[Ohio UZO News] Ukraine: WSJ; WoE; FT; AP; EDM

[Deychak, Orest]

The Wall Street Journal

http://online.wsj.com/article/SB123448584382680105.html

 

Why Nurture Russia's Illusions? 

By Matthew Kaminski 

13 February 2009

A11

Barack Obama wants to make friends with Russia, "press the reset button" as his Veep proposed the other day.

Sounds familiar. Bill Clinton bear hugged Boris Yeltsin and George W. Bush peered into successor Vladimir Putin's soul. Yet relations haven't been this bad since Konstantin Chernenko's days at the Kremlin.

So what? America is on a roll in Eurasia. Democracy, open markets and stability spread across the region in the Clinton and Bush eras. From Estonia to Georgia to Macedonia, free people want to join the West.

At every step of the way, Russia sought to undermine this great post-Cold War project. Grant that the Kremlin acts in defense of its perceived interests but so should the U.S., and continue down this same path.

Here Foggy Bottom's finest chime in: Yes, but imagine a world with a friendly Russia, able to help us, say, stop Iran's atomic bomb program. So let's not push so hard to deploy anti-Iran missile defense sites in Poland and the Czech Republic that Russia hates -- use, if necessary, the excuse that costs and feasibility require further study. Back off on closer NATO ties for Ukraine and Georgia. Make Russia feel important and consulted. Joe Biden sketched out this sort of bargain at last weekend's Munich security conference.

The conceit is we can win the Kremlin over by modifying our behavior. Before Mr. Obama tries, he should be aware of recent history. On missile defense, American diplomats spent as much time negotiating with Russia as with the Central Europeans, offering Moscow the chance to join in. Nothing came of it. On Kosovo independence and Iran sanctions, Russia blocked the West at the U.N.

Last spring, NATO snubbed Georgia and Ukraine in a signal of good will to Mr. Putin. The day after, Mr. Putin privately told Mr. Bush that Ukraine wasn't "a real country" and belonged in the Russian fold. Five months later, Russia invaded Georgia and de facto annexed its breakaway provinces of Abkhazia and South Ossetia.

Mr. Obama may be tempted to think Russia can be won over. After all, they would seem to need America (short for the West) far more than America needs Russia. We're not the enemy. Russia's real strategic challenges are in the East: China looks ravenously at the vast, mineral-rich, lightly populated Siberian steppe cut off from Moscow (to this day, you can't drive across Russia). And to the South: The arc of Islamic extremism, starting with a possibly nuclear Iran, a competitor for Caspian energy and influence.

And as Mr. Putin discovers each day his economy sinks further, Russia failed to take advantage of sky-high oil prices to diversify away from energy. It sells nothing of value to the world aside from gas, oil and second-rate weapons. Its infrastructure is decaying and its population in decline.

A Kremlin leader with a long-term view would see these grave threats to Russia's future and rush to build a close partnership with the West. But the interests of Mr. Putin and his small, thuggish, authoritarian clique don't necessarily coincide with that of Russia.

The Obama magic dust doesn't seem to work on a regime defined and legitimized by its deep dislike for America. Dmitry Medvedev, the Putin underling in the president's office, moved the state of the nation address to the day after the American election to spin the outcome for the domestic audience. The U.S., he said into the winds of pro-American sentiment sweeping across the world in the wake of the Obama win, was "selfish . . . mistaken, egotistical and sometime simply dangerous."

The Kremlin then welcomed Mr. Obama into the White House with the administration's first serious foreign policy headache. Taking $2 billion from its fast-depleting reserves, Russia bullied and bribed Kyrgyzstan to close a U.S. military airfield, the main transport hub for supplies going into Afghanistan. Russia's desire for a "sphere of influence" trumps the threat of resurgent extreme Islamism in its southern underbelly.

The thinking here is Cold War porridge. But the Russians were never offered a new narrative. Mikhail Gorbachev's idea of a "European family" and Yeltsin's reforms foundered. Mr. Putin went back to a familiar recipe: Russia, empire-builder and scourge of the West.

A Cold War mentality lingers in America, too. A foreign policy caste rich in Sovietologists by habit overstates Russia's importance. The embassy in Moscow is huge; bilateral meetings inevitably become "summits," like in the old days.

Mr. Obama's fresh start is a good time for a reality check. The U.S. can work with Russia, seen in its proper place. To even suggest that the Russians have a special say over the fate of a Ukraine or our alliance with the Czechs lets Mr. Putin nurture the illusion of supposed greatness, and helps him hang on to power.

Ultimately it's up to the Russians to decide to be friends. One day, someone in the Kremlin will have to confront a hard choice: Does an isolated and dysfunctional Russia want to modernize and join up with the West, look toward China, or continue its slow decline? Until then, Mr. Obama better stock up on aspirin and dampen his and our expectations about Russia.

---

Mr. Kaminski is a member of the Journal's editorial board.


Window on Eurasia: Moscow ‘Won’t Be Able’ to Bring Ukraine Back into Its Sphere of Influence, Chernomyrdin Says <http://windowoneurasia.blogspot.com/2009/02/window-on-eurasia-moscow-wont-be-able.html>  


Paul Goble

Vienna, February 11 – Viktor Chernomyrdin, Russia’s ambassador in Kyiv, says that Moscow has little or no chance to bring Ukraine back into its sphere of influence anytime soon, not only because of Ukrainian attitudes toward Russia but also because of the scope of American activities in Ukraine. 
In remarkably undiplomatic language, Chernomyrdin, who earlier served as Russia’s prime minister, not only acknowledged d that his own government is losing influence in the country to which he is accredited but also denounced both the US for its activities in Ukraine and Ukraine’s support of Georgia against Russia (www.kp.ru/daily/24240.5/439857/).
The Russian representative told ”Komsomolskaya Pravda” that like the US under George W. Bush, the Obama Administration will not give up its dominant position in Kyiv and will continue to work not only to ensure that Ukraine adopts an anti-Russian position on gas transit but also becomes a member of the Western alliance.
Asked directly whether Moscow had any chance to change this situation and bring Ukraine back into Moscow’s sphere of influence, Chernomyrdin answered baldly: “No, we will not be able to do that,” because the US won’t allow it and because Ukrainians, especially those in the current government, have such a negative attitude toward Russia.
The Americans, he continued, are “everywhere,” using “more than 2,000 foundations” to promote their interests, inviting people to study in the United States for free, and even sitting in the ministry of defense and “openly working” on behalf of American interests and the inclusion of Ukraine in NATO.
Tragically, Chernomyrdin said, Russians have not “learned” how to respond to this American challenge and consequently are losing their influence. And that problem is compounded by the experiences many Ukrainians working in the Russian Federation have had with Russian officialdom, experiences that have alienated them further. 
As a result of all this, the Russian ambassador said, one can hardly reach an accord “with this Ukrainian leadership,” although it is possible that after the presidential elections in January 2010 a new group will come in and then it will be possible to do so, especially if the new people are “sober” and “normal” in their relations with Russia. 
Asked whether Viktor Yanukovich, who has the reputation of being pro-Russian was the person Moscow would like to deal with as president of Ukraine, Chernomyrdin said that “it is difficult to say. It is possible to speak with him. But one should not trust anyone,” hardly an expression of support for someone committed to expanding Kyiv-Moscow ties.
Chernomyrdin’s undiplomatic remarks are intriguing both because many Russians believe they have numerous ways of forcing Ukraine to return to Moscow’s fold (see www.ua-pravda.com/analitika/politicheskiy_krizis_na_ukraine_i_vozmozhnaya_strategiya_r.html) and are even celebrating what they see as a growth of Russian influence there.
Such commentators point to the declaration of a “Donets Republic” in eastern Ukraine this week (newsland.ru/News/Detail/id/338843/cat/42/) and among the Rusin community in western Ukraine (www.rosbalt.ru/2009/02/09/616821.htm), but they say Moscow can employ “a South Ossetian” strategy in Crimea (www.fleet.sebastopol.ua/index.php?article_to_view=2218). 
Why then given all these self-confident expressions in Moscow did Chernomyrdin choose to give this interview at all? At least three possibilities suggest themselves. First, he may be frustrated with Moscow’s failure either to respond to his own recommendations or to recognize the emerging reality in Ukraine.
Second, he may be hoping either to prevent the Russian government from making the situation worse by seeking to destabilize Ukraine through non-diplomatic means or alternatively he may want Moscow to pursue such measures with even greater vigor given the enormity of the stakes involved.
Or third, he may be positioning himself for a return to politics in Moscow itself, hopeful that his expressions of a new realism will appeal either to President Dmitry Medvedev who may be more interested in finding an accommodation with Ukraine than was his predecessor Vladimir Putin or to groups who feel neither Medvedev nor Putin are behaving appropriately.
Whatever Chernomyrdin’s calculation was – and a combination of all of the above may be at work – his remarkable interview with the Moscow paper could prove to be a turning point in Moscow’s relations not only with Ukraine but with other post-Soviet states as well, either boosting Russia’s chances for influence there or eliminating them for some time to come. 

 

Financial Times

http://www.ft.com/cms/s/0/61e69bae-f971-11dd-90c1-000077b07658.html

Austria warns of dangers in potential Ukraine 'catastrophe'

By Stefan Wagstyl in Kiev 

Published: February 13 2009 02:00 | Last updated: February 13 2009 02:00

An economic or political "catastrophe" in Ukraine could trigger a "domino effect" of economic difficulties in the European Union, Austria's finance minister has warned.

Josef Pröll, who is also the country's vice-chancellor, gave his warning amid intense efforts by Vienna to win EU support for extra financial backing for crisis-hit eastern European states, including Ukraine.

"Ukraine is a very important keystone country and we must avoid a domino effect inside the EU, if there is economic and political catastrophe in such a huge neighbouring country," he told the Financial Times.

"We don't see this scenario developing now. But we must prepare and keep an eye on Ukraine."

Mr Pröll was speaking during a trip to eastern Europe made amid mounting international concern about the region's banking debts.

Figures published by the Bank for International Settlements showed that at the end of September, eastern Europe's loans from foreign banks were $1,656bn, three times more than in 2005, including $1,511bn borrowed from west European banks.

Proportionately, the most exposed nation is Austria, with east European loans totalling 75 per cent of gross domestic product, followed by Sweden (30 per cent) and Greece (19 per cent). The danger is that while these loans have helped finance strong economic growth, some will turn bad, as economies plunge into recession.

UniCredit, the Italian bank with big east European operations, has estimated the region's banks have a funding gap - loans minus deposits - this year of €150bn (£135bn).

The International Monetary Fund has said it might need an extra $150bn to help emerging markets, including eastern Europe.

Three countries - Ukraine, Latvia and Hungary - already have secured emergency IMF programmes.

Ukraine is seeking an estimated $5bn in extra loans from sources including Russia, the US, the Middle East, Japan and the EU. Mr Pröll is visiting Ukraine, Croatia, Romania and Bulgaria before an EU finance ministers meeting next month where government support for banks will be discussed.

Mr Pröll declined to quantify Austria's estimates of the region's needs but said support was required, in different forms, from the EU, the IMF, the European Bank for Reconstruction and Development and individual west European states.

A senior aide called for more active EU leadership on the issue, saying a key part of the problem was how government support packages in eurozone states affected other countries, causing potential "distortions" to markets.

 

Associated Press

EU Ukraine Financial Crisis; Ukraine FM resigns amid meltdown 

By MARIA DANILOVA 

Associated Press Writer

12 February 2009

KIEV, Ukraine (AP) - Ukraine's finance minister resigned on Thursday over budget and policy disagreements with the prime minister in yet another sign of the country's deep economic troubles, brought about by the global financial crisis.

Viktor Pynzenyk, 54, a long-time ally of premier Yulia Tymoshenko, said he was resigning due to the government's refusal to cut spending and reduce this year's huge budget deficit at a time when the country is struggling to pay its debts.

"In these conditions my further presence in the job of finance minister has no sense," Pynzenyk said in a statement carried by the Interfax news agency.

Tymoshenko dismissed the resignation of Pynzenyk, who had been increasingly at odds with her policy in recent weeks, as a sign of weakness in the face of the global meltdown and said his replacement will soon be found.

Officials hope to rescue an unraveling economy with a $16.4 billion loan from the International Monetary Fund. But the IMF froze a key second tranche of the aid last week after Tymoshenko's government refused to cut the budget deficit by 40 million hryvna ($4.9 billion) to about 10 billion hryvna or $1.3 billion or 1.1 percent of the GDP, according to President Viktor Yushchenko's office.

After the problems with the IMF, Tymoshenko turned to Russia and to the Group of Seven industrialized nations asking for a $5 billion loan, but there have been no clear indications so far as to whether the aid will be granted.

Tymoshenko has been reluctant to cut spending on wages and social payments and upsetting voters ahead of a presidential election at the end of the year in which she is expected to run.

Ukraine is among the countries hit hardest by the financial crisis. The economy is plunging into a deep recession, the national currency has lost 40 percent since last fall and the state gas company is struggling to service multibillion-dollar debts for Russian gas imports.

Olena Bilan, a macroeconomics analyst with Dragon Capital investment bank, said Ukraine had little choice but to comply with the IMF's demands to rein in spending if it wants to receive the aid.

Eurasia Daily Monitor

February 11, 2009

Tymoshenko Defeats Yanukovych in Parliament

Ukrainian Prime Minister Yulia Tymoshenko survived a no-confidence motion in parliament on February 5. The motion was backed by 203 votes, 23 short of the number required in the 450-seat chamber to oust the government. This was another victory of this kind for Tymoshenko, who survived a similar motion last December. Tymoshenko will stay at least until September, as parliament can vote on no-confidence motions only once in a session.

Tymoshenko's victory was a crashing defeat for the Party of Regions (PRU), the main opposition party of former Prime Minister Viktor Yanukovych, which organized this motion, but lost the game because of internal differences and the lack of trust among potential allies. If Yanukovych fails to consolidate the PRU, it will be very difficult for him to win the next presidential poll, and the party itself may lose its leading positions. 

Like in December, the PRU was abandoned by its would-be allies at the crucial moment. Although the majority of the Communists backed the motion, several of them, including leader Petro Symonenko, were simply absent from parliament. Although President Viktor Yushchenko's aide Roman Bezsmertny called for Tymoshenko's dismissal ahead of the vote (ICTV, February 3), Yushchenko himself failed to take a clear stance, so only one splinter group from the pro-Yushchenko Our Ukraine – People's Self-Defense (NUNS) caucus – the United Center linked to presidential secretariat head Viktor Baloha – supported the motion. Another pro-Yushchenko group, headed by Vyacheslav Kyrylenko, apparently abstained, afraid to lose its ministers in the Tymoshenko government (Zerkalo Nedeli, February 7).

The reluctance of the other potential allies of the PRU to back it against Tymoshenko, whose government is very weak due to both the economic crisis and the incessant conflicts with Yushchenko, is due to the PRU's own weakness. The PRU has earned a reputation for being an unreliable partner in coalition talks because several groups of influence within it have been tearing the party in different directions. When the chair under Tymoshenko was shaky last fall, the PRU negotiated a possible coalition simultaneously with her party and her bitter rival Yushchenko. As a result, a new coalition was formed, but without the PRU.

The problem for the PRU is that it is essentially a business corporation driven by the economic interests of its major sponsors like the metals tycoon Rinat Akhmetov and the gas tycoon Dmytro Firtash, which do not always coincide. In the conditions of the Ukrainian political war of all against all, it is hard for the PRU to compete when everything is at stake with such political machines as the Yulia Tymoshenko Bloc (BYT), where everything depends on the iron will of the leader, and the ideological parties of Yushchenko and Symonenko.

The PRU lost the most recent battle against Tymoshenko even before it started. A day before the vote, the PRU gathered to decide what to do if the no-confidence motion failed and how to persuade several of its least disciplined members to turn up for the vote, rather than how to proceed after Tymoshenko's possible ousting. Moreover, a conflict erupted between the three strongest groups of influence within the PRU linked to Firtash, Akhmetov, and Andry Klyuyev, a businessman from Donetsk who is believed to be the main supporter of the idea of a PRU-Tymoshenko coalition.

Firtash's people reportedly accused Klyuyev of secretly supporting Tymoshenko. Klyuyev accused the pro-Firtash group of weakening discipline in the party (Ukrainska Pravda, February 6). Borys Kolesnikov, who is Akhetov's right-hand man, reportedly alleged that Serhy Lyovochkin, the PRU deputy chairman and a man of Firtash, used his connections in Yushchenko's secretariat to instigate the opening of criminal cases against his party colleagues (Obkom.net.ua, February 6).

After the vote, Kolesnykov called for the expulsion from the PRU of "certain colleagues whose corporate interests dominate over party interests". He said Lyovochkin and his allies played into Tymoshenko's hands by pushing for a no-confidence motion without properly preparing it (Ukrainska Pravda, February 6). The Firtash group pushed for the motion because Tymoshenko's tenure as prime minister threatens his gas business. She managed to oust Firtash's UkrGaz-Energo from the domestic gas trade in early 2008, and RosUkrEnergo, a joint venture between Firtash and Russia's Gazprom, has been removed from gas trade between Ukraine and Russia in 2009. Now she reportedly plans to put an end to Firtash's control of Ukraine's several regional gas distribution companies (Ukraina TV, January 23; Kommersant-Ukraine, February 5).

A possible expulsion of Firtash's people from the PRU should give a chance for Yanukovych to consolidate the PRU around its Donetsk core. The PRU's internal differences have not yet affected either its own or its leader's popularity. According to recent opinion polls, the PRU remains the most popular party and Yanukovych the most popular leader (Segodnya, February 10). Addressing parliament on February 5, Yanukovych, who understands that his popularity may evaporate after a series of political defeats by the time of the presidential election scheduled for January 2010, called for simultaneous early presidential and parliamentary elections (Ukrainska Pravda, February 5). The United Center is apparently the only major party that supports the PRU in this area. Quite naturally, Tymoshenko flatly dismissed the idea (Kommersant-Ukraine, February 6).

—Pavel Korduban

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