Monday, December 29, 2008

Happy New Year for all the readers of What's up, Ukraine! Enjoy these marvellous holidays, and see you in 2009!

The capital of Ukraine has already started "pre-celebrations" to meet a New Year 2009 on a proper level. I would like to present my best New Year wishes to all the respected auditory of this blog, and to join the crowd of happy people of Kyiv, who are not thinking about politics, President, Government, Parliament, early election of whoever it may be, or about budget-2009 (by the way, President signed it today, and the same time called the document "a tragedy of Ukrainian nation").

I'm planning to write my next post here on Monday 5 January. Happy New Year!

Friday, December 26, 2008

…And the unexpected gift. The Parliament of Ukraine approved the Budget 2009 today.

Ukrainian politics is really full of surprises during this Holiday season. The Members of Parliament decided to come back to the State Budget question today, and suddenly voted in favour of this document. The pro-Governmental forces have managed to find four MPs needed to have 226 votes for the project of budget – from the Our Ukraine – People’s Self Defence Block. Now the budget is approved, and nobody cares about the figures and macroeconomic data anymore – it’s time for holidays. As a result, Ukrainian MPs have two extra free days this year: as was decided, they will not work on 30 and 31 December (but the next parliamentary sitting is scheduled for 13 January 2009). Happy New Year, Verkhovna Rada!

But the political problems in the country are – of course – not resolved. Today the President of Ukraine Viktor Yushchenko will have an opportunity to comment a new budget during the live political show on Inter TV channel at 21.30 PM by Kyiv time.

Expected gift – II. The Verkhovna Rada of Ukraine didn’t approve the budget 2009 again.

The Parliament of Ukraine voted against a budget 2009 three times this morning. MPs failed to approve the document as a whole, and then in the first reading. Parliament considered also a proposition to come back to the budget discussion today, but the majority voted against that. The problem is that the Party of Regions, the Communist party and pro-president part of the Our Ukraine – People’s Self-Defence Block (MP’s Group “For Ukraine” founded by ex-Head of the faction Vyacheslav Kyrylenko) don’t support the budget project as it is today.

MP’s have decided to hold sittings on Tuesday, 30 December and Wednesday, 31 December. But a lot of people predict that Ukraine will start the New Year without a budget. Parliament will probably approve the document in January.

Expected Gift. The Parliament of Ukraine made a Christmas present to Yulia Tymoshenko, sending the project of budget back to her office.

Verkhovna Rada failed to pass the 2009 budget on Thursday, December 25. Most of the Members of Parliament decided that the project of budget is not realistic, in particular, because of its extra-optimistic economic forecasts. The budget, presented by the Prime Minister of Ukraine Yulia Tymoshenko on Tuesday, 23 December, supposes that the inflation will stay in frames of 9,5%, hryvnia rate to US dollar will be not more than 7-7,5, and the GDP will grow to 0,4%.

The result of the vote has demonstrated the absence of the real coalition of majority in Ukrainian Parliament. The budget was supported by all MPs of the Block of Yulia Tymoshenko and the Block of Lytvyn, and also by 44 MPs from the ex-president’s faction Our Ukraine – People’s Self-Defense. But the faction of the Communist party (who is not a Coalition member) was not in favor, and the vote failed.

Parliament will hold the sitting today, on Friday 26 December (starting at 10 AM), and will come back to the budget question – and will face problems again. Even non-economist may see that there are problems with a revenue side of the budget, and with the macroeconomic forecast (as was said). Also as Ukraine still hasn’t signed an agreement with Russia on gas supply, and nobody knows the price of gas for 2009, all the economic planning that was made is very approximate.

Some sources in Verkhovna Rada suppose that the budget 2009 will not be adopted before the New Year.

Wednesday, December 24, 2008

New round of political fight. Yulia Tymoshenko accused Viktor Yushchenko in preparation to declare the state of national emergency.

Today’s press briefing of the Prime Minister of Ukraine Yulia Tymoshenko has brought some new colours to controversy between main authorities of Ukraine. She informed journalists that the current goal of the President of Ukraine Viktor Yushchenko is to lead the country to default in order to declare the state of emergency. “By declaring the state of national emergency, President will cancel presidential election (the presidential campaign is supposed to start in summer 2009. – T.V.)”, Mrs. Tymoshenko explained, mentioning that the Constitution prohibits holding election when the country is in a state of emergency.

Yulia Tymoshenko also said that if today or tomorrow Viktor Yushchenko not dismiss the Head of the National Bank of Ukraine, “he will be personally responsible for all that is happening in Ukrainian economy”.

Tuesday, December 23, 2008

It’s a democracy. The question calling the President of Ukraine to leave the country has won the biggest Internet rating.

Today the President of Ukraine Viktor Yushchenko held his annual concluding press conference. In frames of this event he has answered a couple of questions of Ukrainian Internet users, which were submitted in advance. I was following the process of submission of questions with a big interest, as the most popular one appeared to be the following: Mr. President, how much money should the people of Ukraine pay to convince you and other top authorities to leave this country?

Actually, it is not a question but an attitude of Ukrainians toward President in particular, and all the ruling politicians in general. I voted for it, and a lot of my friends – almost all of the people I was talking with during last 2-3 weeks – did the same. I may say that Ukrainians of very different positions and ranges supported this question. For example, the link to this question I received by e-mail from my friend who is a housewife with a very active social position. Of course I didn’t believe that the question would be really asked. But it happened, and all the Ukraine has heard it during a live translation of the press conference on TV and radio. I have to mention that President was surely prepared for that. And tried to move the responsibility for this question outside the borders of Ukraine.

Viktor Yushchenko declared that “it is a provocation”, and that “the respected authors of this question are situated not in Ukraine, and don’t represent Ukrainians” (having in mind Russians, of course). “We even can not pose a question without help”, President assumed. Also Mr. Yushchenko said, “The real authorities should be half step ahead to show the way to nation”. The leader of nation shall tell, “our choice is such-and-such, we have to go in such a direction”, no matter “you like it or not”.

And some extra quotations of President I liked the most:
“The version of early presidential election is written not in Ukrainian offices”.
“Parliament is the most destabilising institution”.
“It is good when Parliament works like an aquarium – clear and visible”.

Monday, December 22, 2008

What’s up, Ukraine? 15-21 December 2008.

Falling currency . On Thursday, 18 December the Ukrainian hryvnia dropped to its historical low against the US dollar – 10-10.5.
Less than a half of the year ago US dollar cost around 4.8 hryvnias. The Prime Minister of Ukraine Yulia Tymoshenko declared that the hryvnia’s value felt down due to “a special speculative operations planned at the currency market of Ukraine, and organized with the assistance of the National Bank (Central bank) and some other banks of Ukraine”, in particular, Nadra bank.
“The bank that was just bought for 600 million dollars, received from the National Bank financial resources of 7 billion 100 million hryvnias”, Yulia Tymoshenko said, adding that “the bribes made up from 3% to 7% of the total amount of financing”. Yulia Tymoshenko pointed out that Ukrainian businessman Dmytro Firtash (owner of the Group DF holding, which is famous also for a scandal around the financial support of the British Conservatives) and the Presidential Secretariat are standing behind the Nadra bank. “They need to tumble the hryvnia’s value to dollar”.

Getting closer. The U.S. Secretary of State Condoleezza Rice and Ukrainian Foreign Minister Volodymyr Ohryzko signed the U.S. – Ukraine Charter on Strategic Partnership.
The joint U.S. – Ukrainian declaration called a “Charter on Strategic Partnership”, signed in Washington on 19 December, appeals for the expanding of the economic and security ties between two countries, and strengthening of the cooperation in energy, trade and other areas.The document does not have a legally binding status.
The declaration states that the United States intends to open a diplomatic post in the Autonomy Republic of Crimea, a region that is highly influenced by Russia (there are many ethnic Russians and Russian-speaking people with Russian passports), and is hosting Russia's Black Sea fleet in Sevastopol (under a lease agreement until 2017). ”Ukraine welcomes the United States' intention to establish an American diplomatic presence (American presence post) in Simferopol, the capital of Crimea”, said the joint declaration.
State Department spokesman Sean McCormack has already said the Crimean diplomatic post would be a small one, dedicated to the organising of cultural events and doing political reporting. Mr. McCormack denied any intentions to provoke Russia by establishment of this post. ”This is about U.S.-Ukraine bilateral relations. If the Russian government chooses to be upset by ... my stating that we're considering opening up… a one-person or two-person American presence post, well, there's not much I can do about that,” he added. Russian officials haven’t made any statements on this point, but analysts are saying that this answer may be given in more sharp position of Moscow in gas-trade dialogue with Ukraine. Minister Ohryzko told reporters the post “probably will be done next year”.
Also Washington promised to help to strengthen the candidacy of Ukraine for NATO membership, which is another painful question for the official Russia. Nevertheless, U.S. would work within the NATO-Ukraine Commission to agree on a plan for training and equipping Ukrainian armed forces. “We plan to undertake a program of enhanced security cooperation intended to increase Ukrainian capabilities and to strengthen Ukraine's candidacy for NATO membership,” the document said.
Washington also promised to help Ukraine with “rehabilitating and modernizing the capacity of Ukraine's gas transit infrastructure”, cooling down Russian dreams to fort a consortium for the exploiting of Ukrainian gas lines.

Fitch Ratings: The credit outlook for the Ukrainian energy and utility sector during 2009 is negative.
The report issued on Thursday 18 December lists the main problems of the Ukrainian energy and utility sector: a funding crisis in the state-controlled power generation sector, downward pressure on regulated tariffs due to a severe recession, restricted access to bank lending and debt capital markets, and continued turmoil at NJSC Naftogaz of Ukraine (‘B’/Rating Watch Negative). Fitch expects an economic recession in Ukraine in 2009 to drive down power demand, providing only temporary respite to falling capacity reserve margins.
Fitch expects liquidity and refinancing risk to remain high for the Ukrainian energy and utility sector through most of 2009, as foreign banks and markets remain effectively closed to Ukrainian issuers. Naftogaz will continue to confront major challenges in 2009, including a lack of transparency, potentially insufficient state subsidisation for its loss-making residential business, higher import prices, accumulating gas payables and restricted access to external financing. However, Fitch continues to view Naftogaz as an important strategic asset for the Ukrainian government (Ukraine rated at ‘B+’/Outlook Negative) and factors state support into the company’s rating.
The 2009 credit outlook, entitled "Ukrainian Energy and Utilities – 2009 Outlook”, is available on the agency's public website

Eternal problem. Russia blocks Ukrainian famine-genocide resolution at the United Nations.
Russia blocked Ukraine-initiated UN resolution claiming Holodomor in the Soviet Union in early 1930s was famine-genocide aimed against Ukrainians, rather than a common tragedy of many nations in the country. “We succeeded to bloc the inclusion of the item into the agenda of the current UN General Assembly,” Russian Ambassador to the United Nations Vitaly Churkin said on Thursday, 18 December, according to the Russian media.
The Ambassador also added the United States and Great Britain backed the Ukrainian motion, which “ended in nothing.” Mr. Churkin said Russian representatives were active in explaining the history of Holodomor to foreign partners. As a result, nine EU countries did not sign the Ukrainian declaration, although “EU members usually act in a consolidated manner”.

Sunday, December 21, 2008

Total opposition. All the main political players and institutions in Ukraine are in opposition to each other.

Starting from the middle of last week, the Prime Minister of Ukraine Yulia Tymoshenko was moving step by step to the point of no return in her relationship with the President of Ukraine Viktor Yushchenko, making rougher and rougher statements. On Saturday, 20 December she reached this point. Mrs. Tymoshenko publicly declared she is in opposition to President and wishes him to resign immediately, called him a thief, accused him in the fall of a national currency rate, and said she is sorry for helping him to become President in 2004.

“I don’t want to be a member of such a governing team, and that’s why I’m clearly declaring that I am in opposition to such an authorities like the President of Ukraine, Head of the National Bank of Ukraine, and all the criminal group that surrounds them”, Prime Minister said during the press briefing. “I am very sorry that this person, I’m talking about President Yushchenko, in favour of whom I was standing on all the maydans (squares. – T.V.), agitating and convincing people for him as an honest and moral politician, and now he went down to such a level, when it is shameful even to say his name”.

Viktor Yushchenko will answer to Mrs. Tymoshenko today at 8 PM of Kyiv time, at the weekly news show on Inter TV channel. But the press service of President has already quoted his interview. Mr. Yushchenko says that the last statements of PM Yulia Tymoshenko put her “in the opposition to Ukrainian people and the country”.

“Today the problem is not in my relationship with this lady”, President says. “She declared the opposition to the nation, to the country”. Viktor Yushchenko is sure that Prime Minister just wants to escape from the responsibility for her actions as a Head of Government.

“The situation is obviously out of control of Prime Minister for a long time”, Mr. Yushchenko emphasized. “But today the moment of responsibility is coming close. Who will be responsible for the inflation of 22%? External crisis? Our crisis is sitting on Grushevskogo street, 7th floor, in the office of Prime Minister”.

The central bank attacked back the Government two days before, stating that “the government's inept policies in running the economy... led to a situation in December in which the country could find itself in the internal default”. “The Government now has no funds to pay salaries, pensions and social benefits or to cover its domestic and external obligations”, the National Bank of Ukraine informed.

So, today the Prime Minister of Ukraine is in opposition to the President of Ukraine and to the National Bank of Ukraine. The President of Ukraine is in opposition to Prime Minister. The National Bank is also acting like a political body, declaring its non-support of the Government and its policies. Official opposition – the Party of Regions – is declaring it is against all the powers mentioned above, and is waiting for spring to come to power after the fail of the “Orange leaders”. The new-elected Speaker of the Parliament Volodymyr Lytvyn is claiming for neutrality, but in fact is in opposition to everyone who is interested in the snap parliamentary election, which would take the high post in Parliament off from him.

Thursday, December 18, 2008

United Center. The Our Ukraine party of Viktor Yushchenko may unite with the party of Viktor Baloha.

After a split of the Our Ukraine – People Self-Defence (OU-PSD) parliamentary faction into pro-President and pro-Coalition parts, the President’s Office is thinking seriously about what to do next. The Our Ukraine party, which is officially headed by Viktor Yushchenko, seems to be split also, and its members are demoralised and bewildered. In its current state the party cannot serve as a real support for President neither in Parliament, nor during the elections – both parliamentary and presidential. There is a strong need for the Our Ukraine party to be reunited and reshuffled somehow. It seems that President Yushchenko, together with his Secretariat, has already worked out a decision – to unite the Our Ukraine with the United Center (UC) party of Viktor Baloha, the Head of Presidential Secretariat.

It is a fact that Viktor Yushchenko lost his influence on Parliament and its work. Even the part of OU-PSD that didn’t join the Coalition with the Block of Yulia Tymoshenko and the Block of Lytvyn is getting out of Presidential control. The previous Head of the OU-PSD faction, member of Our Ukraine Vyacheslav Kyrylenko resigned from this position. Another old strong supporter and friend of Viktor Yushchenko, New York born Roman Zvarych, declared that he may leave the Our Ukraine party at all. Situation with the regional offices of Our Ukraine is even worse. As member of Our Ukraine Puslan Knyazevych (who signed a Coalition treaty) informed journalists yesterday, the party local managers have lack of finances, and feel like “being thrown out” as the central party leaders hadn’t contacted them for months.

Kseniya Lyapina, member of the Our Ukraine who didn’t join the Coalition, worries about the future of her party. In particular, she shared with journalists the information that some people - on behalf of the United Center - are proposing money to the local representatives of the Our Ukraine party . “We are against unification with the UC”, Mrs. Lyapina emphasized.

The irony is that to unite Our Ukraine with the United Center does not mean to strengthen the “presidential party”. Despite of bright financial opportunities, the UC is very weak, and doesn’t have a visible party structure. The Member of Parliament of Ukraine and member of the United Center party Lesya Orobets have recently said in a live interview at the Radio Liberty that total amount of UC members is about 100-200 people in every region. According to this info, the most optimistic estimation of a current size of the United Center is a bit more than 5000 (five thousand!) members. So, is it the Our Ukraine who is in need of support?

I would suggest that the union of the Our Ukraine and the United Center is an idea and a goal of Viktor Baloha, who is interested in re-gaining a status of the Member of Parliament before the presidential election, using the rests of the rating of Viktor Yushchenko in parliamentary campaign. Just as a leader of the United Center, unknown in regions, Mr. Baloga may not win 3% of votes to pass the electoral barrier, not using so called administrative resource.

The future of the Our Ukraine party may be decided next week, when the party Summit will have place.

Tuesday, December 16, 2008

The Coalition of BYT, OU-PSD and BL factions in Verkhovna Rada of Ukraine does exist. But it is not constitutional.

The Coalition Treaty, uniting the parliamentary factions of the Block of Yulia Tymoshenko (BYT), the Our Ukraine – People’s Self-Defence (OU-PSD), and the Block of Lytvyn (BL), was triumphantly signed today in Verkhovna Rada. On behalf of the BYT faction the Coalition Treaty was signed by the Head of the faction Ivan Kyrylenko, on behalf of the OU-PSD – as it was promised earlier – by its Deputy Head Borys Tarasyuk, and on behalf of the BL faction – by the faction’s new Head Igor Sharov. The official name of the Coalition – National Development, Stability, and Order.

37 members of OU-PSD signed the document (total size of the Coalition – 213 MPs). The Head of the OU-PSD faction Vyacheslav Kyrylenko declared that he is going to resign from his position, as he doesn’t represent the faction’s majority anymore. “Any agreement with Tymoshenko worth less than the paper she’s putting her signature on, because it will not be realised, and this will be the main problem of the Coalition”, he said. Mr. Kyrylenko also called the new Coalition as “a serious threat for the state”, noticing the “dominating power” of the Communist Party in this Coalition.

But the Communist party role in the recent developments in Parliament (which is obvious) is not actually the biggest problem of a new parliamentary block of factions. The main paradox is that this newly formed Coalition does not correspond with provisions of the Constitution of Ukraine. We may say that there is a declared unity of factions in Parliament, but there is no new Coalition in its legal meaning.

According to the Part 6 of the Article 83 of the Constitution of Ukraine, “a Coalition of deputy factions, consisted of the majority of Members of Parliament of Ukraine of the constitutional membership of Verkhovna Rada of Ukraine, shall be formed”. (Here is the official translation of the Constitution, but I have to notice that in Ukrainian language the coalition-part sounds more clear, emphasizing that the coalition should comprise the majority of MPs). So, according to the Constitution, 226 or more Members of Parliament should form the Coalition.

There is also a decision of the Constitutional Court of Ukraine, adopted in September 2008 (a detailed info in Ukrainian may be read here), which states that “the requirement on the overall number of Members of Parliament of Ukraine, who on the strength of parliamentary factions are forming the Coalition of parliamentary factions, concerns the moment of formation of the Coalition, and all the period of its activity as well”.

Monday, December 15, 2008

34 to 38? The President's part of OU-PSD consists of 34 MPs

Additional info to my previous post: 34 Members of Parliament were present at the OU-PSD faction sitting in President's Secretariat this morning.

Cutting an Orange. Our Ukraine – People Self-Defence (OU-PSD) faction has been divided to pro-presidential and pro-coalitional parts.

While writing the headline of this post, I automatically added to the name of OU-PSD faction the word “presidential”. Then I deleted it as non-correct. The faction, consisting of 72 Members of Parliament, may not be called presidential anymore, despite of the fact of the recent election of Viktor Yushchenko as official Head of the Our Ukraine party. Only about a half of the faction may still be considered as supporters of Mr. Yushchenko as for today.

Not one, but two sittings of OU-PSD faction took place today at 10 AM. First sitting was held in the Secretariat of President (with his participation), and the second – in the building of Parliament. First sitting has agreed that the Parliament should work in the situational-majority-mode, and the second has approved a draft of the Coalition Treaty to unite officially with the Block of Prime Minister Yulia Tymoshenko and the Block of Volodymyr Lytvyn.

The OU-PSD is divided in almost 50%-50% proportion.

Friday, December 12, 2008

Parliamentary cheating – III. Is Yulia Tymoshenko trying to steal the President’s faction?

Just 30 minutes ago the press conference of Prime Minister Yulia Tymoshenko was finished. First of all, Mrs. Tymoshenko declared that the parliamentary coalition of three factions – the Block of Yulia Tymoshenko (BYT), the Our Ukraine – People’s Self-Defence (OU-PSD) faction, and the Block of Volodymyr Lytvyn – does exist.

Talking about the coalition PM was operating with the word combination “the majority of OU-PSD faction”. According to parliamentary rules, the majority – not consensus – is making the final decisions inside any faction, emphasizes Yulia Tymoshenko. That means that the BYT will try to save the coalition in any price, even if the strictly pro-presidential part of the OU-PSD faction will be against that. Actually, President may lose his parliamentary faction and his influence in Parliament at all. (The possible consequences are rather predictable – a snap election). Deputy Chief of OU-PSD faction Borys Tarasyuk has already mentioned that he may sign the coalition treaty again, if the Chief of the faction Vyacheslav Kyrylenko will refuse to do it.

One more remark concerns the Blackstone company, hired by the Government for millions of dollars to consult Ukraine on how to spend $16,4 billion credit of the International Monetary Fund. Yulia Tymoshenko mentioned that the company was chosen “according the current legislation” (though nobody heard about such a tender), and that it is “highly estimated by the IMF management”. Also Mrs. Tymoshenko admitted that she did meet the billionaire George Soros in Kiev one month ago, and that he gave her “advices on how to fight the world financial and economic crisis’ consequences”.

And here we are. President of Ukraine is against the coalition of his party with Yulia Tymoshenko and Volodymyr Lytvyn factions.

Member of Parliament from pro-Presidential Our Ukraine – People’s Self-Defence (OU-PSD) faction Roman Zvarych unveiled the details of the yesterday’s meeting of OU-PSD faction with President Viktor Yushchenko. The faction was discussing the prospects of the coalition with the Block of Yulia Tymoshenko and the Block of Volodymyr Lytvyn that is said to be formed in the Parliament of Ukraine. In particular, Mr. Zvarych told, “Viktor Yushchenko expressed a deep concern that Our Ukraine party shouldn’t be responsible for this unskilful policy (of the Government. – T.V.) as a part of coalition”. “President gave us to understand that he is against the entry of our faction into this coalition”, Mr. Zvarych added.

Thursday, December 11, 2008

Parliamentary Cheating II. OK, the Speaker is elected, but is there any coalition in Ukrainian Parliament?

On Tuesday, 9 December at 17.46 PM by Kiev time Volodymyr Lytvyn was elected as a Head of the Verkhovna Rada. His candidacy was supported by 154 MPs from the Block of Yulia Tymoshenko (total size of faction – 156 MPs), 40 MP’s from the Our Ukraine – People’s Self-Defence Block (total size of faction – 72), 20 MP’s from the Block of Volodymyr Lytvyn (total size – 20), and also 27 MP’s from the Communist party faction (total size – 27) and 3 MPs from the Party of Regions (total size – 175).

It was really hard to believe that the Presidential faction of the Our Ukraine - People’s Self-Defence Block (OU-PSD) will –support Volodymyr Lytvyn, together with the Block of Yulia Tymoshenko (BYT) and even with communists, despite the will of President Viktor Yushchenko, who was against the candidacy of Mr. Lytvyn and publicly in favour Ivan Plyushch, member of his party. But the things went even further: a new-elected Head of Parliament declared the formation of the coalition of OU-PSD, BYT, and the Block of Volodymyr Lytvyn.

The Tuesday events are still the object of discussion not only for political analysts, but also for politicians themselves. I would quote the main statements of historical Tuesday and the following day.

Tuesday, 9 December 2008:

Petro Symonenko, leader of the Communist Party of Ukraine stated his party supported the candidacy of Volodymyr Lytvyn to unblock the work of Parliament to fight the world economy crisis consequences. “We voted for the work of Verkhovna Rada”, he said, adding that the communists would never vote for Ivan Plyushch or any other candidacy from national-democratic forces.

Head of the Verkhovna Rada Volodymyr Lytvyn doesn’t see any preconditions to re-elect Prime Minister or to make cardinal changes of Government. But “it’s obvious that there will be some proposals from the coalition concerning the structure of the Government”, Mr. Lytvyn thinks.

Our Ukraine - People’s Self-Defence faction did not approve a text of the Treaty, forming the coalition of OU-PSD, BYT, and the Block of Volodymyr Lytvyn, the press-service of OU-PSD faction informed. Deputy Head of the faction Borys Tarasiuk signed the text of Coalition Treaty without the faction’s agreement. The project of Coalition Treaty will be in the agenda of a faction sitting on 10 December.

The Party of Regions has doubts on the liveliness of a new-formed coalition, if it will not have a permanent support of the Communist party, one of the PR faction leaders Oleksandr Efremov said. “It’s hard to imagine, how communists could work together with the nationalists”, he mentioned. “Without the Communist Party faction, the new-formed coalition doesn’t have 226 votes to approve decisions in Parliament”.

Member of Parliament of the OU-PSD faction (leader of the PSD) Vladyslav Kaskiv declared that there is no coalition in parliament as there is no decision of the OU-PSD faction on participation in this coalition; and there is also no Coalition Treaty as nobody in the OU-PSD is familiar with such a document. “De facto we can say that Volodymyr Lytvyn, obviously moved by positive emotions, made a political statement. But there are no legal fact of forming the coalition”, Mr. Kaskiv said. “We can not do good things with not honest methods… The misrepresenting of facts took place today”.

Wednesday, 10 December 2008:

The President of Ukraine Viktor Yushchenko greets Volodymyr Lytvyn for his election as a Head of Verkhovna Rada. “I hope that the election to this responsible position of so experienced and well-balanced politician will permit to unblock a work of the highest lawmaking institution of a country”, he noticed. Parliament has to approve anti-crisis laws and the project of a State Budget for 2009 as an urgent matter, and the needed condition for that is “parliamentary coalition, efficient and capable de jure and de facto”.

Member of Parliament of OU-PSD faction Ksenia Lyapina informed, “During 4 days we have to sign a Treaty (coalition treaty. – TV); if not, the Head of the Verkhovna Rada has to disown his statement about the formation of a coalition”. During the OU-PSD faction sitting on 10 December, MPs “came to a conclusion that the Coalition Treaty doesn’t exist, nobody of us signed it or authorised anybody to sign it”, Mrs. Lyapina noticed.

Taras Stetskiv, Member of Parliament (OU-PSD, PSD branch) emphasized that the coalition “legally does not exist as it is not signed”.

Oleksandr Efremov, the Party of Regions faction noticed that during the Coordination Council sitting Wednesday, 10 December “one of the Deputy Heads of OU-PSD block Roman Zvarych declared that his faction didn’t make a decision on formation of a coalition with the BYT and the Block of Lytvyn, and Borys Tarasiuk was not authorised to sign the Coalition agreement. So, in reality there is no parliamentary coalition”.

Statement of the Presidium of the Political Council of the party of Regions: “So-called formation of a coalition in Parliament is the another adventure and fraud of people. We don’t believe in capacity of this so-called coalition not only because it doesn’t have the quantity of voices needed. We don’t believe in this coalition as it is based on the politicians who had twice proved their incapacity to work together, to work effectively”… “Ukraine will have to watch again the scandal show of Orange chiefs, who are eager to sink each other in a spoon of water. The Party of Regions is out of this campaign. We also would like to hear a clear position of communists – which was their motivation, when they supported Oranges?”

First Deputy Head of the BYT faction Andriy Kozhemyakin hopes that “a progressive part” of the Party of Regions faction will take part in a constructive work of the Parliament. “It is obvious that the highest management of the Party of Regions is leaded by its own ambitions, not understanding that the crisis is a threat for independence of Ukraine”, he added.

Deputy Head of the OU-PSD faction Borys Tarasiuk issued a statement where he noticed that “due to the absence of a Head of the OU-PSD faction Ivan Kyrylenko during the negotiations, I took responsibility to sign the document on founding of a coalition of three factions – OU-PSD, BYT, and the Block of Lytvyn. Of course, I understood that it would be better if the Head of the faction signed this document. But I don’t know whether Ukrainians would understand us, if, delaying action until the next day, we lost this unique chance to start to work in Parliament normally”.

The Prime Minister of Ukraine Yulia Tymoshenko in her TV appeal to the citizens: “Parliamentary political crisis is over. A normal and consistent work will start in Verkhovna Rada tomorrow. Our hands are free from the irons… All these positive steps were done not with the help of President, but in spite of his active countermeasures to the formation of the Coalition”.

So, is there any coalition in Parliament? Nobody knows. The answer to this question depends on the results of current negotiations of parliamentary factions.

P.S. There is still a possibility of formation of a coalition in Verkhovna Rada with participation of the Party of Regions.

Monday, December 8, 2008

Chasing the shadow. What kind of Ukraine the President dreams of?

During these latter days I was thinking a lot, trying to find an answer to one question: what is the current political strategy of the President of Ukraine Viktor Yushchenko? It emerged that it’s not an easy thing to understand. Since the early autumn President is literally pushing Prime Minister Yulia Tymoshenko to form a coalition with the Party of Regions (PR) of Viktor Yanukovych, one of the main “enemies” of Orange Revolution. But the same time Viktor Yushchenko doesn’t want this alliance to be formed.

In September 2008 Mr. Yushchenko accused Mrs. Tymoshenko in high treason (after the vote for cutting presidential powers, which she performed together with the PR on 2nd of September). Then members of President’s Our Ukraine party stepped out of so-called Democratic coalition with the Block of Yulia Tymoshenko (BYT), de facto blocking the work of Parliament. In October President issued a decree that dismissed Verkhovna Rada and scheduled early parliamentary election. In November Viktor Yushchenko decided to cast aside the idea of snap election, publicly encouraging parliamentary factions to unite for adoption of anti-crisis legislation in the name of state interests. The same time Our Ukraine party officially declared that it would not form a coalition with the BYT and/or the PR faction. No logic?

Mr. Yushchenko seems to be in favour of a kind of “technical coalition”, when parliamentary factions vote concordantly, but do not sign any coalition papers. Theoretically, it gives an opportunity for President to call early election any time he wants (it would be legitimate as the coalition doesn’t exist), and also to question the legitimacy of Government any day he’s in a mood for. Nevertheless, the BYT and the PR were close to accept the idea of "technical coalition", but… Viktor Yushchenko ruined it himself. He declared that only Our Ukraine faction should propose the candidacy for Speaker, which was unacceptable for the biggest parliamentary parties. As a result, the BYT and the PR announced their possible alliance, but President answered to that by calling the probable coalition “a danger for Ukrainian democracy”.

What is the President’s logic today, and what does he want to achieve in a long run? Igor Kril, member of the United Centre party founded by Head of the President’s Secretariat Viktor Baloha, gave a little hint on Friday, 5 December. Talking about a candidacy of Prime Minister, acceptable for his party, Mr. Kril said, the PM “should not run for President”. Which means that he/she will not be a competitor for Viktor Yushchenko in 2009. That gives us a tip, why President choose as his Speaker candidate Ivan Plushch, Soviet-times’ Communist Party activist, and now member of Our Ukraine – Mr. Plusch doesn’t have noticeable political ambitions.

The ideal system of top state authorities in Ukraine, Viktor Yushchenko is dreaming of, should be built of modest “technical” people, and crowned by President. Any strong political player holding a key rating-forming position in Government or Parliament is a priory a threat for stability of the mentioned system. It is without doubt that Mr. Yushchenko will keep fighting these threats, using his favourite methods – false situational alliances, presidential veto, and a shadow of snap parliamentary poll. The endless circle may be broken only by presidential election (or Constitutional reform), which will mark a starting point for a new political game. Hopefully, it will be performed according to rules of democracy.

Friday, December 5, 2008

The Bogus Marriage. A coalition of the Block of Yulia Tymoshenko and the Party of Regions is likely to be formed in December 2008.

The Thursday’s sitting of Verkhovna Rada lasted only 8 minutes. Members of Parliament decided to take a time-out for extra negotiations, and to renew their work on Tuesday, 9 December. MPs invited the President of Ukraine and Prime Minister to be present on the sitting that day to witness how Parliament will get out of crisis. Viktor Yushchenko will not come to Verkhovna Rada on Tuesday, he’s going to pay a working visit to Lithuania. Maybe that’s right decision: it will be surely not “his day”. In contrary, Yulia Tymoshenko may appear in Parliament – to celebrate another political victory of her party.

As it was predicted earlier, a coalition of the Party of Regions (PR) and the Block of Yulia Tymoshenko (BYT) looks like just a matter of time. At least, leaders and members of both factions are not denying the fact of negotiations on this issue anymore. On 2 December, MP from the BYT faction Valeriy Pysarenko said “the BYT is ready to form a coalition with the Party of Regions”. The same statements were made by some other BYT and PR MPs during this week. In the Party of Regions’ official rhetoric the future coalition is called as “anti-crisis” and “built on pure economic reasons”, not on ideological ground.

According to insider’s information, the text of a new coalition treaty has already been initialized. But it doesn’t mean that the document will be signed on Tuesday. At first, the PR and BYT have to elect a new Speaker. It still may be a leader of the People's Party Volodymyr Lytvyn or member of the Party of Regions and current First Vice-Speaker Oleksandr Lavrynovych. The BYT and PR have enough MPs – 331 (the constitutional majority is 300 MPs out of 450) – to amend the Constitution in first reading. The main goal of the reform will be to elect President of Ukraine not by popular vote, but in Parliament, which is more convenient for big parliamentary parties. After a joint vote on the constitutional amendment the BYT-PR coalition may be officially formed. New allies will go on with the constitutional reform process after the New Year holidays, in early February. As a result, Ukraine may have President Viktor Yanukovych, Prime Minister Yulia Tymoshenko, and Viktor Yushchenko in opposition, like in “old good times”.

President Yushchenko – of course – doesn't like the BYT-PR reformation ideas. “If this kind of consolidation will not be restrained by the ideological positions, national interests, democratic interests, it may lead to serious challenges for Ukrainian democracy”, he declared on 4 December. President highlighted that the main danger of the BYT-PR coalition is “a deep revision of the Constitution of Ukraine”, which includes the idea of election of President in Parliament. “These are things which are ruining Ukrainian democracy and don’t correspond with our aspirations. This will throw Ukraine back from the sphere of stability for many years”, President argued. He emphasised he “will not allow” that.

Ukrainian media have already informed with reference to the reliable source at the Presidential Secretariat that “there is a new decree on snap election on the President’s working table”, and it is with open date.

Tuesday, December 2, 2008

Boring and sad: the best words to explain a current state of Ukrainian politics.

The President of Ukraine Viktor Yushchenko was on TV yesterday. He appeared in a live political evening show “Svoboda slova” (Freedom of Speech) at ICTV channel. A lot of my friends were looking forward to that event as it might give some keys to predict future developments in Ukrainian politics. It didn’t give any hints. I was sitting in my kitchen, drinking tea and watching TV prepared to make notes, when I suddenly realised that I’m terribly bored. Bored of lack of constructivism and predictability in what our politicians are doing or saying. It was really sad to think that way.

Here are some points I've noticed. First of all, President wanted to separate himself from all the problems the country is suffering of. “Government lost control over inflation”, “the Government’s politic was not a politic of Maydan”, claimed Viktor Yushchenko. He accused in political and economy crisis a “state power” as something to which he doesn’t have any relation at all.

The second main point is about the estimation of future of Parliament. Verkhovna Rada should work; otherwise there will be early election – that was the President’s message. Viktor Yushchenko still hopes that it is possible to elect a technical Speaker and to build a so-called situational coalition in Parliament. (Some ideas on “technical coalition” – in one of my previous posts here). A candidacy for Speaker’s chair “should be proposed by Our Ukraine party”, President thinks. But at the same time he mentions, “Our Ukraine is half-bought by BYT”.

Third point is that the very idea of early election is still alive, despite of President’s Secretariat arguments. After a snap parliamentary poll, all the parties elected may start “from a white peace of paper”, hopes Mr. Yushchenko, “it will be possible to do the manoeuvres, impossible now”.

P.S. On 2 December Parliament was working only for a little bit more than a half of an hour. Next meeting is scheduled for Thursday. Two alternatives have been discussed in couloirs: total paralysis of Parliament followed with snap election or the coalition of the Block of Yulia Tymoshenko and the Party of Regions (the details – in this post). Volodymyr Lytvyn has already called this possible coalition as “coup d’etat”.

Monday, December 1, 2008

What’s up, Ukraine? 23-30 November 2008.

Just in case. Viktor Yushchenko was elected as official leader of his party.
On November 29 Viktor Yushchenko was formally elected as a leader of the People's Union “Our Ukraine" party. From now he may appear as “number one” in the party list for early parliamentary elections, and will have a possibility to run for a position of Prime Minister. Previously President Yushchenko had been the party's honorary chairman.
Some experts think that there are possible problems with constitutional law, since article 103 of the Constitution of Ukraine states that “the president of Ukraine cannot have any other representative mandate, or occupy a position in institutions of executive power or associations of citizens.” The law “On Associations of Citizens” defines political parties as associations of citizens.

Last warning. Yulia Tymoshenko scheduled a deadline for formation of parliamentary coalition with "Our Ukraine" - 1st of December.
”If the democratic coalition is not formed until the end of this week, we will be looking for other options and opportunities,” Prime Minister said. She also made an offer to Volodymyr Lytvyn, leader of the faction of his name, to join the probable coalition of BYT-NU-NS “to form a strengthened variant of the democratic coalition.” The BYT faction was ready to support the candidature of Mr. Lytvyn for Speaker of the Verkhovna Rada.
Both Viktor Yushchenko and Volodymyr Lytvyn refused to join the proposed “democratic coalition”. Head of Presidential Secretariat Viktor Baloha noticed on Sunday’s news evening show that “today’s ultimatums of Yulia Tymoshenko is an evidence of one thing: inconsistency. Who may sit at the table for negotiations with BYT and say that the coalition is possible after that? It is not ethical to raise a question about the return, when it was she who did everything for this coalition not to exist”.

Another space. The Ukrainian Foreign Affairs Ministry accused Viktor Yanukovych in putting his leg on the President’s ground.
On 25 November Ukraine's Foreign Ministry issued a statement on the proposal of the leader of the Party of Regions Viktor Yanukovych to establish the single economic space with Russia. Viktor Yanukovych put forward this idea at a congress of United Russia party in Moscow last week. “Since the start of talks on a comprehensive and enhanced free trade zone with the European Union, the issue of establishing a single economic space has lost its relevance," the Foreign Ministry said in a statement. The ministry emphasized that only President Viktor Yushchenko and Parliament, not party leaders, decide foreign policy priorities.

In contrary to national interests. Ukrainian hryvnia reached a new historic low on Friday.
Ukraine's currency sank to a new historic low on Friday, 28 November, at 7.5-7.6 to the dollar on the interbank market, against a low hit the previous day of 7.25-7.5. One of the conditions of the IMF 16.5 billion loan was greater currency flexibility. The National bank of Ukraine linked its official rate of hryvnia with the interbank rate.
Meanwhile, the Head of the National Bank’s Council Petro Poroshenko has accused Ukrainian authorities of the inefficient use of an IMF loan. “I may officially state that IMF resources are used very inefficiently,” he declared at a Russian-Ukrainian forum in Kiev on Friday. He also criticized authorities that agreed with the policy worked out by the IMF experts. In the opinion of Mr. Poroshenko, this policy “does not take into the account national interests of Ukraine.”

Black hole? Blackstone will consult Ukraine for 1 million euro monthly plus another 3,5 million, and all-inclusive working conditions for its experts.
Blackstone has been appointed as a financial adviser to Ukraine, highlighting the US private equity group's ambition to become the consultant of choice for countries faced with financial crisis, informs Reuters. According to a Ukraine cabinet document seen by the Financial Times, Blackstone will be paid a monthly fee of €1m ($1.26m) and a further €3.5m on completion of the contract. It will be paid all expenses, including bodyguards for staff. The contract, dated November 17, says Blackstone will co-ordinate Ukraine's $16.4bn standby loan from the International Monetary Fund, mediate between the government, the IMF and the World Bank and work on the country's stabilisation plan. It is also responsible for handling talks with Ukraine's creditors and developing a communication strategy for the stabilisation plan. The contract says Blackstone is not responsible for implementing the stabilisation plan or for its success. Blackstone's team of advisers to Ukraine is being led by Martin Gudgeon.

Charity first. Kateryna Yushchenko is on the visit to United States.
The first lady of Ukraine was visiting Pittsburgh hospitals at the end of last week – to gather some ideas that she can take back to her home country. Mrs. Yushchenko heads the supervisory board of the Ukraine 3000 International Charitable Foundation, which works with hospitals around the world to improve pediatric care in Ukraine. “She is coming basically to do work for her foundation, to see what can be done to help the hospitals in Ukraine,” said Luba Hlutkowsky, chairwoman of the board of directors of Pittsburgh Ukrainians, according to the local press.
More than 3,000 people in Pittsburgh – about 1 percent of the city's population – claim Ukrainian heritage. Kateryna Yushchenko, 47, was born in Chicago to Ukrainian immigrants. She moved to Kiev in 1991 and became a Ukrainian citizen in 2005, the year that her husband was elected president.

Sunday, November 30, 2008

Ukraine will be a NATO member. Letter of the President of Ukraine published by the International Herald Tribune.

Viktor Yushchenko's letter will be printed tomorrow, but may be read online now: We're ready if you are - International Herald Tribune.
And one more link to the article appeared in print in the New York Times today - Claims of Secret Arms Sales Rattle Ukraine’s Leaders -

Orange fresh. Who is responsible for the failure of the Ukrainian democratic breakthrough of 2004?

Better late than never. Here is the topic I promised to write about yesterday, based on a letter of Joseph Gregg from San Antonio, Texas. Mr. Gregg is not a professional political analyst, but he is following the Ukrainian politics with a big interest. In the last two years he spent several months in Ukraine; he has also visited Russia a lot. In his letter addressed to me as an author of this web page, he expressed some thoughts about the President of Ukraine Viktor Yushchenko and the nature of failure of the Orange Revolution’ hopes and promises, and asked me for a follow-up opinion. At first, some quotations from the letter:

After the attempt on his life and subsequent events of Maidan, the goodwill of
the world was made available to him. Instead of promises delivered, he was
not interested in the running of the business of the country, only in its
ceremonial leadership with a tone of condescension. The shame is that
these things needed to be done are yet devalued by his other pernicious and ego
led actions. Convinced he is Messiah, he fails to notice no one longer

No matter whom you support, we are all embarrassed and diminished
by his actions to the PM. His latest protestations for her to
pay the Gazprom debt make him the lap dog of Medvedev at the expense of
every Ukrainian. It is as if he would gladly shout “Fire!" in a crowded
theater hoping someone might trample "the Braided One's" toes without even
momentary consideration of other lives that might be lost in the

The problems are huge, the solutions deceptively simple:
direct vote of the citizens for their representative to the VR; equality under
the law and the responsibility for it by elected officials and government
workers; a judiciary that is independent and righteous.

Let me start from the end. I agree that the problems Ukraine is facing today are huge, but the solutions are not as simple as it may seem. Ukraine is in need of deep structural reforms – yes, we have to improve our judicial system, but also we need structural economic reforms, new tax policy, land reform, changes in the model of local budgeting, re-building of a system of social security, new energy strategy, and a lot of other things, which are important and urgent. To accomplish these goals, first of all, we need the Parliament, which is able to work effectively. The experience of the last three years demonstrated that Ukraine will never get such a Parliament, using proportional system of vote – no matter, what kind of party list we would adopt (closed or open).

Ukrainian political parties do not have mass membership. They are built not on the values that have a strong public support, but around the charismatic leaders. “Batkivshchyna” party (and even Block of Yulia Tymoshenko) is nothing without Yulia Tymoshenko; the Party of Regions will break up without Viktor Yanukovych. The election of Viktor Yushchenko as an official leader of “Our Ukraine” is nothing more than an attempt to save the party, which is falling apart. All political system of Ukraine is highly corrupt, and even the essential democratic institutions like the Constitutional Court or Central Electoral Commission are fully packed with main parties’ protégés.

One of the public reasons of switching to the proportional voting system was the idea that it will help to build up a real party system in Ukraine. In fact, it just has led to the paralysing of the lawmaking branch of the state power. To cure that disease we should move back to majority vote – at least to give an opportunity for regional leaders to be present in the Verkhovna Rada, not selling themselves to any party (personality).

Next point I would like to mention concerns the President of Ukraine personally. I do not agree with people making from Viktor Yushchenko a kind of anti-hero, badly treating the country and innocent lady Prime Minister. For example, in the question of Russian Gazprom debt neither he nor she was an independent observer. The current non-transparent scheme of gas supply (and transit) in Ukraine was established after the Orange revolution, and was not changed in times when Yulia Tymoshenko was not a Prime Minister.

I agree that the ideals and promises of the Orange Revolution were ruined to a large extent because of Viktor Yushchenko personal weakness. Standing on Maydan, he declared that “criminals of Kuchma times” will be in prison, but in less than a half of a year he was shaking hands with people, whom he previously publicly called as thieves. In other words, he just failed to be tough with his opponents. The main problem of Viktor Yushchenko was that he talked a lot about the changes, but in fact didn’t change anything essentially. Except of his friends (the current team of Mr. Yushchenko is almost free from his comrades of Maydan times).

I want to believe that Viktor Yushchenko is a good person and a sincere patriot of Ukraine. But he is not good enough as the President. He would be a great leader of a country with well-developed democratic traditions, a country, which is not situated on the edge of geopolitical interests of the world powers. Ukraine is definitely not such a country. To govern Ukraine is a big challenge for every politician.

It’s easy to blame Viktor Yushchenko for political impotence. But let me remind that he wasn’t standing on Maydan alone. All the people leading the Orange Revolution are equally responsible for the weakness of today’s Ukraine. The leaders of the Orange revolution had a lot of nice-sounded slogans, but also a total absence of strategy on future governing. They asked us to shout, “Kuchma go away”, and “Yushchenko, yes!”, but in fact they didn’t even think, what to do after Leonid Kuchma would really go away. For almost four years the Orange leaders haven’t worked out a clear step-by-step plan on how to make Ukraine prosperous and democratic. They go on thinking how to get rid of each other. That’s the main problem of contemporary Ukraine. We are in terrible need of new fresh leaders who will end the deadlock. But there are no sigh of such a new movements. Just show me that growing-up centre of progress in Ukraine, and I will join this team.

Saturday, November 29, 2008

Parliamentary cheating. What will and will not happen on the 2nd of December.

I was not blogging only for two days, but there are really a lot of things I want to say. First of all, I would like to thank Mr. Joseph Gregg from San Antonio, Texas for his letter and the ideas on Ukrainian politics (and one of its top-persons Viktor Yushchenko) he expressed. Mr. Gregg gave his kind permission to be quoted on this website, and I will be pleased to share his thoughts with the readers of my blog, and to have their feedback also. I’m going to post this new discussion-topic on this page later today, but now let me give a couple of ideas about current situation in the Parliament of Ukraine.

As the next parliamentary sitting is approaching, Ukrainian politicians, analysts, and journalists are trying to predict if any coalition is to be formed on 2 December, and if any person is to be elected as a Speaker of Verkhovna Rada. Yesterday I met with one of my ex-colleagues, who’s rather informed about the development of a dialogue between parliamentary factions. When I asked him what did he think on the future of Parliament, he gave a rather interesting answer.

So, according to his predictions, Volodymyr Lytvyn (the leader of a parliamentary block of the same name) will not be elected as a Speaker, although his candidature was supported publicly by Prime Minister Yulia Tymoshenko. Moreover, nobody will be elected as a Speaker on 2 December. The Parliament will be left “on the hook” at least for a week or two. Or more. Then as an “urgent measure to save the country’s economy” a coalition between the Block of Julia Tymoshenko (BYT) and the “Party of Regions” (PR) of Viktor Yanukovych will be formed. This pact may be strengthened by a part of President’s faction “Our Ukraine – People’s Self-Defence”. Volodymyr Lytvyn and his block will not join this coalition, as he will not have any political and practical dividends from that. The government will be re-structured to change “people of President” for people from the PR. After a while the Parliament will change the Constitution of Ukraine in order to switch to the pure parliamentary democracy, and to elect the President in Parliament. Posts of the President and Prime Minister will be divided between Mrs. Tymoshenko and Mr. Yanukovych. Also they will divide all the Ukraine (areas of political and business interests), and will live long and happy. The end.

I would like to add that the idea of coalitioning of Mrs. Tymoshenko and Mr. Yanukovych has been widely discussed in Ukraine for a long time. But previously personally I didn’t believe in that. My logic was the following: building of the coalition with the Party of Regions is surely an effective step in law-making process (as both parties have very strict party discipline, and may perform a positive vote on any topic their leaders would agree), but it will harm the image of Yulia Tymoshenko dramatically. Viktor Yanukovych was one of the guys the Orange Revolution and Maydan were about, and the electorate of BYT is consisted of people who believe in the ideals and promises of the Orange Revolution. Taking to the account the presidential ambitions of Julia Tymoshenko, the coalition with Yanukovych may lead her to failure.

But if the goal of the new coalition is to change the type of democracy, and to establish pure parliamentary republic, there is no need to care about electoral ratings. And that makes the coalition to look like a very well constructed step. But very cynical also, I should add. The BYT-PR coalition will be also supported by Russia as less nationally oriented. Actually that’s not good for Ukrainian independence, both economic and political. But in a short-term it may look like even profitable for Ukraine to fight crisis more effectively, using Russian gas at low-price again.

Anyway there are some contra-arguments. First of all, even if such a coalition is to be formed, it may not be liveable. Both political powers (and their leaders) don’t trust each other, and don’t respect each other. Secondly, there are really no rules in today’s Ukrainian politics. Every plan may be approved, but changed two hours later. Even this very moment a new way for development of political situation in Ukraine may be discussed.

P.S. One more question: and what about Viktor Yushchenko? May Ukraine come back to the situation of late 2004?

Wednesday, November 26, 2008

No way? Ukraine will not receive MAP-proposal during the NATO Summit next week, but may join the Alliance much more faster than we could predict.

The Council on Foreign Relations, an influential American think tank, published a very interesting interview yesterday called "NATO Foreign Ministers Unlikely to Push Georgia, Ukraine Membership". The U.S. ambassador to the NATO during the Clinton administration Robert E. Hunter is talking with Bernard Gwertzman, a former foreign editor and diplomatic correspondent at the New York Times, about future meeting of Alliance’s foreign ministers on 2-3 December, and the possibility for Ukraine to get the Membership Action Plan proposal.

“I don’t think anybody wants to run the risk of giving the Russians a pretext to do what they did against Georgia. Nor do people want to pretend that Ukraine is anywhere near ready to join NATO. Nor are NATO countries ready to give a security commitment to Ukraine”, Mr. Hunter emphasized. Though it is not new information for Ukrainians anymore.

Georgia is an out-of-the-way part of the world, which no one in the alliance, we discovered last summer, is prepared to defend. Ukraine, by contrast, is in Central Europe. It is on the classic invasion routes to and from different countries there, and it is very important that the Russians understand that doing something similar to what they did in Georgia, or even a good deal less, would call into question the fundamental understandings that were worked out in the last fifteen or so years, since the end of the Cold War”, he added. But “at the moment, no one really sees Ukraine or Georgia coming into NATO”, Robert E. Hunter assured. First of all, “Ukraine is having lots of internal problems. In Ukraine, NATO membership is not something that is particularly popular”.

Would countries really be willing to fight for Georgia or for Ukraine, under circumstances of foreign aggression? In Georgia's case, the answer is clearly no. In Ukraine, how do you convince the Russians that the answer is “yes” without actually doing things that might make a Russian intervention more likely? And that would include bringing Ukraine prematurely into NATO”, Mr. Hunter assumes. The link to the interview is right here.

The same day the International Herald Tribune published another article which demonstrates that the US didn't give up the very idea to grant MAP to Ukraine and Georgia. Judy Dempsey reports from Berlin that "the United States has started a diplomatic offensive among NATO capitals in Europe, urging top diplomats to offer Georgia and Ukraine membership to the alliance without first fulfilling requirements under the Membership Action Plan".

"In an unexpected new initiative, Condoleezza Rice, the U.S. secretary of state, has already held lengthy telephone conversations with French and German and other senior envoys, asking them to discard the Membership Action Plan", according to the NATO diplomats. It was not clear whether she or anyone else from the State Department had discussed the move with the incoming Obama administration.

"NATO envoys are already divided over the U.S. initiative. Up to 10 countries, including France, Germany, Norway, Luxembourg, Spain and Italy, opposed the proposal during a meeting Tuesday at NATO headquarters in Brussels", the newspaper states.

The link to this article: U.S. starts diplomatic offensive on NATO membership for Georgia and Ukraine - International Herald Tribune

Tuesday, November 25, 2008

Bad association. EU to sign Association Agreement not only with Ukraine, but also with Azerbaijan, Armenia, Georgia, Moldova, and even Belarus

On 3 December the European Commission is going to present its draft communiqué on the Eastern Partnership (EP) policy. The EC is to propose pulling the six post-Soviet neighbours – Ukraine, Azerbaijan, Armenia, Georgia, Moldova, and Belarus – closer to the West, to recognize their “European aspirations” and to create a new “European Economic Area”. This decision ruined the Ukrainian dream to establish “special relationship” with the European Union.
Previously, a mutual consent to call a new enhanced document to be signed by Ukraine and the EU “the Association Agreement” was interpreted in Kiev as a great achievement of Ukrainian diplomacy.

Our top officials are still talking about the Association as an essential step on the way to membership in the European Union. Most of them, including President, Prime minister and Foreign Affairs Minister use even a word combination “Associative membership in the EU” to emphasize the importance of the document. Now they should feel at least uncomfortable for saying that: the Eurocomission proposes to sign Association Agreements not only with its close and democratic neighbour Ukraine, but also with Azerbaijan, Armenia, Moldova, Georgia, and Belarus with its semi-dictator Lukashenko.

So, instead of “special relationship” Ukraine is to receive a marginal status of “Eastern partner” of the European Union. “The conclusion of Association Agreements will be without prejudice to the partners' European aspirations”, the EU is declaring. Even the negotiations on Free Trade Area or free visa regime will be conducted in frames of the Eastern Partnership policy.

The EUObserver’s article with quotations of draft Commission communication on the EP may be read here.

Monday, November 24, 2008

The Window Dressing. What I didn’t like about 22 November Holodomor Memory Day.

Just for better understanding of my previous posts’ intonations, let me explain why I personally didn’t accept the Holodomor Remembrance Day on 22 November. That day I didn’t visit any of big events on the open air, in museum, opera or church. I didn’t light a candle as was suggested and didn’t put it on a window. It’s not because I don’t respect victims of the Holodomor, or don’t recognise it as a terrible crime. It is because this suddenly established Remembrance Day turned up to become a kind of huge “celebration” with strange and unnatural rituals.

There is no reason to invent artificial dates of memory and sorrow. In every religion there are special days to pray for people who left our world. The Holodomor Day of 22 November is surely an artificial thing, not supported by the Ukrainian society. I don’t know a single person who took the appeals of our officials seriously. All the events around this date – opening of huge and expensive memorials, big TV-screens in all the capitals of regions, translating films and documentaries about the Holodomor, thousands of guests and the all-country mourning with the ban on all not-sad TV programs, etc – reminds me a Soviet-time events, participation in which was obligatory for everyone.

There are a lot of questions. Why this day was scheduled on 22 November? Why not, for example, 23rd or 24th, or 25th? Why not December, or January, or February (when a critical point of hunger was reached)? And, for God’s sake, why this day is called “an Anniversary” in English copies of official documents?

Holodomor of 1932-33 is one of the worst pages of the history of Ukraine. It’s hard to imagine how people, who were ruling Bolshevik’s USSR, came to the very idea to kill peasants by leaving them without food. It’s scaring to think how that innocent victims were trying just to stay alive during almost two years, and to support their families and children. When I was a child, my father’s mother Lydia Pogorila told me how my grand-grandfather took all the family gold and went to the Western Ukraine, where he exchanged it for food. My mother’s mother Polina Orel (she left us 10 years ago) also saved memories about her mother, trying to make a flavour from some herbs and cook a kind of bread for her children. Thanks to God, nobody died in my family from both sides. But people did dye in their neighbourhoods, and it’s a fact. I keep their memories about those sad days, and I will tell these stories to my children.

I am very proud that, after such a terrible times, our grandparents – Ukrainian nation – found a power to go on, to live and love again, and to smile again. They never “celebrated” that horror times by lighting candles and cursing “the enemies”. They just tried to live their lives on the basis of the eternal human values, and were teaching their children to forgive and forget.

We, Ukrainians, have respect for Holodomor victims in our hearts. There is no need to be taught by anyone (is it President or whoever), how exactly we should remember this or that.

Meanwhile, I do know the answer to the question, why the Holodomor Remembrance Day was scheduled on 22 November. We should not forget that the same day previously was called the Liberty Day – to mark the Orange Revolution anniversary. Why the Orange holiday was almost forgotten? The answer is very simple. The inspirers of the Orange Revolution didn’t want to stay again on Maydan (the main square of Kiev) together.

Main leaders of the Orange Revolution preferred to hide behind the shadows of the Holodomor victims, than to come back to Maydan and to look into the eyes of Ukrainians who were standing there four years ago, who believed them blindly and took them to power. Now it’s time to report on the work they were supposed to do since 2004. But they’ve got just nothing to say.

Sunday, November 23, 2008

What’s up, Ukraine? (15-22 November 2008)

Eternal Memory. Ukraine commemorates the 75th anniversary of Holodomor.
On 22 November Ukraine marked the anniversary of the start of a Soviet-era artificially organised famine – Holodomor – that killed millions of people in Ukraine, Russia and Kazakhstan in 1932-33. The terrible cruel famine had a goal to force peasants to join collective farms. As a "breadbasket" of the Soviet Union, Ukraine suffered the most. Holodomor killed from 3 to 10 million of people. "This was not death through hunger – this was murder of people through hunger," the President of Ukraine Viktor Yushchenko said in his speech. Among the guests at the event were President of Poland Lech Kaczynski, President of Latvia Valdis Zatlers, President of Lithuania Valdas Adamkus, President of Georgia Mikhail Saakashvili, speakers of foreign parliaments, representatives of international organizations, foreign state officials, and diplomats.

Parliamentary holidays. The Parliament of Ukraine (Verkhovna Rada) decided to make a break until the 2nd of December.
On 20 November Ukrainian MP’s were supposed to elect new Speaker, following the dismissal of Arseniy Yatseniuk. But that didn’t happen. Instead, the plenary was closed and a new one was scheduled on 2 December.

“Topping” for crisis. The price of Russian gas for Ukraine may be more than $400 per 1,000 cubic meters.
Ukraine received an answer from the Russian authorities for non-friendly statements and media interviews. The President of Russian Federation Dmitry Medvedev said that if Ukraine does not repays the $ 2.4 billion debt, direct gas supplies to Ukraine will be cut off. The Head of Russian gas monopoly Gasprom Alexei Miller added also that the price for natural gas for Ukraine may rise from the current $179.5 per 1,000 cubic meters to over $400.
Naftogas Ukraine (“Oil and Gas of Ukraine”) company rejected the mentioned amount of debt, and said in a statement on Friday there is actually $1.267 billion of debt, but it is owed not to Gazprom, but to an intermediary company RosUkrEnergo. “Naftogaz Ukrainy points out that in 2008, the only supplier of natural gas imported to Ukraine is RosUkrEnergo Company,” press service of Naftogas Ukraine informs.
Prime Minister of Ukraine Yulia Tymoshenko previously declared that Ukraine had reached an agreement with Russian Federation to switch to market gas prices step by step during next three years. The Head of Naftogas Ukraine Oleg Dubyna predicted that the gas price for Ukraine will not grow more than to $250-300 for 1,000 cubic meters.
The President of Ukraine Viktor Yushchenko has immediately accused Tymoshenko in “irresponsible actions” that permitted the accumulation of the debt. “I want to warn that such practice leads to colonization of Ukraine,” he declared at the country’s Security Council meeting on 21 November. One should fight corruption in the gas sphere, and move to transparent contracts, not to transfer all the responsibility to Government”, answered Yulia Tymoshenko the same day, being with official visit in Sweden.

The ghost from Kiev. Viktor Yanukovych visited Moscow.
The Party of Regions has almost ruined a years of work of its PR officers to eliminate the party's strictly pro-Russian image on the West. On 20 November the Head of the Party Viktor Yanukovych visited Moscow to take part in the 10th Congress of the United Russia party and to meet the Russian Prime Minister Vladimir Putin.

Thursday, November 20, 2008

Ukraine is playing with anti-Russian rhetoric

Five influential European newspapers ‘The Times’ (Great Britain), ‘Le Monde’ (France), ‘El Pais’ (Spain), ‘Frankfurter Allgemeine Zeitung’ (Germany), and ‘Dziennik’ (Poland), published today the interviews of the President of Ukraine Viktor Yushchenko, based on their joint meeting two days ago (on 18 November). The main topics of discussion were the 75th anniversary of the Great Famine in Ukraine (Holodomor), Ukrainian bid for NATO membership and internal political and economic situation in country. Talking about these issues, President Yushchenko couldn’t manage himself not to be anti-Russian.

Among all the articles the real “must read” is the one in ‘El Pais’ named “Ucrania quiere garantías para no perder de nuevo su independencia” (“Ukraine wants the guarantees not to loose its independence”). Mr. Yushchenko told journalists that Ukraine needed to become a member of the North-Atlantic Alliance not to loose its independence. The most impressive – as for me – quotation of Viktor Yushchenko from this text concerns the letter of Dmitry Medvedev, mentioned in this blog: “The President of Russia humiliated millions of people who rest in peace, killed innocent people who had not done anything wrong to anyone”. (In the original: “El presidente de Rusia humilla a millones de personas que hoy descansan en paz, inocentes asesinados que no debían nada a nadie”).

The idea that the NATO may save Ukrainian independence from the Northern neighbour was quoted also in ‘The Times’. In article titled “Don’t turn deaf ear to Ukraine Nato bid, Viktor Yushchenko begs allies” the President “gave warning that expansion of the military alliance was vital to European security in the wake of Russia’s war with Georgia, and the only way to secure Ukraine’s independence”.

I’m just wondering why Mr. Yushchenko is so straight in his words. He may not like Dmitry Medvedev or Vladimir Putin, or all Russia as a whole phenomenon, but why he’s showing that on public?

To be pro-Ukrainian doesn’t mean to be anti-Russian. It is a mistake to demonstrate your national consciousness through international conflict. It’s twice big mistake if a half (if not more) of the population of your country speaks Russian at home. (Just for information: I speak Ukrainian). And it’s a three times big mistake, if you are provoking conflict with your neighbour who sells you gas, and whose businessmen own almost all oil refineries in your country. Ukraine is really playing with fire.

You may read full ‘El Pais’ article here, and ‘The Times’ here.

Wednesday, November 19, 2008

Presidential Absenteeism. Following Dmitry Medvedev, foreign Presidents keep refusing to attend Ukrainian Holodomor anniversary

The International Forum “My Nation Will Live Forever” dedicated to the 75th anniversary of the 1932 - 1933 Great Famine (Holodomor) in Ukraine will take place in Kyiv on 22 November. It will be a huge event, with thousands of estimated guests from all over the world. As was previously announced by the Ministry of Foreign Affairs of Ukraine, the Presidents of seven countries, namely Macedonia, Estonia, Poland, Lithuania, Latvia, Georgia, Bosnia and Herzegovina, confirmed their participation in the Forum. The participation of another 5 foreign delegations headed by Presidents was being discussed. The President’s press secretary Iryna Vannykova also said “the representatives of around 40 countries who were personally invited by Ukrainian President Viktor Yushchenko, will come to Ukraine”.

But the situation has been changing. More and more of high guests are refusing to visit Kyiv this week. Some Presidents, who previously accepted the invitation, have recently decided not to go.

The first President who publicly announced that he would not be present at the anniversary, was the President of Russian Federation Dmitriy Medvedev. He even wrote to President Yushchenko a rather critical letter to explain his point of view on a subject. (Some quotations and link to the English translation of the letter you may find here). The Presidents of Azerbaijan, Macedonia and Montenegro had cancelled their visits also.

Director of the Foreign Ministry's department for cultural cooperation Mykhailo Skurativskyi informed journalists today that the Presidents of three countries – Poland, Georgia, and Latvia – will surely attend International Forum. The confirmation from the President of Lithuania is expected soon. “A total of 25 official delegations had confirmed their participation in the forum”, Mr. Skurativskyi told. “The delegations will be mostly led by parliament speakers, vice speakers, and ministers”.

Tuesday, November 18, 2008

What's up, Ukraine? (8-14 November 2008)

1. The Headless Parliament. Arseniy Yatseniuk is dismissed from the post of Head of the Verkhovna Rada of Ukraine.
My point of view on a situation you may read in one of my previous posts here.

2. President announces the government change. The results of 4th Baku Energy Summit.
On 13-14 November the President of Ukraine Viktor Yushchenko visited Azerbaijan to take part in 4th Energy Summit. Unfortunately, the main news from the Summit for Ukraine can not be put in frames of energy issues.
In his interview to journalists Yushchenko said that switching of the Odesa-Brody pipeline to avers (forward) mode has been blockading because of political motives. He expressed opinion that such attitude is explained by “political promises and obligations” of the Prime Minister Yulia Tymoshenko. “The consultations, the Prime Minister had before September in certain capitals and the decisions, the government made after that… blocked transportation of Caspian oil”, the President said.
Viktor Yushchenko also mentioned that “starting from the end of the first half of the 2009, we will be supplied with amounts of oil needed to start the avers mode. I am assured that that time we will have a new Government, which will be able to realise a healthy politics that corresponds to the national interests”.

3. NATO: yes, but not today. On 13 November 2008 the Minister of Defence of Ukraine Yuriy Yekhanurov took part in the high-level NATO-Ukraine meeting in Tallinn, capital of Estonia.
The main conclusion of the Summit: Ukraine has a lot to do before it will be ready to become member of the NATO. Ukraine was hoping to join the bloc’s Membership Action Plan (MAP) at the NATO Summit in December with the US support. But other influential members of NATO (like Germany and France) are thinking that to start the MAP with Russia’s neighbour is not a good idea as for today.
“Let me remind you that at the Bucharest Summit earlier this year, NATO heads of state and government welcomed Ukraine Euro-Atlantic aspirations for membership in NATO and agreed that Ukraine will become a member of the alliance,” stressed NATO secretary general de Hoop Scheffer. US Defense Secretary Robert Gates also emphasiced his country’s support for Georgian and Ukrainian membership. Estonian President Toomas Hendrik Ilves said that “the fact that Ukraine is here today with NATO ministers of defence should convince everyone that NATO understands Ukraine's importance to European security… We should consider how to move beyond the current deadlock over timelines and political symbols.”
So, everyone is thinking positively. It means that Ukraine will become member of NATO in future. May I remind that the EU leaders also promised that Turkey will become member of the European Union. The question is about time-frames. Ukrainian NATO membership bid is really very complicated by internal political crisis and – what is more important – a lack of public support. It seems to me, we do have time to change the situation for better.

4. Holodomor: Distorted History. On 17 November the President of Russian Federation Dmitry Medvedev wrote a letter to the President of Ukraine Viktor Yushchenko.
I’ll just give English translation of the most interesting parts of this letter. No comments:
“In response to your messages concerning the so-called Holodomor as well as the steps taken by the Ukrainian leadership on the issue, I consider it necessary to elaborate on our views of and approaches to the issues at hand. We clearly see that in recent years this topic combined with persistent attempts to receive a NATO «membership action plan», have become a central element of Ukrainian foreign policy.
In our opinion, the tragic events of the early 1930s in Ukraine are being used to achieve immediate short-term political goals.
The famine in the Soviet Union in 1932-1933 was not aimed at the destruction of any one nation. It was the result of a drought, forced collectivization and de-kulakization [campaign of political repressions of the better-off peasants and their families] and affected the entire country, not only Ukraine. Millions of people in the middle and lower Volga regions, northern Caucasus, central Russia, southern Urals, western Siberia, Kazakhstan and Belarus died.
I do not consider it possible to participate in the activities surrounding the 75th anniversary of the «Holodomor» in Ukraine”.
Full text of this letter (translated to English) you may read on the official website of the President of Russia here.

5. Yulia Tymoshenko met George Soros.
As Ukrainian media have informed, on 8 November Prime Minister of Ukraine Yulia Tymoshenko met with famous billionaire George Soros. The meeting took place in Kiev, but not in a center, but in a restaurant near Boryspil airport. Ukrainska Pravda informs that the meeting was confidential, and a role of the interpreter performed the Vice-Prime Minister of Ukraine Hryhoriy Nemyria (who previously worked as a head of Soros Foundation's institution in Ukraine). One of the main reasons of a meeting is future presidential election in Ukraine, journalists think.
President Victor Yushchenko is also tapping the same door. On 14 November we held a phone conversation with the newly elected President of the USA Barack Obama (George Soros was among his financial donors). Victor Yushchenko and Barack Obama agreed to hold a bilateral meeting shortly after the inauguration ceremony of the new President of the USA.

Friday, November 14, 2008

Viktor Yanukovych backs Viktor Yushchenko’s image?

“I don’t want to believe that Viktor Yushchenko wanted the resignation of Head of the Verkhovna Rada of Ukraine”, this is how the ex-Speaker Arseniy Yatseniuk commented the situation around his dismissal in an interview for one of Ukrainian TV channels on 13 November 2008. “And moreover (I don’t want to believe. – T.V.) that he gave such a command”.

It seems to me nobody wants us to believe that.

Even the biggest enemy of presidential candidate Viktor Yushchenko at times of the Orange Revolution, and the main opposition leader as for the current moment Viktor Yanukovych. At least, the statement of leader of the Party of Regions on 13 November sounded very supportive towards President. “Yushchenko called me from Warsaw (on 12 November. – T.V.) and asked me to stop a process of dismissal of Yatseniuk and to have consultations. I refused to do that”, said Yanukovych.

Nevertheless, Arseniy Yatseniuk didn’t give any answer to a question on possibility for a new political party he’s going to form to join Yushchenko’s block at snap parliamentary election.

Thursday, November 13, 2008

Parliament of Ukraine: The Headless Horseman

Speaker of Ukrainian Parliament Arseniy Yatseniuk was dismissed on 12 November. New Head of the Parliament has not been elected yet. Ukrainian parliamentary democracy – and a country Ukraine as a whole – is now again on the political hook. Analysing current situation I’ve got at least 14 conclusions:

1. As for today in the Parliament of Ukraine does exist a kind of “technical coalition”, which actually dismissed Speaker Yatseniuk.

2. This “technical coalition” consists of the factions of the Party of Regions (175 Members of Parliament), the Communist Party (27 MPs), the Block of Volodymyr Lytvyn (20 MPs), and also of a part of pro-presidential faction “Our Ukraine – People’s Self-Defence” (OU-PS), loyal to Head of the Secretariat of President Viktor Baloha (10 MPs; total size of faction – 72 MPs), plus at least 1 MP from the Block of Yulia Tymoshenko (BYT, total size of faction – 156 MPs).
Total: 233 MPs.

3. Only 217 of MPs didn’t vote for the Speaker’s dismissal. It is not enough to build an “alternative” coalition.

4. Despite of all the controversial info on alleged quarrel between President Yushchenko and Head of his staff Viktor Baloha, Viktor Yushchenko was definitely involved in taking the decision on the future of Arseniy Yatseniuk.

5. At least, Viktor Yushchenko did know that the Speaker was to be dismissed. Otherwise Mr. Baloha would not be a Chief of President’s Secretariat anymore.

6. Viktor Baloha may lose his post after signing the coalition treaty with the mentioned group of factions leaded by the Party of Regions. But it will not mean that President is against this coalition.

7. The “technical coalition” may stay only “technical” or “situational”, and may never be legalised. As to my mind, a new coalition treaty will not be signed in the mentioned format, but all the “company” may vote synchronically on previously discussed and agreed questions.

8. The “technical coalition” will elect so-called “Technical Speaker” to make the results of their votes legitimate. (As only Head of the Parliament have a right to sign laws adopted by the Parliament).

9. The formation of technical or real coalition without BYT does not mean an inevitable dismissal of the Government and Prime Minister Yulia Tymoshenko. It’s easy to blame her in all the negative consequences of economy crisis and to harm her rating for future (current) presidential race.

10. Using a well known in Ukraine word combination “I’m leaving (this post. – T.V.) to be back”, previously used by Presidents Leonid Kuchma and Viktor Yushchenko, ex-Speaker Arseniy Yatseniuk have declared his presidential ambitions. But they are unlikely to be realised in a nearest future.

11. Yulia Tymoshenko already blamed President for a “betrayal” and for a “final ruining of any hope on a democratic coalition revival”. There at least two ways for her now: to make a “technical arrangement” with a “technical coalition”, and to stay in power or to fight with the Party of Regions and their new friends publicly, which will lead to resignation of the Government.

12. Third way, profitable for Julia Tymoshenko – snap parliamentary election. Her recent rhetoric (as well as the statements of members of BYT) shows that she may choose this way, trying to look as an innocent victim of President’s game.

13. Early parliamentary elections are inevitable. But the poll will definitely not happen this year. All the politicians need time for more populism.

14. Ukraine is in urgent need of a new generation of politicians to overcome “dirty game” tendencies, deep-rooted in Ukrainian politics.

Sunday, November 9, 2008

Hard hit. The IMF officials talk on Ukrainian economy

This morning I’ve finally read a transcript of a Press Conference on IMF Executive Board Approval of the Standby Arrangement for Ukraine, with participation of Ceyla Pazarbasioglu, IMF Mission Chief for Ukraine and Mark Flanagan, Deputy Mission Chief for Ukraine. It was held in Washington on Thursday, 6 November 2008. I would like to share a couple of quotations of mentioned IMF officials.

On current state of Ukrainian economy
Ukraine is a very open economy and has been hit hard with the global economic slowdown and the financial turmoil… Ukraine's economy has grown very rapidly since 2000, expanding more than 7 percent on average. However, by mid-2008, the economy was overheating with rapid credit growth, inflation exceeding 30 percent, very high wage growth, and surging imports. This led to a 7 percent of GDP current account deficit in the second quarter of 2008. At the same time, household and corporate borrowing increased and was mainly in foreign currency. With the sharp decline in commodity prices, especially steel, and the global financial turmoil, this had a considerable impact on the real sector in Ukraine as reflected in the sharp 5 percent contraction of the manufacturing sector in September. After the sixth-largest bank was put under receivership, deposit outflows increased, credit ratings were downgraded, and at the same time, confidence in the country's banking system and currency weakened substantially.

On the worst-case scenario
The worst-case scenario for Ukraine is obviously if the global conditions continue to deteriorate and that there is further deleveraging in terms of the global financial sector. The authority's program already includes a sharp decline in steel prices. The program has actually incorporates most of the new WEO assumptions except the gas and oil prices are higher in the program compared to the new WEO assumptions. So that actually gives a positive impact going forward in terms of higher growth and lower inflation. The key is to balance the adjustment in the exchange rate against the balance sheet mismatches.

On a possibility of a default
The public-sector debt is low compared to other countries; it is about 10 percent of GDP. The private sector does have large external debt service over the coming years. The authorities have been monitoring these carefully. Some of the external debt is from the banks' parents in European countries and the parent banks seem to be committed to their subsidiaries in Ukraine. In our discussions, we were told that they would be rolling over the credit lines to their subsidiaries.
In terms of the corporate sector, a large part of this external debt is actually intracompany loans and that will depend very much on the strength of corporate balance sheets and how many of these loans are actually the companies' own deposits in offshore accounts. This is a difficult component to know exactly in order to calculate rollover assumptions. But with a comprehensive program, especially with a strong bank recapitalization component, there should be possibilities for refinancing for the real sector.
The current conditions show the banking system is adequately capitalized according to the NBU inspections. But going forward as the situation changes, there may be a need for higher capital, and precisely because of that the program has a component of preemptive recapitalization to avoid the spiral of capital crunch, credit crunch, which could lead to the corporate sector not being able to refinance their loans.

The IMF prognosis
Inflation is expected to decrease to 17 percent by the end of 2009 from the projected 25 percent this year. The current account is expected to compress to about 2 percent the GDP deficit from the mid-2008 level of 7 percent.
We assume a global recovery in the second half of 2009 and with that the Ukrainian economy could be back at its estimated potential growth rate of about 5 to 6 percent by 2011 with inflation at single digits. Current account deficits are projected to remain small in 2010.

Saturday, November 8, 2008

What’s up, Ukraine? (3 – 7 November 2008)

I haven’t been blogging from Tuesday, but it doesn’t mean that nothing happened in Ukraine during this time. I may say that much more should have been done, taking to the account the crisis situation in the country. Here are some highlights of the week from 3 to 7 November 2008.
Long-waited money. On 5 November the IMF Executive Board approved a Stand-By Arrangement for Ukraine for US$16.4 billion.
It was a predictable decision. One interesting moment – the final negotiations were made not by Prime Minister or some member of the Government, but by Head of the Verkhovna Rada Arseniy Yatseniuk who previously didn’t take active part in talks with the IMF. A public reaction of Prime Minister Yulia Tymoshenko to the transatlantic voyage of Speaker Yatseniuk was rather calm (actually after the crisis had started, she didn’t make any rough statements at all, maybe trying to preserve her rating). Tymoshenko just noticed that the IMF decision was a result of “almost round-the-clock work of the Government and the National Bank with the INF mission”, not mentioning President, his office or Mr. Yatseniuk.

Switched-off democracy. Russian TV channels were cut-off and then turned on back to the Ukrainian media space.
On 1st of November Russian cable TV channels’ broadcasting had been cut off in Ukraine, following a decision of the National TV and Radio Broadcasting Council (NRTR). All the main Russian TV channels – Channel One, RTR, REN-TV, TV-Centre and TNT – were banned. NRTR explained the necessity for the Ukrainian cable TV operators to stop broadcasting the mentioned channels because they “violate Ukrainian copyright laws”, and also don’t provide Ukrainian-language subtitling.
I didn’t watch Russian channels a lot, so, it was not a big loss for me personally. But I think it’s really stupid just to switch them off because they are produced in Russia and use Russian language. The fact that it IS a discrimination of media on a political ground is easy to prove – for example, nobody switched off the CNN or the Euronews, though they do have a lot of advertising (not paying any fees in Ukraine of course) and don’t provide Ukrainian subtitling. I am not pro-Russian or something, I also think that some times Russian news are not loyal to Ukraine and its politics, but to switch the Russians off for political reasons is not democratic at all. The tendency was really frightening.
In a middle of the week two of the Russian channels – Channel One and REN-TV – were back. Thanks to the negative public reaction, and also the work of Russian Ministry of Foreign Affairs. But the broadcast allowance, according to the NRTR, in only permanent. It may happen that the channels will be switched off again in accordance to a new early parliamentary elections date (the elections will be definitely held next year).

Gaddafi visits Kiev. The Leader of the Lybian Revolution Muammar Gaddafi returned home on Thursday evening after visiting Russia, Belarus and Ukraine.
In Ukraine, the last and longest stop of the seven-day trip, Gaddafi met with President Viktor Yushchenko and Prime Minister Yulia Tymoshenko, and other officials: lot of talks, but no real outcome. Viktor Yushchenko had made to Gaddafi his favourit proposal he’s making almost to all the foreign presidents he meets – to establish an oil refinery at Western borders of Ukraine (to give job to Ukrainian oil pipeline Odessa-Brody, very ambitious project that has no chances to be realised).
During a press conference in Kiev on Thursday, the Leader mentioned that Libya profits from competition of Western and ex-Soviet nations for access to its lucrative arms market. Also Gaddafi said he predicted the victory of Barack Obama in his Green Book, published in the 1970s. “Everything that is happening now was written in the Green Book 30 years ago already,” Gaddafi said at a news conference in the Ukrainian capital. “And the Green Book says that dark-skinned people will rule the world.”

Big friend of Georgia. President Yushchenko is accused in accepting 4x4 bribe.
Valery Konovaliuk, Member of Parliament of Ukraine (the Party of Regions) said in an interview with the Russian “Izvestia” daily that Viktor Yushchenko sold weapons to Georgia with a 20% discount in exchange for two luxury Land Rover cars, according to a parliamentary inquiry. The prise of the gifts – $100,000 each. Yushchenko's press secretary, Irina Vannikova, released a statement saying the Georgian President, Mikhail Saakashvili, has never given the Ukrainian president Land Rovers as gifts.