[11.10.03]

Outcomes of the Ukraine - European Union summit in Yalta

The Ukraine - European Union Summit was held in Yalta on October 7 - 8.

European Commission President Romano Prodi, Italian Prime Minister Silvio Berlusconi, and EU Foreign Policy Chief Javier Solana met President of Ukraine Leonid Kuchma, first Vice Premier Mykola Azarov & others.

This was the last summit, which Ukraine held in the format the European Union - 15 countries since next year more 10 states will become EU members and the EU border will be directly adjacent to Ukraine.

President Kuchma said at the summit that Ukraine as yet is not ready to become a full-fledged member of the European Union, however it intends to seek it out. Therefore, according to Kuchma, Ukraine is not going to declare its intention to join the EU at a certain date, but will try to achieve criteria necessary for it.

At the same time President of the European Commission Romano Prodi and Italy's Prime Minister Silvio Berlusconi said that Ukraine's full-fledged membership in the EU is a potential possibility (according to Berlusconi before 2011).

Undoubtedly, so far these are declarations in question, however a received signal about a fundamental possibility for Ukraine to become a full-fledged member of the EU is important for Kiev.

Much attention was paid to the issue of the European Union's recognition of Ukraine's economy market status. Ukraine touched upon a question of a necessity to simplify the visa regime for its citizens when travelling to the EU countries and increasing aid for Ukraine when its legislation approaches that of the European Union.

The EU representatives confirmed their readiness to support Ukraine in its accession to the WTO.

Elimination of trade restrictions, development of Ukrainian power and transport networks including their integration into pan-European transport corridors and Trans-European transport network were in the special focus when discussing specific economic issues.

The cooperation aimed to bring about reforms in Ukraine's gas sector particularly in the field of gas transit across its territory to raise Europe's energy security was singled out as a separate item.

Till now Ukraine insisted that EU has to propose something immediately. New line of Ukraine may be interpreted as some disappointment in European direction. Nevertheless officially Ukraine still says that the European integration is the main goal.

Prime Minister's visit to the U.S.

Ukraine's Prime Minister Viktor Yanukovich visited the U.S. (October 6-10).

While in Washington he was also received by Vice President Richard Chaney and the Secretary of State Colin Powell. He also met with several key lawmakers.

During the meeting between Yanukovich and Cheney an issue was raised about the U.S. Government's active assistance for involving Ukrainian companies in Iraq's reconstruction.

Cheney also broached a question of the Odessa-Brody oil pipeline, which at present is not functioning. The Ukrainian Government will have to decide in the nearest future, whether this pipeline will be working in the direct mode (the pumping from Odessa to Brody, that is from the Black Sea basin to Europe) or in the reverse mode (such proposals are made by the Russian companies). Cheney wanted to know what was the Ukrainian Government's decision. R.Cheney's was of opinion that there was no decision about the pipeline's use in the reverse direction.

In his reply Yanukovich reminded that "all his activities as the Prime Minister were aimed at using the Odessa-Brody oil pipeline in the direction of Brody, but at the same time today not a single western company has proposed any specific oil volumes to be pumped through this oil pipeline except declarations and convictions".

The issue of canceling the Jackson-Vanik amendment in relation to Ukraine was discussed at a meeting with the U.S. congressmen and senators. As was reported by Viktor Yanukovich "at present an action group consisting of senators and congressmen was set up to deal with this issue and they promised to resolve it by the end of this year". In addition, a question of assisting Ukraine in joining the WTO was discussed (in particular, the signing of a protocol between Ukraine and the U.S. on mutual access to the markets of goods and services) and issues of recognizing Ukraine as a state with market economy.

It should be noted that in active furtherance of Ukraine's solution of the above issues at different levels similar promises were given earlier as well (especially in what concerns the cancellation of the Jackson-Vanik amendment), but they still remain outstanding. It cannot but affect substantially and adversely the U.S.'s attitude towards Ukraine, undermining positions of politicians striving to deepen cooperation with the U.S.

Yanukovich and Ukraine's former Prime Minister Anatoly Kinakh took part in the conference "Ukraine on the track to a mature national statehood with developed market economy" (October 7-8).

Relations with Russia

The Russian-Ukrainian relations have become strained since the Russian side started to build a dam in the Kerch strait (from September 29 to October 6 one and a half km of the dam were built and only 2.5 km are left to the Ukrainian border). The dam is intended to connect the Tuzla spit in the Ukrainian territory with the Russian shore of the Taman peninsular; upon the completion of the works (as was said by the spokesman of the Russian Border Service) a Russian frontier post will be stationed there.

Ukraine responded by a note (September 30) and on October 6 Ukraine's Minister of Foreign Affairs Konstyantyn Hryshchenko visited Moscow. He conducted negotiations with Mikhail Kasianov, head of the Russian Government, Minister of Foreign Affairs Igor Ivanov and Russia's head of Security Council Vladimir Rushailo. The Russian side assured that all works would be carried out only in the Russian territory.

Igor Ivanov commenting the outcomes of the negotiations said to the journalists that those works "are carried out by the Krasnodar region authorities following the decision of the local department of the Ministry of Extraordinary Situations with the aim of restoring the seashore area of the Taman Peninsular, which had been strongly affected by ecological balance disturbance. I.Ivanov emphasized: "Our side has already said that these works will not be in the violation of contractual obligations of the parties".

Kucha answering the journalists was not inclined to blow up the incident and proposed to treat it as a misunderstanding.

At the same time the Ukrainian opposition made a statement about the threat to Ukraine's territorial integrity, while the leader of the People's Movement (Rukh) party, former Minister of Foreign Affairs Boris Tarasyuk even proposed to address the U.N. Security Council.

The CES theme has continued to be rather acute. Thus head of the European Parliament Delegation for relation with Ukraine, Belarus and Moldova Jan Virsma in an interview for the Zerkalo Nedeli newspaper (October 4) warned against the implementation of "a black scenario" according to which Ukraine may become "a part of an association under Russia's dominant influence".

Macedonian President Visits UKraine. President Kuchma received his Macedonian counterpart Boris Trajkowski in Uzhhorod, Transcarpatia, last weekend. The two presidents reportedly discussed bilateral cooperation and the situation in the Balkans. After the summit, it was announced that the Macedonian-Bulgarian company Granat-AHM was hired as a general contractor for a $45.5 million project to repair 210 kilometers of a mountaneous road connecting Kiev and the town of Chop on Hungarian border.

Comment: Macedonia is looking to Ukraine as a source of support for its economic development. Ukraine’s economy has been one of the most dynamic in Europe over the past three years. During this period, Ukraine’s annual GDP growth has averaged close to 7 percent.

A joint meeting of the Political Committee and the Interparliamentary Council Ukrainian - NATO took place in Kiev on October 7.

According to the research of the Transparency International Ukraine is on the list of the most corrupted countries and holds the 106th place among 133 having index 2.3. Ukraine had the lowest rating (1.5) in 2000, when Viktor Yushchenko was the Prime Minister.

German Minister of Foreign Affairs Joschka Fischer visited Ukraine on October 7-8.

On October 7 - 8 speaker of Ukrainian parliament Volodymyr Lytvyn visited Slovakia.

On October 9 President of Belarus Aleksandr Lukashenko came on an one-day visit to Kiev. In negotiations with President Kuchma economic issues were the main subject of discussions.

Ukraine and Hungary signed an intergovernmental agreement on conditions of mutual travels of the citizens providing for a visa-free entry to Ukraine for the Hungarian citizens and free Hungarian visas for the Ukrainians. A similar agreement was concluded with Poland.

In the meantime President Kuchma expressed concern by the fact that after the introduction of the visa regime with Poland long queues formed in the consular offices. "We do not want the EU border to become a barrier" Kuchma said having noted that "not only Ukrainians will suffer from it."

Leader of the opposition bloc Our Ukraine Viktor Yushchenko said that there are plans to transform his bloc into a political party by 2006 (that is by the forthcoming parliamentary elections).

Ukraine Marks 69th Unniversary Of Babi Yar Attrocity. On 29 September Ukraine’s top leaders laid wreaths at the Babiy Yar memorial where the Nazi troops 69 years ago murdered some 150,000 Ukrainian citizens, most ow whom were Jews.

Comment: Ukraine has officially and publically been commemorating the Babiy Yar tragedy for the past 6 years, which include wreath laying ceremonies by central and regional officials and television programs and discussions dedicated to the tragedy.

Economic Developments

Italy Grants Ukraine 420 Million Euro Credit For Road Construction Project. Italy’s Tomo Internazionale Spa will issue 420 million euro credit for financing the construction of Kiev-Odessa highway. This step is envisioned in a general agreement on cooperation in repairing and operating the Kiev-Odessa highway signed last Wednesday between Ukrainian Transport Ministry, the Ukrainian company Avtodor and the Italian firm. Ukrainian President Leonid Kuchma and the Italian Prime Minister Silvio Berlusconi attended the signing ceremony.

Comment: The credit will be repayed from profits earned from operating the highway and toll-fees from cars using it.