[03.10.03]

Ukrainian Soldier Dies In Iraq. Ukrainian Defense Ministry reported on 1 October that a sergeant, from the Ukrainian contingent participating in stabilization efforts in Iraq, died on 30 September. The soldier reportedly died when the BRDM-2 armored reconnaissance vehicle under his command overturned while patrolling an airport in Al-Kut.

Comment: This is the first Ukrainian military fatality since the contingent deployed to Al-Kut in mid-August. Ukrainian peacekeepers replaced U.S. Marines in Al-Kut.

Kiev Blasts Russian Official Over Comments On Russian Language. Ukrainian Foreign Ministry stated its surprise that one country is trying to resolve for another issues that are outside its competence. The sharp comment was in response to Russia’s First Deputy Foreign Minister Elenora Mitrofanova’s statement last week that Russia’s foreign policy goal is to obtain official status for the Russian language among former Soviet republics.

Comment: Under it new Minister Konstantin Grischenko, Ukrainian Foreign Ministry is expected to be less tolerant of Ruusia’s infringments on Ukraine’s sovereignty. The Russians are well aware that the status of Russian language is a politically sensitive and divisive issue in Ukraine.

Kiev Warns Moscow Against Violation Of State Border In Kerch. Ukrainian Foreign Ministry has issued a statement warning the russian Government that its plans to build a dam between Russia’s Taman Peninsula and the islet of Tuzla in Kerch Strait may violate Ukraine’s state border and territorial integrity. Following the construction of the dam, the Russians reportedly are planning to set up a frontier post on the islet, which Ukraine considers to be its own territory.

Comment: Kerch Strait is a shallow channel connecting the Azov Sea with the Black Sea and separating Crimea in the west from Taman Peninsula in the east.

International Monetary Fund (IMF) Approves Early Repayment Of Ukraine’s Loans. According to the Ukrainian Economy Minister Valeriy Khoroshkovskiy, the IMF has agreed to repayment of Ukraine’s $1.8 billion debt within two years, some six years before the last payment is scheduled to be made. Khoroshkovskiy said the agreement came after talks with IMF representatives earlier last in Dubai.

Comment: Ukrainian National bank chief Serhiy tyhypko declared in August that Ukraine can repay its full debt to the IMF by the end of 2003.

IMF Upgrades Growth Forecast For Ukraine. Two weeks ago, IMF upgraded Ukraine’s GDP growth in 2003 from 4.5 percent to 5.3 percent and from 4 percent to 4.8 percent in 2004.

Comment: Previous IMF forecast was made last April.

The International Rating Agency Fitch corroborated the rating of Ukraine's Eurobonds, which would be redeemable in 2013 at the current level "B+". Fitch predicted Ukraine's economic growth in the current year by more than 5% and the budget deficit at 1.3%. Thus it is expected that Ukraine's state debt will decrease to approximately 32% of the GDP (in 1999 in was 60% of the GDP).

On September 29 Ukraine's leaders laid wreaths to the Babiy Yar memorial, where during the World War II the Hitlerite troops had killed some 150,000 citizens of Kiev (first of all Jews). September 29 was the 69th anniversary from start of the shooting.

On September 30 the last of twelve the Tu-22M3 bombers was eliminated in the presence of U.S. ambassador John Herbst; Ukraine has committed to eliminate the aircraft.

On September 30 President of Ukraine Leonid Kuchma gave a press conference. He, in particular, noted a thaw in relations between Ukraine and the U.S. He again told that the European Union refused to proposed to Ukraine not only accession (in the future) to the E.U., but even a status of an associated member. He also criticized his Government (see below).

Ukraine did not succeed in ending the monitoring of how Ukraine meets its obligations to the Council of Europe. On September 29 the Parliamentary Assembly of the Council of Europe having noted a range of positive changes in Ukraine, nevertheless, took a decision to continue the monitoring. Such a decision was actively supported by Ukrainian lawmakers from the opposition. In particular, Yuri Kostenko (the Our Ukraine faction) said that the monitoring should be continued at least till the presidential elections (autumn of 2004) and then either be continued or be stopped depending on whether these elections are held "honestly and transparently".

Commentary. The opposition is sure that their leader Viktor Yushchenko will wint the elections. Therefore Kostenko's statement, perhaps, should be understood as: "the monitoring could be terminated if Yushchenko is elected the president and be continued otherwise".

In Lviv the situation aggravated dramatically. The opposition faction "Our Ukraine" in parliament seeks the sacking of head of the tax administration in the Lviv region Serhiy Medvedchuk (brother of Viktor Medvedchuk, the President's chief of staff). Earlier it was reported that anti-Semitic leaflets against Medvedchuk were disseminated in the city. Sessions of the city and regional councils were held under a strong pressure of the meetings in the streets. By the majority of votes the sessions took decisions to fire Serhiy Medvedchuk, although these decisions are legally invalid. Serhiy Medvedchuk himself responded saying that "Our Ukraine" had privatized the right to love Ukraine, but "love for Ukraine did not exempt anybody from paying taxes". On October 3 a few thugs in Lviv smashed the editorial office of the newspaper Moloda Halychynna, which was suspected in leaning toward the Social-Democrats.

Chairman of the Lviv Regional Council Mykhailo Sendak said that his family members were threatened. "Unknown persons phoned me and said that if today I chair the session of the Regional Council I would not see my grandson", he said.

New York saw the presentation of the book "Diplomacy and Politics" (September 29) by Ukraine's ex-Foreign Minister Anatoly Zlenko.

President sharply criticized the Government

At the press conference held on September 29 President Leonid Kuchma harshly criticized the Government with respect to key points in the economic policy of Ukraine's Cabinet of Ministers.

The misuse of administrative methods at the food and fuel-energy markets was assessed negatively.

According to the President's opinion "in the situation that had taken shape the market mechanisms for economy control, which had been developed so hard were jeopardized".

Especially stern was the criticism of the Government's attempts to administratively regulate prices for some commodities.

Many Ukrainian and foreign politicians and experts including some from the U.S. vociferated against Ukraine's Government attempts to restrict market mechanisms, against its efforts to restore some elements of command economy.

The President also rather critically evaluated the Government's draft state budget for 2004 having noted that the calculations of the budget's parameters included an extremely low prediction for the gross domestic product growth (4.8%) and a too high inflation index (6.7%).

After the President's address one can expect a certain adjustment of the Government's economic policy toward the enhancement of the role of market, liberal approaches and a serious review of state budget's drafts.

But the Government's resignation is out of the question - the President specifically stressed it (Prime Minister Viktor Yanukovich spoke about a possibility of personnel changes in the composition of the Cabinet of Ministers).

According to the experts' opinion first of all people from the Government's agrarian bloc as well as Minister of Economy Valeriy Khoroshkovsky (he was imputed with not only a passive role of his ministry at the grain market, the food, fuel and energy market, but also with an independent, dissentient position, noncoincident with that of the Government when the agreement between Ukraine, Russia, Belarus and Kazakhstan on the formation of the Common Economic Space was signed) may be fired.

Comment: There 22 posts in the Ukrainian cabinet including premier, fist deputy premier, three deputy premiers and 17 ministers.