Orange Revolution and Ukraine

KatKat_3

I think lots of people watched Eurovision that took place in Ukraine. It's said that " a new country appeared on the map" But ukraine is also known for it Orange Revolution. What do you think how could this great event influence investing into this country.
http://www.kuro5hin.org/story/2004/11/28/154623/66

adamm_3

Hi all.
Well, I know that after Mr.Yushenko became a president, national Ukrainian currency was rapidly stabilized after electional collapse. It's great indeed...
It's known that investment climate in Ukrain now is warmer then a year ago.
Today I saw a new interesting partnership - proof of Ukrainian development:
http://www.valuedventure.com

KatKat_3

Thank you!

And what other poeple think about it?

ReportInvestor

I think that recent votes against the European Constitution, and the desire of France to hang onto its subsidies, has put the EU enlargement project on permanent hold. That does not mean that these new countries won't benefit from trade with the EU, but the EU provides political stability and minimum standards to give investors some protection.

Eurasianet has a good article on the political situation which also has links to plenty of other articles on individual countries But note that the author has an interest in seeing the spread of freedom & democracy throughout the old USSR. Click here for another article on the significance of the "Orange Revolution"

Russia is desperate to maintain influence in the area which is a worry. Putin said that the collapse of the USSR was the worst event to befall his country. So if you are thinking of investing in the Ukraine you will need to take a view on the likely extent & nature of Russian influence/involvment, which will obviously depend on internal Russian and world politics. It is not insignificant that Putin has just imprisoned the CEO of his country's largest company and seized its assets, just like that :eek: . On the other hand British oil companies are prepared to invest in Russia and our declining oil and gas supplies will mean that trade between the West & Russia may be a stabilizing factor in the wider region.

Eastern European funds - "the new frontier" - have done very well over the last few years. Past performance is absolutely no guide to the future in developing markets. Levels of education, standards of infrastructure and - crucially - the rule of law are all key factors in whether a country makes a successful transition to a modern economy.

Baring Emerging Europe Investment Trust delivered 217% gains in the 7 years to April 1 2005 (but that included the enormous boost when EU enlargement was announced). I note that it is prepared to invest in Russia (35% of its portfolio) so it would include the Ukraine if considered suitable. But there is volatility. You would have lost 12% in one month to April 1 2005! That's the nature of emerging markets. The discount to net asset value on this trust is "only" 10% and if Eastern Europe ever went out of favour, that could widen - adding to any losses.

ReportInvestor

Here's an example of a gas dispute tension between Russia and the Ukraine being resolved, and why Ukraine has some leverage & is so important to Russia.

CNN

Gas dispute settled

"....Feuds between two former Soviet republics over energy and transit deals have heightened since Ukraine's new pro-Western government came to power earlier this year and said reducing energy dependence on Russia was a priority.

Russia, meanwhile, relies on Ukraine's pipelines to pump its gas to more lucrative European markets."

ReportInvestor

Appeal of the Orange Revolution starts to fade

Kiev was not built in a day

Insufficiently rigorous economic reform, open political wrangling and the continuation of corruption. No surprises, there, then.

KatKat_3

ReportInvestor wrote:

Here's an example of a gas dispute tension between Russia and the Ukraine being resolved, and why Ukraine has some leverage & is so important to Russia.

CNN

Gas dispute settled

"....Feuds between two former Soviet republics over energy and transit deals have heightened since Ukraine's new pro-Western government came to power earlier this year and said reducing energy dependence on Russia was a priority.

Russia, meanwhile, relies on Ukraine's pipelines to pump its gas to more lucrative European markets."

Thank you a lot for your link! Unfortunately i couldn't open the second one.
For Russia it's very important to take control of Ukraine. The reason is that Ukraine is a kind of a link between Russia and EU and a very cheap market.
At the beginning of the elections Putin supported Yanukovish storongly because of the strong views on Ukraine and his ambitions. He knew that Yushenko was more "european" and would aim at EU. That's why after the 2-d tour without knowing the results of the elections he congratulated Yanukovich. When Yushenko came to his power he started to change ukrainian Policy greatly, he has cut down the fraud a lot. But because of Putin's views a fake oils crises was caused in Spring. Prices on petrol were rocketed. That was made in order to undermine Yushenko's reputation.
Another problem is in the Parliament. Because of the majority that is pro-yanukovish lots of decisions are blocked. So for Ukriane it's very defficult to become a real european country and as long as personal interests will dominate peoples' interest nothing good will happen.

To conclude i'd like to Quote the words of Spanish ambassador :" i even couldn't imagine that Ukraine is such a beautiful county with a wonderful history and friendly people. I am surprised by its investment potential. Now i know how distorted Yellow Press a true situation in Ukriane"

ReportInvestor

Extracts from the link:

"....Six months after Viktor Yushchenko's inauguration as democratically elected president of Ukraine, his government seems to have lost much of its early sense of purpose.....

.......The disappointment is echoed in the columns of newspapers that had once been lavish in their support for the orange batallions. The revolution belonged in part to them, because it was they who insisted the elections conform to the law and then ensured that they did......

........For those now swelling the ranks of doubters, all that the new government has produced to reward their heroic efforts in the snow are price rises, leadership squabbles and a series of excited and ill thought-out policy moves based on a free-market ideology very few Ukrainians fully understand.

Top of the list of misfired government initiatives is the review of earlier company privatisations, which were widely seen as corrupt. To the population at large, it seemed so simple: just confiscate the ill-gotten gains from the millionaire oligarchs and spread the largesse around. For an elected government, operating - or trying to operate - in an international context, however, it is not so easy. How can privatisations be reversed without destabilising Ukraine's fragile market and discouraging wary foreign investors? The prime example is the country's largest steel mill, Kryvorizhstal, sold last year for what was regarded as an unfairly low price to a consortium that included the then president's son-in-law and, in effect, renationalised last month. A new auction has been promised but the timing and mechanics seem to change by week, if not by the day, and lawsuits are already looming. Responsibility for reviewing privatisations rests with the prime minister, Julia Tymoshenko, herself a first-wave "oligarch" who has sworn henceforward to work by the book.

The President and Prime Minister had intended that 14 economic bills would be passed into law before the summer recess. They were crucial to fulfilling the conditions for membership of the World Trade Organisation and an integral part, too, of the "action plan" drafted by the European Union as a preliminary to agreeing a start date for talks on EU accession.

In the last week before the recess, however, the Rada descended into shouting and brawling between pro-Yushchenko reformers and their opponents.

Worse, all the antagonism produced only eight new laws. The one regarded as most crucial for WTO membership, on copyright, was passed but the rest have been held over until the autumn.

If, as some expect, the March elections reflect disillusionment with Mr Yushchenko and do not produce a more reformist parliament, then any chance of legislating for serious restructuring of the economy, let alone of early EU accession, could be lost for several years.

Among Mr Yushchenko's many foreign patrons, there is deep concern that progress is not nearly so fast as had been hoped. One visiting US dignitary with an interest in the success of the "revolution" said: "These people just don't know how to do politics. They are not schooled in the techniques and the necessary give and take".

He was not alone in his frustration. There is a growing consensus in Ukraine that Mr Yushchenko and Ms Tymoshenko have frittered away much of their political capital. If they cannot regain momentum in the autumn, there is a real risk Ukraine will sink back into inertia.

After a series of political and diplomatic gaffes last December, President Putin has left Ukraine to its own devices. Suggestions that Russia was involved in the murder of Ukraine's most celebrated investigative journalist, Georgy Gongadze, or in the dioxin poisoning of Mr Yushchenko before the election have been rebutted. Probably it was always unreasonable to expect tangible results from the Orange revolution so soon. But Mr Yushchenko's options for rallying his disappointed cohorts are decreasing. His call earlier this week for a comprehensive reorganisation of law enforcement, to include the disbanding of the notoriously corrupt traffic police, looked more like a crowd-pleaser than a serious blueprint for change........"

Extract ends.

This market is incredibly volatile. The Baring Emerging Europe Investment Trust I mentioned above added +287% in the 7 years to June 1 2005 compared to +217% in the 7 years to April 1 2005 !

adamm_3

People, you're so informed here! :T
It was more interesting to read your article than news-websites, dear ReportInvestor! :cool:

KatKat_3

Thank for this link. Of course it's difficult to fulfill all people's expectations without making wrong steps especially when they are expecting from you a lot.

ReportInvestor

More problems for Yushenko were mentioned in the Independent today. Yushenko's stupid son is going around with expensive jewelry, a £30K mobile (that's not a typo :eek: ) and a £90K BMW that's unique to Kiev.

But as KatKat suggests, you have to put that all this in the context that at least there is the possibility of improvement where none, or far less, existed before.