Books on Ukraine
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
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
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
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
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.
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.
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.
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.
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
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.
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.
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.