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ACTION UKRAINE REPORT – AUR – Number 916
News Release: International Monetary Fund (IMF), Wash, D.C., Wed, Nov 5, 2008
Mark Rachkevych, Editor, Kyiv Post, Kyiv, Ukraine, Thu, Nov 6, 2008
INFORM, BYuT Newsletter #92, Kyiv, Ukraine, Monday, November 3, 2008
Satellite communications equipment manufacturer in California, USUBC member 96
U.S.-Ukraine Business Council, Washington, D.C., Monday, November 3, 2008
Mychailo Wynnyckyj, PhD, Director, Kyiv-Mohyla Academy Doctoral School, Kyiv, Ukraine
Marta Farion, President, Kyiv Mohyla Foundation of America, Chicago, Illinois, Nov 2008
1. IMF APPROVES US$16.4 BILLION STAND-BY ARRANGEMENT FOR UKRAINE
News Release: International Monetary Fund (IMF), Wash, D.C., Wed, Nov 5, 2008
WASHINGTON, D.C. – The Executive Board of the International Monetary Fund (IMF) today approved a two-year Stand-By Arrangement (SBA) for SDR 11 billion (about US$16.4 billion) to help the authorities restore financial and economic stability and strengthen confidence.
The SBA request entails exceptional access to IMF resources equivalent to 802 percent of Ukraine’s quota in the Fund, and was approved under the Fund’s fast-track Emergency Financing Mechanism. Today’s approval enables the immediate disbursement of SDR 3 billion (about US$4.5 billion).
The authorities’ program is designed to help stabilize the domestic financial system against a backdrop of global deleveraging and a domestic crisis of confidence, and to facilitate adjustment of the economy to a large terms-of-trade shock. The authorities’ plan incorporates monetary and exchange rate policy shifts, banking recapitalization, and fiscal and incomes policy adjustments.
Following the Executive Board discussion, Mr. Murilo Portugal, Deputy Managing Director and Acting Chair, issued the following statement:
“The Ukrainian economy, especially the banking system, is experiencing considerable stress. Falling prices for Ukraine’s major export, steel, have led to a substantial deterioration in Ukraine’s current account outlook.
“This terms-of-trade shock, along with existing vulnerabilities—high inflation, relatively low foreign exchange reserves compared with short-term external debt, significant exposure of banks to foreign funding, balance sheet mismatches, and a weak underlying fiscal position—interacted with the drying up of liquidity caused by the international financial crisis and led to a significant slowdown in capital inflows.
“The authorities’ program, supported by the two-year Stand-By Arrangement with the IMF, aims to restore financial and macroeconomic stability by adopting a flexible exchange rate regime with targeted intervention, a pre-emptive recapitalization of banks, and a prudent fiscal policy coupled with tighter monetary policy. Resolute implementation of the program should help reduce inflation to single digits by the end of the program.
“The flexible exchange rate regime, backed by an appropriate monetary policy and foreign exchange intervention, will help absorb external shocks and avoid disorderly exchange market developments. The recent unification of official and market exchange rates should increase clarity about the regime.
“Recently imposed exchange controls will be phased out as confidence rebuilds. Plans to accelerate progress towards inflation targeting and enhance the independence of the National Bank of Ukraine are important to provide the nominal anchor under the flexible exchange rate regime over the medium term. In the near term, as liquidity pressures diminish, tighter monetary policy will be necessary to guard against inflation.
“A pre-emptive bank recapitalization will alleviate a potential credit crunch that could prolong and deepen the downturn in economic activity. Decisive measures that have been taken to allocate public funds to recapitalize banks and to facilitate bank resolution processes will ensure that problems can be dealt with promptly.
“Increased oversight, more targeted on- and off-site inspections, and improved cross-border supervisory cooperation will help to strengthen the financial system. A proactive strategy to resolve corporate and household debt problems will also be essential to reduce banking sector vulnerabilities.
“A prudent fiscal stance is planned, consistent with both the financing constraint and the need for recession-related social spending. The target of a balanced budget in 2009 will be kept under review in light of the macroeconomic, financing, and revenue outlooks. The targets would be achieved in part by expenditure restraint, and by a phased increase in energy tariffs.
“Ukraine’s extensive safety net provides a backstop to protect vulnerable groups, and the program also allows higher funding for unemployment insurance and targeted income support.
“The authorities have developed a strong and comprehensive package of measures to address the challenges Ukraine is facing and the Fund has provided commensurate financial assistance. Decisive measures have already been implemented by the authorities, including the passage of anti-crisis legislation.
Moreover, the authorities’ policy framework is sufficiently robust to adapt to evolving circumstances. The commitment of leaders of the main political parties to the core elements of the program increases the prospects for successful program implementation. All these elements give confidence that the program will succeed in stabilizing economic and financial conditions,” Mr. Portugal said.
ANNEX
RECENT ECONOMIC DEVELOPMENTS
Ukraine’s economy has grown very rapidly since 2000, expanding by more than 7 percent on average. Initially, this reflected the utilization of large excess capacity and increased productivity supported by a series of structural reforms. Since 2005, growth has been propelled by real domestic demand, namely a credit boom driven by strong capital inflows as well as incomes policies that redistributed large terms-of-trade gains to the population.
By mid-2008, the economy was overheating. Credit growth exceeded 70 percent, CPI inflation exceeded 30 percent, wage growth settled in the 30-40 percent range, a buoyant property market pushed valuations to high levels, and imports surged at an annual rate of 50-60 percent. The current account deficit reached 7 percent of GDP in the second quarter of 2008.
The Ukrainian economy also became vulnerable along other dimensions, including high short-term external debt relative to reserves, high exposure of banks to foreign funding, balance sheet mismatches, and a weak underlying fiscal position. Problems came to the fore as commodity prices plunged and the global financial turmoil deepened. These developments have had a considerable impact on the real sector as reflected in the sharp 5-percent contraction of the manufacturing sector in September.
At the same time, a sharp slowdown of external capital flows raised concerns about the ability of banks and corporates to roll over existing credit lines. When the sixth largest bank, Prominvest Bank, was put under receivership, a widespread deposit outflow began with at least US$3 billion—4 percent of deposits—withdrawn during the first three weeks of October.
Confidence in the country’s banking system and currency weakened. Intervention by the National Bank of Ukraine (NBU) mounted in October, reducing reserves from US$38 billion to US$32 billion. In addition to providing liquidity, the authorities also imposed a set of exchange controls to stem outflows.
The combination of weaker demand from Ukraine’s trading partners, falling export prices, rising import prices, and reduced access to international financial markets are expected to weaken growth prospects. Taking these developments into account, Ukraine’s overall financing needs for the next two years are large.
PROGRAM SUMMARY
The authorities’ program aims at restoring confidence in Ukraine’s macroeconomic and financial stability by addressing the financial sector problems, facilitating adjustment to potentially large external shocks, and reducing inflation. The program is designed to respond flexibly to economic developments.
The program is based on projections that assume a global recession and continued deleveraging in international credit markets in 2009, implying a recession in Ukraine with deteriorating exports, limited external financing and a credit crunch. The projected impact on output—a 3 percent decline—is consistent with Ukraine’s experience under similar circumstances in 2004-05.
Under the program, inflation is expected to decrease to 17 percent by end-2009 from the projected 25.5 percent this year. The current account would compress to a deficit level of about 2 percent of GDP from the mid-2008 level of 7 percent.
Assuming a global recovery in the second half of 2009, the Ukrainian economy could be back at its estimated potential growth rate of 5-6 percent by 2011 with inflation at 5-7 percent by late 2011.Current account deficits are projected to remain small in 2010, in light of the weak economy, and to be moderate thereafter, allowing reserves to rise.
The key measures to achieve the objectives of the program focus on the following areas:
[1] MONETARY AND EXCHANGE RATE POLICY
The program supports the implementation of a flexible exchange rate regime to help Ukraine better absorb the external shocks it now faces. Base money will be the near-term anchor for monetary policy until an inflation targeting regime can be implemented.
The independence of the NBU will be strengthened, and in the near term, monetary policy will be tightened to help achieve the 2009 inflation objective of 17 percent. The program envisages eliminating exchange rate controls as soon as possible, and measures to improve the operation of the foreign exchange market, including cancellation of the foreign exchange transactions tax and a more transparent intervention policy.
[2] FINANCIAL SECTOR POLICY
The authorities intend to prepare a comprehensive bank resolution strategy that will include the resolution of problem banks and the recapitalization of viable banks to cushion the real economy from a potential credit crunch. The authorities have already resolved the sixth largest bank, Prominvest Bank, through a sale to a strategic investor.
The program further proposes to ensure that viable banks have access to liquidity; increase deposit insurance coverage to Hrv150,000 (about euro20,000) from the current Hrv50,000, which will cover 99 percent of individual accounts; and strengthen the monitoring of banks, including through enhanced cross-border supervisory cooperation.
[3] FISCAL POLICY
The authorities will adopt a prudent fiscal stance while accounting for the need for recession-related social expenditures, including higher funding for unemployment insurance and targeted income support. Under the program, the deficit would not exceed 1 percent of GDP in 2008, and in 2009, the general government budget would be balanced (excluding bank recapitalization costs).
Even with the substantial increase of 0.8 percent of GDP social spending during the recession, these fiscal targets are deemed attainable. However, given the uncertainties on economic prospects and the availability of financing, the authorities are prepared to adjust the targets as needed.
To achieve their fiscal targets, the authorities are determined to correct the pricing policies in the energy sector and pursue a more balanced incomes policy by adjusting the minimum wage, pension, and social transfer increases in line with the projected inflation in 2009. These measures will help guard against higher inflation and depreciation.
Ukraine has an adequate social safety net in place to protect the vulnerable against adjustment policies, which the authorities are prepared to expand should the need arise.
Ukraine joined the IMF as a member on September 3, 1992. Its quota is SDR 1,372 million (about US$2,049 million).
2. IMF APPROVES 16.4 BILLION DOLLAR AID FOR UKRAINE
WASHINGTON – The International Monetary Fund has approved a 16.4 billion dollar (12.8 billion euro) loan aimed at rescuing Ukraine from a deepening financial crisis, officials said.
“Resolute implementation of the program should help reduce inflation to single digits by the end of the program,” he added.
It could expect “a fall in GDP, a drop of up to 40 percent in foreign demand for Ukrainian products, and zero industrial growth, or in the best case, two to three percent.”
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3. SILVER LININGS
Editorial, Kyiv Post, Kyiv, Ukraine, Thursday, November 6, 2008
To survive the tough times ahead, everyone will have to adjust including the government policy
Painful as it is, the economic crisis can make Ukraine’s economy healthier and can help plant its citizens more firmly in a market economy. But it will
take better political leadership than has been on display since independence.
The easy credit of the last decade led to unsustainable growth and financial carelessness. Inflation soared and the nation’s trade deficit widened.
To survive the tough times, everyone will have to adjust. Kyiv needs to seize the International Monetary Fund’s offer of a $16.5 billion loan to adopt painful, but badly needed changes. Privatization should be completed, but honestly and openly. Agricultural land should be traded, but anti-monopoly protections strengthened, so that that the oligarchs cannot create cartels in land the way they do in other sectors of the economy.
Done correctly, Ukraine can become a world agricultural powerhouse. Done badly, the elite will speculate on land and Ukraine will become a nation of
sharecroppers.
of moving in the Kremlin direction of a state-run economy, or more firmly adhering to the Western market-oriented model. As imperfect as life is in
the West, we hope the nation, for the sake of its own prosperity, chooses a well-regulated capitalist system.
If Ukraine’s massive bureaucratic state apparatus is trimmed down, the nation will be better off. If red tape and taxes are cut, rapid growth of small and medium businesses – the engines of most economies – can happen.
But the path will be painful as people lose their jobs. Official unemployment is expected to increase from 6.2 percent earlier this year to 7.7 percent by year’s end. Ukraine’s unregulated labor market allows employers to unceremoniously dump their workers. Job reductions should be undertaken with compassion. Employers and government should help mitigate the human toll, both out of fairness and to prevent social instability.
But politicians will have to adjust their populist rhetoric and wean the populace off the idea that the government can guarantee social benefits when
the money is lacking. The government should focus on smart, long-term investments – improving energy efficiency and independence, for instance – that will pay off handsomely in the future.
A shakeout is inevitable as the speculative excesses come to an end in such sectors as housing and consumer lending. A recession is predicted to last
through the first half of 2009. Nations and individuals who use hard times to advance long-term strategic goals can emerge stronger.
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4. WORLD BANK SAYS IT’S READY TO JOIN UKRAINE ASSISTANCE PACKAGE
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5. EXPERTS: GLOBAL CRISIS TO FORCE BADLY-NEEDED REFORMS UPON UKRAINE
Short term pains should be rewarded by long term gains if right policy path is chosen
Now everyone knows how to get members of Ukraine’s parliament to do something useful: dangle a lot of money in front of their noses and spell out tough conditions they must agree upon in order to receive the cash.
“Infrastructure is positive,” said Edward Hugh, a Barcelona-based economist.
Ukraine is also heavily dependent on imports of increasingly expensive natural gas from Russia.
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6. UKRAINE FEELS THE PINCH AS STEEL PRICE DECLINES
His Metinvest holding company has been caught by the global decline in steel prices and demand.
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7. UKRAINE’S ANTI-CRISIS LEGISLATION
WASHINGTON, D.C. – On October 31, 2008 Ukraine’s parliament adopted a package of legislation intended to secure $16.5 bn standby loan from the IMF. The law was backed by 243 lawmakers in the 450-seat.
The parliament approved measures to recapitalize banks, increase guaranteed deposits to 150,000 hryvnias ($25,338) from 50,000 and set up a stabilization fund. All proceeds from the state assets sale and from the state’s bonds sale this year and next year will be injected into the fund. Money from the fund will be used for loans to banks and companies to help them to repay their debts to foreign investors.
The IMF loan and related “anti-crisis legislation” is a key to preventing a financial meltdown, foremost by shoring up confidence in the country’s shaky banking sector – main task now is to overcome the first stage of the financial crisis. The Government and the National Bank of Ukraine has now, with approving this law, all the instruments and enough mechanisms to respond and take measures if the situation in the banking system escalates.
The Government while elaborating measures to overcome fallout from the crisis will be guided by principles of “common responsibility, effective coordination and fast response”. Immediate governmental measures are – to control spiraling inflation, reduce its trade deficit and free up its currency from a US dollar peg.
The IMF loan is a key to propping up confidence in the eyes of foreign lenders. GOU and National Bank hope is that lenders will agree to refinance tens of billions of dollars in private sector debt that matures in the next 12 months.
The IMF loan might be not fully tapped. It is considered as “psychological credit” – to demonstrate both for local and foreign investors that National Bank of Ukraine has sufficient reserves of national currency and Bank is able to transact intervention in any point and provide local currency market with dollar’s volume as much as needed.
Measures to address the financial sector turmoil: The NBU actively supported banking sector liquidity through its refinancing operations. In October, it provided UAH 20 billion (about $4 billion) of liquidity support to a number of banks. To build confidence, deposit guarantees were doubled to $20,000 and are planned to increase further.
The anti-inflationary program relied heavily on monetary measures by the NBU: switching to a managed float in order to reduce forex interventions – the major source of money growth; tightening bank reserve & capital adequacy requirements; increasing the discount rate; carrying out sizable sterilization operations to slow down credit growth.
The Government has approved at the special sitting on October 4, 2008 the Provisional Order of using the Stabilization Fund and an Order on the state’s participation in capitalization of banks.
Ukrainian stock market, with approval of anti-crisis legislation and hope for IMF loan, begins demonstrate rapid growth.
The additional social-oriented anti-crisis legislation package could be elaborated soon for compensation of recently approved by parliament unpopular IMF requirements, including a freeze on social expenditures.
Ukraine is aware that success of anti-crisis program, described in bilateral Memorandum between IMF and GOU, depends from providing the effective mechanism to control for tapping of credits from IMF and other foreign lenders.
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8. BYUT, NUNS & LYTVYN BLOC UNITE TO PASS ANTI-CRISIS BILL
KYIV – The Verkhovna Rada passed the bill aimed to minimize the effects of the global financial crisis on the Ukrainian economy. Lawmakers approved the creation of a stabilization fund to guarantee the repayments of deposits by natural persons and banned a 2-year moratorium on the increase of the minimum wage to the subsistence level.
Following line-item debates on the amendments to the presidential draft, VR passed by 243 votes the draft No. 3309-4 “On priority measures to forestall the negative effects of financial crisis and on some amendments in the laws of Ukraine.” If Pres Yushchenko signs the bill into law, it will be valid till Jan. 1, 2011.
The lawmakers approved the bills major items: the creation of a stabilization fund, banks’ recapitalization, build-up of the Natural Persons’ Deposits Guarantee Fund, and tax breaks for agriculture.
The following procedure was established to form the Stabilization Fund: from the sale of state-owned securities and surplus revenues from the privatization (earlier, it was proposed to pay all the revenues from the 2008 privatization). The revenues from the 2009 privatization will go into the fund in full. The distribution of money from the SF is to be done by the cabinet on coordination with VR committees on the budget as well as on finance and banking.
The lawmakers also changed the banks recapitalization procedure. The present owners of banks will get a preemptive right to buy out additional emission stock, followed by investors and the Finance Ministry. The FM can participate in the formation and build-up of banks’ statutory funds by purchasing their stocks for budget money or state securities. The National Bank of Ukraine will have to buy out state securities at their nominal value for the term of the next 5 days for the money of international credits, that is, for the $16.5 billion IMF loan.
The lawmakers cancelled a provision whereby UkrExImBank’s capital had to be increased by 1 billion hryvnia to buy out a part of the Prominvest bank stock.
It follows that the actual nationalization of the Prominvestbank will be carried out in accordance with the general procedure.
The Natural Persons’ Deposits Guarantee Fund will be built up using 25% of the NBU profits, but not less than 1 billion hryvnia annually. The lawmakers raised the ceiling of guarantees for deposits from 50,000 hryvnia to up to 150,000 hryvnia.
However, the lawmakers did not support the moratorium as of Jan. 1, 2009 through the 2010 yearend on raising the minimum wage to the subsistence level. Consequently, given the financial crisis and the need for a deficit-free 2009 budget, the cabinet will have to find 49.3 billion hryvnia for social programs, deputy head of Yushchenko’s office Oleksandr Shlapak said. The ban on the moratorium does not mean that the minimum wage will be raised on Jan. 1, 2009, as envisaged by the 2009 budget draft.
“When the cabinet has the funding, it can bring the minimum wage to the subsistence level because the change will affect the tariffs,” Oleksandr Zholud, International Center for Perspective Research analyst says. The Korrespondent’s source in the Finance Ministry admitted that the law does not stop the ministry from indexing wages for the rate of inflation. Premier Tymoshenko repeated the statement on Oct. 31.
The creation of the Stabilization Fund does not guarantee that the fund will be able to operate in 2009. “The fund is an empty shell as in 2008 the State Property Fund earned merely 370 million against its 2008 target of 8.5 billion. Can one speak about surplus revenue from privatization?,” our source in the Finance Ministry said. The only viable source for the SF which can pay for the banks’ capitalization is part of the IMF loan as the other projected source (sales of government bonds) is out of the question in the light of recent failures to sell the bonds via auctions.
“That the SF won’t have any sources of funding is a positive development. Due to SF opaque procedures many corrupt schemes may emerge – we know well by whom VR committees are controlled,” says CASE-Ukrayina chief economist Volodymyr Dubrovsky. In a related move, Party of Regions lawmaker Iryna Akimova has insisted that the cabinet and NBU submit to VR a clear-cut mechanism for banks’ recapitalization.
The new law is called by lawmakers the first step towards stabilizing the country’s finance and banking system. The next step should be the support of real economy. Thus, Ms Akimova suggested revitalizing the bill of exchange system and raising depreciation rates for the steel-making and chemical sectors.
BYUT’s Natalia Korolevska agrees with this proposal as it will simplify administering of taxes and VAT rebates: “In particular, the system is good to tax goods in storage. All present supplies of goods stored are considered by the law as sold and are subject to taxation. It should be stopped.”
LINK: http://www.kommersant.ua/doc.html?docId=1051828
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9. ANTI-CRISIS LAW PASSED BY UKRAINIAN PARLIAMENT
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10. PUTTING THE BLOCKADE IN CONTEXT: A UKRAINIAN PERSPECTIVE
KYIV – To western eyes it appeared simple. The country was at the brink, staring into the abyss. Teetering on its edge was the president and prime minister, locked in a very public battle; two leaders more concerned about preserving their political futures than the economic well-being of the nation.
Just when it looked like a financial meltdown was inevitable, up popped the International Monetary Fund (IMF), throwing the nation a $16.5 billion lifeline. To grab it, all the feuding couple had to do was to pass some legislation – a few laws to balance the books and curb future spending.
Even the most seasoned western experts rolled their eyes at this subversion of the democratic process, which naturally attracted considerable flak. To all and sundry it looked like BYuT, the last flame bearer of the Orange Revolution, had succumbed to tricks normally associated with Party of Regions.
Nearly two years on, how can BYuT justify the indefensible? Perhaps it should not try to. What it should do is to provide context and explain the extraordinary circumstances that shaped this “last resort” behaviour.
A QUESTION OF NATIONAL PRIORITIES
[1] Firstly, lawmakers will tell you that the primary driver for this action was to force parliament to focus exclusively on tackling the financial crisis. After all, the situation was dire – a case of all hands on the pump. Dallying with elections at this time would be like rearranging the deck chairs on the Titanic.
This view is shared by Volodymyr Lytvyn, leader of his eponymous centrist bloc, which has 20 seats in parliament. Mr Lytvyn was quoted by UNIAN as saying: “If we seriously raise the question of offering resistance to the financial crisis, we should forget about the parliamentary election. But if we nevertheless announce the election, nobody will implement the anti-crisis measures, because the whole executive power will take part in the parliamentary campaign.”
ALLURING ELECTIONS
[2] Secondly, it is assumed that Ms Tymoshenko wants to cling to her premiership. This is true but not for the reasons surmised. Rivals suggest she is desperate to use her position as a springboard for the presidency in 2010. But that argument does not pass scrutiny, not least because the fallout from the economic downturn – which is far from over – will inevitably blight whoever is in office at the time. Indeed, given her strong opinion poll rating versus the president, combined with options for alliances with smaller parties, the prospect of an election appears positively alluring.
According to a poll for the National Institute for Strategic Studies (conducted 20-24 October), if a presidential election was held tomorrow, President Yushchenko would not even make the run-off. Only 9.7 percent of respondents said they would vote for him, while 20.7 percent favoured Viktor Yanukovych and 24.2 percent Ms Tymoshenko.
Similarly, a recent poll by FOM, to gauge the outcome of a parliamentary election, puts BYuT on 31.1 percent, the Party of Regions on 29 percent and the Yushchenko bloc in fourth place with 4.1 percent, behind the Communist Party with 6.6 percent.
Based on these figures BYuT should back elections now! But BYuT has steadfastly maintained that elections are not in the best interests of the country.
NEW ORDER VS. OLD ORDER
[3] There is a third factor to consider. Ms Tymoshenko knows that the longer she remains in office the harder it becomes to turn back the clock. Under her watch, huge inroads have been made into rolling back the black economy. Massive sums lost to the state through smuggling and non-payment of taxes are now being paid and the grip of shadowy middlemen on the gas industry is well and truly broken.
In addition to taking radical action, BYuT has taken conciliatory steps. The dropping of its legal challenge to the president’s election decree and endorsement of the president’s anti-crisis bill point to a willingness to repair bridges. Indeed, Ms Tymoshenko described the vote on the first reading of the anti-crisis bill, as “a good signal that the democratic coalition can be revived, and parliament can effectively function a lot better than it could in the previous few months.”
This determination to not give up on the coalition, when nearly everyone else has, was a contributory factor to the blockade. And whilst BYuT does not endorse an “end justifies the means” philosophy, the stubborn actions of a few will benefit the country. Maybe extraordinary times deserve extraordinary measures. It is at least important to put them into context, and whilst one is not necessarily proud of this last resort tactic, it has focused minds on what is really important.
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12. ANACOM, INC., JOINS THE U.S.-UKRAINE BUSINESS COUNCIL (USUBC)
Satellite communications equipment manufacturer in California, USUBC member 96
U.S.-Ukraine Business Council, Washington, D.C., Monday, November 3, 2008
WASHINGTON, D.C. – AnaCom, Inc. of San Jose, California, has been approved for USUBC membership, according to the USUBC executive committee, in an announcement on behalf of the entire USUBC membership. AnaCom, Inc. is USUBC member ninety-six.
AnaCom is a worldwide leader in the design and manufacturing of high performance C & Ku Band Transceivers, BUC’s and SSPA’s for VSAT and Satellite Communications applications with a complete satellite IP networking solution to send VoIP, video and data. AnaCom, Inc. has addressed the Satellite Transceiver and BUC market based on the industry’s increasing need for high performance products that are extremely reliable and available at a low cost.
AnaCom’s headquarters resides in a technology park in San Jose, California, in the heart of “Silicon Valley, ” and has several sales offices around the world. AnaCom provides Transceiver, BUC and SSPA products that are sold worldwide to leading satellite communications systems providers, integrators and end-users.
AnaCom’s IP networking solution intelligently combines routing, TCP acceleration, advanced satcom modem, DAMA + SCPC capability, frequency-agile bandwidth aggregation, priority for real time applications (e.g. voice, video,) a complete VoIP solution, including a softswitch for call routing, and a complete suite of network management capabilities all in one box.
AnaCom’s reputation for reliability and ease of use is well known in the satellite industry, and it is the brand of choice by leading satellite professionals. Quality by design, engineering capabilities, and a strong manufacturing base allow AnaCom to maintain lower product costs. Our transceiver, BUC, and SSPA offerings cover all commercial satellite frequencies over a wide range of power levels.
ANGELA V. TLUSTENKO, VICE PRESIDENT
USUBC has been working with Angela V. Tlustenko, Vice President of Sales for AnaCom, Inc., who is now based in Vienna, VA. Angela attended the USUBC financial and economic briefing in Washington on Tuesday, October 28. She is originally from L’viv, Ukraine.
Angela emphasized that her move to Vienna, VA was part of a larger AnaCom goal to be closer to the U.S. defense industry and to all the embassies located in Washington. She said AnaCom is not involved directly in Ukraine at this time but wants to be active on the Ukrainian market and is very interested in developing direct contacts with companies doing business in Ukraine. Angela will represent AnaCom on the USUBC board of directors.
More information about AnaCom, Inc., can be found on their website at www.anacominc.com. If you would like to be in contact with Angela Tlustenko about AnaCom, Inc. please contact USUBC.
USUBC MEMBERSHIP WILL TOP 100 IN 2008
AnaCom, Inc, 46th new member for 2008, and the 76th new member since January of 2007. USUBC membership has quadrupled in the past 22 months, going from 22 members in January of 2007 to 96 members in November of 2008. Membership is expected to top 100 in 2008.
The new USUBC members in 2008 include MaxWell USA, Baker and McKenzie law firm, Och-Ziff Capital Management Group, Dipol Chemical International, MJA Asset Management, General Dynamics, Lockheed Martin, Halliburton, DLA Piper law firm, EPAM Systems, DHL International Ukraine, Air Tractor, Inc., Magisters law firm, Ernst & Young, Umbra LLC., US PolyTech LLC, Vision TV LLC, Crumpton Group, Standard Chartered Bank, TNK-BP Commerce LLC, Rakotis, American Councils for International Education, Squire, Sanders & Dempsey LLP, International Commerce Corporation, and IMTC-MEI.
Additional new USUBC members in 2008 are: Nationwide Equipment Company, First International Resources, the Doheny Global Group, Foyil Securities, KPMG, Asters law firm, Solid Team LLC, R & J Trading International, Vasil Kisil & Partners law firm, AeroSvit Ukrainian Airlines, Anemone Green Capital Limited, ContourGlobal, Winner Imports LLC (Ford, Jaguar, Land Rover, Volvo, Porsche), 3M, Edelman, CEC Government Relations RZB Finance LLC (Raiffeisen), IBM Ukraine, SoftServe Inc., The Washington Group (TWG), SE Raelin/Cajo, Inc. and AnaCom, Inc.
The complete USUBC membership list and additional information about USUBC can be found at: http://www.usubc.org.
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13. UKRAINE’S FIRST PHD PROGRAM OPENS AT KYIV-MOHYLA ACADEMY
Mychailo Wynnyckyj, PhD, Director, Kyiv-Mohyla Academy Doctoral School, Kyiv, Ukraine
Marta Farion, President, Kyiv Mohyla Foundation of America, Chicago, Illinois, Nov 2008
Unlike the traditional Soviet era “aspirantura” which is highly regulated by the Ministry of Education’s Higher Attestatation Council (“VAK”), the Kyiv-Mohyla Doctoral School’s PhD programs represent an embodiment of the principle of university autonomy (independence from the state) which is fundamental to the western system of higher education.
THE TRADITIONAL “ASPIRANTURA” SYSTEM
The fact that Ukraine’s current system of post-graduate education (the traditional “aspirantura” system which culminates in the “candidate of sciences” degree) is in dire need of reform is widely accepted. According to Ministry of Education statistics, only 7% of Ukrainian “aspirants” complete their research degree within the required three year period, and only 25% ever submit their dissertations for defense.
Such a system has led to widespread corruption (buying academic degrees), and to the overall discrediting of Ukraine’s system of post-graduate education. For this reason, many young Ukrainian students who plan to embark on academic careers (especially those returning to Ukraine after studying abroad) do not even consider enrolling in the existing “aspirantura” system.
EUROPEAN INTEGRATION AND INTERNATIONAL STANDARDS
UKRAINE’S FIRST PHD PROGRAM
The Kyiv-Mohyla Academy Doctoral School represents a radical departure from the existing system, and hopefully, in time, will become a real model for reform throughout the country. This year, the Doctoral School enrolled its first 16 doctoral candidates into three EHEA-compliant PhD programs: Management in Public Health (an initiative of the Kyiv-Mohyla School of Public Health); Mass Communications (a joint program of the Kyiv-Mohyla School of Journalism and Department of Sociology); Finance (a joint program of the Department of Finance and Kyiv-Mohyla Business School).
Kyiv-Mohyla’s Doctoral School plans to launch three additional Ph.D. programs next year: Transition Studies (joint program of the Departments of Sociology and Political Sciences), Philosophy of Literature (joint program of the Departments of Philosophy and Literature), and Membrane Technologies (joint program of the Departments of Biology and Chemistry).
THE DOCTORAL CURRICULUM
The structure of training at the Kyiv-Mohyla Doctoral School consists of the following: during their first year of studies, in addition to commencing their individual research projects, doctoral candidates enroll in a series of methodological and skills training courses that are organized by the Doctoral School (up to 20 credits), and also partake in thematic courses and seminars organized by each Doctoral program (up to 20 credits).
A Kyiv-Mohyla doctoral candidate’s training culminates in a dissertation defense before an ‘ad hoc’ thesis committee (not a permanent “rada” whose membership is sanctioned by Ukraine’s “VAK”) organized by the Doctoral School, and composed of five well-known academics from the candidate’s research field – at least one will be from a non-Ukrainian university.
DOCTORAL PROGRAM ADMINISTRATION
The following Kyiv Mohyla professors have been appointed to lead the new program: Mychailo Wynnyckyj (PhD in economic sociology of post-Soviet transition, Cambridge University) as Director of the Kyiv-Mohyla Doctoral School; Dr. Wynnyckyj is currently Associate Professor, Department of Sociology and Kyiv-Mohyla Business School; Volodymyr Morenets (Vice President for Research and Academic Affairs, Chair of the Department of Literature) as Doctoral Program Coordinator for the Philosophy of Literature PhD program, and Tetiana Oharkova (PhD degree in comparative literature, University of Sorbonne, Paris) as Deputy Director of the Kyiv-Mohyla Doctoral School.
DEPARTURE FROM PRIOR SOVIET SYSTEM
The new model of PhD training described above represents a radical change from Ukraine’s existing “aspirantura” system. Whereas the old system was designed by Soviet-era apparatchiks as a means of limiting access for those deemed “unworthy” or “unreliable” for distinguished positions in the USSR’s academy, the Kyiv-Mohyla Doctoral School’s system is designed to aid young Ukrainian post-graduate students to gain access to the worldwide scientific and research communities. In order to accomplish this goal, however, financing is needed.
At present, the Doctoral School initiative at Kyiv-Mohyla Academy is limited in resources to scarce internal university funding and small grants, and the project is currently supported by an enthusiastic group of Kyiv Mohyla faculty who see an urgent need for “aspirantura” reform. Background knowledge and training for this group was obtained through a European Union-funded Tempus project in 2006-7, and a follow-up application to Tempus was submitted for 2009-10.
FINANCING THE NEW DOCTORAL PROGRAM
For more information about the Kyiv Mohyla Academy’s Doctoral School, see: http://www.gradschool.ukma.kiev.ua. In the United States, tax deductible donations to the new PhD program can be sent to Kyiv Mohyla Foundation, P.O. Box 46009, Chicago, IL 60646-0009.
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14. PRATT & WHITNEY-PATON JOINS U.S.-UKRAINE BUSINESS COUNCIL (USUBC)
PW-Paton products include; application of advanced ceramic and metallic turbine coatings, the development and manufacturing of advanced Electron Beam Coating Equipment, repair of gas turbine components and Research & Development of advanced materials and coatings.
JAY MULLOOLY IS GENERAL MANGER OF PW-P
John (Jay) Mullooly is General Manager of Pratt & Whitney-Paton in Kyiv. Jay flew to Washington recently to attend the USUBC breakfast with Ukrainian President Victor Yushchenko. Jay will represent the company on the USUBC board of directors.
Jay told USUBC their international customers need and expect very quick turn times. With the current process, parts are held for customs clearance on the inbound and outbound making the process extremely arduous and lengthy. The customs service only works 4 1/2 days per week and they have a plethora of holidays. All of the customs issues cause unnecessary and costly delays in the turn time.
USUBC MEMBERSHIP WILL TOP 100 IN 2008
Pratt & Whitney-Paton is the 47th new member for 2008, and the 77th new member since January of 2007. USUBC membership has quadrupled in the past 22 months, going from 22 members in January of 2007 to 97 members in November of 2008. Membership is expected to top 100 in 2008.
The new USUBC members in 2008 include MaxWell USA, Baker and McKenzie law firm, Och-Ziff Capital Management Group, Dipol Chemical International, MJA Asset Management, General Dynamics, Lockheed Martin, Halliburton, DLA Piper law firm, EPAM Systems, DHL International Ukraine, Air Tractor, Inc., Magisters law firm, Ernst & Young, Umbra LLC., US PolyTech LLC, Vision TV LLC, Crumpton Group, Standard Chartered Bank, TNK-BP Commerce LLC, Rakotis, American Councils for International Education, Squire, Sanders & Dempsey LLP, International Commerce Corporation, and IMTC-MEI.
Additional new USUBC members in 2008 are: Nationwide Equipment Company, First International Resources, the Doheny Global Group, Foyil Securities, KPMG, Asters law firm, Solid Team LLC, R & J Trading International, Vasil Kisil & Partners law firm, AeroSvit Ukrainian Airlines, Anemone Green Capital Limited, ContourGlobal, Winner Imports LLC (Ford, Jaguar, Land Rover, Volvo, Porsche), 3M, Edelman, CEC Government Relations RZB Finance LLC (Raiffeisen), IBM Ukraine, SoftServe Inc., The Washington Group (TWG), SE Raelin/Cajo, Inc., AnaCom, Inc. and Pratt & Whitney-Paton.
The complete USUBC membership list and additional information about USUBC can be found at: http://www.usubc.org.
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Open access to Ukraine’s agricultural market is one of the key terms of WTO accession. For foreign investors, a major obstacle to doing business in this sector had been the recent government-imposed export quotas and restrictions on grains, including wheat and rye.
Ukraine has committed to a reduction of average bound tariffs on manufactured goods to 4.6%. In addition, the country joined many of the zero-tariff agreements including the Information Techonology Agreement, and those applying to civil aircraft, chemicals, agricultural equipment and parts, construction products, scientific equipment, distilled spirits, pharmaceuticals, furniture, non-ferrous metals, paper, and toys. Export duties on steel scrap and non-ferrous metals will also be reduced.
In the service sectors, Ukraine had, for a long time, limited foreign equity rights. With WTO accession, Ukraine’s core service sectors, including: banking, financial services (and within five years, insurance), business and professional services, telecommunications, construction and engineering, transport, education, distribution, energy, environmental, and many other services will be granted open access and 100% foreign ownership rights.
Ukraine has had a poor track record on protection of intellectual property. With WTO accession, the country has agreed to implement most WTO rules, including on intellectual property rights enforcement, customs valuation, technical barriers to trade, trade remedies, trade-related investment measures, and other requirements.
Perhaps the singlemost important provision for foreign investors of Ukraine’s WTO accession is the country’s commitment to reform its commercial environment.
LINK: http://www.magisters.com/insight/2008-1/ukraine-joins-wto-improvements-for-investors/
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