Reported

30 Ukrainian children held at the Macedonia-Bulgaria border.

Thirty Ukrainian children – participants of folk music groups have been held at the Macedonia-Bulgaria border since yesterday.

Due to improperly issued visas the children cannot come back home. Bulgarian border guards do not let the Ukrainian bus to transit Bulgarian territory.

As Channel 5 reports, two folk music groups from Nezhyn and Kyiv were taking part in the international contest in Macedonia. The youngest of the participants is only one year old.

The head of the dance group Viktoria Vishnevaya reported on the phone that they are still at the border. “We are running out of food. Our thanks to Macedonian side – it let us stay here, gave water to children and provided with free toilets.”

Foreign Ministry of Ukraine is now investigating into visas, in particular why they were issued improperly. The Ministry is also preparing a not to the diplomatic department of Bulgaria to settle the issue as soon as possible.

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Lutsenko

Lutsenko sentenced to 2-year imprisonment in Yushchenko poisoning caseю

Kyiv’s Pechersky District Court has sentenced former Ukrainian Interior Minister Yuriy Lutsenko to two years in prison after convicting him of negligence during the search for Valentyn Davydenko, a driver of the Ukrainian Security Council’s ex-deputy head Volodymyr Satsiuk, an Interfax-Ukraine correspondent has reported.
The presiding judge in the case, Hanna Medushevska, has pronounced the verdict on Friday, August 17.
While reading out the verdict, the judge stressed that the court found Lutsenko guilty of breaking the law on operational and search activities and neglecting the regulations on carrying out operational and search activities.
According to the court ruling, the fact that Valentyn Davydenko, who is the injured party in the case, refused to admit that he was a victim “does not prove the absence of the components of crime in the actions of the defendants.”The judge also said that all proofs in the case were collected legally and that there were enough of them to prove that the defendants are guilty.
“The court critically evaluated the testimonies on innocence of the defendants,” reads the verdict.
The court took into account the state of health of the ex-minister and his state awards as mitigating circumstances.
“The court found Lutsenko guilty and sentences him to two years in prison,” reads the text of the verdict.

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Ukrainian democracy

People First: The latest in the watch on Ukrainian democracy.

Ukrainian democracyRussian language and economic partnership are the order of the day for Ukraine’s regime. With the tax office scaring away Western capital, a grassroots movement springs into action to address issues that affect every region of the country.

Ukraine drifts towards Russia’s economic projects

On July 30, the Verkhovna Rada of Ukraine adopted a new law effectively ratifying the Free Trade Zone Agreement with the Commonwealth of Independent States, an agreement which already covers most of the former Soviet Union.

The law was preliminarily signed by Prime Minister Mykola Azarov back in October 2011. In the government’s opinion, the free trade zone with the CIS will secure a 2.5 percent growth of gross domestic product and a 35 percent increase in sales volume between Ukraine and other member-countries. The government also expects an additional annual budget revenue of Hr 9.4 billion ($1.2 billion).

At the same time, the Agreement provides for certain limitations on the sale of goods from 60 different categories, including natural gas and electricity, as well as the suspension of export fees on Russian, Byelorussian and Kazakhstani (members of the Customs Union) raw oil. The question remains: what hidden risks does the free trade zone with CIS hold in light on Ukraine’s intentions for European integration of Ukraine?

Potentially there might be certain risks due to the fact that the agreement provides sanctions if any member-country concludes any other trade agreement which might result in losses for its partner member-countries. Besides, Ukraine will no longer be able to forward-export goods from Europe to Russia and it will also slow any reforms necessary to bring the national economy in line with European standards.

Russia will deliberately keep an export window open for Ukraine, in order to tie Ukrainian business with the Russian market and make the transformation of Ukrainian economics and politics to meet European standards impossible. Currently the free trade zone agreement with the CIS is only in force between Ukraine and Russia, as so far the document has yet to be ratified by anyone other than Ukraine, Russia and Belarus.

European Union representatives in Ukraine have reported that the ratification of the free trade zone with CIS does not prevent Ukraine from signing a similar document with the European Union. At the same time Leonid Slutsky, chairman of the State Duma’s Committee on International Affairs with CIS, mentioned that the ratification of the CIS free trade zone by Ukraine might also be a step towards joining the Customs Union.

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Ukrainian society

If there is one thing Ukrainian society and the international community dislikes more than anything else it is unpredictable flip-flop politicians. Will they won’t they… are they good for their word… what is their strategy…? Nothing undermines trust more quickly than indecision. Rather than refraining from making promises or being loyal to their word this government prevaricates, postulates and tries to be clever with half a move this way and half a move back. It is childish chess and hardly worthy of a national government.
In our opinion, the problem is that this government does not have a strategy, every decision is made on the basis of now and what is in their best commercial interests. They do not consider the long-term interests of the nation or the will of the people. As a result of their economic policy coupled with their intransigence over the jailed leaders of the opposition they actually have very few options left apart from sliding into the arms of a rapacious Russia. For its part all Russia has to do is to buy up sufficient Ukrainian industry to be able to call the shots. It’s called economic imperialism. Certainly there may be short-term benefits in building economic ties with the CIS but any trade agreement that limits the sale of 60 key areas is not a free trade area, it is a trading block where you are not allowed to tread on Russia’s toes, something Ukraine can do with ease.

Despite the current difficulties, the EU is by far the stronger trading partner. However the EU is not just interested in raw materials and energy. Ukraine has a massive and totally under-utilised technology sector that could be harnessed if those at the top were to take a more long-term view, however, the likelihood of that happening is virtually nil as this administration and the opposition seem only interested in is their personal profit now.

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Ukrainian billionaires

Are Ukrainian billionaires good for Ukrainian capitalism?

Ukrainian billionairesWhat can the list of richest Ukrainians tell us about the economy?
Don’t get me wrong, personally I like many of Ukraine’s billionaires. I have met, chatted and drank cocktails with 7 or 8 of the 13 Ukrainian billionaires, as per Korrespondent’s 2012 richest Ukrainians’ list.
Each has been quite charming and charismatic and generous. Some have put me up in expensive hotels and paid for nice meals. I am grateful for their donations to charities and causes which I also believe in.
I have been to several great parties they have thrown. And, one billionaire in particular, even bought my company (and if any of them want to invite me to go heli-skiing this winter, I am free for most of February.)
I am hardly a hater of rich folk and honestly want more Ukrainians to become billionaires (or millionaires or hundred-thousandaires or, at least to own their own car and house.) I have argued vigorously against all new taxes that the Ukrainian government has suggested, including the new tax on luxury and offshore companies and, of course, I am against any attempts to redistribute income.

So why the problem with Ukrainian billionaires?
I was reading an interesting book by Ruchir Sharma, Breakout Nations: In Pursuit of the Next Economic Miracles), who discussed the role billionaires play in economies, most notably in developing markets. As a banker for Morgan Stanley, Sharma is hardly an anti-business advocate. As an introduction to his book, he wrote, “I’ve developed an unusual rule of the road: watch the changes in the list of top billionaires, learn how they made their billions, and note how many billions they made. Changes in the list, and the size and source of the fortunes, can provide a quick indicator of how well positioned emerging nations are to compete in the global economy.”

In short, a quick look at a country’s billionaires can tell you a lot more about the political and economic system of a country than thousands of reports. In facts, some key facts about a country’s billionaires can tell you a lot about the entire economy. In particular, he looks at the combined billionaire’s net worth and compares it to the size of the country’s gross domestic product.
This is important, not simply because excess wealth is bad a priori, but it shows whether big businesses are facing actual competition within their markets, which would limit the accumulation of capital to specific individuals. He analyzes if their wealth is from non-productive industries and commodities, such as real estate, oil or coal, or if they created new dynamic businesses which shows if the country is creating new wealth or simply exploiting natural resources. Finally, he sees if there are changes in the list of billionaires to understand if wealth has become entrenched.

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Ukrainian billionaires 1

For example, America has over 400 billionaires, including two of the richest men in the world, Bill Gates and Warren Buffet. But, taken together, the total net worth of the billionaires equals 10.6 percent of gross domestic product, much lower than other countries.
On the other hand, there are numerous new entrants every year (think Mark Zuckerberg from Facebook, as well as many people who built companies in dynamic industries, independent of the government, think of Bill Gates at Microsoft or the founders of Google, all in the top 10.
Sharma spends quite a bit of time contrasting the billionaires in Russia and China. As a country, more wealth has been created in China over the past several years than anywhere else in the world. Despite that, the billionaire’s net worth as a proportion of GDP is only 2.6 percent and the richest billionaire in China has only accumulated 10 billion. In contrast, the billionaires net worth in Russia is more than 20 percent of GDP and most of them have accumulated wealth simply by removing resources from the earth rather than creating new wealth.

And Ukraine?
When you add up the total wealth of the 13 Ukrainian billionaires listed in Korrespondent in 2012, their combined net worth is over $61 billion. This equals 37 percent of Ukraine’s total 2011 GDP, one of the highest numbers in the world.
In terms of turnover in the list of Ukrainian billionaires, the top five, Rinat Akhmetov, Viktor Pinchuk, Gennady Bugolyubov, Kostyantyn Zhevago and Igor Kolomoisky, not only were in the top 5 in 2007. They have been the top 5 every year, though in slightly different order.

Of the remaining eight, Viktor Nusenkis, Dmytro Firtash, Oleksiy Martynov and Oleksandr Yaroslavsky were all billionaires back in 2007. While two others, Yuriy Kosik and Petro Poroshenko were multi-millionaires in 2007, ranked at #16 and #25, respectively. In the five years since 2007, there are only two newcomers to the list of Ukrainian billionaires, Oleh Bakhmatyuk and Oleksiy Vadatursky, both who made their fortunes in agriculture over the past few years.

The stability of Ukrainian billionaires contrasts with China, where only four of the top 10 richest where in that position in 2006.
Perhaps, even more telling is the fact that many of the billionaires have been active in government, showing how politics and business are interconnected. Five of the 13 billionaires have been members of parliament and other have had positions in local government or even taken greater roles, such as head of the national bank.

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Ukrainian billionaires 2

In contrast, none of the top 15 American billionaires have ever served in Congress of national government. (#12 Michael Bloomberg is presently the mayor of New York, a position he was elected well after he earned his fortune.)
Even viewing the worldwide list, most of the leading positions are occupied by persons whose fortunes were created independent of politics, such as the founders of Louis Vitton or L’oreal, the beauty company and the richest families in France, or the founder of Zara, the richest man in Spain. Or contrast the fortune of the richest family in Italy, the Ferrero’s, who made their money from chocolates, such as Kinder Suprise, in contrast to Silvio Berlusconi, who used political influence to build his wealth, either from gaining legal monopolies, such as in television, or directly entering politics to preserve his wealth by manipulating the political process.
Sadly, and most worryingly is how the Ukrainian billionaires earned their fortunes. Almost all of them earned their wealth from non-productive industries, such as mining, real estate or other commodities, whereby wealth is earned by taking control of a pre-existing asset and selling it, rather than creating new wealth.
Or, to quote Sharma, see which descriptions better describes the companies created by Ukrainian billionaires:
“Indeed what stands out on the US list is that the greatest and most stable fortunes have been generated by independent and innovative leaders who founded exactly the kind of productive companies (particularly Microsoft, Berkshire Hathaway and Wal Mart) that would make any economy, developed or emerging, more globally competitive.”
Or “but lately these dynamic moguls (in India) are getting replaced on the billionaire list by a new group: provincial tycoons who have cut deals with state governments to corner the market in location-based industries like mining and real estate.”
And guess which group is better for the overall economy? As Sharma writes in conclusion:
“It’s clear what to look for: the number of billionaires should be proportionate to GDP, billionaires should face competition that generates turnover and limits their share of the economy, and billionaires should emerge primarily from productive new industries, not patronage. Creative destruction lies at the heart of a prospering capitalist society, and because well-connected incumbents have everything to gain from the established order, they are the enemies of capitalism.”
So, what do the Ukrainian billionaires say about Ukraine?

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Ukrainian billionaires 3

In contrast, none of the top 15 American billionaires have ever served in Congress of national government. (#12 Michael Bloomberg is presently the mayor of New York, a position he was elected well after he earned his fortune.)

Even viewing the worldwide list, most of the leading positions are occupied by persons whose fortunes were created independent of politics, such as the founders of Louis Vitton or L’oreal, the beauty company and the richest families in France, or the founder of Zara, the richest man in Spain. Or contrast the fortune of the richest family in Italy, the Ferrero’s, who made their money from chocolates, such as Kinder Suprise, in contrast to Silvio Berlusconi, who used political influence to build his wealth, either from gaining legal monopolies, such as in television, or directly entering politics to preserve his wealth by manipulating the political process.

Sadly, and most worryingly is how the Ukrainian billionaires earned their fortunes. Almost all of them earned their wealth from non-productive industries, such as mining, real estate or other commodities, whereby wealth is earned by taking control of a pre-existing asset and selling it, rather than creating new wealth.

Or, to quote Sharma, see which descriptions better describes the companies created by Ukrainian billionaires:

“Indeed what stands out on the US list is that the greatest and most stable fortunes have been generated by independent and innovative leaders who founded exactly the kind of productive companies (particularly Microsoft, Berkshire Hathaway and Wal Mart) that would make any economy, developed or emerging, more globally competitive.”

Or “but lately these dynamic moguls (in India) are getting replaced on the billionaire list by a new group: provincial tycoons who have cut deals with state governments to corner the market in location-based industries like mining and real estate.”

And guess which group is better for the overall economy? As Sharma writes in conclusion:

“It’s clear what to look for: the number of billionaires should be proportionate to GDP, billionaires should face competition that generates turnover and limits their share of the economy, and billionaires should emerge primarily from productive new industries, not patronage. Creative destruction lies at the heart of a prospering capitalist society, and because well-connected incumbents have everything to gain from the established order, they are the enemies of capitalism.”

So, what do the Ukrainian billionaires say about Ukraine?

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Language

Language law to divide and conquer.

Facing the parliamentary elections in Ukraine the authorities have decided to use language issue (granting Russian official status as a second state language) in order to gain popular support. Early in July the Ukrainian Parliament approved the Law ‘On the fundamentals of the national language policy’ allowing local and regional governments to grant official status to Russian and other regional languages. Despite massive protest against the law, involving a two- week hunger strike in Kyiv, the law has been passed to Yanukovych for signature. Based on recent sociological research, 34 percent of Ukrainians support the law while 42 percent are against; also whilst 37 percent of respondents believe that Ukrainian needs more protection only 18 percent speak for the protection of Russian.

Other research demonstrates that the number if people who are against Russian as a second official language has exceeded the number of supporters of the law; 41 percent of Ukrainians support the idea of granting Russian official status compared to 51 percent which are against – previously the numbers were almost even. Another interesting fact is that the language issue is not even in the first ten priority issues for the people of Ukraine which almost exclusively centre on the economic ones. At the same time the people of Ukraine can see that the government wields the language issue to manipulate their opinion – 74 percent strongly believe that by doing so the government hopes to win their votes).

Experts also reveal a significant financial issue in conjunction with the new language legislation. Should the President sign the Law the country will have to spend annually an additional amount of between Hr 17 billion ($2.1 billion) and Hr 50 billion ($6.2 billion) on translation, training and administration services(6).

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Activists in Ukraine

Ukraine unites over pothole issue

Activists in Ukraine have united to monitor the quality of roads signalling a positive step for civil society development. Members of the Road Repair Control group have created an official web-site for posting photos of potholes all over Ukraine. By this record the capital of Ukraine has become a leader in the number of holey roads. New evidence of the negligent attitude of the authorities appear on the web-site every day. The movement has united car enthusiasts, civil organisations and regular people who refuse to silently accept potholed roads and corruption in the field of road repair and construction as well as shady parking practices.

The key message of the movement has been – “we will not remain indifferent to robbery!”. This suggests that the people of Ukraine are starting to wake up and walk away from passive surveillance, towards active protection of their rights.

Members of the movement stress that the problem of corruption can be solved only though the establishment of such an environment in which the people expose the government’s illegal activities. The movement also teaches people to refer all road problems to the local authorities – by following a laid-out complaints procedure for filing an official suit.

From time to time the movement’s activists organise protests in front of governmental buildings to draw attention to specific road problems. Activists even draw circles and signs around potholes in white paint. This has become a people’s address to the authorities.

They give away white paint to everyone willing to support this initiative so that potholes are painted all over Ukraine. So it seems that with the help of white paint, a web-site and civil activity, Ukrainians not only save road users from danger and promote control of governmental activities but also help each other understand that by doing so they are building better Ukraine.

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Today

The M06 is one of Ukraine’s major arterial highways. It is part of the pan-European transport corridor that links Kyiv to Hungary and the whole of Southern Europe thus it is one of the most significant highways in the country. The road had little importance in the Soviet era thus it was not well maintained and this, coupled with the vast increase in heavy transport traffic following independence, meant that by late 1990s this highway was almost undrivable.

The Yushchenko government, in a bid to revitalise the Carpathian region, turned to the EBRD to finance the refurbishment. For their part EBRD wanted to finance the complete reconstruction of the highway to create a European-style motorway that would link Kyiv to Budapest and Zagreb. Kyiv opted for a less expensive refurbishment. The work began in 2007 on the worst sections across the mountains and was completed in 2009. At the same time the Hungarians extended their motorway network to within 50km of the Ukrainian border.

Today the Hungarian motorway is a real pleasure to drive in that it is smooth, even and very well-maintained whilst the Ukrainian sections are back as they were in the late 1990s with tram line ruts, huge potholes, pealing surfaces, pools of melting tar and areas so bad that the average speed is down to 30 km per hour. The comparison could not be starker. The Hungarian roads were built properly to withstand the pressures of modern transportation. In Ukraine it was an expensive, poor quality, patch-up that will now have to be done again costing the nation millions and the same is true for most of the road refurbishments in Ukraine as once the black top is laid, it is very difficult to see what is underneath. But then this is what happens when you combine false economy with endemic corruption. Good luck to the Road Repair Control, you are doing a great job.

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Company

Everybody and every company in any country is required to pay taxes. Similarly every government is required to use those taxes to deliver to the people a society that is the best the nation can afford. The money belongs to the people; the state is purely the administrator whose job is to ensure that all pay their share in accordance with the law and that the money is used in a way determined by the people through the election of their representatives… but not in Ukraine.

Here the State Tax administration is considered to be one of the most oppressive organisations in the country, hell bent on squeezing every last drop of revenue from society by legal means or other. International experience, however, shows very clearly that if tax payers consider the taxes to be too high or unjust or if they can see no societal benefit from paying taxes then they will do almost anything to avoid paying. It is, in mathematical terms, a classic example of the law of diminishing returns and in Ukraine the people have every right to withhold taxes as the very fabric of society is now in severe decline.

In Ukraine the average book keeper will spend up 75% of their time simply dealing with the tax office and the ridiculous multiple filing requirements whilst finance directors spend upwards of 30% of their time dealing with STA interpretations of the law which invariably contradict each other depending upon the officer concerned. Is it any wonder, therefore, that international investors which are the lifeblood of every modern economy are abandoning Ukraine simply because it is just too much hassle? This government has singularly failed to understand that international investors don’t really mind the level of taxation as this is just a cost of doing business, but if the system is uncertain resulting in wasted executive time then they will simply move to more enlightened environments.

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Ukrainian culture

For 70y years, the communist party sought to eradicate the Ukrainian language and the Ukrainian culture… they failed. This government is once again displaying a callous disregard for the nation in raising what should be a non-issue. In case the government hadn’t noticed, we live in Ukraine where the national language is Ukrainian. Of course, there needs to be due respect to the other languages that make up the Ukrainian culture and those include Russian, Romanian, Hungarian, Polish, Tatar and, to a certain extent, English but to have two national languages is simply a recipe for chaos.

Setting the emotion to one side and looking at the impact for one moment it means that investors may now have to produce every legal document in both Ukrainian and Russian, doubling the cost, time and bureaucracy. Imagine the chaos… Documents written in Donetsk, where they could adopt Russian as their official language would need to be authorised in Kyiv where Ukrainian is the official language… Can Kyiv refuse them and which language takes precedent in law as you cannot have two?

That said we should really look at what is behind this hasty decision. Gaining political favour in the East? It will not happen as this law will not change anything for the better. The law was deliberately passed immediately after the closing of Euro 2012 thereby silencing any debate over the success or failure of the event, the cost of hosting it and the real value to the nation. On the first day of protest against this law the opposition joined with the people in street demonstrations whilst in their absence Party of Regions, with less than 70 members in the Rada (the required minimum being a majority of 226 members), passed 36 bills worth billions into law without any discussion using their classic ‘piano voting’. Democracy? Not even close.

The opposition again failed to intervene on the language issue as they fear the loss of support of those who speak Russian on one side and those who speak Ukrainian on the other hence they did nothing.. On the plus side the people of Ukraine now understand the real value of those in the government and opposition.

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Crisis of trust

Ukraine warned of ‘crisis of trust’ with EU over Tymoshenko.

Ukraine’s leaders have been warned by Lithuania’s president that the crisis over Yulia Tymoshenko could block the country’s hopes of a future in mainstream Europe.
Dalia Grybauskaite is the first foreign leader to visit the opposition figure since she was jailed last year.
She spent an hour with her in hospital. Tymoshenko was moved there from prison this week.
Afterwards the Lithuanian leader said the rift began over the Yalta summit, postponed by Ukraine after a threatened boycott by several central and eastern European leaders.
“(This) might become a serious crisis of trust between Ukraine and Europe and I’d like to prevent this mistrust from snowballing as quickly as possible,” she said.
The Ukrainian authorities deny Tymoshenko was ill-treated in jail, saying there is no case for criminal proceedings. Her claims that she was beaten by prison guards sparked an outcry.
“We hope that with the escalation of the supporters’ protest, I think that it is possible now that Yanukovich can use his constitutional powers and solve this political crisis,” Tymoshenko’s daughter Yevgenia told euronews.
However, the Ukrainian president shows no signs of shifting his position on Tymoshenko or Europe.
Viktor Yanukovich – who also met the Lithuanian president on Friday – dismissed the warnings about increasing diplomatic isolation.
An agreement on political association between Ukraine and the EU is on hold over the crisis.
“The European Union proposed a pause,” he said, “and I think such a pause would be beneficial both for Ukraine and the EU.”
The row over Tymoshenko will not go away – and next month’s Euro football tournament which Ukraine is co-hosting looks set to keep the spotlight firmly on her case.
EU foreign ministers are due to discuss strategy over Ukraine on Monday.

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Ukraine opposition

Ukraine opposition rallies for Tymoshenko.

Ukrainian opposition parties on Saturday held a rally in central Kiev in support of jailed former prime minister Yulia Tymoshenko.
Opponents of President Viktor Yanukovich, who enjoys close ties with Moscow, gathered to unveil a plan of action for October’s parliamentary election.
The vote is being seen as a litmus test for Ukraine’s democracy after criticism by the West that Tymoshenko’s jailing over a gas deal she signed while in office was politically motivated.
The leader of the Front for Change said they wanted to fight for a new country, for a new type of political elite with more responsibility and accountability in government.
“We need to tackle corruption and we believe that Ukraine is to be a big part of Europe. We should ratify and sign association and free trade agreements with the EU,” said Arseniy Yatseniuk.
Our correspondent reports that the opposition has founded this coalition on common principes. they expect it to last well beyond the forthcoming elections.

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Ukrainian Tax Service

Ukrainian Tax Service blocks foreign investment

The ambassadors of the USA, France and Hungary have openly reported that they regularly receive angry letters from companies in their countries, complaining about significant problems in communication with the Ukrainian Tax Service. The ambassadors have said on multiple occasions that the Tax Service of Ukraine is scaring investors away. The most frequent complaints of foreign investors are: illegal cancellation of VAT refunds, a general practice of granting VAT refunds to ‘favoured’ companies only, threats of criminal responsibility with the purpose of collecting more funds, tax services being involved in corporate raids and excessive numbers of inspections.

Russian business has also been complaining about the Ukrainian Tax Service. According to Oleksy Urin, Head of the economic policy group at the Russian embassy in Ukraine, Russian companies have invested a lot in Ukrainian economy and their investments must be protected. Some Russian enterprises complain about VAT refunds, advance payments of income tax, overvaluation of imported goods by the Customs Service of Ukraine and the lack of objectivity in the courts’ decisions due to corruption.

Foreign experts have advised that the governing authorities of Ukraine bring their domestic and foreign policies in line. It means primarily that they should combat corruption and restore the rule of law as these areas affect domestic policy most directly. In terms of foreign policy, the governing authorities of Ukraine have been advised to sign the Association Agreement with the IMF and develop pragmatic relations with Russia(9).

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Ukraine’s gas

Ukraine maybe cutting gas selection concerns Gazprom, supplies have already fallen – Miller

Gazprom is concerned by unilateral announcements by the gas giant’s partners in Ukraine that the selection of supplied gas might be reduced – Ukraine’s gas imports have already fallen by nearly 67% since the New Year.

“Gazprom is concerned by those statements made today that Ukraine is getting ready to select significantly less gas than stipulated by contracts,” Gazprom CEO Alexei Miller said Wednesday during a meeting with Russian President Dmitry Medvedev.

Miller said that 27 billion cubic meters (bcm) is the figure being bandied about, though an annual 52 bcm of gas is stipulated contractually.

The contract signed with Ukraine is valid until 2019 and contains a “take-or-pay” provision, Miller said.

Asked by Medvedev which measures the contract envisages in the case of a failure to select the indicated amount of gas, Miller said that Ukraine would still be obligated to pay. “Ukraine made such a statement without having reached agreement with the Russian side, and we have made no such changes in the contract,” he said.

Under the existing contract, if changes in the amount of selected gas are made, adjusted supply volumes must be specified half a year in advance. “The Ukrainian side assumes that if it violates the terms of the contract, we will act in a civilized manner. But I think that if that happens, we will behave in a befitting manner,” Miller said.

There have as yet from Ukraine been no new proposals to Russia concerning cooperation in the field of gas, as were mentioned during a meeting between the two countries’ presidents. “At the meeting with the president of Ukraine, where we discussed various cooperation issues and options, not only were some new documents talked about, but as before the issue was major new projects. Has something been done, or is the situation still not moving?” Medvedev asked Miller.

“Nothing appreciably new has happened,” Miller responded, adding that Gazprom’s Ukrainian partners had not offered any new proposals.

“So far, our Ukrainian friends are only talking, but no specific proposals have been made,” he said. Miller added that “we can hope that some sort of specific proposals will be made in the near future.”

According to the Central Dispatching Department of the Fuel and Energy Complex (CDU TEK), Ukraine imported 44.7 bcm of natural gas in 2011 – Ukraine’s national oil and gas company Naftogaz Ukrainy received 39.175 bcm, and independent importer Ostchem Holding, which belongs to Ukrainian businessman Dmytro Firtash, imported 5.53 bcm of Turkmen gas.

Since the beginning of 2012, Ukraine has cut its selection of imported gas by almost 67%. Whereas at the end of 2011 daily selection was 100-110 million cu m, it has fallen steadily since the beginning of January of this year. By Monday, January 9, it had fallen to 33.3 million cu m. Ostchem’s purchases fell the most sharply – by almost 83% – from 23 million cu m to a mere 4 million cu m per day.

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BYT-Batkivschyna

BYT-Batkivschyna to press Rada to allow independent doctors to check Tymoshenko

The BYT-Batkivschyna faction intends to register a draft resolution to allow independent doctors to examine former Ukrainian Prime Minister Yulia Tymoshenko, who is currently held in Kachanivska prison in Kharkiv.

“A draft resolution to admit independent medical experts to Yulia Volodymyrivna [Tymoshenko] will be registered today,” Serhiy Mischenko of the Bloc of Yulia Tymoshenko told journalists on Wednesday.

He noted that Canada’s government had offered to provide its doctors to conduct medical examination of Tymoshenko.

According to him, on Wednesday or Thursday a draft resolution will be registered, which will suggest setting up a parliamentary investigative commission to probe reports that the former prime minister lost consciousness for more than two hours after taking medication in prison on January 6, 2012.

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Tymoshenko

Tymoshenko refuses medical examination, says prison service

Former Ukrainian Prime Minister Yulia Tymoshenko who is held in Kachanivska penal colony in Kharkiv refused a medical examination on Wednesday, the press service of the State Penitentiary Service reported.

According to them, Tymoshenko made a request to Kachanivska colony’s leadership to be checked up by a commission.

On Wednesday, the commission of the Health Ministry of Ukraine, which was made up if leading medical specialists, arrived in the colony.

“Tymoshenko refused the proposed medical examination. She said that she had no claims to the medical staff of the State Penitentiary Service and the Health Ministry of Ukraine,” the report reads.

The Health Ministry’s representatives made recommendations concerning Tymoshenko’s treatment.

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Lviv

Lviv Regional Council says no to Naftogaz Ukrainy about ten oil, gas fields

The Lviv Regional Council Commission on the Environment and Natural Resources has not given state oil and gas company Naftogaz Ukrainy permission for industrial development of 10 oil and gas fields.

The decision was made at an extended commission session on Thursday, during which 8 out of 12 members voted against giving approval and three abstained, an Interfax correspondent reported.

Earlier the company had asked the regional council to give its approval to industrial development and further oil and gas production at the Vasylenkivska, Burshtynska, Viktorivska, Haichynska, Dnistrovoska, Leonivska, Martivska, Mishunivska, Rava-Rusko-Krekhivska and Chumatska sites.

Commission members said at the meeting that approval would not be given because Naftogaz Ukrainy is not meeting the commitments it undertook in its cooperation agreement with Lviv region.

“Naftogaz implemented under 10% of the cooperation agreement for 2011 – of the UAH 75 million envisaged in the agreement, only 7 million was spent developing the region,” Commission Chairman Irina Seh said.

District board chiefs attending the session asked the regional council not to give permission for new fields because the company was not meeting its contractual obligations. They said gas was being produced with violations to safety regulations and Naftogaz subsidiaries had started re-registering their legal addresses outside Lviv region, so local budgets were losing out on income tax, which makes up the lion’s share of district and rural budgets.

After lengthy debate the commission decided to tell Naftogaz Ukrainy that it was ready for further cooperation but on the condition that the terms of the framework agreement were implemented. Deputies will also ask for subsidiaries to be registered at their actual place of work and will draw up a new agreement for 2012.

The deputies will discuss that at the next regional council session.

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Ukraine’s national football

Ukraine’s national football team climbs one spot in FIFA ranking

Ukraine’s national football team climbed from 55th to 54th place in the new FIFA ranking that was released on the organization’s official Web site on Wednesday.

World and European champions Spain top the table. They are followed by the Netherlands, Germany and Uruguay.

One of Ukraine’s opponents in the Euro 2012 group stage – England – remains in fifth place. France is 15th, while Sweden climbed one position and is now 17th.

The Russian national football team dropped one spot and is now in 13th place.

Ukraine’s Euro 2012 co-hosts Poland moved from 66th to 68th position.

Twelve out of the 16 participants in the upcoming Euro 2012 are among the 20 strongest teams in the world. Ireland is 23rd and the Czech Republic is 31st.

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India’s Embassy in Ukraine

India’s Embassy in Ukraine refutes reports on issuing visas according to gender principle

The Embassy of India in Ukraine has declared that all visas to India are issued only under the standard procedure used by most diplomatic missions.

“The embassy has noticed reports in local media, according to which applications for visas from women undergo additional checks,” reads an embassy statement.

In connection with the appearance of such reports, the Embassy of India stated that it accepts tourists from all regions and does not practice more thorough checks of visa documents based on the gender of candidates.

“All visas are issued after undergoing standard procedures, which are common for most diplomatic missions,” reads the statement.

According to the statement, the number of visas issued by the Embassy of India in Ukraine increased from 13,000 to 20,000 from 2010 to 2011.

“The embassy regrets an incident that occurred in the morning on January 18, 2012, during which the diplomatic mission’s premises were attacked by a group of unidentified people, who did not try to check their facts before taking such unacceptable actions,” reads the embassy’s statement.

As reported, in the morning on Wednesday four half-naked young women staged a protest against the alleged decision of the Indian Foreign Ministry to send out recommendations to all of its embassies with instructions no to issue visas to women aged between 15 and 40 years old from Ukraine, Russia, Kazakhstan, and Kyrgyzstan, explaining that they travel to India to earn money for sexual services.

The police have detained the participants of the protest.

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Khoroshkovsky

Ukraine Political Appointment: Shuffling The Deck Does Not Change the Cards

On January 18, 2012, Ukraine President Viktor Yanukovych appointed Valeriy Khoroshkovsky as a new Minister of Finance to replace Fedir Yaroshenko. Albeit unexpected, the move represents a rotation within the existing power circles, reflecting more orchestrated political maneuvering ahead of the October parliamentary 2012 elections.

Khoroshkovsky, who had left the seat of the head of the National Security Service (SBU) to head the Ministry of Finance, is considered to be close to the president’s circle. The 43-year old businessman does not hold a finance degree and in his professional career changed a number of managerial positions, among which a two-year stint as the minister of economics in 2002-04 and head of the State Customs in 2007. Khoroshkovsky is also associated with the RosUkrEnergo group. Nevertheless, his lack of economic and financial expertise did not prevent this appointment, underscoring its political nature. As minister of finance, Khoroshkovsky will oversee the execution of the 2012 budget including financing the fiscal gap pinned at 2.5%, but potentially larger given the government’s optimistic growth estimate of 3.9%. These tasks may prove to be challenging given Ukraine’s feeble economy and increasing financing needs in 2012. In fact, as financing strains mount, the country needs to approach again the IMF. The newly appointed minister will lead the Ukrainian delegation scheduled to meet the fund representative in Washington, on January 24, 2012.

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Khoroshkovky

There are a number of speculations regarding the implications of the appointment for the current cabinet of ministers and the economy. Khoroshkovky effectively replaces a close ally of Azarov, the current prime minister. As such, the move could potentially be a beginning of a government reshuffle preparing the grounds for an eventual Azarov’s resignation. It could be very convenient to use the prime minister as a scapegoat for Ukraine’s deteriorating economic situation, especially ahead of the October parliamentary elections and in light of falling popularity of the ruling Party of Regions (PR). In terms of structural reforms, the State Tax and the State Customs authorities could be brought under the Ministry of Finance to unify the public finances in the country. The concentration of all country’s financial streams may prove to be beneficial for the government ahead of the parliamentary elections, but detrimental in the long run as a potential source of power abuse and corruption.

However, only time will tell how realistic these speculations are. Nevertheless, the appointment of Khoroshkovky does not represent any essential change, but rather a shift within the ruling elite.

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Ukraine 2

Upon the results of 2011, Ukraine became one of the world’s three biggest grain exporter countries, Ukrainian Minister of Agricultural Policy and Food Nikolai Prisyazhnyuk said on Wednesday.

In his words, “Ukraine become the world leader in terms of barley export, and ranked sixth in terms of wheat supplies to foreign states.”

Besides, the country can report not only the hike of grain export, but also other sorts of food, the minister said, adding, “We are leading exporters of sunflower oil. We ranked second in terms of its production and third in terms of sunflower seed production.”

According to the ministry, Ukraine has exported 9.65 million tonnes of grain since the beginning of the new marketing year (from July 1, 2011 through June 30, 2012), Prisyazhnyuk said, adding that the indicator is 2.86 million tonnes than in the previous marketing year.

In all, Ukraine’s agricultural supplies went up by 30 percent over six months to exceed 10 billion U.S. dollars, while the foreign trade surplus neared 4.8 billion U.S. dollars, the minister said.

“These achievements allow us to make upward forecasts pertaining further development of Ukraine as an agricultural country,” Prisyazhnyuk said.

“While bringing into comparison the grain yield and gross harvest of the aforesaid plants with average indicators in the EU states, we can say that Ukraine has a potential in order to almost double agricultural output in the near future,” he said, adding, “The agricultural production will make it possible to guarantee the country’s food security and may be exported to the global markets.”

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Ukraine

In 2011, Ukraine’s farmers harvested 56.7 million tonnes of grain in the bunker weight (before cleaning and drying), which is 44.3 percent more than in 2010, Prisyazhnyuk said.

Herein, an average grain yield amounted to 3,800 kilograms per hectare. “The country hit its record high over many years,” the minister said earlier, adding that corn yield reached 6,400 kilograms per hectares, which is about 30 percent more than in 2010.

In 2010, Ukraine’s grain harvest decreased by 14.7 percent, as compared to 2009, and totalled 39.27 million tonnes, Prisyazhnyuk said.

Over the years of independence, Ukraine gathered the biggest grain harvest (53.29 million tonnes) in 2008, he reaffirmed.

At the end of 2011, the minister stated that Ukraine may export up to 27 million tonnes of grain in the 2011-2012 marketing year. Under preliminary estimates of the Ministry of Agricultural Policy and Food, which were published earlier, the country could export about 20-25 million tonnes of train in the above-mentioned period.

In the previous marketing year, Ukraine supplied abroad seven million tonnes of grain.

According to official data, Ukraine’s domestic food grain demand is estimated at seven million tonnes, the minister said.

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