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UKRAINE


 

 

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Key Economic Data 
 
  2003 2002 2001 Ranking(2003)
GDP
Millions of US $ 49,537 41,380 37,600 55
         
GNI per capita
 US $ 970 770 720 137
Ranking is given out of 208 nations - (data from the World Bank)

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REPUBLICAN REFERENCE

Area (sq.km) 
603,700 

Population 
47,732,079

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

Capital 
Kiev

Currency 
Hryvnya

President 
Viktor Yushchenko




Update No: 303 - (30/03/06)

Ukraine is in a volatile political situation after elections to the Rada on March 26th. It is clear that a coalition government is inevitable; but also that any combination of parties is fragile and could well not last.
On the positive side no one has disputed the fairness of the vote, unlike in the presidential elections of 2004 that induced the 'Orange Revolution.'
Outcome of the elections to parliament
The official results of the parliamentary elections were released in Ukraine on March 28th. In the final count, the share of the opposition Party of the Regions was 32.06%, with former premier Yulia Timoshenko's bloc on 22.7%. Her party was well ahead in the capital; and she is clearly the real winner. She is obviously in a mood to settle scores. 
The socialist party obtained 5.7%, while the communist party got 3.66%.
The pro-presidential Our Ukraine Party's vote came in at 14%.

The coalition debate in Ukraine
Two possible combinations of governmental coalition were evident even ahead of the official results of the elections. The coalition could have been formed either by the Orange forces (with Yulia Timoshenko's Bloc and Our Ukraine of Viktor Yushchenko) or by Viktor Yanukovich's Party of Regions (in case Socialists and Communists join him).
President Yushchenko was to be on the losing end in any event, whereas the popularity of former Prime Minister Timoshenko was bound to keep on growing even if she was not called to head the government again. 

Three Parties Forming Coalition
March 29th?
Experts are still hesitant as to which parties will join which since all parties are currently in talks with all others.
A memorandum on a coalition of Ukrainian parties Yulia Timoshenko Bloc, Our Ukraine and the Socialists was made public on March 29th, reported Russian news agency Itar-Tass. The memorandum said that Timoshenko's party will choose the prime minister, as it received the most votes out of the coalition members in the March 26th parliamentary elections. 
The memorandum also lays out a general set of principles that the coalition would strive to achieve as well as a formula for assigning important government positions. But so far, Socialist party head Alexander Moroz is the only coalition member to have signed the memorandum.

Timoshenko thrusting her way in
Despite the various possible combinations to form a coalition, politicians discuss only one - the one that will unite all Orange forces. After Yulia Timoshenko and Alexander Moroz had one-on-one meetings with President Viktor Yushchenko, they declared the coalition of the three political forces (Yulia Timoshenko's Bloc, Our Ukraine and the Socialist Party) is the only valid option. 
Yulia Timoshenko also noted that the people of Ukraine had made its choice, so she should become prime minister. Alexander Moroz said he has no ambitions to occupy the prime minister's seat and would agree to any way of choosing the premier - either it would be the leader of the largest faction in the coalition (i.e. Yulia Timoshenko) or a compromise person for all Orange forces.
Timoshenko's comeback will indeed be unpalatable for the president's team. She has never made a secret of her enmity against the majority of Yushchenko's allies. The former premier has insisted since the start of the election campaign that the coalition with Yushchenko could be built only in case he disbands his entourage. Should he do so, he would virtually entrust his fate to Yulia Timoshenko, giving up any personal political ambitions.
Though this alliance would be exceptionally painful, Timoshenko does not hesitate to criticize harshly the president and his team, which can hardly help mend relations. Her talk is anything but emollient. She was brash enough to call Yushchenko an "opportunist clutching at power" and labelled his aides "fake Orange." She said that the good performance of her bloc at the election was "a lesson given to the president."
Timoshenko's arrival at talks with Yushchenko was very expressive as well. She decided to use the central entrance of the president's secretariat, which foreign heads of states normally use. Besides that, Timoshenko decided that the driver should take her right to the entrance, and she would not leave the car until the president's security opened the gate, crossing Bankovskay street for her.
Yulia Timoshenko's Bloc is the only one so far that has come up with schemes to shape posts. Andrey Shkil, a deputy at the Supreme Rada, believes that the head of Our Ukraine's election campaign Roman Bessmertny may become the parliament's speaker while Alexander Moroz may be appointed Secretary of National Security and Defence. Meanwhile, the party in office avoids speculations about the government's line-up and the prime minister especially. "We should speak about the development of the state, instead of discussing sharing seats," Prime Minister Yury Ekhanurov retorted. Our Ukraine's political council urged to sign a memorandum to create a democratic coalition.
Yulia Timoshenko's bold stance at the talks is no accident. Her position is exceptionally auspicious. She will benefit even if her bloc does not join the coalition and she is not chosen prime minister.

Political Suicide of alternatives
Timoshenko has been adamant since the election campaign on one key matter, saying that an alliance with Viktor Yanukovich is unacceptable to her. She is not exaggerating the point, and the reason is not in the ideological controversy. 
Any union with the Party of Unions would be extremely unfavourable for her. Firstly, she would be playing the role of a junior partner in the coalition with Viktor Yanukovich, which she couldn't agree to. Secondly, the alliance with the Blue would deal a serious blow to her image. Timoshenko owes her success to Orange voters, the people who voted for Yushchenko at the presidential election in 2004. She managed to convince them that she is the true bearer of values of the revolution while the president betrayed them by signing a memorandum with Viktor Yanukovich a few months earlier. 
Should the new ruling coalition be built between the Party of Regions and Our Ukraine, Viktor Yushchenko will lose his last advocates, his rating will plummet and Yulia Timoshenko will acquire new followers - those who used to support the incumbent president. A coalition with Viktor Yanukovich will become political suicide for Viktor Yushchenko, Yulia Timoshenko said. 
The president had talks with the leader of the Party of Regions, but the form of any future coalition was not discussed, Yanukovich reported. More detailed talks are till apparently being conducted by others. Boris Tarasyuk, the Interior Minister and Our Ukraine's leader, has even pointed to the conditions under which the party in office could discuss a coalition with the Party of Regions. These are the denial of the idea of a federal state, the refusal to give the Russian language an official status and the acknowledgement of the Euro integration path of Ukraine.
The union of former enemies would, however, play right into Yulia Timoshenko's hands. Any such coalition would be likely to become very fragile. Should the new Supreme Rada be dissolved, the result at any new election would be more auspicious for Yulia Timoshenko, who has already mastered the art of a successful opposition fight.

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BANKING

Banca Intesa completes deal to buy Ukrsotsbank stake 

Banca Intesa SpA, Italy's second largest bank, has completed processing a deal to buy 85.42 per cent of Ukrsotsbank (Kiev), Ukrsotsbank Chairman Boris Timonkin said at a press conference recently, Interfax News Agency reported.
He said that as a result a possible suit filed by Ukrsotsbank minority shareholder - the Cypriot company Tempsford Investments (which owns 7.2 per cent of the bank) - will not be able to block the deal. Tempsford Investments plans to file a suit to stop the additional share issue as part of the deal with Banca Intesa. The Cypriot company states that it was illegally excluded from participating in the issue and it did not receive the possibility to subscribe for new shares.

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ENERGY

Ukraine vows to modernise natural gas network 

Ukrainian Prime Minister, Yuriy Yekanurov, said recently in the Polish capital Warsaw, his country would modernise its natural gas pipeline and storage network within the next five years, Deutsche-Presse-Agentur (dpa) reported. 
Yekanurov also said Kiev intended to conclude new natural gas contracts, beef-up underground storage tanks and boost electricity sales abroad, Polish Radio reported. 
Two recent energy crises in Ukraine and several European Union states caused by Russian cuts of natural gas deliveries to Ukraine have spurred the move to modernise, Yekanurov observed. Ukraine plans to double its underground reserves of natural gas in western areas within the coming years. Yekanurov said extra profits from increased transit fees paid by Russia to Ukraine for gas transfers across its territory will be used to finance modernisation costs. Ukraine intends to sign new contracts for natural gas deliveries from central Asia. Yekhanurov said earlier Ukraine plans to propose that EU and other foreign investors to take part in the construction of new gas pipelines though its territory, with the possibility of subsequently privatising these pipelines. The premier said the government would take all the necessary steps to attract foreign capital into an international consortium that is currently building the Bohorodchany-Uzhgorod gas pipeline.

Gas deal will confirm stable price for 5 yrs 

Ukrainian President, Viktor Yushchenko, hopes a Ukrainian-Russian intergovernmental agreement will confirm a stable price for gas for the next five years - the price documented in the agreement on setting up a joint venture to deliver gas. "The president is well aware that this is a compromise variant for Ukraine," Anatoly Matviyenko, deputy head of the presidential secretariat said. This document will settle the problem of Turkmen gas, linkage between the gas transit price and stable price at least for the next five years, New Europe reported.

Nuclear fuel production units to be built in 12 yrs 

Nuclear fuel production facilities may be built in Ukraine within the next 12 years, Ukrainian Prime Minister, Yuriy Yekhanurov, said. "A nuclear fuel cycle will exist in Ukraine. But one needs 12 years of intensive and active work," Yekhanurov said in a speech to students of the Lviv Polytechnic National University in Lviv, New Europe reported.
Today Ukraine "fully depends on fresh nuclear fuel from Russia," he said. "We should draw certain conclusions, and we are making them," the prime minister said. The creation of a nuclear fuel cycle is hampered, in particular, by disagreements between two scientific institutions, Yekhanurov said. "There are two schools: however, they are rivals and unwilling to cooperate. There are problems of scientific vision," he said. The Ukrainian government is reviewing the issue of joining enterprises that may take part in nuclear fuel production, he said. They include the Sevastopol university of Nuclear Fuel and Industry, the Kharkiv Physics and Technical University and other enterprises. "We will do our best in order that these enterprises work towards implementing the idea," Yekhanurov said.

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JOINT VENTURES

JV set up in Ukraine to sell Isuzu cars in CIS 

The Bogdan Corporation, part of the Ukrprominvest group of companies, and Japan's Isuzu Motors Lt. and Sojitz Holdings Corp, signed a trilateral contract to set up the joint venture, Isuzu Ukraine Automobile Company, Serhiy Krasulya, Bogdan's press secretary, said, Interfax News Agency reported.
The joint venture will specialise in selling Isuzu trucks and busses in Ukraine, as well as increase truck and bus exports from Ukraine to CIS markets, including Russia, he said. Bogdan will own 50 per cent of charter capital in the joint venture, Isuzu Motors will have 30 per cent and Sojitz Holdings will own 20 per cent. Such a distribution shows "the high level of trust the Japanese partners have for the Bogdan Corporation," Krasulya said, citing Bogdan President, Oleh Svynarchuk. The joint venture's main office will be in Kiev.

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MINERALS & METALS

Ilyich steel mill reduces roll output 9% in Jan. 

Ilyich Metallurgical Combine of Mariupol (MMK) reduced finished roll production tentatively up 8.8 per cent year-on-year to 444,000 tonnes in January, the Ukrainian steel major said, Interfax News Agency reported.
Pig iron production fell 0.9 per cent to 422,000 tonnes and crude steel was down 7.8 per cent to 544,000 tonnes. Sinter output fell 13.2 per cent to 1.022 million tonnes and steel pipe output fell 33.3 per cent to 3,800 tonnes. In December 2005, the mill produced 494,000 tonnes of finished roll, 623,000 tonnes of crude steel, 472,000 tonnes of pig iron, 1.137 million tonnes of sinter and 7,300 tonnes of pipes. The mill raised finished roll production 3.1 per cent to 5.537 million tonnes in 2005.

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