[Ohio UZO News] Ukraine: NYT; FT; EDM; KP

[Deychak, Orest]

The New York Times

www.nyt.com

 

I.M.F. to Release Second Part of a $16.4 Billion Loan to Ukraine 

By ANDREW E. KRAMER 

18 April 2009

Late Edition - Final

7

MOSCOW -- The International Monetary Fund agreed on Friday to release the second portion of a $16.4 billion loan to Ukraine that had been delayed over a disagreement on the budget, easing concerns that the country's finances would unravel into a default.

The loan's second installment had been delayed two months because Prime Minister Yulia V. Tymoshenko had declined to cut a budget deficit that the I.M.F. says is equal to 4 percent of the gross domestic product but that the Ukrainian government says is closer to 3 percent.

On this important point, the I.M.F. softened its objections. It agreed to the budget deficit, citing as justification the deepening recession in the country and the need for government spending on one hand, and signs that inflation is falling on the other.

For Ms. Tymoshenko, who is likely to run for president this year, the decision was an important victory on a critical point of economic policy. Despite mounting pressure from the West and within Ukraine, she had held out on the need to maintain social spending such as on pensions, which would be unpopular to cut before an election. The I.M.F. had signaled that it might withhold its lending if the deficit were not reduced. Her main rival, President Viktor A. Yushchenko, had supported a balanced budget.

''Today we received a positive signal concerning Ukraine's stability and solvency, and I am convinced it will be an additional signal for investors to come here,'' Ms. Tymoshenko said in Kiev, the capital, The Associated Press reported.

In a compromise, the cabinet pared some public spending and overhauled utility tariffs to meet I.M.F. demands. Because these changes were rejected by the Parliament, the government passed them by decree on Tuesday. Mr. Yushchenko also approved this procedure.

Ceyla Pazarbasioglu, the head of the I.M.F. mission to Ukraine, said the agreement would ''pave the way for an early return to sustainable economic growth.''

The I.M.F. first agreed to the loan last fall on the condition that Ukraine run a balanced budget, and it swiftly disbursed $4.5 billion. The next disbursement was due in February. But by then Ms. Tymoshenko had insisted on the deficit, and the I.M.F. declined to negotiate the release of the second portion. Ms. Tymoshenko responded with a gambit: she appealed to Russia and other foreign governments for multibillion-dollar bilateral loans to finance the deficit in a noninflationary manner. That would have met the I.M.F.'s requirements and allowed the deficit.

Gregori N. Perepelitsa, director of the Foreign Policy Research Institute in Kiev, said already sharp concern in the West about Russia's mounting influence in former Soviet states may have tipped the I.M.F.'s board members, mostly drawn from Western governments, to signal approval for the loan in spite of the deficits. The I.M.F.'s statement on Friday said only that the deficit was acceptable ''in line with available financing,'' without specifying the source of that financing.

Financial Times

www.ft.com

IMF set to unlock loan to Ukraine

By Roman Olearchyk in Kiev 

Published: April 18 2009 

Recession-battered Ukraine received a boost in confidence yesterday, as an International Monetary Fund mission said it would advise senior management to unlock a $16.4bn standby loan.

The loan was granted last autumn but frozen owing to concerns over fiscal prudence and political stability.

IMF officials said the staff-level agreement with Kiev demonstrated the fund's willingness to adapt to country-specific needs amid deep world recession.

According to the plan, Kiev will use half of a second $2.8bn (€2.1bn, £1.9bn) tranche to service its budget deficit. The rest will be directed towards traditional currency stabilisation and balance of payment needs.

"Half could be used to bridge the budget deficit gap . . . to comply with our foreign debt obligations," said Yulia Tymoshenko, Ukraine's prime minister.

Ceyla Pazarbasioglu, the IMF's mission chief for Ukraine, said the funds could arrive in Kiev by mid-May, if approved by the fund's board. The first tranche of $4.5bn received late last year stabilised Ukraine's financial system. Kiev's currency lost some 40 per cent of its value last summer, but the IMF froze future tranches amid concern over the budget deficit and political bickering.

Bitter rivalry between Ms Tymoshenko, Viktor Yushchenko, president, and opposition groups has complicated Kiev's ability to handle an economy in free-fall. Securing fresh IMF funds is seen as a victory for Ms Tymoshenko, a top contender in an October presidential contest. The expectation of fresh funds could also shore up confidence in the economy, one of the hardest hit by the global crisis.

"Ukraine's progress should be complimented," Ms Pazarbasioglu said. "The global economic and financial system is going through an unprecedented time. Ukraine obviously gets affected, but we are optimistic and very encouraged about the recent stability in Ukraine. It is a dynamic and resilient economy. It has adjusted to the shocks. The current account deficit has narrowed; inflation has declined more than we anticipated."

On Tuesday, Ukraine's government unilaterally adopted tough IMF conditions, bypassing parliament which failed to pass the unpopular legislation. The measures aim to balance the finances of Kiev's pension fund and state gas company, boosting tax receipts and utility prices for households.

On Thursday, the government and central bank adopted a multi-billion-dollar bank restructuring plan, pledging to bail out seven domestically owned banks.


Eurasia Daily Monitor

http://www.jamestown.org/programs/edm/ <http://www.jamestown.org/programs/edm/> 

April 17, 2009

Political Instability in Ukraine Raises Fears of Intervention by Security Forces

On April 13 Parliamentary Speaker Volodymyr Lytvyn said on ICTV, "There is a potential threat of a forced takeover of power (in Ukraine)." A possible cancellation of elections could be part of an "attempt to maintain oneself in power by undertaking any risky action" Lytvyn added (ICTV, April 13). Ukrainian political consultant Kost Bondarenko warned that Ukraine was on the verge of "chaos and dictatorship" and that such a threat, "appears where there is the temptation to seek simple solutions to problems" (Ukrayinska Pravda, March 16).

Ukraine, together with Latvia and Hungary, are the three post-communist countries hardest hit by the global financial crisis. Ukraine's crisis is made worse by political instability and political in-fighting, as seen in the second failure on April 13 to adopt legislation required by the IMF before it releases the second tranche of its stand-by agreement to Ukraine.

Opinion polls suggest as many as 76 percent of Ukrainians do not feel "protected" by the state from internal threats (Ukrayinska Pravda, April 1). Interior Minister Yuriy Lutsenko has threatened to deal harshly with what he believes to be the inevitable "revolution" and "social explosion" caused by unemployment. The unregistered NGO Shchyt (Shield), drawn from security service veterans and Interior Ministry (MVS) cadets, recently destroyed a peaceful protest and volunteered to "counter anarchy, corruption and paid for political actions in order to bring order to Ukraine" (Ukrayinska Pravda, March 21). Shchyt promised to "assist in undertaking order on the streets of our cities" (Ukrayinska Pravda, March 27).

Politicians incessantly debate the possible consequences of pre-term presidential and parliamentary elections and whether there is sufficient time or enough parliamentary votes to change the constitution again (the last time being in 2006). While there is also continued speculation concerning a possible impeachment of President Viktor Yushchenko.

Lytvyn's warnings are reminiscent of ex-President Leonid Kuchma and his presidential administration head Viktor Medvedchuk attempting to extricate themselves from impending election defeat. The current political atmosphere is similar, with Yushchenko now in his last year in office, and his chief of staff Viktor Baloga exploring ways to remain in politics and receive immunity from prosecution. To achieve this, Yushchenko and Baloga have three options: the use of force to introduce presidential rule, becoming a life senator if Yushchenko's constitutional reforms proposed on March 31 are adopted (leading to a bicameral parliament), or being elected to parliament through simultaneous elections on October 25.

The second failure to adopt IMF-mandated legislation rested on the lack of support from the United Center and For Ukraine, two pro-presidential wings of the Our Ukraine-People's Self Defence (NUNS) faction. The two groups, accounting for 27 of the 72 NUNS deputies, are holding Ukraine to ransom because Yushchenko and Baloga desperately want simultaneous elections in order to transfer from the executive to parliament and receive immunity. This would protect them in the event of Yulia Tymoshenko being elected president. The Tymoshenko bloc (BYuT) political scientist Oleh Medvedev suggested that Yushchenko, in seeking to bring down Tymoshenko, might inadvertently destroy Ukraine (Ukrayinska Pravda, April 14).

First Deputy Prime Minister Oleksandr Turchynov warned that "in the presidential team there is a persistent desire to utilize the security forces -Security Service (SBU) and Procuracy- to defend its political and corporate interests" (Zerkalo Nedeli, March 21-27). Yushchenko has drawn on the security forces more often than his predecessor. In the spring 2007 crisis SBU, presidential guard and Interior Ministry units clashed and the president dispatched Interior Troops to Kyiv (EDM, January 25 and June 1, 2007). The head of the military general staff was brought into the National Security and Defense Council (NRBO) and the Interior Troops were placed under the president's command, which were unconstitutional acts. In the fall of 2008 Yushchenko was prepared to dissolve parliament if a grand coalition of BYuT and the Party of Regions had been established following their joint voting on September 2, 2008 (Zerkalo Nedeli, March 21-27). The vote led to the withdrawal of NUNS from the orange coalition.

Yushchenko has gathered the greatest number of security forces under his control, to a far greater extent than Kuchma ever attempted. He has tried to transfer military hardware and units to the presidential guard, re-create a National Guard from the MVS Interior Troops and place the border troops and the special government communications service under his sole command. During the 1990's Ukraine's National Guard was under joint parliamentary and presidential control.

On April 14 Deputy Prosecutor General Renat Kuzmin, revealed in an interview with Komsomolskaya Pravda that the SBU continued its Kuchma-era practice of illegal surveillance on the opposition as well as politicians who had fallen foul of the president. This confirmed allegations first made by Yushchenko's former staunch ally and former Defense Minister Anatoliy Grytsenko, who said "today the SBU is dealing more with repression of the presidents opponents" instead of undertaking its professional duties (UNIAN, September 23, 2008).

On March 4, the SBU raided Naftogaz Ukrainy in what Ukrainian deputies saw as a blatant defense of the RosUkrEnergo (RUE) gas intermediary. Grytsenko told parliament that the SBU was unprofessional and was setting a bad example in failing to separate business and politics with the first deputy head of the SBU Valeriy Khoroshkovsky being described as a "hryvnia billionaire" (www.grytsenko.com.ua, March 6, EDM, March 11). Khoroshkovsky also has close links to RUE co-owner Dmytro Firtash.

Constitutionally the president already controls the NRBO, Defense and Foreign Ministries as well as the MVS, if his coalition is in government (through the government quota allocated to the president's NUNS). Grytsenko, who heads the parliamentary committee on national security and defense, represents the main barrier against this threat of authoritarianism and the further intervention of the security forces in Ukrainian politics. Political instability risks delaying Ukraine's recovery from the affects of the global financial crisis and threatens one of Yushchenko's legacies -the holding of free elections.

 

--Taras Kuzio


Kyiv Post 


April 16, 2009


Still Calling The Shots


 

While not as rich as their Kremlin-controlled Russian counterparts, Ukraine’s wealthiest wield enormous political influence on their home turf.

The global economic crisis has put a severe dent in the financial net worth of Ukraine’s wealthiest citizens. But in terms of influence, they may be richer than ever.

Ukraine’s top dogs, in fact, remain relatively more powerful at home than their wealthier Russian counterparts, who have learned how to bow deeply to an authoritarian Kremlin leadership.

For full article, see:  http://www.kyivpost.com/nation/39756

 

 

 

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