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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: 274 - (27/10/03)

The Old Traumas of Ukraine
The Ukrainians are in a trauma about several events in their long history. The conversion to Christianity in 988AD is not one of them. In a manner it is rather their blessing and not just in a religious sense. It makes them feel European; but of the East. That is the rub. For they are Orthodox, akin to the Russians.
But the snag is that they are always aware of being the smaller, weaker neighbour. It was not always so. Their capital, Kiev, was once the capital also of the Russians in the eleventh century.. They ruled the Russians. But then the Russians, as they became more numerous, made their capital in Moscow. 
In the middle ages the country was called Ukraina, meaning 'on the edge.' Ukraine is a flat agricultural land, which was early on the natural route for nomadic invaders from the interior, emanating from Central Asia. But Polish and Swedish armies crossed into Ukraine too and Ukraine became part of the Polish-Lithuanian empire that stretched from the Baltic to the Black Sea.
A Cossack rebellion in 1648-54 enabled the Russians to intervene and by 1667 Ukraine had become a province of the Tsarist empire. From that date Russia has been the dominant factor in Ukrainian life, which remains true even after independence in 1991. It came to be called 'Little Russia' in the eighteenth century and was forced to adopt the Russian language. Large numbers of Russians and Georgians migrated and settled the eastern areas of the country, farming its rich, black soil.
In the twentieth century the Ukrainians suffered from terrible adversities. A prime battlefield in the First World War and the Civil War, it became the laboratory in which Stalin in the 1930s initiated his policy of forced collectivisation, killing more than five million. Khruschev, as first party secretary, conducted Stalin's purges for him in Ukraine. Then came the Second World War, in which Ukraine lost nine million lives. More purges followed the war.
This terrible history as a killing ground has left its scars and an abiding distrust of Russia and Russia's wars. But eleven million Russians remain in the 52 million population. Russia has a heavyweight ambassador in billionaire Victor Chernomyrdin, ex-head of Gazprom and former premier of Russia. He is there to lock Ukraine firmly into Russia's orbit, above all in energy transit, notably natural gas, which goes to Germany and elsewhere in western Europe. In these circumstances it is seen in the EU as being a satellite of Moscow's, especially while its president is the internationally-discredited figure, Leonid Kuchma, who has nowhere else to turn to.

The Odessa-Brody oil pipeline
This was the interpretation put upon an extraordinary recent development when the Ukrainians greed to rent the Odessa-Brody oil pipeline to TNK, the Russian oil major now 50% owned by BP. It wants to use it to transport Siberian oil to the Black Sea and onwards to Bosphorous and beyond.
At the moment the pipeline is not being used. But its logical employment is to transmit Caspian Sea oil from Odessa to Brody on the Polish border for sale in Europe, that is in the reverse direction. Kazakstan and Azerbaijan are keen to see this happen. Pressure from them and Western firms involved has led to a suspension of the TNK deal which a full review of the situation is being made. 

New traumas of Ukraine
Three years ago in September 2000 a noted investigative journalist, Heorhiy Gongadze, was forced into a car and never seen again alive. His body was found headless in a forest. Subsequently a bodyguard of Kuchma's defected to the West, with tapes, which have the president demanding in vicious language that Gongadze be removed. He also ordered the coming elections to be rigged. The government denies the authenticity of the tapes. But no-one in Ukraine doubts that their president is both a murderer and a rigger of the electoral process.
A campaign by the opposition to have him impeached has run into the ground. Too many parliamentarians have their own skeletons in the cupboard. The opposition is clearly awaiting with impatience the expiry of Kuchma's term, after new elections in October 2004.

The EU remains in play
The EU is determined not to let domestic problems get in the way of a close relationship with Ukraine, a strategically vital country for its energy transit industry and much besides. An EU-Ukraine meeting in Yalta was held in early October, at which Kuchma and Berlusconi, the premier of Italy, the current holder of the EU revolving presidency, held the chair jointly. Berlusconi knows how to deal with rogues, being something of that order himself.
The usual bromides about continuing reforms were expressed. The EU is prepared to open up its markets to Ukraine, it avers. But not in the one area where it could rapidly make a difference, one may be sure, namely agriculture.
Real movement is not likely until 2006, by which time Kuchma will have gone, everything important is likely to be postponed until then. It is not only the Ukrainians who can't wait to see the back of him.

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AUTOMOBILES

UK firm said to invest over US$22m in Ukrainian car plant

A British company will invest US$22m in the Lutsk car plant [LUAZ]. This information has come as a surprise to many, 'Ekspress' has reported. 
The biggest investment in Volyn Region has been registered in the regional centre Lutsk, the head of the foreign economic relations directorate of the Volyn regional state administration, Klavdiya Khomyuk, said. A British firm called Motors Ltd will invest US$22.308m in the car plant by buying up its entire assets in cash.
The sum is huge, it's more than half of the plant's statutory fund. Nobody at the plant has so far had the courage to comment on the news. However, nobody has denied it, either. 
It is not quite clear who will be the plant's new owner, because information about Motors Ltd is scarce. The firm is known to be linked with the manufacture of the famous Jaguar and Austin makes!
The relationship between Ukraine car manufacturers and the powerful concern Ukrprominvest started in 2000, when this company purchased a more than 80 per cent stake in the Lutsk car plant for 10m hryvnyas [over US$1.8m]. 
Since then, the Lutsk car plant has changed for the better. Ukrprominvest's main contribution was the start of the assembly of [Russian] VAZ and UAZ cars of various models. In 2001, the assembly of further VAZ models continued. A total of over 6,000 of them have been assembled. In 2002, the assembly line produced more than 13,000 cars of different makes. 

Yazaki to start making auto wiring in Ukraine

Yazaki, a major Japanese producer of automobile wiring, is set to open a €31.7m factory in Ukraine in the near future. The plant, which started on a trial basis on September 15th, is targeting annual output of US$31.55m and is expected to pay at least US$4.5m into the budget each year from 2006, a spokesman for the Transcarpathian region's administration said recently, Interfax News Agency reported. The Yazaki factory, located in the Transcarpathian Free Economic Area (FEA), will initially export all of its output but, as the Eurocar project for the production of Volkswagen and Skoda cars in the same FEA takes shape, the Japanese firm may sell some of its wiring locally. Yazaki had its plant in December 2002 by Slovakia's IPEK management and Ukrainian specialists on a site 5-hectaresite. The actual premises occupy 22,000 square metres. Yazaki produces a wide range of automobile electrical systems and has an annual turnover of €5.5bn.

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BANKING

EBRD may buy 10% banking major Aval

The European Bank for Reconstruction and Development is considering the purchase of a 10% stake in Kiev-based bank Aval, one of Ukraine's biggest banks, Aval Chairman, Alexander Derkach, said, Interfax News Agency reported. Neither party has signed any documents yet, he added. 
Aval has charter capital of 500m hryvnias, the largest in Ukraine. It is one of the country's top ten banks by asset volume.

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BONDS

Government raises 10-year Eurobond

The Ukrainian government on September 26th decided to raise the limit on dollar-denominated Eurobonds maturing June 11th, 2013, that can be issued this year by US$100m to US$1.1bn, New Europe has reported. The finance ministry placed US$800m in 10 years Eurobonds at 7.65% annually on June 4th and another US$200m on September 29th. The precise details of the latest issue are unknown, but the indications are that the bonds were issued at face-value. Lead-managers are JP Morgan, UBS Warburg and Dresdner Bank. Yield on the bonds issued in June is a fixed 7.65% annually. Face value is US$1,000, payments are semi-annual on June 11th and December 11th. Holders will receive US$38.25 on each bond from December 11th, 2003. Ukraine had intended to borrow US$1.22bn abroad to cover its state budget deficit and refinance external debt in 2003 but in June, the parliament allowed the government to borrow 600m hryvnias in connection with this year's poor harvest. 

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FOREIGN LOANS & AID

World Bank reportedly promises US$2.5bn to Ukraine by 2007

The World Bank could allocate US$2.5bn to Kiev by 2007 under its new programme for Ukraine, according to an optimistic scenario of their relations, Ukrainian Prime Minister, Viktor Yanukovych, said in an interview to journalists in Washington on 8th October, commenting on his meeting with World Bank President, James Wolfenson, Interfax-Ukraine News Agency has reported. 
"We discussed assistance to Ukraine under the World Bank programme up to 2007. We talked about the optimistic scenario of the programme - allocating about US$2.5bn," Yanukovych said.
"We felt that the US Finance Department will help [Ukraine] during the consideration of the issue," he added. The total amount of loans disbursed by the World Bank to Ukraine since 1992 exceeded US$3.5bn for 27 projects.

Ukraine gets US$6m to fight AIDS

The Ukrainian Health Ministry has received its second tranche worth US$6m from the Global Fund to Fight AIDS, Tuberculosis and Malaria. Most of the money will be used to buy necessary medicines, the ministry's press service told ITAR-TASS News Agency.
The tranche will allow 2,100 patients to start receiving treatment immediately, while 4,000 AIDS patients will receive HIV therapy in the near future.
The Health Ministry has already invited bids for the purchase of medicines for AIDS patients, adults and children, and also for HIV-infected individuals.
According to latest reports, almost 52,000 HIV-infected individuals and 2,000 AIDS patients have officially been registered in Ukraine. However, experts believe that there are actually some 400,000 HIV-infected people in the country.

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