Books on Ukraine
Update No: 314 - (22/02/07)
Back to the wall president
The president of Ukraine is in a quandary. He has been much weakened
domestically by recent developments. He preferred, in a crisis last year, to
have his former adversary, Viktor Yakunovich, as his premier than Yulia
Timoshenko, his former ally and by now bitter foe. The heavy price was that
parliament has been able to deprive him of the right to appoint his own prime
minister or even foreign secretary. He is taking the latter slight as a
particular challenge. He will be his own foreign secretary.
He has been conducting a vigorous foreign policy of late. Above all he is
courting the EU. The logical first port of call was Berlin.
Ukraine's Yushchenko, in Germany, stresses hopes of EU membership
Ukrainian President Viktor Yushchenko underlined his aim of winning European
Union membership on February 8th on a visit to Germany, which holds the EU's
rotating presidency. Yushchenko has made membership in the EU and NATO
priorities for his country, but his pro-Western policies have faced growing
resistance from pro-Russian Prime Minister Viktor Yanukovych.
Yushchenko said after meeting German Chancellor Angela Merkel that he had
"no doubts that Ukraine will become a member in the European
structures," but acknowledged that the process would take time. He stressed
the aim of EU and NATO membership is a "key position in our foreign
policy." As for when that might happen, he said "the ball is in the
The 27-nation EU has so far suggested only an agreement with Ukraine to cement
closer economic and political ties - not membership. "When that is
implemented, we will look at how the next step looks," Merkel said at a
news conference. She praised Ukraine's reliability in delivering energy and said
that "we want to do everything so that the process of democratisation is
Ukraine's President speaks at DGO meeting
In the scope of his official visit to the country Yushchenko spoke to
Germany's business leaders, politicians and journalists attending a meeting of
the German Association for East European Studies (Deutsche Gesellschaft für
Osteuropakunde, or DGO) in Berlin, president's press office.
His speech was about Ukraine, its relations with the European Union and role in
Europe's energy system. "We are convinced the European Union needs Ukraine
as much as Ukraine needs the European Union," he said, adding that his
government understood why EU leaders were "a bit sceptical about further
enlargement." "We understand and respect this sentiment. However,
these problems are temporary, as the European family project is unique."
Speaking about an enhanced agreement Ukraine seeks to sign with the European
Union, the President said our country "needs to see the goal it wants to
achieve, and this goal is membership in the EU." He said the European Union
"obviously lacks knowledge of Ukraine," which explains why our country
is still underestimated in Europe. "The reason I came here is to develop
Ukraine's ties with Germany and to help our voice be heard through the prism of
this relationship," he said, describing his meeting with Chancellor Angela
Merkel as successful.
Yushchenko said Ukraine must become a part of Europe's energy market based on
cooperation. "Bilateral decisions narrow Europe's energy prospects."
He welcomed plans to formulate an energy strategy to transport oil from Central
Asia to Europe and said his recent talks with Kazak leader Nazarbayev and Azeri
leader Aliyev had focused on how to create an oil corridor connecting Asia and
Europe. One of the conceptual elements of this strategy may be the Odesa-Brody
oil pipeline, which Ukraine wants to extend to Gdansk, building an oil refinery
in Brody, he added.
The President said Ukraine wished to liberalize energy relations with its
partners, including Russia. When asked to characterize Ukrainian-Russian
relations, he said Ukraine protected its interests when developing cooperation
with its neighbour. He added that our intensive relations with Russia must not
block Ukraine's strategic goal to integrate into the EU.
Yushchenko then spoke of the political situation in Ukraine. He said political
stability was a prerequisite for the country's economic development. He said the
only way to resolve conflicts caused by the imperfect constitution was to
involve political leaders, citizens and experts in amending the country's
supreme law or perhaps even hold a referendum to accept or reject new proposals.
Brandenburg's Prime Minister Matthias Platzeck, who was present at the meeting,
said his state was interested in forging close ties with Eastern Europe, Ukraine
in particular, because of its geographic location and history.
Chernomyrdin: Russia doesn't need Ukrainian gas transportation system
Russia is especially aware of the same. Its ambassador to Kiev is no less a
figure than a former Russian premier, Viktor Chernomyrdin. Russia, he asserts,
doesn't need the Ukrainian gas transportation system, "I can tell you that
Russia doesn't need the Ukrainian gas transportation system. The story is about
cooperation and joint administration," the Russian Ambassador said.
On February 6 the Verkhovna Rada passed the law on prohibition of the sale of
the Ukrainian GTS with the overwhelming majority, the bill was submitted by the
Bloc of Yulia Tymoshenko.
The government estimated the adoption of the law as another reason to attract
attention. In particular, Prime Minister Viktor Yanukovych stated he believes
the law was useless. According to him, passing such laws doesn't add positively
to relations with the Russian Federation in the fuel and energy complex. He
assured his listeners that gas negotiations with Russia are not aimed at
"surrendering" national interests.
On February 1, Russian President Vladimir Putin sated that Ukraine has a
"revolutionary" proposal for Russia with regard to creating a gas
transportation consortium. Some experts stated that the story is most obviously
about conveyance of the Ukrainian GTS in exchange for Russian extraction
The gas war
Throughout the course of 2006 Russia waged "gas wars" against its
CIS partners. Moscow explained that crises with its neighbours were unavoidable
since the energy giant Gazprom had decided to alter its policy and to supply the
formerly Soviet republics with gas at international market prices.
But the snag is that, unlike oil, there are no international market prices for
gas; prices are fixed through bilateral negotiations. Gazprom's, that is to say
Russia's, first battle was with Ukraine. Since 80 per cent of the Russian
"blue fuel" supplied to Europe passes through the territory of
Ukraine, negotiating new prices for gas with Kiev was a priority for Moscow. But
the Russian side was unable to reach its strategic goal and take control of the
Ukrainian gas pipeline system.
In other words, in contrast to Armenia and Moldova Russia doesn't control the
gas pipelines passing through the Ukrainian territory. Despite the fact that
instead of US$96 paid before Russia demanded US$230 per 1,000 cubic meters of
gas as a result of negotiations the price was fixed at US$130 per 1,000 cubic
meters - which isn't a bad price if one takes into consideration that European
countries pay for the Russian gas two or three times higher price.
Obviously, just a few years ago the CIS member states, including Azerbaijan,
were buying Russian gas at a very low price and it is natural that Gazprom is
increasing the price now. When the United States, European countries and CIS
member states criticize the Russian gas policy toward neighbouring states they,
first of all, have in mind not the prices, but the fact that Russia uses its
energy resources as a political lever.
Naftogaz Ukrainy agrees credits of US$650 mln in 2007
Ukrainian oil and gas company Naftogaz Ukrainy has agreed with state bodies to
attract credit totalling 3.3 billion hryvnias (over US$650 million) in 2007,
including 2.5 billion - 2.8 billion hryvnias on the domestic market, company
Deputy CEO Alexander Kovalko told Interfax.
However, the receipt of new credits will not lead to an increase in the Naftogaz
credit portfolio, as the company plans to repay credits received earlier in the
In general, in 2007 Naftogaz Ukrainy plans to refrain from increasing its credit
portfolio. "We do not plan to increase the absolute size of our credit
portfolio in 2007. The company will finance capital investment and current
expenditure using funds received from operating activity," he said.
Kovalko also said loans the company might receive this year would be serviced
using revenue from the implementation of projects financed by the loans in
Naftogaz Ukrainy in 2004-2006 actively borrowed on the international and
domestic markets in order to finance corporate needs (capital investment,
replenishing working capital). The consolidated Naftogaz Ukrainy credit
portfolio at the end of 2006 amounted to over US$2.5 billion. Credits received
from non-resident banks account for 95 percent of the credit portfolio.
Yanukovich sets in motion Ukraine's participation in Europe's Nabucco
Ukrainian Prime Minister Viktor Yanukovich said on January 17 his government is
considering bidding for a contract for the construction of the multilateral
Nabucco gas pipeline project that will pump Central Asian and Middle East
natural gas to Europe, bypassing Russia.
Ukraine will be actively involved in oil and gas pipeline projects wherever it
successfully wins tenders. Ukraine has considerable potential for making
gas-compressing equipment. "Therefore we will be using every possibility to
take part in projects such as Nabucco," the Ukrainian premier said,
following talks with Turkish Prime Minister Recep Tayyip Erodgan in Ankara.
Ukrainian experts are exploring the possibility of linking the Ukrainian
pipeline system to the 3,400-kilometre Nabucco route, to run through Turkey,
Bulgaria, Romania, Hungary and Austria. The construction of the pipeline will
begin in 2008, so that it could go on stream in 2011.
The Nabucco project implies the construction of a gas pipeline as an extension
to the Baku-Tbilisi-Erzerum pipeline.
The Nabucco pipeline is one of Europe's most important energy projects. The
European Commission and the energy ministries of the countries crossed by
Nabucco approved the US$5.8 billion project on June 26, 2006.
Both Ukraine and the European Union hope the alternative pipeline will help them
diversify supply routes. The EU supports Nabucco as it believes that the
pipeline should guarantee Azeri gas deliveries via Turkey and the Balkans and
reduce Europe's dependence on Russia.
Erdogan said Turkey supported Ukraine joining the Nabucco project. "What is
important is for Nabucco to gain strength and to spread," Erdogan said.
"This project is one that will surround Europe. Our approach is a positive
Ukrainian President Viktor Yushchenko on January 16 also said that his country
is interested in participating in the construction of Nabucco. "I discussed
with the Romanian president about Ukraine's possible participation in the
Nabucco project, the development of which we consider important and
interesting," Yushchenko told reporters after meeting with his Romanian
counterpart Traian Basescu. He added that in the coming days he will send
Basescu a formal letter detailing the technical aspects of Ukraine's involvement
in the project.
Basescu stressed that there is little chance for the two countries to develop a
system to support each other with energy in the eventuality of a crisis like the
one between Russia and Belarus two weeks ago.
Basescu said that both countries are hydrocarbon importers and cannot promptly
step in to support each other in case of a crisis, adding that the only feasible
cooperation project would be in the field of electrical energy, as the Romanian
and Ukrainian distribution systems are partially interconnected.
The press secretary of the Ukrainian prime minister, Denys Ivanesko, told New
Europe telephonically from Kiev on January 18 the Nabucco can be "one more
source of gas for Ukraine." He said Ukraine could participate by building a
pipeline to Ukraine's border or provide equipment and pipes for the Nabucco
Ivanesko said the Ukrainian premier will be in Davos, Switzerland, on January
25-27 and is expected to deliver a speech on January 25 in the evening about
energy and the future of European and Ukrainian efforts to build oil and gas
transportation via Ukraine from Russia and from other countries. Yanukovich will
also take part in a Ukrainian lunch on January 26.
Keeping up relations with Russia, Yanukovich is also expected to meet in Davos
with Russian deputy Prime Minister Dmitri Medvedev -- formerly, Putin's chief of
staff, Ivanesko said.
A Ukrainian diplomat abroad told New Europe Ukraine would like to reserve its
place in the common EU energy policy and Yanukovich will try to convince
Europeans that Ukraine should play a key role in that policy.
Kiev, Beijing to cooperate in banking supervision
The China Banking Regulatory and the National Bank of Ukraine on January 30
signed a memorandum of understanding on cooperation in banking supervision.
"This is one of the first steps toward cooperation in conditions of
globalisation when markets have no borders. One Ukrainian bank (Privatbank) is
planning to branch out into China. The memorandum was signed so that we could
exercise oversight," Interfax quoted First Deputy Chairman of the National
Bank Anatolii Shapovalov as telling the press on January 30.
Alexander Kirieiev, executive director - director of banking regulation and
supervision directorate, said Ukraine has similar agreements with several other
countries. The absence of approved EU procedures is hindering the signing of
such agreements with banking regulators in EU countries.
"This stems from the fact that the EU still has not worked out rules for
relations with non-member countries. Therefore no member country signs
agreements individually. We are actively corresponding on the terms,"
Kirieiev said. Earlier the National Bank of Ukraine reported similar agreements
with central banks and financial oversight authorities in Cyprus, Belarus,
Armenia, Latvia, Lithuania and Kyrgyzstan.
EBRD to lend US$150m to Alchevsk steel mill
The European Bank for Reconstruction and Development (EBRD) will lend US$150
million for the construction of a co-generation plant at the Alchevsk steel mill
in Ukraine's Luhansk region, the EBRD representation in Kiev said in a press
release. Calyon Bank is syndicating US$50 million of the loan. The loan will be
extended to a special purpose company, Ekoenergia, owned jointly by Alchevsk
steel mill and its parent company Industrial Union of Donbass (IUD). The overall
cost of the 303-megawatt co-generation plant is US$363.1 million. The unit will
reduce annual carbon emissions by an estimated six million tonnes in its first
four years. This is as much as a large European city like Manchester emits in a
year. This is the EBRD's biggest loan to date for a private company in Ukraine,
Kamen Zakhariyev, the EBRD's Ukraine director, told a press conference at the
Interfax-Ukraine office. Materials distributed at the press conference said that
Japanese Bank for International Cooperation (JBIC) would lend the Alchevsk plant
another US$120 million for the project and that IUD itself would provide US$113