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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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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: 301 - (30/01/06)

Fall of government in Kiev
Parliament voted on January 10th to sack Prime Minister Yuri Yekhanurov's government over a controversial gas deal with Russia, sparked off by events in the New Year that made world-wide headlines, the sudden truncation of Russian gas supplies as two out of five pipelines were cut off. A no-confidence motion was backed by 250 deputies in the 450-seat parliament, annoyed over the deal with Moscow which will force Ukraine to pay nearly twice as much for its gas imports this year, namely US$95 per 1,000 cu m, compared with US$50 previously.
Yekhanurov will remain as acting prime minister until President Viktor Yushchenko names a new premier. Ukraine is due to hold a parliamentary election on March 26thth. Yushchenko is in a predicament because he will not want his bloc to go into elections under a lame duck premier.
Former Prime Minister Yulia Tymoshenko, sacked by Yushchenko last September after the partnership that swept them to power in Ukraine's Orange Revolution turned sour, was the driving force behind the no-confidence vote. Tymoshenko is competing against Yushchenko's allies in the March parliamentary polls, and has seized every opportunity to criticize the government of technocrat Yekhanurov who replaced her.
She has vowed to fight the five-year gas deal signed by Moscow and Kiev on January 5th after a dispute which peaked over the New Year when Russia's gas monopoly Gazprom cut supplies to its ex-Soviet neighbour for two days.
Tymoshenko joined forces with opposition parties representing the pro-Moscow administration ousted at the end of 2004 in the binding no-confidence vote, which required a simple majority.

The Orange Revolution
The Orange Revolution began in Ukraine after massive election fraud in round two of the presidential elections brought hundreds of thousands of Ukrainians on to the streets of Kiev. After weeks of protests and a repeat election, the pro-reform candidate, Viktor Yushchenko, was elected president. Ukraine's image abroad has received an enormous boost - except in Russia, where the Kremlin is full of chagrin at the original land of Rus becoming Western in direction and diplomacy.
Ukraine's bloodless Orange Revolution has become an inspiration for other oppositions in authoritarian regimes, inspiring civic revolutions in Kyrgyzstan and Lebanon. Civil society activists in Russia, Azerbaijan and Belarus routinely wear Orange symbols. President Yushchenko told the BBC that his country has, "set a good example for the millions of people who still cherish freedom and democracy" The Ukrainians can certainly be proud of themselves; they have entered the modern world.

                                           ******

Nevertheless, revolutions have a tendency of going awry. Ukraine's is proving to be no exception, although not everything is going wrong.
In the first year of the Orange Revolution, Ukraine did make considerable progress in certain areas, while progress has been disappointing in others and the economy is faltering. To keep this relative progress going beyond the 2006 elections, many believe that the Orange coalition should re-unite Yushchenko's People's Union-Our Ukraine and Tymoshenko's bloc. Only through the re-unification of the Orange coalition can a pro-reform majority in parliament be created that would continue to promote Ukraine's reform and Euro-Atlantic integration. Personal relations, however, between the president and his former premier may have soured too much to let this happen.
To make an appraisal and form a balance-sheet of the positive and negative developments of the Orange Revolution so far is appropriate at this juncture, as parliamentary elections approach.

Signs of Progress, or Imminent Progress
Firstly, there has obviously been an improvement in human rights and democratisation. As the EU has noted, Ukraine's Orange Revolution and election of Yushchenko has put the country back on its democratic track which had been stalled in Leonid Kuchma's second term. The last more or less free election was in 1994 when the dreaded Kuchma came to power. 
Since the late 1990s most FSU states have evolved towards authoritarian regimes and 'managed democracies,' notably of course Putin's Russia. Ukraine would have continued down such a path if Viktor Yanukovych had been elected Ukraine's president in 2004. The Donetsk region he governed from 1997-2002 was Ukraine's best example of a regional 'managed democracy' ruled by one oligarch, one party and one television channel. A recent EU report noted that there are now no systematic human rights violations in Ukraine.
In August 2005 a Kiev Post editorial wrote that the Ukrainian government is a, 'mismatched and inefficient collection of true reformers, idealists, ambitious operators, bunglers, and schemers, but are not sinister.'
Secondly, there has been civic empowerment. The Orange Revolution represented the largest civic action in Europe since the Velvet Revolution brought down Communist rule in Czechoslovakia in 1989. Ukraine's revolution was the third in a string of what latterly became known as "coloured revolutions", beginning with Serbia's in 2000 and Georgia's in 2003. Following Ukraine's, revolutions have taken place in Kyrgyzstan and Lebanon. 
The number of Ukrainians who took part in Orange protests is huge. Throughout the country, one in five Ukrainians took part in protests locally or in Kiev. In Kiev itself, 48 per cent of its 2.5 million population took part in the Orange Revolution. 
A September 2005 poll by the Kiev International Institute of Sociology asked if Ukrainians were ready to defend their civil rights? 51 per cent said 'Yes' (and only 22 per cent 'No'). In western and central Ukraine this was as high as 65 per cent. One should compare this empowerment with the low level of efficacy, despondency and pessimism found among Ukrainians in the Kuchma era. 90 per cent of Ukrainians then did not feel they could exert any influence on the central or local authorities.
Civic participation in the Orange Revolution changed Ukrainians and Ukraine. The protests transformed the Soviet-era relationship of subjects working for the state into citizens who demand that the state works for them. Ukrainians, who were traditionally viewed as passive by Soviet and post-Soviet rulers, are unlikely to remain passive. Opinion polls since the Orange Revolution show that a large majority remain committed to defending their civic rights if they are again threatened.
President Yushchenko could rightly say in October 2005 that, 'The process that has occurred in the nation is a wholly positive process. You have become different. The nation has become different. We have all become different. The revolution brought freedom to Ukraine'.
Thirdly, there is a democratic political system in the process of coming about. In early 2006, Ukraine will change to a parliamentary-presidential system commonly found in central Europe and the Baltic states. These parliamentary systems have assisted in these countries' democratic progress and Euro-Atlantic integration.
Presidential systems, that are commonly found in Russia and the CIS, have led to authoritarian regimes and executive abuse of office. Executive abuse of office was rife under Ukraine's outgoing President Kuchma.
Fourthly, media freedom now obtains. Ukraine's media environment has been transformed. The Social Democratic united Party has lost control over three television channel's that it used to control (State Channel 1, 1+1, Inter). Other channels controlled by Viktor Pinchuk (ICTV, STB, Novyi Kanal), have become more balanced in their coverage. The de-monopolization and democratisation of Ukrainian television should be continued.
The internet received a major boost from the 2004 elections. The Orange Revolution has been described as the world's first 'Internet Revolution'. Today, nearly 20 per cent of Ukrainians use the internet regularly, particularly young people.
International media watchdogs, such as Reporters Without Frontiers, recorded considerable improvement last year in Ukraine's media freedom. Ukraine's ranking (112) in the 2005 Annual Worldwide Press Freedom Index was far higher than Russia's (138) or Belarus' (152). Ukrainian journalists now work in a freer environment, no longer fearful of arrest or violence. Gone are the censorship instructions issued by Kuchma's administration to television stations.
Journalists no longer need to fear for their lives. The George Gongadze case, who was kidnapped and beheaded in October 2,000, is a thing of the past.
Journalists and the public have increased trust in the media. Between September 2004 and September 2005 trust increased for the most biased and censored television stations (State Channel 1, 1+1, Inter) controlled by the Social Democratic united Party under Kuchma.
Fifthly, there is plurality of political parties. The Socialists, allied to President Yushchenko since the Orange Revolution, are now the leading left-wing party, rather than the Communists, whose allegiance to the Ukrainian state was always suspect. The Communist Party will only have approximately 30 seats in the 2006 parliament, down from 120 in 1998. 
Formerly pro-Kuchma centrists are in disarray. Only one of the three large centrist parties from the Kuchma era (Regions of Ukraine) will enter the 2006 parliament. The Social Democratic United and Labour Ukraine parties each have ratings of 1 per cent. Social Democratic United Party leader Viktor Medvedchuk has a -60 per cent negative rating, because he headed the presidential administration during the last two years of Kuchma's rule. Relations between Medvedchuk's Social Democratic United party and Regions of Ukraine are poor, as the Donetsk clan and Yanukovych believe Kuchma-Medvedchuk 'betrayed' them during the Orange Revolution.
Sixthly, corruption is less rampant. Ukraine under Kuchma was internationally perceived as a highly corrupt state that flaunted its own laws as well as international norms and sanctions. The first year of the Yushchenko administration has seen Ukraine moving from a 'virtual' struggle against corruption under Kuchma to a modest attempt at battling this problem. 4,500 regulations to register businesses, which were a source of corruption, have been annulled. There is now a single window to register businesses and a single window to clear customs. 
Previously a new business venture had to seek permits from 34 structures, which bred corruption.
52 per cent of Ukrainians believe some progress has taken place but more needs to be undertaken. Transparency International, a think tank researching corruption around the world, recorded gains in Ukraine last year. Its 2005 Corruption Perceptions Index provides evidence that policies introduced last year to battle corruption are producing results. Ukraine's improved ranking, 'resulted in an increased sense of optimism regarding governance and corruption in Ukraine.'
The successful re-privatisation of Kryvorizhstal late last year for US$4.8 billion to a Dutch company, six times what was paid for it by Ukrainian oligarchs close to Kuchma in 2004, has been internationally praised for its transparency. Ukraine's oligarchs, the mainstay of the Kuchma regime, have been warned that their days of a cosy and corrupt relationship with the executive are over under Yushchenko.
Seventhly, oligarchs ('robber barons') are less all-powerful. The time when oligarchs could earn high rents from a corrupt and close relationship with the executive is over. The Yushchenko administration has outlined a 'deal' whereby in exchange for no further re-privatisations, oligarchs now have to evolve into law-abiding businessmen. This means an end to corrupt business practices, moving their business activities out of the shadow economy and increasing their tax payments. 
Eighthly, social welfare is on the mend. The minimum pension was increased to the same level as the minimum wage. Wages for those employed by the state increased by 57 per cent. Social welfare spending, including child support to encourage Ukraine to move out of its demographic crisis, has grown in 2005 by 73 per cent.
Ninthly, national integration has improved. Unlike former Presidents Leonid Krawchuk and Kuchma, President Yushchenko is committed to nation-building and an evolutionary affirmative action for the Ukrainian language. The Kuchma regime, as evidenced during the 2004 elections, played on Ukraine's regional divisions to encourage regional conflict between western and eastern Ukraine.
Tenthly, religious freedom has widened. The Ukrainian (Uniate) Catholic Church has moved its headquarters to Kiev, a move that would have been hampered under Kuchma. Prospects for the unification of the Orthodox Churches in Ukraine are now far greater. Former President Kuchma talked of unifying the Orthodox Churches; but he never undertook any action and, in reality, leaned towards the Russian Orthodox Church.
Eleventh, a divergence with Russia has gone much further, the obvious reason Moscow wanted to punish the Ukrainians by wielding the gas weapon. In the same year (2004) that Ukraine experienced a democratic breakthrough, Russia fell further into an autocratic abyss. In the aftermath of fraudulent Russian parliamentary and presidential elections, the New York-based human rights think tank, Freedom House, downgraded Russia from 'partly free' to 'unfree', the first time Russia has been given this category since the collapse of the USSR. 
Russia is undergoing a 'crisis of liberalism' at a time when Ukraine has a liberal politician in power. In Russia, liberals were in power in the early 1990s, but they have been progressively marginalized ever since. In Ukraine the former 'national communists' (Krawchuk, Kuchma), who became centrists allied to oligarchs, were in power until 2004. The election of Yushchenko is the first time the liberal camp has taken power in Ukraine. Some Russian liberals, pushed out of Russia's political scene, are coming to Kiev, notably Boris Nemtsov, head of the Union of Right Forces, former governor of Nizhni-Novgorod and deputy premier in the Yeltsiny years. He has been a prime loser from the ascendancy of Putin and has now thrown in his lot with Yushchenko, to whom he is now an aide. 
The Russian tycoon, Boris Berezovsky, has had a residence in Kiev since February 2005, and can finance the liberal camp of Russian oppositionists, either in the Ukrainian capital or still in Russia. No wonder that the Kremlin sees the new dispensation in Ukraine as a dagger directed at the very heart of Muscovy. May not historians of the future be going to point to the Orange Revolution in the original land of Rus as marking out the eventual liberal and Western destiny of Russia itself? Not if Putin can stop it they won't.
The 2004 breakthrough, 'reinvigorated and jumpstarted the democratic political development' of Ukraine, Freedom House concluded. Ukraine recorded significant progress in four areas: Electoral Process, Civil Society, Independent Media, and the Judicial Framework. In the same year, Russia registered the greatest decline of any country in the Nations in Transit survey. This decline was in the very same four areas in which Ukraine registered progress.
Ukraine's 'Democracy Score' (4.5) is better than Russia's at 5.61 or Belarus's at 6.64, out of a range of 1-7 with 7 the worst score. But, Ukraine's 4.5 score is also moving closer to Croatia's at 3.75, which is a possible candidate for EU membership in 2007 alongside Romania (3.39) and Bulgaria (3.18). Of the four coloured revolutions, Ukraine's Democracy Score is the same as Serbia's (3.75) and improved on Georgia's (4.96) and Kyrgyzstan's (5.64).
Twelfth, security forces have been overhauled. The Interior Ministry, under its energetic Minister Yuriy Lutsenko, has pushed through 5,000 voluntary resignations, 2,000 have failed to pass their personal certification and 400 have been charged. Similar clean ups are being undertaken in the Customs and Tax services. Meanwhile the traffic police, notoriously corrupt as they were, have simply been disbanded, after one demand for a bribe too much was made of a private limousine that happened to have Yushchenko in its back seat travelling anonymously.
Furthermore, foreign policy has of course totally changed direction. Kuchma became a pariah by the end in the West, especially when it became clear that Kiev had been selling anti-aircraft rockets to Saddam's Iraq. Under Yushchenko, Ukraine's foreign policy will be driven by national interests and not the personal whims of the president and his oligarch allies. For the first time, Ukraine's foreign policy is ideologically driven in its 'Return to Europe' formulation. 
By the March 2006 elections, Ukraine will have achieved progress in two areas. Firstly, the lifting of the Jackson-Vanik amendment. Secondly, free market status granted by the EU and USA. A third step, WTO membership, is likely to be achieved in 2006. In the second half of 2006 an invitation from NATO inviting Ukraine into a Membership Action Plan is also likely if Ukraine holds free elections. 
This progress would follow upon greatly improved relations with the US after President Yushchenko's visit to the US in April 2005. Ukraine under Yushchenko will be a real strategic partner of the US in a wide range of international issues, ranging from the global war on terrorism, combating proliferation, Iraq, and democracy promotion.
Finally, free elections are now the norm. Outgoing Prime Minister Tymoshenko said that, 'The Orange Revolution has changed our country. Politicians understand that the people won't accept fraud. Vote rigging now is just as unrealistic as anti-corruption investigations were in the Kuchma era.'

Problem Areas
But problems, as always in a country in upheaval, abound.
Firstly, market economic reform has stalled. Quarrels among senior Orange leaders, coupled with expensive social policies and unclear plans for re-privatisation, led to policy incoherence and government malaise. Economic reform and privatisation failed to become a government priority. Economic growth slumped from 12% in 2004 to only 3% in 2005, with August seeing the first negative growth since 1999. The hike in gas prices is not going to help recovery in 2006.
Yekhanurov was to have headed the People's Union - Our Ukraine bloc in the 2006 elections. This would have been the first time that a Prime Minister has headed an election bloc in an election, both giving voters the chance to decide for themselves about the achievements, or otherwise, of the government and for the government to take responsibility for its actions in a free and fair election. But his demission has changed all that.
Secondly, there is no properly independent rule of law. The National Security and Defence Council under Petro Poroshenko pressured the legal system and courts. Poor personnel policy led to the continuation of Sviatoslav Piskun as Prosecutor, and Roman Zvarych as Justice Minister. Piskun returned to his position on December 10th 2004 two days after parliament and president ratified the 'compromise packet' that allowed Ukraine to hold a re-run on December 26th. Piskun was only finally removed in October 2005 after being accused of thwarting investigations into high ranking Kuchma officials.
Zvarych's short period as Justice Minister was dogged by scandal. His curriculum vitae was shot full of deception which he refused to acknowledge. His claims to have an MA and PhD from Columbia University proved to be false. Zvarych also had no legal training. His replacement, Serhiy Holovatiy, is a far better choice with a positive track record from the 1990s when he was Justice Minister in 1995-1997.
Thirdly, there have been divisions and 'betrayal'. The Ukrainian public finds it difficult to accept a split in Orange ranks. As a Financial Times (October 17, 2005) editorial wrote, 'A Yushchenko-Yulia Tymoshenko coalition remains the best chance for a reformist, Western-oriented government.' After the 2006 elections, Yushchenko's People's Union-Our Ukraine will have a choice of creating a parliamentary majority with either Tymoshenko or Yanukovych, the former now looking the better bet. A pro-reform parliamentary majority would only be possible if the choice was in favour of Tymoshenko, not Yanukovych.
The signing of a Memorandum between President Yushchenko and Regions of Ukraine leader Yanukovych led to feelings of '.betrayal' of the Orange Revolution ideals. In Kiev, 25% believe that Yushchenko 'betrayed' the Orange Revolution, while only 6% thought it was Tymoshenko.
The signing of the Memorandum with Yanukovych portrayed an image of weakness to the opposition. The additional votes received from the signing of the Memorandum would not have been required if the first parliamentary vote for Yekhanurov's candidacy had succeeded. It failed by 3 votes because President Yushchenko had been in the USA for four days prior to it, instead of taking care of business at home; that is, ensuring parliament approved his choice for Prime Minister.
Fourthly, there has been poor leadership. Yushchenko has not risen to the occasion, as was hoped. He travelled abroad far too much in his first year, a factor he himself recognized only late in the year. His hands-off style of leadership is very different to that of the micro-manager Kuchma, who was an abler administrator (having been under the USSR, the managing director of Ukraine's largest plant for years at Dnepropetrovsk, making military rockets). This has led to only sporadic interventions when crises have emerged in May or September 2005, prior to which the president was unwilling to take tough decisions.
Yushchenko's lateness for meetings, often two hours or more, and even with important VIP's, has become legendary. Another problem has been a lack of consistency in policies and statements. In both these cases, Yushchenko's support staff are partly to blame. His press department has a poor reputation in the West and his state secretariat under Oleksandr Zinchenko (January-September 2005) did not function in the manner in which a president needs it to do.
Fifthly, there have been two governments, not one, confounding channels of authority and responsibility. Poroshenko, as secretary of the National Security and Defence Council, acted as a second government, obstructing and interfering in areas beyond his remit, while ignoring others in national security which were. The additional powers given to the National Security and Defence Council were unconstitutional. Poroshenko has been accused of interfering in the rule of law and media by acting as a 'grey cardinal', similar to Medvedchuk as head of the presidential administration.
Sixthly, there has been no clean break with the ancien regime. By the first anniversary of the Orange Revolution no senior official from the Kuchma regime has been charged with abuse of office, corruption, election fraud or the Georgi Gongadze murder. The organizers of the Gongadze murder have still to be accused. Former Interior Minister Yuriy Krawchenko committed suicide, while General Oleksiy Pukach fled abroad. Other senior Kuchma officials were permitted to flee to Russia or the USA. Only the USA has arrested one of these officials, Volodymyr Shcherban, while Russia has continued to provide protection. There has also been no progress in the investigation into the poisoning of Yushchenko in September 2004, which seems extraordinary.
Seventhly, a related point, some dubious business allies are still too influential, even if the regime is no longer an 'oligarchy' state. Businessmen close to Yushchenko were only removed after accusations were made against them by Zinchenko in September 2005. These people, such as Poroshenko, had played an important role in the 2004 elections and Orange Revolution in providing resources for the Yushchenko campaign. Poroshenko and Andrei Derkach, two 'mini oligarchs', provided resources to support the only two television outlets available for the opposition (Channel Five and Era TV respectively).
After his election, their continued presence in Yushchenko's entourage became problematical, as Yushchenko's image increasingly came to resemble that of Kuchma's of being surrounded by 'oligarchs,' the origins of whose wealth in the 1990s privatisations were highly doubtful. When asked if the new authorities were different to Kuchma, 52 per cent said 'Yes' in March while only 37 per cent continued to think so in September 2005. 
Poroshenko's image has suffered an appreciable decline. His negative ratings are on a par with those of Medvedchuk and Kuchma. It would be a strategic mistake to include him on the People's Union-Our Ukraine 2006 election list. But, mistakes are possible. Although not returned as Justice Minister to the Yekhanurov government, Zvarych was promoted to head the People's Union-Our Ukraine 2006 election campaign.

Conclusions
Looking back over the first year of the Orange Revolution, it would be wrong to paint it as either fully 'white' or 'black'. There have been fifteen positive steps and seven negative. That the positive outweigh the negative shows that there were achievements to celebrate on November 22nd 2005. 
Yushchenko is committed to democratisation, economic reform and Euro-Atlantic integration. Yushchenko does not possess the necessary political will to deal with high ranking officials from the Kuchma era. The Memorandum with Yanukovych was a major strategic miscalculation.
Tymoshenko receives greater respect for her political skills. She is also more credible in possessing the political will to bring to trial high-ranking officials from the Kuchma era. The organizers of the Gongadze murder are more likely to be brought to trial by Tymoshyenko than Yushchenko.
Policy incoherence in the first nine months of the Orange Revolution was not solely the fault of the Tymoshenko government. Other factors were the creation of a parallel government in the National Security and Defence Council led by Poroshenko, Yushchenko's lack of leadership and inability to take decisive decisions except in crises. His extensive travels abroad also distracted him from domestic policies.
Both Yushchenko and Tymoshenko have positive and negative traits. If the Orange coalition could re-unite during, or after the 2006 elections, these traits could potentially balance against one another to promote a reform agenda and Euro-Atlantic integration.

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ENERGY

Ukraine has signed gas agreement with Turkmenistan 


Ukrainian Fuel and Energy Minister, Ivan Plachkov, has dismissed information in the media that Ukraine and Turkmenistan have failed to sign an agreement on gas deliveries for 2006. "The contract has been signed, sealed and delivered to Ukraine. All documents are in my suitcase," he told journalists in Kiev. The price set in the contract is "mutually beneficiary and very acceptable for Ukraine," he said. The volumes of Turkmen gas to be exported according to the contract are enough to cover Ukraine's gas balance, the minister said. Asked whether Ukraine may cover a possible gas deficit with Turkmen gas, the minister answered negatively, adding that Uzbek and Kazak gas transportation systems cannot provide for transit exceeding the volumes stated in the contract, New Europe reported.

Energoatom, Holtec ink contract for nuclear waste facility 

Ukraine's national energy producer Energoatom and Holtec International (USA) have signed a contract for the construction of a solid nuclear waste storage facility, New Europe reported.
The site will be used to store spent fuel from the Rivne, South - Ukrainian and Hmelnisk nuclear power plants, which is currently being shipped to Russia.
The first such installation was brought into operation at the Zaporizhzhya nuclear power plant in September 2001. Holtec International won an international tender for the design and construction of a nuclear waste centralised storage site for three nuclear power plants for 125 million Euro. Energoatom is operating 15 water-cooled reactors with a total power of 12,835 Megawatt at four nuclear power stations.

The Caspian oil will go to Europe through Ukraine

A meeting of a Ukraine-Poland-EC trilateral working group was held in Warsaw on December 21st. It was devoted to the realisation of the Odessa-Brody-Plock oil pipeline, New Europe reported.
A preliminary presentation of the feasibility study of the project developed by a consortium of SWECO PIC (Finland), ILF GmbH (Germany) and KANTOR (Greece) was performed within the meeting. One can say that for the first time representative of oil suppliers and consumers discussed a concrete business plan of completion of a Eurasian oil transportation corridor.
It is a very important project from the point of view of a future transit of the Caspian oil and an increase in the export of the Russian oil. Thus the price parameters related to tariffs and the cost of the oil that will be transported by the pipeline were found competitive.
The Polish party confirmed that the project is fully supported by the government. Anna Skovronska-Luczinska, a commercial counsellor of Poland in Ukraine, has noted that Poland is very much dependent upon the Russian supplies of oil therefore Odessa-Brody is an important project from the point of view of the diversification of supplies.
Ukraine may dissolve a contract with TNK-BP under which the pipe is used in the reverse mode. After the presentation frame figures of the business plan presented by Ukraine the Odessa-Brody project was found viable.
Alexander Todiychuk, director of Ukrtransnafta, shared this information in an interview. "The price parameters related to tariffs and the cost of the oil to be transported along our corridor were found competitive," he said. The European Bank of Reconstruction and Development and the European Investment Bank will participate in the project as observers. According to Todiychuk, Polish oil-processing companies Orlen and Lotos and Czech companies will participate in the project. Offers to Baltic oil processing plants and plants located in the south and north of Germany are being considered. Oil producing company Kazmunaigaz will join the project.
Todiychuk has stated that international consultants have held negotiations with Shell, Shevron and a number of other companies producing oil in the Caspian region. "On the whole the participants are content. But still much has to be done in order to adapt to each partner who announced its intention to participate in the project," the Ukrtransnafta director said. "Now appropriate meetings with the participants in the project (processing and producing companies) will be held once a month. We will work at a detailed adaptation of the interest of each potential participant to our business plan," Todiychuk said.
Todiychuk maintains that the Russian party fails to fulfil its obligations concerning the oil pumping. "Unfortunately Russia has failed to fulfil its contractual obligations last year and we are fully entitled to suspend these contracts. On the other hand we are now preparing contracts for a direct use of the pipeline. I think that these two processes will be untied next year." According to him Rozsip has supplied six million tonnes of oil this year instead of the promised nine or even 14 million tonnes.
"These figures are fixed in both the existing contracts and the obligations of TNK-BP and Transneft addressed to the previous president and prime-minister of Ukraine," Todiychuk said.
Ukrtransnafta offers the Russian companies to pump the oil through the Pridneprovskiy pipeline which is a shorter route.

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FOREIGN DEBT

Foreign debt up 20.2% in January-September 2005

Ukraine's foreign debt rose by 20.2 per cent to US$36.861bn over the first nine months of last year, up from US$30.65bn on January 1st, the country's National Bank said recently, New Europe reported.
The state administration sector's foreign debt stood at US$11.702bn on October 1st, including US$4.941bn in debt securities and US$6.761bn in credits, up from US$11.207bn on January 1st. The foreign debt among fiscal regulatory bodies declined to US$1.345bn on October 1st from US$1.69bn on January 1st. Bank foreign debt increased to US$4.462bn in January-September from US$2.663bn, while foreign debt in other sectors rose to US$18.615bn from US$14.531bn.
The National Bank of Ukraine said it plans to tighten control over corporate liabilities to avoid surprise surges in demand on the currency market. "Our state and private structures have started to borrow heavily from abroad. The National Bank is concerned about this figure. We have approached levels that need to be controlled," bank deputy chairman, Alexander Savchenko, said. Corporate foreign debt now exceeds the European average, he said.

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MINERALS & METALS

Nikolayev alumina plant ups output 4% in 11 months

Ukraine's Nikolayev (Mikolayiv) alumina Plant (NGZ), the FSU's biggest alumnia producer, raised output 4.3 per cent year-on-year to 1.24m tonnes of alumina in the first 11 months of 2005, the company said, Interfax News Agency reported.
November output was 119,600 tonnes. Alumina production grew 8.7 per cent to 1.302m tonnes in 2004. NGZ aims to increase output to 1.45m tonnes in five years and 1.65m tonnes in 10 years. It also plans to boost consumption of bauxite produced in Guinea 40 per cent in five years and 100 per cent in 10 years. Russian aluminium giant RusAl controls NGZ.

Ukraine ups titanium sponge output 11.4%

Zaporizhiya Titanium and Magnesium Combine (ZTMK), Ukraine's only titanium sponge producer, raised output of the commodity 11.4 per cent year-on-year to 7,640 tonnes in the first 11 months of 2005, the company said, Interfax News Agency reported.
November output was 721.3 tonnes. The state-owned ZTMK exports most of its sponge, which is used mostly in the space industry. Capacity is 20,000 tonnes of titanium sponge per year. Output rose 7.8 per cent to 7,497 tonnes in 2004.

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