Saturday, October 25, 2008
Ukraine's tumultuous internal politics has long stood in the way of the country's economic development - and even now, at the time of an economic crisis, there seems to be no sign of respite.
Throughout the past week, Edward Hugh of Ukraine Economy Watch has been reporting on the repeated downgrades of Ukraine's rankings by Moody's (Oct. 20), Fitch (Oct. 21), and Standard & Poor's (Oct. 24). But on Tuesday, Oct. 21, Ukraine at least seemed to be "on the point of signing a loan worth as much as $15 billion with the International Monetary Fund." By the end of the week, however, on Friday, Oct. 24, the situation seemed to have changed, largely due to lack of political will, according to Edward Hugh:
[...] Meanwhile Ukraine parliament chairman Arseniy Yatsenyuk told a packed chamber that Ukraine's talks to secure credit from the International Monetary Fund could collapse unless the parliament acts to pass the measures needed to ease the effects of the global financial crisis.
"It is very important for us to achieve results in a vote on the financial crisis," Arseniy Yatsenyuk told the chamber, which was deadlocked for the fourth day, after adjourning debate on the issue until next week.
"Bang, Boing, Crash" I think must be the sort of background noises they can detect rudely inter-rupting them from the street outside as one piece of financial scaffolding after another falls away from the building it had been momentarily holding up while they trundle on with their interminable debate about their endangered country's short term future.
An International Monetary Fund mission has been holding talks for more than a week in Kiev on extending credit that Ukrainian officials say could amount to up to $14 billion. Yatsenyuk said no consensus could be reached on six draft laws to tackle the crisis, including a package proposed by Prime Minister Yulia Tymoshenko's government.
Parliament has been thrown into disarray over proposals to combine debate on the crisis with measures to finance an early election called by President Viktor Yushchenko. Tymoshenko, at odds for months with the president, opposes the election and members of her bloc have milled about the chairman's rostrum to curtail debate.
The president dissolved parliament this month and called a Dec. 7 election to the assembly after the collapse of a government team linked to the 2004 "Orange Revolution". He lifted the dissolution order this week and said he was putting the election back for a week to Dec. 14. It remains unclear when the poll will take place.
LEvko of Foreign Notes wrote that while PM Yulia Tymoshenko thought that holding "early elections during a world financial crisis [would] be a crime against the state" and deputy head of the Central Electoral Commission Andriy Mahera "claimed that it would be impossible to hold early parliamentary elections before 21st December," president Victor Yushchenko believed that "a new coalition and government [would] be formed by January 1st 2009." LEvko summarized the situation this way:
[...] Recent political history in Ukraine, drawn out, tortuous negotiations in forming parliamentary coalitions, their instability, and recent opinion polls on how any future parliament would stack up, all suggest [president Yushchenko] is out of touch with reality. [...]
In another post at Foreign Notes, LEvko reported that Ukraine's second largest metallurgical enterprise - the Mariupol Ilyich Steel & Iron Works - has stopped production:
[...] The plant, a workers' collective, has about 60,000 employees on its books. They have been put on 'reduced wages'.
LEvko fears this is a significant indicator of the economic crisis facing the country - maybe the greatest in the country's short independent history. Wind-down and start up at plants such as [Ilyich Steel & Iron Works] are major operations - they cannot be switched off and on at will. There could be a possibility now that it will never restart. [...]
In the comments section to this post, a reader calling himself Elmer wrote about the alleged personal spending habits of Victor Yanukovych, leader of the Party of Regions, and Rinat Akhmetov, a Party of Regions MP and the richest man of Europe:
I wonder if [Yanukovych] will have to reduce or stop work on his HUGE mansion, "Mezhihirya," or if [Yanukovych] and Akhmetov will have to cut back on their jets and limos and expensive vans and such.
And Ukrainian MPs do indeed seem to be concerned about the effect that the current crisis may have on their personal finances, as some of them seem to have rushed along with everyone else to withdraw their savings from Ukrainian banks, urging Oleksandr Suhonyako, president of the Association of Ukrainian Banks, to issue this appeal, translated from Ukrainian by Taras of Ukrainiana:
[...] There’s only one thing left for us to do: to be real citizens and to ask… perhaps even MPs will heed the call that…don’t run, don't demand, don't use it to withdraw your deposits before the maturity date. Be an example. [...] because the absence of panic is prerequisite for our Ukrainian society to weather this crisis and solidify.