a free service
Richly endowed in natural resources, Ukraine has been fought over and subjugated for centuries; its 20th-century struggle for liberty is not yet complete. A
short-lived independence from Russia (1917-1920) was followed by brutal Soviet rule that engineered two artificial famines (1921-22 and 1932-33) in which over
8 million died, and World War II, in which German and Soviet armies were responsible for some 7 million more deaths. Although independence was attained in
1991 with the dissolution of the USSR, true freedom remains elusive as many of the former Soviet elite remain entrenched, stalling efforts at economic reform,
privatisation, and civic liberties.
Update No: 255
The Ukrainian regime is orienting itself back to Russia as its prime ally and protector. 2002 has been declared the Year of Ukraine in Russia and the Year of
Russia in Ukraine. The eleven million ethnic Russians in the east and South (Crimea) naturally support this policy. It is not so popular with the Ukrainians
proper, but is now deemed as inevitable. The US has other preoccupations within which the western states are of little import. Central Asia and the Caucusus,
indeed even the Baltic states, matter far more in the anti-terrorist alliance and the new orientation of NATO accordingly. The EU is hardly going to be
considering accession by Ukraine, whatever might be said in polite conversation.
Ukraine was the original Rus after all. It broke from Russia in the Middle Ages, but was rejoined with it by a Cossack rebellion in 1654. Its Cossack
traditions, its language and its Orthodox religion all keep it close to Russia. Many Ukrainians, after decades in the Soviet Union are native Russian
speakers, such as President Leonid Kuchma himself.
Kuchma has been in deep trouble, which never somehow quite topples him. He is adept at shuffling his ministries, especially his premiers, aware as an
ex-premier himself, that they are all coveting his job. Last year he manoeuvred his premier, Viktor Yushchenko, into a position where he was forced out by
parliament. His successor, Anatoly Kinakh, is for the moment a less threatening figure.
For Yushchenko had a big success to his credit, recovery in the economy, GDP grew by 5.8% in 2000 and 7.5% in 2001. As an ex-central banker, he knew that he
needed to deal with inflation at the same time as the boom. He bought it down to low double figures after years of near hyper-inflation.
All this was making him popular; so clearly he had to go. He now heads an opposition party and tops opinion polls, although only on about 20%. Clearly there
is all to play for.
Kinakh is a powerful operator, an engineer-businessman with his own party in parliament, the party of Industrialists and Entrepreneurs. The title reveals his
power base accurately - the nomenklatura in charge of state industry and the new tycoons. He gets on much better with parliament, full of people like him,
than Yushchenko. But as a big tycoon he is less popular with the people than Yushchenko.
The big event looming immediately is the occurrence of parliamentary elections later this year. Madelaine Albright, former US Secretary of State, was in Kiev
recently and, although now out of power, she is still, deemed a weighty figure in Central Europe from which she hails herself, from what is now the Czech
Republic. Everybody in that part of the world knows that she was the hawk in the Clinton Administration insistent on the full prosecution of the Kosovo War
in 1999 and they all like a winner. She was adamant on the significance of the forthcoming elections to restoring Ukraine's good name internationally. This
was a diplomatic way of referring to several well-known facts in the republic.
Kuchma patently rigged the last one in October 1999, just as he clearly had a hand in the fatal disappearance of an investigative journalist at the same
time. A call for his impeachment has been made and the regime is skating on thin ice. It just would need 300 out of 450 deputies in parliament to set in train
a referendum process on ratification of constitutional amendment that would recover power from president to parliament. Over 200 have already endorsed the
idea. Then an impeachment of the president could commence.
The elections could see a parliament returned that would have a two-thirds majority ready to go ahead with the referendum and impeachment. The one thing
saving Kuchma here is that he is not the only one with skeletons in the cupboard. Far from it, especially in any likely parliament, which might prefer a
quiet life until the next presidential election two years afterwards.
New national airline to be set up in Ukraine by mid-July
A national Ukrainian airline will be set up by 15th July, Ukrainian Transport Minister Valeriy Pustovoytenko, told a news conference in Kiev on 28 February,
Interfax News Agency has reported.
The minister gave high marks to the cooperation between the Transport Ministry and shareholders of Ukraine International Airlines and Aerosvit, who backed
the idea of creating the National Airline of Ukraine. Ukrainian Airlines, which is likely to become one of the participants in the new company, is currently
in the process of recovery, Pustovoytenko said.
At the end of 2001, the shareholders of Ukraine International Airlines and Aerosvit backed the idea of a merger to form a unified national airline in Ukraine.
As of September 2001, before the Swissair bankruptcy was announced, 61 per cent of the authorized capital of Ukraine International Airlines was owned by the
state, 23 per cent by Austrian Airlines and Switzerland's Swissair, 10 per cent by the European Bank for Reconstruction and Development, and 6 per cent by
the international leasing company, Debis Air Finance.
According to information possessed by Aerosvit, 62 per cent of the company belongs to Ukrainian owners (22 per cent to the Ukrainian State Property Fund and
40 per cent to Ukraine's Aerotur). The other 38 per cent belong to Gilward Investments B.V. of the Netherlands.
Ukraine's first mass-produced AN-140 ready for dispatch
The first AN-140 mass-produced plane manufactured by the Kharkiv aircraft plant will be transferred to the customer, the Ukrtranslizing company, on 4th March,
a spokesman for the Antonov aircraft research and technical corporation told Interfax-Military News Agency.
A contract signed by the Kharkiv plant and Ukrzaliznytsa, founder of Ukrtranslizing, envisages the construction of 10 AN-140 planes, the spokesman said. The
cost of one aircraft amounts to about 45m hryvnas (US$9m)...
The AN-140 passenger aircraft is intended for transportation of 46-52 passengers with a range of 2,100-2,650km. It is powered by two TVZ-11VMA engines
developing 2,500hp each.
Ukraine, Russia agree to produce new passenger aircraft
The Antonov design bureau and the aircraft plant in Ulan-Ude in the [Russian] Republic of Buryatia signed a joint agreement on cooperation in the production
of the An-148 mid-haul aircraft at the Russian embassy in Ukraine on 26th February, UNIAN News Agency has reported.
The Antonov design bureau's chief designer, Petro Balabuyev, said after the ceremony that a framework document had been signed. The next stage will be the
creation of a working group, which will draw up a plan of specific actions in the second half of March. He added that the creators of the new regional
passenger aircraft intended to construct a version of the An-148 for testing by next year and certify it in 2004.
Balabuyev said that this would be a highly efficient regional 80-seater aircraft, with a speed of 850 kph and flying range of 2,500-14,000 km. It is equipped
with a new version of the D-36 engine, which is the best in the world. The construction of the aircraft will be funded by income from the Antonov bureau and
the Buryatia plant, while not a kopeck of state funds will be spent on it, he stressed.
The chief designer is sure that there is demand for the aircraft on the CIS market. The world needs about 6,000 such machines, while the CIS needs about
300-400. He stressed at the same time that the aircraft was intended exclusively for the CIS. "Nobody is looking for our aircraft products in Western
Europe," Balabuyev said.
The chief designer noted that there were no aircraft like the An-148 in Russia, but there were competitors. For instance, a joint project is coming up between
the US Boeing aviation corporation and the Russian Sukhoy and Ilyukhin design bureaus, but they are two years behind. "We have to press the advantage,"
Azerbaijan eager to join Odessa-Brody consortium
Azeri First Deputy Prime Minister, Abbas Abbasov, has positively evaluated the potential for Azerbaijan to participate in an international consortium for the
operation of the Odessa-Brody pipeline, reports New Europe. Andrei Goncharuk, first deputy state secretary for European integration at the Economics
Ministry, said Abbasov reacted positively to this proposal from Ukrainian Prime Minister, Anotoly Kinakh during their recent meeting.
"I do not rule out the possibility of activating the position of the Azerbaijani side in this process," Abbasov said, adding that no problems should arise
with supplies of oil for this pipeline.
The construction of the 674km pipeline, with a diameter of 1,020mm, was completed on August 19th 2001. Construction of the Yuzhny oil terminal was completed
last December and a reservoir park with a capacity of 200,000 cubic metres was built.
As early as the first quarter this year the Yuzhno terminal will be able to receive tankers with dead-weight of up to 100,000 tonnes.
After the completion of construction of the second phase of the Yuzhny oil terminal, it will have a maximum capacity of 45m tonnes of oil per annum and
reservoir capacity of 600,000 cubic metres.
Meanwhile, Azerbaijan has asked Ukraine to consider participating in the oil and gas projects that are being implemented in the region, including the
Baku-Tbilisi-Ceyhan oil pipeline and the Baku-Tbilisi-Erzurum gas pipeline, Abbasov said in Kiev. Moreover, Ukraine might increase its contribution to the
development of oil and gas deposits in Azerbaijan.
FOREIGN ECONOMIC RELATIONS
Ukraine, South Africa agree to broaden trade ties
The Republic of South Africa and Ukraine are planning to expand their bilateral trade and economic relations, the Russian RIA-Novosti News Agency quoted an
official communiqué as stating. The communiqué sums up the results of a meeting held between South African Deputy Foreign Minister Aziz Pahad and Volodymyr
Yelchenko, Deputy State Secretary to the Ukrainian Foreign Ministry.
Aziz Pahad said at a news conference held to discuss the results of talks, that the businessmen of the two countries have little idea of the wealth of
opportunity they might tap in expanding trade and economic relations between South Africa and Ukraine. "We are obliged to prompt them towards mutually
beneficial partnership, he said. As of today, trade turnover between the two countries is just US$36m, which is absolutely unacceptable," Pahad said.
He said that South Africa and Ukraine will shortly sign an agreement on avoidance of double taxation. Also, treaties on cooperation in tourism, science and
technology are "being worked on."
For his part, Volodymyr Yelchenko said that Ukraine is interested in South Africa's experience and technologies to modernize Ukraine's mining industry.
According to Yelchenko, the Republic of South Africa could also play a significant role in promoting Ukrainian products in other countries in the Southern
The Ukrainian delegation was headed by Volodymyr Yelchenko. The two countries established diplomatic relations 10 years ago.
USA backs Ukraine's WTO membership says visiting official
The USA enthusiastically supports Ukraine's efforts to become a member of the World Trade Organization, US Deputy Assistant Secretary of State for Europe and
Eurasia Steven Pifer said at a press conference in Kiev on 23rd February, Interfax News Agency has reported. He said Ukraine's admission to the WTO will
facilitate its integration into the world economy.
He also said the USA attaches great importance to the development of strong, future-oriented contacts with Ukraine.
World Bank mission happy with Kiev economic talks
The World Bank's team is pleased with the outcome of talks in Kiev on planning part II of the Programme System Loan. These talks started on February 3rd. Interfax News Agency quoted Luc Barbone, the bank's director for Ukraine and Belarus, as telling a news conference in Kiev on February 14th that he is very pleased with the progress made during the mission's stay in the Ukrainian capital.
Ukraine expects to obtain nearly US$250m within the framework of the loan before the end of the year. The bank approved the first instalment of US$250m of
the first Program System Loan and remitted US$150m of that amount on September 20th. The release of the remaining US$100m was approved on December 7th.
The US$750m loan is to be made available in three equal annual instalments. As part of the first tranche of this loan, Ukraine received US$150m last year
and the World Bank confirmed the granting of US$100m on December 7th, 2001.
Syndicated loan of US$41.5m secured
The European Bank for Reconstruction and Development, Societe Generale, Faiffeisen Zentralbank Osterreich AG and BNP Paribas have jointly arranged a
syndicated loan to the leading Ukrainian sunflower oil producer, Dnipropetrovsk Oil Extraction Plant.
A US$41.5m secured working capital facility opened to Dnipropetrovsk is the EBRD's third project with the company in Ukraine. The loan will replenish the
plant's working capital, enabling it to purchase sunflower seeds from Ukrainian farmers. The loan will also help strengthen the plant's export sales to
Russia, Where it holds around 20 per cent of the sunflower oil market.
INVESTMENT BACKGROUND REPORTS
Our analysts and editorial staff have many years experience in analysing and reporting events in these nations. This knowledge is available
in the form of geopolitical and/or economic country reports on any individual or grouping of countries. Such reports may be bespoke to the specification of
clients or by access to one of our existing specialised reports.
For further information email:
Considering an investment or a trip to any newnation? First order our Investment Pack which will give you by e-mail the last three monthly
newnation reports and the complete worldaudit democracy check for the low price of US$12. The print-out would be a good companion to take with you. Having
read it, you might even decide not to go!
To order please click here:
Investment background report