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UKRAINE


 

 

In-depth Business Intelligence

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: 283 - (26/07/04)

Relations with NATO
NATO Secretary General, Jaap de Hoop Scheffer, said recently that NATO welcomed Ukraine's bid to fully integrate into Euro-Atlantic organisations. The secretary general spoke after a Ukraine-NATO summit in Istanbul.
The top NATO official stressed that with that in view, it is necessary for Ukraine to carry out reforms in the defence sector, as well as be committed to fundamental values of the alliance. He also emphasised the importance of holding free and fair elections in Ukraine.
Ukraine President, Leonid Kuchma, for his part, said his country's relations with NATO were "good, friendly and constructive." "We have laid a good foundation for future cooperation," he stressed. "Ukraine is satisfied with discussions," the president added.
Kuchma admitted, however, that "neither the economic situation nor the development of civic institutions make it possible to speak about practical terms of Ukraine's entry into NATO." He readdressed the issue of the entry terms to the NATO secretary general. "Time will show when we shall be able to join the alliance," the Ukrainian president stressed. 

Relations with the EU
The Ukrainians would dearly love to join the EU. But that is not practical politics for a long time.
At their eighth summit meeting in The Hague on July 8th, the EU and Ukraine failed to conclude an agreement on a co-operation action plan, but agreed to "pursue discussions in the coming weeks" within the framework of the Union's neighbourhood policy. Kuchma said that the action plan would be drawn up by the autumn of 2004. 
For now, the EU has refused to grant market economy status to the Ukraine on the grounds that the country has failed to provide sufficient commitments to social, economic and civil rights reforms. While Kuchma said that he expects his country to win the status during the Dutch EU Presidency, the EU continues to make this conditional on the country settling a series of legislative issues relating to price formation and bankruptcy. 
The Ukraine has been expecting a prospective action plan to open "real prospects to spread the four freedoms" and eventually to pave the way for the country towards EU membership. For its part, the EU has made it clear that its European Neighbourhood Policy and the associated action plans are not directly tied to the issue of eventual membership. 

Coming presidential elections
Ukraine will hold presidential elections on 31st October 2004. The campaign has already commenced, on July 4th. Kuchma, who vowed that the poll would be free and democratic, is expected to step down at the end of his second five-year term. 
The election is expected to be fought between the current Prime Minister, Viktor Yanukovich, and the opposition's leader, Viktor Yushchenko. 
The upcoming presidential elections in Ukraine will affect its relations with Russia and the West, political scientists said recently in Moscow. "I'm sure that politicians will not sleep, not only in Kiev, but also in Moscow, Brussels and Washington on election night," said Sergei Markov, director of the Political Research Institute. Markov believes the elections will determine not only the future relationship between Russia and Ukraine, but also Ukraine's future role in on the international scene, he said. He and Vadim Karasev, director of the Kiev Institute for Global Strategies, agreed that if Viktor Yanukovich is elected, Ukraine will most likely become more oriented towards Russia, and that if Yushchenko is elected, Ukraine will move closer to the West. 
When asked whether there are other major political players in Ukraine, Karasev said Pyotr Symonenko, the potential candidate of Ukraine's Communist Party, and Socialist Party leader Oleksandr Moroz may also run for president. Nevertheless, he believes the main candidates will still be Yushchenko and Yanukovich.

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AUTOMOBILES

Toyota establishes new company in Ukraine

Toyota Motor Marketing Europe (TMME) launched a new national marketing and sales company in the Ukraine - Toyota Ukraine - following an agreement with Sumitomo Corp, New Europe reported. 
Toyota Ukraine, a wholly-owned subsidiary of Sumitomo Corp, will be responsible for the development of network, sales and marketing activities for Toyota vehicles, parts and after-sales services in Ukraine and Moldova. This endeavour demonstrates Toyota's commitment to further support business growth in Eastern Europe.
Mitsugu Tomita will serve as director general of Toyota Ukraine, which has a capital of 4m and employs a total of 21 people.
From January to June 2004, Toyota sold 559 units in Ukraine. Toyota Ukraine aims to sell a total of 1,330 units in 2004. This represents an increase from 2003 sales of 385 units.

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AVIATION

Ukraine, Peru strike deal in aircraft industry

Ukraine is to help Peru to extend the flying capability of the An-32 planes that the Peruvian security agencies are using. An accord to that effect was reached following talks between visiting Peruvian Foreign Minister, Manuel Rodriguez Cuadros, Ukrainian Minister of Industrial Policy, Oleksandr Neustroyev, and the heads of the Antonov scientific and technical aviation works and the Kiev Aviant state aircraft company, Interfax-Ukraine News Agency reported.
A working group of Ukrainian experts is due to leave for Peru to discuss the transfer of new Ukrainian technologies to Peruvian colleagues in order to maintain the planes' flying capability. Work is to be done at Peruvian plants.
During a visit to the Hostomel airfield belonging to the Antonov works, Cuadros also familiarized himself with the promising research and development of the Ukrainian aircraft industry: the An-124-100 Ruslan heavy transport plane, the An - 140 medium-range plane, the An-74TK-300 transport-convertible plane and the new regional An-148 plane. 
Having familiarized himself with the Ukrainian technologies in aircraft building, Cuadros confirmed [Peru's] interest in expanding the presence of Ukrainian planes of new modifications on the Peruvian market. According to tentative expert estimates, over 30 Ukrainian An-32 and An-26 planes are now being actively used in Peru.

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CREDIT RATINGS

Moody's assigns E+/B2/NP ratings to Ukreximbank

Moody's Investors Service has assigned for the first time to the State Export-Import Bank of Ukraine (Ukreximbank) an E+ financial strength rating (FSR), and ratings of B2/NP for long- and short-term foreign currency deposits, the agency said in a statement recently. All ratings carry stable outlooks, New Europe reported recently.
According to Moody's, the E+ FSR assigned to Ukreximbank is constrained by the bank's still difficult and potentially volatile operating environment. Ukreximbank is fully owned by Ukraine and belongs to the group of large banks (by Ukrainian standards) - among the top five when ranked by total assets. Besides developing standard commercial banking activities, the bank also acts as an agent on behalf of the government, facilitating the administration of loan agreements entered into by the Ukrainian government. Hence the ratings take into consideration the significant role the bank plays in the government's financial affairs and at the same time its relatively high importance for the banking sector and for Ukraine's economy as a whole.

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ENERGY

Ukraine, Russia agree gas transit conditions for 2005

Ukraine and Russia have agreed the conditions for the transit of 112bn cu m of natural gas through Ukraine in 2005, following the 10th sitting of the mixed Ukrainian-Russian cooperation commission, UNIAN News Agency reported. The report said that the parties signed a protocol for 2005 to the agreement on additional measures to ensure Russian gas transit through Ukraine's territory dated 4 October 2001.
They agreed that transporting 1,000 cu m of Russian gas through the Ukrainian territory would cost Russia US$1.09375 for every 100km. As payment for the transit, Russia will supply 23bn cu m of gas at US$50 per 1,000 cu m to secure Ukraine's gas balance, and the rest will be paid with currency.
The report also says that Russia guarantees the transit of 37bn cu m of Central Asian gas to Ukrainian consumers in 2005 through the Russian territory on the same conditions (transit costs US$1.09375 per 1,000 cu m for every 100km). The delegations agreed that if the amount of Central Asian gas decreased to 34bn cu m then the amount of gas supplied by the Gazprom Russian gas giant would be increased to 26bn cu m.
Ukraine committed itself to collecting an export duty of US$100 per 1,000 cu m of gas when exporting gas from Ukraine. The amount of natural gas that is exempt from the duty is 6bn cu m. The parties agreed on joint projects between Gazprom and Naftohaz Ukrayiny [Ukrainian oil and gas monopoly] to supply 5bn cu m of gas (within the quota of 6bn cu m) to European countries via Gazprom.
In late February, Naftohaz Ukrayiny said it was ready to increase the amount of Russian gas transit to Europe in connection with a possible decision by Gazprom to transport gas through Ukraine, bypassing Belarus. 

H1 coal production surges 5%

Ukraine raised coal production 4.95% year-on-year to 40.88m tonnes in the first half of 2004, New Europe reported recently. 
The fuel and energy ministry said Ukraine raised coal production 3.2% year-on-year to 6.6m tonnes in May. Coking coal production grew 1.9% to 3m tonnes and power-generating coal production grew 9% to 3.6m tonnes.

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FOREIGN ECONOMIC COOPERATION

Kiev, Riga to up business ties

Ukraine and Latvia have confirmed their interest in developing trade and economic cooperation in the course of the business forum with the participation of representatives of the two countries' business circles, Interfax News Agency reported.
According to Latvian Economics Minister, Juris Lujans, Ukraine, ranking third after Russia and Belarus among Latvia's main trade partners in the Commonwealth of Independent States, remains one of the most promising markets in Europe.
In the sphere of interests of the Latvian party is extension of partnership in the banking, investment, telecommunications and tourist sectors. Within the business forum frames, the Latvian agency of investment and development and the Ukrainian League of Industrialists and Entrepreneurs signed a memorandum of mutual understanding. According to the Ukrainian party, the volume of trade turnover between Ukraine and Latvia in 2003, compared with 2002, grew by 25% to reach US$363.4m. In the first quarter of 2004, compared with the like-2003 period, it rose 2.3 times to reach US$196m. The business forum took place within the framework of the 6th meeting of the Ukrainian-Latvian interparliamentary commission for trade and economic cooperation.
In the course of the meeting, the parties initialled the draft intergovernmental treaty on economic, industrial, scientific and technical cooperation between Latvia and Ukraine; draft intergovernmental treaties have been also coordinated on the terms of cargo transit, protection of consumers' rights, as well as cooperation between the countries; tourist departments. Treaties have been drafted on mutual recognition of documents on higher education and scientific degree certificates. 

Ukraine, Peru sign cooperation agreement in Kiev

Ukrainian Foreign Minister, Kostyantyn Hryshchenko, and Peruvian Foreign Minister, Manuel Rodriguez Cuadros, who was on an official visit to Ukraine, signed an agreement between Ukraine and Peru on mutual relations and cooperation in a joint statement, UNIAN News Agency reported. 
UNIAN learnt from Foreign Ministry spokesman, Markiyan Lubkivskyy, that in the course of talks the sides exchanged views on a wide range of issues regarding mutual and international problems and confirmed their interest in stepping up mutually-beneficial cooperation in all areas.
The two ministers noted the importance of further development of Ukrainian-Peruvian ties, especially in trade and investment. The two sides noted the presence of significant prospects for deepening bilateral cooperation in aviation, energy, metals, machine-building, the gas and mining industry and fishing. 
Hryshchenko and Cuadros spoke in favour of direct contacts between businessmen from both countries with the aim of implementing projects to rebuild Peru's transport and energy infrastructure, include Ukrainian experts in geological and exploration works for researching the top soil in Peru, and designing and building new gas pipelines across Peru. The talks between the two foreign ministers are evidence of the proximity of views in the stances of the two countries on the urgent issues in international politics. In particular, the sides agreed to step up cooperation within the auspices of the United Nations, support the reform of the United Nations, confirm that it is devoted to the fight against any manifestations of terrorism, corruption, drugs business and illegal arms dealing. 
Hryshchenko and Cuadros agreed on the importance of Ukraine's participation in international integration processes taking place in Latin America. In this context, Peru says it is ready to assist in developing Ukraine's relations with the Andes commonwealth of nations. 

Ukraine, Brunei agree on investment protection

Ukraine and Brunei have signed an intergovernmental agreement on mutual protection of investments, as well as a government memorandum on mutual understanding as regards cooperation in the field of tourism. The signing ceremony took place in Kiev's Mariinsky Palace, where talks were held between Ukrainian President Leonid Kuchma and Sultan of Brunei Haji Hassanal Bolkiah, Interfax News Agency reported.
The intergovernmental agreement on mutual protection of investments envisages making mutual investments on the principles of equality and mutual profit. The document was signed for ten years with a subsequent prolongation of its effect. It will take effect after the parties implement the domestic proceedings required.
The intergovernmental memorandum on mutual understanding in cooperation in the field of tourism envisages that the parties will strengthen and extend cooperation in tourist sector in keeping with the two countries laws, international agreements, as well as within the framework of international tourist organisations.
The document provides for enlargement of bilateral tourist exchange, development of cooperation and extension of direct contacts between the bodies of executive power, tourist agencies and organisations.
The Sultan and the Ukrainian president also discussed cooperation in international diplomatic and anti-terrorist efforts, according to a statement from Ukraine's presidential administration.
The Sultan's four-day state visit to Ukraine was the first for a Brunei ruler. It also was the first visit by the monarch to a former Soviet state. He arrived late on June 17th. Since the establishment of diplomatic relations in 1997, ties between Brunei and Ukraine continue to be enhanced.
The two countries are geographically far apart. The visit, however, is expected to serve as a basis to strengthen further the existing relations and cooperation. The Sultan also travelled to Ukraine's Crimean peninsula on June 19th for visits to the regional capital Simferopol and to Ukrainian naval facilities in the port city Sevastopol. His Majesty's itinerary on June 20th included the Tartar Khan's Palace near the central Crimean village Bakhchiserai. Roughly one-third of the Crimean peninsula's populace are ethnic Tartar's, almost all of whom follow the Sunni Moslem faith. Bakhchiserai, once the capital of the western Tartar empire, is now a tourist attraction.

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MINERALS & METALS

Krivorozhstal in new hands

The Kiev-based Investment Metallurgical Union won the tender for a 93.02% stake in Krivorozhstal, Ukraine's largest steel producer, with an offer near US$800m, a source with Ukraine's State Property Fund said recently, Interfax News Agency reported. The bidding started at US$715m.
The news agency quoted the source as saying that of the six bidders, only the Investment Metallurgical Union and Ukraine's Industrial Group met the requirements set by the contest commission. The union comprises nine members: the Interpipe corporation, Nizhnedniprovsk pipe mill, the Ukrainian-Cypriot company Bipe, the Kredit-Dnipr bank, Aura insurance company, Ukrinvest, Azovstal steel works, Avdiivka coke and chemicals Plant, and Markokhim coke and chemicals plant.
The tender was announced on May 12th with a starting price of around US$715m for the stake. Control over a profit-making coke and chemicals facility in Ukraine was a condition in the tender. In addition to the Investment Metallurgical Union, bids were placed by Ukraine's Industrial Group consortium, Russia's Severstal and Yevrazholding, the consortium of LBM Group and US Steel, and also by the Mukachevo-based company Partnyor.

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TELECOMMUNICATIONS

Ericsson in Ukrainian deal

Swedish telecoms concern Ericsson has signed a contract with ZAO Digital Cellular Communications of Ukraine to supply US$88m worth of GSM network equipment, the company said in a statement, New Europe reported recently. 
Ericsson will also supply a range of services, from the selection of sites to construction, the launching of networks, testing and technical support and network design and radio and transmission planning.

Minor Ukrainian mobile operator expands to cover two more cities

The company Ukrainian Radio Systems (URS) has expanded its mobile phone network to Odessa and Dnipropetrovsk, Interfax-Ukraine News Agency reported.
URS, which works under the brand name WellCom, has previously operated only in Kiev. URS' subscriber base is 42,000. URS announced in April 2003 that it plans to become a nationwide operator and break the duopoly of UMC and Kyivstar, Ukraine's major mobile operators.

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TRANSPORT

Ukraine to supply 2,000 lorries to Iraq

The AvtoKrAZ holding (Kremenchuh, Poltava Region) and the state company Specialized Foreign Trade Firm Progress [arms exporter, subsidiary of krspetseksport] have signed a contract to supply about 2,000 KrAZ vehicles to Iraq over two years as part of a post-war rebuilding programme, Interfax-Ukraine news agency reported.
The press release said that KrAZ lorries had been adapted to Iraq's climate. Most of the shipments, about 1,600 lorries, will be the basic KrAZ-6322 with the 6x6 configuration, which is a modernized KrAZ-260 off-road vehicle.
The contract also envisages supplying fuel lorries and repair-evacuation vehicles to Iraq. Some 120 Ukrainian and 25 Russian companies are involved in the production of vehicles as part of the Iraqi project. AvtoKrAZ is the only producer of lorries in Ukraine. It produces about 27 models and 150 various modifications of lorries for all the sectors of business and the armed forces.

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