Archive for June, 2010

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Ukraine & EFTA sign Free Trade Agreement

June 25, 2010
Interfax-Ukraine

Ukraine’s Foreign Minister Kostiantyn Hryschenko has signed an agreement on free trade with the European Free Trade Association (EFTA), which unites Island, Liechtenstein, Norway and Switzerland.

The document was signed during Hryschenko’s visit to Iceland, where he took part in the EFTA ministerial conference, the press service of the Ukrainian Foreign Ministry reported.

Speaking at the conference, Hryschenko stressed that the agreement on a free trade zone between Ukraine and the EFTA countries is “the first document since Ukraine’s entry into the World Trade Organization (WTO) in 2008.”

“We believe that this agreement is one of the greatest achievements of Ukraine’s membership in the WTO. The signing of this document is particularly important, given the Euro-Atlantic aspirations of our country. I am convinced that the efficient implementation of the agreement will promote Ukraine’s integration into the European economic and political space,” Hryschenko said.

The European Free Trade Association (EFTA) is a free trade organization between four European countries, Island, Liechtenstein, Norway and Switzerland, that operates parallel to, and is linked to, the European Union (EU).

Three of the EFTA countries are part of the European Union Internal Market through the Agreement on a European Economic Area (EEA), which took effect in 1994; the fourth, Switzerland, opted to conclude bilateral agreements with the EU.

A step in the right direction!

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Retirement, Taxes and Age

June 25, 2010

Well dear readers, in the UK, State paid pensionable age is going up fro 65 years old to 66 years old…..and probably higher.

Also the ability for employers to say “OK, your 65 now, thanks for your efforts but you outta here” will also be removed.

The reasons for this is the average life expectancy in the UK has risen for men from 71, 30 years ago, to 77.4 and with women it has risen from 77 to 81.6 years over the same 30 year period.

Add into this the baby-boomers of the 1960’s now being in their 40’s and 50’s, a demographic pension crisis is looming in 20 years…….of which I will be a part.

No doubt additional contributions will also be sought by way of tax to prepare for the pension tsunami ahead as well.

What has this to do with Ukraine?

Well, one of the major drains on Ukrainian finances is of course the State pension which is payable at the tender age of 55 years old.

Now life expentancy in Ukraine, according to historical records and World Bank statistics has remained fairly consistant at 68.3 years, going right back to 1962.

http://www.google.com/publicdata?ds=wb-wdi&met=sp_dyn_le00_in&idim=country:UKR&dl=en&hl=en&q=life+expectancy+Ukraine

Discounting any legacy of State pensions paid to people far exceeding the life expectancies in either nation, if an individual retired today in both nations, the anticipated pension commitments prior to death would be 12.5 years in the UK and 13.3 years in Ukraine.

Now the Ukrainian State pension system has a bare minimum monthly 710 UAH payment per pensioner where as the bare minimum pension per month in the UK is £97.  (Not a great deal of difference considering the UK is supposed to be far more “developed”).  This is almost offset by the additional year Ukraine expects to pay a pensioner before death.  (I am sticking to bare minimum payments without enhancements due to circumstances which occur in both nations).

Major differences exist in the ability to collect tax revenue in the nations however.  Where as 50% of people in Ukraine are in the shadow economy and donate nothing by way of “identifiyable taxes”, the vast majority in the UK pay taxes at sourse every pay day.

There are 62 million people in the UK but only 46 million in Ukraine.  Of course if the majority of 62 million pay taxes during their working life but only 50% of 46 million pay in Ukraine, it is hardly surprising that Ukraine’s pension fund is consistantly running at a deficit and consistantly needing additonal funding…….coming from other areas in the budget……with knock on effects for schools, roads, hospitals etc.

So, is the answer to raise the pensionable age from 55 in Ukraine as the IMF suggest?

I don’t think so, as within the average life expectancy figure of 68.3 years for a Ukrainian, men on average die at 62.4 years and women at 74.5 years.  That means a man would have 7.4 years of pension before expected death.  Not unreasonable in terms of time or expenses to the State…….until you take into account Zeno’s paradox. 

(If you are going to Google “Zeno”, dear readers, please be aware that it is likely to boil your brain unless you have a very, very, VERY good mathematical mind.  (Reductio ad absurdum))

Is the answer to cut the basic State pension?  Everything is relative of course, but 710 UAH is about £59 per month.  Trust me here, that is nowhere near enough to survive on in Ukraine. 

Is the answer to scrap the State pension…..or phase it out at least?  Is it time to state that any State Pension Scheme is a giant Ponzi scheme?

Hardly an ingratiating thing to do when trying to get closer to the EU.  In fact every Ukrainian government has always wanted to raise the State pension to take into account that, as I say, 710 UAH is just impossible to survive on each month.

The only answer to this is to capture more taxes from the nation……..by which I mean the 50% that operates in the black economy.

It won’t be popular, it won’t be easy to inforce, the current draft tax code to change things needs radical amendments to its proposed form……but it will hopefully get somewhere close to where it should be before the new tax year on 1st January 2011 and implimentation.

Ukraine also has it’s 1960’s baby-boomers coming through to retirement and State pensionable age and those people are almost upon Ukraine with a pensionable age of 55 years and a declining population, whilst the UK has a growing population, not all of which is due to migration.

Discounting migration and counting birth rate alone, there is a noticeable difference in the social make-up of birth rates between the nations. 

In the UK, women married produce their children in their 20’s and 30’s, not much different to Ukraine.  Unlike Ukraine however, women who do not marry in the UK, between the ages of 35 and 40 are much more likely to produce children, increasing the future tax paying base.

Why is this?  Social stigma or the fact that UK women at that age are more likely to have forged a career that they can return to after several years out bring up a child from 0 – 5?

Anyway, far more important than any loans, the IMF, World Bank, EBRD and the “Big 4” should be assisting Ukraine with a serious tax code reform and strategies to impliment it given an every shrinking population base.

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You would expect resignation from office……but…..

June 24, 2010

http://www.rferl.org/content/Ukrainian_Mayor_Involved_In_Shooting_Incident/2080013.html

DNIPROPETROVSK, Ukraine — Officials in the eastern Ukrainian city of Dnipropetrovsk are investigating a shooting incident involving a local mayor, RFE/RL’s Ukrainian Service reports.

The Interior Ministry spokesman in Dnipropetrovsk Oblast told RFE/RL that Ternivky Mayor Evhen Bondar is suspected of shooting and wounding a man near the Vovchoi River on June 20.

Dmytro Lymarenko, 22, told journalists that he was struck by one bullet when Bondar shot at him several times. He said Bondar was shooting at empty bottles along the river and shot at him after he asked the mayor to stop making noise.

But police insist a group of drunken young men were insulting Bondar and his family while they laid on the beach and Bondar fired in self-defense.

Officials have 10 days to decide if a criminal case should be opened in the incident.

Now, dear readers, regardless of which set of circumstances you believe outlined above (and both are possible), you would at the very least expect this man to resign from office having shot one of the citizens he governs……..of course he won’t…….regardless of whether charges are brought or not.

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Back to the Baroness and EU Super Embassy’s

June 23, 2010

Well dear readers, the inevitable appears to have happened.

http://euobserver.com/9/30330

Meeting in Madrid on Monday (21 June), EU foreign policy chief Catherine Ashton and deputies from the European Parliament sealed a deal on the nature and content of the new corps, meant to give coherency to the Union’s external policy.

“We should not underestimate how important today’s decision is (…). This means we can now move forward with the service and have it operational by the autumn.” said Ms Ashton after the lengthy meeting in the Spanish capital.

So, as Ukraine is one of the first nations listed for an EU Super-Embassy no doubt the foreigners and expats in Ukraine will see a number of national embassy’s disappear.

Of course this will ease a problem for Kyiv who have many embassy premises currently occupied on a list of properties for sale……as per the political incompetence of Mayor Cosmos of Kyiv.

I will accept that in such times of economic restraint, closing the Luxemburg Embassy in Kyiv for example, makes sound fiscal sense, particularly when that money and diplomatic expertise can be redeployed to a location where the diplomatic voice of Luxemburg will have much more clout…….like Papua New Guinea……..but what of the Luxemburg national who loses his passport or gets arrested in Kyiv?

Are nations, considering the debarkle of Israel and EU passports, going to allow blank sovereign passports to be held in a multi-national bundle issued by a diplomat or mandarin of another nation?

Of course, I do not expect the large EU players to close their embassies.  Germany, France, the UK, and neighbouring states such as Poland etc etc will continue to have their own soveriegn representatives in Kyiv (and other cities as well), but would Belgium be happy with a Bulgarian official issuing a replacement Belgian passport?

Would Belgium be happy for a Bulgarian diplomat to visit their citizen in a Ukrainian gulag?

More to the point would a Belgian national want to see the Bulgarian diplomat when sat in a Ukrainian gulag anyway?

There is a major trust issue with the EU super embassy when a nation closes its own representitive embassy and effectively passes first point of contact for their citizens in need to a diplomat from another nation over whom they have no assurance of the pedigree.

If I get arrested would I want a Greek, Romanian or Spanish official to come and visit me or even represent me? – Absolutely not!

Firstly, no matter what kind of trouble I get myself into in Ukraine, I would be very unlikely to even turn to my own Embassy intially, but I would turn to those I know inside Ukraine instead.  If they could not help, then OK the Embassy can be informed but they cannot really help other than to insure my cell conditions are adequate as is my food, access to legal representation etc……and then make any representations at an official level if they felt I was being wronged by Ukraine.

Now whilst you may be “bent over and roughly taken from behind” occasionally in business in Ukraine, the chances of a foreigner from the EU or generic “West” being wrongly detained let alone jailed are very, very, very, VERY slim……unless they actually carried out the act of which they are accused……in which case tough sh*t.

It is not often I defend idealism over pragmatics……in fact this maybe a first on this blog…….BUT who is better placed to represent the bilateral goals, bilateral negotiations, bilateral interests and ME in Ukraine?  An EU super-embassy with diplomat/mandarin of suspect pedigree……or the UK Embassy?

No brainer.

From a Ukrainian point of view, does the soon arriving EU super-embassy in Kyiv help them (other than freeing up prime property for sale)?

As I state, the local neighbouring nations will probably want to keep their own embassies active simply because they are relevant for border demarkation, bilateral issues not effecting the majority of EU nations and the like.  The major EU sponsors of Germany, France, UK and Italy are very unlikely to remove their embassies from Kyiv as they will wish to discuss matters of EU and bilateral consequence quietly and not necessarily through a central mouthpiece.

With the major EU players and neighbours likely to keep their embassy’s in Kyiv for obvious reasons, who will Ukraine speak to? 

What role is there for a super-EU Embassy in Kyiv other than a central issuing point for shengen visas for Ukrainian citizens?

If Ukraine wants to influence EU thinking, who do they speak with, a central EU body…..or quietly with Germany, then France, The UK and Italy first?

How will this embassy be staffed?  The best and the brightest at the expense of soveriegn nations bilateral interests, or the dullards and incompentants, (sideways moves out of the way).  The friction over appointments is guaranteed within an already frictious environment of the EU given recent events.

Of course the newly enhanced political presence of the Luxenburg Embassy in Papua New Guinea doesn’t care.

Message to Mr Cameron and Mr Hague:

I have never needed to call upon His Excellency Leigh Turner or any of the Consuls in Ukraine in many years (or their Russian counterparts when I lived in Moscow) in times of need both personal or business……in fact I see much more often the Greek, Polish and Russian consular staff in Odessa than any politicians, diplomats or mandarins outside of those Ukrainian politicos I know…….HOWEVER,…..do not even consider the option of closing UK Embassy’s around the globe for replacement by EU Super Embassies under the control (or lack of)  of Cathy Ashton.

If anything, the FCO is under represented in nations and thought should be given to expanding it…….even if done on the cheap through Honourary Consuls in cities in nations further afield than capitols.

You will find many people who have no criminal record, already subject to the Official Secrets Act, long term residents in major cities outside capitols where our embassies are located, with ample time, who would be willing to act on behalf of the UKs better interest and who almost daily spend time advising their fellow UK citizens on how to survive and succeed here free of charge……not to mention advising Ukrainians and Ukrainian businesses on who to and how to deal with counterparts in the UK.

The reasources around the planet exist to expand the UK influence without hardly any additional expense (other than maybe sundry expenses) and there is absolutely no requirement to lose any political sway or image to Ms Ashton for reasons of finance.

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Ukrainian, Israeli Visa Freedom comes closer

June 22, 2010
Interfax-Ukraine

The Israeli government at a meeting on Sunday, June 20, ordered Foreign Minister Avigdor Lieberman to hold talks with Ukraine on the introduction of a visa-free regime for the citizens of both countries.

According to the Web site of the Israeli government, in order to continue an initiative on the cancellation of the visa regime between Israel and Ukraine, the Israeli government, at the request of a concerned committee, authorized the foreign minister to hold talks with Ukraine on this issue.

As reported, Ukraine and Israel began to discuss the idea of introducing a visa-free regime between the two countries in 2009. In early 2010, this issue was discussed seriously and studied in the two countries at the highest level.

In March 2010, Israeli Tourism Minister Stas Meseznikov said that the Israeli side expected the introduction of a visa-free regime with Ukraine this autumn.

Well, dear readers, I have mentioned this several times in previous posts……and it seems to be following the timescale I thought it would.

On the upside for Mossad, genuine blank Ukrainian passports are are fairly easily obtained…….on the down side, you can’t go anywhere that easily with one without a Visa…….so for now, cloning EU passports will still be the best way forward.

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Odessa Biker Rally 2010

June 21, 2010

Well dear readers, the week long Odessa annual biker rally ends today, so I’m off for another look.

Something more meaningful tomorrow………maybe!

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Ukrainian spies jailed in Romania

June 20, 2010
Associated Press

BUCHAREST, Romania (AP) — A court has sentenced a Romanian noncommissioned military officer and a Bulgarian citizen to 12 1/2 years in prison for passing classified information to Ukraine.

Bucharest’s Appeal Court on Friday found Floricel Achim guilty of handing over classified military information from 2002 to 2008 to his Bulgarian friend, Marinov Zikolov. Zikolov gave the information to Ukraine, which unlike Romania is not a member of NATO.

The classified information included maps, military technical information and details on radars.

The two can appeal the sentence to the high court.

So dear readers, are we to expect the standard reaction in the spy game of two Romanian spies in Ukraine being arrested………or will a decision be taken to leave that on the back burner whilst EU negotiations of fre trade and visas are on-going?

Will the usual quiet release of these 2 people occur in about 14 months when the press has lost interest or a quiet agreement between nations be made to allow them to serve their time in Ukraine occur……resulting in a quiet release?

Does any of this really matter?

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