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  • Ukraine Briefly Cuts Power to Crimea Amid Dispute With Russia Over NATO
    ANDREW ROTHDEC. 24, 2014 NY TIMES INTL

    MOSCOW — Ukraine on Wednesday briefly severed electricity to the Crimean peninsula, nine months after it was annexed by Russia, in a pointed reminder of the territory’s reliance on Ukrainian energy sources.

    The electricity shut-off came as Moscow threatened a greater rift with the West if Ukraine attempted to make good on its intention to join NATO.

    The Russian deputy defense minister, Anatoly Antonov condemned the decision on Tuesday by the Ukrainian Parliament to abandon Ukraine’s nonaligned status and declared that NATO was attempting to use Ukraine as a “forward line for confronting Russia.”

    Ukraine’s ambitions to join the Western military alliance have been presented as a direct military threat to Russia by President Vladimir V. Putin and top security officials.

    “Under the slogan of a Russian threat, NATO is expanding its military potential in the Baltics, Poland, Bulgaria, and Romania,” Mr. Antonov said in remarks carried by the Russian news agency Interfax.

    Ukrainian lawmakers voted overwhelmingly on Tuesday to abandon the country’s nonaligned status, which was adopted in 2010 under President Vladimir F. Yanukovych, as a step toward NATO accession.

    “If this decision in the future takes on a military character, then we will respond appropriately,” Mr. Antonov said. “Then there will be a complete severing of ties with NATO, which will be practically impossible to repair.”

    The NATO secretary general, Jens Stoltenberg, said in an interview with a Norwegian media outlet broadcast on Wednesday that Ukraine membership would be hampered by territorial disputes — a reference to the Crimean peninsula and the simmering conflict with Russian-backed separatists in Ukraine’s southeast.

    Russia’s annexation of the Crimean peninsula in March has provoked disputes ranging from military security to the provision of basic utilities, including energy, for which Crimea is highly dependent on the mainland.

    As if to accentuate that dependence, stoplights in Crimea suddenly darkened on Wednesday morning, local media reported, and telephone coverage was lost across the entire peninsula. Russian military units stationed on the peninsula, which have been reinforced since the annexation, were forced to switch to alternative power sources but suffered no loss to military readiness, the Russian Defense Ministry said in a statement on Wednesday.

    Vladimir Demchishin, the Ukrainian minister of coal and energy, confirmed during a meeting of the government that energy deliveries to Crimea had been halted intentionally, saying that the peninsula had exceeded consumption limits.

    “The Crimean peninsula for a considerable period of time this morning was cut off,” Mr. Demchishin, the minister said, adding that power supplies had since been resumed to the peninsula, which has a population of more than two million. “We hope that consumers in Crimea will adhere to the limits which were agreed upon.”

    Ukraine is confronting an energy crisis as supplies of coal from the belligerent Donetsk and Luhansk regions have been disrupted by the conflict there, and rolling blackouts in other Ukrainian regions and in Crimea have occurred on several occasions.

    Mr. Putin, in a speech this month, declared Crimea “sacral” and has given priority to projects to maintain and improve quality of life on the peninsula. But Russia has no direct land access to Crimea, and plans for a bridge to be built from Russia across the Kerch Strait, where ferry traffic is regularly disrupted by bad weather, will be completed at the earliest in 2018.

    The blackout occurred just hours before negotiators were set to meet in Minsk, Belarus, to continue talks on a settlement to the conflict in southeast Ukraine, where a shaky cease-fire has held since early September despite almost daily reports of shelling from the region.

    The meeting of the “contact group,” the first since September, comes as the search for a political solution to the conflict and attempts to delineate a cease-fire line have stalled.

    In Moscow, the government put into effect further measures to control the economic damage resulting from Western economic sanctions and falling oil prices, which sent the ruble plummeting last week.

    The Central Bank of Russia on Wednesday announced that it would make foreign currency loans available to the country’s largest lenders like Sberbank and VTB to help them “manage their own currency liquidity” and refinance foreign loans.

    Russian companies must settle $120 billion in payments due on external debt next year.

    The announcement was one in a recent series of measures taken by the government to stabilize financial markets and prevent further devaluation of the national currency. A day earlier, Russia’s government ordered five major state-controlled exporters, including Gazprom and Rosneft, to limit their foreign currency holdings in order to prop up the ruble.

    Late on Tuesday, Standard & Poor’s put Russia’s sovereign debt on “credit watch negative” because of a looming recession and the danger of loans that could default. A downgrade by the ratings agency would classify Russian debt as “junk,” or below investment grade.
    http://www.nytimes.com/2014/12/25/wo...s&emc=rss&_r=0

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    • Russia Moves to Stave Off Panic Among Depositors After Rescuing Bank
      BLOOMBERG Ksenia Galouchko and Olga Tanas December 23, 2014 1:36 PM

      After arresting a decline in the ruble, Russia is now trying to avert a banking crisis.

      Lawmakers rushed legislation through the lower house of parliament today allowing the Deposit Insurance Agency to buy stakes in banks before they face bankruptcy proceedings to keep the system stable. While the ruble strengthened for a third day as the government told state-run exporters to sell foreign currency, it’s still down 30 percent in three months. Standard & Poor’s said today it may cut Russia’s credit rating to junk in part because of concern about the banking system.

      “Urgent measures are needed for the stabilization of the banking system to avoid a panic among the population and a run on banks,” Vitaly Isakov, a money manager at Otkritie Asset Management in Moscow, said by e-mail. “There are fears about certain banks’ ability to survive in the current situation.”

      Russia’s economy is on the verge of recession following a collapse in oil prices and sanctions over the conflict in Ukraine. After policy makers managed to contain last week’s record ruble decline, in part by engineering a cash squeeze in the financial system, they are now being confronted with the latest chapter of the unfolding crisis.

      The central bank put National Bank Trust, the country’s 15th-biggest based on retail deposits, under the control of the Deposit Insurance Agency yesterday. An investor will soon be selected to carry out the 30 billion-ruble ($550 million) rescue, the Bank of Russia said.

      Losing Deposits

      Trust, once part of exiled former oil tycoon Mikhail Khodorkovsky’s business empire, had a capital hole of tens of billions of rubles and lost more than 3 billion rubles in retail deposits last week, central bank Deputy Governor Mikhail Sukhov said yesterday. Bank of Russia’s press service confirmed his comments, earlier reported by the Interfax newswire.

      In the wake of that, members of the State Duma, the lower house of parliament, introduced and passed a law on the purchase of banks by the Deposit Insurance Agency.

      That followed legislation on Dec. 19 to allow a 1 trillion-ruble boost to the agency’s funds and a doubling of insured deposits. Two days earlier, the central bank moved to ease demands on banks as foreign debt payments loom. Ruble liquidity has become the main focus rather than the exchange rate, Andrey Belousov, a Kremlin economic aide, said on Dec. 19.

      “The situation is alarming, confirmed by the fast implementation of measures to recapitalize the banking system,” Oleg Popov, a money manager at Allianz Investments in Moscow, said by e-mail today.

      Rescue Bill

      The central bank remains reluctant to inject liquidity into banks because it’s concerned the money will be spent on buying foreign currency, said Natalia Orlova, chief economist at Moscow-based Alfa Bank. That risks inflaming the banking industry’s problems, she said by e-mail.

      “Many banks may turn into zombie-like structures, which in the future may end up costing the government even more because they’ll have to be rescued,” Orlova said.

      In deciding to re-evaluate Russia’s BBB- rating, which is the lowest investment-grade level, S&P cited “the impact of the weakening economy on its financial system.” Russia last had a credit rating below investment grade, or junk, in 2004.

      The ruble was up 0.1 percent to 55.745 against the dollar by 6:25 p.m. in Moscow, having touched a record 80.1 on Dec. 16. The currency is down 41 percent this year, the second-worst performance of about 170 currencies tracked by Bloomberg, following Ukraine’s hryvnia.

      The decline in the currency and ensuing measures by the central bank hindered the flow of money around the banking system. The willingness of Russian banks to lend to each other declined after a surprise interest-rate increase of 6.5 percentage points to 17 percent on Dec. 16.

      Overnight Rate

      The Mosprime overnight rate hit 27.3 percent two days later, the highest since Bloomberg started compiling the data in 2006. Mosprime, which usually moves in tandem with the key rate, has since fallen to 23.5 percent.

      The inter-bank rate will decline first and later the central bank will start cutting the key refinancing rate to stimulate economic growth, said Popov at Allianz.

      “The ruble’s drop has stopped and rates will gradually come down,” he said. “It will return to normal.”

      Russia’s economy will probably contract next year and won’t see growth for four consecutive quarters, according to a Bloomberg survey of economists. The risk of the world’s biggest energy exporter falling into recession in the next 12 months rose to 93 percent from 75 percent a month ago, according to the median estimate of 20 economists.

      Gazprom, Rosneft

      Under last week’s initiative, the Deposit Insurance Agency will have as much as 1.09 trillion rubles from the government that it can invest in subordinated loans and preferred shares of banks. The increase will bring Russia’s budget to a deficit of 0.8 percent to 0.9 percent of economic output this year, compared with the 0.6 percent surplus estimated earlier.

      To support the ruble, the government is also pushing five state-controlled exporters, including OAO Gazprom and OAO Rosneft, to reduce their foreign-currency holdings by March 1 to levels no higher than on Oct. 1, according to an order to the state’s board representatives on the government website.

      “Given that Russian banks face a wave of bankruptcies among corporates and households, more bailouts are inevitable,” Piotr Matys, an emerging-markets foreign-exchange strategist at Rabobank International, said by e-mail. Russia Moves to Stave Off Panic Among Depositors After Rescuing Bank - Bloomberg

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      • Russians Head Into Holiday Facing Economic Malaise
        Daniel Schearf December 25, 2014 11:55 AM VOICE OF AMERICA

        MOSCOW—

        Russian preparations for the New Year holiday are clouded by economic recession and a tumbling currency, the ruble. Nonetheless, people in the Russian capital appear to be in a festive mood.

        Despite economic worries, Moscow's residents and visitors are flocking to Christmas fairs to enjoy seasonal and amusements.

        But a fiscal freeze is descending. Falling oil prices and Western sanctions have undermined the ruble, driving up prices for imported goods and pushing Russia toward a recession.

        President Vladimir Putin says the economic contraction will last a couple of years at most, but that is little comfort to many Russians, including shopper Soso.

        "I'm trying not to think about it. It's very bad, we'll see how it develops. It's a nightmare," said Soso.

        More Russians will be enjoying winter activities this season since they cannot afford to travel abroad.

        Some take a pragmatic view of holiday business, like roasted chestnuts vendor Galina.

        "It seems to me that those who have money aren't going to economize on chestnuts, right? Maybe the old people, the pensioners, or people with small salaries. But people who have money, they'll always have money," said Galina.

        Holiday shoppers may be changing their spending habits, but they are still buying, said Maria, who sells knitted gifts.

        "In connection with our economic problems, people of course, are choosing less expensive and more practical items. But our goods are very marketable, so people are buying them as gifts despite their money problems," she said.

        As Russia prepares to ring in a wallet-tightening New Year, a man portraying Grandfather Frost, the Slavic Santa Claus, gives some holiday words of advice.

        "I'm neither wizard, nor warlock, nor soothsayer. I'm simply a New Year's winter magician. Your New Year's depends on you. However you want it to be, however you celebrate it, whatever your New Year's wishes will be that night -- that's how the next year will be. Everything depends on you. So, if you have the desire for a better life, then that's how things will turn out," said Grandfather Frost.

        Despite the holiday magic, less optimistic voices say the Kremlin's failure to diversify the economy and its continued actions in Ukraine threaten to plunge the country into a full-fledged economic crisis. Russians Head Into Holiday Facing Economic Malaise


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        • What is the price of Ukraine’s “developmental delay”?
          Back to Euro-Atlantic course after 10 years of “wandering,” thousands of lost lives, and territorial losses
          Ivan Kapsamun 24 December, 2014 - 18:20 DEN - THE DAY

          Yevhen MARCHUK: “The parliament’s decision to abandon the nation’s non-aligned status and go back to NATO integration represents the optimal choice. The hard work of making it happen is ahead of us”

          The government has finally decided to take a long overdue measure of abandoning the non-aligned status of Ukraine. On December 23, the parliament made into law the presidential bill “On Amending Certain Laws of Ukraine in View of Ukraine Abandoning Its Policy of Non-Alignment.” As much as 303 MPs voted in favor of it. According to the law, Article 6 of the Law “On National Security of Ukraine” will now state that priority national interests include “integration of Ukraine into the European political, economic, and legal space in order to join the EU and the Euro-Atlantic security space; development of equal and mutually beneficial relations with other states in the interests of Ukraine.”

          After the Euromaidan, and especially after Russia launched its war against our country, abandonment of Ukraine’s non-aligned status Ukraine looks like getting rid of unnecessary ballast. It was in force long enough for Russia to do its dirty work. Initially, Leonid Kuchma’s administration helped the Kremlin to reverse Ukraine’s NATO integration drive, which was prepared and implemented by Yevhen Marchuk who managed to bring us very close to the Membership Action Plan. Later on, it was Viktor Yanukovych who helped Russia to entrench Ukraine’s neutrality in legislation, just as it set to destroy Ukraine’s security apparatus from within. Finally, Russia launched its long-prepared special operation, using a certain moment of anarchy in Ukraine after the Revolution of Dignity (it is possible also that the Kremlin was the architect of its desired bloody scenario for the Euromaidan as well). The operation resulted in the annexation of Crimea, the partial occupation of the Donbas, thousands of people dead, injured and destitute, and economic collapse in these regions.

          “Kuchma tried to stay equidistant from all powers, but this duplicitous strategy failed,” People’s Front MP Serhii Vysotsky commented for The Day. “Yanukovych became the ideological successor of this policy. He brought to the climax and perfect absurdity the system created by Kuchma, and eventually it completely collapsed. Ukraine’s current condition is Kuchma’s legacy. Russia took advantage of all this, as it attacked us, annexed our territory and is fighting in Donetsk and Luhansk regions. All these congenital injuries were caused by Kuchma, making him directly responsible for what is happening now.”

          “Until recently, all our garrisons were in western Ukraine, as if we were still afraid of ‘imperialists’ going on the offensive,” head of the Samopomich’s parliamentary caucus Oleh Bereziuk told The Day. “It has turned out, however, that our real enemy is in the northeast, where there were no garrisons. Therefore, this mistake of our predecessors must be corrected now. People understand that they need to have an alliance with highly developed, intelligent political actors, respectful of human rights and their countries’ laws.”

          Of course, mistakes must be corrected. Abandonment of the neutral status, albeit a belated one, and focus on Euro-Atlantic integration are correct and necessary decisions. The question remains, though: who will be held responsible for missed opportunities and lost time? Who will pay the price for lost lives, infringed territorial integrity, and “developmental delay”?

          “Under prevailing circumstances, the Verkhovna Rada’s decision represents the optimal choice,” Marchuk stressed in his comment for The Day. “The current version of the national security shows that the Ukrainian side does take into account Russia’s aggressive stance towards our country. We should prioritize economic recovery, the cessation of hostilities and the democratization of the entire political system now. For the start, let us fulfill all the conditions and criteria of the EU, for they match the criteria of NATO. The Law ‘On Principles of Domestic and Foreign Policy’ deals with meeting the criteria of the first stage, which is absolutely necessary for a serious discussion on NATO accession to start. The alliance’s response is yet another confirmation of the need to fulfill these criteria, as it says: ‘The door is open, but your actions are up to you.’ Cooperation with the NATO Headquarters provides for creation of bilateral annual plans. These will be not just internal Ukrainian plans, as they will have the NATO Headquarters’ blessing.” What is the price of Ukraine’s “developmental delay”? | The Day newspaper

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          • SUMMING UP THE YEAR
            The Day’s experts discuss the “Ukrainian factor,” a European quest, and the new international and domestic political landscape 24 Dec,2014 - 18:11 DEN - THE DAY

            excerpt:

            UKRAINIANS HAVE SET THE WORLD IN MOTION
            Lilia SHEVTSOVA, leading analyst, Brookings Institution:

            “The year 2014 will go down in history as one that called into question generally accepted political axioms and upset the world order that had formed after the end of the Cold War; one that challenged European security and stability in the post-Soviet space. We’ve all of us been witness to the completion of another chapter in [the book on] world progress and the beginning of the next one, the contents of which remain to be seen. We owe all this to Ukraine, rather to the Ukrainian Euromaidan, considering that the Euromaidan triggered off an avalanche of events in a direction and with consequences that were hard to predict. One thing remains clear: the amorphous, marshy, rotten, intertemporal era has come to an end.

            “Although the new world political landscape is only starting to take shape, certain features – rather, the trajectory of world development – can already be seen. For one thing, it is clear that the West won’t be able to sit what’s happening out, remaining comfortably complacent. The liberal democracies have suddenly found themselves facing the choice between remaining comfortably complacent, looking on as the world is turning into a Darwinian field of enmity of all against all, or getting back on stage and remembering their values. For many in the West this choice was a shocking reality.

            “The post-Soviet personalistic-power-based development model also found itself under threat, and the crisis in Ukraine signaled the beginning of a new turbulence in the post-Soviet space. Ukraine simply proved to be the weakest link in the post-Soviet chain that broke it asunder, demonstrating that country’s desire to get out of the gray zone and move in the direction of a new kind of statehood, the rule-of-law state.

            “The Russian elite (the upper echelons anyway) is a different most dramatic story; it is struggling to get back to the past because it is not prepared to live in the 21st century. However, regardless of who is moving forward, to the future, or backward, to the past, the international community has awakened itself to reality and is trying to solve – or at least figure out – the problems that have piled up over the past two decades.

            “Ukrainians have set the world in motion. If Ukraine succeeds in creating a new kind of statehood, the rule-of-law state, consolidating the nation on the foundations of civism, this will be a great breakthrough. This will serve as an example for Russia and other post-Soviet states. The challenge facing Ukraine is more complicated and dramatic than the problems that faced the Baltic states, primarily because the Kremlin cannot see the Russian autocratic state without Ukraine as its province; also because the West that was prepared to integrate the Baltic states is still unprepared to offer Ukraine its embrace.

            “Ukraine’s breakthrough toward a liberal democracy is far more difficult to accomplish. This breakthrough would be a test of strength for Ukrainians, their elite in the first place. It would prove their staunchness, consistency, and self-sacrifice. Ukraine’s breakthrough is the number-one civilizational challenge of the 21st century. It must demonstrate that the West is prepared to return to its principles and remember its mission. At the same time, it is a test for the world’s authoritarian ‘International’ and its leader, the Russian autocratic state. It must demonstrate their being prepared to expand and confront the liberal democracies.

            “It is true that we are witness to a head-on clash between civilizations, although many in the West refuse to recognize this obvious fact, trying to reduce this crisis to a geopolitical conflict. There are influential forces in the West that are indefatigably calling for a compromise to the detriment of Ukraine, so that Russia gets Ukraine and [Europe] gets peace, security, and business as usual in return. If this line prevailed in the West, the obvious diagnosis would be the revival of the Munich spirit [back in the 1930s]. We know the end result! Personally, I doubt that all those accommodators and compromise lovers will get the upper hand because there is yet another trend, an increasing public understanding – also on the political level – of what will happen if the positions are surrendered again. There are signs of understanding that another ‘deal,’ trading principles for an outward conciliation, will only trigger a new wave of aggressiveness on the part of a system that is struggling to survive by breaching the rules of the game. Another thing is that they still can’t get together for this battle, and they don’t have the leaders for it. Nor can one rule out the possibility of the Kremlin making every effort to produce a generation of such leaders. Look at what the Kremlin has done to transform Chancellor Merkel!

            “Last but not least, Ukraine and its struggle will have an impact on Russia. Some will say I’m overstating the situation. Absolutely not. The Battle of Ukraine has already caused a crisis in the Kremlin and undermined Russia’s stability. Its regime has turned out to be incapable of coping with the military paradigm to which it has reduced Russia. It is anyone’s guess how many resources are left for it to survive. This might as well be the beginning of the end of that autocratic regime. True, this agony could last for quite a while and, naturally, cause a great deal of suffering.

            “It is true that Ukraine has to pay a heavy, incredibly heavy price for its desire to break out of the historical impasse and get back to normal. Ukrainians will have to go through the ordeal. Most importantly, however, they have set off on this journey, and it is hardly possible to stop this nation which is resolved to protect its dignity.”

            SUMMING UP THE YEAR | The Day newspaper

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            • Ivan Verstyuk: Ukraine's hardest year
              Dec. 27, 2014, 11:46 a.m. KYIV POST

              Since gaining independence in 1991, Ukraine, an Eastern European country of 45 million people, hasn't had the year that would be as difficult in both political and economic terms as was the year of 2014.

              War with Russia over territories of Crimea, Donetsk and Lugansk depressed the Ukrainian economy by 7 percent this year, according to the estimates of the country's central bank.

              Nation remains divided over political issues - while majority leans towards the European Union and its liberal values, some still believe in what they call a "spiritual unity of brotherly nations", referring to some intersections in political histories of Ukraine, Belarus and Russia.

              Relying on financial support of Western democracies came as an all-healing recipe for Ukraine's government, led by a billionaire confectionery mogul Petro Poroshenko, a president, and prime minister Arseniy Yatsenyuk, seen as a technocrat by the Western media though widely criticized in Ukraine for doing opposite to what he says.

              "We are the government of kamikaze," Yatsenyuk once said referring to a necessity to pass unpopular reforms.

              IMF program

              A $17 billion package from the International Monetary Fund, approved in April, was supposed to bring country's financial health into a better condition. Having received only $4.6 billion of this 3-percent loan whose overall size is comparable with a price of the Marlboro brand on the tobacco market, government laments it needs much more - up to $15 billion additionally.

              Missions from the IMF, a Washington D.C.-based lender and reform-pusher that is a part of the United Nations system, are frequent guests in Kyiv, Ukraine's capital city. Their advice to Ukraine is similar to the one given to heavily indebted Greece along with a much bigger, $300-billion bailout package - austerity.

              Bloated public expenditure

              Deficit of public finance is generated mostly by Naftogaz, a state-run developer of oil and gas fields as well as an operator of pipelines delivering Russian gas to the EU. Selling gas at extremely low prices to the population, to keep the image of a loving care-taker, government-owned Naftogaz soaks up much of the fiscal revenue. Its deficit is more than the public budget deficit by 30 percent.

              However, Naftogaz is not the only one financial flaw in Ukraine's poorly tailored budget. Much of the taxpayers' money is spent on paying off the public pensions which account for no less than 18 percent of gross domestic product, with the special pensions, mostly to the former Soviet officials, standing at 4 percent of GDP.

              Lesser amount of money, though still substantial, goes to the Ministry of Culture, an obsolete office that distributes money to an older generation of artists who lack abilities to weather the storm of an art market.

              State-owned companies keep their enormous spending on things like luxurious notebooks with leather covers or so called corporate parties. Ukrposhta, a public postal service that fails to adjust to a rapidly developing e-commerce market, celebrated a Postal Day on Oct. 9 very sumptuously this year with the then-leader of parliament Oleksandr Turchynov attending it.

              Currency devaluation

              Hryvnia, Ukraine's currency established in 1996, lost 50 percent of its value against the U.S. dollar this year as people kept buying American currency to secure their savings amid war in the eastern region of Donbas, that Russia sees as a part of its plan to launch a modern version of the Soviet Union.

              Inflation reached 20 percent this year, but consumers kept their skeptical mood regarding local banks, whose deposit rates exceed 27 percent sometimes, and preferred to invest in Benjamins. Meanwhile, shadow currency market blooms as demand for foreign currency is not met by the official currency exchange outlets.

              Currency fluctuations pushed many to withdraw their banking deposits early which left the banks short on liquidity. Therefore, the central bank declared 32 banking scene actors insolvent this year.

              Business scene

              Big oligarch-owned conglomerates prevail in Ukraine's corporate sector, contributing as much as 85 percent to the nation's GDP, while in high-income countries only 50 percent of the economy is dominated by big business, defined as employing at least 500 people. Steel and agriculture are Ukrainian economy's key drivers.

              Way too often people prefer low-paid public jobs instead of launching their own businesses, while those who dare become victims of tax officers' unfriendly attitude. "Working with the tax service is the least pleasant of all types of interaction with public offices," says Oleksandra Kharytonova, owner of Alexamar, a translation boutique in Kyiv. "Their newly appointed employees have a very vague understanding of what they're expected to do."

              Meanwhile, others say people just do not have a habit to spend, stashing the cash under their pillows. "As of now, the consumer has clearly taken a wait-and-see position and saves as much as he can," says Oleksiy Oshkalo, a car repair shop owner.

              Corruption and bureaucracy

              Bribery and nepotism prevail in the country whose shadow economy might be as big as an official GDP figure, according to an estimate of Friedrich Schneider, an Austrian economist and expert on corruption issues.

              A visit to a doctor usually ends up with giving a bribe, $3 for an advice on how to treat allergy and $1,000 for a surgery, while public healthcare system, that dominates the market, is officially recognized as free of charge for anybody.

              Introducing the test-based electronic examination for the high school graduates willing to pursue undergraduate studies pushed away onerous corruption practices previously sustained by universities' admission offices. However, receiving a job at a state-run academic institution still could be as difficult as writing a dissertation on Martin Heidegger, a philosopher known for unconventional use of language, while having a hangover. Vast amount of paperwork and enormous lists of documents to submit as well as unfriendly attitude towards younger generation of scientists keep the local academia a rather gerontocratic institution.

              Obtaining a stamped court decision, that certifies your divorce or, maybe, a business affair, might take up to three years due to huge lines of retirees in the court offices. Suing the public pension fund to get a higher pension is in vogue among the senior citizens. Meanwhile, public offices still demand paper court documents, though all of them are available online.

              One should really think twice before choosing accountancy as a major during the university studies. With salaries paid in untaxed cash, business owners expect their accountants to set up a functioning system of avoiding taxation, which is seen as a much more useful expertise than, say, understanding of International Financial Reporting Standards, world's common language for presenting financial information.

              Country of contrasts

              While an average monthly salary in Ukraine stands at $220, according to the State Statistics Service, iPhones, whose latest version costs $730 here, remain ubiquitous. Even teenagers, mostly unemployed unlike their peers in the U.S., have them.

              It costs $3.5 to have a lunch - a soup, salad and, say, macaroni with meat - at a middle-class restaurant. If you work at least 20 days a month - this would cost as much as $70, or a third of what Ukrainian earns on average.

              Hyatt, a 5-star hotel in the downtown Kyiv, is neighboring with a 19th century brick building in a very poor state with its residents drying up their bedclothes on the balconies. These are not just two different buildings, but two different worlds. And now it's about which of these two is going to win.
              Ivan Verstyuk: Ukraine's hardest year

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              • HAPPY NEW YEAR (Gregorian Calendar)!
                https://www.youtube.com/watch?v=GzObM18W4dI

                Ukraine and Ukrainian Christmas at BRAMA

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                • A beautiful song! Thank you Hannia. My best wishes for 2015 to all of you!!!!!

                  Comment


                  • Great song.

                    Happy New Year.



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                    • A Good Season To Bury Bad News
                      Dec 29, 2014 Claire Bigg RADIO FREE EUROPE

                      From shock resignations to military offensives to crackdowns, bad news often strikes in late December while much of the world is busy ringing in the holidays. So far, Russia leads the trend.

                      Soviet Invasion Of Afghanistan

                      The protracted Soviet-Afghan War began on December 24, 1979, with the invasion of Afghanistan by Soviet troops. A Soviet commando executed Afghan leader Hafizullah Amin and replaced him with its own protege, Babrak Karmal, in a bid to quell rebellion against the Soviet Union's influence in Afghan politics. But what the Kremlin believed would be a quick and decisive victory ended with a humiliating retreat after more than nine years of conflict.

                      Demise Of The Soviet Union

                      On December 25, 1991, Soviet President Mikhail Gorbachev gave up his struggle to preserve the crumbling Soviet Union and resigned as president. He declared his office extinct, ordered the dissolution of the U.S.S.R., and handed over full power to Boris Yeltsin. The hammer-and-sickle flag was lowered over the Kremlin on New Year's Eve and replaced with the Russian tricolor, marking the demise of the Soviet Union.

                      New Year's Eve Assault On Grozny

                      On New Year's Eve in 1994, just over two weeks after Moscow began its first war against separatists in Chechnya, Russian forces launched their first major assault on Grozny. Instead of ringing in the new year, Grozny residents cowered under shelling and bombing. The assault ended in a crushing defeat for Russian forces. Due to the poor military training of troops and confusing orders from Moscow, they quickly retreated after suffering devastating losses during the operation. Russian forces eventually captured Grozny in early February 1995.

                      Yeltsin's Resignation

                      Russian President Yeltsin kept with tradition by making his grand exit during the holiday season, announcing his surprise resignation in a televised speech on New Year's Eve in 1999. Yeltsin ended his final speech by wishing his stunned nation a happy new year. His resignation, six months before the end of his term, paved the way for then-Prime Minister Vladimir Putin's rise to the presidency.

                      Russia-Ukraine Gas Disputes

                      The bitter gas-pricing feuds between Russia and Ukraine usually culminate in the final days of December, with Russia's Gazprom monopoly turning off the taps on Ukraine at the peak of festivities. In 2006, Gazprom reduced supplies on January 1. Three years later, also on January 1, Gazprom entirely halted supplies to Ukraine. Supplies were restored on January 20 after lengthy bilateral talks.

                      Khodorkovsky Verdict

                      The high-profile embezzlement trial of Russian oil tycoon Mikhail Khodorkovsky wrapped up on December 30, 2010, one day before Russia's biggest national holiday. Khodorkovsky and his associate, Platon Lebedev, already in jail for tax evasion, were sentenced to an additional six years in prison following a protracted trial widely denounced as politically motivated.

                      Navalny Verdict

                      Lawyers for Aleksei Navalny announced on December 29 that the verdict in a fraud case against the Kremlin opponent was brought forward to December 30. The initial date for the verdict had been January 15, 2015. Supporters say the charges against Navalny, who faces 10 years in prison, are retaliation for his opposition to President Putin. Navalny's supporters are planning a protest rally near the Kremlin after the verdict is announced.

                      Azerbaijan's Crackdown On RFE/RL

                      Other governments have used Christmas as a smokescreen for actions that would attract more attention -- and criticism -- at a less festive time of the year. On December 27, Azerbaijani law enforcement officers sealed RFE/RL's bureau in Baku after ransacking the premises and detaining staff members for a day of questioning. The homes of journalists working for the U.S.-state-funded broadcaster were also raided. Incidentally, Azerbaijan barred international radio stations, including RFE/RL, from national frequencies on January 1, 2009.

                      Detention Of Kazakh Opposition Figure

                      Despite being a prominent Kazakh opposition figure, Muratbek Ketebaev's detention on December 27 has drawn almost no attention from the Western media. Ketebaev was arrested in Madrid on an Interpol warrant issued by Kazakh authorities in mid-December. He faces extradition to Kazakhstan, which accuses him of being implicated in the 2011 Zhanaozen riots and a planned terror attack in Almaty the following year. He denies the charges. Ketebaev is a vocal critic of Kazakhstan's longtime autocratic leader, Nursultan Nazarbaev, and has actively denounced high-level corruption in the Kazakh government. Ketebaev had lived since 2001 in self-imposed exile in Poland, which granted him political-refugee status. A Good Season To Bury Bad News
                      Last edited by Hannia; 30th December 2014, 14:28.

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                      • Bloomberg Businessweek: Ukraine's economy set to drop 7.5 percent in full-blown crisis
                        Dec. 30, 2014, 3:04 p.m. Kateryna Choursina & Mark Raczkiewycz BLOOMBERG BUSINESSWEEK

                        Ukraine’s economy probably shrank 7.5 percent this year, after the conflict with eastern separatists and Russia’s takeover of Crimea helped trigger a “full-scale” financial crisis, central bank Governor Valeriya Gontareva said.

                        The Ukrainian banking system is “non-functioning,” and the rate of the hryvnia, which has fallen 48 percent against the dollar this year to become the world’s worst-performing currency, reflects its true value, Gontareva said today at a central bank briefing in Kiev. When asked whether Ukraine would default on its debt, she said: “I don’t think Ukraine needs to be a pariah country.”

                        The conflict has killed more than 4,700 people, according to a UN estimate, while Prime Minister Arseniy Yatsenyuk said this month that the fighting wiped out 20 percent of Ukraine’s economic potential. The central bank has spent $1.3 billion of its reserves supporting the hryvnia and will continue taking steps to limit its decline, the governor said.

                        “There is a full-blown financial crisis,” Gontareva told reporters. “We can only overcome it if we implement quick and even extreme reforms.”

                        Ukrainian lawmakers approved a 2015 budget yesterday, taking another step toward unlocking future tranches of a $17 billion International Monetary Fund-led bailout. The central bank expects to receive three tranches in early 2015, including two delayed tranches that were due this year.
                        Rescue Plan

                        The government is trying to expand the rescue package, with the European Union saying Ukraine needs another $15 billion to stay afloat next year. The country is seeking at least $10 billion to stave off default and needs an international donor conference to prevent default, Yatsenyuk said Dec. 11.

                        The conflict has roiled markets in Ukraine and Russia, which has been slapped with sanctions from the U.S. and the EU, who accuse President Vladimir Putin’s government of supporting the rebels with cash, weapons and fighters. While Putin has said he “respects” the militants’ separatist wishes, he denies involvement in the conflict.

                        Ukraine’s hryvnia was little changed at 15.82 against the dollar at 11:48 a.m. in Kiev. The yield on Ukraine’s 2017 dollar bond jumped 3.1 percentage points to 33.015 percent, according to data compiled by Bloomberg. The ruble gained 0.1 percent to 58.25 against the dollar. It’s down 44 percent this year, becoming the world’s second-worst performing currency.

                        Ukraine has shifted its economy to a war footing, as the standoff with the rebels is at risk of becoming a “frozen conflict,” President Petro Poroshenko said yesterday.

                        He’s focusing on a diplomatic track as efforts to secure an enduring truce in the Luhansk and Donetsk regions have failed. He said yesterday that he’ll meet Putin, German Chancellor Angela Merkel and French President Francois Hollande in the Kazakh capital Astana on Jan. 15.

                        alks between separatists and representatives of Ukraine’s military ended in Donetsk yesterday without agreement. The negotiations will continue on Dec. 31 in Luhansk, a news website run by the self-proclaimed Donetsk People’s Republic reported yesterday.

                        The 2015 budget envisages an increase of defense spending to 5.2 percent of gross domestic product, Finance Minister Natalie Jaresko said yesterday. It cuts social spending to keep the budget deficit in check, while doubling duties to 10 percent on imports that are not “essential.”

                        Moving ‘Expeditiously’

                        An IMF mission will return to Kiev Jan. 8 and is moving “expeditiously” to continue discussion with the government on a program to stabilize the economy and restore sustainable growth, the fund’s representative in Kiev said yesterday by e-mail.

                        The central bank has spent $8.6 billion of its reserves, which have fallen to their lowest in more than a decade, to help state gas utility NAK Naftogaz Ukrainy pay debt for deliveries from Russian gas export monopoly Gazprom this year, Gontareva said.

                        The bank has worsened its 2015 inflation forecast to 17 percent to 18 percent because of expected rise in utility tariffs, Gontareva said. Ukraine’s Economy Set to Drop 7.5% in Full-Blown Crisis - Businessweek

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                        • Ruble Drops 5 Percent As Russian Economy Shrinks
                          AP NATALIYA VASILYEVA 12/29/2014 8:48 am EST

                          MOSCOW (AP) — The Russian currency extended its losses on Monday after a report showed the economy has started shrinking in annual terms for the first time since 2009 as the country is buffeted by falling oil prices and Western sanctions.

                          Meanwhile, the government, which has been scrambling to support the ruble and the economy, announced fresh steps to keep the banks afloat.

                          The ruble has been one of the world's worst performing currencies this year and was down another 5 percent on Monday, trading at 56 rubles per dollar in early afternoon in Moscow, wiping off some of the gains it made last week.

                          The fall came as the Economic Development Ministry issued a report showing the economy shrank by 0.5 percent in November compared with a year earlier. The ministry attributed the year-on-year decline in the economy, Russia's first in five years, to a sharp drop in manufacturing and investment.

                          The economy has been buffeted by a combination of lower prices for the country's crucial oil exports and the impact of Western sanctions.

                          Stabilizing the ruble is a priority for the country's monetary authorities. The Central Bank in past weeks raised its key interest rate to 17 percent and said it will offer dollar and euro loans to banks so they can help major exporters that need foreign currencies to finance operations.

                          The bank's foreign currency reserve has now dropped below $400 billion for the first time since August 2009, as the government has been selling the currency on the market to support the ruble.

                          Many Russian companies and banks have been locked out of Western capital markets following the sanctions imposed on the country for its involvement in Ukraine.

                          The government on Monday announced new steps to prop up the banking sector. Prime Minister Dmitry Medvedev told a government session that he has just signed a decree to provide a total of 1 trillion rubles ($19.6 billion) to Russian banks. The list of the banks and the amount that each of them will receive is expected drawn up by mid-January, according to Deputy Prime Minister Igor Shuvalov.

                          Shuvalov said the measures should help "the banking sector be more stable in the new circumstances and safeguard it from new shocks if they do occur," he was quoted by Tass.
                          Ruble Drops 5 Percent As Russian Economy Shrinks

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                          • How to Identify a Fake

                            A significant percentage of information on high-profile events (the confrontational situation in Ukraine, in our case), does not correspond to reality. The root cause of this is the use of such information for governmental propaganda purposes: in this case the news stories are used not to inform the public, but to impose certain opinions on them, which is generally beneficial to one side or another. This document will attempt to highlight the main methods used for identification of lies in mass media.

                            Let us begin by agreeing that we’ll attempt to work only with proven facts, and not with statements by either side. For example, if the Russian Ministry of Foreign Affairs makes a statement on some event in Ukraine, while the Ukrainian Ministry of Foreign Affairs or Ministry of Defence denies said statement, then we find ourselves in a classic scenario of “word against word”; two interested parties say that which benefits them. For this reason our [website] has so few refutations of verbal statements: they are possible only when someone contests information that is beneficial to them (for example, when Donetsk militants denied their seizure of “Grad” multi-rocket-launcher systems, which was reported by channel LifeNews, loyal to them). Therefore we shall try to speak of only facts.

                            continue very interesting read: How to Identify a Fake

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                            • Los Angeles Times: Russia says Ukraine deal to buy US nuclear fuel poses safety risks
                              Dec. 31, 2014, 2:09 p.m. LA TIMES

                              Russia's Foreign Ministry accused Ukraine of endangering public safety in Europe with its decision to buy nuclear fuel for its Soviet-built nuclear plants from a U.S. supplier, saying Ukrainian leaders had failed to learn anything from the 1986 Chernobyl disaster about safe nuclear energy usage.

                              Ukraine's Zaporizhia nuclear power plant, the largest in Europe, in the city of Enerhodar. Ukrainian officials signed a deal Tuesday to buy nuclear fuel from U.S. energy giant Westinghouse instead of Russia's monopoly supplier. (Olexander Prokopenko / Associated Press)

                              "Moscow was somehow alarmed" over the deal announced earlier in the day by Ukrainian Prime Minister Arseny Yatsenyuk for Kiev to buy fuel for its nuclear plants from U.S. company Westinghouse through the year 2020, the ministry said in a statement posted on its website.

                              "Consequences of possible accidents and meltdowns will be the full responsibility of the Ukrainian authorities and U.S. suppliers of the fuel,” the statement added.

                              The shift in supplier for the Ukrainian plants that produce 44% of the country's electricity was part of an effort across Eastern Europe to diversify fuel supplies currently sourced almost exclusively from Russia's monopoly Rosatom.

                              Westinghouse, majority-owned by the Toshiba Group and the builder and operator of more than half of the nuclear plants around the world, noted it "has been working in the Ukrainian market since 2003, and brings diversification of suppliers, global best practices and technology to the Ukraine market.

                              "Westinghouse fuel is currently operating safely and efficiently at the South Ukraine Nuclear Power Plant without any defects in performance,” the company noted in a statement from its global headquarters near Pittsburgh.

                              The Russian Foreign Ministry statement was carried in full by the country's state-controlled media and appeared to signal Rosatom's pique over erosion of its once-captive market.

                              "It seems that the Chernobyl tragedy did not teach Kiev authorities any lessons concerning a scientifically feasible approach to the [peaceful] use of nuclear energy," the statement said. "In fact, it might be that nuclear safety is sacrificed for the sake of political ambitions."

                              Chernobyl, in northern Ukraine near the Belarus border, was the scene of the world's worst nuclear disaster when an explosion and fire destroyed the No. 4 reactor at the four-unit plant and sent up a radioactive cloud that circled the plane.

                              Russia has been chafing at Ukraine's pivot toward economic and security alliance with the West and away from its traditional integration with Russia. The Security Council revised Russia's military doctrine last week to label the U.S.-led North Atlantic Treaty Organization the greatest threat to Russian security and earlier in the week blamed the alliance for Ukraine's decision to renounce its nonaligned status.
                              Los Angeles Times: Russia says Ukraine deal to buy US nuclear fuel poses safety risks
                              ==========================
                              ==========================
                              In order to ease its energy dependence on Russia, Ukraine's Emergoatom signed the deal w/Westinghouse
                              Electric in Brussels. Additionally, Kyiv has indicated interest in purchasing Westinghouse nuclear fuel for their other 13 reactors as well.

                              Last edited by Hannia; 31st December 2014, 16:13.

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                              • As oil falls, Russia choked by military, social spending
                                Darya Korsunskaya & Elena Fabrichnaya REUTERS Dec 30, 2014 3:01am EST

                                (Reuters) - Russian authorities are facing some unpalatable options as they try to keep the economy afloat - unless they can persuade President Vladimir Putin to curb massive military spending.

                                Officials fear that without limiting the defense budget, the government will have to raise taxes, increase the pension age or print money to prevent the state deficit from running out of control.

                                Despite a crisis brought on by diving oil markets and Western sanctions, they believe Russia can muddle through next year provided the price of crude, its dominant export earner, holds near current levels.

                                But even at $60 per barrel, the present oil price is little more than half what the Kremlin needs to balance the budget, and it is quickly running out of money.

                                Without radical action, the officials are much less confident about 2016-17 - and even sooner, should global oil prices continue their slide towards $40.

                                One senior government source expressed concern about the effects of an unchecked deficit on one of Russia's two funds built up from past oil income.

                                "If no spending is cut and revenue risks persist, we will have a deficit of 4 trillion rubles. The Reserve Fund will be spent within 18 months," he said. "In 2016 we will have no resources to meet our budget obligations. Not to mention 2017."

                                At current exchange rates, 4 trillion rubles equates to $71 billion, not far from the $89 billion that the Reserve Fund now holds.

                                Sanctions imposed by the European Union and United States over Moscow's role in the Ukraine crisis have deepened the problems: foreign investment is down sharply, more than $100 billion has fled abroad this year, Russian firms and banks have lost access to international capital markets and privatization plans are on hold.

                                The central bank has had to spend heavily from its reserves, which have dropped to just below $400 billion from $510 billion at the start of 2014, to arrest a steep slide in the rouble.

                                DEFENSE DRAIN

                                Spending will be cut 10 percent next year but Finance Minister Anton Siluanov said last week that this was not enough to balance the budget. Expenditure is dominated by social and defense commitments, and Putin had set military investment as a priority even before the stand-off with the West began when Russia annexed Crimea from Ukraine in March.

                                Out of total spending of 13.96 trillion rubles ($248 billion) in 2014, social benefits account for over 33 percent, and defense and security 32.5 percent.

                                Next year, military spending will rise to 35 percent of the 15.51 trillion rouble budget. That means about $100 billion for defense and security at today's exchange rates.

                                At the same time, the weaker rouble will lead to higher inflation next year by pushing up import costs, threatening Putin's reputation for safeguarding Russians' living standards.

                                The lion's share of social spending goes on pensions, and this will rise sharply due a rapidly aging population unless the government takes radical action by raising the retirement age from 55 years for women and 60 for men.

                                "Without cutting military spending and raising the pension age, we won't muddle through. What options do we have? Raise taxes and print money, which triggers a downward spiral of inflation and higher interest rates," the government source said.

                                "DRAMATIC DEVELOPMENT"

                                In the shorter term, the biggest economic risk would be a further plunge in oil prices, even if they bounced back rapidly. A drop to $40 for just a few days could inflict great psychological damage.

                                Earlier this month, the rouble fell as much as 20 percent against the dollar in one day after oil plunged and the central bank raised its main interest rate sharply. The authorities were forced to impose informal capital controls to cool the panic and slow the flood of money out of the country.

                                Putin has said formal capital controls are not on the agenda. Officials are anxious to avoid such drastic action as this would inflict long-term damage on Russia's international financial reputation: investors will put money into a country only if they believe they can take the profits back out later.

                                "We won't introduce capital controls unless there is a dramatic development," said a top-level government source. "I don't know if $40 per barrel will trigger it. For our country it is very bad, it is a tragedy. But whether it will trigger capital controls or not, I just don't know," the source said.

                                In December 2008, oil fell during the global financial crisis to around $36 but even then Russia did not reinstate capital controls.

                                "This crisis is more psychological, more emotional than those we have seen in the past. But in principle, the situation is not very different from 2008. We can always switch to measures we used in 2009," the source said, naming state guarantees and direct funding of troubled companies among possible measures.

                                However, former finance minister Alexei Kudrin said the current crisis was different because of the sanctions. "To come out of the crisis, the government and the president should settle the conflict with leading powers, mainly Europe and the United States," he said last week.

                                However, the top-level government source held out little hope for an easing of tensions with Washington. "Relations with the United States are frozen," he said.

                                ($1 = 56.2950 rubles)
                                As oil falls, Russia choked by military, social spending | Reuters

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