[18.11.03]

Ukraine and the enlargement of the ЕU

Ukraine's foreign policy by and large was related with the issues that Ukraine faced after the EU enlargement. Actually, this is a case of some new "iron curtain" in Europe though it is not that strong as in the times of the USSR.

On October 10 a meeting was held in Kiev between the ministers of foreign affairs "Enlarged Europe: Cooperation in the Region of Central-Eastern Europe Through Common Borders with the Enlarged European Union". The meeting involved the participants from 18 European countries and the OSCE.

As EU spokesman Christopher Patten said the EU was not going to offer any compensations for denouncing the agreement on free trade. A string of such agreements of Ukraine with its neighbors entering the EU were denounced in recent months as required by the EU rules.

On November 10-12 Ukraine's Prime Minister Viktor Yanukovich visited Slovenia. The main subject centered around the attempts to minimize for Ukraine the disadvantages that ensue from Slovenia's accession to the EU.

On November 10 Mykhailo Reznik was appointed Ukraine's ambassador to the U.S.A. Earlier he was Ukraine's ambassador to the People's Republic of China. Former ambassador of Ukraine to the U.S. Konstantin Hryshchenko not long time ago was appointed the Minister of Foreign Affairs of Ukraine.

On November 10 President Leonid Kuchma sent to Ukrainian parliament a proposal for sending a Ukrainian peacekeeping battalion in the strength of 400 to Liberia.

The opposition bloc "Our Ukraine" has collected, according to their own words, some 1 million signatures for an immediate resignation of President Kuchma. This action is mainly of a show-off nature, since it is difficult to infer that less than a year before the end of his term in office (according to the Ukrainian laws: in October 2004) an issue about an early resignation could be seriously considered.

On November 12 President Leonid Kuchma gave his regular press conference. At this press conference he, in particular, said that the issue of the Island of Tuzla should not be confused with the foundation of the Common Economic Space (CES) with Russia, Kazakhstan and Belorus. (Russia has recently declared that the status of the island is arguable, while Ukraine insists that the Tuzla island belongs to Ukraine). He also said that Ukraine having renounced his own nuclear weapons in 1993 is not going to restore its nuclear status. He said a folk adage "What fall from the vis (Ukrainian cart), that is lost" - "There's no use crying over spilt milk".

Commentary. In recent weeks a number of Ukrainian politicians expressed an opinion that in connection with the Tuzla Island conflict Ukraine had to put off its ratification of the CES agreement or even to develop anew its nuclear arms.

At the press conference Kuchma once again confirmed that he was not going to be put to vote as the president in 2004.

Speaker of Ukrainian parliament Volodymyr Lytvyn visited Romania (November 13-14).

President Leonid Kuchma went on an official visit to Moldova on November 13-14. A free trade agreement between the two countries was signed. Presidents of Ukraine and Moldova Leonid Kuchma and Vladimir Voronin also discussed controversial issues related to the border and to the status of the unrecognized Transdniester Moldavian Republic (TMR). This integral part of Moldova, broke away more than 10 years ago, still remains a potential source of a conflict next door to the Ukrainian border. Ukraine is one of the main participants of negotiations aimed at settling the conflict and working out conditions conducive to the return of the TMR to Moldova under acceptable conditions.

One more Ukrainian peacekeepers perished in Iraq on November 13. Most likely it was an accident. (This was the second death of a Ukrainian peacekeeper in Iraq. On 29 of October 7 Ukrainian peacekeepers were wounded having been ambushed by Iraqi guerrillas).

The economic growth has accelerated again

In January-October of the current year the GDP increased by 7.2% compared with January-October of 2002 (over 9 months the corresponding indicator was 6.5%). In October this year the real GDP grew by 12.3%.

The volumes of industrial production grew over January-October 2003 by 15.7%. The manufacturing industry turned out by 17.8% more products than over 10 months of 2002 while the primary production industries by 4.6%.

Metallurgy and the metal working industry accounted for 24.5% of the overall industrial production, whereas in January-October of the current year the volumes of output increased by 13.4%. The engineering industry continues to be in the lead: 33.6%. In the food industry the output volumes over 10 months increased by 22.6%.

Moody’s upgraded Ukraine's rating

On November 10 the international rating agency Moody’s reported that Ukraine's ratings for bonds in foreign and national currencies was upgraded from B2 to B1. The rating in terms of the banking deposits in foreign exchange was also raised from B3 to B2. The prediction of the ratings is stable.

In accordance to the agency's statement this decision was taken with the account of Ukraine's economic growth over 4 years and the increase of the National Bank's international reserves against the background of prudential financial and monetary policies.

As Moody’s experts believe Ukrainian economy managed to derive benefits from its relation with fast-growing economy of Russia in the field of trade, services and investment relations.

In addition, the agency's report says the internal political differences in the Verkhovna Rada and between parliament and the President of Ukraine did not hamper the law makers to adopt a number of important documents on the tax reform to secure a further economic growth in the country. Structural reforms in agriculture and the start of the pension reform were noted as well.

The expert make predictions that Ukraine's ratings will go on higher after the presidential elections.