Ukraine Profile

KIEV, Ukraine -- Ukraine gained independence after the collapse of the Soviet Union in 1991 and has since veered between seeking closer integration with Western Europe and reconciliation with Russia, which supplies most of the country's energy. urope's second largest country, Ukraine is a land of wide, fertile agricultural plains, with large pockets of heavy industry in the east. While Ukraine and Russia share common historical origins, the west of the country has close ties with its European neighbours, particularly Poland, and Ukrainian nationalist sentiment is strongest there. A significant minority of the population of Ukraine are Russians or use Russian as their first language. Russian influence is particularly strong in the industrialised east, as well as in Crimea, an autonomous republic on the Black Sea which was part of Russia until 1954. The Russian Black Sea Fleet is based there. Crimea is also the homeland of the Crimean Tatars whom Stalin accused of collaborating with the Nazis and deported to Central Asia in 1944. More than 250,000 have returned since the late 1980s. In 1932-1933 Stalin's programme of enforced agricultural collectivisation brought famine and death to millions in Ukraine, the bread basket of the USSR. Not until its twilight years did the Soviet Union acknowledge the extent of the suffering. News of another Soviet-era calamity, the 1986 accident at the Chernobyl nuclear power station, rang alarm bells around the world immediately. About 8% of Ukraine's territory was contaminated as were large areas in neighbouring Belarus. Millions have suffered as a result. Independence The first president after independence, former Communist Party official Leonid Kravchuk, presided over a period of economic decline and runaway inflation. His successor, Leonid Kuchma, oversaw steady economic recovery, but was accused of conceding too much to Russian economic interests. Opposition to Mr Kuchma grew, further fed by discontent at controls on media freedom, manipulation of the political system and cronyism. The authorities' attempt to rig the 2004 presidential elections led to the "Orange Revolution", with reference to the colour of the main opposition movement. Orange Revolution Mass protests, a revolt by state media against government controls and the fracturing of the governing coalition brought in European-Union mediation and a re-run of the election. A fragile alliance of anti-Kuchma forces, from pro-Western democrats, socialists, business interests and nationalists united behind opposition leader and former prime minister Viktor Yushchenko, who won the presidency. Mr Yushchenko secured the transparency of the democratic process, the rule of law and media freedom, but his efforts to move towards Nato and EU membership made slow progress in the face of Western reluctance to antagonise a resurgent Russia and a divided public opinion in Ukraine itself. Rivalry with his prime minister, Yuliya Tymoshenko, soured into open antagonism, and neither proved able to cope with the worldwide economic downturn after 2008. Their opponent in the 2004-2005 Orange Revolution, Viktor Yanukovych, won the 2010 presidential election. He swiftly re-oriented foreign and trade policy towards Russia and clamped down on media freedom. He also had various oppenents, most prominently Ms Tymoshenko, imprisoned in trials regarded at home and abroad as politically-motivated. Although trade with EU countries now exceeds that with Russia, Moscow is the largest individual trading partner. Ukraine depends on Russia for its gas supplies and forms an important part of the pipeline transit route for Russian gas exports to Europe. Gas disputes A dispute over price rises prompted Russia briefly to cut supplies for use by Ukraine in January 2006 and raised concerns across Europe too. The gas was switched back on only after Ukraine agreed to pay almost twice the former price, which rose sharply again for 2007. In January 2009, Russia again cut gas supplies in a row over unpaid fees. The Ukrainian economy's dependence on steel exports made it particularly vulnerable to the effects of the global financial crisis of 2008, and in October of that year the country was offered a $16.5bn (£10.4bn) loan by the International Monetary Fund (IMF).

Germany's Merkel Compares Ukraine Repression With Belarus

BERLIN, Germany -- German Chancellor Angela Merkel says people in Ukraine are living under dictatorship and repression just like those in its authoritarian neighbor, Belarus. Merkel's comments, made to parliament Thursday, come as Germany continues to pressure Ukraine President Viktor Yanukovych to ensure that jailed opposition leader and former prime minister Yulia Tymoshenko receives proper medical treatment. "Today, we in Germany and the European Union, live in peace and freedom," she said. "This is unfortunately not the case throughout Europe, because in Ukraine and Belarus people are still suffering under dictatorship and suppression. We must never forget, however large the issues we are dealing with and however tiring certain party political disagreements can be, we must never forget the gift that we in the European Union and the Transatlantic organization have been protecting for the last 67 years. A gift of peace, freedom, democracy, human rights, the rule of law and human dignity." Germany has been leading Europe's critical stance on her case. Tymoshenko ended her nearly three-week hunger strike on Wednesday after being moved from prison to a local hospital for treatment of chronic back pain. President Yanukovych is facing growing criticism about her conviction and his government's refusal to let her travel to Germany for treatment. Tymoshenko is serving a seven-year jail sentence after being convicted of abuse of office in a 2009 gas deal with Russia. She denies the charges. Western nations say they were politically motivated. Some European Union member states have threatened to boycott the Euro 2012 football (soccer) championship, which Ukraine is jointly co-hosting with Poland. On Tuesday, Ukraine postponed a planned summit of Central and Eastern European leaders, after some pulled out to protest the treatment of Tymoshenko. The summit was scheduled to take place in Yalta on Friday and Saturday. About 10 EU leaders said they will not attend, including German President Joachim Gauck and Czech President Vaclav Klaus. Tymoshenko is now standing trial on tax evasion charges, which could extend her prison time to 12 years. She says the charges are part of a campaign by President Yanukovich to remove his strongest political rival.

We Couldn't Sell All Our Tickets: England Fans Shun Euro 2012 Over Safety Fears

LONDON, England -- The England football team has long been seen as one of the best supported squads in the world. But it now faces the prospect of being deserted by fans ahead of this summer’s European Championship in Ukraine amid safety concerns and general apathy. Mounting fears that local racist hooligans may use the major event to target fans from ethnic minorities and a spate of terrorist attacks are thought to have added to factors putting off supporters. Of the 9,000 official supporters tickets made available through the Football Association, just 2,000 have been sold for England's opening game against France on June 11 at the Donbass Arena, in the former mining city of Donetsk. And only 1,000 more tickets have been sold for the game against hosts Ukraine in the country's capital Kiev on June 15. The dismal figures will be the lowest turnout ever for the Euro competition. Assistant chief constable Andy Holt, who is leading the British police involvement in the tournament, warned that England supporters could be goaded by local racist thugs. He said: 'It may be a flashpoint for some sort of disorder if fans feel they are being unfairly treated.' He said there was little intelligence that England fans were planning on causing trouble, adding: ‘The reality is that the overwhelming majority of England fans heading to Euro 2012 are there to support the national team and the game of football. ‘Those who engage in any trouble must realise that they will feel the full force of local policing laws. 'Anyone involved in football-related trouble can also expect to face a football banning order when they return to the UK." England's recent run of poor performances in international tournaments also looks to have dented support. A Football Association spokesman said: ‘We are pleased with the England fans members who have bought tickets to support England in Ukraine.’ The FA says it has been liaising with fans and authorities over safety concerns and believes many more supporters will be getting tickets directly from UEFA. A record 70,000 fans headed to Germany to support England during the 2006 World Cup. But confidence in safety at this tournament has been hit by a series of devastating terrorists attacks. UEFA have played down the threat of trouble and tried to reassure fans that security measures for Euro 2012 are adequate despite a series of explosions in the Ukrainian city of Dnipropetrovsk. At least 27 people were injured in the blasts, which local authorities are believed to be treating as the work of terrorists. Four explosions have been reported in Dnipropetrovsk, with a tram stop and railway station among the apparent targets. Dnipropetrovsk was initially set to be a host city for Euro 2012 but was replaced in 2009 by Kharkiv. It is located around 240 miles from Kiev, the destination of the tournament final.

Boycott Of Ukraine During Euro 2012 Carries Risks

WARSAW, Poland -- It's an ethical dilemma that has Western leaders in a bind: to boycott or not to boycott Ukraine-hosted matches in the European soccer championship over the alleged abuse of jailed opposition leader Yulia Tymoshenko? When Tymoshenko launched a hunger strike last month after saying she was beaten by prison officials, several European leaders vowed to boycott Ukraine during Euro 2012 in protest, with even German Chancellor Angela Merkel threatening to stay away. But many warn that to shun Ukraine could do more harm than good. Leaders, sports officials and even some rights activists argue that using Europe's most prestigious sporting event to punish Ukraine is hardly likely to win Tymoshenko's release. On the other hand, it could alienate Ukraine further from the West, demoralize its people and create a troubling sporting precedent. For instance, will countries now shunning Ukraine, which co-hosts the tournament with Poland, also be willing to take a hard line against economic giant Russia when it hosts the Sochi winter Olympics in 2014 and the World Cup in 2018? Russia, after all, also has political prisoners and a spotty human rights record. The United States led a boycott of about 50 countries against the 1980 Moscow Olympics over the Soviet Union's invasion of Afghanistan - and that was widely seen as a flop that made no difference to the conflict. It's no surprise that Russia's Vladimir Putin, who returned to the presidency this week, says Tymoshenko's case and Euro 2012 should be kept separate. ''One must not in any circumstances mix politics, business and other questions of this sort with sports,'' Putin said last week. A leading Polish analyst, Marcin Zaborowski, argues that talk of boycotting Ukraine ''opens up a broader question about whether international sports events should just be for democratic nations.'' ''If you do that, then you remove an important element in international relations,'' said Zaborowski, director of the Polish Institute of International Affairs. He argued that major sporting events - including soccer matches between political foes like Turkey and Armenia, and the U.S. and Iran - have helped ease tensions by giving politicians, athletes and fans a chance to interact in a nonpolitical space. Sports can also be a morale booster for people living in oppressive systems, Zaborowski said. During the Cold War, for instance, participation in Olympic games and other international competitions lifted the spirits and pride of Eastern Europeans by giving them a stage on which their athletes could excel. Should regular Ukrainians, who are already struggling with poverty and corruption, also have their party ruined due to this political controversy? These issues are sparking a great deal of debate in co-host Poland, Ukraine's neighbor to the West. The tournament opens June 8 in Warsaw with a Poland-Greece match and ends in Kiev on July 1, with matches in between in four Polish and four Ukrainian cities. Poland's leading opposition leader, Jaroslaw Kaczynski, the head of the right-wing Law and Justice party, is joining some Western Europeans in calling for Poland to boycott Ukraine, arguing that Tymoshenko's imprisonment is a clear attempt by President Viktor Yanukovych and his allies ''to eliminate the opposition leader from public life.'' ''Such a situation cannot be tolerated'' by the EU, Kaczynski said. But Prime Minister Donald Tusk and President Bronislaw Komorowski, while also critical of how Ukraine is dealing with Tymoshenko, strongly oppose a boycott. Warsaw, of course, can hardly act against its co-host in the tournament, which is seen as a chance for the two ex-communist states to prove themselves as efficient and modern. A failure for Ukraine would be a failure for Poland, too. But the stance by Poland, an EU member, is also firmly in line with a long-term strategy of promoting democratic change on its eastern border by engaging Kiev. Warsaw fears that a punishing approach could push Ukraine closer to Russia. Tymoshenko is serving a seven-year prison sentence on charges of abuse of office while negotiating a natural gas contract with Russian in 2009. The former Orange Revolution leader charges that Yanukovych, her arch-foe, orchestrated her jailing to get her out of the way during October parliamentary elections. Western leaders also have strongly condemned the case as politically motivated and have been increasing their pressure on Kiev since she began her hunger strike. Though sports should, many argue, be a space free of politics, there is a long history of politicians using it as a tool - most dramatically with threats to boycott Olympic games. Experts say these have never really done much to change the situation on the ground, though athletes have found their dreams of competing slashed after years of training. The boycott of the Moscow games, spearheaded by President Jimmy Carter, caused bitterness that lingered for years. ''What did it help in 1980 that the U.S. didn't compete? The Soviets still stayed in Afghanistan,'' said Bill Mallon, a past president and co-founder of the International Society of Olympic Historians. ''I don't think boycotts are ever really helpful. All they ever do is deny athletes the chance to compete.'' In 1978, the Netherlands led calls to boycott the World Cup in Argentina to protest a military dictatorship and its human rights violations. But the boycott didn't happen. To be sure, nobody now is talking about keeping national teams from competing in this summer's championship. But EU President Hermann Van Rompuy, European Commission President Jose Manuel Barroso and the governments of Austria and Belgium say they will stay away. Merkel vows to do the same if treatment of Tymoshenko doesn't improve. While many fans probably don't care if one politician more or less is sitting in the stands, all the talk of a boycott is already embarrassing Ukrainian leaders. ''We found the resources, built the stadiums, the airports, bridges, roads, interchanges, renovated hospitals and now they are telling us: boycott Euro,'' Ukrainian Prime Minister Mykola Azarov said Monday. ''Is that normal? How should we feel about this? Who do they want to humiliate? They want to humiliate our entire people, our country.'' UEFA, the European football association that is organizing the event, not surprisingly also opposes a boycott of Ukraine. Michel Platini, the president, sent a letter in March to a human rights group and the parliaments of the EU, Sweden and Germany acknowledging Kiev's problems but arguing that the matches and other activities planned on the sidelines could help Ukrainian society. Platini wrote that when UEFA decided to stage Euro 2012 in two ex-communist countries, its goal was to open up to a part of Europe that had never hosted a championship. ''This desire to broaden our horizons is without doubt a double-edged sword,'' Platini wrote. ''But it does have the virtue of opening up nations and favoring exchanges.''

Ex-PM Enters Hospital, Ends Hunger Strike

KIEV, Ukraine -- Jailed opposition leader Yulia Tymoshenko, whose plight has soured relations between the country's leadership and the West, was moved to a hospital for treatment for back pain on Wednesday and ended her hunger strike.
resident Viktor Yanukovych has faced growing criticism over the conviction of Tymoshenko and the authorities' refusal to let her travel abroad for treatment for chronic back trouble.

Her transfer from prison in the eastern city of Kharkiv to a nearby hospital for treatment under the supervision of German doctors was worked out last week in a compromise.

But it seemed unlikely to relieve pressure on Yanukovych, who looks increasingly isolated as Ukraine prepares to co-host Europe's biggest soccer tournament.

Tymoshenko, 51, a former prime minister, was jailed last October for seven years for alleged abuse of power while in office, a charge she denied.

She says she is the victim of a vendetta by Yanukovych who narrowly beat her for the presidency in February 2010.

The European Union and the United States have condemned her trial and sentencing as politically motivated and want her released.

Outcry in the West intensified after Tymoshenko said she had been beaten in jail and went on hunger strike on April 20 in protest against alleged ill-treatment.

Authorities deny she was mistreated.

German doctor Lutz Harms of Berlin's Charite hospital, who is supervising her treatment, said she ended her hunger strike after being admitted to the Kharkiv clinic on Wednesday morning.

"We have begun to start a normal process of feeding," Harms told reporters.

She will take fruit juice at first and then begin to take solids.

Therapy for her back pains will take at least eight weeks, he said.

Reuters witnesses said Tymoshenko was brought to a side entrance of the hospital by ambulance in a convoy which included several police cars.

A few supporters nearby shouted out "Freedom for Yulia!" as she was carried in on a stretcher.

Yanukovych appeared untroubled at World War Two Victory Day celebrations on Wednesday, despite the pressure.

Addressing veterans in Kiev, he spoke of the need to defend world peace by shunning "populism of all types", but remained silent about Tymoshenko.

In a setback on Tuesday, he called off a meeting in Yalta of Central and Eastern European leaders after several said they were staying away because of the Tymoshenko affair.

Arseny Yatsenyuk, leader of the Front of Change party, said cancellation of the Yalta meeting was a "shameful failure" for Ukraine.

"This leadership is dragging the country and its people with it into international isolation," Interfax news agency quoted him as saying.

Vitaliy Klichko, world heavyweight boxing champion who heads the Udar party, said: "The leadership clearly has no wish to change the situation and meet calls by Kiev's European partners to respect human rights and democratic standards."

Western outrage over the treatment of Tymoshenko, who led the 2004 Orange Revolution protests which doomed Yanukovych's first bid for the presidency, has led to threats by European politicians to boycott the European soccer championships which Ukraine co-hosts next month.

The month-long Euro-2012 tournament which Ukraine is co-hosting with Poland from June 8 to the final in Kiev on July 1, is meant to showcase the former Soviet republic as a modern European nation.

Some Western government ministers now say they will not attend.

European Commission President Jose Manuel Barroso has said he has no plans to visit Ukraine and the other 26 commissioners are following suit.

Russia’s Growing Influence In Ukraine: Economics and Energy

KIEV, Ukraine -- The Ukrainian government is negotiating the issue of ruble-denominated government bonds, making the country no longer reliant on IMF assistance. Ukraine’s 2010 IMF assistance package of $15.6 billion was suspended in March 2011 because of Ukraine’s refusal to continue with IMF reforms, in particular raising household utility prices to reduce subsidies to the state gas company Naftohaz Ukrainy. This confirms what the Nikolai Azarov government has been discussing since summer 2011. Three November 2011 auctions for three and five-year government bonds with 8.22 and 8.75 percent returns, respectively, failed to attract buyers, and a March issue of a $1.5 billion Eurobond was postponed. The Ukrainian Finance Ministry had until then regularly sold government bonds denominated in US dollars and Euros. This is a reflection of an overall Western disinterest in investing in Ukraine, as seen by the lack of Western interest in recent privatizations, and the bidding conditions for the sale of the stakes in Ukraine’s energy sector have been specially formulated in order to suit oligarchs. The main “foreign” investments in the last two years have been Ukrainian and Russian capital returning from offshore tax havens such as Cyprus, which accounts for a third of FDI into Ukraine. Negotiations for Ukraine to issue ruble-denominated government bonds are underway between Ukraine and Russia’s central banks, Gazprom and the two countries’ finance ministries. The bonds would be purchased by Russian banks active in the Ukrainian market – VTB (President Vladimir Putin is Chairman of its Supervisory Board), Russia’s Sverbank, Alfa-Bank and Vnesheconombank (VEB) – and Kiev hopes to raise $500 million. Sverbank Board Chairman German Gref, a former economic adviser to President Putin, has stated his readiness to assist Ukraine in issuing ruble-denominated government bonds. Until now Ukraine has paid Russia for gas in US dollars and has been negotiating since last year to reduce the price by a third, or $250 per 1,000 cubic meter, compared to $416 last quarter. Ukraine has already borrowed $2 billion to pay for Russian gas from VTB Group – a loan that matures in June. Last month, Ukraine negotiated a second credit line of $2 billion from Gazprombank to pay for imported gas. In 2011, Ukraine spent $1 billion in foreign currency each month to pay for of imported gas set in the January 2009 Ukrainian-Russian gas contract negotiated by Prime Ministers Yulia Tymoshenko and Putin. The move toward ruble-bonds comes at the same time as the Yanukovych administration is preparing the ground after the October elections for a gas consortium in return for a Russian “discount” on the gas price. On November 8, 2011, the government sponsored law no. 9429, which permitted the reorganization of Naftohaz Ukrainy (an opposition alternative was proposed two weeks later). Adopted amendments to the February 2007 law, initiated by Tymoshenko, will lead to Naftohaz Ukrainy’s reorganization by the government that will bypass parliament. This opens up the possibility of privatization of Ukraine’s gas pipelines, opposition deputy Serhiy Sobolev said, because the amendments no longer contain provisions banning privatization, lease or rent of the pipelines. There are three strategic disadvantages to Ukraine for issuing ruble-denominated government bonds. Firstly, loans in rubles will be 2-4 percent more expensive than bonds in US dollars or Euros. The ruble’s exchange rate is highly dependent on the price of oil and gas. The cost of imported gas would be dependent on the Russian currency which, if it devalues against the US dollar, would reduce the price, and if it strengthened the price would rise. In contrast to Russia, which has a floating exchange rate, Ukraine’s exchange rate is fixed against the US dollar. Secondly, President Putin has elaborated Russia’s strategic goal of restoring the economic space of the former USSR (minus the three Baltic states that are EU members). President Putin reportedly controls a “war chest” of $20 billion to purchase strategic economic and energy sectors in the CIS. Ukraine withdrew from the ruble zone in June 1992 and began issuing a temporary currency, the karbovanets kupon, which remained in place until 1996 when Ukraine launched a new currency, the hryvnya. Thirdly, Ukraine’s dependence on Russia will inevitably grow and reduce Kiev’s leverage in negotiations with Moscow. Russia has long sought to control Ukraine’s gas pipelines, which transport two thirds of Russian gas, and is pressuring Ukraine to join the CIS Customs Union. These two goals will become more achievable if Ukraine issues ruble-denominated government bonds as Ukraine would be heavily dependent on Russian banks crediting the Ukrainian economy. Kiev has warned Brussels that the EU should focus on Ukraine’s geopolitical and strategic importance and ignore democratic regression by threatening that Ukraine could drop its European integration efforts in favor of integration with Russia and the CIS. Kiev’s threats should be understood as real but are likely to be ignored by both the US and EU, and therefore by the IMF. Ukraine is a very low priority for both the Barack Obama administration, which is in the middle of a re-election campaign, and the EU, which is faced with numerous domestic crises. Ukraine is over-playing its geopolitical importance and dialogue between the US-EU, which is all but frozen. The IMF assistance package is unlikely to be revived because of US and EU pressure to punish Ukraine for its democratic backsliding. The Ukraine-EU Association Agreement was initialed on March 30, but its signing by the European Council and ratification by parliaments is frozen until political prisoners are released and permitted to participate in elections.

Ukraine Rejects Probe Into Tymoshenko Abuse Claims

KIEV, Ukraine -- Ukraine rejected a demand on Friday from jailed opposition leader Yulia Tymoshenko for a criminal probe into what she calls severe beatings at the hands of prison guards - claims which alarmed Western leaders who view her as a political prisoner. Tymoshenko - who is on hunger strike and has complained for months of crippling back pain but refused treatment from Ukrainian medics - has agreed to accept treatment from a German doctor at a Ukrainian hospital, a doctor who saw her said. The case has embittered Ukraine's relationship with the European Union weeks before it co-hosts the continent's soccer championship, a prestige event that was meant to be a showcase for the ex-Soviet state's dreams of European integration. Tymoshenko, 51, says she is the victim of a vendetta by her rival, President Viktor Yanukovich. Last week she said prison guards had beaten her during a forced visit to a hospital. Her supporters circulated photographs showing bruises on her arms and abdomen. The allegations revived outrage in the West over her plight which some European politicians say reflects a decline in democratic standards in the former Soviet republic since Yanukovich came to power in February 2010. Prosecutor general Viktor Pshonka said on Friday his office had been unable to verify Tymoshenko's claims of physical mistreatment and he refused to open a criminal inquiry. "Following an investigation, the request to launch a criminal case has been denied," he told reporters. Tymoshenko, 51, has been in detention since last August and declared a hunger strike in prison on April 20 in protest at being mistreated. She has said that she cannot trust Ukrainian doctors because they work for the authorities. Germany, one of the countries that has been most outspoken over her case, had offered to treat her back pain in Berlin, but Pshonka said she would not be permitted to travel. After seeing Tymoshenko in prison in the eastern Ukraine city of Kharkiv, Doctor Karl Max Einhaupl of Berlin's Charite clinic said she had "provisionally agreed" to be treated by one of his colleagues in a local hospital starting from May 8. The European Union, partner in Ukraine's declared drive to European integration, has condemned Tymoshenko's conviction on abuse-of-office charges last October as an example of selective justice. It has shelved landmark deals on political association and free trade with Ukraine over the issue. Some European politicians have cancelled plans to visit Ukraine on May 11 for a gathering on Central European issues in the southern resort of Yalta. Leaders are also threatening to boycott the ceremonial opening of next month's Euro-2012 soccer championship, a month-long event which Ukraine is co-hosting with Poland. Despite Western pressure, Yanukovich, who narrowly beat Tymoshenko in the 2010 presidential election, has refused to intervene to free her, and prosecutors have brought to court fresh tax evasion charges against her which carry a sentence of up to 12 years. Tymoshenko has been suffering from chronic back pain for months and has trouble walking, her family says. Tymoshenko was one of the leaders of the 2004 Orange Revolution protests which doomed Yanukovich's first bid for presidency but failed to produce a strong ruling coalition, allowing him to make a comeback in 2010. Tymoshenko says the charges brought against her are driven by Yanukovich's desire for personal revenge.