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UKRAINE


 

 
Key Economic Data 
 
  2002 2001 2000 Ranking(2002)
GDP
Millions of US $ 41,380 37,600 31,300 54
         
GNI per capita
 US $ 770 720 690 144
Ranking is given out of 208 nations - (data from the World Bank)

Books on Ukraine

REPUBLICAN REFERENCE

Area (sq.km) 
603,700 

Population 
48,055,439

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

Capital 
Kiev

Currency 
Hryvnya

President 
Leonid Kuchma 

  

Background:
Richly endowed in natural resources, Ukraine has been fought over and subjugated for centuries; its 20th-century struggle for liberty is not yet complete. A short-lived independence from Russia (1917-1920) was followed by brutal Soviet rule that engineered two artificial famines (1921-22 and 1932-33) in which over 8 million died, and World War II, in which German and Soviet armies were responsible for some 7 million more deaths. Although independence was attained in 1991 with the dissolution of the USSR, true freedom remains elusive as many of the former Soviet elite remain entrenched, stalling efforts at economic reform, privatisation, and civic liberties. 

Update No: 279 - (23/03/04)

Presidential poll forthcoming
Presidential elections are due in October. The incumbent, Leonid Kuchma, is due to step down, although the constitutional court has indicated that he can serve anther term, because his first one in 1994-99 began before the stipulation of no more than two terms for a president was introduced.
Kuchma somehow knows that he is too unpopular to pull it off. Even the long-suffering Ukrainians would somehow baulk at another five years of him, there having been a series of demonstrations already.
His regime is a by-word for corruption, even by lax post-Soviet standards. There was a move afoot to transform the presidency into one elected by parliament, not the people. Now it is expected in the Kuchma camp that it would be easier to persuade the 300 deputies in the 450-seat parliament needed for constitutional changes to vote to enhance the powers of the premiership, while leaving direct elections to a greatly reduced presidency. Kuchma could then be appointed premier by the new president.
The snag is that the only convincing candidate for the presidency is easily Victor Yushchenko, the former premier and central banker, who oversaw a turn-around in the economy in the early 2000s. He is by miles the most popular politician in the country. Nobody would believe in an electoral result that saw anybody else win. He would hardly want Kuchma as his premier, a totally discredited figure.
There is one resort that Kuchma must have been contemplating - arranging a fatal "accident" for Yushchenko. The problem is that would brand him as a murderer, which the population believe him to be anyway. Too many investigative journalists have 'disappeared' over the years.
Yushchenko heads the democratic, Western-oriented 'Our Ukraine' coalition. It is a suitable name, for at the moment Ukraine is anything but the property of its people. Parliament is full of former Soviet stooges who have enriched themselves at the people's expense. It is an even more corrupt set up than in Russia. A question of the rise not of liberal democracy, but of liberal kleptocracy.

Tax offices squeeze the opposition
Yushchenko reported to a conference on Ukraine's place in Europe and the world on February 21st that the tax authorities were applying pressure upon 30 companies which support his party and his candidature. "The state tax administration is being used as a means of political persecution," he said.
The aim is to strong-arm the changes to the constitution through parliament. The government claims that power has become too skewed to the presidency, which under Kuchma has, indeed, some truth.
In the western city of Lvov, an opposition stronghold, legislators in the local parliament have found their companies being subjected to legal probes, when they have ties to the opposition. Consequently many of them have defected to the pro-Kuchma outfit, the Social Democratic Party (United). It is very much a case of keeping in with the powers that-be.
The SDP(U) now has 28 members in the Lvov Parliament, up from 16, the defections being from the Business Lvov party. The local tax inspector until recently was Serhy Medvedchuk, brother of Kuchma's chief of staff and head of the SDP (U), Viktor Medvedchuk, one possible presidential contender. Now Serhy Medvedchuk has moved to Kiev, where he is in charge of national taxation affairs. The techniques honed in Lvov can now be used nation-wide.

Albright and Bildt urge caution
At the conference on February 21st Madelaine Albright, former US Secretary of State, and Carl Bildt, former premier of Sweden, were present and urged Kuchma not to manipulate the constitution. But they are out of power and are not likely to deter him from his course. Too much is at stake for himself and his cronies.
Yushchenko would need to carry out something of a revolution, such as happened in Georgia just recently, to change things. The auguries of that are not so good given the general fatalism, indeed apathy, of the population, an ingrained Ukrainian trait. But there can always be a first time.

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BONDS

Government places US$600m in Eurobonds


Ukraine announced recently it placed Eurobonds to a total of US$600m with annual yields of 6.88%, New Europe reported recently. 
The Ukrainian government approved the issue after a pricing session, the finance minister's office said in a release. The redemption deadline is March 4th, 2011. The yields will be paid every six months. Finance Minister, Mykola Azarov, said an essentially new period has begun in Ukraine's borrowing policy. "The government has placed the bonds among serious investors, which have the reputation of the 'financial locomotives' of permanent markets," the release quoted him as saying. "The yields have been set at 6.875%, whereas in May last year the placement of 10-year Eurobonds with yields of 7.65% was considered a phenomenal success for Ukraine. This is a weighty indicator of the growth of Ukraine's investment attractiveness and of confidence in the economic growth that our country demonstrates." Ukraine has held a roadshow for the bonds in New York, Boston, Los Angeles, Frankfurt am Main and London. The Merrill Lynch International Bank and Dresdner Bank AG are the lead managers of the issue. Previously, Ukraine put on the market Euro-denominated Eurobonds totalling 1.17bn with annual yields of 10% and dollar-denominated Eurobonds totalling US$1.59bn with annual yields of 11%.

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CREDIT RATINGS

Moody's says Ukraine must accelerate structural reforms

Ukraine's international credit rating would come under upward pressure if structural reforms were accelerated and specific improvements were achieved in the areas of taxes, especially value-added tax (VAT) refunds, elimination of VAT exemptions, and in the energy and banking sectors, according to a recent report by Moody's Investors Service, New Europe reported recently. 
"Major political, legal, and bureaucratic hurdles remain to be cleared before a more rapid pace of reform and microeconomic restructuring can take hold," Moody's analyst, Jonathan Schiffer, said. The report also said that Ukraine's foreign-currency country ceiling for debt is B1, with a B2 ceiling for foreign-currency bank deposits, which reflects a substantial pickup in economic growth, steady macroeconomic growth, steady macroeconomic policies, and a manageable level of debt. Earlier reports said that in November, Moody's upgraded Ukraine's foreign currency country ceiling to B1 from B2, the rating of foreign-currency bank deposits to B2 from B3, and the government's bonds to B1 from B2. Ukraine's First Deputy Prime Minister and Finance Minister, Nikolai Azarov, has stated on many occasions that Ukraine's sovereign ratings are understated. He told representatives of Moody's of his position in last December.

Moody's assigns 1st time ratings to Ukrsibbank

Moody's Investors Service has assigned B2/NP foreign currency deposit ratings and an E+ Financial Strength Rating (FSR) to UkrSibbank of Ukraine, reported New Europe recently. 
All ratings carry stable outlooks, the agency said in a press release. Moody's said that, UkrSibbank was the seventh-largest bank in Ukraine by assets and capital, and the fifth-largest bank by customer loans as of September 30th 2003. The bank's strong corporate banking franchise is complemented by the investment banking operations, and UkrSibbank has also been actively developing its retail banking operations. According to Moody's, UkrSibbank's approach of offering a wider range of both commercial and investment banking products is an important factor supporting its ratings, as such a broad product range may become an effective hedge during periods of market volatility. The bank's biggest shareholders are Ukrainian Metallurgical Company, Redan and Ukrinvest.

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ENERGY

Ruhrgas to participate in 1st stage of gas transport group

Interfax News Agency reported recently that Germany's Ruhrgas is ready to participate in the construction of the Bogorodchany - Uzhgorod pipeline, at the first stage of a project to set up an international gas transport consortium, Hilmar Enke, head of the company's office in Ukraine, said. According to the Web site of the Ukrainian Fuel and Energy Ministry, Enke said at a roundtable meeting in Kiev recently that Ruhrgas would take part in this project if it considers it to be economically viable and provided it may take part on equal terms with Ukraine and Russia.
He said that the company also believes it necessary to continue talks on ways to modernise the Ukrainian gas transportation system, which is required to ensure stable deliveries of natural gas to Europe. He added that Ruhrgas is planning to help increase the volumes of gas sales on the European market.
However, Enke did not specify what terms Naftohaz Ukraine and Russian gas giant Gazprom are proposing for Ruhrgas participation in the consortium, and said that a round of talks is scheduled in Kiev.
The Bogorodchany-Uzhgorod pipeline is the first part of the Novopskov (Russia) - Uzhgorod (Ukraine) gas pipeline, which is to be extended to Kazakhstan to transport Central Asian gas to Ukraine and Europe. The Novopskov-Uzhgorod pipeline may have a capacity of 19-29bn cubic metres of gas per year, and cost US$2.2-2.8bn. Russia and Ukraine set up the 000 International Consortium for the Management and Development of the Gas Transport Network of Ukraine on a parity basis. In early November 2002, Naftohaz Ukraine and Gazprom signed documents on founding the consortium. The purpose of the consortium was to ensure the transport of gas and reliable, safe, stable functioning of Ukraine's gas transport system.

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FOREIGN ECONOMIC COOPERATION

Ukraine initials deals with Sudan and Ethiopia

Ukraine recently initialled with Sudan a bilateral intergovernmental agreement on attraction and mutual protection of investment, and with Ethiopia a bilateral agreement on trade and economic cooperation, New Europe reported recently. 
The Ukrainian Foreign Ministry press service said recently the documents were initialled in the course of the visit to those countries by a Ukrainian delegation including representatives of the ministry, a number of other departments and businessmen. In the frames of the tour, February 21st-March 2nd, the Ukrainian delegation also visited the United Arab Emirates (UAE). The delegation was led by First Deputy Minister to the cabinet, Alexander Shnypko. Representatives of Ukraine met with the heads of Ethiopia and Sudan and had some meetings at UAE departments to discuss perspectives for the development of bilateral trade and economic relations. When in Sudan, Shnypko delivered President Kuchma's personal message to that country's leader Umar Hasan Ahmad al-Bashir. In Ethiopia, both countries' businessmen took part in a business forum organised with the support of the local chamber of commerce.

Turkey, Ukraine sign agreement to set up free trade zones

Turkey and Ukraine have signed the protocol of the fourth term Joint Economic Committee (JEC) meeting, Anatolia News Agency reported.
Ukrainian Deputy Prime Minister, Dmytro Tabachnyk, and Turkey's State Minister, Kursad Tuzmen, signed the protocol. Tabachnyk said that both sides worked in mutual understanding and noted that the two sides laid the foundation of future cooperation between the two countries.
Stating that investments in iron-steel, chemical industry and construction materials were brought onto the agenda, Tabachnyk said that they reached consensus on preparation of investment projects for setting up free trade zones in both countries.
Tuzmen in his part said that bureaucratic problems on Eximbank's US$20m of loan which would be used in exports to Ukraine were solved and stated that the two countries reached consensus on transformation of the Black Sea into free trade zone in the future.
He noted that Turkey supported Ukraine's membership to the World Trade Organization.
Stating that the two countries decided to further improve cooperation in all sectors especially in iron, steel, chemical industry and food sector in meetings, Tuzmen said that they also discussed cooperation agreement aiming at supporting small and medium scale enterprises (SMSEs) with formation of the iron-steel working group.

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FOREIGN LOANS

Kiev and EBRD to finance Odessa-Brody-Plock

Ukraine and the European Bank for Reconstruction and Development (EBRD) recently worked out an understanding on financing the extension of the Odessa-Brody oil pipeline to Plotsk, New Europe reported recently. 
A consortium in charge of the project is to be set up in the first half of 2004 in accordance with an understanding reached during a Ukrainian delegation's visit to London, said Prime Minister, Viktor Yanukovych, Interfax News Agency reported.
Talks are underway for holding a meeting between countries and organisations interested in the Eurasian Oil Transport Corridor of which the Odessa-Brody pipeline is a component, Yanukovych said.
Meanwhile, Vice Premier, Andrei Klyuyev, who was part of the delegation, and EBRD President, Jean Lemierre, discussed resuming cooperation with the EBRD and the EuroAtom in completing construction of the two additional reactors at the Rivne and Khmelnytsky NPPs.
Lemierre articulated his very favourable appraisal of the Riskaudit company's auditing mission to the two plants, with a view of appraising their security/safety standards.

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TELECOMMUNICATIONS

Ukrainian telecom company posts rise in profits, services, investment in 2003

Net profits of the Ukrainian state telecommunications company Ukrtelekom in 2003 rose by 13 per cent on the previous year to 616m hryvnyas [almost US$120m], Ukrainian news agency UNIAN reported on 9th March, quoting a press release posted on the company's web site.
Ukrtelekom's investment increased by 41 per cent in 2003 on 2002 to 1.535bn hryvnyas [almost US$300m], according to another UNIAN report. Income from new services provided in 2003 rose by 180 per cent on 2002 to 232m hryvnyas [some US$45m], a third UNIAN report said.

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TRANSPORT

Kirpa unveils plan to commission Kiev-Odessa autobahn

Ukrainian Transportation Minister, Georgi Kirpa, pledged that by Independence Day (August 24th) two major facilities will be commissioned in Ukraine, Ukrinform News Agency reported recently. 
The transportation ministry is supervising construction of the Kiev-Odessa autobahn and a deep shipping canal, which will link the Danube's Bystroye branch to the Black Sea.
The news agency quoted Kirpa as saying the Kiev-Odessa highway will allow vehicles to travel at speeds up to 200 km per hour, though the autobahn's some segments will have speed limitations at 160 km per hour. Kirpa also said the Kiev-Odessa highway is supposed to charge fees for travel, which will amount to 12 kopecks per km for automobiles and 31 kopecks per km for trucks.
The Danube-Black Sea canal's commissioning will allow shifting 60% of the Danube's cargo turnover to the river's Ukrainian branch, Kirpa said. The canal will be 162.6 km long and 8.1m deep.

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