EUROPEAN UNION REACHING OUT

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EUROPEAN UNION REACHING OUT

Tribuna, January 4, 2002, p. 5

Ukraine has seriously started implementing its major strategical purpose – integration in the European community.

The Ukrainian Center for Economic and Political Research of Razumkov has recently held interesting research on this subject. Its report covers the whole specter of problems, which Ukraine may encounter before entering the organization. The matter concerns a new wave of EU expansion, which is highly likely to seize countries, bordering on Ukraine – Poland, Hungary, Slovakia.

Experts proceed from the assumption that EU expansion to the east in general opens great perspectives for Ukraine’s collaboration with the European Union. However, there are no guarantees, and the problems in economic and migration spheres are quite realistic. In the first case, EU expansion may lead to aggravation of competition among Ukrainian enterprisers, reduction in number and quality of business contacts in border regions, loss of traditional markets. In the second case, this process will be accompanied by introduction of visa regime by candidate-countries, tightening of customs control and limits to moving across the border and possibilities for finding job for Ukrainian citizens abroad.

According to different prognoses, in 2000 in Poland there were 60-100,000 Ukrainians, in the Czech republic – 100,000, in Slovakia – 50,000. The situation is as follows: while Ukraine cannot control unemployment, there will be demand for cheap Ukrainian labor forces in Europe, as well as the candidate-countries.

According to experts, the political pressure of the EU on Ukraine will be increasing, first of all, in securing democratic institutions, protecting human rights and the freedom of mass media, fighting organized crimes and corruption. At the same time, they express hope that the EU drawing closer to Ukraine’s borders will enable Kiev to widen its participation in securing the safety in the continent.

MINISTERS ON HOLIDAY

Moskovskaya Pravda, January 1, 2002, p. 1

Yesterday the Cabinet of Minsiters went on vacation, which will last until January 14.

According to the Cabinet, over half of ministers and deputy prime ministers will be on vacation in the first half of January. Mikhail Kasianov is going to visit his Slovenian colleague, whose motherland is famous for its ski resorts.

Finance Minister Alexei Kudrin will spend his holidays in the Leningrad region. Deputy Chairman of the government, Agriculture Minister Alexei Gordeev decided to combine the pleasant with the useful – he will take his rest in the Berlin agricultural fair “Green Week”.

Deputy prime ministers Valentina Matvienko and Viktor Khristenko, Minister of Cooperation of Federal power bodies in settling social-economic questions of the Chechen Republic Vladimir Yelagin and other four members of the Kasianov Cabinet did not declare where they will go on holiday.

OFFICERS AND MISTRUST

Sovetskaya Rossia, January 4, 2002, p. 1

The Agency of Patriotic News (APN) has declared that Putin is losing support of the army.

The process of consolidating military opposition is growing in the Armed Forces of Russia. There are more and more military men, dissatisfied with the work of President Putin over the past two years.

The year 2001 is called ruin of hope by officers and ensigns. Instead of considerable pay rise, they got nothing. The new 2002 is not promising any good.

It will not some to a open mutiny, according to the APN in the Defense Ministry of the Russian Federation, however, there may be actions of protest of the military and their families.

JANUARY FROST

Moskovsky Komsomolets, January 4, 2002, p. 2

The last working day of the outgoing year passed without sensations for Russian currency dealers. The ruble exchange rate remained rather high, and at this background the auction at the exchange started with the rate of 30.12 rubles to the dollar, which then rose by two copeks. This rate will keep until January 9 – it is then, after the Christmas and New Year holidays, that dealers of the Central Bank and commercial banks will come back to their work.

On the one hand, the money in commercial accounts of commercial banks is increasing in the Central Bank, reaching to 99.315 billion rubles against 93.695 rubles yesterday. Thus, the ruble liquidity of banks is being restored. On the other hand, the dollar rate has not increased much, because only a small part of this money goes to currency markets due to mutual settlement of accounts, conducted at the end of the year between natural monopolies.

Meanwhile, it is clear that the first part of January will fall out of the auction: January 14 is approaching. The dollar will be rising, but slowly, although the market will remain bullish. The rising dollar is being encouraged by deputy finance minister Mr. Ulyukaev, who said that the dollar/ruble exchange rate would parallel the inflation rate in future, which should support Russian producers. In other words, Russian producers will not survive without ruining Russian consumers.

What else may influence currency dynamics in Russia? Two factors: oil and certain steps of the Russian authorities – both political and financial. As for oil, the OPEC decision to reduce sale of “black gold” by 1.5 barrel a day gave rise to price quotation. The auction was characteristic of stable increase in oil quotation and keeping the price over $20 a barrel.

As for the authorities, on the one hand, the prime minister announced that in the first quarter of 2002 “the government is going to work out a number of measures for balancing out industries”, on the other hand, the tax reform is over, and in 2002 the tax burden will increase by 14%. The federation Council has recently voted for that, and the economy will be moving further into the shade, and commercial banks will be buying dollars “to be on the safe side”. By the end of January the ruble will not fall below 30.25 to the dollar, or the Central Bank will step in. We will see what we will see…

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