Ukraine’s Parliament voted Thursday to approve Arseniy Yatsenuk as the interim Prime Minister who will head the government until elections are held on May 25. The Parliament also approved a cabinet of ministers from the broad coalition that drove Viktor Yanukovych from office..
Yatsenyuk spoke before the Parliament on Thursday and if his description of the current situation is accurate, conditions in Ukraine are worse than anyone knew. Yatsenyuk said the country “is in the deepest economic, political and social crisis in the history of its independence.” He told the Parliament that the state treasury had been plundered and the country was one step away from financial and economic collapse.
Meanwhile, Yanokovych announced that he would make a statement to the press on Friday in the Russian city of Rostov-on-Don, 50 miles east of the international border with Ukraine.
Yatsenyuk enumerated a daunting list of challenges ahead. (The link goes to the website for Ukraine's Parliament and the text is in Ukrainian but it can be translated by your browser):
- Preservation of the sovereignty, territorial integrity, and inviolability of Ukraine.
- Completion of the Association Agreement with the European Union.
- Comprehensive development of good-neighborly relations with Russia.
- Emergency stabilization of the financial situation.
- A complete and thorough investigation into the deaths that occurred during the mass protests from November 2013 to February 2014.
- Formation of a new system of governance based on the rule of law, openness, and transparency of government.
- Decisive and systematic anti-corruption.
- A purge of law enforcement agencies and the courts to remove those who abused power, and violated constitutional rights and civil rights.
- Fair and transparent presidential elections in 2014.
27.02.2014 | 11:37
PRESS SERVICE OF THE MINISTRY OF FOREIGN AFFAIRS
On February 27, Russian charge d’affairs in Kyiv Andrey Vorobiev was summoned to the Ministry of Foreign Affairs of Ukraine; he was delivered the note concerning immediate bilateral consultations in accordance with Clause 7 of the Treaty on Friendship, Cooperation and Partnership between Russia and Ukraine of May 31, 1997, another note asked all the military units of the Russian Black Sea Fleet to refrain from moving beyond places on the Ukrainian territory where they are temporarily stationed.
Separately, it was stressed that the Russian Federation, as a country - the guarantor under the Budapest memorandum dated on December 5, 1994 had made a commitment to respect the independence, sovereignty and the existing borders of Ukraine.
(Link goes to English language version of the Ukrainian Parliament's website.)
|
26.02.2014 | 17:04
Press Service of the Ministry of Internal Affairs
Acting Interior Minister Arsen Avakov signed an order to liquidate Berkut, a special riot militia force. He said this at a briefing in the Ministry of Internal Affairs of Ukraine. The reason for liquidation of Berkut was its complete discredit to the Ukrainian people. In the near future the Ministry of Interior will create a new unit and its functions, structure and philosophy of operation will meet the requirements of nowadays.
(Link goes to English language version of the Ukrainian Parliament's website.)
|
The cabinet Minister positions were divided to include a diverse group that represents various political elements that opposed Yanokovych.
Position in Government |
Minister |
Political Party |
Prime Minister |
Arseniy Yatsenyuk |
Batkivshchyna |
First Vice Prime Minister |
Vitaliy Yarema |
No party affiliation |
Vice Prime Minister |
Oleksandr Sych |
Svoboda |
Vice Prime Minister, Regional Development, Construction, Housing |
Volodymyr Hroisman |
No party affiliation |
Minister of Justice |
Pavlo Petrenko |
Batkivshchyna |
Minister of Finance |
Oleksandr Shlapak |
No party affiliation |
Minister of Economic Development and Trade |
Pavlo Sheremeta |
No party affiliation |
Minister of Education and Science |
Serhiy Kvit |
No party affiliation |
Minister of Social Policy |
Lyudmyla Denysova |
Batkivshchyna |
Minister of Ecology and Natural Resources |
Andriy Mokhnyk |
Svoboda |
Minister of Culture |
Yevhen Nyschuk |
Maidan activist |
Minister of the Cabinet of Ministers |
Yevhen Semerak |
Batkivshchyna |
Minister of Health |
Oleh Musiy |
Maidan activist |
Minister of Energy and Coal Industry |
Yuriy Prodan |
No party affiliation |
Minister of Youth and Sports |
Dmytro Bulatov |
Maidan activist |
Minister of Internal Affairs |
Arsen Avakov |
Batkivshchyna |
Minister of Agrarian Policy and Food |
Ihor Shvaika |
Svoboda |
Minister of Infrastructure |
Maksym Burbak. |
Batkivshchyna |
Minister of Foreign Affairs |
Andriy Deshchytsia |
No party affiliation |
Minister of Defense |
Ihor Tenyukh |
Svoboda |
Batkivshchyna is the center-right pro-European political party of Yulia Tymoshenko.
Svoboda is the far right nationalist political party of Oleh Tyahnybok.
|
Ukrainians have heard promises before. The country’s political leadership has an unusual number of unseemly characters, opportunists, and unconventional oligarchs. In 2004, President Viktor Yushchenko, a former head of the national Bank of Ukraine, was poisoned with TCDD dioxin which left him disfigured. Yulia Tymoshenko, known in Ukraine as the 'Gas Princess' for the fortune she made in the natural gas industry campaigned for Yushchenko during his illness. She later served two separate terms as Prime Minister. Her business partner, former Prime Minister Pavlo Lazarenko, was tried in US District Court, found guilty of money laundering and extortion, and he spent a number of years in federal prison. Tymoshenko was later convicted and jailed in Ukraine. Yatsenyuk is a Tymoshenko supporter. It is expected that she’ll run for President in the May election.
Yatsenyuk says he intends to pursue the plans for association with the EU that Yanukovych dropped last November, setting off the protests that led to his replacement. But Yatsenyuk may find out that the EU and the IMF are just as fed up with promises as Ukrainians are. Every Prime Minister and President since 2008 promised fiscal reforms connected to the subsidized natural gas industry but nothing was done to implement them.
Ukraine produces some natural gas but most of its supply is piped from Russia.
The revenues generated by this trade are vital to the ruling Russian elite. At present, all Russian natural gas exports are controlled by Gazprom. As a state-controlled firm, Gazprom has the closest possible links with top Russian leaders (Russia’s Prime Minister Dimitri Mevedev served as president of Gazprom). The personal and political fortunes of Russia’s leaders are closely tied to Gazprom. In 2012, President Putin estimated that half of total Russian government revenue came from oil and natural gas taxes. Other estimates put the figure higher. Russia’s economic revival in the Putin/Medvedev era has been heavily dependent on the massive wealth generated by energy exports to Europe. |
The ruling elite in Ukraine has also benefitted from the trade in natural gas but Russia has leverage as the supplier of an essential energy commodity. Russia also supplies countries in eastern Europe through the pipelines that traverse Ukraine. In 2006, a dispute between Russia and Ukraine erupted over payments for supply, use of the pipeline, and accusations of siphoning. The supply was disrupted. Disputes continued intermittently and natural gas supply was disrupted again in 2009.
In a deal negotiated in 2010,Ukraine agreed to extend the stay of the Russian Black Sea Fleet in Crimea until 2042, from the original withdrawal date of 2017 in return for natural gas price concessions.
Natural gas ties Ukraine to Russia. It enriches the ruling elite and it adds to the power and influence they have over the public. The high cost of natural gas paid to Gazprom isn’t passed along to consumers. The cost to the public is kept low with government subsidies. Because of the rising cost, government spending has risen to 7% - 7.5% of GDP to pay for the subsidies. It might help to imagine the US spending an equivalent percentage of its GDP for a single commodity. The cost would be $1.1 trillion a year, an amount greater than the cumulative total of all Social Security benefits and veterans benefits paid by the US each year.The amount isn't sustainable for Ukraine and it goes deeper into debt each year to cover the cost.
As a social safety net program, the natural gas subsidies are regressive. The wealthy use more gas and collect a disproportionate share of the subsidy payments. The program could be targeted to provide assistance to those who need it most and the IMF recommended limiting it to the bottom 40% of the population.
The total amount of subsidies paid also seem excessive for the amount of natural gas a country the size of Ukraine would use. Consumption has been reduced somewhat in recent years but in prior years Ukraine was using more natural gas than Germany, a much wealthier country with almost twice the population.
Lenders have noted other anomalies in Ukraine’s fiscal policies. Public spending equals 50% of GDP, but there’s no evidence of it in the outcomes produced by the health care system. The country has a life expectancy of only 64 years. There are over 100 countries in the world that do better. Deaths outnumber births and the population is declining. Visible infrastructure, like the roads throughout the countryside are in disrepair and unsafe. The country’s finances leave much room for questions.
Today, Ukraine’s ruling elite swear they want to be European. The urgent priority is $35 billion that Ukraine needs to replenish its treasury. What strings would be attached to that amount and how would they be guaranteed once Ukraine has the funding it needs with Russia hovering nearby?
It turns out that part was worked out far in advance. Shell, Exxon Mobil, and maybe some others will begin hydraulic fracturing for shale gas deposits that were discovered in Ukraine.
As for Vladimir Putin, there's something he said in an interviewa couple of years ago that still reverberates.
You know, no matter what happens, and wherever Ukraine goes, anyway we shall meet sometime and somewhere. Why? Because we are one nation. And however angry the nationalists from both sides can be with my words, and there are nationalists in our country, as well as in Ukraine, this is in fact true. Because we have one Dnieper Kiev baptistery, we certainly have common historical roots and common destiny. We have common religion, common faith, and we have very similar culture, languages, traditions and state of mind, as you have said correctly. |