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UKRAINE


 

 

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)

Books on Ukraine

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: 307 - (27/07/06)

Ukraine's future looks less orange than lemon
Everything was meant to change in Ukraine as a result of the Orange Revolution in the last three months of 2004. We are now confronted with the fact that in reality it was a Lemon Revolution.
Corruption and cronyism were supposed to give way to transparency and democracy. "Bandits" were meant to be jailed, dubious privatisations were meant to be reversed. EU and Nato membership appeared to be within reach. 
It has not quite worked out like that - though some important goals were achieved. Pinpointing the most important gain, "the main achievement of the Orange Revolution was freedom of speech," says Taras Berezovets, chief editor of the Ukrainian political website, Polittech.org. 
"Another benefit has been freedom of business. Politicians stopped interfering, and we now have an economic boom, which has continued despite recent political crises." 

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A parliamentary election in March, unlike many previous elections, was free and fair - so much so, that the winner was the man who "lost" the Orange Revolution, the pro-Russian former prime minister Viktor Yanukovych. 
He has now been nominated again for the premiership, which, under constitutional amendments brought in after the Orange Revolution, would make him the most powerful man in the country. 

The Lemon Revolution
But many of the Revolution's promised changes did not occur. Everything has turned bitter.
Corruption allegations still dog some government ministers. Political parties resemble business clans, bankrolled by tycoons who often double as members of parliament. Reports of vote-buying are rife. 
Things started to go wrong from the very start. 
Any political goals the leaders of the Orange Revolution may have shared were forgotten during the coalition government headed by Yulia Tymoshenko, which took office in February 2005, and quickly descended into in-fighting. 
Ms Tymoshenko accused Mr Yushchenko's inner circle of corruption. He sacked her, and accused her of abusing her position to repay debts. 
Mr Yushchenko then outraged many of his own supporters by turning to his rival, Mr Yanukovych, for help in a parliamentary vote to confirm his new prime ministerial nominee. 
During the Revolution it had been Yushchenko and Tymoshenko against Yanukovych. Suddenly it was Yushchenko and Yanukovych against Tymoshenko, who voted against Mr Yushchenko's nominee. 

Catch 22 
In the months since the March election - in which his party came a poor third - Mr Yushchenko has been faced with a choice of which enemy to form a coalition with: Ms Tymoshenko or Mr Yanukovych. Ukrainian commentators say he negotiated with both simultaneously, dragging the talks out for months in an attempt to extract maximum concessions. 
Finally, he struck a deal with Ms Tymoshenko, and with the Socialist Party as a junior partner, just as in 2005. But within days the Socialists had second thoughts and opted instead to join a coalition with Mr Yanukovych. 
Now Mr Yanukovych has the upper hand, and is inviting Mr Yushchenko's party to join his coalition. 
Mr Yushchenko now has to decide whether to agree, or whether it would be better for his Our Ukraine party to go into opposition. 
A third option, favoured by Ms Tymoshenko, would be for him to dissolve parliament and call new elections. 
"It is a Catch 22 situation," says Taras Kuzio, a senior fellow of the US body, the German Marshall Fund. 
"Yanukovych as prime minister would overshadow Yushchenko. Yushchenko would be sidelined. And his supporters would desert him in droves, going over to Tymoshenko. Politically, he would be finished. 
"But if he calls fresh elections it could be even worse." 

'Anti-crisis' coalition 
Taras Berezovets of polittech.org agrees that new elections held now would simply reduce Our Ukraine's share of the vote from 14% in March to 9% or 10%. What a new Yanukovych government would mean for Ukraine and for the legacy of the Orange Revolution is an open question. 
For example, the "anti-crisis coalition" formed by his Party of Regions, the Socialist Party and the Communist Party, pledges to continue moving towards Mr Yushchenko's goal of EU membership and to abide by any result of a referendum on Nato membership. 
"Yanukovych claims he is a new man, and is not going back to the bad old ways," says Taras Kuzio. "We simply do not know whether he will have to work within the parameters of the post-Orange system or not." 
How long a Yanukovych government would last is also unclear. 
The Party of Regions' big business backers do not have much in common with the Communists, and neither group has much in common with the more "Orange" members of the Socialist Party, some of whom have already begun splitting away. 
So whatever happens next, Ukraine seems far from a return to political stability. But it is certain that no single party can command sufficient support to form a government alone and that in the maelstrom of Ukrainian politics, how long ANY coalition will hold together is highly speculative. Uncertainty seems inevitable for the foreseeable future. Although circumstances can change with great rapidity, nothing in any way concrete is thus far on the horizon.

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CREDIT RATINGS

Kredobank national scale ratings assigned 

Standard & Poor's Ratings Services said recently it assigned its B/C counterparty credit ratings to Ukraine-based JSC Kredobank. At the same time, it assigned its uaBBB Ukraine national scale rating to the bank. The outlook is stable. "The ratings on Kredobank reflect its low capitalisation and profitability, modest domestic market position, and above-average credit risk," said Standard & Poor's credit analyst Annette Ess, New Europe reported.
In addition, the bank operates in the unstable political and macroeconomic environment in Ukraine (foreign currency, BB-/Stable/B; local currency, BB/Stable/B). Supporting rating factors are its good franchise in Western Ukraine, focused organic domestic retail growth strategy, which is being implemented by an experienced management team, support from its strategic shareholder Powszechna Kasa Oszczednosci Bank Polski (S.A.) (PKO; BBBpi), and good corporate governance. Standard & Poor's said in a press release the bank will be able to successfully implement its domestic retail growth strategy supported by its shareholders' experience and capital contributions, and maintain control over credit and market risks, as reflected by the stable outlook. Higher creditworthiness will depend on a longer track record of support and increased integration with PKO, marked improvements in capitalisation and profitability, and a decrease in lending concentrations as a percentage of capital.

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MINERALS & METALS

Mittal Steel Kryvy Rih raises prices 2.5-5.8% 

Mittal Steel Kryvy Rih, Ukraine's biggest steelmaker, on July 1st raised factory-gate prices for its products by an average of 2.5 per cent to 5.8 per cent from a month earlier, the company announced, citing changes in prices for inputs and energy, Interfax News Agency reported.
The company said that despite the price increases it is continuing to pursue a marketing programme aimed at boosting sales of finished product on the domestic market. The level of sales on the domestic market has been growing constantly in recent months thanks to a favourable market situation.
Mittal Steel Kryvy Rih, formerly known as Kryvorizhstal, raised prices by US$25 per tonne on June 1st for all its steel products with the exception of rods, prices for which were raised on July 1st, by US$18-US$48 per tonne (including VAT) depending on diameter. 
Mittal Steel Kryvy Rih, which has about a 20 per cent share of the Ukrainian steel market, ships up to 50,000 tonnes of rods to the domestic market per month and produces a total of about 72,000 tonnes. Overall monthly output is 620,000 tonnes, of which 120,000-130,000 tonnes are sold domestically.
The company exported to 80 countries in the first half of 2006, including Algeria, Syria, Libya, Jordan, Italy, India and Pakistan. Asked whether Ukrainian metalware plants would respond by increasing imports of rods, particularly from Russia, Boiko said this issue has not been discussed yet.
A representative of a metals trading firm said Mittal Steel Kryvy Rih had invited 15 metal traders, including Comex, Leman and Metall Holding, to a meeting in Kiev on July 13th to discuss shipments of metal products. The talks are expected to continue on July 14th at the steel works.
But the representative voiced doubts that the meeting would bring results, and said it was an attempt to divide market participants.
An official at the Industrial Policy Ministry, which consistently advocates the need for expanding domestic consumption of steel products and a policy of restraining prices, said Mittal Steel Kryvy Rih had not invited the ministry to the meeting. 

Turkmen gas agreement no longer valid 

Turkmenistan considers the agreement on delivering gas to Ukraine in 2006 to be no longer valid, a statement by the Turkmen Foreign Ministry read. A Ukrainian delegation headed by Ukrainian Fuel and Energy Minister, Ivan Plachkov, held talks at the Turkmen Oil, Gas and Mineral Resources Ministry on June 29-30, New Europe reported.
"The delivery of Turkmen natural gas to Ukraine was discussed. The parties agreed that after the agreement on delivering Turkmen natural gas to Ukraine had been signed in 2006, Russia's Gazprom did not give a licence to transit the gas, saying that the pipeline in Uzbekistan, Kazakstan and Russia which is used to deliver gas to Ukraine has the capacity of some 150 million cubic metres of gas per day. Assuming these conditions, the agreement expired and Turkmenistan considers it outdated," the statement read. "Turkmenistan proposed that Ukraine sign a contract on gas deliveries to Ukraine for the fourth quarter at a price of US$100 per 1,000 cubic metres of gas. It was also proposed that Ukraine urgently acquire a licence to transit the volume of gas to be provided by the contract across Russia," the statement read.

Naftogaz transits 62.28 bcm of gas in H1 

Ukrainian national oil and gas company, Naftogaz, ensured the transit of 62.28 billion cubic metres of gas in the first half of 2006, including 57.09 billion cubic metres to European countries. The company exceeded its target by 139 million cubic metres, or 0.2 per cent, and was 752 million cubic metres or 1.3 per cent above target for gas transit to Europe, Naftogaz reported. 
The company also implemented its commitment before the trader RosUkrEnergo A.G. (Switzerland) to withdraw gas from underground storage facilities and transit it to Europe. In the first four months of 2006, Naftogaz withdrew over one billion cubic metres of gas from underground storage facilities and transferred it to RosUkrEnergo.

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FOREIGN LOANS

IBRD to provide US$154.5m to Ukreximbank 

Ukraine's State Export and Import Bank (Ukreximbank) is planning to raise US$154.5 million from the International Bank of Reconstruction and Development, part of the World Bank, under a government guarantee to implement a programme to support export enterprises, the Ukrainian Finance Ministry said in a statement posted on its website. 
A Ukrainian delegation including finance ministry representatives will hold talks with the IBRD from June 26-30 on a guarantee agreement to implement a second project to develop exports, the statement says. The first project was implemented in 1997-2004. "A loan of US$154.5 million will be raised to implement the second part of the export project," the statement says. "Ukreximbank will take out the loan and also implement the project. The Ukrainian government will guarantee the loan," the statement read. 

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