Blue &Yellow: Politics and Economics in Ukraine

Ukraine’s PFTS Index climbed 108 percent since January, with engineering company Motor Sich JSC rising more than 300 percent, even as political wrangling stalled budget cuts needed to draw the next $3.4 billion tranche of a $16.4 billion IMF loan. Ukraine may not have enough money to pay for Russian gas ahead of winter unless it gets the bailout payment by Dec. 7. Ukrainian bonds fell the most in the world during the past month.

Thanks to her vigorous response to a swine-flu panic she herself manufactured, however, Tymoshenko has been steadily catching up, nearly halving the gap in the polls. Outfoxed, Yanukovich tried to return the parry by ordering more surgical masks, but the damage was already done.

From an NPR article discussing the swine flu panic in Ukraine and how it affected the current presidential race between Tymoshenko and Yanukovych. If this was a political gimmick by the prime minister it didn't dramatically affect the polls, she's still behind Yanukovych. There is also no telling how the panic will affect voter sentiment next month, how kindly will voters look on someone who unnecessarily frightened them? The prime minister is overplaying her hand by continuing to push the panic button, excerpt below from Bloomberg. The prime minister refers to the vetoed bill for funding the swine flu epidemic. 

• Ukraine will be on the top of the agenda for the new EU foreign minister. [Guardian]
• Comparing presidential candidate's programs. [RFE/RL]
• The wealthiest presidential candidate is Serhiy Tihipko, but I think its the gas princess. [For-Ua]
• These videos and translations offer a side commentary to the latest gas crisis/resolution. [Ukrainiana]
• After jump, Ukrainian political satire on youtube. [H/T Taras Kuzio]
  

Gas payments, gas price, and the possibility of another gas shut off  have dominated discussions between  Russia and Ukraine this year, with President Yushchenko using it as means to criticizes the prime minister, Tymoshenko. His open letter to Medvedev is another illustration that this issue will not fade away between the president and prime minister.

In an open letter to the Kremlin leader, text of which was published on his website, Yushchenko said: "Keeping the contracts unchanged ... will create potential threats specifically to the reliability of supplies of gas to Ukraine and its transit to other European states.

"It is obvious that such a development of events is not welcome either for Ukraine or for Russia and the European Union," he said.

If runoff was held between Yanukovych and Tymoshenko, the Regions Party leader would get 41.5% of the vote and the premier, 37.2%, the poll showed.

Should the Font for Change Leader Arseniy Yatseniuk and Tymoshenko be contending in the second round, Tymoshenko would get 36.8%, Yatseniuk 24.2%.In the pair Yanukovych versus Yatseniuk, the former would win with 44% against 23.7%.

Interfax-Ukraine's reveals the results of a new presidential election poll showing that Yanukovych is the front runner against his two major opponents if a runoff is held. However, the last sentence in the article notes that 25% of the respondents have not made a decision on who they will vote for in a runoff. Yanukovych holds a small lead over Tymoshenko in this poll, those 25% undecided could have a major impact on the actual result. Of course, Yanukovych crushes Yatseniuk so those undecided wouldn't have much of an impact unless they all voted for the ex-speaker. According to the election calendar a second round would be held on 7 February 2010, if none of the candidates received 50% of the vote in the first round.

As the presidential election nears, lets reminiscence on the last election. Here is an article from the NY Times concerning  the Ukrainian political situation in 2004 (originally published September 25, 2004).

It was in 1932-33 though that Jones would make his name, walking alone along a railway line visiting villages during a terrible famine that killed millions. He sent moving stories of survivors to British, American and German newspapers but they were rubbished by the Stalin regime – and derided by Moscow-based western journalists, men like the New York Times correspondent Walter Duranty, who wrote: "There is no famine or actual starvation, nor is there likely to be," and dismissed Jones' eyewitness accounts as a "big scare story"

From a Guardian article on Gareth Jones who reported on the Holodomor, a documentary called "The Living" has been  made about him and his work in revealing the man made famine in Ukraine. Unfortunately, no word on whether the documentary will get a wider release and I couldn't find a site for the documentary itself. 

The long-term foreign-currency rating was lowered to B- from B, six levels below investment grade and on a par with Argentina and Lebanon, Fitch said in a statement today. The outlook remains negative, signaling a possible further cut.

Cooperation with the IMF has been suspended twice after Ukraine failed to keep pledges to cut the budget as political leaders jostled ahead of presidential elections in January. The government refused to raise natural gas prices for households and failed to adopt laws to stabilize the financial system. Opposition lawmakers pushed through parliament higher spending on social benefits, including an increase in the minimum wage.

The rest of the article can be found at Bloomberg, as noted  in the article this is not a surprise move by Fitch.  With the country headed for a presidential election the IMF is taking a wait-and-see approach to Ukraine. However, Ukraine's finances will remain shaky as its economy continues to contract and the IMF sits on the sidelines. 

Ukraine's the government response to the flu epidemic is now entangled, like other political issues, in a fight between the prime minister and president. 

On his part, Mykhailo Pasichnyk, the head of Ukraine’s Professional Pharmacists Association, said that the country already has communal drugstores and the state-run Medicines of Ukraine drugstore network. However, their share on the internal market is small. Of course, the state has the right to develop its own system of pharmacies and can do so, but Pasichnyk believes that the main question is to overcome shortages.

• Viktor Baloha predicts a Yanukovych victory in the presidential election in January 2010. [Interfax-Ukraine]
• Anders Aslund looks at the IMF's actions in eastern Europe. [Peterson Institute]
• On two anniversaries in Georgia. [Window on Eurasia]
• I wonder who this guy is working for, Mr. Againstall candidate. [Ukrainiana]
• Gazprom is ready for action it has the power to prevent--another gas dispute. [Bloomberg]

"I want to stress that those who organised these events knew the situation and they've ignored it. The parliament speaker and the leader of the opposition and, most importantly, the prime minister, ignored the facts of the epidemics," Yushchenko said.

"This is completely similar to the May Day rallies in Kiev after the Chernobyl disaster," he said referring to the Soviet cover-up of the 1986 nuclear reactor explosion to Ukrainians who were exposed to radiation for days without knowing of it

The government was also proposed to send at least UAH 500 million to the regions in 2009, while distributing additional funds allocated to the Health Ministry to take measures to prevent the spread of pandemic flu, as well as the epidemic of seasonal flu and acute respiratory infections.

The parliament also proposed that the government cancel a ban on holding mass events in regions in which quarantines were not imposed due to the flu epidemic.

An Interfax-Ukraine story on a Rada resolution passed on Wednesday concerning the swine flu. Much information on the swine flu outbreak in Ukraine, BBC Ukraine has an entire web page devoted to news on it (not sure how long its existed, could predate recent events) . With the flood of information and action by the government there also comes additional accusations that the "hysteria" over the swine flu is being politically manipulated, according to presidential candidate Sergiy Tigipko. This event has shifted attention away from the economy and presidential election for now. If its meant to be a distraction from problems weighing on the Government, its not doing a good job, as the Kyiv Post notes:

1. Ukraine's UFO files now available. [ForUa]
   
2. Robert Amsterdam's blog post on Yulia Tymoshenko. [RA]
   
3. A great animated chart showing the change in life expectancy and income in Ukraine over time. [Gapminder]
   
4. Vice interviews a local from Dzerzhinsk, Russia once the center of the Soviet chemical weapons industry. [Vice]

Winter is upon us, and the last couple of days have seen rumors rumbling about the possibility of another gas interruption - due to payment problems at Ukraine's end.  It is alleged that Ukrainian Prime Minister Yulia Tymoshenko alerted Vladimir Putin to the fact that President Viktor Yushchenko was impeding 'the normal partnership between the Central Bank, which had the gold reserves at disposal, and the government', thus jeopardizing payment.

Robert Amsterdam's blog post about the possibility of a another gas standoff, which appears unlikely. As the post notes, the gas issue is another arena where the prime minister and president are arguing over. However, the post notes that the rhetoric probably won't turn into action that could trigger a new gas war. The post presents several reasons on why there won't be a new conflict including the fact that Yushchenko will soon be out of job and thus irrelevant.