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Focus on Ukraine, March 23-29, 2009

March 30, 2009
Overview of political events of the week

March 23

President Viktor Yushchenko, Premier Yulia Tymoshenko, Acting Minister of Foreign Affairs Volodymyr Khandohiy and other high-ranking officials arrived in Brussels to participate in the Ukraine-EU International Joint Conference to discuss Ukraine’s potential in the energy sector.
Representatives of 36 countries and leading gas companies of Europe are participating in the conference.
As a reminder, this meeting was planned a year ago. There were plans to allocated Ukraine EUR 2.5 billion, but then the sum was reduced to US $ 2.5 billion. The money is intended for the reconstruction and construction of Ukraine’s gas transport system.


Ukraine signed a joint statement with the World Bank, the European Commission, the European Bank for Reconstruction and Development and a European investment bank on the modernization of its gas transport system (GTS).
This gives grounds for counting on investments into Ukraine’s GTS that will allow for a considerable increase in its throughput capacity to 60 billion cubic meters. Premier Tymoshenko argues this would be much more advantageous to Europe than construction of new pipelines. Nevertheless, the Russian side remains dissatisfied. Russia’s Energy Minister Sergei Shmatko put forth a requirement that Russia also be included in the Ukrainian pipeline modernization project based on the rights of a supplying country.
Tymoshenko and Yushchenko demonstrated their political consensus by signing the joint declaration with the European Commission.

March 24

The government finally presented after a year and a half it new anti-crisis package that consists of four laws.
The first bill calls for raising the excise tax on commodities, which is considerably lower than in other countries of the world.  The second bill calls for an increase on goods that are detrimental to one’s health, in particular tobacco products. The third bill will balance the financial plans of Naftogaz Ukrainy and the agricultural fund. The fourth bill calls for an increase in payments of commercial enterprises to the Pension Fund. The head of the government expressed hopes that the parliamentarians will vote in favor of these bills a week from now.


Bohdan Sokolovskiy, who is officially authorized by the president on energy security issues, announced that Europe is prepared to allocate nearly US $6 billion to Ukraine for the modernization of its gas transport system, which will allow it to increase throughput capacity by 60 billion cubic meters.He stated that this is the figure fixed in the declaration signed in Brussels.
At the same time, Sokolovskiy informed that the signed document does not rule out the participation of Russia in this project, but on condition of the absence of claims to Ukraine’s pipeline grid.

March 25

Yulia Tymoshenko made an official working visit to Japan, where she had a meeting with her Japanese colleagues and the managers of Japan’s most powerful companies.
As a result of the meetings the Japanese association Nexi and UkrEximBank signed a memorandum, according to which the Ukrainian party can count on half a billion dollars in investments.
In addition to that, the Ukrainian side discussed with its Japanese partners the modernization of Ukraine’s economy and scientific and technical cooperation.

March 26

The Ministry of Foreign Affairs of Ukraine stated that the agreement between Ukraine and the EU regarding the former’s gas transit system poses a threat to Russian interests.
The ministry informed that measures for the modernization of Ukraine’s energy infrastructure were prescribed in a memorandum signed by the EU and Ukraine back in 2005.
As is known, Russia’s Foreign Ministry disseminated a statement in which the document signed in Belgium was labelled as “an unfriendly step on the part of Ukraine and the EU towards Russia”.  
An official representative of the ministry Andrei Nesterenko said the forum in Brussels showed that Ukraine is not adhering to some of its agreements with Russia.  
The Kremlin informed Interfax that the review of agreements between the EU and Ukraine reached in Brussels in the gas sector will be a key topic of discussion at the meeting between scheduled for March 31 between Russian President Dmitri Medvedev and German Chancellor Angel Merkel.

March 27

The Party of Regions organized a demonstration in the center of Kyiv under the banner “Say stop to the crisis”.The party only managed to rally 5,000 demonstrators of the 40,000 it had hoped for on the central square of Kyiv. Leader of the Party of Regions Viktor Yanukovych called on citizens to initiate early elections.

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