Five EU Foreign Ministers blast Ukrainian authorities
Carl Bildt, William Hague, Karel Schwarzenberg, Radoslaw Sikorski and Guido Westerwelle - the foreign ministers of Sweden, Britain, the Czech Republic, Poland and Germany - have today written a
letter to the 'New York Times'.
"We cannot, however, conceal our growing concerns regarding the state of democracy in Ukraine. Independent media and civil society organizations report pressure from the authorities.
In late 2010, criminal proceedings were started against a number of leading opposition politicians. And a year later, former Prime Minister Yulia Tymoshenko was sentenced to seven years in prison for allegedly abusing her office, following a trial that has been widely criticized both in Ukraine and abroad as not meeting international standards.
Moreover, more than a dozen other opposition politicians are facing similar charges. On Feb. 27, the former minister of the interior, Yuri Lutsenko, was sentenced to four years in prison after another disappointing trial.
These trials bear the marks of politically motivated and selective justice. According to independent experts, they have been conducted in a manner that has failed to respect the principles of the rule of law and the human rights of the defendants.
These developments are incompatible with Ukraine’s own European choice. Democracy, human rights and the rule of law are the values underpinning the association agreement and Ukraine has already committed itself to them in the framework of the O.S.C.E., the Council of Europe, and also vis-à-vis the E.U.
Thus, it is fair to say that the association agreement has been imprisoned, and the Ukrainian leadership is holding the key. "
Yanukovych has made his decision. He is prepared to pay the price of isolation rather than release his most feared political opponents from prison.
Mafia state, or what?
Just over a year ago
I mentioned how Viktor Yanukovych was "Building himself a private Kingdom of Monaco - in Crimea", complete with a 900 metre length of private beach along one of the most beautiful and desirable parts of the Black Sea coastline.
This beachside mini-kingdom is based around a former recreational holiday centre called 'Mis Aiya' which had previously been owned by Ukraine's national highways agency - 'UkrAvtoDor'. It was privatised at a knock-down price in the summer of 2007, just after major constructional improvements had taken place.
The purchasers
are tightly connected to the two opaque shell companies, 'Tantalit' and 'Vidrodzhennya Ukrainy', who ostensibly own Yanukovych's infamous 'Mizhhirya' palace on the banks of the Dnipro riiver near Kyiv, and shell companies that own a large hunting hunting lodge, adjacent forests and hunting grounds, also near Kyiv. No-one can be absolutely sure who the true offshore-registered owner of all of this real estate is..but most reasonable observers consider it to be 'Yanukovych.. and family.
In 2006 Viktor Yanukovych was appointed head of the government for a second time, and a PoR parliamentary deputy, Volodymyr Demishkan, was appointed head of the highways agency 'UkrAvtoDor'. Almost immediately a decision was made to commence privatisation of this most desireable chunk of Crimea real estate.
Several months later, in 2007, Demishkan's son, Serhiy, was arrested, allegedly on a charge of premeditated murder. [Gruesome details from a previous blog of mine
here. and an up to date report from 'K.P'
here]. The victim, who had 'crossed' Demishkan jr in business deal, had a heating radiator tied to his back and was thrown into a canal to drown.
Demishkan Jr confessed to the offence when in custody, but once Yanukovych became president, he was released on bail.
Just a month ago he was found guilty of kidnapping and murder...and then released on the grounds he may be seriously ill with a terminal illness. As a rule, Ukrainian courts seldom take such factors into account when passing sentence.
LB.com journalist, Tetyana Chornovil, who describes the Mis Aiya affair in a
series of recent articles, provides one example: Judge Rodion Kyreyev, who sentenced Yulia Tymoshenko to seven years in prison last year, previously sent to prison a man suffering with hepatitis B and C, and who was HIV positive. The poor man was the only support for his elderly mother, invalid sister, and pregnant girlfriend. His crime? Stealing jewelry valued around $65.
Chornovil writes: "Was the compassion of the court shown to Serhiy Demishkan a coincidence? ...the court freed a killer whose father helped 'UkrAvtoDor' give up the highway agency's workers' holiday recreational centre...in the West such coincidences woud destroy the career of any highly-placed official.."
p.s. Just out: a new book entitled
"The Man Without A Face: The Unlikely Rise of Vladimir Putin" by Masha GessenRead two reviews
here and
here"Gessen speculates, the Russian prime minister suffers not so much from kleptomania as pleonexia, "the insatiable desire to have what rightfully belongs to others… He compensates for his compulsion by creating the identity of an honest and incorruptible civil servant."
Check out Putin's Black Sea palace
here . Does Yanukovych suffer from the same affliction?
New man at MinFin closes Yanuk's grip on state finances
The sober-minded
'Kommersant' runs a story today entitled 'Financial assistance', about the new 38-year-old Minister of Finance, Yuriy Kolobov.
Below are some portions of the article:
A powerful ally of the National Bank has appeared in the government. Yesterday, the President appointed first deputy head of the National Bank of Ukraine, Yuriy Kolobov as Minister of Finance.
According to experts, he will be responsible for the refinancing of debt, and preventing social benefits problems springing up on the eve of parliamentary elections. Political analysts believe that his appointment now gives the President full control of the country's monetary and fiscal policy.
The post of the Minister of Economic Development and Trade is still open. The main contender, Petro Poroshenko, met the president last week and has now to submit a plan for the development for the economy.
The head of the parliamentary committee on finance, banking, tax and customs policy, Vitaliy Khomutynnyk (PoR) called financier Mr. Kolobov a professional with extensive experience in banking. "He knows the problems of the financial system from the inside. As the first deputy chairman of the National Bank, Yuriy Kolobov attended our committee meetings and we had a constructive relationship. I think, in his new position he will also be effective," said Khomutynnyk.
Mr. Kolobov has worked in the National Bank about a year before that held senior positions in Ukreximbank, BTA Bank and Oshchadbank. His career before 2008 is almost unknown.
According to economic experts, in his new position Mr. Kolobov's first task is to fulfill obligations and eventually repay debts of up to $100 billion, a portion of which have to be repayed by the summer. [BTW Much more on this here:
http://www.economonitor.com/blog/2012/02/staring-into-the-ukrainian-economic-and-political-abyss/ ]
His predecessor, Valeriy Khoroshkovsky, last week said that Ukraine would be able to fully repay foreign debts, even without assistance from the IMF.
Director of economic programs of the Razumkov Centre, Vasyll Yurchishin doubts whether further IMF lending will take place: "The IMF does not like to give money before elections."
Kolobov has to find sources of funding to improve social welfare standards - increases of which will become an integral part of autumn's parliamentary election campaign. "If he agreed to head the Finance Ministry, it means he knows what he has to do," said one commentator.
Others add that the the new finance minister will "find common ground with the banks and "persuade" them to actively buy government bonds".
"Foreign borrowing is now closed, leaving only internal resources - and these resources are primarily the money of banks. If practices of the mid-'90's are revived when the sale of government bonds was carried out in close relationship between the Treasury and the banks, a substantial increase in the flow of money to buy hryvnia and foreign currency government bonds can be expected. At that time a system of "manual control" was utilised whereby banks were interviewed, after which they could not refuse to buy government bonds. They were given a direct recommendation to buy, so that there would be no problems" according to a 'Liga.net' source.
Political analysts also believe that the appointment of 'their own man' to this key ministry finally firmly closes the president's circle of control over public finance income and expenditure.
National Bank of Ukraine chairman Sergey Arbuzov is the son of Valentina Arbuzova, who heads the VseUkrainskiy development bank, owned by the president's son, Alexander Yanukovych.
34-year-old Arbuzov and Kolobov share spectacular
common career trajectories.
Viktor Yanukovych has thus concentrated all the financial, monetary and fiscal policies in the country, according to the director of the Institute of Global Strategies Vadim Karasev.
"The [newly] constructed financial vertikal should now bolster the power vertikal, cutting off any lobbying efforts to control the budget", he said. This is especially true on the eve of parliamentary elections.
The article includes a cartoon captioned "He knows how to find solutions to problems, and senses where the financial streams are" It shows a tiny [offshore?] island with half-buried money in the sand... suggesting Yanukovych now has all of the levers of power necessary to put the squeeze on the offshore accounts in which Ukraine's richest oligarchs/politicians stash their loot.
Will Kolobov have any success in all of this? My hunch is not much.. Most banks are in a pretty anaemic state right noww...drawing a cash transfusion from them is not a good idea.
And squeezing your sponsors..?
Yanukovych unconcerned about Ukraine's isolation
The British Foreign and Commonwealth Office
commented on today's 4 year sentence handed down to former Ukrainian Interior Minister, Yuriy Lutsenko thus : "The apparent political motivation behind the trial calls into question Ukraine’s commitment to a closer relationship with the European Union and runs counter to fundamental EU principles of democracy and a transparent and fair judicial process"
Similar reactions have been voice by other European capitals and multigovernmental institutions.
New Secretary of the NSDC, Andriy Kluyvev, when asked today in Brussels about Yulia Tymoshenko's imprisonment, admitted it had had a negative impact on EU-Ukraine relations, but
declared unapologetically : 'criminal responsibility for crimes committed was irreversible.'
[BTW, Klyuyev's recent demotion from vice PM has
caused some irritation in Party of Regions']
Clearly, Yanukovych and his pals are totally unconcerned by this negative impact - they intend to gain ever-greater control - their critics can "blow it out of their a**".
LB.com's Sonya Koshkina
describes the emergence of what she calls a new 'Cold war'.
Here's a precis of some of the point she makes:
During 2010 and most of 2011 many in Europe and Washington lived under the illusion that Yanukovych dreamt of defining his place in history as a great reformer and Euro-integrator. However, as a result of the Tymoshenko and Lutsenko trials, and 'the leader's' broken promises to his European interlocutors, this illusion has been shattered. There is now serious talk about application of sanctions against some Ukrainian individuals in the Europarliament.
Relations with the USA have also become frosty - Yanukovych received a final warning from Hillary Clinton in Munich several weeks ago, but despite this, Lutsenko was today sentenced to four years inprisonment. The US ambassador had previously been denied the right to visit Tymoshenko in prison and new criminal proceedings have been opened against her too.
According to Koshkina, after Munich, the Presidential Adminstration started thinking seriously about Autumn's parliamentary elections.
In order to minimise the risk of losing, the following strategy has been devised:
Conducting a campaign of maximum pressure against the opposition to dissuade as many as possible of their candidates from standing for election.
Maximising economic pressure, e.g. by the tax authorities, on major businessmen who would be prepared to fund an opposition election campaign [this process is already well under way].
To manipulate the election laws and 'deprive the opposition of oxygen'.
If these measures do not ensure a favourable result, the elections could be postponed indefinitely.
It has been made clear to Yanukovych that if Tymoshenko and Lutsenko are not allowed to participate in the Autumn elections, they will not be considered valid in the West, so why bother holding them at all?
In order to compensate for the huge deficits which would have been filled by no-longer available overseas borrowings, those at the top of Ukraine's 'Forbe's list' are to be squeezed. Quite what the reaction of these guys will be, Koshkina does not say...
China could also be a source of funds, if Ukraine's farmlands were provided as collateral.
Reshuffles will not help Ukraine
I can recommend
this OSW article on the recent reshuffles in the Ukrainian government as prelude to Autumn's parliamentary elections in the country.
However, the article claims that for Andriy Klyuvev, who was recently demoted[?] from deputy PM to Secretary to the post of the National Security and Defence Council, [See
previous F.N. blog on this topic], the "main task at the NSDC will be to prepare the Party of Regions for the elections this autumn, which proves that he is still trusted by Viktor Yanukovych."
In Friday night's big TV interview,
Yanukovych said that Klyuyev will
not be heading the Party of Regions' election headquarters even though he was one of the main architects of this political project.
The OSW article claims "A parallel goal for President Yanukovych is to contribute to the growing significance of ‘the Family’ and at the same time to preserve a certain balance of influences of individual oligarch groupings within his inner circle and to build his position as an arbiter between them. The oligarchs are too strong for the president to be able to rule without giving due respect to their interests. On the other hand, allowing one of the oligarch groups to gain a clear advantage over the other poses the risk of weakening the president’s position.." and the emergence of conflicts.."
The weakening of Klyuyev and 'confederation of Donetsk clans' in favour of 'the Family' and the RosUkrEnergo lobby could turn out to be a major miscalculation.
In another
'L.B.' article, Vitaliy Pornikov also discusses the recent reshuffle, but he concludes: "To overcome these [economic] problems, redistribution [of power] amongst the clans is not what is required. Nor is the victory of one group over another. And not even the appearance of a decorative professional [like Poroshenko] in the government. Even a supra-party government of professionals will not now save the country.
To overcome the problems, a new government is required, one that is not only merely competent, but one that has gained trust. A government that will be trusted both inside the country, in the West and in the East.
