[Ohio UZO News] Ukraine: FT; RFE/RL; KP; EDM

[Deychak, Orest]

Financial Times

www.ft.com

Ukraine welcomes $4.5bn stand-by IMF loan

By Roman Olearchyk in Kiev and Stefan Wagstyl in London 

Published: November 7 2008 

Ukraine will receive initial loans worth $4.5bn in the next few days to bolster the crisis-hit economy under the International Monetary Fund's bail-out package, say officials in Kiev.

Victor Yushchenko, the president, welcomed the IMF decision on Wednesday to approve its $16.5bn (£10.5bn, €13bn) bail-out package, calling it a "signal to the international community to boost the rating of trust in our country". Yulia Tymoshenko, the prime minister and the president's bitter rival, called the loan a "great victory" that would allow Ukraine to "completely stabilise" its financial system.

The IMF approved the stand-by loan after Kiev's fractious parliament passed enabling legislation. The IMF decision, together with news that cash-rich investors were close to rescuing two troubled Ukrainian banks, were welcomed in financial markets as moves that could mitigate the impact of the global crisis.

The IMF move follows declines in central bank reserves from $38bn to $31bn after heavy currency market intervention. The hryvnia, which gained 17 per cent, reaching 5.82 to the US dollar on Wednesday - compared with an all-time low of 7 in late October - edged up yesterday and closed at 5.79.

The IMF said the funds would help Kiev overcome the impact of "global deleveraging and a domestic crisis of confidence". In return, Ukraine has committed itself to adopting a flexible exch-ange rate regime, recapitalising banks, reducing its budget deficit to zero in 2009 and tightening monetary policy.

The IMF forecast a sharp recession next year, with output dropping 3 per cent compared with expected 6 per cent growth this year, as Ukraine struggles to cope with a fall in demand for steel and chemicals, pressure to fund imports and problems refinancing foreign loans.

The IMF loan is expected to help Kiev bail out some of its 170 banks. In October, the central bank rescued Prominvestbank, the sixth largest, after a hostile take-over attempt triggered a run on deposits.

This week, two consortia backed by Russian and Ukrainian investors have been competing to purchase Prominvestbank. *Hungary has announced a Ft600bn (£1.8bn) package to strengthen its largest banks. Andras Simor, central bank governor, said the funding, for which banks could apply in exchange for partial state ownership, would reassure markets, allowing banks to borrow more cheaply. The package will be financed using the IMF's $12.5bn credit line.

Radio Free Europe/Radio Liberty

www.rferl.org

Moving Forward In U.S.-Ukraine Relations 

November 6, 2008

by Borys Tarasyuk 

 

I would like to congratulate Barack Obama on his decisive victory in the U.S. presidential election. His marathon campaign, which lasted 21 months, met with well-deserved success. I would also like to give his opponent, Senator John McCain, his due. In my opinion McCain did not succeed largely due to the disenchantment of Americans with the present administration.

Since gaining its independence 17 years ago, Ukraine has had bilateral relations with the United States. Both Republicans and Democrats have played roles in those relations. But what does the future hold for U.S.-Ukrainian relations as a new administration settles down in Washington?

If you ask any serious Ukrainian politician whether a Democrat or a Republican U.S. president is better for Ukraine, he or she will reply that ultimately there is really no great difference. And this is the truth. 

Aside from the confusion surrounding President George Bush's 1991 "Chicken Kyiv" speech, which most likely was prompted by a desire to buck up Soviet leader Mikhail Gorbachev rather than a deep conviction that Ukraine should not be independent, the Unites States has always been aware of Ukraine's strategic importance in terms of the democratization of the post-Soviet space. This awareness has been convincingly demonstrated time and again during the last 17 years.

It happened that bilateral relations developed most dynamically during the administration of Democratic President Bill Clinton. This is only natural: our young country was embarking on a new path of independent development. We were laying the foundations for reform in all spheres, and the support of the most powerful country on Earth was very important.

A pivotal moment came when Ukraine voluntarily agreed to give up its nuclear weapons in exchange for security guarantees from the United States, Russia, and the United Kingdom (later, from Germany and France as well). The 1993 trilateral declaration of the United States, Russia, and the United Kingdom and the 1994 Budapest memorandum (signed by the United States, Russia, the United Kingdom, Germany, and France) would have been impossible without strong U.S. support. 

Even now, despite the aggressive behavior of one of the signatories, those documents continue to play a serious and positive role in the region.

During the 1990s, the work of the Kuchma-Gore Commission was a powerful impetus driving political and economic relations. Unfortunately, this work was halted by domestic problems in Ukraine stemming from President Leonid Kuchma's authoritarian regime, including incriminating recordings made in the president's office by his bodyguard and the sale of a Kolchuga radar system to Saddam Hussein's Iraq. These developments coincided with the beginning of the administration of Republican President George W. Bush and they had a negative impact on the development of bilateral relations.

A sort of uncertain stagnation lasted until the 2004-05 Orange Revolution, after which cooperation really did move onto a new and substantive plane. During the Bush years, Ukraine was granted market-economy status. We joined the World Trade Organization. We received invaluable U.S. support in our efforts to have the 1932-33 famine in Ukraine recognized as an act of genocide against the Ukrainian people.

Hopes For The Future

Today, the entire world is engulfed in a deep financial and economic crisis. At the same time, the ghosts of the Cold War haunt Europe. Under these circumstances, Ukraine and the United States are in a position to build upon their strategic partnership to their mutual benefit and to the benefit of others in the international community. Below, I would just mention a few arenas for expanded cooperation, and I hope the new president of the United States will hear my message.

First, I applaud Barack Obama's intentions to bring the conflict in Iraq to an end and thus free up U.S. foreign-policy resources for other challenges. I agree with those analysts who say the current threats in the Middle East pale in comparison with the potential dangers that arose within the Eurasian space during the course of the night of August 7-8 in South Ossetia.

Ukraine is ready to again contribute to an international security framework for the continent. It is no secret that Ukraine and the United States have worked closely on aspects of an effective antimissile system that would be a key defensive mechanism within the Euro-Atlantic collective-security space.

In addition, our common interests demand further and deeper coordinated action in implementing the Treaty on Conventional Forces in Europe; strengthening international nonproliferation regimes; improving global nuclear security; and combating the threat of nuclear, chemical, and biological terrorism.

Among European countries, Ukraine is the largest contributor of personnel and resources to UN peacekeeping operations. We are the only European country that is currently participating every single such mission. De facto, Ukraine is doing more today in the area of peacekeeping than some NATO members. But this work provides us with valuable experience and boosts the international authority of our country.

No discussion of security would be complete without mention of energy. Ukraine already hosts a vast network of energy-transport infrastructure. Now, the Odesa-Brody-Plotsk pipeline and the White Stream natural-gas pipeline are also in development. These projects -- built on Ukraine's key transit location and with the participation of the EU, the United States, and European and U.S. companies -- will realistically secure the diversification of energy supplies and transit routes for Western Europe.

As the global economic crisis unfolds and food prices continue to rise, Ukraine -- a key exporter of agricultural products -- is in a position to restore its onetime glory as the breadbasket of Europe. If Ukraine is able to create and implement an effective land-market system, opportunities for expanded cooperation in this area will be enormous.

This list can be continued, but these examples are sufficient to demonstrate the importance and potential of strengthened U.S.-Ukrainian ties. Despite the many things clamoring for his attention over the last two years, Barack Obama has found time to formulate and articulate positions on all of these issues. I am sure that, as president, he and his foreign-policy team (among which are many of my old colleagues and friends) will continue to demonstrate an interest in Ukraine and in cooperation with Kyiv. After all, our interests are deeply intertwined.

Borys Tarasyuk is a former Ukrainian foreign minister. A serving member of parliament, he is currently chairman of the parliamentary European Integration Committee. He also heads the Rukh political party. The views expressed in this commentary are the author's own and do not necessarily reflect those of RFE/RL

 


Kyiv Post


www.kyivpost.com


Silver linings


5 November, 2008 

To survive the tough times ahead, everyone will have to adjust including the government policy.

 

Painful as it is, the economic crisis can make Ukraine’s economy healthier and can help plant its citizens more firmly in a market economy. But it will take better political leadership than has been on display since independence.

The easy credit of the last decade led to unsustainable growth and financial carelessness. Inflation soared and the nation’s trade deficit widened. Meanwhile, not enough was done to end the elite’s stranglehold on competition or secure a more diverse economy, ready for the global challenges ahead.

To survive the tough times, everyone will have to adjust. Kyiv needs to seize the International Monetary Fund’s offer of a $16.5 billion loan to adopt painful, but badly needed changes. Privatization should be completed, but honestly and openly. Agricultural land should be traded, but anti-monopoly protections strengthened, so that that the oligarchs cannot create cartels in land the way they do in other sectors of the economy.

Done correctly, Ukraine can become a world agricultural powerhouse. Done badly, the elite will speculate on land and Ukraine will become a nation of sharecroppers.

This economic crisis has shown the dangers of having an economy that relies on commodity exports and easy credit. The nation’s leaders face the choice of moving in the Kremlin direction of a state-run economy, or more firmly adhering to the Western market-oriented model. As imperfect as life is in the West, we hope the nation, for the sake of its own prosperity, chooses a well-regulated capitalist system.

If Ukraine’s massive bureaucratic state apparatus is trimmed down, the nation will be better off. If red tape and taxes are cut, rapid growth of small and medium businesses – the engines of most economies – can happen.

But the path will be painful as people lose their jobs. Official unemployment is expected to increase from 6.2 percent earlier this year to 7.7 percent by year’s end. Ukraine’s unregulated labor market allows employers to unceremoniously dump their workers. Job reductions should be undertaken with compassion. Employers and government should help mitigate the human toll, both out of fairness and to prevent social instability.

But politicians will have to adjust their populist rhetoric and wean the populace off the idea that the government can guarantee social benefits when the money is lacking. The government should focus on smart, long-term investments – improving energy efficiency and independence, for instance – that will pay off handsomely in the future.

A shakeout is inevitable as the speculative excesses come to an end in such sectors as housing and consumer lending. A recession is predicted to last through the first half of 2009. Nations and individuals who use hard times to advance long-term strategic goals can emerge stronger.

Eurasia Daily Monitor

www.jamestown.org/edm/

November 5, 2008
Is Yushchenko’s Top Aide Backing Ruthenian Separatist Movement?


The leaders of Subcarpathian Ruthenians (pidkarpatski rusyny) have urged Kyiv to grant autonomous status to their native area, Ukraine’s westernmost Transcarpathian Region. There was no official reaction from the Ukrainian government, but several parties accused them of separatism; and a criminal investigation has been launched. Ukrainian nationalist parties see Moscow’s hand behind the Ruthenian movement. The party of Prime Minister Yulia Tymoshenko suspects Viktor Baloha, the head of President Viktor Yushchenko’s secretariat and a native of the Transcarpathian Region, of supporting this movement.

Although Ruthenians are recognized as a separate ethnic group in neighboring countries such as Hungary, Slovakia, and Poland, Kyiv does not recognize them. Ukrainian nationalists, who see Ukraine as a monocultural and monolingual nation-state, dismiss Ruthenians as nothing more than an old name for Ukrainians. Only slightly more than 10,000 of Transcarpathia’s more than one million residents identified themselves as Ruthenians in the last Ukrainian census in 2001. Ruthenian movement leaders claim that some 800,000 Ruthenians reside in Transcarpathia.

Ruthenia was granted an autonomous status within Czechoslovakia in 1938. After Hitler divided Czechoslovakia, the region briefly became an independent Carpatho-Ukraine. It was then occupied by Hungary, and Stalin annexed it to Soviet Ukraine during World War II. The majority of Transcarpathians voted for the region’s autonomous status within Ukraine in a referendum in 1991, but the Ukrainian constitution of 1996 granted autonomous status only to Crimea. The leaders of the Ruthenians insist that Transcarpathia’s autonomy should be restored and based on Ruthenian identity.

On October 25 in the Transcarpathian Region of Mukacheve, 109 delegates gathered together at the Second European Congress of Subcarpathian Ruthenians where they adopted a memorandum calling for the restoration of Ruthenian autonomy. According to the memorandum, if Kyiv refuses to negotiate with the movement’s leaders to restore the Ruthenian autonomy of 1938, the autonomy will be restored unilaterally as of December 1, 2008. The Reverend Dimitri Sidor, the leader of the soim, Ruthenia’s unrecognized assembly, addressed the gathering, denouncing what he described as discrimination against Ruthenians in both the Soviet Union and independent Ukraine. The gathering made loud statements such as warnings against “occupation” of Transcarpathia by “the [Ukrainian] nationalist terrorist organizations” (Kommersant Ukraine, October 27). Also, an “interim Ruthenian government” was appointed (times.liga.net, October 27).

Ukrainian nationalists promptly accused the Ruthenian leaders of separatism and Moscow of backing the gathering in Mukacheve. Yushchenko’s Our Ukraine party (NU) issued a statement saying that “anti-Ukrainian provocations in Crimea, Donbass, Transcarpathia, and other regions of Ukraine have been the links of one chain aimed at destabilizing Ukraine” (Ukrainska Pravda, October 27). The radical nationalist Freedom party urged prosecution of the organizers of the Mukacheve gathering. According to Freedom, “a well-developed network of agents provocateurs” managed “directly from the Kremlin” was behind the gathering. “Transcarpathia and Crimea are the weak spots exploited by the Kremlin in order to subjugate Ukraine,” Freedom said in a statement (UNIAN, October 27).

Certain links to Russia would be hard to deny. The Mukacheve gathering was reportedly guarded by youngsters from Rodina, a pro-Moscow group, who arrived in Mukacheve from southern Ukraine. Sidor is a priest of the Moscow Patriarchate of the Russian Orthodox Church, and while the Ukrainian mainstream media tend to ignore him, he is often interviewed by Russian journalists (www.glavred.info, October 28; Zerkalo Nedeli, November 1).

Prosecutors in the Transcarpathian Region have launched a criminal case against the Reverend Sidor and another leader of the Ruthenian movement, Transcarpathian council deputy Yevhen Zhupan, suspecting them of encroaching on Ukraine’s territorial integrity (Ukrainski Novyny, October 30). Questioned by the Security Service of Ukraine (SBU), Sidor and Zhupan denied the accusations (Kommersant-Ukraine, October 30). Sidor also denied the statement by the Bloc of Prime Minister Yulia Tymoshenko (BYT) that Baloha was behind the Ruthenian movement (Ukrainska Pravda, October 27).

Tymoshenko’s allies, who apparently hold Baloha responsible for her rift with Yushchenko, are pointing at Baloha. Oleksandr Solontay, a Transcarpathian council deputy representing the BYT, said that the Ruthenian movement had been revived after the 2006 election, when Baloha’s allies formed a majority in the council. (www.glavred.info, October 28). In March 2007 the Transcarpathian council voted 71 to 8 in favor of recognizing Ruthenian ethnicity, which was not officially recognized nationwide.

Hennady Moskal, a former governor of Transcarpathia and one of the leaders of the People’s Self-Defense group led by Interior Minister Yury Lutsenko, suggested that Baloha may be using the Ruthenian issue as a bargaining chip in talks on his own political future. Moskal recalled that the Mukacheve gathering coincided with rumors of Baloha’s imminent dismissal (Ukrainska Pravda, October 27). Zerkalo Nedeli, an influential weekly that also dislikes Baloha, noted that preparations for the Ruthenian gathering were launched when the NU refused to forge an alliance with Baloha’s United Center party for the forthcoming early parliamentary election (Zerkalo Nedeli, November 1).

—Pavel Korduban

 





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