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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: 310 - (26/10/06)

The enemy of my enemy is my friend - or ally
The Ukrainian situation is finally settling - so it seems. The two leading rivals two years ago appear to be pulling up. Churchill who had perhaps the longest career in political office of anyone in a democracy, stretching from 1905 to 1955, said that there are no friends among the top six figures in the government of such, even if they were once so beforehand.
Ukrainian President Viktor Yushchenko and Prime Minister Viktor Yakunovich know full well that they are not real friends, rivals for the presidency in 2004; - all the better basis for an alliance against their mutual enemy, Yulia Timoshenko, an erstwhile ally of Yushchenko's. They were discussing creation of a wide coalition to cement their new relationship in early October. 
"This is one of the themes on the agenda of the president/prime-minister meeting underway at the head of state's secretariat," presidential press-secretary Viktor Baloga told a news briefing at the time.
Earlier, the parliamentary faction of the pro-presidential bloc Our Ukraine declared it was shifting into opposition to the anti-crisis coalition of the Party of Regions, the Socialists and the Communists and ruled out any chance coalition talks might resume. Nevertheless Yushchenko called for starting the process of negotiations anew.
Earlier, true to form, the Yulia Timoshenko Bloc said it would stay in harsh opposition to the government. Timoshenko is for now out in the cold. But she should see the immediate period ahead as her wilderness years, which Churchill experienced in the 1930s. She is in her early forties and a very able woman. Her time could easily yet come. Those in power are making egregious errors.

Closing the East-West divide
Yushchenko is well aware that he has made mistakes in his two years in power since the Orange Revolution in 2004. He has not bridged the East-West divide in the country that almost parallels the East-West divide in the Cold War. The Russian Ukrainians and the Ukrainians proper are on a different wavelength.
On October 10th, as a sign of the new times, Yushchenko tapped an eastern Ukrainian businessman with powerful industry connections to head his Security Council. The president gave the job to Vitaliy Hayduk, president of the Industrial Group, a business consortium linked to coal and steel magnate Serhiy Taruta. Taruta was one of the few eastern tycoons to back the pro-Western Yushchenko in the 2004 presidential election. 
The Industrial Group, which brings together numerous metals companies, has argued that European markets hold more promise for Ukrainian business and that closer trade ties with Russia would only increase competition with Russia's wealthy metals sector.

Firming up the centre
But almost as if he is a Hegelian philosopher, seeking a synthesis of the thesis he espouses and the anti-thesis he rejects by and large, Yushchenko is quite literally cultivating the middle ground, Central Ukraine, his own version of Tony Blair's famous Third Way.
On a working visit to Chernihiv in early October, he conducted a meeting with governors of Ukraine's central regions: Mykola Lavryk (Chernihiv), Yuriy Andriychuk (Zhytomyr), Vira Ulyanchenko (Kyiv), Vadym Chernysh (Kirovograd), Valeriy Asadchev (Poltava), Nina Garkava (Sumy), Arsen Avakov (Kharkiv), and Oleksandr Cherevko (Cherkassy). 
The President said they must carry out pro-European policies and improve the regional economy, President's press office reported. 
Yushchenko said he would oppose "politically motivated" staff changes in the regions. "For you and for me, there is only one alibi - effective work," he said.
The Head of State insisted that, "although different political forces see state management differently, we must ensure the harmonization of relations between the branches of power." He said there were no legal grounds to disband oblast or district administrations. He added it was important to improve administrative reforms, characterizing the existing model of state management as "conceptually imperfect" due to the excessive concentration of powers in the capital.

Yushchenko and Putin agree to meet in the near future
If Ukraine needs to bridge its own East-West divide, it certainly also needs to mend fences with Russia.
Putin has put out an overture here, doubtless pleased at Yushchenko's rapprochement with Yakunovich. He has declared that he and Yushchenko have agreed to meet in the near future. "Recently I talked with Yushchenko and we agreed to conduct a meeting within the framework of the commission, which was formed long ago, but has not started to work yet," Putin said, greeting VR speaker Oleksandr Moroz in Kremlin.
The Russia's President underlined that for the Yushchenko-Putin commission to start functioning it is necessary to reach certain agreements in the economic sphere and to bridge regular political contacts.

Ukraine may become the WTO member by the end of 2006
But the West and the wider world matter as well. Membership of the World Trade Organisation (WTO) beckons this year.
If Ukraine finalises adjustment of its legislation with the WTO standards and principles, inks mutual access to markets and services and works out final version of the Working Group's report, it will be the WTO member by the end of 2006. 

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Yushchenko welcomes as President Mesic of Croatia 
President Victor Yushchenko welcomed President Sjtepan Mesic to Kiev on September 27th. 
First he thanked his colleague for coming to Ukraine to commemorate the 65th anniversary of the Babyn Yar massacre. In September 1941 Croatian Ustashe troops fighting alongside the Nazis perpetrated an appalling massacre. "This is a significant page in the history of Ukrainians and Jews and so we decided to honour the memory of the Babyn Yar victims internationally," he said. 
President Yushchenko added that Ukraine would insist that the Holodomor be recognized as genocide. He said ten parliaments, among them the US Congress, had passed this resolution so far and called for Croatia to "support all our initiatives on the Holodomor." 
Victor Yushchenko and Stjepan Mesic discussed ways to develop trade, economic, military and scientific cooperation. They also spoke about visa procedures and agreed to sign an agreement on readmission. The Croatian leader said the two countries should open markets to each other and build ties with big companies. President Yushchenko said Ukraine supported "open, liberal policy" and thus would gladly sign a free trade agreement with Croatia. The Ukrainian President then promised to help Croatian investors build a heart surgery hospital in Kiev oblast. 
Mesic invited his colleague to Croatia, a welcome invitation for more reasons than one. Croatia is one of the most beautiful countries in Europe, indeed the world.

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The following is of self-explanatory interest:-

Ukraine's EU hopes far away
by Oksana Bondarchuk, Kiev Post Staff Writer
Konstantin KlimenkoEuropean Commission Ambassador to Ukraine Ian Boag told the Post in an interview Oct. 10 that relations between the EU and Ukraine are productive. 
Ukraine's acceptance into the European Union "is not on the agenda," EC ambassador to Ukraine Ian Boag has said. And joining NATO is not in itself a stepping stone to the EU, he added. Future bilateral relations will depend a lot on whether Ukraine joins the World Trade Organization, according to Boag, a British citizen who has been serving as the top Eurocrat in Kiev for over two years.
KP: How would you describe the current state of EU-Ukrainian relations?
IB: I think that current relations are very good. They are very productive. You see that the new prime minister [Viktor Yakunovich] went twice to Brussels in a very short space of time [at the end of last month]: once to head the Ukrainian delegation to the Cooperation Council, and the other time to meet the president of the [European] Commission and the president of the European Parliament. I think that this was very useful. We have a lot of things ongoing at the moment. We have the implementation of the Action Plan. We have the memorandum of understanding on energy. We have initialled and will soon sign a memorandum on cooperation in agriculture, which will be in addition to the Action Plan…
KP: Could you explain what you mean by "cooperation in agriculture?"
IB: Basically, it is a memorandum, which sets outs a framework whereby we agreed to consult and discuss on a variety of issues. It does not settle substantive points, because there is not too much about agriculture in the Action Plan. And, therefore, this is designed to set a framework in which we can discuss various things about trade in agriculture products and discussions from geographic indicators, which is very important to us. This will be signed, I think, in Brussels on the 18th of this month…
KP: Have bilateral relations changed since the second premiership of Viktor Yakunovich, whom many see as pro-Russian?
IB: Well, I always felt that the description of people as being pro-Western or pro-Russian is rather simplistic. The prime minister of Ukraine is the prime minister of Ukraine. I have to say that when Prime Minister Yakunovich went to Brussels, we had very good talks. And what he said about reform, about 
relations with the European Union, about joining the WTO [World Trade Organization], which for us is an absolutely fundamental question, was very satisfactory. Obviously, as the president of the European Commission said, what we do with every new government is that we judge what that government does. 
One of the first tests is, obviously, the question of membership in the World Trade Organization. Upon this depends what we will be doing in the future. 
At the beginning of next year, we hope to begin negotiations on what we call an in-house agreement, and this will contain very far-reaching elements, one of which will be a free-trade agreement, and not just free trade that abolishes customs tariffs. 
It will envisage approximation of legislation, the harmonization of industrial norms and standards… All of the things that will bring Ukraine very much closer to the European Union, the single market of the European Union. Without that, without the WTO, we can't start talks on this. Therefore, this is absolutely vital…
KP: Is Ukraine really ready to enter the WTO, because you have said that its economy is still unstable?
IB: Well, the way that we would view it is that joining the WTO means to become a fully-fledged member of the global economy. It allows a degree of transparency, because Ukraine has to obey the rules of the rest of the world, and the rest of the world has to obey the rules vis-ŕ-vis Ukraine. To give you a concrete example: at the present moment, there is a quota for the export of steel products to the European Union. 
If Ukraine is a member of the WTO, that quota falls, because we are not allowed to impose quotas within the framework of the WTO. So that is a benefit for Ukraine. 
And once Ukraine is a member of the WTO, it allows for negotiations on a free trade agreement. 
Both membership in the WTO and the possibility for a free trade agreement will certainly encourage foreign direct investment in Ukraine and, indeed, encourage Ukrainian investment in Ukraine. 
There are, of course, certain individual sectors in the Ukrainian economy which have raised concerns, and that is what will be discussed at the meeting I mentioned in October.
KP: Do you think the Ukrainian government is doing enough to get into theWTO?
IB: As I say, the key things are the 21 - which I understand is the figure - laws or amendments to laws which have to be passed in the Verkhovna Rada [parliament]. 
The government has completed all the bilateral memoranda, except two, with Taiwan and Kyrgyzstan, which we hope will be wrapped up soon. 
So, the really key thing is the legislation in the Verhkhovna Rada. We very much hope that the government will push this very strongly. And we very much hope that there will be a substantial majority in the Verkhovna Rada in favor of this.
KP: How do you assuage the concerns about particular branches of the Ukrainian economy with regard to WTO entry?
IB: There are individual branches of the economy that have been identified to us as having particular concerns … One of the ideas that was put forward as a way forward for Ukraine in agriculture was the whole area of organic farming. There is a premium market for organic products, and it may be that Ukraine has a possibility to take advantage of that market…
KP: Getting back to the Brussels visit of Ukrainian Prime Minister Yakunovich. 
Have his statements about halting Ukraine's progress toward joining NATO changed the perception of Ukraine in Europe, or was the feeling that he just said what everyone knew anyway?
IB: You have to separate the question of NATO from the question of the EU.
All I can point out is that not all members of the EU are members of NATO and vice versa. The question is that since the disintegration of the Soviet Union many countries that want to join the EU also want to join NATO and they want this to be done one before the other or more or less at the same time. But there is no absolutely necessary correlation between these two. 
I can't speak about NATO announcements. It is quite possible to join the EU without joining NATO. In many cases, the run up for the preparation to NATO membership goes in the same direction as the run up to the EU in terms of reforms.
KP: So can we say that such statements by Ukrainian officials don't influence Europe's attitude toward Ukraine?
IB: No, the EU takes its own attitude towards Ukraine.
KP: The EU has occasionally accused Ukraine of not following through on promises of reforms. How has this changed since the Orange Revolution?
IB: I think the Orange Revolution brought about a great deal of change. It brought in a new government, which had its own, very clear attitude to its relations with Europe, to its desire to carry out reforms. It is not easy to carry out reforms. We recognize that. I think most Ukrainians wish it could be possible for Ukraine to go much faster with reforms. We have mechanisms to help Ukraine to carry out these reforms, we have the Action Plan.
KP: Could you give some examples of such mechanisms?
IB: Well, we have various projects we are in the process of implementing.
For example, we have a project on bringing Ukrainian legislation closer to European legislation. 
We also have projects in the fight against corruption, to promote judicial reform, to promote administrative reform, to promote energy efficiency, which is also vital for Ukraine because Ukraine is very energy inefficient, and there is a lot that needs to be done to improve that.
KP: Do you feel you get good support from Ukrainian officials?
IB: Yes, we do. We have very good support.
KP: Can you name some achievements by Ukraine toward its goal of joining the EU?
IB: There are a number of things. And I think I would go back to the Action Plan. 
For example, one of the priorities of the Action Plan was the holding of free and fair elections, not only the 2004 presidential elections, but also the parliamentary elections in March this year, which all international observers recognized as free and fair. This is important. 
Another tremendous step is cooperation over the question of [Moldovan breakaway republic of] Transnistria, which was initiated by President [Viktor] Yushchenko at the GUAM summit last year [regional union of Georgia, Ukraine, Azerbaijan and Moldova]. We very much appreciate the commitments of Ukraine to this.

KP: How will the recent independence referendum in Transnistria influence your work in this region?
IB: You know that the EU said, like almost everybody else, that it doesn't recognize the referendum or its results. We want to see an improvement in that situation and hopefully, a solution. 
Also, since Romania will join the EU on Jan. 1 next year, we will have a direct border with Moldova.
Of course, we are interested in the situation in our neighbourhood being stable and peaceful. 
And the present situation in Transnistria means that this is not the case. We are working as much as we can on this problem. 
We work very closely with Moldova, where we have many programs. We raise the issue of Moldova at meetings with the Russian government at the highest level.
KP: Getting back to Ukraine, what are Ukraine's prospects for EU membership, taking into account the fact that after Romania and Bulgaria have joined the EU, the EU will stop its expansion eastwards?
IB: One has to say very frankly that at the present time Ukraine's membership is not on the agenda. It doesn't mean that you will never join. It is in the future. There is a queue of states waiting to join, like Turkey, Macedonia and others. 
Recently, the EU got a significant enlargement with new members. The fact that Ukraine's membership is not on the agenda has nothing to do with the evaluation of Ukraine's merit. Its membership, in general, is basically on hold. 
At the present moment, what can be said is that if Ukraine continues to make progress in reforms, in integration into the European market, in becoming more attractive by increasing the country's GPD, improving the standard of living of its population, it will be moving in the right direction. 
KP: Don't you think that certain realities in Ukraine could make Russia more attractive, especially taking into account the pro-Russian leanings of the present government?
IB: I think that even without membership, the EU offers a lot that is attractive to Ukraine. 
It is a market with about 500 million consumers with a very high standard of living (including imminent membership of Romania and Bulgaria). In addition, there are industries looking for investment opportunities, and Ukraine being close to the EU is very attractive. 
Also it is not only a question of economics, but of people-to-people contacts. When I travelled all over Ukraine and visited universities, I talked to students who wanted to continue their studies in Europe. Many of them would like to go work in the EU. So the EU is really attractive for Ukrainians everywhere. 
It is not simply a question of choosing between Russia and Europe. Ukraine has its geography and has a big neighbour - Russia - on one side and another big neighbour - the EU - on the other. 
It is obvious that Ukraine needs some good relations with both the EU and Russia. I think that is not really a question of choice between one and the other. 
What, I think, Ukraine is really in the process of choosing, is a set of values: how to live, how to do business. What we encourage Ukraine to do is to adopt the global transparency values of democracy and human rights.

KP: It was announced recently that the cost of visas for Ukrainians travelling to the EU will rise. Doesn't this send the wrong signal?
IB: Well, it depends, because it may be that the prices will go up within the framework of the visas-for-invitation agreement, which is in the process.
There is a disposition for the price not to rise for those countries where we are in the process of negotiations about the visa-invitation agreement. There are a number of categories of Ukrainians who receive free visas. 
But, as I said, these negotiations are still ongoing, so we can't see what the final shape will be. 
I can't go into the details of these negotiations, but I can only say that they are aimed at making it easier for people to travel.
KP: Could something be changed in these negotiations if pro-Western Foreign Minister Borys Tarasyuk leaves his post?
IB: I don't want to get into a discussion about Ukrainian domestic politics. 
The one thing I can say is that the post of foreign minister is one of those posts whose candidacy is selected by the president. 
And I believe that all Ukrainians would like to see the visa regime as generous as possible. So I don't think it depends on the individuality of some people. I think it is what the entire country wants.
KP: As you know, Germany and Russia have agreed to build a gas pipeline around Poland and Ukraine, and this affects the interests of some Central European countries. 
What would you say to calm Ukrainian fears that Europe could be more interested in cheap gas than a strong Ukraine?
IB: I am not sure that the construction of a new pipeline will make gas cheaper, and I think it is just a general desire to diversify energy sources. The key thing is that Ukraine retains ownership and control over its gas transit network. 
Ukraine is obviously very important for the EU and Russia as a transit country, and I think it will continue to be so for a long time even if the additional pipes are constructed because the amount of consumption [in Europe] will probably increase.
KP: Do tell, what would you like to achieve as the ambassador of the EU in Ukraine?
IB: I think I would like to achieve what any ambassador would like: it is to promote relations as much as possible between, in my case, the European Commission, the European Union and Ukraine. 
Things have changed very dramatically since I came to Ukraine in September 2004. And I am very confident that we will continue to develop our relations, because of the logic of mutual interests and the desire to bring relations closer.

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AVIATION

Ministry hopes Kazakstan will buy more An-148's

Ukraine's Transport and Communications Minister, Mykola Rudkovsky, hopes Kazakstan will sign a deal to buy another seven to ten Ukrainian Antonov An-148 planes, New Europe reported.
"After the first planes were delivered to Kazakstan, a second project will probably be ventured and Kazakstan will order from seven to ten more An-148s," Rudkovsky said at the sixth TransEurasia international conference in Astana.
Kazakstan was one of the first countries to have ordered An-148 planes, he said. "Ukraine will work to ensure on-time quality implementation of the order," the minister added. It would be premature, however, to assert that a new contract will be signed, Rudkovsky said.

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BANKING

OTP Bank receives Ukrainian OK to acquire Raiffeisenbank 

Putting an end to market speculations, the Raiffeisenbank Ukraine (RBUA) announced on October 9th that its Hungarian bidder OTP Bank - Hungary's largest bank - has already received approval from the Ukrainian Central Bank to acquire a 100 per cent shareholding, website wiadomosci.onet.pl reported. 
"According to the resolution of the bank's Supervision Commission, as of October 2nd, OTP has received permission to purchase 100 per cent of the statutory capital of JSCB Raiffeisenbank Ukraine," a RBUA statement said. OTP signed an agreement to acquire the Ukrainian bank from its Austrian owners for 650 million Euro on June 1, 2006 and subsequently received the go-ahead from Ukraine's anti-monopoly body on August 15th. RBUA officials said earlier that the Ukrainian bank would be renamed OTP Bank Ukraine. RBUA is the sixth largest bank in Ukraine in terms of assets, capital, and loan portfolio. The bank services about 110,000 clients and has a network comprising 16 branches, 25 banking outlets and 17 representative offices around Ukraine. Furthermore, OTP said it would look to open 60-80 new branches a year in the mid-term. With foreign subsidiaries in Bulgaria, Croatia, Montenegro, Romania, Russia, Serbia, Slovakia and Ukraine, OTP Bank is one of the dominant players on the CEE banking market, with a market capitalisation is around US$ nine billion. OTP Bank Group currently serves more than 11 million clients in nine countries. 

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ENERGY

Shell's arrival an important event 

Ukrainian President Viktor Yushchenko has said that Ukraine is interested in serious work with oil company Shell on Ukrainian territory. The president's press service said on October 12th that, at a meeting with Shell CEO Jeroen van der Veer, Yushchenko said that the company's arrival on the Ukrainian market is "an important event, especially if we speak about the energy sector," New Europe reported.
"The energy issue relates to the strategic policy of our state, therefore a lot of attention will be paid to your activity, to your presence," Yushchenko told van der Veer.
According to the Ukrainian president, in June the company Ukrgazvydobuvaniya signed a joint agreement with Shell regarding the development of the gas potential of the Dneprovsko-Donetsk basin.
Interfax News Agency quoted the president as saying this is of major significance for Ukraine and will increase the state's energy security. He also stressed the need to start implementing this agreement as soon as possible.
In turn, Van der Veer told the Ukrainian side about steps taken since a number of documents were signed in June concerning Shell's work in Ukraine. He said that there are already six Shell filling stations operating in Ukraine and the company is happy with their turnover. He announced the holding of a third meeting on bio-fuels, gasification and coal and noted Ukraine's good potential in this sphere.
He also said that at the moment a large group of highly qualified Shell specialists are in Kiev and are ready to work with Ukrainian specialists. Van der Veer said that the company wants to train Ukrainian specialists to use the latest technology. "Our aim is long-term cooperation with Ukraine," he said.
The sides discussed a number of organizational issues connected with Shell's entry into the Ukrainian market, and considered ways to further develop projects and plans for the immediate future.
"This project should work like clockwork," Yushchenko said. He proposed to set up a number of general working groups for various aspects of cooperation - particularly bio-fuels and coal.
The president stressed that he is ready to take personal control over active cooperation between Ukraine and Shell.

Oil production company Ukrnafta wins Libyan tender 

Large Ukrainian oil production company, Ukrnafta, has won a tender to explore and develop an oil and gas section in Libya, Vladimir Doroshenko, director of the company's geology and field development department, said, Interfax News Agency reported.
"On September 25th we received a letter saying that we had won the tender in Libya. After receiving detailed documentation we will be able to give more details," he said. Doroshenko did not say the same of the Libyan section, or give its parameters. The state stake of 50 per cent plus one share in Ukrnafta has been transferred to the charter capital of Naftogaz Ukrainy. Ukrnafta is currently managed by minority shareholders affiliated with PrivatBank, which control 42 per cent of the company's shares.

Transneft, Ukraine discuss oil shipments via ports 

Ukrainian Fuel and Energy Minister, Yury Boiko, and Transneft president, Semyon Vainshtok, discussed future cooperation at a meeting in Moscow on September 18th, the Russian oil pipeline monopoly's vice president, Sergei Grigoryev, said, Interfax News Agency.
"General issues were discussed at the meeting, particularly future plans to utilise Ukrainian ports," he said.
The Ukrainian ministry reported that Boiko and Vainshtok discussed increasing oil transhipments through Ukraine and the prospects for the future use of the Odessa-Brody pipeline.
"The participants of the meeting discussed the prospects of developing bilateral, mutually beneficial cooperation in 2006-2007 within the context of the expansion of long-term collaboration on the principles of market economics and strategic partnership," the ministry said in a press release.
Russia will export 3.8 million tonnes of crude in the direction of Odessa in the fourth quarter of 2006, and 3.7 million tonnes in the direction of the Yuzhny port.
Shipments to Ukraine are expected to total five million tonnes, including 2.5 million tonnes to Kremenchug and 2.5 million tonnes to Lisichansk.
Utilisation of Ukraine's oil transport system declined in 2005. Oil transshipments decreased due to the unfavourable situation on the global market, while shipments to the domestic market dropped due to the shutdown of two of Ukraine's six oil refineries.

Rompetrol entering Ukrainian retail market 

Rompetrol said on September 21st in an e-mailed statement that is aiming for a retail network in Ukraine, with a goal of 200 stations in two years. Initially, Rompetrol will focus on the south of the country, noted analyst, Bram Buring, from investment bank Wood in a report.
"Rompetrol's Petromidia refinery is the closest to the Ukraine's wealthy Black Sea coast market. Rompetrol exports about half of its production. The logic of going into Ukraine is sound enough - like Turkey it is a Black Sea market, so cheap transport costs. But, a 200 station network in Ukraine (population 47 million) would give Rompetrol the country's third largest network while in Turkey (population 70 million) it would not be in the top ten and would have to compete with all the global players," Buring said. Wood kept a positive outlook, saying that "at first glance, Ukraine is a market where Rompetrol can expand while avoiding going head-on with the biggest global and/or regional players, but as with most Rompetrol plans the issue is raising the financing."

Rosukrenergo to supply gas at US$95 in Q4 

RosUkrEnergo AG is to supply gas to Ukraine in the fourth quarter 2006 at US$95 per 1,000 cubic metres, Gazprom said in a press release. "Given the potential for long-term cooperation between our company and Ukraine, we are prepared to supply natural gas in the forth quarter at US$95 per 1,000 cubic metres," RosUkrEnergo spokesperson Andrei Knutov said, New Europe reported. 
The statement said that Gazprom CEO, Alexei Miller, and Ukrainian Energy Minister, Yury Boiko, wound up talks in Moscow on September 27th on supplies of Central Asian gas to Ukraine in the fourth quarter. To ensure acceptable price conditions, the mechanism for gas supplies though the joint venture RosUkrEnergo is being maintained. "Contracts have been signed to supply RosUkrEnergo with Central Asian natural gas in the fourth quarter 2006 that take into consideration the economic conditions of gas purchases by Gazprom. The price of the gas being sold by RosUkrEnergo to consumers in Ukraine in 2006 will not change and will amount to US$95 per 1,000 cubic metres," the statement said. 
In addition, the sides have agreed a resource base for gas supplies to Ukraine in 2007-2009 of 55 billion cubic metres per year "which fully corresponds to the requirements of the Ukrainian economy for gas exports," the sides said. The participants in the talks said that the five-year contract with RosUkrEnergo for supplies of Russian gas was signed back in January 2006 based on a generally accepted price formula. Miller and Boiko discussed approaches to price formation for Central Asian gas in 2007-2009, based on market principles and taking strategic cooperation in the gas sphere into consideration. The final drawing up of contracts with gas prices for 2007-2009 will be completed by the end of this year, the statements said.

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FOREIGN AID

WB to resume financing credit health programme 

The World Bank will resume financing a credit issued for the tuberculosis component of a project aimed at combating the spread of tuberculosis and HIV/AIDS in Ukraine as soon as a number of formalities between the Ukrainian government and the World Bank have been finalised, New Europe reported.
In a telephone conversation on September 27th with a World Bank representative, Ukrainian Healthcare Minister, Yury Polyachenko, announced the government's decision to increase the annual budget of anti-tuberculosis measures by 12 per cent.
The World Bank official welcomed the Ukrainian Healthcare Ministry's efforts to improve the functioning of the national anti- tuberculosis service and praised steps being taken in cooperation with international organisations to introduce modern requirements for tuberculosis prevention, early diagnosis and treatment in Ukraine.

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FOREIGN LOANS

Ukreximbank acquires US$154.4m loan 

The World Bank and the State Export-Import Bank of Ukraine (Ukreximbank) signed a guaranteed loan agreement in Kiev on September 26th on a second export development project, in which Ukreximbank will receive a US$154.4 million loan, Interfax News Agency reported. 
The agreement was signed by Paul Birmingham, the World Bank's director for Ukraine, Belarus and Moldova, and Ukreximbank CEO, Viktor Kapustin. Ukrainian exports have been the main engine for economic growth in the country in recent years, Birmingham said. The constant expansion of exports is one of the Ukrainian government's main state priorities, therefore the World Bank feels it is necessary to carry out the second export development project, he said. Kapustin said the loan was issued for 20 years. As part of the project, Ukreximbank will provide the World Bank's funds as credit lines to other Ukrainian banks chosen through tenders to receive loans for export-oriented Ukrainian enterprises. The results of the tender will be announced in one to two months.

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INFORMATION TECHNOLOGY

Microsoft boosts sales 49% in 2006 financial year

Microsoft increased software sales 49 per cent from July1st 2005 to June 30th 2006 compared with the previous year, Valery Lanovenko, director general of Microsoft Ukraine, said recently, New Europe reported.
"Microsoft's general business grew 49 per cent in the 2006 financial year, knowing that 5 per cent of its business is in Central and Eastern Europe, where there are 18 countries," he said. Microsoft is growing because of a 41 per cent growth in sales for Windows systems, and a 60 per cent growth for server software and Microsoft partners in Ukraine has grown 150 per cent to 102 companies since 2003, he said. Microsoft raised the status of the Microsoft Ukraine office in July 2006 to the level of an independent representation.

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