballot station without answering reporters' questions. It was a hasty, dour affair for the man once cheered by hundreds of thousands, and to whom he bequeaths a very uncertain future.

Source: Radio Free Europe

Yanukovych To Take Ukraine Presidency, PM Defiant

KIEV, Ukraine -- Viktor Yanukovych will be sworn in as Ukraine's fourth president Thursday with the country still locked in crisis as his defeated election rival, Prime Minister Yulia Tymoshenko, clings to office.

Viktor Yanukovych

Yanukovych will take his oath in parliament by placing his right hand on a 16th-century Ukrainian-language gospel and a copy of Ukraine's constitution, in a ceremony attended by a host of international dignitaries.

The new president is expected to return the country of 46 million bridging Russia and the European Union to a more Moscow-friendly course, in a reversal of the pro-Western policies of outgoing President Viktor Yushchenko.

But in a signal that he does not want to abandon EU integration, Yanukovych has chosen the EU's headquarters in Brussels for his first foreign trip Friday before heading to Moscow.

The inauguration "will all take place without fanfare, in a very modest way and without the pointless use of budgetary resources," said one of Yanukovych's top aides, Anna German.

International officials attending the ceremony will include EU foreign affairs chief Catherine Ashton, US national security advisor James Jones and speaker of the Russian parliament Boris Gryzlov.

Also in Kiev will be the head of the Russian Orthodox Church, Patriarch Kirill, who will hold a service to be attended by Yanukovych. His presence has infuriated Ukrainian nationalists, who have vowed to hold protests.

After the ceremony but before his trip to Brussels, Yanukovych is due to fly to his eastern stronghold of Donetsk to watch local side Shakhtar Donetsk play England's Fulham in the Europa League, the Interfax news agency reported.

Yanukovych has called on Tymoshenko to resign gracefully after her narrow defeat by a margin of some 3.5 percent in February 7 presidential elections. But the charismatic prime minister has refused to budge.

"Her days of lies and avoiding responsibility are numbered," Yanukovych's Regions Party said in a statement.

But Tymoshenko has defiantly vowed to find enough support in parliament to prevent "the creation of an anti-Ukrainian dictatorship."

She has sought to persuade Ukraine's parliament, the Verkhovna Rada, to hold a vote of confidence in the government although her request has been rejected on technicalities.

On paper, Tymoshenko can muster an anti-Yanukovych majority in parliament, but this could be seriously undermined by defections from the minority parties and even her own.

If parliament rejects a no-confidence vote, Tymoshenko's government would be able to stay on in power until July as only one such motion is allowed per session.

"This question needs to be made clear," Tymoshenko said, according to the Interfax news agency. Aides said that she would not be taking part in the inauguration.

Yanukovych will become Ukraine's fourth post-independence president after Leonid Kravchuk, Leonid Kuchma and the outgoing Viktor Yushchenko, who led the Orange Revolution of 2004 that raised hopes of reform but ultimately disappointed its supporters.

The president-elect has a controversial past that saw him jailed twice for theft and assault as a youth under the Soviet Union, although the convictions were later erased.

He is also accused of involvement in the vote-rigging in the 2004 election that sparked the Orange Revolution. He initially won but the courts ordered the vote to be re-run after they found mass irregularities. In the subsequent vote, Yanukovych lost to Yushchenko.

Tymoshenko has alleged that Yanukovych's victory in the February elections was marred by mass election fraud, even though international observers gave the polls a clean bill of health.

Source: The Sydney Morning Herald

What Does Ukraine Await In The Yanukovich Period?

KIEV, Ukraine -- It is unquestionable that Viktor Yanukovich’s period in Ukraine will be difficult from Viktor Yushchenko's. To begin with there will be a different foreign policy. Ukraine's ship will be turned to Moscow, and Ukraine must expect unprecedented concessions in the bilateral relations between the two countries.

Viktor Yanukovych with Russia's Vladimir Putin (L) in a file photo. For sure, the Kremlin will once again have its own man, in Kiev.

It is 100 percent sure that Medvedev and Putin will pay a visit to Kiev, although they have not visited the country since the “Orange Revolution”. Yanukovich will acquire Russia as a reliable ally in the international arena.

Business structures which are close to Yanukovich will also be given advantages.

Ukrainian political experts consider that during the privatisation of JSC Ukrtelecom, the factories in Odessa and other similar attractive State enterprises (which must be sold because an economic crisis is underway in Ukraine) milliners from Yanukovich’s home region of Donetsk will be given priority.

Yanukovich will most likely not hand Ukraine’s gas transit system to Russia or that the contract with the Russian Navy in the Crimea, which expires in 2017, will be extended indefinitely.

However during Yanukovich’s rule the Russian language will be more privileged and the Ukraine language oppressed.

It is unquestionable that Yanukovich’s party will put the issue of making the Russian language a state language on the agenda of Parliament, although it is possible that each individual district will be granted the right to determine which language will be in official their territories.

Every Southeastern district and the Autonomous Republic of Crimea are ready to adopt Russian as the language of administration and government.

All previous regulations about the use of the Ukrainian language will remain the same, but with the tacit agreement of the Government education in the Russian language will be reinstated.

The translation of Russian films, soap operas and advertisements will be stopped.

The regions of Ukraine will have to forget about celebrating the historic victories of the Ukrainian people over Russia, such as UNA-UNSO, Konopoti Bita and Kruti days.

Stepan Bandera and Roman Shukhevich, who were declared Ukrainian Heroes during Yushchenko’s period, may have these titles stripped from them.

It is possible that the celebration of the day of victory over Fascism in 1945 will be restored to its former glory, with parades, salutes and the paying of respects to veterans.

Kiev does not expect to turn away from the West, but Yanukovich is opposed to entering NATO. Probably the Party of the Regions will try to establish Ukraine as a neutral state by altering the Constitution, and thus close the issue of NATO for a long time.

The West is bored with the rivalry between the members of the Orange political elite, who could not negotiate with The Kremlin, and as result, the EU has to predict before New Year comes: "will we have gas or not?"

Europe expects that Yanukovich will settle all the issues about gas transportation (it is natural that Brussels is not interested in whether the Ukrainian people suffer or not) and is ready to cooperate with him.

Not wishing to spoil relations with West despite not seeking to strengthen them, Yanukovich will not recognise South Ossetia and Abkhazia. He will only do this if it is very profitable for Kiev or Kiev will be in a hopeless situation.

However it is unquestionable that the friendship between Tbilisi and Kiev is over.

Yanukovich will not support Saakashvili in a war with Russia. It is possible that Ukraine will stop supplying weapons to Georgia, though under Yushchenko it did so at prices unprofitable for Ukraine. It will either sell weapons to Georgia at market prices from now on or not at all.

Source: The Georgian Times

Ukraine's Options Remain Open

KIEV, Ukraine -- Ukraine's presidential elections put the country back into the spotlight of the international media, probably for the first time since the Orange Revolution in 2004. Back then, on a tide of optimism and immense hope for change and reform, Ukraine received generally positive opinions from analysts all over the world.

The Maidan - epicenter of the Orange Revolution.

Now, having just passed the first severe economic crisis in its independent history, the country is uniformly condemned for being plagued with corruption, having no clear direction and economic policy, and lacking stability - in other words, for not living up to the high hopes of 2004.

In many ways this criticism is justified. The fact that the outgoing president, Viktor Yushchenko, received a humiliating 5.5% of total votes in the first round of presidential elections on January 17 and failed to advance to the runoff is a clear sign of the nation's disappointment with him and reflects a strong desire for change.

The country's policymaking has suffered from a long-lasting deadlock between the main branches of power; its obscure legislation has spurred corruption; the judicial system can hardly be relied upon; and growing a successful business in such conditions is a real challenge.

What cannot be justified, however, are the audacious claims we hear that Ukraine has no option but to choose from either slipping into national default or sacrificing its independence for the sake of a Russian bailout.

On the contrary, against the backdrop of difficult internal issues and challenges it faced during the global crisis, the country's economy has coped with the situation comparably well and is now putting itself back on a recovery path.

The banking sector has stabilized due to the joint efforts of the International Monetary Fund (IMF), the National Bank of Ukraine (NBU) and the government, as well as the active support lent to local foreign-owned banks by their parent institutions.

The revival of global commodity markets is supporting the recovery of Ukraine's steel giants, having kept exports and GDP on the rise for three successive quarters. Unemployment has stabilized at approximately 9%, which compares comfortably with other countries in the region.

Foreign investor interest in the domestic market is clearly reviving, with the local stock market index up 273% from its bottom in March 2009 and 14% since the beginning of 2010.

Debt/GDP level is manageable

Ukraine's level of gross public and private debt had stood at a reasonable 57% of GDP just before the crisis erupted in the autumn of 2008. On this measure, Ukraine had a considerably more secure position compared to many of its peers in emerging Europe and beyond.

Ukraine's debt ratio then surged due to the national currency's depreciation and the contraction of GDP, hitting 84% in the third quarter of 2009. This level is still considerably below the debt/GDP ratios of such regional peers as Hungary (177%), Bulgaria (116%) or Kazakhstan (100%).

Looking at the composition of gross debt brightens the picture further. Despite the influx of nearly $13bn of IMF financing - including a $2bn special drawing right allocation (SDR) - Ukraine's external public debt amounts to $24bn, or less than 21% of GDP and 23% of its total external liabilities.

The government needs to repay a mere $1bn out of this amount in 2010 - a fraction of the country's current international reserves totalling $26.5bn. Domestic public debt amounts to $12bn or 10% of GDP.

The private sector debt should also be analyzed more accurately. External liabilities in the private sector amounted to nearly $80bn in the third quarter of 2009. According to NBU estimates, approximately $18bn-20bn of this amount matures in 2010 (net of trade credits).

Refinancing the bulk of these liabilities does not seem a "miracle scenario" at all if one keeps in mind that out of $28bn that fell due in 2009, 75% was rolled over. The primary reason is related-party lending, which accounts for a majority of the above liabilities.

This type of lending is a commonly used form of direct equity investing in Ukraine. The rollover rate may be even higher this year, as the anticipated post-election political stabilization should open access to new external financing.

Not surprisingly, the state budget suffered from the economic downturn, as did budgets all over the world. We estimate that last year's budget gap reached 8-9% of GDP (including the consolidated budget deficit and the deficits of the Pension Fund and the state-owned Naftogaz), or approximately $10bn.

In the course of the year, the IMF provided $7bn for budget support (including $2bn of SDRs used for budget purposes), leaving little need for money printing. Unlike in many other economies, Ukraine's central bank has kept a firm grip on the money supply, which has created conditions necessary to stabilize the currency and reduce inflation to approximately 12.3% in 2009 from above 20% in 2008.

Foreign investors reconsider the market

IMF lending remains key to unlocking access to non-inflationary sources of budget deficit financing for Ukraine. IMF representatives have indicated that they are likely to restart lending following the presidential elections, and president-elect Viktor Yanukovych has confirmed his intention to continue cooperating with the Fund.

Despite the bitter aftertaste left by the recent crisis, foreign investors' appetite for Ukrainian risk is growing. Following the buyout of ISD, one of Ukraine's biggest industrial groups, at the beginning of January, the local stock market surged by 14% in 21 trading days, with some blue-chips gaining as much as 50%.

Braving the looming elections, prices on Ukrainian sovereign bonds rose by 2-3%, while yields declined to 8.5-10.8%, moving closer to their pre-crisis levels. Average daily liquidity went up by more than 100% in January compared with December 2009, driven by both local and foreign money.

Ukraine is not straightforward, true, but it is a large, well-educated and aspiring European nation restarting its growth from a very low base. To say the least, this place merits an in-depth and careful analysis, and on any account is worth a short visit to form one's own judgment.

Source: BusinessNewEurope

Tuesday, February 23, 2010

Ukraine's Ukrtelecom Seeks Debt Restructuring

KIEV, Ukraine -- Ukrainian telecoms firm Ukrtelekom is the latest state-controlled company seeking to restructure its foreign debt, a letter from its chairman of the board to the state communications authority showed on Tuesday.

Ukrtelekom third state firm to seek restructuring.

The letter says Ukrtelekom wants to pay $14 million of the $55.6 million due by Feb. 25 on $500 million in debt owed to Credit Suisse First and Deutsche Bank. The rest, it said, it wants to pay within three months of the deadline.

Similar deals for other state companies have prompted broader concerns about Ukraine's debt ratings and finances, although the scale of the restructuring is far smaller than those sought by energy firm Naftogaz and the state railway.

"We are announcing that using our own funds, we plan to repay 25 percent of the the debt owed to Credit and Deutsche on Feb 25...," the letter said.

"Ukrtelekom is conducting talks with the creditors for a delay of the repayment date for 75 percent of the payment...," it said. The debt was issued in 2005 and Ukrtelekom began making twice yearly payments as of 2008.

The company declined to comment.

Ukrtelekom has been slated for privatisation for years but its initial public offering had been delayed by political wrangling and infighting. Estimates of its value have swung anywhere from $3 billion to $1 billion.

The company has been helped by the state with the issue of the country's only 3G license but is weak in the mobile market against competitors such as Russian MTS (MTSI.MM) and Kyivstar, controlled by Russia's Alfa Group and Norway's Telenor (TEL.OL).

Analysts and investors had worried all last year that Ukraine was on the edge of a sovereign default. Although the state never did delay debt repayments, the technical default of ailing energy giant Naftogaz proved some of those fears right.

Naftogaz successfully renegotiated its debts, but it was the unexpected announcement by state railway firm Ukrzalyznitsya that it wanted to restructure $440 million of a $550 syndicated loan that sent European markets reeling, albeit briefly.

Acting Finance Minister Ihor Umansky said earlier this month the state railway will end restructuring talks within a month.

Despite implicit guarantees, none of the restructured loans were found to actually have a state guarantee which meant that negotiations did not translate into a sovereign default.

Source: Guardian UK

Moscow Makes New Demands On Ukraine After Yanukovich’s Victory

MOSCOW, Russia -- Moscow has demanded that incoming Ukrainian president Viktor Yanukovich among other things end Kiev’s contacts with the CIA and allow the FSB (former KGB) to return to Crimea, part of a more general effort by Russia to exploit the election outcome in Ukraine and an indication of what will be at stake there in the coming months.

Moscow is making demands on Ukraine.

In an article in today’s issue of “Vlast’,” journalist Vladimir Solovyev, drawing on both Russian and Ukrainian diplomatic sources, describes Moscow’s pleasure at the election of Yanukovich and its expectations that he will reverse many of the “orange” policies of his predecessor Viktor Yushchenko.

Russian Prime Minister Vladimir Putin, Solovyev notes, has not been able to hide his delight that Yushchenko will soon be out of office and that the “orange” revolution which brought him to office in 2005 will now be overcome, bringing Ukraine back into Moscow’s orbit.

Last week, when Kazakhstan President Nursultan Nazarbayev visited Moscow, Putin said that he well “remembers 2005 and those quasi-revolutionary events which took place in Ukraine.

Then, the leaders of this ‘color revolution’ used the dissatisfaction of people and their expectations for change.” Now, however, Ukrainians have recognized that they were “deceived.”

An anonymous Russian foreign ministry source told the “Vlast’” journalist that Moscow was pleased “not so much by the victory of Yanukovich than by the defeat of Yushchenko” and by the ways in which this change represented a defeat of the American policy of “promoting ‘orange revolutions’ and democratic ideals.”

“For us,” a Kremlin source said, “the main thing is that Yushchenko will no longer be ruling in Ukraine.” But unlike his foreign ministry counterpart, the Kremlin source indicated that Moscow was prepared to work with Timoshenko but feels that “it will be easier to resolve certain questions, such as the presence of Russia’s Black Sea Fleet in Crimea” with Yanukovich.

For Moscow, “Vlast’” continues, “the five year administration of Yushchenko is recalled in Moscow as a terrible dream,” and the paper says that “Russian diplomats are joking that February 7th (the date of the second round of elections in Ukraine) should be made a red letter day like May 9th.”

That is because, one Russian diplomat told the paper, “the last five years became a test. We struggled in order not to allow Ukraine to enter NATO and to preserve our fleet there. [And] not without difficulty, we saved the canonical unity of the Orthodox Church,” by means of a complex “special operation.”

Last week, Solovyev continues, “Putin outlined Moscow’s expectations from the new Ukrainian powers that be: ‘We would like to hope that the difficult period in the life of the fraternal to all of us Ukrainian people is behind and that it will be possible to develop normal inter-government relations, to build plans in economics and strengthen social cooperation.”

Moscow has already delivered its list of what it expects from Ukraine, the “Vlast’” journalist says.

On February 13, Sergey Naryshkin, the head of the Russian Presidential Administration, spent “about six hours together with Yanukovich” during which the Kremlin official outlined Moscow’s requirements for better relations.

According to a Ukrainian diplomatic source, Solovyev continues, Moscow has prepared “a whole list of concrete steps which the new powers that be in Kiev could undertake as a sign of the renewal of the former friendship between the fraternal peoples.”

Moscow “would like,” the source continued, to see Ukraine’s security services drop its relations with the American CIA.

In addition, Moscow would like to “renew the work of the Russian FSB office in the Black Sea Fleet, the officers of which [Yushchenko] had required to quit Crimea at the end of last year.” And it has indicated that Moscow “expects” Yanukovich to “end any military cooperation with Georgia, a link that had flourished under his predecessor.

“All these questions in principle are in the competence of the president,” the Ukrainian source said, and consequently positive actions on them can become “gestures of good will by the new powers that be of Ukraine on the path to the full restoration of relations” between Kiev and Moscow.

Naryshkin’s visit is the first sign Russia wants to restore high-level ties. And some in Kiev expect President Dmitry Medvedev to come to Yanukovich’s inauguration on February 25th to show that relations have resumed in that way. And he noted that some will remember that Medvedev was responsible for Ukrainian affairs at the time of “the orange revolution.”

Meanwhile in another Moscow comment on the shift in Ukraine, Avtandil Tsuladze in yesterday’s “Yezhednevny zhurnal” writes that “even for people who are not professionally interested in politics, it is obvious that the US had surrendered Ukraine to Putin’s Russia in order to solve more immediate tasks – “sanctions against Iran and help for NATO in the Afghan war.”

But Tsuladze says, it is clear that the Americans are not going to get what they want either on those issues because “Russian ‘hawks’ consider the US to be their chief enemy,” and “their logic is simple: the worse things are for the United States, the better it will be for them.

Meanwhile, in another indication of the reordering of the Eurasian geopolitical space, the Russian state statistics committee has now shifted Georgia from the “near abroad” category to the “far abroad,” putting it outside of the area that Moscow has made clear it considers to be its immediate sphere of influence.

Source: Window on Eurasia

Ukraine’s New President To Visit Brussels Before Russia

MOSCOW, Russia -- President-elect Viktor F. Yanukovich of Ukraine, who tried during the campaign to shed his reputation as an obedient Kremlin ally, intends to make his first foreign trip after taking office to Brussels, not Moscow, officials said on Tuesday.

President-elect Viktor Yanukovich

Mr. Yanukovich, whose inauguration is on Thursday, is scheduled to visit the headquarters of the European Union next Monday for meetings with senior officials. He is to hold talks with the president of the European Council, Herman Van Rompuy; the president of the European Commission, José Manuel Barroso; and others.

Later in the week, Mr. Yanukovich is likely to go to Moscow to see President Dmitri A. Medvedev and Prime Minister Vladimir V. Putin.

Mr. Yanukovich’s decision to travel to Brussels seems intended to send a message to the country that he is serious about bolstering relations with Europe and will not be beholden to Russia. It may also help in his effort to appeal to voters who supported his opponent, Prime Minister Yulia V. Tymoshenko.

Ms. Tymoshenko’s base is in Western Ukraine, where people tend to yearn for closer ties to Europe and reject Russian influence. Mr. Yanukovich won the Feb. 7 election by 3.5 percentage points by rolling up large margins in the east of the country, which is more oriented toward Moscow.

The Kremlin offered no reaction on Tuesday to Mr. Yanukovich’s decision to go to Brussels first. Under the departing Ukrainian president, Viktor A. Yushchenko, relations with Russia were very tense, and Russian officials seem pleased just not having to deal with him.

Ms. Tymoshenko, who dropped her legal challenge over the election on Saturday, is refusing to step down as prime minister, and Mr. Yanukovich is seeking to assemble a coalition in Parliament to dismiss her. His move to woo the West may improve his chances of garnering support from deputies who might otherwise vote for her.

Europe has long been worried about political instability in Ukraine, which has a large manufacturing economy and serves as a conduit for Russian natural gas.

In an op-ed article in The Wall Street Journal last week, Mr. Yanukovich wrote that he wanted Ukraine to be a bridge between Russia and the West.

“A Yanukovich presidency is committed to the integration of European values in Ukraine,” he said, later adding, “We are a nation with a European identity, but we have historic, cultural and economic ties to Russia as well.”

Source: The New York Times