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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: 269 - (29/05/03)

Putin-Kuchma meeting
The relationship that really matters for Ukraine is with Russia. Russian ambassador Chernomyrdin matters far more in Kiev than US ambassador Herbst. This is partly because of who he is, "Mr Gazprom" and a former premier of Russia as well as billionaire top boss of the gas giant, while Herbst is a career diplomat, only just appointed.
Ukraine has a low profile in the West, but not in Russia. Kiev was the first capital of Rus, as Russia was then called, and Russians, even of a liberal persuasion, still think of Ukraine as part of Russia. The population is one fifth Russian in ethnicity, particularly concentrated in the east and the Crimea, which the Russians have never forgiven Khrushchev for handing over to the Ukrainians in 1954 (when of course it did not matter much). Odessa and Crimea are, indeed, the best places in the former Soviet Union outside Georgia from many human points of view (excepting the Baltic states if one likes bracing weather).
It was in Crimea's capital city, Sebastopol, 850 kilometres south of Kiev, that Putin and Kuchma held a meeting, in early May, a time of year when Sebastopol has certainly more clement weather than Kiev or Moscow, complete with bread-and-salt offerings by smiling girls in Ukrainian folk costumes. This might seem a trivial matter, but not really. Ukraine is the one country where the smiles for a Russian leader are genuine.
Putin and Kuchma got on well in a way that neither do with any other world leaders. They can converse in Russian (Kuchma's mother tongue, although he is ethnically Ukainian), they have a common communist party past and they are regarded as unsavoury characters by most Westerners, even if in Putin's case Western leaders are prepared to overlook the fact. Kuchma took Putin to his own Camp David, a rather more attractive place than the Texan ranch of the US president, for it is a former Tsarist palace near Yalta on the Black Sea coast. 
The fact that the visit included May Day was symbolically important. It is a time when communists remember the Internationale - but also is traditional in Russia and Ukraine for free time 'to kick back.' Said Ukrainian spokeswoman Alena Hromnitska: "Their schedule will not be too rigorous. And there will be time for relaxation."
The two latterday Tsars toured sites where the old-time Tsars used to stroll and take the air, the Yalta seafront, the Crimean country park and local vineyards. This is like Bush and Blair, a 'special relationship,' but conducted in a regal, not exactly democratic manner.
Of course the two leaders discussed serious issues, the joint development of an Antonov-70 airplane, a cargo turboprop, and an energy corridor through Ukraine, taking Russian natural gas to Europe, and many other things.
But there was a massive shadow hanging over their meeting, all the same. Kuchma retires from office at the end of next year. Everyone is waiting for his departure, for well-known reasons, the most discredited figure of all the European leaders.

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AGRICULTURE

Ukrainian premier promises to alleviate woes in agro-sector

In the light of the situation in the agro-industrial sector caused by poor weather conditions, the government will make it a goal to secure normal conditions for agricultural producers and "everything necessary" for consumers at current prices, Ukrainian Prime Minister, Viktor Yanukovych, said in Kirovohrad during a press conference following a special meeting he chaired on agro-industrial issues. The heads of ministries and department as well as the heads of Regional administrations also took part, Interfax-Ukraine News Agency reported. 
"Our duty is to make sure that the difficulties being experienced by the agro-industrial sector are not felt by Ukrainian citizens, to make sure that agro-industrial producers have work and that consumers receive everything they need at the prices currently being maintained by the state," he said. According to data from specialists, the weather situation in Ukraine has been "very difficult." 
Such weather conditions in Ukraine "have not been observed in 50 years," Yanukovych said. He also noted that decisions on a whole range of issues in the agro-industrial sector will be taken during a session of the Cabinet of Ministers and publicised in the media - both current issues and future ones. "This means the issues and the response of the Ukrainian Cabinet of Ministers, the banking system and legislators," the premier said, adding that "the parliament must pass a series of draft laws in order to create market conditions for the development of the agro-industrial sector."

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AUTOMOBILES

Volkswagen to assemble cars in Ukraine

Volkswagen plans to assemble VW Passat, VW Bora, VW Golf and VW Polo cars in Ukraine, said Intercar Ukraine Ltd, Volkswagen's general importer in Ukraine, New Europe reported. The company is considering the Eurocar plant in Uzhgorod as the main premises for assembly.
A final decision on launching assembly of German cars will be adopted in the near future. Consultations are being held between Volkswagen, Intercar Ukraine and Eurocar. Intercar Ukraine plans to sell 4,500 Volkswagen cars in 2003 and bring Volkswagen's share of the foreign car market in Ukraine to 10 per cent.

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ENERGY

Germany interested in Odessa-Brody oil pipeline

Germany is interested in the transport of Caspian oil via the Odessa-Brody oil pipeline to the Germany northern seaport of Wilhelmshaffen, Ukrainian Prime Minister Viktor Yaukovych said at a news conference in Hanover. 
Interfax News Agency quoted Yanukovych as saying consultations with Germany have already begun. "We see good prospects for our plans to extend this oil pipeline though Germany to its deep-water ports," the prime minister said. He added that "this will allow the delivery of Caspian oil both to refinery facilities in Europe and for its further transportation to other continents."
At the same time, Ukrtransnafta CEO, Alexander Todiychuk, told journalists that a business plan for the project to deliver Caspian oil to the port of Wilhelmshaffen through the Odessa-Brody oil pipeline would be drafted by the end of April.
Commenting on the creation of an international gas transit consortium, the Ukrainian prime minister noted that Ukraine and Russia now have to work out the "technical conditions" of the project. "Then this issue will be finally resolved with Germany's participation," he said.
Yanukovych said that Germany and Ukraine would also implement a joint aircraft building project. He said that a joint expert group in charge of this initiative has been set up. "This project will allow Germany to secure a share in the Ukrainian aircraft building sector, to use Ukraine's transport airplanes or take part in creating a joint leasing company," Yanukovych said. 

Ukraine, Russia may enlarge gas transit to Europe: Ruhrgas

Ukraine and Russia may significantly enlarge the amount of gas production and transit to Europe across Ukraine, a representative of Germany's Ruhrgas told Naftogaz Ukrainy and Gazprom at the tripartite negotiations on the gas transport consortium in Kiev. Ukrainian Fuel and Energy Minister, Serhy Yermilov said recently, "that is nearly the most essential issue for the future gas transport consortium." He noted that Ukraine and Russia had obtained very important information that the demand for gas in Europe will increase.
The negotiations also centred on possible models of the future consortium, Interfax News Agency reported Yermilov as saying. It was agreed to hold a tripartite summit in late May.
Recently the tripartite meeting was held on the corporate level with the participation of experts, he said. Earlier reports indicated that Russia and Ukraine had set up a limited liability company, International Consortium for Control and Development of Ukrainian Gas Transport Systems, on an equal basis. Naftogaz Ukrainy and Gazprom signed the founding documents in early November 2002. Representatives of Ruhrgas were invited to take part in tripartite negotiations between Ukraine, Russia and Germany on the international consortium. The consortium will provide for gas transport and reliable, safe and sustainable functioning of the Ukrainian gas transport system. During his visit to Ukraine, Russian President Vladimir Putin, expressed satisfaction with what has been done to set up the Russian-Ukrainian-German consortium.
"We believe we will be able to come close to some agreements by autumn," he said. "We would like to prepare a draft feasibility study and come close to an understanding on the participation of all of the parties in the project regarding costs. Based on an analysis of the state of Ukrainian gas transport systems, it is necessary to decide what amount of funds is needed in order not to maintain those networked and to expand them with the aim of increasing Russian gas exports to Western Europe," the Kremlin leader said.
Ukraine wants the plans for the Russian-Ukrainian-German consortium to be realised as soon as possible, Ukrainian President Leonid Kuchma said. Kuchma told a news conference in the Ukrainian autonomous region of Crimea that Ukraine is satisfied with the way negotiations on the consortium plan are proceeding. He said Ukrainian-Russian negotiations had made the concept for the consortium a reality and that trilateral talks are underway with Russia and Germany.
Kuchma said the European Bank for Reconstruction and Development had offered a loan for the project. "We have good prospects," he said at the news conference, which he and Putin held after the two presidents met in Crimea.
Putin also confirmed that he had discussed "chances of using this country (Ukraine) as a transit stage for the export of Russian oil and electricity" with Kuchma. "This gives us reason to expect that we and our EU partners will be able to come close to forming a unified Russia, Ukraine, to which the EU and Asian countries will be drawn," the Russian president said.

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FINANCIAL NEWS

Inflation falls to 0.7% in April

Inflation in Ukraine reached 0.7% in April against 1.1% in March and February and 1.5% in January, according to Ukrainian state statistics committee data, reports Interfax News Agency. Inflation in Ukraine has reached 4.5% since the beginning of the year. It was recorded at 0.3% in the same period last year.
In early April, Ukrainian President, Leonid Kuchma, expressed his concern about high rates of inflation at the beginning of the year as compared to budget parameters. The Ukrainian Economy Ministry has so far confirmed the 6% inflation forecast for 2003, and the National Bank has expressed its intention to somewhat strengthened the rate of the hryvnyas and to place deposit certificates to block price growth.

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FOREIGN ECONOMIC COOPERATION

Ukraine to import grain from Russia, Kazakstan

Ukraine will buy grain abroad, Prime Minister, Viktor Yanukovych, told a cabinet meeting. This alone will help prevent rises in bread prices due to a massive destruction of winter crops and the delayed sowing campaign, Yanukovych said.
Yanukovych ordered the ministries of foreign affairs and economics to ensure grain purchases, primarily from Russia and Kazakstan. About 1m tonnes of grain needs to be imported, according to the government's estimates. To this end, the Agrarian Policy Ministry proposes that the import duty on wheat be temporarily lifted. The Cabinet of Ministers intends to use imported grain to bake bread and keep Ukrainian grain until next year to be used for sowing.
The government decided to allot 600m hryvnyas [over US$100m] in assistance to agricultural producers, Novyy Kanal television reported.
In 2003, frosts destroyed some 4.5m ha of winter crops out of the 8.4m ha sown, the Agrarian Policy Ministry said. 

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FOREIGN ECONOMIC RELATIONS

Ukraine, China sign new cooperation agreement

The Ukrainian government has given the green light to a new cooperation agreement with China. The document is aimed at making the two countries' crackdown on copyright violations more effective, as well as providing a more sound legal framework for these efforts. In addition, Ukraine and China hope the agreement will give a fresh impetus to bilateral trade and investments.

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FOREIGN INVESTMENT

Philip Morris may build 2nd plant in Kharkov

International tobacco giant, Philip Morris, is planning to build its second tobacco plant in the Ukrainian town of Kharkov costing US$100m, New Europe reported. The company's Ukrainian subdivision said there was a meeting between Kharkov region administration chief, Yevhan Kushnarev, and a senior company official. 
"The meeting participants discussed plans for expanding existing Philip Morris production facilities in Ukraine and the possibility of future investments," a company representative said. "Kharkov is a very important region for Philip Morris. It is planning to remain there for the long haul and develop," the company representative said.

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FOREIGN LOANS

World Bank plans to confirm US$300m credit

The World Bank plans to confirm in July the extension of credits for Ukraine under projects for issuing land ownership rights certificates (estimated at US$200m) and modernising the country's tax service (US$100m).
Interfax News Agency has quoted the press secretary to First Deputy Prime Minister Mykola Azarov, as saying the World Bank officials finalised these aims during a meeting in Washington between bank President Johannes Linn and a Ukrainian delegation headed by Azarov. The delegation was in the US capital to take part in the annual spring convocation of the World Bank and International Monetary Fund.
Ukraine and the World Bank have also agreed to continue working on a second Programmatic Adjustment Loan (PAL-2) with two tranches, which will make it possible to step up significantly the process of its preparation and confirmation by the bank's board of directors. So the first tranche's extension could be discussed as early as July, Lykyanenko noted.
The US$750m PAL programme is basic to World Bank assistance for Ukraine for 2001-2003, having been confirmed in September of 2000. The country's state budget for last year envisaged Ukraine receiving US$250m under PAL-2 but the extension of the funds was pushed back to this year. Expectations are that the bank's board of directors will also in July, address a strategic assistance programme for Ukraine for 2003-2007. 

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NUCLEAR ENERGY

Chernobyl catastrophe clean-up costs over US$12bn

Ukraine has spent some US$12.2bn on eliminating the consequences of the Chernobyl catastrophe, Ukrainian parliamentary speaker, Volodymyr Litvin, said recently. 
In 1991-2002, some five per cent of the funds allocated for budget spending was used for this purpose, and some US$6.5bn was spent over 12 years, Litvin said. "Ukraine cannot fully finance all the necessary expenditures in this area, and therefore it is necessary to concentrate on the most pressing issues," Interfax News Agency quoted him as saying.
Litvin criticised the moratorium on the construction of nuclear power plans in Ukraine, which was declared in 1990, stressing that it cost Ukraine billions of dollars. The moratorium was cancelled in 1998.

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