US-Ukraine Business Council

Friday, August 14, 2009

UKRAINE BUSINESS NEWS: EIGHT ARTICLES

2.UKRAINE TO RAISE OVER $1 B WORTH OF LOANS TO DEVELOP
FARM COOPERATIVES SO THEY CAN BUY EQUIPMENT, SAYS PREMIER
Interfax Ukraine Business Express, August 10, 2009

3. UKRAINE TO ATTRACT INVESTORS FROM FOUR COUNTRIES
TO BUILD SMALL GRAIN ELEVATORS, SAYS PREMIER
Interfax Ukraine Business Express, Kyiv, Ukraine, August 10, 2009

4.UKRAINE: HRYVNIA WEAKENED BY 4%
CEE Insights, Erste Group Research, Vienna, Austria, Friday, August 14, 2009

5. UKRAINE INTERNATIONAL AIRLINES (UIA) TAKES DELIVERY
OF FIRST BOEING 737-800 SERIES PASSENGER PLANE
Ukraine International Airlines (UIA), Kyiv, Ukraine, Monday, July 27, 2009

6. NATO LIAISON OFFICE IN UKRAINE HEADED BY
POLISH REPRESENTATIVE MARCIN KOZIEL
UkrInform, Kyiv, Ukraine,Wednesday, August 5, 2009

7. POLISH DEFENCE OFFICIAL HEADS NATO LIAISON OFFICE IN UKRAINE
PAP news agency, Warsaw, Poland, Wednesday, 5 Aug 09

8.UKRAINIAN CABINET RECOMMENDS RADA TO RATIFY AGREEMENT
WITH NATO ON CARGO TRANSIT TO AFGHANISTAN VIA UKRAINE
Ukrainian News-on-line, Ukrainian News Agency, Kyiv, Ukraine, Thu, Aug 13, 2009
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1. UKRAINE'S MOST UNDERVALUED RESOURCE, RICH BLACK SOIL, BECOMES FOCUS OF GROWING BATTLE OVER LAND
Outdated equipment is one reason for low productivity on Ukraine’s rich soil.
Nation should secure a prosperous future by ensuring that small-scale farmers control the land.
OP-ED: by Hanna Hopko, Special to Kyiv Post
Kyiv Post, Kyiv, Ukraine, Friday, August 14, 2009

Ukraine is a rich country, no doubt about it. But Ukraine is a rich country with poor people.

Apart from a handful of oligarchs who got obscenely rich on natural resources, the other 46 million people are screaming for improvement. Ukraine’s agricultural sector has the potential to be the answer. It can also feed Europe and to stop village degradation.

However, Ukrainian politicians do not concern themselves with strategic planning and development of the state. They are too busy with their sacred war – the 2010 presidential election. Disappointed and pessimistic, most citizens do not think about or do not have the resources to do anything with the beautiful nature and fertile soil. But if you don’t exploit opportunities, competitors will.

WHO WILL PROFIT?
So, in the end, who will profit from Ukraine’s famously rich black earth?

The global battle for this resource seems to be accelerating. One recent article in London’s Guardian newspaper was headlined: “Fears for the world’s poor countries as the rich grab land to grow food.” A map with the story showed poor countries, including Ukraine, where foreigners are buying, attempting to buy or leasing the land. In Ukraine, it is illegal for foreigners to buy agricultural land. But leasing rights are allowed, and competition over land use is a major source of government corruption in Ukraine.

The author, environment editor John Vidal wrote: “The acquisition of farmland from the world’s poor by rich countries and international corporations is accelerating at an alarming rate, with an area half the size of Europe’s farmland targeted in the last six months,” citing reports from United Nations officials and agriculture experts.

“New reports from the UN and analysts in India, Washington and London estimate that at least 30 million hectares are being acquired to grow food for countries such as China and Gulf states who cannot produce enough for their populations. According to the UN, the trend is accelerating and could severely impair the ability of poor countries to feed themselves.”

Vidal calls the trend “land-grabbing” and “neo-colonialism.” Some of the latest cases of land-grabbing include “Saudi Arabia’s purchase of 500,000 hectares in Tanzania. The Democratic Republic of the Congo expects to shortly conclude an eight million-hectare deal with a group of South African businesses to grow maize and soya beans. India has lent money to 80 companies to buy 350,000 hectares in Africa.
Other countries that have acquired land in the last year include the Gulf states, Sweden, China and Libya. Those targeted include not only fertile countries such as Brazil, Russia and Ukraine, but also poor countries like Cameroon, Ethiopia, Madagascar, and Zambia.”

The report predicts that land prices will rise. Some of the world’s largest food, financial and car companies have invested in land. Alpcot Agro of Sweden bought 120,000 hectares in Russia. South Korea’s Hyundai has paid $6.5 million for a majority stake in Khorol Zerno, which owns 10,000 hectares in Eastern Siberia. Meanwhile, Morgan Stanley bought [leasing rights to] 40,000 hectares in Ukraine.

“According to a U.S.-based think tank, the International Food Policy Research Institute, nearly $20 billion to $30 billion a year is being spent by rich countries on land in developing countries,” the article concluded.

A recent World Conference of Science Journalists in London devoted a whole day of debates to the global food crisis and stability. To summarize dozens of speeches, it suffices to say that the global food crisis is only in its infancy. A full-scale war for food will start very soon.

According to the United Nations, grain requirements will increase by 50 percent by 2030 and by 100 percent by 2050. Most experts in high-profile organizations forecast the global population will reach 9.5 billion in the mid-21st century. Even today, with merely 6.5 billion people, nature is experiencing tremendous pressure. There is a shortage of land and water and global climate change.

PRODUCTIVITY OF UKRAINE'S AGRARIAN SECTOR IS ONLY 50%
Professor Ian Crute, director of Rothamsted Research, said: “Historically, Ukraine has been one of the world’s breadbaskets, for it is the most fertile land in Europe. Prospectively, Ukraine is becoming an important source of food supplies. Yet the productivity of Ukraine’s agrarian sector is only 50 percent of what it could be. This can be explained by organizational problems, climate change, and soil fertility.

"I would not like to be a political adviser for Ukraine, but one of the most useful things to do could be consolidation of small-scale landowners into large collective associations, where the main investment could be focused on the mechanization of production, capitalization, learning skills and land management.”

In Israel, where the state owns agricultural land, there is a well-developed system of assistance for farmers. Have you ever seen any state or central bank loans in Ukraine at fair interest rates to help Ukrainian farmers in villages to buy tractors?

Quite the opposite: State policies look like they were specifically designed to destroy life in the villages and famers altogether, and they are succeeding! However there are exceptions as rich and promising Ukrainian farmers arise, renting thousand of hectares, and supplying people at the villages with work.

REAL FIGHT FOR LAND IS HEATING UP
But the real fight for land is heating up. It began some time ago, and was somewhat dampened by the moratorium on agricultural land sale. It will continue with a renewed force if the moratorium is lifted. Rich multinational corporations will buy, and it will be legislatively impossible to strip them of lands that could be used for feeding Ukrainians. There may emerge a situation when Ukrainians will be starving in spite of having the most fertile black earth.

The late James Mace, a well-known researcher of Ukraine’s Holodomor of 1932-33, warned about ill-considered land sales in the article headlined “Tragedy in the Making.”

“The villagers, essentially turned back into serfs according to Stalin’s version of social justice, were left with nothing. And now, it seems, they are being prepared for eviction from the land that fed them and their forefathers. Is the writer of these lines the only person in Ukraine who is ready to scream bloody blue murder?” Mace asked.

Ukrainian scientists have long been speaking about the Ukrainian land as a strategic resource. Agricultural land for Ukrainians is the same as oil and gas is for Qatar.

Russian political scientist Andriy Okara said that “the last two under-sold Ukrainian strategic resources are the agricultural land and the women. Now we have an opportunity to witness one of the greatest land squanders in the Ukrainian history.”

Serhiy Krymsky, a modern Ukrainian philosopher, also suggests that land war is one of the most urgent problems the nation will face in this century.
Who emerges victorious will depend on the readiness of Ukrainian officials to defend its strategic interests. Now is the chance to correct past mistakes.

NOTE: Hanna Hopko is a Kyiv-based activist and freelance journalist. She can be reached at hannusiaua@gmail.com/
LINK: http://www.kyivpost.com/opinion/op_ed/46921
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2. UKRAINE TO RAISE OVER $1 B WORTH OF LOANS TO DEVELOP
FARM COOPERATIVES SO THEY CAN BUY EQUIPMENT, SAYS PREMIER

Interfax Ukraine Business Express, Kyiv, Ukraine, Monday, August 10, 2009

POLTAVA REGION - Ukraine is planning to raise over $1 billion worth of foreign loans under state guarantee to develop farm-servicing cooperatives so that they can buy equipment for grain storage and the collection and processing of milk, Prime Minister Yulia Tymoshenko has said.

"The overall amount of investment for farm cooperatives will total over $1 billion," she said at a press conference in Poltava region on Monday.

As reported, Ukraine's Cabinet of Ministers has agreed to an Agriculture Ministry proposal that national joint-stock company Ukragroleasing borrow about $300 million from the Japan Bank for International Cooperation (JBIC) against state guarantees under an investment project to acquire resource-saving technologies, hardware and equipment for milk procurement, storage and processing.

Under the document, NJSC Ukragroleasing is named as the executive agent for an investment project involving Japanese corporations Marubeni and Sojitz.

The broker of the Cabinet of Ministers in loan servicing is the State Export-Import Bank of Ukraine (Ukreximbank), which is to work under an agent agreement with the Finance Ministry.
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3. UKRAINE TO ATTRACT INVESTORS FROM FOUR COUNTRIES
TO BUILD SMALL GRAIN ELEVATORS, SAYS PREMIER

Interfax Ukraine Business Express, Kyiv, Ukraine, Monday,, August 10, 2009

LOKHVYTSIA - (Poltava region) - Ukraine is planning to attract investors from four countries – Japan, Canada, South Korea, and China – to implement projects on the construction of small-sized grain elevators, Prime Minister Yulia Tymoshenko has said.

"These are Japan, Canada, South Korea, and I'm confident that China will also join in soon," she said at a council on the development of the grain market and its infrastructure in the town of Lokhvytsia, Poltava region, on Monday.

Tymoshenko also ordered the Agriculture Ministry to ensure respective contracts are signed by September 2009 and a bill facilitating permission procedures for the construction is drafted, and to foresee for the next budget year the possibility of cheapening interests rates on loans for the construction of the grain elevators.

She said earlier that the Ukrainian government expected to build grain elevators with a total capacity of three million tonnes by the end of 2009 or early 2010 using Japanese and Canadian investment.

Tymoshenko said that there were currently around 24,600 grain elevators in Ukraine with a total capacity of 55 million tonnes. She said that a mere 30 million tonnes of grain in the country could be stored at certified elevators, and that a mere 15 million tonnes
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4. UKRAINE: HRYVNIA WEAKENED BY 4%

CEE Insights, Erste Group Research, Vienna, Austria, Fri, Aug 14, 2009

KYIV - As the NBU has put limitations on its interventions since 6th August, the local interbank FX market has seen strong weakening moves. Hryvnia has weakened from 8.04/8.06 to 8.33/8.37 hryvnia per $ since the beginning of this week, which is almost 4%. FX market lacks supply as market participants are waiting for the reaction of NBU and has no interest to sell FX.

HELP TO STABILIZE THE BANKING SYSTEM
NBU has adopted a legal act #466, which has a list of additional measures, which should help to stabilize the banking system. The plan foresees that the bank recapitalization will be done in the amount of UAH 11bn, out of which UAH 9.8bn is for banks of 1&2 tier, and UAH 1.2bn for banks of 3 & 4 tier.

Liquidity of banks which issue loans for investment programs in key industries will receive support from NBU. NBU plans to protect the clients of Ukrprombank by the way of recapitalization or transfer its liabilities in the amount of UAH 6.98bn to one of the state-owned banks.

Liquidity of recapitalized banks (Rodovid, Ukrgasbank and Bank Kyiv) will be supported as well. NBU plans as well to introduce for banks a 2% margin between bid and ask for cash exchange operations.
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5. UKRAINE INTERNATIONAL AIRLINES (UIA) TAKES DELIVERY
OF FIRST BOEING 737-800 SERIES PASSENGER PLANE

Ukraine International Airlines (UIA), Kyiv, Ukraine, Monday, July 27, 2009

KYIV - On July 24th Ukraine International Airlines expanded its fleet with the new passenger airplane –Boeing 737-800, delivered from Boeing plant in Seattle.

The new aircraft is the first of four new Boeing 737-800 aircraft scheduled for delivery in the nearest future. The second one will arrive later in autumn 2009. Two more new Boeing 737-800 aircraft are scheduled for delivery in early 2010 as a part of UIA’s long term programme of fleet renewal and expansion.

This will be the first new generation Boeing 737-800 aircraft on the Ukrainian register (registration number UR-PSA).

The aircraft’s interior will offer a number of additional improvements including an increased number of seats. The airline intends to use the new aircraft with up to 189 passenger seats on high density routes including charter, popular leisure and high load scheduled destinations allowing for more efficient fleet utilization.

The new generation -800 is equipped with the latest navigation equipment and CFM (56-7B26) engines that feature a number of technical improvements with lower fuel burn and increased reliability making the aircraft more efficient, environmentally friendly and easier to maintain.

This and all future aircraft in the UIA fleet will come with ‘winglets’, (extended raised wingtips) that are designed to improve the aerodynamic efficiency of the aircraft by reducing drag allowing for fuel savings, and, consequently, lower carbon emissions.

“This latest version of the B737-800 is probably the most modern and reliable aircraft available today. Equipped with winglets and the latest engines, it is environmentally friendly as it has lower carbon emissions. It is a “greener” machine,” said UIA President Yuri Miroshnikov.

“We continue to upgrade our classic B737 fleet. The programme to install winglets on the remaining B737-500s and -300s will be completed this coming winter. The winglets improve aerodynamics and reduce fuel burn, noise and emissions. We are committed to making UIA one of the most environmentally friendly airlines in Europe.”

Ukraine International Airlines is operating Boeing aircraft since its foundation in 1992. Today UIA’s fleet consists of 18 modern Boeing 737 aircraft.
UIA has its own base for full technical and engineering maintenance of Boeing aircraft, which provides technical services not only to UIA aircraft but to those of other airlines.

The new aircraft, with the latest aircraft and engine technology available in the world today, will enhance UIA’s leadership position in the Ukrainian aviation market.

ABOUT UKRAINE INTERNATIONAL AIRLINES (UIA)
Ukraine International Airlines is Ukraine’s leading international carrier. Founded in 1992, UIA was one of the first businesses in Ukraine to attract foreign investment.

UIA was the first airline in CIS to introduce Boeing 737 aircraft, to get JAR 145 certification and to be registered by IOSA. Today UIA’s fleet consists of 18 modern Boeing 737 aircraft.

The airline connects Ukraine with nearly 3,000 locations of the world, operating about 350 scheduled flights a week to London, Paris, Amsterdam, Brussels, Berlin, Frankfurt, Vienna, Zurich, Rome, Milan, Madrid, Barcelona, Lisbon, Helsinki, Dubai, Kuwait, Abu Dhabi, Tbilisi, Dubrovnik, Nice, Naples, Lvov, Ivano-Frankovsk, Kharkov, Lugansk, Uzhgorod , Chernovtsy, Dnepropetrovsk, Odessa and Simferopol. The base airport for UIA is Kiev-Boryspil (KBP).

The shareholdings in Ukraine International Airlines are as follows: State Property Fund of Ukraine – 61.6%, Austrian Airlines – 22.5%, Aer Cap – 6% and European Bank for Reconstruction and Development (EBRD) – 9.9%. Detailed information about UIA is available at www.flyUIA.com.

FOOTNOTE: Ukraine International Airlines (UIA) and Boeing are both members of the U.S.-Ukraine Business Council (USUBC), Washington, D.C.,
http://www.usubc.org.
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6. NATO LIAISON OFFICE IN UKRAINE HEADED BY
POLISH REPRESENTATIVE MARCIN KOZIEL
UkrInform, Kyiv, Ukraine, Wednesday, August 5, 2009

KYIV - Polish representative Marcin Koziel has been appointed a new head of the NATO Liaison Office in Ukraine, the Polish Permanent Delegation to NATO has reported, an UKRINFORM correspondent in Warsaw said.

Polish military expert, former Deputy Defense Minister Stanislaw Koziej said in an exclusive interview with UKRINFORM that Koziel is a “highly qualified military analyst.”

He said that the appointment of a Polish representative as head of the NATO Liaison Office in Ukraine was a good choice for NATO, because “Poland in NATO is viewed as a lawyer for Ukraine, as the country trying to help Kyiv qualitatively prepare for its possible membership of the organization.”

Koziel replaced James Greene of the United States as head of the NATO Liaison Office in Ukraine. James has headed the office since February 2004.
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7. POLISH DEFENCE OFFICIAL HEADS NATO LIAISON OFFICE IN UKRAINE

PAP news agency, Warsaw, Poland, Wednesday, 5 Aug 09

WARSAW - Marcin Koziel has been leading the NATO Liaison Office (NLO) in Kiev since the beginning of August, Poland's Embassy at NATO reported on Wednesday.

Koziel, a civil servant at the Polish Defence Ministry, in the years 2002-09 worked at NATO's International Secretariat in Brussels and focused chiefly on NATO-Ukraine cooperation. As head of the NATO Liaison Office Koziel is responsible for NATO's contacts with Kiev.

The NATO Liaison Office was established in Kiev in April 1999 to facilitate Ukraine's participation in the Partnership for Peace and to support Ukrainian efforts in the area of defence reform.

NATO and Ukraine are working to deepen and expand their partnership and create a strong framework for cooperation. This will include intensified consultations and cooperation on political, economic and defence issues, with a view to raising the relationship to a qualitatively new level.
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8. UKRAINIAN CABINET RECOMMENDS RADA TO RATIFY AGREEMENT WITH NATO ON CARGO TRANSIT TO AFGHANISTAN VIA UKRAINE

Ukrainian News-on-line, Ukrainian News Agency, Kyiv, Ukraine, Thu, Aug 13, 2009

KYIV - The Cabinet of Ministers recommends the Verkhovna Rada to ratify an agreement between Ukraine and North Atlantic Treaty Organization (NATO) and transit of non-military cargoes of the alliance via Ukraine that provides operations of the international forces facilitating security in Afghanistan.

Ukrainian First Deputy Foreign Minister Volodymyr Khandohii told this to Ukrainian News. He said the Cabinet of Ministers endorsed a corresponding draft law at its meeting on Wednesday.

As Ukrainian News earlier reported, President Viktor Yuschenko in July 2009 instructed the Cabinet of Ministers to secure installment as soon as possible of an agreement between Ukraine and NATO, which was signed in April 2009, on the transit of the NATO cargoes via Ukraine to Afghanistan.