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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 


  

Update No: 288 - (04/01/05)

Yanukovich resigns as premier to conclude Ukraine crisis
The Ukrainian prime minister, Viktor Yanukovich, resigned from his post on New Year's Eve, bringing to an apparent end a two-month crisis in which the former presidential candidate sparked weeks of protests when he claimed victory in a fraudulent run-off vote. "I have made the decision to submit my formal resignation," Mr Yanukovich said in a televised New Year's Eve address.
After hearing of his loss on Boxing Day by 7.8%, Mr Yanukovich had vowed to provide a strong opposition, and said that he would remain in politics. "We are still fighting, but I don't have much hope," he said. 
The move came after both the Central Elections Committee (CEC) and the Supreme Court rejected his complaints at voting procedures in the repeat vote on December 26th. That leaves a further court appeal over the CEC decision as his only recourse. 
Yanukovich had been under increasing pressure to resign since late November, when the opposition led a no-confidence vote in parliament demanding that the government's resignation. Yanukovich subsequently held firm, despite protesters taking to the streets and forming blockades that prevented him entering his office. 
After the vote on Boxing Day he refused to concede, causing the blockades to be renewed again, albeit for only 4 hours. The opposition, led by president elect Viktor Yushchenko, have said they will delay any inauguration until Yanukovich has had enough time to lodge all complaints against the vote. 

The rats leaving the sinking ship; the men who knew too much
Yakunovich's delaying tactics were interpreted by Yushchenko supporters as a ruse to give his corrupt cronies time to get away with their ill-gotten gains. Like other old lags (he served four years in prison for two sentences of assault and robbery) Yakunovich has his own code - that of total loyalty to his cronies.
An event that throws some light on this murky side of the Ukrainian revolution is the death of the transport minister, Heorhiy Kyrpa, days after the election. Kyrpa, a close associate of outgoing president, Leonid Kuchma, was suspected of funnelling millions of dollars via Ukraine's lucrative railway network to top government officials for use in the attempt to manipulate the presidential election.
He was found shot dead with a pistol beside his body, suggesting suicide. But another interpretation is possible. Those who knew Kyrpa said that he had been in touch with the opposition, probably to trade information about the criminal activities of leading government figures in return or immunity from prosecution.
The Prosecutor-General has opened a criminal investigation into the matter. It is known that shortly before his death Kyrpa was in a heated telephone conversation with someone described as a top administration official; he also received a visit from another top official. 
Earlier in December there had been another suspicious death. Yuriy Lyak, the director of a bank suspected of dubious operations involving huge sums of money, was found dead. His throat had been cut, slashed by a letter-opener, and a suicide note was found beside him. A separate investigation has been ordered into his death.
Given the ruthlessness of the tactics used by the old regime, such as the September 5th poisoning attempt on Yushchenko, which has gripped the attention of the world, it is only too likely that these two inconvenient witnesses to the shenanigans of the old regime have been silenced before they could talk. An administration source, naturally requiring anonymity, said that both deaths were linked to election fraud and government corruption. "I think that we will see quite a few more deaths as some important figures try to ensure nobody will inform against them."
There is one canary who is already singing, however, safe in custody in the US. Pavlo Lazarenko, a former premier convicted in California a few months ago of money-laundering, has already implicated Kuchma, strongly suspected of ordering the deaths of investigative journalists and the rigging of his re-election in October 1999. Further revelations are expected concerning government corruption.
Cover-ups, once suspected, sooner or later tend to unravel. As the Italian banker Calvi, who had dealings with the notorious far-right group in Italy, P2, and Banka Ambrosiana, the Vatican's banking group, said: "As far as I am concerned if more than one person knows a secret, it is no longer a secret." Unfortunately for him he learnt this nugget of wisdom too late, just before being found dead, suspended from Blackfriars Bridge in London.

Man behind the throne
Another key figure likely to be investigated by the new when it forms is Viktor Medvelchuk, the head of the Ukrainian presidential administration, and widely regarded as the man behind Kuchma's throne.
His fortune is said to run into billions of dollars, built up in partnership with six other businessmen; collectively they are known as "The Magnificent Seven." Their activities straddle the commanding heights of the economy, oil, gas, power supply and raw materials, together with steel and heavy 
industry.
One of his close associates was Lyakh, the dead banker. Another is Hryhoriy Surkis, who among other things owns Dynamo football club, where the gang liked to foregather for their informal deliberations. Yet another is Kuchma's son-in-law, Viktor Pinchuk, who with Surkis has been placed on the US visa black list of undesirable characters.
Medvelchuk managed the failed campaign of Yakunovich and coordinated the relations with Putin, who disastrously backed him.

Turning to the EU and West 
Yushchenko will draw a discreet veil over this episode and make his first foreign trip to Moscow. But there is no doubt that Ukraine now has the greatest chance ever of becoming a burgeoning Western country.
This is where the EU can help. If Turkey, as was agreed in December, is now to enter negotiations next October to join, albeit a decade or two hence, then how can Ukraine be denied to qualify for consideration too. Yushchenko has declared that entering into negotiations with the EU, with a view to joining it in the long run, is the prime goal of his presidency. 
After the heroic stand for democracy by the activists of the Orange Revolution over the last two months of last year it would be extraordinarily pusillanimous and short-sighted of Brussels and Strasbourg not to agree.

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AGRICULTURE

Ukraine boosts wheat exports

Ukraine exported 505,600 tonnes of wheat, mixed wheat and rye for US$52.8m in September 2004, up 120 per cent on August, according to data from the state statistics committee, Interfax News Agency reported.
Ukraine exported almost no wheat in September 2003. Ukraine has exported 791,400 tonnes of wheat for US$90.5m since the beginning of 2004, down 12 per cent from the same period in 2003. Ukraine revived wheat exports in the current marketing year (July 2004-June 2005), which were halted in the previous marketing year due to the lack of a harvest, Ukraine will see a wheat harvest of 17.775m tonnes in 2004, almost a five-fold increase from 3.6m tonnes in 2003, according to preliminary data from the agrarian policies ministry.

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AVIATION

Ukraine delivers first plane to Azerbaijan

The ceremonial delivery of the first of the four An-140 planes commissioned by Azerbaijan's AZAL concern [state airline] took place at the Kharkiv-based state aircraft plant recently, a Defense Express correspondent has said. The plane was consecrated before the delivery, according to Orthodox tradition, Defense-Express web site reported.

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FOREIGN ECONOMIC COOPERATION

Ukraine, Georgia can boost economic cooperation

Ukraine and Georgia have great potential for deepening economic cooperation, mainly in the development of trade relations, energy shipment and transport corridors, said Ukraine's First Deputy Foreign Minister for European Integration, Alexander Motsyk, and Georgia's Foreign minister, Salome Zurabishvili, who met in Tbilisi recently as part of the meeting of the Council of Foreign Ministers of the Black Sea Economic Cooperation (OBSEC). According to the Ukrainian foreign Ministry, the sides discussed bilateral cooperation, having expressed satisfaction with the high level of Ukrainian-Georgian relations. Motsyk and Zurabishvili pointed out the importance of cooperation within international organisations and regional initiatives.
Separate emphasis was given to the cooperation of the GUUAN grouping of Georgia, Ukraine, Uzbekistan, Azerbaijan and Moldova.

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FOREIGN INVESTMENT

Ukraine's top companies investing heavily abroad

The country's millionaires are busy buying up foreign companies, most of them trying to gain access to world markets and some hoping to avoid inevitable problems at home after the presidential elections, Korrespondent reported.
The time has passed when ZAZ [Zaporizhzhya Car Plant] was associated with Zaporizhzhya - more by way of anecdote than through its product. The Zaporizhzhya Car Plant is the focal point of an international corporation which has serious intentions of becoming a major player on the European motor-vehicle market. On 29 October it became known that one of ZAZ's biggest shareholders - the UkrAvto company - had signed a contract with Poland's BPH [commercial] bank on paying off the debts of the Warsaw motor-vehicle enterprise, Samochodow Osobowych (FSO). The agreement was the last in a series of deals between the Ukrainian company and a number of creditors of the Polish car plant.
Now UkrAvto will be able to own one of the biggest car manufacturing plants in Poland. Tariel Vasadze, the chairman of ZAZ's supervisory council, and honorary president of the UkrAvto corporation, told Korrespondent that in purchasing FSO, UkrAvto had pushed its wish to rescue the receiver of its investments and its old supplier of parts for ZAZ. "We have serious ties with this plant. We receive parts from Poland for the manufacture of the Daewoo Lanos. In turn ZAZ supplies parts for vehicles of the Polish plant," he said.
Large-scale privatization in Ukraine can already be said to be completed. Big capital has now moved abroad and not only to offshore companies but to foreign producers too. The Donetsk Industrial Union of Donbass (IUD) corporation has declared its large-scale expansion into Poland. Headed by Serhiy Taruta, it intends to buy a major metallurgical works and a number of other major facilities.
Apart from UkrAvto and IUD, several other Ukrainian business groups have made significant acquisitions abroad and announced plans to continue their expansion outside the country. A spokesman for the Cabinet of Ministers, who preferred to remain anonymous, said that the number of Ukrainian business groups owning property abroad is rather greater than is known. "There are plans you would have to research seriously for more than a month," he noted.
Although the majority of financial-industrial groups decline to discuss their acquisitions in other countries, specialists can straightaway give several reasons why major Ukrainian companies are becoming more attracted to foreign property - from expanding production to insuring themselves against political risks in the run-up to the presidential election. The spheres of interest of Ukrainian consortiums are at the moment confined to metallurgy, the food industry, the banking sector and car manufacture, and their geography is in the main Russia and Central Europe. Volodymyr Sidenko, director of economic programmes at the Razumkov centre, says the reason why business groups are so keen to acquire foreign assets is that they want to get round the many restrictions on the import of Ukrainian goods to various markets. "They purchase production capacities abroad so as to overcome the various restrictions on Ukrainian production and to avoid anti-dumping investigations and setting quotas," Sidenko believes. "Our business groups are manoeuvring and substituting exports from Ukraine with switching production to the territory of those countries which are imposing the restrictions." Indeed, protectionist measures are being applied in certain sectors of interest to Ukrainian exporters. Numerous import restrictions have been established for Ukraine, for example on metal production. As Sidenko notes, the quota for Ukraine in the EU countries is now 607,000 tonnes of metal output and this is just three-quarters of the country's export potential. "The reduction in exports is forcing our companies to consolidate in Europe," the expert says.

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MINERALS & METALS

Ukraine to raise steel output

Ukraine will raise crude steel output by 4.6 per cent to 39m tonnes this year, Alexander Belousov, deputy director general of the Ilyich Metals Combine of Mariupok, said at the 7th Russian Metal and Steel Market Conference in Moscow, New Europe reported.
Belousov said steel consumption in Ukraine would grow 15.2 per cent to 7.5m tonnes. Ukrainian steel production will hit 40m tonnes in 2005, Belousov said. The Mariupol works is one of Ukraine's biggest steel producers.

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TRANSPORT

Ukraine, Russia launch ferry line

Ukrainian and Russian Transport Ministers, Heorhy Kirpa and Igaor Levitin, signed an agreement on organising a direct international railway-ferry line between Port Krym and Port Kavkaz. The signing ceremony was held at Port Kyrm and was attended by Ukrainian and Russian presidents Leonid Kuchma and Vladimir Putin, who had arrived at Port Kyrm from Port Kavkaz on a ferry. The Ukrainian president's press service said that a Port Kyrm-Port Kavkaz direct railway-ferry line will increase the transit of passengers and cargo between Russia and Ukraine and reduce the cost of transport services. It will also create favourable economic conditions in the merchant ports of Kerch and Feodosiya due to growing proceeds from handling cargo, create jobs and improve the operation of the Europe-Asia transport corridor. The parties also signed a Ferry Council charter, as well as the rules of transporting cargo via the railway-ferry line. After the signing ceremony the Russian and Ukrainian transport ministers gave their go-ahead to the departure of the first railway ferry. In the presence of the Russian and Ukrainian presidents the ministers signed a memorandum on organising a faster passenger railway between Kiev and Moscow.

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