Friday, April 30, 2010

Ukraine's Orange Revolution Well And Truly Over

KIEV, Ukraine -- Ukraine's parliament erupted into what looked like a fully fledged riot this week over a controversial vote to extend a Russian navy lease.

Ukraine's ex-Prime Minister and opposition leader Yulia Tymoshenko attends a rally in front of the parliament in Kiev.

The treaty clears the way for the Black Sea fleet to stay in Crimea until 2042 in return for a 30 per cent reduction in Ukraine's price of natural gas imports.

It also signals a dramatic return to Russia's embrace under Ukraine's new president Viktor Yanukovych.

Many say the vote means Ukraine's Orange Revolution, which grabbed headlines around the world more than five years ago, is well and truly over.

Parliamentary speaker Vladimir Litvin, who was forced to take refuge under an umbrella as eggs rained down on him during the parliamentary brawl, is glad to see it go.

He says not a single promise of the revolution was fulfilled, and the authorities who took up office with the people's support exhibited only their corruption and ability to quarrel between each other.

In fact, disagreements between the two leaders of the Orange Revolution, president Viktor Yushchenko and prime minister Yulia Tymoshenko, may be its best known legacy.

But while they battled on, old rival Mr Yanukovych never went away.

Return to Russia

He won the presidency in February, beating Ms Tymoshenko, and has wasted no time in turning Ukraine back towards Moscow.

Ms Tymoshenko has in the meantime re-established herself as the leader of the opposition.

She spoke to ABC's PM from the middle of her fight against the Russian navy deal, calling it one more favour for the Kremlin and the local oligarch tycoons who back the new president.

"We cannot allow our country to turn into a private corporation," Ms Tymoshenko said.

"Put simply, that is what Yanukovych wants to do."

Mr Yushchenko is also taking aim at the treaty.

He may be a spent political force, drawing just 5 per cent of the vote in this year's presidential elections, but he is still lashing out at his former ally, Ms Tymoshenko.

"For her, national interests are of secondary importance," he said.

"The most important thing for her is to be present in politics. Unfortunately lots of disappointments were brought in via such a model."

Failed reforms

Meanwhile, activist Peetro Antyp says he can recall the time five-and-a-half years ago when hundreds of thousands of people massed in Independence Square in the capital, Kiev.

He remembers the spirit that was in the air, the dreams of a new era for Ukraine.

"The fact is that many issues we were standing for were not solved," Mr Antyp said.

"Many people were hoping for reforms, but they did not happen. Here, there is a feeling of disappointment."

After the revolution, corruption was rife and reforms aimed at establishing a transparent government floundered.

Ms Tymoshenko says it is the politicians who failed, not the principles of the revolution.

"People are disillusioned, not in their ideas and ideals, but in the politicians who proved incapable of turning these ideals into reality," she said.

In the Kiev spring there are few signs of another revolution. Russian navy bases and natural gas prices are controversial.

But many in Ukraine say after watching their campaign for reforms go nowhere, they are in no mood to try again.

Source:ABC News

Ukraine Sees $19 Billion IMF Credit Agreed In June

KIEV, Ukraine -- An International Monetary Fund mission will visit Ukraine next month for talks on a new credit program that the government hopes the Fund will agree to in June, Deputy Prime Minister Sergey Tigipko said on Thursday.

Deputy Prime Minister Sergey Tigipko.

Tigipko, speaking on his return from a week of talks in Washington with IMF officials, said Ukraine was seeking a $19 billion program though he said the Fund had not given a firm answer on this.

A senior IMF official said on Wednesday that the ex-Soviet republic needed to provide more detail on fiscal and financial reform plans before loose ends on a new multi-billion-dollar program could be tied up.

A $16.4 billion bailout program was suspended last year by the IMF because the previous Ukrainian leadership reneged on pledges of financial restraint.

Tigipko said the IMF, whose mission would arrive in Kiev on May 17, was particularly focused on revenue figures in the government's 2010 budget which has just been approved by parliament.

Tigipko indicated that the Fund regarded them as over-optimistic, but he hoped the IMF mission would be convinced by economic performance in April.

"We must show the revenue part of the budget and show how realistic it is. There are differences, but they are theoretical at the moment ... There will be April which will show the realistic tendency in budget revenue," he said.

"We will hold talks on whether our revenue figures are realistic or not, including (being enough to cover) VAT reimbursement," he added.

IMF First Deputy Managing Director John Lipsky, in a statement on Wednesday, said "outstanding issues" had to be clarified including fiscal consolidation, in addition to financial sector and other reforms.


The new administration of President Viktor Yanukovich is anxious to get a new IMF stand-by program under way to help restore investor confidence in Ukraine's struggling economy, which was hit hard by the global downturn.

At the end of 2008 the hryvnia lost more than 60 percent of its value against the dollar because of shrinking markets for Ukraine's main export industries of steel and chemicals and huge foreign debt repayments. Hampered by a lack of investment and loans, the economy shrank by more than 15 percent in 2009.

Parliament on Tuesday hastily approved a 2010 state budget with a relatively tight deficit target of 5.3 percent of gross domestic product, one of the key requirements of the IMF for further credit.

The government has made a commitment to the IMF to try to hold its budget to 6 percent of GDP.

It was able to nail down the detail of the draft budget only after Ukraine received a 30 percent discount on the price of its huge gas purchases from Russia in an agreement on April 21.

Tigipko said he expected the mission to stay in Kiev about 12 days and then report back to the IMF board of directors who would later take a vote on the program. "If there is a vote it will be in June and immediately after this the money will come to Ukraine," he said.

Tigipko said the IMF remained concerned over the financial stability of the state energy holding Naftogaz which imports huge supplies of gas from Russia and transports it to Europe.

Before the April 21 agreement between Russia and Ukraine, Naftogaz was heavily subsidised by the government, selling gas to households and local utilities at a price below that which it paid for its imports.

The company says it is owed about $500 million by consumers who have not paid for gas provided.

Tigipko said Ukraine wanted this time to be able to use some of the IMF credit for covering the budget deficit, despite a trend in the IMF to funnel money solely into national currency reserves.

Source: The Washington Post

Thursday, April 29, 2010

Ukraine Investigates Alleged $290M Misuse By Tymoshenko Government

KIEV — Ukraine's state prosecutor on Wednesday opened a criminal case relating to what it said was misuse by the government of Yulia Tymoshenko of about $290 million cash received for selling carbon quotas.

Yulia Tymoshenko

The prosecutor's office said in a statement that 2.3 billion hryvnas, received last year for selling carbon-emission rights under the Kyoto agreement, had been misused by the former Cabinet and the Finance Ministry.

"As a result, a criminal case for violation of budget legislation and abuse of authority was launched," the statement said, without mentioning Tymoshenko by name.

The action caused "serious consequences for Ukraine's state interests," it said.

During a Cabinet meeting, Prime Minister Mykola Azarov accused the Tymoshenko government of massive misuse of budget funds, including the alleged disappearance of about $378 million received for selling carbon quotas to Japan.

He suggested that much of the money had gone to funding Tymoshenko's unsuccessful election campaign, an allegation she denied.

"I am even happy that today Azarov is preparing a criminal action against me. 'Come closer and then we'll see who wins,'" she said. "It is impossible to blame me for misuse of money and property back then. … It's impossible," she said.

Source: The Moscow Times

Prosecutors Investigate Ukraine Parliament Chaos

KIEV, Ukraine -- Ukrainian prosecutors said Thursday they are considering filing charges against parliament members who hurled eggs and set off smoke bombs in the chamber as lawmakers ratified a controversial agreement with Russia.

Ukrainian opposition and pro-presidential lawmakers fight during ratification of the Black Sea Fleet deal with Russia, in parliament in Kiev, Ukraine, Tuesday, April 27, 2010.

The parliament speaker was bombarded with eggs and deputies brawled Tuesday before a vote ratifying an agreement to extend the Russian navy's lease of a Ukrainian port by 25 years.

Kiev city prosecutors said Thursday that those who caused the disorder could face charges of hooliganism, which carry a sentence of up to four years in jail.

President Viktor Yanukovych and Russian President Dmitry Medvedev signed the ratified deal on the Black Sea Fleet into law on Thursday.

The deal is the most concrete sign of Russia's renewed influence in Ukraine since Viktor Yanukovych became president in February.

Yanukovych replaced Viktor Yushchenko, who adamantly pushed to move Ukraine out of Moscow's shadow and integrate more closely with Western Europe. Yushchenko opposed a Black Sea Fleet lease extension.

Source: AP

Russia Digs Deep In Battle For Ukraine Supremacy

MOSCOW, Russia -- It was, admitted Prime Minister Vladimir Putin, an exorbitant sum – $40 billion to keep a Russian naval base in Ukraine until almost the middle of the century.

Vladimir Putin has plenty to smile about when it comes to his influence over Ukraine.

“But for us, this is not just a question of money,” Putin said.

For Moscow, the bitterly-contested deal with Ukraine to keep the Russian Black Sea Fleet base in Crimea until at least 2042 goes beyond money and to the heart of Moscow’s struggle to regain a historic influence in its neighbor.

The rancor was underlined Tuesday when pro-Western opposition Ukrainian lawmakers staged an unprecedented protest against the deal, letting off smoke bombs and hurling a broadside of eggs at the speaker of Parliament.

“Any kind of practical foreign policy is always expensive,” Mikhail Margelov, head of the foreign affairs committee in the upper house of Russia’s Parliament, wrote in the Kommersant daily.

“Especially if Moscow has the intention of being the leader in the post-Soviet region.” Russia controlled the majority of present-day Ukraine under the Tsars and maintained its hegemony as the territory was ruled from Moscow in the Soviet Union.

Ukrainian independence in 1991 amid the implosion of the Soviet Union marked a break in centuries of Russian-led control over Ukraine, a land wedged between East and West, poor in energy resources but rich in fertile soil.

After over a decade of carefully keeping an intimate relationship with Moscow, Ukraine’s government swung dramatically to the West with the 2004 Orange Revolution that ousted the old pro-Russian elite.

The uprising is still regarded by many as Putin’s most stinging defeat in his decade-long domination of post-Soviet politics.

But the pendulum swung back with the victory of pro-Kremlin candidate Viktor Yanukovych in this year’s presidential elections, an opportunity Russia has now moved with stunning speed to exploit.

"The Russian idea is to bind Ukraine in the long term in the Russian orbit and keep it out of the influence of Western institutions and also of the EU,” said Nico Lange, director of the Konrad Adenauer Foundation in Kiev.

“Russia is trying to close a whole number of long-term deals with Ukraine in a very short amount of time. It is astonishing how fast developments are moving.” Yanukovych, battling an economic crisis and trying to convince the IMF to disburse a much-needed loan tranche, grabbed eagerly at the Black Sea deal, which guarantees Ukraine a 30 percent discount on Russian gas imports.

“Five years ago, Ukraine had a dream – Europe. But now the most pragmatic course from the authorities’ point of view is to get closer to Russia,” said Andrei Ryabov, an analyst at the Moscow Carnegie Center.

“Ukraine gets cheap fuel, employment and delays the need to reform the economy. This is Ukraine’s vision for the next five years, trying to avoid social and economic aggravation.” According to Putin, the cost of the discount to Russia over 10 years will be at least $40 billion, possibly even $45 billion, funds that will hit the budget for years to come.

Less than a week after Yanukovych and Russian President Dmitry Medvedev signed the lease-for-gas deal on April 21, Putin jetted into Kiev to show that this was only the start of a new era of Russian-Ukrainian cooperation.

In an unprecedented move, Putin offered Ukraine the chance to bundle its nuclear power businesses in a vast new joint holding company with Russia’s atomic interests.

Acknowledging the implications of his proposal, he said it could be implemented gradually if the Ukrainian side found it too “revolutionary.”

Meanwhile, reports have indicated that Russia is eying taking a 50-percent stake in Ukrainian aircraft maker Antonov, legendary for its gigantic cargo planes. Another project mooted is a road bridge over the Strait of Kerch between Ukraine and Russia which would symbolize the newfound unity between the two states.

Source: Agence France Presse

Wednesday, April 28, 2010

Stability Still Elusive In Divided Ukraine

KIEV, Ukraine -- The punches traded in Ukraine's parliament Tuesday show the country remains far from politically stable and a deal to prolong the stay of the Russian Black Sea Fleet has only exacerbated divisions.

Ukraine parliament on Tuesday.

Analysts said the decision by President Viktor Yanukovych to sign an agreement allowing the fleet to remain in Ukraine until at least 2042 has sharply polarized national opinion to a worrying degree.

"Yanukovych's political stability ended the day when he signed the accord on the fleet," said Igor Zhdanov, president of the Open Policy center in Kiev.

"This is only a beginning, but this beginning could end in a serious political cataclysm. A step in this direction has already been made," the analyst said.

As the parliament - the Verkhovna Rada - filled with fog from smoke bombs hurled by opposition lawmakers, thousands of their supporters demonstrated outside, and charismatic ex-prime minister Yulia Tymoshenko vowed to hold a new rally on May 11.

"The events of today have shown that there is a division both within the political class and society about the fleet," said Volodymyr Fesenko, director of the Penta center for political research.

"I think there are going to be further outbursts."

The election victory of the pro-Russian Yanukovych in February had raised hopes even amongst his sharpest Western critics that Ukraine was set for much needed stability amid a severe economic crisis.

Unlike his predecessor, the pro-Western Viktor Yushchenko who finished his term a lonely figure after falling out with former allies, Yanukovych enjoys the support of all the main branches of power.

Prime Minister Mykola Azarov is his loyal acolyte and his supporters have a majority in parliament.

In the election, he had reached beyond his Russian-speaking strongholds in the east of the country, and made overtures to the Ukrainian-speaking west regions.

But regional parliaments in western Ukraine have now called for the president to be impeached and the division with the east seems as strong as ever.

Yanukovych's deputy chief of staff Ganna German admitted to reporters in unusually candid comments ahead of the ratification that the government was well aware the accord with Russia would be taken badly in a large part of the country.

"If another option existed it is possible that this decision would never have been taken. But our economy has put us in a complete impasse," she said.

"From two evils, you chose the lesser. Of course for many in the country it was a heavy blow. But losing everything would have been an even heavier blow."

Under the deal, Russia has agreed to give Ukraine a 30 percent discount on Russian natural gas imports estimated to be worth 40 billion dollars over 10 years.

But while the situation remains tense in Ukraine, analysts cautioned there is not yet sign of any repeat of the 2004 Orange Revolution when a popular uprising swept the established pro-Kremlin order from power.

"We are still far from a new revolution," said Fesenko.

"I have the impression the opposition did not believe too much in the success of its initiative (in parliament) and the objective was more to attract media attention."

Zhdanov said the future outcome will depend on the actions of the government and the opposition, especially if the authorities use tough tactics against protesters.

"If the authorities try and stop the protests then that will encourage them," he said.

The image of Tymoshenko, microphone in hand, next to fellow opposition politician Arseniy Yatseniuk as she addressed the crowd outside parliament, may have brought back memories of the opposition unity in the Orange uprising.

But analysts in Moscow, where the authorities have been toasting the deal which will bind the ex-Soviet neighbours closer for decades, doubted whether the Ukrainian opposition has the strength to launch any sustained challenge.

"Tymoshenko has rallied all the forces that she could," said Kirill Frolov of the CIS Institute.

"It was the maximum. They cannot prevent the course of history, which is leading towards a restoration of the closest relations between Russia and Ukraine."

Source: Agence France-Press

Parliament Pandemonium In Ukraine

KIEV, Ukraine -- The speaker of Ukraine’s Parliament huddled under umbrellas as eggs rained down and smoke bombs filled the chamber with an acrid cloud.

Parliament speaker Volodymyr Lytvyn was pelted with eggs and had to preside behind a shield of umbrellas.

Then the lawmakers attacked each other, punching and brawling in the aisles.

The chaos erupted Tuesday as Parliament narrowly approved a 25-year extension to Russia’s lease on a naval base in a Ukrainian port on the Black Sea until 2042 — a move bitterly opposed by pro-Western lawmakers. Ukraine would get cheap natural gas from Russia in exchange.

Ukrainian politics are contentious, and the Parliament is often rowdy. Even so, Tuesday’s session was exceptional, offering a glimpse of the raw emotions surrounding the country’s divisive relations with Russia.

Ukraine, about evenly divided between its Europe-leaning west and its Russian-leaning east, has in recent years become a flashpoint in the struggle between the Western world and Russia for influence in the countries of the former Soviet Union. And for many Ukrainians, the naval base has been a symbol, for better or worse, of the Russian role in the country.

Russia’s influence in Ukraine has surged since the February election victory of pro-Kremlin President Viktor Yanukovych. The win infuriated Ukrainians who resent Moscow and inflamed the violent passions that plague the politics of the former Soviet republic.

The current base lease expires in 2017, and the base’s opponents said Russia should withdraw after that. Moscow has based its Black Sea Fleet there since czarist times.

Yanukovych said the reduction in gas prices would bolster Ukraine’s sagging economy and help it meet its obligations to the International Monetary Fund.

The opposition was not swayed.

“Ukraine has begun to lose its independence,” said Yulia Tymoshenko, a former prime minister who lost the presidential race to Yanukovych.

As Parliament speaker Volodymyr Lytvyn opened Tuesday’s legislative session, opposition members threw eggs at him, forcing him to preside behind black umbrellas held by aides.

Opposition lawmakers draped a huge Ukrainian flag over their seats, a signal they would abstain from voting.

Lytvyn defiantly forged ahead amid the falling eggs, calling lawmakers to the stand to make their case on the Black Sea Fleet deal.

About 7 minutes into the session, a smoke bomb went off underneath the draped flag and another was hurled from the back of the gallery. The chamber filled with an acrid cloud as smoke alarms went off — unprecedented scenes in the Parliament.

The lawmakers’ bickering deteriorated into members throwing punches and grappling during the nationally televised session.

Source: AP

Tuesday, April 27, 2010

Ukraine-Russia Deal On Naval Base, Natural Gas Could Pose Challenges In Region

MOSCOW, Russia -- Ukraine's decision to host a Russian naval base for 25 more years in exchange for cheaper gas, ratified Tuesday despite a brawl over it in the Ukrainian parliament, does little to alter the immediate military balance in the Black Sea but presents other challenges for U.S. goals in the region.

Russian Black Sea Fleet

Secretary of State Hillary Rodham Clinton has played down the significance of the pact, saying it should be seen as part of an effort by Ukraine's new president, Viktor Yanukovych, to improve ties with both Russia and the United States in a "balancing act" that "makes sense to us."

But analysts say the deal could hurt Western efforts to support Ukraine's fitful democratic transition, both by allowing it to postpone reforms of its corrupt energy sector and by provoking another round of infighting in the country after years of political instability.

Some also warn that the deal could boost those determined to restore Russia's influence over its neighbors and complicate NATO plans to use the Black Sea as a base against potential foes in the Middle East and Central Asia. The Pentagon, for example, has considered putting part of its missile shield against Iran on ships in the Black Sea.

Russian Prime Minister Vladimir Putin, visiting Kiev before the ratification vote, hailed the deal as a breakthrough in ties with Ukraine and emphasized how much money Russia was giving up to keep its fleet in Sevastopol, on the southern tip of Ukraine's Crimean Peninsula.

"The proposed price seemed absolutely exorbitant," he said, saying the discount amounted to $40 to $45 billion in savings for Ukraine. "It would be possible to build several bases with this money, but for us, this is an issue of cooperation with Ukraine rather than just the financial aspect."

But Ukraine, which has been battered by the global recession and is seeking an IMF bailout, most likely would not have been able to pay the prices Russia had been asking for natural gas.

As a result, critics say, Ukraine could have negotiated a discount without extending the base lease, originally set to expire in 2017, especially since it owns the pipelines that Russia uses to deliver the gas it sells to Europe.

The deal gives Ukraine about 30 percent off the prices set in the contract it signed with Moscow last year, after a standoff during which the Kremlin cut gas supplies to Europe. But that contract set prices so high that the newly negotiated discount brings them down only to current market levels, said Edward Chow, a senior fellow at the Center for Strategic and International Studies.

"They gave something -- extending the naval base lease -- in order to get what they were really entitled to from the beginning," he said of the Ukrainians, noting that Russia had already renegotiated contracts with other customers in Europe and given them discounts because of falling demand and prices.

The new agreement, Chow argued, is the latest in a series of deals that have benefited powerful industrialists in Ukraine and allowed the country to avoid cleaning up its corrupt gas sector, believed to be a source of funds for politicians. Like those before it, he added, the new deal is so flawed it is unlikely to last long and could again threaten the supply of gas to Europe.

For example, he said, the pact requires Ukraine to buy more gas in subsequent years, perhaps more than it needs. But it doesn't require Russia to continue using Ukraine's pipelines, a key source of income for Kiev. The Kremlin plans to build new pipelines that circumvent Ukraine.

David Kramer, a former George W. Bush administration official now at the German Marshall Fund, said the deal could "feed some of the worst instincts in Russian psychology" about the former Soviet Union, especially after an uprising in Kyrgyzstan toppled a government opposed by the Kremlin.

"They may feel they're on a roll, and usually before too long, the Russians overplay their hand and do it in an unhelpful, unproductive way," Kramer said. But he added that he is more worried about the polarizing impact of the deal on Ukrainian politics, which could make it difficult for Yanukovych to govern effectively.

The intensity of emotions over the decision to extend the Russian lease until 2042 was evident Tuesday as fistfights broke out in parliament and opponents set off smoke bombs and threw eggs at the speaker. But Yanukovych's slim majority prevailed, allowing him to push through a new budget without a sharp rise in utility fees and clear the way for the IMF loan.

The new lease has also caused concern in other countries on the Black Sea, especially Georgia, which Russia defeated in a brief war in 2008. Although the Russian fleet is in poor shape, Moscow plans to upgrade it with Mistral-class helicopter carriers from France.

Radu Tudor, a defense analyst in Romania, one of three NATO allies on the Black Sea, said the Russians' extended presence in Sevastopol poses less of a military problem than a political one.

"They continue to see security as they did in the Cold War, with NATO as the enemy," he said. "So it's going to be much harder now to transform the Black Sea from a Russian lake into a NATO sea."

Source: The Washington Post

Ukraine Lawmakers Approve 2010 Budget For IMF Loan

KIEV, Ukraine -- Ukraine’s parliament approved the 2010 state budget with a deficit of 5.3 percent of gross domestic product, opening the way for the next payment of the country’s International Monetary Fund loan.

Two hundred and forty-five deputies voted in favor of the budget, which the previous government failed to adopt last year, leading to a freezing of disbursements from the IMF credit. Lawmakers approved the bill in one vote instead of the customary three readings.

The IMF may send a mission to Ukraine in the first half of May, Deputy Prime Minister Serhiy Tigipko said according to the government Web site today.

“This budget will allow us to move forward, to step forward on our way to reforms,” Finance Minister Fedir Yaroshenko told a smoke-filled parliament after opposition and government members fought, hurled eggs at each other and lit tossed smoke bombs in the building over a law that ratified an agreement allowing Russia to keep its fleet in the port of Sevastopol until at least 2042.

Ukraine was forced to turn to the Washington-based lender for help in late 2008 after the global financial crisis pushed the economy into a recession and weakened its currency.

A failure by the government to cut spending before January presidential elections pushed the budget shortfall to 8.8 percent of GDP, beyond the 4 percent limit set out in the loan agreement. In November, the IMF froze access to the loan.

The former Soviet state is now seeking a $20 billion loan until 2012, Tigipko said on April 23. The IMF, which has yet to confirm the agreement, has said the budget gap must be no wider than 6 percent of GDP this year for the country’s loan program to continue.

The IMF managers show a “demanding” attitude towards Ukraine and approached “with understanding” an increase in social spending, Tigipko said, according to the statement.

The IMF money will be used to “implement reforms to boost the economy,” Tigipko said last month. Ukraine’s Output shrank 15.1 percent last year, the deepest decline since 1994, according to the state statistics office.

The government expects private investments will increase “significantly” once cooperation with IMF is restored, Tigipko said in the statement, adding that investment plummeted in 2009.

Source: Bloomberg

Protests As Ukraine Approves Russia Navy Base Extension

KIEV, Ukraine -- Opposition lawmakers hurled eggs and smoke bombs inside Ukraine's parliament on Tuesday as the chamber approved an agreement allowing the Russian Navy to extend its stay in a Ukrainian port until 2042.

Deputies scuffle during a session in the chamber of the Ukrainian parliament filled with smoke as smoke bombs were released in Kiev April 27, 2010.

Thousands of opposition demonstrators rallied outside the parliament building as deputies from newly elected President Viktor Yanukovich's coalition approved a 25-year extension to the Russian Black Sea Fleet's base in Crimea.

The chamber of the parliament filled with smoke as smoke bombs were released and Speaker Volodymyr Litvyn took shelter under his umbrella as eggs rained down on him.

Ukrainian nationalists, led by former Prime Minister Yulia Tymoshenko and former President Viktor Yushchenko, regard the base as a betrayal of Ukraine's national interests. They wanted to remove it when the existing lease runs out in 2017.

But parliament ratified the lease extension by 236 votes -- 10 more than the minimum required for it to pass.

Yanukovich agreed the navy base deal with Russian leader Dmitry Medvedev on April 21 in exchange for a 30 percent cut in the price of Russian gas to Ukraine -- a boon to Kiev's struggling economy.

In a parallel discussion on Tuesday morning, the Russian Duma was expected to rubber-stamp the deal, which is being touted by the Kremlin as a diplomatic coup.

The Russian fleet has been based in Sevastopol since the reign of Catherine the Great in the 18th century. But, under an accord after Ukraine gained independence following the break-up of the Soviet Union, the fleet would have had to leave in 2017.


Yushchenko, Yanukovich's pro-Western predecessor who favored Ukrainian membership of NATO, pushed hard when he was in office for the fleet to be withdrawn on time in 2017.

But the newly elected Yanukovich says he wants to significantly improve ties with Ukraine's former Soviet master. He says the Black Sea fleet in Crimea does not endanger Ukraine's national interests and enhances European security.

Yanukovich's opponents say he is acting against the constitution. But the constitution is ambiguous, containing two contradictory articles on the stationing of foreign military bases in the country.

"If society today turns a blind eye to the Kharkiv agreement, it is possible that it will be the biggest loss to our sovereignty and independence," Yushchenko said at the weekend, referring to the meeting in the city of Kharkiv where Yanukovich and Medvedev agreed the deal.

The Russian fleet in Sevastopol comprises about 16,200 servicemen, a rocket cruiser, a large destroyer and about 40 other vessels including submarines, landing craft, small destroyers and support ships.

To the embarrassment of Yushchenko, the fleet sent warships to support Russian military action against Ukraine's then-ally, the former Soviet republic of Georgia during Russia's brief war there in August 2008.

Opponents of the Black Sea deal say that, by hosting the Black Sea fleet, Ukraine could be dragged into future Moscow conflicts with other powers.

Proponents point out that the Crimea was part of Russia until then-Soviet leader Nikita Khrushchev gave it to Ukraine in the 1950s. The region retains a strongly Russian-leaning population.

Source: EU Monitor

Ukraine's President Says Chernobyl Still A Threat

KIEV, Ukraine -- On the 24th anniversary of the world's worst atomic accident, Ukraine's president warned Monday that a reactor at Chernobyl remains a serious threat to Europe.

A relative of Klavdia Luzganova, who died when a reactor at the Chernobyl nuclear plant exploded on April 26, 1986, mourns over her grave Monday at Mitino cemetery in Moscow. Health groups estimate that radiation from the explosion has caused more than 700,000 premature deaths.

The 1986 explosion of reactor No. 4 sent a cloud of radiation over much of Europe, and severe health problems persist. President Viktor Yanukovych says about 2 million people have illnesses caused by the radiation, and non-governmental organizations estimate the disaster has caused more than 700,000 early deaths.

The reactor is encased in a deteriorating shell and internationally funded work to replace it is far behind schedule.

During commemoration ceremonies Monday, Yanukovych said the reactor is a threat "not only for Ukraine, but for Europe, Russia and Belarus."

The radiation left swaths of Ukraine and Belarus uninhabitable. Both countries were part of the Soviet Union at the time of the explosion.

Yanukovych laid flowers at a monument to explosion victims in Chernobyl and visited a plant that reprocesses spent nuclear fuel.

Yanukovych pledged to provide better care for Chernobyl victims and those who still have related diseases, calling that an issue of "conscience and honor."

Prime Minister Mykola Azarov promised better medical treatment, higher pensions and accommodation.

In Kiev, an Orthodox priest prayed near a monument to Chernobyl victims in front of hundreds who gathered to pay tribute to those who died. Some in the crowd complained about inadequate compensation and treatment for those who fell ill after taking part in the cleanup.

"We lost our town, we lost everything. Every time, the authorities promise to raise our pensions, but they always lie," said Serhiy Krasylnikov, a former plant worker who heads a Kiev district union of Chernobyl victims.

A commemoration march took place Monday evening in Minsk, the capital of Belarus. In previous years, opposition groups had used unsanctioned commemoration gatherings as a venue for protesting against the authoritarian government. This year, officials sanctioned the march.

In Minsk's heavily policed central square, about 2,000 demonstrators held aloft opposition flags bearing slogans such as "Dictatorship is like another Chernobyl," and "You cannot stop radiation with decrees."

"(President Alexander) Lukashenko is like a second Chernobyl for Belarus. He doesn't solve the problem, but aggravates it," said Dmitry Rusevich, an 18-year-old student.

Their march was due to end with a candlelit vigil by a church dedicated to the victims of the disaster.

Independent analysts in Belarus say much is being done to hide the truth about the wider consequences of the disaster. They say contaminated agricultural produce still finds its way onto store shelves.

Source: AP

Monday, April 26, 2010

Tilting To Moscow

KIEV, Ukraine -- Viktor Yanukovich became the president of Ukraine promising a rapprochement with Russia. He has certainly delivered one.

Dmitry Medvedev (L) and Viktor Yanukovych.

The deal Mr Yanukovich has just signed with his Russian counterpart, Dmitry Medvedev, represents a decisive break with the policies of his predecessor, Viktor Yushchenko.

By allowing the Russian navy to extend the lease over its base at Sevastopol in the Crimea, he has effectively torpedoed Ukraine’s pursuit of Nato membership. The alliance’s rules prohibit any member nation from hosting foreign bases on its soil.

True, membership of Nato was already looking an increasingly distant prospect for Ukraine. The alliance backed away from offering the country a road map to entry at its Bucharest summit in 2008.

Russia’s assault on Georgia later that year reduced further Nato’s appetite for sheltering more former Soviet states under its umbrella.

But the deal kills any hope of accession. And it tilts Kiev eastwards in other ways, offering Russia economic concessions that Moscow can hope to transform into lasting influence.

Mr Yanukovich has quickly put his stamp on foreign policy, cosying up to Russia rather than returning to the norm of balancing between the west and Kiev’s former colonial master.

Mr Yanukovich’s price harks back to an earlier period of backroom deals by Kiev. He has traded the concessions in return for cheap gas. This may be popular at a time of economic hardship, but it is a retrograde step.

It perpetuates Ukraine’s dependence on cheap Russian energy, thus leaving Moscow with a powerful lever in any future disputes between the two countries – one Moscow has shown itself more than willing to use. The only way to break this would be for Ukraine to pay the full price.

That Mr Yanukovich has gone down this route is disappointing, but it is not wholly surprising. He has always looked more comfortable in Moscow than in Brussels.

Mr Yanukovich can also argue that he has been driven by economic necessity rather than ideology. Ukraine is still reeling from an economic collapse that sliced 15 per cent off output last year.

It is only six years since the Ukraine’s Orange Revolution opened up the possibility of faster integration into the European Union and membership of Nato.

That momentum has been dissipated by the incompetence of Mr Yushchenko’s presidency.

Yet most Ukrainians still see their future in the EU. Mr Yanukovich’s deal has made the achievement of that aspiration less likely.

Source: Financial Times

Ukrainian Lawmakers To Set Tone For Russia Ties With Naval Base Vote

MOSCOW, Russia -- Russian Prime Minister Vladimir Putin flies into Kiev on Monday as the Ukrainian parliament's prepares to consider ratifying the deal on Russia's naval base in Crimea in a vote of no little importance to Moscow.

Russian fleet in Sevastopol, Ukraine.

Russia's parliament will also consider the agreement on Tuesday, but there will be no fireworks in the State Duma. Ukraine's Supreme Rada might be a different proposition.

The government says it has the votes, but the extension to the lease will be fiercely fought by the opposition, led by ex-prime minister and losing presidential candidate Yulia Tymoshenko and former President Viktor Yushchenko - united again, at least on this, after years of bitterness once the shine had worn off their orange revolution.

Before President Viktor Yanukovych beat Tymoshenko in February's runoff to replace Yushchenko, there was no discussion of extending the lease - Yushchenko had told Russia to prepare to leave in 2017. But times change, and although the makeup of parliament didn't, enough lawmakers voted for Yanukovych's prime minister after booting out Tymoshenko and her Cabinet.

So the ruling coalition relies on the votes of members of the previous broadly nationalist parliamentary majority, and the Rada will now have to consider the question: what is Ukraine's sovereignty worth?

The basics of the deal have been well-reported - for Russia, an extra 25 years at the Black Sea Fleet's main Sevastopol base, and for Ukraine, a 30% discount on Russian gas until 2020, when the current contract expires.

The discount will cost Russia an estimated $3 or $4 billion a year at current prices. And after 2017, it will reportedly be offset by comparable cuts in the new, higher rent for the naval facilities Russia uses in Crimea.

Russian President Dmitry Medvedev said the Black Sea Fleet base and the gas contract were only technically linked, and the deal was purely financial.

"The discount will be applied against Russia's rent for the deployment of its Black Sea Fleet and the naval base in Sevastopol. This is a technical, rather than political link, and involves a financial transaction only," he said.

The economics of the deal have already been touted in Ukraine. National energy company Naftogaz says the deal will prevent it from going bankrupt, and given the prices consumers pay - or in many cases fail to pay - for the gas it buys from Russia, there is little reason to doubt that this is the case.

It is news each month when Gazprom receives its money on time and in full, as it has since the Tymoshenko and Putin ended the gas standoff between the two countries in January 2009.

But despite the undoubted economic importance to Ukraine, this is, of course, much much more than a financial transaction.

It will set a marker for how far the administration of Ukrainian President Viktor Yanukovych can go in moving Kiev closer to Moscow. Elected almost exclusively due to strong support in the mostly Russian-speaking east of Ukraine, his first trip as president was to Brussels.

That was quickly followed by a visit to Moscow, and another, and he seems to have hardly looked west since.

Yanukovych made no bones he would look at extending the lease of the base, but it is a surprise to see a deal done so soon. The continuing presence of the Black Sea Fleet in Crimea is the only significant thing Moscow wanted from Kiev.

Russia has already started building Nord Stream, a gas pipeline straight to Germany under the Baltic Sea, and both Russia's South Stream and the European Nabucco projects would hope to be filled with gas that would otherwise be pumped via Ukraine, so the country's major role as a transit nation for Russian gas exports to Europe are undoubtedly numbered. The deal up until 2020 is perhaps the last card Kiev had to play.

Ukraine's opposition argued the country's constitution excluded the deployment of foreign military bases on its territory, but the Constitutional Court has ruled the agreement legal, as it is not a new treaty but rather the extension of the current one. So parliament would seem to have the last word on the deal.

Do the Ukrainian lawmakers think their president got enough when he signed the on the dotted line last week?

We will have their answer soon enough.

Source: RIA Novosti

April 26, 1986: Chernobyl Nuclear Plant Suffers Cataclysmic Meltdown

CHERNOBYL, Ukraine -- 1986: Design flaws, compounded by human errors, cause Soviet engineers to lose control of a reaction at the Chernobyl nuclear power plant. A partial meltdown occurs. Many die. Many more suffer. The final count of victims may not be over yet.

Aerial view shows damage to Reactor number 4 on April 26, 1986.

When someone says “nuclear disaster” you don’t think Three Mile Island. You probably don’t think Windscale Fire. You probably don’t even think Hiroshima. You think Chernobyl.

Ironically the disaster that has become synonymous with the dangers of nuclear energy was caused in part by a safety test. The power-regulating system and emergency safety system of the fourth reactor at Chernobyl in Ukraine (then part of the old Soviet Union) were shut down for the test on April 25.

Most of the control rods (the reactor components that stop nuclear fission from cascading out of control) were withdrawn from the nuclear core, while engineers allowed the reactor to operate at 7 percent power.

At 1:23 a.m. on April 26, the fourth reactor experienced an enormous power excursion, or sudden increase in the power level. This caused a steam explosion, and hydrogen escaped to the outside air.

The hydrogen mixed with oxygen and ignited, triggering a chemical explosion. This second explosion ripped the roof off of the reactor, exposing its radioactive core.

Worse yet, it ejected an enormous amount of highly radioactive particulate and gaseous debris into the atmosphere — the majority of which drifted to Belarus (also part of the U.S.S.R. as Byelorussia).

The effort to contain the resulting fire and cleanup is tragic and well-documented. Firefighters rushed to the scene to put out the blaze, many exposing themselves to deadly levels of radiation in the process.

The fire was finally put out at 6:35 a.m. the following morning, but the exposed radioactive core remained.

Soviet engineers scrambled to come up with a containment solution. Workers wearing heavy protective suits shoveled radioactive debris into what remained of the reactor.

This cleanup crew could only be on the rooftops of surrounding buildings for a maximum of 40 seconds, because the radiation levels were so high.

Helicopters then dropped about 5,000 metric tons of sand, lead and boric acid onto the reactor, in hopes it would contain the radioactive mess. It didn’t.

Engineers finally poured 20,000 tons of concrete and lead onto the reactor to contain the radiation in December 1986. The resulting concrete sarcophagus exists to this day, but questions of its stability and lifespan remain.

The cloud of radioactive debris spewed by the disaster drifted over Ukraine, Belarus and Russia. Consequently more than 300,000 people were evacuated from a roughly 18-mile zone that would later be dubbed the Zone of Alienation.

Fifty thousand people were evacuated just from the town of Pripyat, turning it into an abandoned city virtually overnight.

The death toll from the Chernobyl disaster is not well documented. Officially there were 56 fatalities, mostly from radiation poisoning after the event.

However, a cover-up by Soviet authorities has spurred much speculation over what the long-term effects of the incident are.

Outbreaks of cancers and birth defects have been blamed on the Chernobyl disaster but never scientifically substantiated.

Because of power demand, the plant operated with its three remaining reactors for more than 14 years before being decommissioned in December 2000.

The plant is scheduled to be dismantled and cleared away by the year 2065. Until that happens, one can take guided tours of the disaster site: Ukraine’s Ministry of Atomic Power started letting visitors in a few years ago.

Source: Wired

Sunday, April 25, 2010

Belarus Leader Raps Russia, May Snub Security Summit

MINSK, Belarus -- Belarussian President Alexander Lukashenko on Sunday berated ally Russia for not paying for its military bases deployed in his country and warned that he could snub the summit of a Moscow-dominated security pact next month.

Belarussian President Alexander Lukashenko.

Lukashenko, who has sought to improve ties with the West, bitterly hit out at Russia's gas-for-base deal with Ukraine.

"I want to congratulate my Ukrainian colleagues on this victory -- they have saved a few billion dollars by signing this deal," Lukashenko told reporters.

Ukrainian President Viktor Yanukovich, bargaining with Moscow for cheaper gas, agreed last week to extend the lease of Russia's Black Sea Fleet in the Crimea by 25 years beyond 2017, a move the opposition sees as Ukraine selling its sovereignty.

"If someone has forgotten it, Russia has two military bases on Belarussian land," Lukashenko said. "And Russia pays us zero roubles, zero kopecks and zero dollars for these bases."

"Besides Belarus, Russia has no one on its western flank."

He said one of the bases was part of Russia's national ballistic missile early warning system, while the other provided communications with Russian submarines in the Atlantic.

Russian officials say Moscow does not pay Minsk for the bases because Belarus gets Russian oil and gas at low prices, while Belarus says the lack of payment is due to a close military and political partnership between the two.


Those ties have soured amid trade wars, Belarus's anger over what it sees as high prices for Russian energy and Moscow's irritation with Minsk's refusal to recognize Georgia's breakaway provinces of Abkhazia and South Ossetia as independent states.

Adding further to tensions, Lukashenko has criticized Moscow's prompt support of Kyrgyzstan's opposition, which came to power after a bloody revolt this month. Ousted Kyrgyz leader Kurmanbek Bakiyev was sheltered in Belarus.

Lukashenko threatened he would not attend an informal summit of the Moscow-dominated Collective Security Treaty Organization (ODKB) set for May 8 in Moscow, unless the issue of Kyrgyzstan's "coup d'etat" was included in the agenda of the meeting.

Both Belarus and Kyrgyzstan make part of the post-Soviet security pact, along with Russia, Armenia, Kazakhstan, Tajikistan and Uzbekistan.

"What sort of organization is this one, if there is bloodshed in one of our member states and an anti-constitutional coup d'etat takes place, and this body keeps silent?" Lukashenko said.

"At this stage, there is no agenda (for the summit). If nothing is changed, I have nothing to do there."

ODKB countries control a key land route from Europe to Afghanistan, and the group is often billed as a regional counterweight to NATO.

In June last year Lukashenko snubbed an ODKB summit in Moscow over a milk export row with Russia.

Source: The Washington Post

Russian PM To Visit Ukraine

MOSCOW, Russia -- Russian Prime Minister Vladimir Putin will visit Ukraine on Monday following an accord allowing Russia to retain a naval base there until 2042 in return for cheap gas, a Russian statement said.

Russian PM Vladimir Putin

The communique released on Saturday did not spell out Putin's program.

The visit comes on the eve of the ratification by the parliaments of both countries of the deal signed last week granting a 25-year extension to the lease that allows Russia to maintain its Black Sea Fleet in the Crimean port of Sevastopol. The lease had been due to expire in 2017.

In exchange, Moscow gave Kiev a 30 per cent discount on Russian natural gas, which is expected to save Ukraine billions of dollars as it struggles to recover from a crushing economic crisis.

Ukrainian President Viktor Yanukovych, who has sought to improve ties with Russia since taking office in February, signed the controversial deal on Wednesday with his Russian counterpart Dmitry Medvedev.

Source: BigPond News

Saturday, April 24, 2010

Champion Boxer Re-Enters Political Ring In Ukraine

KIEV, Ukraine -- World boxing champion Vitali Klitschko announced Saturday the launch of a new political party to reform Ukraine, giving it the feisty name of "OUDAR", an acronym which means a "punch".

World boxing champion Vitali Klitschko.

"I am used to achieving my goals, I am convinced that this will be the case not only in the field of sports but also in politics," Klitschko said in a statement.

"With a strong and well-aimed 'punch', I am ready to knock down the wall between society and the authorities which is blocking the development of Ukraine," he said.

The heavyweight WBC champion did not indicate the political leanings of his party OUDAR, whose full name is the Ukrainian Democratic Alliance for Reform.

During the former Soviet state's Orange Revolution in 2004, Klitschko supported pro-West former president Viktor Yushchenko against the current head of state, Viktor Yanukovych, elected earlier this year and considered pro-Russian.

Klitschko, 38, however is not a newcomer to political ambition.

The nicknamed "Dr. Iron Fist", because of his doctorate in sports and as one of the few champions never to have been knocked down in his career, did however hit the mat twice in Kiev politics, failing in his bid to be elected the capital's mayor in 2006 and 2008.

Source: AFP

Thousands Protest Russia-Ukraine Deal

MOSCOW, Russia -- Thousands of opposition demonstrators marched in front of the parliament building in Kiev, Ukraine, Saturday, protesting a deal reached earlier this week to extend Russia's military presence in the former Soviet Republic, national news media reported.

Opposition protesters wave hands at a mass meeting in front of the Ukrainian Parliament in Kiev on Saturday.

Parliamentary opposition leader Yulia Tymoshenko -- the former prime minister who lost to Viktor Yanukovych in the presidential election run-off in February -- told protesters Saturday that the ratification of the treaty must be prevented at all costs.

She claimed that Yanukovych is "selling out" Ukraine, has "openly embarked on the path of destruction of [Ukraine's] national interests, and has actually begun the process of eliminating the state's sovereignty," according to a transcript of the speech on her website.

After the deal was signed Wednesday by Yanukovych and Russian President Dmitry Medvedev, Tymoshenko said it violated part of the Ukrainian Constitution, which forbids the country from hosting foreign military bases after 2017.

Saturday, protesters reportedly adopted a resolution calling the agreement an "unprecedented act of national treason and disgrace," and calling on all opposition groups to unite against it.

According to Tymoshenko's website, some 10,000 people gathered at the rally. But Ukrainian national news agency UNIAN estimated the number of protesters at 5,000.

The deal extends Russia's lease of a major naval base in the Black Sea port of Sevastopol, Ukraine, for an additional 25 years, in exchange for a 30 percent cut in the price of natural gas that Russia sells to Ukraine.

The agreement may bring an end to years of disputes over natural gas prices, which culminated in Russia turning off the pipeline to Ukraine. The dispute affected not only Ukrainians, but many Europeans who depend on Russian gas pumped through Ukraine.

The two countries had been at odds ever since the "Orange Revolution" swept Yanukovych's fiercely anti-Russian predecessor Viktor Yushchenko to power in 2005.

Throughout his time in office, Yushchenko repeatedly threatened to expel Russia's Black Sea Fleet from Sevastopol. The Russian military lease there was scheduled to expire in 2017.

"The prolongation of the Black Sea Fleet's presence in Sevastopol is essential to Russia," Yanukovych said Wednesday. "We understand that the Black Sea Fleet will be one of the guarantors of security on the Black Sea."

The Kremlin-friendly Yanukovych, who hails from predominantly Russian-speaking eastern Ukraine, trounced Yushchenko in national elections last January.

The Russian president said the new deal added a "concrete and pragmatic dimension" to centuries of relations between Ukrainians and Russians.

Opposition groups in Ukraine, however, were quick to denounce the agreement. Yuschenko's "Our Ukraine" party said the treaty would lead to the "Russification" of Ukraine.

Opposition activists decided Saturday to stage another protest in front of parliament April 27, when the deal will be put to a ratification vote.

Source: CNN

Ukraine 'Ready' For Relaxed Visa Regime With EU, Says PM

KIEV, Ukraine -- Ukrainian Prime Minister Mykola Azarov said that the European Union has every reason to relax visa requirements for Ukrainian citizens, the Kyiv Post reported Friday, citing Interfax news agency.

European Enlargement and Neighbourhood Policy Commissioner Stefan Fuele takes notes.

He said this during a meeting with EU Commissioner for Enlargement and European Neighborhood Policy Stefan Fuele, the government's press service reported.

The Ukrainian prime minister said that talks on the abolition of the visa regime started in 2004. Ukraine has met most of the demands set by the European Union, Azarov said.

"We are abiding by a readmission agreement. We have no problems with the delimitation of borders and organization of border controls. We are ready to provide our citizens with passports with biometric data within six months," Azarov said.

The prime minister noted that Ukraine expects more active steps from the European Union.

"For Ukrainian citizens who support the idea of joining the European Union and know that visas for EU citizens were canceled five years ago, it is unclear why no progress has been made and why humiliating procedures when obtaining visas remain. So we are waiting for more active steps from the European Commission," Azarov said.

Source: Turkey's Daily News

Ukrainian Opposition Denounces Deal With Russia

KIEV, Ukraine -- Ukrainian opposition leaders on Friday denounced a deal allowing Russia to keep its navy in Ukraine for another quarter of a century, saying it amounted to ceding control over the nation's territory.

Ukraine's President Viktor Yanukovych answers question during a press-conference in Kiev. Yanukovych on Thursday defended a deal to allow a Russian base to stay in Ukraine until 2042 after it was slammed by his opponents as a surrender of national sovereignty.

The agreement is the first concrete sign that newly-elected President Viktor Yanukovych will steer Ukraine back into Russia's orbit, reversing his pro-Western predecessor's attempts to decrease Moscow's influence.

In return, Moscow gave the ex-Soviet republic steep discounts for the Russian natural gas on which its industries depend.

Wednesday's deal signed by Yanukovych and Russian President Dmitry Medvedev allows Russia to extend its lease of the Black Sea Port of Sevastopol for another 25 years after the current lease agreement expires in 2017.

Former President Viktor Yushchenko, who now leads opposition party Our Ukraine, said the deal amounted to Russia's "military occupation."

The agreement is set to come up for ratification next Tuesday in both Russia and Ukraine. Former Prime Minister Yulia Tymoshenko, who leads the biggest opposition faction in parliament, urged lawmakers to vote against the deal.

She said Friday that the agreement is a "strategic mistake" that would mean that "Ukraine has lost control over its territory."

But the opposition faces an uphill battle in trying to block the ratification in parliament, which is controlled by Yanukovych's party and its allies.

The opposition denounced the deal as illegal, saying that the constitution does not allow foreign troops to stay in Ukraine. But supporters of the agreement point at another section of the constitution that allows them to stay temporarily with parliament's approval.

Yushchenko pledged to join efforts with Tymoshenko, his fierce political rival, to block the ratification, but even he predicted that the majority coalition in parliament will have its way.

Some opposition lawmakers in the federal parliament and regional legislatures talked about launching impeachment proceedings against Yanukovych.

"Yanukovych's actions should be treated as a state treason, and an impeachment procedure should be launched in parliament," said Borys Tarasyuk, former foreign minister in Tymoshenko's government, who currently chairs a parliamentary committee on the European integration.

Analysts said the pact will trigger a deeper split in Ukrainian society between the Russian-speaking east and south and the western regions where nationalist sentiments run strong.

"The first evident consequence is a significant rise of temperature in Ukrainian politics," said political analyst Igor Zhdanov.

Source: BusinessWeek

Friday, April 23, 2010

Ukraine Deputy PM Criticizes Yanukovych On Russian Base Extension

WASHINGTON, DC -- A senior official in Ukraine's ruling coalition is criticizing the country's president for a deal to extend the stay of Russia's Black Sea Fleet at a Ukrainian ports.

Serhey Tihypko

Serhey Tihypko, prime minister for economic issues, said in an interview with The Associated Press that while the deal might make economic sense, President Viktor Yanukovych should have been more open about the negotiations.

"The procedure of debating the agreement and completing it behind closed doors is not what the Ukrainian people want," Tihypko said through an interpreter.

Tihypko joined the coalition after finishing third during the first round of the presidential contest in January.

Yanukovych signed the deal Wednesday with Russian President Dmitry Medvedev to extend the Russian lease at the port of Sevastopol after the existing lease expires in 2017.

Yanukovych's predecessor, Viktor Yuschenko, had threatened to end Russia's lease on the strategically important base.

The deal signals that Yanukovych is looking for closer co-operation with Russia. But Tihypko said that good relations with Russia will not cause a turning away from the West.

He said that European integration remained the country's number one foreign policy priority.

He praised the base deal on economic terms.

Tihypko said that under the agreement, Ukraine will receive large discounts on gas shipments in return for extending the lease, which will ease the country's budget woes.

"From the economic point of view, the latest agreement on the base is a good one," he said.

Ukraine has been hit by the global downturn harder than many other European countries. The country was granted a $16.4 billion bailout loan by the IMF last year.

In October, the fund halted the fourth and final portion of the loan, worth $3.8 billion, demanding that the country's leadership resolve its budget crisis.

Ukraine negotiated the payout of $2 billion in December, but $1.8 billion remains frozen.

Tihypko was in Washington attending meetings of the IMF and World Bank.

He was expected to meet with IMF Managing Director Dominique Strauss-Kahn Monday.

Tihypko said that he believe his country could complete a new agreement with the IMF by June.

Source: The Canadian Press

Russian Envoy To Ukraine Hails Naval Base Deal

KIEV, Ukraine -- The deal extending Russia's use of a naval base in Ukraine's Crimea is economically beneficial for both Moscow and Kiev, the Russian ambassador to Ukraine said on Friday.

The agreement, signed on Wednesday by Russian President Dmitry Medvedev and Ukrainian President Viktor Yanukovych, extends the lease on the Russian base in the port of Sevastopol for 25 years after the current lease expires in 2017, and may be further extended by another five years.

"As far as Russia is concerned, it is not only a question of the redeployment of the Black Sea Fleet or the construction of new coastal infrastructure, but also a broad array of issues related to understanding how friendly our neighbor is," Mikhail Zurabov said.

He said the new deal was important for eliminating the remaining "uncertainty" in relations between the two countries.

"We do not want to find ourselves in a situation of such high uncertainty and I don't think our Ukrainian colleagues want that either," he said, adding that uncertainty was bad for the economy.

Russian President Dmitry Medvedev submitted the agreement to the Russian lower house of parliament, the State Duma on Friday. The Duma has scheduled a plenary session on the ratification of the agreement for April 27 and Ukraine's parliament is due to hold a session on the same day.

There has, however, been strong opposition to the deal in Ukraine and it is not clear that it will in fact be ratified on Tuesday.

The Ukrainian opposition said any prolongation of Russia's military presence would require amendments to the Constitution as well as a national referendum.

Former Ukrainian President Viktor Yushchenko said on Thursday the deal amounts to "military occupation" and urged all opposition and patriotic forces to unite in the face of the threat to Ukraine's sovereignty.

Mykola Tomenko, deputy speaker of parliament and a leader of the Yulia Tymoshenko Bloc opposition party said on April 14 that Article 17 of the Constitution forbids foreign military bases on Ukrainian soil.

However, on Thursday Ukraine's Constitutional Court ruled the extension of the base lease did not violate the country's Constitution.

Yanukovych, who became president two months ago, has pledged to steer Ukraine away from the pro-Western stance of Yushchenko, who vowed that Russia would have to look for a new base for its Black Sea Fleet after 2017.

Source: RIA Novosti

Yushchenko Criticizes Russian Fleet Deal

KIEV, Ukraine -- Ukraine's ex-president Viktor Yushchenko sharply criticized the agreement on prolongation of the Russian Black Sea Fleet basing in Crimea, signed by the two countries' presidents in Kharkiv on April 21.

Viktor Yushchenko

He described the reduction of gas price at the cost of the BSF stay in the territory of Ukraine after 2017 a 'capitulation' and transfer of Ukraine into the category of 'Russian lackeys'.

“I cannot welcome these agreements either as a citizen or as a politician,” the Our Ukraine party leader emphasized in a TV Channel 5 interview.

He said, hanging in the balance are sovereignty and independence against cheap gas, which will make the national economy uncompetitive.

Source: BSANNA News

Thursday, April 22, 2010

NATO Says Russia Base Does Not Affect Ukraine Pledge

TALLINN, Estonia -- Ukraine's signing of an agreement extending the lease of a Russian naval base in Crimea does not affect its prospect of eventually joining NATO, NATO Secretary-General Anders Fogh Rasmussen said on Thursday.

NATO Secretary-General Anders Fogh Rasmussen.

Rasmussen said NATO policies had not changed since it promised Ukraine eventual membership at a summit in 2008.

"We stated that Ukraine, and Georgia, by the way, will become members of NATO, provided of course if they so wish and fulfill the necessary criteria. And this is still our position," he told a news conference at a NATO meeting in Estonia.

Referring to the base deal, he added: "It's a bilateral agreement and it will not have an impact on our relationship neither with Russia nor with Ukraine."

Ukraine's newly elected President Viktor Yanukovich has said membership of the U.S. military alliance is no longer on the agenda and earlier this month he scrapped a state body set up to oversee the country's eventual accession to the alliance.

At the same time, he was careful not to close off all cooperation with NATO.

Russia agreed on Wednesday to a 30 percent cut in the price of its gas supplies to Ukraine in exchange for a 25-year extension of the lease of its Black Sea fleet based on Ukraine's Crimean peninsula.

The concession on the Black Sea fleet was the clearest sign yet of a foreign policy shift by Kiev toward Moscow, which was angered by NATO's promise of membership to Ukraine and Georgia, former Soviet republics it sees as part of its sphere of influence.

Despite its promise of eventual membership for Ukraine, NATO has cooled on the prospect while seeking to rebuild ties with Russia damaged by Moscow's intervention in Georgia in 2008.

Earlier on Thursday, U.S. Secretary of State Hillary Clinton rejected Russia's claim to a sphere of influence and said Moscow had no right to veto whether a country could join an organization like NATO.

Source: The Washington Post

Ukraine Suspends VimpelCom Deal On Day Of Share Debut

MOSCOW, Russia -- Ukraine's antitrust authority Thursday said it has suspended its earlier approval of a $22 billion tie-up between Kyivstar and Russian mobile operator OAO Vimpel Communications after a rival company complained about their market share and use of mobile spectrum.

VimpelCom's Beeline Brand

Astelit, part-owned by Turkey's Turkcell AS, petitioned Ukrainian authorities to re-examine the deal, and the Antimonopoly Committee of Ukraine said it will "check the information we received in order not to allow monopolization."

Astelit told authorities to consider VimpelCom Ltd.'s share of 2009 mobile revenue in Ukraine, rather than merely its subscriber count, since some Ukrainians have more than one mobile phone, the antitrust regulator said. It should also review the companies' share of GSM spectrum, some of which is used by the Ministry of Defense, the committee's statement said.

A final decision will either confirm the committee's earlier approval of the merger, deny it, or require shareholders of newly created VimpelCom Ltd. to take further steps.

VimpelCom Ltd., which was to assume OAO VimpelCom's VIP ticker on the New York Stock Exchange Thursday, declined to comment immediately on the Ukrainian announcement. Part-owner Telenor ASA of Norway said a Ukrainian review of the decision could take several months.

VimpelCom shareholder Alfa Group said it hasn't received documents from Ukraine but it doesn't expect legal consequences arising from the regulator, since all regulatory criteria were satisfied when the deal closed.

"In the worst-case scenario, the creation of VimpelCom Ltd. being reversed, the company's minorities would get OAO VimpelCom's shares back, which might be listed back on the NYSE until the conflict with the Ukrainian regulator has been resolved," VTB Capital analyst Victor Klimovich said. The company may have to give up some frequency spectrum in Ukraine in order to placate the authorities there, he said.

VimpelCom Ltd. said Wednesday that 97.87% of OAO VimpelCom's shareholders had tendered their shares in the offer to merge with Kyivstar, above the required 95% threshold. The remaining shareholders will be squeezed out in a process to be detailed by May 26.

Source: The Wall Street Journal

Wednesday, April 21, 2010

Ukraine Fleet Deal Expands Russia's Regional Reach

KIEV, Ukraine—Ukraine agreed Wednesday to extend the lease of Russia's Black Sea Fleet base in return for sharply lower natural-gas prices, a long-term trade-off that reasserts much of Moscow's influence over its former Soviet neighbor after years of tension.

Russian President Medvedev (L) with his Ukrainian counterpart Viktor Yanukovych.

The deal was the latest sign of Russia's determination to use its vast energy resources to restore dominance lost when the Soviet Union collapsed in 1991. It will allow Russia to keep a strategic military presence beyond its borders until 2043, a quarter-century beyond the end of its current lease for the naval base on Ukraine's Crimean peninsula.

Ukraine, hit hard by the global economic downturn, received a waiver of export taxes that will knock as much as 30% off the price of Russian gas over the next nine years, avoiding disputes that have often led to midwinter gas cutoffs.

The commitments were a clear sign that Ukrainian President Viktor Yanukovych, who took office two months ago, is moving the country closer to Moscow after years of rule by pro-Western leaders of Ukraine's Orange Revolution. Some of those politicians, now in opposition, condemned Mr. Yanukovych's concession on the naval base as a sellout of Ukraine's sovereignty.

Mr. Yanukovych and his Russian counterpart, Dmitry Medvedev, announced the accords after meeting in the Ukrainian city of Kharkiv. Mr. Medvedev told a joint news conference that the gas and base accords were linked. "This was a step we have awaited for a long time," he said of the base extension. In return, he said, "our Ukrainian partners will receive a discount in the price of gas."

Ukraine, a country of 46 million people wedged between Russia and the European Union, has struggled to balance its relations with the two since independence in 1991. Mr. Yanukovych's predecessor, Viktor Yushchenko, infuriated Moscow by trying to kick the fleet out of Ukraine, calling it a hostile presence.

The Black Sea Fleet was once part of the Soviet navy and remained in Ukraine under the Russian flag. The current lease on the base was signed in 1996.

Mr. Yanukovych, who has abandoned his predecessor's goal of bringing Ukraine into the North Atlantic Treaty Organization, now risks alienating a large part of his compatriots by allowing the fleet to stay. Former Prime Minister Yulia Tymoshenko, who leads Ukraine's largest opposition party, said the decision violates a constitutional prohibition on foreign military bases in Ukraine—a ban that allows exceptions for stationing troops under a temporary lease.

"It's not just treason," she said. "It's the start of the systematic destruction of the independence of our state."

Ukraine's Foreign Ministry issued a statement saying: "We do not regard the Black Sea Fleet as a source of threat to Ukraine's sovereignty and territorial integrity."

Mr. Medvedev said the fleet's continued presence would provide "a greater, better guarantee for European security in the Black Sea basin."

The base extension will have repercussions for other former Soviet republics. The fleet, consisting of about 40 combat vessels, provided maritime support for Russian ground forces during a brief war with Georgia in 2008 and sank a Georgian vessel carrying missile launchers.

Russia on Wednesday also confirmed it plans to buy a French Mistral-class warship, according to state news agency RIA-Novosti, a vessel capable of carrying tanks and helicopters and conducting an amphibious landing.

Georgian President Mikheil Saakashvili, who was in the U.S. for a nuclear security summit, called Wednesday's moves further signs of an expansionist Moscow agenda. Russian Prime Minister Vladimir Putin, he said in an interview, "doesn't make any secret of trying to restore some kind of Soviet empire... Ukraine, more or less from their point of view, has been fixed."

"I hear lots of talk [in the U.S.] that the Cold War is over," he said. "It might be over for America, but certainly it's not over for Vladimir Putin."

For Russia, the price of Ukrainian cooperation will amount to billions of dollars in export duties from which Kiev will be exempted. Ukraine has been paying $330 per 1,000 cubic meters of Russian gas under a 10-year agreement on a market-based pricing scheme signed last year.

Mr. Yanukovych called the accord an unsustainable burden on Ukraine's economy, which shrank 15% last year, and pledged during his election campaign to renegotiate it.

The new gas deal, signed Wednesday by Russian gas exporter OAO Gazprom and Ukraine's state energy firm Naftogaz, will waive export duties on 30 billion cubic meters of gas that Ukraine will buy this year and on 40 billion cubic meters it expects to buy in subsequent years until 2019.

Gazprom said the discount will be 30% of the market-based price but not more than $100 per 1,000 cubic meters. Dragon Capital, a Kiev-based investment bank, estimated that the price cut will save Ukraine about $1.5 billion this year.

That will allow the country's new government to adopt a budget for this year and secure renewed lending from the International Monetary Fund, officials said. Deputy Prime Minister Serhiy Tihipko will head to Washington on Thursday to present an economic-growth plan to the IMF, which last year suspended a $16.4 billion loan program after large social-spending increases were passed into law.

Gazprom's chief executive, Alexei Miller, said the company's profits will be unaffected by the new arrangement. He also said that under the deal, Ukraine won't pay penalties if it buys less gas the agreed in the contract.

"This deal is a win for everyone," said Matthew Saegers, a Eurasian energy specialist at Cambridge Energy Research Associates. "Gazprom wins because it maintains its profitable position. Ukraine gets a reduction in price. And the Kremlin gets what it wants—to show that it's the deal maker and geopolitical master in this part of the world."

Source: The Wall Street Journal

Ukraine, Russia To Extend Black Sea Fleet Lease

KIEV, Ukraine -- The presidents of Ukraine and Russia agreed on Wednesday to extend the stay of Russia's Black Sea Fleet in the Ukrainian port of Sevastopol after the existing lease expires in 2017, news agencies reported.

The move is among the strongest concrete signs since President Viktor Yanukovych took power in February that he will steer away from his pro-Western predecessor's drive to shed Russia's influence.

It also is likely to boost Yanukovych's standing at home by taking some pressure off Ukraine's beleaguered economy. The agreement includes Russia giving Ukraine steep discounts for the natural gas on which its industries depend.

The previous president, Viktor Yushchenko, had fought to kick the fleet out when its lease expired, calling it a hostile presence in Ukraine.

Russian and Ukrainian news agencies quoted Russian President Dmitry Medvedev as saying at a meeting in Kharkiv, Ukraine's second largest city, that Kiev will receive large discounts on gas shipments in return for certainty over the base's future — $100 for every 1,000 cubic meters of gas or 30 percent if the benchmark price falls below $330.

Ukraine for years bought Russian gas at well below market prices, but after Yushchenko took office and pledged to bring the country into NATO and the European Union, Russia repeatedly raised prices. Price disputes led to Russian gas cutoffs; the most severe, in early 2009, lasted two weeks and severely curtailed Russia's gas exports to Western Europe, most of which transit Ukraine.

The news reports said the base's lease would receive a 25-year extension. It was not clear whether the extension was effective immediately or upon the current lease's expiration, but Russian state agency ITAR-Tass cited an unidentified document as saying it was from 2017.

Russia currently pays $90 million per year for the base. There was no word on any change under the new deal.

The lease extension is likely to increase opposition to Yanukovych in the country's western provinces. Ukraine's split between the Russian-speaking east and Ukrainian-speaking west also is predominantly a political division, and leaders have always been forced to play a delicate balancing act for fear of upsetting either camp.

Russian gas company Gazprom said in a statement Wednesday that it has lifted all penalties for the failure to buy as much gas as contracted and said that the discounts for Ukraine "will not harm Gazprom's financials."

Ukraine has been hit by the global downturn harder than many other European countries, and it has been anxious for discounts for Russian gas.

Military analyst Mykola Singurovskiy of the Kiev-based Razumkov think-tank said the base agreement violates the Ukrainian constitution.

Source: AP

Tuesday, April 20, 2010

Ukraine Sees New $12 Billion IMF Program

KIEV, Ukraine -- Ukraine hopes to secure a new $12 billion lending program from the International Monetary Fund for the next 30 months, Deputy Prime Minister Serhiy Tihipko said Tuesday.

Deputy Prime Minister Serhiy Tihipko

"We will present a Ukrainian draft program for cooperation with the IMF over the next 2.5 years. It's a new program aimed at supporting economic growth," he said ahead of a trip to Washington, D.C. Thursday for talks on a new agreement with the fund.

Mr. Tihipko added that he hopes a deal will be reached at the beginning of May, with the first tranche disbursed in June.

The IMF had released around $11 billion of a $16.4 billion program to Ukraine before freezing lending in late 2009 after large spending increases were passed into law. The country badly needs to secure further lending to revive its economy after a 15% contraction last year.

The Ukrainian government has pledged to draft a budget with a deficit of no more than 6% of GDP in order to unlock further lending.

Whether Ukraine can achieve a relatively balanced budget will largely depend on the results of negotiations on the price of imported Russian natural gas. Large subsidies to Ukrainian consumers mean the price of gas is a significant burden on state finances.

Ukrainian Prime Minister Mykola Azarov said Tuesday that negotiations on a lower price were "tough" ahead of a meeting between the two countries' presidents Wednesday.

"Everything depends on the good will of Russia," Mr. Azarov said at a meeting with Ukrainian industrialists, adding that he hopes talks will end with a mutually beneficial agreement.

Russian President Dmitry Medvedev will fly to Kharkiv Wednesday in an attempt to finalize an agreement with Viktor Yanukovych, his Ukrainian counterpart, on a discounted price.

Under a contract signed by former Prime Minister Yulia Tymoshenko in January 2009, Ukraine moved to a market-based price this year of $305 for 1,000 cubic meters in the first quarter. The new president, elected in February, and the government he formed last month argued that the gas contracts are unfair and have pushed for a reduced price.

Ukraine is seeking a discount of one-third, which would save around $3 billion this year. Concessions could help Ukraine's crucial energy-hungry chemicals and steel industries drive an economic recovery.

Mr. Tihipko said GDP growth could exceed the government's forecast of 3.7% this year.

Source: The Wall Street Journal

Ukraine Has $1.4 Billion In Domestic Debt Payments

KIEV, Ukraine -- Ukraine’s government must pay 11 billion hryvnia ($1.4 billion) by the end of next month to service domestic debt, as the country waits for international loan donors to resume payments needed to fund its budget.

Premier Azarov says that current debt "is a bomb under our financial stability..."

The government has to repay 6 billion hryvnia this month and 5 billion hryvnia next month, Prime Minister Mykola Azarov said at a meeting with the confederation of industrial companies in the capital Kiev today. The government also needs to cover about 4 billion hryvnia in pension costs, Azarov said, without elaborating.

“This is a bomb under our financial stability,” he said.

Borrowing costs rose to 15 percent at an auction of 3.3 million hryvnia last week, compared with 11.42 percent at the end of March, as investors wait for the International Monetary Fund to resume its $16.4 billion program to help Ukraine cover its financing needs. Credit default swaps on five-year debt rose 20 basis points yesterday to 523, the biggest jump since Feb. 4.

The former Soviet state has received $10.6 billion from the Washington-based lender to date. Deputy Premier Serhiy Tigipko said in an April 15 interview his government struck a deal to extend its IMF program.

The government is also trying to reduce its budget deficit by negotiating a lower price for gas imports from Russia. Azarov said today those talks were “extremely difficult,” as he urged manufacturers to reduce their energy consumption.

Russia’s ‘Good Will’

“Everything depends on Russia’s good will,” Azarov said. Manufacturers need to consume less energy because Ukraine “cannot buy such expensive gas,” he said.

Russian President Dmitry Medvedev and his Ukrainian counterpart Viktor Yanukovych will tomorrow try to finish talks to determine how much Ukraine must pay Moscow for gas imports. The meeting will be their third in two months.

“I hope that we will review the contract and come to a mutually beneficial agreement with Russia,” Azarov said.

The country’s Fuel and Energy Minister Yuriy Boyko was in Moscow yesterday to discuss gas contracts, Russian state- controlled gas supplier OAO Gazprom said in a statement, without providing any details.

Source: Business Week

Monday, April 19, 2010

Ukraine Might Allow Russian Language In Courts

KIEV, Ukraine -- Lawmakers of Ukraine's pro-presidential Party of Regions have submitted to the parliament a bill, allowing the use of Russian language in during legal proceedings.

Viktor Yanukovych

Under the current legislation, legal proceedings can be carried out solely in Ukrainian language.

"Legal proceedings solely in the state language create barriers and sometimes make it impossible to defend rights and interests protected by the law, which is a violation of the Ukrainian constitution's Article 55," a summary of the bill, published on the parliament's official website, said.

Ukraine's new government said in early April it would give "broad cultural autonomy" to the country's regions, including to choose the main language used in local government and schools.

The bill, authored by Party of Regions lawmakers Serhiy Kyvalov and Vadym Kolesnychenko, was first introduced to the Supreme Rada in 2007, but was rejected. It allows a court to switch to Russian-language if both parties involved in legal proceedings show consent.

The summary stresses that the bill is not aimed at limiting the use of Ukrainian as a state language and contains no provisions which change its status.

"The bill does not give the state language status to Russian, both explicitly and implicitly," the summary reads.

Ukraine's president, Viktor Yanukovych, was elected in February on the back of strong support in the largely Russian-speaking south and east of the country, but was less popular in the more nationalist west.

He has said that he would like to make Russian a second state language, but the balance of power in the country makes it unlikely that any political force could secure the votes in parliament necessary to change the constitution.

The governing coalition, led by Yanukovych's Party of Regions, is therefore likely to incorporate the European Charter for Regional or Minority Languages into Ukrainian law, which would allow individual regions to use Russian — or other widely spoken languages — for official communication and schooling.

Yanukovych's election sparked fears that he would seek to align Ukraine too closely with Russia, but he has been careful to court the European Union as well, and the language policies are being promoted as part of a wider platform of tolerance.

Source: RIA Novosti