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UKRAINE


 

 
Key Economic Data 
 
  2002 2001 2000 Ranking(2002)
GDP
Millions of US $ 41,380 37,600 31,300 54
         
GNI per capita
 US $ 770 720 690 144
Ranking is given out of 208 nations - (data from the World Bank)

REPUBLICAN REFERENCE

Area (sq.km) 
603,700 

Population 
48,760,474

Principal 
ethnic groups 
Ukrainians 72.7%
Russians 22.1%
Jews 0.9%. 

Capital 
Kiev

Currency 
Hryvnya

President 
Leonid Kuchma 

  

Background:
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: 275 - (01/12/03)

The Ukrainian republic is too big and centrally placed for Washington to ignore it. Its president, Leonid Kuchma, is largely ignored by the US and UK leaders, as at a Prague meeting in 2001. He is a thoroughly disreputable figure, who rigs elections and harasses the media, even having journalists killed. But his term of office expires within a year. 
The US Vice-President, Dick Cheney, was the host at a meeting with the Ukrainian Prime Minister, Victor Yanukovich, a more welcome figure, in Washington in October. The admission of Ukraine to the World Trade Organisation was on the agenda. The US backs the proposal. Cheney was also concerned to see if the Odessa-Brody pipeline would be available to take oil from the Black Sea to Poland and beyond, instead of being used in the reverse direction, as Tyumen Oil (TNK) plans to do, to transport oil from Russia to Turkey. TNK is in partnership with BP, which bought 50% of its stock recently.
No Western major has yet made a definite proposal for the pipeline, says the premier. The issue is still open, he said. Azeri and Kazak oil from the Caspian could one day be using the pipeline.
The Ukrainians are pleasing the US by having dispatched a brigade of 1,650 troops to relieve American marines on the front-lines in Iraq. They did this in June when few NATO allies were as willing. This is not being forgotten.
Yanukovich was given a sympathetic hearing in Washington when he argued the it was an anachronism for Ukraine's trade with the US to still be restricted by the Jackson-Vanik Amendment, a relic of the Cold War. In addition the US is looking at ways to provide incentives for investing in Ukraine, as by OPIC funds for projects there and to facilitate trade by extending US Exim credits.

Russian influence grows
The influence of Russia, Ukraine's main supplier of energy and much else, is enormous in Kiev, exercised in a magisterial manner by no less a potentate than Viktor Chernomyrdin, former premier of Russia and head of Gazprom, who, unlike other former Yeltsin intimates, has kept up a rapport with Putin. He, rather than the jailed Khodorkovsky, is in all probability Russia's wealthiest man, if it is not Mayor Luzkhov of Moscow.
He insists that Ukraine will have to pay world prices for its gas and oil from Russia, even after the agreement to share a common economic space, made at Yalta in October. The Eurasian Economic Union comprises Russia, Belarus, Moldova, Kazakstan, Kyrgyzstan and Tajikistan, all with substantial Russian populations or troops on their soil.
There are few more important partners for Russia than Ukraine and Kazakstan. On the very same day that Presidents Putin, Kuchma and Nazerbayev were signing the new accord in Yalta, Russian naval forces, with no warning, began building a causeway into the Kerch strait of the northern Black Sea in an attempt to seize control of an island and the adjacent shipping channel from Ukraine. The work was suspended as soon as Kiev rushed forces to the area. But Moscow has achieved its aim. Kuchma has had to agree to talks to surrender control of the strategic waterway and the adjoining Sea of Azov. The Sea of Azov may contain large reserves of oil. Big Brother is back.

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AUTOMOBILES

Isuzu motors may provide Luaz with US$290m credit

Japan's Isuzu Motors plans to participate in an investment programme at OAO Lutsky Automobile Plant (LuAZ) for the production of trucks and buses, and hopes for support in this from Ukrainian president, Leonid Kuchma, LuAZ said in a recent press release. Isuzuz Motors President, Yoshinori Ida, set down his position in a letter to the Ukrainian president. The company chief said that Isuzu Motors plans to participate in the production of trucks and buses at LuAZ and will supply components. In addition, a planned trade credit from Isuzu Motors for the supply of components to LuAZ in 2003-2009 amounts to about US$290m, New Europe reported.
The Isuzu Motors president positively evaluated the LuAZ investment programme and expressed the hope that it would receive the support of the Ukrainian government. In addition, the Japanese company is studying the possibility of producing diesel engines at the Serp 1 Molot plant in Kharkiv. On October 1st Kuchma issued a decree cancelling the LuAZ investment programme, calling it unjustified, and ordered that a draft law be submitted to parliament within two months cancelling the law on the stimulation of automobile production in Ukraine, and other legislative acts on state support for the automobile industry, as not corresponding with GATT/WTO regulations. 
As part of the LuAZ investment programme it was planned to set up production of trucks, to reach production of 5,000 units by 2007, in addition a buses - ranging from small to large. At the end of the year LuAZ planned to produce a trial consignment of LuAZ-1301 sports utility vehicles and to begin serial production in 2004.

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FOOD & DRINK

Ukraine to import around 120,000 tonne of palm oil

In the 2003/2004 marketing year (MY) Ukraine may import around 100,000-120,000 tonnes of palm oil, Liudmyla Zinchenko, director general of the Ukroliyaprom Association, said at a press conference recently, New Europe reported.
According to her, prices for palm oil on the world market are presently growing, which may affect amounts of production of some brands of margarine in Ukraine. Around 120,000 tonnes of palm oil is expected to be imported this MY despite palm oil price rises on the world market, said Edward Sartan, managing director and head of the representative office of Tradepoint Commodities BV. The company accounts for around 80% of palm oil imports in Ukraine. He said that over the past month, prices for palm oil on world markets have increased by US$120 per tonne to US$605 per tonne. The amounts of palm oil supplies may be adjusted by producers, who use palm oil along with sunflower oil. "Only those who can afford to choose between sunflower and palm oil will be able to watch the prices; those who are compelled to use palm oil only are actively signing contracts to purchase it," he said. According to the APK-Inform analytical company, in 2002/2003 MY Ukraine imported 93,868 tonnes of palm oil.

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FOREIGN LOANS

World Bank official discusses loan with Ukrainian speaker

The World Bank's decision on whether to grant Ukraine its Programmic Systemic Loan Two is strongly dependent on the decisions taken by the Supreme Council [parliament]. This was discussed during a meeting between Supreme Council speaker, Volodymyr Lytvyn, and World Bank Vice-President for Europe and Central Asia, Shigeo Katsu, UNIAN News Agency has reported.
The speaker's press secretary, Ihor Storozhuk, said that at the start of the meeting Lytvyn had said that Ukraine expects to have normal relations with the World Bank. Katsu said that the future of cooperation between Ukraine and the World Bank is dependent mainly on the Supreme Council. He said that the prompt approval of a number of bills is of prime importance for the continuation and development of contacts between Ukraine and the World Bank.
According to Storozhuk, it was stated during the meeting that the most urgent issue at the moment is disbursal of the Systemic Loan Two to Ukraine. In this context, it was stated that bills that the Supreme Council is planning to consider shortly are important. At the same time, it was stated during the meeting that these documents have to be considered before the World Bank board of directors can consider disbursing the loan at its meeting planned for 9th December.
Katsu said that the decision of the board of directors may be substantially influenced by the Supreme Council's adoption of bills restricting the number of tax privileges and restructuring debts in the energy sector, and of a balanced budget for 2004.
Lytvyn pointed out to the guests that the issue of curbing privileges might be made more difficult by the fact that Ukrainian politicians have already been drawn into the presidential election campaign. "During this process, everyone turns into a defender of the people, and it becomes very difficult to push through any changes involving cutting privileges," Storozhuk reported Lytvyn as saying.
Lytvyn also said that much would depend on the arguments presented, the position of the government, and the joint work of the government and parliament in resolving this problem.
During the meeting, Lytvyn also assured the World Bank representatives that all documents connected with the World Bank that arrive in parliament for ratification are placed under special control and there should be no delay in their approval.

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INFORMATION TECHNOLOGY

Intel studies possibility of Ukrainian investments

US corporation Intel, the world's leading producer of micro-processors, is studying the possibility of creation of engineering or production subdivisions in Ukraine, Intel CEO, Craig Barrett, said in Kiev recently, New Europe reported.
According to him, during his visit to Ukraine he is going to study possibilities for direct investments. He expressed his wish to examine the situation in Ukraine, including current opportunities and then to make decisions, adding that he sees possibilities for such companies as Intel to implement engineering developments of production. Barrett said Ukraine has engineering talents, which is very important. Barrett said Ukraine has engineering talents, which are very important. Barrett specified that direct investments apply to engineering or any other activity regarding the creation of production. He informed that in addition to direct investments, Intel makes investments into the sphere of education while introducing hi-tech projects.

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INTERREGIONAL COOPERATION

Uzbekistan favours cooperation with Ukraine in restoring Afghanistan

Uzbekistan is interested in Ukraine's joint participation in the restoration of Afghanistan, Uzbek Foreign Minister, Sodiq Safoyev, has said.
"What we need is to takr part in tenders and win," Sodiq Safoyev told a news conference following a meeting with his Ukrainian counterpart, Kostyantyn Hryshchenko, Interfax-Ukraine News Agency has reported.
"If we stick together, bearing in mind Uzbekistan's experience of work in Afghanistan, its territorial proximity to Afghanistan and its infrastructure, as well as the inexhaustible economic potential of Ukraine in industry and construction, then uniting efforts could bring about an industrialization effect and lead to tangible results," the Uzbek foreign minister said. 
Safoyev also said that both countries could participate in the restoration of irrigation facilities, energy and electric energy plants and in laying out motor roads and railway lines. 
Talking about prospects for cooperation between the two countries in the trade and economic sphere, Safoyev emphasized that Tashkent was interested in Ukrainian enterprises taking part in the privatisation process in Uzbekistan. 
He also voiced his support for developing bilateral cooperation at regional level, noting a stable tendency for progress in mutual relations in this field.
Ukraine and Uzbekistan are ready to lift all trade restrictions, Ukrainian Foreign Minister Kostyantyn Hryshchenko and his Uzbek counterpart, Sodiq Safoyev, said, answering a question by the Interfax-Ukraine News Agency. 
Safoyev said that "experts have been instructed to look into this issue and take a relevant decision before a regular session of the intergovernmental commission which is due to be held at the beginning of next year."
The idea of setting up a free trade zone is viable and achievable. Both Ukraine and Uzbekistan could set an example to encourage all the other countries," the Uzbek foreign minister emphasized. 
At the same time, he noted that the restrictions only applied to 2 per cent of total trade turnover between the two countries. 
Hryshchenko said that setting up a free trade zone "is a matter of principle" for Ukraine. 
Ukraine, in its foreign economic activities, gives priority to achieving a "free trade zone which is free of curbs and restrictions and which really works." "We have real opportunities to move forward from words to deeds," the Ukrainian foreign minister said. 
Kostyantyn Hryshchenko and Sodiq Safoyev signed a cooperation programme for 2004 between the two countries' foreign ministries following the talks between them and agreed to conduct regular consultations on topical issues of bilateral relations and international life at the level of foreign ministers and experts.

Turkey determined to develop military ties with Ukraine 

Turkey intends to develop military-technical cooperation with Ukraine regardless of how third countries may feel about it, Interfax-Ukraine News Agency has reported, quoting a diplomatic source close to the talks between Ukrainian Foreign Minister Kostyantyn Hryshchenko and the Turkish state secretary of national defence, Atila Isik. 
During the course of the talks, the parties also discussed prospects for cooperating in securing safety in the Black Sea region, working together in military industries, in NATO and also in the rebuilding of Iraq.

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TRANSPORT

Russian governor suggests road project with Ukraine across Kerch Strait

Aleksandr Tkachev, the governor of Russia's Krasnodar Territory, has proposed that a causeway in the Kerch Strait [that has caused a border row between Ukraine and Russia] should be completed in order to build a transport passage, a road that could link Ukraine's Crimea with Russia's Kuban, UNIAN News Agency has reported.
Addressing a news conference in Simferopol on 3rd November, the governor of Krasnodar Territory said that after the restoration of the Tuzla spit the continuation of the causeway was becoming the question at issue. But this question needs to be discussed in spring for us to see whether the causeway has survived the winter and whether it will be suitable for use and the passage of cars across it, Tkachev said.
Discussing such a project will be of benefit to both sides, Tkachev said, adding that the winners will be "our peoples, our territories and business, and we need to create a single economic space some time in the future."
During the visit by the delegation from Krasnodar Territory to Crimea, the sides agreed that the prospects for such a project would be discussed in theory. The project is currently being worked on, Tkachev said. He also said that he would try to persuade Russian Prime Minister Mikhail Kasyanov and other agencies of the need for such a transport passage between Crimea and Kuban. "Kuban, the Taman Peninsula and, equally, Ukraine will benefit from this," the governor of Krasnodar Territory said.
For his part, the chairman of the Crimean Council of Ministers, Serhiy Kunitsyn, said that the project is of an interstate nature. Crimea has already put forth its proposals on the issue to the Ukrainian Council of Ministers, Kunitsyn said. "I am sure that Krasnodar will do the same," he said. 

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