Friday, March 09, 2012

Who is going to pay for the pre-election carrots?

In an excellent bni analysis article, Graham Stack, explains:

"Ukraine's foreign exchange reserves, essential to supporting the country's fixed exchange rate, have fallen by nearly one-quarter since August, and are now hovering at only a fortnight over the three-month import cover regarded as minimum. With global steel prices on which Ukraine depends continuing to slide and the price of Russian imported gas soaring, it is time for Kyiv to look for external help – but that's easier said than done.

Ukraine's central bank, the National Bank of Ukraine (NBU), reported March 6 that its forex reserves had fallen to only $31bn, which it said is sufficient to finance imports of goods and services for only three-and-a-half months. The central banker's rule-of-thumb says that three months import cover is a minimum to support a currency, giving Kyiv a fortnight to put things right..."

Stack concludes:

"Ukraine's best bet now – aside of course from releasing Tymoshenko and Lutsenko – is that the newly-elected Putin, looking to get off to a good start with Ukraine and his foreign policy, might now choose to soften these conditions [relating to the price Ukraine pays for Russian gas] in return for some woolly commitment by Kyiv to the Eurasian bloc.

Putin has said his first foreign visit as president would be to a CIS state and this likely means Ukraine. But Putin's inauguration is scheduled for May, so he won't make it to Kyiv in his new role for another six weeks. And with the pace of events heating up as Greece and Europe wobble, this may even prove too late for Ukraine."

The EU are in no mood to sign political-association and free-trade deals while opposition leaders remain in jail. The IMF feel the same way about additional loans for the same reason.

Meanwhile, earlier this week president Yanukovych announced a $2Bn pre-election 'blow-out' to boost Party of Regions' sagging prospects in the October 28th parliamentary elections.

Something is gonna have to give...

Meanwhile the macabre Tymoshenko soap opera continues..
Deutsche Welle report:

"Tymoshenko needs treatment outside of confines of prison, say German doctors.

According to German doctors, the former Prime Minister of Ukraine Yulia Tymoshenko is so seriously ill that she needs treatment [that can only be provided] outside of prison.

Representatives of the Berlin University Hospital "Charite", who examined the former Ukrainian Prime Minister Yulia Tymoshenko believe that because of the severity of her illness, she needs urgent treatment, "if at all possible, outside prison". To conduct the necessary therapy according to international standards inside prison is impossible "because of its complexity"...

Ukrainian and German doctors "came to a consensus" on the diagnosis of the former prime minister. Tymoshenko feels very ill and needs immediate treatment.."

The former PM has complained of health problems for many months. All of this begs the question: "Why has she not received the best treatment possible for all of this time?

1 comment:

Anonymous said...

Time for a stress test. will Ukraine survive the post Euro 2012 football matchm Wilst all effort is being made to give the impression of a government in total control the pressure is building and eventually the seams will go e way and the container will either explode or implode.

The European Banks and International Monatary fund should insist on a stress test of Ukraine's major banking institutions to make sure they can withstand a run on assets.

the last thing Ukraine can afford is a collapse in the monetary system and banks laundering money offshore and then cliaming the loss was due to the economic collapse.

I am sure this all bears on the thinking of EU power shakers if they press too hard on the fabric of Ukraine's political system the consequences may be greater then the would like.

A preferred solutions for commonsence to prevail and for the Governmnet to find an alternative way out of the mess they have created.

It is difficult to see how Yanukovych can gain any respect or confidence from the international community other then from other autocratic presidential despot governments for his actions. This is not a government of strength of good governance but a state that has lost its way and is desperate to try and hold on to what little has been allowed to remain.

The October Parliamentary elections are unlikely to bring any change or wave of hope.

As long as power is concentrated in the hands of the office of the President Ukraine will never be a democratic state.

The only hope now is for those who hold all the wealth and power in Ukraine will wake up and realize they have much more to loose then to gain if Ukraine is allowed to continue to head down this path.

They too may be looking for an exit. Plan and a potential circuit breaker.