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UKRAINE

 

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 

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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: 264 - (01/01/03)

The Ukrainian president, Leonid Kuchma is rapidly become an outcast in respectable political circles in the West. He is deluded enough to think that a visit from the Pope and the odd foreign leader gives him a clean bill of health in Western eyes. They do not.

The Prague fiasco
It is well known by any Western interlocutor of Kuchma's that they are dealing with a rogue of the first order, a likely murderer, a winner of rigged elections, a censor of the press and wider media and a leader turning a blind eye to corruption in his entourage and to arms sales to rogue states.
The latter aspect of his activities is found particularly unappealing by the leaders of the US and the UK, Bush and Blair, who by chance were due to sit on either side of him on the second day of the NATO meeting in Prague in November, when the 46-member North Atlantic Partnership Council was to foregather. This was simply due to the alphabetical order of their countries names in English. Bush and Blair would have found themselves obliged to shake the hand of someone, who had given approval of sale to Iraq of four Kolchuga radar systems that could be used against American and British pilots. They naturally bridled at the very idea.
The Secretary-General of NATO, Lord (George) Robertson, an old labour stalwart and former UK defence minister, saw a way out of the predicament. He ordered the language of the sitting arrangements to be switched to French (the rarely-used second language of the Atlantic organisation), whereupon Ukraine was not on either side of le Royaume-Uni (UK) or les États Unis (the US), but next to Turkey on one side and empty space on the other. Back to the bottom of the class!
The snub could not have gone unnoticed by Kuchma, nor the lack of enthusiasm of the participants to seek out his company. He must have been cringing in embarrassment. He is not likely to risk another such rebuff. 
But, if his future isolation is likely to be self-imposed, this is not so for his neighbour, President Alexander Lukashenka of Belarus, who along with his top 50 henchmen has been banned from the EU. The 'last dictator of Europe,' as he is known, is now persona non grata in the capitals of the EU. He has also sanctioned dodgy arms sales to Iraq and excels in repression of all and sundry in his republic.
No such indignity is likely to be perpetrated upon Kuchma, the leader of a far larger and more serious country, so long as he abides by the constitution and retires as president in two years' time, as it requires him to do. European leaders are prepared to tolerate him until then, as long as that is the last of him.

Can he survive at home?
The regime somehow looks like surviving at home. Everyone knows that they have less than two years to wait.
Nevertheless, he has been the target of an opposition campaign to oust him, including the main opposition parties, the Communists, the Socialists and certain nationalists, that has even taken to the streets and besieged his presidential office. A leading opposition figure, Ms Julia Timoshenko, ex-head of United Energy Systems of Ukraine, the largest utility, has said that he should be offered an amnesty if he goes soon and goes quietly. There is certainly plenty that the press has disclosed to make an amnesty required in such circumstances 

Journalists continue to disappear
One of the gravest charges made by opposition forces concerns, indeed, is the persecution of journalists who have a tendency to disappear. In mid-November the latest of a series of mysterious deaths by journalists came to light. The chief of a Ukrainian financial news agency, Mikhail Kolomiyets, went missing in October; his body was found in neighbouring Belarus, where he was hanging from a tree. "On the day he disappeared he had had lunch with someone," Mikhail Kukhar, a friend and fellow journalist, said, "Who, we don't know. But then he came back to work, erased everything from his computer, took his contacts book and just went without saying anything to anyone, within ten minutes. We think this behaviour suggests that he was afraid of something." Indeed.
Another friend, Lyubov Ruban, is reported to have stated that Kolomiyets had called her, saying that he intended to commit suicide; although other friends he contacted say that they had no inkling of anything of the sort. The Ukrainian and Belarussian authorities have launched an investigation, both working on the assumption of suicide.
It is of course a convenient assumption for them to make. But even if true, why did he kill himself and why in Belarus? An easier place to fake a suicide hanging for an inconvenient journalist than Belarus cannot be imagined, where such things happen all the time.
Last year Igor Alexandrov, a director of a television company, was found beaten to death in the Donestsk region of Ukraine, in the Russian-speaking east of the country. Belarus and the coal-mining Donestsk region are the old haunts of Sovietism, not unlikely places for free-thinking journalists to meet their end. But nothing is really known about the deaths of Kolomiyets and Alexandrov and nothing connects them with the regime.
This is not true of one particular journalist. The body of an investigative reporter, George Gongadze, was found two years ago after Kuchma was heard on the tapes calling for him to be "wiped out." He had been beheaded, so strictly only his torso was found, perhaps in an attempt to prevent identification. But there is no doubt that it was his torso.
Naturally the president denies the authenticity of the tapes; but few credit his denials.

Other shenanigans 
Equally convincing of his complicity are remarks in which Kuchma ordered his minions to rig his re-election in October 1999. It is from them US intelligence sources know that he gave orders to sell four Kolchuga radar systems to Iraq that can be used against US and UK pilots. A US firm hired by the FBI says that an alleged recording of Kuchma agreeing to the sale is genuine, which means that the other recording concerning Gongadze is highly likely to be so as well.
The US has suspended US$55m in bilateral aid after the news of the sale came out. Kuchma is now in bad odour in the campaign against terrorism, which had been a welcome distraction for the regime.
Kuchma probably still retains enough support in parliament to prevent impeachment. Half of the seats are chosen on a party list, half on a district one. The latter is easy to manipulate with loyal district officials making sure that pro-regime candidates win, as indeed they did in elections in March.

End-game approaches
The opposition, which dominates the party list, is itself deeply divided, ranging from nationalists to communists and socialists. That of course strengthens Kuchma's hand. The main opposition force, the centre-right, Our Ukraine, is led by the most popular politician in the country, Viktor Yushchenko, the premier in 2000-2001 when the economy began to pick up. He is admired in the West, being beforehand a successful central bank chief who tamed inflation.
Yushchenko's strategy seems to be to wait out the expiry of Kuchma's term in October 2004 and stand for president then, which Kuchma is barred from doing by the constitution. Yushchenko is a sparkling operator on the media, unlike the leaden Kuchma or the staid premier, Anatoly Kinakh. But the latter has the enormously powerful Union of Industrialists and Entrepreneurs behind him, which he founded. It is the main backing for the regime in parliament. 
The one thing that Kuchma has to fear is that these allies turn on him. But that is not so likely given the skeletons in their own cupboards, concerning shady privatisation deals. He should see out his term. But whether he can ensure Kinakh succeeds him is another matter. 

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AGRICULTURE

Ukraine to ship Brazil 500,000 tonnes of grain


In accordance with signed agreements between the Brazilian association of grain processors, Khleb Ukrainy and the Ukrainian grain association, the South American country will import 500,000 tonnes of Ukrainian grain, New Europe reported recently.
Ukrainian Deputy Prime Minister, Leonid Kozachenko's press service has announced that agribusiness trade turnover between the two countries is expected to rise from US$80m to US$150m. Notably, a preliminary agreement has been reached on the opening of a joint enterprise for the production and processing of cane sugar. Processing Brazilian sugar cane will make it possible to operate 10 more Ukrainian sugar plants and ship almost 500,000 tonnes of cane sugar to foreign markets. In the 2002/2003 agricultural year (from this June to next July), Ukraine, once the breadbasket of the former Soviet Union, plans to export around 12m tonnes of grain of a harvest of roughly 40m tonnes. The previous year, those figures were a respective 9.1m and 39.7m tonnes.

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AVIATION

Germany to lease Ukrainian cargo planes for Afghan deliveries in 2003

The German Defence Ministry will continue leasing Ukrainian An-124-100 Ruslan cargo planes for deliveries to the German military contingent in Afghanistan, Interfax-Ukraine News Agency has reported.
Interfax-Ukraine has learnt from an informed source in Kiev that a new contract commissioning Antonov Airlines to make 80 Cologne-Kabul flights starting from January 2003 was signed the other day. The German company (Muller&Partners International Logistic) acted as an intermediary.
Observers believe that the Bundeswehr is satisfied with the level of cooperation with Antonov Airlines which began in January 2002.
From the beginning of the year, An-124-100 planes have executed over 200 flights for the German Defence Ministry.

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BONDS

Ukraine raises US$120m in Eurobond issue

Ukraine sold US$140m worth of 2000 Eurobonds on 6th December and, taking into account an earlier 16 per cent amortization, managed to raise about US$120m to cover the budget shortfall, a government source has said, Interfax-Ukraine News Agency has reported.
The bonds were sold at 102.5 per cent of face value, up on the US$260m sale of 2000 Eurobonds in November, the source said. It added that the Finance Ministry has now managed to sell the whole US$400m additional issue of 2000 Eurobonds. The money will be used to plug the budget shortfall resulting from Ukraine's failure to obtain the expected US$250m in loans from the World Bank and 92m euros from the EU.
On 22 November Ukraine floated an additional issue of 2000 Eurobonds worth a total of US$260m in face value, raising US$219.8m.
Ukraine rejected a number of bids worth a total of US$70-80m due to a disagreement over price. The yield on Ukraine's Eurobonds is now at the record low of 10.843 per cent.

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ENERGY

Ukraine invites Azerbaijan in on gas consortium, oil project

Ukraine has invited Azerbaijan to take part in a gas consortium to manage Ukraine's gas pipelines and in the creation of a single system to transport oil to Europe. The offer was made by Ukrainian Prime Minister Viktor Yanukovych during a meeting with Murtuz Aleskerov, the chairman of the Azeri Milli Majlis parliament, in Kiev, Interfax-Ukraine News Agency has reported.
"We are proposing that you consider the possibility of participating in this consortium," Yanukovych said. Azerbaijan will "face the task of transporting gas to Europe," Yanukovych noted, "thus, this issue will be of interest to you." Yanukovych offered to set up a joint working group or commission on this issue.
Another "serious issue" on which Ukraine is prepared to work with Azerbaijan is the creation of a single system to allow the two countries to utilize their oil transport capabilities. "We would like to create the possibility for you to be able to transport oil through Ukraine," Yanukovych said, referring to the Ukrainian Odessa-Brody oil pipeline.
On 7th October, Ukraine and Russia signed an intergovernmental agreement on strategic cooperation in the gas sector and a corporate agreement between Russian gas monopoly, Gazprom, and the Ukrainian national oil and gas Naftohaz Ukrayiny company on the creation of an international consortium to manage and develop Ukraine's gas transport system.

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FOREIGN INVESTMENT

Foreign investments top US$680m

In January-September foreign investments in Ukraine jumped 28.6 per cent against the same period of last year to US$680.9m. The Ukrainian state committee for statistics said investments from Commonwealth of Independent States and Baltic states amounted to US$36.6m (5.4 per cent of the total), and from other countries to US$644.3m (94.6 per cent). The export of capital by non-residents stood at US$274.7m.

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FOREIGN LOANS

Ukrainian parliament approves World Bank loan

The Supreme Council [parliament] has passed a law "On ratifying the loan agreement between Ukraine and the International Bank of Reconstruction and Development." A total of 388 members of parliament out of 424 registered in the session hall voted in favour of approving the law, UNIAN News Agency has reported.
As UNIAN reported earlier, the World Bank will disburse US$24.25m under this agreement as a loan to refurbish the water-supply network in Lviv. The loan is to be repaid in 20 years. 

Ukraine to restructure US$282m debt to Turkmenistan

The Ukrainian Finance Ministry expected an agreement, that was due to be signed at the end of November in Turkmenistan, would restructure Ukraine's US$282m debt to that country. At the talks with the Paris Club on the debt restructuring, Ukraine underscored a special status of liabilities to Turkmenistan since they had been restructured already, reported New Europe. 
At the same time, Kiev said it would match the conditions of restructuring the debt to Turkmenistan with the terms of other creditors. Turkmen representatives said they would not restructure the debt on the Paris Club's conditions and would insist on a more lucrative deal, especially on offsetting the Ukrainian debt within three and a half years from 2001 under a Libor+1-1.5 per cent credit rate, compared with the Libor+0.5 per cent for the Paris Club countries. 
The restructuring of Ukraine's debt for Turkmenistan was stipulated by an inter-governmental agreement dated November 5th, 1994. According to the accord, Ukraine's debt totalled US$723.44m, including a US$51.54m fine. The debt was reimbursed by even quarterly portions worth US$35.21m. The interest rate on its servicing was set once a year at the level of an annual dollar deposit rate Libor+1 per cent, fixed annually for January 1st. 
The last payment was due on December 25th 2001, however, in January 2000 Ukraine suspended servicing both this and other debts to the sovereign creditors, who are the Paris Club members.

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