Monday, September 30, 2013

Ukraine At Tipping Point

KIEV, Ukraine -- The current tug-of-war for Ukraine to join the European Union's Association Agreement or Russia's Eurasian Union is of global importance.

Putin will not release his grip on Ukraine.

The outcome will have lasting impact for Ukraine and the two protagonists, Europe and Eurasia, and for the balance between democratic and autocratic regimes worldwide.

Ukraine's orientation will determine whether Europe is enlarged to include its largest geographic country, or Russia's President Vladimir Putin succeeds in resurrecting a new Soviet-like empire to the concern of all.

Four years ago, Poland and Sweden, motivated by the difficult history with the Soviet Union, unveiled the ambitious Eastern Partnership for Ukraine and five other former Soviet republics.

Ukraine negotiated the Association Agreement and a Deep and Comprehensive Agreement (DCFTA).

They were to be finalized in December 2011, but the 2010 election that brought President Viktor Yanukovych to power is derailing the process.

The countries would benefit from economic trade and further integration, and a visa-free zone permitting people to move freely throughout Europe.

But requirements had to be met.

The president's stalling has disillusioned most EU members.

In retaliation, they withdrew their offer despite its vital geopolitical importance. Poland and Sweden continued pressing for European integration.

So did Canada.

Each undemocratic turn the president took -- abandoning the rule of law, incarcerating opposition leaders, tampering with elections, personal profiteering of politicians and officials -- moved Sweden closer to the disenchantment of the European club.

Only Poland kept working to make the EU enlargement happen.

Enough is enough, even for the most patient friends.

Yanukovych must show movement on the 19 requirements prior to the November 2013 Vilnius Summit if he wants the agreement signed.

The key one is the freedom for opposition leader Yulia Tymoshenko.

In failing to comply, Yanukovych has consistently underestimated the EU resolve to adhere to democratic principles.

He has been wrong in hedging his bets.

A recent European Court of Human Rights ruling stating Tymoshenko's rights had been violated makes it impossible for the EU to sign.

Last week, Lithuanian President Dalia Grybauskaite, the host of the November summit in Vilnius was categorical:

The EU will not sign the deal while the former premier is in jail.

So it's a cliff-hanger:

Either Yanukovych opens the door for Ukraine to Europe or falls back into Russia's unloving embrace.

Already, Putin is showing his true colours by banning candy imports from Ukraine, then souring trade relations further with more trade restrictions and military fly-bys in Ukrainian airspace.

To date, the tactics have backfired.

Even Germany, one of the least supportive of Ukraine's European integration, told Russia to back off.

Politics is fluid, however, and the world's attention may be drawn away.

The U.S.-Russia rapprochement precipitated by the Syrian crisis might prompt Russia to use this as a leverage to get its way with Ukraine.

Canada can play a role here:

Continue to be a friend to Ukraine by ensuring it does not become a prize for Russia in the larger political play.

Putin's belligerent tactics serve to remind all democracies of Russia's dangerous past and unsavoury present.

They call for greater vigilance, be it on partnerships on Syria or in containing its appetite in swallowing up neighbours like Ukraine.

In the matter at hand, it means convincing Yanukovych to meet the most critical EU requirement: Free Tymoshenko.

Prime Minister Stephen Harper's position has been supportive of this position.

Now is the time to again apply all manner of diplomatic pressure to ensure Yanukovych does the right thing.

It would be a historic moment for Canada -- all democracies -- to complete the task of European enlargement initiated by Poland and Sweden to include Ukraine in the European zone.

They need to act now to ensure the agreement is signed.

If it isn't, much of the effort Canada and others have put into liberalizing Ukraine will be lost.

Ukraine and the EU will lose, and Russia wins.

Source: Winnipeg Free Press

Woman In Ukraine Dies Having Sex On Railway Tracks

ZAPORIZHIA, Ukraine -- A Ukrainian couple's inability to rein in their passion for each other ended in tragedy when a woman was killed by a train and her partner had his legs torn off during pre-dawn love-making on a railway track, police say.

Police say the couple was drunk.

The accident took place in the southeastern Ukrainian region of Zaporizhia early on Saturday.

"Returning from our friends', my girlfriend and I could not overcome our passionate nature and wanted to feel a sense of thrill near a railway track," a police statement quoted the 41-year-old man as saying.

A police spokesman separately said on Sunday that the pair was believed to have been drunk.

The woman died on the spot while the man was hospitalised with his legs torn off below the knee.

Police did not release the names of the victims, saying it had opened a criminal probe over the safety violation.

Source: AFP

Sunday, September 29, 2013

Ukraine Angry As Canada Suspends Free-Trade Talks

OTTAWA, Canada -- After three years of talks and five rounds of negotiations, the Canadian government suddenly suspended free trade negotiations with Ukraine – leaving a nearly complete deal in limbo, charges Ukrainian Ambassador Vadym Prystaiko.

Canadian International Trade Minister Ed Fast sent a letter telling Ukraine that talks were off.

Nearly $315 million in trade and services occurs between the two countries every year.

A free trade agreement could benefit Canada’s banks, the intellectual property rights sector and the oil and gas industry.

But suddenly in June, after rounds of meetings in Kiev, Ottawa and Geneva, International Trade Minister Ed Fast fired off a letter to his Ukrainian counterpart saying the talks were essentially over, Prystaiko said.

The letter implied Canada was dissatisfied with Ukraine’s attempt to renegotiate hundreds of tariff reductions at the World Trade Organization and unless changes were made, free trade talks would not proceed, said Prystaiko.

Most of the 371 tariffs in dispute have to do with agriculture.

“We don’t believe this can be done in cold blood, that easily,” Prystaiko said of the suspension of talks.

It’s unfortunate Ukraine is trying to renegotiate hundreds of tariff reductions it committed to at the WTO, said Adam Taylor, a spokesperson for International Trade Minister Ed Fast.

Ukraine joined the WTO in 2008.

“We continue to remain engaged with Ukraine on many fronts, but will not continue with free trade negotiations until the government of Ukraine demonstrates that it will adhere to its existing trade obligations,” he said.

A large part of Prime Minister Stephen Harper’s economic agenda is free trade between nations — particularly in Europe and Asia.

However, talks with the European Union have not gone smoothly.

The rift with Ukraine throws a wrench into Harper’s plan to stimulate job growth through trade.

The Ukrainian government says they are surprised by the Canadian about face.

In 2010, Harper traveled to Kiev, met with President Viktor Yanukovych and said he wanted to see closer ties with Ukraine — as long as human rights were respected.

Ukraine became independent from the Soviet Union in 1991 and like most former Eastern bloc countries, it began to democratize and pivot towards Europe.

However, political scandals have plagued the nation of 46 million.

Yanukovych was elected Ukrainian president in 2004 but the court ruled his election as fraudulent.

He was forced to give up power.

Meanwhile the Orange freedom movement, led in part by Yulia Tymoshenko, was gaining ground.

Tymoshenko became the first female prime minister of Ukraine in 2005.

Then in 2010, she ran for president but lost to Yanukovych.

In 2011, Tymoshenko was jailed for abuse of office charges, which she has called absurd and politically motivated.

This November, the European Union is poised to sign a number of agreements with Ukraine, including a trade agreement, but the EU wants Tymoshenko freed so she can seek medical treatment in Germany.

Before Fast’s letter appeared, Prystaiko said they tried several times to get an answer as to why talks surprisingly shut down in May.

“First they told us, you know, we aren’t suspending, we are sort of postponing because everyone is busy, the summer is coming, let’s do it later. Then we see a letter coming from minister to minister. That is a different story,” Prystaiko said.

Many trading partners, including the United States, Australia and the EU were not impressed with Ukraine’s move at the WTO.

Canada is the only country to act, Prystaiko said.

If Canada wasn’t serious about an agreement, Prystaiko wonders why they bothered to start negotiations in the first place.

Nearly one million Canadians are of Ukrainian background, he said, adding the two countries have a history and should be natural trading partners.

But lately, it has not been easy for Ukrainians to obtain a Canadian travel visa, he said.

More than one in 10 is refused.

The problem is so bad, he said, one government minister couldn’t get a visa for a conference.

In 2005, Ukraine no longer required Canadians carry travel visas.

Ukraine expected Canada to do the same.

“It is a 16-per-cent refusal, with no explanations. What are you trying to achieve? You have one million Ukrainians who want to see their friends and families,” said Prystaiko.

According to Remi Lariviere, a spokesperson for Citizenship and Immigration Canada, last year 9,449 Ukrainian travel visas were approved and 1,722 were denied – that is an 85 per cent approval rate.

The global approval rate was 82 per cent.

Prystaiko said Ukraine is considering bringing back visa requirements for Canadians.

Source: The Star

Ukraine Is Penalized For Fans’ Racist Abuse

ZURICH, Switzerland -- Ukraine has been ordered to play their next home 2014 World Cup qualifying match against Poland behind closed doors due to the racist behaviour of their fans, FIFA said on Friday.

Ukraine's supporters were involved in "several racist and discriminatory incidents" during the 9-0 win over San Marino in a qualifier in Lviv on September 6, added the world governing body.

The FARE (Football Against Racism Europe) observer at the match reported that local fans displayed neo-Nazi banners and made "monkey noises and gestures" as well as Nazi salutes.

Ukraine, who hosts Poland on October 11 before its last qualifier away to San Marino, is second in Group H on 15 points, level with Montenegro and one behind leaders England.

Poland is fourth with 13 points.

Ukraine, whose supporters set off fireworks at the San Marino game, has also been banned from playing any qualifiers for the 2018 World Cup in Russia at the Lviv Arena.

In addition, FIFA's disciplinary committee fined Ukraine Football Federation (FFU) 45,000 Swiss francs ($49,800).

Peru, who is already out of the running for a place at the 2014 finals in Brazil, must play its next home World Cup qualifier against Bolivia on October 15 without any fans.

The sanctions, which also included fining the Peruvian FA (FPF) 20,000 Swiss francs ($22,000), were imposed by FIFA after crowd disturbances during the 2-1 qualifying defeat by Uruguay in Lima on September 6.

FIFA said if such incidents occurred again it would have no option but to impose harsher sanctions against Ukraine and Peru federations which could include "a match forfeit, a points deduction or disqualification from a competition".

Source: SBS

Saturday, September 28, 2013

Ukraine Teeters On The Brink Again

LONDON, England -- Ukraine has muddled its way through several debt crises in the past, but investors and traders are concerned that default may finally be round the corner as the country's finances deteriorate and its relations with Russia worsen.

When it was downgraded to Caa1 from B3 by Moody's on September 20, it gained the dubious honour of joining the Triple C club alongside Cuba, Ecuador, Egypt and Pakistan.

Some observers, however, are playing down the risk of default, saying the country can still find a way to make its debt payments, which amount to more than US$10 billion in hard currency in the coming year.

"Fears of default and devaluation in Ukraine are almost seasonal in nature and usually peak at the end of Q3 or beginning of Q4 and get forgotten as the winter holidays approach," said Peter Attard Montalto and Dmitri Petrov, analysts at Nomura.

The actual risk of default is still only moderate, they said.

Bond investors are not so sure.

The sovereign's 7.95% due 2014 sold off aggressively to hit a yield of 15.87% on Tuesday before recovering a touch to 13.9% on Thursday - an extremely high level for one-year risk.

Ukraine's yield curve is hugely inverted, with the 2014 bond trading on Friday at a Z-spread of plus 1,398bp compared with plus 775bp for its 7.5% 2023 note.

On Thursday, a central bank official said that Ukraine would meet its debt repayment obligations on time, but the 2014 bond's cash price only rose by 1/8 of a point to 96.25.

"The difference this time around seems to be that there is a political element to the problem, particularly the issues with Russia," said a DCM banker who has worked on Ukrainian Eurobond deals in the past.

"There is growing concern that this will all provoke a full-scale trade war with Russia, with damaging consequences for the Ukrainian economy."

Ukraine's foreign reserves stood at US$21.65 billion on August 31 - insufficient to cover three months of imports.

Worryingly for investors, Moscow has been angered by Ukraine's apparent preference for a free trade agreement with the EU - due to be signed in November - over a customs union with Russia.

"There is growing concern that this will all provoke a full-scale trade war with Russia, with damaging consequences for the Ukrainian economy," said Timothy Ash, an emerging markets analyst at Standard Bank.

Russia recently restricted Ukrainian exports by increasing non-tariff barriers for several weeks - a serious move as Russia accounts for around 25% of Ukraine's total exports, Moody's said.

Ukraine is also seeking a loan from the IMF, though it may find the conditions attached hard to swallow - particularly the requirement to cut gas subsidies just ahead of the 2014 general elections.

"Loss of confidence, locals fleeing the currency, a big current account deficit to cover, significant corporate balance sheet exposure to dollar debtit would be more painful for households if the default occurs than if gas subsidies are reduced," said David Hauner, an analyst with Bank of America Merrill Lynch.

"But with an election coming up, I can't see this happening," he said.

Source: Yahoo News

Bringing Reformed Ukraine In From The Chill Of Purgatory

KIEV, Ukraine -- During the next few weeks, the European Union will make a decision that will have crucial implications for the Continent’s future.

It is imperative that they not get it wrong, not only for the sake of Europe, but for American interests as well.

That decision is whether or not to offer an association agreement and free-trade pact to Ukraine, a former republic of the Soviet Union.

A final decision by the EU’s ruling executive body, the European Commission, will depend on whether Ukraine has instituted economic, legal and political reforms consistent with further integration toward Europe.

No one doubts that Ukraine’s performance presents a mixed picture.

Under President Viktor Yanukovych, the country’s progress in these areas has been uneven but generally moving the right direction, as it was under his predecessors prior to 2010.

For example, international observers were critical of irregularities during last year’s parliamentary elections, but the results — including the election to parliament of a controversial nationalist party opposed to Mr. Yanukovych — were seen as reflective of the actual votes cast.

The real issue regarding the association agreement and free-trade pact is something of a surprise.

Mr. Yanukovych came to power with strong support from Vladimir Putin’s Russia and was expected to take Ukraine closer to a pro-Moscow orientation.

That has not happened.

Perhaps partly to placate Russia, Mr. Yanukovych has made it clear that Ukraine will not become part of the NATO alliance.

A few years ago, I spoke in Kiev, Ukraine’s capital, at a conference on this topic.

I think staying out of NATO is the right call, as the large majority of Ukrainians are opposed to membership in any military bloc.

However, Mr. Yanukovych has also ensured continuing cooperation with NATO in peacekeeping missions and in the alliance Partnership for Peace.

More telling, though, is the current government’s clear preference for a pro-Western, and pro-EU economic orientation.

This is critical when it comes to the all-important issue of energy, on which not just Ukraine but the EU have had to dance to Moscow’s tune on natural-gas supplies and pricing, with the threat of cutoffs an ever-present reality.

To his credit, Mr. Yanukovych’s ruling “Party of Regions” has pressed full-speed ahead with developing shale fracking technology, over the objections of the supposedly “anti-Russian” opposition.

Even the economy and energy don’t tell the whole story.

As anyone familiar with Ukrainian attitudes knows, the issue of whether the two EU agreements gets signed this fall is a major historical and geopolitical turning point.

It, in fact, boils down to a choice of civilizations.

Will Ukraine become part of Europe or go back to Russia?

As a country of 46 million people in a vital geostrategic crossroads, Ukraine would greatly bolster Russia’s comeback as a major power if it were reincorporated into a Moscow-led bloc.

That would be bad not just for the EU, but for the United States, too.

Some in the EU seem to understand that.

Recently, Estonian Prime Minister Andrus Ansip and the EU’s high representative on foreign affairs and security policy, Catherine Ashton, jointly voiced their opinions of Ukraine’s great importance to the EU.

“We can’t lose Ukraine,” Ms. Ashton was quoted by the Estonian news service.

Mr. Ansip agreed, and as the leader of a country that itself used to be part of the Soviet Union, that carries some weight.

On the other hand, some European leaders are not so sure.

Elmar Brok, a prominent member of the European Parliament, disagrees, insisting on further progress on legal reforms before committing to the association agreement and free-trade pact.

German Chancellor Angela Merkel is thought to be skeptical, given Ukraine’s size, poverty relative to the EU and ongoing issues with corruption.

In the end, it may boil down to a question of whether the glass is half-empty or half-full.

Does Ukraine’s promise outweigh what no one denies are continuing deficiencies?

Or looked at more dynamically, can further and faster progress be expected if Ukraine is locked into a relationship with the EU?

The answer to that won’t be known for certain unless and until the agreements are signed, and the door is open to Ukraine’s historic choice for Europe.

By the same token, if Europe decides to slam the door shut, there is no uncertainty.

For Ukraine, the only other game in town will be Russia.

Ultimately, the question is whether Europe will do what’s in its own self-interest, and that of the United States.

Let’s hope the answer is yes.

Source: The Washington Times

Friday, September 27, 2013

Ukraine Has One Foot In Europe And The Other In The Economic Abyss

KIEV, Ukraine -- But the economic abyss seems less scary than Putin’s embrace. Ukraine managed to avoid the Kremlin’s influence after the collapse of the Soviet Union about twenty years ago and over the past decade has been torn between the pro-Russian contingent and the European sphere.

President Bill Clinton speaking in Yalta.

Now, the Ukrainian government has made up its mind and decided to go West.

But Russia won’t let them off the hook that easily.

“We have to move towards the European integration,” said Ukrainian president Viktor Yanukovych during the international economic conference in Yalta, Crimea, last weekend, reaffirming the government’s commitment to sign the Association Agreement with the EU in November.

Though Yanukovych asserts that joining with the EU is in the country’s best interest, the government continues its dialogue with Russia.

Russia, which has long kept Ukraine in its orbit, seems to have taken to bullying and pressuring its smaller, impudent neighbor.

The Kremlin has been showing its claws since European integration would make it impossible for Ukraine to enter the Custom Union — the trade organization that Russia has formed with Kazakhstan and Belarus.

Russian officials have been making aggressive remarks and pro-Kremlin media commentators call Ukraine’s move towards the EU financial suicide, predicting the collapse of its economy.

“Total costs of overcoming default could add up to 25, maybe, 30 billion Euro ($41 billion).

Is Europe ready to take on such a financial responsibility?” said Russian presidential adviser, Sergey Glazyev, who came to Yalta to dismiss the benefits of a possible free-trade deal between Ukraine and the EU.

He warned that Russia, if snubbed, will not give Ukraine any perks in the form of discounted gas or custom fees.

Russia has sharply cut off quotas for goods coming from Ukraine, raised the quality control bar on imported goods and created obstacles at customs, causing substantial financial losses to Ukrainian businesses.

The angry message says: if Ukraine wants to have free trade with Europe, there will be no trade with Russia.

Russia has a point, though.

Ukraine’s economy – fragile and in terrible shape – could collapse should Russia decide to sever ties with its neighbor and largest business partner.

But Russia’s aggressive approach makes it obvious that Ukraine is making a good choice.

Becoming an addition to Russia’s Eurasian empire doesn’t give Ukraine much chance for political and economic freedom, while getting closer to the EU would allow Ukraine to look for new markets anywhere in the world, as well as to maintain its independence.

Unfortunately, the economic data seems more convincing than the promise of independence and political and human rights; European economic prosperity may not happen for some time.

Ukraine’s sovereign credit rating is pretty weak: while both Standard & Poor and Fitch gave the country a B rating with a negative outlook, Moody’s Investor Service cut Ukraine’s rating further down to Caa1, citing bad relations with Russia.

At the same time, Moody’s admits in its statement that the prospect of signing the Association Agreement is positive for Ukraine’s institutions, economic and political reforms mid-term.

Ukraine’s economy contracted about 1.3% in the second quarter, and the country’s debt rose to $134.4 billion, according to a statement from Ukraine’s central bank.

But despite the daunting economic climate today, many economists and business experts agree that if Ukraine finds a way to survive through the transition, the economic benefits will be far more substantial than they would be with Russia’s Custom Union.

The question is, how will Ukraine survive if the Kremlin shuts its doors (despite Ukraine’s attempts to continue the dialogue) and the EU promises take time to turn into economic benefits?

Perhaps with the help of friends.

If the international attendance at this year’s Yalta conference is any indication, Ukraine has many of them.

The summit by the Black Sea, organized by Ukrainian billionaire and steel industry tycoon Victor Pinchuk, serves as a playground for European and American politicians, thinkers and economists to discuss the world’s most pressing issues, including the Eastern European region.

This year’s conference featured American power couple Bill and Hillary Clinton, former British prime minister Tony Blair, and a nice cast of American and European politicos, economists, thought-leaders and bankers — like Mario Monti, Dominique Strauss-Kahn and Patrick Cox among others.

Bill Clinton said that he “doesn’t approve of all the pressure that Ukraine has been subject to” by its neighbor, and suggested that as long as there is room for freedom and enterprise, Ukraine has all the chances for prosperity.

He pointed out that the US supported South Korea because it seized the promise of freedom and progress.

His remarks were followed by Tony Blair, the former prime-minister of Great Britain, who said:

“We should stick with you and help you on that journey” Ukraine and Russia have to find some way to cooperate and make decisions together that would work for both countries, but it’s also understood that Ukraine needs to have a plan B in case Russia continues its abusive tactics and shuts the door on Ukrainian businesses.

Finding new markets and attracting new investments could be the way.

If Western friends step in with more than just talk of democracy and transparency, Ukraine might achieve a level of strength that would be helpful in dialogue with a behemoth such as Russia.

Source: Forbes

Thursday, September 26, 2013

EU Steps Up Courtship Of Ukraine To Wield More Influence In East

BRUSSELS, Belgium -- The EU is stepping up its courtship of Ukraine amid an escalating contest with Russia for influence in eastern Europe.

José Manuel Barroso (L) and Herman Van Rompuy

The bloc’s goal is to cement closer ties with Ukraine by concluding a political and economic pact, known as an association agreement, at a summit in November that will feature heads of government from a region of Europe where Brussels and Moscow are butting heads.

The EU’s two most senior officials – José Manuel Barroso, the European Commission president, and Herman Van Rompuy, the European Council president – expressed their “determination in moving forward” with the agreement after meeting Ukraine’s president, Viktor Yanukovich, at the UN General Assembly in New York on Tuesday.

EU member states agreed in a private meeting on Monday to sweeten their offer so that Ukraine could enjoy many of the pact’s benefits, including trade liberalisation, as soon as it is signed.

Under the original plan, Ukraine would have had to wait for all 28 EU parliaments – as well its own – to endorse the text, a process that diplomats say could drag on for a year or longer.

Addressing the UN General Assembly on Wednesday, Mr Yanukovich signalled his approval, describing Ukraine’s “Euro-integration aspirations” as “a decisive vector for the country’s development”.

Mr Yanukovich is also now entertaining a compromise, according to EU officials, that could result in the release of opposition leader Yulia Tymoshenko to seek medical treatment in Germany, but not a formal pardon.

Her imprisonment on controversial corruption charges two years ago has thwarted closer ties with the west.

In spite of lingering concerns about the Tymoshenko case and the Ukrainian legal system, the EU has intensified its outreach to the country – as well as Georgia and Moldova – in response to increasingly aggressive moves by Russia to keep them in its own orbit.

Moscow stunned European diplomats this month when it prevailed on Armenia to abruptly drop a long-negotiated association agreement to instead sign up to a fledgling Eurasian customs union that Russia is developing with Kazakhstan and Belarus as a counterweight to the EU.

The Kremlin has been particularly harsh towards Ukraine, the largest country in the region.

An adviser to President Vladimir Putin of Russia warned Kiev this weekend that signing the EU pact would damage trade relations with Moscow, its biggest energy supplier, and could ultimately force a debt default that would require a €35 billion ($47 billion) bailout.

“If Ukraine signs this association agreement [with the EU], and after this faces a worsening trade balance, then the question arises: who will pay for Ukraine’s imminent default?” Sergey Glazyev, the Putin adviser, asked.

During his annual state-of-the-union address, Mr Barroso insisted that the EU would not tolerate such tactics.

“We cannot accept any attempt to limit these countries’ own sovereign choices,” Mr Barroso said.

“We cannot turn our back on them.”

Stefan Füle, the EU’s enlargement commissioner, has argued that the EU offer does not represent “a choice between Moscow and Brussels,” saying, “we want our partners to have good relations and co-operation with Russia”.

But the commission has also been sharpening its sales pitch.

On Wednesday it proposed opening the EU market to Moldovan wines, just days after Russia prohibited them, citing health concerns.

“In some aspects, the Russian pressure has helped us,” an EU official said.

In spite of the determination to win over Ukraine, particularly among eastern member states such as Poland and Lithuania that are still wary of Russian domination, others continue to harbour concerns about a formerly communist country with a history of corruption and selective justice.

The EU set 11 benchmarks for reform last December that Ukraine was to satisfy in order to seal the accession agreement.

Mr Füle recently praised Kiev’s “unprecedented” progress.

But in an editorial published in a Ukrainian paper last week, David Lidington, the UK’s Europe minister, took a more sober view, noting that the UK had still not decided how it would vote on the pact.

“Our decision will be based on an objective assessment of whether the changes introduced provide sufficient evidence of a genuine commitment to reform,” Mr Lidington wrote.

“We very much hope that we will be able to launch a new phase of EU-Ukraine partnership at Vilnius. But we need to be convinced that it is really going to work.”

Mr Barroso and Mr Van Rompuy also reminded Mr Yanukovich at the UN that the association agreement still hinges on Ms Tymoshenko’s release as they urged him to “make tangible progress” on reform.

Source: ft

Ukraine Joins NATO’s Counter-Piracy Operation Ocean Shield

BRUSSELS, Belgium -- A Ukrainian navy frigate is steaming towards the Horn of Africa to join NATO’s counter-piracy mission Operation Ocean Shield after NATO Allies gave their final approval to Ukraine’s participation in the mission.

Ukrainian frigate, “Hetman Sahaydachnyy”

Ukraine will be the first partner nation to join the operation.

The North Atlantic Council gave its go ahead late Tuesday (24 September 2013) to Ukraine’s participation in Ocean Shield.

The Ukrainian Parliament gave its approval to participate earlier this month.

The Ukrainian frigate, “Hetman Sahaydachnyy” set sail from the port of Sevastopol earlier this week and is expected to join the NATO mission off the Somali coast early next month.

The ship will join the other two ships in the mission, the HNOMS Fridtjof Nansen and the USS De Wert.

The ships maintain a high level of vigilance off the Horn of Africa, despite the fact that the last successful pirate attack happened more than a year ago.

Source: NATO

Wednesday, September 25, 2013

Yanukovych Sure On EU Pact As Ukraine Braces For Russia Backlash

KIEV, Ukraine -- Ukrainian President Viktor Yanukovych said he’s confident his country will sign an accord to cement ties with the European Union this year as Russia threatens retaliation for snubbing its own customs union.

Viktor Yanukovych

Ukraine plans to sign an Association Agreement and free-trade pact with the 28-member bloc at a summit in the Lithuanian capital of Vilnius on Nov. 29, Yanukovych said in an interview yesterday in New York.

Russia has disrupted the passage of Ukrainian goods across its border in recent weeks and has tied requests from its neighbor for cheaper natural gas imports to membership in the customs bloc it created with Belarus and Kazakhstan.

“There’s a mutual understanding that there will be no obstacles on the way to signing the agreement,” Yanukovych said after meeting European Union President Herman Van Rompuy and European Commission President Jose Barroso.

“The main problem in Ukraine’s relations with Russia has always been Russia’s use of energy to pressure Ukraine.”

The EU deal would pull Ukraine further away from Russia’s orbit 22 years after it declared independence following the Soviet Union’s demise, directing it toward the path that brought the three Baltic nations, also former Soviet republics, into the world’s largest trading bloc in 2004.

“We are hearing these threats and even some humiliation by the media outlets,” Yanukovych said.

“That doesn’t help our relations and that doesn’t paint Russia in a good way.”

‘No Sense’ 

While Ukraine is “convinced” it will sign the EU agreement in November, it wants to find a way to develop a relationship with the Russia-led customs union, Yanukovych said, adding that it “makes no sense” for the bloc’s members to reply to Ukraine’s EU agreement with a trade war.

“Our relations with the EU will benefit the customs union,” Yanukovych said.

“Ukraine is a bridge between Russia and the EU and it’s very important to make sure the bridge is strong and reliable.

Dialog between Ukraine, Russia and the EU on trade issues is possible in the near future.”

While EU enlargement head Stefan Fule said the bloc backs Ukraine amid Russian pressure, to seal the pact the country must address examples of selective justice such as ex-Premier Yulia Tymoshenko’s jail term.

A European Parliament commission led by ex-Polish President Aleksander Kwasniewski and Pat Cox, the former head of the legislature, is working on a solution to the issue of Tymoshenko’s seven-year sentence for abuse of office while serving as prime minister, according to Yanukovych.

‘Very Complicated’ 

There are no means of freeing her or allowing her to receive treatment in Germany under existing Ukrainian law and she’s awaiting decisions in other cases against her, Yanukovych said.

“The Tymoshenko issue is very complicated,” he said.

“It would be less complicated if she’d attend court meetings, but she’s refusing to do so.”

Separately, the Ukrainian leader said he’s optimistic the government can reach an agreement this year with the International Monetary Fund for a $14.3 billion bailout as the economy struggles to recover from a recession.

While the Washington-based lender has sought an increase in household gas tariffs to reduce budget subsidies, Yanukovych said that would be “unacceptable” and he’s seeking different terms.

“We’ve been in talks with the IMF all these four years and we expect the IMF will finally be willing to make an agreement,” he said.

“We’ve fulfilled all of the conditions, except for one, which is an increase in gas prices for households.

There is no room for us to hike the price.

On when the agreement may be signed exactly -- this is a question to the IMF.

We’re willing to replace that condition with another and are willing to discuss it.”

Exxon, Shell 

Ukraine is seeking alternative sources of fuel to bypass what it considers an “unfair” price charged by OAO Gazprom (GAZP), Russia’s natural-gas export monopoly, Yanukovych said.

The Ukrainian leader will meet executives from Exxon Mobil Corp. (XOM) and Royal Dutch Shell Plc (RDSA) during his U.S. visit and plans to sign agreements that will allow the companies to start producing natural gas in Ukraine, he said.

Exxon is seeking to explore off Ukraine’s Black Sea shore, while Shell in January signed a shale-gas production sharing agreement with the government.

Ukraine wants to raise its gas production to 30 billion cubic meters a year by 2017 from 21 billion cubic meters currently, which would be enough to cover its domestic consumption of the fuel, Yanukovych said.

Source: Bloomberg

Ukraine's Troubles Hit Bonds

KIEV, Ukraine -- Ukraine's government bonds tumbled to fresh lows Tuesday, narrowing the cash-poor country's options for financing its debt and its spending, and pushing it closer to a bailout from the International Monetary Fund.

Ukraine's wide budget deficit and other problems have hurt its bonds. Here, its central-bank building in Kiev.

The ex-Soviet republic has a litany of problems: a wide budget deficit, a wider trade deficit, dwindling reserves of foreign currency and debt coming due that needs to be repaid with it.

And recent trading in Ukrainian bonds suggests that it will be prohibitively expensive for the government to raise fresh funds from capital markets anytime soon.

On Tuesday, a 10-year dollar-denominated government bond hit a yield of about 10.5%, according to Tradeweb, up from 9.64% on Monday.

That bond yielded around 7.5% when it was issued in April.

Yields rise when prices fall.

Yields on Ukrainian debt have moved even higher on short-term bonds—a warning signal that investors are deeply concerned.

"Ukraine is one of the emerging-market countries in [the] worst shape," said Viktor Szabo, a fund manager at Aberdeen Asset Management in London.

"The price action is only catching up now with the deterioration of the country's fundamentals."

Mr. Szabo, who doesn't hold Ukrainian government bonds, added: "Ukraine will find it very difficult to access foreign debt markets now."

Providing a backdrop to the country's plight is a soured relationship with Russia.

Ukraine is a major transit point for Russian natural gas headed to Europe, and Ukraine also needs gas to power its industry.

Ukraine has long pressed Russia for cheaper gas supplies, saying high prices cripple its economy.

Russia wants Ukraine to enter a customs union in exchange for a discount.

Ukraine wants to ink a trade deal with the European Union instead.

Time appears short, and investors fear that Ukraine will face a cash crunch in coming months.

Ukraine's international reserves are steadily sliding, to $21.7 billion as of Sept. 1.

That is enough to cover only a few months of imports.

Meanwhile, prices for the country's main metals and chemicals exports have slid while the cost of key Russian gas imports has risen.

Through the end of 2014, Ukraine's government must pay about $10.8 billion to service foreign-currency-denominated debt, including interest payments, according to Moody's Investors Service.

But as of July, Ukraine had only $1.8 billion in cash in its coffers, according to Moody's, which late Friday downgraded Ukraine to Caa1—deep in "junk" territory.

The government is running a budget deficit of about 5% of economic output.

"The red flags have been flying for some time in Ukraine," said Tim Ash, head of emerging-markets strategy at Standard Bank.

Still, many investors have been lured by the fat yields the bonds pay in exchange for the risk.

Ukraine is a huge producer of crops, especially wheat, and it has strengthened economic ties with the EU.

Franklin Templeton allocated 3.46% of its $70 billion Global Bond fund to Ukraine, as of June 30, according to a fund document.

A Franklin Templeton spokeswoman declined to comment.

Ukraine's next move isn't clear.

The government has made ad-hoc borrowings, including a $750 million loan from Russia's Sberbank last week.

Daniel Vernazza, an emerging-markets economist at UniCredit, reckons that Ukraine will need aid by the middle of 2014 at the latest.

He says Ukraine is most likely to sign the trade deal with the EU, then ask the IMF for help—though a Russia deal also is possible, he says.

Mr. Vernazza says Ukraine has tried to keep both options open—"but it is evident these choices are mutually exclusive."

Ukraine's last IMF lending program was frozen in 2011 after the government refused to increase household gas prices, which it heavily subsidizes.

In an interview broadcast Monday with Russian state news channel Rossia 24, Ukrainian Prime Minister Mykola Azarov said he hoped the IMF would change its conditions for new lending—adding that he "can't place the burden of unjustified gas prices" on the public.

"The world is large. If we don't reach an agreement with the IMF, we'll take [loans] elsewhere," Mr. Azarov said, without elaborating.

In a briefing earlier this month, an IMF spokesman said the fund has had "periodic discussions" with Ukraine at a "technical level," but that no in-depth discussions had taken place with policy makers.

Source: The Wall Street Journal

Tuesday, September 24, 2013

Russia Sends New Warning To Ukraine Over EU Deals

MOSCOW, Russia -- Russia issued a new warning to Ukraine on Monday that Moscow could respond with protectionist barriers if its former Soviet ally joins a free trade pact with the European Union.

Russian First Deputy Prime Minister Igor Shuvalov.

Russia is worried it will be flooded by European goods if Ukraine removes import duties with the EU under agreements likely to be signed in November, but also fears Kiev is making a pivotal shift away from Moscow.

"This is Ukraine's choice and we have to respect it, but at the same time money has to be taken into account," First Deputy Prime Minister Igor Shuvalov told the Reuters Russia Investment Summit.

"If they have a stronger economy, it will be a plus, but only if it is not achieved by making us weaker."

He denied Moscow was putting pressure on Kiev or drawing up plans to retaliate.

But he also said Russia would have to act "if there is evidence of dumping or the use of hidden forms (of protectionism) such as support for exports, support for agricultural producers".

Shuvalov's remarks made clear Moscow had not been appeased by Ukrainian Prime Minister Mykola Azarov, who tried on Saturday to soothe Russian fears over planned agreements with the EU on political association and free trade.

Azarov says Ukraine, whose economy is dominated by exports such as steel, chemicals and agricultural produce, would benefit almost immediately from lower duties on Ukrainian exports.

Russian officials, led by President Vladimir Putin, say Ukraine has more to gain from joining a Customs Union grouping Russia, Kazakhstan and Belarus.

Moscow is also holding out against Ukraine's pleas for cheaper Russian gas to help its hard-pressed economy.

Moscow's efforts to persuade Kiev not to move closer to the EU form part of a broader drive by Russia to deter former Soviet allies from edging out of its orbit and moving their economy and future trade towards western Europe.

But Ukraine, a vast country with a population of 45 million and psychologically tied closely to Russia by history and shared culture, is the sorest point of contention. 

Shuvalov has played an important role in this drive in his government role overseeing relations with the former Soviet republics in the Commonwealth of Independent States (CIS).

He said the Russia-led customs union would not suffer if Ukraine did not join, but its accession would create a trading bloc with a population of about 200 million. 

Reiterating that Kiev could not join the customs union if it signed the free trade pact, because the two were legally incompatible, he said:

"It's either one or the other."

The 28-nation EU, which includes eastern European countries that were for decades under Soviet control, has made clear it will not give in to what it called Russian attempts to limit the "sovereign choices" of Ukraine and other countries.

Kiev still has one potential obstacle to overcome before any deals are signed with the EU - it has not bowed to pressure to release former prime minister Yulia Tymoshenko, a political rival of President Viktor Yanukovich who was jailed for abuse of office and is seen by the EU as a victim of "selective justice."

But EU governments agreed in Brussels on Monday that, if they sign a political association agreement with Ukraine, they will speed up procedures for its implementation.

Such agreements can take years to be ratified by member states but could now take immediate effect once Ukraine ratifies it, EU officials said.

Ukraine's economy relies heavily on exports of steel, coal, fuel and petroleum products, chemicals and grain.

More than 60 percent of its exports go to other former Soviet republics, with Russia, Belarus and Kazakhstan the most important.

Source: Yahoo News

Why China Just Bought One-Twentieth Of Ukraine

KIEV, Ukraine -- China has inked a deal to farm three million hectares, or about 11, 583 square miles of Ukrainian land over the span of half a century—which means the eastern European country will give up about 5% of its total land, or 9% of its arable farmland to feed China’s burgeoning population.

China likes the look of this red star, in this field in Ukraine.

Under the deal between China’s Xinjiang Production and Construction Corps, or XPCC, and KSG Agro, an Ukrainian agricultural company, crops and pigs raised in the eastern region of Dnipropetrovsk will be sold at preferential rates to two Chinese state-owned grain firms.

The project will launch with 100,000 hectares and eventually expand to three million.

The deal comes after Ukraine lifted a law barring foreigners from buying Ukrainian land last year.

As part of the deal, China’s Export-Import bank has given Ukraine a $3 billion loan for agricultural development.

In exchange for its produce, Ukraine will receive seeds, equipment, a fertilizer plant (Ukraine imports about $1 billion worth of fertilizer every year), and a plant to produce a crop protection agent.

XPCC also says it will help build a highway in Ukraine’s Autonomous Republic of Crimea as well as bridge across the Strait of Kerch, a transport and industrial center for the country.

Critics say the move exemplifies a slew of global land deals that smack of colonialism and resource extraction by richer countries in poorer ones.

Today, such deals are increasingly motivated by governments seeking food security for their citizens, rather than profit-mongering by private companies.

Saudi Arabia, South Korea, the United Arab Emirates, Britain, the US and other countries have been buying up foreign farmland, especially after the global food price spike of 2007 to 2008 that spurred global riots.

According to a report last year by the nonprofit Grain, the main target of these purchases has been Africa but also Eastern Europe, Latin America and Asia.

Between 0.7% and 1.75% of the world’s farmland is being transferred from locals to foreign investors, another study in January found.

Given its dwindling available farmland and expanding population, China has been among the most aggressive.

The country eats about one-fifth of the world’s food supplies, but is home to just 9% of the world’s farmland, thanks to rapid industrialization and urbanization of the formerly agrarian nation.

Its deal with Ukraine is its biggest farmland investment yet.

Since 2007, China has bought farmland in South America, Southeast Asia and Africa.

Some analysts fear the Ukraine-China pair up paves the way for an eventual Chinese takeover of all of Ukraine’s farmable land.

Similar fears about local food security led the government of the Philippines to block a China investment deal; Mozambique has resisted the arrival of Chinese farmers who would have displaced locals.

Others argue the project gives Ukraine the opportunity to boost food exports.

Since the breakup of the Soviet Union, the country has been slow to fully privatize and develop its agricultural industry.

Source: Quartz

Monday, September 23, 2013

Ukrainian Police Raid Ukrsotsbank Central Office in Kiev

KIEV, Ukraine -- Ukrainian economic crime police raided the central office of the country’s sixth-largest lender by assets, PAT Ukrsotsbank, in Kiev following a ruling by a regional court.

Ukrsotsbank a subsidiary of UniCredit Bank Austria AG.

The office closed because of the today’s search, Anastasia Pestrikova, head of external relations at Ukrsotsbank, said by phone, without elaborating.

The lender is a subsidiary of UniCredit Bank Austria AG.

The search followed a ruling by the Leninskyi district court in Donetsk, Interfax-Ukraine newswire reported today, citing a person familiar with matter.

A spokesman for the Internal Affairs Ministry in Donetsk Region did not answer his phone when called by Bloomberg News.

The Leninskyi district court in Donetsk also did not answer calls.

Graziano Cameli was named Ukrsotsbank’s new chief executive officer in July after the former CEO, Borys Tymonkin, resigned for a senior management post at Vetek Group.

UniCredit Bank Austria wrote down Ukrsotsbank’s goodwill by 165 million euros ($223 million) in March.

Ukrsotsbank reported an increase in its first half net income to 6.49 million hryvnia ($0.8 million) from 4.47 million hryvnia a year earlier, according to local accounting standards, the bank said on its website.

Source: Bloomberg

'Millionaires' Ghost Town In Kiev, Ukraine Looks Like A Deserted Movie Set

KIEV, Ukraine -- Photos of brightly-colored buildings on cobblestone streets in Kiev, Ukraine resemble a deserted movie set more than an actual neighborhood.

Vozdvyzhenka - 'Millionaires' Ghost Town

But in actuality this ten-year-old development located near the heart of the capital city are luxury homes for the rich.

But this 42-acre community in a mock-19th century style is a modern-day ghost town because, according to The Guardian, due to the economic downfall in 2008, it remains nearly unoccupied.

Now, the "millionaire's ghost town" is quiet except for occasional tourists and wedding photo shoots.

50 of 250 units are supposedly owned, but the developer explained that many belong to investors who live elsewhere.

While Vozdvyzhenka was at one time an industrious part of town, these apartments are a hard sell to buyers even though prices have been slashed by half.

Reports that the construction has cracks in the walls, water in the basement, and heating problems don't help.

Source: Huff Post Home

Sunday, September 22, 2013

Russia Seeks To Derail Ukraine’s Trade Deal With EU, Deploying Taunts And Insults

YALTA, Ukraine -- When Hillary Rodham Clinton gave a shout-out to Ukrainian chocolate, it was clear the battle had been joined.

Russia’s tactics in a struggle that pits East vs. West are “totally stupid and counterproductive,” said Viktor Pinchuk.

Russia wants Ukraine firmly in its camp, but time is running out.

To gain the predominant say over its neighbor’s destiny, Moscow has been furiously trying to derail a pending trade agreement between Ukraine and the European Union.

Russian President Vladimir Putin’s government has been deploying insults, dire warnings and customs delays in its efforts to sway the decision.

And, for a while, it refused to import chocolates from Ukraine’s premier confectionery company after Russia’s usually pliant health inspectors suddenly discovered heretofore undetected sanitary shortcomings in the candy boxes.

Russia’s tactics in a struggle that pits East vs. West are “totally stupid and counterproductive,” said Viktor Pinchuk, one of Ukraine’s wealthiest men and the host of an international conference here that ended Saturday, after Clinton and a parade of American and European leaders urged Ukraine to finalize the deal with the EU.

Putin wants Ukraine to join the customs union of Russia, Belarus and Kazakhstan instead, but his strategy has been all vinegar and no honey.

The Ukrainian prime minister, Mykola Azarov, called Russia’s demands an attempt at “humiliation.”

And yet, as much as Putin seems to be pushing Ukraine into Europe’s embrace, ambivalence here runs deep.

Azarov and Ukrainian President Viktor Yanukovych have said they intend to sign with the EU in November, but they have a way of hedging every statement.

It’s a momentous choice.

Ukraine has the chance to opt for a road that in theory would extend European values of transparency and the rule of law far to the east.

Or it can join Russia in a financial and cultural zone that is increasingly defining itself as separate from the West and not answerable to Western norms.

As a nation of 46 million, Ukraine would be a significant addition to Putin’s Eurasian Union.

If Ukraine is to sign what is called an association agreement with the EU, dismantling most trade barriers, it will have to pursue far-reaching legal reforms and renounce the sort of “selective justice” that has landed former prime minister Yulia Tymoshenko and other political opponents of the current government in prison.

Yanukovych said Friday that he wants to release her, as Europe demands, but just can’t seem to find the legal means to do so.

His opponents charge that he’s also reluctant to tackle the country’s endemic corruption.

“Total corruption has eaten the country today,” said Vitali Klitschko, a boxing champion who heads the UDAR opposition party.

Signing the association agreement is a vital step toward rooting it out, he said.

If Yanukovych fails to meet the EU’s terms and the agreement falls through, Klitschko asked the president to his face, “Will you have the guts to resign?”

Russia’s abrasive tactics 

There’s another factor.

Ukraine’s trade volumes with Russia and with the EU are about the same, even without the chocolate, which means there are powerful interests here in favor of Moscow, in sectors that might be hurt if the country is opened up to European competitors.

Joining Russia could mean instant relief on the price of natural gas, much of which is imported from Russia.

Siding with the EU could have long-term benefits, but, Azarov said, the immediate effect would be negative, as Ukraine struggles to implement reforms and deal with Russian trade sanctions.

“It isn’t all roses,” he said.

“There are thorns, as well.”

But the Russians seem to be even spikier.

Sergei Glazyev, who is Putin’s assistant in charge of enlisting Ukraine, showed up here Saturday and threatened Ukraine with even more sanitary-inspection problems if it joins Europe, as well as new trade barriers and no hopes for an easing of gas prices.

He said the hit to Ukraine’s economy from the loss of the Russian market would be in the billions of dollars.

He questioned whether the EU, which is dealing with its own less-than-robust economy, is prepared to take on the huge burden that he said Ukraine would inevitably become.

For good measure, he freely insulted a fellow panelist and questioners from the audience, and cracked a joke about Ukrainian chocolate.

His pugnacious manner was either intended to sow doubts within the EU about whether this is a fight worth pursuing, or just emotional acting out.

“It demonstrates weakness,” Lithuanian President Dalia Grybauskaite said of Russia’s tactics.

“No one has the right to bully others,” said the Polish foreign minister, Radoslaw Sikorski.

As for chocolate, Clinton called it “excellent” and noted that it “can be exported to anywhere in the world with the proper effort.”

Hopes and promises Europeans worry that Yanukovych will bet on them ultimately being flexible on releasing Tymoshenko and on other changes to the legal system, so eager are they presumed to be to usher Ukraine away from Russia.

Not so, they insisted.

“There’s no way the European Union can lower the bar when we’re talking about values and principles,” said Stefan Füle, the EU commissioner for enlargement and European neighborhood policy.

“The risk of miscalculating,” Sikorski said, “is just too big for you to take.”

“The rule of law matters to your economy, to your society, to your sense of self-worth,” said Tony Blair, the former British prime minister.

On Wednesday, the Ukrainian parliament formally signed off on the agreement, after passing a series of laws.

That bipartisanship in this politically riven country was made possible by Russia’s punitive approach to persuasion.

Now the issue, from the EU’s point of view, will be whether Ukraine has a plausible plan for actually implementing those laws.

Poland’s former president, Aleksander Kwasniewski, said Ukrainians shouldn’t be afraid of siding with Europe, citing the benefits that came to his country after it did so.

The agreement could lead to eventual EU membership, he said.

Plus, he added, Poles learned the hard way that standing up to Russia is the best way to get Moscow’s respect.

And, Sikorski solemnly said, if Ukraine comes on board, “I undertake to eat more Ukrainian chocolate.”

Source: The Washington Post

Sikorski: Ukraine A Step Away From EU Deal

YALTA, Ukraine -- Speaking at the YES – Yalta European Strategy conference, Poland’s Foreign Minister Radoslaw Sikorski said that Ukraine is very close to meeting all the conditions set by Brussels in order to sign an association agreement between the EU and Ukraine.

From left: Polish FM Radosław Sikorski, German MEP and head of the EP's Foreign Affairs Committee, Elmar Brok, Ukraine FM Leonid Kozhara at the YES conference in Ukraine, 21.09.2013

“Ukraine is on the final lap, and it must double its efforts and finish off the job in order to convince everyone in the EU that it wants to undertake the conditions set out in the Association Agreement and to abide by European values,” Sikorski told journalists after a meeting with his Ukrainian counterpart Leonid Kozhara.

“I get the impression that the Ukrainian authorities have made a strategic decision, but I also know that not all EU member states are convinced,” added Poland’s foreign minister.

While the Association Agreement would be a political boon for the EU and its Eastern Partnership initiative – which gives political support to seven post-Soviet states – Eurocrats still want Ukraine to make legislative changes to its justice and election procedures before signing the Agreement.

Ukrainian foreign minister Leonid Kozhara claimed that such changes may be made in a matter of days, telling the press that “we have practically finished the job,” and “we are sure that the technical aspects will be finalised by the end of the month.”

Shadow of Tymoshenko 

Meanwhile, an unflattering report by European Parliament envoys – former Polish president Aleksander Kwasniewski and former EP president Pat Cox – could block the Agreement’s signing in Vilnius in November, head of the Foreign Affairs Committee at the European Parliament, Elmar Brok told journalists.

Speaking in Yalta, Brok said that “from the outset we have said that before signing the Association Agreement, Ukraine must fulfil all the conditions – one of these is the resolution of the selective means in which the law has been imposed on Yulia Tymoshenko.”

“If Messrs Cox and Kwasniewski cannot produce a positive report to the European Parliament on 15 October, then we will have a problem,” Brok stated.

Former Ukrainian prime minister Yulia Tymoshenko was sentenced to seven years in prison in October 2011 after she was accused of abuse of power when concluding an energy deal with Russia in 2009, which allegedly costs the Ukrainian state millions of dollars.

The EU believes that Tymoshenko was put behind bars for political reasons, however, and is demanding her release.

Source: Polskie Radio

Saturday, September 21, 2013

Released Prisoner Challenges Ukraine President Over Tymoshenko Imprisonment

YALTA, Ukraine -- In this part of the world, political leaders often find themselves landing in jail when they fall out of favor.

Ukrainian President Viktor Yanukovych

Such a situation led to a testy exchange Friday between the president of Ukraine and a political opponent who was released from prison two months ago.

The point of contention was the continued incarceration of Yulia Tymoshenko, the former prime minister and bitter electoral foe of President Viktor Yanukovych, and it resulted in a sarcastic back-and-forth in front of hundreds of rapt political and business leaders from dozens of countries.

Her trial and imprisonment has attracted worldwide attention and sharp criticism from the United States and the European Union over what they call “selective justice.” 

This matters to Ukraine, which wants to sign a cooperation agreement with the E.U. despite escalating pressure against the move from Russian President Vladimir Putin, who has been trying to intimidate Yanukovych.

But European leaders say Tymoshenko must be released as part of a series of reforms.

Yanukovych says the situation is complicated — she was convicted of abuse of office for signing an expensive gas deal with Putin’s Russia in 2009.

But at the Livadia Palace, where World War II allies Joseph Stalin, Winston Churchill and Franklin D. Roosevelt met in March 1945 to carve up postwar Europe, Yuriy Lutsenko, who was the interior minister in Tymoshenko’s government, pointed out that the president could easily join Ukraine to modern-day Europe with the stroke of a pen.

Yanukovych pardoned Lutsenko in July.

He had been serving a four-year sentence, also for abuse of office, and now, the former prisoner said, Yanukovych could do the same for Tymoshenko.

“I’m really thankful that this experiment on me was stopped,” a thin and blue-suited Lutsenko said during a question period at an economic forum, sounding not very thankful at all.

“I call on you, the president who is not afraid of Putin — don’t be afraid of Tymoshenko, either. Just take a pen and sign a decree.”

Don’t flatter yourself, the burly Yanukovych replied.

“You’re not even in her weight class,” he said.

“Don’t try to compare yourself.”

Then he barked at Lutsenko to stand up so he could see him past a small dais.

Lutsenko, in the second row of the audience, rose.

“I’m glad to see you here,” Yanu­kovych told him, sounding not a bit glad.

“There is no person more interested in solving this case, but there are obstacles,” he said.

“The answer is compromise.”

He did not spell out what kind of compromise.

The ornate palace’s White Room was full of officials from the E.U., which hopes to sign the agreement with Ukraine in November.

Ukrainian politicians and analysts have been speculating that Tymoshenko, who suffers from a back ailment, could be released any day to help seal the pact.

“It’s not easy,” Yanukovych said.

The problem, he suggested, was in working out some sort of “legal framework” that would allow him to free her.

As for Tymoshenko’s weight class, he did not explain how that would figure into his decision.

Source: Washington Post

EU Presses Ukraine Leader Over Tymoshenko, He Stalls

YALTA, Ukraine -- Senior European Union officials pressed Ukrainian leader Viktor Yanukovich on Friday to release jailed opponent Yulia Tymoshenko before a landmark summit, but he said he had not taken a firm decision on her case.

Ukraine's former prime minister Yulia Tymoshenko

Yanukovich, speaking at a gathering of European leaders and officials in Crimea, said his ex-Soviet republic was committed to signing key agreements with the EU at a November summit, marking Ukraine's pivotal shift towards integration with Europe.

But, replying to questions from Ukrainian opposition leaders over whether he would release former prime minister Tymoshenko, he said only that he was trying to find a way of approaching this "difficult question".

Tymoshenko, Yanukovich's most formidable political rival, was jailed for abuse of office in 2011 after a trial which the EU has said smacked of selective justice. 

European envoys have been pressing him to pardon her so she can go to Germany to get treatment for back trouble which has kept her confined in hospital under prison guard.

But he said: "At the moment, we have not yet said either 'Yes' or 'No' (to her being released)", adding there was still time to work out a compromise.

Lithuanian President Dalia Grybauskaite, whose country holds the rotating EU presidency, said Ukraine would have to meet three criteria, including freeing Tymoshenko, for deals on association and free trade to be agreed at the summit in Vilnius, Lithuania.

"Without these, there will be no signing. There must be no illusions that just a little bit can be done or something be done only in a first reading in parliament," she told journalists.

"The request from the European Union on Tymoshenko's case is still on the table and, without a solution, I do not see a possibility for the signature," she said.

Her strong words were backed up by an EU group, which included Swedish Foreign Minister Carl Bildt and met Yanukovich separately.

In a statement, they said they had underlined the importance of Ukraine meeting its obligations, including over Tymoshenko, stressing "time is getting short".

If Tymoshenko was released and became politically active again, she could threaten prospects of Yanukovich's election for a second term in 2015.

Answering questions from her political allies during a panel discussion, Yanukovich said:

"We are trying, and are seeking even today, to find a way of approaching this very difficult question relating to Tymoshenko."

But he said no firm decision had been reached. 


Asked if he would sign a pardon, Yanukovich appeared to suggest Tymoshenko would first have to acknowledge her guilt.

"Nobody has a bigger interest in solving this issue than I. But there are obstacles. An answer has to be given to ... the courts. Only the court can give an answer or (there can be) a voluntary decision by Tymoshenko.

The answer lies in finding a compromise with the participation of Tymoshenko," he said.

The agreements on political association and free trade which Ukraine, to the dismay of its former Soviet master Russia, is hoping to sign with the EU will require the backing and subsequent ratification of all 28 member states.

Yanukovich has come under strong pressure from Moscow to give up its drive towards integration with mainstream Europe and instead join a Russian-led Customs Union with promises of cheaper gas and softer duties on goods.

Yanukovich won expressions of support from EU officials for withstanding this pressure and sticking to his course of Euro-integration.

Source: Yahoo News

Friday, September 20, 2013

Ukraine Makes Significant Progress In Meeting EU Criteria - Lithuanian Ambassador

KIEV, Ukraine -- The Lithuanian Ambassador to Ukraine Petras Vaitiekūnas is convinced that the EU-Ukraine Association Agreement (AA) will be signed at the Eastern Partnership Summit in November.

Ambassador Petras Vaitiekūnas

He based his opinion on the current progress of Ukraine in the area of European integration including the unanimous approval of the draft of the Association Agreement between the EU and Ukraine by the Cabinet of Ministers of Ukraine on September 18.

"Ukraine has made great progress, and every day it is making significant steps to meet the criteria. My personal opinion is that the agreement will be signed in November in Vilnius," stated Lithuanian Ambassador Petras Vaitiekūnas in his interview with Interfax-Ukraine.

In addition, the diplomatic official talked about Lithuania's experience of European integration including lobbying of economic interests, intellectual property, as well as issues of cooperation in the humanitarian and cultural areas.

Believing it would be useful for Ukraine he offered to continue sharing Lithuania's Eurointegration experience.

"Ukraine has made great progress on integration and there are a few steps left for Ukraine to make," said Ambassador Vaitiekūnas on September 16 during a press conference, as reported by Ukrainian News.

He welcomed the Ukrainian government and the opposition uniting their efforts on the issues of European integration and reminded that the decision to sign the agreement would be made by each Member State separately, which is where Ukraine, in his opinion, should intensify its lobbying efforts.

Having no doubts that the EU-Ukraine AA will be signed in November, Ambassador Vaitiekunas stressed, however, that the laws required to sign it should be informative and qualitative.

Notably, just on September 5, 2013, the Ukrainian parliament adopted several new laws providing for the Eastern European country to come closer to meeting the requirements, which were set by the Council of the EU in December 2012, and are necessary for signing the AA.

The three key areas in which the EU expected "determined action and tangible progress" on Ukraine's part included fair elections, reforms implementation and elimination of selective justice.

Suffice it to say on August 30, 2013, President of Ukraine Viktor Yanukovych reconfirmed that Ukraine would fulfill the necessary conditions for signing the Association Agreement with the EU.

Source: Herald Online

Ukrainians Are Freeloaders, Says Russian

KIEV, Ukraine -- A diplomatic scandal began brewing on Thursday after a Russian official described Ukraine as “dependent” and a “freeloader” for its push to sign free trade and political association agreements with the European Union.

Russian President Vladimir Putin warned that should Kiev sign the agreements, Moscow will block its imports from Ukraine in order to protect its territory from cheaper and more quality products that may flood the market after the agreements come in force. 

Ukraine’s Foreign Ministry summoned a Russian diplomat on Thursday to express disappointment with recent remarks by Ilya Rubtsov, the head of the CIS department at the Russian Foreign Ministry.

Rubtsov said Ukraine’s push towards the agreement with the EU and only partial acceptance of the Moscow-led Customs Union shows the country has been seeking to benefit from both without making any commitments.

"It's a kind of dependency and a freeloader mode," Rubtsov said, Unian reported.

“You have to understand that the process of integration is a process of compromise. If you want to get something, you have to give something in return.”

Ukraine’s Foreign Ministry, in a statement, said that the remark was “incompetent” and expressed concerns that the comment reflected an increasingly general negative mood in the Russian media.

"The Foreign Ministry is disappointed with incompetent comments by Russian officials on the state and prospects of relations between Ukraine and Russia,” the ministry said in the statement.

The Russian diplomat sought to distance Rubtsov’s remark with the position of the Russian foreign ministry.

The diplomat said that "a statement made by an ordinary employee at the Foreign Ministry does not have an official weight," according to the statement from the Ukrainian foreign ministry.

The diplomat said Rutsov’s remark was not in line with “diplomatic language.” Ukraine now expects that Russia’s Foreign Ministry will officially react to the scandal.

"We expect that development of peer relations and mutually beneficial cooperation between [Ukraine and the Customs Union] that would meet the spirit of the strategic partnership between our two countries," the ministry said.

"Ukraine does not oppose cooperation between its European policy and relations with the Eurasian community," the ministry said.

Ukraine has been seeking to sign the political association and free trade agreements with the EU at a summit in Vilnius in November.

Russian President Vladimir Putin warned that should Kiev sign the agreements, Moscow will block its imports from Ukraine in order to protect its territory from cheaper and more quality products that may flood the market after the agreements come in force.

Russia has been seeking to step up efforts of trying to disrupt the agreements and the planned appointment of a Russian hardliner may play a role.

Vladislav Surkov, a Russian official who is believed to have designed Russia’s anti-Western foreign policy course and contributed to reducing democracy, will soon advise Putin on relations with Ukraine, a Russian newspaper recently reported. 

Surkov, who has a notorious image in Russia for launching a crackdown on opposition parties and reducing freedom of speech, has overseen a pro-Putin youth movement that had been frequently involved in provocations.

President Viktor Yanukovych said earlier this month that Ukraine should continue its pro-European course and sign the agreements.

The Ukrainian government on Wednesday formally gave its approval for landmark political and trade agreements to be signed with the EU despite Russia’s mounting pressure to avert the deals.

Prime Minister Mykola Azarov said the agreements will be “life-changing” for Ukraine, providing “for consistent progress towards the European quality of life." 

Source: Ukrainian Journal

Thursday, September 19, 2013

Ukraine Approves EU Deal Despite Russian Objections

KIEV, Ukraine -- Ukrainian government ministers have approved a draft agreement with the EU, which includes a free trade pact.

Yulia Tymoshenko's trial was widely seen as politically motivated.

If formally signed in November, it would be the EU's furthest-reaching treaty with a country not currently negotiating membership.

EU ministers have said the deal is dependant on Kiev introducing extensive reforms, and are urging the release of opposition leader Yulia Tymoshenko.

The move also takes place against strong objections from Russia.

Prime Minister Mykola Azarov described the deal as a decision of historical significance - Ukraine's roadmap to a strong economy and high standards of living. 

"We all want clean air and water, safe food, good education for our children, up-to-date medical services, reliable legal representation.

"All these are not abstract terms, but norms and rules that are already in place in the EU," Mr Azarov told ministers.

'Eurasian Union' 

Russia, which ruled Ukraine for centuries until 1991, has said if the association agreement is signed its markets could be flooded with less-expensive European goods, and warned it could take retaliatory action.

Russia is pushing Ukraine to join a Kremlin-led customs union with Belarus and Kazakhstan.

Russian President Vladimir Putin hopes to establish a "Eurasian Union" - a trade bloc similar to the EU, but without the commitments to democratic values and open competition which are fundamental to EU membership.

Last week, the EU's commissioner for enlargement, Stefan Fuele, issued a warning to Moscow, saying it was "unacceptable" to use threats against ex-Soviet states.

Mr Fuele's words came after Russia banned imports of Moldovan wine and spirits, citing quality concerns.

The European Commission - the EU's executive - is hoping to clinch association agreements with Moldova and Armenia in November.

Ukraine's strategic importance for Russia historically far outweighs that of Armenia or Moldova, and Ukraine's heavy reliance on Russian gas has given Moscow considerable leverage.

Russia's gas monopoly Gazprom has previously cut supplies to Ukraine in the winter, complaining of overdue bills.

Source: BBC News

Lviv, Ukraine: A Cultural City Guide

LVIV, Ukraine -- In the far west of Ukraine, just 40 miles from the Polish border, lies Lviv, a grand old dame of a city worthy of its Unesco World Heritage status.

Statue of Neptune in Rynok Square.

Not only is it Ukraine’s most cultural and elegant city, it’s also its most tourist friendly, where prices are considerably lower than in the capital, Kiev, yet standards of hospitality are surpassed.

Capital of the historic region of Galicia and founded in 1256 by King Danylo Halytski, Lviv has seen much turbulent history and been ruled by Poland, Sweden, the Austro-Hungarian Empire, Nazi Germany and the Soviet Union.

Miraculously, the city itself has come through remarkably unscathed.

Not so its citizens: in 1939, one in three of its inhabitants were Jewish; almost none survived.

Though Livivians of today are known for both their fervent nationalism and for their churchgoing, their city has an easy-going, almost frivolous air, filled with university students, embellished by its frothy confection of Renaissance, Baroque, Belle Epoque and Art Nouveau buildings and scented with aromas from its hundreds of Viennese style coffee houses.

We only had to step out from our hotel, the Opera, and stroll with the crowds along Lviv’s central spine, Svobody (Liberty) Avenue, to find out how relaxed the place is.

We began our exploration at the lavish Opera House and then wended our way to exquisite Rynok Square, centrepiece of the historic old town, where every entrancing building deserves close inspection (Lviv’s doors, balconies and stone carved façades are particularly absorbing).

On the way, we dipped into some of the dozens of churches and cathedrals, each a feast for the eye: the Greek Catholic churches of the Transfiguration (violet and blue, decorated with traditional embroidery) and of St Andrew (a riot of Baroque gilded carving); the Armenian Cathedral (austere and contemplative, founded in 1370); Latin Cathedral (soaring, with marvellous stained glass); and the Mannerist Boim Chapel, topped by an unusual depiction of The Sorrowful Christ, sitting moodily beneath his cross.

In Rynok Square, we entered Korniakt Palace (No 6, now a museum), whose Italian Courtyard is an almost impossibly romantic slice of pure Italian Renaissance, worthy of Romeo and Juliet. No 4, known as The Black House, also draws the eye, as does the wonderful old Pharmacy, still operating but also part of the Pharmacy Museum, on the corner of the square and Drukarksa St.

Off the square to the southeast lies Rus’ka St, heart of the former Jewish Quarter.

Round the corner, at 54 Staroyevreyska St are the faint vestiges (part of the northern wall) of the Golden Rose synagogue, a ghostly reminder of the tragedy and violence that took place in this district.

Nearby we came across Halytska Market, manned by sturdy farmers’ wives in headscarves.

Others stood on the pavement outside, offering plastic cups full of fraises des bois or perhaps home made yogurt, walnuts, herbs or a pair of kittens.

It made us long to explore the countryside around.

Instead we contented ourselves with a stroll to the Lychakivs’ke cemetery, reminiscent of Père Lachaise in Paris for its elaborate stone-carved monuments, its vast size and enigmatic air.

And then it was time for coffee and pastries - again.

Source: Travel

Wednesday, September 18, 2013

Ukraine To Push For EU Agreement Signing

KIEV, Ukraine -- Ukraine plans a push on Wednesday towards signing a landmark agreement with the European Union by scheduling a debate in the government and sending a senior official to Brussels.

Prime Minister Mykola Azarov

The agreement on political association and free trade is supposed to be approved by the government before it can be signed in November.

“Tomorrow the government will debate and approve the agreement,” Prime Minister Mykola Azarov said.

“At least I, as the prime minister, will propose to approve it.”

At the same time, Andriy Kliuyev, the secretary of the National Security and Defense Council, a top security body under President Viktor Yanukovych, will travel to Brussels for key meetings over the agreements.

Kliuyev is supposed to meet Martin Schultz, the president of European Parliament, Pawel Kowal, MP and the head of the committee on Ukraine ties, and Hannes Swoboda, and MP and the head of the Progressive Alliance of Socialists and Democrats, according to a report by his press service.

This is the second visit by Kliuyev to Brussels in less than a month, underscoring the country’s foreign policy priorities.

“We have to go through quite a difficult path of cooperation, but we are optimistic about the process,” Azarov said.

“For us this is a historic event of huge importance.”

Ukraine was a step closer towards signing the agreement with the EU after Parliament voted on September 5 to approve the first set of required bills.

The ruling Regions Party and opposition groups joined forces in overwhelmingly supporting the bills, some in the first reading, with some bills still requiring approval from the Constitutional Court.

The bills were earlier designated by the European Union as important for Ukraine to sign political association and free trade agreements at a summit in Vilnius November 28-29.

The bills approved include legislation that stipulates milder regulations in prisons allowing inmates more frequent family visits, the freedom to use mobile phones and cash, and to wear civilian clothes.

Other bills seek to reform customs tariffs and stricter implementation of court decisions.

Meanwhile, at least one bill has failed to gain traction with lawmakers.

The bill, aimed at eliminating discrimination against homosexuals, has failed to win backing from the ruling Regions Party.

Lawmakers, citing poor support for the bill among the people, were supposed to send a team to Brussels to try to renegotiate it.

The developments come amid threats from Moscow that Russia will restrict imports of good and products from Ukraine if Kiev signs the agreements with Brussels. 

Russian President Vladimir Putin has been persuading Ukraine to instead join the Customs Union, a trade bloc of Russia, Belarus and Kazakhstan.

Leonid Kozhara, Ukraine’s foreign minister, said the signing of the agreements will strengthen security in the region by improving cooperation between Ukraine, Russia and the EU.

“Once Ukraine and the EU sign the agreement this will be an important factor for security in the Eastern European region,” Kozhara said.

“In the future, of course, it will promote harmonization of relations in the triangle of the EU-Ukraine-Russia.”

Source: Ukrainian Journal

Tuesday, September 17, 2013

A Puncher's Chance

KIEV, Ukraine -- WBC title-holder Vitali Klitschko prepares to become the next president of Ukraine.

Vitali Klitschko seeks to rid his country of corruption and "reset the system."

A year is a long time to rest. Vitali Klitschko last fought on Sept. 8, 2012, and his hands have been silent since.

He has no lack of challengers.

Plenty of them are lining up for the chance to lose to Klitschko or to his brother, Wladimir, who together have ruled the heavyweight class for a decade.

Vitali will hold on to his WBC title until he faces a mandatory defense of it next spring, or until retirement.

The reason for his inactivity is simple and fundamental.

The champ has no time for boxing.

He is 42 years old. As his temples gray, the man has found a more mature pursuit that might lead him to another title.

Even though he has yet to announce his candidacy for the 2015 elections, Klitschko is favored to become the next president of his native Ukraine.

Since Klitschko's last fight, UDAR, the reformist political party he founded, has won 42 seats in Ukraine's 450-seat national parliament.

Ukrainian politics is a corrupt arena rife with physical peril, so at least Klitschko is trained for this next bout, no less rough.

Difference is, in the political ring, his foes are formidable.

And, as we discovered while watching his political ambitions sharpen into focus over the past year, losing the vote might be the least of his worries.

In the Austrian Alps, it's easy to forget what country you come from, realizing how pleasant it would be to call this place home instead.

It is July 2012. Klitschko has set up camp here in preparation for his Sept. 8 fight against Germany's Manuel Charr.

He drives along a newly paved road, past homes of contented moderation, beneath jagged mountains that encourage introspection.

"Life is perfect here," says Klitschko, his 6'7½" frame engulfing the steering wheel of his Mercedes SUV.

"But we are not from here. We are from Ukraine."

The collective Klitschko speaks of might refer to himself and Wladimir, 37, who between them hold six major heavyweight boxing titles.

"We" could also encompass all Ukrainians, heirs to a Soviet history that has prevented their country from developing into the type of stable European democracy Klitschko is now seeing through his windshield.

In its 22 years of independent governance, Ukraine has endured violence, theft and pocket-lining so brazen it would cause a Washington lobbyist to plead for restraint.

"Being a politician in Ukraine is really something," Klitschko says, stopping at a security gate that reaches across the mountain road.

"He steals. He kills people. He makes business for himself and not for the country. I'm the heavyweight champion, and I make good money. But it's nothing compared to a Ukrainian politician."

It is his Charr match that brings Vitali Klitschko to the village of Going am Wilden Kaiser; many experts speculate the fight will be his last.

The Klitschko brothers have so controlled their weight class, winning 24 title defenses over the past seven years, 18 by knockout, that heavyweight boxing has spiraled into an identity crisis.

Vitali now considers himself a politician foremost, decreasingly so an athlete, with plans to import into his country the egalitarian values that now come naturally to a place like Austria.

Klitschko parks the car and steps onto the gravel driveway in front of a two-story wooden ski lodge.

Down the mountain is the Stanglwirt, a five-star resort where the Klitschkos have trained for nearly all of their title defenses, believing the oxygen-deprived mountain air beneficial to their preparations.

In Austria and neighboring Germany, the Stanglwirt has become known as the Klitschko base of operations, and fans understand where to find them.

Therefore, after an afternoon's open training session at the resort, Vitali migrates to this mountain house, secluded by woods.

The location hasn't provided total sanctuary.

Over the years, several women have made the hike up the mountain pass, bypassing the security gate, to make a particular offering to Wladimir. Vitali, who has three children with his wife of 17 years, Natalia, never answers the door.

Wladimir is the younger brother, the nicer one.

Vitali is less inclined to appeals.

This bearing is well-suited to Ukraine's politics.

Debates in the Ukrainian parliament, the Rada, sometimes erupt into physical brawls -- a legislative chamber turned into a rumble for cash and property.

Klitschko was tear-gassed during a demonstration outside a government building the previous summer, his right hand sliced open by a broken bottle.

These are among the prices of politics in his country.

"Being a good guy is not a profession," he says as he settles down to a dinner of grilled chicken and sweet potatoes.

The day's sparring, against a trio of younger fighters, replays on the pull-down screen that covers one window of the house.

Klitschko is the bigger man on the video, as is customary in the ring and in life.

Fighting against him is like fighting your older brother.

You lunge and stretch and swing away, but his height and reach advantage render you helpless.

In 47 career fights, Klitschko has never been knocked down.

Still, his longtime German trainer, Fritz Sdunek, reminds him that Charr, whom Vitali will fight in Moscow, is undefeated at 21–0.

Klitschko listens, nods, but other numbers rouse his thoughts.

Ukraine has the largest swath of rich soil in Europe, yet its people suffered a devastating forced famine intended to suppress nationalism.

It has a sizable, educated workforce, but jobs and prosperity are scarce.

Its statehood has a rich history dating to the ninth century, but Ukraine struggles to define its sovereignty.

It measures 233,000 square miles, which makes it the largest country located entirely within Europe, yet it often feels Third World in its stagnation.

Its positive attributes would predict economic growth were it not for the singular fact of corruption, a legacy of Soviet bureaucracy that has robbed Ukraine of its financial capital.

Klitschko has long known the circumstances.

In November 2004, he was training in Los Angeles for his first WBC title defense, against Danny Williams in Las Vegas, while the most significant event in Ukrainian politics was unfolding.

The Orange Revolution was a fight between halves, the western half of the country leaning toward the rule of law, the eastern half favoring continued allegiance to Moscow's system of patronage.

During his election campaign, the western candidate, Viktor Yushchenko, was allegedly poisoned with dioxins by his eastern political foes, his face grotesquely disfigured.

When the Party of Regions, which supported the east's candidate, Viktor Yanukovych, attempted to steal the national election, Yushchenko supporters occupied Kiev's main street; nearly 1 million people camped out for a month in the winter cold demanding a new vote.

The country plummeted into social, political and economic crisis as talk of an imminent armed conflict circulated through the nation's largest city.

Klitschko experienced a political awakening.

"I wanted to cancel the fight and fly to Ukraine," he says.

During training, he woke up at 4 a.m., seeking updates from friends who were active in the Orange Revolution.

Danny Williams had knocked out Mike Tyson in his previous fight, and Sdunek was concerned that his distracted charge would meet a similar result against the British challenger.

He urged Klitschko to focus, telling him, "It's better if the world champion uses the boxing ring as a stage for democracy."

The next month, Klitschko fought with an orange sash fastened to his black trunks and stopped Williams in the eighth.

It would be Klitschko's last fight for almost four years.

The western candidate, Yushchenko, won a revote in January, and many Ukrainians were hopeful that this signaled positive change.

"I was very motivated," Vitali says.

"I was ready to invest my energy and time."

Slowly, however, political realities undermined the Orange Revolution, the idealistic talk of protests gone with the warmth of spring.

"The millionaires wanted to trade places with the billionaires," Klitschko says.

While he became disillusioned with politics, his boxing career was about to take a similar adverse turn.

Just nine days before his scheduled title defense against Hasim Rahman in April 2005, Klitschko tangled legs with a sparring partner, tearing his right ACL.

Klitschko had to cancel the fight.

The ACL injury, an old shoulder tear, a bad ankle -- the many ailments of an extended boxing career compounded to push Klitschko to retire from boxing altogether a few months later.

But he wasn't done fighting.

Disappointed by the failure of the Orange Revolution yet committed to its principles, Klitschko entered politics himself.

"I told Vitali, 'It's too much work,' " Sdunek says.

" 'You'll have problems with bandits.' But he's a fanatic."

Klitschko ran for mayor of Kiev in 2006.

He finished second, with 24 percent of the vote.

He hired former New York mayor Rudy Giuliani as a political consultant and ran again in 2008.

This time, Klitschko finished third, with 18 percent of the vote, exposing a weak political chin, unprepared for the challenges of this new arena.

All he says now is, "A bad loser tries to find excuses."

Klitschko's defeats did yield a consolation prize: He was granted a seat on the Kiev City Council.

The council is a den of kickbacks, inside deals and politicians who get rich by embracing the entrepreneurial spirit.

"On the city council, I saw from the inside how dirty the game is," Klitschko says.

He has been involved in several physical altercations in council sessions.

Although he has yet to cock his powerful right hand to settle a legislative dispute, the fact that some colleagues are unafraid to provoke him speaks to the value of the property that is often up for grabs.

"It's really a fight," he says.

"And it's very important to know the rules."

Prefight weigh-ins are usually good for a laugh, and the Sept. 7 weigh-in preceding the bout between Klitschko and Charr at Moscow's Olimpiyskiy stadium provides its own humor.

The emcee speaks heavily accented English, accentuated by his attempt at ringside grandeur.

When an undercard fighter steps onto the scale, the scale breaks.

This is what happens when you are European and the heavyweight champ and you have beaten all the best Americans.

You fight in Moscow because Vegas gets a better gate with acrobats or magic shows or Floyd Mayweather.

Still, Charr is treating this as if it's still the big time as the two fighters converge for the obligatory stare-down.

When they have ogled each other long enough for neither fighter to be called a coward, a promoter steps between them.

But Charr refuses to back away. An uproar ensues.

Charr wants to be taken seriously.

But he achieves the opposite result, laughter rising from the crowd.

And when the challenger leaves the stage, Klitschko breaks into a grin.

These fights all end the same. Klitschko returned to boxing in October 2008 and regained his WBC title by beating Nigeria's Samuel Peter in Berlin.

The Klitschkos eventually became the first brothers to hold all of boxing's heavyweight titles.

This goal achieved, Vitali could turn his attention to reshaping his political career.

On the Kiev City Council, Klitschko had participated in coalitions, a necessity in a country of 44.5 million with 200 political parties; voting blocs are the only way to pass legislation.

But Vitali had a change of heart.

"I realized I don't have to support anybody," he says.

"We had to build our own vision." For this, he turned west.

The brothers had begun their professional careers in the gyms of Germany, where the fight game was more sophisticated than in scrappy Ukraine.

They learned to speak German fluently.

They came to identify with the culture of the country, appreciating the higher standard of living.

In turn, Germans -- who awarded Vitali the nation's highest civilian award, the Federal Cross of Merit, in 2010 for "strengthening German-Ukrainian relations" -- consider the Klitschkos one of them.

In spring 2009, Vitali capitalized on this familiarity to aid his political designs.

He arranged a conference with the Christian Democratic Union (CDU), the party of German Chancellor Angela Merkel.

"I needed to see how a real political party is structured," Klitschko says.

For a week, he and his delegates met with CDU staff at its headquarters in Berlin.

"I was afraid," he says.

"They have a huge structure. Very complex. It was a dark woods."

Unlike highly centralized Ukrainian political parties, the CDU was a web of party councils, regional representatives and advisory groups.

It fostered equality by canvassing members, an approach that appealed to Klitschko's sporting sense of fair play.

"Vitali Klitschko's primary goal is to introduce Ukraine to the European community of values," says Hermann Groehe, secretary general of the CDU.

"He shows great determination."

That determination has been constantly tested: In February 2010, the spirit of the Orange Revolution met its symbolic end.

The eastern candidate in the 2004 election, Viktor Yanukovych, won the Ukrainian presidency.

Two months later, Klitschko and a dozen of his advisers met in Kiev, intent on turning their growing political bloc into a legitimate party.

They wanted greater focus for their mission, a clear brand for the voting public.

They needed a name.

As the meeting wore on, Klitschko punched a fist into his palm.

"We need a name that's like a punch in the head," he said, "something that will wake people up."

Victoria Podgornaya, a political scientist and former consultant to Klitschko asked: "Are we Ukrainian? Do we support democracy? Do we agree that we need to make alliances to achieve our goals? And are we not for reform? We should name the party 'UDAR.' "

The name stuck, and not just because it was a catchy acronym.

The word Udar is Ukrainian and Russian for punch.

In the ring at the Olimpiyskiy, Manuel Charr quickly learns what the word means.

Fighters will tell you that Klitschko is difficult to defeat because he is awkward.

His punches arrive in unpredictable fashion, from odd angles and at random frequency, generated from his ungainliness.

Opponents find this cadence confusing, and while they try to figure out a way to combat it, Klitschko wears them down, ultimately sapping their will to compete.

In the fourth round in Moscow, Klitschko's left hand connects and cuts Charr over the right eye.

The cut bleeds badly, and the doctor stops the fight.

The fans, unfulfilled, whistle their displeasure.

The arena feels dark and empty and far from the meaningful things in the world.

The Klitschkos have fought everyone there is to fight.

They can't be blamed for their dominance.

Vitali climbs down from the ring and walks toward the dressing rooms.

He might be leaving the boxing arena. But there's hardly much left to leave. 

Klitschko returns to Kiev two days after the Charr fight.

It is election season in Ukraine, and Klitschko convenes a news conference, entering the room looking nothing like the fighter he was in Moscow.

He wears a crisp suit. He carries a slim brief.

He has not even a mark on his face.

Klitschko's manner is bright, hopeful even, as he takes a seat on the dais, observes the gathered media and says, "We want politics to work for the people, and not just for the wealthy. Our task is to reset the system."

More than 60 percent of Ukrainians believe their country has developed in the wrong direction since the fall of the Soviet Union.

This is what surveys will tell Klitschko in advance of the parliamentary election on Oct. 28.

As its name implies, UDAR says it plans to deliver a shock to the Ukrainian system: radically transforming an ingrained social and political culture of graft and intimidation into one based on the rule of law.

Although those closest to Klitschko question undertaking such an overwhelming task when he could easily go into business after boxing, he said simply, to his wife, "This is what I have decided."

He feels driven to this path.

In 2007 the mayor of Kiev, Leonid Chernovetsky, manipulated the law to obtain nearly 7,500 acres of state land valued at $10 billion.

Chernovetsky and his supporters canvassed members of the Kiev City Council, attempting to gather the votes needed to transfer the land to shell companies under their control.

A fellow councilman approached Klitschko, offering him $1 million for every vote he could deliver.

Although Klitschko declined the offer ("I told him, 
'F -- off,' " he says), other city council members were more pliant.

"They feel these numbers can totally change their lives," Klitschko says.

The motion passed.

Chernovetsky fled to Tel Aviv and eventually resigned; Kiev is now run by an administrator appointed by the president.

This is the nature of power in Ukraine.

"A government representative makes $30,000 a year," Klitschko says, "but he drives a Bentley to work. Everybody knows he's corrupt. But nobody says anything."

His message is one that any politician might offer a discontented voter.

Klitschko wants to create an independent board to fire corrupt government officials.

He wants to reduce bureaucracy, establish a public veto, open the state's books.

Why should Ukrainians believe him when similar Orange Revolution pledges resulted in nothing but backsliding?

"In a primitive sense, voters see Klitschko as a strong man who looks like a leader," says Andreas Umland, a political science professor at the National University of Kiev-Mohyla Academy in Kiev.

"The hope is that since he is already rich, and that he hasn't stolen it like the other politicians here, he is different from the others."

Some political observers in Kiev contend that Klitschko will find the implementation of his plans unmanageable, or that he lacks the political brainpower to play such a complicated game.

Others fear an even crueler outcome.

"Politics is really without rules," Wladimir says.

"In boxing, you're gonna get a bloody nose or a bruise under the eye.

In politics, you can get a bullet in the head or dioxins in the food."

Vitali was was frightened.

It was his first day of basic training in the Soviet military.

The year was 1989, and the momentous political changes that were taking place across the Eastern bloc would soon reach Kiev itself.

Klitschko's father, Vladimir, a colonel in the air force, had arranged for him to be assigned to a notoriously difficult base in Ukraine.

Vladimir wanted his son, already an accomplished kickboxer at 17, to prove just how tough he was.

Klitschko's basic training group was made up largely of conscripts from Azerbaijan, a former Soviet republic.

When the lights went out on that first night, the Azeris roamed the bunkhouse, swinging belts, using brass buckles, asserting their control over the platoon.

Klitschko was in the ethnic minority, and he had no choice but to stand up for himself, scared as he was.

At roll call the next day, the drill sergeant let the group in on a little secret.

The towering Ukrainian in their midst -- the one who had doled out his share of black eyes and bruises the night before -- was the kickboxing champion of the Soviet Union.

The Azeris suddenly changed their attitude toward Klitschko.

"I was 'Bro' from then on," he says.

"You have to show your skills. You have to show that you are ready to defend yourself."

He had learned an early political lesson, that to win over his enemies, he first had to confront and defeat them.

The October election results only serve to affirm that lesson.

In a vote that will be tainted by fraud, Klitschko's UDAR finishes third, winning 14 percent of the vote for seats in parliament (the ruling party won 30 percent) -- giving it a strong foothold in a nation divided by so many factions and bolstering Vitali's presidential aspirations.

For now, Klitschko won't confirm whether he is running; he ducks and weaves the question like the prizefighter he is.

His boxing career is no more clear.

Age and his body have begun to betray him.

In March 2013, Klitschko visited Dr. Richard Steadman, a knee specialist based in Vail, Colo., who operated on Klitschko's knee in 2002, for an undisclosed procedure.

Because of a right hand injury he suffered during training, Klitschko will not fight for the rest of the year, at least; the WBC has given him until March 2014 to defend his title.

So what is the future for Klitschko?

Back in the summer of 2012, months before the result of the Manuel Charr fight and the October elections were known, he provided a hint of the answer in the peaceful Alps, in a house quiet after dinner.

Klitschko's Italian-German physiotherapist was giving the champ's right elbow a rubdown, working strained tendons.

As he lay on his back along a massage table, Klitschko spoke, his voice soft and vulnerable.

"The Ukrainian people are upset with the game that the government has played with them," he said.

"The people want to know why we don't have a better future."

He stared at the ceiling for a while, the physiotherapist working his elbow.

"Tell me," Klitschko said, finding the words at last for the thought that preoccupies him, "how many mayors are there in the cities of the world? And how many presidents of countries are there?"

He paused. He couldn't help but smile. "And how many heavyweight champions are there?"

Source: ESPN