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UKRAINE


 

 

Key Economic Data 
 
  2003 2002 2001 Ranking(2003)
GDP
Millions of US $ 49,537 41,380 37,600 55
         
GNI per capita
 US $ 970 770 720 137
Ranking is given out of 208 nations - (data from the World Bank)

Books on Ukraine

REPUBLICAN REFERENCE

Area (sq.km) 
603,700 

Population 
47,732,079

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

Capital 
Kiev

Currency 
Hryvnya

President 
Viktor Yushchenko




Update No: 306 - (29/06/06)

"Orange Revolution" allies finally club together again to form new coalition 
A compromise was finally sorted out in Ukraine on June 22nd, just five days before a June 27th deadline to form a new government. This came three months after the elections, which saw a comeback for the pro-Russian Party of the Regions, led by former premier, Vladimir Yakunovich. But he and his party are not the beneficiaries. 
After months of bitter wrangling over government posts, Ukraine's pro-Western parties have formed a ruling coalition, sidelining Yakunovich's party, which came in first in the March parliamentary election. 
The coalition includes three parties, which jointly staged the "Orange Revolution" against the allegedly falsified victory of the Moscow-backed Prime Minister, Victor Yanukovich, in the country's presidential poll in late 2004, but later split over power ambitions of their leaders. Under the coalition deal signed on June 22nd, the office of Prime Minister will go to Yulia Timoshenko, whose bloc came in second in the March poll. She held the post after the Orange Revolution, but was sacked by President Victor Yushchenko last August. The President's Our Ukraine bloc, the third runner-up, will get the post of Parliament Speaker. 
The third coalition member is a small Socialist Party, whose support was crucial in giving the "Orange coalition" a majority of 239 seats in the 450-member Verhovna Rada legislature. Mr. Yanukovich's opposition Regions Party and its allies the Communists will hold 207 seats. 

Perils of new government
As coalition talks dragged on and neared a constitutional deadline, Yanukovich's party, with 186 seats, lobbied to join a broad coalition with Yushchenko's supporters, one that would have divided the "Orange" allies. Some of Yushchenko's allies, including the acting prime minister, Yury Yekhanurov, expressed support for a broader coalition. 
Yanukovich, in televised remarks, predicted the failure of the new coalition even before its final completion. He suggested that a government led by Tymoshenko might not win a majority of votes. "An attempt to form an artificial Orange coalition will fail," he said. 
If finalized, the agreement would evidently return Yulia Tymoshenko as the country's prime minister nearly a year after Yushchenko dismissed her from the post. It would also recreate the political and ideological rivalries that have weakened Yushchenko from the start of his presidency, leaving competing centres of power.
The new government, whatever its final form, faces enormous problems in the months ahead, including rising costs of natural gas supplies from Russia. 
In her first stint as prime minister, Tymoshenko also proved divisive, pushing through increases in pensions and salaries, capping prices on gasoline and meat and challenging questionable privatisations of state properties. 
With the country deeply divided among those eager to move closer to Europe and those hoping to retain close ties with Russia, conflicts over these policies are certain to resurface. 
"The road to forming it was difficult," Vitaly Chepeneg, Tymoshenko's spokesman, said of the coalition in a telephone interview from Kiev. "And its work is not going to be easy."
The formation of the "Orange coalition" is feared to aggravate the split in Ukraine between pro-Europe Western provinces and pro-Russian Eastern and Southern regions. It is also likely to further strain Ukraine's already tense relations with Russia. 

Haggling with Russia over gas
Speaking after announcing the coalition deal, Ms. Timoshenko called for a review of a controversial natural gas deal with Russia. 
Under the deal signed in January after Russia cut off all gas supplies to Ukraine for three days, Kiev agreed to nearly double its payments to Moscow. Russia's state-controlled gas monopoly Gazprom is strongly opposed to any revision of the deal. 
Gazprom also said that as per the January deal, it intends to renegotiate upwards its gas prices for Ukraine after July 1st. 
"If Timoshenko reconsiders the gas agreements with Russia, this is likely to trigger off a large-scale gas war that will hit the whole of Europe," Krelmin-linked political analyst Sergei Markov told the Interfax news agency on June 22nd. Russia meets about a quarter of Europe's gas needs.

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ARMS SALES

Ukraine made US$680m in arms sales in 2005 

Ukraine's exports of arms, military and dual-purpose services in 2005 amounted to about US$680 million, up five per cent as compared with 2004, said Valentin Badrak, director of the Ukrainian Centre for Army, Conversion and Disarmament Studies, New Europe reported. 
Quoting his centre's estimates, he said at a news conference in Kiev that the share of Ukrspetsexport, the government-owned arms trader, exceeded 80 per cent. Badrak said that aircraft and armoured vehicles and components, as well as air defence systems, constituted the bulk of exports in 2005. Aircraft repair and upgrading services, including space services, constituted at least 20 per cent, and exports from army stocks, no less than 10 per cent, Badrak said. Like in 2004, Southeast Asia was the biggest market for Ukraine.

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ENERGY

Ukrainian, Azeri experts to offer joint energy projects 

A Ukrainian-Azeri group of experts will develop and propose energy projects to the two countries' governments, Ukrainian President, Viktor Yushchenko, said after talks with Azeri President, Ilham Aliyev, in Kiev recently, New Europe reported.
Yushchenko said that the talks had dealt with the economy, trade and energy. "The goal of our discussions was to assess our opportunities in these sectors," he said.
Yushchenko also said that he had voiced Ukraine's readiness to propose joint projects to Azerbaijan near Odesa, as well as projects involving the Odesa-Brody oil terminal, and deep refining of Kazak oil in Brody (in Lviv region).
In addition, prospects for the implementation of the Brody-Gdansk oil pipeline project were discussed, the European Union and European lending organisation's readiness to finance the project was assessed and an agreement was reached to continue the dialogue on its implementation. "We talked about a plan to organise a chain of gas filling stations in Ukraine, where the interests of Azeri producers would be represented. Aliyev said, "Cooperation in energy and in the oil and gas sector is being clearly outlined." "Supplying Ukraine with our oil is quite feasible and we are studying the option. The moment experts finish their work we'll be able to start working in this area," the Azeri president said.

Ukraine will be backed by US in revising gas deal 

Ukraine can count on support from the US if it wishes to reconsider its gas agreements with Russia, US Ambassador to Ukraine, John Herbst, said, Interfax News Agency reported.
Herbst said in an interview to Den (Day) daily that, if the Ukrainian government comes to a conclusion that the gas agreements with Russia should be reconsidered, it can expect support from the US, which has pointed to certain problems in this issue since the very beginning of the gas price dispute with Russia. At the same time, Herbst did not specify what support Ukraine could expect and suggested that Ukraine should find where it stands on this issue itself. Herbst also said he believes Ukraine's convergence with NATO should not worsen Kiev's relations with Moscow or any other country. 
The ambassador described current relations between Ukraine and the US as very good. Among the steps that confirm this, he mentioned the renewal of the Generalised System of Preferences, bilateral agreements on the World Trade Organisation membership, the granting of market economy status to Ukraine, and the lifting of the Jackson-Vanik Amendment in relation to Ukraine. All these steps signal progress that Ukraine has made in its reforms, he said. Herbst will finish his diplomatic mission in Ukraine in May.

Ukrgas-Energo seeks US$1.2 billion loan 

The Kiev-based joint venture UkrGas-Energo intends to seek a syndicated loan of US$1.2 billion by August 1, 2006, to fill Ukrainian underground storage facilities with 12 billion cubic metres of natural gas, UkrGas-Energo Chairman, Ihor Voronin, said at a press conference in London, New Europe reported.
"The loan will be secured by the gas in the underground storage facilities to be used for the autumn and winter heating season," Voronin said, adding that the company is not planning to export the gas. UkrGas-Energo expects to obtain a five-year loan and is in negotiations with three major international banks to this end, Voronin said. These negotiations are "at different stages," but the company is optimistic about their outcome, he said.

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FOREIGN INVESTMENT

EBRD investment could exceed 550m Euro in 2006 

European Bank for Reconstruction and Development (EBRD) investment in the Ukrainian economy could exceed 550 million Euro in 2006, Kamen Zakhariev, EBRD director in Kiev, said, Interfax News Agency reported.
"We are expanding our activities. If everything works out, the bank's new investment could reach 550-600 million Euro," he said. Ukraine was second, after Russia, in EBRD investment in 2005, Zakhariev said. "For Ukraine, this means that it is becoming one of the key players for bank investment," he said.
The EBRD plans to open a credit line for US$100 million this year for Ukrainian banks that will provide loans to energy sale projects, Zakhariev said. The EBRD is making slow progress in preparing municipal projects for heating and water supply because of imperfect legislation, he said. "We don't always want to see higher prices. But prices should be self-supporting in the long-term or it won't be possible to invest in that sector and that would be bad for Ukraine," Zakhariev said.
An agreement could be signed this year to finance a metallurgical project for 100 million-150 million Euro, he said. The EBRD is also discussing lending support to Naftogaz Ukrayiny's investment programme. A decision is expected this year on joint financing by the EBRD and the European Investment Bank to finish work on the section of the M06 Kiev-Chop highway from Kiev to Brody for a total of about 300 million Euro. The EBRD could enter the capital of small Ukrainian banks in 2006, Zakhariev said. "We have a framework program for entering the capital of mid-sized and regional banks. This is a more difficult market segment, therefore projects move more slowly," he said. Zakhariev said the EBRD will mainly concentrate on implementing energy projects in Ukraine in 2007.

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FOREIGN LOANS

Ukreximbank to raise US$150m from World Bank 

The State Export and Import Bank of Ukraine (Ukreximbank) plans to sign an agreement with the World Bank to raise a US$150 million loan, Viktor Kapustin, the bank's CEO, said at a meeting of the Ukrainian Industrial and Entrepreneurs Union in Kiev. "We will sign an agreement to raise a loan from the World Bank. It will be long-term and relatively cheap and it will be used to finance export operations for US$150 million," Kapustin said. The borrowed resources will be used relatively quickly, he said. The bank will set up a system of investment funds with the participation of Ukrainian, US, British, Asian and Russian investment companies, he said. "The first fund has already been set up and will literally start working immediately. Other funds will be set up in June, July and August," Kapustin said. Ukreximbank was established in 1992. The government owns all of its shares. 

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