Wednesday, July 31, 2013

Ukraine’s Air Defense: Balancing Between CSTO And NATO

KIEV, Ukraine -- Ukraine is preparing to take part in air defense exercises with Russia and Belarus and a multilateral air force exercise in Kazakhstan, all to be held by November 2013.

Ukrainian Su-27 fighter

Minsk and Astana are key Russian allies in the Collective Security Treaty Organization (CSTO), and Moscow has been seeking to develop a common CSTO air and space defense system.

Among post-Soviet countries, Ukraine boasts fairly developed air defense capabilities, yet it technically and financially depends on cooperation with Russia.

Using sticks and carrots of air defense cooperation, Kremlin hopes to bring Ukraine closer to the CSTO.

Such rapprochement, however contradicts President Viktor Yanukovych’s non-aligned security policy.

Russian politicians continue their efforts to bring Ukraine closer to the “Eurasian NATO”—the CSTO.

On June 25, Gennady Vasiliev, the leader of the United Russia Duma faction suggested that Ukraine become an observer in the military bloc.

That same day, the CSTO Military Committee gave basic approval to Russia’s proposal to develop the alliance’s air defense system.

Since 1995, Ukraine belongs to the Commonwealth of Independent States (CIS) air defense system, which Russia probably wishes to continue in order to maintain as an outer security buffer.

But the new CSTO project is designed to “recreate the entire airspace protection perimeter that existed in the Soviet Union,” said Russian analyst Ivan Konovalov.

A Russian political lobby for this project exists in Ukraine within the ruling Party of Regions.

Member of Parliament (MP) Oleksandr Kuzmuk, a former defense minister, supported Kiev’s creation of an integrated air defense system with the CSTO countries back on July 14, 2010.

Yet, joining the CSTO air defense organization would conflict with Ukraine’s “non-bloc” security policy that the government passed shortly after Yanukovych’s election to the presidency.

The issue is complicated by Kiev’s dependency on Russia in air protection.

Ukraine has a relatively comprehensive air defense system, which functions as part of the country’s air force.

Its most powerful surface-to-air missile (SAM) units are the Soviet/Russian long-range S-300 and S-200 missiles, as well as Buk-M medium-range missile systems.

Key Ukrainian fighter and interceptor aircraft include MiG-29 and Su-27 and Su-25 Soviet models.

The majority of the equipment is over 20 years old, but the low threat level, mechanically robust equipment and well trained people maintain the system at a workable level.

Military analyst and former Ministry of Defense (MOD) official Ihor Kozyrkov told Jamestown on July 15 that Ukraine’s air defense counter-terrorist intruder response capabilities were tested in an exercise and approved by counterparts from the United States and Poland on the eve of FIFA’s EURO 2012 Soccer Cup, co-hosted by Ukraine. 

While Ukraine’s defense sector was minimally financed during the 2008–2010 economic crisis, procurement somewhat improved in 2012.

According to the MOD White Book 2012, the military purchased a Ukrainian-made P-18 radar and received four MiG-29 and Su-25 aircraft, a Kolchuga air surveillance unit and three SAMs—all after modernization.

But this is a marginal improvement as equipment maintenance and development requires substantially more resources.

On December 22, 2011, Air Force Colonel Dmytro Karpenko told TSN news that no more than 40 percent of Ukraine’s active-duty S-300 missiles were technically in acceptable condition.

Maintenance and development of equipment often leads to disputes with Russia.

On July 15, Oleksiy Melnyk of Razumkov Center told Jamestown that Russia reacted “painfully” when Ukraine modernized its Soviet aircraft unilaterally, whereas cost and delay issues often arose when Ukraine properly sought the (Russian) manufacturer’s consent before undertaking any modernization efforts.

In some cases, Ukraine was accused of disclosing Russian know-how.

Furthermore, according to air defense expert Oleksandr Manachynsky, Russia was not happy that Ukraine had exported Buk-M1 missiles to Georgia in 2008 and Soviet Su-27 fighter jets and other equipment to the US in 2010–2012.

Ukraine’s decade-plus plans to develop its own missile systems have not materialized to date.

And military analyst Valentyn Badrak has warned about the country lagging behind its neighbors’ armies in modernization.

On July 1, 2013, the Ukrainian defense ministry announced it was abandoning its flagship “Sapsan” missile project and would focus instead on “ready” alternative missile models with the hope to have a prototype this year and start production in 2014–2015.

Meanwhile, Russia could supply its CSTO allies with modern S-400 and S-500 systems, according to analyst Ivan Konovalov.

It is also Russia’s official policy to subsidize weapons sales to CSTO members—a policy that could prove particularly tempting for Ukraine. Ukraine is also dependent on Russia in air defense training.

According to the MOD White Book, in 2012, the armed forces held drills with medium- and short-range SAM systems in Ukraine, and the average aircraft crew flight time grew 3–3.5 times.

But the military only carried out 30 percent of its planned practice launches of guided missiles.

Military analyst Dmytro Tymchuk wrote on December 1, 2011 that Ukraine did not test fire any of its S-200 and S-300s, instead agreeing with Moscow to train at Russian sites, such as Ashuluk in Astrakhan region.

Furthermore, Ukraine intends to participate in the CIS Air Defense exercise “Boyevoye Sodruzhestvo 2013” at Ashuluk.

While Ukraine’s motives are pragmatic, its participation in such exercises, though often only observational, serve Russian propaganda aims when reported on in the media.

In its turn, Russia is the one who pays: Nezavisimaya Gazeta’s Vladimir Mukhin cited Russian defense ministry sources that Moscow would spend 3 billion rubles (roughly $97 million) on the CIS air defense system.

At the same time, however, Ukraine uses its partnership with the North Atlantic Treaty Organization (NATO) to train in aerial defense.

The flagship project Air Situation Data Exchange Program is aimed not only at improving airspace protection and safety, but also serves to modernize the Ukrainian military’s operational standards.

During June 2012, amidst the EURO 2012 soccer tournament, Ukraine and the North Atlantic Alliance extended the program to cover data exchange between Ukraine and bordering Central and Eastern European NATO countries.

Moreover, in theory, Ukraine could broaden its air defense cooperation with NATO under the “smart defense” initiative—sharing and pooling capabilities in times of defense austerity.

Yet, this is likely to meet Russian opposition.

On the other hand, assuming Ukraine’s government manages to improve the ailing economy and sign the Association Agreement with the European Union, Russia would lose some of its leverage over Ukraine’s air defense.

For now, however, Kiev largely continues to maintain the current fragile balance between the two security organizations—NATO and the CSTO.

Source: The Jamestown Foundation

Tuesday, July 30, 2013

Putin To Ukraine: You Belong With Russia, Not Europe

KIEV, Ukraine -- Russian President Vladimir Putin visited Ukraine over the weekend to attend a joint commemoration marking the 1,025th anniversary of Russia's conversion to Christianity, which took place in the original Russian state centered in Kiev.

Russian President Vladimir Putin (2nd from L) meets with members of the Holy Synod of the Ukrainian Orthodox Church of Moscow Patriarchate in Kiev, Ukraine, Saturday. Mr. Putin also met with Ukrainian President Viktor Yanukovych to urge that Ukraine join Putin's planned Eurasia customs union.

Mr. Putin used the occasion to press a far more secular and, for the Kremlin, urgent agenda.

Ukraine is facing an historic choice that may determine its development for decades to come.

Much of Russia's own strategic future plans also revolve around what it decides.

The Kremlin wants Ukraine to integrate economically with Russia by joining a Moscow-led customs union and then go on to become part of Putin's grand "Eurasian Union" of former-Soviet states, which would have an eastward-looking focus.

But Ukraine plans to sign a landmark association agreement with the European Union in November, which would grant it trade preferences with Europe and preclude membership in an alternative trading bloc such as Russia's customs union. 

Putin arrived in Kiev Saturday, with Patriarch Kirill of the Russian Orthodox Church in tow, to attend lavish celebrations marking the day in 988 AD when Prince Vladimir of Kiev adopted Orthodox Christianity and then ordered a mass baptism of his subjects in the Dneiper River.

Though the church has since fragmented, millions of Ukrainians still adhere to the Moscow-based church headed by Kirill. 

But Putin's mind was clearly elsewhere.

"This day marks the unity of our peoples. We have several common questions we will be able to discuss during these days of celebrations. There will be another meeting tomorrow… where we will talk security," the Kremlin-funded English-language RT network quoted Putin as telling Ukrainian President Viktor Yanukovych.

Ukraine was on a pro-Western path following the 2004 Orange Revolution, but that movement was reversed after the Russian-speaking Mr. Yanukovych won a hard-fought 2010 election, in part on pledges to repair Ukraine's tattered relations with Russia.

In the months that followed Yanukovych's election, he largely succeeded in reversing the Orange Revolution and, in particular, derailed Ukraine's bid to join the Western military alliance NATO.

He also sealed good ties with Moscow by extending Russia's lease on Sevastopol, headquarters of the Russian navy's Black Sea fleet, by another 25 years.

However, Yanukovych has been unable – or unwilling – to deliver Ukrainian agreement to join the customs union, whose main members are Russia, Belarus, and Kazakhstan, a step that might forever cement Ukraine into a Russian-led economic and political union of ex-Soviet countries.

At the same time, he has insisted that Ukrainian cooperation with Europe shouldn't close the door to better relations with Moscow.

At a meeting with Ukrainian religious and political leaders Saturday, Putin made his best pitch for choosing the Russian path.

"Competition on global markets is very fierce today. I am sure that most of you realize that only by joining forces can we be competitive and stand a chance of winning in this tough environment. We have every reason too, to be confident that we should and can achieve this," Putin said, according to a Kremlin transcript of his remarks.

Putin argued that Ukraine was built up and industrialized within the USSR, and it still shares a considerable amount of common infrastructure with Russia.

He claimed that living standards in Soviet Ukraine were even better than in some European countries, such as Italy.

"As you know, there are various integration processes underway now in the post-Soviet area.... There are facts that speak for themselves. Our bilateral trade with Ukraine fell by slightly over 18 percent in the first quarter of this year. Our trade with the customs union countries increased by 34 percent in 2011, by 11 percent, I think, in 2012, and was up by 2 or 3 percent in the first quarter of this year, despite the downturn in the global economy. We have steady growth," he said.

Putin added that Russia will respect Ukraine's choice, whatever it may be.

"Russia is really desperate, because Ukraine is the major trophy in Putin's Eurasian Union project. That's what leads Putin to pull out all the stops in the race to win this," says Sergei Strokan, a foreign affairs columnist with the Moscow daily Kommersant.

"Ukraine is trying to delay this choice as much as possible, because it wants to keep its European window open. But the Europeans have been quite tough, basically telling Ukraine that it can't sit on two chairs. Ukrainian public opinion is divided over this, but it seems that the dominant mood – at least of the younger part of the population – is for a European strategy. Trying to sit on two chairs is probably the best Yanukovych can do for Putin. But the European option is looming, and Ukraine will probably try to use it – regardless of what Putin wants," Mr. Strokan says.

Source: Christian Science Monitor

IMF Says It Must Monitor Ukraine's Economy More Closely

KIEV, Ukraine -- The International Monetary Fund said on Monday that Ukraine must participate in post-program monitoring because of its relatively large debt to the Washington-based lender, subjecting its economic policies to greater scrutiny.

The IMF said the enhanced monitoring was triggered by its rules, but it could also be a sign that the Fund is worried about Ukraine's ability to pay back the $8 billion it owed the IMF at the end of June.

The IMF froze a $15 billion standby credit program with Ukraine in 2011 after Kiev reneged on commitments to raise domestic gas prices.

The program officially expired last December.

Ukraine received only two disbursements before the program went off track, totaling about $3.4 billion.

The IMF's board decided Ukraine must still participate in the monitoring given the size of its debts to the IMF in relation to the size of the European nation's economy, the Fund said on Monday.

The IMF usually reviews the economies of each of its 188 members once a year.

But countries that received aid packages may have more frequent discussions with the Fund to ensure they can still repay their debts.

The IMF may choose to step in with advice if it is worried about a country's debt or policies.

The IMF said its extended monitoring of Ukraine's economy will take place at the same time as Kiev's regular economic health check in the fall, and the IMF's board plans to discuss the findings in December.

A poll earlier this month showed Ukraine's economy will not grow significantly in 2013, despite optimistic government forecasts, as long as steel production continues to fall.

Ukraine is also one of several emerging market economies at risk of a balance of payments crisis due to severely depleted central bank reserves, according to data from Bank of America Merrill Lynch.

According to the data, Ukraine only has enough reserves to cover three months of imports, putting it at risk should foreign financing suddenly dry up.

The reserves are also insufficient to cover debt maturing before mid-2014.

Analysts and other donors have called on Ukraine to resume cooperation with the IMF and improve its business climate in order to attract more foreign investment. 

Ukraine and the IMF launched talks early this year to nail down a new aid package, but the Kiev government has found alternative lending sources on external markets and has indicated it does not require fresh IMF funds yet.

The IMF last week said it has not discussed details of a new program for Ukraine since April.

Source: Yahoo News

Monday, July 29, 2013

Chocolate Trade Clash Erupts With Russia

KIEV, Ukraine -- Ukraine said Monday it will set up a special team to look into a trade dispute with Russia that emerged after Moscow suddenly banned imports of chocolate produced by the largest Ukrainian confectionary.

Serhiy Arbuzov

The dispute erupted a day after Russian President Vladimir Putin visited Ukraine the 1,025th anniversary of Christianity in Kievan Rus.

Putin urged Ukraine to drop its plans for closer integration with the European Union and instead to join forces with Russia in order to become more competitive globally. 

The developments signal that parties have failed to iron out disagreements.

“We are now looking into these issues. A team was created to deal with investigation of this matter,” Serhiy Arbuzov, first deputy prime minister, said Monday.

“I think that in two or three days we will be able to make a statement.”

Moscow cited the presence of benzopyrene, a carcinogen, in the chocolate.

The chemical is usually linked to lung cancer and is naturally emitted by forest fires and volcanic eruptions.

It can also be found in coal tar, cigarette smoke, wood smoke, and burnt foods such as coffee.

Russia warned Ukraine in early July that it may ban imports of Ukrainian chocolate, coal and glass in reaction to Ukraine’s plans to introduce duties on imports of Russian cars.

Prime Minister Mykola Azarov met his Russian counterpart Dmitry Medvedev in Sochi on July 12 to try to iron out disagreements and to prevent a looming trade war.

This was followed by meetings between Putin and President Viktor Yanukovych on Saturday in Kiev and Sunday in Sevastopol.

The fact that Moscow has decided to go ahead with the trade sanctions shows the parties have failed to make any progress in the talks, signaling that the issue may potentially escalate further.

Gennadii Onishchenko, the head of the Russian consumer protection agency, which is believed to be often used by Russia in trade disputes with other countries, said his agency had long suspected that Ukrainian chocolate had poor quality. 

“Unfortunately, our suspicions have come true, which we sincerely regret,” Onishchenko told Interfax while announcing the ban on imports of the Roshen chocolate.

Roshen on Monday defended the quality of its chocolate and said that there are no formal rules in Russia that regulate the presence of benzopyrene in the chocolate, which means the allegations could be arbitrary.

“The allegations on benzopyrene content cannot be considered as an act of violation of Russia’s regulations because such rules on chocolate have not been set,” Roshen said in a statement.

Source: Ukrainian Journal

Sunday, July 28, 2013

Putin In Ukraine To Celebrate A Christian Anniversary

KIEV, Ukraine -- In an apparent attempt to use shared history to make a case for closer ties, President Vladimir V. Putin attended religious ceremonies in the Ukrainian capital on Saturday to commemorate the 1,025th anniversary of events that brought Christianity to Ukraine and Russia.

President Vladimir V. Putin of Russia with Patriarch Kirill I of the Russian Orthodox Church in Kiev, Ukraine, on Saturday.

At a reception in Kiev, the capital, Mr. Putin spoke of the primacy of the two countries’ spiritual and historical bonds, regardless of political decisions that often divide them.

Relations have been rocky in part because of attempts by Ukraine, a former Soviet republic, to formalize its political and economic ties with the European Union.

“We are all spiritual heirs of what happened here 1,025 years ago,” Mr. Putin told church hierarchs at the Monastery of the Caves in Kiev, one of the holiest sites of Orthodoxy, according to the RIA Novosti news agency.

“And in this sense we are, without a doubt, one people.”

Mr. Putin’s trip was also the latest sign of the deepening ties and common agenda of the Kremlin and the Russian Orthodox Church.

The events last week commemorated Prince Vladimir of Kiev’s decision to convert to Christianity and baptize his subjects in 988, an event known as the Baptism of Rus, the founding of the Russian Orthodox Church, whose adherents include those beyond Russia’s modern borders.

The anniversary has been the subject of lavish political and news media attention in Russia, where Saturday’s events were broadcast, reflecting the Kremlin’s embrace of the church and its spiritual leader, Patriarch Kirill I.

The attention has also lent apparent endorsement to church criticism of Western democracy and secular culture, particularly homosexuality.

The patriarch presided over prayers on Saturday after arriving in Kiev on Friday accompanied by representatives of all of the world’s Orthodox churches and bearing fragments of a cross on which the Apostle Andrew is believed to have been crucified.

On Thursday, Patriarch Kirill and the other church leaders met with Mr. Putin in the Kremlin, where they discussed the fate of Christians in the Middle East.

The cross, on loan from Patras, Greece, has already been venerated by hundreds of thousands on a tour across Russia sponsored by Vladimir Yakunin, the powerful head of the Russian Railways, who is close to Mr. Putin and the church.

Patriarch Kirill invoked the concept of the Holy Rus, referring to Russia, Ukraine and Belarus as a unified spiritual expanse united under the faith.

Ukraine’s religious landscape has been divided for centuries, not least after the collapse of the Soviet Union, by tensions over allegiance to Moscow.

The Ukrainian Orthodox Church of the Moscow Patriarchate is one of the largest parts of the Russian Orthodox Church, but other groups in Ukraine planned their own commemorations.

The patriarch has sought to unify the faithful with warnings of the encroachment of secular values.

He recently warned that legislative efforts to legalize same-sex marriage in Europe posed a grave threat to Russia.

“This is a very dangerous apocalyptic symptom, and we must do everything so that sin is never validated by the laws of the state in the lands of Holy Rus, because this would mean that the people are starting on the path of self-destruction,” he said at a Moscow cathedral, according to the Web site of the Moscow Patriarchate.

He previously said that such “blasphemous laws” could prove as dangerous to believers as the executioners of the Great Terror during the government of Stalin. 

The church’s views have increasing resonance in the political debate in Russia, where Parliament adopted laws in June banning “gay propaganda” and the adoption of children by foreign same-sex couples.

In a film called “The Second Baptism of Rus,” shown recently on Russian state television, Mr. Putin credited Prince Vladimir’s choice of religion with “building a centralized Russian state,” something he sees as a cornerstone of his leadership.

Mr. Putin recalled the story of his mother having him baptized in secret after his birth in 1952 because of Soviet repression of the church.

He described Communism as “just a simplified version of the religious principles shared by practically all the world’s traditional religions” and said that today’s turn to religion was “a spontaneous movement from the people themselves to turn back to their roots” in response to the ideological vacuum after the Soviet Union’s collapse in 1991.

Ukraine’s president, Viktor F. Yanukovich, appeared beside Mr. Putin during the service on Saturday, though relations between Moscow and Kiev have continued to be marred by battles over gas pipelines and other disputes despite a widely held view in Russia that Mr. Yanukovich would be more solidly aligned with Russia.

Ukraine is scheduled to sign an association agreement with the European Union in November.

While insisting that choices of international relations were Ukraine’s to make, Mr. Putin argued Saturday that Ukraine would fare better by deepening its political and economic ties with Russia.

On Saturday, Femen, the Ukrainian feminist group known for its bare-breasted protests, said three of its activists and a photojournalist were beaten and taken away by an “organized group of people” on the way to a protest of the celebrations.

On its Web site, Femen accused the spy agencies of Ukraine and Russia of being behind the attack, though it did not provide evidence.

The Kiev police said they had detained three women for “petty hooliganism” after they refused to cover up when they were spotted naked on the street.

The police Web site said a photographer who was accompanying them was detained for disobeying police orders.

It did not talk about beatings.

Femen later reported that its leader, Anna Hutsol, was beaten up while in a cafe on Saturday night and her laptop was taken.

Source: The New York Times

Frustrated EU Warns Ukraine Time Is Running Out For Trade Talks

BRUSSELS, Belgium -- The European Union warned Ukraine on Friday that time was running out to resolve a number of bilateral trade disputes and secure the signing of a landmark free trade agreement, after the latest round of talks produced no results.

Deputy Director General Peter Balas

The former Soviet republic hopes to sign agreements on political association and free trade with the 28-member bloc at a summit in Vilnius, Lithuania, in November.

But it has yet to meet conditions set out by Brussels, which is concerned by the Ukrainian government's protectionist policies as well as what it sees as politically motivated persecution of political opponents.

Struggling to bridge a large foreign trade deficit, Ukraine has, in particular, introduced new barriers against imports of goods ranging from cars to coke, a fuel produced from coal and used in steel production.

It has also announced plans to raise tariff ceilings on hundreds of other goods, which have drawn sharp criticism from many other members of the World Trade Organisation.

Peter Balas, deputy head of the Directorate General for Trade of the European Commission, visited Kiev this week to discuss the issues with Ukrainian economy minister Ihor Prasolov, the EU delegation to Ukraine said in a statement.

It said Brussels had hoped Ukraine would address its concerns regarding the restrictions on the imports of cars, coke, renewable energy equipment and other goods.

"However, these expectations could not be realised: the Ukrainian side was not in a position to offer complete solution to any of the EU's concerns," the delegation said. 

"The maximum that was promised is that the Ukraine authorities would continue, in the coming period, internal reflections about possible solutions."

The Kiev government said it would then send its proposals to Brussels.

The EU made clear it was disappointed.

"The EU side is concerned that the only outcome of the long consultation process is just the promise of further bilateral discussions," it said.

"There are increasing concerns that the time is running out to find mutually acceptable solutions."

The EU shelved the association and free trade deals with Ukraine in 2011 after a local court jailed former prime minister Yulia Tymoshenko, a key opponent of President Viktor Yanukovich.

It criticised the case as an example of selective justice.

The bloc has warned that if the deals fall through again, it will take years to get back to them as Ukraine goes through elections, and EU institutions face a turnover of top personnel.

Source: Yahoo News

Saturday, July 27, 2013

Ukraine: Getting Out From Underneath The Bear?

LONDON, England -- The election of Viktor Yanukovych as president of Ukraine was expected to reinforce the historic cultural and political links between Kiev and Moscow.

Quite amazingly Ukrainians appear to be taking credible steps to improve their energy security.

And for a time a real shift in Ukraine's geopolitical orientation eastwards did appear to be under way.

Yanukovych extended the Crimean lease for the Russian Black Sea fleet to 2042 and heavily promoted the Russian language in Ukraine.

However, over the past year or so it has become clear that the government in Kiev is taking the first credible steps to undermine the principal Russian lever on the Ukrainian economy, gas dependency.

The reason for decisive action from Kiev is Russia's repeated attempts to weaken Ukraine's energy security severely.

Russia's Gazprom and its allies have already built Nordstream 1 and 2, which will permit the movement of 55 billion cubic metres (bcm), via the Baltic Sea, circumventing Ukraine.

Russia's President Vladimir Putin has now announced his intention to build Nordstream 3 and 4, which would increase Baltic Sea transit capacity to 110 bcm by 2018.

Gazprom also looks like it may well go ahead with Southstream, which would provide a further 63 bcm of capacity.

The danger for Ukraine is that Russia will send no gas via Ukraine, depriving Ukraine of revenue – and also of leverage in negotiations with Moscow over gas prices.

Ukraine is already being squeezed by Gazprom's pricing strategy.

In 2012, Ukraine consumed approximately 25 bcm of Russian gas at a price $430 per thousand cubic metres (mcm).

By contrast, much richer Germany paid only $379 mcm.

And if $430 mcm was the sort of deal Kiev could get from Moscow when it had some transit leverage, what would the price to be paid when transit leverage disappeared?

The threat posed to the Ukrainian economy – and, indeed, to national independence – appears to have galvanised Kiev into developing a credible energy-security strategy.

The initial stage of this plan is to take advantage of falling EU gas demand and Union rules on energy liberalisation and interconnection to seek reverse-flow gas supplies.

Ukraine approached gas companies from Germany, Poland, Slovakia, Hungary and Romania for supplies.

Their gas comes principally from Russia, at contract prices below the price that Ukraine pays Russia.

By this May, Ukraine had already received 5 bcm of re-directed Russian gas.

Next year, it plans to increase reverse-flow supplies to between 8 bcm and 10 bcm.

A second stage of the plan is to switch to coal from gas.

The government hopes by 2015 to have reduced demand for gas by 3 bcm.

The third stage is a major energy-efficiency drive.

This is focusing on the large-scale failures within the national infrastructure.

For instance, the pumping stations that move the gas around the Ukrainian network had a leakage rate of 37% in 2012.

A key part of the plan is to diversify supply by adding liquefied natural gas (LNG) to the supply mix.

The first step is for Ukraine to rent a floating re-gasification station off the coast of Odessa.

LNG tankers would dock at the station and, once transformed from liquid back to gas, it is pumped ashore.

Ukraine has entered an agreement with Excelerate Energy to rent a re-gasification station for a reported $60 million per year.

The station should be ready to receive 5 bcm per year by 2014.

This first stage would be followed by the construction of a fixed terminal, which should be in place around 2018.

This would provide a further 5 bcm of capacity.

These four steps – reverse-flow deals, the switch from gas to coal, greater energy efficiency, and LNG supplies – have the potential to transform Ukraine's energy security and perceptions of Ukrainian independence.

It is ironic that Russian attempts to undermine Ukrainian independence by increasing the country's gas dependence could actually turn out to have had the opposite effect. 

Source: European Voice

Ukraine’s Dilemma To Bow To Russian Dominance Or Drive For EU Integration

KIEV, Ukraine -- An anniversary to mark the Christianisation of Russia – or ‘Rus’, as it used to be known – 1,025 years ago has been stirring tensions in Ukraine’s capital. This comes on the eve of a two-day visit by Russian President Vladimir Putin.

MP Volodymyr Oliynyk

Anti-Russian Ukrainian nationalists have been gathering outside the Russian embassy in Kiev demonstrating their dissatisfaction with Moscow’s policies toward their country.

The visit is, on one level, to celebrate a joint Christian heritage.

But Putin is also keen on creating a gas transport consortium and on persuading Ukraine to participate in a Customs Union which currently includes Russia, Belarus and Kazakhstan.

This is in contrast to Ukraine’s drive to join the European Union.

The position of the ruling Party of Regions is that Ukraine should not refuse to participate in the Customs Union.

MP Volodymyr Oliynyk said: “We believe our interests should be represented everywhere – not only in the European Union, but also within the Customs Union, where we have economic and cultural interests. We shouldn’t refuse to be in it.”

At the heart of the question ‘which way to turn’ lies the challenge – some say insurmountable – of belonging to more than one bloc.

Ukraine is dependent on Russian natural gas, and disputes over pricing briefly caused supplies to EU countries to be cut off in 2009, and resulted in a controversial gas deal, signed by then-prime minister Yulia Tymoshenko.

Energy and trade make powerful arguments, with all the potential to force Ukraine to make political concessions, such as extending the lease on the port of Sevastopol, which is the base of the Russian Black Sea fleet, in exchange for lower gas prices. 

This is part of the pressure to join the Customs Union, Ukrainian former foreign minister and now an opposition MP Borys Tarasyuk explained.

He said: “There have always been political attempts to keep Ukraine subordinate to Russia. This is why geopolitical projects have been created, like the Commonwealth of Independent States made up of former Soviet Republics, and the Eurasian Union – now the Customs Union.”

Ukrainian politicians, in keeping a balance between Russia and the West, try to limit their obligations in both directions.

Public opinion in Ukraine is currently 42 percent in favour of European integration, with 31 percent believing Ukraine should join the Customs Union, and some 13 percent saying Ukraine should not join either club.

Source: euronews

Friday, July 26, 2013

Yanukovych, Putin To Team Up For Navy Day

KIEV, Ukraine -- Russian President Vladimir Putin and Ukrainian President Viktor Yanukovych will jointly attend Navy Day festivities in Sevastopol on Sunday, Yanukovych’s press service reported Wednesday.

Putin (R) and Yanukovych will attend Navy Day in Sevastopol, Ukraine.

The festivities in Crimea, featuring a joint parade of the Ukrainian and Russian naval ships, will follow celebration of 1,025th anniversary of the introduction of Christianity in Kiev, then the capital of the ancient Slavic state of Kievan Rus.

The disclosure of Putin’s Sevastopol traveling plans on Sunday shows that the Russian president will probably spend more time in Ukraine than has been originally expected, opening possibility for negotiations.

Ukraine has been seeking to avert Russian trade restrictions following Kiev’s refusal earlier this year to join the Customs Union, a Moscow-led trade bloc.

Ukrainian nationalist Svoboda party said Tuesday it will launch a protest action against Putin during his visit to Ukraine and against Moscow’s expansionist foreign policy.

Putin and Russian Orthodox Church Patriarch Kirill will attend the celebration in Kiev along with other foreign and religious leaders.

"The event will be also attended by heads of state and delegations from countries in which Orthodox Christianity believers dominate, as well as leaders of local Orthodox churches,” the Yanukovych press service reported.

Oleksandr Popov, the appointed by Yanukovych head of the Kiev government, said presidents of five countries and leaders of nine churches are expected to arrive for the celebrations in Kiev.

“This is what makes this year’s celebration special,” Popov said.

“Kiev hasn’t seen yet something like this.”

Yanukovych is also expected to hold a series of bilateral meetings with heads of state that will arrive in Ukraine for the celebrations, according to the press service.

Culture Minister Leonid Novokhatko said the main prayer will be held on Saturday near the monument of the St. Volodymyr and rejected speculations that the gathering will be dominated by Russians and restricted to Ukrainians.

"Primarily foreign visitors, representatives of religions, secular and spiritual leaders, plus a church choir and journalists will be there," Novokhatko said.

"I would not say that there will be representatives of one country,” he said.

“There will be representatives of all the countries that will join us for the celebrations.

There will be secular and religious, plus chorus, plus the clergy, and that’s it for that space.”

Source: Ukrainian Journal

Activist Presses Ukraine For Release Of Tymoshenko

KIEV, Ukraine -- A Ukrainian civic activist says Ukraine’s president must release a jailed former prime minister and adopt judicial and electoral reforms to meet benchmarks for closer relations with the European Union.

People pass by a poster of Ukraine's imprisoned former Prime Minister Yulia Tymoshenko at a tent camp of her supporters in Kiev. Human rights groups have described the charges against Mrs. Tymoshenko as politically motivated.

Sergii Bondarchuk, a former member of Ukraine's parliament, told editors and reporters at The Washington Times this week that his working group of the National Roundtable Agreement for the European Future wants to help President Viktor Yanukovych to be in a position to sign an association agreement and free-trade pact with the EU in the Lithuanian capital, Vilnius, in November.

The government of Ukraine is eager to sign these agreements.

While most European governments believe Ukraine has not done enough to meet EU benchmarks, some are reluctant to block the agreements out of concern that could push Ukraine into closer ties with Russia.

Mr. Bondarchuk accused Mr. Yanukovych of “blackmailing” the EU as well as Russia.

“Ukrainian authorities do understand that Ukraine is needed by both Russia and the EU,” he said through an interpreter.

The National Roundtable, a civic society group, has drawn up a list of 11 issues that it says must be resolved by the Ukrainian government to enable integration with the EU.

Prominent among these is the release of former Prime Minister Yulia Tymoshenko and an end to the practice of “selective justice” that targets Mr. Yanukovych’s political rivals.

“It is closely connected with Yulia Tymoshenko’s destiny,” Mr. Bondarchuk, who has been in regular contact with the jailed former prime minister, said of the National Roundtable.

Mrs. Tymoshenko is serving a seven-year prison term for abusing her powers as prime minister in striking energy import deals that prosecutors said favored Russia and left Ukraine with crippling bills.

Mr. Bondarchuk described the natural gas issue as “Ukraine’s curse” and the main source of corruption in the country.

He said Russia and Gazprom, its gas company, have done everything to control the gas.

“From one side, the words of brotherhood from Russia’s side are spoken constantly; from another side, the price of gas in our territory is among the highest in Europe,” he said.

“During the last three years, the extra charge for Russian gas for Ukraine was $17 billion.”

Western governments and human rights groups have described the charges against Mrs. Tymoshenko as politically motivated.

“Pretty much everybody who followed the trial in December of 2011, at least everybody in the West, regards it as a judicial farce,” said Steven Pifer, a former U.S. ambassador to Ukraine and now with the Brookings Institution.

In April, the European Court of Human Rights ruled that Mrs. Tymoshenko’s pretrial detention was unlawful.

Human Rights Watch says Ukraine has a mixed human rights record.

“The case against [Mrs. Tymoshenko] and other highly politicized cases give grounds for concern that the government uses politically motivated charges to deal with its political rivals,” said Rachel Denber of Human Rights Watch.

Mr. Yanukovych has also come under pressure from the opposition to release Mrs. Tymoshenko to undergo treatment in Germany for chronic back pain.

Mr. Bondarchuk was active in the pro-democracy Orange Revolution of November of 2004.

Mrs. Tymoshenko was one of its leaders.

During the Orange Revolution, Ukrainian opposition leaders were “solid people,” but now, “opposition politicians are new computers, but old software,” he said.

Mr. Bondarchuk said that neither he nor Mrs. Tymoshenko favor another “revolutionary path” in Ukraine, but “there is a risk of revolution, which could put the whole country into chaos.”

He accused Mr. Yanukovych of heading a “super presidential republic” in which the president is “the only real decision maker.”

Tatiana Shalkivska, a spokesman for the Ukraine Embassy in Washington, declined to comment on Mr. Bondarchuk’s accusations, but some analysts have also noticed a drift toward authoritarianism in Ukraine.

“If you look at what has happened in Ukraine since 2010, when Mr. Yanukovych became president, you have seen a trend toward a more authoritarian government,” said Mr. Pifer.

Source: The Washington Times

Thursday, July 25, 2013

Ukraine Is Not Yet Dead, But It’s About To Go Bankrupt

KIEV, Ukraine -- Ukraine’s national anthem, the famously morosely titled “Ukraine has not yet died,” gives a pretty good indication of the country’s troubled and tragic history.

Not a member of the EU, but adding to its economic woes.

Unfortunately for Ukrainians, there is mounting evidence that another serious economic crisis is rapidly approaching, and that the country’s structural problems and persistent economic weakness are no closer to being solved.

To the extent that Ukraine attracts attention in the West, it has usually been for its political regression under Viktor Yanukovych and his Party of Regions.

However, Ukraine’s economy is deteriorating rapidly and if attempts to engineer a smooth landing fail, we could see a messy default at an extraordinarily inopportune time for the European economy.

The first and most urgent crisis is that Ukraine is running out of money.

Throughout the course of 2012, its foreign currency holdings went from $31 billion to less than $25 billion, and by June had slumped to roughly $21.7 billion.

Even more alarmingly, Ukraine’s level of “import coverage” (the number of months’ worth of imports that it can afford with its current level of foreign reserves) decreased from an already low level of 3.5 months in January 2012 to less than 2 months by the end of May.

While there is no perfect “rule” of import coverage, anything less than three months is usually seen as problematic, and Ukraine’s level has been relentlessly ticking down for the last two years.

Why such a rapid run-down in foreign reserves?

Well, the Ukrainian Central Bank has been busy defending the hryvnia, which is informally pegged at a rate of roughly 8 to the dollar.

The central bank has, so far, refused to allow for devaluation or even to start using a peg based off of a basket of currencies such as the euro and the Polish zloty.

By linking its currency directly to the dollar instead of to the currencies of its closest trading partners, Ukraine has effectively strengthened its currency at a time that its economic partners have weakened theirs.

And, unsurprisingly, for a country that has unilaterally strengthened its currency (depressing exports and bolstering imports), Ukraine has run increasingly large current account deficits.

Ukraine’s current account went from a respectable deficit of 1.5% of GDP in 2009 to a more than 8% deficit in 2012.

It’s true that 2013 has seen some slight improvement, the current account was on pace for a 7% deficit through early 2013, but a country with a shrinking economy and a rapidly shrinking population simply cannot afford to run deficits of such a magnitude for very long.

Ukraine will have a hard time affording much foreign borrowing due to the high yields it must pay on its bonds.

Ukraine’s government bonds are rated B, or five levels below investment grade, and the country usually pays somewhere in the range of 7-8% for ten-year notes.

If those funds were being used for some sort of productive investment, perhaps in transport infrastructure, such a high interest rate would be acceptable, but since they’re essentially subsidizing consumption, they’re not going to prove sustainable. 

As all of the above should make clear, Ukraine is playing on borrowed time: its foreign currency holdings are withering, it has an unsustainable peg to the dollar, its current account deficit is way too big, and its government finances are too shaky to allow large-scale foreign borrowing.

The expectation is that the IMF will once again ride to the rescue and provide the country with a bailout sufficient to prevent a messy default.

The problem is that the IMFs demands, particularly the demand to reduce subsidies for natural gas, are politically unacceptable to the oligarchs on whose support Yanukovych ultimately depends.

Europe has such an endless litany of economic problems that it almost seems cruel to add Ukraine to the mix.

Nonetheless, the country at the crossroads of Russia and the EU is about to experience yet another economic crisis and it anyone’s guess as to how it will turn out.

Source: Quartz

Svoboda Readies Protest For Putin Visit

KIEV, Ukraine -- Ukrainian nationalist Svoboda party said Tuesday it will launch a protest action aimed against Russian President Vladimir Putin during his expected visit to Ukraine later this week.

Russian President Putin (R) with Russian Orthodox  Patriarch Kirill.

Putin is expected to join Russian Orthodox Christian Church Patriarch Kirill as both have been invited to celebrate the 1,025th anniversary of the introduction of Christianity to Kiev, then the capital of the ancient Slavic state known as the Kievan Rus.

Andriy Illienko, a lawmaker from the Svoboda party, said the protest will also aim against alleged attempts by the Russian leaders to take Ukraine closer to the Russian sphere of influence.

The protest will be a “traditional event” for the party, Illienko told Interfax-Ukraine.

“We carry it for many years. This event is usually a time when Ukraine gets the head of the Russian Orthodox Church.”

Polish President Bronislaw Komorowski got egged during a visit to Ukraine to a memorial dedicated to Poles killed by Ukrainian insurgents in 1943.

Svoboda said it had nothing to do with the incident.

Putin’s visit comes as Russia has been preparing to launch trade restrictions against Ukraine after Kiev had rejected closer integration with the Moscow-led trade bloc, known as the Customs Union.

A recent meeting between Ukrainian Prime Minister Mykola Azarov and his Russian counterpart Dmitri Medvedev failed to solve many trade issues, including high Russian natural gas prices.

Svoboda will seek official permission from the authorities for the protest action that they will organize in areas as close as possible to Putin and Kirill.

"It is unlikely that we would get right under their noses,” Illienko said.

“I think our courts will make sure that all sorts of restrictive decisions are approved.” 

The Kiev police on Tuesday announced changes in traffic patterns and closures of main roads in downtown Kiev, including Khreshchatyk Street, during the weekend when most of the celebrations are due to take place.

"Due to such restrictions the authorities ask motorists to treat temporary difficulties with understanding and to plan a route in advance of their travel within the city in those days," the police said in a statement.

Source: Ukrainian Journal

Wednesday, July 24, 2013

China Faces Renewed EU Tariffs On Ironing Boards; Ukraine Spared

BRUSSELS, Belgium -- The European Union renewed tariffs as high as 42.3 percent on ironing boards from China to curb competition for Italian, Polish and British producers while letting a levy against Ukraine lapse.

The EU re-imposed the duties against China for another five years to punish Chinese exporters such as Greenwood Houseware (Zhuhai) Ltd. for allegedly having sold ironing boards in the bloc below cost, a practice known as dumping.

The expiring anti-dumping levy against Ukraine is 7 percent.

A repeal of the measures against China “would result in increased exports at dumped levels of ironing boards” by Chinese manufacturers to Europe, the 28-nation EU said today in the Official Journal.

The decision, taken on July 15 in Brussels, will enter into force tomorrow.

The trade protection, imposed in 2007, aims to help EU producers including Italy’s Colombo New Scal SpA, Poland’s Rorets Polska Sp. zoo and the U.K.’s Vale Mill (Rochdale) Ltd. keep market share against Chinese competitors.

China’s share of the EU market for ironing boards fell to between 15 percent and 20 percent in 2011 from between 40 percent and 45 percent in 2008, according to the bloc.

When it applied the anti-dumping measures in April 2007, the EU set the rates at 9.9 percent against Ukraine and between 18.1 percent and 38.1 percent against China, depending on the Chinese manufacturer.

In 2010, the EU lowered the rate against Ukraine to 7 percent and raised the maximum levy against China to 42.3 percent.

Ukraine’s sole exporter of ironing boards was identified as Eurogold Industries Ltd., affiliated with Switzerland-based Eurogold Service Zumbuehl & Co.

The renewal of the duties against China and the end of the levy against Ukraine are the outcome of a 15-month investigation that prevented the levies against both countries from expiring as previously scheduled in April 2012.

Source: Bloomberg

Ukrainian Charged With Murder Of Muslim Pensioner In Britain

BIRMINGHAM, England -- A Ukrainian man being questioned about explosions at mosques in central England was charged on Monday with murdering a Muslim pensioner.

Mohammed Saleem, 82, with his wife. He was stabbed in the back.

Pavlo Lapshyn, 25, was in the UK on a sponsored work placement scheme, police said.

The post graduate student from Dnipropetrovsk, Ukraine, was first arrested on Thursday as part of an investigation into blasts near two mosques in the towns of Walsall and Tipton, one in June and the other last week.

West Midlands police said he had since been charged with the murder of Mohammed Saleem, a grandfather who was stabbed to death in April as he walked home from his mosque in the Small Heath area of the English city of Birmingham.

"We understand that these incidents have caused a great deal of anxiety and distress within local communities," Assistant Chief Constable Marcus Beale said in a statement.

Officers from the West Midlands Counter Terrorism Unit would travel to Ukraine over the next few days, the force added.

There have been several attacks on Islamic buildings in Britain since the murder of a soldier on a London street in May.

Two British Muslims will be tried in November for that killing.

Source: Yahoo News

Tuesday, July 23, 2013

Ukraine Rape Draws Outrage Over Official Impunity

VRADIYEVKA, Ukraine -- It was an ordinary summer evening for 29-year-old Irina Krashkova, a single mother in this quiet farming town. After a day running errands, she went dancing with her girlfriends at the local bar.

Rape victim 29-year-old Irina Krashkova.

As she walked home, she said, two policemen pulled up beside her.

One was 1st Lt. Evhen Dryzhak — a feared man about town, described by locals as a heavy drinker who beat and insulted townsfolk and forced them to pay his bar bills. 

What happened next shattered Krashkova's peaceful life, filled with days breeding ducks and playing checkers with her 12-year-old son Dimitry.

The cops, Krashkova said, forced her into the car and drove her to the woods.

There, with the help of a friend, they allegedly beat her so badly they fractured her skull.

The officers then took turns raping her, Krashkova said.

The case brought attention to Ukrainians' growing outrage over the perceived impunity of officials and their powerful friends — from lawmakers to businessmen to small-town cops.

Reports of police abuse ranging from horrific violence to quiet bribery have risen sharply since the 2010 election of President Viktor Yanukovych.

The opposition accuses him of moving Ukraine down an authoritarian path and trampling democratic institutions and the rule of law.

Even after Krashkova fingered Dryzhak as the leader of the attack, the burly officer continued to walk the streets of Vradiyevka for a week — showing up at work and buying raspberries at the local market.

He even interviewed witnesses in the case.

The horror of the crime combined with years enduring abuse from Dryzhak and his fellow officers to send a current of rage through the town.

Hundreds of residents stormed the police station in protest.

It was only then that Dryzhak was arrested.

His alleged accomplices, police Lt. Dmitry Polishchuk and their friend, were detained soon after the attack.

All three say they are innocent and refuse to testify.

Krashkova's case bore shocking resemblance to one in Mykolaiv, the capital of the region that includes Vradiyevka.

Last year, a young woman was raped, set on fire and died after two weeks in the hospital.

Three suspects were detained, but one with powerful regional connections and his friend were quickly released.

They were jailed again only after protests erupted across the country.

One suspect has been sentenced to life, while two others received prison terms of 14-15 years.

Krashkova's case, too, has become a national cause.

Hundreds of activists rallied Thursday against police abuse and impunity in the center of Kiev and erected tents to maintain a round-the-clock protest.

Some came on foot from Vradiyevka, a town some 330 kilometers (200 miles) south of the capital.

But the protest was forcefully dispersed overnight by riot police and the tents were torn down.

Several activists were detained. 

Ukrainians say they are tired of seeing the powers-that-be, their kin and their cronies avoid punishment for crimes big and small — from bribe-taking to ignoring traffic rules to committing rapes and murders.

People complain that they are defenseless against the giant corrupt government machine, in which law enforcers and officials close ranks and cover up each other's crimes. 

From her hospital bed, Krashkova recently described the horror of the attack.

"They strangled me, they beat me and called me all kinds of names," Krashkova said in a weak voice in a video interview with local media.

Her face was swollen and bruised and her head was wrapped in a white bandage.

"Dryzhak raped me and asked Polishchuk, 'Do you want to?' He said 'yes' and raped me."

The Associated Press does not generally identify victims of sexual assault, but makes an exception where the victim has publicly identified herself.

After the attack, the alleged rapists drove away but soon returned — apparently to finish her off.

They could not find her in the dark.

After they left, Krashkova started walking — taking a few steps, passing out, coming to, taking a few more steps.

Eventually she reached a village and stumbled into a flour mill.

Manager Svitlana Chubko found Krashkova naked, covered in blood, hiding her private parts with a bunch of leaves, and clutching a pair of sandals.

"Her lip was hacked, you could see her teeth," Chubko told The Associated Press.

"She was all covered in blood, her head was hacked, her face was swollen, she was all covered in bruises."

While Polishchuk and the friend who drove the car sat in jail, Dryzhak remained free — claiming he had been on duty at the police station that evening.

A week later, enraged residents stormed the police station, believing he was hiding inside.

They threw rocks, smashed the windows with bats and hurled firebombs.

Serhiy Maksimenko, a local opposition activist, is convinced that the case would have been hushed up had it not been for the protest.

That's because Polishchuk is the nephew of a senior regional prosecutor and Dryzhak is closely connected to the top regional police official.

"I am 100 percent sure that had the people not risen up, this Dryzhak guy would have come out clean, he would be investigating this very case," Maksimenko said.

"They would have scared her into keeping her mouth shut."

Prosecutors investigating the police response said the deputy police chief tried to protect Dryzhak.

They say he beat one of the two alleged accomplices to force him not to testify against Dryzhak, and that several policemen falsely testified that he was with them at the station all night.

The police chief was fired, his deputy arrested and the policemen who gave false testimony are under investigation.

Some two weeks after the attack on Krashkova, business was running as usual at the Vradiyevka police station; the broken windows and doors had been replaced.

Policemen showed no sign of remorse.

One officer lamented that Vradiyevka was dragged through the mud on national television.

Another mocked an Associated Press journalist for traveling from the capital Kiev, saying:

"Why, has something happened?"

Valery Koba, the acting police chief, sought to strike an apologetic tone, saying that what happened was "simply unacceptable," but denied that it was characteristic of police impunity.

If Dryzhak and Polishchuk are found guilty, Koba said, it would be "an exception rather than the rule, if you look at the police as a whole."

Human rights groups have a different view.

An April report by Amnesty International said that police abuse is rampant in Ukraine, while the authorities refuse to investigate and fight it.

And a study by the global corruption watchdog Transparency International released last week said that nearly half of Ukrainians believe that corruption has increased significantly over the past few years.

"The reaction of Vradiyevka residents clearly demonstrates to what extent people don't trust the current system of investigating and punishing crimes committed by government officials," Amnesty said earlier this month.

Emboldened by media attention and a pledge by top government officials to bring order, Vradiyevka's townsfolk have filed a raft of complaints against police abuse over the years.

One man went on national television and accused police of torture to draw out a false confession.

Another man said on the same TV show that police raped his wife, driving her insane.

Authorities have not responded publicly to the televised complaints.

Lyudmyla Montian, 40, who worked with Krashkova at the grocery store, said residents fear that Vradiyevka would sink back into lawlessness once the Kiev investigators leave town.

In the case of Oksana Makar, the dead rape victim from Mykolaiv, a senior police officer who was fired for allowing the release of the two suspects has been reinstated by the Interior Ministry.

"Everybody wants things to change," Montian said.

"But will they change? People are not sure."

Krashkova's mother wept as she expressed her fear that the rapists would evade justice.

"How can the holy earth carry such beasts?" Maria Krashkova told the AP.

"Did I give birth to four children so that somebody could torture them?"

Source: AP

Journalist Bloodied In Donetsk Incident

KIEV, Ukraine -- A journalist who has exposed traffic police brutality and corruption was attacked and severely beaten by two unknown assailants near his home in Donetsk on Sunday.

Interior Affairs Minister Vitaliy Zakharchenko

Oleh Bohdanov, a member of Dorozhniy Kontrol, or Traffic Control, a publication that exposes police by filming officers interacting with drivers, was taken to hospital in a serious condition.

“My head hurts, my back hurts, they have probably badly hurt my kidneys,” Bohdanov, who was found covered in blood near his home, said in a video released on YouTube by his colleagues.

Bohdanov’s car was burned down seven months ago in a case that had never been solved.

The latest attack comes as protests against police brutality have been gaining momentum in Ukraine culminating with a rally in Kiev on Thursday.

The rally, however, was dispersed by riot police at midnight during which a crew of Channel 5, a news television station, was also beaten up.

About 150 protesters, many of whom marched from different Ukrainian regions to the rally in Kiev, demanded resignation of Interior Affairs Minister Vitaliy Zakharchenko, a close ally of President Viktor Yanukovych.

The protest began as a spontaneous reaction to the case in Vradiyivka, Mykolayv region, where two police officers had apparently raped and tried to kill a young woman, sparking a storm of local police station by angry villagers.

Many Ukrainians become increasingly fed up with police brutality and impunity of local officials that galvanize popular protests.

The developments work against Yanukovych, who is expected to seek re-election in March 2015.

The quick dispersal of the rally in Kiev underscores fears within the government that the protests may spin out of control and pose real threat to the government.

Valeriy Koriak, the head of the Kiev police, defended the actions of the police during the dispersal of the rally and said the protests have been used by opposition in order to put the blame on the ruling party.

“Politicians are skillfully speculating on this,” Koriak said in an interview with Interfax-Ukraine.

“The opposition is using the events in Vradiyivka in order to discredit the current authorities in the eyes of the people.”

“We ourselves condemn what happened and understand that this is unacceptable. But as long police exists, bad things periodically happen. May be not like this, but something like this. It is impossible to make police officers like tin soldiers.”

“The police are not the enemy, the police are helpers, albeit with the deficiencies. We are working to try to maintain a constructive relationship with the population,” Koriak said.

Asked about the television crew that has been beaten up by police during the dispersal on Thursday, Koriak said that journalists should simply stay away from the scene.

“Do not abuse the patience police,” Koriak said.

“The only request – do not come too close, do not meddle in the epicenter."

Source: Ukrainian Journal

Monday, July 22, 2013

Bionic Hill: Ukraine's 'Silicon Valley'

KIEV, Ukraine -- Bionic Hill Innovation Park is a hi-tech park being developed as a ‘live, work, learn, and play’ community.

Roman Popadiuk served as the first U.S. Ambassador to Ukraine. He is currently a principal with Bingham Consulting. Bingham Consulting has been retained by the Bionic Hill project to assist in developing the project.

Bionic Hill offers a unique environment for development and growth of high-tech and knowledge-based businesses in Ukraine, focusing on information and communication technologies, biotech and pharmaceuticals, energy efficiency and clean energy solutions.

Former U.S. Ambassador Popadiuk said: “Ukraine has a highly skilled IT workforce. This, coupled with the IT sector’s highly competitive labor costs, continues to be a strong attraction for foreign IT companies.”

Estimated project investment is to reach US $772 million.

Popadiuk continued: “The project is a private enterprise but has the support of the Kiev City Administration and the national government. The city is providing some infrastructure support and the national government, via the Rada, is planning a variety of tax incentives. The project also has the support of the national government’s State Agency for Investment and National Projects of Ukraine.”

Such support of the Government contributes greatly to the project development and ensures ‘green light’ in many aspects (tax and customs incentives in particular). 

Located on 363 acres of picturesque green area within the city of Kiev, the project is being developed as a prime mixed-use property with business, residential, educational, retail, and recreational facilities.

It will offer flexible business space and different types of residential spaces of 900,000 m2 (9.7 million sq ft) in total. 

Popadiuk said, “Bionic Hill will serve as a research and business base for the IT, biotech, energy and pharmaceutical industries. This expanse of business sectors will strengthen Ukraine’s economy and help spur job growth. The project, for example, envisions containing a workforce of 35,000.” 

“The Bionic Hill University will serve as an important center for training a new class of managers who can help lead Ukraine forward in the global economy. It will also serve as a center for research and conferences that will help highlight Ukraine’s important role in technology.” 

The project targets a wide range of tenant/partner companies: from promising technological start-ups and spin-offs to mature local companies and global hi-tech corporations. 

It will serve as a one-stop shop providing a full range of services: 

• high-quality real estate solutions (for accommodation of project teams, R&D operations, representative offices, showrooms, labs, clean production, etc.) 

• business support services (business incubator, co-working facilities, legal and accounting services, patent services, notarial bureaus, conference facilities, etc.) 

• resource center (training programs at Bionic University, HR support, networking and matchmaking, access to financing opportunities, etc.) 

• tax incentives for IT companies and R&D centers 

• accommodation for employees and visitors (hotel and dormitory facilities, apartments for sale/rent, detached houses for sale/rent) 

• centralized management of the park (centrally provided technical maintenance, landscaping, security, cleaning, etc.) 

To ensure a state-of-the-art environment, a number of leading professional partners have been involved to contribute to the project: a global leader in assurance, tax and advisory services (Ernst & Young), recognized international experts in planning, design and engineering (HWI, ARUP and SWA Group), a global leading specialist in energy and environmental design (AECOM), a major Ukrainian telecommunication operator (Kyivstar) and others. 

The Bionic Hill project construction will be performed in three stages, commencing in 2013 and being completed by 2020. 

The first construction stage is to be commissioned in Q1, 2015 and to include 100,000 m2 (1.1 million sq ft) of business space, housing, food courts, sporting facilities and recreational areas. 

Popadiuk concluded that, “Bionic Hill is an important development project for Ukraine. It will not only highlight the strength of Ukraine’s IT sector but also help broaden the foundation for future economic growth.” 

Source: Bingham Consulting

Sunday, July 21, 2013

Courts Orders Arrest Of KreditPromBank Assets And Accounts To Prevent Artificial Bankruptcy

KIEV, Ukraine -- Based on a petition to the court from "Praktyka" Asset Management Company, which represents American, European and Ukrainian investors, the Kiev City Commercial Court on 10 July 2013 ordered the arrest of KreditPromBank's assets and accounts worth UAH 217 million ($27 million).

NBU's Ihor Sorkin

The Ministry of Justice Division of State Executive Service in the Kiev City Pechersk District began executing the court order on 16 July 2013.

At issue is a venture fund called "Kyivschyna 1," created in 2010 and valued at UAH 217 million ($27 million), which attracted investors from the US, Europe and Ukraine.

Investment fund managers opened the "Kyivschyna 1" deposit account with KreditPromBank and viewed it as a secure vehicle for investing into the Ukrainian economy.

At that time KreditPromBank's shareholders included several western banks, investment funds representing agricultural giant Cargill and international financial institutions such as the European Bank for Reconstruction and Development (EBRD) and, was considered a trusted banking institution.

Investors in the venture fund were paid their interest for almost three years until KreditPromBank was sold in March 2013 to Mr. Mykola Lagun.

Once the KreditPromBank sale to Lagun was finalized, interest payments stopped. 

Investors were called into meetings with Delta Bank top managers, among them owner of both banks Mykola Lagun and Delta Bank's First Deputy Chairman Vitaly Masiura, who offered investors 20% of the value invested in the "Kyivschyna" venture fund.

As a form of pressure, investors were told that if they refused the offer they would receive nothing from their deposit.

Meanwhile, after Lagun's purchase of KreditPromBank, the latter's management was replaced by top managers of Delta Bank, who concurrently worked in both banks steadily depleting the assets and accounts of KreditPromBank and transferred them to Delta Bank in violation of Ukrainian laws and bank regulations.

Essentially, bank managers were raising the risk of KreditPromBank's artificial bankruptcy.

Investors appealed to the National Bank of Ukraine to act in accordance with Ukrainian laws and NBU regulations, which require that NBU appoint a bank administrator to protect investors and depositors from any potential wrong-doing.

To date, the NBU has not acted, which prompted investors to file a court case in the Kiev City Commercial Court placing under arrest the assets and accounts of KreditPromBank in an effort to prevent the bank from being artificially bankrupted.

Defrauded investors from the United States appealed to the US Embassy to get involved in the case.

US Ambassador John Tefft wrote National Bank of Ukraine Governor Ihor Sorkin on June 11, 2013:

"I am greatly concerned by any report that a Ukrainian bank would treat foreign investors differently than those native to Ukraine. As a regulatory authority over all banking in Ukraine, I would greatly appreciate all Kreditprom investors - foreign and domestic - be afforded equal treatment."

US-Ukraine Business Council also took up the case in a letter to President Viktor Yanukovych, stating: "the bank's assets and accounts are already being transferred to Delta Bank, which is owned by Mr. Mykola Lagun. These actions appear to be consistent with preparation for [KreditPromBank's] artificial bankruptcy."

The USUBC concluded: "we highly value your commitment and the actions of the Government of Ukraine to improve the investment climate in Ukraine. At the same time, actions like those described above effectively negate all your efforts and should, in our opinion, receive an appropriate response."

Source: PRNewswire

U.S. Supports Ukraine's Foreign Policy

KIEV, Ukraine -- U.S. Ambassador in Ukraine John Tefft believes that President of Ukraine Viktor Yanukovych follows the right foreign policy vector.

U.S. Ambassador in Ukraine John Tefft

Ambassador Tefft stated this during his interview while referencing the popular discussion issue on Ukraine's choosing between the European Union and the Customs Union, as reported by Den newspaper.

The U.S. sees Ukraine's future in Europe but understands that Russia remains its important neighbor and trade partner, said Ambassador Tefft during his interview.

He reiterated that the U.S. followed the constant foreign policy debate in Ukraine about what path to choose.

"The president chose what I think is the right policy - Ukraine should be a part of Europe, while trying to maintain good relations with Russia. The U.S. does not have any objection to that," said Ambassador Tefft, reports Den.

"But when it comes to choosing a particular union, or when it comes to customs and other economic issues, the EU, in my opinion, holds great promise," said the U.S. diplomat.

On May 13, 2013, United States Secretary of State John Kerry addressed Ukraine's drive toward European integration adding: "and we are particularly committed to helping Ukraine work to become a prosperous European democracy, and we appreciate their commitment to that."

Notably, on May 29, 2013, the Supreme Eurasian Economic Council - the governing body of the Customs Union of Kazakhstan, Russia, and Belarus - has agreed to grant Ukraine an observer status.

And yet, Ukraine's participation in the work of the Customs Union and the signed memorandum to enhance cooperation with the Eurasian Economic Commission do not contradict Ukraine's WTO membership and the strategic course toward European integration through the Association Agreement and the establishment of a deep and comprehensive free trade area with the EU, assured President of Ukraine Viktor Yanukovych.

In the meantime, Ukraine has been focusing on fulfilling the criteria required for signing the Association Agreement and the free trade zone agreement with the EU.

All branches of the government, as well as the opposition and civil society will have to coordinate their efforts in order to reach a success, concluded President Yanukovych during his meeting with Vice-President of the European Parliament Jacek Protasiewicz earlier this year.

Source: Yahoo Finance

Saturday, July 20, 2013

Ukraine Compares EU Pact Signature To ‘Fall Of Berlin Wall’

BRUSSELS, Belgium -- The Ukrainian ambassador to the EU, Kostiantyn Yelisieiev, said the signature of an EU-Ukraine Association Agreement, which could take place in November, would be similar in magnitude for his country to the fall of the Berlin Wall in Germany.

Kostiantyn Yelisieiev

Yelisieiev, who was recently promoted to advisor on external political processes to the Ukrainian president, made a passionate plea for the EU to adopt a “strategic vision” on Ukraine's future geopolitical position in Europe.

“We consider in Ukraine the signing of this agreement as the second event after the declaration of the independence of Ukraine [16 July 1990]. And I would like to enforce my argument: this signing for Ukraine will be, like years ago, the fall of the Berlin wall for Germany,” the ambassador said.

The association agreement with Ukraine was initialled more than a year ago but the EU made its signature conditional on progress made in areas such as democratic and judicial reforms, including the release from prison of former prime minister Yulia Tymoshenko.

The draft agreement offers closer political and economic cooperation, but stops short of offering a path towards EU accession.

Ukraine hopes to sign the agreement at the 28-29 November Eastern Partnership Summit, to be held in Vilnius under the Lithuanian EU presidency.

Several EU leaders, especially from the former Soviet bloc countries, are pushing for a signature of the association agreement in Vilnius, out of geopolitical considerations.

Lithuania, which took over the rotating presidency on 1 July, puts high hopes on the summit's success.

But others, led by Germany, have raised conditions linked to judicial reforms (see background).

Yelisieiev, speaking to several journalists in Brussels, criticised the “lack of strategic vision” of countries that are opposed to signing the agreement.

“This agreement will reinforce the political independence, territorial integrity and sovereignty of my country. That’s why those who are against signing this agreement are against an independent, strong, European Ukraine,” he said, without naming Germany.

It was obvious however that the Ambassador's remarks referred to the German position and to that of the centre-right European People’s party in the European Parliament, where Angela Merkel’s Christian-Democrat MEPs play an influential role.

The diplomat said his country had drawn up a chart with the positions of the different EU member states, and found it "strange" that several countries had not spelt out their views.

A blunder in the G8 statement? 

Yelisieiev also drew attention to the G8 summit's June communiqué, which “welcomes the trade and economic integration of Russia with some of the countries in the region”.

Moscow has long been pushing for a ‘Eurasian Union’, the backbone of which is a Russia-led customs union, involving for the time being only Belarus and Kazakhstan.

Russian President Vladimir Putin has made special reference to the sentence during the G8 final press conference, saying:

“I was especially happy to see that the summit’s final communiqué states that our G8 colleagues welcome the integration process underway in the post-Soviet area, the Customs Union’s establishment. This is very important for us,” Putin said, according to a Kremlin transcript.

But Yelisieiev said the G8's apparent show of support for Russia's 'Eurasian Union' raised the suspicion that the EU's G8 members (Germany, France, UK, Italy) were following a “hidden agenda” regarding Ukraine.

EU sources told EurActiv the sentence in the G8 communiqué was a mistake made by the "sherpas", personal representatives of heads of state, who negotiated it on behalf of EU countries.

Russian diplomats are considered to be very good at negotiating joint statements, often cheating their counterparts, sources say.

In Kiev, the incident is certainly not interpreted as a sherpas' error.

Yelisieiev said he had requested explanations but had not received a satisfactory answer yet.

Tymoshenko to be sent to Berlin hospital? 

Regarding Tymoshenko, Yelisieiev did not deny press reports that the former Ukraine prime minister could be sent to Germany for treatment.

The dialogue between Kiev and Berlin had “drastically intensified” during the last two weeks, he acknowledged.

Asked whether Ukraine was willing to respond to other outstanding issues spelt out by the EU – such as judicial reforms or changes to the electoral law – Yelisieiev answered that "tangible progress" would be made by the beginning of October. 

Other opinions 

However, a diplomat from one of the largest Western countries contacted by EurActiv made clear that sending Tymoshenko abroad for treatment would not be seen as sufficient to deal with EU concerns about ‘selective justice’.

“Such a move would be welcome, but is not enough,” the diplomat stressed.

An ambassador from an Eastern European country told EurActiv that he didn’t see German pressure on the Tymoshenko case as tenable in the long run.

He said that Tymoshenko “obviously has an issue” with Ukrainian justice over her dealings as a businesswoman and subsequent “abuse of power” in a 2009 gas deal between Ukraine and Russia, and that it was “difficult to disregard” such a fact.

He added that the EU usually pressures countries aspiring to joint the EU not to compromise on crimes or corruption cases involving high officials.

“If we had put a former prime minister in jail, the Commission would have congratulated us,” the diplomat said.

EU-Ukraine relations are expected to be discussed by EU foreign affairs ministers on 22 July, but no big decisions are expected.

Russian President Vladimir Putin is reportedly to visit Ukraine on 27 July, in a last attempt to keep the former Soviet republic in Russia's orbit.

Source: EurActiv

Ukraine Riot Police Break Up Protest

KIEV, Ukraine -- Ukrainian security forces have broken up a demonstration by hundreds of people in central Kiev protesting against police brutality after the alleged rape of a woman in the south of the country by two officers.

Around 200 people turned out on Kiev's Independence Square on Thursday evening for the protest, many clutching pictures of relatives who they claimed to have been tortured or beaten by the Ukrainian security forces.

However, with the protesters showing no sign of shifting in the early hours of Friday morning and erecting tents to stay the night, Ukraine's elite Berkut riot police moved in to break up the demonstration, an AFP correspondent reported.

Nine people were arrested as the armoured police forced people out of the square as the protesters sung the national anthem and cried "Glory to Ukraine, Death to the Enemies!"

At least one television journalist was wounded.

There has been fury in Ukraine over the gang rape in the southern Mykolayiv region of 29-year-old Iryna Krashkova who says two policemen raped her after taking her into the woods in a taxi.

Initially, police detained only one officer leaving the other one free, saying he could not have been involved in the rape and claiming he was on duty that night.

It was widely thought that the policeman enjoyed the protection of local authorities because of family connections.

The outrage over this incident has also sparked protests against other alleged violations.

On July 12, opposition activists attempted to storm a police station in Kiev and on July 6 a station in the Kiev region town of Fastov.

Source: AFP

Friday, July 19, 2013

Cold Showers Expose Budget Pinch As Ukraine Coffers Run Dry

KIEV, Ukraine -- Ukrainians are used to a few days a year without hot water as sizzling summer temperatures give the nation’s state-run utilities a chance to fix leaky pipes.

President Viktor Yanukovych

This year, the stoppages have stretched into months.

“It’s like living in the middle ages,” said Olga Tymofeyshyna, a 25-year-old bank worker from Kamyanets-Podilsky, about 50 miles from the border with Moldova.

“Because of the government’s inability to pay its bills we’re suffering from a lack of basic services. We’re very angry.”

In addition to hot-water shortages, street cleaners in the western town of Stryi threatened to block one of the former Soviet republic’s busiest highways this month, complaining they hadn’t been paid since April.

In nearby Lviv, Ukraine’s seventh-biggest city, the treasury has blocked cash for school renovations, including money donated by parents.

Ukraine, which was awarded more financial aid than any eastern European nation in the past five years, is struggling to recover from its second recession in four years and is “one step away” from a balance-of-payments crisis, Capital Economics Ltd. says.

The fiscal gap has more than tripled from 2012, while cash in the treasury’s budget-spending account has plunged to a decade low.

Months of talks have failed to bring a new bailout.

‘Tricky Situation’ 

“It’s a tricky situation -- revenue can’t meet spending because the budget assumes unreal growth,” said Alexander Valchychen, chief economist at ICU investment bank in the capital, Kiev.

“The cash balance at the government’s treasury account is chronically low.”

Ukraine’s fiscal gap widened to 22.5 billion hryvnia ($2.8 billion) in the first six months of the year from 6.7 billion hryvnia ($0.82 billion) in the same period of 2012, the Finance Ministry said this week.

The budget is based on projected economic growth of 3.4 percent, while the European Bank for Reconstruction and Development forecasts a 0.5 percent contraction as Europe’s debt crisis curbs demand for steel, Ukraine’s main export earner.

Ukraine’s economy shrank 1.1 percent in the first quarter from the same period a year ago, while industrial production fell for the twelfth months in a row in June, sliding 5.7 percent, according to the state statistics data.

‘Isn’t Easy’ 

The budget’s growth assumption will be revised once results are in for the first nine months of the year, Halyna Pakhachuk, head of the Finance Ministry’s debt department, told reporters July 16 in Kiev.

Fulfilling the existing budget “isn’t easy,” she said.

The State Treasury’s account balance dwindled to 3.8 billion hryvnia ($0.47 billion) as of July 1, the lowest level for that month since 2003, according to its website.

Wage arrears jumped 11 percent from the previous month in May to 421.5 million hryvnia ($51.8 million), Trade Union Federation data show.

Residents of Ivano-Frankivsk, a town in western Ukraine, where cash to fix roofs and overhaul apartment elevators hasn’t been received from the government, have taken matters into their own hands.

“Treasury! You owe Ivano-Frankivsk 2.6 million hryvnia ($0.32 million) for hospital repairs,” reads one of several red-and-yellow billboards erected next to streets and signed by the “town inhabitants.”


Spending Reports of unpaid bills are false, the Treasury said July 12 by e-mail.

Allocation of budget funds is being carried out in accordance with the law, the Finance Ministry said July 8 in a statement on its website.

Far from acknowledging spending delays, President Viktor Yanukovych, who faces re-election in 2015, said last month that it’s “desirable” for budget expenditure to be increased, calling for a mid-year review of the budget.

Lawmakers began their summer break last week without fulfilling his wish.

Yanukovych instructed the government today to find resources to purchase ambulances and increase premiums to emergency doctors by Sept. 2.

It should also ensure funding for a Yanukovych social program for children is maintained, according to a statement on the presidential website.

Ukraine has sold $2.3 billion of Eurobonds this year to stave off a third International Monetary Fund bailout in four years, with the government refusing to meet demands by the Washington-based lender to cut energy subsidies that damage state finances.

Reserves Plunge 

The yield on the government’s dollar bond due 2023 has risen to 9.327 percent from 7.599 percent when it was sold in April, data compiled by Bloomberg show.

The cost to insure state debt against non-payment for five years using credit-default swaps has surged to 796 basis points from 627 points at the start of the year, behind only Greece and Cyprus in Europe.

Reserves at the central bank fell to a six-year low of $23.1 billion in June as Ukraine repaid $1.1 billion of Eurobonds.

The slump “serves as a reminder that Ukraine’s fragile external position continues to keep it one step away from a full-blown balance-of-payments crisis,” London-based Capital Economics wrote July 8 in an e-mailed note to clients.

The consequences are starting to be felt in Kiev.

Pavlo Golov, a teacher at the capital’s National University of Theater, Cinema and Television, is still awaiting his vacation pay, which is usually disbursed July 1.

“The accounts department blames the treasury and told me they don’t know when the money will be paid or whether it will come all at once or in chunks,” according to Golov, 28.

“They said I must wait and need to be patient.”

Source: Bloomberg