More commenter analysis

Here's some more analysis from a commenter who signs himself LEvko. It belongs up here:

The Ukraine-Russia gas crisis is part of a trial of strength in the wake of Kremlin's humiliation during and after last year's Orange Revolution - "The Empire Striking Back?"

Putin's Kremlin has rather overplayed its hand so early in this poker game
- Western European countries are already getting anxious about their gas supplies.

A piece in today's 'FT' on the gas crisis states: "The Austrian government
on Wednesday attempted to calm fears of gas shortages across Europe as Ukraine's fuel and energy minister arrived in Moscow for emergency talks aimed at finding
a solution to a row over prices that could see Russia cut exports. Martin Bartenstein, economics minister, said ensuring energy supplies would be a priority of Austria's presidency of the European Union from January 1. "Europe needs more investment and greater diversification of its energy sources," he said.

Suez, the Franco-Belgian energy group, said the dispute was an "alarm bell" for Europe's politicians over the risk of becoming too dependent on Russian gas imports. Gerard Mestrallet, Suez chief executive, said: "Geographical concentration of supply at a time when our dependence is growing does not set the stage for prices to ebb from the high levels they have reached in recent months.

"Echoing these sentiments, the German Embassador in Ukraine, in an interview in today's Ukraininan 'Delo' newspaper is clearly sympathetic to Ukraine's plight, considers Gazprom's attitude unreasonable, its ultimatums unacceptable, and suggests gas price increases should be staged. Worryingly for Russia, he says, "..Russia and Ukraine are our partners, and if they mess us about, we will look for energy sources in other places.

"Putin and his Kremlin associates, for it is they who are pulling the strings, by uncompromisingly threatening to terminate gas supplies to Ukraine and recklessly increasing the price of gas from $160 to $230 per Mcm, have nailed their colours to the mast and left little 'wiggle room' in any further negotiations. Any lower figure when a deal is finally done will look like defeat and more loss of face for Putin when dealing in Ukrainian matters.

Apparently if no deal is reached by 1st January, in a propaganda stunt straight from the Khruschev era, some Russian TV channels will transmit live pictures of the theatrical turning off of valves on pipelines supposedly transporting gas to Ukraine.

As in any dispute where goods or services are provided by long-term suppliers to consumers, 'status quo ante' conditions normally apply until agreement is achieved, and then back-dated financial adjustments and repayments made. I suspect that EU Embassadors are beginning to lean on the Kremlin telling them to bear this in mind, and get things sorted.

European consumers, transit countries, and supplier countries whether they like it or not are mutually interdependent and are bound together is this dispute. In my opinion the Ukrainian authorities are doing OK in trying to get as good a deal for themselves as possible, I hope they don't get too cocky. Yushchenko's comments to the press tend to be bland, and [deliberately?] obfuscating, so maybe they won't.

On the internal politics front in the run-up to the VR elections, statements from Yanukovych have been somewhat contradictory. Although he considers $230 per Mcm unacceptable and " a blow below the belt," he blames the current government for this crisis. How it is affecting voters' preferences I'm not sure. It's all most interesting..

LEvko: This is the kind of comment that I would like to see as a blog post. If you have any interest, please contact me and maybe we can get you access to post here.

Russia prepares to turn off gas to Ukraine?

So is it official? --Russia prepares to turn off gas to Ukraine. Come 10 a.m. tomorrow Russia will shut off the gas supplies to Ukraine? And it will be televised?

It would be hard to know how they can shut it off. I guess they could just refuse to send any gas through the Ukrainian pipeline but that would affect the end-user Europeans. Or they could subtract, I guess, the amount of gas to be supplied to Ukraine from the total. But Ukraine says it has rights to 15% to pay the transit fee. And more could be siphoned off and not all of it would be with the approval of the government. That is how it has happened before.

It just astounds me though how the Kremlin can risk upsetting the Europeans like this. It can't possibly help either with its diplomatic relations or with its commercial relations. Its a damn them all strategy in effect, though they may think that pointing a finger at Ukraine is enough to remove any responsibility. It isn't. Russia has to be a dependable supplier for Europe or they will look at alternatives. And there is already some indication that Europeans are doing just that.

How about this for a resolution? Russia says it turns off the gas and there is an agreement in the next day or two for less than what Russia demands. The Kremlin talks it up as in the best interests of all parties to have a deal and thereby avoids a black eye--in their view. But that would be the view of an isolated Kremlin that sees the world in stark us-vs.-them terms. The damage has already been done.

Who knows though if such a result will take place. The Kremlin--I don't think the term "Russians" describes really the interests behind all of this--has signed a deal for Turkmen gas that will leave very little for Ukraine to be able to purchase. They are closing the noose a bit tighter it looks like.

I think it's clear that when it comes to Ukraine the Kremlin has lost its mind.

Of course, others who support Kremlin interests think differently about this. They argue that Ukraine has stiffed them at every turn in everything that they have done. Of course, they figure this only from the point of the Orange Revolution. What happened before that was just alright with them. But that shows what really sticks in their craw--freedom and independence for Ukraine.

A play for the Crimea?

Review of Ukraine base lease 'fatal'--Russia

Ukrainian President Viktor Yushchenko, who is resisting Russia's demand for a nearly five-fold increase in gas prices in 2006, has hinted Ukraine could hit back by reconsidering the terms of leasing the Sevastopol base in the Crimean peninsula.

"The agreement on the Black Sea fleet base is one part of a bilateral treaty, the second part of which contains recognition of mutual borders," Sergei Ivanov said in televised comments. "Trying to revise the treaty would be fatal."

The 1997 pact gave new legal status to the historical home base of the Black Sea fleet, which Russia inherited from the Soviet Union, and ruled out Moscow's territorial claims to Ukraine.

One wonders what the Kremlin means by all this. Does it mean that Russia will make a play for the Crimea? Are they going to invade? When we were there, close down by where the Russian fleet lies at acnhor we came upon a new monument celebrating the "Russian city" Sevastopol's 300th anniversary. And the Russian flag flies not only over the fleet but also over the train station there. (When we asked someone on the train we were with, who said he was Ukrainian through and through even though he lived in the Crimea and spoke Russian predominantly, why the flag flew over the train station, he was perplexed by it. I don't think he had taken note of it before.)

Maybe they could take the Crimea back. Maybe the people in Crimea would welcome them back. (The Tartars might not feel all that comfortable doing it, one would think.) I guess that would solve the Tuzla problem once and for all.

But this is just irresponsible on the part of the Kremlin, if they want to take their place in the world. I guess though they want their place to be on their own terms. And those terms sound an awful lot like empire.

Tymoshenko pointed at the Russians as the culprits every time something went wrong. She was wrong on all counts and is one other reason why she is unfit to govern. Ukraine needs good relations with Russia and Russia shouldn't be blamed for everything to stir up the people.

But Russia does deserve blame here. One commenter here says that Russia shouldn't subsidize a country that kicks them at every turn. This is a breathtaking charge. For one thing, it suggests that Russia is not as big a power as it asserts itself to be that it cannot ignore a country that is smaller than it is, poorer than it is, with not much in terms of any military that could challenge it.

But the problem really is that it's got the morality skewed badly. A guy has someone pinned down, beating him, gets a face full of spit for his troubles. "Can I really give a guy like that a break who would spit in my face?" His friends shake their heads. You can hear this talk from inmates quite a bit. "Well, if he hadn't gotten in my way, he'd be alive today." Or, "It was the way he looked at me. If he hadn't looked at me like that he'd be alive today." Or, better, from the rapist: "She had it coming to her." They have their points don't they? In an amoral world, yes.

I can't see that Russia comes out of this better off. Maybe Europe will bury its head in the sand and ignore it as long as the gas keeps coming. But that can't be true for all of Europe. For the newer states, this just confirms what they feel already about Russia. And maybe they would be as bothersome as a couple of ticks on a steers hide for all they could do in Europe. And thsi would not be the case for all Europeans. Some are advocating moving away from Russian dependence right now. Would that be good for Russia?

United Press International - NewsTrack - Ukrainian slaves rescued from Russian ship

This--United Press International - NewsTrack - Ukrainian slaves rescued from Russian ship --reminds me of a joke I posted here before that has made the rounds here in Ukraine.

A Ukrainian and a Russian are both in the desert in need of water. They come upon a bottle filled with it buried partially in the sand. Grabbing it, the Russian turns to the Ukrainian and says, "Let's share this like brothers!" The Ukrainian responds, "I'd prefer fifty-fifty."

The New Crimean War? More on natural gas

Here's some more on the natural gas crisis here--WSJ.com - The New Crimean War.

As to why, the article states:

First, Russia seeks to influence Ukraine's March 2006 parliamentary elections by suggesting to Ukrainian voters that the current government in Kiev is economically incompetent and its pro-Western tilt harmful to consumers.

Second, the Kremlin seeks to discredit Ukraine's "Orange" government among Russian citizens in order to inoculate its population from the contagion of democratic revolution.

Third, Russia seeks to drive a wedge between Europe and Ukraine by painting the Kiev government as reckless and unreliable.

If this is what they're thinking, they are playing a game of high risk. Is it necessarily all that clear that the results they think will come about will in fact occur? Point the finger at Ukraine if things go south and expect the world to see Ukraine as the culprit. Not very smart.

One thing about Saudi Arabia they have been smart about is not to push the price of oil too high that it creates incentives to conserve or to seek alternatives. That is smart from a business point of view. But Russian natural resources are being used as political tools by an insular Kremlin that miscalculates chronically.

Here's one for you: Why would the Kremlin support Iran in the face of Iranian support for Chechen terrorists? Seems like the same kind of thinking. What look like short-term gains trump anything that might be had in the long run. But that is the Kremlin.

A change in the blog

I am thinking about making a change here in the next few weeks. I want to make this a co-blogger affair. There are any number of people out there who have made comments on the site who have some good insights into Ukraine and into this area of the world. It is those kind of insights I think would be something to offer readers on a more consistent basis.

There is a lot going on around here and I don't have all that much time to track it all. This is not only true for Ukraine but also for Central Asia and for Russia. These are all neighbors and for some of them, the effects of the Orange Revolution are still being felt, if not in imminent revolution, then in a certain paranoia that is influencing policy still. And Europe is an issue too since Ukraine is moving in that direction. All of these countries are places of interest for this humble little blog.

If you would prefer anonymity, that is a possibility too. We could work up s pseudonym for you to work under.

So anyway, if you have any interest, let me know. I am looking for from 2 to 4 others. Email me at foreignnotes at hotmail dot com.

Merry Christmas

A very Merry Christmas to everyone.

Even though it was all uncertainty for awhile, though our youngest daughter didn't give up hope in the face of repeated cross examination and skepticism from her father, Santa Clause visited our humble square of air and brought us all presents.

Of course, we have jumped the gun on it all. Christmas here isn't until January 7th. But Ded Moroz. Ukraine's Santa Claus, comes on January 1st. So we are ahead of the Christmas season wave here. The kids don't mind it though--not one bit.

Is it blackmail?

Some in the Russian press object to calling the demand for price increases blackmail. Technically, they may have a case, but that is not all they are saying. This from ITAR-Tass:

The Ukrainian TV had broadcast statements on "the Kremlin blackmail"throughout last week without caring to explain why the demand to honestly pay for the gas it consumes is regarded as blackmail in Ukraine, which is now a market-economy country.

Ukraine is not being honest because it is not paying for what it gets now? Of course, the price paid for now is the price mutually agreed upon in 2004 I think it was. So it is dishonest to pay an agreed to price? In the Kremlin's world where all is Russian interests narrowly conceived, it looks like it is. And wasn't that agreement to extend to 2009? Seems like it was. So is it dishonest to raise the issue that legally speaking the agreed to price is binding? Or is it only binding as long as it is in Russian interests, as conceived by the Kremlin? What about all that talk from Putin about rule of law? So much lip service being paid to it by the Kremlin. If it is in Russian interests, the rule of law bends to do the Kremlin's bidding. Or is the feeling of the Kremlin and Russian elites that rule of law should only be for Russians? (Or those capable of exercising it, which seems to be the present formulation. It's yours if you have the power to keep it.)

And what about this market economy business they argue? Wasn't Ukraine a market economy back when it signed the agreement? Or are they saying it wasn't back then? If they aren't a market economy then a price differential should be the norm? But if it is a market economy, then pay the international rate? Is it just a coincidence that all non-market economies in the area are in line with the Kremlin? This is just so much opportunism looking around for a justification.

And you can spare me the Russophobe label here. When the interests of the elite are in issue, the term "phobia" is dragged out and put to good use. So when Chernobyl exploded, any statement about the potential effects of radiation were termed "radiatophobia." If they had had the power to do it then, anyone talking about it would have been committed for observation by pliant psychologists. But this is just another case of bending everything to serve Kremlin interests. It's just more of the same.

Much more gas analysis

Here some more analysis of the gas crisis here--One Gas Mask For All. Yulia MOSTOVAYA. Zerkalo Nedeli On The WEB. And it is a crisis.

This is not to say that economically Ukraine wouldn't be better off to eat the higher prices. It would be much better off, in the long run. But it needs to be in manageable bites. Maybe that is impossible to do--industries and governments are not usually motivated to do what they aren't forced to do. But economic devastation could be a real possibility. And Yuschenko and the gains of the Orange Revolution might not be the only casualties. Democracy could also be a casualty. The great cynical irony is that after the Orange Revolution, Russian analysts sneered that Ukraine would dabble in democracy and that it would then be discredited leaving Ukraine on the more natural path that Russia blazed with Putin. "You'll be with us in the end," was what they said.

It looks like it won't be the result of any kind of Slavic inevitability or historical necessity but because of Russian meddling. (And if you don't think it is meddling, just look at the prices Belarus and others who toe the line pay.) They will give history a big shove and then talk about the inevitability of it all. It seems like that is a result no one should want in Ukraine.

Of course, they could just cede the pipeline to Russia if that is what they are really after. Easy to resolve then. But that only makes sure you get eaten last, to paraphrase Winston Churchill.

So the government has to mobilize. But it looks like nothing is being done. And the opposition is looking to what will amount to a carving up of the cadaver. Criminally irresponsible still.

Does Europe see this all with any degree of concern? If appeasement seems to come to mind readily there might be a reason for it. Hunker down and maybe they'll pass us by. If the argument that Lavrov has made that they will use it for their near neighbors gives them any feeling of relief they are naive. Using resources as a tool of foreign policy has no natural limit. If it is in their interest to use them against Ukraine, when it is in their interests again, they will be used again. Anything else is living in a Disneyland world. All is joyous and wonderful inside and all the problems are left outside--for a hefty price. But those problems still press in and eventually you have to come out and deal with them.

Some other good gas analysis

Here's some very good analysis of the gas problem here by a commenter to the last blog post of mine. I thought it should be up here on its own.

Dear Scott - Your comments describing the Ukraine-Russia gas crisis are most interesting and quite sobering. As I see it Ukraine has a [semi] monopoly position as a transit country, and Russia is a [semi] monopoly supplier, so the situation is developing into a high stakes poker game, the prize being the Ukrainian gas transit system. Are we as close to gas supply disruption as your piece suggests? Curtailment of gas supply, even if temporary, to many high volume gas consuming industrial processes, particularly continous processes, can be disastrous.

European consumers have supply contracts with Gazprom, and not with Ukrainian companies, so wouldn't they be legally liable for losses incurred due to non delivery of gas, rather than Ukrainian companies? As you say the vituperative statements emerging from Gazprom and the rest must be unnerving the Europeans too. Nobody likes as bully and a blackmailer.

My guess is that for the moment Russia has too much to loose by reducing gas shipment through Ukrainian pipelines, and Ukraine has too much to loose if it starts
reducing throughput of gas, so this is going to drag on for a while.

Some commentators say that Putin is trying to influence next Spring's VR elections. Would he be so crude as to suggest, 'Vote for Yanuk, and you'll get cheap gas, vote for the others, and you pay 'top whack' for gas'. I don't think so. I think he knows that he has already lost Ukraine. Akhmetov and the rest must be just as worried about steep gas price increases, as everyone else. Their effects would be felt particularly hard in Eastern Ukraine - Yanuk's home turf. I think that the local populus would feel doubly betrayed by Russia if their factories were closed and domestic radiators were cold this winter.

I might have some more comment on this later. I have been busy this weekend with new bundle of joy matters so I haven't been around here much.

Hardball on natural gas

Here's some more of the same on Russian gas to Ukraine--KREMLIN HAS UPPER HAND IN GAS NEGOTIATIONS WITH UKRAINE - Eurasia Daily Monitor.

Triggering that round of presidential telephone calls was the breakdown of negotiations on Russian gas supply to Ukraine and gas transit via Ukraine to European Union countries. On December 5-6 in Moscow, Naftohaz Ukrainy chairman Oleksiy Ivchenko and Gazprom's management took irreconcilable positions on the supply and transit agreements for 2006. Without a Russia-Ukraine transit agreement taking effect on January 1, 2006, it is not clear how or on what terms Russian gas can reach the European Union.

In a remarkably vituperative press statement, Gazprom charged that the Ukrainian side was being "totally unconstructive, playing a very dangerous game, holding the Ukrainian people hostage [and] endangering the energy security of European consumers of Russian gas" (Interfax, December 6). With the January 1 deadline fast approaching, Moscow expects the EU to lean on Kyiv. Russian Prime Minister Mikhail Fradkov, in Brussels for a joint meeting of the European Commission and the Russian government, complained about Ukraine and warned the EU of "possible delays in Russian gas deliveries to Europe" because of Kyiv's position. He asked the EU to use its "convincing arguments in advising Ukraine to ensure unimpeded transit of gas to Europe" (Interfax, December 7).

Ukraine may face national bankruptcy if the Russian price hikes and cash-only payments take effect overnight, as Moscow now demands. Ukraine's gas bill to Russia would in that case rise from some $1.25 billion to an estimated $4.5 billion annually. Moreover, Ukraine's metallurgical and chemical sectors -- the main industrial consumers of gas -- could be forced out of operation, warns Union of Industrialists and Entrepreneurs chairman Anatoly Kinakh, currently Secretary of Ukraine's National Security and Defense Council. According to Kinakh, the
chemical industry overall would operate at a loss if the price of gas exceeds $95 per 1,000 cubic meters, and the metallurgical sector overall would become loss-making if the gas costs more than $103 per 1,000 cubic meters. These two sectors jointly account for 30% of Ukraine's annual GDP and 45% of the country's export revenue, according to Kinakh's estimates (Interfax-Ukraine, December 9). Moscow at this point demands $160 per 1,000 cubic meters of gas.

However, rather than bankrupting Ukraine, Gazprom may well be aiming for
a deal to acquire part-ownership of Ukraine's transit pipeline system, in return for conceding soft terms on gas supply to Ukraine. The Kremlin could score a major net strategic gain in this event.

I think the Russians believe they have the upperhand when it comes to the negotiations here. Ukraine can't go to anyone else for its supplies. Russia is it. So they have to deal. And Russia wants to increase the price threefold and have threatened to cut off supplies by January 1st if their price demand is not met. They say they will just send it to the EU.

If Ukraine cuts of all gas transiting to the EU and the EU complains, the Russians will say, "It's not us!" and point to Ukraine. I think they expect the EU to lean on Ukraine because of the potential for a shutoff. (They get 40% of their requirements from Russia.) And the EU just might do this. "It's only business. Nothing personal." To think they might want to risk jeopardizing their gas supplies to help Ukraine in the face of a Russian powerplay might just be too much to expect. Principle is one thing when you are warm and comfy and your industry is not subject to work stoppages. But it is quite another thing when the populace is faced with natural gas shortages and the specter of paying a much higher price or risk freezing in their homes.

But, as uncharacteristic as it may sound, the EU might take Ukraine's side in this. It might think it has more in common with Ukraine than it does with Russia and it might think its interests are more in line with nurturing the growth of democracy here than with aligning itself with Russia in this dispute.

But that might split the EU. Germany has shown itself eager to please Russia. They may stand to lose the most if supplies are cut off. They will probably deal on their own. Could they block any kind of effort on the part of EU institutions to respond in favor of Ukraine? Maybe. That would bother the newer additions like Poland, Czechoslovakia and the Baltic states no end. I think they would see it as treachery. Maybe Germany would see this as so much buzzing of gnats around their national head. "Just do it an let the gnats buzz. It may be a nuisance but nothing more." But would they not lose anything from this? The newer additions don't have all that much power so there might not be all that much they can do about it. But it could constitute a fundamental breach for them and might not bode well for the future of the EU. Can it survive if all countries seek only their own narrow interests at the expense of the other countries?

I think that there is a downside for Russia in this. If the EU gets the idea that Russia is willing to risk the shutting off of supplies to the EU because of some power play with the countries it considers to be in its sphere of influence, I don't think that would go over well. Some in the EU think that it must decrease its dependence on Russian gas supplies right now. They may have a hard time doing it through other suppliers. But they might look to decrease dependency through the use of alternatives. Would that be a good thing for Russia? Or do they think they can just sell it to someone else?

But sitting here, I would be prone to tell Russia to take our last offer and if they don't like it to cut off the supply. I would schedule an address to the nation and tell the people that the Russians are doing it to us again, that we need to hunker down to be able to weather this much as we have other agressions by the usual parties, uh, party.

Then I would retaliate by blocking the supplies to the EU and call it a self defense measure. We would then see what happens. It could be that the Russians might not like the result.

But I am sitting here with nothing riding on what I might think. The possibility that people could freeze in their homes and that industry would be stopped here in Ukraine would be hanging heavily over all of this. Anything to avoid that result would probably be most likely.

This could have much broader implications for the country than the elections in March. We'll see.

Ukraine Bird Flu Outbreak Spreads

It looks like it's getting closer--Ukraine Bird Flu Outbreak Spreads.

Ukraine's bird flu outbreak appeared to have escalated Monday as health officials reported new cases of domestic foul found dead in two cities and 19 villages on the Crimean peninsula.

The bird flu virus had been confirmed only in nine of the villages, said Irina Shakhno, spokeswoman for the Emergency Situations Ministry's Crimean office.

The Health Ministry said that reports were coming in about domestic birds found dead in 10 other villages, the regional capital, Simferopol, and another city, Feodosia. It was not immediately clear how many birds had died.

Feodosia is along the coast. Simferopol, on the other hand, is in the middle of the peninsula. Is it creeping this way? Who knows but it started out in the Danube delta area in southwestern Ukraine near Romania. Romania was where the first outbreaks were in the area. The Crimea is closer to Kiev than that though it isn't in a straight line.

And we are having chicken tonight.

Putin Talks Tough Over Ukraine Gas

More natural gas talk from the Russians--Putin Talks Tough Over Ukraine Gas

President Vladimir Putin struck a hard line Thursday in a dispute with Ukraine over natural gas supplies, saying that the country could afford to pay the market price for Russian gas.

Cabinet officials reported to Putin that Russia and Ukraine had failed to strike a deal on Russian natural gas supplies to Ukraine next year. 'Difficult work is under way and no solution has been found yet,' Industry and Energy Minister Viktor Khristenko said.

Can Ukraine afford to pay for natural gas at world market rates? That would mean a tripling of the price that Ukraine has paid in the past. And they might be able to do it in absolute terms. But that increase in cost would make industries that were once competitive, competitive no longer. Maybe that is a good thing economically, but it will be a severe shock to the whole system and people. One Russian analyst said that the prevalence now of mortgages for homes along with the increase in prices Russians are paying means that Russians may have to mortgage their homes to pay for the increased costs of things like energy. That might end up being true here. And there would be a major shake-out of industries and workers would suffer. Economists might say it is a kind of shock therapy needed to more rationalize the economy and that Ukraine and Ukrainians would benefit in the long run. And maybe they would, economically. But what it might do politically here would run from a house cleaning at least to disaster at most. Yuschenko will get the blame and anybody involved with him. It would make him radioactive politically. Democracy might also be blamed much as it was in Russia for all the economic problems. They could look for a strong man to set things right again.

The irony would be that Russian analysts have made the argument that Ukraine would follow them from the bright sunlight uplands of democratic freedom to the twilight world of the firm handed uncle that keeps everything straight. (Well, maybe they didn't put it quite that way.) "Just wait," they say, "what you see happening in Russia is in your future too." And it could happen because of Russian gas.

This is the one area where Tymoshenko would be right in putting this all down to clear Russian heavyhandedness attempting to affect the policies of Ukraine. But she is silent about it. I wonder why?

Moderating comments

I have taken to switching on the moderate comments function on this blog. I have found to my utter disgust that the comment spam rats have shown up and chewed holes in just about everything. Some old posts of mine have close to 200 spam comments. And a lot of them have some.

How in the world do you get rid of those except for one at a time? I could selectively turn off comments but that is a lot of work. Having to moderate the comments is a bit of an inconvenience to any commenters here, but there aren't all that many so the inconcenvenience to the few is outweighed by the ability to prevent any new incursions.

I only wish I could just fumigate the place. Ticks me off not a little bit.

Yushchenko to Stay Out of 2006 Vote

This interesting--Yushchenko to Stay Out of 2006 Vote--not so much for the fact that Yuschenko will stay out of the elections--I don't know what that means practically--but for the change in the poll numbers for the Our Ukraine party. A week or so ago, they were trailing Tymoshenko's party by about the same difference that they now lead. Maybe some of the successes are starting to make headway with the voters.

The Party of Yanukovych leads and they are blitzing the radio with political ads. (We have only heard the ones on the radio. Don't know if they have been doing the same thing on TV.) Their message is that things were better when we were in charge. That has a lot of traction now because of the economy and because there has been no effective rebuttal. But if, hopefully, when the pro-government parties get into gear, pasting Yanukovych's picture on the screen in any number of ways and linking him back with the thuggery that he was responsible for would be an effective response. I don't know why they haven't done it now except that maybe they are still canvassing who will be in what coalition and who will agree to do what in support. But they have to get moving on this.

Any increase in support that Yanukovych has is because there has been no effective response. As a matter of fact, there hasn't been any kind of response. The enemies have all been in the family, it seems like, and all the plotting and strategy has been directed against them. This has allowed a resurgence in support of Yanukovych's party.

So what gives? Is he a joke or isn't he as I have said? The answer is still yes but anything more said on this will have to wait.

Business uncertainty

Here's an article on Andy Grove, ex-head of Intel, that deals with managing in uncertainty. I call it the "business uncertainty principle," a borrowing from subatomic physics. The basic idea is that business doesn't progress by adding facts, it progresses by adding constructs. Those constructs are views of the world and determine, in the end, what facts are.

It's all that reinvention talk that guys like Peters make the big bucks talking about. I take it from a thinking perspective. In any event, you can't really mange uncertainty, you can only respond to it in ways that preserve your options. And Grove has a pretty good record of doing this consistently.

Why the lull

I haven't been posting here as much recently because my wife is in the hospital and dealing with that and family is much more important.

There are still things going on here that need comment. There's a poll out that says Yanukovych would be PM if the election were held today. That flies in the face of what I have said about him. So that needs to be explained a bit. And there are other things. There's still a lot to talk about here.

I'll work them in if I have the time.

EU Market Economy Status

This is good news--EU Views Ukraine as Market Economy:

"The European Union agreed Thursday to recognize Ukraine as a free market economy, a status the country sought to give it an economic and political foothold in the EU.

The prized status, which still must be formalized, presents a major victory for Ukraine's pro-western President Viktor Yushchenko, but also for Ukrainian businesses seeking to trade with Western Europe, who have been hampered by anti-dumping rules. "

This means that the EU will not be dealing with Ukraine at arms length with things like anti-dumping. It's a nice step and a bit of confirmation that things are on the right track. The cynic though might say that it is a case of the EU propping up Yuschenko. I'd take it either way.

The celebration

Looks like the rumor was wrong. There was lots of orange down on the square last night.

Some of the speakers who were passionate during the revolution up there on the stage last night seemed to have lost a lot of the fire they had back then. Were they reacting to what they think the people think? Or have they just lost it? Don't know which it is.

Tymoshenko hasn't lost it. She made her case last night though I didn't listen much to it. When Yuschenko spoke, she stood behind him with what looked like tears in her eyes.

Yuschenko gave a laundry list speech at first. It was a "this is what we have done" kind of beginning. A bit boring and didn't really speak to the mood in the country right now. After that was over, he went on to an explanation about his motivations for picking the people he did and what happened when he dismissed them. I thought it was heartfelt and should have been where he started. By the time he got there, I think he lost a lot of people who compared the positive gains he says the country has made to their own lives and found the difference to be telling.

I know that they have listened to the Clinton spin people recently. I think a lot of what was done in that administration to make the president's case was a wreckless slashing and burning on all sides without much regard to the effect it had on the institutions of government and on the people.

But to have someone here talking to Yuschenko that could help shape his message and approach is a good idea no matter where it comes from. Yuschenko needs that and he needs some discipline too to get him to control his outbursts. Last night for example, when he got on the stage, some in the crowd chanted, "Yulia! Yulia! Yulia!" He responded with, "You can continue and I'll listen. When you finish, I'll begin." It is what he felt but it won't help to make him any new friends.

That is the same thing he did in that affair about his son. Talking that way to a news organization that supported him during the revolution didn't serve him well. That that news organization now says it is in opposition to the Ysuchenko government should be laid entirely at the feet of Yuschenko. It didn't need to happen.

He said something else that was on a par. He may feel it, but he's gotta control saying something about it. That may be impossible because to suppress it might seem dishonest. He needs friends and that is hard to do when you are in their faces for what are petty things.

I do though think he set the right tone later in the speech. He was forthright and candid I think about the government and what happened. And he ended up the speech with a reemphasis on the direction the country needed to take. It was much of what was stated in the revolution last year.

Those who listened to it I think would have to come away from it thinking that Yuschenko is still sincerely engaged in trying to correct the problems of the country. That he doesn't have more to show for the time he has been involved is a very real and a very bad problem. And it is all to be laid up to his mistakes. But I think the mistakes came from trying to do the right thing. He vacillated between government unity and making the right decisions. His hand was forced and unity was the casualty. It should have been but much, much earlier.

My wife thought he was the only speaker who sounded like he did last year on the square. I think he did too. We'll see what effect it has.

We listened to the speech with people who are disenchanted with Yuschenko. That might be the majority of Ukrainians, I don't know. Their lives haven't changed much and things have gotten more expensive. For this they blame not primarily Tymoshenko, though she is getting it too, but Yuschenko. These particular people, the ones we had over, still support Tymoshenko because they saw her as getting something done.

I think I may not have been the best host last night. (They were at our place.) In a bit of heat, I kept saying to them, "Ask Tymoshenko where the investment went." That she was doing something is true but it amounted to nothing better than rearranging the deck chairs on that big sinking ship. Investment is needed for the pie to grow here and for people's lives to get better. But she with her careless populism scared a lot of it away. And her statist managing of the economy got them all shortages and inflation as a bonus. A pure disaster.

There is irony there too. She blamed the Russians for a number of the problems of the Ukrainian economy. But it is the Russians who are the only ones who can stomach the perceived risks in the Ukrainian economy. (Like I have said before, a lot of the risks are only perception. We think they have been vastly overstated.) So she blamed the Russians for it all and then instituted polices that made it inevitable that the Russians would take a significant role in the economy. But now Russia isn't the problem anymore for her I guess. She went there and saw how wonderful it all was there for herself.

A lot of people say that corruption hasn't changed at all and that that was the major pledge of Yuschenko on Maidan last year. And that is the truth on both counts. The problem is that corruption was never as much a problem of systems and structure as it was one of culture. What this means is that there was only so much that could be done by Yuschenko in the first place. And some of it has been done, to his credit. The rest of it has to come from a change in the culture.

Corruption was not simply a problem of Kuchma or of Yanukovych or of the militsya who stopped the car looking for a bribe to let it go. It has always been a problem of the people of Ukraine. For every official who wants a bribe for something, there is someone willing to pay it. And these would include even those who stood out in the cold cheering on Yuschenko. They would be the first to condemn Yanukovych for paying officials to get votes. But when it comes to getting their children into the right school or to getting their child a degree or to selling their apartment at the time they need to or to getting that piece of paper that allows them to do something they want to do, everyone, everyone, is willing to pay what it takes to whomever it takes to get it done. But corruption something the other guy does, the bad guy, not me. My motives are pure. But it is all corruption and it is all a problem, all of it. It distorts policy and creates a drag on the economy. And it creates costs that all people are paying for now, costs that are keeping the lot of them in poverty and subjecting them to rule by the whims of stupid bureacrats who can't do anything other than manage paper but who have power and know how to use it for their own benefit. (OK, so they aren't stupid in that either.) And that means, in the end, government by the rich and for the rich.

But it's the other guys, not me.

There is more to say on this but I don't have more time. We are expecting a baby in the next couple of weeks and that means making the rounds to doctors and other places to get ready for it. Not much time left after all that.

Things at the Kremlin

Here's something interesting about the thinking of Kremlin officials. Another Massive Dose of Kremlin Diagnoses.

Maybe it is the natural tendency of any court to focus inward so that the reality for them becomes the reality of court life. It happened with Louis XIII and XIV. They are the great examples of it. Louis the XIV's court, for instance, had it in spades. Marie Antoinette is supposed to have said when informed the people were starving, "Let them eat cake!" But what she really said was something like they should try brioche which is a delicate type of bread or cake that she and the court ate. In other words, they should try eating what I eat when I am hungry. She lived in a complete fantasy world unrelated to any reality. And when things got bad and they tried to escape, the whole thing was treated as some sort of game they might play in the parlor rooms of the palace. They were recognized and their way blocked by revolutionaries. In the end, that fantasy world came butt up against the reality of the guillotine.

The same thing could be said for Nicholas' court. And this is not for tzars and tzarinas and sun kings only. The same thing happens in the administration of democratically elected presidents. The extreme example is Nixon, but then you have Kennedy's Bay of Pigs which was a response to the dynamics in the administration more than it was to the reality on the ground. And there are other examples.

But the same thing is true of big corporations. How much time is spent fighting the fires of office politics as opposed to doing the work of the company? Glen Reynolds makes this point:

...In a small organization, people deal mostly with customers and suppliers. They get ahead mostly by making both (but especially the customers) happy. In big organizations, people mostly deal with other people within the organization, and they get ahead mostly by making those people happy. Pleasing customers is a way to get ahead only to the extent that it also pleases the bosses, and if you have to choose whom to please, you're better off pleasing your boss than your customer.

So it happens everywhere. Does that fact let the Kremlin off the hook? No because the extent of the unreality suggests a certain willfulness about it. And the potential for real mischief is a lot greater than it is with others. To have the Soviet era paranoia like they do in an age when the evils of that system are clear, seems to have more to do with the fact that they prefer it rather than that they are forced to it by circumstances or that it reflects some sort of reality. It hearkens back to the good old days of empire. How satisfying that is.

Anyway, these things tend to come up against reality eventually. The question is what form will that eventually take?

Orange Revolution celebration

There's going to be a celebration of the Orange Revolution this next Monday and Tuesday down on the Maidan. There will be some of the same artists who performed during the revolution. There won't be any color orange though from what we hear. Maybe it's that it's too identified with Yuschenko and they don't want to identify it with him. Or maybe it's that they want to be all inclusive and reach out to the east, a West and East together kind of thing. Either way it will be funny--an Orange Revolution celebration without the color orange.

Maybe we'll see the return of those American made boots and drug filled oranges that filled the imaginations of people in the east, courtesy of Mrs. Yanukovych. Something like this:

I saw last night upon the Square
Some boots, spiked citrus that was not there.
They were not there again today,
Oh how I wish they'd go away!

(Apologies to whoever wrote the original. "I saw last night upon the stair/A little man who was not there..." I think it was a physicist.)

Some of the people in the tent near the Presidential Admin building had a sense of humor. They had oranges and boots hanging around. One guy walked around with a boot on a stick. A real poke in Yanukovych's eye.

Those were the good old days.

Piracy

A Ukrainian ship is being held for ransom right now. This article--SOS as pirate motherships take to the high seas seeking cargo and hostages - [Sunday Herald]--suggests piracy is bad right now and set to get worse.

Global piracy is now one of the biggest threats to world shipping, far eclipsing the risk from terrorism, and Somalia "a war-torn realm in almost complete anarchy" has fast become one of the world's pirate hot spots. Since March 15 this year, there have been 32 attacks off Somalia. In 2004, there were just two attacks, in 2003, three, and in 2002, six. In the first nine months of 2005, there were 205 pirate attacks worldwide. Murders by pirates are also rising. In 2004, 30 crew members were killed. In 2003, the figure was 21.

The favoured tactic of the Somali pirates is to capture the vessel and crew, take it to one of their safe havens around Mogadishu and hold the hostages for ransoms of hundreds of thousands of pounds. Today, some seven vessels and more than 100 sailors, from countries including Burma, Indonesia, the Philippines and the Ukraine, are held captive by the pirates pending the ransom payment. When the ransom is received the ship, cargo and crew are all freed.

And there was a recent attack on a cruise ship. It was repelled when they used a sonic gun capable of damaging hearing at 300 yards. I guess they were a bit concerned they might not be able to use their iPods ever again so they beat it out of there.

I guess the sound was unpleasant enough for them but what if they had had ear plugs or were listening to some theme music while they rampaged? Sounds a bit too neutral a weapon to me. Maybe they'll develop something that fires asbestos into the air as the pirates approach. Concerned about cancer they will break off.

Andrew Linnington of the UK maritime union Numast said the waters off Somalia should be declared a war zone. "It's got to the stage where it's anarchy," he said.

The International Maritime Bureau has made a direct request to the Royal Navy to intervene in east African waters. The Ministry of Defence promised that if there were navy vessels in the area and intelligence of piracy then the Royal Navy "would undertake action in pursuit of pirates and help to deal with the problem."

UK shipping minister Stephen Ladyman is supporting a move by the International Maritime Organisation for the UN Security Council to pass a resolution to deal with Somali piracy. UK ships are now under advice to keep a minimum of 150 nautical miles from the Somali coast.

If they Security Council votes a resolution and the Somali warlords violate it what then? I hear that violating a UN resolution is not a sufficient casus belli. But maybe I heard wrong.

I once used an example of pirates seizing a ship in my international business law class. I think the students thought it to be an anachronism. Looks like it wasn't.

Bird flu

This doesn’t sound very good—Bird Flu Triggers Immune System “Storm.” (Hat tip: Glen Reynolds.)

As concern mounts over the potential spread of avian flu to humans, researchers believe they've discovered one reason why the infection can prove so deadly.

Experiments with human cells have found the H5N1 virus can trigger levels of inflammatory proteins called cytokines and chemokines that are more than 10 times higher than those that occur during a bout of the common flu.

This massive increase in cytokine and chemokine activity can inflame airways, making it hard to breathe. It also contributes to the unusual severity of the avian flu, which can result in life-threatening pneumonia and acute respiratory distress….

"This is basically a cytokine storm induced by this specific virus, which then leads to respiratory distress syndrome," Osterholm said. "This also makes sense of why you tend to see a preponderance of severe illness in those who tend to be the healthiest, because the ability to increase the production of cytokines is actually higher in those who are not immune-compromised. It's more likely in those who are otherwise healthy."

Basically, the healthier you are the sicker you become because of increased cytokine production. That turns things on its head. For other illnesses, being in good health lessens the effects. Not with bird flu it looks like.

This is not good.

Bird flu has been found within ten miles of Ukraine’s southern border in Romania. I kid with people in the US that we are eyeing the birds that land on our balcony suspiciously. Not any more, the kidding that is. This looks serious and we could be part of the initial surge of it, if it crosses the human threshold. But this doesn’t look good on that score.

Market economy status--EU

This is very, very good news. Commission Clears Ukraine for Improved Trade Relations.

The European Union is set to lower its defences against imports from Ukraine in a sign that Brussels is finally providing concrete help for Kiev after the Orange Revolution.

The European Commission has decided that Ukraine deserves the title of "market economy status" - a move that reduces Brussels' scope to levy hefty anti-dumping duties on Ukrainian imports. Such a classification has been one of Kiev's main objectives this year. The EU is Ukraine's biggest trading partner; annual bilateral trade stands at $22bn (€18.6bn, £12.6bn), ahead of the $20bn trade between Ukraine and Russia.

"Ukraine now fulfils all the criteria to be granted market economy status," says an internal Commission paper seen by the Financial Times. "This means that Ukraine will be treated as a full-fledged market economy in all trade defence investigations," once the measure has come into force. The Commission expects the process will be completed by the end of this year or early next year.

Viktor Yushchenko, Ukraine's president, has sought greater help from the EU to consolidate the country's democratic swing, but Brussels has been dismayed by disarray within the Ukrainian administration and has been reluctant to encourage
Ukrainian hopes for EU membership.

I am busy now so I don't have time to talk about this. I'll get back to it later. Score one for Yuschenko though.

Looting history

Looks like state owned assets aren't the only thing that has been looted in Ukraine. Historical sites and artifacts have been too--Black Earth, Black archeology, Black Times.

We have been to Chersones and it is impressive. A Greek city along the shores of the Black Sea in the Crimea. But pots and pieces of pottery sit out in the weather, in a chicken wire enclosure to prevent theft, I am sure. But they sit there with the paint or tint fading on them. There are other artifacts in the museum but it looked to me as if there is a lot of neglect.

And a lot of apathy. Make sure the museum is opened and closed on time and that the fee is paid, but that's about it. We saw no digs there and no one suggested anything like that was in the offing.

We wandered all over the ruins and could have dug a hole without anyone seeing us in the middle of the day (midwinter.) And you can get in along the beach from either side so, if a surreptitious dig is at night, it will be easy to get in, dig and get out without anyone seeing.

It is hard to know what can be done about it. Even if they hired guards, those guards could be coerced into letting them loot. Money or threats, the standard. No one's going to want to risk life or limb for any artifact, especially if he can be paid instead. So it's hard to see that as any solution.

So what is to be done?

The anniversary of the revolution

Today is the anniversary of the revolution of 1917, the most famous revolution around these parts prior to this past year.

There are some communists gathering on Maidan downtown right now to celebrate it. They say there are about 30,000 of them there. They apparently started out in Arsenalna, the place where the revolution started in Ukraine (or at least in Kiev.) They fired a few shots off in celebration—not from guns but with some large bore fireworks like they use at all times of the year. The problem is that they had no permission to gather there and do that so the police ran them off.

And I don’t think they have permission to gather in Maidan either so it might be fun to see what comes of that. Of course, for more than 70 years, they didn’t have to have permission to gather anywhere, the communists didn’t. Getting permission now just must seem to them to be a mite disrespectful of the movement. That’s dissing them.

But thirty thousand are a lot of people to just clear off with police, even riot police. So they’ll probably stay and have their rally and talk about the good old days when it all meant something. Then they can dream of their renaissance much like American southerners did. But, I am afraid, that kind of dream is going to end like the dream of those southerners. It ain’t gonna happen, no how, no way.

That is not to say that Ukraine has become immune to authoritarian systems of government. It hasn’t. If Yuschenko and the reformers don’t reform, there is a very real risk of a thug showing up and taking charge, especially if there is an economic downturn.  It’s just to say that it won’t be done in the name of communism. Communism is dead; thuggery as a governing principle is not.

No noise

Pssst! Do you hear that? That's the sound of no cabinet arguments in public about government policy. There haven't been any since the cabinet shuffle and that is a good thing for Yuschenko. I guess you might say, paraphrasing what was said about a migration of a whole people, "Yuschenko dismissed his government of his own free will, because he had to." And it has at least worked to make the sounds issuing from government more unified. That is good.

Now he just needs to make his case. He has the time and the calm now to do it.

An upbeat analysis

Here's an optimistic analysis I would pretty much agree with--Viktor Gets His Groove Back. (Subscription req'd.--the pdf is available here. )

Automated comment idiocies

We have been hit pretty hard by automated comments around here. Some of them are pretty idiotic.

"Nice post! I address the same thing at my blog!" There follows a link to a site called Business Lawyer. I guess they got the lawyer right but missed pretty much everything else.

Or the one from an adult site asking for tips on blogging--finger to mouth and demure look, no doubt--that then says, "I have bookmarked you!" It just sends chills up my spine thinking about it.

Give me a break.

Busy, busy, busy

I have been very busy over the past week and have not had time to post much here. The good news though is that there has not been much to post about. But there is some.

The government finally seems to be talking with a single voice for one. There has been none of the old back and forth in the press between ministers and the president that I have heard like there used to be. That is a good thing.

And the Kryvorizstahl mill sale went off without a hitch. Some analysts seem to be saying that the sale is a victory for Yuschenko that should help him in the elections this spring. I don't know how a sale of the steel mill will increase his attractiveness to the people in the face of what has gone on, but it can be one piece to be added to other pieces--like economic and political stability, two others-- that might all add up to victory then. Steady, consistent effort to get things done might just pay off. And it would be new.

So I don't know how much of a victory the sale represents. But what it does do is to begin to demonstrate seriousness on the part of the government in making the climate here more investment friendly. This sale goes a long way towards making that case. And that is a good thing.

I will say it again: It is much better to have the power to make things happen than to sit around waiting for something to go wrong in order to make political hay out of it.

In other news, Yuschenko's Our Ukraine is forming a youth organization. Tymoshenko is following suit. "I'll see your youth organization and raise you, what?" Nothing. Yuschenko signs an agreement with Yanukovych which he says recognizes the east as having legitimate interests in the government, an east that is pro Russia, and Tymoshenko responds by visiting Putin in Russia and bringing back a glowing report on Putin as president. She seems to be on the back end of the wave.

More of the same, but different--Russia

This doesn't look good--UNIAN-News from Ukraine.

Russia's Foreign Minister Sergei Lavrov said on Wednesday, Oct. 12, that the main diplomatic resources of Russia are natural gas, oil and electric power and promised to use “all of the means of economic pressure” on disloyal CIS neighbors. According to Nezavisimaya Gazeta (Independent Gazette) daily, Lavrov made these statements at a closed meeting of Federation Council, upper house of the Russian parliament, according to MosNews.

There was some talk a few months back about what the appropriate Russian response should be to the recent government dismissals in Ukraine. There were three possibilities. The first one was that Russia should go for the jugular while Ukraine is weak by upping the price of natural gas to world levels. That would create economic chaos and lead the fall of the government and disenchantment with the revolution. Russia would then sweep in and pick up the pieces.

Otheeh other end was the idea that Ukrainshoulddl be dealt with diplomatically just as other states deal with other states diplomatically. That requires thinking of Ukraine as an equal. For some Russians. especially those in the Kremlin, that seems impossible to do.

The tird apporach was somewhere in between these two.

The first would be devastating to the economy. The price paid by Ukraine right now for natural gas is less than a third the world price. It is partly due to the low cost of energy that Ukraine's export success has depended. Raising the price of natural gas would make a lot of export commodities like steel uncompetitive.

And it would raise the cost of living for Ukrainians as well. Right now the cost to heat an apartment is pretty low by American standards but the people here are living on a lot smaller incomes. They might be able to pay the price right now but if it were tripled or quadrupled, what would they do? It gets pretty cold here in the winter. And a lot of people use gas for cooking. Could they afford to if the price hit world levels? I doubt it. Heating a home and cooking might become unaffordable.

But does this statement by Lavrov mean the Russians intend to do it? They have been threatening this for a number of months, so the threat of it is nothing new. But that threat has always been in the context of price negotiations on the natural gas. Now that threat is coming from the Foreign Office. That might mean the Kremlin has settled on the policy. Looks like it's door number one.

Decline in the hinterlands

We spent a part of the previous weekend in the village at my in-law’s place. While there, my father-in-law informed me that they had had an investor interested in leasing land there and putting in a chicken farm. He would have used the cooperative buildings and equipment and depended on the cooperativistas land for his business needs. It all would have been leased and it would have been state of the art. What is perhaps more significant is that it would have employed close to 200 persons. That is an awful lot of people for a village that numbers not much more than that.

But I say “would have” because it isn’t going to happen. The cooperative that would have been “co-opted” for the purpose polled its members and a number of them came back with a “no.” They thought life was fine as it is, that they get about a metric ton of grain from the coop as it is and that having a chicken farm was not something that would add anything to their lives. And that was it as far as the investor goes. He is now off looking for some other place. And this little village languishes.

I was stunned when I heard it. It’s not a case of their entering the twentieth century; progress is good and all that. That is not why I was stunned. They do have a life. It’s not something we would consider to be a life, but it is a life to them and enjoyable to them. If it were simply a matter of progress, I wouldn’t have been so struck by it.

The problem is not progress, the problem is keeping the young people there in the village. I have written about this before but more and more of the young are leaving the villages to make their way in the larger cities. Some would see that as a good thing. But we are talking about their getting jobs that pay at the most $200 for what skills they bring and a lot will make less than that. And they are coming to the large cities to live where? With relatives? If they have them which is not certain. They end up having to find a room because renting an apartment is just out of the question. For two room apartments, and that means just two rooms--kitchen and bathroom excepted--the rent is over $250 a month in Kiev, last we looked. And it keeps going up in price. (Some think the price will be $300 by year’s end.) So goodbye to all their hard earned pay for the whole month to make their rental payment.

And don’t even think about buying a home, which here is an apartment. Mortgages can be found but they are not all that widespread and the interest rates are 17% with an inflation index to make sure the bank gets its money, all of its money, back with interest no matter the economic conditions of the country. There aren’t many who can afford that kind of thing, not coming from the village anyway. It is cheaper in some of the other cities and in some of the outlying areas of Kiev, but not enough to make a go of it at $200 a month or less.

That company was offering the same pay for people to work on the chicken farm in that village. $200 a month in that village and in any village in the Ukraine is a very good salary. (In Western Ukraine, it would be a very, very good salary.) They could afford a house there after not too many months of saving, though maybe not a new white brick home that the more affluent have built. And they would have their plot of land nearby for their vegetables and maybe some animals. Their electricity costs and gas costs would be only a few dollars a month. With all of those advantages, they would be putting quite a bit of money away, relatively speaking. So the young people who might be lured away to life in the city could stay there in the village.

That is my problem with the whole thing. It isn’t the older people that’s the issue at all. It is the younger ones. And the fact that they voted what was simply their own very narrow interests, not thinking about the fate of their own village, is beyond me. They will live to an old age, though some of them not so old because of the harshness of the life, and then die off. One by one the houses will be vacant and then there will be no village. Their children might, might, come back at times to visit the old homestead. But that is extremely doubtful-- they will be too busy trying to scratch out a life for themselves in the city to have much time for that.

Kyiv scams

Here's something to keep in mind for anyone visiting--Kyiv scams

I have been hit by numbers 3 and 4. I didn't know how some people in St. Petersburg could have gotten both my card number and PIN number. This article explained it.

Something to think about.

Yushchenko will not fight loss of own authority

This is probably the right thing to do--:: Yushchenko will not fight loss of own authority and deputy immunity :: Ukrayinska Pravda--especially for this reason:

"I gave my word that no destructive steps will be taken towards the constitutional initiatives in question. I do not want to challenge these amendments, because I do not want 47 million Ukrainians to think that Yushchenko is thinking about preserving his authority," assured the president.

I had thought earlier that it would be a good thing for him to repudiate the reforms because he was going to need all the power he could get. (I know, I know, that had the potential for making him a Ukrainian Putin and me a bit inconsistent. But if someone tells you one day to take an umbrella and on another not too, is it that his judgment is bad or does it have something to do with the weather?)

He might have been able to do it before, but clearly he can't do it now. And it might not be a bad idea anyway. Some reform is necessary and now might be as good a time as any. And to allow a president to take power to himself would not be moving in the right direction, even though it might be for good reasons and the person trustworthy.

Is there such a person really? Doesn't absolute power corrupt absolutely? Maybe not and yes it does but not in every single case. There are a few notable exceptions, George Washington for one. (Wasn't it Napoleon who said, "They expected me to be another Washington"?) But my argument was that the risk of ending up with the kind of system they had here was outweighed by the potential benefits that could come from effective and quick reforms. In other words, to risk that Yuschenko became another Kuchma was not much of a risk in the face of what could be gained if he did what he said he would do.

So I think he is right and I think he is doing the right thing. The "probably" is a nod to what I thought might be the good thing to do. Not realistic now even if it were the thing to have done.

It's the economy stupid

At least it should be here. Yuschenko is saying the right things about it--Yushchenko Makes Plea for Growth

Ukrainian President Viktor Yushchenko urged his new government on Wednesday to create favorable conditions for business to kick-start slumping growth and bring
back reluctant foreign investors.

Chairing a meeting of the team assembled after last month's dismissal of former Orange Revolution ally Yulia Tymoshenko, he told ministers to concentrate on the economy and steer clear of politics ahead of March's parliamentary election.

"If we want to provide proper European wages and pensions we have to ensure economic growth," Yushchenko told the session.

"To ensure economic growth we must mobilize financial resources in the form of investment. And to mobilize them we need to have clear procedures for Ukrainian business."

Yushchenko said the ousted government, riven by months of infighting, had done little to improve the business climate. "Two-thirds of the measures which impeded business were in fact government orders," he said.

Some themes II

2. The dismissal of the government was a crisis. This was the tack of some articles. Others framed it in terms of ultimate doom and catastrophe. In none of the articles I read, until I got to the analyses for investors, was anything good said about it.

But the government dismissal was not a crisis; it resolved a crisis. The crisis was actually the previous 8 months or so of the government. Lots of ministers saying lots of things and all seemed to be pulling in different directions.

There were any number of problems but the one that seemed to hang around the most was the re-privatization issue. I had thought after the election that it was not politically possible for Yuschenko to avoid re-privatizing some of the enterprises sold off during the Kuchma era. It had been a centerpiece of his campaign and it also represented a reassertion of some justice after what had gone on in the previous administration and for many years in the past. But the figure out of the gate was 3,000. There was no way that was going to fly with investors and business. No one wants to put money into something where the title is suspect right off the bat. And, in the context of this area of the world, showing that the government had both the power and the will—the means, motive and opportunity--to re-privatize is not going to reassure anyone that title to anything will ever be more than suspect. If they do it once, they can do it again if the will is there. And with the kind of populism that was a part of Tymoshenko’s government, the will to do so would always hang around in the background ready to hand if needed or wanted. At least that would be the feeling.

No, the crisis was the previous government. The new government has created the sense of much more stability. They all seem to be talking with a single voice right now. And that has made financial analysts less wary.

3. Tymoshenko is the winner in all of this. The polls seem to say that. Her party seems to have 20% of the electorate while Yuschenko is currently at about 14%. This is significant and if the election were held today, she would be forming the new government.

But the election is not being held today. It will be held in March, 6 months away. Those 6 months are an eternity in democracies. Lots of things can happen in the meantime that can change those poll numbers. And the point is, a point lost on a number of people, that Yuschenko is in power and has the power to make the kinds of changes that can affect those poll numbers. Tymoshenko, on the other hand, has no power to affect anything. She can call a press conference and talk about it all, but the power is with Yuschenko and his government and that can make all the difference. Of course he actually has to do something positive but to be able to do something is better than waiting around for something to bad to happen to capitalize on it.

Isn’t it possible that Tymoshenko realized this and that is the reason for the offer to Yuschenko on the new government?

The funny thing is that some of her appeal came from the fact that she was seen as sticking it to the Russians. But now that she has made her way north and found some kind of an accomdation with Putin and with Russia, what will that do to her appeal? After this, will the activists still see her in the same light? Yuschenko may have become more pragmatic but she seems to have followed suit. What will the OR purists have to say about that?

To be continued…

Some themes

Some of the themes I have seen in articles and my response to them:

1. Yuschenko resurrected Yanukovych. This was mentioned in some articles and was a question asked by an anonymous poster to the website. As a question, it is a good one. As a statement of fact, it is not incontrovertible.

Does it give Yanukovych more status than he had? It may in the minds of people but Yanukovych had no status prior to that agreement. He was a no show as the opposition. You would hear some sniping from the trees by people like Chernovil (his last campaign manager) but it was petty stuff, not the campaign on a broad front that it should be by a serious candidate representing the opposition. (“This government isn’t professional!” said Chernovil. Not a very original statement and not much of an opposition campaign. As an opening salvo, fine. But if that constitutes the whole broadside, pitiful. And that was it.) The agreement showed everyone that Yanukovych was still alive. That may be something to know but it doesn’t go very far in making him formidable opposition. At least, not considering where he has been.

And that agreement is really not much of anything anyway. I said that it can be repudiated and it can. The charge would be opportunism but that is the charge right now. Does that charge help Yanukovych?

The funny thing is that Yanukovych was called in to the prosecutor’s office to answer questions a day or two ago. His supporters said it violated the memorandum. It may have but it just goes to show that Yuschenko has the power so he has he advantage.

The real argument is that it somehow rehabilitates Yanukovych in the minds of the people or that it grants some sort of legitimacy to him. I think it does neither. For rehabilitation, that would mean that an agreement signed by Yuschenko served to change the minds of the people regarding Yanukovych. “He is a bandit but since Yuschenko dealt with him maybe not.” Those ardently for the Orange Revolution were ardently against Yanukovych. The tone of the responses to the memo by those supporters is one of betrayal by Yuschenko not of reconciliation with Yanukovych.

Legitimacy would be a weaker benefit for Yanukovych but it suffers from the same problems: He is a bandit to the supporters. Could it affect any swing voters? I don’t know that there are any. People already have their opinions formed on Yanukovych. In the West, see the first sentence. In the East, he has a lot of support; some of it may be a little soft. But he represents the interests of the eastern part of the country and they just put up with anything else. Who else represents the interests of the East especially after the Orange Revolution? It does a government and a people no good to write off half a country.

Then there’s the idea that Yanukovych could remain a protest vote option, a kind of “devil-we-know.” That is something that is hard to gauge but he would have been that anyway. The memo doesn’t make that any more likely than it was before. There isn’t anyone in Ukraine now who doesn’t know who he is. If his name were on the ballot they would know it--he has name recognition galore. The question would be: Would they vote for him if they were disillusioned by all other parties? I doubt it, but I guess it’s possible. The disillusionment would have to be complete and I don’t see that as being all that likely.

I do have to issue a caveat here. This is based on what Yanukovych has done since the Revolution. It might be that an effective opposition could be mounted by him—the targets of opportunity are all over the place. (Military types would call it a “target-rich environment.”) We heard today that some of the Russian “political technologists”—spin doctors—are making there way back here again. They have learned their lesson according to the report and won’t make the same mistakes again (they said in all lack of humility.) That remains to be seen. It's hard to be effective when you see your adversary as a backwoods hick who stares out in wide-eyed astonishment at the high sophistication of the tailored suits from Moscow. That they see Ukraine as beneath them is the lesson they should have learned. Did they learn it? It’s possible but I doubt it.

But if some kind of effective campaign can be launched for Yanukovych, his stock could go up with some voters. “We had 12% growth when I was PM. Gasoline was cheaper and so was chicken, pork and everything else. Was there corruption? Yes, there was. And the man responsible for it, the man who also worked to take the vote away from the people, is no longer in government. He is out and well he should be. But he is running around loose when he should have been arrested and prosecuted. Why hasn’t he been arrested and prosecuted? He worked to steal the election from the people for his own purposes unknown to me at the time. But he runs now at large, scoffing at the people he sought to defraud, untouched by the law. Why is that? Ask Yuschenko why. I suppose the answer is that if he got something from Yuschenko, Yuschenko must have gotten something from him….” Or something like that.

Anyway, if he comes up with an effective campaign, he could end up with some more legitimacy—it remains to be seen how much more. But that depends on him and his organization, not on the memorandum. And to date, there has been not much of anything coming from his camp.

To be continued…

I talk to my brother-in-law

I was talking to my brother-in-law last night. He was one who was down on the square most every day during the Orange Revolution. In fact, I was with him at Maidan on the night of the first election, November 21st, I think it was, when the protests started. That was a Sunday night, described here.

It was kind of funny because when we met at the subway that night, he seemed to be filled out a bit more than I had remembered. He had on a winter coat but that coat was not thick enough to account for the extra bulk he seemed to have. I didn’t mention it at the time—I thought I might not have judged it right-- and just let it go.

Later, my wife was talking to my sister-in-law and she said that that Saturday before we went, the day before, she thought she heard her husband sawing wood in another part of their apartment. She went to look for him and when she found him, he was sawing wood. When she asked him what he was doing, he hemmed and hawed a bit before he told her that he was putting together some protection—some wood on the front like a breastplate and wood on the back-- in case he went down to Maidan the next day. Wood was the only thing he had to do it with, and the only thing it would stop would have been a knife or blows from a truncheon. It wouldn’t have stopped any bullets from any caliber carried by the police or the military. He knew this but thought that most of the problem would come from crowd dispersion measures rather than from a wholesale gunning-down by the military. He did though accept that as a possibility and something he risked because later that week, when he had been down on the square for a couple of days, he asked me to take care of his wife in case he was killed or imprisoned. The way he put was, “If I don’t come back.”

That’s just some background.

Talking to him last night, he was of the opinion that Tymoshenko hadn’t had enough time to do what she needed to do; she was fired before she could make things better. I think that is the opinion of a lot of Ukrainian supporters of the OR. They think that Tymoshenko was working to reform the system and was sacked before she could finish.

One of the things he mentioned was pensions and government wages. He said that now she was out there would be no increases in pensions and government wages. Though he isn’t affected by either of these—he works in the private sector—increasing both of these is seen by a lot of people as a measure of government effectiveness and even justice. The fact is that pensions have been rather low for a long time, since the economic collapse in the later 90s. The hryvna was devalued and wages and pensions were caught in that devaluation. To make that up is a kind of test of government effectiveness for some people. Tymoshenko resonates with that.

He also told me that a couple of guys at his work had said that Yuschenko was now in with that “bandit” Yanukovych. He proved it by signing that memorandum. My brother-in-law didn’t say if he agreed with that assessment. I think he isn’t settled about that right now. Out of respect for Yuschenko, his mind isn’t made up on that point, at least not yet. This I think is good news for Yuschenko if it is widespread and I think it is. (Others we know say things like, “I don’t know who to believe!” Shows their minds are not made up.) I don’t think people have made up their minds yet about it because they have a lot invested in Yuschenko. But he does have to communicate with them more. I think people are looking for Yuschenko to come and tell them what he has done and why he had to do it. He hasn’t done that yet. He needs to do it.

A new poll out says that Yuschenko has about 20% approval. That doesn’t contradict what I have said. People are upset with him but that doesn’t necessarily mean this is their final position about him. I think they are registering their dissatisfaction. And they ought to.

The interesting thing is that although Tymoshenko polled better than Yuschenko, she was only a couple of points better. Her approval rating is at around 22%. Not good news.

It might be that disapproval of Yuschenko will translate into bad poll numbers for anyone involved with him in the OR. Show Tymoshenko suffers. If Yuschenko builds his case separate from Tymoshenko, she will be left with the worst of both worlds. And there is some argument that she has made a number of mistakes on her own that leave her in a weakened position. That is the argument here. (Need to read it carefully, the translation is a little rough.)

Bothered by it all

I can’t read any of the commentary anymore. I am sitting here just disgusted with it all. If all the Orange Revolution meant to people here was a shot at taking down those on the opposite side, then it was no better than the revolution of 1917. “I get my people in and deal with the people who opposed me.” Then they get their people in by coup or by "legitimate" means and deal with your side. Then you get yours in and do it again and it goes on and on and nauseatingly on. And Ukraine remains some backwater, third world, basket case, with a few people controlling the wealth, the land, and everything else. But the people will have their pound of flesh, while the structures around them crumble to the dust. With the people distracted this way to what are small matters in the end, the oligarchs can just sit and grin as they watch their portfolios get fatter and fatter and fatter.

What should have been bought on Maidan was getting off that kind of ride. Rule of law, discussions held and decisions taken in the open, solid institutions which cannot be bought by someone with the most money or influence. In other words, what should have been bought on Maidan was the ability for what has happened over and over again in Ukraine to never happen again. Ever. If that is not what was paid for, then Ukrainians got nothing. But that is what it looks like. People want someone to pay and they will have it and stagnation, poverty and corruption will remain.

I will put this plainly and it will tick off a lot of Ukrainians (most of whom long ago abandoned this site): Tymoshenko was a disaster for Ukraine. She is a capable woman and gets things done and was instrumental in the Orange Revolution, but she was a disaster for Ukraine. Why is this? Prices are rising steeply on most everything and a lot of investment, investment that should be Ukrainian by right, is passing over this country for places like Romania. Let that sink in for a minute. Romania. If there is a country worse off than Ukraine it has got to be Romania (and the rump state Moldova) but they are getting more investment than Ukraine right now.

A lot of goodwill was generated by the Orange Revolution and companies and investors that couldn’t have told you where Ukraine was in the world before, suddenly found it. And all were charmed, I repeat this, all were charmed by the sight of people out in the streets trying to reclaim their rights. Investment would have come in from that fact alone but Tymoshenko immediately began to talk about revising all privatization deals and only settled on 3000 when pushed. You tell me what a company or investor is going to do when faced with the prospect that any company they might join forces with or any building they might buy or any asset they might purchase here could be swept up in a revision of privatizations from years back. They held back and in honor of the revolution, they waited to see what would happen. But these things don’t wait long. Doors open but they also shut.

There is no way around this. Ukraine needs investment to grow and for the people to better their lives. People don’t leave Ukraine for Europe because of the politics or the way of life or for the European social safety net. They leave Ukraine because they see more opportunities there to provide for their families than are present in Ukraine. And regardless of the troubles that Europe faces right now, there are more opportunities there than there are here for Ukrainians. And that is true in economically stagnant places like Germany. (0.6% growth last year.) There are more opportunities in Germany with its economic stagnation and high unemployment rate, than there are here in Ukraine. That is scandalous.

If Ukraine is going to reverse that, it can only be done with outside investment. And there needs to be a lot of it.

And you can spare me the “resources belong to the people and should be used for their benefit” crap. Those resources are in the hands of a very few right now, much as the resources in any Latin American back water are in the hands of a very few. That is the way it has always been here. These very few now hold them in the name of capitalism. Those same resources were once held in the name of the people. But the results were very much the same. A small group of people enjoyed (enjoy) the benefits of those resources and the rest of the people be damned, or killed, or exiled, whichever is the flavor of the day. Exile is now out and killing is not on the scale it once was, not anywhere near, but I am not so sure that people here are eating like they should—they can’t afford to. So suffering and death may still be very real.

Some blame the oligarchs and argue that the government needs to retain the power to fight these oligarchs who control the resources. They argue that Tymoshenko was the one to do it and she was on her way to doing it until dismissed by Yuschenko.

That she was doing things is true. That she was confronting some of the oligarchs is also true. But what she was really doing economically was redistributing wealth using state power. And the result was greater inflation, rising prices and a people who cannot afford to live.

In her television interview, Tymoshenko said that any rise in prices was offset by the increases her government made in wages and pensions. That was disingenuous. The wage increases don’t track with the price increases and not all are tied to the government—there is commerce and industry here that hasn’t seen much of any wage increase.

We know of people who are living on 300 hryvna a month. That is $60 to live on for the month and these are government employees. A lot of the prices for food are at US levels right now. To buy a chicken, a single, whole chicken, for instance, costs one-tenth that salary. (The increase on chicken has been about 30% in the past 6 months.) And the same thing is true on other items. My wife and I think there are a lot of people who can’t be eating all that well right now. They don’t have the money to.

I’ve got news for everyone, it is not the power of the government that will deal with entrenched oligarchic power. It will be the reforms of government, dealing with corruption and opening things up to competition that will do it.

One thing here is a real type of the attitude of the people in government and most everywhere else. It is the closed door. If you go to any building here, any hospital or government agency or store, you will find a full set of doors across the front to get in just like in any entranceway in any building in the US. The difference here is that only one of those doors will be open. (You will find some exceptions to this--usually Western companies like a McDonalds--but very few.)

If people want to know what is wrong and how to set it right I will just say, “Open up the doors!” Open up for investment and competition--open everything up-- and see the oligarchs wither away and die. And see the people better off than they have been, ever.

I do have something to say about the “Yuschenko is as much responsible for this as Tymoshenko” argument but I have other things I need to do right now.

What was given up

According to this article--FT.com / World / Europe - Yushchenko overcomes crisis in Ukraine--this was given up in the vote for PM:

Mr Yushchenko and Mr Yanukovich jointly pledged to ensure fair parliamentary elections in March and to adopt an amnesty for all people suspected of forging votes in last year's elections, in which Mr Yanukovich was initially declared the winner until Mr Yushchenko convinced the Supreme Court that the voting had been rigged and a re-run was held which Mr Yushchenko won.

In other words, the only thing that could be considered new would be the amnesty. The rest he was sorta, kinda obligated to do anyway.

Of course, there was some talk he would repudiate the amendments giving the PM and Parliament the major power. If that was the case, you could argue that he gave that up with the agreement. But, really, this agreement doesn't obligate him to do anything in the end. If he repudiated it, people would accuse him of opportunism. That wouldn't be anything more than he will be charged with now anyway. But if it serves a larger purpose, he could and should do it down the road if he needs to.

The real problem is that something needs to get done. There needs to be some real reform and quick in the next few months. The past eight months or so have been a total waste in terms of what has been done compared with what should have been done and could have been done, the squandered opportunities. Get something done and all of this will have been justified.

And he needs to get out and tell the people about it.

Yekhanurov is in

According to the radio, Yuschenko resubmitted Yekhanurov to the Rada and he was confirmed. I don't know the vote count right now but it will be interesting to see how close it was.

I wonder how much if anything was given up.

More on New Orleans violence

Here's a bit more on the kinds of crimes and violence that occurred in New Orleans in the aftermath of Katrina--Katrina highlights Big Easy's violence.

After the storm came the carjackers and burglars. Then came the shootouts and the chemical explosions that shook the restored Victorian houses in New Orleans' Algiers Point neighborhood.

"The hurricane was a breeze compared with the crime and terror that followed," said Gregg Harris, a psychotherapist who lives in the battered area.

And they all just did it for the food.

More hurricanes

First Katrina and now Rita. According to reports, Rita is bearing down on the Gulf Coast of Texas. I didn't get when they thought landfall would be but there is evacuation going on in Houston and Galveston is apparently a ghost town right now. Everyone, or most everyone, is gone. Can't believe it.

I grew up in Texas and remember hurricane Beulah, 1967 it was, and Celia in 1970. Beulah is the one I remember most. Lots of rain and flooding up in San Antonio where we lived, high winds, though not hurricane force, and tornadoes. We of course were 120 miles away from the coast so we wouldn't have gotten the hurricane force winds. What we did get though was quite a bit. But it was a real big deal further down near Corpus Christi and that area.

I was in grade school at the time and I remember walking home and seeing some fish along the fence line of the school grounds. I thought that the hurricane had sucked up fish from the Gulf of Mexico and had dropped them over San Antonio, with some ending up by the school fence. That made the hurricane a very impressive thing to me. The problem with my theory is that I only found fish in that one spot so, thinking about it now, someone probably just dumped some fish there from their trip to the lake to get rid of them. Someone was always making a trip to the lake--can't remember the lake there now-- or to the coast and cleaning out their boat in their driveway or alongside the road.

Even so Beulah was a big deal and it impressed me enough to remember it.

I do hope for the best for Texas. I was born there and lived a lot of my life there.

One thing I can say though with a lot of confidence: Texans will not permit looting and lawlessness. They take that sort of thing personal.

Enough votes now?

Looks like it was a matter of poor "get out the vote" efforts and vote counting. According to this article--Kyiv Post. Yushchenko to resubmit Yekhanurov; rejects Tymoshenko�s offer--they've got the votes now.

[Yuschenko spokewoman, Irina Gerashchenko] said Yushchenko believes Yekhanurov, whose candidacy was rejected Sept. 20, now has the necessary backing to win the 226 votes he needs.

Yushchenko's decision came after a four-hour meeting with parliamentary faction leaders, which also included Tymoshenko and last year's losing presidential candidate Viktor Yanukovych, whose party had abstained from the Sept. 20 vote. Tymoshenko had proposed earlier in the day that Yushchenko form an alliance with her that would give her back the prime minister's job.

Petro Symonenko, the leader of the Communist Party, told Ukraine's Channel 5 that Yushchenko hadn't convinced any new factions to support Yekhanurov, but would pick up votes from some groups whose members had split during the Sept. 20 ballot.

They have to learn what Morgan Williams, editor of the Action Ukraine Report, says the experts were saying in Washington yesterday: A non vote is better than a no vote. A no vote is a defeat and a defeat is not a good thing. It means weakness and in politics when weakness is sensed, the politicos gather for a piece of the hide. Makes negotiations tough. "Why give up something when I can wait for the demise and take it myself?"

Tapping files with his finger

Tapping files and saying, "I have the evidence right here!" is a familiar thing to Americans. But it ain't the same thing as evidence--Ukrainian Journal .

Now kompromat is the tactic? Central control of the economy, orders to governors to bring in higher agricultural yields, state control over oil refineries, and now kompromat. Could it be simply a case of nostalgia, a longing for the good old days?

In response to Turchynov's claim, reported here, that there was no evidence he had been poisoned, Yuschenko responded

"That's rubbish," Yushchenko said in New York where he is attending a U.N. General Assembly session. "The SBU didn't have enough time for the investigation
because it had been busy spying on friends."

That says it all doesn't it? And it's a good start. Yuschenko should beat them over the head with those files. All this effort to get a government in place and Tymoshenko and allies give press conferences tapping files with the evidence, well, er, inside of course.

Some of this might be Yuschenko's fault though. He should have been a bit more circumspect in what he alleged about Tymoshenko. But he said she was busy trying to get the debts of her company canceled as PM. Who knows if it is true, but it is an allegation of something big and highly damaging and it is not easily proven. It is natural for people to want some evidence of it rather than a statement that it was done. Without that evidence forthcoming, it is susceptible to the claim that it is just nasty politicking. And it opens up the gate to tit for tat.

He needs better advice than he seems to be getting.

Anyway, just one more reason why Yuschenko needs to come out and make his case to the people.