Table of Contents
Ukraine
After Russia, Ukraine is the largest country in Europe. It shares its borders with Russia, Belarus, Poland, Slovakia, Hungary, Romania and Moldova. The population stands at around 50 million.
Ukraine is an important emerging market at the crossroads of Central Europe, Russia, Central Asia, and the Middle East. There are currently around 250 US companies operating in the country as investors, exporters, importers, or members of the legal or consulting sectors. The most prominent industry sectors are the food industry, energy, building materials, consumer goods, informatics, health care, transportation, environmental technologies and tourism services.
Investment Promotion Agency:
Odessa Regional Investment Promotion Bureau
4 Shevchenko Avenue, Odessa 65032
Ukraine
tel: +38 (0) 482 280 233
fax: +38 (0) 482 280 203
History:
"The name “Ukraine” literally translates as “on the edge.” It is a country on the edge of other countries, sometimes part of one, sometimes part of another and more frequently divided. In the 17th and 18th centuries, it was divided between Russia, Poland and the Ottoman Empire. In the 19th century, it was divided between Russia and Austria-Hungary. And in the 20th century, save for a short period of independence after World War I, it became part of the Soviet Union. Ukraine has been on the edge of empires for centuries....There are endless arguments over whether Ukraine created Russia or vice versa. Suffice it to say, they developed together. That is more important than who did what to whom....Germans came in 1941 and swept everything before them, and then until the Soviets returned in 1944 and swept everything before them. He was one of tens of millions who lived or died on the edge, and perhaps nowhere was there as much suffering from living on the edge than in Ukraine. Ukraine was caught between Stalin and Hitler, between planned famines and outright slaughter, to be relieved only by the grinding misery of post-Stalin communism. No European country suffered as much in the 20th century as Ukraine. From 1914 until 1945, Ukraine was as close to hell as one can reach in this life"... Read more: Geopolitical Journey, Part 6: Ukraine | STRATFOR
East Ukraine - leans toward Russia
read: " Ukraine: Why the Orange Revolution ran out of steam", BBC.com
Zaporizhzhya is one of Ukraine's main industrial cities: It is built on the East bank of the majestic Dnieper river - where the mainly-Ukrainian speaking, more agricultural West gives way to the mainly-Russian speaking, more industrial East.
A Russian-speaking city, Zaporizhzhya was one of many areas of Ukraine to turn its back in 2010 on the country's Orange Revolution as anti-Russian rhetoric grew and crippling corruption spread through society. At first sight it is just another sprawling former Soviet city. Its huge chimneys silhouetted against the winter sky, belching out white smoke. But it has a special place in Ukraine's history and also in the annals of the Soviet Union. Hundreds of years ago this was a strategic site. Cossack raiders based on Khortytsa Island took advantage of the impassable rapids to plunder goods passing through.
The raiders are seen by many as the founders of the Ukrainian nation. In Soviet times a huge hydroelectric dam was built here, and vast steelworks grew up to take advantage of the nearby iron ore deposits. A car plant followed and the Soviet Union's equivalent of the Volkswagen Beetle - the "humpback" Zaporozhets - was built here. For many Soviet citizens the Zaporozhets was their first car. As a consequence the people here feel close ties to Russia, as well as a certain independence of spirit. Their market - as much as there was a market in the Soviet Union - was largely in what is now Russia. They speak Russian, and many have relatives on the other side of the border.
read more from: " Ukraine: Why the Orange Revolution ran out of steam", BBC.com
Religion
"Consider the way they are said to have chosen their religion. Volodymyr, a pagan ruler, decided that he needed a modern religion. He considered Islam and rejected it because he wanted to drink. He considered Catholicism and rejected it because he had lots of concubines he didn’t want to give up. He finally decided on Orthodox Christianity, which struck him as both beautiful and flexible. As Reid points out, there were profound consequences: “By choosing Christianity rather than Islam, Volodymyr cast Rus’ ambitions forever in Europe rather than Asia, and by taking Christianity from Byzantium rather than Rome he bound the future Russians, Ukrainians and Belarusians together in Orthodoxy, fatally dividing them from their Catholic neighbors the Poles.” I suspect that while Volodymyr liked his drink and his women, he was most concerned with finding a balance between powers and chose Byzantium to create space for Ukraine"....Read more: Geopolitical Journey, Part 6: Ukraine | STRATFOR
Ukraine, Europe and Russia
"Ukraine is on the edge again today, trying to find space. It is on the edge of Russia and on the edge of Europe, its old position. What makes this position unique is that Ukraine is independent and has been so for 18 years. This is the longest period of Ukrainian independence in centuries. What is most striking about the Ukrainians is that, while they appear to value their independence, the internal debate seems to focus in part on what foreign entity they should be aligned with. People in the west want to be part of the European Union. People in the east want to be closer to the Russians. The Ukrainians want to remain independent but not simply independent. It makes for an asymmetric relationship. Many Ukrainians want to join the European Union, which as a whole is ambivalent at best about Ukraine. On the other hand,....Read more: Geopolitical Journey, Part 6: Ukraine | STRATFOR
"Ukraine is as important to Russian national security as Scotland is to England or Texas is to the United States. In the hands of an enemy, these places would pose an existential threat to all three countries. Therefore, rumors to the contrary, neither Scotland nor Texas is going anywhere. Nor is Ukraine, if Russia has anything to do with it"...
"The Russians are not, I think, trying to recreate the Russian empire. They want a sphere of influence, which is a very different thing. They do not want responsibility for Ukraine or other countries. They see the responsibility as having sapped Russian power. What they want is a sufficient degree of control over Ukraine to guarantee that potentially hostile forces don’t gain control, particularly NATO or any follow-on entities. The Russians are content to allow Ukraine its internal sovereignty, so long as Ukraine does not become a threat to Russia and so long as gas pipelines running through Ukraine are under Russian control. Read more: Geopolitical Journey, Part 6: Ukraine | STRATFOR
Looking to Poland:
"..their geopolitical speculation was their fixation on Warsaw. Sitting in Kiev, the young analysts and traders knew everything imaginable about the IPO market, privatization and retirement system in Poland, the various plans and amounts available from those plans for private investment. It became clear that they were more interested in making money in Poland’s markets than they were in the European Union, Ukrainian politics or what the Russians are thinking. They were young and they were traders and they knew who Gordon Gekko was, so this is not a sampling of Ukrainian life. But what was most interesting was how little talk there was of Ukrainian oligarchs compared to Warsaw markets. The oligarchs might have been way beyond them and therefore irrelevant, but it was Warsaw, not the European Union or the power structure, that got their juices flowing." Read more: Geopolitical Journey, Part 6: Ukraine | STRATFOR
Independence & Sovereignty
"Ukraine is independent, and I think it will stay independent. Its deepest problem is what to do with that independence, a plan it can formulate only in terms of someone else, in this case Europe or Russia. The great internal fight in Ukraine is not over how Ukraine will manage itself but whether it will be aligned with Europe or Russia. Unlike the 20th century, when the answer to the question of Ukrainian alignment caused wars to be fought, none will be fought now. Russia has what it wants from Ukraine, and Europe will not challenge that." Read more: Geopolitical Journey, Part 6: Ukraine | STRATFOR
Energy:
"Ukraine controls Russia’s access to the Black Sea and therefore to the Mediterranean. The ports of Odessa and Sevastopol provide both military and commercial access for exports, particularly from southern Russia. It is also a critical pipeline route for sending energy to Europe, a commercial and a strategic requirement for Russia, since energy has become a primary lever for influencing and controlling other countries, including Ukraine....Read more: Geopolitical Journey, Part 6: Ukraine | STRATFOR
Crisis 2008-2009:
Ukraine above the Rest in Crisis Management
Anders Åslund
Few countries have responded better to the global financial turmoil than Ukraine, which was hit quite hard in the early stages of the crisis. Following the collapse of Lehman Brothers, international finance froze, and Ukraine's economy collapsed due to precipitous falls in exports, particularly steel. Ukrainian politicians, however, acknowledged the crisis early and secured prompt International Monetary Fund assistance. Further, Ukraine has moved quickly to recapitalize its banks and minimize its deficit. With elections scheduled for October and preliminary signs of economic recovery, Ukraine may have already turned the corner and be on a path toward leaving the crisis stronger than it entered it.
>> Read full op-ed
GeoPolitics:
"Russian view of Ukraine: Since the break-up of the Soviet Union, most of the former Soviet republics and satellites found themselves cast adrift, not part of the Russian orbit and not really part of any other grouping. Moscow still held links to all of them, but it exercised few of its levers of control over them during Russia's internal meltdown during the 1990s. During that period, a number of these states-Estonia, Latvia, Lithuania, Poland, Hungary, Romania, Bulgaria and the former Czechoslovakia to be exact-managed to spin themselves out of the Russian orbit and attach themselves to the European Union and NATO. Others-Azerbaijan, Georgia, Moldova, Uzbekistan, Kyrgyzstan and Ukraine-attempted to follow the path Westward, but have not succeeded at this point. Of these six, Ukraine is by far the most critical. It is not simply the most populous of Russia's former possessions or the birthplace of the Russian ethnicity, it is the most important province of the former Russian Empire and holds the key to the future of Eurasia.
First, the incidental reasons. Ukraine is the Russian Empire's breadbasket. It is also the location of nearly all of Russia's infrastructure links not only to Europe, but also to the Caucasus, making it critical for both trade and internal coherence; it is central to the existence of a state as multiethnic and chronically poor as Russia. The Ukrainian port of Sevastopol is home to Russia's Black Sea fleet, and Ukrainian ports are the only well-developed warm-water ports Russia has ever had. Belarus' only waterborne exports traverse the Dnieper River, which empties into the Black Sea via Ukraine. Therefore, as goes Ukraine, so goes Belarus. Not only is Ukraine home to some 15 million ethnic Russians-the largest concentration of Russians outside Russia proper-they reside in a zone geographically identical and contiguous to Russia itself. That zone is also the Ukrainian agricultural and industrial heartland, which again is integrated tightly into the Russian core.
These are all important factors for Moscow, but ultimately they pale before the only rationale that really matters: Ukraine is the only former Russian imperial territory that is both useful and has a natural barrier protecting it....read more here."
source: Stratfor.com, read more here.
Politics - oil & Russia:
In political terms, some observers say Moscow played a full range of the "battle for transit" to give Kiev, which is seeking NATO membership, a lesson: It could not have the best of both worlds -- to be a part of the "Western world" with a hostile policy toward Russia and to retain its economic competitiveness that is based largely on the low cost of energy imported from Russia.
Op-ed
Russia's Botched Policy in Its Own Backyard
Anders Åslund |
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 Since Ukraine's Orange Revolution in 2004, relations between Russia and Ukraine have become increasingly more difficult. Conflicts between the two countries have involved gas, agricultural trade, the Russian naval base in the Crimea, the war in Georgia, and Ukraine's interest in NATO. This relationship is symptomatic of the broader problem for Russian foreign policy: The country's rulers do not know how to deal with their post-Soviet neighbors. The result is that post-Soviet nations prefer developing relations with anyone but Russia.
The West needs to solidify its support for Ukraine regardless of who wins Ukraine's upcoming presidential election. Fortunately, it is doing so. Vice President Joe Biden made this point clearly during his recent trip to Kiev, while the European Union is pursuing efforts at integration, notably through a forthcoming European Association Agreement on trade.
>> Read full op-ed |
Cities in Ukraine:
Odessa
Strategically important city.
"Odessa is a warm water port, but militarily it is of limited value. Turkey's control of the Dardanelles and Bosphorus has enabledNATO to control water traffic between Odessa and the Mediterranean Sea. The city of Odessa hosts two important ports: Odessa itself and Yuzhne (also an internationally important oil terminal), situated in the city's suburbs. Another important port, Illichivs'k, is located in the same oblast, to the south-west of Odessa. Together they represent a major transport hub integrating with railways. Odessa's oil and chemical processing facilities are connected to Russia's and EU's respective networks by strategic pipelines."
Odessa is situated in the extreme south-west of Ukraine and borders the countries of Moldova and Romania. With a population of 52 million, Ukraine is the second largest market in the Former Soviet Union and Odessa is the gateway to that market. With its international airport, good road network and rail system, Odessa has near perfect communications with not only the rest of the Ukraine but also the rest of the Former Soviet Union.
The main industries in the region are mechanical engineering, metal-working, chemical, oil-refining, food-processing and textiles. Machine-building is a particularly prominent industry with specialization in sub-sectors such as diamond-grinding and laser treatment.
Investment Promotion Agency:
Odessa Regional Investment Promotion Bureau
4 Shevchenko Avenue
Odessa
65032
Ukraine
tel: +38 (0) 482 280 233
fax: +38 (0) 482 280 203
Lugansk
Lugansk has been identified as a priority development site within Ukraine. A former mining area, Lugansk is now concentrating on attracting investors to provide employment for those who have been affected by the closure of the mines. The benefits of locating in the trade zone include tax, customs and other financial incentives.
Particular sector strengths in the area are agriculture, light industry, metallurgy, chemicals and engineering. The education system is a strong one and graduating students are well qualified in traditional skills such as mechanical engineering and also in the increasingly popular computer sciences. The region produces around 6000 university graduates per year of which over half are qualified in technical subjects.
Other notes:
After the brief war between Russia and Georgia a few years ago, many analysts were quick to predict Ukraine would be next. This proved wrong. There are a few key differences to remember... Compared to Georgia: Ukraine is a much bigger country than Georgia… Its population is one-third of Russia’s. Also, Crimea is not technically a disputed area, like South Ossettia is in Georgia.
Macroeconomic Profile 2008
Ukraine looks worst of all. Its inflation has just reached 31 percent a year, although its state finances are in excellent shape and its growth rate stays at 7 percent. Ukraine's outsized inflation is caused by its central bank, which, for some reason, insists on a dollar peg unlike all other countries in the region. Since the dollar has fallen 13 percent in relation to the euro in a year, Ukraine has imported about that much inflation. Furthermore, its central bank maintains a refinance rate of only 16 percent, which means a negative real interest rate of 15 percent, an extremely expansionary monetary policy. Consequently, Ukraine's money supply has ballooned by 56 percent in the last year, as foreign banks lend their subsidiaries in Ukraine excessive amounts, because they can finance their credits at about 5 percent a year abroad and lend in Ukrainian hryvna for 40 percent a year. This folly must end. The obvious solution is to let the exchange rate of the hryvna float freely to impede both the importation of inflation and speculative currency inflows.
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