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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
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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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