Economy: One year later
0 commentsUkraine's economic descent began last September. According to George Soros the country had come"close to default.". The hryvnia collapsed, a bank crisis ensued, and the real estate boom in Kyiv ended. There was also the gas shut off by Russia and a horrendous gas agreement that ended it. The IMF arrived and bailed out Ukraine, but the country is facing a difficult economic recovery.
This year's nominal GDP in Ukraine will amount to UAH 956.4 billion, according to the materials circulated at a press conference by First Deputy Head of the Presidential Secretariat Oleksandr Shlapak on Wednesday.The secretariat also expects 16.5% inflation and a $2.2 billion deficit in foreign trade in Ukraine.
The presidential secretariat forecasts that GDP will contract by 12.9% in 2009 (IMF estimate a bit higher for GDP). While Yushchenko said on Bloomberg that the Ukrainian economy would take two years to recover from the economic crisis. One bank is already calling a bottom and believes the economy will start to recover in 2010. However, the World Bank thinks that the high budget deficit will hurt economic growth .Meanwhile, the WSJ writes on the intense political infighting that has paralyzed the Rada and (also) threatens economic recovery.
Assorted links
0 comments- Asking a question we all want to know about the president of Ukraine. [EDM blog]
- The Economist discusses important historical dates for east Europeans. [The Economist]
- The Economist on the Perimeter, a Russian device designed to deter itself. [The Economist's Free Exchange]
- Vice-speaker suggests MPs take a vacation while the Rada remains idle. [Interfax-Ukraine]
- Moldova's new pro-Western government. [BBC News]
- Ex-Russian envoy to Ukraine sees something positive from the economic crisis. [RIA]
Banking Recovery
0 commentsUkraine received $400 million from the World Bank to help the banking sector recover. However, government assistance to the banking sector hasn't been without controversy. Kyiv Post looks at allegations of fraud in government aid meant to re-capitalize Ukrainian banks. An earlier post discussed the investigation by the Interior Ministry, below an excerpt form the Kyiv Post article.
Most Ukrainians distrust their banks anyway, so the burgeoning scandal will only reinforce these opinions. The lack of faith undermines Ukraine’s ability to emerge from one of the worst financial crises in its 18 years of independence. If disillusionment rises, more citizens may stop trusting banks altogether with their deposits or stop repaying their loans.
Oleksandr Savchenko, who resigned as deputy head of the central bank on Sept. 11, said the central bank’s recapitalization of commercial banks was done in an unfair and non-transparent way that allowed insiders to profit on currency manipulation and speculation.
Savchenko told Korrespondent magazine in an interview published on Sept. 18 that at least one scheme involved selling dollars to favored banks at the official NBU rate, which is much lower than the commercial rate. Those who benefited, Savchenko said, profited greatly.
Disinformation in Ukraine
0 comments"The deliberate poisoning of the candidate for the presidential post took place. There was an attempt on his life using dioxin. A medical examination, as well as the questioning of witnesses, has proved this," Medvedko told journalists on Friday in Kyiv, answering a question of a correspondent of the Interfax-Ukraine news agency.
Oleksandr Medvedko commenting on the president's poisoning in 2004. I recently posted on several cases of kompromat this past summer in Moldova and Russia. I missed the poisoning disinformation that came out recently in Ukraine, but EDM (volume 6, Issue 176) has an article on this.
This conspiracy-disinformation attempt did not gain a significant
following at first, and was apparently shelved, but with new
presidential elections scheduled to take place in Ukraine in
January 2010, the old charges surrounding the poisoning were
resurrected, and new lurid details were added and set in motion. On
September 18 the Ukrainian newspaper Segodnya published a
sensational report stating that Larysa Cherednichenko, the former
head of the department for supervision over investigations into
criminal cases of the Ukrainian prosecutor general's office,
claimed that high-ranking officials from the presidential
secretariat and family members of Yushchenko had falsified evidence
in his poisoning case (www.kyivpost.com, September 19).
Return of Kompromat
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During the Moldovan election kompromat was released against a Romania embassy official and a former Communist mayoral candidate in two separate cases. Around the same time there was video released in Russia of a British diplomat spending time with prostitutes. Most recently, a video allegedly showing a U.S. diplomat doing the same thing has surfaced. The U.S. doesn't think its authentic.
Granted, these incidents are only connected by the fact that they all dealt with kompromat, but I wonder if something similar will arise in Ukraine close to the presidential election. In the Moldovan case, it was material against two local politicians during a heavily contested parliamentary election. In Russia it was the FSB smearing two of its biggest rivals, with one being a fabrication. I figure that if it happens in Ukraine it will be similar to the Moldovan incidents. Its a presidential election, but the material could target allies of the leading contenders in the election. Not necessarily explicit sex tapes, but other material meant to discredit.
Granted, these incidents are only connected by the fact that they all dealt with kompromat, but I wonder if something similar will arise in Ukraine close to the presidential election. In the Moldovan case, it was material against two local politicians during a heavily contested parliamentary election. In Russia it was the FSB smearing two of its biggest rivals, with one being a fabrication. I figure that if it happens in Ukraine it will be similar to the Moldovan incidents. Its a presidential election, but the material could target allies of the leading contenders in the election. Not necessarily explicit sex tapes, but other material meant to discredit.
Assorted links
0 comments- On what else, Yushchenko and the gas agreement. [Bloomberg]
- Taras Kuzio looks at the "Russian threat" to Ukraine. [EDM]
- Naftogaz has debt issues. [Kyiv Post]
- The president warns Russia not to interfere. [Interfax-Ukraine]
- Russia's limited time frame, and Ukraine's options. [Window on Eurasia]
Interfax on FT: Yushchenko on Tymoshenko
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"Neither the World Bank nor the IMF did the work that had been foreseen ... to shift the government towards reforms," the newspaper quoted Yuschenko as saying.Tymoshenko, in turn, accused Yuschenko of trying to sabotage her presidential bid and her efforts to pull the country out of recession.
Interfax-Ukraine discusses a recent FT article on Yushchenko. The president apparently didn't feel that the IMF and World Bank were pushing the government hard enough in implementing reform. (The World Bank just approved a loan to Ukraine.) He may have point, like he had a point on the gas negotiations last year. However, his comments are also just another reminder of the political bickering that's defined their relationship.
Rada: Are you working?
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EDM (Volume 6, Issue 169) brings up an issue that President Yushchenko brought up as well, the Rada hasn't gotten back to work. Yatsenuik also commented on the Rada's behavior in Interfax-Ukraine.
Meanwhile, EDM looks at the Rada and how the presidential election is affecting its work. The Party of Regions was blocking the podium before the summer recess and it seems that the party has chosen to stick with this strategy. As the article notes, Regions has adopted a populist tone, something that's been noted here, in a cynical attempt to drum up support from voters.
Perhaps the stand off shouldn't have been unforeseen considering that the president can longer disband the Rada. The parties can now ignore the president's plea and focus on priority one, the presidential election. Meanwhile, Regions continues to push ahead on populist measures and others are supporting them in hopes of unblocking the Rada.
Asked how he is planning to cooperate with the current parliament if he is elected president, Yatseniuk said that he saw no chance to oblige the Verkhovna Rada to work with its current staff.
"I've been in politics for a long time, but I've never seen such a level of cynicism as in [this] parliament," he said.
Yatseniuk said that the parliament had currently turned into a "clannish-oligarchic structure" and a law firm for oligarchs.
Since he was the former speaker of the Rada, his observations are relevant, but I question his comments that his never seen this much cynicism. I'm sure that there was plenty of cynicism in politics during the Soviet Union
It is an open secret that the PRU is attempting
to fool its potential voters. One Ukrainian weekly noted that PRU
members are not interested in increasing pensions and wages, as
most of them are businessmen who are not ready to pay their
employees more (Zerkalo Nedeli, September 12). However, by
advocating this policy the PRU is not risking anything,
understanding that its demands will not be met by Tymoshenko
because of the economic crisis. The BYT is not willing to accept
the PRU's conditions not only due to the economic situation, but
also since Tymoshenko apparently believes that the blockade of
parliament works against her main rival in the election campaign.
According to her team's findings, Yanukovych is losing potential
voters because of the blockade, while Tymoshenko may use the
blockade to her advantage by claiming that the PRU actually makes
the approval of higher social standards impossible by disrupting
the legislative process (Segodnya, September 15).
At least for now the Party of Regions populist tone has worked or at least not hurt the party. Yanukovych reminds the front runner in the presidential election, granted the economic crisis has done much to damage Tymoshenko and Yushchenko (whose ratings were already low before the crisis). Tymoshenko's party is taking a gamble that Regions blocking of the Rada will backfire on it.
Bloomberg on Yushchenko
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Even as he faces likely defeat in Jan. 17 elections, Yushchenko offers no regrets. He casts his rivals, Prime Minister Yulia Timoshenko and pro-Russian leaderViktor Yanukovych, as “populist” vote-chasers and himself as a champion of unpopular truths about the need for an independent national identity.
From a Bloomberg article on Yushchenko's presidency and post-Orange Revolution Ukraine. His unrepentant behavior is precisely why he is heading to defeat in January. Just because people don't agree with you doesn't by default mean that you are right, both could be wrong.
“I say words that many don’t like, but I won’t give up,” said Yushchenko, 55, in a Sept. 17 interview in his Kiev office. “If a lot of people don’t agree with you, that doesn’t mean that you are wrong. Either you aren’t popular but deliver a strategic service to the nation, or you dream about elections.”
I expect there will be a a growing number of articles, like this one, on Viktor Yushchenko's presidency as election day comes closer. Other news sources will pick up on the fact that Yushchenko will not be winning a second term.
Friends: Poland and Ukraine
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A few weeks ago I posted on the Slovakia-Hungary language row, now The Economist has another article that looks at Polish-Ukrainian relations as a model that its neighbors could follow. Ukraine and Poland have managed to build a solid relationship even though the countries despite a bloody history that included ethnic cleansing.
Timothy Snyder's book Reconstruction of Nations covers the role of Poland in creating this positive relationship between the two counties, worth the read. The two countries are still planning on joint hosting Euro 2012, as long as Ukraine fulfills its obligations.
That is not just good business for florists. It could be a template for other countries seeking to step over the shadow of history. Neither Poland nor Ukraine tries to rub each other’s nose in its wrongdoing, nor does either insist on seeing their own soldiers as untainted heroes. Neither side expects the other to see history exactly its own way. Much more important is to focus on the common factors: the conflicts between Poles and Ukrainians were made immeasurably worse by the activities of outside powers, Nazis and communists alike. Disagreements remain, but are eased by practical cooperation. The planned Polish-Ukrainian-Baltic military brigade is a good example of this. Only 65 years ago, Ukrainians, Lithuanians and Poles were killing each other.
Never Ending Issue: Gas
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Every month Ukraine announces that it paid Russia for gas, but every month also brings a swirl of rumors about a new gas dispute. The issue will remain as Ukraine gears itself for the presidential election in January 2010. While Yushchenko still seeks changes to the gas agreement between Russia and Ukraine, Russia isn't interested. The gas deal is working perfectly for them, it keeps Ukraine off balance as its forced to meet its obligations or face a possible cut off.
FT's article on a possible new gas war notes that Gazprom is being cryptic concerning winter gas supplies. Ukraine holding its election in January is a gift from heaven for Russia, who could generate another dispute close to or during the election. Yanukovych can then ride to the rescue and "resolve" the problem, granted there is the possibility that the heavy interference would backfire, aiding Tymoshenko or even Yatsenuik. Nevertheless, I expect to see Russian soft power on full display this coming winter.
“Russia’s possible refusal to develop the gas contracts is a serious threat to [national energy firm] Naftogaz’s operations and consequently the uninterrupted transits of Russian natural gas via Ukraine,” the press service quoted Bohdan Sokolovskiy as saying.
The statement came after President Dmitry Medvedev told the Gazprom chief on Monday that the energy giant should stop paying Ukraine’s transit fees in advance and stick to the January agreement that ended a gas row between the ex-Soviet allies, which does not include provisions on advance payments.
Analysts suggested the instruction could be followed by a refusal to pay higher transit fees to Ukraine despite an agreement reached by the two countries’ prime ministers earlier this month.
Yulia Tymoshenko and Vladimir Putin agreed in Poland last week that Ukraine would import less gas than agreed in the contracts without paying any fines, and would increase its transit fees.
“I hope we have no catastrophe in winter,” said the Gazprom boss ominously. Last January, when Kiev failed to pay on time and Russia cut off Ukraine’s supplies for two weeks, there were extensive shortages in central and south east Europe. About 80 per cent of Russia’s gas to the European Union flows through Ukraine through the same network as Ukraine’s own supplies.
Not News: Yushchenko presidency coming to a close
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Mr Yushchenko said he expects Russia to stir up separatist sentiment on Ukraine’s Russian-leaning Crimean peninsula. But he ruled out escalation into a military conflict of the kind seen last summer in Georgia, another pro-western ally on post-Soviet turf. Moscow continues to firmly back the independence aspirations of two Georgian breakaway enclaves, one of which, South Ossetia, was at the centre of the war. Many in Kiev fear a similar scenario in Crimea.
Referring to last January’s natural gas stand-off between Kiev and Moscow, which disrupted European supplies, and relentless Russian warnings that recession-battered Ukraine was unable to pay its gas bill, Mr Yushchenko said: “There are a lot of hidden and cynical schemes being played through information airwaves, aimed at discrediting Ukraine” in the eyes of Europe and the world.
RA has a post on President Yushchenko's comments in the Financial Times, the source of the above quotes. Its no surprise that things are "looking pretty bad" for the president, his popularity has remained in the low digits for some time now. He couldn't force new elections last year and he hasn't managed to change the Tymoshenko-Putin gas deal. His politically irrelevant. There are other polls, but they all point to low approval ratings for the president. Perhaps he'll do what Leonid Kravchuk did after he lost to Kuchma and run for a seat in the Rada?
History: Sept. 1st
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While Gulag Archipelago may now be required reading, the GQ article"conspiracy" shows that it doesn't signal a softening on controls on free speech and the regime maintains a firm grip on its image. Its therefore no surprise that county has been defensive about its behavior during World War II. Russia's position on the German-Soviet pact fits into the current regime's view of the Soviet Union as a proud empire tragically brought down. Robert Amstredam's blog at one of the better posts on the anniversary. The Economist had a great piece on the anniversary, a mock address that Putin should have given in Gdansk. Its easy to see why Mr Putin would choke at uttering a single word from the address.
Most people would say that WWII started on Sept. 1, 1939, but for Russia, the Great Patriotic War began on June 22, 1941. How Vladimir Putin handles this challenging 70th anniversary of the Nazi invasion of Poland at a commemoration event in Gdansk will speak volumes about Russia's transformation since the fall of the Soviet Union. Though he has condemned the secret protocols, given the recent trend of official policy toward history, I think some salt is about to rubbed in some still open wounds.
Those were dark and shameful years for many countries. Out of deference to my British friends I will not mention the Munich agreement, and out of politeness to my hosts I will not cite the Polish land grab of Cieszyn that followed it. But many wrongs do not make a right. As a Russian leader it is my responsibility to ensure that my country acknowledges both the bright and black spots in our history. Our pride at the sacrifice and heroism showed by the Russian people—and by many others in the Soviet Union—in defeating Hitler does not mean that we cannot mourn the victims and crimes of Stalinism both at home and abroad.
I represent the Russian Federation; I cannot take direct responsibility for the actions of another country. So I cannot apologise for the Soviet Union’s shameful and unprovoked attack on Poland on September 17th. I can certainly condemn it, and I do so now. I similarly condemn the illegal annexation of the Baltic states of Estonia, Latvia and Lithuania, just as I rejoice in their renewed statehood after 1991.
We will never see history quite the same. Russian hearts will always freeze at the sight of veterans parading in SS uniforms in Latvia, Estonia or Ukraine, however much we may with our heads try to understand the impossible choices that led people to wear them. We may never quite see Hitler and Stalin as two sides of the same coin, as some of you do. But I hope we can at least agree to disagree in a spirit of mutual respect. I urge my compatriots, in public office, in the media and elsewhere, to join me in this endeavour.
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