Blue &Yellow: Politics and Economics in Ukraine

"Yulia Tymoshenko, who earlier held the post of Ukraine's prime minister, is accused of illegally issuing the prime minister's order to convert into the national currency the funds received under the Kyoto Protocol, in the amount of EUR 180 million, retaining a commission of UAH 960,309.64 and sending these funds to replenish a single treasury account from which all of the budget's expenditures are financed," the press service reported.
The Prosecutor General's Office noted that these funds should have been accumulated on special currency accounts until the need arose to use them for environmental purposes in accordance with the budgetary legislation.
"Due to the abovementioned criminal actions by Yulia Tymoshenko, nearly UAH 1 million worth of damage was caused to the state budget," the press service said.

 The timing is perfect, its always good to take care of an opponent during the holidays when people are busy on other things. According to the PGO, the prime minister used the funds to cover budget expenditures and  is apparently under house arrest.

The Chornobyl zone and the zone of alienation will be open for tourists from January 2011.
"There is a huge demand, people want to go there, they want to hear, see and find out, which is why we decided to work out such a mechanism that would allow for organized systemic visits to the zone," Oksana Nor, General Director at Chornobyl Interinform, told a press conference in Kyiv on Tuesday.

All necessary studies have been carried out and measurements taken in the containment area, based on which a number of tourist itineraries have been worked out, she said. The next stage will be signing contracts with travel agencies that will bring tourists to the zone of alienation, she said.

 Wait, so Chernobyl was not open to tourists before this announcement.When I went there it seemed that the site was already open to tourists.

Ukrainian opposition leader Yulia Tymoshenko was charged on Monday over alleged misuse of state funds during her tenure as prime minister from 2007 to 2010, Tymoshenko’s spokeswoman said.
Tymoshenko, who narrowly lost the February presidential election to President Viktor Yanukovych, has repeatedly dismissed as politically motivated accusations her government misused money raised by selling carbon emission rights.

No one should be surprised about this, it's been in the works for months. In fact, lets go through the past year and follow Ms Tymoshenko's political decline. First, a post on the Yushchenko-Tymoshenko rivalry, its a 2009 vintage but germane. Their intense feud almost assured a Yanukovych victory, however the terrible economy sealed it. In this post her public persona is attacked, prior to the presidential election. A post on the presidential election first round, Yushchenko is humiliated and Tymshenko comes in second to Yanukovych.

Before the second round, Regions flexed its muscles in the Rada. A sign of things to come in the year. Tymoshenko loses the presidential election. A legal challenge never gets off the ground. Some pundits probably didn't expect Yanukovych to consolidate his power and turn on the opposition as quickly.  Channel 5 gets a taste of the new regime. The political-legal challenges to Tymoshenko. This happened in May, yet no one should have expected Regions to stop. She was correct about political persecutions returning, in this interview. The local elections results showed the political power of Regions and its ability to get the election outcome it wants. The recent brawl was a pathetic way to end the year for Tymoshenko and her party. Yet fitting considering how far she fell politically.

Ukraine is expected to become the second-fastest growing economy among emerging markets in 2011, trailing oil-rich Kazakhstan, according to Dragon Capital investment bank in Kiev. Experts say Ukraine is growing faster than others simply because it was one of the worst affected by the global financial crisis and the growth is fueled mostly by rising prices for metals, its main export.

"The Ukrainian economy is highly exposed to global commodity cycles," said Olena Bilan, chief economist at Dragon Capital, a leading investment company in Ukraine. It "contracted sharply and now is recovering faster than regional peers."

From an AP story, the economy is expected to grow 4.3% next year. However,  it looks like it will be several years before it returns to the pre-crash level. Also as this Interfax-Ukraine article notes, a large part of the economy is still in the shadows. We see why the Ukrainian government is eager to pass a new tax code, it needs to close the budget deficit by finding new sources of revenue. Below is an excerpt from the article quoting Sergiy Tigipko, vice premier.

"Concrete reforms are needed, and [the document] you passed yesterday is a compromise that has to be taken… The adoption of the Tax Code is a large step. We've not taken a whole step forward, but we've moved three quarters [of a step] forward. It's important that the code was endorsed, and in the future we'll propose such reforms," he said.

He said that after the reform is conducted, including during next year, "we'll be able to totally balance the budget."

Prodan added that at the same time the administration expressed readiness to consider proposals from the protesters.

She also noted that the Tax Code could be sent from the parliament to the presidential administration no earlier than Friday evening, and preliminary conclusions would be ready only by Saturday morning. The conclusions on the Tax Code of the administration's group of experts will be ready only on Monday, she added.

Interfax-Ukraine writing about the changes to the tax code.The Yanukovych government has its first real political test as its tries to deal with the angry response from the public.

"There is a high probability that the code will be vetoed. But we will be able to talk about this after we consider the issues of the Tax Code on Thursday," Yanukovych said.

 President Yanukovych equivocating, but what is the problem with the tax code?

Economists cannot find justice in the new Tax Code either. According to the statement made by the Union of Economists of Ukraine (VSVE), none of their suggestions concerning the systemic taxation reform based on the principle of economic patriotism, fair distribution of tax load, and creation of the best imaginable conditions for the development of entrepreneurship, were reflected in the Tax Code passed by the parliament on November 19.

“VSVE emphasizes the high pro bability of grave negative social and economic consequences for the national economy in the event of enacting the present Code,” reads the statement. The VSVE scholars believe that such a crucial document as the Tax Code should have been adopted only after a serious independent nationwide scholarly consideration, at relevant conferences and roundtable debates, rather than after some obscure lobby talks and a parody of nationwide discussion.

From Den, discussing the proposed changes to the tax code. DT also analyzes the tax code situation, noting that the problem is not the changes itself, but whether the government will actually use its new powers fairly.

 

This isn't a bad outcome considering his erratic behavior over the years. He shouldn't have been re-elected in 2008, another poor decision by Yushchenko to support him.

Here is a snapshot of the local election results 2010 from Ukrainska Pravda and the second round of the presidential election 2010 (this map doesn't show the final result, but works for the purpose of this blog post).  Its a rough comparison  since the presidential election involved two individuals while the local elections involved political parties. However, I think that its fair to use the presidential election in comparing local elections results. It serves as a proxy for support for Regions and BYuT in February 2010, eight months ago.

The point is to show the shift in support in western and central  Ukraine from Tymoshenko to Regions or fringe parties. I think that the Ternopil election last year was an indicator of how the local elections would play out. Tymoshenko's party would be squeezed out of its strongholds and replace either by Regions or fake/fringe parties that have no change of receiving national support.

After his election a decade ago in Russia, it took Vladimir Putin his entire first term in office to accomplish what Yanukovych has undertaken in less than a year. Yanukovych has taken five steps to remove obstacles to the monopolization of power. The first to go were parliament, which has become a rubber stamp institution, followed by television whose oligarch owners rushed to prove their loyalty to the new regime. The third, on October 1, was Ukraine’s return to a presidential constitution and a month later the Party of Regions won a majority in local councils in a bitterly contested election.

These four steps were followed by a fifth, a coordinated attack on the main opposition force, the Fatherland (Batkivshchina) Party led by Yulia Tymoshenko. “October 31 will go down in history as the first day of an election without Yulia Tymoshenko,” observed Ukrayinska Pravda (November 1). Registration of clone, fake lists of Fatherland candidates removed Batkivshchina from two key strongholds, Lviv and Kyiv, while an “anti-corruption” campaign unveiled financial irregularities in the 2007-2010 Tymoshenko government that harmed her image.

The assessment by Taras Kuzio  for Eurasia Daily Monitor (Volume7, Issue 203- no link)  of the local elections neatly sums up the consolidation of power under Yanukovych. Many of the issues presented by Kuzio have been discussed on this blog, but not the next step for the president.

Ukrayinska Pravda analyst (September 24) Leshchenko positively portrayed the divisions within the Party of Regions suggesting “Maybe these will halt the final destruction of democracy in our state.” With Yanukovych having completed five stages in his political monopolization of Ukraine, the sixth –removal of oligarchs– could be his next target. The next two years will likely decide whether Ukraine becomes a Putin-style managed democracy without oligarchs or if the oligarchs fight back (EDM, September 22). 

Emphasis mine, Yanukovych heads into his first year as president with complete control over the political system. However, now comes the tough part, dealing with the oligarchs. Naturally, now that the local elections are over Ukraine will revamp its election legislation, but Regions denies there was electoral  fraud.

Lebedev, a billionaire who co-owns the airline Aeroflot and the Russian opposition newspaper Novaya Gazeta, said it would be wrong to link the two investigations against him in Russia and Ukraine. Nor would it be correct to blame Russia's prime minister, Vladimir Putin, he said.

Instead, he pointed to Ukraine's president, Viktor Yanukovych, a close ally of the Kremlin. He said Yanukovych had ordered in the tax police after taking offence at an article in this week's Evening Standard.

Hmm, a coordinated move by Kremlin and Kyiv against a perceived threat? Or just a big coincidence?

“Domestic and international election observation efforts, most notably those led by the widely respected domestic, non- partisan monitor OPORA, reported numerous procedural violations on election day,” the State Department said today in an e- mailed statement.

Ukrainian President Viktor Yanukovych’s Party of Regions received the most votes in the Oct. 31 elections held in 24 provinces and the republic of Crimea, according to an exit poll by the local office of GfK market research.

An excerpt from BusinessWeek's article on the local election results. Regions have won in every oblast, with Tymoshenko's party taken only 13.1% percent of the according to an exit poll from GfK. A strange election result for a party who did well in the last Rada election. Her party and its allies have called the elections rigged.

Roughly speaking, on a nationwide basis, exit polls show that the Party of Regions showed it commands the support of 35-40 percent of voters (the rough equivalent of first und support registered for President Yanukovych in the first election results from January 2010). While the Regions Party held on to its past levels of support, it made notable gains in Right Bank Central and Western Ukraine and emerged as the leading candidate for the mantle of Ukraine’s first pan-Ukrainian party capable of serious reach throughout the country. 

Adrian Karatnycky gives his post-mortem on the local election and its just as bad as the one he gave for the presidential election.For example, he notes that there were election irregularities for Tymoshenko's party, but dismisses the effect it had on the party's election fortunes.

This drop in support was further augmented by the unreported secret of these elections: the fact that Ms. Tymoshenko campaigned lightly for her slates in the municipal and regional elections and her central party apparat spent almost no money on billboards and advertising in the weeks leading up to the vote.

That choice, no doubt, was dictated by the limited impact of local legislatures on budgetary decision-making and policy, which are primarily determined now by the President and the government. But it was a choice that appears to have been consciously made with catastrophic results.

Emphasis mine, clearly Regions have an incentive to weaken Fatherland and it allies, but Karatnycky tries to argue that the party's decline is self-inflicted rather than a concerted effort by Regions. Karatnycky also makes the bizarre claim that President Yanukovych is a " founding father of the young Ukrainian state ", under such logic is Kravchuk, Kuchma, and Yushchchenko. Though technically, only Kravchuk actually founded an independent  Ukraine. 


Am I being picky? Probably, though the claim by Karatnycky that this not a descent into managed democracy is naive. Regions is interested in retaining and expanding its power. Perhaps BYuT would have done the same if Tymoshenko had won the presidential election, but she didn't. Instead Regions won and there is little to suggest the party is interested in maintaining a competitive democracy.

Officials from Ukraine’s Interior Ministry and the General Prosecutor’s Office issued contradictory statements on Oct. 25 when asked to explain the existence of nearly 13,000 extra election ballots. The ballots were uncovered by an opposition party over the weekend at a printing house in the eastern Ukrainian town of Kharkiv.The development follows a morning announcement that President Viktor Yanukovych had ordered his nation’s law enforcement authorities to investigate allegations by opposition leader Yulia Tymoshenko, the former prime minister he defeated in the Feb. 7 presidential election.

Regions is safeguarding its victory in the local elections by printing extra ballots, article from the Kyiv Post. It seems to be following a two prong strategy of ballot stuffing and investigation the opposition to keep it on the defensive.

Opposition leaders are warning that Yanukovych could try to influence the upcoming vote with tricks like ballot-stuffing and coercion (in 2004, his presidential bid was annulled after his campaign was found guilty of widespread vote rigging). But Yanukovych may not need the artificial support. His party has been gaining ground since parliamentary elections in 2007, when the crippling ineffectiveness of the Orange coalition began to take its toll at the polls, says Regina Smyth, an Indiana University professor who studies elections in post-communist states.

I'm skeptical about this short Newsweek blurb claiming that people are voting for stability or that Regions has been gaining ground since the 2007 Rada elections. If that were true why did Regions tailor a local election law that favors them, alter the coalition so that individual MPs could join it, and strengthen the presidency (through a court decision). This actions suggest the party fears it could lose support and wishes to create structural changes that would discourage a strong opposition from emerging.

I'm not a constitutional lawyer so I really can't debate the particulars of the court's decision. But when you stand back, the perception in the West is, in 2004, with the support of over 400 members of the Rada (Ukraine's parliament), Ukraine adopted these constitutional changes and they've been implementing them for five years. And all of a sudden the constitutional court comes out and says, "Oops, we made a mistake"? The appearance, I think, is not good for Ukrainian democracy. It does look like Ukraine is moving backwards. And I think from the perspective of many in the West, while the reform situation produced in some ways gridlock - and you saw it in terms of the battles between the executive branch and the Rada over several years during the Yushchenko presidency - it had a greater balance of power between the Rada and the president, and it provided for some checks and balances. And it seems that the government now, or the president now, wishes to move away from that system. And I think that will cause concern in the West, both in the United States and Europe, about where democracy in Ukraine is going.

Radio Free Europe interviews (emphasis mine)  Steven Pifer, a Brookings fellow and former US Ambassador to Ukraine from 1998 to 2000. The move by the court certainty is a step back, I question is description of the post-2004 of one that "provided some checks and balances". It seemed like a system that encouraged delay, opacity,with the occasional rule breaking by both the president and the Rada.

 It's not going to be good for Ukraine's image, or for the image of the current government, if the first national election held after the presidential election in February is seen as dramatically worse in terms of democratic standards. That's not going to be good. My worry about it is that it then becomes harder to keep Western interest in Ukraine alive.

Pfier response to a slightly loaded question on the local elections, where  RFE points out the local election law favors the party in power.

 If Ukraine's new system was so dysfunctional, why didn't anyone change it before now? The problem was that no faction in the country's bitterly divided political system trusted any other faction to change the setup, fearing that reform would benefit one political group at the expense of all others. Thus when Yulia Tymoshenko, currently an opposition leader, proposed changes as prime minister, the attempts foundered.

The move back to a presidential system now will give Yanukovych powers Yushchenko lacked, allowing him to hire and fire ministers with far less interference from parliament.

By promoting calm, this could benefit all of Ukraine, though whether stability ultimately improves or not will depend on how Yanukovych follows up on the court's ruling. He has two options. He can either work with parliament to change the constitution -- the more promising path. Or he can unilaterally declare the previous 1996 constitution in effect, an approach guaranteed to fire up the opposition and estrange his coalition partners in parliament.

Nice summary of the court ruling earlier this month in Foreign Policy, but the I don't agree that there is a "calm" or that the change will "benefit all of Ukraine". The new president has shown a disdain for fair play and a preference for more authoritarian style of leadership. For those who think that this will somehow be good for the economy, lets take a look at Dani Rodriks article on authoritarianism and economic growth. 

Yanukovych did not displease his Russian guests, as during his speech he never once mentioned Ukraine’s desire to join the EU. Instead, he said that Ukraine “will choose the speed, form and methods of integration that conform to its national interests” (Ukrayinska Pravda, October 4). Yanukovych is the first of four Ukrainian presidents to avoid supporting efforts to join NATO or to publicly endorse joining the EU. Yanukovych has repeatedly ignored requests by the G7 Ambassadors for a meeting in Kyiv (Ukrayinska Pravda, October 11).

Taras Kuzio writing about Russian influence on Ukrainian foreign policy.  Toe be fair, Russia also successfully lobbied other countries to make it unlikely that NATO would offer Ukraine a MAP. As for the EU, even if Yanukovych wanted to join the EU, would the EU be ready to include a country the size of Ukraine right now?

The conditions of the privatization of a state stake in OSJC Ukrtelecom make the largest holding in the country SCM and Russian telecommunications group MTS the most likely buyers of the stake, according to analysts polled by Interfax-Ukraine.

According to the conditions of the Ukrtelecom's privatization approved by the government on Tuesday, companies which income over the previous financial year exceeding 25% of total income of Ukrainian operators seen over the said period cannot bid for the 92.79% stake in Ukrtelecom with the initial price of UAH 10.5 billion.

Why do I think SCM will be the winner?

Still, Tymoshenko went on, it would be wrong to boycott the elections as it will show the weakness of Batkivshchyna.

Tymoshenko proposed to appeal to the Council of Europe, asking it to react to vote-rigging tactics of the regime.

Probably will be rigged, but can be done? The new president has shown his capable of undoing quite a bit in just a few months in office.

"There must and will be the supremacy of law in Ukraine. This is the main principle of democracy. Any decision by a court, let alone Constitutional, must be complied with by the President, the Cabinet and the Verkhovna Rada," the head of state told a press conference led jointly with Polish President Bronislaw Komorowski in the Livadia Palace in Yalta on Friday.

President Yanukovych quoted after the Constitutional Court cancelled the 2004 political reforms put in place when his predecessor won. The court remained completely silent on this issue during Yushchenko's presidency, yet miraculously the court cancels the amendments for President Yanukovych. And slowly president Yanukovych returns Ukraine to the managed democracy under Kuchma with a weak press and a controlled Rada. If Tymoshenko's party wins a majority in the next Rada elections the president would have the upper hand in that relationship.

When ten thousand protesters took to the streets in Moldova in the spring of 2009 to protest against their country’s Communist government, the action was dubbed the Twitter Revolution, because of the means by which the demonstrators had been brought together

****

• Observers in the press are likely to make the assumption that Yanukovych is simply driving Ukraine toward convergence with the Russia model, to the great pleasure of his benefactors in the Kremlin.  I'm not so convinced....From Robert Amsterdam's blog. [RA]
• The first Russian who settled in Lviv, he writes, was Ivan Fedorov, the printer who arrived in 1572, but until 1939, there were very few ethnic Russians there. They consisted mostly of anti-Bolshevik White Army soldiers and their families, and they numbered at most in “the hundreds.”...Paul Globe [Window on Eurasia]
• Its members were hand-picked, its task momentous: to come up with a plan should a eurozone country enter a crisis and threaten the currency union.But it achieved, to a first approximation, exactly nothing, beyond simply keeping its own existence a secret....Felix Salmon on secret meetings. [Reuters]
• Many journalists and activists believe it suits the authorities for journalists to feel afraid. At Telekritika's headquarters in Kiev, Lesja Ganzha, who belongs to an anti-censorship movement, compared the current Ukrainian policy to that pursued by Russia in the early Putin years. "It's not just a comparable policy, it's exactly the same policy," she told me....Eastern Approaches. [The Economist]

"Last time I was asked the same questions that I had already answered. I don't see other reasons to summon me for questioning, apart from an attempt of political pressure and an attempt not to allow me to work in opposition," Turchynov said.

He also said that the Kyiv regional branch of the Batkivschyna Party was expected to hold a conference on Tuesday.

The former deputy prime minister discussing his second interrogation by the SBU over RusUkroEnergo and the gas seized by the government that was owned by the gas firm. Obviously the SBU doesn't see the event as a action taken for sake of Ukraine, as Tymoshenko has argued. Local elections are coming up in Ukraine, so I doubt that the SBU will slow down its investigation.

But Yanukovych may have more incentive than just such foreign criticism to boost press freedom. His popularity at home is plummeting, perhaps in part because of his heavy-handed approach to the media. A new poll by the Razumkov center says that in August, 22.5 percent of Ukrainians "completely support" Yanukovych, down from 40.9 percent in April. In February, he was elected with 49 percent of the popular vote.

From Radio Free Europe, the article is about press freedom in Ukraine under Yanukovych. However, I hadn't known about the decline in the president's ratings. His ratings could bounce back or stay weak, I'd like to see his ratings in December/January. The rest of the article summarizes recent events in Ukraine regarding media freedom.

The Bloc of Yulia Tymoshenko (BYT) suspects the Security Service of Ukraine (SBU) was involved in making phone threats against Batkivschyna Party leader Yulia Tymoshenko, the deputy head of the BYT faction in parliament, Serhiy Sobolev, said in an interview with Interfax-Ukraine.

Among the documents impounded by SBU there are orders by the Soviet State Security, MGB, for 1945 and some documents from SBU archives in Lithuania.

Says Iryna Kalynets, a dissident and former inmate of the Lontsky St prison: “What is going on is an attempt to stall research work at the museum. It is a violation of the law and infringement on human rights.

Not sure why the SBU would seize historical documents, unless they were sending a message as well. The Yanukovych government continues to focus on the past. The former economic minister has been placed on the Interpol wanted list. Hard to tell if this is political prosecution and/or corruption.

The SBU chief is engaged in his professional activities which are in no way connected with the activities of mass media. I have no such information. As for his property, he transferred it under the management of his relatives. We have many officials, who came to work at different agencies, and who owned certain property, and transferred the management of this property in line with the law. This is happening not only in Ukraine but across the world," the president said when asked about Khoroshkovsky's ownership of a TV channel.

President Yanukovych defending his SBU chief, his denial perhaps a confirmation. 

"Our political force, as one of the most consistent opposition forces, starting from the presidential elections in 2010, is essentially being deprived, oblast by oblast, of the chance to participate in the elections. Yanukovych’s battle against democracy has reached new heights," Yulia Tymoshenko said today during a meeting with foreign diplomats in Ukraine. 

According to her, the Batkivshchyna Party has been excluded from the political process in four oblasts. "We won’t run if the situation doesn’t change in four oblasts: Kharkiv, Kyiv, Lviv and Luhansk oblasts." 

But Central Electoral Commission Secretary Iurie Ciocan announced on September 6 in the capital, Chisinau, that voter turnout was just 29.05 percent, more than 4 percentage points short of that goal. About 85 percent of those who voted backed direct elections, according to preliminary results.

How did this happen? Moldova heads back to the polls to elect another Parliament who will try to elect a president.  Looks like the Communists are going to get another chance to return to power. According to Reuters, the coalition will set the next election for November 21.

What happened next on that morning in early August is a matter of speculation. The one fact everyone agrees on is that Klymentyev vanished. His family reported him missing the next day and Kharkiv police opened a murder inquiry. His friends are convinced he is dead, though so far there is no body. On 17 August a boy discovered his mobile phone and keys in a small rubber boat floating in a rural reservoir.

The Guardian's article on the Vasyl Klymentyev whose been missing since August.  There is also a bit about Channel 5 and TVi, who have lost their licenses. RFE/RL has more information on the missing journalist, including one possible motive for his disappearance. 

On August 9, Klymentyev and Matviyenko took photographs of mansions belonging to regional Tax Chief Stanislav Denisyuk and three other local officials, including a former Ukrainian Security Service officer. They intended to use the pictures in an article to be published in the next issue of the paper. 

Matviyenko met Klymentyev on August 11 to discuss the article and the photos. Later the same day, Matviyenko says, he was not able to reach Klymentyev by phone.  

Meanwhile, the head of the opposition government, MP from the BYuT Sergei Sobolev said that the opposition to seek government report on negotiations on a joint venture with Gazprom and the preparation of a new gas agreement with Russia, as well as initiate the resignation of Energy Minister Yuriy Boiko.

According to BBC Ukraine, Naftogaz and Gazprom haven't abandoned the idea of merging. 

There are indications that the Ukrainian government has agreed to return RosUkrEnergo (RUE) the disputed gas, which the Stockholm court ruled belongs to RUE. According to the ruling, Ukraine has to either accept by September 1, or appeal by September 8. The government apparently chose to return the gas, as there is little chance that an appeal would be upheld. This means that ahead of the peak heating season, Ukraine will be short of 12 billion cubic meters (bcm) of gas which is more than 20 percent of its annual consumption. The situation raises questions about the integrity of both the previous and current governments.

From Eurasia Daily Monitor, the long running story continues and RusUkrEnergo appears to be winning.

The good news is that Budapest’s Ferihegy terminal is clean and modern. The bad news is that the rail link—just a five minute walk from Terminal 1—is a disgrace. Dirty, dilapidated, and hard to find, with graffiti everywhere and broken lifts and ticket machines, it looks like something out of a poor eastern block country in the early 1980s.

A burly man accosts me and tries to get me to take a taxi to the city centre. I politely say that I am going by train. The taxi is quicker, he says. And the train is a long way. I’m used to dealing with these people but his persistence annoys me. He starts telling fairy stories: the train is not running today and it's "inconvenient". In a well-run airport the taxi drivers wait outside in an orderly queue, rather than hassling the passengers.

From Eastern Approaches, a short post on how an airport and transport from/to an airport can reveal something about the country your in. With that in mind, Boryspil  airport in Ukraine isn't that bad, its relatively clean and modern. Transport to the airport is okay as long as you take a bus rather than a taxi (they'll gouge you good unless its from a reputable taxi service). However, the domestic airports are a different manner.

Number of registered unemployed persons in Ukraine in July 2010 decreased to 396.8 thousand, representing 1.4% of the population of working age, according to the website of the State Statistics Committee.

This is from the Russian version of Interfax-Ukraine, I couldn't find this article on the Ukrainian or English version of the site. Ukraine has just faced one of its worse economic contractions since the end of the Soviet Union, yet only 1.4% of the labor market is unemployed. The keyword in that except is "registered", how many unregistered unemployed persons are there in Ukraine?

That's Oleg Shinkarenko who was warned  by the SBU to cease his criticism of the the regime or face prosecution. President Yanukovych wanted to meet with bloggers over the event, to calm their fears? An anti-censorship campaign has begun in response to this regime's heavy handed tactics toward its critics, here's quote by the president from the BBC Ukraine link. 

Regarding the court's decision on channel TVi and 5, I as a citizen and as a guarantor of the Constitution have no right to influence the courts.

How many believe this nonsense? Ukrainian courts are susceptible to political influence and he controls the SBU. However, its clear his attempting to distance himself  by pretending that he has no control over process. 

"An additional price increase of 50 percent for households and utilities will be effected in April 2011. Semiannual increases of gas prices paid by households and utility companies will continue until domestic price levels reach import parity. Thereafter, all gas prices will be adjusted as needed to reflect market prices," the document reads.

The next price increase comes next year,but  Ukraine already raised gas prices this month by 50%. The document in the excerpt is a memo to the IMF. 

• Reported crime up by a third in 2010. [Kyiv Post]
• July 16, Ukraine declared its sovereignty twenty years ago. [BBC Ukraine] 
• On the Russian Orthodox Church, Kyiv Patriarchate, [Kyiv Post]
• "'Metropolitan Hilarion noted that many schismatics living in various regions of Ukraine were increasingly inclined to come back to the canonic Church, and this was a "continuous process, though it not a widespread one so far.'" [Interfax]
•  "There is currently lots of liquidity in Russia and the issue can potentially find demand at the right price," said Elena Kolchina, head of fixed-income products at Renaissance Asset Managers in Moscow. Ukraine may lure Russian banks with yields near 10 percent on five-year bonds, though 12 to 13 percent would represent "fair price," Kolchina said. [SFGate]

In September 2003, Anatoly Chubais caused an outcry after introducing the concept of “liberal imperialism,” effectively saying Russia would regain its influence in the former Soviet Union through corporate investment. The phrase might have been provocative, but Russian oil companies undertook downstream investment in oil refineries and gas stations, pursuing vertical integration. Russia’s metallurgical companies and retail chains carried out horizontal integration, doing on a larger scale what they did so well at home. Consumer and mobile phone companies extended their successful business models abroad.

From a Moscow Times article by Anders Aslund analyzing how Russia may be altering its near abroad policy to focus on economic integration with its neighbors. However, Aslund doesn't mention to the reader that Russia still relied on tough action, like shutting off gas to Ukraine in 2009, to remind its neighbors who has the upper hand. Also, while Aslund notes Russia did not directly intervene in the recent presidential election, Yanukovych and Tymoshenko had a better disposition to Russia than Yushchenko. Yushchenko was one his way out so there was no need to act in that election.

Ukraine's national debt could reach 40% of gross domestic product by the beginning of 2011 once all of the planned loans have been taken, Vice Prime Minster of Ukraine Sergiy Tigipko told journalists on Thursday in Kyiv.

“Ukraine’s Cabinet and the Kiev administration will further take steps to ensure Kiev city’s budget has enough funds to hold an efficient debt policy,” Kopylov said today in a statement, e-mailed by the ministry press office today. Kiev’s 2011 dollar bonds rose to 96 cents on the dollar, the highest since July 2, pushing the yield down to 13.016 percent, Bloomberg data shows.

Kiev is likely to restructure principal of its $200 million of notes due 2011 and $250 million of bonds due 2012, while continuing to meet interest payments, said an unidentified official in the city’s administration on July 5.

Of course the central government won't let Kyiv go belly-up. Kyiv's supposed to host the Euro 2012 it still needs to finish financing and renovating/constructing for the tournament.  But will they try to push out the mayor and put someone they trust in office?

Didenko's lawyer Ihor Stepanov told reporters that the defense was planning to appeal against the ruling.

"We will challenge [this] illegal ruling in a court of appeals," he said, adding that the fact that Kyiv Pechersky District Court on Monday took no decision on a petition by MPs to release Didenko on bail gives grounds to cancel the court's ruling.

That's Ihor Didenko, ex-deputy head of Naftogaz whose been arrested for "two months".  RusUkroEnergo, according to Stockhold Arbitration Tribunal, is owed money and gas by Naftogaz. The SBU has turned its attention to former officials from the Tymoshenko regime to find someone to blame. Dzerkalo Tizhden has a good analysis on the SBU investigation. In short (as explained in DT) Naftogaz seized 11 billion cubic meter of gas from RusUkroEnergo, which Tymoshenko claims was legally acquired. The people arrested acted as agents of the Ukrainian state, according to her. However the SBU claims that the gas was stolen and  the agency is pursuing officials involved in acquiring the gas. As the DT article notes, the Ukrainian state is not liable for Naftogaz action nor does the state have to comply with the ruling. Nevertheless,with alacrity SBU has opened an investigation and arrested lower level officials from the Tymoshenko government.

• How long will this last, Ukrainians happy with the current president. [RFE/RL]
• FiveThirtyFive tries its hand at analyzing Kyrgyzstan. [FiveThirtyFive]
• A protest by FEMEN. [via Ukrainiana]
• A birthday for the president. [Ukrininform]
• Kharkiv is named the best city to live in by Focus Magazine, though the emphasis seems to be on business rather than tourist attractions. [NCRU]

However, the MVS has become more politicized and is undergoing a “Putinization.” At his 100 days anniversary meeting with the media, Yanukovych was asked why the MVS prevented the opposition from protesting. He responded that this was untrue and that the MVS merely defended civic peace and halted attempts by a minority to prevent the majority from living in peace. As stated in Ukrayinska Pravda (June 5), “A few more such comments (from Yanukovych) and one could think that one was listening to an explanation by a Unified Russia party spokesman.”

From Eurasia Daily Monitor (Volume 7, Issue 120) "The “Putinization” of Ukraine’s Security Forces", another good excerpt from EDM (again no link). A speculative article on the political direction of the  Ukrainian state under Yanukovych, which the article claims is looking more like Russia.  This idea is echoed in a blog post at Window on Eurasia on the vertical power structure being constructed by Yanukovych.

Some Ukrainians may now indeed want “a strong hand” but that does not mean that there is any reason to end public discussions of the issues. And in that regard, the range of opinions in society “is much broader and more diverse than [is reflected in the views expressed by] party representatives on the Ukrainian political Olympus.”

Ukrainians who oppose this measure need not turn to Ukrainian courts, Ivanov suggested. They have every right to make a direct appeal to the European Court of Human Rights, and they have every reason to do so: Even in Soviet times, the majority of deputies in local soviets were non-party people.

Tragically, it appears likely that Yanukovich plans to go even further to reverse Ukraine’s past democratic games. The Ukrainian president and Aleksandr Yefremov, the head of the Party of the Regions fraction, now say they would like to have a referendum to eliminate changes in the Constitution introduced after 2004 . 

 The plan provides for lowering the state budget deficit from 5.3 percent in 2010 to 2 percent by 2014, while public debt should be stabilized at 45 percent and inflation is expected to decline from 16 percent in 2009 to 5-6 percent by 2014. In line with IMF requirements, the plan includes increasing the pension age. It is scheduled to start repaying, from August 2010, the multi-billion dollar value-added tax debt to exporters accumulated in 2008-2010, which is one of the main hurdles to foreign investment. A new tax code, to be passed this year, aims to simplify taxation and bring it closer into line with European standards. The share of the public sector in the economy will diminish from 37 percent to 20-25 percent. Talks on a free trade zone with the European Union are scheduled to be completed in 2012 (www.zn.ua/2000/2020/69596). The plan can be summed up in three key words: liberalization, deregulation and Europeanization.

Even Yanukovych’s critics agree that the plan is good, but there are doubts about the seriousness of the government’s intentions. Former Finance Minister, Viktor Pynzenyk, a liberal economist and fierce critic of both Prime Minister, Mykola Azarov’s, cabinet and their predecessors, suggested that the plan was drafted only to coax the IMF into issuing more loans.

From Eurasia Daily Monitor  (Volume 7, Isssue 116," Will Yanukovych’s Reform Plan Convince IMF?", no link), a nice excerpt to go along with the news that the IMF and Ukraine have come to a new standby  agreement for $14.9 billion. Following the agreement Fitch raised Ukraine's credit rating from B- to B. The EU is pitching in by providing "macro assistance" for EUR 500 million.

The plan was most certainly meant to get the IMF to release loans to Ukraine, but its also likely that the government's intentions are serious. Regions has its share of oligarchs (like the not-dismissed SBU chief) who wouldn't benefit from seeing the Ukrainian economy in shambles. Clearly the (expected) autumn local elections and the next Rada elections will test the government's commitment to this plan, will they jump for populist measures or restrain themselves? The the last time Yanukovych was prime minister he increased pensions prior to the Rada elections in 2007. Also, a EU-Ukraine free trade zone would be an accomplishment (in time for the Euro) considering its been discussed since at least 2007.

Of course, CMA market data shows that Ukraine credit fault swaps haven't declined substantially since the announcement, below is July 8 2010 data. Its still in the top ten list for riskiest sovereign debt.

Mr Khoroskhovsky wasted little time and launched an investigation demanding documents from the regulator about the tender. Inter then asked the court to cancel the results of an earlier tender and the court obliged, citing irregularities in the earlier tender. As a result TVi will remain a satellite channel with little coverage in Ukraine, and Channel 5, whose licence allows it to be mainly about entertainment, may not be able to retain its news programmes.

The Economist writes on the move by regulators to take away broadcasting frequencies from Channel 5 and TVi. An earlier Ukrainska Pravda article reported on a letter sent to President Yanukovych from the Channel Five editorial board essential asking Yanukovych to halt Khoroskhovsky.  Now, Yanukovych slipped up during the presidential  campaign and expressed what he actually thought about media freedom. This move fits in with his comments that freedom of speech was costly for the Ukrainian people (meaning Regions-leaning oligarchs). 

Thomsen noted that Ukraine's external debt now stands at 40% of GDP and this could severely affect the country's economy, the press service of the Verkhovna Rada reported.