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Events from May 21 to 28, 2004

[05.06.04]

On May 23-24 Crimea (Ukraine) was a venue for the meeting of four presidents of member countries of the Common Economic Space: Ukraine, Russia, Kazakhstan and Belarus.

President of Brazil Lula de Silva came to Ukraine on May 22 with a short visit. He had a meeting with Ukrainian President Leonid Kuchma.

On May 24-25 Ukraine was visited by president of the NATO Parliamentary Assembly Douglas Bereuter. He met with Lytvyn, Yanukovich, and Kuchma. The main subject of the talks was the issues of Ukraine's Euroatlantic integration.

In addition, on May 24-27 a delegation of seven U.S. congressmen visited Kiev.

All the Congressmen – members of the delegation – are the U.S. envoys to the NATO Parliamentary Assembly: Mike Bilirakis from Florida (R), Joel Gefly from Colorado (R), Paul Gillmore (R) from Ohio, John Tanner (D) from Tennessee, Vern Elerse (R) from Michigan, John Boozman (R) from Arkansas and Todd Udall (D) from New Mexico.

The so-called "cassette scandal" had its further development on May 26. Volodymyr Tsvil addressed the Ukrainian section of radio Deutsches Welle who referred to himself as a direct participant of the scandal. According to him it was he who took out of the country the recordings made ex-major of the state guard Mykola Melnichenko in the study of Ukraine's president.

On May 27-28 a meeting of the heads of the states of Central and Eastern Europe took place in Mamaia (Rumania). President Kuchma speaking at the meeting said that the European Union, he believed, did not have a sufficiently clear strategy with respect to Ukraine.

President of the European Commission Romano Prodi said in an interview for the Kiev's newspaper Den ("Day") that he did not make any statements to the effect that Ukraine and Belarus did not have any prospects for membership in the EU. Judging from his clarifications he meant that at present Ukraine's accession to the EU was not on the agenda.

NATO made a decision to invite President Kuchma for NATO Istanbul summit on June 27. Most likely this decision was made after some deliberations.

Dramatic rise in prices for oil products threatens economic stability.

The main economic event in Ukraine is a sharp growth of prices for oil products that began in May. Only within several days in end-May the prices for gasoline and some other petroleum products increased by 30-40%.

In end-May under the influence of price rise for motor fuel the prices for some foodstuffs and fare in public transport increased.

The experts assess the threat of an inflation jump as sufficiently serious, but do not consider a similar scenario as inevitable.

Objective factors: the soaring of world prices for oil and seasonal rise of petroleum products in the period before harvesting lie behind the price rise.

A chance factor also played a role in it: shutdown for repairs of two large refineries, which account for almost one third of overall crude oil refining in Ukraine.

No doubt, Russia's increase of the export duties on oil from USD 35.2 per ton to USD 41.5 per ton produced a certain destabilizing effect.

Nevertheless, the probability of any appreciable economic destabilization in Ukraine under the impact of the events on the market of oil products is very low.

This probability has been strongly exaggerated by the representatives of the Ukrainian opposition, who conscientiously provoke intensification of panic moods. Similar "political" forecasts of the opposition spokesmen, as the experience of overcoming destabilization of the grain and food market in 2003 by the current government are economically unjustified and have nothing to do with the real developments of events.

Ukraine's government is planning a complex of measures aimed at reduction of prices. Among them the main role should be played by the limitations of exports of petroleum products; agreements between the government and companies operating on the fuel market for limiting their profitability; reduction of the excise tax rates and customs import duties on petroleum products, the strengthening of antimonopoly measures.

The increase in the supply of petroleum products after the resumption of work at the two large Ukrainian refineries will also affect the stabilization of the situation in June.

In addition, in Ukraine they also count on the fall of the world oil prices as a result of the planned increase of quotas for oil production by the OPEC countries.

On the whole, the situation on the oil market by all means will negatively affect Ukraine's economic and social development and also may somewhat strengthen the positions of opposition contenders at the forthcoming presidential elections in autumn this year.

However, there are no grounds to believe that the jump in oil prices will really lead to long-term economic and social aftermath.


Current Commentary







Events from June 6 to June 12, 2004 - [17.06.2004]



Events from May 30 to June 5, 2004 - [07.06.2004]



Events from May 21 to 28, 2004 - [05.06.2004]



Events from May 14 to 20, 2004 - [25.05.2004]



Events from May 8 to 13, 2004 - [24.05.2004]



Events from May 1 to May 7, 2004 - [11.05.2004]



Events from April 24 to 30, 2004 - [02.05.2004]



Events from April 18 to 23, 2004 - [23.04.2004]



Events from April 1 to 8, 2004 - [08.04.2004]



Events from March 19 to March 26, 2004 - [29.03.2004]



Weekly briefing on key developments in Ukraine - [18.03.2004]



Events from February 1 to 6, 2004 - [08.02.2004]



Events from January 24 to 30, 2004 - [02.02.2004]



Events from January 15 to 23, 2004 - [24.01.2004]



Events from January 5 to January 15, 2004 - [21.01.2004]



Events from December 20, 2003 to January 1, 2004 - [21.01.2004]



Events from December 16 to December 20, 2003 - [25.12.2003]



Events from December 8 to December 15, 2003 - [15.12.2003]



Events from December 1 to December 5, 2003 - [06.12.2003]



Events from November 22 to December 1, 2003 - [02.12.2003]




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