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

[Deychak, Orest]

Let’s hope that Ukraine’s political elites rise above their rivalries and do the right thing…

Associated Press

EU Ukraine Financial Crisis; Ukrainian parliament leaders mull anti-crisis legislation needed for IMF loan 

By MARIA DANILOVA 

Associated Press Writer

27 October 2008

 

KIEV, Ukraine (AP) - Leaders of clashing Ukrainian parliamentary factions on Monday debated legislation required to receive a crucial $16.5 billion loan from the International Monetary Fund as the country struggles to stay afloat amid a severe financial crisis.

The IMF made the loan conditional on the passage of laws aimed at boosting the shaken banking sector, but the deepening political crisis threatens to torpedo the deal.

The work of the Verkhovna Rada has been blocked all last week by allies of Prime Minister Yulia Tymoshenko, who is fighting an order by President Viktor Yushchenko to hold early parliamentary elections in December.

Experts hope the IMF loan, which amounts to nearly half of the country's current foreign currency reserves, will shore up the shaken financial sector and give the central bank the necessary reserves to defend the falling national currency, the hryvna, which has plunged over 20 percent in recent months.

"This will allow the National Bank to counter the devaluation pressures on the hryvna," said Olena Bilan, a macroeconomics analyst with Dragon Capital investment bank.

The hryvna plunged to a historic low of 6.01 to the dollar last week after a 40 percent fall in exports and a run on banks that stripped the banking sector of $3.4 billion this month as Ukrainians rushed to convert their savings into dollars.

Analysts say Ukraine is in for a painful economic downturn. Output in the steel industry, which accounts for 6 percent of the GDP and 40 percent of the country's exports, was down by 30 percent.

The country's main automobile producer, the Zaporizhye Automobile Building Plant, said Monday its output fell by 8.6 percent in September compared to last year's figures. The State Energy Regulating Committee announced that Ukrainians faced a 35 percent hike for house heating and cooking gas bills, according to media reports.

The stock market, which lost over 75 percent this year, after gaining 130 percent in 2007, opened with further losses of about 2 percent in morning trading Monday.

Financial Times

IMF outlines $16.5bn Ukraine loan

By Roman Olearchyk in Kiev and Alan Beattie in Washington

Published: October 27 2008 02:00 | Last updated: October 27 2008 02:00

The International Monetary Fund yesterday announced an outline $16.5bn loan agreement with Ukraine, which is struggling to restore confidence in a shaky banking system and sliding currency damaged by the global financial crisis.

The loan to Ukraine, which has yet to be approved by the IMF's executive board, comes amid negotiations between the fund and a string of other countries around the world suffering from the spreading impact of the credit crisis, including Iceland, Hungary and Pakistan.

On Friday, Iceland secured a $2bn loan from the IMF, the first western country to do so in three decades.

In a statement issued late Sunday, Dominique Strauss-Kahn, the IMF's Managing Director said staff from the fund and Ukraine authorities had reached tentative agreement on a 24-month so-called "standby arrangement" - its standard rescue loan for countries needing hard currency quickly.

He cautioned, however, that consideration of the package by the IMF board would come only after Ukraine's parliament - itself deadlocked - approved a package of emergency legislation aimed at propping up confidence and liquidity.

"Ukraine has developed a comprehensive policy package designed to help the country meet the balance of payments needs created by the collapse of steel prices, and the global financial turmoil and related difficulties in Ukraine's financial system," Mr Strauss-Kahn said.

The $16.5bn (€13bn, £10.3bn) loan package, while smaller than the record $30bn IMF rescue extended to Brazil in 2002, is large relative to Ukraine's economy - around eight times the financial "quota" or contribution that Ukraine makes to the fund. Rescue packages are normally limited to three times IMF quota. Mr Strauss-Kahn said that the fund needed to move quickly and forcefully to maintain confidence.

Ukraine's export-oriented economy is suffering from falling demand for steel, its main export, and a widening current account deficit, which has put pressure on its currency. The country's central bank has in recent weeks spent some $3bn of its reserves, now at about $34bn, to defend the currency, which has slid from a rate of below 5 to 6 against the US dollar.

Mr Strauss-Kahn said the IMF "is moving expeditiously to help Ukraine." But the IMF announcement comes amid a deep political crisis in Ukraine. Viktor Yushchenko, the country's president, dissolved parliament earlier this year after the collapse of a pro-western coalition led by his rival and premier, Yulia Tymoshenko.

Last Monday, he allowed parliament to resume session, delaying plans to hold snap elections on December 7 so MPs could swiftly adopt a package of measures to cushion the country from the financial crisis and a possible recession.

Included in the package was the setting up of an emergency stabilisation fund to protect Ukraine's banks, many of which are seen as vulnerable to a shaky currency. But after a week of bickering, Ukraine's MPs failed to adopt the package, raising doubts about their ability to reach a consensus.

The main sticking point is early elections. The president's camp has insisted MPs adopt a law setting the stage for early elections along with the financial rescue package. But Ms Tymoshenko has vigorously opposed holding a snap vote, insisting that could complicate the country's ability to deal with the financial crisis 

The Wall Street Journal

World News: IMF Offers Ukraine $16.5 Billion Rescue 

By Gren Manuel 

27 October 2008

A11

 

The International Monetary Fund unveiled Sunday its second national rescue plan in a matter of days, saying it would offer to lend a larger-than-expected $16.5 billion to Ukraine. The announcement follows Friday's $2.1 billion loan to Iceland and underlines how the IMF, after years in the shadows, has come to the forefront of helping weaker nations hit by the financial crisis.

The IMF board will consider final approval of Ukraine's $16.5 billion, 24-month standby facility once Ukraine passes some financial overhaul legislation, it said.

Separately, IMF Managing Director Dominique Strauss-Kahn said the IMF was ready to approve a "substantial financing package" for Hungary after reaching broad agreement on a reform package that the country will implement as a condition for the emergency loans, the Associated Press reported. He didn't say how large the loan would be. Pakistan is also talking to the IMF.

Mr. Strauss-Kahn said Ukraine had signed up to a comprehensive policy package designed to shore up its balance-of-payments position, noting that on top of the financial crisis Ukraine had been hit by the fall in the price of steel, a major industry in the country.

But the deal means Ukrainian Prime Minister Yulia Tymoshenko will have to implement harsh economic austerity measures in the run-up to an election in December amid the political turmoil that has plagued the country since the Orange Revolution in 2004.

Ukraine government officials weren't available to comment.

Ratings agency Standard & Poor's <javascript:void(0);>  late Friday cut its currency rating on Ukraine even though it believed an IMF loan would be offered, saying a lack of internal political agreement could mean the country wouldn't be able to implement the IMF's program to fix the economy.

The loan -- higher than earlier estimates of between $11 billion and $15 billion -- is small in comparison to the country's external debt, which analysts at Capital Economics in London estimate at $55 billion due this year.

Mr. Strauss-Kahn said the program to be implemented by Ukraine will aim to restore financial stability, help make the banking sector liquid and solvent and cut inflation, while trying to insulate companies and households from a deep output decline.

One additional problem for Ukraine is that its balance of payments is heavily influenced by the price Russia sets for the country's vital imports of natural gas. 

(Note: articles about IMF and Ukraine are also in today’s Washington Post and Chicago Tribune)

 

Belarus:

 

	U.S. Helsinki Commission (Commission on Security and Cooperation in Europe)

October 24, 2008
www.csce.gov <http://www.csce.gov/>  

 


BELARUS’ PARLIAMENTARY ELECTIONS FAIL TO MEET OSCE DEMOCRATIC ELECTION COMMITMENTS


Vote Count Particularly Problematic


 

By Orest Deychakiwsky and Winsome Packer, Policy Advisors 

The conduct of the September 28 parliamentary elections in Belarus fell significantly short of international standards, despite some hopes that there would be improvements following the August release of political prisoners, Belarus’ reluctance to recognize South Ossetia and Abkhazia and statements by senior Belarusian officials raising expectations. The Commission followed the run-up to the elections closely, holding a hearing on September 16 titled “Business as Usual? Belarus on the Eve of the Elections,” and issuing a press release expressing concern about the pre-election climate and encouraging last minute steps, including transparency in the vote count and full access for OSCE observers. [Both the hearing (CLICK HERE <http://csce.gov/index.cfm?FuseAction=ContentRecords.ViewDetail&ContentRecord_id=439&Region_id=0&Issue_id=0&ContentType=H,B&ContentRecordType=H&CFID=5451362&CFTOKEN=17351655> ) and the press release (CLICK HERE <http://csce.gov/index.cfm?FuseAction=ContentRecords.ViewDetail&ContentRecord_id=709&Region_id=0&Issue_id=0&ContentType=P&ContentRecordType=P&CFID=5451407&CFTOKEN=98124523> ) are available on the Commission’s website.]

Two members of the Commission staff traveled to Belarus as part of the OSCE Parliamentary Assembly’s delegation of the overall OSCE Election Observation Mission, observing in Minsk and Smolevichi. In its statement, issued the day after the election, the OSCE election observation mission concluded that despite minor improvements, the conduct of the parliamentary elections in Belarus “ultimately fell short of OSCE commitments for democratic elections.” On election day, voting itself was generally well conducted, though the vote count was assessed as bad or very bad in 48 percent of OSCE observations. 

The experiences of Commission staff on voting day were consistent with those of other OSCE observers. For the most part, the voting itself in the precincts staff visited went smoothly. However, the vote counting process was particularly problematic, given the lack of transparency. All 110 elected members of the Chamber of Representatives of the National Assembly (lower chamber of parliament) are pro-government. No opposition activists from out of 70 nominated by the democratic opposition were elected. 

The vote count in one Minsk precinct in which Commission staff observed jointly with a Swedish member of parliament was dramatically lacking in transparency. There were three candidates on the ballot in this precinct, including one opposition member. Both the OSCE and domestic observers were hindered from having a full view of the vote counting proceedings. The precinct electoral commission set tables up as barriers about three meters from the tables on which the ballots were being counted. Further obstructing the observers’ view of the ballot count were the electoral commission workers themselves, who were positioned in such a way as to make viewing difficult. Attempts by observers and a proxy of the opposition candidate to clarify which provisions of the electoral code permitted this behavior by the electoral commission went nowhere. All of the ballots – from the early voting, mobile voting, and regular voting were mixed in together. When an OSCE observer took a picture of the vote count, or, more accurately, of the election commission members blocking the vote count, the chairwoman interrupted the count to write a complaint against the observer. After about 20 minutes, the opposition candidate’s proxy notified her that according to Article 55 of the electoral code, “the count must be performed without a break until the results of the voting have been obtained.” Only at that point did the Chairwoman cease writing and resume the count. 

In the North-East Minsk district that other Commission staff monitored with an Irish senator, the experience was similar. The voting process at the eight polling stations that they monitored was orderly and transparent. The problems came in the counting process. Similar to the reports from other observers, Commission staff and the Irish observer were prevented from standing close enough to watch the vote counting in a manner that allowed them to see the names and other distinguishing information on the ballots, even though the importance of this facet of observation was stressed to the government by the OSCE and the Interior Minister assured observers in a briefing on September 25 that election monitors would be able to watch the counting from a close vantage point. 

In a far departure from this promise, the precinct officials refused to announce what boxes they were opening during the process. They would lift a box, dump its contents on a table on the other side of the room from where the observers were seated, and ten or so people would crowd around the table to separate the ballots and "count" the votes. Observers could not distinguish which ballots came from early voting versus the ballots cast on election day, or spoiled ballots. They refused to announce the results of the count or record them in the protocol as was delineated in the procedural manual provided by ODIHR. They then huddled with a calculator to tabulate numbers, write them on a piece of paper in complete silence. Afterward, the precinct chair posted all of their numbers on a bulletin board. They then gathered up the ballots and left the building without a word. It is apparent that further legal and cultural changes are required for truly democratic elections to occur in Belarus. 

Several problems that manifested themselves during the actual voting were that the material used to seal the ballot boxes was easily manipulable and could be removed and put back on (clay dough and a string). In a number of precincts, the early voting ballot boxes were not in plain view, as required by law. Early voting was significant in several precincts, up to 39 percent in one case. 

Before voting day, there appeared to be a certain willingness on the part of some in the West to give the benefit of the doubt to the authorities, in part due to the minor improvements that had taken place in the election campaign, such as slightly increased access of opposition representatives to district election commissions, and the decision to repeat the airing of the candidates’ five-minute campaign spots on state TV and radio stations. This, together with the release of political prisoners Aleksandr Kozulin, Syarhei Parsyukevich and Andrei Kim (which led to the temporary lifting of U.S. sanctions on two subsidiaries of Belarus’s giant petrochemical conglomerate Belnaftakhim), and Belarussian leader Alexander Lukashenka’s unenthusiastic response to Russia’s occupation of Georgia and refusal to date to recognize South Ossetia and Abkhazia created an atmosphere of optimism that Lukashenka would be willing to take steps towards democratic reform and engage in a dialogue with Europe and the United States. 

The stark lack of transparency in the vote count was also surprising to many because it flew in the face of Belarusian authorities’ pledges prior to the vote, and it was probably unnecessary. Given the overall election campaign climate, which did not allow for genuine political competition and where the opposition had extremely minimal representation on precinct election commissions, the vast majority of pro-governmental candidates would have won in any event. This is within the context of the wider extremely inhospitable environment for the democratic opposition, in which for almost 15 years the Lukashenka regime has tightly controlled the media; vilified the opposition; repressed the independent media; disappeared, detained, imprisoned, and beaten opposition members and democracy activists; harassed and suppressed non-governmental organizations and, in short, done its best to stifle independent thought. 

Notwithstanding the EU’s temporary lifting of some visa sanctions against senior Belarusian officials, Mr. Lukashenka may have yet again missed an opportunity to move Belarus towards democratic Europe, which would enhance Belarus’ independence, at a time when it especially needs to be strengthened, given intensifying Russian pressure on Belarus. Notwithstanding the flawed elections, both the United States and Europe have displayed a willingness to continue to engage in dialogue with Minsk and to encourage Belarus to move forward along the path of compliance with freely undertaken OSCE human rights and democracy commitments. The poor quality of the September 28 elections did not facilitate this process, as had been hoped by the West. Nevertheless, if the Belarusian authorities take steps to increase political freedom and respect for human rights, the real possibility exists for a gradual opening in U.S.-Belarusian relations – for Belarus to begin the process of reducing its self-imposed isolation and eventually taking its rightful place among the community of European nations. 

 

 

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