EU approves Black Sea policy

Interfax-Ukraine
Brussels – The European Parliament has approved an EU Strategy for the Black Sea, with the main emphasis put on energy and security.

At a plenary session in Strasbourg on Friday, parliamentarians overwhelmingly approved a report by MEP Traian Ungureanu, which outlined the main provisions of the strategy.

The main innovation will be the creation of a specific budget line for the Black Sea Strategy and the increase in human resources for its implementation.

The European Parliament expressed concern about the agreement between Ukraine and Russia to extend the stationing of the Russian Black Sea Fleet in Sevastopol.

European Commissioner for EU Enlargement and European Neighborhood Policy Stefan Fule promised to follow the recommendations of Ungureanu’s report while drafting the EU strategy for the Black Sea region.

The report notes that the EU, in its Black Sea policy, should encourage the priority financing of small-scale cross-border cooperation projects. Other priorities include the stabilization of the situation in the region, respect for human rights, migration management, the improvement of energy security, the environment, as well as social and economic development.

The MEPs also believe that “in order to provide visibility, strategic guidance and high-level coordination, ministerial meetings between the EU and the wider Black Sea region countries should be organized on a regular basis and include all actors and countries in the region.” The European Parliament also “sees Turkey and Russia as partners which should ideally be properly involved in Black Sea regional cooperation.”

The European Parliament invited the EU to develop “an early warning system as a conflict-prevention and confidence-building tool in the Black Sea region” in order to avoid destabilization and conflict-escalation.

MEPs also called “for the focus to be on concrete cases rather than general expressions of concern” and called “for consideration to be given to confidence-building measures such as public disclosure of arms sales and naval military activities.”

The strategy for the Black Sea region “comprises the EU Member States Bulgaria, Greece and Romania, the candidate country Turkey and the ENP partners Armenia, Azerbaijan, Georgia, the Republic of Moldova and Ukraine, as well as the Russian Federation as a strategic partner.”

Among the main challenges facing the region are “protracted conflicts, displaced populations, bilateral disputes, closed borders and strategic rivalries leading to militarization and proliferation of arms, weak institutions and governance and the deterioration of democratic rule, cross-border crime and trafficking, border and movement management, and poor maritime security and safety.”

The presumption of guilt……or innocence. A President’s statement

Well dear readers, it has been reported that the Ukrainian President has express his hope that the former Ukrainian Prime Minister will prove her innocence of the charges made against her.

“Yulia Tymoshenko will have a chance to protect herself [in court], and I’m one of those who want this to happen. I would like her to prove that the charges brought against her are false,” the Kommersant-Ukraine newspaper quoted Yanukovych as saying in an interview with CNN International news service”

In the same statement, he also went on to say, that a court ruling cannot be questioned and that this means the correctness of both acquittal and conviction.

“If the court finds her guilty, she will be punished like any other person,” Yanukovych said.

He also recognized the shortcomings of the current judicial system in Ukraine.

“We still have to reform the judicial system in order to fight corruption.”

Totally outrageous that a the person charged must prove their innocence rather than guilt be proved would be the cry from many people……until we are to consider other statements and legal situations in other nations.

One can recall that GWB whilst readying to take Oraq back to a decade in th Stone Age told Saddam Hussian to prove he did not have WMD rather than GWB proving that Iraq did have them.

Anybody owning a car that is caught on speed camera in England is automatically assumed to be the driver and thus guilty and has to prove they were not the driver at the time to avoid the fine and penalty points on their license.  A definite arbitrary case of being assumed guilty and having to prove innocence.

Staying with England, if we consider the Crown Prosecution Service will only allow cases they are 70% or more likely to win even entering the court justice system, the inference alone is that by getting to court you will have to prove your innocence as the Crown prosecutors, and therefore the State, already think you are guilty and have a 70% or more chance of proving it beyond all reasonable doubt…..a fact that probably does not escape the consciousness of any Magistrate, Judge or jury member.

In other words, to even get to court in England, your conviction stands a 70% chance (at least) of occurring and thereby are there to prove your innocence.   A 50/50 chance of conviction does not get to a UK court as the CPS generally do not consider it worth the public expense to get you to court.

Trial by media?  How many times do the media place the accused in a position of proving innocence before even getting to court?

It seems that whilst what has been said is on the face of it quite contrary to “innocent until proven guilty”, a belief that many of us hold true, the way that is has been said in actual fact is not so far removed from the realities we prefer to overlook in many nations.

A quick return to Pension Reform

Well dear readers, quickly returning to the pension reforms, “The pension reform will be carried out according to the following algorithm: we will balance the solidarity system and will introduce the accumulation system on which every person will allocate a certain amount every month for the pension,” according to Vice Prime Minister Serhiy Tihipko.

Much rejoicing from the IMF at yet another promise seemingly being kept and quiet acknowledgement from others within Europe that Ukraine is trying to get its future finances in order……..but……for implementation of the pension reform, according to Tihipko, it is necessary to overcome two problems; to increase the number of the working people and to legalize the wages. It is planned to form the law on the pension reform till March 2011 and to fully implement it till 2013.

What he means is, first it is necessary to move a good proportion of the black economy into at least the grey, if not white economy (increase the number of working people) and then tax them (legalize wages)……just like most countries do when trying to fill the State coffers.

2013 is rather conveniently after the next elections in October 2012.

Recycling…..Ukrainian aircraft carriers

Associated Press
BEIJING (AP) — A leading defense analyst says China has fully restored an aircraft carrier from Ukraine that it intends to use to train Chinese pilots.

Hong Kong-based Kanwa Asian Defense magazine says the restoration included all living and working compartments, the engines, navigation systems and power generating equipment.

The ship is China’s first aircraft carrier. The U.S. Department of Defense expects it to be relaunched at any time for a pilot training platform.

China bought the mothballed carrier in 1998 and towed it to the northeastern port of Dalian for a complete refitting.

Kanwa said the complete restoration was intended to make the ship fully functional and be practice for building China’s future homemade carriers

Reverse takeovers – Regal Petrolium Ukraine

Well dear readers, aren’t reverse takeovers interesting?

Take a look……..

Interfax-Ukraine
Heamoor Limited (Cyprus) and Ukrainian oil and gas holding Geo-Alliance, companies controlled by Ukrainian businessman Victor Pinchuk, have made a proposal to purchase the shares of Regal Petroleum plc, a British oil and gas company with assets in Ukraine, at a price of 25 pence per share.

Under the terms of the deal published on the London Stock Exchange, Regal makes an additional issue of shares and exchanges them for a 100% stake in Geo-Alliance. Thus, Geo-Alliance, in fact, becomes a subsidiary of Regal.

As a result of the exchange of shares, the current owners of Geo-Alliance receive up to 70% of Regal’s fully diluted share capital, as enlarged by the acquisition. The previous owners of Regal, in turn, get the option to sell their Regal shares to Heamoor at a price of 25 pence per Regal share for three months following the completion of the reverse take-over (the acquisition).

The deal requires the necessary Ukrainian anti-trust approvals. According to Regal, more complete information about the deal will be made public until February 10, while until March 10 the company’s shareholders will get all of the necessary documents.

As a result of the reverse take-over procedure, Pinchuk-controlled companies will be able to enter the London Stock Exchange (LSE). Earlier, Geo-Alliance planned to conduct an initial public offering (IPO) on the Warsaw Stock Exchange (WSE), but abandoned its plans due to worsening market conditions.

In connection with the announcement about the potential acquisition of Regal, trading in its shares on the LSE was suspended.

As reported, Energees Management, which is controlled by Ukraine’s Smart Holding, made a proposal on the purchase of Regal Petroleum Plc at 24 pence per share, the initial closing of which is due on January 24.

Maybe time to have a quick flick through the foreign publicly traded enterprises in Ukraine in the commodity field, particularly in light of some rather tasty privitisations coming soon and look for those likely to become controlled by the locals.  (That only ever happens for good reason and normally means a reasonable return for those with the dangely bits to play in Ukraine.)

A return to household lending in Ukraine……

Well dear readers, whilst many of my “Western” readers would positively baulk at what is written below, in Ukraine, it is good news and a vast improvement on the current situation…..

Interfax-Ukraine
Mortgage credit rates in Ukraine could fall to 16% per annum by late 2011, down from the 18-20% rates seen as of late 2010, according to the first deputy board chairman of Kyiv-based Subsidiary Bank Sberbank of Russia, Alexander Vedyakhin.

“Over the year, mortgage credit rates will fall, but it will be a gradual fall. If we manage to pass the 20% level and reached 18-19%, at the end of the year we could reach 16%,” he said at a press conference in Kyiv on January 15.

Vedyakhin also said that the down payment for mortgage credits would fall to 25-30% of the property value, while currently it is some 40-50%.

The expert also said the banks would relax the procedure for issuing mortgage credits to individuals, but that the conditions would not return to pre-crisis terms.

He said that the mortgage crediting for the medium and medium-plus housing segments worth from $300,000 to $1 million would mainly develop this year.

The banker also said that Subsidiary Bank Sberbank of Russia from January 15 started issuing mortgage credits in Russian rubles at 14% per annum.

Subsidiary Bank Sberbank of Russia was founded in 2001. Its only stockholder as of October 1, 2010 was OAO Savings Bank (Sberbank) of the Russian Federation.

The bank ranked 27th among the 176 operating banks in Ukraine as of October 1, 2010, in terms of overall assets, estimated at UAH 8.394 billion, according to the National Bank of Ukraine.

Appointing a government, who do you choose?

Well dear readers, yesterday afternoon I spent some time with some people of clout in the local community, and as ever the subjects of business, politics and the economy arose, along with issues like human rights, freedoms, reforms and other such wonderfully interesting subjects for a Sunday afternoon.

Being an immigrant in Ukraine and the only immigrant amongst the gathering, of course many were interested in my opinion.

As the afternoon progressed, it reached a stage whereby we were theoretically selecting politicians for Ukraine regardless of their nationality with a proviso they must be current politicians.

Only 3 Ukrainians made the list and none were the names of the more internationally recognised.

Also nowhere on the list were any American or UK politicians.

What does that say about the leadership not only of Ukraine but the Anglo/American nations?

BP, Rosneft and the ripples it will cause

Well dear readers, not directly involving Ukraine, other than the TNK-BP and Rosneft presence here, the share swaps that occurred yesterday between BP and Rosneft are likely not to be without controversy.

BP already owned 3% of Rosneft before yesterday and is also a major stakeholder in TNK-BP as the name would suggest.

I cannot ever remember  a share swap between oil companies of this size and on the scale of yesterday before.  Rosneft, if memory serves is about half the size of BP in commercial terms.

Nothing wrong in what has been done of course, it is the nature of the free market……with of course a political will behind it.  Rosneft is chaired by the Russian Deputy Prime Minister and has been looking for a way to explore outside Russia and the surrounding nations and BP has been looking to get more active in Russia.

A business and political fit that seems fairly comfortable.

I am not sure whether BPs 9% share holding in Rosneft as announced yesterday, is additional is additional to the already held 3% giving BP a total of 12% of Rosneft.  75% of Rosneft is owned by the Russian State and I assume the remaining 13% by various shareholders since Rosneft was floated in London some years ago.

Rosneft in turn have taken a 5% share in BP, which would on the face of it, back up my above guess that BP is about twice as large commercially as Rosneft.

All fair enough and in the interests of both parties as long as BP and the Russian government can stay on a cordial footing which has not always been the case in the past.

It will be interesting to see what happens with TNK-BP over the next few months.

Meanwhile, only some weeks ago, the British Government along with many others were publicly condemning the continued detention of Mikhail Khodorkovsky and fellow inmate Lebedev after the were found guilty of further charges of fraud and tax evasion relating to Yukos Oil.

Many of the Yukos assets when it was broken up by the Russian State after their imprisonment were given to Rosneft.  So the British Government some weeks ago are condemning the Russian State for their continued imprisonment whilst now accepting a major role of BP with the recipient of assets stemming directly from the jailing of Mikhail Khodorkovsky.

Now of course it will be argued that BP is no longer a British State company but a free market player and this is quite true.  However, just as with BAE Systems, BP often has the government “go into bat” on its behalf with other foreign governments.  It still serves the British Government (regardless of party) to have the BP flagship doing well considering a lot of pension schemes of British people rely on their share dividends to pay pensioners directly or indirectly.

Aside from this human rights link, there is of course the environmental issues in the USA hanging over BP.  Given the absolute paranoia that is associated with “national security” in the USA, you can bet some ill infomred congressmen and/or senators will consider Rosneft owning 5% of BP a national security threat to the USA…….somehow…….given BPs leases and current actions in the USA.

Given Russian involvement in taking and storing US nuclear waste and other “sensitive” agreements between Russia and the USA, this share swap hardly registers as a national security issue in comparison……but knee-jerk paranoia from politicians within the USA has become something of the norm sadly, so it is a fair bet someone within the USA will call this share swap a “national security threat” given there is not much love for BP in the USA anyway and Russia will forever be the enemy (along with China and anyone else who disagrees with the USA of any size and capability).

Staying in the USA, I am sure the risk managers in BP will expect nationalist rhetoric from some within the US political circles over getting into bed with Rosneft and thus the Russian Government.  This may well assist the USA and BP in ending their relationship without litigation over canceled permits/leasing agreements and pending environmental fines, one canceling out the other, or it may set the free market against government in a battle with severe economic outcomes for one or the other…..particularly as the UK, because of pensions liabilities tied to BP shares, will have to stand up for BP and now so will Russia having a reasonable stake in BP via Rosneft.

It will be very interesting now to watch the reaction of the human rights groups, as and when they make the link between the UK government, BP, Rosneft, Yukos and Mikhail Khodorkovsky as well as the US political scene and the almost guaranteed paranoid rhetoric by some within, that this represents a threat to US national security.