Ukraine preparing for the global world – updated quite a lot

January 30, 2007

This info was released by the leading local broker Concorde Capital. Ukraine’s WTO accession and financial sector reform:

Concorde Capital, Ukraine
Monday, January 29, 2007

At the World Economic Forum, in Davos Switzerland last week, Prime Minister Viktor Yanukovich said that his government would solve the final three legal issues preventing Ukraine from joining the WTO in 1Q07. According to Yanukovich, before Ukraine can complete ascension into the WTO, the country needs to reach agreements with the United States concerning meat imports and grain exports and sign a bi-lateral trade agreement with Kyrgyzstan. Yanukovich also highlighted his government’s interest in developing capital markets in Ukraine as a means to boost foreign investment (…)

Nick Piazza: Ukraine seems well on its way to getting WTO membership wrapped up this summer. Ukraine has already signed a bi-lateral deal with the US, and now needs only to agree on a timeframe for the implementation of these new meat and grain quotas (…)

My source, is, again, www.businessneweurope.eu

Ukraine is a very interesting case of a country seeking its place in the world. Two years ago it overthrew a closed, Russia-oriented, corrupt and cleptocratic regime in a widely acclaimed Orange Revolution that brought current President Yanukovich to power. It blew in a Western-oriented, democratic, economically liberalising fresh wind into the country, raising hopes for EU accession, liberation from the clutches of Russian hegemony, more room for Ukrainian-speaking pride (the country is roughly divided into a Russian-speaking and heavy-industry dominated East and a Ukrainian-speaking West, more agriculture-oriented) and prosperity through integration into the world economy. Well, all is not so simple, the “politics business” has set in that disillusions everybody, the structural problems of the country continue running deep. Curiosities remain, such as a hard-core socialist at the head of the public institution overseeing the country’s privatization process (the State Property Fund). Elections in the spring 2006 brought back onto the scene the pro-Russian forces of the previous regime. In fact, the country is now split in two – with a government accountable to the Parliament in the hands of Yanukovich, the President’s rival, – and a waning Presidency. Yet the arrival of Yanukovich to power, thanks to an eclectic coalition which includes socialists, has not reversed one fundamental trend – the will to integrate into the world economy and to be more autonomous from Russia. Despite fiercest political infighting, the end of 2006 witnessed the smooth passing in parliament of all the laws needed for WTO accession, a free trade agreement with the EU is underway – seen by many as a a first step to EU accession (that’s optimistic, though). Big Eastern industrial consortiums such as Systems Capital Management, belonging to the biggest of Ukraine’s billionaires Rinat Akhmetov [I recommend a fantastic article in The Banker on Ukrainian billionaires – you need to subscribe, but it is free, as far as I know] who was deeply involved with the previous regime, have stopped playing the “pure” political game and now play it more internationally-business-pragmatic: raise capital internationally, disclose your shareholding structures – unthinkable three years ago, issue shares (there is a verb “to IPO” in the finace world, “no, you’re kidding, they’re ipoing too?”) and promote it in upcoming FT conferences with an Investors Relations guy hired from Britain.

Now Ukraine needs to find a balance “between East and West”. And while “globalising” – in this case attracting international investment from agro-industry to banking – is no longer an issue, what really still divides the country is the geopolitical issue – Yanukovich refuses the idea of joining NATO and prefers having good strategic ties with Russia. The president with his face damaged forever by the poisining inflicted to him while he was Kuchma’s opponent leans clearly towards the west and Would consider NATO. But fundamentally, nobody wants to go back, because current growth and progressively rising prosperity thanks to the recent opening of the economy is so obvious. As well as the benefits of freedom – there’s still something euphoric in the air, despite post-Revolution disillusion.

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