Ukraine News Update:Reuters,NYTs,FT,EDM
Provided by Orest Deychakiwsky
Reuters
Ukraine leader abandons poll, recession looms
Wed Nov 12, 2008
By Ron Popeski
KIEV, Nov 12 (Reuters) – Ukrainian President Viktor Yushchenko abandoned plans on Wednesday to hold an early parliamentary election this year and said officials should focus on coping with the effects of the global financial crisis.
Data showing industrial output plunged 19.8 percent year on year in October raised the prospect of a recession just one week after the International Monetary Fund finalised a $16.5 billion loan to bolster the country’s financial and banking systems.
Oil refining and steel, Ukraine’s key export, were the hardest hit sectors of the ex-Soviet state’s economy.
Politics remained in an uproar.
Yushchenko acknowledged that the election he called for December after the collapse of an “orange” governing coalition would not now take place.
Parliament dismissed its chairman, a longstanding ally of the president, all but paralysing the chamber.
“We have a few issues to solve over the next weeks. It is obvious that organising an early election any time around Christmas would be unwise,” Yushchenko told reporters while attending Independence Day celebrations in Poland on Tuesday.
“The most important thing is to undertake anti-crisis actions and approve the 2009 budget. The budget should include a line referring to the financing of the election.”
Yushchenko had said the election was the only way to resolve political deadlock after the break-up of a coalition of groups led by him and Prime Minister Yulia Tymoshenko — his ally in the 2004 “Orange Revolution” and now his arch-rival.
Tymoshenko had opposed the poll on the ground that Ukraine had to tackle the crisis and called for the restoration of the “orange” governing team — shattered when the president’s Our Ukraine party quit its alliance with the prime minister’s bloc.
The two leaders have been at odds almost continuously since the 2004 protests that brought pro-Western politicians to power, though the president has twice named Tymoshenko prime minister.
CHAIRMAN DISMISSED
In parliament, 233 members voted to remove chairman Arseniy Yatsenyuk, long linked to the president. The vote, conducted after fistfights, with deputies removing glass panels and disabling the voting system for a time, passed by seven more than required, a day after a similar vote failed to pass.
Yatsenyuk, 34, initially quit a day after the “orange” team fell apart in September. That was never confirmed in a vote.
“What is most important now is not to allow the burial of Ukraine’s democracy through a funeral of Ukraine’s parliament in all its splendour,” Yatsenyuk said.
He vowed to form a political party as planned. “I have been removed but I’ll be back, only not in this capacity.”
The speaker’s departure deals a blow to both the president and the premier. It further weakens any remaining influence pro-Western “orange” politicians have on key institutions and leaves parliament unable to work until a successor is elected.
Most analysts’ attention was focused on the dramatic industrial output figures. The sharpest falls were recorded in coke production and oil refining at 43.9 percent, and metal output, down 35.6 percent.
Redundancies have already been announced in key industries and large sections of steel mills and other plants stand idle as world demand sinks.
Zsolt Papp, chief economist at KBC Investment, said the figures suggested Ukrainian officials were still not fully aware of the severity of the crisis.
“If this (output) number becomes the established trend, then questions will arise whether the $16.5 billion package will be actually enough,” he said. “The data put the whole Ukrainian situation in a completely different light.”
Goldman Sachs deplored the drop as “shocking” and said it was one the first pieces of hard evidence of a global slowdown in October.
“It immediately casts doubt on the assumptions underlying the recently agreed IMF programme of 6.0 percent growth in 2008 and minus 3.0 percent in 2009,” it said in a note.
“Serious questions remain about how much of the country’s estimated $40 billion in external debt amortisations next year will be refinanced…There is likely to be considerable distress – and some defaults – among private external borrowers.” (Additional reporting by Sabina Zawadzki and by Gabriela Baczynska in Warsaw; editing by Tim Pearce)
The New York Times
NEWS ANALYSIS
On NATO’s Table, Ukraine And a Test of Russian Ties
By THOM SHANKER
12 November 2008
Late Edition – Final
11
WASHINGTON — When the presidents and prime ministers of every NATO nation met in Bucharest, Romania, in April, they agreed unanimously that Ukraine and Georgia, two former Soviet republics, would someday, without a doubt, enter the Western alliance.
But in the face of Russian resistance and even some recalcitrance within the alliance, the leaders could not agree to formally invite either Ukraine or Georgia to the ritual of requirements, reforms and deadlines. It was the diplomatic equivalent of proposing marriage without setting the wedding day. And it was a notable rejection of American policy, which had long sought to begin the formalities of the engagement, known in NATO parlance as a Membership Action Plan.
Instead, an ad hoc coalition of longtime NATO members — Germany, France, Italy and Spain — continued to block the desires of Washington and the newer members of Central and Eastern Europe to bring the two countries into the fold.
Not just alliance membership, but the tone of relations between Russia and the West will be on the table on Wednesday and Thursday when Defense Secretary Robert M. Gates joins NATO defense ministers in Estonia, a tiny republic adjoining Russia’s Baltic coast, to discuss how to bring Ukraine, at least, rapidly into the alliance.
Mr. Gates and allies pushing Ukraine’s membership agree that the war between Russia and Georgia in August gave them more evidence of the need for shoring up NATO’s commitments.
”I’m not so sure this is a meeting the secretary would have attended had the Russians chosen not to invade Georgia,” said Geoff Morrell, the Pentagon press secretary. ”But in the aftermath of that, the secretary wanted to send a very strong signal of his support for Ukraine and the Baltic states and our other NATO allies from Eastern Europe that the United States stands firmly behind them.”
At the same time, however, the debate over ”Who shot first?” in the war between Russia and Georgia reaffirmed the views of those allies that want to slow membership, especially for Georgia. As details emerge that point to provocative, perhaps even foolhardy behavior by Georgia’s leadership, some NATO-nation diplomats are relieved that Georgia was not in the alliance.
Under the NATO charter, an attack on one ally requires all to rise to its defense. In the case of the August conflict, had Georgia been a NATO member, the alliance could have been pulled into war with Russia.
Only Ukraine’s membership is on the agenda this week at the special session of NATO defense ministers. To be sure, Ukraine is a special case, for the alliance and for Russia.
With 46 million people and vast agricultural and industrial resources, Ukraine is set strategically between Russia and the newer NATO members that were separate nations under Moscow’s hegemony in the Warsaw Pact. Ukraine would be the largest and most important former Soviet republic to enter the alliance. Estonia, Latvia and Lithuania never had such political, economic and cultural ties to Russia itself.
That helps explain why Russia reluctantly accepted NATO membership for its former Warsaw Pact partners, and even for the Baltic states — but has drawn a line at Ukraine.
”Russia has issued all kinds of threats and warnings,” said a senior administration official who, like other policy makers, agreed to discuss the NATO session in advance under customary diplomatic ground rules of anonymity.
To counter those warnings, the Bush administration will make the case to the Kremlin that Ukraine’s entry into NATO is a decision to be made by Ukrainians, and is not a threat to Russia.
”These are people making choices about their own future,” said another senior United States government official. ”This is not encirclement of Russia. This is not a NATO strategy going against Russian interests.”
While in Estonia, NATO defense ministers will discuss how to push Ukraine’s military toward requirements for membership, including transparency in budgeting and movement toward a professional military.
”We have to take a ‘tough love’ approach with Ukraine,” said another senior official. ”It is clear that they need to deliver on reforms — not just military reforms, but democratic reforms. Their government appears to be in a perpetual state of crisis.”
A formal decision on offering a Membership Action Plan to Ukraine awaits an alliance meeting of foreign ministers in Brussels next month, and there is no evidence that allies wishing to slow Ukraine’s membership have altered their view. The issue will turn on politics in the United States as much as in Ukraine.
The Bush administration has invested heavily in NATO membership for Ukraine. President Bush stopped there en route to the April alliance summit. Vice President Dick Cheney visited Georgia and Ukraine in September to express the administration’s support for the quick entry of both into the alliance.
President-elect Barack Obama is not expected to make clear his official views on NATO expansion or Washington’s relations with Russia until after Inauguration Day on Jan. 20.
Election politics are adding uncertainty in Ukraine, as well.
Yulia V. Tymoshenko, the prime minister, and Viktor A. Yushchenko, the president, are former allies now in a bitter power struggle, with new elections possible in mid-December — within days after the NATO foreign ministers’ session. Leadership during the financial crisis is central to the vote, but Mr. Yushchenko has adopted a tougher approach toward Russia than Ms. Tymoshenko. He is pushing for NATO membership, while Ukraine’s population, 17 percent ethnic Russian, is divided on the issue.
Financial Times
Ukraine’s rich buy lenders
By Roman Olearchyk in Kiev and Stefan Wagstyl in London
Published: November 12 2008
Cash-rich Ukrainian investors have agreed to purchase two of the country’s most troubled banks in moves that could help stabilise the country’s financial sector.
Yesterday, a state administrator of Prominvestbank, the sixth largest bank, announced that a 68 per cent stake had been sold to a consortium of strategic investors led by brothers Andriy and Serhiy Kluyev, two wealthy businessmen-MPs.
The shares were sold by Volodymyr Matvienko, the bank chairman, along with relatives and employees. They claim a smear campaign triggered a run on deposits at Prominvestbank.
Earlier, billionaire Dmytro Firtash, Gazprom’s partner in the supply of natural gas to Ukraine, said he had purchased a controlling stake of 90 per cent in another troubled Ukrainian bank, Nadra Bank. Nadra officials declined comment.
Mr Firtash told the Financial Times that each country was developing its own way out of the crisis. “The president has said Ukraine will not bail out its banks with taxpayers’ money so it is clear that in Ukraine it will be private business people who can do this and I, as a Ukrainian, am buying this bank.”
Mr Firtash added that Nadra was a “good bank” with good management that had run into difficulties in the crisis raising funds.
The developments follow last week’s decision by the International Monetary Fund to grant Ukraine a $16.4bn standby loan. Ukrainian officials said yesterday that the IMF loan and new bank investors would shore up confidence in Ukraine’s shaky financial system and sliding currency.
In October, the central bank injected more than $600m through a rescue package into Prominvestbank, froze the bank’s deposits and introduced state management. Nadra was not put under emergency measures but was also causing concern to authorities.
Similar-sized Ukrainian banks sold in previous years for $700m to $2bn. While the price tags in the latest deals were not disclosed, it was expected to be much smaller due to the global crisis.
Alexander Valchyshen, head of research at Investment Capital Ukraine, a Kiev-based investment bank, said: “These investors paid less – something like $100m-$125m for a controlling stake in Nadra and $240m-$270m for Prominvestbank. But, in my perception, these investors may invest the same amount of funds, or even more, to keep these banks afloat.”
Ukraine’s stock market rose 31 per cent to 291.43 points from a year-low of 222.26 on October 27
Financial Times
Fall in steel orders cools Ukraine growth
By Roman Olearchyk
Published: November 11 2008 02:00 | Last updated: November 11 2008 02:00
Abrupt signs of recession are being felt in the eastern industrial heartland of Ukraine. Donetsk, the largest steel and coal-mining town in this export-oriented region, is suffering from falling orders.
Smoke stacks are no longer polluting the atmosphere but the city’s 1m residents are not breathing easier. “The air in recent weeks has been cleaner,” says Victor, who works for a leading steel company in Donetsk. “But the dirty air has been replaced with a sense of anxiety. Industrial growth is slowing. It is being replaced by growing fears of lay-offs.”
Many Ukrainians do not understand the economics behind a $16.4bn (£10bn, €13bn) standby loan that the International Monetary Fund gave their country to stabilise its currency and banking system. But they know something is wrong when smoke stops churning out of the factories that pay their $400-$1,300 monthly pay cheques. Ukraine has ranked as one of the world’s top 10 steel exporters. Annual production is down 6 per cent year on year to 33.5m tonnes and the decline is accelerating: domestic steel output plummeted 49 per cent in October compared with last year to 1.9m tonnes because of low demand.
Factories across Ukraine have slashed production. The country’s three ferroalloy plants warned that they would halt production altogether. Sergiy Gayda, a steel industry analyst at Dragon Capital, a Kiev-based investment bank, says two-thirds of Ukrainian steelmaking facilities were idle.
“Out of 42 open-hearth furnaces owned by Ukrainian producers, only 10 operated by seven companies were working in late October,” he says, adding that the Makiyivka and Ilyich metallurg-ical plants completely halted production last month.
As production falls, workers complain that they have been sent on unpaid holidays. Others say they have received salaries late. Some factories warn that they could be forced to make workers redundant.
Hundreds of thousands of steel industry employees fear that they could lose their jobs. Coalminers, who supply a key raw material to the industry, say they could be next. “It’s scary. We don’t know if we will be paid in coming weeks or if we will have a job at all,” says Mykhailo Masyuk, a coalminer in the region.
Anxiety in Ukraine’s industrial regions is spreading throughout the country. Steel is a major source of foreign currency for Ukraine and has accounted for 40 per cent of the country’s exports. With exports falling, Kiev’s current account deficit has widened. The currency has declined.Ukraine is braced for a recession.
Nervous about the future, there are signs that citizens are stocking up on flour, oats and other basic foods. Some worry that they could default on bank loans used to buy cars and apartments.
Production from Soviet-built steel factories has contributed substantially to the eight years of growth that have pulled Ukraine out of economic turmoil following the collapse of the Soviet Union. But now credit markets are frozen and Ukraine’s overheated economy is cooling off.
Rinat Akhmetov, Ukraine’s richest businessman, is worried. His Metinvest Holding owns several steel mills and coalmines.Donetsk residents hope billionaires such as Mr Akhmetov will help cushion them from a serious blow.
Asked how his business has been affected, Mr Akhmetov was tight-lipped. He could not clearly say whether production at a handful of his factories would be halted but pledged to avoid redundancies.
“We see thousands of people being laid off in Europe,” Mr Akhmetov says. “It is hard to say what will happen. This is my hometown. My company is socially responsible and will do everything possible.”
The IMF said last week that Ukraine’s 6 per cent growth this year could fall to 3 per cent in 2009.
Anton Khmelnitski, head of the Eastern Europe investment team at UK-based Polar Capital, says Ukraine is in for a “hard landing”.
Victor Yushchenko, Ukraine’s president, says the first tranche of the IMF loan approved last week helped stabilise his country’s financial system. But he warns: “The biggest problem now is to prevent a deep fall and stagnation.”
A top aide announced yesterday that plans to hold a snap parliamentary election this year had been put off until the economic situation calmed down.
Eurasia Daily Monitor
November12, 2008
Ukraine Moves To Stabilize Financial System
Ukraine has secured a big loan from the IMF in order to stabilize its finances amid the global crisis. To qualify for the loan, parties in parliament agreed to set aside EDtheir differences and pass stabilization laws proposed by President Viktor Yushchenko. Thanks to this, Ukraine managed to stabilize its currency, the hryvnya (UAH). The government also persuaded the owners of two problem banks, Prominvestbank and Nadra, to sell them. Both may fall under Russian control.
As the global crisis erupted, the UAH plunged by over 20 percent against the U.S. dollar. Several Ukrainian banks that were heavily dependent on foreign loans faced default. Prominvestbank, the country’s sixth largest bank, had to turn for to the National Bank of Ukraine (NBU) for stabilization loans and to call in NBU managers (see EDM, October 8).
The government of Prime Minister Yulia Tymoshenko appealed to the IMF for assistance. In order to qualify for IMF financing, Ukraine’s parliament passed a package of stabilization measures on October 31. This was the first big piece of legislation since the summer, when the ruling coalition of Yushchenko and Tymoshenko broke apart. The package, drafted by Yushchenko, was approved by 243 deputies, who represented the parties of Yushchenko and Tymoshenko plus the small centrist Lytvyn Bloc, far more than the 226 votes needed.
The package provided for: the creation of a government stabilization fund to help companies repay foreign debts and invest in domestic projects; the possibility of nationalizing problem banks; attracting loans from international financial organizations; and dropping the government’s populist plan to increase minimum wages (Ukrainska Pravda, October 31).
On November 5 the IMF Executive Board approved a two-year $16.4-billion standby loan for Ukraine, the biggest loan ever taken out by the country. The IMF praised Yushchenko’s financial stabilization package. “The authorities’ program, supported by the two-year standby arrangement with the IMF, aims to restore financial and macroeconomic stability by adopting a flexible exchange rate regime with targeted intervention, a pre-emptive recapitalization of banks, and a prudent fiscal policy coupled with tighter monetary policy,” the IMF said (www.imf.org, November 5).
With the arrival of the loan, the NBU flooded the Ukrainian currency market with U.S. dollars for banks to buy and at the same time introduced tougher restrictions on currency trade. The UAH stopped falling immediately, freezing at around UAH5.8 to the dollar, down from UAH4.6 to the dollar some three months ago, but up from almost UAH7 several days earlier. Following the IMF move, the United States also indicated its readiness to help Ukraine. Ambassador William Taylor said that a group of financial experts would arrive shortly in Ukraine to help the local government tackle the crisis (Inter TV, November 7).
Yushchenko said that the IMF loan was needed to show that the NBU had the power to tackle a crisis. Parliamentary speaker Arseny Yatsenyuk, who briefly led the NBU in 2004, opined that the IMF funds were a guarantee of stability but they would not be spent. “I believe this credit will not be used,” he said. “This is a signal to the world and Ukraine that the NBU can intervene in the market at any moment and sell as many dollars as needed in order to stabilize the exchange rate” (Inter TV, October 31).
Prominvestbank’s stabilization was one of the IMF’s conditions, and the government promptly moved to rescue the bank. Yushchenko instructed the NBU and Tymoshenko to change its ownership or to nationalize it. Tymoshenko was apparently in favor of nationalization, but the NBU found the buyers. Slav AG, an Austrian-registered company controlled by the Klyuyev brothers, parliamentary deputies from the pro-Russian Party of Regions, acquired 68 percent of Prominvestbank shares from the Matvienko family for an undisclosed sum. The Klyuyevs pledged to invest UAH4.5 billion ($770 million) in the bank. They will also have to pay back a UAH5-billion ($862 million) stabilization loan that the NBU issued to Prominvestbank in early October (Kommersant-Ukraine, November 12).
The Klyuyevs do not have that much money so they will have to take out loans to recapitalize Prominvestbank. One of the brothers, Serhy Klyuyev, denied the rumors that the bank had been bought for a third party. He said several banks were ready to help Prominvestbank with loans (Delo, November 12). Ekonomicheskie Izvestia, a Kyiv-based business weekly, however, reported on November 12 that the Klyuyevs would re-sell Prominvestbank to Russia’s Sberbank.
Apart from the Klyuyevs, several Russian banks and Ukrainian businessman Dmytro Firtash were interested in Prominvestbank (Kommersant-Ukraine, November 12). Firtash eventually managed to buy another ailing financial institution, Nadra, which is Ukraine’s seventh largest bank, reportedly for $200 million. Nadra faced difficulties in repaying $230 million in foreign debts, and the NBU persuaded its owners to sell the bank (Kommersant-Ukraine, November 10). Firtash is linked to Russia’s Gazprom. RosUkrEnergo, a joint venture set up by Gazprom and Firtash, was the monopoly supplier of Russian gas to Ukraine until recently.
—Pavel Korduban
Eurasia Daily Monitor
November 11, 2008
Yushchenko Uses Security Service Against Former Orange Allies
The Ukrainian Security Service (SBU) is targeting the president’s former Orange ally, the Yulia Tymoshenko bloc (BYuT), as part of a strategy to undermine Tymoshenko’s popularity ahead of the January 2010 presidential elections. The campaign uses methods similar to those used by former President Leonid Kuchma.
The concerted campaign aims at smearing the BYuT, Tymoshenko, and pro-Tymoshenko defectors from the erstwhile supporters of the president Our Ukraine-Peoples Self Defense (OU-PSD) with accusations of “corruption” and other abuses of office. The biased nature of the campaign is similar to those in the Kuchma era insofar as the campaign ignores loyal political forces (pro-regime centrist parties and oligarchs under Kuchma and the pro-Yushchenko wing of OU-PSD) and potential coalition allies (the Communist Party under Kuchma, Party of Regions under Yushchenko).
There are four facets to the campaign. Firstly, the presidential secretariat compiled a 350-page dossier of accusations of “treason” against Tymoshenko and presented it to the prosecutor’s office in August. The SBU spent from July to September investigating the accusations. Two days after the secretariat presented its “evidence,” the prosecutor’s office announced that it had found no “concrete criminal infringements of the law” by the government and that the dossier included nothing that could be used to launch criminal charges against Tymoshenko (Ukrayinska Pravda, November 6).
Secondly, they are besmirching the prime minister’s reputation by linking Tymoshenko’s position as CEO of United Energy Systems in the mid-1990s to then-Prime Minister Pavlo Lazarenko. Yushchenko and Kuchma are trying to have Lazarenko extradited from the United States where he is serving a jail term on money laundering charges, after seeking political asylum there in 1999.
Thirdly, the secretariat is challenging the citizenship of naturalized Ukrainians, such as Davyd Zhvania, a businessman who provided funding for the Pora (Its Time) youth NGO and Orange Revolution protests in 2004 and the Peoples Self Defense Party in 2007. Zhvania is a deputy in the PSD wing of OU-PSD, which has de facto aligned itself with the BYuT in the inter-orange quarrels. Zhvania became a Ukrainian citizen in 1999 after renouncing his Georgian citizenship. The prosecutor’s office and courts rebuffed the presidential secretariat’s challenge that the citizenship had been received “illegally” and that he had kept his Georgian citizenship, although Ukraine does not recognize dual citizenship.
Pro-Yushchenko oligarch Igor Kolomoysky, CEO of the Pryvat group, openly admitted in an interview that he had Israeli and Ukrainian citizenship but has not been investigated (www.pravda.com.ua, March 28 and 31). Party of Regions deputy Yukhym Zvyahilsky, who fled to Israel in November 1994 but returned to Ukraine in March 1997, also has dual Israeli-Ukrainian citizenship.
Finally, BYuT and PSD deputies have been accused of “corruption.” The president has claimed that the deputies were involved in contraband in collusion with “organized crime.” Significantly, the SBU’s investigation is only targeting deputies from BYuT and the pro-Tymoshenko wing of OU-PSD.
One of the accused is deputy head of the PSD Gennadiy Moskal, who is deputy head of the parliamentary committee to combat organized crime and corruption. It is unlikely a coincidence that Moskal submitted a request on October 21 to the prosecutor’s office to investigate how the biggest castle in Central-Eastern Europe in Mukachevo, an important symbol in Hungarian history, was transferred until 2056 to Vysokyi Zamok, a small private company owned by family members of the presidential secretary Viktor Baloha (Zerkalo Nedeli/Tyzhnia, October 18).
A BYuT statement rejected accusations made by the SBU as merely part of a campaign to “blacken whomever Yushchenko sees as his main enemy—the government, its head and team” (www.byut.com.ua, November 6). The BYuT warned that acting SBU chairman Valentyn Nalyvaichenko would face consequences for “the privatization of the SBU on behalf of certain private persons, the degradation and discrediting of the Security Service, and its transformation into a directorate of the presidential secretariat for black PR” (www.byut.com.ua, November 6).
As Ukraine approaches the fourth anniversary of the Orange Revolution on November 21 and the pros and cons of what has changed for the better are being analyzed, one area that remains negative is civil-military relations (see EDM October 21). One important element of this is the continued practice, inherited from the Kuchma era, of the politicizing of the SBU.
The decline and growth of the SBU’s politicization are related to how the president is faring in the opinion polls. It always increases and becomes most acute when the president feels under threat from his domestic opponents.
In the Kuchma era the SBU became politicized during his second term following the November 2000 “Kuchmagate” scandal and climaxed during the 2004 elections. Under Yushchenko the SBU’s re-politicization, after a short respite following the Orange Revolution, increased quickly starting in the middle of his first term.
The SBU’s re-politicization has taken place for three reasons. First was the appointment of Deputy SBU chairman Valentyn Nalyvaichenko as acting chairman after parliament refused to support his candidacy which was proposed, as per the constitution, by the president. Nalyvaichenko has seemingly agreed to act as the head of a politicized SBU, unlike SBU chairman Ihor Smeshko who acquitted himself in a positive manner during the Orange Revolution.
Rumors that Nalyvaichenko was to be replaced because of his unpopularity in parliament were leaked by an SBU officer to the newspaper 24 (November 6). The position was offered to a Party of Regions deputy who turned it down. Nalyvaichenko is reportedly to be transferred to the presidential secretariat or National Security and Defense Council.
Secondly, the president’s approval ratings collapsed in 2006 from a very high point in his first year in office. They recovered briefly in 2007 and then collapsed again in 2008 to below 5 percent. A recent poll showed that the lack of confidence in the president among Ukrainians has gone up from an already high 56 percent in January to a staggering 82 percent in October (www.pravda.com.ua, October 27).
Thirdly, it is not coincidental that the SBU’s re-politicization has taken place during the last two years under acting chairman Nalyvaichenko, while the presidential secretariat is headed by Viktor Baloha. Baloha’s aggressive “in your face” defense of the president has drawn on the SBU to battle the president’s opponents.
The SBU’s re-politicization has brought no real benefits to Yushchenko in terms of improved public support or greater security. If anything, the opposite has occurred as can be seen by the willingness of the BYuT to vote with the Party of Regions on September 2 to change the law on the SBU to make it accountable to parliament as well as to the president.
—Taras Kuzio
