A month of Newspapers

Kyiv Post, Nov 10

Front Page Article: Ukraine Goes Offshore
“The proliferation of tax-minimization schemes, some of dubious legality, is costing the Ukrainian state budget billions of dollars each year in lost revenue. Yet officials show no inclination to crack down on these offshore havens.”

The article lists the biggest investors in Ukraine since independence:
1. Cyprus
2. Germany
3. Netherlands
4. Russia
5. Austria

The top recipients of Ukrainian foreign investment:
1. Cyprus
2. Russia
3. Latvia
4. Poland
5. Georgia

Cyprus’s prominence is due to its appeal as a tax haven.

[Here’s another article completely unrelated to the tax avoidance / evasion story entitled:]

Ukraine still stuck near bottom of world investment climate rankings “The report said Ukraine eased business start-up by substantially reducing the minimum capital requirement. It cut 9 out of 31 procedures to obtain construction permits and it eased tax compliance by continuing the implementation of voluntary electronic filing for value-added-tax returns. But Ukraine’s regulatory environment and tax system are still ranked amid the most complex and corrupt in the world, according to the World Bank ranking.”

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Kyiv Post, Nov 19

Front page: Tax revolt gains steam on revolution’s anniversary “However, Vice Premier Sergiy Tigipko told Channel 5 TV that the tax hikes were necessary because of conditions imposed by the International Monetary Fund for $15 billion in new loans to Ukraine’s government. ‘Increases in utility rates and a hike to the minimum retirement age are necessary for Ukraine to receive more IMF credits,’ he said. ‘We are going to have to make unpopular reforms.'”

Gryshchenko: Democratic Ukraine is ‘moving forward’

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Kyiv Post, Nov 26

Ukrainska Pravda exposes presidential estate scandal “President Viktor Yanukovych lives in a house surrounded by a milti-million dollar estate with its own bowling alley, enormous clubhouse, soon-to-be-built tennis court, a near-by hunting ground and shooting gallery. Yanukovych’s story – and he’s sticking to it – is that he only owns a house on the estate and a tiny patch of land around it. The president says he doesn’t know who owns the surrounding territory of 138 hectares, equal to 24 Shevchenko Parks – where massive construction and development is taking place.”

Trial date set for officers charged in student death The first judicial hearing in the May 18 police-custody death of university student Ihor Indylo starts on Dec 1 in Kyiv’s Desnyansky District Court . . . A Shevchenko District police inspector and an on-duty officer are being charged with excessive force and gross dereliction of duty. . . ”

Corporate Raiding: Top-level corruption, bureaucracy continue to stunt desperately needed foreign investment in Ukraine
“The problems are clearly deep when such prominent and respected Canadian investors as James Temerty, named this year by Ernst & Young as ‘Entrepreneur Of The Year’ in Ontario province, get bogged down in Ukraine’s muddy business environment.
     What did investing in Ukraine cost Temerty, a Canadian with Ukrainian roots? An estimated $100 million in losses, insiders say.
     Northland Power, Temerty’s Canadian energy group, leaped into Ukraine more than a decade ago. Through an investment venutre, it acquired a majority stake in Kyiv-based Darnytsia Heat and Power Plant. The simple plan was to modernize the plant, turning it into a leading and efficient player on the domestic market. But instead, Northland’s domestic subsidiary, UkrCanPower, spent much of the past decade defending its basic ownership rights over the investment.
     Norland eventually lost the battle to an influential domestic group. . . .
      . . . the pling of leading grain tranders such as Cergill, Tepfer International and Bunge, which have invest billions of dollars over the years into Ukraine’s promising yet far underdeveloped agriculture sector . . . Ukraine’s government first squeezed their business by restricting grain exports to keep domestic food prices low, then issued a disproportional grain export quotas to three domestic companies in a process deemed unfair and nontransparent. . . .
     While a select group of grain companies that received the lion’s share of export quotas will profit greatly amid record global grain prices, over, the quotas in place until June 30, 2011 will cause up to $2.6 billion damages to Ukraine’s agricultural sector, according to the Chamer. Moreever, the export restrictions utilized by Ukraine appear to violate World Trade Organization rules . . . .
     Yanukovych’s administration did nothing — until pressured by international energy companies — to stop obsccure companies from importing more than 1 million tons of oil and motor fuels free of duties and taxes through a nontransparent loophole. The suspect trade took place in recent months, accounting for 60 percent of all oil imported into the country and robbing the national budget of hundreds . . .”

In buying train tickets online, experts say customers may feed corruption “A shadowy company has made at least Hr 2 million from the online sale of train tickets and stands to make millions more as the scheme is rolled out on a larger scale.
     Express 2 takes a commission from all online ticket sales in a scheme dating back to March 2009 that requires the traveler to pick up a ticket ordered on the state railway website from the station. Since Nov. 15, tickets for certain routes can be printed directly from the Internet, a more convenient service that promises even larger profits for the firm.
     Experts said this looks like a common scheme used to pilfer profits from the state for the benefit of private, well-connected individuals.”

[I consider this typical government collusion — which is good to criticize, coupled with anti-capitalist overtones — which are bad.]

[Front page article about people who, as an experiment, tried living on Hr 907, or $155 a month, the national minimum wage. Ukraine’s minimum wage rhetoric is different from the US’s. In the US its about forcing employers to pay a salary to unskilled labor. In Ukraine, it’s more about pensions, student aid and other social benefits which are proportional to the minimum wage. Technically, Ukraine’s minimum wage also concerns itself with the salaries of unskilled labor, but it seems that all the small and medium companies are very good at operating in the shadows, and all the large companies are so well connected that few businesses if any are impacted by the minimum wage.]

Minimal wage means meat, medicines are luxuries
“‘All civilized countries have flexible taxation systems,’ said Oleksandr Okhrimenko, president of the Ukrainian Analytical Center. ‘The United States, for example, introduced some tax benefits to families who take care of their old relatives. That scheme basically enables people to take part in distribution of welfare.’
     European countries have a so called progressive taxation scale: the wealthier a person is, the mor taxes he or she pays. Income taxes in Germany very from zero percent for the poorest to 50 percent for the richest.
     The new draft of the Ukrainian tax code also contains this progressive approach, but its formula is not even close to the German one: the richest Ukrainian will have to pay 17 percent in income tax, while the rest of people will keep paying 15 percent as they have done before.”

Tax code protests intensify in nation “Ruslan Zorya, an entrepreneur and leader of the non-government Aktiv Cherkassy group, on Nov. 24 told reporters that only 10 of the 30 buses taking people to the tax code demonstration were allowed to make the trip. The other buses were turned back for various technical violations. He said.
     Cerkassy police responded that many of the bus drivers had not filed for permission to make the journey, as required by regulations.”

Visa-free travel to Europe rests on commitment to democracy
“And there are a lot of conditions. Among them:
– Adoption of legislation on preventing and fighting corruption and establishment of a single and independent anti-corruption agency; [HA!]
– Addressing external relations issues (including human rights and fundamental freedoms) linked to the movement of persons;
– Adoption of biometric international passports to reduce identity fraud;
– Establishment of training programs and adoption of ethical codes on anti-corruption involving public officials involved in issuing passports, border control and customs;
– Better border management to end Ukraine’s status as a transit point and source of illegal migrants to Europe;
– Preventing and fighting organized crime; and
– Adoption of a national strategy for prevention and fighting of money laundering.
     . . . . and, in return, [Ukraine] will get access to greater amounts of financing for its own domestic projects. . . .
     Given the financial difficulties of Ukraine, whoe government is dependent on a $15.5 billion line of credit from the International Monetary Fund, it is hard to see how it will come up with the money to meet EU conditions for visa-free travel and budget contributions to the 27-nation bloc.”

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Kyiv Weekly, Nov 26-Dec 2

Jerusalem Syndrome “Ask the first person you meet on the street the name of the capital of Israel, you will hear Tel-Aviv 99% of the time. This is the most widespread fallacy at the expense of Jerusalem, which is the true capital of Israel. Tel-Aviv never was and could never be the capital of the ‘promised land’.”

[WTF???]

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Kyiv Post, Dec 3

Import schemes in energy market cost state dearly “Since August, select companies have been exclusively granted permission to import goods into Ukraine absolutely tax-free. As a result, a torrent of imported crude oil and motor fuel has entered Ukraine, distorting competition and causing notable underpayments to the state budget of the country, all of which ruins the investment climate of Ukraine.
     Over four months, 1 million metric tons of motor fuel and 460,000 tons of crude oil have been imported under the preferential scheme, accounting for up to 60% of total fuel imports.”

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Kyiv Post, Dec 10

Experts: Partial ban on indoor smoking in public places in ineffective remedy “The move to clean up Kyiv’s restaurants — most of which currently allow smoking — has been championed by public health advocates and non-smokers.
     But experts say that the measure falls short. Health officials say that only a complete ban on indoor smoking in public places can prevent the damage caused by inhaling second-hand smoke, a major cause of disease and premature death. . . .
     The new recommendation for separate smoking rooms in entirely optional, said Oleksandr Brihinets, head of the permanent commission of the Kyiv City Council on cultural and tourist issues and one of the initiators of the project.
     He suggested that no-smoking establishments use signs to advertise their policy, and said that they will be placed on an official list of tourist points. The owners of non-smoking places could also receive some benefits from the city authorities. For example, large neon signs would not be considered advertising, as they will be for other establishments starting next year, saving them thousands of hryvnias in payments to the authorities, Brihinets said. Other incentive [sic] are being considered.”

Tymoshenko wants IMF to probe Naftogaz, RosUkrEnergo spending

Moody’s: Ukraine banks still suffer from bad loands made before crisis “Non-performing loans in Ukraine’s banks are set to hit 40 percent of total loans by the end of 2010, accordin to a major report released this week by Moody’s Investors Service.
     Moody’s said the outlook for Ukrainian banks is negative because of this very high level of problem loans and banks low profitability. . . .
The depreciation of the hryvnia from around Hr 5 to the U.S. dollar to around Hr 8 also hit foreign-currency borrowers, which make up around 50 percent of all loans.”

Nation will start 2011 with two tax codes; transition expected to cause confusion “Ukrainians will wake up on Jan. 1 next year with double vision — not necessarily as a result of New Year parties, but because there’ll be two tax systems operating.
     The new tax code, adopted by parliament and signed into law by President Viktor Yanukovych this month, will come partially into force at the beginning of next year.
     Businesses will have three months to adjust to rules that take effect immediately, while several more months will be granted before other changes envisioned in the recently adopted tax code take effect.
     This all means that two tax systems will be working side-by-side for a while. This transitional period, experts say, could lead to confusion, which state tax administration officials could use to their advantage.
     ‘This will be a nightmare for accountants because during one calendar year, two laws will work, giving room for tax officials to abuse their powers,’ said Oleksandr Minin from KM Partners, a law firm. . . .
     The privilege tax breaks for small business have been left untouched. As a result, a variety of business activities performed by individuals will continue to be registered as individual business entities paying a small privileged tax rate. Their single tax will remain low — between Hr 20 to Hr 200.
     But there was one blow for small businesses. Big businesses will no longer be able to include the costs of goods and services, purchased from these private entrepreneurs and deduct the cost from their tax bills.
     The old tax system allowed medium and large enterprises not only to hire entrepreneurs to perform certain works or services, but also to take advantage of this system to reduce tax payments. Many companies employed a large number of full-tie staff this way. . . .
     ‘Now when payments to individuals registered under this system will not be tax deductible for corporate tax purposes, this will increase the cost of doing business with such entrepreneurs for companies,’ said Ron Barden, partner for tax and legal services at PricewaterhouseCoopers.’ . . .
     The tax introduces new tax rates on profits that will be reduced from the current 25 percent to 23 percent in 2011 and further to 16 percent in 2014. However, experts said the nominal tax rate does not reflect the so-called effective tax rate, which is considerably higher.
     While firms could artificially increase their gross costs, so as to declare a smaller profit to be taxed, tax authorities could at any time and for any reason disagree with the declared data.
     The tax code now provides for limited deductibility for a range of service payments to non-residents — up to 4 percent of prior year net revenues and a 4 percent limit on royalty payments to non-residents.
     ‘These two issues were of major concern for investors and the limits may still impact the overall cost of doing business, but not excessively, especially with the reduction in the corporate tax rate from 25 percent to 23 percent,’ Barden said. . . .
     Social payments on salaries . . . remain high. . . . As a result, many employers will in the near term continue to prevent employees from revealing their true salaries, keeping them in the shadows.
     ‘Currently every wage (up to an established cap) the employer pays triggers roughly at least 40 percent (or more, depending on the industry) of social contributions to the revenue. Add 15 percent personal income tax that the employer is liable to withhold from the salary and you will see how expensive it is to pay “white” wages,’ he added.
     This all makes it very expensive to pay wages legally, concluded Kotenko. . . .
     The relationship and powers of tax administration and taxpayers remains unchanged by the new tax bible.
     That’s hardly good news, given that the World Bank’s annual Doing Business report confirms that Ukraine’s tax environment is far from friendly. In 2001 Ukraine ranked 181 out of 183 countries for ease of its tax system.
     The world Bank counted 135 tax payments per year in Ukraine, which take up to 657 hours per year, almost 56 days. The total amount of taxes paid reach 55.5 percent of a business’s profit.”

Tax protests fizzle out, but organizers plan to launch new ones on Jan. 22 “Rallies against adoption of the new tax code fizzled out by Dec. 6, days after parliament passed an amended version of the bill which left the single flat tax in place that benefits millions of small entrepreneurs.
     The compromises represented a victory for small and medium-sized entrepreneurs who rallied nationwide to demand that President Viktor Yanukovych veto the bill.
     Yanukovych didn’t completely scrap the bill, as many protestors hoped. But after meeting with them, he sent the bill back to lawmakers on Nov. 30, urging parliament to adopt changes that preserve tax breaks for small businesses. The changes, including a reduction in the powers of tax authorities, were adopted on Dec. 2. One day later, police cordoned off Kyiv’s Independence Square and dismantled a half-dozen protest tents erected by demonstrators.
     Some protest organizers said [they] saw the developments as a victory. Others insisted protestors had been duped. . . .
     Vasyl Popik, head of the taxi drivers trade union with 50,000 members across Ukraine, said his group was satisfied with changes made to the tax code to ease the burden on small business.”

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Ukraine extends $2 billion loan “Ukraine is extending by six months the term of a $2 billion loan from Russia’s VTB, a Ukrainian deputy finance minister said on Dec. 8.
     ‘We have extended the VTB loan under the same conditions,” Andriy Kravet told Reuters.
     Ukraine took the six-month bridge loan from the Russian state bank in June to help the government plug holes in the budget.”

Government extends grain export quotas “The government on Dec. 8 extended restrictions on the export of grain until the end of March and increased export quotas, the agriculture minister said Wednesday.”

Despite spending lots of money, government fails to solve serious problem of stray, dangerous dogs

Apartment owners band together to look after homes “Irina Myakota, a 47-year-old broker, lives in an old four-story building with columns on Gonchara Street in Kyiv. It has been seven years since dwellers of her house have lived without the dreaded “ZHEK,” and they are so much the better for it.
     ZHEK in Ukraine is the local residential utilities office, highly inefficient, which manages utilities and building upkeep in neighborhoods.
     Myakota and her neighbors rescued themselves from the clutches of ZHEK by becoming owners of their own house. In other words, they created a condominium and an association of the co-owners of the apartment building.
     Now they are responsible for everything that happens with the house, be it the changing of broken windows, painting of walls or the picking up of garbage. Myakota was not sure, however, that they did the right thing when they started.
     But it is turning out beautifully, in comparison to neighbors still held hostage by ZHEK. . . .
     Myakota, one of the activists of her condominium, is not completely satisfied. She would like to see support from the city for improvements such as the fixing of elevators or the cleaning of courtyards. “We are hardly surviving,” Myakota siad. “But it wasn’t better with the ZHEK. When we had a ZHEK, we had nothing at all.”
     But ZHEKS are on their way out within the next three years. According to the communal reform that will come into force by the end of 2014, Ukrainian citizens will have to create ownership associations — known by the Russian acronym OSMD — in about 70 percent of apartment buildings. . . .
     As of the beginning of 2011, Zuev’s companny will start managing three ZHEKs and 88 apartment buildings on the outskirts of Kyiv, in Vinogradar area.
     Privatizatino of apartments started in Ukraine right before the collapse of the Soviet Union. Most people then bought their paartments from the state for peanuts. In Soviet times, housing was state-owned and apartments could not be sold. Landings, staircase, roofs, cellars and courtyards remained state-owned. And all of this will soon change.
     From information supplied by the Ministry of Housing and Communal sector, so far Ukrainians have created OSMDs — or ownership associations — only in 15 percent of apartment buildings that are at least five-story high. . . .
     ‘There is enough money only for little things.’ The house face needs to be redone to keep the heat in, the roof needs repair and there are cracks in the walls.
     ‘This is why people who live in apartment blocks in sleeping areas are afraid to create [an association] — one needs to have money to maintain the house,” she said.
     This is where property management firms come in. Zuyev from ZhilKom said anything that eliminates ZHEKS will be an improvement. ‘Tenants will become customers of the managing company,’ Zuyev said. ‘They have the right to control the works and to change the managing company.'”

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Kyiv Weekly Dec 10-16

Climate changes will kill millions every year “UN experts published the latest forecast of climate conditions on the planet. In their opinion, by the year 2030 climate changes will indirectly lead to the death of a million people each year and inflict damages to the economy to the tune of US $157 bn.”

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The Ukrainian Weekly, Sun Nov 7, 2010

Ukraine Roundtable XI . . . “Washington was the venue on Oct 20-21 for the 11th annual convening of the “Ukraine’s Quest for Mature Nation Statehood” roundtable series.”

Siberian nationalists seek alliance with ethnic Ukrainians in Far East “A group of Siberian nationalists has called on ethnic Ukrainians living in the Far East — a community the Siberians note that currently has vewer opportunities to preserve its national culture than do the indigenous Siberian peoples — to join the Siberian nationalist movement.
     In an indication of seriousness, the Siberian Popular Assembly, fresh from its effort to have people east of the Urals declare ‘Siberian’ as their nationality in the just-completed Russian Federation census, has published an appeal to the Siberians of the Russian Far East and done so in the Siberian, Ukrainian and Russian languages.
     ‘Brother Ukrainian,s’ the appeal begins, ‘at this historic moment of the awakening of the Siberian nation, we Siberians extend to you the hand of friendship. There are scarcely any other peoples closer than we are by their historical fate,’ one of colonization, persecution, and Russification. . . .
     The Ukrainians of the Far East came into existence as a distinctive community at the end of the 19th century when the tsarist authorities provided free transportation and free land to Ukrainians suffering from famine. Several hundred thousand Ukrainians took advantage of that offer and called teh land they settled in “Zelenyi Klyn,” or Green Triangle. . . .
     Indeed, one of the causes of the defeat of the Russian White Movement [during the Russian Civil War] in the Far East was the opposition of its leaders to any concessioins to the non-Russians and especially to the Ukrainians, who most of the White leaders refused to acknoledge were a separate and distinct nation.
     The Bolsheviks exploited that and promised the Ukrainians in the Far East native language schools and broad cultural autonomy. But, having defeated teh hites, the Soviet government reneged and promoted the thorough-going Russianization and Russification of the ethnic Ukrainians.”

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The Ukrainian Weekly, Nov 21

Odesa-Brody pipeline gets another chance “Using the Odesa-Brody oil pipeline as originally intended, south-north, is under active consideration again –– this time, by the governments of Ukraine and
Belarus. The pipeline has been used since 2004 in reverse, north-south, by Russian oil companies for exports out of Odesa. Such reverse-use blocks the access of non-Russian oil into the Odesa-Brody pipeline for supplying Ukraine and other countries in the region. These countries have sought unsuccessfully to correct the situation during the intervening years. Four recent developments are spurring the same countries to re-open the issue:
     1. Russia has imposed a steep price hike through export duties on crude oil to Belarus, compounded by taxation of Belarusian exports of oil products refined from Russian crude. This has compelled Belarus to seek non-Russian supplies for its massive oil-processing industry, so as to maintain operations and avert a Russian takeover of the assets.
     2. The growing volumes of Venezuelan oil are potentially available for delivery at Ukrainian Black Sea and Baltic ports and onward transportation to land-locked Belarus. While the cost-effectiveness of existing transportation by railroad is questionable, the Odesa-Brody pipeline would alleviate this problem if used northward to Brody as originally intend-ed.
     3. Russian oil transit through the Druzhba pipelines via Belarus and, espe-cially, via Ukraine to Europe is expected to decline in the years ahead, as Russia re-directs export volumes toward its own Baltic Pipeline System. . . .”

Chernovetskyi relieved of some duties “Kyiv Mayor Leonid Chernovetskyi has lost part of his authori-ty in Ukraine’s capital city. Via a presiden-tial decree he was dismissed from his post as head of the Kyiv City State Administration, which he held concurrent-ly with his office as mayor. Now the exec-utive branch in Kyiv will be chaired by a representative of the Party of Regions, Oleksander Popov.”

Mandatory dubbing of films abolished “KYIV – A decree obliging film distrib-utors to dub or subtitle foreign films dis-tributed in Ukraine has been abolished, Culture and Tourism Minister Mykhailo Kuliniak said at a press conference on October 29.”

[Several stories about visa agreements which would allow Ukrainians to travel more easily. “Arbitrary restriction” in my opinion.]

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The Ukrainian Weekly, Nov 28

Two-thirds say they are patriots “KYIV – The vast majority of Ukrainians – 76 percent – consider them-selves patriots, reads a report by the Rating sociological group. The main sub-ject of pride for the Ukrainians is the place where they were born and raised (33 per-cent) and the land on which they live (31 percent). According to the survey, the results of which were reported on November 17, only one in 10 admitted that they have no patriotism. In addition, as it turned out, the residents of Ukrainian cities are less patriotic than villagers. Youth is least patriotic, and older people are most patriotic. The survey revealed that Ukrainians are proud of the great men of their nationality (28 percent), the state in which they live (25 percent), spiritual qualities of the people (20 percent), the national language (17 percent), literature and art (9 percent), and military power of the country (3 percent). They are also proud of their hard work and ability to manage a household (21 percent), national songs, festivals and customs (20 percent), faith and religion of the people (17 per-cent). In addition, for 9 percent of Ukrainians a subject of pride in their coun-try is the state flag, emblem and anthem, and for 12 percent the victories of their country’s athletes. A total of 45 percent of Ukrainians think that true patriotism is manifested in respect for traditions, and 36 percent in strengthening families and rais-ing children. The study was conducted in September. (Ukrinform)”

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The Ukrainian Weekly, Dec 5

Peres advises Ukrainians to forget history “KYIV – President Shimon Peres of Israel, speaking in Kyiv on November 25 during in a public lecture on “Political and Economic Challenges in the Era of Globalization,” said he advises Ukrainians not to focus on history and to leave history to scholars. “If I were asked what to advise Ukraine, I would say: forget about history, history is not at all important… You won’t be able to not repeat the mistakes of the past, you will simply make new ones,” he said (according to a Ukrainian translation of his remarks as reported by the BBC). ”

Ukrainians gain visa-free travel to Israel “KYIV – Ukrainians will be able to visit Israel without visas beginning on February 9, RFE/RL’s Ukrainian Service reported on November 23. Ukrainian Foreign Affairs Ministry spokesman Oleksander Dikusarov told journalists that all citizens with passports will be able to visit Israel for 90 days without a visa. Israelis will enjoy the same visa-free travel privileges to Ukraine.”

6.6 million have left Ukraine “KYIV – According to the World Bank, Ukraine ranks fifth in the world among countries with the highest migration rates, the newspaper Segodnia reported on November 11. Living overseas are 6.6 mil-lion Ukrainians who emigrated in various years – nearly 15 percent of Ukraine’s total population. Running ahead of Ukraine in terms of the number of emigrants are Mexico (11.9 million), India (11.4 million), Russia (11.1 million) and China (8.3 mil-lion). According to the World Bank, Ukraine is losing not only potential laborers, but also graduates. Thus, working overseas are 3.5 percent of the total number of the Ukrainians who have a higher education.”

U.S. policy may lead to inflation in Ukraine “KYIV – The United States has turned on the printing presses, which could result in an increase in petrol prices in Ukraine and a rise in the price of some goods imported from Europe, Ukrinform reported on November 17, citing Focus magazine, which conducted a survey of experts. The victory over competitors from other coun-tries through a reduction in the price of goods is the ultimate goal of all currency wars in the world. Ukraine also contributed to exchange rate wars by collapsing the hryvnia in 2008, which allowed domestic steel and chemical exports to survive the economic crisis, the publication writes. However, the rest of the public had a hard time, as food prices soared and wages pegged to the dollar exchange rate plum-meted. This time things could be more com-plicated, especially if the dollars that are being printed by Washington are sent to for-eign markets, including to Ukraine. “America can impose another loan on Ukraine from certain international institu-tions, bringing the country to national default,” believes Yurii Havrylechko, an expert from the Foundation for Safe Society. . . . The president of the Association of Ukrainian Banks,Oleksander Suhoniako, proposed that the Ukrainian financial market be closed for “hot” dollars. “Speculators who will buy securities in Ukraine will inject a few billion dollars into the market, which is a lot by our standards. In order to buy out such an amount of dollars, the National Bank of Ukraine will have to print hryvni. As a result, there could be inflationary pressure on the national currency,” the expert said. The world will start to feel the first effect from printed U.S. dollars in the next few weeks, when the first tranche of new dollars will be put into circulation. Then the echo of currency battles will come to Ukraine. (Ukrinform)”

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The Ukrainian Weekly, Dec 12

Kyiv Mohyla Academy reports new government restrictions “KYIV – Ukraine’s Ministry of Education and Science, led by the controversial Dmytro Tabachnyk, has begun a campaign to restrict the autonomy of the National University of Kyiv Mohyla Academy and halt its progressive reforms in higher educa-tion, the university’s president, Serhiy Kvit, said at a December 9 press conference.The ministry wants to eliminate the uni-versity’s English language requirement, its pioneering Ph.D. programs, and unique admission standards for its master’s degree programs, which require passing five exams, he said. Minister Tabachnyk even seeks to forbid students from freely attend-ing lectures. “The minister wants to cancel in our stat-utes and rights precisely that which in Western Europe is the foundation of the Bologna Process and the European Higher Education Area (EHEA),” Dr. Kvit stated.”

Tax protesters face charges “KYIV – Police in Kyiv have launched an investigation into the alleged destruc-tion of city property by protesters, RFE/RL’s Ukrainian Service reported on December 6. Thousands of small and medium-sized business owners and opposition activists protested on Kyiv’s Independence Square from November 22 until December 3, with many of them camping on the square. They were chal-lenging Ukraine’s new tax code, which was adopted by the parliament in mid-November. The protesters set up a tent camp on the square, which was forcibly closed by police on December 3. Police say that when the tents were removed they discovered that protesters had ham-mered iron spikes into the paving stones and caused significant damage. Kyiv’s city administration is currently calculat-ing the damages, with a preliminary fig-ure of some $25,000 being mentioned. An investigation was officially launched into the “premeditated destruction of city property.” One of the coordinators of the demonstration, Oleksander Danyliuk, was summoned to police and questioned about the damage.”

Ukraine to ban cigarette advertising

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The Ukrainian Weekly, Dec 19

Ukraine’s judiciary most corrupt “KYIV – The Global Corruption Barometer 2010 published by Transparency International shows that corruption is on the rise worldwide, and Ukraine scores among the worst in the former Soviet Union. Furthermore, its judiciary system is the most corrupt in the world, according to the Berlin-based organization. In the report, almost 92,000 respondents in 86 countries were asked to evaluate the state of corrup-tion in their home countries.”

Yanukovych decrees major reorganization of governmentWikileaks spotlight Ukraine’s power struggles and corruption ““Much of the skepticism about former Prime Minister Yulia Tymoshenko that was voiced by her critics repeatedly sur-faced in the U.S. diplomatic cables exposed by Wikileaks, including her alleged lust for power, her populist politics and close relations with Prime Minister Vladimir Putin.
     The most embarrassing cable surfaced on December 15; it was authored by U.S. diplomats in Kyiv and sent to the State Department by former U.S. Ambassador William Taylor Jr. in December 2009.Ms. Tymoshenko’s presidential cam-paign was based on a “populist economic policy,” they reported, which would enhance the role of the state” in national-izing private enterprises as part of the for-mer prime minister’s two-faced approach to Ukraine’s oligarchs,U.S. diplomats criticized Ms. Tymoshenko for an “obvious lack of ele-mentary knowledge of economic funda-mentals,” the cable reported. She didn’t conduct significant reforms during her term, instead focusing on her battle with former President Viktor Yushchenko, which harmed the economy as a result.About 70 percent of her government’s expenses were done without holding ten-ders for the work, and almost 25 percent of the costs of government contracts were stolen, the cables alleged.
     U.S. diplomats were concerned about a “Putinist chain of command” regardless of who won the 2010 presidential vote – Ms. Tymoshenko or Mr. Yanukovych.
     Another cable leaked on December 2 reported sharp criticism of Ms. Tymoshenko offered by a close advisor, as reported by the German magazine Der Spiegel to be her former finance minister, Viktor Pynzenyk.The former prime minister “wasted the opportunity for implementing economic reform that came with the financial crisis. . . .
     Mr. Firtash [Gas Oligarch] acknowledged his interac-tions with Russian Jewish mafia boss Semion Mogilevich, admitting that he needed “his approval to get into business in the first place,” the report said, reveal-ing the important role that Mr. Mogilevich played in the Russian government.
     Mr. Firtash claimed he was forced into dealing with organized crime members, including Mr. Mogilevich, or he would never have been able to build a business. If he needed a government permit, for example, he needed permission from the appropriate “businessman” who worked with the official who issued that particular permit, Wikileaks revealed. . . .
     Another of Ukraine’s most powerful oligarchs, Rinat Akhmetov, didn’t figure as prominently in Wikileaks. Most notably, however, former U.S. Ambassador John Herbst referred to him as “the godfather of the Donetsk clan” in a February 2006 cable dispatched to Damon Wilson, who served at the time as senior director for European affairs at the National Security Council.
     The Wikileaks cables confirmed that Mr. Akhmetov hired the K Street political lobbying firm Davis, Manafort & Freedman for an “extreme makeover” of the Party of Regions following Mr. Yanukovych’s 2004 election defeat.They were “working to change its image from that of a haven for mobsters into that of a legitimate political party,” former U.S. Ambassador Herbst reported in March 2006.””

Civil servants to be cut by 30% “KYIV – The Cabinet on December 14 resolved to reduce the number of civil ser-vants working at central executive bodies and territorial authorities subordinate to them by no less than 30 percent in compli-ance with the president’s decree of December 9 “On Optimization of the Central Executive Bodies System.” (Ukrinform)’

[See! It’s not all bad news!]

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The Ukrainian Weekly, Dec 26

Yanukovych administration intensifies campaign against opposition “The administration of President Viktor Yanukovych has intensified its cam-paign against opposition leader Yulia Tymoshenko in recent weeks, filing criminal charges against the former prime minister and employing both violent methods to intimidate her allies.
     The conflict turned bloody when about 40 national deputies of the Party of Regions staged a December 16 attack in the Verkhovna Rada against deputies loyal to Ms. Tymoshenko, who were blocking the parliamentary rostrum and tribune in protest against the criminal charges filed against their leader.
     To add insult to injury, the Procurator General of Ukraine filed criminal charges against the attacked deputies – not those who threw the punches and flung chairs. The Yanukovych administration is prosecuting the misdemeanors of its opponents while ignoring its own . . . .
     The same day charges were brought, prosecutors also denied Ms. Tymoshenko the right to leave Ukraine. They changed her sta-tus from suspected of criminal activity to accused on December 20.”

University rector’s wife beaten “DONETSK, Ukraine – Authorities in Donetsk have launched an investigation into the beating of the wife of the local universi-ty’s de facto rector, Yurii Lysenko, RFE/RL’s Ukrainian Service reported on December 20. . . . Ms. Lev suffered a concussion and is recuperating at home. Her husband, Mr. Lysenko, was elected uni-versity rector by faculty members earlier this month. The Education Ministry, which had proposed its own candidate, has refused to confirm Mr. Lysenko in that post.”

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