[Ohio UZO News] Ukraine: AP; KP editorial; Aslund Memo; WoE

[Deychak, Orest]

AP


Group urges aid for Ukraine, Moldova flood victims 


Aug 07 2008

GENEVA (AP) - About 60,000 flood victims in Ukraine and Moldova urgently need food and clean water, the international Red Cross said Wednesday. 

Heavy rains and floods two weeks ago left more than 30 people dead, dozens missing and forced 30,000 to flee their homes in the two eastern European countries, the International Federation of Red Cross and Red Crescent Societies said. 

"These are the worst floods in two centuries," said Joe Lowry, the agency's representative for the region. 

"People are in desperate straits, food is urgently needed as well as clean water. Many people have lost crops, gardens, livestock, poultry as well as their food reserves." 

In western Ukraine, some 40,000 houses were flooded, and more than 30,000 hectares (74,000 acres) of croplands and nearly 700 kilometers of roads were severely damaged, the federation said. 

Large tracts of farmland in neighboring Moldova have also been submerged. 

"Moldova is still recovering from a succession of serious droughts," Lowry said. "This is the worst possible irony for Europe's poorest country."   

 

Kyiv Post

 

Opinion » Editorial 


Not sexy


by Editorial , Kyiv Post
Aug 06 2008

It's no secret, but it is a topic many people want to avoid. The sex tourism business in Ukraine is booming. A simple Google search of the words 'Ukraine' and 'sex' produces a plethora of sex tours offered to foreigners. Do you want a day trip or would you prefer to stay longer? Would you like to pay by credit card?

It is a serious problem for Ukraine, and this is why: a large share of the young ladies that should be devoting their time to studies, using their brains, climbing the corporate ladder, bringing up the next generation of this country's citizens, creating artistic masterpieces and developing in other ways, are busy selling themselves for sex. It is also especially scary considering Ukraine has the highest, and fastest growing, HIV infection rate in Europe.

We recognize that one of the most important underlying problems to this dilemma is economical. People need money to survive, and see their bodies as a means to make it. This is clear-cut prostitution. But there is another aspect of this problem:  many Ukrainian women are seeking a different type of man to what they are finding. Perhaps, this type is less egocentric, more sensitive to their needs. They are easy prey for the well-trained Western-salesmen types, who wine and dine women in return for short-term sex.

There is no easy solution to these complex issues, but there is an easy way to make a start. The number one step should be raising awareness of these sensitive problems. The need for awareness campaigns is becoming more acute as the UEFA Euro-2012 soccer championship is nearing, and the world's interest in Ukraine as a tourism destination is growing.

Congratulations to FEMEN, a grassroots organization of young Ukrainian female students which held a colorful and eye-catching public awareness campaign on July 30. By dressing up as prostitutes, and waiving U.S. dollar bills alongside banners declaring 'Ukraine is not a Brothel,' they got their important message across, if at least for short sound bites aired on many Ukrainian televisions. 

Their message was simple: they urged Ukrainian women not to sell their bodies; and foreigners to stop preying.

Ukrainian women, as FEMEN insisted, are potentially worth more than the big dollars they earn in the sex trade. True, they may not earn stacks of cash per day in the beginning of their climb up the corporate ladder, but they will preserve personal integrity and dignity for Ukraine as a nation.

(For accompanying article:  http://www.kyivpost.com/)

 

Memorandum

 

July 15, 2008

 

Anders Åslund

Professor 

Peterson Institute for International Economics

 

Ukraine's Inflationary Crisis: Two Short-Term Scenarios 

In May 2008, Ukraine's inflation hit 31.1 percent compared with May 2007, the third highest inflation in the world after Zimbabwe and Venezuela. Thanks to a revaluation of the exchange rate of the hryvnia, inflation declined to 29.3 percent in June, but this is still very high. Worse, producer prices exploded by 43.7 percent in the last year, and Ukraine's average wages surged by 39 percent in May over May 2007. Increases in producer prices and wages are usually passed on to consumer prices with a delay, which suggests that inflation is likely to rise if Ukraine does not undertake drastic policy changes.

 

Rising inflation, mainly in food and energy prices, is a global phenomenon, but average inflation is currently 4 percent a year in the Western world and 8 percent a year in the emerging economies. Neighboring Poland and Slovakia have moderate 4 percent inflation, which shows that domestic economic policy is crucial. To fix the exchange rate to the euro, as the Baltic countries have done, is bad, but a dollar peg is far worse. In this region, only Ukraine has fixed its exchange rate to the dollar, which is the reason for its extreme inflation. Through its dollar peg, Ukraine has imported roughly 15 percent inflation in the last year. It also forces Ukraine to maintain negative real interest rates, currently of 13 percent a year, which boost inflation further.

 

Ukraine's monetary policy is not sustainable. To cure it, the dynamics must be understood. Ukraine suffers from a massive monetary expansion. Its money supply (M3) increased by 54.3 percent in June over June 2007. The money supply is fed by foreign banks lending to banks in Ukraine. These banks might finance their loans with 6 percent in Europe, but consumer loans in Ukraine yield up to 55 percent. This lucrative interest gap attracts huge speculative credit inflows that are used for purchases of consumer goods, real estate, and imported goods. They drive inflation and imports, boosting the trade and current account deficits. In the first five months of 2008, Ukraine's imports skyrocketed by 52 percent and the trade deficit broadened to 12.7 percent of GDP. As a consequence, the private foreign debt is growing fast. 

 

In several ways, the situation is reminiscent of Russia in 1997, when huge foreign inflows of hot money into treasury bills kept the ruble exchange rate too high, while foreign speculators benefitted from high interest rates fixed in dollars. All were hoping to get out this Ponzi scheme in time, as they now do in Ukraine. Some salvaged themselves, but the country suffered.  The difference is that the Ukrainian state budget is in surplus, the public foreign debt is minimal, and the international currency reserves of the National Bank of Ukraine are substantial at $36 billion. Therefore, the Ukrainian government can stop this financial madness with limited harm to the nation, but only if it does so instantly. Two scenarios are plausible.

 

The first and right approach would be to immediately abandon the dollar peg and let the hryvnia float. Initially, the hryvnia exchange rate might temporarily rise modestly, but not much because the foreign banks will stop their speculative currency inflows, when they no longer know the future hryvnia exchange rate. Since the National Bank no longer endeavors to keep the hryvnia stable, it will stop buying foreign currency, and the money supply will no longer increase. Then, inflation will decline, as will import purchases, and the trade and current account balances will start improving. Some of the hot bank money is likely to float out, and then the hryvnia will begin falling. The National Bank should opt for inflation targeting, that is, keep the exchange rate floating and try to keep inflation down with tighter monetary policy, notably positive real interest rates. Poland and Turkey have done so in similar situations in recent years, and the NBU can learn from their experiences. Considering how suddenly the hryvnia has surged, a depreciation in the order of 20 percent would be possible. Thus, Ukraine would re-establish its competitiveness and defeat inflation. Exports will increase and imports be compressed. Economic growth might suffer, if the domestic tightening has greater impact than the expansion of exports, though the proportions are difficult to predict. 

 

The second scenario is catastrophic. The dollar peg is being maintained in one way or the other. The bank inflows continue and boost the money supply, since the National Bank continues to purchase hard currency and thus expand the supply of hryvnia. As a consequence, inflation increases ever more, making the speculative bank loans even more lucrative. The imports increase so fast that Ukraine as a country loses its creditworthiness. Meanwhile, exports are reduced by excessive production costs. Relatively soon, Ukraine would end up in a financial crisis. It becomes forced to devalue and let the exchange rate float, as Russia in August 1998, and then the exchange rate may fall by as much as 50 percent. Because of currency misalignment, real estate prices would plummet by at least half, and half the banks may go bankrupt. GDP would fall and it would take years for Ukraine to recover its creditworthiness, although its international competitiveness would be restored.

 

A financial catastrophe can and must be avoided, but only if the hryvnia is swiftly allowed to float.

 

 

History buffs will find this very intriguing:

 

Window on Eurasia: Was Beria a "Liberal" on the Nationality Question? 

 

Paul Goble

 

            Vienna, August 4 -Stalin's notorious secret police chief Lavrenty Beria's actions toward Ukrainians in general and Western Ukrainians in particular show that within the limits of the late Stalinist period, he was a reformer or even "liberal" on the nationality question, according to a provocative new article by Ukrainian political scientist and historian Kost' Bondarenko.

            In the latest issue of "Profil'," Bondarenko says that the archives show Beria played a different role in the Ukraine that most Ukrainians believe: the worst repressions there took place before he arrived, he in fact amnestied some in the Ukrainian Partisan Army, and he used Ukrainians as his personal guards in the last years of his life (www.nr2.ru/189320.html).

            On the one hand, such actions help to explain the otherwise hyperbolic charges Nikita Khrushchev brought against Beria that the NKVD chief was working with foreign intelligence services planned to hand over sections of the USSR to the West in order to justify his arrest and execution.

            And on the other, they are consistent with reports about Beria's actions at the 19th Party Congress in 1952 when again within the conventions of the time he appealed to non-Russians and his moves to set the groundwork for the restoration of the independence of the three Baltic countries to undercut NATO and promote détente. 

            If Beria's efforts in these two directions are more or less well-known - the first was the subject of a close study by American specialist Charles W. Fairbanks more than 30 years ago and the latter has been discussed in the Estonian media over the last several years - Bondarenko's discussion of the NKVD chief's actions in Ukraine break new ground. 

Drawing on archival and memoir literature, Bondarenko rests his argument on three intriguing points.  First, he notes, Beria was not responsible for the worst repressions in the Ukrainian SSR; those were over before he arrived on the scene.  And in fact, he can be given some credit for limiting them.

Second, Beria not only extended amnesty to some Ukrainian Partisan Army participants but moved administratively against officials who opposed his doing so, a remarkable record given Stalin's proclivity for clean sweeps against any and all groups the Kremlin had decided were its enemies.

And third - and this is the most intriguing of Bondarenko's evidence - at the very end of his life, Beria used Western Ukrainians as his personal guard, a choice that undoubtedly reflected his feelings about whom he could trust and a decision that helps to explain some of the cloudier aspects of the so-called Mingrelian affair.   

            According to the Ukrainian writer, Beria feared that after the inclusion of Western Ukraine into the Soviet Union as a result of the Molotov-Ribbentrop Pact, "it would be difficult" to hold Ukraine within the USSR unless Moscow were willing to make certain "concessions to Ukrainians in the sphere of nationality policy." 

            In Bondarenko's version, Beria believed that using repression alone would "not lead to anything good," because "after a generation, the children of UPA [Ukrainian Partisan Army] fighters would" simply resume the cause of their fathers, something that the secret police head feared might become even more threatening of Moscow's interests. 

            To avoid that outcome, Bondarenko says, Beria initiated "several amnesties" for UPA militants, removed those in the organs who opposed his more careful policies, and even conducted "secret" talks with the Organization of Ukrainian Nationalists (OUN), none of which was "a joke" during that period of Stalinist repression.

            But intriguingly, the Ukrainian historian reports that "during the last months of his life, Beria trusted only Ukrainians.  All his personal guard, the Ukrainian historian says, consisted of Ukrainians who had been mobilized in the Western oblasts of Ukraine" and thus presumably had been the beneficiaries of his more "liberal" approach there.

            "Beria paid for his tendency toward liberal reforms and for liberalism on the nationality question" in particular after Stalin died, the Ukrainian historian says, because the NKVD chief had lost the struggle for power to Nikita Khrushchev who was particularly well-informed about what had been taking place in his native republic.

            Bondarenko's conclusions are certain to be challenged. They involve the darkest periods of Soviet history, one when the lack of sources opens the way for inventive arguments. But they do shed light on a major theme in Russian history - the secret policeman as reformer, who acts in "liberal" ways not from conviction but because he understands the dangers of doing otherwise.

 

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