Books on Ukraine
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
Update No: 280 - (29/04/04)
The Ukrainians are facing a presidential election in October, which is looking as if it will be traumatic. The incumbent, Leonid Kuchma, could have finessed the matter some months ago, but not now. He has somehow bungled the show.
He is immensely unpopular, having patently rigged the last election and having engaged in vicious human rights abuses to remain in power. Kuchma is due to step down, although the constitutional court has indicated that he can serve another term, because his first one in 1994-99 began before the stipulation of no more than two terms for a president was introduced.
Kuchma somehow knows that he is too unpopular to pull it off. Even the long-suffering Ukrainians would somehow balk at another five years of him, there having been a series of demonstrations already.
His regime is a by-word for corruption, even by lax post-Soviet standards. There was a move afoot to transform the presidency into one elected by parliament, not the people. Now it is expected in the Kuchma camp that it would be easier to persuade the 300 deputies in the 450-seat parliament needed for constitutional changes to vote to enhance the powers of the premiership, while leaving direct elections to a greatly reduced presidency. Kuchma could then, the idea runs, be appointed premier by the new president.
The new man
There is someone very well poised to take over from Kuchma, somebody not likely to give him away. The head of the Ukrainian Central Bank in the late 1990s was Leonid Yushchenko, a brilliant technocrat, much admired in the West. He became premier in 2000 and presided over a miraculous growth performance, in which GDP bounded up by 5.7 % and then by 7.5 % in successive years. He was obviously too good to have around and Kuchma sacked him in middle 2001.
He is a great friend and former fellow student in the West of Georgia's new president Mikhail Saakashvili, who had the temerity to visit him in Kiev shortly after his own election in Tbilisi. It is clear what Saakashvili wants in place in Kiev - and his backers in the West too.
The population have not forgotten him, not at all. He is widely respected and would be a shoo-in in an honest election. But will it ever happen?
Yushchenko is a savvy operator. He has made it clear that he would not institute legal proceedings against Kuchma. He may even have skeletons in his own cupboard. But one thing he knows for sure - everybody else in Ukrainian public life does, not just Kuchma!
He is likely to drop any vendetta against the outgoing president so long as he is really going out. There is a logical solution to the Ukrainian problem. Let bygones be bygones.
Ukraine Airlines fly 34% more passengers
Ukrainian Airlines flew 34% more passengers in 2003 and 64.7% more cargo, the transport ministry said. The ministry said 46 airlines flew 2.4m passengers and shipped 148,400 tonnes of cargo. The number of passengers on international routes grew by 30%, while passengers on domestic routes increased by 60%. Airlines flew 515,000 passengers on domestic routes. The share of domestic scheduled flights rose from 18.8% in 2002 to 21.7%, New Europe reported recently.
Moody's assigns B1 rating to Ukrsibbank loan notes
Moody's Investors Service has assigned a rating of B1 to the upcoming issue of loan participation notes issued by Dresdner Bank AG on a limited-recourse basis for the sole purpose of funding a loan to UkrSibbank pursuant to a loan agreement between Dresdner Bank AG and UkrSibbank, New Europe reported recently.
The notes will be denominated in US dollars and the loan represents a senior unsecured claim on the bank. The outlook for the rating is stable, Moody's said in a press release. The rating of the notes has been placed at the B1 country ceiling for bond ratings in Ukraine, says Moody's. Moody's notes that UkrSibbank was the seventh-largest bank in Ukraine by assets and capital, and the fifth-largest by customer loans as of September 30th 2003. The bank's strong corporate banking is complemented by the investment banking operations, and UkrSibbank has also been actively developing its retail banking operations. According to Moody's, UkrSibbank's approach of offering a wider range of both commercial and investment banking products is an important factor supporting its ratings, as such a broad product range may become an effective hedge during periods of market volatility. UkrSibbank, which is headquartered in Kiev, was registered on June 18th 1990. Its main shareholders are Ukrainian Metallurgical Company, Redan and
Kiev, Ashgabat to sign gas agreement in May
Ukraine and Turkmenistan plan to sign a long-term agreement for supplies of Turkmen gas to Ukraine from 2006 to 2032 during a visit by Ukrainian President Leonid Kuchma to Ashgabat at the start of May. A source in the Turkmen presidential press service said recently that this was agreed during a telephone conversation between Turkmen President, Saparmurad Niyazov, and Kuchma on March 20th. Under an existing five-year gas supply agreement between Turkmenistan and Ukraine, signed until 2006, gas supplies amount to 36bn cubic metres per annum. This gas is supplied at US$44 per 1,000 cubic metres. Under the agreement, Ukraine pays for 50% of the supplies in cash and 50% in goods and services, Interfax News Agency reported.
Ukrtransnafta oil transportation up 4.5%
OAO Ukrtransnafta, the operator of Ukraine's oil pipelines, increased oil transportation through the republic's territory 4.5% year-on-year to 9.137m tonnes in January-February this year, New Europe reported recently.
The Ukrainian Fuel and Energy Ministry said that this included a year-on-year increase of 13.6% to 1.684m tonnes in February. Transit of oil to Europe in January-February 2004 increased 4.5% year-on-year to amount to 5.137m tonnes. Oil supplies to Ukrainian oil refineries also increased 4.5% to 4m tonnes. Transit accounted for 56.2% of total transportation, with supplies to Ukrainian refineries accounting for 43.8%. Oil transportation through the Druzhba pipeline in January-February increased 7.1% year-on-year to amount to 3.507m tonnes, with transportation through the Pridneprovsky trunk pipeline up 3.0% to 5.63m tonnes.
Naftohaz Ukrainy to attract US$45m credit from West LB
Ukrainian oil and gas concern, Naftohaz Ukrayiny, plans to sign an agreement with West Deutsche Landesbank to receive a credit of US$45m to service contracts to buy gas from Turkmenistan, company CEO, Yury Boiko, said at a press conference in Kharkiv on March 12th, New Europe reported.
He said that the interest rate on the credit will be the same as on a previous credit -4.8% per tear. A source in the company said earlier that the interest rate on the credit will be the lowest rate in the history of Ukrainian borrowing. This credit, like the previous one, will be secured by Naftohaz Ukrainy export contracts. Naftohaz Ukrainy received a credit from West LB of US$30m at the end of 2002 at LIBOR +4.25% to modernise the gas transport system and ensure gas supplies, using 1bcm of gas in an underground reservoir as collateral. The credit was repaid from natural gas export revenue. Naftohaz Ukrayiny is increasing its cooperation with international financial institutions to reduce spending on credits, create prerequisites for receiving a credit rating and to prepare to enter the corporate debt market. West LB carried a loss of €1.7bn in 2002.
Japan grants over US$1.2m for Chernobyl project in Ukraine
The governments of Ukraine and Japan and the UN Development Programme [UNDP] have been implementing a joint project to support communities living in areas affected by the Chernobyl catastrophe, Interfax-Ukraine News Agency reported.
Ukrainian Emergencies Minister Hryhoriy Reva, the Japanese ambassador to Ukraine, Kishichiro Amae, and UN representative Douglas Gardner said this at the project presentation ceremony. Japan is to provide over US$1.2m in financial aid. The project called "Helping the population that fell victim to the Chernobyl catastrophe to overcome fears, problems and risks" is to be carried out by the Ukrainian and Japanese governments, the Ukrainian Emergencies Ministry, the Japanese embassy in Ukraine, the fund for the defence of people, the UNDP and the Chernobyl programme "Revival and development." The project is aimed at tackling the problems that victims of the Chernobyl catastrophe are facing and at reviving the economy in the affected regions. The project is expected to provide aid to over 20,000 people from 70 communities in that region, including businessmen.
FOREIGN ECONOMIC COOPERATION
Ukraine, Jordan to boost bilateral investment
Ukrainian and Jordanian entrepreneurs have created a Business Council designed to elaborate and introduce measures to boost flows of commodities between the countries and increase mutual investments, New Europe reported.
The agreement on cooperation and creation of the council was signed by Anatoly Kinakh, the chairman of the Ukrainian League of Industrialists and Entrepreneurs, and Hamdi Tabba's, the Jordan Businessmen Association chairman, at a Ukrainian-Jordanian business forum recently. The newly created organisation will assist Ukrainian and JordanIAN entrepreneurs in establishing direct business contacts and ensuring steady trade and economic relations between the countries. The delegation of Ukrainian entrepreneurs, led by Kinakh, visited Jordan and Syria recently. In Amman, the Ukrainian delegates are attending the business forum and an international exhibition on rebuilding Iraq, and in Damask they will attend a Ukrainian-Syrian business forum.
Ukraine, Egypt to discuss trade, tourism cooperation
Ukraine and Egypt will hold a meeting of the bilateral intergovernmental trade, economic, scientific and technical cooperation, the Ukrainian Foreign Ministry's press service said, Interfax News Agency reported.
It said the issue was discussed during a meeting between Ukrainian Ambassador to Egypt Andriy Veselovsky and Egyptian Tourism Minister Mamdouh El-Beltagui. The number of tourists visiting Egyptian resorts, particularly Sharm El Sheikh and Hurghada, has been rising over the past years, the interlocutors noted. In 2003, 79,000 Ukrainians visited these resorts. At the same time, there is interest in tourist visitS to Ukraine, for example, in health tourism.
EBRD invests €116m in 2003, OKs 6 projects
The European Bank for Reconstruction and Development invested €116m in Ukraine in 2003 and approved six new projects, the EBRD said in a press release posted on its Web site recently.
Overall EBRD investment in Ukraine reached €1.279bn and the number of confirmed projects, including those where financing has not yet begun, 58. Ukraine has the fifth most projects and overall investment after Russia (171 projects, €5.17bn), Poland (129 projects, €2.84bn), Romania (75, €2.36bn), and Hungary (66, €1.53bn). Ukraine came tenth among 27 countries in terms of EBRD investment in 2003. The EBRD confirmed 119 projects for these countries in 2003 and invested €3.72bn.
Sistema, Rostelecom interested in Ukrtelecom
AFK Sistema and Rostelecom have shown interest in acquiring a 42.86% stake in Ukrainian national telecoms operator Ukrtelecom, the acting chairman of Ukrtelecom, Hryhory Dzekon, said, Interfax News Agency reported.
"These two companies are the only ones interested and they are holding consultations with us," he told a parliamentary committee on construction, transport and telecoms recently.
One of the reasons why there is little interest from European operators is that Ukraine does not have an independent regulating body for the telecoms industry, Dzekon claimed. The law on telecommunications, which came into force at the end of 2003, envisages the creation of such a body - the National Telecommunications Regulation Commission. The commission is to be formed this year and start work in 2005. Ukraine's State Telecoms Committee will implement the functions of the new body until theN. "There is a strong difference between the regulation of our market and the western (market) and this frightens western investors. Russian companies consider everything here to be the same as in Russia," he said.
Another obstacle is the lack of an expert valuation of the company's VALUE. "When we present the company at a road show, we cannot answer natural questions about price," he said.
Ukrtelecom owns a large number of facilities that cannot be privatised and it is not clear what can be done with these, he said. One of the problems facing Ukrtelecom concerns compensation from the government for offering concessions to certain categories of the population. In accordance with Ukrainian legislation, the company must offer concessions whether it receives compensation or not. The government owes the company over 400m hryvnias in compensation.
In addition, there are some contradictions in Ukrainian legislation that do not help the interests of foreign investors in privatisation. For example, 30% of the money made from the sale of Ukrtelecom must go to increasing its charter capital. "The more an investor pays for the shares the more will be sent to increase charter capital, the government's share of the company will grow and the investor will receive a smaller share," State Property Fund First Deputy Chairman Alexander Bondar said.
The Ukrainian State Property Fund plans to sell 42.86% of Ukrtelecom in 2004. After the sale, the controlling stake of 50% plus one share will remain in state hands. Earlier the remaining 7.14% was sold on easy terms to Ukrtelecom employees. Initially, the fund planned to sell the 42.86% stake in 2002, but postponed the sale several times due to the unfavourable situation on the international telecoms market.
Ukrtelecom posted A net profit of about 600m hryvnias in 2003, down 25%, according to preliminary figures. Revenue rose 15% to 5.05bn hryvnias. Ukrtelecom and companies in which it is a shareholder control about 60% of Ukraine's telecommunications market. It has 9m fixed line subscribers.
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