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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: 305 - (30/05/06)

There is no doubt that relations between Russia and Ukraine are rapidly deteriorating. The gas spat at the beginning of the year has changed the whole mood.
The only thing that could possibly save the situation is if the prolonged political crisis in Ukraine is resolved in Russia's favour by the Party of the Regions, led by former premier Victor Yakunovich, being included in the government. But this is unlikely, although not impossible. The Party of the Regions did after all come first in the March elections.

Ukraine May Find Way Out of CIS
A most serious move is now under contemplation by Kiev that would put relations with Moscow into an even worse state.
Kiev followed the example of Tbilisi in early May and announced that it is seriously questioning the expediency of membership in the Commonwealth of Independent States. That announcement was the main outcome of the Vilnius summit of heads of the Baltic and Black Sea states. But, unlike Georgia, which has nothing to lose from its departure from the CIS, Ukraine's separation presents a number of problems.
The press service of Ukrainian President Viktor Yushchenko organized a special briefing on the future of the CIS by the head of the foreign relations service of the president's secretariat Konstantin Timoshenko. Mr Timoshenko reported that the Ukrainian leadership is not satisfied with the effectiveness of the organization's functioning and that the president is seriously considering Ukraine's withdrawal from it. "Unless something changes, the question of Ukraine's withdrawal from the CIS will become a practical plan, if not tomorrow, then in the near future," Timoshenko said.
The presidential adviser's appearance was the apotheosis of a series of anti-CIS moves by Ukrainian authorities. For a week, various officials had been harshly criticizing the CIS. Ukrainian Deputy Foreign Minister Vladimir Ogryzko set the tone when he stated during a visit to Moscow that Kiev is disappointed the CIS has turned from an organization of action to an organization of conversation. He said that Ukraine has repeatedly made specific proposals within the CIS and none of them were developed by the organization.
Ogryzko cited the example of President Yushchenko's proposal to set up common border protection for the CIS countries, which was ignored. "Will there be any desire to make new proposals after that? The question arises as to why we need that shell? For business or as a club?"
The Ukrainian Security Council followed the Foreign Ministry. Its secretary Anatoly Kinakh hit at a sore spot when he said that the CIS has lost its economic meaning. "Hundreds of documents have been passed by the CIS, but they are not implemented. The procedure for creating a free trade zone between member states has not been completed," he recalled.
Yushchenko did not touch on the topic of the CIS directly at the Vilnius summit. But it was clear from his speech at the forum that the CIS is not the future Kiev has in mind. Yushchenko called maximum closeness to NATO and the European Union the main goals of his presidency. "It will be a great honour for me to solve those problems," he said. "There is no worthier challenge for our political elite today." The Ukrainian president said it was possible that the plan to begin the process of joining NATO would be put into action at the November meeting of the organization in Riga. The storm of criticism of the CIS coincided with the Vilnius summit. Most observers agree that the countdown to the dissolution of the CIS has begun. The presidents and foreign ministers of the Baltic, Eastern European and Scandinavian countries were present at the summit and its main moderator was US Vice President Dick Cheney. In his speech, Cheney criticized Moscow's policies in the former Soviet Union and stated that they pose a threat to democracy. Cheney praised Russia's neighbours and held up Ukraine and Georgia as examples for the other former Soviet states.
Kiev and Tbilisi took that praise as a signal to act. The statements by Ukrainian leaders came immediately after Georgia, another country of new found democracy, expressed the same intentions. Georgian President Mikhail Saakashvili has instructed the Georgian administration to determine the advantages and disadvantages of CIS membership. Georgian politicians immediately informed the head of state that the advantages of CIS membership were extremely few. Chairman of the Parliamentary Committee on Foreign Affairs Konstantin Gabashvili stated that "the only advantages of the CIS were visa-free travel and free trade and without them membership loses all meaning." Georgia and Ukraine are in different positions, however. Georgia has nothing to lose, since visa and trade wars have been in progress again for a long time. Relations between Ukraine and Russia, despite their disagreements, have been privileged.
Russian politicians threatened the leaders of the colour revolutions with big economic problems in response to their anti-CIS initiatives. Vadim Gustov, chairman of the Federation Council Committee on CIS Affairs, predicted high unemployment in Ukraine, reconsideration of economic agreements and higher energy prices. "The Ukrainian economy is oriented toward Russia. The Russian market is basic for Ukrainian goods. No one needs their goods in Europe, and whom Ukraine will sell them to outside the CIS is a big question," he said. He called the criticism of Russia at the Vilnius summit "a return to the Cold War." "A sanitary corridor is being created around Russia and Ukraine has been pulled into that game," he said.
Gustov was seconded by chairman of the Duma Committee on Foreign Affairs Konstantin Kosachev, who said that Kiev and Tbilisi are pursuing a policy of deteriorating relations with Russia to speed up the process of integration with Western European and Transatlantic structures. "I'm afraid that counting on easing that integration is mistaking wishes for facts. No one in those structures is waiting for Georgia or Ukraine," Kosachev commented.
The parliamentarians' statements are only a warning. Russia has shown how it treats incompliant neighbours more than once. The gas war with Ukraine and the trade wars with Georgia and Moldova are the only means of exerting pressure that Russia has at its disposal. If Ukraine decides to leave the CIS, Russia could make travel from that country subject to receipt of a visa. Moreover, Russia could cancel the policy implemented two years ago that allows Ukrainians to stay in Russia for up to three months without registration. Those measures could have much more unpleasant effects for Ukraine than the wine war does for Moldova.
In Kiev, they are convinced that the matter will not reach those extremes. "We have never descended to such crude means of influence as import prohibitions on made-up pretences based on sanitary norms," press secretary of the Ukrainian Foreign Ministry Vasily Filipchuk told Kommersant. He said that Moscow should learn the lessons of last year's gas war. "Judge for yourself who suffered more. After that, the world community began to doubt Russia's reliability as an energy resource provider. Moscow only harms itself with such steps," he said.

The Kiev-Riga axis
Energy and NATO membership were at the top of Ukrainian President Victor Yushchenko's agenda during his official two-day visit to Latvia on April 27-28. The two sides also discussed energy issues, which have become increasingly sensitive due to the Kremlin's new assertiveness in foreign policy.
President Vaira Vike-Freiberga, a big player on the Baltic stage, but also right across the former Soviet sphere, welcomed her Ukrainian counterpart at the Riga Castle, where the leaders discussed trade possibilities between the two countries and Ukraine's ambition of joining the EU and NATO. The talks resulted in three bilateral agreements, according to the president's press-office. After meeting with Yushchenko, Vike-Freiberga told journalists they had discussed Ukraine's vital transit role in energy supplies. "We would like the Caucasian energy resources to go through Ukraine," Vike-Freiberga said.
Yushchenko added that Ukraine would be a unique transit country and could supply oil and gas to other regions, including the Baltic states. He said that no European country could create a stable energy policy by itself as the energy market was "a market of interdependency."
The Ukrainian president also thanked the Latvian government for meeting the needs of Ukrainians residing in the Baltic state. He assured Vike-Freiberga that, likewise, his government was ready to help and support Latvians in Ukraine.
"I am convinced that in our diverse world it is vital to preserve native languages, literature and history in order to preserve nationalities," Yushchenko said, adding that a special council for working with expatriate Ukrainians has already been established in Ukraine.
During the council's first meeting, he added, it was decided to give passports to hundreds of Ukrainians living abroad, including 144 in Latvia. "We aim to help the Ukrainian diaspora integrate with Ukraine and adopt its way of life," he said.
Vike-Freiberga assured Yushchenko that Ukraine could rely on Latvia. "It is very important for Ukraine and Latvia to develop economic and business relations, whose potential has not been fully used," she said, adding that the business climate in Ukraine had considerably improved since 2005.
Freiberga also complimented Yushchenko on the commendable conduct of Ukraine's "truly democratic" elections, before offering her heartfelt condolences to the nation on the 20th anniversary of the Chernobyl disaster.
"This catastrophe showed that the Soviet system was faulty and incapable of protecting its people," Freiberga said.
Yushchenko also spoke to students, diplomats, politicians and academics in a lecture at the University of Latvia entitled "Ukraine in the Modern World" during his visit. The Ukrainian president outlined the changes that had taken place in his country following the "Orange Revolution" and spoke of Ukraine's efforts to join the EU and NATO.
He expressed hope that a Latvian-Ukrainian commission would become functional within a few weeks' time and would establish a framework for future cooperation between the two countries. The commission would pick some seven or eight areas of policy to focus on, Yushchenko said, with the contentious issue of energy close to the fore

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ENERGY

Yekhanurov blames FinMin for sliding Naftogaz rating
 

Ukrainian Prime Minister, Viktor Yekhanurov, has blamed Finance Minister, Viktor Pynzenyk, for criticising Naftogaz Ukrainy's financial plan and therefore being partly responsible for the downgrading of the national gas and oil provider's credit ratings, New Europe reported.
"Your criticism has led to the downgrading of Naftogaz's ratings," Yekhanurov said interrupting Pynzenyk's report on risks of the implementation of the state budget in 2006 at a government meeting recently.
It was earlier reported that Fitch Ratings downgraded Naftogaz Ukrainy's local and foreign currency Issuer Default Ratings (IDRs) to B+ from BB- (BB minus) on April 25th, due to the company's deteriorating financial condition, with the Outlooks for the IDRs remaining Negative.
Fitch questioned the degree of state support for Naftogaz, despite its 100 per cent state ownership. Fitch also said it could revise the outlook to Stable "if Naftogaz were able to demonstrate an ability to offset rising natural gas costs either through a renegotiation in prices, an increase in transportation tariffs or an ability to pass on these costs to domestic end-users."
Of additional concern to Fitch are reports in the press that Naftogaz has accumulated debts of around US$700 million for natural gas supplied by RosUkrEnergo in February and March, after Naftogaz was forced to sell gas in the domestic market at prices lower than the acquisition price. As a result, out of the reported 11 billion cubic metres of gas supplied in the first quarter of 2006 to Naftogaz, only four billion cubic metres has been paid for, which has in turn caused RosUkrEnergo to cut its supplies to 50 percent of the previously agreed volumes. 
The Outlook remains Negative, reflecting Fitch's concerns over potential price increases for Ukraine to import gas. 
Under the current agreement with Russia's Gazprom (BB+/Stable), transportation tariffs through Ukraine are fixed for five years, whereas gas prices for Ukraine could be reviewed every six months, the statement said.

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FOREIGN RELATIONS

Russian-Ukrainian relations developing positively
 

Despite the domestic political situation and a break in Moscow-Kyiv dialogue, Russian-Ukrainian relations are continuing to develop positively, Ukrainian Foreign Minister, Borys Tarasyuk, said, New Europe reported.
"Despite difficulties we are ready to continue a bilateral political dialogue at the highest level. It is obvious that Russia is waiting for Ukraine to form a new government, but still Russian-Ukrainian dialogue continues," Tarasyuk said at the international research conference Ukraine-Russia-Europe, held in Kiev recently. Russia and Ukraine are countries "that are developing their relations on the basis of a strategic partnership despite the dramatic difficulties in witnessed over the past few months," he said.

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NUCLEAR ENERGY

Ukraine, Russia, Bulgaria agree on nuclear materials transit 


Ukraine, Russia and Bulgaria have signed an intergovernmental agreement on the transit of nuclear materials through Ukraine, New Europe reproted.
The signatories to the agreement, signed in Kiev recently, are Ukrainian State Nuclear Regulatory Committee Chairman, Yelena Mykolaychuk, Bulgarian Deputy Economy and Energy Minister, Jordan Dimov, and Russian Federal Atomic Energy Agency deputy head, Sergey Antipov. The sides will cooperate in transporting fresh and spent nuclear fuel, other nuclear cycle materials, natural uranium and highly radioactive waste, from Bulgaria to Russia via Ukraine. Russia is the main supplier of nuclear fuel to Bulgarian nuclear power plants. Bulgaria and Ukraine send their spent nuclear fuel to Russia for temporary storage.

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