By Timothy Ash of Standard Bank
For the casual/neutral observer of Ukraine, perhaps based in the EU, the story perhaps looks quite straitforward: the EU/IMF/west needs to pull its finger out and provide enough financing for Ukraine to offset the impact of potential economic sanctions from Russia.
Opinion polls show that a great majority of the Ukrainian people now favour EU integration – 57:14, according to one recent poll – as opposed to hooking back up with Russia in the CIS Customs/Eurasian Union. Ukrainians are braving the elements in street demonstrations in favour of signing with the EU. Surely this should be supported? After all, the sums needed by Ukraine ($15bn-$20bn), appear small change relative to the size and strategic energy importance of Ukraine, compared to the huge size of Euro-periphery bail-outs.
If only things were that simple. Continue reading »
In an opinion piece for the FT, Viktor Yushchenko, former president of Ukraine, argues that the EU has the ability to help Kiev avoid an imperialist nightmare.
The outcome of this week’s Vilnius Summit became known, unfortunately, a week ahead of schedule. The Ukrainian government decided to suspend the five-year old negotiations to secure an ambitious Ukraine-EU Association Agreement. Along with the Ukrainian parliament, the Kiev government has engaged in a dangerous, uncivilised and dishonest political game. Continue reading »
Pointing that way
The jury is still out on how history books will look back at Viktor Yanukovich, the towering 63-year old who rose up from a troubled Soviet childhood in Ukraine’s tough eastern industrial heartland to eventually become president of this independent country of 46m.
His greatest legacy may turn out not to be domestic, but in helping Russian president Vladimir Putin restrict the EU’s eastern border at Poland, leaving much of the eastern edge of Europe within a competing Eurasian Union. Some fear it would be ‘USSR 2.0′. Continue reading »
By Ievgen Vorobiov of the Polish Institute of International Affairs
Ukraine’s decision to “suspend preparations” for signing an Association Agreement with the EU will backfire after the Vilnius summit. The announcement was met with palpable disappointment in the EU and placid lack of surprise in Moscow.
Given the dire economic situation in Ukraine, a lack of agreement with the EU augurs ill for Ukraine’s investment climate and energy diversification. Although the government declared its intention to repair ties with Russia, Ukraine’s exporters cannot discard the challenges of weak demand in Russia, which might unleash a new round of trade wars. Continue reading »
Firtash: solving problems
Ukraine’s parliament stuck the Yulia Tymoshenko to-do item into the “later” basket on Tuesday, putting off until Thursday a vote on legislation that could set in motion the release of the jailed opposition leader. Her freedom is a key condition set by the EU to sign historic free trade and association agreements next week in Vilnius. Tick, tock.
Yet while Ukraine’s handling of this case of “selective justice” drags on, there was also news out of Ukraine on Tuesday reinforcing the view that Russia – which is pressuring Ukraine to back away from the EU agreements – is meddling in the Ukraine gas market somewhat “selectively”, too. Continue reading »
Ukraine has stepped back from the brink of another gas war with Russia and resumed gas imports from its powerful neighbour after a one week lull.
It’s a relief for the EU that relies on Ukraine as a transit hub for most of its Russian imports. But reconciliation of the latest gas spat could be part of a poker game that Moscow and Kiev are playing in the run up to the EU summit in Vilnius. Continue reading »
Foreign media coverage of Ukraine has been dominated over the past year by the European Union’s repeated warnings: the signing of historic bilateral association and free trade agreements is conditional on the release of jailed opposition leader Yulia Tymoshenko.
But lost in the Tymoshenko buzz is a desperate plea from Kiev to Brussels: help us import more gas from EU markets at lower prices than those charged by Gazprom, the Russian gas giant. Continue reading »
By Vasyl Filipchuk of the ICPS and Amanda Paul of the EPC
The Yalta conference in Crimea, Ukraine, left a clear feeling of a geopolitical shift in Europe. Not the one 68 years ago at this Black Sea resort but the annual Yalta European Strategy conference organised last weekend by Ukrainian philanthropist Victor Pinchuk with the participation of Tony Blair, Bill and Hillary Clinton, Karl Bildt, Stefan Fule and many other European and global leaders and opinion makers.
Movers and shakers from both the EU and Ukraine left Yalta confident that the EU’s third Eastern Partnership summit to be held in Vilnius in November will see the signature of an EU/Ukraine association agreement. Continue reading »
It is what Ukraine least wants. Just as the country gets closer to signing an economic and political pact with the EU, investors have got the jitters about its creditworthiness.
The cost of insuring Ukrainian debt – as shown by the price of credit default swaps – has hit a three-year high after Moody’s downgraded the country to Caa1 on Friday. The cost of a five-year CDS jumped for a third day in a row on Thursday, to 1037 basis points. Continue reading »
Sergey Glazyev piles on the pressure
An advisor to Russia’s president warned that Ukraine’s already troubled economy would need a €35bn bailout to avoid default if it signs a free trade and association pact with the EU this November, in a clear sign of fresh pressure on Kiev to back away from western integration and instead join a Moscow-led customs union of former Soviet republics. Continue reading »
Russian President Vladimir Putin may have physically left Ukraine on Sunday, after wrapping up a two-day visit during which he pressured Kiev to choose Moscow over the EU as a closer economic partner. But upon waking up the next day Ukrainian leaders were vividly reminded of what may follow if they ignore Putin’s words – most likely a trade war.
In an early Monday report, news agency Interfax revealed that Russian regulators decided to ban imports of chocolates and other sweets produced by Ukrainian confectionary giant Roshen. Continue reading »
Long the main transit route for Russian natural gas exports to Europe – and a big consumer of Gazprom fuel itself – Ukraine is now starting to use its vast gas transit pipeline network in reverse mode. It is importing less expensive gas from Europe to the West, and at prices lower than its “brotherly” Slavic neighbour charges. Continue reading »
It’s not a rush for the exit. But it’s rather more than a shuffle to the door. A noticeable number of European banks – Austria’s Erste being the latest – are giving up on Ukraine.
Like other European banks that are busy cleaning up troubled balance sheets back home, Erste announced on Thursday that it had agreed to sell its loss-making, 100 branch Ukrainian subsidiary to a domestic businessman. Domestic banker Oleksandr Adarich bought the business for a mere $83m. Continue reading »
Russia has come to its own conclusions about the disruption of its gas exports to Europe during a cold snap this month and is once again blaming Ukraine of causing the problem.
While there’s nothing new about this, the dispute appears to have triggered a decision at the highest level in the Kremlin to cut Ukraine out of the Russian gas transit business altogether as soon as possible. Continue reading »
Turkey’s decision to allow Russia permission to build the South Stream gas pipeline seems to have caused a degree of panic in Ukraine. The agreement, reached on Wednesday, could have significant implications on long-running gas negotiations between the two countries and reduce Ukraine’s bargaining power in extracting much needed price concessions from Moscow.
The South Stream pipeline would see Russian gas exported across the Black Sea to Europe, bypassing Ukraine, whose gas transit network is currently responsible for carrying 80 per cent of Russian energy exports to the EU. Continue reading »