Saturday, March 31, 2007

Yushchenko's spells out his demands

President Viktor Yushchenko promised at today's NU party conference to sign an 'ukaz' dismissing the VR "if the process of formation of a [ruling] coalition by anti-constitutional means does not end."

"If the activity of the majority is not renewed on a constitutional basis, I will sign an ukaz to dissolve parliament," said the president, appealing to the majority coalition of national unity [CNU] to 'end the process of usurpation of authority'.

Yushchenko demanded that at the next session of the VR, a decision be made to curtail the formation of the coalition on the basis of individual membership, and that the VR passes a law on the imperative mandate for VR deputies. The CNU is to ensure that 'all resonant matters' be examined 'without hindrance' in the Constitutional Court.

The head of state demanded the government and CNU ends 'politization of the law-enforcement agencies', and highly-placed officials who are not carrying out their duties satisfactorily in these law-enforcement agencies, be dismissed.

He demanded the constitutional reform process begin immediately and a united constitution committee begin its work next week. All changes in constitution must be discussed by April or May this year. The second stage of constitutional reform must be realized by autumn of this year.

Yushchenko noted that the positions set out in 'Universal' of national unity should be fixed in legislation, and a new version of law on the Cabinet of Ministers which takes into account the proposals of Head of The State must be accepted.

He added that after a compromise on these key issues between the President, the speaker of the VR and the KabMin is found, a new mechanism of collaboration should be agreed.

Negotiations are due to start on Monday.

Yushchenko has laid out his position clearly. The PoR-led coalition of national unity are firmly entrenched in power already, so could make concessions.
Tonight's opposition rally in the Maidan was well attended, strengthening Yushchenko's hand and putting pressure on the coalition to compromise.

A report in English from 'IHT' here.

[Many of the BYuT and NSNU VR deputies that, for various reasons, have already, or are considering drifting over to the Coalition of National Unity are high power businessmen. Their presence in the CNU could cause internal disturbances, e.g. it deprives the Communists of their casting vote. The 'new boys' are demanding a high price - Anatoliy Kinakh received a seat in the KabMin as Minister of Economics, which probably has upset some PoR pretenders for this position. None of them are keen on early elections. Some of the so-far loyal NU deputies like Petro Poroshenko do not want early elections either.]

Thursday, March 29, 2007

Will Yush 'pull the plug' on VR?

Read today's statement by President Yushchenko 'on the anniversary of last year's VR election' in English here and decide..

Maybe as a counter-bluff, Raisa Bohatyryova, co-ordinator of the parliamentary coalition and leader of the PoR fraction declares that early VR elections would lead to early Presidential elections [which Yush would lose].

But there is a big diffence between this and threatening to use a consitutional majority in the VR to over-ride any such decision by the President.

Wednesday, March 28, 2007

Will Kurochkin killing be solved?

The investigation into the killing of Russian 'businessman' Maksym Kurochkin is to be led by deputy Prosecutor-General Vitaliy Shchotkin.

Shchotkin is a 'dyed-in-the-wool' Donetskiite who from the late '80's until 1996 was one of the region's top investigators and prosecutors. He was then moved to Kyiv, where again he worked as one of 'top bananas' in the Proscutor-General's office. His career coincided with the most lawless years in the Donbas when virtually none of the dozens of organized crime killings and business feuds were solved by law enforcement agencies, and later, the dreadful Kuchma era.

He was involved in 'muddying the waters' in the unsolved 'Georgiy Gongadze murder investigation, and other cases.

PM Yanukovych considers Kurochkin's murder by a sniper's bullet in the yard of a Kyiv court-house yesterday to be: "most likely a business vendetta" [razbor] with no political motive.

Shchotkin's track record indicates he is precisely the man the authorities require to tackle the Kurochkin case...particularly as it seems there has been some 'previous' between the Russian 'Luzhnikovtsi' [linked to Kurochkin], and 'Donetski'.

On Saturday 31st March Yuriy Lutsenko's 'People's self-defence' movement are staging a mass meeting at Independence Square - Maidan. Apart from Lutsenko, Yuliya Tymoshenko and Vyacheslav Kyrylenko from NSNU are to appear.

This may be the last chance for the remnants of the OR to show 'Regiony' what degree of support that they can muster at the time when opposition VR deputies continue to drift to the Coalition of National Unity in parliament. 'Vlasti' will do all it can to sabotage the meeting and cause it to flop.

Mad Max croaked in Kyiv court-house

Today 'Mad' Max Kurochkin, a 38 year old Russian 'kriminalniy avtorytet/businessman' was shot dead by a sniper in the yard of the the Svyatoshinsky district law court in Kyiv. He died almost instantly after the bullet ripped through his heart. The man's career exceeds the wildest imagination of any 1930's gangster movie script writer, and his violent death exposes the dirty underside of Ukrainian business and politics.

Apart from a multitude of criminal activities including a violent battle for control of the massive 'Ozerka' market in Dnipropetrovsk , he had been linked to the killings of several businessmen. He was the owner of substantial assets in Ukraine including major hotels, Crimean sanatoria, and power utility companies - oblenergo's.

His biggest claim to fame was as executive director of the 'Russian Club' which actively supported Yanukovych's presidential campaign in autumn 2004. Other members of the 'club' included Gleb Pavlovsky - possibly the Kremlin's top political technologist, Kuchma's eminence gris Viktor Medvedchuk, and Russian ambassador in Ukraine Viktor Chernomyrdin. At that time Kurochkin had survived an attempt on his life from a car bomb explosion. This man was big trouble.

He had been detained since last November and had been charged with extortion. Kurochkin's business partner, Dnipropetrovsk central market head Volodymyr Vorobyov was shot dead at the end of last year. Several days ago a bullet-ridden Toyota Landcruiser containing three corpses was found near Kyiv, one of them was that of Kurochkin's personal bodyguard.

During his last court appearance he appeared to be deranged, and today, moments before his death, he declared to journalists that an attempt would be made on his life.

There will be much speculation about who ordered the 'hit' - there is certainly no shortage of suspects. He could have been a serious embarassment to top politicans, and a dangerous rival to 'big name' businessmen who gained their wealth by the same violent means as Kurochkin. The lack of protection from law enforcement officials could be considered criminal too.

Presidential secretariat head Viktor Baloha tonight delivered a line that may have come straight from one of those 1930's gangster movies: "The death of the accused on the eve of the court's verdict is a professional challenge to the police. The path from the courtroom should lead either to prison or to freedom, not to the cemetery."

Tuesday, March 27, 2007

Some more OP's

37% of Ukrainians trust Yanukovych fully or at least sometimes. Tymoshenko is trusted by an almost identical number of Ukrainians. A lot more detail [in English] from this recent OP here.

Yuriy Lutsenko, leader of the 'People's self-defence' movement does well too [bad news for PoR], as does Vitaliy Klychko, but the most striking statistic is the degree to which all of Ukraine's politicians are mistrusted. Least trusted are VR speaker Oleksandr Moroz and Communist leader Petro Symonenko.

If there were to be VR elections in the near future 36.7% of voters would definitely or probably vote for PoR.

35.2% would definitely or probably would vote for BYuT.

The figure for NU is 25.3%

On the list of 100 richest Ukrainians are 16 'Donetskiye'. Of these, 7 are PoR VR deputies and one is a Socialist party VR deputy. These 16 'Donetskiye' also include Vitaliy Hayduk - secretary of the National Security and Defence Council, deputy prime minister Andriy Klyuyev, and Serhiy Bubka - who is #3 on Yanuk's cell-phone directory list.

Do any of these richest Ukrainians relish the uncertainty of early elections?

Monday, March 26, 2007

New look for Yanuk

PM Viktor Yanukovych has addressed the nation on the first anniversary of last year's VR elections. "I would be insincere if I did not admit that everything that we have managed to achieve would have been impossible had we not drawn correct conclusions from the events of 2004, 2005 and 2006, and if we had not applied huge efforts in order to acquire and apply [this] new political experience." said Yanukovych.

He even felt confident enough to invite journalists to his Kyiv house, where he publicly admitted for the first time that he had 'been behind bars'. Speaking of his wife he said, "After we got to know one another in '69, in 1970 I wound up in prison. [But] she waited for me. I was released on '72 and immediately after this, after two months we married. She waited for me."

He also offered his perform his Roy Orbison [or was it Elvis?] impersonation [see photo], but lamely chickened out with the exuse that his guitar was out of tune.

Its looking good for Yanukovych and PoR - the president is faltering, opposition VR deputies are drifting over to the National Unity coalition, and there's even talk of a 'constitutional majority' of over 300 deputies by the summer. So why the heavy-handed hounding of Yuriy Lutsenko and his 'People's self-defence' movement which is not even registered as a political party? This, perhaps reveals more than staged appearances and speeches written spin doctors, PoR's true colours - and their weakness. Maybe they have not drawn correct conclusions from the events of 2004, 2005 and 2006, after all.

Lutsenko's public meeting in Kharkiv and the determined attempts by the city authorities and mayor Mikhailo Dobkin to disrupt it using foul means including the use of paid thugs, are described in 'Bez Tsenzury'. Dobkin was in London last week with Yuriy Boyko at an investment forum.
"You ain't nothin but a hound dog,
Cryin all the time..." [Elvis Presley]

Sunday, March 25, 2007

PoR threaten Lutsenko

PoR has posted a clunky 'strongly worded statement' [oooh!] filled with vintage '50's Soviet-style rhetoric, condemning declarations made by the ex-Minister of Internal affairs Yuri Lutsenko at a public meeting in Zhytomyr yesterday, and threatening that he will be called to account for them.

The PoR statement claims three forces drive 'People's self-defence' movement leader Lutsenko: cynicism, hatred, and a pathological need to destroy everyone and everything.

"Only a person stung by a pathological hatred to those who does not share his views is capable of demonstrating such a level of abuse towards authorities who are consistently leading the country's economy from a state of chaos onto the path of normal development.

Calling this 'avantyurizm' would be the correct definition of this phenomenon...Lutsenko has descended to loutish [khamskykh] comments directed at the acting government and its leader, no doubt in the expectation that the government and PM will lower themselves to his level. [Yanukovych's nickname when he spent 3 1/2 years in prison as a youth was 'kham' He has allegedly frequently used violence towards fellow ministers - LEvko]

He [Lutsenko] will be held responsible by the people he is calling to the barricades and who could succumb to this provocation. They will certainly ask him: in who's name are you inciting us to break up Ukraine? And indisputably punishment will be fair.."

The leader of "People's self-defence" Yuri Lutsenko had demanded at the meeting that prime minister Viktor Yanukovych give a report about his work in Kabmin over the year, "Victor Fedorovych, it is time to answer for the disorder! Either give us improvement - or go!", said Lutsenko, [referring to last year's PoR's election slogan.]

On the nascent coalition of national unity, Lutsenko said, "This is not the coalition of national unity, but a coalition of national traitors". The leader of "People self-defence" also issued a call to people present at the Zytomyr meeting to turn to VR speaker Oleksandr Moroz and ask: "What is the rate of exchange for pieces of silver today?", and also called Anatoliy Kinakh, who recently dumped NSNU to a accept a seat in the KabMin, a robot [dear oh dear..]

PoR are Lutsenko's best recruiting sergeants - their American PR advisers and spin doctors must be pulling their hair out.

p.s. Police detained Lutsenko's lawyer, who was present when Lutsenko's apartment was searched, for several hours yesterday.

Saturday, March 24, 2007

Back-stabbing in the bank boardroom

Oleksandr Morozov was sacked from his job as the head of Ukrainian national savings bank 'Oshchadbank' last Monday. I've posted previously on the attempts of 'Regionaly' to get their hands on this important state asset.

Morozov had been financial director of Yushchenko's NU bloc in 2002. Oleh Rybachuk, one of the top OR field commanders and a close aide of Yushchenko, was also sacked from the position of head of the bank's supervisory council.

Today Morozov is interviewed by 'Ukrainska Pravda' [In Ukrainian & Russian] and exposes a tangled web of power struggles so typical of contemporary Ukraine.

He claims that the Klyuyev brothers, who seem to be behind the forced change of management, have an unexpected ally in the ousting of the orange management of bank - the newly-appointed Minister of Foreign Affairs and Yushchenko confidante Arseniy Yatsenyuk. Apparently Morozov, when he was CEO of Oshchadbank, had denied Yatsenkyuk's requests for finance. The latter had been first deputy head of President Yushchenko's secretariat at the time.

Morozov is challenging his dismissal in the courts, claiming he is interested only in clearing his name of any impropriety.

He says he is proud that under his management, all procedures for obtaining credit and tendering operations were completely transparent. Even when new members of the supervisory council were appointed he proposed they attend any sessions of credit and tendering committees.

Now he fears that "Oshchadbank" will return the times when it was 'leased out' to the Social Democrats [close allies of Kuchma.]

He describes an extremely brief meeting with a boorish deputy PM Andriy Klyuyev, and suggests that Klyuyev has a difficult relationship with one of Yanukovych's closest aides Serhiy Lyovochkin with whom Morozov had friendly ties when they were both young bankers.

He claims that in several recent meetings with Yanukovych the PM expressed satisfaction with the way Oshchadbank was being run, and that he felt secure in his position as the bank's head. Even now, he does not feel that Yanukovych was responsible for his downfall.

Prior to Morozov's appointment he claims Oshchadbank had given credits in exchange for part of share capital of private businesses - of people who controlled the bank at that time.

The questioner asks Morozov if it is true that half a year ago, Yatsenyuk came to Oshchadbank with a request for money to fund a project under the aegis of the first lady of the Ukraine, and that Morozov turned this request down, so spoiling his relations with pres.

He guardedly replies, "Me and Yatsenyuk discussed the possibility of participation of "Oshchadbank" in financing humanitarian projects."

The interviewer suggests that Morozov's sacking was part of a deal whereby Yatsenyuk convinced Yushchenko give up his people from the management of Oshchadbank in exchange for preserving control over 'Ukreksimbank' into which Yatsenkiuk's men would be placed.

Morozov says that he has heard from several sources that on the minutes of the supervisory council meeting at which it was decided he would be sacked, the last signature on the list of supervisory council members present was that of Yan Bernazyuk, a close associate of Yatsenyuk. This despite Bernazyuk's absence at that session of the supervisory council.

He gives a broad hint that he was 'stitched up' by a "trio of the Petrovychs" - both the Klyuyevs, and also Yatsenyuk share that same patronymic.

One of Ukraine's biggest savings banks is now controlled by the chief organisers of the attempted 2004 presidential election steal.
ps Check out this tidy British website for info on Ukraine.

Friday, March 23, 2007

Authorities' O.R. tactics against students being repeated?

Yuriy Lutsenko's 'People self-defence' movement says that the Ukrainian Ministry of Education and Science recommends all Zhitomir city's secondary and higher educational institutions to conduct state monitoring exercises to check their students' progress at a time that coincide with Lutsenko's scheduled public meeting in Zhitomir.

According to 'People self-defence' press-service, on 21st March a telegram with the signature of Minister Stanislav Nikolayenko was sent to Zhitomir on the conducting of monitoring exercises on Friday 23rd March, at 17:30 hours. Lutsenko is due to appear in the Korolov square in that town at 18.00 hours as part of a nationwide tour. An interview on local TV is also planned.

During the Orange Revolution similar tactics were frequently used against students to hinder their attendance at opposition events or public meetings in any particular town.

If this is true then it merely reveals the stupidity of the authorities - clearly they must fear Lutsenko. Students seldom 'back the wrong horse.' Meat-heads like Minister of Internal Affairs Tsushko [see photo] and Nikolayenko never learn.


An article in 'Donbass' comparing the economy of the Donbas region with the remainder of the country includes this:

"Because of the corruption, and for other reasons, direct foreign investments (FDI) so far have largely passed Ukraine by. Nevertheless in the years since independence they have amounted to 21,2 billion dollars in total. In 2006 the figure was 4,3 billion dollars.

Figures for the Donetsk region are respectively 837,1 and 272,4 million dollars. Last year FDI reached record levels, exceeding those of 2005 by 3,3 times.

According to statistics, the greatest activity in this sphere was demonstrated by the British Virgin islands, located in the Caribbean. From there, 182,4 million dollars entered the country - 115,2 million dollars more than the previous year. Among other major investors were Austria, Great Britain, Germany, Cyprus, and the USA.

The Virgin Islands comprise forty islands with a total area of the land of 153 square kilometers and with the population of 18 thousand people..[hmm..]

And 'Regionaly' have gained control of both of Ukraine's state banks - 'Oshchadbank' and 'UkrEksImBank'. I posted previously on the Klyuyev brothers' attempts to do this recently. The Oschadbank's new CEO and head of the supervisory council are both men from the brothers' 'Aktivbank' - 38th largest in the country - big jump for them.

Thursday, March 22, 2007

Yuriy Boyko in London

Fuel and Energy Ministry of Ukraine Yuriy Boyko participated in the 'Ukrainian Energy Summit' in London last week. [Check out the photos in this link]

This from the reputable 'Independent Gas Consumer Alliance' site:

"A report originally published on a European website was distributed at the Ukrainian Energy summit. That report claims that RosUkrEnergo has connections with the Fuel and Energy Minister of Ukraine Yuriy Boyko and Naftogaz First Deputy Chairman of the Board Igor Voronin as well as Semen Mogilevich, an alleged crime figure named in a FBI most-wanted list in connection with allegations of money-laundering, securities fraud and racketeering.

Gazprom started to cooperate with Mogivelich and one of his companies - Hungarian off-shore Eural Trans Gas (the predecessor of RosUkrEnergo) in 2003. Eural Trans Gas had some agreements on gas transmission to Ukrainian pipeline and underground storages. From the storages the gas was transmitted to Europe. In 2003 the turnover of Eural Trans Gaz reached the point of $2 billion, and the profit from the transporting and reselling of the 35.4 bcm was $220 billion.

and this:

US investigation can halt RosUkrEnergo listing in London

The US Department of Justice has completed the investigation aimed to establish the true ownership of the Swiss-registered intermediary company RosUkrEnergo which imports natural gas into Ukraine.

The official findings of the inquiry are not released yet. But sources close to investigation have made clear that behind RosUkrEnergo there were certain interests of Semen Mogilevich, an FBI wanted alleged crime lord reportedly accused of fraud, corruption and racketeering.

The sources also hinted about the interests of high-profile Ukrainian politicians and officials, including Fuel and Energy Minister Yuri Boiko, in RosUkrEnergo. In London at the energetic summit the meeting of the Ukraine minister was crumpled by the questions of the journalists, concerning his connection with criminal circles and a possibility of breaking the contracts with RosUkrEnergo in connection with the new facts.

What is such a man doing running this vital Ukrainian ministry?

Wednesday, March 21, 2007

P-G's dogs go for Lutsenko

Lutsenko's Narodna Samooborona organization [People's self defence] is requesting supporters to picket the Prosecutor-General's investigative administration building in Kyiv tomorrow where their leader, former Minister of Internal Affairs Yuriy Lutsenko is to be questioned. The turn-out will be an indicator of the support he can muster.

LEvko thinks that 'nachal'stvo' got a shock in Kharkiv when they saw Lutsenko's crowd-pulling power last week. Some reports say that Yanukovych himself couldn't pull such a crowd when he last visited the city.

More on today's events from 'Unian':

The campaign against Lutsenko has escalated significantly with today's search of his apartment.

Search in Lutsenko’s flat aimed at disrupting protest action in Kyiv

Institute of Global Strategies director Vadym Karasyov is convinced that the search in the flat of ex-Interior Minister of Ukraine Yuri Lutsenko is aimed at disrupting potential protest actions in Kyiv. He said this in an interview to UNIAN.

“This is an attempt to behead the upcoming protest march, which had all chances to turn into rather a serious mass action in the center of the capital. This is an attempt to not only disrupt the march, but also to bring Yuri Lutsenko out of the frames of the current and future political play, by means of accusing him of crimes and, thus, creating him an image of a negative hero”, V.Karasyov said.

The political scientist regards the search as a move to frighten not only Yuri Lutsenko, but also People’s Self-Defense activists.

According to the expert, these actions indicate that the anti-crisis coalition tries to divide the current opposition into its components, and to sort them out with different methods: with the President – from the position of appeasement and quasi-compromises, with BYuT – by means of other instruments, and with People’s Self-Defense – using a strong-arm scenario."

The president's chief of staff has already sprung to Lutsenko's defence, calling the Prosecutor General's office 'and instrument of blackmail.’ Opposition politicians will be thinking hard how to react if Lutsenko continues to be harassed.

Nachal'stvo are giving Narodna Samooborona a powerful focus for their vague campaign.

A prescient article in today's 'Donbass' newspaper, printed on the eve of the search of Lutsenko's apartment defends 'Samooborona's' right to stage public meetings, and criticises the orchestrated campaign which is being led by the present Minister of Internal Affairs Chushko and the odious deputy P-G Renat Kuzmin against its leader Yuriy Lutsenko.

The article concludes: "Analyzing similar actions, you are involuntarily reminded of the arrests of participants of the "Ukraine without Kuchma" campaign in 2001. Any excuse is being sought in order that Lutsenko suffers the same fate as Yulia Timoshenko and ends up in prison even before the planned 'March for Justice'. The policy of fighting those who think differently using repression is returning. Perhaps as a matter of fact, in order to prevent this, movements such as 'People's self defence' are necessary."

Tuesday, March 20, 2007

Moroz's corrupt VAT lobbying

Documents in the possession of "Glavred", attest to the fact that BYuT and the SotsPartiya Ukrainy are much closer than it would seem, particularly in business matters.
The above-mentioned periodical today publishes copies of two letters hand-written by VR speaker and veteran Ukrainian Socialist leader Oleksandr Moroz to the MinAgroPolitiki, and to vice PM Mykola Azarov, in which he shamelessly lobbies the interests of a private company "Kreativ' co-owned by Kirovograd deputy mayor and wheeler-dealer , BYuT member Stanislav Berezkin.

In the first letter, to the Minister of Agrarian policy Yuriy Melnyk, dated 15th December 2006, Moroz describes 'Kreativ' as a company that "actually works at the solution of a strategic problem - the production of bio-fuel, and can ensure large investments for the development of corresponding capacity". Oleksandr Moroz requests the company is put on the "list of enterprises, called up to the appropriate program". 'Glavred' says that he is talking about the granting of tax privileges.

The second letter, dated 28th February 2007, is to the first vice- premier Mykola Azarov and asks for"assistance in resolution of a question about the compensation of VAT for the same "Kreativ".

The letters were written at the request of Socialist deputy Mykola Sadoviy, in order that "Kreativ" receive 3,3 mln. hryven VAT refund. Sadoviy was once head of the Kirovovhrad SPU regional committee, and Stanislav Berezkin is his regional compatriot. Sadoviy, naturally receives a cut of the refund.

Stanislav Berezkin has been investigated in the the past by Kirovograd organized crime investigation administration on suspicion of abuse of official position during his work in the city hall, and machinations involving municipal property.

The ' Glavred' piece has many more details on the VAT scam being pulled by 'Kreativ' in this case.

LEvko says it's an example how politics in Ukraine all too often works. Ukraine is a deeply corrupt country - this story will hardly cause a ripple.

ps Azarov, a VAT fiddle specialist, has some shady business connections in Kirovohrad too.

Saturday, March 17, 2007

Grabbing chairs in Oshchadbank's boardroom

Last August, after almost endless squabbling, the VR anti-crisis coalition was finally formed. Yushchenko proposed Yanukovych's candidature for PM and it was quickly approved the VR.

The day Yanukovych was voted into office, events took place that in the words of 'Lvivska Hazeta' were reminiscent of the 1917 Bolshevik revolution when the order was: "Seize the banks, telegraph offices, and bridges!" An attempt was made in the VR to indecently rush through and appoint new faces, mostly from PoR's top echelons, to the National Bank of Ukraine's supervisory council, even before the Cabinet of Ministers [KabMin] was ratified. Similar propositions on the appointment of new people to the supervisory council of State Savings Bank of Ukraine [Oshchad bank], and Ukr-Ex-Im-Bank, were similarly forced to a vote. All these proposals, however, failed to garner the necessary number of votes, and fell through.

In recent days there have been determined attempts, led by deputy PM Andriy Klyuyev and his associates, to take control of Oshchad bank again.

The bank's supervisory council comprises 5 presidential appointees, 5 KabMin appointees and 5 VR appointees. Recently the KabMin resolved to appoint its 5 candidates, but the president stopped this and turned to the Consititutional court for support because two of the KabMin's candidates already have highly-placed positions in government - combining these with seats on the Oshchadbank's supervisory council is not allowed by the constitution.

The KabMin decided not to wait any longer for the court's decision, and on the 14th March renewed their list of names.

On Friday, Oshchad bank's supervisory council were scheduled to meet, but only 9 council members turned up, one short of a quorum. [I assume that 5 of the absentees were president's men.]

The most significant matter on the agenda was to be the appointment of a new supervisory council chairman which would result in a de-facto hand-over of control of the bank to the KabMin. The chairman of the bank board was to be replaced also.

Donetsk politicial old-hand and now vice-premier Volodymyr Rybak led the KabMin's delegation. The supervisory council is currently chaired by leading Orange Revolution organizer and former presidential admin. chief of staff, Oleh Rybachuk , who claims the bank is well run and no changes are necessary.

Yuliya Tymoshenko had ordered her man not to attend the meeting, but he disobeyed her because "he cannot refuse the Klyuyev brothers' urgings to change the bank's management, as his and his family's future hangs on this." Allegedly his family had been threatened. In the event it was a Socialist who went missing having been 'taken ill'. The chairman of the bank reported sick too. According to Ukrainian law, persons on sick-leave cannot be sacked until they return back fit to work, a 'wheeze' pulled by many pro-PoR officials immediately after the O.R.

To prevent the 'attack' on their bank and to 'play for time' its administration called in sanitary inspectors and rodent exterminators to lay down rat poison in order to close down the building on that day, but to no avail. A postponed meeting is to take place next Monday.

LEvko says this affair is a minor example of the battles currently being fought between the president, government, and opposition. But why should the president have 1/3 of the seats in the bank supervisory council? Same goes for the Kabmin. Maybe it would be better to have supervisory council members chosen on a 50-50 basis between ruling coalition and parliament. But then the pres. wouldn't buy that would he? 'Nobody trusts nobody no more'.

As I have said before, PoR's urgency to grasp control of Oshchad bank reminds me of the old joke, when a crook was asked by a court judge, 'Why do you rob banks?" he replied, "You are so stupid for a judge.. it's because that's where the money is of course."

Note: "Oschadbank is State-owned and headquartered in Kiev, Ukraine. The successor of “Soviet State Savings Bank of Ukraine” JSC State Savings Bank of Ukraine was registered by the National Bank of Ukraine on 31 December 1991. Oschadbank gained its present status of an open joint-stock company in 1999. The General License of Oschadbank allows it to operate a universal commercial bank in every segment of the financial market, providing its customers with the full range of banking services. The State through the Cabinet of Ministers of Ukraine owns 100 per cent of Oschadbank’s shares. The bank traditionally specialises in serving individuals (households) throughout its extensive branch network." [From the bank's website.]

Friday, March 16, 2007

Reprivatization, or something else?

Kyiv Post have run a story today on the possible reprivatizations of Mariupol MetKombinat and Nikopol Ferroalloy Plant. The article is OK but fails to point out these two cases are less about the Ukrainian state obtaining a fair price for assets previously sold cheap to insiders during the Kuchma regime, and more about ferocious battles between rival Financial Industrial Groups who would like to grab or hold onto these significant assets.

SCM [and possibly Pinchuk's 'Interpipe'] would be very interested in aquiring MMK in any resale, particularly at a preferential price.

The article fails to mention that MMK's boss, Volodymyr Boyko is Socialist Party of Ukraine's main financial sponsor, and SPU are a vital part of the VR anti-crisis coalition.

Some observers say that the there is little chance of MMK being reprivatized because of the leverage which could be applied by VR speaker and SPU boss Oleksandr Moroz, and socialist State Property Fund head Valentyna Semenyuk.

Others are not so sure about this. I posted about this last week here.

Nikopol Ferroalloy Plant was part-owned by two of Ukraine's most powerful oligarchs - Viktor Pinchuk and Ihor Kolomoyskyi. Since Pinchuk recieved a further lion's share of the company these two, with the support of their political sympathizers, had been at one another's throats, but with the threat of privatization, they are co-operating. It is now looking as if privatization of NFP has been 'kicked into the long grass' too.
More on this from me here.

Thursday, March 15, 2007

Global reconciliation?

A feature of contemporary Ukrainian politics is the constant shifting in alliances between Yushchenko-Yanukovych-Tymoshenko-Moroz that reminds me the old Microsoft screen-saver, (called 'Mystify')where sides of a polygon constantly get bigger or smaller and rotate [the main protagonists being the apexes of the polygon].

A couple of weeks ago a BYuT-NU opposition agreement was signed by Tymoshenko and head of the NU council and chief of the Presidential secretariat Viktor Baloha.

Today a meeting took place between Yushchenko-Yanukovych-Moroz. This was followed by a session of the powerful National Security and Defence Council [see photo of the two Viktors, Azarov and NSDC secretary Hayduk]. The planned agenda on global warning and other matters was altered, and discussions took place on stabilization of the turbulent relations between the President, the parliament and the government.

Tymoshenko immediately reacted saying, "It seems to me that while I left Kyiv for [just] half a day this criminal government has somehow entangled Viktor Andriyevych [Yush] in its plans, and has again attempted to drag him down a road with no end."

When asked about the further fate of the union between BYuT-NU and the president, she replied, "Our strategic plans on the defence of Ukraine, the defence of the people, are unchanged. And in whatever format we will do this, in coalition with opposition forces, or independently - we will do this. That's the main thing."

But it does look like Yush and Yanuk are drawing a bit closer together. A piece in Glavred entitled 'Global reconciliation instead of global warming', speculates that perhaps the Yanuk government is worried about the possibility of early parliamentary elections [which are being not too convincingly threatened by the opposition.]

Maybe the KabMin realizes that if the President bows to the wishes of the opposition and continues to refuse to sign off bills accepted by simple majority of votes, then the activity of government will be hampered, so it is better to negotiate with the Head of State after all.

Or maybe the President has realized that he cannot be Head of The State and leader of opposition simultaneously.

Now Yanukovych and the anti-crisis coalition may be ready to accept Yushchenko's choice for Foreign minister, the pro-western Volodymyr Ohryzko, something Yush hinted at after his meeting with Moroz and Yanuk., indicating new-found flexibility.

Tuesday, March 13, 2007

Old men behaving badly..

Mildly amusing video clip of a mass brawl which took place at a 'sitting' of the Kirovohrad city council today here.

Good cake-throwing technique is displayed, as well as gritty teamwork when elevating protagonists, enabling them throw punches further at opponents [is this legal?]

Monday, March 12, 2007

FIGs against elections

According to a recent O.P. , in February 62% of Ukrainians are against conducting early early elections. Only 21% support the idea. In March corresponding figures are 57 and 24%.

Political scientist Andriy Yermolayev says the calls for early elections by BYuT and NU are merely part of the fight by political elites for the national resource.

"In this current year Ukraine will enter the WTO. This year and next year large privatizations of major enterprises, and the creation of a market for land will take place [in Ukraine]. Powerful financial industrial assets are preparing for their inclusion into global corporations. And fights are being conducted around these active assets."

The last thing Financial Industrial Groups want to see right now is political upheaval, and the FIGs have clout. Neverthess, 15% of Donetsk oblast would like to see Yuliya T as president of Ukraine. ByuT are making some progress there.

Saturday, March 10, 2007

Tymoshenko's big tidy-up

I've paraphrased portions below from an op-ed article in today's big-selling 'Donbass' newspaper:

Opposition does not give authorities time to doze

The results of Yulia Tymoshenko's trips to the regions of the country have impressed even her most ardent sceptics. When two weeks ago the leader of opposition declared her intention to personally take part in the work of local councils in order to reduce housing and community charge tariffs [a campaign she called the big 'tidy-up or clean-up'] - no one expected this policy to be so successful on a national scale.

Everything began on 8th February, when the opposition organized by BYuT gained a victory in the Kiev city rada, where for the first time in a large city, there was almost a two-fold reduction in tariffs.

In the two weeks she travelled to Vinnitsya, Cherkassy, Khmel'nitskiy, L'viv, Lutsk and Bila Tserkva.

In spite of difficulties, tariffs were reduced in Cherkassy, Khmel'nitskiy, Lutsk and Bila Tservka. In Vinnitsya they created commission to check if increase in prices were justified.

Only in Lviv did the city council obstinately refuse to reduce tariffs by even one percent.

[The article says that this winter has been unseasonably mild, so reductions are absolutely in order.]

The trips caused the government to act and recognize that there are indeed abuses in the tariff sphere.

Despite the fact that more than half of Ukraine's coal is obtained in Donbass , and more than half of Ukraine's entire gas production is in the Kharkiv region, prices for heating have nevertheless increased several times. In spite of this the secretary of Donetsk town council Nikolai Levchenko still blamed increases in heating charges on Tymoshenko.

[Locally produced gas, which satisfies about 25% of Ukraine's requirements, is used almost exclusively for domestic purposes.]

In any event, it is good when there is an opposition. It can apply pressure on the authorities in order to decrease tariffs, and to solve other problems. In a word, it does not give the authorities time to sleep. Ther have been reports recently of possible early elections - it is necessary to remember that tomorrow people will make an objective evaluation of those, who put their hands into their pockets today.

'Donbass' is not often so forthright when writing about the opposition.

Friday, March 09, 2007

Pinchuk and Kolomoyskiy co-operate to hang on to NZF

After the O.R. the Tymoshenko government tried to keep declared promises and reprivatise assets that had been sold off to insiders at below-market prices with the blessing of the former president Leonid Kuchma. In the event only Kryvorizhstal was taken away from Rinat Akhmetov and Kuchma's son-in-law Viktor Pinchuk and reprivatized, to be later purchased in auction by Mittal steel at a much higher price.

Another major enterprise that had been earmarked for reprivatisation was Nikopol FerroAlloy Plant [NZF] owned by Viktor Pinchuk, who heads 'Interpipe', and Ihor Kolomoyskyi, co-owner of 'Privat Group'.

In 2005 the proposed reprivatisation of NZF created a 'big stink' between president Yushchenko and his Prime Minister, Yuliya Tymoshenko, who favoured minority shareholder Kolomoyskyi. [He is rumoured to be sympathetic to BYuT.]

But now it seems Pinchuk and Kolomoyskyi are co-operating again in order to hang on to NFZ. Today's 'Kommersant' gives an update. Here are some [paraphrased] bits:

"Victor Pinchuk and Igor Kolomoyskiy close ranks

The co-owners of NZF Victor Pinchuk and Igor Kolomoyskiy have combined in the fight against reprivatisation of the enterprise. Yesterday the State Property Fund stated that Victor Pinchuk's Ukrsotsbank has refused to carry out a court order to return to the state 50%+1 of NZF shares on the grounds that they have been transferred to another registered bearer - the Dnepropetrovsk registrar 'RK profit' Plc,which maintains registration document for a number of the enterprises of Igor Kolomoyskyi's 'Privat' group ". Experts consider that the head of the State Property Fund now has little chance in the fight against the united forces of two multi-millionaires.

NFZ is one of the world's biggest producers of ferroalloys (about 10% of world market). Estimated annual profits of the enterprise could be $500 million. In 2003 50%+1 of the state's shares were sold for $77,5 million to the 'Prydinproviye' consortium - part of Victor Pinchuk's "Interpipe". At that time Pinchuk already had possession of 23% of the company's shares, with 26% under the control of its co-owners, Igor Kolomoyskiy's "Privat" group.

In 2005 the Tymoshenko government challenged the privatization of the 'GosPaket' of NZF, and on 20th January, 2006, the chamber of administrative affairs of the Supreme Court finally confirmed the illegality of privatization. Ukrsotsbank now say they cannot satisfy a resolution made the supreme economic court at the beginning of this February and transfer 50%+1 of the shares of NZF back to the state. [Looks like its owners have its seems have done some 'fancy legal footwork' to avoid doing this].

The director of the union of blast-furnace workers Vladimir Tereshchenko is confident that the transfer of shares by Ukrsotsbank to a registrar close to the "Privat" group indicates that two co-owners of NZF have combined in the intention not to allow reprivatisation of the enterprise.

"Igor Kolomoyskiy and Victor Pinchuk, in essence, have come to an agreement," according to a legal observers. "These two owners possess such a powerful juridical and financial force, that the state property fund has little chance to reprivatise the plant".

The transfer of NZF shares to "Profit" will substantially complicate the process of their return to the state. The state property fund will now have to work through the courts again in order to try and get the shares returned - better for them to come to a peace deal with NZF's owners, say observers.

LEvko says this story highlighs a feature of contemporary Ukraine - avowed bitter political and business enemies will kiss, make up and co-operate for the sake of their own self-interest. Ukrainian politics in particular is full of turncoats.

Pinchuk has transformed himself into Ukraine's leading philantropist and is now quite chummy with Yushchenko. He has become a regular fixture at the World Economic Forum in Davos, where he 'showed Yanukovych the ropes' recently.

Thursday, March 08, 2007

Ukraine's future will be decided in the East

Heating has been cut off to 'hundreds of houses in which live tens of thousands of people' in the Lugansk towns on Sverdlovsk, Krasnodon, Byelovodsk and Lutugino, as a result of accrued communal services debts.

Electricity to sixty apartments, a school, and a psychiatric hospital in the town of Svatovo has been cut off for the same reason.

There are 'sit-ins' taking place in several Lugansk mines, where miners are unhappy about non payment of promised bonuses, and because many of their top managers have been replaced with 'donetski' by Serhiy Tulub, the coal industry minister. Workers at the Sverdlovsk engineering works specialising in mining equipment are also complaining that wages are not being paid. They say this is an attempt to deliberately run down personnel in order to improve prospects at an analagous SCM factory in Druzhkivsk, Donetsk oblast.

The Lugansk oblast council is dominated by PoR. The second largest party there in last year's VR elections were Vitrenko's progressive socialists - and they barely took 5% of the vote.

It is inevitable that in a democracy the popularity of the party in power falls with the passing of time. But in his article originally run in 'Trud' entitled "Battle for the east - where and how will the fate of Ukraine be solved", Aleksey Kuznetsov predicts that two forces - PoR and BYuT will dominate the political landscape of country, and that PoR's long term prospects are not great.

Here are some portions that I have either paraphrased or translated:

PoR are losing the confidence of the electorate even in their native region – Donbass.

The fight for the political future of the Ukraine today is taking place in the densely populated cities and the settlements of the industrial east and southeast. The support by the inhabitants of the East Ukraine for PoR is already on the wane. 'Regiony', have not made the life of their voters better as they promised. Public services charges and the prices in goods continue to grow, but wages have not increased substantially.

Even satisfaction that "we beat the 'orange' parties" is decreasing. 'Regiony' are repeating the mistakes of Nasha Ukraina, who, after coming to power completely forgot about its voters and promises which it had given them. However there has been little open warfare between Yanukovych's more disciplined companions-in-arms, in contrast to NU.

'Regiony' are still afloat, but their demise is just a question of time. The main political themes of the past ten years have been 'Ukraine with Kuchma' followed by "who will emerge victorious - the east or the West?" Today the conflict between the poor and the rich is coming to the fore.

The state should be the regulator in this eternal dispute. A democratic country may be considered to be a ship which sails against the wind, tacking one way, then the other. It maneuvers, turning into the wind first one side, then the another. Countries advance by social zigzags, by tacking. E.g in Great Britain the conservatives and labour parties hold the social equilibrium between capital and hired work force with enviable regularity, transferring authority between one other. [not quite true, but still..]

Ukraine has sailed on the 'oligarchial tack' through the criminal 90's, and is still on this tack. All the parties speak of their concern for the people - the working class, but in reality they protect the interests of their biggest investors, the oligarchs.

All of Ukraine's political parties defend the interests of their oligarchs and have one aim -to create conditions for the fastest enrichment of their investors at the expense of the remaining citizens of Ukraine. The only exception from this rule [according to the author] is BYuT. The battle for the future of Ukraine will be conducted not in the traditional orange regions - in the west and in the center, but in the industrialized east.

The huge human and economic potential of the industrialized east of Ukraine has always played a foremost role in the political set-up of the country. It was from here Kuchma came to replace Kravchuk. And it was from here that Yanukovych came to push out Yushchenko. It is possible that it is from here the future victory of Tymoshenko will be prepared.

Nowhere in Ukraine is the contrast between the rich and the poor more striking . Highly expensive foreign-brand automobiles are seen against the background of empty houses and broken roads, working plants against the background of the neglected housing – this is the typical landscape of eastern Ukraine.

New leaders capable of working with the voters in community associations are required i.e. in trade unions - Ukraine today stands on the threshold of trade-union revolution. The political force which will harness this new wave, will have every chance to succeed in the future battle for the voices of the workers of the East Ukraine. They understand this well already today in BYuT.

VR deputy and colleague of Yuliya T, Mikhail Volynets has for several years successfully worked to construct a network of independent trade unions in Donbass. 'B'yutovtsi' are smart enough not to go to the people with political slogans and under the banner of their party, whose name amongst Donetsk voters until recently generated hatred. So they have gone a different way.

Within a short period Volynets has created new trade-union organizations, not only for miners, but also for oil-industry workers, metallurgists, transport workers and teachers. Their task is not only to fight for the rights of workers, but also to prepare the ground for the next elections.

A time will come when new trade-union leaders, after winning battles with the administrations of different enterprises ,will gain the confidence of workers and form an army of the supporters for Yuliya Tymoshenko.

Attitudes change fast in Ukraine. Who would have thought than an associate of Pavlo Lazarenko, the head of a gas enterprise, a business woman from Dnipropetrovsk, would be supported by majority in the west and in the centre to the Ukraine, after moving ahead of Yushchenko - the idol of Galicians.

One of the most successful trade-union projects of Mikhail Volynets is the independent trade-union association "Oktan", at the Lisichansk oil refinery. Its head is Vladimir Novikov, a former deputy head of a traditional trade union, which existed from the Soviet times.

BYuT ensured the new trade union was well financed, and was supported by first-class lawyers and p.r. people. (Oktan" is registered not only in Ukraine, but also abroad). The leader of Oktan is already known to the entire regional press and to leading internet publications. Novikov has been aided by American specialists, who worked with the Polish trade union "Solidarity".

Oktan today has approximately a thousand members at British- Russian owned TNK-BP plant.

This only one example, only a beginning. Today for "NeoProfSoyuzy" it is important to maintain a high tempo of development and to strengthen their positions. .

Victory in future elections depends on who will be able to find common language with millions of working east of the Ukraine. We already know who has the sympathies of the voters of west and center of Ukraine.

LEvko says PoR have to start delivering tangible improvements in the standard of living soon otherwise some of the speculation above may become reality.

Tuesday, March 06, 2007

MMK to be reprivatized?

Last Wednesday it was announced that the Ukrainian Consitutional court is to examine a law passed in the VR in 2002 to permit privatization of a controlling block of shares in the giant Mariupol metallurgical combine im. Ilyich. [MMK], and determine if it was legal. MMK's owners, a worker's collective could be deprived of its ownership, and the the entire corporation reprivatized.

When Yuliya Tymoshenko's government reprivatized another Ukrainian steel giant, Kryvorizhstal, and resold it in an open auction in 2005 there were many weeks of sensational pro- and anti-government headlines. In the case of MMK, a comglomerate of similar magnitude and importance, there has hardly been a ripple of discontent even though some fear that the possible recovery of MMK by the state, now led the Yanukovych government, could lead to a new series of reprivatizations in the country. Why is this?

First a bit of history:

MMK im. Ilyich is one of three most important metallurgical enterprises in Ukraine. In 2006 its net income was 14,3 billion hvn ($2,83 billion), profits 1,7 billion hvn ($336 million). More than 90% of MMK shares are controlled by Socialist party VR deputy Vladimir Boyko. Apart from steel-making, MMK includes ship repair yards, an airline, food processing factories, farms, publishing houses, retail outlets including supermarkets and pharmacies, insurance companies..even a sausage factory!

Privatization of MMK im. Ilyich began in 1996 with 42% of shares being passed over to the workers' collective, the rest of the company remaining state-owned. Later the shares of the collective were transferred to "Ilyich- steel" PLC. On 2nd November, 2002, the VR passed a law on the privatization of MMK enabling 50%+1 of shares belonging at that time to state to be purchased by "Ilyich- steel" at the once-only 'special knock-down price' of 454 million hvn.

Some observers say that the 'attack' on MMK has several motives apart from obtaining a fairer price for the state coffers. Its CEO Vladimir Boyko is the major financial sponsor of the Ukrainian Socialist Party, so there is a political angle to this. In recent elections Socialist candidates in Mariupol performed much better than their PoR counterparts.

If MMK were to be reprivatized, Ukrainian's largest Financial Industrial Groups, Rinat Akmentov's SCM, and also Taruta's and Hayduk's IUD would dearly love to buy it up [particularly at a 'comfortable price' which could, no doubt, be arranged]. Rinat Akmetov is PoR's main financial sponsor - some estimates say 60 - 100 PoR VR deputies are 'his people'.

There is even some talk of these two leading FIG's even working together on the deal. I have posted previously on how sustained commercial pressure has been applied to MMK by its competitors for many months. Now the possibility of reprivatization seems to be quite high.

At first sight it seems risky that PoR's sponsors SCM would use their muscle to grab MMK and cause PoR to fall out with the Socialists, on whose votes they depend in their VR anti-crisis coalition. But if Socialist leader and VR speaker Oleksandr Moroz and his associates are already 'compromised' having accepted a 'bung' [bribe] to go into a coalition with PoR, and if IUD's Gayduk, now secretary of the National Security and Defence Council, and close to Yushchenko, were to be part of the 'carve-up'...

Hundreds of millions of dollars would be involved in any deal. Can the judges be trusted to be impartial?

Doesn't look good for MMK..

Friday, March 02, 2007

USA lays down its terms to Tymoshenko

Analysis in 'ProUa' on Tymshenko's trip to the USA here

As usual, I've translated some portions:

"A bi-polar model with Party of Regions and BYuT as poles would least suit Washington.

Early elections will become a reality when at least two of the three main players of Ukrainian politics consider it would be beneficial to them. At the beginning of the 20th century the possibility of war was discussed in many different countries, but it only started when they decided in key capitals that it would be better to be at war than to allow opponents to continue to strengthen their positions.

PoR leaders are starting to think that if they take a chance now then it may be possible to 'break the bank' and establish a monopoly of power in the country. There are few also in Yulia Tymoshenko's team who doubt the importance to use such chance.

In April of the last year, [just after the VR elections] during a meeting of of US vice-president Dick Cheney with the president of Ukraine Victor Yushchenko in Vilnius, the Americans suggested two possibilities: a "wide" coalition with PoR on condition of a westernized foreign policy and without Viktor Yanukovich in government, or an "orange" coalition led by Yulia Tymoshenko. It was understood, that the latter variant would mean Tymoshenko as PM.

The interest of Washington to BYuT noticeably fell away after subsequent events. Many supporters in favour of drawing Ukraine away from Russia began to search for ways of attracting the 'Regiony'. And many of PoR's leadership made big efforts to create an image in the West of image of reliable partners.

Now Tymposhenko has received a second chance to get support amongst parts of the American elite. First, attitudes between Russia and the USA continue to worsen steadily.
In both capitals, on the eve of presidential elections both in the USA and in Russia in 2008, influence is increasing of those who consider that it is important that the Ukraininian government clearly specifies on which one of the two geopolitical centers it is focused. This greatly complicates the adoption of a multi-vector policy for Yanukovych, and he certainly would not go for an open break with Moscow.

The anti-crisis coalition has not undertaken any distinct steps to make relations with Russia in the gas sphere more transparent. And recently talk of transfer of the management of the Ukrainian gas-transport system to Gazprom has frightened many in the American elite. All this has led Washington to look more favourably on Yulia Tymoshenko again.

But the most serious challenge for Tymoshenko is that in the USA they are awaiting from her an open demonstration of sympathy to a pro-western course - one that she for many years has tried to avoid in order to preserve the sympathies of voters of Eastern, Southern and Central Ukraine. The BYuT leader has never openly declared support for the idea of prompt membership of Ukraine in NATO, and has never spoke about the necessity of a greater openness in the Ukrainian economy for trans-national companies.

These policies are expected from her in the USA. It is a question not of promises at personal meetings, but of declaring these policies during any possible election campaign and including them in the program of any possible future government. In the document on the creation of a coalition in parliament which was signed last Saturday by both Tymoshenko and Viktor Baloha of NU, only the wish to obtain membership of the European Union is mentioned, Entry into NATO would be decided by referendum. These are the same policies as those proclaimed by PoR.

Despite numerous disappointments, in Washington there is still more faith in Yushchenko's team than to Tymoshenko's. The Americans demand, and will continue to demand from BYuT the support of the president and 'Our Ukraine' as the influential center of authority. This is necessary for Washington in order to control Tymoshenko and not allow her to stray beyond certain frameworks.

A two-party system having BYuT and PoR as its poles does not suit the Americans. In other words, the USA would like a repeat of the situation that existed during the first half-year 2005 when Tymoshenko headed the government, but [was forced to] operate under full control Yushchenko and his colleagues.

Tymoshenko and most of her team would do anything to avoid such supervision [again]."

I'm reminded of Tymshenko's words during a TV interview after the collapse of months of coalition formation negotiations with NU: "I am finished with giving other politicians leg-ups" [pidsadzhuvaty - to help one to mount a horse].. she is 'her own man'


Lack of feel-good factor

According to an article entitled 'Is it good for only two percent?' in Friday's'Donbass' newspaper:

"Only two percent of Ukrainians consider the economic situation in their country as 'good'; a further 27 percent rate it as 'average', according to OP results the consortium of the sociological organizations of the CIS "Eurasian monitoring".

This is the lowest index of all countries, where a similar study was conducted. For example, in Russia 13 percent have a positive view of the economic situation, and in Kazakhstan, 54 percent.

In contrast to this data, in the past year in Ukraine 370,000 automobiles were sold - 105,000 more than in the previous year, and the sum, spent by Ukrainians on their acquisition was $6,1B, (the comaparative figure in 2005 - $3,3Bn).

The market for cell phones in the Ukraine grew by 237 percent and its total value was $1,44Bn; and the volume of tourist services increased by 40 percent. Other sociological studies show there has been increases in the incomes too . According to data from the Razumkov Center, there were 25,3 percent of respondents, who said they "could hardly make ends meet" during January 2004 , and during December 2006 the figure was 16,3 percent."

LEvko says the lack of 'feel good factor' is bad news for for all parties, but in particular for PoR in the event of early elections. The reasons are whopping increases in housing and utility charges, a crumbling infrastructure, continuing corruption in many sectors of the economy including healthcare and education, a sense of injustice because a select few are enriching themselves at the expense of the masses, and apathy because leaders of all colours have let their supporters down and not fulfilled their election promises. Others say that Ukrainians will always be naturally miserable - it's just a national trait.

Oh, and there are many, many people who cannot afford an automobile or a mobile phone..

ps Yanukovych said in Odessa today that early elections, "could lead to the destabilization of the social and economic situation."

Early VR elections?

For a while now, there's been much talk by the leading Ukrainian politicos about the possibility of early VR [and possibly even presidential] elections. Yushchenko reminded everyone today that the procedures for early elections are accurately defined by the law, adding that declarations on such early elections are blackmail, provocation and psychological pressure, but he did not rule out the possiblity of such elections taking place.

Deputy PM and minister of finances Mykola Azarov also made some interesting statements yesterday in a radio interview. He confirmed that PoR representatives are preparing a bill on early parliamentary and presidential elections. Earlier this had been declared by PoR VR deptuty Vasiliy Kiselev. According to him the bill will be submitted to parliament tomorrow, 2nd March.

Azarov's statement attests to the fact that the "Regionaly" do not want to be linked to the 'Sotspartiya' and the Communists during the elections, even though Yanukovych came to power thanks to a coalition arranged with SPU leader Oleksandr Moroz. Since then the ratings of the SPU and CPU have fallen precipitously, and in the event of early elections both of these parties could possibly be 'wiped out'.

Yesterday BYuT leader Yulia Tymoshenko during her CSIS presentation in Washington stated that the crisis of authority in Ukraine cannot be overcome by means of a revolution, but by the calling early elections. The Americans seemed not object - the main thing is that the elections be fair and democratic.

Recent opinion polls conducted by the Research & Branding Group in February, indicate that if elections to the VR took place next Sunday, then the greatest support would be given to two political forces - Partiya Regioniv (28%) and BYuT (20%). "Our Ukraine" would receive only 7% of votes cast.

At the same time, according to another opinion poll conducted by the Kiev International Institute of Sociology, if Presidential elections took place in February, 39,2% of Ukrainians would vote for Yanukovych, 28,1% for Tymoshenko, and 13.1% for Yushchenko.

LEvko says Ukrainian OP's provide only a 'fuzzy' picture. BYuT have least to lose and most to gain. PoR could possibly obtain a useful absolute majority in the VR, particularly if numbers were to be 'adjusted' upwards again, but they already have a reasonably disciplined working majority. Perhaps they are getting a bit hubristic and over-confident. As a British politician one said, 'A week is a long time in politics.'

NU have much to lose - a vote for them would be a wasted vote - but no-one's excluding the possibility of early elections..

Thursday, March 01, 2007

Russian businesses in Ukraine

Interesting article [in Ukrainian and Russian] in the latest 'Kontrakty' business weekly, entitled 'Russians' creep - why it is impossible for Russian Financial Industrial Groups to buy up Ukraine'. It provides details of Ukrainian commerical enterprises controlled by Russian businessmen. The central thesis of the article is that the high competitive ability [konkurentosposobnost'] of Russian business in comparison with its Ukrainian counterparts is a myth.

I've translated just a few bits:

In the consumer and financial sectors of Ukraine the Russians are far from being leaders. This is not surprising, indeed even their home market is congested with western companies. Following Moscow, Petersburg and other large cities of the Federation, Russian consumer business began to move into Kyiv. However, they have not been able to squeeze out domestic retail networks in any way. E.g. the hundreds of millions of dollars that were supposed to be invested in a retail outlet network in Ukraine by 'Pyatyerochka' and 'Perekrestok' to capture a large portion of the Ukrainian market has yet to be seen. The only successful Russian distributor on the Ukrainian market that it is possible to name is perhaps the 'Yevroset' cell phone chain stores owned by Yevgeny Chichvarkin and "Eldorado" group. But the Russian network of household equipment stores clearly loses out to its Ukrainian competitor - 'Foxtrot'.

In the financial sector the Russians have not had too much success either.The market share in the banking sector of Russian establishments is not more than 2%: the Russian banks active in Ukraine, as a rule, only attend clients from a number of Russian business- groups..
Russians have found it hard to play an active role in the market for capital's real estate..
The high competitive ability of Russian business in comparison with Ukrainian is no more than a myth.

The secret of the success of Russian business in the Ukraine is simple: the business groups of the northern neighbor only dominate in sectors traditional to itself - communications, petroleum refining, and production of aluminum and alumina, where the Russian companies are amongst the world's leaders.

However, the Russians do not have sufficient experience, finances, or state support to expand in such branches as metallurgy, chemicals, or engineering, where the leading positions are occupied by Ukrainian FIGs.

This also applies to branches with the high level of competition - retailing, the financial sector and so forth where Russian players lose out not only to western companies which have entered the Ukrainian market, but also to local businesses, who are more familiar with the local realities.

The major lobbying power of Russians in Ukraine is also a myth.. the Ukrainian state, under the pressure fron domestic FIGs, have declined to privatize enterprises coveted by Russians.

The continuation of the expansion of Russian business groups into the Ukraine is highly improbable. Leading domestic FIG's already have their eye on attractive 'gosaktivy', e.g. 'Luganskteplovoz' or 'Ukrtelekom'. Russian FIGs have enough troubles in their own native country: the nationalization of large business taking place in Russia forces FIGs of our northern neighbor to pay greater attention to retention of existing assets and to IPO's, rather than to expansion into Ukraine.

The lot of Russians in our country remains the purchase of smaller companies, or at best the acquisition of assets which are not part of the production chains of Ukrainian magnates. Foreign oligarchs are not needed in Ukraine - we have sufficient of our own."

The article ends with a detailed list of Russian business assets in Ukraine.

ps Video of today's presentation by Yulia Tymoshenko at the CSIS here