Archive for October, 2011

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Ease of doing business in Ukraine – Latest WB report

October 24, 2011

Well, the latest World Bank “Ease of doing business” report is out and Ukraine dropped 3 places.  Whether that is because Ukraine got worse or others got better faster and simply overtook Ukraine is not really clear from a brief look although I am sure amongst you dear readers will sit numerous statisticians and economists who have nothing better to do than work that out.

More interestingly, half way down the page in the above link are numerous block boxes upon which you are free to click and subsequently are presented with a breakdown of the + and – of any particular category relating to Ukraine’s rankings.

Quite obviously, looking at the summary sheet you are taken to immediately in the link I provide, if Ukraine can sort out the tax situation it will dramatically climb in the global rankings.  We will see where Ukraine sits next year when the new Tax Code has come into effect in a few months time.

I’ve not heard anything further about the sovereign nation Ukraine was negotiating with relating to civil service realignment and tax collection assistance overhaul since May.  If a deal has been made, I am yet to hear about it from reliable sources and I am not about to repeat rumour from unreliable ones.

Regardless, the Von Bismark-esque style of governance Ukraine seemingly now runs under (OK not exactly in the style of  Otto Von Bismark but there are several prima facie parallels) has yet to make any radical improvements within the parameters of the WB score sheet.

Let’s see where we are next year.

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Odessa Oil Refinery For Sale

October 23, 2011

I am reliably informed by friends in Luk Oil that their Odessa refinery, which processes 3.6 million tonnes of crude a year,  is up for sale.

Will it sell?  I would imagine it will be snapped up rather quickly to be honest.

Why?  Because last week, without any pomp or ceremony in the public eye, RWE, MOL, Chernomoretzgas and Naftogaz completed a deal for Black Sea shelf oil and gas exploration.

One has to come to the conclusion the Mr Graffer at Luk Oil HQ in Moscow will have been receiving visits from the German, Hungarian and Ukrainian partners of this little quartet amongst others.

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Black Sea Economic Cooperation – The Next Chess Piece?

October 22, 2011

For those of you who have never heard of the Organisation of BSEC (Black Sea Economic Cooperation), it is hardly surprising unless you live next to the Black Sea like I do.

The BSEC is a forum of 11 nations consisting of consisting of Albania, Algeria, Azerbaijan, Bulgaria, Georgia, Greece, Moldova, Romania, Russia, Turkey and Ukraine.  Formed in 1992 its purpose was to foster interaction and harmony among the Member States, as well as to ensure peace, stability and prosperity encouraging friendly and good neighbourly relations in the Black Sea region.

Jolly good, but what has that got to do with anything?  How abstract can I be and what has it got to do with chess?

The answer is geopolitics and the rapid movement of chess pieces surrounding Ukraine now that the EU has hit the hurdle of European sensibilities in relation to the Association Agreement with Ukraine.

The major players notwithstanding the EU in the Ukrainian neighbourhood are Russia and Turkey.

A few days ago as predicted here, Ukraine signed a Free Trade Agreement with the CIS nations in St Petersburg.  Turkey, via the deft and skillful hand of Mr Ahmet Davutoglu (a very under-rated but exceptionally wily foreign minister) have been pushing Ukraine for a similar free trade agreement for more than a year and will undoubtedly succeed.  Parity in Visa processes for Turkish citizens to Ukraine is already in place.

Now let us look at the list of nations in this organisation again.  Of the 11 nations only 3 are EU Member States.  Those 3 nations happen to arguably be the weakest in terms of rule of law, corruption and transparency.  All 3 are also not exactly  feeling a lot of love from their EU compatriots at present for various reasons despite the Black Sea being of geopolitical and strategic importance.

We then have Turkey and Ukraine, two nations which the EU really doesn’t want as Member States but can’t really afford not to be on exceptionally good terms with either.  Neither Turkey or Ukraine are likely to want to remain second cousins  via Association Agreements or EaP or SaP parameters no matter how much the EU would like to keep them close but outside the club.

Turkey is already noticeably turning its back on the EU and making the most of the North African upheaval.

Within a few days of the EU canceling the Ukrainian President’s trip to Brussels, Ukraine had signed a FTA with the CIS States and will undoubtedly now look far more closely at the Eurasian Union that Russia proposes, a move that would immediately save it $9 billion each year in gas prices alone.  That is a lot of money when you have the credit raising ability of a chicken tikka masala on the international markets.

The chances of Georgia, Moldova and others getting Association Agreements with the EU should it not happen with Ukraine are exceptionally bleak both for geographical and reasons of political will on the EU side.  Both Georgia and Moldova have issues of territorial  ambiguity with Russian troops sat in disputed areas just as an example.

Back in August I commented upon the then theories flying around the media of a two-tier EU.  The core and periphery if you will.  I stated that a third tier should be considered that almost exactly mirrors the BSEC when it comes to the problem children of Greece, Romania and Bulgaria and would allow for Turkish, Moldovan and Ukrainian enlargement in Tier 3.  Several of the EU EaP target nations could also be included that are also in the BSEC.

There would be technicalities relating to free movement, economic governance etc, but the tiers could be ring-fenced.

This will of course not happen.

What will happen is that Russia (possibly with the assistance of an increasingly important Turkey) will now move to make the BSEC a far more vocal and preeminent geopolitical entity and will go out of its way to support and engage with all the members of the organisation to make it so.  In doing so of course, the EU will lose influence over many prospective EaP and SaP nations possibly with dire results relating to immigration, economics, international organised crime and security to name but a few areas.

A more robust alliance between Russia and Turkey geopolitically would undoubtedly make the BSEC an organisation of significants on the EU doorstep and it would be an organisation built upon an undercurrent of dislike for the EU.  Almost all commentators seem to be adhering to the EU’s sense of self-aggrandisement and importance to Ukraine as if there is no other option for it.

In Russia, Turkey and their areas of growing geopolitical influence and partnerships, Ukraine has options make no mistake.

The BSEC is something to keep an eye on, quite possibly a chess piece soon to be maneuvered in the game.

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Hacked again

October 21, 2011

Well folks, I did have a piece ready for today, but the draft is on my other website.

That website is curently down as the server has been hacked again for the 3rd time in 4 months.

BlueHost – useless!

Lesson learned and I will write my drafts for publishing the following day on this site in future.  An advantage of different sites on different servers.

Hopefully I can access what was supposed to be todays effort later.

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European On-line Jobs Day – 9 November

October 20, 2011

A very brief post today to draw to the attention of my local readers the European On-line Jobs Day occurring on 9th November.

All interactive, real time, technically wonderful stuff, giving advise on how to get employment in the EU.  Chat with advisors or just watch the sessions live.

For some of you, it will possibly be a worthwhile event, so click on the link and register.

(Errrm – Yes the crystal ball is still working well.  Ukraine signed a FTA with the CIS nations as predicted two days ago.  Next prediction will be the Black Sea Economic Area forum will take on a more, robust and influential guise.  Why?  From 11 members, there are only 3 EU members in that club and 8 that aren’t. – Regional power-play waiting to happen for those rather miffed with the EU at present.)

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Tymoshenko style political prosecutions unique in Europe? – Hardly

October 19, 2011

Before I get going, let me say that whether Ms Tymoshenko is released or not, this post is not intended to belittle or enhance the case for or against her recent brush with the judicial system.

As much as the current government of Ukraine is being criticised for selective application of the law, and a Soviet relic of a law at that, the law is the law and no government in 20 years of independence has bothered to repeal it or decriminalise it, including the government of Ms Tymoshenko herself.

There are also things to be said about the selective non-application of the law.  Should GW Bush visit Canada shortly as is rumoured, will he be arrested for torture (water-boarding and enhanced interrogation techniques) under both international and Canadian law which would allow for his arrest and prosecution in Canada.  Will that law be applied or selectively not applied?

Rather than looking globally and returning to Europe, the continent where Ukraine and the EU sit, and the two main protagonists over the Tymoshenko case, be they siding with either rule of law in action (which technically it is) or politically expedient application of the law (which it quite possibly is), there has been little mention of other selected application or non-application of the law for political ends on the continent.

I am not just referring to the basket case that is Belarus when it comes to political persecution (or not).

Within the EU, Bulgaria and Romania are both under pressure from the EU to apply the rule of law to previous leaders as the links show.  In fact the EU is quite frustrated by both Bulgaria and Romania not going after the previous leaderships and deliberately (and politically) dragging out investigations in the hope of statue barring judicial hearing via the passage of time.

So frustrated is the EU it has set up a monitoring committee over two of its own members relating to the selective lack of applying the law.

But it does not end there.  EU Member State Hungary, in very similar circumstances to the current Ukrainian leadership, is looking at prosecuting not one but three previous Prime Ministers relating to their mismanagement of the economy.  Surely an absolute mirror of the Tymoshenko case, finite detail not withstanding.  It is still past political decisions being held to account by the judicial system for political ends of the current Hungarian leadership just as Ukraine is being accused of.

I know, surprise surprise, so far they are all ex-Communist States but Romania, Bulgaria and Hungary are all full EU Member States and thus are deemed to have met the Copenhagen Criteria.

But it is not just the ex-Communist States, EU prospect Iceland, despite a very active and effective democracy and engaged civil society, are about to use the courts to prosecute its previous Prime Minister, not for anything he did during the financial crisis that subsequently crippled Iceland, but they are prosecuting him for not doing anything at all about the financial crisis.

Iceland are prosecuting an Ex-Prime Minister for his political inaction rather than political actions.

Fortunately or unfortunately, depending upon your point of view, the current Ukrainian authorities seem to have very little clue about similar actions to their own happening all around them in Europe.  They came up with the worst possible justification, using the French prosecution of an Ex-President for corruption when he was Mayor of Paris decades ago,  as some form of justification for the case for which she has just been found guilty.

They would be far better citing the French case to attempt to justify the most recent charges against Tymoshenko when in charge of United Energy.

Even more fortunate is that the Ukrainian public seem unaware of the issues in Bulgaria, Romania, Hungary and Iceland and are under the impression from a constant foreign media barrage that Ukraine is the only pariah on the continent of Europe (less the basket case of Belarus) who employ such methods to deal with past politicians and their decision when in office.

How long it will be before somebody in power wakes up to what is happening around them and uses it publicly to justify what has happened to Tymoshenko we will see.  How long the EU can keep the lid on those Member States and potential members doing similar things getting into the Ukrainian media is also debatable.

So is Tymoshenko and her case unique in Europe? – Hardly.

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As an update to yesterday’s post (which I actually wrote on the 17th as what you see today was actually written yesterday as is my method for blogging here), I was right and Mr Yatseniuk was wrong.  Ms Tymoshenko was not released and my doubts about Mr Yanukovych’s visit to Brussels also proved to be well founded,  The visit was canceled.

Suffice to say, the crystal ball was working rather well.

The crystal ball also tells me that Ukraine will sign a FTA with the CIS nations in St Petersburg very soon before the EU has chance to consider any options to go forward with Ukraine and get past the current impasse.  If Ukraine has any sense it will do the same with Turkey fairly swiftly as well.

The current impasse being Ukraine wanting a specific guarantee of EU Membership sometime in the distant future should it meet the Copenhagen Criteria included in the AA literature over and above Article 49.  In return nobody would be that surprised to see Ms Tymoshenko win her appeal or the law decriminalised under which she was convicted.  The EU is very unwilling to include such a paragraph.

It would appear the EU is about to make the same mistake with Ukraine as it did with Russia in the 1990’s in that it will not  “go for it” comprehensively enough and subsequently then deal with issues like democracy and rule of law.  It wants changes before making commitments rather than afterwards.  European sensibilities and all that.

Failure to go the whole 9 yards in Russia eventually led to Putinism, having failed to engage enough money, determination and political will, together with a naivety that a genuine pluralistic democracy would emerge after the collapse of communism as a natural consequence.

European sensibilities are about to make the same mistake with Ukraine.  By trying to change things to their liking before using guaranteed carrots and painful sticks to encourage change under new agreements, rather than allowing it closer to the fold and then manipulating Ukraine when it actually has something tangible to lose, such as the guarantee of membership in the far distant future should it meet the democratic and rule of law grades.

Taking away the prospect of sweets Ukraine has never had, rather than taking away actual sweets given does not really have the same ramifications in Ukrainian psyche.

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Yatseniuk predicts Tymoshenko release today

October 18, 2011

Well, Arseniy Yatseniuk whilst in Brussels has predicted the release of Ms Tymoshenko on 18th September, which is today.

Obviously no appeals process has even come close to beginning in a meaningful way, so in order for Mr Yatseniuk to be right, the law under which Ms Tymoshenko was jailed will have to be decriminalised today in the RADA, thus prompting her immediate release.

Of course he is much more likely to know what is on the RADA legislative agenda than I do, and one hopes is also more in-tune with the sentiment of his RADA colleagues when it comes to the likely outcome of any vote to change the law, so we will see.

Whilst her release before Christmas is probable as I posted on the day she was sentenced, despite the 7 year term given,  and it would make the President’s visit to Brussels later this week much less difficult, at least on the surface, if she were released now.  That would assume the visit goes ahead.  Behind the public facade nothing much will have changed in sentiment from either side, one wonders if it will come today or simply any day prior to the initialing of the DCFTA and AA not much further down the time-line.

Decriminalising the law before his visit does not make the President look that much better in the eyes of the EU anymore than it makes Ms Tymoshenko anymore angelic in their eyes.

I hope Mr Yatseniuk is right although I would not take it for granted that today will be the day.  Personally, I very much doubt it.

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