The Ukrainian Weekly 2005, No.52
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www.ukrweekly.com ïêàëíéë êéÑàÇëü! CHRIST IS BORN! Published by the Ukrainian National Association Inc., a fraternal non-profit association Vol. LXXIII HE No.KRAINIAN 52 THE UKRAINIAN WEEKLY SUNDAY, DECEMBER 25, 2005 EEKLY$1/$2 in Ukraine WorldT Bank evaluatesU Ukraine’s YekhanurovW returns from Moscow economic and fiscal policy in 2005 without deal for natural gas supplies by Zenon Zawada “In particular, it was noted that goods by Yana Sedova Russian counterpart, Mikhail Fradkov. Kyiv Press Bureau originating in the zones and shipped Kyiv Press Bureau At a press conference in Kyiv the next within Ukraine were often exempt from day, President Viktor Yushchenko KYIV – The Yushchenko government customs duties,” the statement said. KYIV – Ukraine’s natural gas crisis accused the Russian state-controlled nat- is correct to halt any further reprivatiza- “This was unfair to investors outside the escalated after Prime Minister Yurii ural gas monopoly, Gazprom, of black- tion of valuable assets, but needs to limit zones who had to pay customs duties on Yekhanurov returned from a failed mailing the Ukrainian government. government spending, which is now 5 imports, and it created potential rent- December 19 meeting in Moscow with “You know, one has to be absurd in percent of Gross Domestic Product seeking opportunities for zone adminis- resolving this problem by resorting to (GDP), according to the World Bank’s trators.” such [methods] ... it’s blackmail,” Mr. evaluation of Ukraine’s economic and Eliminating free economic zones Yushchenko said. “I don’t think that fiscal policy in 2005. won’t significantly affect economic authorities from both sides would lower “It is important to provide certainty growth, Mr. Davis said. themselves to such tones, to such meth- and stability to investors following a Looking ahead, the World Bank’s ods. That is not my policy. I’m not used to period of protracted uncertainty,” said Ukraine experts emphasized the need for solving problems through confrontation.” Paul Bermingham, World Bank director limiting the budget deficit, which Prime Rather than pursue further political for Ukraine, Belarus and Moldova, in a Minister Yurii Yekhanurov recently pro- negotiations, the Ukrainian leadership December 16 statement released at a jected won’t be any higher than 2.5 per- will turn to the Stockholm International press conference that day. cent of next year’s GDP. Arbitration Court, Mr. Yekhanurov said “In this regard, the government’s stat- “In 2006, the fiscal policy needs to be at the December 20 press conference. ed intention of not proceeding with fur- directed into financing more of fixed and “We have received no written ther reprivatizations is welcome. At the human capital, with limited increases of requests to break the contract so far,” he same time, we urge Ukraine to adopt the recurrent spending to keep the budget said. “On the contrary, we were assured legislation needed to set clear European- deficit under control and not to under- that the contract would remain intact. I style rules to govern corporate activity,” mine macroeconomic stability,” the hope we will stay within the limits of he added. release said. these civilized relations in future.” Such laws include a new joint stock The U.S. should follow the European Gazprom triggered the crisis on company code, amendments to the law Union and declare Ukraine a market December 14 when it announced that it on stock markets and amendments to the economy, Mr. Davis said, and the would not give Ukraine discounted rates law on banks and banking, he said. Ukrainian government should pass all CuttySark Co. under its current contract and has threat- While further such efforts aren’t nec- legislation for World Trade Organization ened to cut supplies altogether if new essary, the Kryvorizhstal sale was a criti- ascension. Ukrainian Prime Minister Yurii terms aren’t reached by January 1. cal step toward Ukraine’s modernization, Yekhanurov answers journalists' ques- Ukraine depends on Gazprom for 31 said Mark Davis, the World Bank’s sen- (Continued on page 16) tions at a December 20 press conference. percent of its natural gas supplies. The ior country economist for Ukraine, in the remainder comes from domestic sources press release. It demonstrated to all and Turkmenistan. investors the benefit of a transparent pri- Showing no flexibility thus far, vatization process, Mr. Davis comment- “Race for the Rada” series promotes Gazprom sent the new terms for a bilat- ed. eral agreement and pricing formula to “It promises to bring technology, mar- Kyiv on December 20. ket share, investment and jobs to Ukraine interest in 2006 parliamentary elections Russia currently provides Ukraine at a time when energy price increases by Tamara Gallo Olexy member of BUG, welcomed the guests Ukrainian Congress Committee of America to the first Race for the Rada discus- with natural gas at a price of $50 per will require technological innovation in 1,000 cubic meters in exchange for trans- heavy industry,” he said. sion on the topic of the influence of NEW YORK – Continuing in the musicians, celebrities and music on the porting it through Ukraine to Europe. The threat of wide-scale reprivatiza- spirit of the Orange Revolution slogan The Putin administration wants to tion and subsequent uncertainty regard- Orange Revolution and during the run- “Razom Nas Bahato” (Together We up to the parliamentary elections in switch to cash payments and more than ing property rights contributed to this Are Many), the Ukrainian Congress quadruple the price to between $220 and year’s investment decline, the release Ukraine. Committee of America, Shevchenko The evening’s guest speaker, Dr. $230 per 1,000 cubic meters, the approx- said. Other factors were public invest- Scientific Society, Columbia imate market rate that wealthier ment cutbacks and increased tax pres- Adriana Helbig, an ethnomusicologist, University Ukrainian Studies Program delivered an interesting presentation on European nations pay. sures. and the Brooklyn Ukrainian Group The Russian government has offered World Bank experts lauded President “Music and the Orange Revolution: (BUG), have joined forces to launch Sounding the Ukrainian Nation.” Ukraine another way out of the crisis, Viktor Yushchenko’s government for their “Race for the Rada” discussion expressing interest in a Russian- “better-than-expected” budget execution. Highlighting how times have changed, series, in an effort to generate support Dr. Helbig illustrated a simple compar- Ukrainian natural gas consortium that Increased social spending has been for and interest in Ukraine’s upcoming would give it co-ownership of Ukraine’s paid for by eliminating most remaining ison of how, prior to the Orange parliamentary elections. Revolution, it was difficult to find transit pipelines, the Russian daily news- tax privileges and tightened tax collec- The co-sponsoring organizations paper Kommersant reported. Under that tion, the press release said. However, a Ukrainian music CDs, while now, for have chosen a variety of topics to example at the recent international eth- condition, Russia is ready to limit natural significant share of the revenue increase appeal to different interests and tastes gas price hikes, Kommersant reported. came from the value-added tax (VAT) on nomusicology conference in Atlanta, enabling participants to obtain a better Ga., the association of Ukraine with Mr. Yekhanurov rejected this plan, imports, which is not a stable basis for understanding of the “hot topics” in instead offering to pay market prices for social spending increases, the release rock music has “begun to push Western today’s Ukraine and provide an open researchers toward serious analysis of natural gas as part of a gradual shift from said. exchange of ideas in a relaxed and barter transactions to cash payments dur- The World Bank supported Ukraine’s the complex musical and socio-cultural enjoyable atmosphere. phenomena taking place in Ukraine ing the next two or three years. decision earlier this year to eliminate The first such event, hosted by the As negotiations remained at an free economic zones, the release said. today.” Brooklyn Ukrainian Group (BUG), Commenting on the role of the musi- impasse, President Yushchenko prepared Rather than serving the purpose they was held on Thursday, December 15, at Ukrainians for the likelihood of the crisis were created for, they provided large tax cians on the maidan – Kyiv’s the UCCA’s National Office. Serving Independence Square, the focal point of being unresolved by the January 1 dead- loopholes to privileged companies at the as the evening’s MC, Roxy line. However, he assured Ukrainians expense of taxpayers and investors out- Toporowych, co-founder and board (Continued on page 13) side the zones, the release said. (Continued on page 17) 2 THE UKRAINIAN WEEKLY SUNDAY, DECEMBER 25, 2005 No. 52 ANALYSIS NEWSBRIEFSNEWSBRIEFS Parties get down to crucial election campaign Gongadze trial starts in Kyiv added, saying that such reform may be by Jan Maksymiuk than four months before election day, possible in 2008. Ukraine should use com- RFE/RL Belarus, Ukraine and Moldova Report Ukrainians continue to lose faith in their KYIV – The Kyiv Appellate Court on mon sense in the development of the econ- political leaders. December 19 began preliminary hearings omy and authorities’ attitude to business, Ukraine has started its campaign for “[Public] trust in all political leaders con- in the case involving the murder of he noted. (Action Ukraine Report) next year’s parliamentary elections. They tinues to decline. At present none of Internet journalist Heorhii Gongadze in will be the country’s first under a fully [Ukraine’s] political leaders enjoys a posi- 2000, the Ukrayinska Pravda website Ukraine begins final pullout from Iraq proportional, party-list system. And with tive trust-distrust balance. Distrust in all (http://www.pravda.com.ua) reported. constitutional reform taking effect on politicians exceeds trust in them, and it does The proceedings take place behind closed KYIV – On December 20, Ukraine January 1, 2006, they are expected to quite significantly.