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Focus on Ukraine, February 9 – 15, 2009

February 16, 2009

Overview of political events of the week

February 9

President Viktor Yushchenko described the attempt to take out a loan of USD 5 billion from Russia in order to compensate the lack of funds in Ukraine’s national budget is detrimental to the country and poses a threat to national security.
The head of state is convinced that the agreement on loans is an integral part of the gas agreements that Yulia Tymoshenko made with Vladimir Putin.
The fact is that this is the only way in which Ukraine afford to pay for such expensive gas. President Yushchenko feels that Ukraine will be forced to pay back this loan with its national gas transit grid and will lose any possibilities of inheritance from the Soviet Union.

Premier Yulia Tymoshenko confirmed that Russia can give Ukraine a loan, though she failed to mention that Moscow is demanding control of Ukrainian property in exchange for the US $5 million loan.
As a reminder, the Ukrainian government is currently holding talks on major emergency loans to compensate the lack of funds in the national budget.
Last November the International Monetary Fund granted Ukraine a loan of US $4.5 billion. Official Kyiv stated it requested the loan in order to prevent the collapse of the country’s banking system.
The U.S., China, Japan and the European Union have been named as potential creditors.

February 10

The latest scandal between the president and the premier of Ukraine flared up at a meeting of the National Security and Defense Council dedicated to the gas issue.
The president blamed the premier for her handing over Ukraine’s gas pipeline grid to Russia and forcibly leading Naftogaz Ukrainy into bankruptcy.
The president said the premier initially signs a contract according to which Ukraine pumps Russian gas practically free of charge, thereby losing nearly US $5 billion a year, and now is pulling the country into debt.
In response, Tymoshenko assured that Yushchenko is trying to bring the company RosUkrEnergo back into the Ukrainian market and made public secret documents that she handed over to the NSDC.
Tymoshenko affirms that everything the president has said are pure lies and is requesting that the European Commission conduct an independent investigation into Ukrainian-Russian gas contracts.

Yulia Tymoshenko said at a briefing in the Presidential Secretariat held after the meeting of the NSDC that she will appeal the decision of the council should it envisage the renewal of the operation of RosUkrEnergo on the Ukrainian gas market.

The Presidential Secretariat informed that Leonid Chernovetskiy could be dismissed as the head of the Kyiv City State Administration if he continues to violate the law by increasing the rates of municipal housing and utilities services at his own accord and without substantiation.
The matter is about dismissing Chernovetskiy from his post as the head of the city administration, which afforded him the possibility of introducing a number of paid services and increasing the rates of already set utility services in Kyiv.
In Kyiv these are two separate posts that most often one individual occupies. Furthermore, the Kyiv Prosecutor’s Office abrogated the decision of the KCSA to increase the rates of utilities.

The decision of Kyiv City Hall to introduce paid medical services was deemed illegal.
The State Committee on Regulatory Policy and Entrepreneurship rescinded the acts of the Kyiv City State Administration on fees charged by hospitals and medical clinics and sent a letter to the government, the president and the General Prosecutor’s Office requesting a legal assessment of actions of the city government.
The State Committee is ruling out that those individuals that devised these resolutions in city hall could face criminal liability.

February 11

The NSDC instructed the Prosecutor General’s Office and the State Security Service (SBU) whether Ukrainian government officials complied with the law during the talks held in Moscow on the gas issue.
According to the directive, the government must inform the NSDC by March 1 how exactly Naftogaz Ukrainy will function in the event RosUkrEnergo blocks access to gas repositories, which may have affect gas transit through Ukrainian territory.

Spokesman of the U.S. State Department Robert Wood said the U.S. is prepared to grant Ukraine a loan upon such a request, reminding that Ukraine’s Premier Yulia Tymoshenko requested a loan to a number of countries.
Ukraine needs the money to cover its national budget deficit. The U.S. supports the programs through which Ukraine received a loan from the IMF.

February 12

Ukraine’s Minister of Finance Viktory Pynzenyk tendered his resignation. He justified his decision saying the Cabinet of Ministers is ignoring his proposals to save the country from default.
Pynzenyk was the main opponent to the pro-government coalition adopting the deficit budget, which the IMF was opposed to. The government of Tymoshenko is hoping the IMF will salvage the country from the current economic crisis.
In response, Tymoshenko said Pynzenyk failed to meet the challenges of the financial crisis and went off to the wayside. A new minister of finance will soon be appointed.

Several thousand doctors, teachers and small business people demonstrated in front of Kyiv City Hall demanding that the hike in utility rates be remanded.
Among the demonstrators were representatives of transport companies demanding normal economic conditions and parents distraught by the plans of the city government to privatize schools and raise the cost of visiting children’s study groups tenfold.

February 14

The Ministry of Foreign Affairs of Ukraine assigned the ambassadors of Ukraine to the EU in member countries of the EU, the U.S., Russia and other countries to immediately inform the senior officials of those countries of the “unprincipled” actions of Premier Yulia Tymoshenko.
Specifically, in the material circulated with the signature of Foreign Minister Volodymyr Ohryzko it is written that the statements of Tymoshenko about the fraudulent activity of the NSDC in the energy sector and the intention of the NSDC to reinstate the activity of RosUkrEnergo on the Ukrainian gas market and obligate the government to denounce the recent gas agreements signed with Russia are untrue.


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