Archive for April 15th, 2010

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The state of “Purdah”

April 15, 2010

Well dear readers, purdah is not a state which has recently arisen on the borders of Afghanistan and Pakistan…..nor is it some transendental meditative state designed to arrive at purity and true enlightenment.

A state of purdah now exists for “our people” at HM Embassy Kyiv……but it is not a diplomatic nightmare of a break away region in Ukraine.

Purdah is a time when “our people” in Kyiv, Moscow, Warsaw, Bombay or anywhere else on the planet, are basically barred from making political comment on themes that would infer support, indifference or contradictory views which may be seen to provide support to one political party over another……..because the UK is now into election mode.

Thus civil servants are effectively “gagged” regarding political issues relating to the UK.

Leigh Turner’s blog from deep within the bunker of the UK Embassy building in Kyiv has therefore been allowed to wander down the avenues and footpaths of……..Jubilee Walkway in London.

Just the mention of Jubilee takes me back to 1977 and the Silver Jubilee of Her Maj, a time when the author of your favourite blog……..that’s me, I’m the author of your favourite blog…….Mr Turner’s comes in a close second with Mr Crawford’s……… was wearing short trousers, trying to eat jelly and rapidly melting ice-cream from a trestle table decorated in red, white and blue,  on a ridiculous slant due to the gradient of the road on which a street party was being held somewhere in Hampshire.

To this day, I will contend that my fancy dress costume of Winston Churchill was better than the Metal Mickey robot which won, but maybe a young boy with a cigar in his mouth getting the “V” for victory sign the wrong way around was just too much for the judges.

Anyway, returning to Leigh’s blog, it seems normal service and some rather excellent talking points relating to the relationship between Ukraine and the UK will be resummed after 6th May and the election is concluded whilst he is subject to the state of purdah.

Then again, if there is a hung parliament, which seems likely from what I read at the moment, does the state of purdah continue as any comment could still be seen as favouring one party more than another if a coalition is necessary?

If so, I would like to make a suggestion to our good Ambassador and his international colleagues, that the unofficial table tennis matches that occur in the UK Embassy building between national representatives on an ad hoc basis become a semi-official tournament…..not necessarily naming the official playing, but at least the nation and a league position.

Admittedly, some would frown over such highly regarded national civil servants from many nations entering into such light hearted endevours……and maybe I am slightly eccentric or even completely mad to think that the hoy polloy such as myself would even be interested in how their embassy is fairing in an unofficial table tennis league in Kyiv……but there are plenty of oddballs like me who probably would have a passing interest.

Hmmmm, thinking about a hung parliament…….not literally hung from lamp posts although for some that would not be a bad thing……..I start to wonder about any new boss for the FCO and who would be preferred from amongst a pool of mostly talentless politicians.

Obviously being permanently domiciled in Ukraine, my interest as far as the UK goes, really does go no further than the politician who is seen to control the FCO position with regard to Ukraine.

As I am not under a state of purdah…… I may return to this closer to the election.

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Taking advice from experts

April 15, 2010

Well dear readers, the current administration set tackling the ecominc mess that is Ukraine as the number 1 priority for 2010.

Apart from privitisation of Odessa Port Side, Ukrtelecom and a State owned train carriage works expecting to raise somewhere between $2 and $5 billion……..no small sum when the total IMF loan is $16 billion……..tax reforms and bank reforms are also going to take place rather swiftly it seems.

For certain a new tax regime will commence on 1st January 2011 and it appears that minimum bank  statutory capitals will be increased substantially.

Already the Association of Ukrainian Banks (AUB) is complaining quite loudly.  To be fair, they have a point.  Plans are set to be implimented to raise the minimum bank statutory capital from 75 million UAH to a very substantial 500 million UAH. 

To get figures in currencies you will understand, roughly there is 8 UAH to $1, 10 UAH to Euro 1 and 12 UAH to £1.

Looking at it in this light, the current legal minimum for bank capital of UAH 75 million is not really high enough……….but the new minimum limit is almost 7 times more and quite a hike.

Many of the smaller banks simply will not be able to raise such captial.  This will force either closure or amalgamation for approximately 100 different banking providers…….as is my best guess after a cursory glance at the banks opperating in Ukraine.

The problem for the PoR Administration is that they are seen as the party of business.  However they have made the economy the number 1 priority and insuring the banking sector gets reformed is part and parcel of their risk management for any future financial crisis yet to appear on the horizon. 

Fair enough, many nations are making plans to regulate their banks internally or across enconomic blocks, so Ukraine should be no exception.

Party of Regions has very few people within its ranks I would call experts, although it does contain many experts in getting exceptionally wealthy one way or another.  One of the few experts it does have with international education and international experience at the highest levels is Iryna Akimova, the economic advisory to the President.

However, Yanukovych on becoming President stated he would seek expert assistance in almost every area either internally or externally of Ukraine.  It seems this was not a political soundbyte.

Behind the advice both he and the current administration is recieving is of course the IMF on some issues, but also the World Bank, in the shape of Pablo Saavedra and an interestingly named organisation called the League of Financial Development…………exactly what I was thinking……….. who or what are the League of Financial Development? 

Whoever and whatever they are, they are certainly an external organisation to Ukraine.

It seems there are many unpopular decisions being made by this administration rather quickly, although I suppose after 5 years in opposition they have had plenty of time to identify and plan changes to what they saw as needing attenti0n.

It remains to be seen if they are right or wrong in what they identified and how they go about making such changes as they deem necessary…….but it does seem as though they are seeking external advice before acting over some very politically sensitive issues…….such as tax and the banking industry.

It seems decisions, right or wrong, are being made…….which after 5 years of decisions being made, overturned and then overturned again…….does give the impression of momentum.

As to whether that momentum is going the right way or not is of course a personal opinion.

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This will not sit well with Ms Tymoshenko…….

April 15, 2010

Now then dear readers, I am not talking about what looks to have been an exceptionally good visit for Yanukovych in the USA…….and seems to have won him cross the board interntaional plaudits……I am refering to this………  (The highlighting is my own)

Ukrainian News – One of the leaders of the Bloc of Yulia Tymoshenko, Verkhovna Rada Deputy Chairman Mykola Tomenko thinks that the question of prolongation of the Russian Black Sea Fleet in Crimea after 2017 requires amendments to the Constitution and a national referendum.

He said this at a news briefing.

Tomenko notes that article 17 of the Constitution forbids foreign military bases on the territory of Ukraine.

“I would like to inform the Ukrainian leadership and the Russian leadership ahead of the Ukrainian-Russian crucial negotiations that the prolongation of the lease of the base by the Russian Black Sea Fleet after 2017 is possible only if amendments are introduced into the Constitution by 226 votes first and by 300 later, and if this decision is endorsed by the all-Ukrainian referendum,” he said.

Tomenko said possible negotiations with Russia are inadmissible on the prolongation of the stay of the Russian Black Sea Fleet on the territory of Ukraine and on provision of the Russian language with the status of second state language. He believes the questions can be negotiated by the parties in exchange for a lower Russian natural gas price for Ukraine.

Ukraine proposes Russia to pay a higher rent for the base of the Russian Black Sea Fleet in Crimea.

As Ukrainian News earlier reported, Russia is prepared to consider Ukraine’s proposals on the terms of the stay of the Russian Black Sea Fleet in Crimea.

Wow there.  Hold the horses!!

Where to start with this? 

It is certainly not the policy of Ms Tymoshenko that the Black Sea Fleet stay be extended.  There is also absolutely nothing wrong with the gas prices either……after all it was she that negotiated the current prices with Russia.  In the past week she has gone to great lengths to protest the good deal that is the current gas contract she negotiated and she has also picked up the nationalist cause as well.

Now we have a very, very senior member of her party outlining what has to be done to extend the stay of the Russian Black Sea Fleet in Ukraine.

The 226 votes initially required are a given considering a majority of 241 and growing by the day, if the current administration decides to even try and allow the extention of the RBSF.

At the moment the current administration are considering upping the rent in an effort to offset the gas prices negotiated by Ms Tymoshenko.

It is of course good and natural diplomacy if someone wants something bad enough, to set the bar high and to your advantage…….particularly if that same person has you by the balls over another issue…….such as gas prices.

So far the current administration has said any possibility of the RBSF staying longer is based purely on economic reasons.  These reasons, I suspect, are not just based on income to Ukraine from Russia regarding rent or simply gas prices, but also the local economy of Crimea which would need an instant replacement for the RBSF in the local economy…….and I do mean instant, as in within a month or two, not 6 or 12 months.

Crimea is a PoR stronghold and it would have to have a damned good economic replacement lined up and ready to go the day the fleet leaves to avoid adverse voter effects as they drop into poverty.  This same issue though would face any party in power when the day comes……and PoR may not be in power on that day.

Now, moving to the issue of 300 votes to get it through the RADA, that is a massive ask…..at least at the moment…….until you read “He believes the questions can be negotiated by the parties in exchange for a lower Russian natural gas price for Ukraine.”

That statement alone, not only infers Ms Tymoshenko did not negotiate the best deal for Ukraine, but also some members of the BYuT may well vote to extend the lease to the RBSL in exchange for lower gas prices……the question is…… how many?

Personally I do not think that there would be another 59 MPs amongst the opposition who would vote to renew the lease and make the magic 300……..at least in this parliamentary cycle………but what do I know?

In 2012, however, if things stay as they are, OU-PSD will leave the RADA political landscape if they only gained 5% of the national vote like their man Yushenko did.  Yatseniuk and Tigipko would make some serious gains……and Tigipko is in the current ruling majority, which would increase their voting power and reduce the dissenter vote.

Who knows how many BYuT MPs will have defected to the majority by that time and if Yanukovych continues to play as well as he did in Washington and deliver the Free Trade Agreement and at the very least a road map to Visa Free Travel from the EU, together with the apparant upturn in Ukrainian exports of steel, chemicals and agri products…..which have little to do with him and more to do with global demand recovering slightly, but it is a wave he can ride, it is possible……although still very difficult……. he will reach the magic 300 votes required to change the Constitution.

The question is can Russia wait until 2012 for an answer and in the meantime, can Yanukovych either offset the RBSF rent against gas prices if he cannot shift them another way?

With regards to the referendum over the issue, if the timing coinicides with a strong voter showing in PoR and Tigipko favour at the 2012 elections, then there is a good chance the referendum would follow similar lines.

These are all ifs and buts…….the major problem he faces it that he is trying to steer an non-aliegned status for Ukraine……..so another major factor will be the relations between the EU and Russia and the US and Russia at the time of any referendum.

If Russia is still being seen as a partner by major world leaders, then this may ease his spin over remaining non-aliened but with Russian military on the teritory of Ukraine……well, mostly in the territorial waters of Ukraine…….but you know what I mean.  If it is not, he has restricted his options already.

These are issues for anyother day, in the short term, however, it will be interesting to see how Ms Tymoshenko reacts to this statement by a very senoir person in her party.

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