[Ohio UZO News] Ukraine: AP; WP; NYT

[Deychak, Orest]

Associated Press

Ukraine PM predicts economic stagnation amid global crisis, as political
standoff deepens 

20 October 2008

07:24

KIEV, Ukraine (AP) - Prime Minister Yulia Tymoshenko warned Monday that
Ukraine is headed for economic stagnation, speaking after the failure of
her latest attempt to ease a political standoff she says will make the
crisis worse.

Tymoshenko said Ukrainians are in for tough times as demand falls
globally for steel and chemicals, the country's top export commodities,
and banks are reluctant to extend consumer credit.

"Everybody will feel that," a somber-looking Tymoshenko told reporters
in Parliament.

The Ukrainian economy has been severely shaken by the global crisis. The
government has had to rescue two top banks, the national currency's
value has fallen around 12 percent in recent weeks, the stock market has
been in free fall and the country is seeking a loan of up to $15 billion
from the International Monetary Fund to help stabilize the financial
sector.

Tymoshenko is fighting to avoid early parliamentary elections ordered by
President Viktor Yushchenko and keep her job.

She has called for all political forces to form a broad coalition aimed
at softening the consequences of the financial crisis, but the main
opposition party and Yushchenko's allies refused to meet with her Monday
and discuss her proposal. Yushchenko's office denounced her idea as a
"political confidence game."

Tymoshenko's dramatic statement marked a reversal from her earlier
position, where she sought to put a positive spin on the economic
problems. The comments appeared to be a last-minute attempt to retain
power and avoid the third parliamentary vote in as many years.

Tymoshenko's protests and court appeals have put the parliamentary
elections -- which Yushchenko set for Dec. 7 -- on hold. The two heroes
of the Orange Revolution that put Ukraine on a pro-Western course and
made Yushchenko president have become fierce foes ahead of the 2010
presidential vote.

 

The Washington Post

Rival Leaders Seek IMF Aid For Ukraine 

Philip P. Pan 

Washington Post Foreign Service

18 October 2008

FINAL

A08

 

Ukraine's feuding president and prime minister sought help from the
International Monetary Fund in separate meetings Friday as a political
dispute between them complicated talks for a multibillion-dollar loan to
stabilize the country's struggling financial system.

The global financial crisis has battered Ukraine, with the former Soviet
republic's stock market plunging and its currency falling sharply. The
government imposed limits on bank withdrawals Tuesday to stop a run that
drained more than $1 billion from deposits, and it has been forced to
rescue two big banks from insolvency.

Ukraine's top leaders are seeking an IMF loan to shore up the financial
system, but a bitter split in the democratic coalition that came to
power in the 2004 Orange Revolution has cast a shadow over talks to
obtain the funds.

President Viktor Yushchenko dissolved parliament last week and called
for early elections in December, but his former ally, Prime Minister
Yulia Tymoshenko, is fighting the decision in court, saying it would be
reckless to spend $80 million on a parliamentary vote during the
economic crisis.

At a news conference Thursday, Tymoshenko said that the IMF was prepared
to lend the country $3 billion to $14 billion to see it through the
crisis, but only if the president postponed the elections. "It is very
difficult for them to hold negotiations of this kind with Ukraine while
one hears all these proposals for early parliamentary elections," she
said, according to the Interfax news agency.

After meeting with IMF officials Friday, Tymoshenko said in a statement
that her government was "extremely interested" in working out a deal for
the rescue package, noting the challenges posed to Ukraine by the
falling price of steel, the country's main export. But she stressed that
the economy was fundamentally sound.

Yushchenko also sought to calm investor fears after meeting with the
IMF. "The situation on the domestic and international markets is not
easy, but I am an absolute optimist and sure that we will be able to
present a proper response," he said, according to a statement from the
presidential office.

But as IMF talks were underway, Fitch Ratings downgraded Ukraine's
long-term credit ratings, arguing that the risk of serious damage to
Ukraine's economy was rising. Standard & Poor's <javascript:void(0);>
put Ukraine's credit rating on review earlier in the week.

The New York Times

Political Turmoil Jeopardizes Financial Relief for Ukraine 

By ANDREW E. KRAMER; Nicholas Kulish contributed reporting from
Budapest. 

18 October 2008

Late Edition - Final

9

MOSCOW -- Aid for Ukraine's staggering economy may be endangered by the
country's continuing political instability.

Like Iceland and Hungary, Ukraine is seeking aid from the International
Monetary Fund to counter the global financial crisis. But Ukraine, its
economy reeling from falling steel prices, is also struggling with
political problems.

The infighting threatens an emergency loan from the monetary fund. The
fund is seeking assurances from the cabinet that next year's budget will
be balanced, but President Viktor A. Yushchenko issued a decree this
month dissolving Parliament and, with it, the cabinet.

That decree, which would lead to elections on Dec. 7, is being contested
by the president's opponents in Parliament. So until the decree's
validity is decided in the courts, it is unclear whether the current
cabinet holds power. The prime minister, Yulia V. Tymoshenko, says it
does, while the president's office says it does not.

In the interim, a delegation from the monetary fund has been meeting
with representatives of the prime minister and the president. The fund
is offering a loan of as much as $15 billion to shore up the country's
finances as foreign investors flee.

Ms. Tymoshenko, who met with the delegation on Friday, expressed support
for the loan. But if the president's order to dissolve Parliament is
upheld, she said, the cabinet will lack the authority to negotiate with
the fund.

In that case, negotiations will be delayed until a new Parliament is
formed after the elections. After previous elections, coalition-building
in Ukraine has taken months.

''Alarm bells aren't ringing yet,'' Sergei Teriokhin, a former minister
of the economy and member of Parliament in Ms. Tymoshenko's bloc, said
in a telephone interview. But if the contested status of the cabinet is
not resolved, he said, the monetary fund will not know whom to meet
with. ''It is necessary that somebody in the country make guarantees on
the budget policy of next year.''

Mr. Yushchenko and Ms. Tymoshenko have alternately collaborated and
competed since they rallied crowds together on Independence Square in
Kiev during the protests known as the Orange Revolution in 2004. Most
recently, his Our Ukraine bloc was in a coalition with Ms. Tymoshenko's,
an arrangement that gave her the prime minister's post. But the two
split after the Russian invasion of Georgia in August. Mr. Yushchenko
accused Ms. Tymoshenko of muting her criticism of the Russian military
action to please the Kremlin.

The political turmoil has coincided with a steep economic decline. On
Friday, the international agency Fitch Ratings downgraded Ukraine's
sovereign debt rating and issued a negative outlook for the country. A
Ukrainian shipping company, Industrial Carriers, has gone bankrupt. The
government has frozen rail tariffs for steel companies, and as foreign
investment dries up, speculators are betting on a decline in the
national currency.

In response, Ukraine plans to nationalize some commercial banks, which
have liquidity problems, a member of Parliament told the monetary fund's
delegation on Friday.

Hungary, which has struggled to cope with the effects of the financial
crisis, also received a vote of no confidence on Friday when Fitch cut
its rating to negative from stable. Hungary's large debt, much of it in
foreign currencies, has made the country particularly vulnerable to the
current external shocks.

The government scaled back its growth estimates for 2009 to just 1.2
percent from 3 percent. Hungary has lined up support from the European
Central Bank and the monetary fund in an effort to reassure credit and
currency markets.

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