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UKRAINE

NEWS REPORT
 

 

In-depth Business Intelligence

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)

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REPUBLICAN REFERENCE

Area (sq.km) 
603,700 

Population 
48,055,439

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

Capital 
Kiev

Currency 
Hryvnya

President 
Leonid Kuchma 

  

Update No: 287 - (09/12/04)

The stakes in Ukraine's presidential elections have been almost incalculably high. Rarely has so much depended on the outcome of the ballot box. The Supreme Court has now adjudicated that there should be a re-run of the second round, since it, and indeed the first round, were marred by blatant fraud.
It became very clear in the course of the campaign that three key events occurring in the last weeks of the campaign were tipping the scales in favour of the opposition challenger.

Mass rally for challenger
Firstly, tens of thousands of supporters of Ukrainian presidential candidate and challenger, Viktor Yushchenko, filled Kiev's main square on November 6th as part of protests planned nationwide against alleged election fraud in the first round. Yushchenko, who faced Prime Minister Viktor Yanukovych in the presidential election's Nov. 21 second round, prophetically told the crowd of 30,000 that victory was at hand. "We stand a few steps before the final victory of democratic forces," said Ukraine's top opposition leader, whose appearance on stage before supporters waving orange flags - his campaign colour - sparked screams of "Yushchenko!" 
Some of this ex-Soviet republic's top rock bands had performed for the crowd before Yushchenko's arrival. Organizers claimed more than 100,000 people had gathered; police put the number at 10,000. The key thing is that the demonstrators kept up the pressure, remaining in the city centre. 
Kiev's mayor Oleksandr Omelchenko had threatened to ban the rally, but a local court gave Yushchenko the go-ahead to hold the rally. No major police presence was visible.
In the western city of Lvov, more than 4,000 people also peacefully rallied in support of Yushchenko. Protests were also planned in other cities around this nation of 48 million.
Neither Yushchenko nor Yanukovych, running in a crowded field with 22 minor candidates, received more than 50 percent of the votes on October 31st 's election, which Western governments and election observers said was flawed, pointing to media bias in favour of Yanukovych and state interference.
The election was seen as pivotal for the democratic future of Ukraine, flanked to the west by NATO countries and to the east by Russia, which still wields great influence over Ukraine's economic, political and military affairs.

Deal with the socialists the key; the communists staying neutral
Some percipient political analysts rightly reckoned that Yanukovych, seen as more inclined to cultivate strong ties with Russia, would attract significantly less of the minor candidates' vote than would Yushchenko. This, indeed, turned out to be the case.
For the second decisive event was that Yushchenko secured the support of Oleksandr Moroz, leader of the Socialist Party, who came in third in the first round with 5.83 percent of the vote. In exchange for Moroz's backing, Yushchenko pledged Nov. 6 to carry out political and constitutional reforms to redistribute power between the president, parliament and the government, effective in 2006. 
Their deal also calls for the eventual withdrawal of 1,600 Ukrainian troops from the U.S.-led coalition in Iraq where they serve under Polish command. Nine Ukrainian soldiers have died in Iraq and 20 have been wounded. Authorities announced earlier this year that the country's military presence in Iraq would be gradually phased out.
On Nov. 8, Yushchenko won the support of former prime minister, Anatoly Kinakh, who got less than 1 percent in the first round. In a knife-edge result every one per cent can count.
Communist Party leader Petro Symonenko refused to back either finalist, leaving another potentially key 5 percent of the first round vote uncertain.

The real significance of the result; a profile of the clans
Ukraine's opposition always stood a real chance of winning. Its opposition groups have for over a decade helped forge a civil society and healthy political parties far beyond anything seen in President Vladimir Putin's Russia. Yanukovich represents the Donetsk clan, one of several geographically defined oligarchic groups that compete to dominate Ukrainian business and politics. He has little sway over either the Kiev clan, led by Viktor Medvedchuk, Kuchma's chief of staff, or the Dnepropetrovsk clan of Viktor Pinchuk, Kuchma's son-in-law. But both oligarchs preferred Yanukovich to Yushchenko, who has vowed to "end corruption" and send "bandits" to jail.
Yushchenko's promises resonate across Ukraine. Even though the oligarchs control all but one of the main television stations, he remains popular. Actually, the normal fare on these stations is so tedious that their support for the establishment camp may have been counter-productive.
Under President Kuchma, the economy started to boom -yet thanks partly to Yushchenko's brief, reformist stint as premier four years ago. But the oligarchs' grip has grown tighter. In June, a consortium led by Pinchuk and Rinat Akhmetov, a Donetsk magnate, bought a state-owned steelworks in an auction allegedly rigged to specifically exclude foreign bidders offering two or three times as much. The move was probably more than just another property grab; it also suggests an effort to forge an inter-clan alliance for the post-Kuchma period. 
Such an alliance makes Yushchenko's rule more difficult - and he knows it. So he is cagey about plans to confront the oligarchs. "I don't exclude investigations of the clans behind Medvedchuk or Yanukovich, but the rest of business wants clear rules," he says. By leaving Pinchuk off this list, Yushchenko may have been hinting that he wanted a truce with Ukraine's most powerful magnate should he become president, which he now almost certainly has.

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AGRICULTURE

Ukraine collects record high grain harvest, premier says

Ukraine has collected 45m tonnes of grain this year, Prime Minister Viktor Yanukovych said at a 'Cabinet of Ministers' meeting recently. "This is the biggest harvest since independence, this is a big victory of our farmers," he said, ITAR-TASS news agency reported.
The figure looks especially high compared to last year's bad harvest, when Ukraine collected only 20.2m tonnes of grain.
"We have never had a harvest like that. And 45 million would have been a good harvest even for those good old days when agriculture financing was much better. This year we have obtained this result only because we continued introducing new approaches to agricultural reform," Yanukovych said.

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AVIATION & SPACE 

Ukraine, Russia to launch satellite in December


Ukraine and Russia are planning to launch the Sich-1M satellite, designed to study Earth, in December 2004, a source in the National Space Agency of Ukraine said, Interfax-AVN Military News Agency web site reported. 
The project for the joint development and usage of the Sich-1M satellite is among the priority Russian-Ukrainian space exploration programmes. The Sich-1M is a modification and an upgrade of another Sich-1M satellite that was successfully launched in 1995. 
The Sich-1M will have devices that would allow it to monitor Earth and space in optical, infrared and microwave spectra, which makes monitoring in cloudy and dark conditions more efficient. In addition, devices that will allow for the satellite's use in scientific studies of the earth and the oceans in terms of geology, climate and ecology, will be installed on the Sich-1M. The information received from the satellite will be used to resolve economic issues of Ukraine and Russia. 
The Sich-1M will be fitted with a radio communications line of the same frequency as that of foreign satellites, that may serve as a foundation for international cooperation and presenting the Sich-1M's information to the international market within the committee for earth-observing satellites. The launch will also be part of a programme for the creation of a micro satellite to resolve local tasks of scientific and economic character.

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ENERGY

Russian oil company buys stake in Ukrainian gas firm


The Antimonopoly Committee of Ukraine has allowed the Russian oil company, Alyans, to buy a stake in the authorized capital of the Ukrainian gas company, Alyans-Haz, UNIAN News Agency reported.
The purchase will allow the Russian company to have an excess of 50 per cent of votes in the company's top management body.
The main activity of the Russian oil company Alyans is the exploration and extraction of oil and gas.
The Alyans-Haz company (Simferopol [Crimea]) has not been carrying out any economic activities of late.

Russia to keep Ukraine oil supplies stable in 2005

Supplies of Russian oil to Ukraine in 2005 will be the same as in 2004, at least, Industry and Energy Minister, Viktor Khristenko said, Interfax News Agency reported.
He said there will be no problem with signing a protocol to the agreement on oil supplies between Russia and Ukraine, containing these parameters. "There will be no problem with signing, 22 million tonnes - this figure will not be less for next year," he said.
Oil supplies to Ukrainian refineries in 2003 increased 15.8 per cent year-on-year to 24.62 million tonnes. Supplies of Russian oil increased 28.9 per cent to 21.32 million tonnes.
Supplies of Russian oil to Ukrainian refineries in January-September this year amounted to 15.73 million tonnes, or 86.9 per cent of total supplies.

Gazprom, Naftogaz sign deal on pipeline consortium

Gazprom and Naftogaz Ukrainy signed an agreement on cooperation in the investment phase of the international gas pipeline consortium project, Interfax News Agency reported.
Alexei Miller, the Russian gas monopoly's CEO, and Yury Boyko, head of the Ukrainian oil and gas company, signed the deal in Kiev in the presence of the presidents of both countries.

Ukrnafta to increase oil production 2.3% in 2005

Large Ukrainian oil production company OAO Ukrnafta plans to produce 3.07 million tonnes of oil in 2005, up 2.3% from the target for 2004 of 3 million tonnes, company department chief, Volodymyr Doroshenko, said at the international conference Oil and Gas 2004 in Kiev recently, New Europe reported.
Gas production in 2005 is planned at 3.35 billion cubic metres, the same as this year. Ukrnafta produced 2.845 million tonnes of oil and 3.274 bcm of gas in 2003. The company accounts for 93% of all oil produced in Ukraine, 40% of gas condensate and 18% of gas. Naftohaz Ukrayiny owns a stake of 50% plus one share in Ukrnafta, and a group of companies controlled by PrivatBank controls another 42% of the company.

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FOREIGN INVESTMENT

Foreign investment in Ukraine up 14.9 per cent in January-September

Foreign direct investment [FDI] grew by 14.9 per cent or US$1bn in Ukraine over January-September 2004, the State Statistics Committee said recently. By 1 October, FDI in Ukraine's economy amounted to US$7.76bn [since 1991], corresponding to US$163 per capita, Interfax-Ukraine News Agency reported.
In January-September 2004, FDI in Ukraine equalled US$1.321bn, including US$51.9m from the CIS countries (3.9 per cent of the total FDI) and US$1.269bn from other countries. Over the same period, foreign investors withdrew US$277.6m.

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MINERALS & METALS

Primary aluminium output up

Ukraine raised its primary aluminium output 7.3 per cent year-on-year to 70,850 tonnes in January-September, Serhy Hryshchenko, board chairman of the Ukrtsvetment concern said at the Metals 2004 conference in Kiev, Interfax News Agency reported.
Production grew 10.2 per cent to 1.16m tonnes of alumina, 10.2 per cent to 15,880 tonnes of aluminium wire and 46.8 per cent to 24,300 tonnes of semi-finished goods made from copper and copper alloys, Hryshchenko said. Non-ferrous output in value was 5.04bn hryvnias, he said. In 2003 Ukrainian non-ferrous exports fell 31.4 per cent to 260,000 tonnes (US$636m), Hryshchenko said. Copper and aluminium products accounted for 90 per cent of the exports compared with 80 per cent in 2002, he said. "The same tendencies can be seen this year as well, and prices have risen on foreign markets for the goods which Ukraine produces, namely unprocessed aluminium, aluminium alloys, copper and brass bars and rods, ferronickel and others," he said. 

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TRANSPORT

Ukraine, Russia sign accord to launch high-speed rail link

The Russian and Ukrainian transport ministers, Igor Levitin and Heorhiy Kyrpa, recently signed a memorandum to organize a high-speed passenger railway link between Moscow and Kiev, in the presence of the two countries' presidents, ITAR-TASS News Agency reported.
At present, it takes almost 13 hours to get from Moscow to Kiev, using the current accelerated train service. Customs proceedings take up about one hour of the trip's duration.
The Russian Transport Ministry told an ITAR-TASS correspondent that when the memorandum enters into force, "the work of border guards and customs officers will be intensified using contemporary logistics and advanced equipment."
In addition, the parties will unite efforts to repair the tracks and railway equipment, which will allow the speed of the trains travelling between the Russian and Ukrainian capitals to be increased to 180 kph and to reduce the trip's duration to just eight hours.

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