Sunday, October 30, 2011

Ukrainian authorities not seeking solution to Association Agreement obstacles?

As I mentioned in my previous blog the firmest demand made it last week's Europarliament resolution on Ukraine was the insistence that Yulia Tymoshenko be allowed to participate in the country's political life right away.

This has not received much attention in the Ukrainian media, but in his show last Friday, Savik Shuster mentioned it as an aside during Petro Poroshenko's appearance.

Poroshenko is a passionate supporter of Ukraine's entry into the European Union and met most of Europe's 'top bananas' in Brussels and Strasbourg' a couple of weeks ago. He appealed to the Ukrainian goverment not to let the opportunity slip in the previous week's show.

The exchange is near the end of this video clip. Here is my transcript:

Shuster: ..[the Europarliament] demands, insists that Yulia Tymoshenko has the possibility, which is her right, to take part in political life right now and in future elections, so how can the authorities agree to this?

Poroshenko: If you want me to creatively suggest [to the authorities] tens of possibilities [how to do this] believe me, I have them. If you want songs, I have them, but I am deeply convinced that this should not be a matter of public discussion because the authorities know very well by what means they can get out of the situation into which they have driven themselves, and at the same time keep face, [and] at the same time save the face of our European friends and partners...

each of you know those who gave their time, their authority, their wishes onto the altar of Ukraine's Europeanness. And if there was a desire [to do this], then possibilities would be sought, if there is not a desire - reasons are sought. I think that lately the authorities are seeking reasons, not possibilities.

My guess is that there are lots of major businessmen of all colours who feel the same way as Poroshenko, and their disquiet will be growing. How much influence do they have on Yanukovych? Probably not that much...

p.s. Polish foreign minister Radoslav Sikorski, in a TV interview expressed his conviction that although the text of an association agreement with Ukraine, which depended on the Polish presidency, has been agreed and is a success, he is not prejudging anything. "President of Ukraine, Viktor Yanukovych, who is trying to raise the stakes with Europe by demanding the re-trial of Yulia Tymoshenko should be made aware of this. When raising the stakes you can overestimate the strength of your own cards," he warned.

Eminent international lawyer Robert Amsterdam recently wrote: "Although Yanukovych has already indicated that the [Tymoshenko] verdict can be reversed, the following day he flip-flopped back to obstinacy, presumably to avoid the perception that he was willing to give in to pressure. With so many conflicting motivations and key interests on the line, one is left with the impression that a high-stakes game has begun, and the main player is way out of his league."

Very true...

Saturday, October 29, 2011

Linkage in Europarliament resolution is clear

President Yanukovych's spokesmen are actively either trying to put a positive spin on Thursday's "European Parliament resolution on the current developments in Ukraine", or are accusing the EU of double or inconsistent standards. They are denying linkage between further progress in Ukraine's Euro-integration and Tymoshenko's release.

The resolution itself is quite clever.

[The Europarliament] "Welcomes the agreement that has been reached on the conclusion of a Deep and Comprehensive Free Trade Agreement; regards this agreement as a solid basis for the possible finalisation of the negotiations on an Association Agreement between the European Union and Ukraine."

i.e. The details of the free trade and association agreements are all but sorted. and are, one could say, 'ready to go'.

The resolution "calls on the Council and Commission to reschedule the meeting with President Yanukovych so that it takes place ahead of the planned EU-Ukraine Summit in December 2011"

An offer Yanukovych can hardly refuse - so the ball is now definitely in Ukraine's court.


[The Europarliament] "Takes the view that a deepening of relations between the EU and Ukraine and the fact of offering Ukraine a European perspective are of great significance and in the interests of both parties; recognises Ukraine's aspirations pursuant to Article 49 of the Treaty on European Union, provided that all criteria, including respect for the principles of democracy, human rights, fundamental freedoms and the rule of law, are met;

Deplores the sentencing of former Prime Minister Yulia Tymoshenko as a violation of human rights and an abuse of the judiciary for the purpose of the political suppression of Ukraine's leading opposition politician...[and] insists that Yulia Tymoshenko should be allowed to exercise her right to participate fully in the political process both as of now and in the forthcoming elections in Ukraine...

..expresses concern at some signs of decline in democratic freedoms and at the possible instrumentalisation of state institutions for partisan purposes and to exact political revenge"

Surely, if the EuroParliament insist Tymoshenko be allowed to participate fully in the political process right now..this means they are insisting she should be released right now, otherwise, no deal?

p.s. The official translation of "Deplores the sentencing of former Prime Minister Yulia Tymoshenko" is "Засуджує обвинувальний вирок..

I.m.h.o this sounds rather soft; maybe "Vvazhaye zhalyuhidnym..would be better..


Treaty on European Union Article 2: The Union is founded on the values of respect for human dignity, freedom, democracy, equality, the rule of law and respect for human rights, including the rights of persons belonging to minorities. These values are common to the Member States in a society in which pluralism, non-discrimination, tolerance, justice, solidarity and equality between women and men prevail.

Article 49, referred to in Thursday's European Parliament resolution, says that any European state that respects the "principles of liberty, democracy, respect for human rights and fundamental freedoms, and the rule of law", may apply to join the Union.

Thursday, October 27, 2011

All crooks at the top

'Ukrainska Pravda' has run several articles lately exposing corruption at the top of Ukraine's Mount Olympus. Here's a precis of what they say:

First Deputy Prime Minister Andriy Klyuyev heads a Government Commission for funding investment projects. One of the first decisions made this body on his appointment was to allocate state aid of about $ 25 million to a semiconductor factory in Zaporizhzhya earmarked for the development of solar power plants.

The main shareholder of the factory with a share of 75 percent, is the Vienna-based "Activ Solar GmbH" - it has been linked many times with Klyuyev himself.

Klyuyev's son-in-law, Kaveh Ertefai from Dubai, is a director. His son Bohdan is a business development manager at the company. Amongst its founders is "Slav Beteiligung GmbH" which is owned by the Kluyev brothers on a 50-50 basis. Slav Beteiligung's offices are in the same building as those of Activ Solar in Vienna.

The secretive end-owners of Activ Solar are a mysterious Leichtenstein-based company, 'P&A Corporate Trust', 1 Stocklerweg, Vaduz.

A major portion of Yanukovych's palatial 'Mezhyhirya' residence, as well as hunting lodges and large expanses of forest near Kyiv, are owned by London-registered Blythe (Europe) Ltd which in turn owns 35% of the Kyiv 'Tantalit' company. The director and nominated share holder of Blythe (Europe) Ltd is the same 'P&A Corporate Trust' registered at the same address in Leichtenstein.

Wikileaks reveals that Klyuyev and Yanukovych were almost certainly close business partners in the past. Is it possible they still are? The president 'plugged' the Zaporizhzhya factory in his scandalously plagiarised book, and actively promoted the sale of its solar panels during a recent visit to Greece.

Two years ago Yanukovych sold Klyuyev his Kyiv apartment for a grossly inflated price of $7m.

When Europeans decide whether to grant Associate Membership to Ukraine, or not, later this year, apart from the persecution of Tymoshenko, Lutsenko and others, these matters, as well as those I've recently blogged about, will be borne in mind as they vote.. No-one wants to invite pick-pockets to their house-party.

p.s. Ukraine's Foreign Ministry welcomed today's resolution [which was supported by all factions in the European Parliament] calling it: "A great victory." One PoR deputy called it "absolutely normal" and claimed "the main credit for this resolution should go to president Viktor Yanukovych". A few more victories like that ...

LEvko's view is that the EU's 'red lines' are very clear; all these statements are groundwork for internal consumption intended to shift blame elsewhere when the deal goes 'belly up'...

p.p.s. "One of the reasons the EU has reacted so harshly is they feel they've been hoodwinked twice by Yanukovych," said Andrew Wilson, a senior policy fellow with the London-based European Council on Foreign Relations. "The EU is entirely right to have taken the tough line with Ukraine. And in many ways they can and should be even tougher. Yanukovych's biggest problem in dealing with the EU is his belief that the rest of the world is as cynical as he is.
"Ukraine is always said to be at a crossroads, and because of this miscalculation, now they actually are."

Wednesday, October 26, 2011

Authorities' brazen greed knows no bounds

In June this year I posted several blogs about a huge scam involving the purchase by the state-owned 'ChornomorNaftohaz' company of an oil drilling rig but, not content with the $150 million kick-back from that deal, Energy Minister Yuriy Boyko has just pulled the same stunt again.

According to 'Dzerkalo Tyzhnya', 'ChornomorNaftohaz' has purchased yet another oil drilling platform, this time for $399.8 million. Tenders were received from three middlemen, all of them highly dubious, including from Highway Investment - the middlemen for the first oil rig.

The winners of the tender process this time were the Latvian Rigas Kugu company. They have nothing to do with oil platforms, but are merely a shipyard for construction and refurbishement of small-sized coastal vessels. Their majority share owner is a certain Vasyl Melnyk who is currently entangled in big-time scandals in his home country.

'D.T.' with the aid of the specialist U.S. consultants, 'Rigzone', found there are two oil drilling platforms currently available on the world market which would have suited ChornomorNaftohaz's requirements - both priced at $200m.

The publication consider rental of such a rig would be a far better bet - even optimistic oil production projections indicate that there is no need for purchase of such expensive capital equipment. Anyhow, after the scandal following the purchase of the first oil drilling platform, it would be reasonable to assume that the purchase of the second would be conducted in a 'squeeky clean' manner.

'D.T.' suggest the brazen attitude of ChornomorNaftogaz and Ukrainian ministers in this latest purchase indicates that the president himself must be involved in the scam too, particularly as ChornomorNaftogaz's parent company, 'NaftoHaz Ukrainy' is already up to its ears in debt.

In the light of such stories, the prosecution of opposition politicians looks even-more politically motivated. No wonder the Europeans are so disgusted with Ukraine's leaders whose commitment to fighting corruption is total hogwash.

The kleptomaniacs in the Ukrainian cabinet should take note of how things are done in other European countries. The British Business Secretary and cabinet member Vince Cable who has just been penalised by the taxman for failing to pay up to £25,000 in VAT on time. The £500 penalty was for late payment of tax on earnings from media work and speaking engagements in 2009-10 - the year before he became a minister.

p.s. An excellent, quick-paced television documentary, in Ukrainian, on the above-mentioned oil rig scandal from TVi here

Tuesday, October 25, 2011

Petroleum scam money used to fund PoR election campaign?

Nearly a year ago, I posted a blog about a huge scandal surrounding the importation of petroleum products into Ukraine via the mysterious "Livela" company.

A good overview was provided on the website:

"Problems of refineries in Ukraine

2011-01-19 Last week, the Supreme Administrative Court judgement passed a ruling confirming the mysterious Livela company’s right to the untaxed import of crude oil and fuels. This company is most likely linked to politicians belonging to the Party of Regions. The Court’s judgement may form the basis for the resumption of the company’s activities; it has led to multi-billion losses for the Ukrainian budget and harmed the profitability of the oil processing industry.

Livela is a daughter company of the secretive Taistra firm; it has been operating on the basis of an outdated Ukrainian law from 1992 on the protection of foreign investments, which exempts companies with foreign capital from the payment of taxes (customs duties, VAT and excise duties). Although the act expired in 2003, the next year Taistra managed to obtain a judgement from the Court which preserved its tax breaks. Livela worked actively from August to November 2010 to rapidly monopolise the market for fuel imports (resulting in an 80% market share). In December, in connection with a investigation by the anti-monopoly committee, Livela ceased its imports.

The losses to the Ukrainian budget amounted to approximately 3 billion hryvnia (US$375m). The import of cheap fuels has caused a decline in the profitability of refineries in Ukraine; the LUKoil refinery in Odessa suspended production in October. On 15 January, the Executive Director of TNK-BP in Ukraine announced that if the Government does not take measures to protect the Ukrainian petroleum industry, production in the group's refineries in Lysychansk will cease.

It is not known who benefits from Taistra’s activities, but it is clear that it must be supported at the highest level of the Party of Regions (some sources suggest that the first Deputy Prime Minister Andriy Kluyev is involved). If Livela resumes importing fuels, this could lead to the rapid bankruptcy of the already unprofitable Ukrainian oil-refining industry."

Many more details on "Livela" and "Taistra" here

Now 'Ukrainska Pravda's brave journalists run a story providing strong circumstantial evidence that Yanukovych and his band of crooks had indeed been using 'Livela' as a milch-cow, almost certainly to fund the nationwide 2010 local election campaign.

Amongst their conclusions:

According to the Ukrainian customs data, "Livela" and "Taistra" actively imported fuel in 2004, 2007 and 2010, respectively. Viktor Yanukovych was either prime minister or president during these years,

In the summer of 2010, when the Party of Regions began to prepare for country-wide local elections the PoR headquarters were headed by First Deputy Prime Minister of Ukraine, Andriy Klyuyev.

"Taistra" is linked, via PoR parliamentary deputy Volodymyr Zubyk, to a big-time property developer 'InterHalBud' which has probably been used, in turn, to 'legalise' 'Taystra's liquid assets - converting them into high-rise residences and other buildings. Zubyk has previously been associated with Klyuyev.

According to the Ukrainian customs data, "Livela" started to import fuel to Ukraine again in August 2010. A month later the electoral campaign for election of deputies and heads of local councils was launched.

Local elections formally ended on November 3rd. According to the country's customs service, on the 23rd of that month, "Livela" ceased importing fuel to Ukraine.

The 'U.P' article provides a stunning graphic for the last 5 months of 2010 showing the quantity of diesel and petroleum that was imported by 'Livela' during that period and its correlation with the 2010 election campaign... In November 2010 around 80% of the country's diesel and gasoline was imported via "Livela" - in December it dropped to zero.

p.s. Is it any wonder that the EU are wary of signing Association Agreements with party leaders who 'legally' steal money from state coffers to fund their political election campaigns while at the same time they imprison political rivals e.g. for 'overpaying their driver'?

p.p.s. From a recent thoughtful essay "Expanding the EU’s Ostpolitik" by Thomas de Waal

"To these [Eastern Partnership] oligarchic elites the EU’s toughly regulated economy model is, as one Brussels official put it to me, a “Trojan horse,” which could undermine everything they currently possess. Which is why with three of the six countries—Armenia, Azerbaijan, and Belarus—there is currently no prospect of any free trade agreement and in the other three—Georgia, Moldova, and Ukraine—there is resistance to the proposed Deep and Comprehensive Free Trade Area (DCFTA) with the EU. [No more 'Livela fiddles for a start..LEvko]

Viktor Yanukovych’s Ukraine is the starkest example of this duality. The Ukrainian leadership knows that the EU offers its best development model and route out of poverty, but the short-term political agenda—put crudely, the preservation of power and wealth—trumps a longer-term vision. The jailing of former prime minister Yulia Tymoshenko on October 11 was a slap in the face to concerted efforts by the EU to encourage Ukraine to look west...."

....If a new Ostpolitik is to have a really transformative effect in these post-Soviet countries, then its central component should be an eventual membership perspective. Those who baulk at this prospect should not just consider the positive outcomes it could bring but also the negatives of a continuing status quo. In the eastern regions of Belarus, Moldova, and Ukraine, that would mean they remain a continuing source of criminality, poverty, and perhaps political repression, while in the South Caucasus, that means they will continue to be sources of potential conflict and disaster—while in both cases the big western neighbor of these regions, the EU, will inevitably end up fighting the fires and footing the bills." [Hmmm...]

Monday, October 24, 2011

Could anyone do any better?

On Friday's 'Shuster Live' programme, former president Yushchenko expained why Ukraine is paying far to much for Russian gas. He used a marker and board, drawing complex, and i.m.o. very poorly drawn 'back-of-an envelope' diagrams and figures. For someone who claimed he was 'one of the best five bankers in the world' it was all very unprofessional - terrible white-board work. Has he not heard of Powerpoint?

Naturally all of her enemies claim Yulia Tymoshenko is to blame for the dreadful 2009 gas deal.
But what none of them can explain is how, under the same circumstances, they would have done better.

It seem to me the only way this could be done is if either Putin confesses he bribed Tymoshenko to do a bad deal [solid evidence of this, rather than conjecture would need to be produced], or Putin openly declares that another Ukrainian interlocutor would have been granted a better deal. Either are hardly likely.

What Yushchenko should have said is: if you buy from a monopolist supplier, you always get screwed, particularly if you are one of the world's biggest consumers of the product being purchased.The Russians are smarter, they have spend billions on North Stream - to deny Ukraine being a monopolist transitter of gas....Like the meerkat in this amusing advert says: "Seempels".

Thursday, October 20, 2011

Why Tymoshenko is the deal-breaker..

"The European Union said on Thursday it had reached a technical agreement with Ukraine on a free trade deal, but linked its implementation on Kyiv's treatment of the jailed former prime minister and opposition leader, Yulia Tymoshenko."

Rather than a softer mattress and warmer radiator..pineapple chunks for cocoa before bed....'treatment' surely means release from jail, no?

Yesterday, president Yanukovych was interviewed on television. He commented only once, unprompted, on the Tymoshenko fiasco:

"[As for the] Tymoshenko case ... I am convinced that time will pass - and everything will stand its own place. If she is innocent - the court will make a decision, and this will be the decision of the court. If she is guilty - she will bear responsibility. So I do not even want to comment. This process will, at the end of the day, eventually come to an end."

Tymoshenko, as every man and his dog knows, was found guilty on October 11th and sentenced to seven years in jail for her crimes, so how come the "if she is innocent"?

It seems to me Yanukovych's Freudian slip reveals she is being used a bargaining chip or hostage in the Russian vector/EU vector game, while at the same time her political career is being destroyed - she may well be innocent after all...

Maybe he even admires his adverary. Unlike him and his buddies she did not run for the hills like a timid rabbit, as they did in 2004, even though this was suggested to her by intermediaries..

Some commentators, with the best interests of Ukraine at heart, and out of geopolitical considerations, say the EU should perhaps cast a blind eye onto what is going on in the country and allow Ukraine to sign up to the club.

I googled "Why was the EU founded?" This is what came up top :

"The overall aim of the EEC/EU, since its foundation in 1958, is to promote peace; the values of human rights; democracy; equality; the rule of law; and the well-being of its peoples. These values are the bedrock of the EU’s work and its role in the world....

The European Union is a unique body. No other part of the world has such an organisation whose mission is to bring countries together to pursue shared interests and values."

Nothing to do with geopolitics, my friends.

Wednesday, October 19, 2011

What 'Der Spiegel' thinks about Ukraine..

Check out:

"Ukraine Retreats to a Dark Past"

"Ukraine May Soon Have Pariah Status Like Belarus"

Cf. President Yanukovych today claiming: "Ukraine's reputation is gradually growing in the world. We are returning respect, we are returning trust".

Yanuk fails marshmallow experiment

Many years ago, in the now-famous Stanford marshmallow experiment, children were led into a room, empty of distractions, where a treat of their choice (Oreo cookie, marshmallow, or pretzel stick) was placed on a table, by a chair. The children could eat the marshmallow, the researchers said, but if they waited for fifteen minutes without giving in to the temptation, they would be rewarded with a second marshmallow.

Years later the experiment revealed a strong correlation between a children's capacity for deferred gratification and their success in later life.

As Oleksandr Motyl points out, president Yanukovych could have waited for EU association and free-trade agreements to be signed late this year before 'setting the dogs' onto Tymoshenko. She posed no threat to the president, and the country's organs of power were all under his firm grip.

He would have basked in the glory of successfully signed agreements, and the future would have looked rosy. There would have been plenty of time to 'deal with' the Tymoshenko problem if there were to be any sign of uplift in her ratings.

Playing off the EU against Russia in order to obtain the best possible result for his country makes some kind of sense, but why mess all of this up with the Tymoshenko trial and sentencing?

The man couldn't wait to gobble up the fluffy marshmallow..

Tuesday, October 18, 2011

Three scenarios from 'Segodnya'

Today's big-selling, PoR-leaning 'Segodnya' newspaper runs a story which depicts three scenarios "that the West could choose" for Ukraine, following Yulia Tymoshenko's inprisonment.

The first is that the furore will die down quite soon and Tymoshenko will soon be forgotten - the likelyhood of such scenario is 60%, they suggest. The Europeans and the USA will not want to push Ukraine too far into isolation or into Russia's hands, for geo-political reasons, and some EU countries [apparently?] fear loss of business opportunities. As a result, the association and free trade agreements with the EU will be signed. Closer euro-integration will [hopefully?] speed up democratisation processes in Ukraine. Naturally, this is the scenario envisaged by the president and his advisers.

The second is the 'Belarusisation'of Ukraine. 'Segodnya' suggests a 30% likelyhood and claims Germany, France and Italy are perhaps not too keen on closer ties between Ukraine and the EU, because of their relationships with Russia. They could even support Belarus-type sanctions against Ukraine. The Kremlin's position vis a vis Ukraine's would become stronger in such circumstances.

The final scenario, which they say is 'hypothetical', is the toppling of Yanukovych - 10% likelyhood. There is nowhere near a critical mass of dissatisfaction, there is no figurehead to lead such mass movement of discontent, and the USA in particular is not prepared to support any possible opposition forces. Segodnya admits though, that dissatisfaction with the authorities within a significant portion of society is near a critical level.

The latent assumption in this piece is that Tymoshenko remains behind bars, even though Arseniy Yatsenyuk in Brussels today optimistically predicted she would be freed on 18th October".

In your humble blogger's opinion, for what it is worth, if Yatsenyuk is wrong about Tymoshenko's release, the chances of the first two proposed scenarios are 30-60 rather than 60-30....But the fact that 'Segodnya' speculate at all on these matters is significant..

Now if Tymoshenko were to be released...

Update - WSJ report president Yanukovych told them he has given her the 'thumbs down'...
European leaders will interpret his declaration as a snub and i.m.o. will respond robustly..
Similar from Bloomberg.

Sunday, October 16, 2011

Make or break week for Ukraine?

From regular 'Economist' commenter "Didomyk":

Oct 14th 2011 7:12 GMT .
Ukraine's future relations with the West and specifically with EU, as well as with Putin's Russia, will be shaped by the results of four significant events that are scheduled over the next week or so:

(1)Yanukovych will meet Russia's President Medvedev in Donetsk on Oct. 18th [Ukrainian-Russian Inter-regional Economic Forum..LEvko] for further talks on his attempt to get lower prices for Russian gas. Will Russia show more flexibility both in terms of gas pricing (now tied to crude oil prices) and in terms of a requirement to pay for a fixed annual gas volume irrespective of the actual consumption ? Will Medvedev continue to link possible reduction of gas prices to Russian control over Ukraine's gas transmission system ? Is there a room for a compromise on Ukraine's proposals for a tri-party control (Ukraine-Russia-EUnion) over the operations of the transmission system over a long term ?

(2)On Oct.18th Ukraine's Parliament will continue to consider changes to the 50 years old Soviet criminal code that remains valid in Ukraine. The main issue is decriminalization of political decisions taken by political leaders who were confronted with limited options. In a democratic system their errors in judgement, if any, are subject to the electorate's vote on the election day, not to criminal proceedings of the type Tymoshenko has been subject of.

(3)Yanukovych is planning to visit Brussels on Oct. 20th [nothing about this on prezza's official site yet] hoping to advance bilateral talks on the free-trade agreement. Opinions have been voiced calling for EU leaders to boycott Yanukovych until Tymoshenko is set free and the verdict annuled. Others possible options would be to meet with Yanukovych and to conclude EU-Ukraine free-trade negotiations, while making it very clear that ratification of the agreement will be suspended unless Yanukovych demonstrates a substantial change to his policy of using courts in oppressing opposition.

(4)An IMF delegation is scheduled to visit Kyiv next week to negotiate a resumption of an urgently needed lending program. Last March the IMF froze loans after disbursing $3.4 billion of a possible $15.6 billion approved for Ukraine, because Yanukovych' government did not meet budget austerity requirements.

The willingness of the IMF team to approve further disbursements will reflect a consensus in Brussels, Paris, London, New York, etc. to assist Ukraine in implementing further economic reforms..

Saturday, October 15, 2011

Tickets to west torn up

The chances of signing association and free trade agreements with the EU are rapidly diminishing. If Tymoshenko is not released from prison very, very soon, the agreements will not be signed and the country's hopes for closer ties with Europe will be in tatters.

Watching last Friday's political shows, there was little sign from PoR spokesman of any possible back down and attacks on the 'devil-woman' Tymoshenko were as vituperative as ever. Even if she were to be released, the persecution will continue...she will be be continually hounded, called in for questioning, hassled, arrested...

On the day of the verdict and sentencing of Tymoshenko her supporters on the street were outnumbered by black-helmeted 'space cadets' - why should the president feel threatened?

'Dzerkalo Tyzhnya' claims Yanukovych finally decided on Thursday to lock up Tymoshenko despite the shitstorm from abroad. They suggest the consequences for the economy of Ukraine if the country turns its back on the EU, could be "catastrophic" .

As the excellent political commentator Vitali Portnikov says, Ukraine has just entered the Eurasian Sovok world without even signing any documents. Their pass card to the Eurasian Union was Tymoshenko's verdict.

LEvko's tip: Dump hryvnya a.s.a.p.

p.s. Big-selling "Donbass" newspaper asks its online readers whether Tymoshenko's sentence was fair.

40% say Yes - she is guilty
53% say No - it's all politics..

Well over 2000 respondents so far....

Thursday, October 13, 2011

Hanging on to the money, above all else

One curious aspect of Yulia Tymosenko' criminal sentence was the ridiculously huge fine of $188 million that accompanied the 7 year stretch. It was set as reimbursement for alleged losses caused by the 2009 gas contract she had negotiated with Putin.

It's possible that she has this sort of cash salted away on some far and distant shore..but not in Ukraine, and not anywhere it would be easily accessible. So what happens if she does not pay the fine?

Imposition of such a gigantic financial penalty onto a single person seems slightly absurd, particularly as Tymoshenko was not accused of corruption or self-enrichment in the case against her, yet Yanukovych and his pals seem to take a different view. Maybe they think this was her under-the-table 'rake-off' from the 2009 gas deal?

Fuel and Energy minister Yuriy Boyko says the fine money is to be used to pay for Russian gas, [ho,ho, ho..] and Yanukovych himself, apparently raised the issue of a fine with Angela Merkel when the met a few days ago in Warsaw.

There have been a couple of unconfirmed reports that he caved in and agreed to Merkel's insistence he release Tymoshenko, but remained adamant Tymoshenko 'compensate the state' for the alleged $188 million loss. Merkel responded: "We're not in a market here where you can haggle!" and on this their conversation ended. Maybe she took this as a hint from Yanukovych she pays Tymoshenko's fine?

Yelena Bondarenko, a prominent PoR spokesperson, is of the opinion that if Tymoshenko doesn't pay up then she should serve her full sentence. "Decriminalisation is not amnesty...whoever is guilty of damage should either compensate the damage, or serve time".

I think the mercantile approach is revealing of Yanukovych's world view. Values, justice etc. count for nothing. Money and wealth, grabbing it, stealing it, taking it away from enemies, is everything. Just like in the gangster movies - throw them in the cellar until they get the money back.

Anyone who is mega rich in Ukraine [including Tymoshenko] made their money in the 'wild east' period - the early and mid nineties. If the country is to make any progress these people, who entered politics merely to protect their wealth and interests, have to sort out their differences and call a truce if the country is to make any progress.

The big dilemma for Yanukovych is that if he releases Tymoshenko now the chances of him and associates hanging on to wealth they themselves have amassed decreases markedly. It is dawning on them that they could be in big, big trouble in a year or two's time when their political fortunes fade and her's rise..Remember how they all bolted abroad after the O.R.? [This option may now be narrowing.] But the massive anti-Yanukovych bombardment from the West may yet turn out to be counterproductive..There has been a bit of a rally by PoR spokesmen today to protect the 'vozhd' from foreign critics...the UESU charges against her have been reanimated... and she is still behind bars..

Yanukovych today profoundly commented on the Tymoshenko affair thus: "If such a situation occurred in any other country, even the most democratic, no-one would be say anything there, [no-one would] even open their mouth"....but Ukraine is being examined "under a microscope."

Clearly this man 'knows his stuff'.

Maybe 'Lucky' Alex from Belarus has persuaded him being a pariah is not that bad after all..

Wednesday, October 12, 2011

Yanuk not welcome in Brussels [updated]

As I predicted in by previous blog...

Today's 'Kommersant' newspaper reports that according to a source: '"Right now there his a high probability that Jose Manuel Barrosso [president of the Eurocommission] will refuse to meet Yanukovych [next week in Brussels]."

They were told by EU representatives: 'We've had it up to here with the actions of Ukraine authorites'.

A Polish Euro-deputy was blunt when addressing the Ukrainian Foreign Minister: 'Mr Hryshchenko, you have betrayed [us] and made a laughing stock of your friends in the EU!'

Prominent German Euro-deputy Elmar Brock claimed: "The visit of Yanukovych possibly may not take place."

Update: The Ukrainian Ministry of Foreign Affairs are getting their excuses in early to attenuate any political fiasco resulting from Yanuk's possible un-invitation, by claiming that: "The 20th October date was not declared officially. We are preparing for the visit and are interested it takes place as quickly as possible. But everything depends on the dynamics of the Association Agreement negotiation process."

LEvko's fears that even if the meetings take place next week, and even Association Agreements are signed, Ukraine's window of opportunity for Eurointegration may have now closed.. The moment may have passed. Any enthusiasm for it amongst EU members and friends has now drained away...

Tuesday, October 11, 2011

No duty-frees for Yanuk in Brussels next week?

Amongst the unprecedented tsunami of criticism from European leaders [these from the White House and the British Foreign Secretary are typical] there is one declaration that could hurt Yanukovych more than others.

He is scheduled to visit the European parliament in Brussels a week on Thursday - on 20th October. Elmar Brok, a well-known figure there and former Chairman of the European Parliament Committee on Foreign Affairs, says Ukraine must resolve the situation surrounding the Tymoshenko case before his visit. Other Euro-parliamentarians are already talking of cancelling his visit.

Yanukovych has been stringing along his European critics for several months now, misleading them with commitments of a 'soft landing' for Tymoshenko. Now that she has been sentenced he has been exposed a charlatan.

Today's attempts by Yanukovych to wriggle out of his responsibility for her imprisonment, declaring that this is not a final verdict because there's still an Appeal Court to which she can turn, and his attempt to blame an outdated legal system and his predecessor who instigated investigations against her, will not cut much ice because Ukraine's legal system, with its 99%+ conviction rate, is totally discredited already. The prosecutor's office, the Perchersk court..they are all his people.

Yanukovych will be feeling very satisfied right now having eliminated his biggest enemy from the field of battle. All the country's oligarchs must now bow before him -he can become as rich as they are - no other politician can challenge his power. But the concrete step of cancelling next week's visit to Brussels would hit Yanukovych harder than all of today's declarations of dismay and anger from world leaders..bring him back down to earth, at least a little.

Expect Yanukovych in that event to 'cry wolf' and threaten integration eastwards rather westward..

p.s. One commenter notes that the losses from Tymoshenko's 2009 gas deal would be as nothing compared to economic losses to Ukraine - lost exports, lost inward investment, lost remittances from Ukrainian's working abroad etc. that would result from cancellation of the planned association and free trade agreements. But would the Customs Union compensate? Hardly..With Russia everything is a zero-sum game..

EU to respond swiftly to Tymoshenko trial

Today a spokesman for EU foreign ministers meeting in Luxemburg said: "All the ministers expressed grave concern about the Tymoshenko case. It is clear that in the event of a deterioration in the situation it will be difficult to avoid delays in signing and ratifying the [association] agreement; " adding that the EU is following the case very closely, and as soon as a verdict is announced, they will study it and respond as quickly as possible.

On September 12th Tymoshenko's trial was adjourned for two weeks - until September 27th. Then on the 30th of that month the trial was again adjourned until Tuesday 11th October, when the court's verdict is expected.

Over the last four weeks the court has sat for only four days, during which lengthy concluding statements were delivered. This has given plenty of time for observers to sift through all of the evidence presented in the four-month trial, and thoroughly assess the entire proceedings.

So a swift response is certain...maybe even written already..

Saturday, October 08, 2011

Thursday, October 06, 2011

EU prospects damaged already

There has been much speculation lately that former PM Yulia Tymoshenko will be found guilty and sentenced next week; but by means of an artificially created mechanism of decriminalisation of portions of the law, she will be freed soon after.

This has lead to a commonly held view that: "The authorities will realize two strategic goals – preserve their political image, demonstrate strength and consistency by pronouncing Tymoshenko guilty, at the same time [the verdict] will be softened by the decriminalization after the trial to satisfy the Europeans,"

Commentators who propose such a view are mistaken. The political image of Ukraine's current rulers has already been serious damaged in the West, whatever the outcome of the Tymoshenko trial, because of the barrage of allegations voiced by European leaders and press over the last few months that the trial is politically motivated. The damage is difficult to quantify, but the country has certainly experienced terrible 'bad press' - no question about this. Prosecuting Tymoshenko has delivered little or no political gain domestically either.

The grubby face-saving decriminalisation maneouvres apparently 'forced' onto the Ukrainian authorities will not satisfy Europeans either because everyone is aware the motives for them are completely cynical. They merely leave a bad taste in the mouth.

The reason for the probably permanent damage to Ukraine's current authorities' reputation, and also to the country's medium term euro-integrational prospects, is that the case against Tymoshenko has been fundamentally weak. What should have been a showcase trial has turned into a catalogue of procedural errors, the judge has been biassed, and the defence has clearly not had a fair opportunity to challenge and test the evidence against them. This will all be supported and confirmed in the weeks to come by international monitoring groups. Hence the conclusion that the trial was concocted to eliminate a major political opponent.

However, having taken a pounding in recent weeks from European leaders at the YES conference and at the Eastern Parnership summit in Warsaw , Yanukovych may feel he has already taken the hardest knocks they can deliver. He suffers from the delusion that the EU needs Ukraine more than Ukraine needs the EU so after Tymoshenko is found guilty and sentenced there will surely be a big temptation to say: 'Not so fast..not so fast...let's see what happens..' and keep Tymoshenko under lock and key. A final option to pardon her will always remain available of course, if the political heat gets too great..

If, and/or when Tymoshenko is released, her priority will be to ensure the West's attention is focussed on former interior minister Yuriy Lutsenko's preposterous trial. Then there will be hearings in New York, and in the European court of Human rights..and appeal hearings in Ukraine..

Yanukovych should check out the press frenzy surrounding the return of Amanda Knox to the US, after her recent release from an Italian jail ...and draw parallels... imagine the welcome Tymoshenko will receive the next time she visits Brussels or Strasbourg..or even Moscow.

Now if she was a plain Jane...

p.s. Lots of aerial photos of Yanukovych's Mezhyhirya palace and grounds here
Remember, the man's overriding ambition is to be one of Europe's richest men..
Also photos of Yatsenyuk's and Tymoshenko's houses nearby..she apparently, ahem, 'rents' hers..

Wednesday, October 05, 2011

Ukies love expensive watches..

Probably Ukraine's best known television political talk-show host, Savik Shuster, was seen recently wearing a $120k Breguet wristwatch, of the kind so beloved by Ukraine's flashy elites..and also by missus Yanukovych.

He admitted to journalists the watch was a gift, but refused to say from whom...

absolutely astonishing...the man is compromised...but we knew that already..

Another recipent of an expensive watch, Presidential Administration spokesperson, Hanna Herman, seems to have been banished from the PA, and is now standing on the "naughty step". She did not accompany her boss Viktor Yanukovych to New York recently, and was not seen in Warsaw for the Eastern Partnership summit either, even though she had lived in Poland in the past and knows the scene there well. Someone had to take the blame for the plagiarised book fiasco and it was, allegedly, all her idea... Did she have to give the watch back too?

p.s. How far respect for the law in Ukraine lags behind that of normal European countries is well illustrated in this 10-minute video clip produced by brave journalist Dmytro Hnap.

In most countries the roads belong to everyone and can be freely used by everyone - but not in Ukraine. The video exposes the scandalous and rapidly-growing practice of businesses, banks, restaurants etc. reserving portions of the roadside for their own exclusive use by means of unofficial, [but official-looking] signage, and traffic cones. Invariably, hostile security men challenge any normal citizen who dares take advantage of his citizen's right to park his vehicle in such locations. Because all of this is illegal, in clear and direct contravention to Ukrainian traffic laws, one would think it would be easy to sort out, but no...Asking notoriously corrupt police officers to intervene is a complete waste of time. As the video clip reveals, some state agencies, including DAI traffic police themselves, deploy these despicable practices themselves...

If any vehicle dare get in the way of premier Azarov's motor cavalcade in Kyiv, it gets a whack from the baton of Azarov's bodyguards..Meanwhile thousands of the capital's commuters are stuck in public transport for half an hour at a time waiting for Azarov to pass..

When are people going to say, 'Enough is enough?'

Saturday, October 01, 2011

Late on comments

I have been a bit tardy on moderating some comments. Blogger hasn't been notifying me like it is supposed to. We'll see waht we can do about that.

Thanks for the comments. We live in interesting times and none more interesting than in the kingdom of Ukraine. (Kingdom because it is one and no parliamentaty reform is going to change that.)

Cheers all.