[Ohio UZO News] Ukraine: AP; FT; WSJ; AP

[Deychak, Orest]

Associated Press

US, Ukraine look to strengthen ties 

By DESMOND BUTLER 

Associated Press Writer

19 December 2008

WASHINGTON (AP) - The United States and Ukraine are looking for ways to strengthen cooperation in a rejection of Moscow's claim to a sphere of influence along its borders.

A new strategic partnership statement is intended as a signal to Russia, according to Deputy Assistant Secretary of State David Merkel.

The document, which U.S. Secretary of State Condoleezza Rice and Ukrainian Foreign Minister Volodymyr Ogryzko were unveiling Friday, is nonbinding, but outlines areas of cooperation and reiterates the U.S. commitment to eventual NATO membership for Ukraine.

"It is a clear signal from the U.S. and from Ukraine that the partnership is strong and the path toward democracy and European integration is strong," Merkel said.

The document touches on broad areas of cooperation, including economic development and defense, promising to enhance U.S. training and equipping of Ukraine's military through NATO.

It also includes a statement by Ukraine welcoming the U.S. intention to open a new "diplomatic presence" on the Crimean peninsula, the Ukrainian region where Russia's Black Sea fleet is based. The United States wants to aid economic development in Crimea to lessen the economic impact of an eventual base closure, Merkel said.

Russia's war in August with NATO aspirant Georgia and Moscow's recognition of rebel Georgian territory as independent has stoked fears in Ukraine that Moscow may try to encourage a separatist movement in Crimea.

A majority of the 2 million residents of Crimea are ethnic Russians, many of whom feel close to Moscow. Russian officials have denied claims that Moscow has plans to encroach on Ukraine's sovereignty.

But the region is likely to remain tense because Russia has a lease on its Soviet-era naval base in Sevastopol until 2017 and Ukraine has said it will not be extended.

The new U.S.-Ukrainian document signals that the United States is looking for ways to help Ukraine in the standoff.

Merkel said the document is intended to "break Moscow's narrative that it has laid out markers saying that the direction has to be reversed, the direction of U.S. involvement has to be blunted."

He added: "This really speaks to the continuity of the relationship and the desire to become more and more active."

Financial Times

www.ft.com

Russians threaten to cut off gas

By Isabel Gorst in Moscow and Roman Olearchyk in Kiev

Published: December 19 2008 

Russia raised fears of a new year gas shortage in Europe when it threatened on Thursday to cut off exports to Ukraine.

A Ukrainian delegation headed for London for talks with EU officials who want to avoid a repeat of a price dispute that disrupted gas supplies to Europe in 2006.

Gazprom, Russia’s state-controlled energy group, warned that it would cut off gas to Ukraine on January 1 unless Kiev paid more than $1bn (€700m, £655m) of arrears. 

Alexander Medvedev, deputy chief executive, criticised the EU for forging close ties with Ukraine but failing to ensure that it could pay energy bills. “Why is it that our colleagues in Europe find time to discuss ways for Ukraine to enter Nato but for some reason do not find time to talk about Ukraine’s economic situation,” he said. Gazprom said Ukraine settled $800m of arrears this week but warned that it would make no additional repayments until the new year – a charge Ukraine rushed to deny.

The gas company said: “If the debt is not paid and no other solution is found we cannot sign a new contract and we will be under no legal obligation to supply Ukrainian consumers with gas from January 1.” 

Ukraine depends on Russian energy supplies but can exert pressure on Gazprom because it owns pipelines that transport most of Russian gas exports to Europe.

Analysts said the financial crisis hitting both countries could prolong the dispute, unlike the 2006 row, which was settled in three days.

Naftogaz, Ukraine’s state energy company, sent executives to London for talks with Andris Piebalgs, the EU energy commissioner. A spokesman for Mr Piebalgs said the EU “was very worried about developments”.

  <javascript:void(0)> 

World News: Ukraine's Currency Moves Provoke Russian Threats 

By Alexander Kolyandr and Geoffrey T. Smith 

19 December 2008

A11

 

Fresh attempts to stabilize Ukraine's falling currency Thursday met with Russian threats to cut off natural-gas supplies and a call by the prime minister for the central bank's chairman to be fired.

The central bank intervened in markets by selling more dollars and promising another increase in already high interest rates. The hryvnia is down 12% this week and by about half since September.

The drop has increased unease among the population and the banking system. A weaker hryvnia raises the chances of bank defaults, as many have lent in dollars or euros to Ukrainians whose only income is in local currency. Popular protest is starting to bubble across the country, though an opinion poll published Thursday by the Gorshenin Institute think tank showed few are ready to take to the streets.

Much of the ire is directed at the country's banks, which have been suspected of using foreign currency made available by the central bank to speculate on the interbank lending market rather than making it available in the country.

Prime Minister Yulia Tymoshenko on Thursday called for the firing of Volodymyr Stelmakh, chairman of the National Bank of Ukraine <javascript:void(0);> , for mismanaging the situation. President Viktor Yushchenko is considering restrictions on the use of foreign currency by exporters and reducing central-bank refinancing funds available to commercial banks.

Compounding the problem is that natural gas must be bought from Russia. Local consumers pay Naftogaz Ukrainy <javascript:void(0);> , the country's gas utility, in hryvnia for gas it has to buy from Russia's OAO Gazprom <javascript:void(0);>  in dollars.

Gazprom <javascript:void(0);> , which supplies a quarter of Europe's natural gas, said Thursday that it isn't obliged to continue supplying natural gas to Ukraine, which has fallen behind on payments, and may halt deliveries beginning Jan. 1. The Russian company says it has received $800 million from Ukraine, but believes Ukraine won't complete payments for November and December before 2009. Naftogaz says it is paying its debts regularly.

The dispute has broader ramifications, as Ukraine is a key transit point for gas headed to Europe. The European Union expressed concern about the threat of a midwinter cutoff and urged a solution to the standoff.

The hryvnia has fallen from around 4.75 to the dollar in September to historic lows of 9.8 on Thursday. Finance Minister Viktor Pynzenyk said the central bank will sell dollars at 8.95 hryvnia Thursday and at 8.70 hryvnia Friday.

Central bank Chairman Stelmakh said the National Bank of Ukraine <javascript:void(0);>  will cut the money supply by increasing the key rate from the current 12%. He didn't specify what the new rate will be or when the increase will come.

Last month the central bank allowed the hryvnia to trade freely as stipulated by the International Monetary Fund when it gave Ukraine a $16.5 billion stabilization loan.

The cost of insuring Ukrainian sovereign debt against default continues to trade at extremely high levels. It now costs around $3.2 million a year to insure $10 million of Ukraine bonds against default for five years, up from $1.9 million a month ago and $230,000 a year ago.

Associated Press

Hundreds of Ukrainians protest economic crisis amid layoffs, plunging currency 

By MARIA DANILOVA 

Associated Press Writer

18 December 2008

KIEV, Ukraine (AP) - The currency has lost half of its value, tens of thousands face layoffs, residents in the capital are bundling up in winter clothes as the heat sporadically goes out and Russia is threatening to cut off gas supplies.

It's going to be a tough winter in Ukraine.

"I could understand if this were a village, but for the capital of a European country not to have heating, water and gas -- how can this be?" asked Tamara Osipova, one of about 1,000 angry protesters outside the Kiev mayor's office on Thursday.

This ex-Soviet republic has been one of hardest hit by the global financial crisis. Expert warn that the discontent visible Thursday could turn into mass opposition to a government paralyzed by political infighting.

"This is all going to boil over next year," political analyst Ivan Lozowy said. "Desperate people are capable of desperate actions."

After years of robust economic growth, Ukraine has sunk into a deep recession, pressured by a drastic fall in the exports of steel, the core of the economy. A lack of confidence in the banking system, coupled with constant political turmoil under President Viktor Yushchenko has spurred a sharp devaluation in the national currency.

The hryvna has lost a half its value since the global credit crunch hit in September, and closed at trading 9.8 to the dollar Thursday, down from 4.9 in September.

Valentyna Ivanova, a 68-year-old retired engineer, said she could not survive on 700 hryvna a month -- half of which she will spend on utilities after fees were raised.

"When I come home I should eat something, shouldn't I? And how will I buy food?" she asked at the protest.

Yushchenko has forecast the economy will contract up to 10 percent by the first three months of 2009.

Many Ukrainians also borrowed dollars to buy apartments and cars. Yushchenko's economic adviser, Valentyn Zhukovsky, predicted that up to 60 percent of them may default. That will prompt some banks to confiscate property, while others may go bankrupt, experts say.

Prime Minister Yulia Tymoshenko has accused the central bank of speculating on the hryvna and pocketing profits and demanded the bank's head be fired.

Tens of thousands of workers, meanwhile, face layoffs at steel mills and other industries. Industrial output shrank nearly to 30 percent in November, from a year earlier, the sharpest drop in a decade.

A recent nationwide poll of 2,000 people found that 16 percent of respondents were ready to take to the streets if life doesn't improve. The study by Gorshenin's Kiev Management Problems Institute had a margin of error of 2.2 percentage points.

Adding to the tensions are Russia's threats to cut off natural gas supplies next year if a $2 billion debt isn't paid by Jan. 1.

Ukraine has a fraught history with mass protests. The 2004 election that catapulted Yushchenko to the presidency saw hundreds of thousands take to the streets to protest electoral fraud in what came to be known as the Orange Revolution.

But unlike those mainly peaceful protests, experts say, the current mood is gloomier and actions could get violent. Many Ukrainians feel betrayed and blame authorities for aggravating the crisis by their infighting and corruption.

The anger is palpable on Kiev's snow-covered streets, where activists have been rallying for weeks. Last week, several districts saw hot water and heating cut off or disrupted, bringing back memories of the bleak post-Soviet years.

Kiev Mayor Leonid Chernovetsky and his longtime foe Tymoshenko have blamed each other for the funding shortages that triggered the disruptions.

Osipova, a 69-year-old retired music teacher who survives on a 800-hryvna monthly pension, has little use for any politicians.

"They are all bandits," she said.

 

-------------- next part --------------
A non-text attachment was scrubbed...
Name: not available
Type: application/ms-tnef
Size: 20907 bytes
Desc: not available
URL: <http://clevelanduzo.org/pipermail/uzonews_clevelanduzo.org/attachments/20081219/eebb2c6c/attachment.bin>