Books on Ukraine
Update No: 308 - (31/08/06)
Political atavism to the fore
The political landscape in Ukraine was supposed to have been radically changed
by the Orange Revolution in 1994. In fact recent elections have after a
three-month travail brought back a veteran warhorse of the pre-revolutionary
regime, former premier Viktor Yakunovich, to the leading position in his former
post, whose powers now are much stronger than of yore.
President Viktor Yushchenko has been eclipsed. In the battle of the Viktors it
is now clear who is the true victor. Yushchenko may have agreed to the
downgrading of the powers of the presidency with the idea that he could stand
for the premiership again (he was once premier under former President Kuchma).
That now looks a vain hope. There is nothing like being in office to dim one's
popularity in countries in an (inevitably painful) transition.
The other main leader of the Orange Revolution, Julia Timoshenko, has been
sidelined too. She as sacked as premier a year ago by Yushchenko, with whom, it
is now clear, she has had a definitive falling-out. He preferred to have
Yakunovich back, an ideological foe, than the Iron Lady of the same political
persuasion. But then the bitterest enmities in poltics tend to be between those
in the party; one just has to think of Thatcher's Conservatives and now Blair's
But her eclipse is probably likely to be only temporary. Her sacking by
Yushchenko now looks like a blessing in disguise, as does her six-week jail term
under Kuchma. She can now lead the opposition, with every prospect of success
next time round.
Former Ukraine Prime Minister Lazarenko Sentenced to 108 Months
A single event can sometimes light up a whole landscape. Such is the case
with the digrace and now jailing of a former premier of Ukraine. Former
Ukrainian Prime Minister, Pavlo Lazarenko, was sentenced on August 25th to 108
months in jail and fined US$10 million for money laundering and interstate
commerce of stolen property in connection with business deals he oversaw while
US District Court Judge, Martin Jenkins, sentenced Lazarenko at a hearing in San
Francisco. Lazarenko was indicted by a federal grand jury in 2000 on charges
that he extorted US$30 million from a Ukrainian businessman and obtained US$12
million from a state-owned farm through fraud.
US prosecutors said he transferred millions of dollars to banks in Antigua,
Switzerland and the US, including some in San Francisco.
In June 2004 a jury found Lazarenko guilty of 29 counts of money laundering,
wire fraud and interstate transportation of stolen property. Judge Jenkins threw
out 15 convictions and affirmed the other convictions, including all the money
laundering charges, some wire fraud charges and the charges on transportation of
stolen property. Jenkins refused Lazarenko's request for a new trial.
Ukraine's future looks less orange than lemon
Everything was meant to change in Ukraine as a result of the Orange
Revolution in the last three months of 2004. We are now confronted with the fact
that in reality it was a Lemon Revolution.
Corruption and cronyism were supposed to give way to transparency and democracy.
"Bandits" were meant to be jailed, dubious privatisations were meant
to be reversed. EU and Nato membership appeared to be within reach.
It has not quite worked out like that - though some important goals were
achieved. Pinpointing the most important gain, "the main achievement of the
Orange Revolution was freedom of speech," says Taras Berezovets, chief
editor of the Ukrainian political website, Polittech.org.
"Another benefit has been freedom of business. Politicians stopped
interfering, and we now have an economic boom, which has continued despite
recent political crises."
But many of the Revolution's promised changes did not occur. Everything has
Corruption allegations still dog some government ministers. Political parties
resemble business clans, bankrolled by tycoons who often double as members of
parliament. Reports of vote-buying are rife.
MAKE-UP OF THE PARLIAMENT
Party of the Regions 32% (Yanukovych)
Taras Berezovets of polittech.org suggests that new elections held now would
simply reduce Our Ukraine's share of the vote from 14% in March to 9% or 10%.
What a new Yanukovych government will mean for Ukraine and for the legacy of the
Orange Revolution is an open question.
For example, the "anti-crisis coalition" formed by his Party of
Regions, the Socialist Party and the Communist Party, pledges to continue moving
towards Mr Yushchenko's goal of EU membership and to abide by any result of a
referendum on Nato membership. "Yanukovych claims he is a new man, and is
not going back to the bad old ways," says Taras Kuzio. "We simply do
not know whether he will have to work within the parameters of the post-Orange
system or not."
How long a Yanukovych government will last is also unclear. The Party of
Regions' big business backers do not have much in common with the Communists,
and neither group has much in common with the more "Orange" members of
the Socialist Party, some of whom have already begun splitting away. One can be
sure that a Julia Tymoshenko-led opposition will be noisy and probably
effective. One has to hope that these events are the birth pains of creating a
democracy in a nation that has never known one. At the least there will
certainly be elections and the people will be able to make a judgement on the
politicians who are now supposed to be serving them - quite a distance from what
could be expected from the Soviet and successor politicians who ruled the roost
before the Orange upsets which achieved true election results, who were never
before that held to account.
So whatever happens next, and it may well be that the makeup of the present
coalition will not hold indefinitely, Ukraine seems far from a return to
NRB expects more talks on sale to Sberbank
Kyiv-based Bank NRB expects to continue talks on its sale to Sberbank of Russia,
Vyacheslav Yutkin, the president of Bank NRB, said, Interfax News Agency
"We have agreed with Sberbank and (Bank NRB) shareholders that we will
start the second phase of registering the transaction. We expect to complete it
by the end of this year," he said. Bank NRB recently removed a packet of
documents from documents the National Bank of Ukraine submitted six months ago
to receive permission to conduct transactions, because the timeframe of the
annual auditor's report expired, which is necessary to submit such documents,
Yutkin said. Under the terms of the agreement with Sberbank, Russia's National
Reserve Corporation (NRC) has already handed over shares in Bank NRB for direct
ownership, and Project-Invest, a joint Ukrainian-Swiss venture between RiS-Ukraine
and Zumservis-Ukraine, which is a founder of Bank NRB, has joined the National
Reserve Corporation, Yutkin said.
Kiev to seek fully "transparent" gas deals
Russian exports of natural gas to Ukraine and Russian gas transit through
Ukraine to Europe have become "the main focus" in the two countries'
relations, Ukrainian Ambassador to Russia, Oleh Dyomin, said recently, arguing
that agreements that are "not quite perfect" largely explain this.
Every year, the two countries sign a protocol to a 2001 gas export and transit
agreement, Interfax News Agency reported.
"There was to exist such a protocol for 2006, but unfortunately it has
still not been signed," Dyomin told a news conference in Moscow. "The
ultimate goal that the Ukrainian side will press for is putting our system of
agreement in order: everything must be as transparent as possible,"
Interfax quoted him as saying.
"Everything should be utterly clear not only to specialists, but, because
this has become a very popular subject and everyone is interested in it,
everything should be utterly clear to everyone living in our countries,"
Dyomin said. Europe is following the Russian-Ukrainian gas dialogue "very
closely," he said.
Ukrainian Prime Minister Viktor Yanukovich has said that the gas price will be
an optimal one for Ukraine.
"We are working even now in order to make sure our country has a sufficient
provision of gas, to achieve a gas price that is optimal. I am not ready yet to
say what this price will be, but I want to assure you that this price will be
optimal," he said at a press conference in Kiev. He promised that
negotiations in that area would be open and transparent. He stressed that
Ukraine's government would aspire to find common language with energy suppliers
and agreements in this sphere must be concluded at the state level.
Negotiations with the Russian national gas monopoly Gazprom are considered a
first test for Yanukovich's government. In return for discounted prices, Gazprom
is demanding control over transit pipelines through Ukraine.
No details on Yanukovich's plans to travel to Brussels and visit the European
Union and to Washington, which he named as his priorities, were available.
Speaking about Russian-Ukrainian relations, Ambassador Dyomin pointed at the
importance of energy issues.
"The normalisation of relations in the area of energy, as well as the
definition of more clear criteria in trade and industrial cooperation, is of
course a priority," he said.
The activation of all mechanisms of the interstate commission, primarily the
economic subcommittee, is a very important element, he said, adding that
"there are a lot of issues that have been waiting to be discussed for a
long time, and their resolution cannot be delayed."
Ukraine's Fuel and Energy Minister, Yury Boyko, has arrived in Moscow for his
first working visit, where he was to meet with Russia's industry and energy
minister and Gazprom's Board Director, Alexei Miller. Boyko's visit precedes
Yanukovich's visit to Moscow.
UkrGaz-Energo raises US$110m from Raifffeisen
Ukraine's sole gas importer UkrGaz-Energo has raised a US$110 million loan from
Raiffeisenbank Ukraine and Raiffeisen Zentralbank Oesterreich AG at a weighted
average rate of LIBOR plus 3.05 per cent, Interfax News Agency reported.
UkrGaz-Energo will use the money to buy natural gas in order to accumulate it in
underground gas storage facilities and supply it to Ukrainian consumers during
the 2006-2007 heating season. UkrGaz-Energo had pumped over five billion cubic
metres of natural gas into underground storage facilities as of August 1,
including about 3.6 billion cubic metres in June-July. RosUkrEnergo plans to
supply UkrGaz-Energo with 32 billion cubic metres of gas in 2006, 58 billion
cubic metres in 2007, and 60 billion cubic metres annually in 2008-2010.
Naftogaz transits 62.28 bcm of gas in H1
Ukrainian national oil and gas company Naftogaz ensured the transit of 62.28
billion cubic metres (bcm) of gas in the first half of 2006, including 57.09 bcm
to European countries. The company exceeded its target by 139 million cubic
metres, or 0.2 per cent, and was 752 million cubic metres or 1.3 per cent above
target for gas transit to Europe, New Europe reported.
The company also implemented its commitment before the trader RosUkrEnergo A.G.
(Switzerland) to withdraw gas from underground storage facilities and transit it
to Europe. In the first four months of 2006, Naftogaz withdrew more than one
billion cubic metres of gas from underground storage facilities and transferred
it to RosUkrEnergo.
FOOD & DRINK
Humak buys back 15% of shares from Orkla foods
Chumak, one of the largest producers of ketchup, mayonnaise, sunflower oil and
canned goods in Ukraine, has bought back 15 per cent of its shares from Norway's
Orkla Foods, Chumak president, Carl Sturen, said, Interfax News Agency reported.
"We bought back this package in 2006. We correlated our plans in relation
to the Ukrainian and Russian market, however we decided not to work together at
the current stage," Sturen said. Sturen did not rule out cooperation with
the Norwegian company in the future. Chumak was set up in 1996 as a joint
venture between Sweden's South Food and several Kherson region plants. Orkla
Foods, a subsidiary of the Orkla group, bought a 15 percent stake in Chumak in
2002. Chumak has three processing plants in the Kherson region. The Ukrainian
State Securities and Stock Exchange Committee said that Austria's Chumak Holding
GmbH had a 38.49 percent stake.
Khreschatyk Bank acquires US$25m syndicated loan
Kiev-based Khreschatyk Bank has acquired a US$25 million loan at Libor + 2.8 per
cent, the bank's press service said. A credit agreement was signed recently, New
The one-year loan can be prolonged for another year. WestLB AG, London Branch
organized the loan. The bank will spend the funds on loans for its clients, in
particular the financing of foreign economic operations, retail loan programs
and the financing of special budget programs for construction, transportation,
infrastructure and public utilities in Kiev. Other participants in the syndicate
include BayernLB Group (BayernLB and MKB Bank Nyrt.), Hypo Alde-Adria Bank
International AG, SC Parex banka, Habibson Bank Limited, Bank Austria,
Finansbank (Holland) N.V., Raiffeisen-Landesbank Steiermark AG.
World Bank approves project to develop exports
The board of directors of the World Bank has approved a second project to
develop Ukrainian exports under which the Kiev-based State Export and Import
Bank (Ukreximbank) will raise a US$154.5 million loan, Interfax News Agency
The loan will be provided for 20 years with a five year discount rate of Libor +
0.33 percent, the source said. The loan agreement will be signed very soon.
It was reported earlier that Ukreximbank is selecting commercial banks to take
part in the project based on financial criteria agreed on with the World Bank.
The goal of the second project is to support the development of export
enterprises in Ukraine, help implement the newest technology to manage
production, introduce new banking instruments and widen business access to
sources of export financing and develop the banking sector.
MINERALS & METALS
RusAl to invest US$200m in Nikolayev Alumina expansion
Russian Aluminium plans to invest US$200 million in 2006-2008 through subsidiary
Aluminium of Ukraine in expanding production capacity at the Nikolayev Alumina
Refinery (NGZ). "A total of US$200 million will be invested in the program
to increase the refinery's capacity to 1.7 million tonnes, as well as in
construction of the No. 2 slurry dump," NGZ general director, Yury
Ovchinnikov, said at a press conference in Nikolayev recently, New Europe
He said US$69 million would be invested this year. However, the amount of
investment in the first half of 2006 was slightly lower than in the same period
of 2005, which Ovchinnikov said was due to objective reasons such as frost and
the discovery of 149 bombs on the site of the future slurry dump that had to be
cleared and destroyed. Ovchinnikov was reported as saying earlier that the new
modernization plan for NGZ calls for expanding capacity to 1.7 million tonnes of
alumina per year instead of the previously planned 1.6 million tonnes.
Norway's Telenor values Kyivstar at US$8bn
Norwegian telecommunication company Telenor has valued its Ukrainian subsidiary,
Kyivstar, at US$ eight billion, Telenor's Executive Vice President, Thor
Halvorsen, said, New Europe reported. Telenor holds a 56.5 per cent stake in
Kyivstar, which is Ukraine's largest mobile operator, while the remaining 43.5
per cent is indirectly controlled by Altimo, the telecommunications arm of
Russia's Alfa Group, a major industrial and financial holding. Altimo and
Telenor are also key shareholders in Russia's second largest mobile operator,
VimpelCom. VimpelCom in February offered to buy 100 per cent in Kyivstar, which
had 16 million subscribers as of June 30, having valued the company at US$ five
Golden Telecom agrees to purchase 75% stake in S-Line
Golden Telecom has signed an agreement on the purchase of a 75 per cent stake in
Ukrainian Internet provider S-Line for US$7.5 million, Golden Telecom said in
documents provided to the US Securities and Exchange Commission, New Europe
The approval of the Ukrainian anti-monopoly agency is needed for the deal to be
finalised, the documents say. As part of the deal, Golden Telecom will also
offer S-Line a US$2.5 million loan, which will be guaranteed by the remaining 25
per cent stake in S-Line and should be paid off by November 2010. S-Line offers
wireless wideband Internet access in Kiev. Golden Telecom, Inc., is a leading
facilities-based provider of integrated telecommunications and Internet services
in major population centres throughout Russia and other countries of the
Commonwealth of Independent States.