Sunday, September 30, 2012

Kiev Claims US Senate Resolution On Tymoshenko Not Serious

KIEV, Ukraine -- A US Senate resolution calling for visa sanctions against Ukrainian officials for jailing former Prime Minister Yulia Tymoshenko last October has caused great controversy in Kiev.


Tymoshenko’s opposition party, Fatherland, welcomed the resolution, describing it as an important warning to President Viktor Yanukovych, whom they hold responsible for Tymoshenko’s imprisonment.

The government, on the other hand, has dismissed it, saying the resolution was not binding and dropping hints that those who pushed it through in the U.S. Senate were on the Ukrainian opposition’s payroll.

In any case, the resolution must have affected Yanukovych’s mood ahead of his visit to New York to attend the UN General Assembly session this week.

The U.S. Senate’s Foreign Relations Committee passed the draft of the resolution authored by James Inhofe (R-OK) and Dick Durbin (D-IL) on September 19.

The resolution said that Tymoshenko was a pro-Western reformer whom the Ukrainian administration jailed in an effort to dispose of a political rival.

The resolution suggested that the State Department introduce a visa ban on those responsible for her imprisonment and that the State Department and the Organization for Security and Cooperation in Europe (OSCE) apply pressure on Yanukovych to release Tymoshenko.

The Ukrainian Foreign Ministry dismissed the draft, saying that it reflected only the views of its authors “known for sympathizing with the Ukrainian opposition”.

The Ukrainian foreign ministry spokesman, Oleg Voloshyn, downplayed the resolution, saying that there was a low chance that the US government would follow the recommendations.

Voloshyn also cited US Assistant Secretary of State Philip Gordon as saying at a conference last week that his administration would prefer dialogue to sanctions in relations with Ukraine.

As a matter of fact, the ministry misinterpreted the US position; Secretary of State Hillary Clinton demanded Tymoshenko’s release early this year, so the resolution reflects the views of the Obama administration and not only the views of its authors.

Kiev hoped that the Senate would have had no time to approve the resolution before the elections in both the United States and Ukraine this fall, so its final approval on September 21 was an unpleasant surprise to the foreign ministry.

The government presented it as a miracle worked in the US by Tymoshenko’s lobbyists.

The foreign ministry in a statement released on September 22 dismissed the resolution as non-binding and said it was “difficult to seriously treat” the document which, the ministry claimed, was hastily edited in order to bypass other senators’ protests and approved late in the night in order to avoid discussions in the Senate.

The ministry accused the unnamed “friends of Tymoshenko’s team” of trying to discredit Ukraine’s parliamentary elections scheduled for October 28.

The pro-government daily Segodnya, in an article published on September 24, described the resolution as a defeat of the Ukrainian government’s lobbyists by Tymoshenko’s lobbyists in the US Senate, saying that most of the senators were not even aware of the resolution passed in their name.

Yanukovych’s office blamed the Ministry of Foreign Affairs for this defeat while the ministry blamed the Party of Region’s lobbyists in the US, according to the newspaper’s sources.

The deputy chairman of the parliament’s foreign affairs committee, Leonid Kozhara, said that the resolution was a “sense of Senate”—not making law and not enforceable. He went as far as claiming that the resolution was pushed through by certain US firms, which were “paid very big money” to ensure its support among senators.

Meanwhile, the opposition hurried to hype the significance of the resolution.

Anatoly Hrytsenko, a candidate for parliament from the Fatherland party, welcomed it as “the last warning” from the United States to Yanukovych, although admitting that it was non-binding.

Tymoshenko’s lawyer Serhy Vlasenko, who is a people’s deputy, said that Fatherland would send its proposals to the US State Department on whom to include on a future visa ban list.

He said President Yanukovych should top the list, to be followed by his older son—who, as a businessmen, is “the main financial sponsor of the totalitarian regime in Ukraine”—as well as the prosecutors who indicted Tymoshenko and Prime Minister Mykola Azarov.

The opposition deliberately hypes the issue, which perfectly suits its purposes in the midst of an election campaign.

At the same time, the government, judging by its tone, hardly underestimates the significance of the resolution, which is the first official document calling for sanctions against Kiev approved at such a high level in Washington.

There have been calls for sanctions also in the European Union, but Brussels made it clear that there would be no sanctions at least until after the elections in Ukraine.

At the same time, Brussels has postponed the signing of an association and free trade agreement with Kiev indefinitely over Tymoshenko’s imprisonment.

European Commission President Jose Manuel Barroso, addressing participants in a high-level forum in Yalta on September 15 via a video link, said he saw no political conditions for the signing.

Source: The Jamestown Foundation

Video Appeal By Jailed Tymoshenko

KHARKIV, Ukraine -- Ukraine's jailed former prime minister Yulia Tymoshenko has urged her country to "rise up" against President Viktor Yanukovych's party in next month's parliamentary election.


An image taken from the video filmed at a hospital in Kharkiv by Ukraine's jailed former Prime Minister Yulia Tymoshenko.

In an emotional video appeal, recorded covertly by her lawyer with a mobile phone in a hospital where she is undergoing treatment, Ms Tymoshenko accused Mr Yanukovych of turning Ukraine into a "police state" and her own life into "hell". 

The state prison agency retaliated by publishing a video of Ms Tymoshenko banging her high-heeled shoe against a hospital door in order to be allowed to see her supporters.

The videos offered a rare glimpse into Ms Tymoshenko's life and state of health behind bars more than a year after she was jailed on charges of abusing her office during natural gas import negotiations with Russia in 2009.

In the both videos, apparently shot around the same time, Ms Tymoshenko, her hair combed into a long blonde braid, looks pale, but energetic and determined.

She is wearing blue jeans, a white shirt and high-heeled shoes and is moving around with the help of walking aids.

Ms Tymoshenko, 51, is suffering from a herniated disc and has been receiving treatment in a local hospital for months.

The West has condemned her imprisonment as politically motivated and the European Union has put on hold a key co-operation deal with Kiev.

Ms Tymoshenko, the country's top opposition leader, denies all the charges against her, and accuses Mr Yanukovych of throwing her in jail to bar her from the contesting the October 28 election.

In the video recorded by her lawyer on Friday and released on Saturday, Ms Tymoshenko urged Ukrainians to support her party in the vote and end what she called Mr Yanukovych's "criminal" rule.

She said: "Today, unfortunately, the whole country lives under a criminal authority." Mr Yanukovych's Party of Regions hopes to maintain its parliamentary majority, but will struggle to do so in the face of an opposition re-energised by Ms Tymoshenko's imprisonment.

The next presidential election is in 2015. Ms Tymoshenko used the video message to complain about her hardship in prison.

"Every day I find myself not only under psychological pressure. Every day here is turned into hell in an absolutely conscious, deliberate way and it is Yanukovych's direct plan," she said.

Mr Yanukovych's office declined to comment on the video.

The state prison agency responded by saying that Ms Tymoshenko's video was recorded illegally and released its own video, which it says shows her resorting to a "provocation" and behaving inappropriately.

In that video, Ms Tymoshenko takes what appears to be a portable metal detector and bangs it against a hospital door.

"Stop these illegal actions," a guard says as he confiscates the object.

Ms Tymoshenko then takes off her right shoe and strikes it against the door.

"You are not letting me see the people who have come for me," she says.

"You are breaking the law."

Source: The Independent

Saturday, September 29, 2012

Ukraine To Lease Out The Black Earth

KIEV, Ukraine -- Ukraine, already one of the world’s top producers and exporters of grain, is floating a bold plan to boost domestic harvests by offering to lease out millions of hectares of unused, government-owned farm land.


Ukraine's black earth

Billed by authorities in Kiev as Ukraine’s response to rising concerns over global food security, the project could lure in billions of dollars in investments, helping Ukraine achieve its much-hyped goal of harvesting more from its famously-rich black earth by doubling yields and annual crop volumes.

Mykola Prysyazhnyuk, Ukraine’s agriculture minister, said that, this year and next, investors would be offered 50-year leases, tax free status and unlimited export rights for crops farmed on 2m to 4m hectares of arable land not currently being used.

If the pilot project proves successful, the country could offer more land in future.

“Our nation today has about 10m hectares of land” which is not being farmed at all, or not being used effectively, Prysyazhnyuk said.

“I am confident this project will be realised within two-three years.”

About 15m hectares of land is currently being farmed in Ukraine.

Details are still being worked out but a government presentation says investors would be invited to toil fresh farm land through production-sharing agreements or public-private partnership.

Prysyazhnyuk said the arrangements would give Ukraine the option to lay aside a share of crops harvested by investors for emergency reserves, or a share of profits generated from exports.

“Investors will be given government guarantees that exports will be unrestricted. The state will ensure that its land is farmed with the highest of technologies. It will get investment and a share of the profit either as goods, to protect domestic food security when needed, or as cash,” Prysyazhnyuk said.

Ukraine expects to have more than enough crops to share with the world in the future, according to Prysyazhnyuk.

The nation would likely export more than 20m tonnes from this year’s harvest, which he predicted would tally in at 47m tonnes.

Harvests could double in future if modern farming technologies are introduced and increased acreage is farmed.

Legislation to allow farm land tenders is being drafted by Volodymyr Ignashchenko, an advisor to Ukraine’s government.

He prepared legislation for a series of on- and offshore hydrocarbon exploration tenders held this year, that were won by the likes of Chevron, ExxonMobil and Royal Dutch Shell.

Having succeeded in bringing in big investors to its under-invested energy sector, Ignashchenko said the country’s leadership was dedicated to replicating this success in agriculture.

He said farming companies and financial investors were expected to take part in the new tenders in partnership with each other.

“The most interested big investment funds, including state ones, could be from China, Arab countries and the like. There is also interest from American and European investors,” Ignashchenko said, following a visit to Washington, DC, where the plan was presented to investors and US government officials.

He said the project had earlier been presented to major agribusinesses operating in Ukraine, including Cargill and Bunge.

But agriculture insiders in Ukraine have expressed concerns about the project.

One fear is that domestic oligarchs could, by partnering up with “investors”, use it as a means of snapping up the nation’s remaining farm land.

That could strengthen their grip over Ukraine, already viewed by many as an oligarch-captured economy.

There are also concerns that tax and other privileges will give new investors an unequal advantage over other farming businesses already toiling the land.

Prysyazhnyuk was short on detail about how such concerns would be addressed.

But he said efforts were under way to establish a “balance” that would put all market players on an equal footing.

Source: Earth's Currency
NEW YORK, USA -- The United States and the European Union jointly urged Ukraine to stop selective prosecutions and said the two are working closely to monitor the state of democracy ahead of parliamentary elections in the country.


Hillary Clinton (R) and Catherine Ashton.

US Secretary of State Hillary Clinton discussed the issue with EU foreign policy chief Catherine Ashton in New York earlier this week, stressing that the October 28 elections will be an important test.

"Ukraine is hugely important to European security and stability. We have been very clear how much we regret what we see as selective prosecutions, including imprisonment of former prime minister [Yulia] Tymoshenko," a US official said. 

"Our relations with Ukraine can really only move forward when we see an end to those selective prosecutions," the official said.

The meeting between Clinton and Ashton came after the U.S. Senate had voted unanimously to approve a resolution demanding the release of Tymoshenko and calling on the Department of State to institute visa restrictions against those responsible for her imprisonment.

The resolution, which showed strong bilateral support for the measures, sent shockwaves through the Ukrainian government amid fears that some officials may be potentially facing looming travel restrictions.

Tymoshenko was jailed to seven years in prison in October 2011 for abusing power while negotiating a 10-year natural gas agreement with Russia in January 2009.

She denied any wrongdoing and said the trial was politically motivated to eliminate opposition leaders by the authorities in Ukraine.

The concerns expressed by Clinton and Ashton at the meeting over the worsening level of democracy in Ukraine, opens the possibility that the EU may eventually consider similar travel restrictions against the same officials.

This puts major pressure on President Viktor Yanukovych and members of his family and the government ahead of the October 28 elections to make sure the vote is recognized as fair and free by the Western powers.

“I think the elections will be conducted in a normal way,” Prime Minister Mykola Azarov in comments released by the government on Thursday.

“This is a very important stage for us because the country needs further reforms.” 

“Conducting the reforms without the trust of the people is very hard, that’s why we have to obtain a mandate of trust at the elections,” Azarov said.

“We are doing everything to provide free and democratic elections,” Azarov said. 

Source: Ukrainian Journal

Friday, September 28, 2012

Ukraine Government To Reject Call For Painful Reforms

KIEV, Ukraine -- Ukraine does not need to implement unpopular economic reforms advocated by its Western lenders after next month's parliamentary election, a leading government official said on Thursday.


Ukrainian President Viktor Yanukovich gestures after a signing ceremony in Kiev September 13, 2012. Yanukovich told government ministers he would ''tear off'' their heads if they did not stop political intriguing before October 28 parliamentary elections, Ukrainian media said on Friday.

President Viktor Yanukovich's Party of the Regions is expected to secure the most votes in the October 28 mid-term poll, and analysts say that his government could then increase energy prices and adjust the exchange rate to improve economic competitiveness.

However, party campaign manager Andriy Klyuev, who is also Secretary of the National Security and Defence Council and close to Yanukovich, said that the government will instead focus on improving living standards.

"As for unpopular measures, we have already implemented all of them," Klyuev said in an interview.

Klyuev ruled out, in particular, an increase to gas prices, which the International Monetary Fund (IMF) says is necessary to cut the budget deficit, and an adjustment to the hryvnia exchange rate.

"We have no right to make the population pay for the mistakes of the previous government," he said of gas prices.

Ukraine relies on imported Russian gas for residential heating systems, and the price has been rising for the past few years because Kiev's 2009 deal with Moscow tied the price to global oil prices.

The government subsidises gas and heating prices for households.

The IMF says this is a burden on state finances and halted lending to Ukraine in early 2011 after Kiev refused to raise the prices.

Ukraine's budget deficit for the January to August period tripled year on year to about $2 billion (1.2 billion pounds), but Klyuev said that government finances were under no risk.

"We have sorted out the state budget," he said.

"As for the exchange rate, it is stable ... central bank reserves are adequate and I see no problems here," he said.

Ukraine has kept the currency pegged at about 8 hryvnia to the dollar since early 2010 through a combination of policies, including central bank intervention.

This approach has hurt the competitiveness of Ukrainian goods at a time when economic growth is already slowing because of falling demand from the troubled euro zone.

Klyuev dismissed such concerns, saying:

"There is no stagnation. We see gross domestic product growing a little and I hope the crisis will be over soon and we will develop our economy more actively." 

Klyuev, a former first deputy prime minister, is confident of a strong showing in the election.

"I think we will have a rather respectable representation in parliament. We are ahead of our (closest) competitors by 6-7 percent," he said, citing an opinion poll that gave Party of the Regions 22 percent of the vote and put heavyweight boxer Vitali Klitschko's Udar (Punch) party in second place with 15 percent.

A bloc that includes Yanukovich's key political opponent, former prime minister Yulia Tymoshenko, was in the third place with 14 percent, Klyuev said.

However, other surveys paint a different picture.

A September poll by TNS put support for Party of the Regions at 17.8 percent, with Tymoshenko's Batkivshchyna (Fatherland) bloc at 16 percent and Udar at 11.1 percent.

More than a quarter of voters were still undecided, according to the poll. 

Tymoshenko, who narrowly lost the 2010 presidential vote to Yanukovich in a close run-off, was sentenced to seven years in prison last October on abuse-of-office charges in a trial criticised by the West as an example of selective justice.

Her party has since formed a bloc with another opposition movement, Front Zmin (The Front of Change), led by pro-Western liberal politician Arseny Yatsenyuk. 

Source: Yahoo News

Americans Can Learn Something From Ukraine's Struggle For Liberty

KIEV, Ukraine -- Making a brief escape to this heartland of the old Soviet Union, I find myself more inspired by the people's striving for liberty here than by the petty nastiness of the American presidential campaign.


Free press is being squeezed in Ukraine.

For over a year, Republican candidates and tea party activists have been emoting about the doom that awaits if the president is reelected, as if four more years of Barack Obama is a dire threat to our freedom.

If you want to see a genuine threat to freedom, come to Kiev.

Two decades after Ukraine escaped from the suffocating embrace of Russia and eight years after the Orange Revolution promised a truly democratic society, the country is slipping back into the Russian orbit and the government of President Viktor Yanukovych is undermining the independent media that bravely call him to account.

As in Russia, rich businessmen -- many allied with Yanukovych -- are building monopolies in all sectors of the economy, including the media.

As these "oligarchs" gain control of major media outlets, they stifle aggressive, critical reporting and leave little of the advertising market for independent newspapers, magazines and broadcasters.

Responding to sharp criticism from Europe and the U.S., Yanukovych insists that he supports free speech and a robust, free media, but his actions tell a different story.

Currently, his government is trying to get a law through parliament that would make it a crime for journalists to defame government officials and politicians.

With the definition of defamation in the hands of the government, this would stop all but the most courageous journalists from investigating and exposing corruption and abuse of power among government leaders.

I am here as a guest of the U.S. State Department.

Every day for a week, I have been talking to groups of students, journalists, artists, librarians and others.

I tell them about my work at the Los Angeles Times.

I show them my cartoons.

I teach kids how to draw caricatures and share with university students how I got my start in journalism.

The underlying theme in every presentation is that the cornerstone of my career is the United States Constitution.

Several times I have been asked if I am ever censored or get in trouble for the brash opinions I publish day after day.

I answer no, I have not been censored, sanctioned or made to suffer for my exercise of free speech because, in the United States, the law is on my side.

The 1st Amendment is stronger than any government.

I have met many bright-eyed, enthusiastic students who want to be journalists.

I have met teachers and reporters who are intent on keeping liberty alive in this country.

I have also talked with a cartoonist, a librarian and several others who look wistful and defeated.

They fear that a great opportunity was squandered when the Orange Revolution became mired in incompetence and finally ceded power to men who take Russia's Vladimir Putin as their role model.

It seems presumptuous of me to tell these people to keep up the struggle.

My freedoms were won for me by Americans of past generations.

I have never had to take any risk greater than opening myself up to rude comments from readers.

But, I tell them anyway:

Don’t give up; you still have a chance to turn this around.

I hope I am right.

The younger generation of Ukrainians reminds me of my children and their friends.

They speak English.

Some have studied in the U.S.

If they walked down a street in any American town, they would blend in easily.

On weekends and in the evenings, they gather in Independence Square under a tall column at whose top stands a huge female figure clothed like a Greek goddess and trimmed in gold.

She is the symbol of free Ukraine.

At the far end of the square is a McDonald’s restaurant.

I stood on the steps there one night, watching the young Ukrainians, admiring their energy and innocence.

Across the street, a massive modern building loomed.

Across its face was a huge video screen.

It played the same campaign ad over and over -- Ukraine’s parliamentary elections are a month away.

The towering face of Yanukovych lit up the night again and again; Ukraine's strongman asking for votes, asking to be entrusted with these young people's future. 

Source: Los Angeles Times

Thursday, September 27, 2012

Regions Party Withdraws Libel Legislation

KIEV, Ukraine -- In a stunning turnaround and following massive protests, the ruling Regions Party said Tuesday it will withdraw a controversial bill that introduces jail sentences for journalists who disseminate “libelous” information.


Vitaliy Zhuravskiy

The bill, seen by journalist organizations as an open attack on freedom of speech in Ukraine, was approved in the first reading a week ago.

A close inspection of the bill showed at least one key file had been drafted by the presidential administration, raising questions about President Viktor Yanukovych’s involvement in the matter.

The bill triggered massive protests from reporters in Ukraine that had printed names and contact information for 244 lawmakers that had voted in favor of the bill, urging voters to “call or email the deputies and ask them why they had supported the bill.” 

The developments led to Vitaliy Zhuravskiy, the Regions Party lawmaker and a sponsor of the controversial bill, to submit a new bill to Parliament that seeks to recall the first one.

“Taking into account all circumstances and coming out of state interests, I decided to recall my bill,” Zhuravskiy said in a statement released by the Regions Party.

“I understand that ahead of Parliamentary elections any initiative will be taken with fear and distrust at least.”

Serhiy Leshchenko, a journalist at Ukrayinska Pravda and a member of the protest, said the recall of the bill is a victory, but said the pressure on the government must continue.

“Today, after battling Zhuravskiy and the Regions Party for the libel bill, journalists managed to win couple centimeters of lost over the past three years space of freedom,” Leshchenko wrote on his blog.

“The main thing is not to stop this.”

“Also, we have to remember well for many years ahead those who have wanted to put us in jails,” he said.

The development comes as Yanukovych has been in New York for the United Nations General Assembly, and facing criticism for reducing democracy and freedoms in Ukraine.

His visit came only three days after the U.S. Senate has voted to approve a resolution that calls for the release of opposition leader Yulia Tymoshenko, who had been sentenced to seven years in jail.

The resolution also called on the Department of State to institute visa bans on those Ukrainian officials who had been involved in the imprisonment of Tymoshenko. 

The approval of the resolution came as a surprise for the Ukrainian government, which has apparently expected the issue to linger for months and definitely until after October 28 parliamentary elections in Ukraine.

The resolution condemned the “selective and politically motivated” prosecution and imprisonment of Tymoshenko.

It also expresses “deep concern” the continued detention of Tymoshenko “threatens to jeopardize ties” between the United States and Ukraine.

Source: Ukrainian Journal

Wednesday, September 26, 2012

Why Do So Many Officials Die On Ukraine's Roads?

KIEV, Ukraine -- When Roman Shubin, the deputy prosecutor of Vinnytska Oblast, died on September 23 in a car crash, some people immediately suspected foul play.


Ukraine's political and other elites very often treat the country's roads as their own private racetrack.

After all, as chief prosecutor for Ukraine's high-profile crimes unit, Shubin worked on some pretty touchy cases -- including the 2004 dioxin poisoning of Viktor Yushchenko, who was in the midst of a hard-fought presidential election campaign against current Ukrainian President Viktor Yanukovych, and the gruesome killing of investigative journalist Heorhiy Gongadze in 2000.

The trails of suspicion in both cases led high up into the ruling elite.

And suspicious "accidents" seem to happen fairly often in Ukraine.

In 1999, opposition presidential candidate Viacheslav Chornovil -- running against President Leonid Kuchma -- died in a car crash that the Interior Ministry determined was "accidental."

A new investigation was opened in 2011.

In 2002, Yulia Tymoshenko -- then one of the leaders of the opposition to Kuchma -- was involved in a mysterious car accident in Kiev that some observers have speculated may have been an assassination attempt.

In 2004, Yuriy Chechyk, director of Radio Yuta in Poltava, was killed in a suspicious car crash while on his way to a meeting with representatives of RFE/RL's Ukrainian Service.

In Shubin's case, there have been reports that he had been threatened in the past and that he had asked to be transferred to another position.

Reporting the death, Kiev's "Segodnya" newspaper quoted an unnamed former investigator as saying he "doubts" the car crash was accidental.

"[Shubin] had enemies," the source said.

Details of Shubin's crash are sketchy, but apparently he rammed into the back of a KamAZ truck, either at "high speed" or at "very high speed," according to different reports.

Some media reported that he might have had a heart attack or other medical problem prior to the collision, although there has been no evidence of that.

All of which appears to point to another, more prosaic, explanation of the tragedy.

As is the case across the former Soviet Union and in many other parts of the world, Ukraine's political and other elites very often treat the country's roads as their own private racetrack.

Party of Regions lawmaker Vladislav Lukyanov bragged on Facebook in July that he drove from Kiev to Odesa in 2 hours and 40 minutes, which would give him an average speed of 200 kilometers (124 miles) an hour.

Asked about it by journalists, Lukyanov was unapologetic.

"When we went to Odesa and I was at the wheel, we selected a stretch of road where there were no obstacles or other cars and I experimented to see what speed my car could achieve. We did not create any obstacles or danger for other road users because there were none."

Apparently, Lukyanov got around every corner without encountering a fully loaded KamAZ truck.

He added that he learned that his Audi is capable of speeds of more than 300 kilometers (186 miles) per hour.

On the evening of September 23 in Kiev, two people died -- including the director of the financial policy office of the Economic Development Ministry -- in a crash during what police suspect was an illegal street race on a highway in the capital. 

Serhiy Chekashkin was driving a Dodge Viper SRT10 when he died while racing someone in a Ferrari.

The $160,000 American-made Viper can go from 0 to 160 kph (100 mph) in 8.6 seconds.

According to media reports, Chekashkin also owned a Ford Mustang GT, another Mustang, a Jeep Grand Cherokee SRT8 Hennesy, and a Nissan GT-R.

For visitors to Ukraine, the British government offers this advice on its website: 

"Local driving standards are poor: street lights are weak, speed limits, traffic lights and road signs are often ignored, and drivers rarely indicate before maneuvering." 

Source: Radio Free Europe

Tuesday, September 25, 2012

Full Senate Okays Tymoshenko Resolution

WASHINGTON, DC -- Sending shockwaves through the Ukrainian government, the U.S. Senate on Saturday approved resolution demanding the release of opposition leader Yulia Tymoshenko and calling for visa restrictions against those responsible for her imprisonment.


Foreign Minister Kostiantyn Hryshchenko.

The unanimous approval of the resolution comes only days after its approval by the Senate Foreign Relations Committee, showing strong bilateral support for the measure in the Congress.

The quick approval comes as a surprise for the Ukrainian government, which has apparently expected the issue to linger for months and definitely until after October 28 parliamentary elections in Ukraine.

The development comes as major setback for President Viktor Yanukovych, who is expected within days to travel to the U.S. to join the United Nations General Assembly.

The Yanukovych administration has been hastily cancelling interviews with U.S. media outlets that had been earlier scheduled in New York, including with Bloomberg News, citing a “change of plans.”

The development also puts major pressure on Foreign Minister Kostiantyn Hryshchenko and may lead to his dismissal by Yanukovych for his apparent failure to anticipate and prevent the worst-case scenario.

“The resolution on Yulia Tymoshenko was approved in the Senate UNANIMOUSLY!!!!” Serhiy Vlasenko, Tymoshenko’s lawyer, wrote on his blog on Saturday.

“What will Hryshchenko say now?! They hoped this would continue for years!!!” 

The resolution condemns the “selective and politically motivated” prosecution and imprisonment of Tymoshenko.

It also expresses “deep concern” the continued detention of Tymoshenko “threatens to jeopardize ties” between the United States and Ukraine.

The resolution calls for the government of Ukraine to release Tymoshenko, to provide her with timely access to medical care, and to conduct the October parliamentary elections in a fair and transparent manner consistent with OSCE standards.

The resolution also calls on the Department of State to institute a visa ban against those responsible for the imprisonment and mistreatment of Tymoshenko and the more than dozen political leaders.

Ukraine’s Foreign Ministry issued a statement questioning the legality of the vote by the U.S. Senate, calling the procedure of its approval “doubtful.”

“It is hard to take seriously a document that has been approved last night at procedure that with all diplomatic etiquette restraint can be called doubtful, at least,” Interfax reported citing an official at the Foreign Ministry.

“The friends of Tymoshenko made everything for throwing into a Ukrainian information space a falsified reason for loud and ungrounded discussions and to discredit the future parliamentary elections,” the official said.

“These efforts contradict the national interests of Ukraine and are doomed to fail.” 

“What were the motives of authors of the resolution that have been trying at any cost to navigate through protests of other senators over the resolution?” the official said.

“With this goal they have been hastily making amendments and have suggested the Senate to approve it as a new document after 3:00 AM, only several minutes before the Congress was set to close the current session and when there were less than half a dozen of members of the upper house of American Parliament.”

But the Foreign Ministry’s response was harshly criticized by opposition and by analysts in Ukraine.

“I don’t know what Minister Hryshchenko and his diplomats have been smoking to issue such a rude statement on behalf of the state of Ukraine,” Hrytsenko wrote on his blog.

“The resolution of the Senate is not a direct action document. It only has a recommendation character. But even that has scared Yanukovychs, Azarovs and Hryshchenkos so much that it has paralyzed their ability to think.” Serhiy Leshchenko, a journalist at Ukrayinsla Pravda, said.

“Despair is how one can describe the state of mind of Foreign Minister Hryshchenko.”

“The reputation of Ukraine in the world has reached the bottom,” Leshchenko said, adding that any rude statement or other tough talking may create even more problems for government officials and their allies.

“These people seem to have forgotten in what currencies they keep their assets and which resorts overseas they travel to for vacation and to what countries they send they kids to school,” he said.

Source: Ukrainian Journal

Monday, September 24, 2012

Ukraine Agrees $3Bn Loan-For-Corn Deal

KIEV, Ukraine -- Ukraine is set to sign an unusual loan-for-crops contract with China that will see Kiev access $3bn in credit lines in exchange for supplies of corn, a commodity that Beijing has started to import in large quantities.


The deal expands into food the scheme that Beijing has used to secure energy supplies through so-called oil-for-loans deals with countries such as Venezuela, and comes amid concerns about global food security.

Mykola Prysyazhnyuk, Ukraine agriculture minister, said in an interview that the deal with the Export-Import Bank of China would be signed in mid October.

“China is asking for about 3m tonnes of corn each year ... to be supplied at market prices that are set at the time of export,” Mr Prysyazhnyuk said.

The deal between Kiev and Beijing comes as China has rapidly become the world’s fifth largest importer of corn.

The country will buy overseas about 8.3m tonnes of the commodity between 2011 and 2013, or as much as it imported in the previous 15 years combined, according to estimates from the US Department of Agriculture.

Corn is a key feedmeal to fatten cows, sheep and pigs as consumption of meat in China continues to grow, analysts said.

“This market is important and attractive for us. We have not yet exported crop there,” Mr Prysyazhnyuk said.

Ukraine, already one of the world’s largest exporters of wheat and corn, is betting that a new relationship with China will open up access to a huge market, boosting agriculture investments.

Corn prices hit an all-time high last month due to the impact of the worst drought in 50 years in the US, the largest producer.

France has called the first ever emergency meeting next month of a new G20-backed group to discuss shortages in global agricultural markets.

The Ukraine-China loan-for-crop deal is likely to raise concerns among other big importers of agricultural commodities in Asia, including Japan and South Korea.

Mr Prysyazhnyuk said the Chinese loans will be used to finance the purchase of Chinese agriculture technologies, herbicides and pesticides.

“We will use these investments to boost our harvest and, in turn, fulfil export obligations to China.”

China in the past has bought corn from the US and Brazil through international agricultural trading houses such as Cargill and Louis Dreyfus Commodities.

Last year Beijing imported 5.3m tonnes of corn, the most since at least 1960.

Beijing has used its financial firepower over the past five years to secure supplies of commodities, particularly crude oil, offering Russia, Brazil, Ecuador and others repayment of multibillion dollars loans with raw materials rather than money.

Venezuela, for example, ships at least 100,000 barrels a day of crude oil, or five per cent of its production, to repay $4bn from the Chinese Development Bank.

Ukrainian officials have in recent months revealed that discussions are also under way to land billions of dollars in additional loans from China in return for help with energy modernisation as part of a new “strategic” partnership.

China’s Embassy in Kiev declined to discuss the corn and energy deals.

For Kiev, the deal with China forms part of an effort to restore its credibility in global agricultural markets after it alienated buyers in 2010-11 by restricting grain exports due to a bad crop.

Mr Prysyazhnyuk said the country was unlikely to restrict exports now, pointing to an expected 46-47m tonnes grain harvest, more than recent forecasts.

Ukraine is expected to harvest more than 20m tonnes of corn this year, and could export more than half of it.

Source: FT

China's Naval Might Levels Up As Ukraine Delivers Aircraft Carrier

BEIJING, China -- China's first aircraft carrier was handed over Sunday to the navy of the People's Liberation Army, state press said, amid rising tensions over disputed waters in the East and South China Seas.

China's first aircraft carrier (Formerly Ukraine's Varyag carrier).

The handover ceremony of the 300-meter (990-foot) ship, a former Soviet carrier called the Varyag, took place in northeast China's port of Dalian after a lengthy refitting by a Chinese shipbuilder, the Global Times reported.

During the handover ceremony the aircraft carrier raised the Chinese national flag on its mast, the PLA flag on its bow and the navy's colours on its stern, the short online report said.

A ceremony to place the ship into active service would be held sometime in the future, the paper said without elaboration.

China's defense ministry was unavailable to comment on the ceremony.

The announcement comes at a time of heightened tensions over maritime disputes in the Asia-Pacific region, where China's growing assertiveness has put it on a collision course with Japan, Vietnam and the Philippines.

China also Sunday postponed a ceremony marking the 40th anniversary of the establishment of diplomatic ties with Japan, due to a noisy territorial dispute with Tokyo over the Diaoyu Islands, known in Japanese as Senkaku.

Tensions have also risen this year with Vietnam and the Philippines over disputed islands in the South China Sea.

Beijing confirmed last year it was revamping the old Soviet ship, and has repeatedly insisted the carrier poses no threat to its neighbours and will be used mainly for training and research purposes.

But numerous sea trials of the aircraft carrier -- currently only known as "Number 16" -- since August 2011 were met with concern from regional powers including Japan and the United States, which called on Beijing to explain why it needed an aircraft carrier.

Construction of the Varyag originally ended with the 1991 collapse of the Soviet Union.

China reportedly bought the carrier's immense armoured hull -- with no engine, electrics or propeller -- from Ukraine in 1998 and began to refit the vessel in Dalian in 2002.

The PLA -- the world's largest active military -- is extremely secretive about its defence programmes, which benefit from a huge and expanding military budget boosted by the nation's runaway economic growth.

China's military budget officially reached $106 billion in 2012, an 11.2 percent increase.

According to a report issued by the Pentagon in May, Beijing is pouring money into advanced air defenses, submarines, anti-satellite weapons and anti-ship missiles that could all be used to deny an adversary access to strategic areas, such as the South China Sea.

China's real defense spending amounts to between $120 to $180 billion, the report said.

Source: Agence France Presse

Sunday, September 23, 2012

Senate Committee Calls For Ex-PM Release

WASHINGTON, DC -- In a stunning rebuke to Ukraine’s government, the U.S. Senate Foreign Relations Committee has called for the release of former Prime Minister Yulia Tymoshenko and proposed the State Department institute a visa ban against those responsible for the imprisonment of Tymoshenko and her political allies.


U.S. Sen. Jim Inhofe (R-Okla.)

The resolution, passed unanimously late Wednesday night, now heads to the full Senate, where its adoption seems likely.

The resolution condemns President Viktor Yanukovych for his role in Tymoshenko's "politically motivated imprisonment" and calls for her immediate release.

The resolution notes that "international calls for Ms. Tymoshenko's release, access to outside visitors, and adequate medical treatment have been ignored even as her health continues to deteriorate."

Senate Res. 466 calls for the unconditional release of political prisoners, including Tymoshenko.

It also urges for the upcoming Ukrainian parliamentary elections, due to take place on October 28, to be fair and transparent.

It comes days before Yanukovych is supposed to arrive in the U.S. to participate in the United Nations General Assembly.

A team of key government and National Bank of Ukraine officials is currently in Washington for talks with the U.S. government and the International Monetary Fund, seeking to unblock a $15.2 billion loan.

The resolution is the first major warning coming out of the U.S. of the suggested targeted sanctions, such as the visa ban, against Ukrainian officials that may particularly painful to those involved.

The European Union earlier threatened to postpone signing a free trade and political association agreement with Ukraine until Tymoshenko is freed.

No visa ban measures have so far been discussed in Brussels.

The resolution was introduced by U.S. Sen. Jim Inhofe (R-Okla.), a member of the Senate Foreign Relations Committee and co-sponsored by U.S. Sen. Dick Durbin (D-IL), Senate Majority Whip.

“My resolution condemns the selective and politically motivated prosecution and imprisonment of Tymoshenko and other Orange Revolution leaders,” Inhofe said in a statement.

"This resolution sends a strong and unmistakable message to the Ukrainian government: selective prosecution of political opponents has no place in the community of democracies," said Durbin.

"With parliamentary elections just around the corner, we also urge the Ukrainian government to conduct open and fair elections that are open to domestic and international observers."

In October 2011, Tymoshenko was sentenced to seven years in prison for abuse of power based on a 2009 gas contract she signed with Russia.

She is serving her sentence in a Kharkiv women's prison.

She has been receiving treatment at a Kharkiv hospital since May.

She was diagnosed with a spinal disc herniation.

In late March, a second case bringing further charges against Tymoshenko was filed with Kharkiv's Kievsky District Court.

The case deals with her activity at United Energy Systems.

She is accused of misappropriation of funds.

The Ukrainian Foreign Ministry reacted quickly to the resolution by saying it mostly reflects the position of “its two authors known for their sympathies to the Ukrainian opposition.”

The ministry said Ukraine will continue active cooperation with the U.S. on a broad number of issues, from nuclear non-proliferation to development of economic and trade relations to fighting the international terrorism.

Oleh Voloshyn, the spokesman at the Ukrainian Foreign Ministry, said discussing the visa ban is “premature, to put it mildly.”

“The key test is of course the elections. If the elections are conducted not on a proper level, this will be a different story,” Voloshyn said in an interview with TVi.

“But if the elections are held normally, I think this resolution will be forgotten as a nightmare.”

“Let’s be honest: Ukraine today is not so much important country for the U.S. so that we deserve separate hearings. Let’s see how it goes, but it is hard to say that this is a serious position of the Senate.”

Source: Ukrainian Journal

Poland Urges Ukraine To Make East-West Choice

KIEV, Ukraine -- Polish President Bronislaw Komorowski urged Ukraine's leader on Thursday to push for integration with the European Union, but acknowledged that a key obstacle is the country's jailing of its former premier, Yulia Tymoshenko.


Polish President Bronislaw Komorowski (R) and Ukrainian President Viktor Yanukovych.

After talks with Ukrainian President Viktor Yanukovych in Kiev, Komorowski said Ukraine must decide whether it wants to align itself with the EU or join a Russia-led customs union.

"It is impossible to implement those two scenarios at the same time," Komorowski said at a news conference with Yanukovych.

"A choice has to be made."

Tymoshenko, the country's top opposition leader and the heroine of the 2004 Orange Revolution, is serving a seven-year jail term on charges of abuse of office while leading natural gas import negotiations with Russia in 2009.

Tymoshenko, 51, denies the charges and accuses Yanukovych, the antagonist of the Orange Revolution, of throwing her in jail in order to bar her from Ukraine's Oct. 28 parliamentary election.

The nation's relations with the EU have been strained over her treatment, which the West has condemned as politically motivated.

The EU has balked at implementing a key cooperation deal with Ukraine over the Tymoshenko case.

Komorowski said Tymoshenko's jailing is a key impediment n Ukraine's road into the European club.

"The Tymoshenko case is an internal matter of Ukraine, but at the same time this case is a serious, significant obstacle in the rapprochement between Ukraine and the European Union," Komorowski said.

"From our side we expect that all Ukrainian political players will work toward removing these obstacles which hamper the ... integration of Ukraine with European structures."

Yanukovych skirted a question on whether he could pardon Tymoshenko, who also faces an array of other accusations, including in connection with a 15-year-old murder case.

"The (legal) process in the case of Tymoshenko is not over yet," Yanukovych said at the news conference.

"We are interested and will do everything so that all the cases take place only in the legal framework."

Tymoshenko is undergoing treatment in a Ukrainian hospital for a severe spinal condition which has left her partially paralyzed and in constant pain.

She has been unable to attend trials and take part in investigations in cases against her. 

Yanukovych wished her a speedy recovery so her trials can continue.

Tymoshenko's lawyer, Serhiy Vlasenko, said the Ukrainian leader's statement signaled a continuation of "political repression" in Ukraine.

"Yanukovych has shown his true face. He has shown that he doesn't understand European values, European democracy and what a leader of a European country should be like," Vlasenko told The Associated Press.

Source: AP

Saturday, September 22, 2012

Exclusive: Ukraine Trade Demand Shocks Global Partners

KIEV, Ukraine -- Ukraine has told its trading partners it wants to raise maximum tariffs on hundreds of imported goods, a move that could unleash protectionist forces and may even pose a threat to the $18 trillion global trade system.

An Ukrainian border guard waits for vehicles at a checkpoint in Shegyni, at the Ukrainian-Polish border.

In a document marked "secret" sent to members of the World Trade Organisation last week, Ukraine says it intends to raise the limit on the tariffs it can legally impose on more than 350 goods.

Based on figures in the proposal, Kiev's plan would hit overall imports worth more than $4.6 billion in 2011.

The document, which diplomats said they had received on September 14, consists of 85 pages of annexes detailing the items affected.

It says Ukraine is prepared "to enter into negotiations and consultations" with WTO members for the concessions.

There was no response to requests for comment from Ukraine officials in Geneva or Kiev.

Ukraine, a relative newcomer to the WTO whose trade deficit widened by more than 50 percent last year to $14 billion, has already threatened to block car imports and said last year it would act to improve its terms at the WTO.

The United States said Ukraine's possible decision would raise "serious concerns", although WTO officials played down the move, which, though radical, is permissible under the agency's rules.

Some trade experts fear the plan, which would force hundreds of trade deals to be renegotiated, could trigger increasingly protectionist policies worldwide.

The four-year-old global financial and economic crisis has so far not led to a rush to protectionism but, under pressure to help their producers weather the storm, governments have pounced on "unfair" moves by their rivals.

The United States and Brazil were the latest to trade diplomatic blows.

WTO Director General Pascal Lamy, who forecast on Friday that world trade would grow by a mere 2.5 percent this year, has repeatedly warned of the danger of a return to protectionism.

The WTO oversees the vast majority of global trade, running a system that assumes every country accepts legal limits on the tariffs they charge on imports to protect their businesses.

If a country wants to raise the tariff ceiling on one product, it normally offers to reduce the limit on another to keep its economic openness unchanged overall.

Some diplomats say Ukraine's plan to renegotiate on so many goods - cars, trucks, agricultural machinery, meat, flowers, fruit, vegetables, washing machines and even syringes - is tantamount to reopening negotiations on its membership terms.

"We don't know what is behind Ukraine's move," said one trade diplomat.

"Maybe the financial crisis. Maybe political reasons. Maybe industrial." 

Longstanding WTO members typically have high ceilings and set tariffs well below the maximum, giving them wriggle-room in tough times.

The tariffs of newer members, many of which were forced to accept tough terms to join the WTO, are often set right at the ceiling.

Some, including Ukraine, which joined in 2008, have bristled over that constraint.

"SERIOUS CONCERNS" 

The sheer size of Ukraine's demand makes it hard to deal with, diplomats say.

Other countries cannot raise their own tariffs to punish Ukraine without violating a WTO principle that member states must offer the same tariff to everybody.

"This decision raises many serious concerns and questions for us," said Carol Guthrie, spokeswoman for U.S. Trade Representative Ron Kirk in Washington, without going into details.

"We expect other WTO Members may have similar concerns and questions. Only after we get additional details from Ukraine will we be able to fully evaluate the consequences of its decision and assess next steps."

WTO spokesman Keith Rockwell declined to characterize Ukraine's plans as protectionist.

He said it was natural that some countries would want to renegotiate their trade deals.

"Protectionism is a loaded word. In the trying economic circumstances we are encountering today, governments face very strong pressure to act," Rockwell said. 

"To this point, Ukraine's actions in this regard have not been outside the rules."

But Anwarul Hoda, a former deputy director-general of the WTO, said the way Ukraine planned to raise its tariff ceiling posed a real threat.

"If Ukraine just goes ahead and raises the duty and the others can't do anything then there would be a systemic failure," said Hoda, whose 2001 book "Tariff Negotiations and Renegotiations under the GATT and the WTO" is regarded as an authority on this area of the WTO rules.

Trade ministries have until December 12 to respond to Kiev's proposal, but several diplomats said Ukraine's document had not given them enough information and nobody from Ukraine has yet replied to their many questions such as what new tariff ceilings Ukraine seeks, and what it might offer in return.

MOTOR CARS AND CIGARETTES 

Ukraine's Prime Minister Mykola Azarov said last September "the time has come for us to start our negotiations with the WTO to adjust some provisions in our favor.

And we will be doing this," according to Interfax news agency.

Since the election of President Viktor Yanukovich in 2010, Kiev has upset many of its trading partners with a string of aggressive positions, including obstructing bids by Yemen and Laos to join the WTO and an ongoing challenge to Australia's tough new cigarette packaging laws.

The latest proposal uses an area of WTO rules known as Article 28 of the General Agreement on Tariffs and Trade (GATT).

"It's a loophole in the GATT rules, the legal procedure," said one diplomat.

"If other countries follow Ukraine, this might be big trouble."

Two lawyers said it was impossible to challenge Article 28 under the WTO's dispute settlement system.

Hoda said he needed to study the case in depth before being sure.

Article 28 dates from the 1940s and was used often until the creation of the WTO in 1995 cemented efforts to liberalize global trade.

Since then, it has been used about 30 times, mostly for small or technical adjustments to a country's tariffs, and almost always for fewer than 10 tariffs at a time.

Ukraine's request was "surprising for its size alone," said the European Union trade spokesman John Clancy.

"Our preliminary analysis shows that the tariff increase would affect a significant amount of trade - and in particular EU exports worth almost 2 billion euros ($2.6 billion)," he said in an emailed response to questions.

"YOU HAVE TO BE CAREFUL"

Under Article 28, Ukraine should "pay" for tariff increases by lowering tariffs on other goods.

But Clancy said Ukraine's list was so long it could prove difficult to find enough areas where other tariffs could be cut.

At least 35 WTO members qualify to negotiate with Ukraine, including the European Union, United States, Japan, South Korea, Australia, Canada, Brazil, China and India, and the process is so complicated it would likely take years.

If negotiations don't work, Ukraine could simply raise its tariffs unilaterally, leaving its trading partners to raise their own tariffs to balance out its move.

But big trading nations would find that impossible in practice.

"If you want to exercise retaliation you have to be very careful about the tariff line that you choose, in order not to hit some other trading partners," said a Geneva-based trade lawyer.

"If you get some other countries affected, then these other countries may initiate a political controversy against you," he said.

"It is not as easy as one might think."

In such a situation, Hoda said, the WTO framework may not "be adequate.

A small player in renegotiations is in a good position to go ahead and raise the tariffs, without any fear of reprisal or retaliation".

The EU's Clancy played down such worries and said he expected negotiations with Ukraine to succeed.

"Protectionist tensions would not be in anyone's interest," he said.

Source: Yahoo News

Ukrainian Famine Memorial Raises Questions Over Payment And Content

WASHINGTON, DC -- It’s hard to decide which part of Public Law 109-340 is most troubling.


A Massachusetts Avenue rendering perspective of the Memorial to the Victims of the Ukrainian Holodomor of 1932-1933.

The lack of honest political commitment and cheapness in the promise that “the United States government shall not pay any expense” for the memorial, or the decision to outsource it to a foreign government.

But it turns out that the 2006 law, which authorizes the Ukrainian government to build a memorial to Stalin’s man-made 1932-33 famine in Ukraine, isn’t exceptional.

If the late 19th and early 20th century made Washington famous for its statues of Civil War generals on horses, the early 21st century will likely make us famous for our hodgepodge of small memorials to anything and everything, paid for by outside groups and foreign governments, with little public conversation or agreement about their purpose and meaning.

The Ukrainian Famine Memorial, which received final approval from the National Capital Planning Commission earlier this month, is a fascinating case in point.

It is meant to honor the victims of one of the most horrific evils of the 20th century — Stalin’s political use of hunger and starvation to punish or annihilate Ukrainian peasants in the early 1930s.

When finished, the monument will sit on a small but prominent triangle of land just off Massachusetts Avenue, northwest of Union Station.

Designed by Larysa Kurylas, a Washington-based architect of Ukrainian descent, it will include a sculpture of grain set into a stone marker with an inscription that reads:

“Famine-Genocide in Ukraine: In memory of millions of innocent victims of a man-made famine in Ukraine engineered and implemented by Stalin’s totalitarian regime.”

The memorial was strongly supported by Ukrainian American groups, which include survivors of what is now called the “Holodomor.”

Their memories of the suffering are horrific: relentless and punitive requisitions of grain and livestock; gangs of government thugs wandering the countryside, stealing or destroying food and other vitals of life; babies dying in their mother’s arms; bodies littering streets and fields; borders sealed to flight; and whole villages reduced to eating bark, roots and worms, before even that proved insufficient for survival.

Scholarly estimates put the death toll at around 3.5 million to 4 million people, though more politically contentious figures have claimed as many as 7 million to 10 million victims.

But set aside the question of whether the memorial recalls a powerful and painful event, and consider the problems created by allowing the Ukrainian government to create it — with substantial control over the text and design competition.

Perhaps when the memorial was authorized in 2006 — after the Orange Revolution in Ukraine brought what seemed to be more reform-minded, Western-leaning leadership for the former Soviet state — this seemed like a good idea.

But times change, and even as the memorial was clearing the last approvals in Washington, it was still a matter for debate in Ukraine, where there is little agreement about whether the Holodomor was a genocide, and whether the blame should be laid at the feet of Stalin in particular, and Russia by extension.

Source: The Washington Post

Friday, September 21, 2012

Ukraine To Keep Cutting Russian Gas Import In 2013

KIEV, Ukraine -- Ukraine has indicated that a cut in Russian natural gas purchases will be deeper next year than expected thus far, to 24.5 billion cubic meters (bcm).


Makiyivka coal mine in Ukraine.
This means that Ukrainian gas imports from Russia will be below contractual volumes for the third year in a row, for which Ukraine may be punished according to the take-or-pay clause in the 2009 contract between Gazprom and the national oil and gas company Naftohaz Ukrainy.

Ukraine cuts gas imports saying that it cannot afford to pay the prices set by Russia, but Moscow insists that Kiev can expect price cuts only if it joins the Russian-led customs union.

Ukrainian Energy Minister Yury Boyko announced on September 13 that Naftohaz’s order for Gazprom’s gas for next year amounted to 24.5 bcm.

This would be ten percent less than Naftohaz is going to import from Russia this year, Boyko added.

More precisely, this will be 9.3 percent less than this year if Naftohaz imports 27 bcm of gas in 2012 as Kiev said earlier it would.

However, Boyko noted at a forum in Yalta on September 15 that Naftohaz intended to buy even less than 27 bcm this year.

He added, tongue-in-cheek, that Russia did not voice any objections.

Naftohaz bought slightly more than 40 bcm of gas from Gazprom last year, compared to the 42 bcm it has to buy according to the 2009 contract so as not to pay penalties.

Boyko’s statements must anger Gazprom, which has been insisting that Ukraine should increase gas purchases in order to pump more gas into its underground storage facilities for the winter.

Otherwise, Gazprom argues, it will be difficult to ensure uninterrupted deliveries to customers in the European Union.

This past June, when the Ukrainian government approved the national gas balance for this year, local news agencies cited Gazprom chief Alexei Miller as saying that Ukraine asked for 27 bcm of gas for each of the years 2012 and 2013.

Now it turns out that Kiev wants to buy even less.

Kiev has indicated several times that while Ukraine would keep cutting Russian gas imports, Russia should start paying Ukraine for using its underground gas storage reservoirs for maintaining pressure in the Europe-bound gas pipelines when gas consumption peaks in winter time.

Moscow has thus far ignored this claim.

At the same time, Moscow is entitled to sue Naftohaz for importing less gas than prescribed by the contract.

However, Kiev apparently believes it can fire back with a countersuit against Gazprom for overcharging, especially in light of the recent EU anti-monopoly probe against Gazprom.

Ukrainian Prime Minister Mykola Azarov claimed, addressing a forum in Yalta this past weekend, that in 15 years’ time Ukraine would have enough gas of its own.

This is in line with the optimistic national draft energy strategy compiled by the energy ministry, according to which gas imports should be cut to as little as 5 bcm by 2030.

And Kiev hints that even this little amount might be imported from Azerbaijan or Qatar rather than Russia.

Ukraine has already started to take steps in that direction.

Visiting Turkish Prime Minister Recep Tayyip Erdogan reportedly agreed to allow tankers loaded with LNG for Ukraine to pass through the Turkish straits.

Meanwhile, domestic gas consumption was cut by seven percent and gas imports by 39 percent year on year in January–July, according to official statistics.

The cut in gas consumption cannot be attributed to decrease in industrial demand, which is the largest gas consuming sector in the country.

Ukraine has experienced an economic slowdown this past year, but is still not in a recession.

In fact, Ukraine’s industrial output rose slightly—0.2 percent year on year—in January–July.

This rate of gas import decline is less impressive than the 50 percent reported for January–May, which may be due to Ukraine hurrying to buy more gas for storage ahead of an expected increase in the Russian gas price in the fourth quarter of this year.

Ukraine increased domestic gas output only by one percent in January–July, but coal extraction was up five percent, which bodes well for the government’s plan to partially replace gas with coal in power and heating generation.

This past July, Ukraine received a $3.7 billion loan from China for replacing gas with coal at co-generation and heating plants, and the government plans for four state-owned co-generation plants to soon abandon gas in favor of coal.

At the same time, Kiev does not abandon hope that it can persuade Moscow to cut gas prices.

Azarov complained at the Yalta forum that Russia—while saying that bilateral relations should be built on equality and good neighborliness—has been “strangling” Ukraine with high gas prices.

However, Russia does not change its stance that concessions on gas are possible only in exchange for political concessions from Ukraine.

Russian Deputy Prime Minister Arkady Dvorkovich said in Yalta that Ukraine should think about joining the customs union of Russia, Belarus and Kazakhstan if it wants a gas price cut.

But Yanukovych, who also attended the forum in Yalta, remained entirely noncommittal.

Meanwhile, winter is just three months away.

Source: Jamestown Foundation

Thursday, September 20, 2012

Prez Facing Flak For Link To Libel Bill

KIEV, Ukraine -- President Viktor Yanukovych came under pressure on Wednesday amid reports that he may be behind a controversial bill that introduces jail sentences for journalists disseminating ‘libelous’ information.


Viktor Yanukovych

The bill, which was approved by Parliament in the first reading on Tuesday, is seen by opposition groups and by journalist organizations as an open attack against the freedom of speech.

The bill was submitted by a Regions Party lawmaker, but a closer inspection of the draft shows one of its files was actually created in the presidential administration.

The file, under Properties category, contains STPU, an abbreviation that stands for the ‘Secretariat of the President of Ukraine’ and that is included by default in all computers at the administration.

The finding is embarrassing for the Yanukovych administration and undermines his earlier remarks that he stays away from influencing lawmakers in Parliament.

Furthermore, it reveals it’s the president, who has been already criticized for jailing opposition leaders, who now has been seeking to punish journalists that had been frequently exposing alleged corruption in his government.

The presidential administration responded to the reports by trying to shield the president from the bill.

It said it had checked all computers and other document folders and had never found the file in question among them.

“The checkup showed the [document] file is absent in all records,” the presidential administration said in a statement.

“The document is also absent at the computer server at the administration.” Vitaliy Zhuravskiy, a lawmaker who officially submitted the bill to Parliament, had also ruled out the president’s involvement with the bill.

“Not a single state institution, let alone the president of Ukraine, has anything to do with my bill,” Zhuravskiy said in a statement issued by the Regions Party.

“This is my initiative because these are my beliefs.”

When later in the day Zhuravskiy was asked to explain the abbreviation STPU on one of the files, he said he may have stopped by the presidential administration and used one of its computers to edit the file he had on his flash drive. 

I used the computer to edit this file on the flash drive,” Zhuravskiy said.

The explanation, however, does not hold water.

A file that was created someplace else and only edited on a computer at the presidential administration would not change its Properties information.

“The STPU abbreviation would only appear in a file that has been created on the computer at the presidential administration,” Ukrayinska Pravda reported.

Source: Ukrainian Journal

Wednesday, September 19, 2012

Manufacturing Output Plummets In August

KIEV, Ukraine -- Ukraine’s manufacturing output contracted 4.7% on the year in August, led by weakening steel exports, presenting new challenges for the country’s government as it struggles to attain budget revenue forecasts.

Prime Minister Mykola Azarov

The plunge accelerated from a 0.9% on year decline in July, a sudden drop that had prompted pessimistic remarks and comparisons to the major economic slump recorded after the 2008 crisis.

“The second wave of the crisis is currently very seriously going through Ukraine,” Prime Minister Mykola Azarov said at an international conference in Yalta over the weekend.

“I wouldn’t say the second, but the continuous crisis.”

The comments come in line with remarks recently made by Azarov at a closed meeting of the government, when he said the economic situation was “not just bad, but very bad.”

The National Bank of Ukraine admitted earlier this month it had been forced to intervene to sell U.S. dollars to support the hryvnia to stop recent panic on the forex market.

Ukraine’s exports of steel have been declining this year amid weakening demand for the commodity due to unfolding debt crisis in Europe and fears of looming recession in the region.

Steel is the backbone of the Ukrainian economy and weakening sales have a dramatic impact on the government’s budget revenue collection and may have serious impact on the value of the hryvnia, the local currency.

Ukraine’s exports of ferrous metals, mostly steel, including goods made from ferrous metal, fell by 9.4% year-on-year to $9.87 billion in January-June, down from $10.89 billion a year ago, according to the State Statistics Committee.

In an attempt to support the domestic steel sector, Azarov said the government would consider increasing spending on construction of affordable housing and infrastructure projects.

He also said imports of certain steel products will be banned to allow domestic companies sell more.

Azarov said the projects would help Ukraine to make sure that the world credit crisis of 2008, which had forced the Ukrainian economy to contract 15% on the year in 2009, will not be repeated in 2012.

“Economic performance is dependent on the highly cyclical steel sector, and growth is sensitive to a downturn in the global economy or a eurozone growth shock,” Fitch Ratings said in July.

Ukraine’s economy will expand 2.4% in 2012, but will accelerate growth to 3.5% in 2013, reflecting likely stronger external demand for steel, Fitch said.

Source: Ukrainian Journal

Ukraine Devaluation Fears On The Rise

KIEV, Ukraine -- The threat of a devaluation of Ukraine’s currency hangs over the country after its central bank found itself temporarily unable earlier this month to defend the hryvnia’s peg to the U.S. dollar.


The threat comes despite the Ukraine government’s efforts to suppress devaluation risks posed by dwindling foreign direct investment and swelling foreign debt until after the parliamentary election scheduled for Oct. 28.

“The risk of a postelection devaluation remains high in our view, though a currency adjustment doesn’t seem inevitable as yet,” said Olena Bilan, chief economist at Dragon Capital, a leading investment bank in Ukraine.

In early September, the National Bank of Ukraine, or NBU, allowed the hryvnia to slip about half a percentage point against U.S. dollar. The currency USDUAH is pegged at around 8 per dollar.

The two-day dip sounded alarm bells for the Ukrainian economy and lent credence to forecasts that the hryvnia could be devalued by as much as 20% by the end of the year.

That is the rate hryvnia non-deliverable forwards are currently trading at, according to TRData.

The Ukrainian hryvnia slid 0.6% on Sept. 4, trading near a three-year low of 8.19 per dollar after hovering in prior weeks in a stable range between 8.10 and 8.13.

It has since rebounded to trade in the range seen before to the depreciation, but has shown volatility in recent days.

The hryvnia traded at a rate of 8.118 per dollar in recent action, little changed from Monday.

No 2008-09 rerun

In a report, analysts at Dragon Capital examined risks tied to a 20% devaluation scenario.

“With hryvnia devaluation expectations for the second half of 2012 high and persisting,” the effect of a potential devaluation “will be less dramatic than in 2008-09, as Ukraine’s current macro backdrop is more supportive.”

In other words, don’t expect bank runs this year.

Indeed, Ukraine’s economy has yet to fully recover from the 2008-09 global crisis, which sent the hryvnia plummeting 36 %.

The supportive factors cited by Dragon Capital include projections for gross domestic product to grow 1% in 2012 and 2.5% in 2013, compared with a 15% contraction in 2009.

Potential capital needs of $3.5 billion to $5.6 billion can be fulfilled by private banking groups and the government, compared with $18 billion injected into Ukrainian banks between fourth quarter 2008 and the first half of 2012.

At the same time, the economy has entered a cooling phase that began in the second half and will continue into next year, said Alexander Valchyshen, the head of research at Investment Capital Ukraine.

“Economic risks have grown, capital inflow from abroad has practically stopped and the interbank market finds itself in a state of distrust between participants, which is confirmed by the high rates for credit,” he said.

Foreign direct investment increased 1.8% to $1.6 billion in the second quarter of 2012 compared with the same period a year earlier, yet Valchyshen attributed much of that statistical result to money deposited abroad being transferred home by Ukrainians.

This lack of investment has exacerbated the trade deficit, which reached $8.7 billion year-to-date in July, or 29 % higher year-over-year.

The lack of revenue flowing into state coffers has led the government to borrow from foreign institutions, stretching the foreign debt to $62 billion, or 35 % of GDP.

Bilan expects that to expand to $67 billion, or 37.8% of GDP, by year- end.

Meanwhile, fiscal policy questions remain as foreign businessmen continue to complain about hundreds of millions of dollars in unreturned value-added taxes.

‘Debt hole’ getting deeper

The budget deficit rose to $2.1 billion, swelling $1.3 billion in July alone.

“The government allows far more expenditures than what the Ukrainian economy and budget can allow,” said Andriy Novak, chairman of the Committee of Economists of Ukraine.

He said spending could have been stabilized simply by avoiding the excessive buildup of state administration and law enforcement structures, spending for which has risen more than 30% annually.

“The government is digging itself into a debt hole, which not only destabilizes the budget but also the currency market, negatively affecting the hryvnia’s exchange rate,” he said.

As a result, the government has been tapping its international reserves, which have fallen $8.2 billion from August 2011, or by 21 %.

About $87 million in reserves were spent in August alone, leaving $30 billion available as of Aug. 31, a large portion of which isn’t liquid, Novak said.

This economic backdrop opened the door to new pressure on the currency.

Indeed the NBU acknowledged its own role in the depreciation, having issued 3.8 billion hryvnias ($475 million) as part of refinancing loans to three private banks.

The NBU claimed that the private-bank executives used the funds for speculative purposes rather than to issue loans, as had been expected.

The officials have been isolated by Ukraine’s banking community, the NBU said, according to media reports.

The National Bank’s task will be to avoid similar scares at least until the Oct. 28 parliamentary election, given that the main campaign theme of the ruling Party of the Regions is stability.

“The NBU will not allow the hryvnia to depreciate much more in the seven weeks left before the Oct. 28 parliamentary elections, though this may require administrative measures such as mandatory sales of forex proceeds or curbs on deposit withdrawals in case of a bank run,” said Bilan of Dragon Capital.

“Thus we expect the hryvnia to remain close to 8.15 [per dollar] until the end of October.”

The NBU on Sept. 11 boosted the overnight interbank rate to its highest level in 10 months.

NBU Governor Serhiy Arbuzov assured the public recently that there won’t be any “deep depreciation” of the currency during the next year.

But government projections indicate otherwise.

It has already projected the hryvnia’s devaluation in its prospectus reports for Eurobond issues.

In February 2011, it projected an exchange rate of 8.0 per dollar by 2014.

In July, the forecast was for a rate of 8.6 per dollar, while the most recent forecast in August was for 8.4 per dollar.

Market participants aren’t asking whether the hryvnia will devalue, but instead are debating by how much.

Ukraine’s external financing gap will widen considerably in the fourth quarter owing to persistent weakness in its external commodity and debt markets, said Vitaly Vavryshchuk, fixed income analyst at Concorde Capital.

“The NBU will be forced to let the hryvnia weaken to prevent a meltdown of its reserves,” he said.

“The central bank will likely be targeting the range of 8.20-8.40 [per dollar] until reserves go down to $25 billion to $26 billion, allowing for further hryvnia weakening thereafter.”

Valchyshen’s prognosis is UAH8.3 by the year’s end.

Dragon Capital expects no recession and the share of forex loans will decrease to 41% from 51% of total loans in 2008.

The government’s loan book is dominated by corporate bonds, mainly forex-hedged exporters.

Another bulwark against devaluation, Bilan noted, is that current NBU reserves cover 3.5 months of imports to Ukraine, above the standard threshold of three months.

Yet concerns persist regarding the deteriorating economic backdrop.

“The minimum the government should have done was approve a balanced state budget with a small deficit in 2010-12 and at the same time pursue a more active policy of supporting Ukrainian producers to ensure more years of economic development,” Novak said.

“For the last three to four years, the Ukrainian economy has been producing fewer goods and importing more.

That is a road to nowhere,” Novak said.

Source: MarketWatch

Tuesday, September 18, 2012

Condoleeza Rice: EU Should Be More Open Toward Ukraine And Turkey

KIEV, Ukraine -- The EU should not separate itself from the neighboring countries such as Ukraine and Turkey, said the 66th U.S. Secretary of State (2005-2009), Condoleezza Rice at the ninth annual Yalta European Strategy (YES) meeting (September 13-16, 2012).

Condoleezza Rice

She stressed that if Europe focused on itself as a result of a crisis then one of the largest magnets of democratic development in Europe and the whole world would be lost.

Both Turkey and Ukraine have been trying to become members of the EU for some time now.

Presently, the EU is finalizing the Free Trade Agreement (FTA) with Ukraine and cooperating with the country within its neighborhood policy.

FTA is a part of Ukraine's Association Agreement (AA) with the EU.

In 2011, Ukrainian parliament reconfirmed signing AA a priority of the country's foreign policy.

AA has reached the final stage of initialing in July 2012, when the sides finished editing and coordinating approvals of the second - economic - part of the AA.

Turkey's negotiation on membership in the EU started back in 2005 but came to a halt because of domestic and external problems including the Cyprus issue.

The EU froze talks in 8 of the 35 key areas under negotiation.

Although Ankara is aiming to comply with the EU laws by 2013, Brussels refused to back this date as a deadline.

Reportedly, Turkey's accession process may postpone until 2021.

This year's summit "Ukraine and the World: Addressing Tomorrow's Challenges Together", opened by the President of Ukraine Viktor Yanukovych and the Prime Minister of Turkey Recep Tayyip Erdogan, focuses on Ukraine's relations with other nations.

Over 200 leaders from politics, business and society representing more than 20 countries came to discuss major global challenges and their impact on Europe, Ukraine and the world.

Among the participants of the Summit are Aleksander Kwasniewski, Stefan Füle, Robert Zoellick, Carl Bildt, Gordon Brown, Javier Solana, Condoleeza Rice, Dominique Strauss-Kahn, Shashi Tharoor, Richard Branson, Elmar Brok and others.

The annual Yalta meeting which was organized by the Yalta European Strategy (YES) in partnership with the Victor Pinchuk Foundation traditionally takes place in southern Ukrainian town of Livadia at the former summer retreat of Russian tsar Nicholas II - Livadia Palace.

Source: The Sacramento Bee

Monday, September 17, 2012

Ukraine Leader Threatens To "Tear Off" Heads Of Ministers

KIEV, Ukraine -- Ukrainian President Viktor Yanukovich told government ministers he would "tear off" their heads if they did not stop political intriguing before October 28 parliamentary elections, Ukrainian media reported on Friday.

Ukrainian President Viktor Yanukovich gestures after a signing ceremony in Kiev September 13, 2012. Yanukovich told government ministers he would "tear off" their heads if they did not stop political intriguing before October 28 parliamentary elections, Ukrainian media said on Friday.

Yanukovich, who is known for his rough language, made his outburst last Wednesday after Economy Minister Petro Poroshenko appealed to him for more active support in imposing a recycling fee on cars and machinery from Russia.

"A bad dancer is always impeded by something," Yanukovich replied, a slightly softer version of a crude Russian expression that says a poor dancer always blames his testicles.

Clearly seeing Poroshenko's request as a stalling tactic, he said: "I'll tear off your heads very soon. Straight after the elections if you go on talking without doing anything."

Yanukovich, who was presiding over an economics strategy meeting in the town of Dnipropetrovsk, went on: "I told the prime minister this and today I am telling all of you sitting in the front row the same thing.

"We have a month and a half left (before the election). If you want to play at politics - go on play at politics (at your own risk)."

Yanukovich's caustic remarks appeared to reflect some unease over how his Party of Regions may perform in the October election given his government's unpopularity over tax and pension reform.

Despite a united opposition bringing together the main opposition parties, including Batkivshchyna of jailed former Prime Minister Yulia Tymoshenko, experts predict Yanukovich's allies will hold on to their majority in the 450-seat parliament.

Poroshenko, a billionaire businessman whose assets include chocolate factories and a major television station and who was named economy minister in March, was reported by Interfax news agency as replying to Yanukovich: "Alright then, thank you. We'll do it without your help."

The online newspaper Ukrainska Pravda quoted Poroshenko as telling journalists in the Black Sea resort of Yalta on Friday that the comment had not been personally directed at him alone.

"It was addressed to everyone who was on the front row. I was standing at the tribune at the time ...," he said.

Source: Yahoo News