Headlines March-April 2012 | Roman (was) in Ukraine

President Books A Huge ‘Proffit’

In the five years after President Viktor Yanukovych made the spelling error on a application for his failed 2004 presidential bid, he wrote four books with titles such as “A Year in Office” and “How Ukraine Should Live On.”

In his income declaration for 2011, published on April 14, the president said Donetsk-based publishing house Noviy Svit had paid him Hr 16.4 million, or more than $2 million, for the copyright to those four books and any future works. This payment constituted 95 percent of his total declared income for the year.

Many Ukrainian writers and publishers say it is impossible to make anything close to this sum through sales for the few books that he published. They said it looked suspiciously like an attempt to disguise other income by laundering it as book royalties.

“In Ukraine, no one gets such royalties for a book,” said Dmytro Kapranov, a writer and a co-owner of publishing house Zelenyy Pes.

U.S. President Barack Obama made nearly $2.5 million in royalties in 2008, the year he shot to global fame, for his two books. Former U.S. President Ronald Reagan and current U.S. Secretary of State Hillary Clinton pulled down $8 million advances each, but they were outdone by the late Pope John Paul II, who got $8.5 million for a 1994 book.

Kapranov said authors in Ukraine earn around 5-10 percent from sales of their publications. According to his basic calculations, this would mean each of the four books’ circulation should have reached at least a half-million copies, a figure unheard of on Ukraine’s book market.

Kapranov said the most recent publications by the country’s bestselling authors Lina Kostenko and Vasyl Shkliar reached 100,000 copies. The popular Ukrainian translations of books about Harry Potter had a slightly smaller circulation.

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Donbas seems to be a place with no future

I recently came across the saddest commentary on Ukraine’s eastern provinces that I have ever encountered. It’s a video blog by one Stanislav Tsikalovsky from the city of Luhansk. The 34-year-old Tsikalovsky goes by the name of Proctologist. His slogan is: “Believe me, because madmen always speak the truth.”

The truth that recently caught the attention of some 30,000 Ukrainians came in a video Tsikalovsky made after a trip to Lviv, in western Ukraine. Here’s what he had to say: “I would like to dedicate this video blog to the city of Lviv, which I visited, and to those people who hosted us, showed us their city, and told us about its beauty and prospects for the future.

I wasn’t sure what to say until I sat down in the Lviv-Luhansk train and arrived in my native Luhansk. I disembarked and understood that, besides crying in front of a camera, I wouldn’t succeed in describing the beautiful city of Lviv. And not because there’s nothing to say.

You understand that quite well, if you’ve seen my photographs. There are, I’m ashamed to admit, many, many, many interesting things there. But when I stepped onto my native Donbas-Luhansk land and looked around, I saw and understood that we don’t even have a future. We have no city authorities and no provincial authorities. And it’s not even a question of having no prospects of large-scale change. We have no prospects of any kind of change whatsoever. All that’s left for us, for you, is at a minimum for us, the Donbas, to be enclosed with barbed wire and not be let out, so as not to interfere with normal people’s efforts to develop themselves and build a good country. And at a maximum, I guess, simply to drink ourselves silly. Bye.”

The bit about hopelessness and lack of future prospects is depressing enough. But for a native of Luhansk to recommend enclosing the Donbas with barbed wire is enough to drive one to drink.

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Demographic crisis will stunt growth, harm pensions, create labor shortage

The grim demographic milestones that Ukraine will reach by 2020 is pushing population issues to the forefront of the nation’s economic debate as it could see growth stunted due to labor shortages with debt implications for its pension and health systems.

Consumer market strategy researcher Euromonitor International stated in a recent report that Ukraine will experience the largest absolute population loss in Europe between 2011 and 2020, which will adversely impact the country’s long-term economic growth.

Having already experienced an 11.8 percent population decline between 1991 and 2011, from 51.6 million to 45.5 million, Euromonitor reported, Ukraine’s population stands to fall by about 200,000 annually, dropping to 44.5 million people by 2020 due mostly to the long-term trend of the death rate exceeding the birth rate.

In an even more dramatic forecast, the United Nations projects that Ukraine’s population will decrease to 35 million by 2050. Despite two years of economic growth, the birth rate was 1.4 in 2011, still below the replacement level of 2.2.

Outgoing migration, principally among the young working age population in the 1990s has also exacerbated population decline. And the smaller birth generation during the 1990s that has recently joined the labor force coupled with few incoming labor migrants is fueling the present and future labor shortages.

“Every year 200,000 thousand more people die (in Ukraine) than are born,” said Rumane Verikaite, a Euromonitor data analysis manager.

The report said a large number of deaths are due to increasing life expectancy, an aging population and high young and working age male mortality. Men in Ukraine can expect to live 10 years less than women due to smoking, accidents at work and high incidence of suicides for men younger than 65.

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NBU reserves dwindle to US $26-27 bn

After alarming statements about the necessity of urgent restructuring of foreign debts last week, the government suddenly changed the course. Several days ago, Deputy Minister for Economic Development and Trade Vadym Kopylov spoke about the intention of postponing repayment to the IMF by 10 years. Now, Ukraine is ready to empty its pockets to immediately satisfy the creditor. “We confirm the intention to stably fulfill the liabilities, including to the International Monetary Fund within the established timeframe,” read a statement released recently by the Ministry of Finance. According to the ministry’s preliminary estimates, the condition of state finances and domestic financial market provides a possibility to fulfill the program of borrowings and maintain the level of the state debt of a safe level

Independent economists do not share the optimism of the government officials. According to their estimates, it will be practically impossible to refinance the accumulated debts that require repayment this year. Favorable outcome is possible only in case the cooperation with the IMF is renewed or Ukraine manages to re-sign gas contracts with Moscow. The chances for realization of such scenario, however, remain minimal. “As the parliamentary elections approach, the probability of reviving the credit program of the IMF is dropping substantially. That is why credit ratings of Ukraine will remain under pressure until the government reaches considerable decrease of the cost of import gas by signing a new gas agreement with Russian,” says Olena Belan, chief economist at Dragon Capital.

The total amount that Kyiv must repay foreign creditors in 2012 exceeds USD 6 bn, taking into account the part of the debt to be paid from the NBU reserves. Payouts to the IMF only this year should amount to US $3.719 bn. The deadline for repayment of repeatedly prolonged credit from Russian VTB amounting to US $2bn is June.

http://kyivweekly.com.ua/pulse/finance%20&%20markets/2012/04/02/153541.html

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$30,000 Watch Vanishes Up Church Leader’s Sleeve

Facing a scandal over photographs of its leader wearing an enormously expensive watch, the Russian Orthodox Church worked a little miracle: It made the offending timepiece disappear.

Editors doctored a photograph on the church’s Web site of the leader, Patriarch Kirill I, extending a black sleeve where there once appeared to be a Breguet timepiece worth at least $30,000. The church might have gotten away with the ruse if it had not failed to also erase the watch’s reflection, which appeared in the photo on the highly glossed table where the patriarch was seated.

The church apologized for the deception on Thursday and restored the original photo to the site, but not before Patriarch Kirill weighed in, insisting in an interview with a Russian journalist that he had never worn the watch, and that any photos showing him wearing it must have been doctored to put the watch on his wrist.

The controversy, which erupted Wednesday when attentive Russian bloggers discovered the airbrushing, further stoked anger over the church’s often lavish displays of wealth and power.

http://www.nytimes.com/2012/04/06/world/europe/in-russia-a-watch-vanishes-up-orthodox-leaders-sleeve.html?_r=2&smid=rdt

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Expats in struggle to file Ukrainian tax declarations

Ukraine’s tax administration has gone out of its way this year to warn foreigners residing in the nation that they are required to file tax declarations and pay their fair share. But compliance has proven incredibly difficult.

A combination of unclear legislation and disarray at tax administration offices across Ukraine has made filing tax returns for foreigners difficult. Those who manage to navigate past the administrative hurdles could find that their tax returns are filled out incorrectly – especially if they followed instructions from the tax authorities themselves.

The problems lie in several areas, experts say.

Local tax districts are refusing to receive tax returns from foreigners claiming they are not in their databases, warns Oksana Lapii, who manages expatrate tax issues at auditing giant Ernst & Young’s Kyiv office.