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Events from May 30 to June 5, 2004

[07.06.04]

Political Developments

Ukrainian President Invited to NATO Summit in June.

President Kuchma has been invited to the NATO summit in Istanbul on 28-29 June to take part in a meeting of the Ukraine-NATO Commission. Head of the NATO Information and Documentation Center in Ukraine Michael Duray told the journalists in Kiev that the Commission’s meeting will be "a top level event." Meanwhile, Republican Congressman from Nebraska Doug Bereuter, who is also president of the NATO Parliamentary Assembly, visited Kiev last week and told the news conference that Ukraine could become member of NATO as early as in 2007. Bereuter is scheduled to present a report based on his visit to Kiev at the next session of the NATO Parliamentary Assembly.

Comment: Bereuter-led delegation consisted of 7 Congressmen and three senior staffers. They included Reps. Bilirakis, Gilmore and Tanner.

While in Kiev the delegation met with President Kuchma, Prime Minister Yanukovich and Speaker of the Parliament Lytvyn.

Ukraine Will Pull Out Peacekeepers From Sierra Leone But Reinforce Contingent In Iraq. Commander of the Land Troops of the Ukrainian Armed Forces Petro Shulyak told journalists last week the Ukrainian contingent of more than 500 soldiers will be withdrawn from that country by the end of this year. Shulyak also announced that following this year’s rotation of the Ukrainian contingent in Iraq its numerical strength will increase to 1,722 peacekeepers.

Comment: Today there some 1,600 Ukrainian peacekeepers serving in Iraq, which makes the fourth largest coalition contingent in the country.

Ukrainian peacekeepers are also serving in Liberia, Lebanon and Kosovo.

Defense Minister Calls For Radical Reform In Ukrainian Army. Defense Minister Yevhen Marchuk, writing this week in an influential daily Den', said that he favors radical reform in the Ukrainian armed forces. Marchuk wrote that in terms of the numerical strength of its army, Ukraine ranks 13th in the world, while in terms of budget expenditures on the military, the country is in the 126th place. According to Marchuk, Ukraine spends $2, 600 per serviceman annually, while this figure amounts to $8,460 in romania, $34,600 in Hungary, and $91,000 in France. Marchuk also revealed that during Ukraine's 12 years of independence the armed forces have not bought a single domestically produced tank or a single airplane or helicopter.

Comment: the Ukrainian armed forces currently have some 355,000 servicemen.

On June 3 President Leonid Kuchma sacked Chief of General Staff Oleksander Zatynaiko and Commander-in-Chief of the Land Forces Petro Shulyak. Minister of Defenses Yevgen Marchuk was reprimanded.

Commentary. These sacking were the outcome of the explosions at the ammunition depots in the Zaporozhye region of Ukraine early in May. Enormous ammunition depots inherited by Ukraine from the USSR still pose a serious problem. Utilization of outdated weapons is carried out extremely slow owing to the shortage of funds. As Minister of Defense Yevgen Marchuk said just to start a full-scale utilization of ammunition, which are kept in Ukraine's ammunition depots, Euro 50 million are needed.

Ukrainian Lawmaker Changes Factions. Parliamentary Speaker Lytvyn announced earlier this week that the lawmaker Mykhailo Dobkin has left the Center group in the Parliament to join the Social Democratic Party-United (SDPU-o). Dobkin said he joined SDPU-o because it is a strong party and because it stands for reforms.

Comment: The current structure of the Parliament is as follows:

Right opposition:

Our Ukraine-------------------100 lawmakers

Tymoshenko Bloc (BYuT) ----------- 19 lawmakers

Left opposition:

Communists------------------- 59 lawmakers

Socialists------------- ---------20 lawmakers

Pro-governement:

Ukraine's Regions------- --------- 63 lawmakers

SDPU-o---------------------- 39 lawmakers

Democratic Initiatives-People’s Power---- 29 lawmakers

Labor Ukraine-------------------29 lawmakers

Popular Democrats-Industrialists & Enterpr.- 17 lawmakers

Soyuz------------- ----------- 17 lawmakers

Agrarians--------------------- 16 lawmakers

Indeterminate, "backwater":

"Center" ---------------------- 17 lawmakers

On June3 speaker of Ukrainian parliament Lytvyn said that in view of new attempts to thwart parliament's sessions he did not rule out that the current session would be terminated prematurely.

Commentary: the opposition factions again resorted to the tactics of stalemating the sessions attempting the consideration of issues about UAH 10 billion (some USD 2 billion), which allegedly were not shown in the budget and also the issue on banning privatization of the large "KrivorozhStal" Integrated Works.

Socialists And Communists To Confer On Joint Presidential Candidate. Socialist Party leader Olexander Moroz was quoted this week as saying that the leadership of the Socialist Party and the Communist Party is planning to hold a conference to discuss the possible fielding of a joint presidential candidate in the Ukrainian presidential election scheduled for 31 October.

No date for this conference was mentioned.

Comment: Last week, Communist Party leader Petro Symonenko proposed to Moroz fielding a joint presidential candidate and forming a coalition for subsequent parliamentary elections.

The trial in the U.S. of former Ukraine's prime minister Pavlo Lazarenko ended on June 3. The jurors recognized him guilty. A verdict, as expected, will be announced in the fall.

Commentary: Ukraine as before still is seeking his extradition since he is charged with a number of crimes committed in Ukraine (first of all, two political killings).

Economic Developments

Ukraine Signs Oil Deal With Azerbaijan. the governments of Ukraine and Azerbaijan this week signed an accord on cooperation in the oil sector. The document was signed within the framework of an ongoing visit of Azerbaijani President Ilham Aliyev to Kiev. Under the accord, Azerbaijan is reportedly obliged to sell a sufficient amount of oil to Ukraine "on a commercial, indiscriminate basis," in order to make it possible for Kiev to fill the Odessa - Brody oil pipeline.

Ukraine To Go It Alone In WTO Bid. Ukrainian presidential spokesman told journalists late last week that Ukraine does not intend to coordinate the process of joining the World Trade Organization (WTO) with the three other signatories of accord on the creation of the Single Economic Space (SES), Russia, Belarus, and Kazakhstan.

Comment: Ukraine’s policy is to seek a separate admission and its goal is to enter the WTO as soon as possible.

Ukraine continues to build up its gold and foreign exchange reserves

In May Ukraine's National Bank's gold and foreign exchange reserves increased by 4.4% or by USD 375 million having constituted as of May 28, 2004 USD 8,897 billion.

NBU's net international reserves in May grew by 8.6% or by USD 572 million up to USD 7,197 billion.

Thus it consolidated a positive tendency of 2003 when the country's gold and foreign exchange reserves increased by 57.7% and NBU's net international reserves - by 97.8%.

Many Ukrainian experts believe that the gold and foreign exchange reserves by the end of the current year will exceed USD 10 billion.

The build-up of the gold and foreign exchange reserves occurs owing to the inflow to the domestic market of foreign exchange earnings of the Ukrainian exporters in volumes much in excess of the importers' demand.

The National Bank of Ukraine is compelled to make constant purchases of foreign exchange with the aim of preventing excessive revaluation of the national currency (hrivnya). Since the beginning of the year the purchases of foreign exchanged constituted almost USD 2 billion.

A moderate strengthening of hrivnya to U.S. dollar decreases a negative impact on the prices of the domestic customers' market exerted by external factors, in particular, higher prices for imported energy.

Despite serious price rise of imported oil and petroleum products on Ukraine's domestic market the month of May registered a sufficiently low inflation (according to Ukrainian yardstick): 0.7%. For the July-August period Ukraine's Ministry of Economy predicts deflation.

A Ukrainian company has won a tender for outfitting Iraqi's army

According to the reports of the U.S. Ministry of Defense the contract was won by the joint venture ANHAM. Its overall amount is USD 120.1 million and the works totaling USD 78 million will be done in Ukraine.

As of June 2003 eighty Ukrainian companies set out a claim to participate in reconstruction of Iraq. Before the war 36 Ukrainian companies had an experience of cooperation with Iraq.

The U.S. representatives repeatedly expressed their intention to assist Ukrainian companies in procuring commissions for participation in Iraq's reconstruction.

This tender won for the first time by the Ukrainian side, undoubtedly, will strengthen the positions of those political forces in Ukraine, which stand out for continuation of Ukraine's involvement in the peacekeeping mission in Iraq.

The highest growth of industrial production was recorded in Ukraine among 12 countries of the CIS. The growth in January through April of 2004 compared with January-April of 2003 constituted 17.7%.


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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