[Ohio UZO News] Ukraine: NYT; FT; WSJ; CT; OSCE

[Deychak, Orest]

The New York Times

www.nytimes.com

 

As Heavy Industries Tumble, Eastern Ukraine Reels 

By DAVID STERN 

1062 words

8 April 2009

Late Edition - Final

6

MAKEEVKA, Ukraine -- Few areas of Europe have taken such a body blow
from the world economic crisis as the industrial heartland of eastern
Ukraine, home to giant enterprises in the steel and metals industry in
which orders have dried up nearly completely and prices have plummeted.

In the Donetsk region, home to 4.6 million people, around 80 percent of
the economy is tied to the metals industry. In January, when industrial
production dropped by a precipitous one-third throughout Ukraine as a
whole, in Donetsk it fell by half against the previous year.

Small wonder, then, that Sergei Yeryomin is looking for some place to
vent his rage and despair. Mr. Yeryomin, his wife, Tatyana, and
thousands of others lost their jobs at the giant Kirov Metallurgicals
Factory in this city on Jan. 1.

''If we had a leader to lead us out on the streets, we would go,'' he
said, sitting in his living room and wondering how to support his wife;
his son, Anatoli, 15; and his daughter, Ekaterina, 8. ''In Makeevka,
everyone was connected to the factory. If it wasn't the father, then the
son worked there.''

In the absence of a galvanizing voice rallying the workers, or a
politician in the Ukrainian capital, Kiev, to marshal the popular anger,
Mr. Yeryomin and many others are focusing their unhappiness on the
borders of this part of Europe, sliced and diced in countless wars
through the centuries.

''I look with pride at Russia,'' said Mr. Yeryomin, who lived in Russia
as a child and counts himself among the 40 percent of inhabitants of the
Donetsk region who are considered ethnically Russian. ''We should cut
Ukraine in two, and give half to Poland and half to Russia.''

This part of eastern Ukraine has always felt more attached to Russia
than to western Ukraine and neighboring Poland. For many here, the
fraying economy is accompanied by a sense that officials in Kiev, where
the government is paralyzed by political infighting, have abandoned
Ukrainians to their fate.

Just last week, more than 10,000 protesters gathered in Kiev to demand a
change of government, prompting President Viktor A. Yushchenko to issue
a surprise announcement that he was considering early presidential and
parliamentary elections.

Whether any politician can allay both the global and the homegrown
troubles of the metals industry in Ukraine is unclear. For now, the
national currency, the hryvnia, has lost 40 percent of its value against
the dollar from its high last year, and the reforms demanded by the
International Monetary Fund as a condition for receiving a life-giving
$16.4 billion loan are the subject of endless wrangles in an
argumentative Parliament.

The Ilyich Metallurgical Combine, the second-largest steel producer in
Ukraine, epitomizes the recent plunge back into poverty. Even by the
maximalist standards of the post-Soviet metals industry here, it is
huge: 50,000 employees; production facilities scattered over more than
five square miles in Mariupol, some 75 miles south of Makeevka;
disparate sidelines including fisheries and an airline.

Today, it is operating at only half capacity. Orders for March were
anemic; those for April are trickling in. Workers have taken an average
30 percent cut in salary to avoid layoffs. Of the six furnaces in the
open-hearth shop, only one is working full time. Another has been
stripped for parts. Storage yards that a few months ago were stuffed
with steel slabs for shipment are bare. Silence has descended over large
swaths of production, close to 80 percent of which went to export.

Global steel orders -- for cars, ships, construction or heavy machinery
-- dropped to virtually zero last fall, analysts say. Prices for a ton
of semi-finished steel dropped from around $1,000 to just $250.

That is not enough to cover the relatively high cost -- $360 per ton --
of producing at Ilyich's open-hearth furnace. Steel-company owners who
gobbled up the state enterprises of the Communist era have not done
enough to modernize, according to industry analysts in Kiev, and are now
paying the price.

Similarly, employment rolls remain bloated -- another homegrown problem
and a relic of Soviet times, when full employment was a government
tenet. ''Ilyich could easily cut 20,000 to 25,000 people and keep the
same output,'' said Sergiy Gayda, a steel analyst with Dragon Capital,
an investment bank in Kiev.

Where, however, do those workers go?

''Nobody wants an uncontrollable mass out on the streets,'' said Yevgeny
Shendrik, deputy chairman of the regional council of trade unions in the
city of Donetsk. It is a city where unemployment has officially almost
doubled, to 67,500, in the past two months, and the authorities suspect
that up to one-third of the 1.2 million registered workers are toiling
for a small fraction of their nominal salary.

In Ukraine, statistics are as murky as prospects for the future. Some
analysts argue that the recent slump has helped Ukrainian steel become
competitive because of the fall of the local currency. Last year, some
companies' profits were as high as 60 percent. Ilyich Steel, the main
shareholder of the Ilyich metal works, in March issued a $31.3 million
dividend to shareholders for 2008.

''The situation is not as bad as people say,'' said Eugene
Cherviachenko, a metals and mining analyst for Concorde Capital, another
Kiev investment house. ''Ukraine has huge resources -- everything you
need for steel production.''

In Makeevka, with 400,000 residents, just outside Donetsk, the Kirov
factory laid off nearly all its workers in December and January. Now, an
average of four people vie for every job. In nearby towns, that ratio
soars to 70 or 80 people for every available job, officials say.

Mr. Yeryomin and his wife accepted severance pay of about $7,000 on Dec.
31. Since then, he has received one month's unemployment benefits, the
equivalent of about $240, and found no new job despite searching daily.
''I don't know how to do anything,'' he said, ''except work with pig
iron.''

The Financial Times

'Chaotic' Ukraine will be saved by its own citizens

Published: April 8 2009 

>From Ms Adrianna Melnyk Hankewycz.

Sir, In your editorial "Eastern intentions"
<http://www.ft.com/cms/s/0/0eb510dc-2202-11de-8380-00144feabdc0.html>
(April 6), you rightly point out that the economic success or failure of
eastern Europe states has broad implications for Europe as whole. Chief
amongst these states is Ukraine, which you describe as politically
"chaotic" and "almost beyond saving".

Ukraine, a fledgling democracy, is indeed chaotic, but not terminally
so. Instead, the current political situation in Ukraine is what might be
expected of a parliamentary system with young political parties prone to
coalition building and fracturing. Mass gatherings and rallies have
become commonplace since the country's 2004 "Orange revolution" and,
unlike in neighbouring Russia, they are often anti-government. As
politicians struggle to acquire their democratic sea legs, they are
being held accountable by the country's burgeoning civil society and
politically active citizenry.

Until the global financial crisis began to affect the country adversely,
Ukraine had, in recent years, been one of Europe's fastest-growing
economies, with annual gross domestic product growth rates of 6 to 8 per
cent.

Over the past four years, Ukraine has made tremendous strides on both
the economic and political fronts. Now, with falling global demand for
steel, the country's biggest export, combined with a 40 per cent
devaluation of the Ukrainian hryvnia against the dollar and a near
freeze on foreign investment and capital inflows, Ukraine's economy is
indeed in tatters.

Western Europe's exposure to and investment in Ukraine have grown to
levels too high to ignore. Through its political development and
economic transition of the past four years, Ukraine has proved itself
more than worthy of support from the International Monetary Fund and
other multilateral agencies.

Beyond saving? That decision will not be one for the IMF. The "saving"
will be done by Ukraine itself.

Adrianna Melnyk Hankewycz,
Bronxville, NY, US

The Financial Times

Fresh face wins reputation as Kiev's Obama

By Roman Olearchyk 

Published: April 7 2009 

Squeezed by recession and fed up with poisonous politics, Ukrainian
voters are desperate for a leader to rekindle the lost optimism of the
Orange Revolution.

If recent polls are right, an increasing number of them see 34-year-old
Arseniy Yatseniuk as an alternative to three leaders whose mud-slinging
power struggle has dominated Kiev's politics since 2004.

Some people are calling him Ukraine's Barack Obama. Mr Yatseniuk is
young, yet experienced. Since 2004 he has served as central bank chief,
economy and foreign affairs minister - and, most recently, parliament's
speaker until he was ousted last year.

Parliament has called early presidential elections for October 25,
although Viktor Yushchenko, the president, wants the vote held in
January 2010.

"It is clear that Yatseniuk is trying to position himself as a Ukrainian
Obama," says Olexiy Haran, a political science professor in Kiev. "He is
capitalising on the deep disappointment voters have with Ukraine's
current leadership. Voters desperately want new faces."

A member of parliament, Mr Yatseniuk has yet formally to announce his
candidacy, but he is already talking about hiring advisers from the US
president's campaign team. He is expected to throw his hat into the ring
on May 22, when he turns 35, Ukraine's presidential age requirement.

"About two-thirds of citizens have completely lost trust in our current
leaders," he says. "They are looking for new people who will produce
results, improve the economy and end the political infighting."

Having grown strongly after the Orange Revolution, Ukraine's economy has
switched into reverse. It is one of the worst hit by the global
financial crisis. Mr Yatseniuk, who headed the central bank at the time
of the Orange Revolution, says civil unrest could erupt at any moment.

"We have a revolutionary situation," he says. Many citizens are in a
panic, unable to retrieve deposits from troubled banks. Officials say
unemployment in the country of 46m could soon double to 2m.

An economic liberal, Mr Yatseniuk says his rivals are scrambling to keep
new faces out. He warns of a "constitutional conspiracy" between the
leading parties to eliminate the presidency, or cut most of its powers,
before the election.

Unlike his opponents, Mr Yatseniuk is fluent in English, a skill he says
is "crucial to communicating to the world". Lacking this skill, Kiev's
current leaders have struggled to build international understanding and
support for Ukraine.

As president, Mr Yatseniuk says he would keep Ukraine's foreign policy
pro-western, sticking to long-term goals while improving relations with
Russia.

Ilko Kucheriv, director of Kiev-based Democratic Initiatives Foundation,
a democracy-building think-tank, says Mr Yatseniuk's emergence "is a
sign that voters are upset" with the ruling establishment. But he says
that is as far as the parallels with the Obama campaign go.

"You can't compare him to Obama. He does not, at this point, have a
dedicated and stable group of supporters."

Prof Haran says Mr Yatseniuk has yet to answer important questions about
his candidacy. "What is his team, his programme for Ukraine and who are
his financial backers?"

The key to power in Ukraine has lain in recent years in winning the
backing of business. Political analysts say Mr Yatseniuk's rising appeal
with voters comes, in part, from his favourable coverage on
oligarch-controlled television channels.

Victor Pinchuk, billionaire son-in-law of Leonid Kuchma, former
president, is a key financier of Mr Yatseniuk's philanthropic
activities.

Mr Yatseniuk admits being worried that many voters see him as backed by
Dmytro Firtash, the natural gas tycoon. But he welcomes support of
business leaders, saying they also want a change.

"In a campaign, I would ask all of them to donate money. But I will be
clear not to promise any quid pro quos . . . offering free and fair
conditions for all. I'm sure they will be happy with this."

Yanukovich in poll pole position 

A poll by the Razumkov think-tank centre last month suggests that 17 per
cent of Ukrainians would cast their vote for Viktor Yanukovich, the
former premier who was backed by Moscow in the 2004 election; almost 16
per cent for Yulia Tymoshenko, prime minister; and 12 per cent for
Arseniy Yatseniuk.

Support for Viktor Yushchenko, the president, who was backed by a
majority of Ukrainians after he was propelled to power by the
pro-democracy Orange Revolution, was 3.5 per cent.

The Wall Street Journal

International Finance: Russia Fumes Over Gas Bill From Ukraine 

Reuters News Service 

8 April 2009

C2

MOSCOW -- Russia threatened to fine Ukraine for failing to buy enough
natural gas in the first quarter, increasing pressure on its neighbor at
a time when the World Bank said Kiev's economy was contracting fast.

Alexei Miller, chief executive of Russia's state-run gas giant OAO
Gazprom, said in an interview that the corporation was in talks with its
Ukrainian counterparts regarding possible sanctions over
lower-than-agreed-upon gas imports.

"We are discussing this with our Ukrainian colleagues. This is spelled
out in our agreements," he said.

The threat dealt a further blow to Ukraine, which is facing anger
sparked by the authorities' handling of the economic crisis and
political wrangling over the date of the next presidential election.

Gazprom had previously said it wouldn't impose fines, in recognition of
Ukraine's dire financial plight.

Russia's apparent rethink comes after Ukraine's leaders -- squeezed
between traditional loyalty to former Soviet master Moscow and a desire
to move closer to the West -- angered the Kremlin by signing an
agreement in Brussels to overhaul Ukraine's aging pipeline network.

Adding to Kiev's woes, the World Bank predicted on Tuesday Ukraine's
economy would contract 9% this year, rather than the 4% it had forecast
before. Things could get worse, it added.

"We . . . still see downside risks to this forecast should the external
environment deteriorate further and/or the authorities delay critical
anticrisis steps," the bank said.

The World Bank also predicted that inflation, fueled by a big
devaluation of the hryvnia currency, would spiral to 16.4% this year
against an earlier forecast of 13.6%.

Inflation last year was even higher at 22.3%.

Chicago Tribune

Ukrainians lament 'lost time, lost hopes'; Viktor Yushchenko, onetime
agent of change, is now the symbol of dashed dreams, says Tribune's Alex
Rodriguez 

Alex Rodriguez, TRIBUNE REPORTER 

1239 words

5 April 2009

Final

8

 

KIEV, Ukraine

Night after night, he appeared onstage here in a downtown plaza, his
face ashen and pocked with cysts from a poisoning attempt on his life.
At his feet were legions of Ukrainians wedged shoulder to shoulder,
gleefully screaming his name until their throats were raw.

Viktor Yushchenko was the agent of change, followers of the 2004 Orange
Revolution believed, a pathway to an era when rule of law would supplant
corruption and cronyism. In the West, politicians held him up as the
bulwark against Russian aggression. Not long after he led daily
demonstrations that culminated in his ascent to the presidency,
oddsmakers had him on their shortlist for a Nobel Peace Prize.

Today on the streets of Kiev -- where Ukrainians cram into bank lobbies
to pull their life's savings out before the money vanishes into
Ukraine's economic black hole -- Yushchenko is the incarnation of dashed
dreams.

"This presidency has been all about lost time, lost opportunities and a
lot of lost hopes of Ukrainians for a better life," said Dmitro
Kazmirchuk, 28, a Kiev businessman. "No leader has ever been as trusted
by Ukrainians as Yushchenko was. And now the people won't trust anyone
anymore."

Yushchenko's tumultuous first term as president is in its final year. He
can run for another term in elections scheduled for this winter, but
with approval ratings that have plunged to under 2 percent, his chances
for victory would be minuscule.

By all accounts, it's an ignominious end to a presidency that began on
the shoulders of one of most improbable events in post-Soviet history.

In a country where Kremlin-connected autocrats kept a population of 46
million on a tight leash, tens of thousands of Ukrainians rose up and
compelled the government to overturn a rigged presidential vote. The
Kremlin's candidate, Viktor Yanukovych, was forced into a rematch with
Yushchenko that Yushchenko won through the appeal of people power.

The 2004 bloodless uprising would come to be known as the Orange
Revolution, and it gave Yushchenko a powerful burst of momentum as he
tried to steward Ukraine toward integration with the West.

That momentum disappeared long ago. In a series of interviews in Kiev,
former members of Yushchenko's team talk of a president who was fatally
distracted by political dogfights with his onetime Orange Revolution
ally and current prime minister, Yulia Tymoshenko, and with Yanukovych.

Yushchenko's advisers say he also lacked the political will to combat
corruption, a cancer in Ukrainian society that Yushchenko had told
throngs of orange-clad Ukrainians in Kiev he would eradicate.

Yushchenko made his country a staunch ally of the U.S., but the
political and economic stability that Washington wanted for Ukraine
never took root. The Bush administration had hoped Ukraine would one day
join the European Union and NATO; today those goals seem distant.

Oleg Rybachuk, Yushchenko's former chief of staff and a longtime friend,
says five years of warring with political foes in Kiev and the Kremlin
have taken a harsh toll on the Ukrainian leader.

"My impression is that I feel my president is very lonely," said
Rybachuk. "You can feel that, you can see that. He's not smiling
anymore."

Yushchenko declined a request for an interview. He has said that his
leadership has been hamstrung by political power plays and changes to
Ukraine's constitution that diminished presidential authority. And, he
has said, the country has ably detached itself from the authoritarianism
of years past.

"Believe me, the last four years have not been the worst time in the
life of Ukraine," Yushchenko told a Kiev magazine earlier this year. "I
do not want the nation to live as it did in 1990, 1991, 1993 or 2000 --
any of those years."

Unlike Tymoshenko, known as a fiery speaker and crafty political
strategist, Yushchenko was an unlikely choice to lead the opposition
movement.

As Ukraine's Central Bank chairman in the 1990s, he won praise as a
skillful economist who reined in runaway inflation and steered the
country from the brink of default during the 1998 Russian financial
crisis. But he was never seen as a charismatic figure.

That was Tymoshenko's job. When they appeared on stage in 2004 to rally
Ukrainians against elections rigged to put Yanukovych into power,
Yushchenko was professorial and stiff while Tymoshenko was the firebrand
exhorting people to form human blockades around key government
buildings.

After his inauguration in 2005 with his wife, Chicagoan Kateryna
Yushchenko, and then-Secretary of State Colin Powell nearby, Yushchenko
took the helm of a country braced for sweeping political and economic
reform.

In certain areas, he succeeded. Elections since 2004 have been regarded
as fair contests. The media, muzzled in the 1990s during the rule of
Kremlin-backed leader Leonid Kuchma, broadcast and wrote freely about
Ukrainian politics and society under Yushchenko.

But other crucial reforms including the battle against corruption never
got off the ground, because Yushchenko failed to purge government of
wealthy, power-hungry businessmen who exploited their offices for
personal gain.

With every crisis Yushchenko faced, his popularity with Ukrainians
diminished. The latest row with the Kremlin over natural-gas prices
doubled the price Ukraine pays for gas, putting a severe strain on the
country's steel mills and factories. Ukraine is on the verge of economic
collapse, a crisis triggered by the global financial meltdown but
worsened by wrangling between Yushchenko and Tymoshenko.

"He never sought ways to actually influence the economy or put forward
an anti-corruption agenda," said Rostislav Pavlenko, a former analyst in
Yushchenko's administration. "Instead, he paid more attention to
speeches and accusations."

Along the way, Yushchenko has had to cope with the pain and
disfigurement associated with the poisoning attempt on his life in 2004,
a crime Ukrainian authorities have yet to solve. Doctors determined that
dioxin was the toxic agent used, and the toll that it exacted on
Yushchenko was more than physical.

"Yushchenko was handsome and liked by women, very relaxed and
good-humored," Rybachuk said. "After the poisoning, he told me that
every time he saw himself in the mirror, it shocked him. He felt like
his identity has been stolen."

Those close to Yushchenko's team say he hasn't ruled out a run for a
second presidential term. "If he runs," said Pavlenko, "it would be to
deliver his message that he was right all along, and that he was
misunderstood."

Right now, that message would be a hard sell for most Ukrainians.

"At a time of financial crisis, I see no actions from the president, not
a single project or law to support people who have lost almost
everything," said Irina Svitovskaya, 44, owner of a beauty salon in
Kiev. "He has lost the people's trust."


OSCE Project Co-ordinator in Ukraine


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Press release


OSCE, European Union provide Ukraine's Central Election Commission with
IT equipment to establish state voter register


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KYIV, 7 April 2009 - The OSCE Project Co-ordinator in Ukraine and
representatives of the European Commission handed over IT equipment to
the country's Central Election Commission (CEC) today to help create a
state voter register.

As part of a multi-donor OSCE PCU project to assist in further
strengthening election processes in Ukraine, some 951 computers and 557
multifunctional printers were provided to establish a state voter
register and to support the work of 755 voter register maintenance
bodies across the country.

"The establishment of a state voter register in Ukraine is a
longstanding recommendation of the OSCE. This IT equipment will
significantly raise the capacities of the register maintenance bodies to
maintain accurate voter databases. The system will in turn improve the
quality of the forthcoming Presidential election. However, amendments to
election legislation remain critical in this regard," said Lubomir
Kopaj, OSCE Project Co-ordinator in Ukraine.

Dirk Schuebel, the Head of the Political, Press and Information Section
of the European Commission's Delegation to Ukraine said: "The delivery
of this equipment, which has been financed by the European Union, will
help Ukraine fulfill the commitments it made in the EU-Ukraine Action
Plan with respect to democracy and the rule of law, especially on
democratically conducting elections."

Zhanna Usenko-Chorna, the Deputy Chairperson of the CEC, added that the
equipment would enable the CEC to introduce the new register in time for
the upcoming presidential election.

The 1.6 million euros worth of IT equipment was funded by the EU, which
supports the OSCE PCU project along with the Canadian International
Development Agency, the Swedish International Development Cooperation
Agency, Irish Aid and the Strategic Programme Fund of Britain's Foreign
and Commonwealth Office.

The OSCE PCU supports the election process in a non-partisan and
objective manner by assisting the Ukrainian government through
appropriate projects. The OSCE Office for Democratic Institutions and
Human Rights, which observes elections, operates under a separate
mandate.

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