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KYIV APPEALS TO COUNCIL OF EUROPE OVER DEATH SENTENCE IN THAILAND. Foreign Minister Anatoliy Zlenko has asked the Council of Europe to help Ukrainian authorities in their attempt to commute the death sentence handed down to Ukrainian citizen Viktoriya Mamontova in Thailand, Interfax reported on 5 September. Last month, a Thai court sentenced Mamontova to death for possessing heroin. Mamontova is the first Ukrainian citizen to be sentenced to death abroad following the Ukraine's proclamation of independence in 1991. JM

UKRAINIAN GOVERNMENT OPTIMISTIC ABOUT ECONOMIC GROWTH. The Ukrainian cabinet predicts that in 2002 the country's GDP will increase by 6 percent, the annual inflation rate will amount to 9.8 percent, and the average exchange rate will be 5.6 hryvni to $1 (currently $1 is equal to 5.34 hryvni), Interfax reported on 5 September. The government also expects that this year GDP will grow by 7.3 percent, inflation will not exceed 12.3 percent, and the average annual exchange rate of the hryvnya will be 5.4 to $1. JM

UKRAINIAN PRESIDENT IN BULGARIA. Visiting Ukrainian President Leonid Kuchma and his Bulgarian counterpart Petar Stoyanov on 4 September called for international respect for Macedonia's territorial integrity and sovereignty and said the implementation of the agreement to disarm Albanian rebels is crucial to prevent the conflict from deteriorating into a civil war, international agencies reported. Kuchma said Ukraine support's NATO's efforts in Macedonia and is ready to contribute to the peace process in that country. The two presidents spoke after officials representing the sides signed seven cooperation agreements. One of these accords permits the transit of Ukrainian troops to join international peacekeeping forces in Kosova. Another agreement is on the repatriation of Ukrainian nationals who are illegally in Bulgaria. Kuchma called on Bulgaria "not to act to hastily" in introducing visa requirements for Ukrainians and to set a bilateral working group to examine the issue (Bulgaria pledged to introduce the requirement after the EU listed visa requirements on Bulgarians in April). Also signed were accords on cooperation between the two countries' interior ministries and customs services, as well as on combating crime. Kuchma was to meet with Prime Minister Simeon Saxecoburggotski on 5 September before returning to Kyiv. MS

The Romanian government last week criticized a decision by Moldova to cancel the sell-off of two of the country's electricity networks in which two private Romanian energy companies had expressed interest.

Moldovan officials earlier last week announced that the sell-off of two of the countries biggest distribution networks (REDs) -- RED North and RED Northwest -- had been canceled.

The decision came as a Moldovan court ruled that shares of RED North must be auctioned off to partially repay the $5 million Moldova owes the Ukrainian company Energoalians for electricity sales over the past few years. According to the ruling, Energoalians has priority in buying the shares.

The announcement came after Electrica and Termoelectrica -- two Romanian energy firms interested in the privatization of the Moldovan networks -- sent experts to Moldova to assess the situation.

Romanian Prime Minister Adrian Nastase was quick to criticize the decision to cancel the sell-off and repay the debts to the Ukrainians with shares in the two companies.

"It is not normal, when we want to participate in [the Moldovan] electricity networks sell-off, to learn that [Moldova's energy] debts to Ukraine have been transformed into shares in these networks, and that the public bidding -- in which two Romanian firms were involved -- was canceled two or three days ago," Nastase said.

The Romanian premier warned that Romania might request similar treatment from Moldova, which owes Bucharest some $32 million in unpaid energy bills. He also urged Romanian authorities and companies to be more pragmatic and aggressive in tackling the issue of Moldova's debts to Romania.

Romania and Moldova share what they call a "privileged relationship" based on kinship and common language. Moldova was part of Romania before World War II, and some 65 percent of its 4.5 million population is Romanian.

However, economic cooperation between the two countries has been very limited in the decade since Moldova proclaimed independence from the Soviet Union. Both Romania and Moldova -- with monthly per capita incomes of some $100 and $30 respectively -- are among the poorest European states.

But while Romania is gradually shifting toward integration into Western structures, Moldova -- which voted Communists back into power earlier this year -- has recently begun to lean further toward Russia, Ukraine, and other former Soviet republics.

Moldova's Communist president, Vladimir Voronin, says his proMoscow orientation is based mainly on economic pragmatism. Moldova has long been heavily dependent on Russian oil and gas, while the huge Russian market can easily absorb Moldova's main products -- wine, tobacco, and foodstuffs.

Russia is by far Moldova's largest trading partner, receiving almost 40 percent of Moldovan exports, while Romania accounts for a mere 9 percent. Some 35 percent of Moldovan imports originate in Russia and Ukraine, compared with less than 16 percent in Romania.

Moldova also owes Russia some $600 million in unpaid energy bills, making it vulnerable to Russian pressure -- as happened last winter, when Russia temporarily cut off gas deliveries because of late payments.

Foreign direct investment in Moldova accounts for a mere $350 million. Russia constitutes the main foreign investor, with some $150 million -- or more than 40 percent -- invested.

When he came to power in April, Voronin also pledged to bring Moldova into the fledgling Russia-Belarus Union. But little has been done so far, and a visit earlier last week to Minsk by Moldovan Prime Minister Vasile Tarlev ended with no mention of the union. And in an interview with Moldovan Radio on 4 September, Moldova's new foreign minister, Nicolae Dudau, said that declarations made earlier by the country's leadership on the intention to join the union "remain valid," but that "does not mean Moldova is ready to join the union now, since its structures are still being molded."

Despite Voronin's communist rhetoric, Tarlev -- a technocrat -- is increasingly conscious of the troubles Moldova's economy is facing as winter draws near. On 30 August, he indicated his government's interest in increased economic cooperation with Romania -- which may become an alternative source of energy during winter.

The same day, Tarlev also tried to water down the fledgling privatization dispute with Bucharest. He refused to comment on Nastase's remarks regarding the cancellation of the deal, and said Moldova is willing to improve its economic relations with Bucharest.

But he defended the decision to cancel the sell-off of the two energy networks, saying Moldova "has not lost anything." Tarlev also pointed out that the deal is solely his government's business: "Each state has its own major interests and has the right to modify, to solve, or to initiate certain issues," he said.

Tarlev also announced that he will meet with Nastase and Ukrainian Prime Minister Anatoliy Kinakh in Chisinau in mid-October. The meeting, he said, was meant to improve economic cooperation between Moldova, Romania, and Ukraine.