Thursday, January 31, 2013

Ukraine Says Open To Raising Gas Prices

BRUSSELS, Belgium -- Ukraine's government is open to raising gas prices for some consumers, the country's foreign minister said Wednesday, in comments signaling that one of the major stumbling blocks to a new International Monetary Fund loan deal could be removed.

In an interview with Dow Jones Newswires and The Wall Street Journal, Leonid Kozhara also said Ukraine wouldn't pay a $7 billion gas bill that Russian energy giant OAO Gazprom OGZPY sent its state-run energy company this week.

He warned Russia that if it maintained the prices it charges Ukraine for gas, it will eventually lose a key export market.

Mr. Kozhara's two-day visit to Brussels comes the day after an IMF mission arrived in Ukraine to prepare loan talks.

Ukraine's economy minister Wednesday played down the chances of an imminent deal on what Kiev hopes will be a $15.4 billion loan program, saying the IMF mission would first "study the situation in Ukraine," Interfax news agency reported. 

But Mr. Kozhara's comments are the clearest indication yet that the government may give ground on gas price rises, which it previously ruled out.

"The Ukrainian government is ready to negotiate everything, including gas prices on the consumer market," he said.

Asked if the government was prepared to take steps on domestic gas prices, Mr. Kozhara said "absolutely."

The issue has haunted Ukraine-IMF ties and led to the suspension of the previous loan agreement in 2011.

Ukraine spends billions of dollars each year reselling Russian gas to consumers at cut prices.

The IMF has argued that cutting those subsidies would relieve pressure on the budget and promote more efficient energy use.

The IMF could still press other difficult demands on Ukraine, including further budget tightening and greater exchange-rate flexibility.

The government faces $9 billion in foreign debt repayments this year, half of it to the IMF.

Potentially complicating the IMF deal is this week's demand by Gazprom that NAK Naftogaz pay $7 billion for failing to buy an agreed minimum of Russian gas imports last year.

Analysts say the bill could be an attempt by the Kremlin to raise pressure on Ukraine, which for months has pushed for a discount on gas prices.

Russia has demanded closer economic and political ties in return.

The Gazprom bill came days after Ukraine signed a $10 billion gas deal with Royal Dutch Shell RDSB.LN PLC to help develop the country's shale gas—the latest step by the government to diversify energy supplies away from Russian dependence.

The energy issue is a crucial one as Kiev faces difficult choices about whether to try to deepen ties with the West that have been harmed by the trial and imprisonment of former Prime Minister Yulia Tymoshenko or whether to shift closer to Russia.

Kiev so far has resisted Russia's push for it to join the Moscow-dominated Eurasian customs union, saying that would prevent the completion of a trade and political deal with the European Union that was put on hold in 2011.

The EU and Ukraine, whose presidents will meet at a Brussels summit next month, hope to complete the trade deal in November.

Mr. Kozhara insisted Ukraine's ties with Russia remained "strong."

He said the government hoped to negotiate a solution to the gas imports issue with Moscow behind closed doors.

But he said Ukraine wouldn't pay the bill.

"We haven't acknowledged the bill as such," he said, adding that "we are not going to pay."

The foreign minister said frequent disagreements over gas imports stood in the way of closer ties with Russia.

"This government has proved that we can resist any kind of pressure," he said.

And he warned Russia that if it doesn't show flexibility on the gas price issue, not only would Kiev consider taking the issue to international arbitration, but Moscow could gradually lose one of its biggest gas export markets.

"We have today many more [energy] sources, and speaking frankly…Russian gas won't be needed any more in a few years. If Russia wants this, Russia will get this," he said.

"It's simple. Ukraine cannot afford gas for $500 per 1,000 cubic meters. We want at least the price Russia sells the gas at in Germany."

Source: The Wall Street Journal

Wednesday, January 30, 2013

Ukraine: Yanukovych's 'Family' Spreads Its Tentacles

KIEV, Ukraine -- Regions won only a slim election victory, but President Viktor Yanukovych has taken the opportunity to pack his new government with members of his ‘Family’ – and to level new and grave charges at jailed opposition leader Yulia Tymoshenko.

Serhiy Arbuzov's career has skyrocketed with the support and protection that being a member of the 'Family' provides.

When Vladimir Putin’s second presidential term was drawing to a close, the question arose of who would be his successor.

The press mockingly discussed the possibility that he might appoint his beloved labrador dog Connie.

Ukrainian president Viktor Yanukovych took the joke too seriously.

In January he announced his new government, after the parliamentary election last October.

No pets have yet been named as ministers, but the principle of blind personal devotion to President Yanukovych has certainly been central to his appointments.

At the same time, the Prosecutor General Office has also made new accusations against opposition leader Yulia Tymoshenko, charges that could bring her a prison sentence for life.

Such is how Viktor Yanukovych has chosen to start the new political cycle that will take him up to the next presidential election in 2015.

A 17 Year Old Murder 

In 1996, businessman and MP Yevhen Shcherban was gunned down as he stepped off a private jet at the airport in his home city of Donetsk; his wife and several bystanders were also killed.

Now Tymoshenko is accused of ordering his murder, in collusion with Pavlo Lazarenko, then-Ukrainian prime minister and her business partner.

Lazarenko has recently been released from an American prison where he was serving a sentence for money laundering.

The paradox is that the trial of those accused of murdering Shcherban took place nearly ten years ago, when Tymoshenko was an opposition MP.

Given the bizarre rules of Ukrainian politics, there was nothing to stop her being named as a suspect then.

However during the 2003 court case, which examined the circumstances of the murder in great detail, Tymoshenko’s name was never once mentioned, although Lazarenko was a suspect, accused of involvement in ordering the killing. 

Tymoshenko’s inclusion in this story looks like a ‘trial shot’ by Yanukovych – and demonstrates that he is ready to take this affair to the bitter end.

He has no intention of bending to western pressure to release Tymoshenko.

On the contrary, according to his logic this new accusation should put the west off supporting her further.

The previous charge against Tymoshenko, for which she is serving a seven year prison sentence – overstepping her authority as prime minister while brokering a gas deal with Russia in 2009 – convinced neither the Ukrainian public nor Western observers.

Her party received 25% of the vote in last October’s election, halving the gap between it and Yanukovych’s party compared with the 2010 presidential election.

At the same time the European Union made Tymoshenko’s release a condition for signing its Association Agreement with Ukraine, establishing closer economic and political links than with any other country without candidate status.

In this situation Yanukovych had two options.

He could agree to a gradual ‘thaw’, which would entail a democratisation of Ukrainian internal politics and the release of Tymoshenko; a European parliamentary observation mission consisting of ex-Polish President Aleksander Kwasniewski and ex-European Parliament President Pat Cox has been actively working for this outcome.

Germany has also made repeated proposals that Tymoshenko, who suffers from a spinal hernia, be released for long term treatment at Berlin’s Charité hospital. 

Yanukovych’s other option was to pursue his own agenda to the bitter end: insisting on the rightness of his actions, keeping Tymoshenko behind bars and blackmailing the west into a climbdown by threatening to conclude a Customs Union with Russia.

The president chose the second option, and is presenting the west and the Ukrainian public, who refused to accept Tymoshenko’s guilt before, with a much more grave accusation against her.

This time it’s not just petty abuse of power, but a contract killing.

Such a serious charge shows his readiness to test to the limit Brussels’ and Washington’s disapproval of his selective approach to justice and persecution of the opposition.

All In The ‘Family’ 

This is one side of Yanukovych’s outline scenario for this new political cycle that will take him up to the next presidential election in 2015, and it is clear that his chief rival cannot expect to be released before then.

The other side was revealed by his recent government appointments, all of which have gone to close associates of his elder son.

The recent elections confirmed that Yanukovych has lost the support of Ukraine’s oligarchs, who would like him to free Tymoshenko so that they can enjoy the fruits of the EU’s Association Agreement.

So he is now dependent on his own inner circle, connected to him by the ties of ‘Family’ business.

Viktor Yanukovych and his wife Lyudmyla, from whom he is now separated, have two sons.

The younger, named Viktor after his father, is a racing driver, although the peak of his career so far was probably his election to the Ukrainian parliament in 2006 at the age of 25, after his father personally added his name to the top end of his Party of the Regions’ electoral list.

And although Viktor junior can barely put two words together he is now serving his third term as an MP.

Viktor’s fame rests not on any brilliant speeches or reform plans, but on a short video in which he can be seen weaving unsteadily along a street in a drunken state during working hours, when in theory he should be at a sitting in parliament.

The president’s older son Oleksandr’s reputation is rather more sinister.

He is a dentist by profession, and his official business interests comprise only a small bank and a construction company.

But these are just a front for the presidential family’s criminal activities and lifestyle.

His very name is synonymous with the redistribution of wealth in Ukraine that has been evident since his father came to power.

His unpleasant reputation is the result of his friends’ occupying key posts in Ukraine’s police and tax authorities, famous for their ability to ‘process’ other people’s property.

The process is very simple and has already been rolled out in Russia.

Ukraine’s judicial system is corrupt and hostile to business, so large companies try to optimise their tax liabilities by walking a legal tightrope.

The power structures then begin by making problems for the business owners and then suggest, as a way out, that they get a cut of profits or shares.

‘The family’ was a term coined for Boris Yeltsin’s entourage, who ruled in the name of the infirm Russian president in the 90s.

At the very end of 2012 President Yanukovych appointed a completely new government, giving his son Oleksandr’s friends all the most important jobs.

And now ‘the family’ has become the answer to any question about whose interests are represented by any given minister in the Ukrainian government.

All the President’s Men 

Although Mykola Azarov has been reappointed as Prime Minister, it is obvious to all that his days in the post are numbered, as the newly appointed First Deputy PM is the Family’s most prominent member, Serhiy Arbuzov.

Arbuzov's meteoric rise shows just how well you can do in Yanukovych’s Ukraine.

Only three years ago he was manager of Oleksandr Yanukovych’s small bank back home in Donetsk.

After his father’s election as president, however, Arbuzov initially became First Deputy Director of Ukraine’s Central Bank, and a year later was at its head.

So now Arbuzov is deputy PM, and doesn’t hide his further ambitions.

He is conducting an aggressive PR campaign: he has set up a TV channel at government expense, and from time to time posters with his photo adorn the billboards of Kiev.

He is also behind a new business paper, ‘Kapital’, which is about to hit the streets. 

Arbuzov’s spin doctors have been known to resort to dubious practices: for example, a non-existent German university registered in a dormitory suburb of Cologne has named him as one of the best bankers in Eastern Europe.

In a bid to legitimise Arbuzov as a businessman, they have also acquired the Metalist Kharkiv football club, which has been doing well in the UEFA Europa League this season.

Since Arbuzov’s cabinet appointment, Igor Sorkin, one of his Central Bank deputies and another native of Donetsk, has taken his place at the head of the Bank.

Another deputy, Yury Kolobov, is now Ukraine’s Finance Minister.

This unprecedented aggrandizement of the Family in December 2012 has allowed its tentacles to spread to key ministries.

All the top posts at the Ministry of Energy, for example, are now occupied by ‘Family’ protégés, with the new minister, Eduard Stavitsky, replacing the seemingly invulnerable Yuri Boiko, the nominee of the oligarch owned RosUkrEnergo gas company.

Stavitsky’s only noteworthy previous achievement was the transfer of ownership of Mezhyhirya, an official government residence in a vast estate, from the Ukrainian state to a Liechtenstein trust owned by the Yanukovych family.

The president now lives there in unbelievable luxury, which he owes to Stavitsky’s deft handiwork.

Oleksandr Klymenko, another Family henchman, heads the newly created Inland Revenue Department, former by a merger of the Tax and Customs and Revenue Services.

In addition, the President’s ‘Family’ also now controls the Ministries of Agriculture, Defence, Foreign Affairs, Economic Affairs and Natural Resources and Environment.

In other words, key roles in the Ukrainian government are now in the hands of people from nowhere, whose chief merit is their membership of Oleksandr’s mob and their loyalty to his father the President.

These are the people who have been entrusted with a mission of the highest importance: to organise Ukraine’s system of government, along with its oligarchs and opposition, in such a way as to guarantee Viktor Yanukovych a further presidential term in 2015.

Whatever it costs.

Source: OD Russia

Ukraine Gongadze Case: Court Convicts Journalist's Killer

KIEV, Ukraine -- A Ukrainian court has convicted a former police chief of murdering journalist Georgy Gongadze in 2000, a crime which rocked the country.

Olexiy Pukach is a former police general.

The court in Kiev found that Olexiy Pukach had killed the journalist, then cut off his head.

It sentenced Pukach to life imprisonment.

Pukach confessed but said he had acted on the orders of the late Interior Minister, Yuri Kravchenko.

The murder sparked protests against the president at the time, Leonid Kuchma.

An attempt to prosecute Mr Kuchma for ordering the killing collapsed in December 2011 when a judge ruled that secret audio recordings which apparently incriminated him could not be used as evidence, as they had been obtained through "illegal means".

Mr Kuchma has always denied involvement in the journalist's murder.

A few months before his death, Georgy Gongadze founded the news website Ukrainskaya Pravda, which was sharply critical of the Kuchma presidency. 


While serving as head of the Ukrainian interior ministry's external surveillance service, Pukach tracked Gongadze, the court found.

Pukach testified that he had accidentally strangled the journalist with a belt while interrogating him about possible links to foreign states in September 2000.

He further admitted severing Gongadze's head from his body, which was found in woodland in the Kiev area later that year.

Part of the skull was found in 2009.

Arrested in 2009, Pukach confessed to the killing at an early stage, saying he had used an axe to behead the journalist.

A lawyer for Pukach said the defence would appeal against the court's judgment, the Russian news agency Interfax reports.

Three officials from Pukach's department are already serving jail terms for their part in the murder.

Kravchenko was found dead with gunshot wounds in 2005, in what was officially described as a suicide, just as he was about to be questioned.

Questions have been asked about how he managed to shoot himself twice in the head.


Tuesday's verdict brings closure neither to the Gongadze family, nor to Ukraine.

Too many questions remain unanswered.

In his final remarks in the courtroom, General Pukach claimed Leonid Kuchma should have also been in the dock.

Yet his name did not feature in the trial.

Pukach claims the murder was ordered by Mr Kuchma's Interior Minister, Yuriy Kravchenko.

Conveniently for all involved, Mr Kravchenko "committed suicide" in 2005.

He was buried with state honours.

But the question about how he shot himself twice in the head remains unanswered. 

For Ukraine, the Gongadze murder became a catalyst for widespread social unrest in 2001 and eventually led to the Orange Revolution of 2004.

Source: BBC News

Tuesday, January 29, 2013

Ukraine Kicks Off IMF Loan Push As Reserves Dip Below Key Level

KIEV, Ukraine -- Ukraine will press for a third international bailout in four years this week as the former Soviet republic gears up for $10 billion of debt payments and foreign reserves languish near a two-year low.

Under pressure from a shrinking economy and an energy dispute with Russia’s OAO Gazprom (GAZP), the government will seek a $15.4 billion loan when an International Monetary Fund mission arrives today in the capital, Kiev.

Its last aid package, which ended Dec. 27, was halted for failure to meet the fund’s terms.

Ukraine is grappling with falling output of steel, its top export earner, a widening current-account gap and reserves that have fallen below three months of imports.

While the government can finance itself in global debt markets at present, an IMF accord is required to put the country on a “sustainable path,” according Viktor Szabo, who helps manage $10 billion at Aberdeen Asset Management (ADN) in London.

“They need a deal,” said Szabo, whose fund exited Ukrainian state and corporate debt in November because of the absence of an IMF agreement.

“The current-account deficit isn’t sustainable as seen from the pressure on the currency and reserves.”

The hryvnia has fallen 1.7 percent during the last year to 8.1420 per dollar, prompting the central bank to sell foreign currency.

Reserves dropped to $24.5 billion in December from $38.2 billion in August 2011 as the current-account gap widened to a record $12.4 billion in the first 11 months of 2012, when imports averaged $8.6 billion a month.

Debt Repayments 

Ukraine must repay $5.7 billion to the IMF in 2013, according to the lender’s website, with an initial payment of $404 million due Jan. 30 and an additional $2.4 billion by May 10.

It also has $1 billion of Eurobond repayments due in June and a further $2.2 billion from local bonds issued in foreign currencies.

The government will seek a loan equivalent to about $10 billion Special Drawing Rights, or SDRs, the same amount it agreed on in 2010, according to First Deputy Prime Minister Serhiy Arbuzov.

“We want to discuss those figures and conditions that were fixed in the previous loan program,” he told reporters Jan. 14.

While Ukraine complied with IMF demands to raise the pension age, it refused to increase domestic heating tariffs, a condition designed to narrow the budget gap, resulting in loan disbursements being frozen in 2011.

Russian Gas 

Efforts toward an alternative solution -- trimming the price of natural gas imports from Russia -- have been unsuccessful.

Gazprom is demanding $7 billion for Ukraine’s failure to take contracted volumes of the fuel in 2012.

The government may raise utility tariffs for the wealthy, Premier Mykola Azarov said last week, without providing details.

The Washington-based IMF, which sought an across-the-board price increase of 30 percent or more in 2011, has suggested that scrapping untargeted benefits for the rich may free up funds to help offset the cost of higher tariffs to the poor.

While gross domestic product may have advanced 1 percent in 2012, according to the government, the economy probably shrank in the second half because of lower metals prices, HSBC Holdings Plc (HSBA) and Erste Bank Group AG (EBS) estimate. GDP is set to contract 1.8 percent this year, Goldman Sachs Group Inc. (GS) said Jan. 24, contradicting Azarov’s forecast for 3 percent to 4 percent growth.

‘Double-Edged Sword’ 

Industrial production fell for the first time since 2009 last year, dropping 1.8 percent after a 7.6 percent jump in 2011 as metals output plunged 5.2 percent, official data show.

Fourth-quarter GDP data are scheduled for release this week.

Ukraine sold $1.25 billion of 10-year Eurobonds Nov. 20.

The yield on that debt declined to 7.324 percent yesterday, the lowest level since it started trading, data compiled by Bloomberg showed.

Access to international debt markets may be “a double- edged sword” that may steer the country away from an IMF pact, according to Andreas Kolbe, a credit strategist at Barclays Plc’s investment arm in London.

“The availability of financing is likely to reduce the incentive for the government to implement unpopular reforms required to come to an agreement,” he said.

“We remain skeptical regarding the prospects of an IMF deal this year.”

Default Swaps 

The cost of insuring state debt against non-payment for five years using credit-default swaps has fallen to 572 basis points from as high as 803 in July, according to data compiled by Bloomberg.

The IMF delayed a planned Dec. 7 visit to Kiev as President Viktor Yanukovych picked a new Cabinet and central bank governor after October’s parliamentary elections.

Moody’s Investors Service and Standard & Poor’s later cut Ukraine’s credit rating one step on weak economic prospects and significant external financing needs, and said further downgrades may follow should talks with the IMF fail.

Moody’s rates Ukraine at B3, six levels below investment grade.

S&P rates it one level higher at B.

While Ukraine is attempting to delay an IMF deal for as long as possible by tapping bond markets, it will eventually have to reach an agreement with the lender, according to Andrew Matheny, an analyst at Goldman Sachs in Moscow.

“In employing this strategy, the government is accumulating more debt, at a higher cost and in foreign currency,” he said Jan. 22 in an e-mailed note.

“A well-funded IMF program is necessary to ensure external and fiscal sustainability.”

Source: Bloomberg

Saturday, January 26, 2013

Ukraine, Shell Gas Deal Stirs News World

KIEV, Ukraine -- BBC, Financial Times, The Globe and Mail, The New York Times, Reuters, The Wall Street Journal and a number of other global media representatives draw public attention to the signing of the production sharing agreement between Ukrainian government and the Royal Dutch Shell.

Ukrainian President Viktor Yanukovych (L) with Shell Chief Executive Peter Voser.

According to the agreement, Shell and Ukrainian state company Nadra Yuzivska have equal shares in the enterprise - 50 percent.

"A new project has been born. This is just the beginning, we shall continue this cooperation," commented Ukrainian President Viktor Yanukovych at the January 24 signing of the agreement in Davos, Switzerland.

The document is supposed to promote investment to Ukraine, help increase domestic gas production, create jobs, lift the economy, and boost state budget revenue.

Reuters emphasizes the 50-year contract is "the biggest contract yet to tap shale gas in Europe," noting that the USD 10 billion deal is a significant step on the road to energy independence from Russia.

Reportedly, Ukraine possesses 1.2 trillion cubic meters of shale gas - third largest deposits in Europe.

The Wall Street Journal reminds that Ukraine is putting extra effort into exploring domestic gas reserves due to high prices for imported Russian gas.

As the country stays committed to European integration, Yanukovych rejected Russia's offer of cheaper gas in return for closer economic and political cooperation of the neighboring countries.

Neil Buckley of the Financial Times believes deal with Shell could promote investment to Ukraine.

He reminds that in 2013 Shell alone is committed to invest USD 400 million.

Criticizing political and economic environment in Ukraine, the author notes that reduced energy dependence of Ukraine could give a push to closer integration with the EU.

This, in its turn, would "alter the investment environment" in the Eastern European country.

The New York Times quotes London-based Lambert Energy Advisory expert, who notes that large energy companies recognize "the huge potential of the country."

The paper compares Ukrainian gas estimates to those of Algeria, seventh largest gas exporter.

Shell won the right to explore gas in Yuzivske gas field in Eastern Ukraine in May 2012.

In August 2012, Shell, ExxonMobil, Romanian OMV Petrom, and Ukrainian state company Nadra received joint rights to develop underwater deposits at Ukrainian deep marine shelf field under the Black Sea.

Source: Herald Online

Russia Hands Ukraine $7Bn Gas Bill

KIEV, Ukraine -- Russia has demanded that Ukraine pay billions of dollars for failing to import an agreed amount of gas.

The move came just as Kiev has taken a significant step to break free from its reliance on costly Russian gas imports.

The bill was presented as Ukraine signed a deal with Royal Dutch Shell to exploit “unconventional” gas reserves in shale and sandstone that could ultimately involve $10bn-plus in investment, according to a senior official in Kiev.

The Russian demand threatens to cause a third high-profile energy dispute between the former Soviet states after Russia twice cut off gas supplies to Ukraine since 2006 amid squabbles over prices.

It comes at a time when both Russia and the EU are trying to persuade Ukraine to form a closer partnership with them.

The bill also threatens to worsen Ukraine’s precarious financial situation, with the potential to hurt its credit rating and ability to borrow on international markets.

Russian gas monopoly Gazprom alleges that Ukraine imported less gas last year than it was obliged to under a minimum “take or pay” clause in a 2009 supply contract.

The Ukrainian official told the Financial Times that Gazprom sent a $7bn demand to Ukraine’s Naftogaz state gas company on Wednesday as Viktor Yanukovich, the president, was preparing to leave for Davos, where he attended Thursday’s deal signing with Shell.

[The president] decided, nonetheless, to travel to Davos and go forward with Thursday’s signing . . . The geopolitical battle has started,” the official said.

Naftogaz was unlikely to pay the bill, the official added, challenging Gazprom instead to take the issue to international arbitration.

Gazprom’s refusal to reduce prices to its neighbour – though it has done for some west European clients since 2010 – has forced Ukraine to cut imports, seek alternative supply sources, and boost energy efficiency.

Ukraine imported 33 billion cubic metres of gas from Russia last year – down a quarter from 2011 – of which Naftogaz’s share was 24.9bcm.

Naftogaz confirmed that it had a received a “bill for gas which Ukraine did not import” but declined to reveal the value or volume of the alleged shortfall.

“We feel that we met all obligations, paying all bills for gas imported from Gazprom in 2012, in full and in a timely fashion,” the company added.

It said the company had notified Gazprom in advance that it would not need all its contracted gas, as permitted by its agreement.

Gazprom declined to comment on Friday.

The Russian monopoly told the FT a day earlier that Gazprom was not enforcing potential fines on Ukraine for the gas shortfall because it needed to “set realistically attainable goals” for Ukrainian consumption.

Ukraine’s determination to pursue other sources, exemplified by its Shell deal, however, seems to have persuaded the Russian monopoly to send the bill.

Mr Yanukovich also pulled out at the last moment from a meeting last month with Russian president Vladimir Putin.

He was understood to be poised to receive a gas price discount in return for a loose commitment to join a customs union that Russia is creating with former Soviet states Belarus and Kazakhstan.

Ukrainian officials have hyped up Thursday’s agreement with Shell, and the prospects of more production sharing agreements with US energy giants Chevron and ExxonMobil .

They hope to repeat the US shale gas boom, betting that unconventional gas production technologies will wean its energy-intensive economy off costly Russian imports.

But with its economy teetering on the verge of recession, Ukraine’s government is trying to cover or roll over some $10bn in sovereign external debt that matures this year.

A mission from the International Monetary Fund arrived in Kiev this week to hold talks on a $15bn bailout programme sought by Ukraine.

The IMF has long insisted that Kiev must raise heavily subsidised household gas prices in Ukraine, to reduce the burden of the subsidies on the budget, as a condition of any bailout – a move that would be deeply unpopular politically.

Source: ft

Thursday, January 24, 2013

Tymoshenko Murder Accusations Overshadow Upcoming EU-Ukraine Summit

BRUSSELS, Belgium -- The EU-Ukraine summit scheduled for 25 February may mark a low point in the relations between Brussels and Kiev, with diplomats warning that it would be “impossible” to move forward without solving the case of imprisoned former Prime Minister Yulia Tymoshenko, who is now accused of commissioning a murder.

Yuriy Lutsenko and Yulia Tymoshenko in a file photo.

It is "impossible to move forward in the EU-Ukraine relations before the problem of selective justice is eliminated,” said The EU Ambassador to Kiev, Jan Tombiński, who was quoted in the Ukraine press.

The diplomatic term ‘selective justice’ refers to the imprisonment of Tymoshenko and her ally Yuriy Lutsenko, a former interior minister.

Lutsenko and Tymoshenko are already serving four- and seven-year sentences respectively for abuse of office, but Tymosjenko was additionally charged last Friday with commissioning the murder of Yevgen Shcherban a powerful lawmaker in 1996.

Tymosenko rejected the charge, calling it “hysteria”.

"The EU-Ukraine Summit due on 25 February is a regular component of the EU's dialogues with other states.

It is not aimed specially at discussing issues related to Yulia Tymoshenko and other cases of selective justice.

However, the issue will be discussed at the summit, as it is impossible to move forward in the EU-Ukraine relations before the problem of selective justice is eliminated," Tombiński said, as quoted by the Kyiv Post.

EurActiv was the first to report about the intentions of the Ukrainian prosecution to press murder charges against Tymoshenko, back in November 2011.

General Renat Kuzmin said the murder of MP Yefhen Shcherban, one of the richest man in Ukraine, and his wife at the Donetsk airport in 1996 by people dressed as police officers was commissioned by Tymoshenko.

The murderers have confessed having received $1 million (€742,394) from a bank account linked to Lazarenko and Tymoshenko, Kuzmin said.

The Kyiv Post today quotes Prosecutor General Viktor Pshonka saying that law enforcement agencies of no country would ignore such crimes. "And Ukraine is no exception," he stressed.

Tymoshenko and Lazarenko have categorically denied being involved in the murder.

In the meantime, it was reported that Tymoshenko's state of health has worsened. 

Source: EurActiv

Tuesday, January 22, 2013

Lawyer Of Former Ukraine PM Yulia Tymoshenko 'Faces Criminal Charges'

KIEV, Ukraine -- The senior lawyer acting for jailed former Ukrainian prime minister Yulia Tymoshenko says he is under criminal investigation and fears imminent arrest.

Serhiy Vlasenko, lawyer of former prime minister Yulia Tymoshenko.

Serhiy Vlasenko told reporters on Monday that he had been accused of car theft, robbery and failing to obey a court ruling stemming from his divorce several years ago.

Vlasenko dismissed all the accusations and claimed they were part of a campaign by Tymoshenko's long-time political foe, President Viktor Yanukovych, to leave Tymoshenko in jail without a lawyer.

Ukrainian authorities stepped up their legal campaign against Tymoshenko last week, accusing her of organising the murder of a businessman nearly 20 years ago.

She is serving a seven-year prison term on charges of abuse of office, a sentence that has been condemned by the west as politically motivated.

Source: AP

Tymoshenko Probe Angers Opposition Groups

KIEV, Ukraine -- Political confrontation appears set to escalate in Ukraine after opposition parties on Monday demanded the holding of an emergency session of Parliament in reaction to a new investigation against jailed opposition leader Yulia Tymoshenko.

Yulia Tymoshenko

The Batkivshchyna party, joined by other opposition groups, seeks to hold the session on January 29 and plans to summon up key law enforcement officials, including Prosecutor General Viktor Pshonka.

Pshonka, Internal Affairs Minister Vitaliy Zakharchenko and SBU security service chief Oleksandr Yakymenko will face a no-confidence vote, Arseniy Yatseniuk, the leader of Batkivshchyna, said.

This may pose a problem for President Viktor Yanukovych, who does not control a stable majority in Parliament after October 28 elections.

Yanukovych had to rely on independent lawmakers to make several important appointments in the government.

The demands emerged in reaction to plans by prosecutors to seek life in prison for jailed Tymoshenko for her alleged involvement in the murder of lawmaker and businessman in 1996.

Tymoshenko denied any involvement in the murder and said the allegations were politically motivated to eliminate her from political life.

European leaders have repeatedly criticized the Ukrainians authorities for on-going political pressure and investigations against opposition leaders.

But the latest developments raise serious concerns because they may undermine Ukraine’s plans to sign next month an important political association and free trade agreement with the European Union.

“If the latest developments in Ukraine prevents the singing of the agreement, we see no other solution but demanding a total change of the government via holding early parliamentary and presidential elections,” the opposition Udar party said in a statement.

Pshonka said on Friday that investigators had completed their investigation into the killing of businessman and lawmaker Yevhen Shcherban in 1996 and concluded that Tymoshenko and then Prime Minister Pavlo Lazarenko had ordered the murder, paying the killers $2.8 million.

Tymoshenko on Friday was “served notice of suspicion” of organizing the murder, Pshonka said.

Tymoshenko is already on trial for alleged financial crimes when she headed a gas-trading firm in the 1990s.

The trial was adjourned on Friday after she didn't appear in court due to her continued ill health, her lawyer said.

Prosecutors accused her of trying to "avoid responsibility."

Oleksandr Tymoshenko, Yulia Tymoshenko’s husband who is now based in Prague, the Czech Republic, on Monday called Pshonka’s latest allegations a “complete madness.”

The allegations “show that the authorities exhausted all sorts of evidence in other cases and they are absolutely on the verge of complete madness.”

“All reasonable, objective people realize that Tymoshenko had nothing to do with the murder of Shcherban,” Oleksandr Tymoshenko said.

"I appeal to all honest people - do not believe a word of this dull elite and occupiers in the government!” Oleksandr Tymoshenko said.

“Fight for your future. Yulia Tymoshenko has defended you - it's time to defend her. Do not be ignorant. Tomorrow they will come to you."

Source: Ukrainian Journal

Monday, January 21, 2013

Ukraine Continuing Gas Imports Via Poland

KIEV, Ukraine -- Ukraine continues to import European natural gas via Poland as it seeks to break the stranglehold of Russian supplies, Kiev's energy minister says.

Ukrainian Energy and Coal Industry Minister Eduard Stavitsky said Friday the state-owned gas company Naftogaz is still receiving supplies under a contract with German utility RWE via reverse flows from Poland, Interfax-Ukraine reported.

"For now we are getting gas via Poland only ... and we are working on two more routes," he said.

"Something will be known about them very soon."

Naftogaz in November struck a deal with RWE to supply it with 56 million cubic meters of natural gas over a two-month period via Poland through the reversing one of the lines that connecting the two countries' transmission systems at Drozdovychi. 

The German company wouldn't confirm the price it is getting from Naftogaz but local media reports claimed it is cheaper than those charged by the Russian company Gazprom, which is fetching what Ukraine considers to be an exorbitant rate of $426 per cubic meter, British energy analysts ICIS Heren reported.

Ukraine has already purchased about 57 million cubic meters from RWE via Poland, but the arrangement is continuing, Stavitsky said.

Naftogaz in May signed an agreement with RWE creating a legal framework for the importation of natural gas supplies from the German utility -- a deal that wouldn't contain binding purchase or supply commitments, such as required by Gazprom. 

News of the framework agreement came after Ukrainian Prime Minister Mykola Azarov in March told the German newspaper Die Welt that if Ukraine can't reach an agreement with Gazprom on renegotiating its current gas contract, it could buy Russian gas from RWE through reverse flows.

The throughput capacity at Drozdovychi is about 4 million cubic meters a day. 

Meanwhile, Stavitsky said another deal to import RWE gas via Hungary hadn't begun while two more reverse-flow European gas routes are being considered, ITAR-Tass said.

In November, Stavitsky's predecessor, Yuriy Boiko, said Ukraine was to start importing natural gas through Hungary on Jan. 1.

"The current shipments of gas (from RWE) go through the territory of Poland," he told the Inter television channel at the time.

"Starting from January 1, the supplies will go through the territory of Hungary... We have done a great job, have held talks with the countries that have received permission from regulators and bought the capacities."

He said Ukraine hoped to save $2 billion via the purchase of 5 billion cubic meters of western natural gas through long-term contracts.

Experts told Interfax-Ukraine that Kiev could also use reverse flows via Slovakia to buy up to 20 billion cubic meters of natural gas per year on European spot markets though Slovakia starting in 2015-16.

However, progress on Slovakian front has been slow, ICIS reported.

The analysts said a recent tender held by Slovak transmission system operator Eustream showed no market interest, with Eustream unlikely to press ahead with plans for a new pipeline without booked transmission capacities.

Source: UPI

Sunday, January 20, 2013

Ukraine Signals Gas Price Rise To Unlock IMF Aid

KIEV, Ukraine -- Ukraine signaled it could raise gas prices for some households, a long-delayed move that could help it unlock critical financial help from the International Monetary Fund.

Prime Minister Mykola Azarov said Friday that the government could raise prices for wealthier citizens, but wouldn't cave to all IMF demands as it wasn't "desperate" for loans and was seeking funding on international markets.

The comments to a small group of Western reporters come days before IMF officials arrive in Kiev on Jan. 29 for two weeks of talks, where the government says it hopes to secure a $15.4 billion lending program.

Ukraine is battling an economic slowdown as demand for its steel and chemicals exports dwindle.

The government is to repay over $9 billion in foreign debt this year, more than half of it to the IMF.

Mr. Azarov's comments are the first indication that the government may give ground on gas price rises, which it had previously ruled out.

The Fund has long argued that the government should cut hefty gas-price subsidies in order to reduce the burden on the national budget and promote more efficient energy use.

For months, Ukraine has tried in vain to secure a lower price for critical gas supplies from Russia, which has demanded closer economic and political ties in return.

President Viktor Yanukovych's planned trip to Moscow at the end of December for a key meeting with Russian counterpart Vladimir Putin was canceled at the last minute.

Analysts and Western officials said Ukraine is now turning to the West for support.

One Western diplomat in Kiev said the government now appeared to be "serious" about securing the IMF funding.

Mr. Azarov said Ukraine is ready to review the budget deficit and key monetary indicators to find common ground with the IMF mission.

A previous loan program was frozen in 2011 after Ukraine refused to raise gas prices.

Mr. Azarov said his government is also negotiating to borrow on international markets, but gave no further details.

"Currently, the financial market is extremely favorable for borrowing," Mr. Azarov said.

"And we have a normal fiscal situation; we have something to go to investors with."

First Deputy Prime Minister Serhiy Arbuzov is currently in New York "negotiating with investors," he said.

"I think Moscow is playing much harder to get, and hence Ukraine is seeing if it can get softer terms from the IMF. That said, if the government can tap the market then perhaps its willingness even to cut a deal with the IMF might be limited," said Timothy Ash, an analyst at Standard Bank.

Source: The Wall Street Journal

Newly Adopted Ukraine Teenager Reunites With Best Friend In Louisville

LOUISVILLE, USA -- A Shelby County couple welcomes home their newly adopted child, a 16-year-old girl from the Ukraine. This is a unique story because now their new daughter is reunited with her childhood best friend.

Tania hugged her new sister.

Excited and anxious, Becky Williams waited for her husband and daughter Tania's plane to land in Louisville.

"It may be kind of overwhelming, meeting all of us for the first time, but were just very, very excited," said Mrs. Williams.

Becky and Roger Williams already have eight children of their own and this is their first time adopting.

"When we heard her story, we just wanted to help out and see what we can do and the more we learned her and we are just happy to have her," said Mrs. Williams. 

They first learned about Tania when she was visiting her best friend, Madison Dziedzic, last year in Louisville.

Madison, who is also from the Ukraine, was adopted three years ago.

The girls grew up together in the same orphanage.

"It's awesome," said Dziedzic.

"I'm so happy for her and she's so excited and nervous, but she's glad that I'm here." 

While Tania was a little shy at first, her nerves were calmed when she saw Madison and her new large family waiting for her.

The Williams decided they wanted to adopt a teenager because in Ukraine, when orphans turn 16 they are basically left on their own.

"Statistically she had, like a 10% chance of immediately committing suicide, a 70% chance of becoming involved in drugs and prostitution, so the odds were just so much stacked against her," said Mr. Williams.

The Williams' adoption comes at a time when dozens of approved adoptions have been halted in Russia.

"It's been almost a year that we have been working on the process with Tania that I couldn't imagine at some point in the midst of that being told, well it's just not going to work out," said Mr. Williams.

Russia's president enacted a law that bans adoptions by Americans.

A political retaliation because of a new United States law which imposes sanctions on Russians deemed to be human rights violators.

"The leaders in Ukraine are very much opposed to Russia's decisions, so now is really the time that we can make a great impact," said Mr. Williams.

After living in the United States, Madison says she can't help but feel for the orphans in Russia.

"Everybody wants to have a family and I just don't like it at all," said Dziedzic.

The Williams say they are already in the process of adopting another teenager from the same orphanage in the Ukraine.

They hope to have her home by this summer.

Source: Wave News

Saturday, January 19, 2013

Ukraine Sliding From Oligarchy To Cronyism

KIEV, Ukraine -- The recent appointment of a second government led by Prime Minister Nikolai Azarov confirms Ukraine’s evolution from an oligarchy to a cronyist state whereby positions of power are increasingly being accorded to “the Family,” composed of President Viktor Yanukovych’s close relatives and loyal associates from his home town of Yenakiyeve in Donetsk oblast.

President Viktor Yanukovych

“The Family” is orchestrated by the president’s eldest son, Oleksandr.

Azarov is not a “Family” member and heads a caretaker government.

However, twelve positions have been allocated to “The Family,” facilitating the privatization of the state budget and security forces.

Illustratively, former National Bank of Ukraine (NBU) Chairman Serhiy Arbuzov was made first deputy prime minister, a position from which he is likely to rise to prime minister.

The new NBU Chairman Ihor Sorkin was born in Donetsk and in 2002–2010 headed the Donetsk branch of NBU.

Sorkin’s wife, Angela, is the deputy head of UkrBiznesBank, now owned by Oleksandr Yanukovych but headed by Arbuzov until 2010.

Both Angela Arbuzov and Oleksandr Yanukovych are (bizarrely) dentists by profession, and Oleksandr entered Ukraine’s top 100 wealthiest people in 2011, a year after his father came to power.

Ihor Sorkin’s parents live in Moscow and his father is employed by a Gazprom entity whose affiliate in Donetsk employs Ihor’s sister.

The State Tax Administration and Customs Service have been merged and, under the new government, continue to be headed by “Family” member Oleksandr Klimenko.

“The Family” also continues to control the interior ministry (Vitaliy Zakharchenko) and the Ministry of Agriculture (Mykola Prysyazhniuk).

Arbuzov and Prysyazhniuk will steer the last big privatization wave in Ukraine, this time of land.

Rukh party defector Oleksandr Lavrynovych for now remains minister of justice and is slated to be Chairman of the Central Election Commission, but Batkivshchina defector Andriy Portnov will succeed him as justice minister.

Portnov had provided legal counsel to Tymoshenko who challenged Yanukovych’s 2010 election.

Two opposition defectors would be therefore in place to ‘manage’ the re-election of Yanukovych in 2015.

Dmytro Tabachnyk, loathed by the opposition for his inflammatory remarks about Western Ukrainians and Ukrainian history, remains minister of education and was lobbied in 2010 by the Russian Orthodox Patriarch.

The tradition since 2010 of ex-Russian citizens who served in the Russian armed forces controlling the security forces continues with Minister of Defense Pavlo Lebedyev and Oleksandr Yakymenko, made first deputy chief of the SBU by Yanukovych last year.

The oligarchic gas lobby has lost influence in the new government, having been unable to secure many parliamentary seats in the October 2012 elections within the Party of Regions.

As an insurance policy and to support the non-Tymoshenko opposition, the gas lobby invested in Vitaliy Klychko’s Ukrainian Democratic Alliance for Reforms part (UDAR).

In the new government, Leonid Kozhara replaced Kostyantyn Gryshchenko as foreign minister (the former is aligned with oligarch Rinat Akhmetov’s group and the latter with the gas lobby).

Gryshchenko’s replacement was part of a PR campaign claiming the “pro-Russian” gas lobby had derailed Ukraine’s European integration.

Akhmetov controls transportation, economy, social and regional policy in the government and holds strong influence over Minister of Economic Development and Trade Ihor Prasolov, the former first deputy head of Akhmetov’s business empire Systems Capital Management (SCM).

Akhmetov’s man in Dnipropetrovsk, former governor Oleksandr Vulkov, facilitated the expansion of SCM into that oblast.

Vulkov was appointed Deputy Prime Minister where he will work alongside another loyalist, First Deputy Prime Minister Borys Kolesnykov.

Gas lobby member Yuriy Boyko was moved from being minister of energy and the coal industry to first deputy prime minister where he could be marginalized.

Whereas, in November 2012, First Deputy Prime Minister Valeriy Khoroshkovsky resigned, as he claimed, due to the absence of economic reforms and the freezing of Ukraine’s European integration.

Yet, Khoroshkovsky’s European integration credentials are suspect since, notably, in 2010–2012 as chairman of the Security Service (SBU) he revived KGB-style policies against the opposition.

Nevertheless, the departure of Khoroshkovsky, Serhiy Tihipko and former Our Ukraine businessman Petro Poroshenko means there is no longer even a moderate pro-European influence within the Azarov government.

The chameleon nature of Ukrainian politicians such as Khoroshkovsky and Akhmetov represents a conundrum for Western policymakers who wrongly accept at face value what these Ukrainian politicians tell them—which, more often than not, is what Westerners wish to hear.

In reality, in the past both oligarchs have prioritized short term graft over medium-to-long-term objectives of European integration.

The increasing cronyism and privatization of the budget and security forces by “the Family” portends deepening corruption and political instability over the coming year in Ukraine.

Taken together, the new-old Azarov government will not be able to undertake needed reforms, sign a new agreement with the International Monetary Fund or unfreeze Ukraine’s relations with the European Union.

Source: Eurasia Daily Monitor

Ukraine Government Plans To Charge Ex-Premier With Murder

MOSCOW, Russia -- The government of President Viktor F. Yanukovich of Ukraine said Friday that it planned to bring murder charges against his political rival, the jailed former prime minister, Yulia V. Tymoshenko, in connection with the 1996 assassination of a member of Parliament.

Yulia Tymoshenko is already serving a seven-year jail sentence for abuse of office, meted out in October 2011.

The charges, which carry a potential sentence of life in prison if she is convicted, are the gravest accusations yet in a series of criminal prosecutions that Western governments have denounced as politically motivated and that Ms. Tymoshenko is fighting in the European Court of Human Rights.

The decision to bring a murder case against Ms. Tymoshenko was announced by Ukraine’s prosecutor general, Viktor Pshonka, at a news conference on Friday.

He said that Ms. Tymoshenko, and another former prime minister, Pavlo Lazarenko, paid $2.8 million to have Yevhen Scherban, who was both a lawmaker and one of Ukraine’s richest businessmen, killed in a dispute over business interests.

“The material which has been assembled in the pretrial investigation shows that Tymoshenko indeed ordered the killing together with Lazarenko,” Mr. Pshonka told reporters in Kiev, the Ukrainian capital.

Ms. Tymoshenko has been jailed since October 2011, when she was convicted on charges of abusing her position in connection with approving a contract to purchase natural gas from Russia.

She has appealed to the European Court of Human Rights, complaining of judicial missteps and human rights abuses, and a decision is expected soon.

Her supporters said the murder case was an effort by the Yanukovich government to pre-empt a decision by the court, which is expected to verify numerous abuses and order Ms. Tymoshenko’s release.

Even a team of American lawyers hired by the Yanukovich administration to review the case has said her legal rights were violated during trial, witnesses were blocked from testifying and she was wrongly jailed before her conviction and sentencing. 

“They do not conceal that they want to hold not only the opposition leader but all of Ukraine behind bars for life,” Ms. Tymoshenko’s political party, Ukrainian United Opposition Fatherland, said in a statement on Friday evening.

“Understanding that the European Court of Human Rights will put an end to the dirty and empty tricks against Yulia Tymoshenko in the near future, Yanukovich’s associates have resorted to a deeply brazen and mendacious step,” the party said.

Ms. Tymoshenko, 52, has continued to excoriate Mr. Yanukovich from the prison hospital in eastern Ukraine where she is being held, but she has been having back problems, and one of her lawyers said her health has deteriorated sharply in recent days.

Because of her poor health and inability to appear in court, a judge on Friday suspended proceedings in a second trial against Ms. Tymoshenko, this one on tax evasion charges.

Her imprisonment sidelined her from participation in the Ukrainian parliamentary elections this fall, helping Mr. Yanukovich’s Party of Regions expand its majority.

Some analysts have suggested that Mr. Yankovich’s main goal is to keep her in jail until after the 2015 presidential election, easing his path to a second five-year term. 

Source: The New York Times

Friday, January 18, 2013

Berthoud Organization Reaches Out To Help Orphans In Ukraine

KRAMATORSK, Ukraine -- Orphans must leave group homes when they reach age 16 in Ukraine. Ukraine Orphan Outreach has started a transitional home for orphans who age out of the country's system at 16.

Ukraine Orphan Outreach of Berthoud has established House of Grace in Kramatorsk to assist orphans who age out of Ukrainian group homes.

They receive a stipend from the government if they continue school and can live in unsupervised co-ed dormitories.

Many of these children eventually turn to prostitution or drugs because they have no guidance or support system, according to Kris and Clark Stoesz, founders of Ukraine Orphan Outreach.

The founders in Berthoud have put aside one vision for the organization in favor of another.

The outreach ministry brought 10-12 orphans to Colorado for several years in a row for a summer camp to give the children a different perspective on life and hope for the future.

A few of the orphans were also adopted by Colorado parents out of this ministry.

The organization has adapted its focus to center on Ukraine and include mission trips, camps, and support of a transitional home for young men.

"It's taken us awhile to find our right plan of action," Kris said.

Kris and Clark started looking for a house about a year ago to act as a transitional home for young adults who have aged out of orphanages, to teach them to become successful and productive members of society.

The organizers had been looking at the idea of building a home from the ground up until they partnered with Agape in Ukraine, a Christian ministry team that has a mission to "bring hope to orphans ("

Agape had a house that offered possibilities in Kramatorsk, eastern Ukraine.

Agape had identified a Ukrainian couple, who up until then had cared for orphans in a small apartment, and established them in the house with six boys.

UOO came on board to help fund the project.

They named the home House of Grace.

"The way to succeed in foreign missions is through strategic relationships," Clark said.

The couple agreed that without the system of Agape in Ukraine, it would have been very difficult to engineer this project.

"We've always had this dream to be tangible in the country," Kris said.

The couple says it is important to help the young men at the house succeed.

The six young men in the home are in technical school now after high school, and Clark has grand plans for them.

Kris and Clark don't want to enable the teens to accept handouts as their due, but the couple is excited to help them achieve their dreams.

If one of the boys wants to go into welding and open a metalworks shop, for example, Clark will be happy to supply funds through the orphan outreach organization.

The boys, whose last names were not made available, all wrote their stories, which were translated from Russian to English and sent to Kris and Clark with photos. 

Igor's father was imprisoned when the boy was age 5, and his mother and godfather later abandoned Igor and his sister.

Artem's father went to prison as well, and his mother died from a drug overdose. 

Vadim's mother drank heavily and he used to steal from drunk men who hung out at the house.

The children all eventually lived in orphanages and, when they aged out, started trade school, but also smoked, drank and used drugs.

When they each, through different paths, learned about God and heard about the transitional house, they found love, purpose and a family for the first time.

Clark and Kris also plan to continue summer camps in Ukraine.

The first camp was this past summer.

Ten members with UOO cooperated with a church in Ukraine to hold a camp in 2012 in Kramatorsk.

The 50 children who attended were orphans and from nearby neighborhoods.

The outreach organization will also assist a tour of "The Old Shoemaker," a musical by Ukrainian orphans, to perform at area churches and other venues in Colorado later this year.

For details about Ukrainian Orphan Outreach and to help support its efforts, visit

Source: Reporter Herald

Syria Terrorists Kidnapping: Ukraine And Russia Working With Syria To Save Ukrainian Journalist

KIEV, Ukraine -- The Syrian Embassy in Ukraine has said that the Syrian, Ukrainian and Russian authorities are cooperating to ensure the speedy release of Ukrainian journalist Ankhar Kochneva, who was abducted by rebels in Syria.

Syrian militants have demanded a 20-million-dollar bail for the release of Ukrainian journalist Ankhar Kochneva, her former husband Dmitry Petrov was quoted by Ukrainian media as saying on Thursday.

“Our authorities, including our embassy, in cooperation with Ukrainian and Russian authorities, are doing all they can to release her,” the embassy told Interfax-Ukraine regarding the situation with the abducted Ukrainian.

According to the embassy, Kochneva is “significant prey” for the group that abducted her, as in this way they prevented her from objectively covering the events in the country.

The embassy said that an information war was currently being waged against Syria, during which a number of leading Western and Arab media “pledged to make misleading reports about the events in Syria.”

“The fact is that Syria is the only country in the Middle East that opposes the United States and its satellites on the implementation of the plan for the New Middle East.

Accordingly, these countries set the goal of breaking Syria, and they don’t want it to exist as a strong independent country,” the embassy said.

The statement says that the “so-called Free Syrian Army” uses violence and acts of terror against the civilian population.

“The number of terror attacks grows every day, thousands of victims have been killed, both civilians and military personnel, and many people have been abducted, and if a ransom is not paid for them, they are killed (and sometimes they are killed even after the receipt of a ransom), not to mention sabotage against infrastructure.

Unfortunately, among those abducted is Ankhar Kochneva, who was objectively performing her journalistic duties, exposing the deception of some media involved in disinformation,” the embassy said.

The statement also says that 48 Iranian pilgrims were kidnapped in Syria five months ago, and owing to the joint efforts of the Syrian authorities and a number of other countries able to resolve such a problem, the abducted persons were released a few days ago.

As reported, Kochneva was abducted by gunmen of the Free Syrian Army in Syria in October 2012.

The kidnappers of the journalist threatened to kill her if a ransom of $20 million was not paid.

The kidnappers even contacted Ukrainian journalists and expressed their indignation at the inactivity of the Ukrainian authorities in this matter, but Kiev repeatedly said that it was doing everything to release Kochneva.

Source: Global Research

Thursday, January 17, 2013

Ukraine Shocks European And US Leaders

MOSCOW, Russia -- In the last week of 2012 and in early 2013, Ukraine has noticeably stepped up talks about its relationship with the Customs Union (CU), whose current members are Russia, Belarus and Kazakhstan.

The discussion of forms of cooperation between Ukraine and the CU struck a chord even in those seemingly not involved.

A number of European officials stated that accession of sovereign Ukraine to the CU was totally unacceptable.

In particular, according to Brussels, Ukraine's accession to the CU was not compatible with its integration into the European Union.

Meanwhile, it is no secret that the prospects of Ukraine's European integration are dubious.

Not to mention the fact that, given the economic situation in the EU, the goal has slightly lost its desirability.

The Americans traditionally took an active participation in the discussion of hypothetical plans of Kiev on the possibility of deepening of the cooperation with the Customs Union.

Concerns were expressed by the current and former U.S. Ambassadors to Ukraine, as well as advisors of former U.S. presidents.

While Europeans and Ukraine are located on the same continent, why is the U.S. concerned?

Despite the shouts from Europe and from the shores of the Atlantic, Ukrainian President Viktor Yanukovych has continued the theme of cooperation with the Customs Union in the new year.

In particular, on January 4th in an interview with Komsomolskaya Pravda in Ukraine Viktor Yanukovych stated that Ukraine should change some of the norms of the Ukrainian legislation in order to cooperate with the Customs Union.

In addition, he admitted that his visit to Russia on December 18th was postponed because not all details on cooperation between Ukraine and the Customs Union have been agreed upon.

"The plan was that by December 18th they (the experts) would prepare specific proposals. But the meeting had to be postponed to a later date because the experts have not been able to agree on all the details of the future agreements," said Yanukovych.

Of course, this statement of the Ukrainian President is not very specific, but it cannot even compare with his statements made three years ("we're not interested"), or even six months ago.

This sudden change of rhetoric gives a reason to suspect that "the concept has changed."

Perhaps it was previously assumed that activation of the integration on the post-Soviet space will be used in 2015, when Yanukovych would be working on getting elected for the second term.

It was expected that until then Ukraine would blackmail Brussels with Moscow and vice versa in order to get the most benefits in both directions.

However, by the end of 2012 it became apparent that this approach was not justified, all reserves were exhausted, the economic growth has stopped and the situation would not wait until the elections of 2015.

Apparently, the signal was so intense that even the thick-skinned Ukrainian president clearly felt it.

But is it too late?

Let's suppose that Viktor Yanukovych as the guarantor of the Ukrainian constitution has come to acknowledge the need for Ukraine's accession to the Customs Union and convinced his government that this was a necessity.

A sober assessment of the situation shows that his team has a very narrow margin for maneuver and very little time.

Three years ago, Yanukovych won the presidential election.

Then his team took advantage of the demoralized opposition, reformatted the Parliament, formed the majority in the Parliament, and appointed its government. 

This was the period when Yanukovych's team could have joined the integration project dynamically and with determination, seamlessly and without losing its face, speaking as an equal participant in the project.

While Ukraine has remained aloof from the process of integration, the project developed on its own.

Now, Ukraine would have to play by the rules that have been agreed in the past years by the three parties to the CU.

Let's suppose, however, that despite the less desirable conditions than three years ago, Kiev will announce the beginning of the integration process.

Without favorable public opinion, the implementation of the process will not be possible for several reasons.

At first glance, the public opinion of Ukrainian citizens should not be a barrier to a more active participation of Ukraine in the post-Soviet area integration processes.

This can be gleaned from the case studies of the last decade that demonstrate stable results.

Due to the lack of prospects for the EU membership and because of the economic dependence on Russia, the majority of Ukrainians support eastern orientation of their country.

54 percent of respondents spoke in favor of the development of relations with Russia and other CIS countries.

At the same time, the development of relations with the EU was favored by only 36 percent.

These are the results of the Dw-trend survey conducted in October of last year by the Ukrainian branch of the Institute of Sociology IFAK commissioned by "Deutsche Welle".

In Ukraine and Russia, the majority of respondents would like the countries to be independent from each other but amicable, with open borders without visas and customs (in Ukraine - 72 percent, in Russia - 60 percent).

In Ukraine this number increased by three percent over six months, in Russia it has remained unchanged, according to the survey conducted by the Kiev International Institute of Sociology and the "Levada Center" in September and October of 2012.

"Independent but amicable states with open borders without visas and customs" is precisely the degree of interstate integration provided by the Customs Union.

It is noteworthy that these preferences mean that the respondents base their answers primarily on humanitarian issues.

The economic advantage of integration is important, but is not primary.

In addition, it is the area for analysts and experts, and their conclusions may swing the public opinion in one or another direction, in particular, if the campaign is consistent and aggressive.

Here we come to an important point - a deliberate campaign "for" or "against" the CU participation.

It is important that there has been no informational training by the Ukrainian government explaining the need of entering the CU.

Not only that, there has been criticism by many high ranking officials, and one of the consistent critics until recently was Valery Khoroshkovsky, first deputy prime minister of the Ukrainian government.

It will be extremely difficult to popularize the idea of ​​integration in the information space in a short time.

It appears that the West will start a tough informational campaign against the CU.

For its part, the pro-Western Ukrainian opposition will act in the same way.

It is important that the majority of the so-called Ukrainian expert community has been funded by Western grants for two decades.

The information campaign conducted by Ukrainian analysts looks like this:

Information-analytical center "LIGA," headline of December 20th, 2012, "The Customs Union will Ruin the Hryvnia".

Expert opinions, pros, and cons were discussed.

Naturally, there were nearly no pros and many cons, one of them was in the title.

For the sake of as a scientific experiment, this con should be discussed further.

"The process of the hryvnia devaluation may accelerate. Indeed, Ukraine will have to compete with its closest neighbors who will further devalue the currency. Under this scenario, the hryvnia exchange rate could rise to 8.8 and higher," said the president of the Ukrainian Analytical Center Oleksandr Okhrimenko.

Suppose this is the way the situation will be developing.

But let's look at this issue regardless of the Customs Union.

"In 2013, Ukraine will not be able to avoid devaluation of the national currency."

In 2013, due to the lack of devaluation adequate to the economic realities, the deficit will continue to grow rapidly.

The deepening recession in Europe will lead to a decrease in exports, and half-measures of the Ukrainian government will lead to the loss of the internal market ... Likely, in early 2013 the Government and the National Bank will release the hryvnia, and the national currency may fall in price by 10-20% (up to 8,8-9,5 hryvnia to the dollar), like in the neighboring countries.

In this case, disparities would partially decrease at least for a while.

The Customs Union is not mentioned in the context of devaluation at all.

This is just a brief illustration of what counter campaign would look like.

Currently, the Ukrainian authorities may be tempted to act without consideration of the public opinion.

But this would only be easy if they were acting in the interests of the West.

Here they would have to work hard for the benefit of the country in terms of the information war represented by the West from the outside, and its agents of influence in the face of the opposition and the Ukrainian "expert community" from the inside.

Kiev has no chance of winning this war, and has no one to blame except itself.

In early August of 2011, several prominent Russian economists and political scientists sent an open letter to Russian Prime Minister Vladimir Putin.

The signatories supported the Kremlin's desire to involve Ukraine in the Customs Union, but criticized the methods by which Moscow planned to achieve this goal.

The authors of the letter were convinced that the trade and economic war between Russia and Ukraine would not only fail to yield a positive result, but would have negative consequences for both countries.

They suggested giving the Ukrainian authorities more time to promote the CU in the country and engage experts of the two countries.

Source: Pravda

Ukraine Moves Closer To $10 Bln Shale Gas Deal With Shell

KIEV, Ukraine -- Ukraine took a step closer to a breakthrough shale gas deal with global energy major Royal Dutch Shell on Wednesday when local authorities in the eastern Donetsk region approved a planned production sharing agreement.

Ukraine says Shell estimates investment at $10 bln-$50 bln.

The former Soviet republic, which hopes its big shale gas reserves will help end reliance on costly imports of Russian natural gas, chose Shell last May as a partner to develop the Yuzivska shale gas field.

Deputies of the Donetsk regional council voted to approve the deal with Shell, removing one of the final hurdles to an agreement.

Ukraine is said to have Europe's third-largest shale gas reserves at 42 trillion cubic feet (1.2 trillion cubic metres) behind those of France and Norway, according to the U.S. Energy Information Administration.

"If exploration is successful in the Yuzivska area, we will be able to produce a few billion cubic metres (bcm) of gas per year in just five-six years and eight to 10 bcm in 10 years," Environment and Natural Resources Minister Oleh Proskuryakov told the council.

"At its peak, in 13-15 years, annual production may exceed 20 bcm. This will not only strengthen our energy independence but will also significantly reduce gas prices."

Ukraine currently pays about $430 per thousand cubic metres for Russian gas under a 10-year deal signed in 2009 by a preceding government.

The present Kiev government says the price is exorbitant, but it has so far failed to persuade Russia to bring it down.

"Secondly, the Yuzivska area production sharing agreement is the biggest project in Ukraine that will attract tens of billions of dollars in investment," Proskuryakov said.

"Shell sees investment at $10 billion under the most likely scenario and over $50 billion under the optimistic scenario."

Shell's office in Ukraine declined to comment on the figures or to say any expected date for signing a deal.

Under the terms of the tender, the two sides have until May to sign a contract. 

Proskuryakov, whose office also had no immediate comment on an expected date of signing, had earlier said his ministry expected to finalise and sign the deal in the first quarter of this year.

Shale gas exploration requires a process called "fracking" in which fluid is injected at high pressure into beds of rock, often deeply situated in the ground, to access gas reserves trapped there.

In a separate tender also carried out last May, Ukraine picked Chevron to develop another shale gas area, Olesska in western part of the country.

The government has not yet signed a production sharing agreement with Chevron either.

Some countries which were initially encouraged by the success of the shale gas industry in the United States have faced disappointment after starting their own exploration.

Ukraine's neighbour Poland, whose reserves were estimated by a 2011 U.S. study at 5.3 trillion cubic metres, slashed the estimate to about a tenth of that in a government report last March.

U.S. oil major Exxon Mobil agreed to sell two shale gas exploration concessions in Poland to the local refiner PKN Orlen for an undisclosed price last month after its test wells failed to produce commercial quantities of gas.

Source: Yahoo News

Wednesday, January 16, 2013

Ukraine 2013: The Same Old Games?

KIEV, Ukraine -- Following tense parliamentary elections, the change of government and a pre-recession economic landscape, will Ukraine’s 2013 be mired in the same old post-Soviet games in politics and governance?

Kiev, Ukraine

The games of politics and European integration 

Western politics is widely believed to be about the three “I”s – Ideas, Interests and Institutions.

In Ukraine, however, it is only about two: Individuals and their Interests.

The two exceptions when ideas did play a role happened during the short period of a national-democratic movement between 1988 and 1991 and the events of 2004 Orange Revolution.

The first, however, was limited to certain regions and tainted by turncoats and KGB infiltration.

In the second, the course of events unveiled the fact that ideas were employed to camouflage the usual Interests of the by-then usual Individuals.

The pillars of post-Soviet governance – a business-politics nexus; cronyism; and patronage, all based on concealed (in some cases not very thoroughly) informality – is what the country has become quite accustomed to.

All the celebrities of the political stage – Viktor Yushchenko, Yulia Tymoshenko, Viktor Yanukovych and Arseniy Yatseniuk – have made their way upwards in recent years by staying close to these pillars.

Meanwhile, ideas and institutions remained nothing else than a veil for the post-Soviet power game.

“Post-Soviet” aptly describes the country’s governance today.

Disguised by ideology, Soviet standards of the abuse of power and corruption have simply resurfaced following the split of the Soviet Union albeit in a different form.

The Moral Code of the Communism Builder was replaced by the so-called democratic values.

A new façade emerged, but with the old interior, compiled of practices and decision-makers from the past.

“European integration” has become quite a valuable element of this façade.

Since 1994, under the plethora of declarations, committees and action plans, Ukrainian presidents and governments have focused all their attention, in practice, on the post-Soviet political game.

In fact, their European Union integration efforts have never been anything else than an imitation.

One should only delve into the practicalities of life in Ukraine to see how the foundational concepts of the EU, from the rule of law to fair competition, are applied in the country.

Unfortunately, the Association Agreement with the EU, initiated on March 30th 2012, seems to have also fallen prey to this game.

The post-Soviet point of view on its implementation would be rather obvious.

Oligarchs and clans, who have effectively established control over the country’s Soviet-built industry and, to some extent, agriculture, will take the “icing” of the free trade.

The rest of the “cake”, namely, the political part and other demanding provisions, such as those on competition or public procurement, would be preferred to stay on paper.

The EU is divided on signing the Agreement, which will hardly do any good under the current administration, but might tie Ukraine to Europe geopolitically and economically.

However, it is also true that as a country, Ukraine has no other choice but rapprochement with the EU.

The reforms needed for progress in EU-Ukraine relations are exactly the ones the country so badly needs.

And the Agreement, be it addressed with genuine political will, is of crucial importance for the country’s future; European aspirations, which, in their essence, are shared by the majority of its people.

The most pressing dilemma in the EU's relations with Ukraine is how to address the current government’s reluctance for political and economic reforms without thrusting it and the country along to the braces of Russia.

The New Cabinet of Ministers announced on December 24th 2012 is more like the “president’s family club” than a public government.

The further on into Yanukovych’s presidential term, the more the perspective of the Russian-led Eurasian Customs Union looms for Ukraine.

This path seems to have no other advantage besides a suitable gas price for the unmodernised industries of the oligarchs, but spares the unwilling president from the headaches of democratic reforms.

The result of the multi-year EU integration game is that the country’s geopolitical choice is hostage to a very narrow circle of individuals and their interests.

The game of civil society building 

But who can help citizens if their government is just a network of individuals preoccupied with their own interests?

The statistical boost in the number of NGOs and outspoken, self-proclaimed civil society activists is understood by observers as a tendency of civil society’s increasing participation.

However, the debacle of the civil society builders during the recent parliamentary elections is much more telling.

The best known civil society activists and journalists have remarkably failed in getting elected, and not because of falsifications.

Their obsession with PR-stunts, blogging and showmanship is perhaps no less than that of the politicians, but they also seem equally remote from the needs of the public.

Apparently, the game-like activities and campaigns are far from being able to provide capable action to represent the interests of, let alone empower, citizens in the harsh reality of modern Ukraine.

The much publicised civil campaign Chestno (Honestly) led by Oleh Rybachuk, the former head of Viktor Yushchenko’s Presidential Administration, vowed to filter out “dishonest” candidates at the elections, but produced no substantive results.

Civil councils, hastily arranged at ministries and state administrations, drastically lack any substantive effect and thus seem to interest only their members.

Even the latest round of the so-called “December First Initiative”, supposedly a voice of the country’s “wise men”, went largely unnoticed.

New game or …? 

Still, the apathy of the former “Orange” voters and supporters is gradually giving place to a search for a new force to assuage the frustration with the usual games and lack of genuine representation of their interests.

Various manipulation and vote-buying techniques have backfired in many constituencies in Central and Western Ukraine, and especially in Kiev, highlighting the limited output that post-Soviet political technologies can deliver.

The right-wing Svoboda party garnered more than two million votes and won constituencies as far East as Poltava oblast.

This is widely seen as the major surprise of the elections.

The most important part, however, is that judged by many experts to be typical – either a protest-vote or a far-right party – Svoboda seems to have a chance of becoming atypical in terms of post-Soviet games.

Being a marginal party with the support of 0.36 per cent in the 2007 snap parliamentary elections, Svoboda always claimed Ukrainian nationalism as their ideology.

The Ukrainian media became used to castigating the party for alleged anti-Semitism and xenophobia.

Svoboda’s leader Oleh Tyahnybok officially stated that the party is not anti-Semitic and its official programme and campaigning does not include anti-Semitism or xenophobia.

Instead, they centre on an anti-oligarch, pro-Ukrainian and pro-middle class agenda claiming to address the real needs of ordinary Ukrainians.

In foreign policy, the party vows to prioritise cooperation with Ukraine’s “natural allies” – the Baltic and Scandinavian countries, Poland and in perspective – Belarus.

This approach has increasingly found ground with the voters.

Currently, the most interesting point is whether it will follow the signs of sliding from traditional nationalism, usually called a minority faith, into a direction of a moderately nationalist, conservative party of the law and order type.

In which case, could this be the contours of a new political landscape in Ukraine, in which Batkivshyna’s (Fatherland) programme might serve as a base for a liberal conservative party, with a percentage of the communists possibly reflecting the base for the new left?

State of play

For the moment, Ukraine is being balanced rather than integrated anywhere; and run rather than governed by the president of a post-Soviet semi-authoritarian type, who is obsessed with the extension of his authority and family assets, and hardly anything else.

He was brought to the presidency by the oligarchs, who might feel uneasy about his increasing embedment in the office and power, but are thriving economically.

The latest cabinet is stuffed with “family” and “family-friendly” people led by Sergiy Arbuzov.

Unlike his predecessors, the first deputy prime-minister might play the primary role, with Prime Minister Mykola Azarov staged to take public blame for economic hardships.

Ukrainian society favours change and, in general, a pro-European course, but is rather disconnected from the authorities and has no other way of being heard.

The ever deteriorating standards of living are traditionally disregarded in the game-scripts written in high cabinets.

The president can always count on at least 20 per cent of the overall vote produced mostly from his stronghold, the regions of Donbass and Crimea.

And although the majority are eager to vote him out, at the same time, they equally dislike the oligarchs and are in search of a new force.

The president’s usual political opponents come from the same script, being more different in form than in essence, and the one perceived most dangerous by the president is kept behind bars.

Svoboda, recently seen as marginal and regionally constricted, has managed to leave its niche.

Presumed to have no chances of winning, it might be welcomed by Yanukovych and maybe Russia as the most suitable opponent for the second round of 2015 presidential elections.

In summary, this provides for a somewhat surreal state with anaemic institutions, a distraught and impoverished population, which is hitting far below its potential weight.

Here, it is worth mentioning that according to a recent study by the German Gesellschaftfür Internationale Zusammenarbeit (GIZ), Ukraine, surprisingly for many, received the highest acclaim from western European visitors to the EURO-2012 football championships.

The current version of the country’s governance, run by Soviet-inherited individuals and their corresponding interests, can’t seem more outdated.

One might say that the nation is at a crossroads.

Historically, this is nothing new.

The outcome will depend on how capable and ready it is to proceed in politics, European integration and civil society in place of the ongoing post-Soviet games. 

Source: New Eastern Europe

Tuesday, January 15, 2013

Ukraine To Seek $15 Bln In New IMF Loans

KIEV, Ukraine -- Ukraine expects to sign a new cooperation agreement with the International Monetary Fund (IMF) to raise $15 billion in new loans from the international lender, First Deputy Prime Minister Serhiy Arbuzov said on Monday.

First Deputy Prime Minister Serhiy Arbuzov.

“We still want to hold talks on the sums and conditions fixed in the previous [IMF] memorandum. This amounts to about 10 billion SDRs,” Arbuzov said.

At the current exchange rates, this sum is equal to about $15.4 billion.

An IMF mission is expected to arrive in Ukraine on January 24 to hold talks with the Ukrainian government.

In July 2010, the IMF approved a $15.15-billion standby loan for Ukraine "in support of the authorities' economic adjustment and reform program."

Ukraine has so far received two tranches worth a total of over $3.4 billion.

The provision of further aid was suspended in December 2010.

The IMF demanded that Kiev increase gas prices for households, an extremely unpopular measure in Ukraine that the authorities refuse to fulfill.

Source: RIA Novosti