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: 257 - (30/05/02)
The Ukrainians are in a dire state. The economy is rebounding, GDP growing by 7.5% in 2000 and 5% in 2001. But this was after a catastrophic decline in
1998-99 with the Russian rouble's debacle of the time.
The premier who presided over the recovery was Viktor Yushchenko, whose subsequent popularity made him ripe for the chop as far as President Kuchma was
concerned, when his premier was being hounded in parliament.
Free and fair elections?
Ukraine is in principle a democracy since independence in 1991, but the status quo candidate, despite desperate economic circumstances, always wins. President
Kuchma had been premier before being elected president for the first time in 1994. His re-election in 1999 was by a clear margin. Yet nobody who asks others
comes across someone who voted for Kuchma!
The paradox is not hard to fathom. Local officials rig the elections or are soon sidelined, if not dismissed. It is not certain that this will be so next
time in 2004, an election in which Kuchma is not qualified by the constitution to stand. That would not have stopped him if he had kept up the momentum of his
heyday. But he has not.
He has, according to the media, a large number of skeletons in his cupboard. Politicians and journalists of an awkward disposition have a way of
'disappearing' in Ukraine.
The latest to be removed from the scene was Valery Malov, the head of Ukraine's biggest arms exporter, who died in a car accident on March 6th, amid a scandal
involving the president and arms to Iraq ahead of the vital elections. There have been many others, including Alexander Yemets, a parliamentarian who died at
the peak of the 'Kuchmagate' bugging scandal in January 2001. In August 1998 Alexander Veselovksy deputy head of the central bank, died during investigation
of dodgy deals with foreigners.
There is the festering sore of the story of journalist, Georgy Gongadze. The disappearance in 2000 and subsequent discovery of his headless body, sparked
anti-government protests and led to a government crackdown last winter.
The president is not the only one under fire. A local monitoring group, International Secretary for the Committee of Voters of Ukraine, or CVU, cited in its
February-March report that political corruption is rampant throughout the country. Opposition figures are routinely denied air time on national TV and radio.
The complicity of a corrupt elite with the regime is what keeps Kuchma in power.
Opposition makes an impact
The parliament of 450 seats is elected on two lists. One half of the seats are chosen on a party basis, the other half on a constituency one, with direct
elections for individual candidates counting for all. In the latter case, the role of local business moguls and political barons counts enormously and
together with numerous electoral fraudulent practices, saved the day for the regime, pro-President Leonid Kuchma, in parliamentary elections earlier this
On the party list it was a different story. The leading opposition party, Our Ukraine, headed by former premier Viktor Yushchenko, scored 22%, ahead of the
about 20% of the communists and well ahead of the pro-Kuchma party, For United Ukraine, on around 14%. Another opposition figure, former head of the gas
giant company, Yulia Tymosheko, did well, but has the decided disadvantage, in a still very sexist country, of being a woman, but this is a formidable
billionairess, not to be regarded as anybody's object of pity.
Yushchenko as premier and next president
As the presidential election approaches, Kuchma may want the post-election re-assurance of exemption from prosecution for past misdemeanours, by giving a
leg-up to Yushchenko by inviting him to be premier again. Yushchenko has never criticised Kuchma, saying that respect for the president is his due and
similar bromides. Yushchenko would get his own bonus from a such new deal with Kuchma, a virtual certainty of succeeding him. His own popularity plus
Kuchma's political machine would make the election a shoe-in. The comparison with Putin and Yeltsin in 1999 springs to mind, when the outgoing president was
given promise of immunity by his incoming premier. A Yushchenko-Kuchma axis could be in the offing when the moment is right.
World Bank to offer agriculture loans
The World Bank has confirmed its intentions to disburse US$142m in loans to Ukraine to make the issue of land titles more affordable for its rural residents,
Interfax News Agency quoted Ukrainian Deputy Prime Minister, Leonid Kozachenko, as telling the press recently after a meeting with bank representatives. He
said the loan would allow the issue of land titles to be completed. The schedule of disbursing a US$250m loan to finance companies in Ukraine's agriculture
and related industries was also discussed at the meeting.
Ukrtransnafta joins Druzhba-Adria project
Ukraine's Ukrtransnafta company, which controls the former Soviet republic's oil pipelines, has signed a basic agreement on the transportation of oil through
the Druzhba-Adria oil pipeline, Interfax News Agency quoted the vice president of the Russian pipeline monopoly Transneft, Sergei Grigoryev, as telling the
press. He said that the transportation of oil under this project costs US$0.64 a tonne per 100 kilometres. Earlier, Ukraine insisted on the old tariff of
US$0.73. Grigoryev said that representatives of Transneft and of the companies representing the project's member-states plan to join the agreement in Moscow
in the near future. But the implementation of the project will start only after an appropriate intergovernmental agreement is signed.
The first phase of the Druzhba-Adria project, operated by Transneft, will give Russian companies an opportunity to export five million tonnes of crude oil
annually to the Croat port of Omisal. The transportation of oil under this project has been guaranteed by the Tyumen Oil Company and YUKOS.
Ukrainian industry keen on Turkmen gas pipeline project
Ukraine has a chance to participate in a respectable international project. Turkmenistan has offered Ukraine the opportunity to take part in the construction
of a gas pipeline from Turkmenistan through Afghanistan and Pakistan. If Ukraine wins the right to participate in the tender, their plants - especially pipe
plants and plants producing compressor facilities - will have a chance to sell their products, and thousands of Ukrainian workers will have a job. In
addition, Turkmenistan is interested in developing oil deposits in the Caspian Sea shelf, Ukrainian TV has reported.
Ukraine was offered four areas on the Turkmen shelf for developing oil and gas deposits.
Participation in the construction of the gas pipeline through Turkmenistan, Afghanistan and Pakistan will provide opportunities for Ukraine's factories,
according to Ukrainian businessmen. Firstly, Ukrainian large-diameter pipes are cheap and secondly Ukraine can construct the pipeline for half the price.
Serhiy Taruta, director-general of the Industrial Union of Donbass Corporation said: "Most importantly, we are talking about the Khartsyzk pipe plant and its
large-diameter pipes. We are very interested in the project announced by the Turkmen president. According to preliminary information, it will require
large-diameter pipes - 56 inches. We would like to participate in the tender. We hope to win."
Volodymyr Lukyanenko, head of the board of directors of the Frunze machine building holding in Sumy said: "Generally speaking, Ukraine could construct the
entire gas pipeline - pipes from Khartsyzk, Ukrainian labour and our compressor facilities. We hope to supply at least 30-40 per cent of our compressor
Turkmen president offers Ukraine to develop gas on Caspian shelf
The president of Turkmenistan, Saparmurat Niyazov, has invited Ukraine to start a joint project to extract gas on the Turkmen shelf of the Caspian Sea. The
Turkmen president proposed this during talks between the two countries' delegations, UNIAN News Agency has reported. A Ukrainian delegation led by President
Leonid Kuchma was in Turkmenistan on a three-day official visit.
In reply to President Kuchma's question about Ukraine's participation in developing gas deposits on dry land, Niyazov said: "We won't let anyone in on dry
land: neither Russia, nor the USA or Ukraine. This would not benefit Turkmenistan because if you extract Turkmen gas yourselves, you won't buy it from us."
Niyazov also said that during their talks he and Kuchma discussed existing projects to transport gas westward: the building of a gas pipeline along the
Caspian coast, the Transcaspian project and the building of a pipeline through the Caucasus. "These projects are devoid of political manipulation or intrigue,
there is only economic interest from our countries."
Niyazov also said that the gas pipeline which carries gas via Uzbekistan and Russia to Ukraine is in need of modernization. According to the Turkmen
president, the condition of the pipeline affects its throughput capacity. The throughput has reduced from 120bn cu.m. to 65-70bn cu.m. a year, the president
He also promised "to come back to" the Odessa-Brody project to carry Caspian oil via the pipeline. "We shall come back to the Odessa-Brody project. We need
time," Niyazov said.
Ukrainian shipyard launches floating dock for Russian navy
The Russian navy has accepted a new floating dock for the repair and recycling of nuclear submarines from Kherson shipbuilders. It cost more than US$40m and
12 years to build the dock whose displacement is 13,500,000 tonnes. The dock spent almost six years at the pier of the Kherson-based Palada shipyard. The
Russians were short of funds to pay for the order. The construction was completed after a relevant agreement between the government of the two states had been
signed, Ukrainian One Plus One TV reported on 25 April.
The construction began in 1990. In four years' time the dock was ready for trials. Due to a shortage of funds, the Russians gave up the dock and the
construction work was frozen. The project received a new lease of life after the Kursk disaster.
Viktor Dyachenko, Palada's director said: "There was no building for 12 years. The dock was ready for trials back in December 1995. But as the Russian navy
owed us money for this dock, the tests were put on hold. Now, two years of hard work with the Russian navy have paid off. The financing resumed, the tests
were completed and the acceptance certificate was issued today."
The dock will be transported to the Russian territorial waters to be used for recycling old submarines. However, specialists say that it can be used to build
new ones, too.
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