Ukraine Country Brief

Introduction/overview

Ukraine is the second largest country in Eastern Europe. It borders the larger Russia to the east, Belarus to the north, Poland, Slovakia and Hungary to the west, Romania and Moldova to the southwest, and the Black Sea and Sea of Azov to the south. The city of Kyiv is Ukraine’s capital.

Ukraine became an independent, democratic state following the Rada’s passing of the Act of Declaration of Independence on 24 August 1991 and a subsequent referendum held on 1 December 1991 in which approximately 90 per cent of voters expressed support for the Act. Shortly after, Ukraine’s independence was recognised internationally, including by Australia. Ukraine’s population of 47 million celebrates 24 August as the country’s national day.

Political overview

Ukraine is a unitary state composed of 24 oblasts (provinces), one autonomous republic (Crimea), and two cities with special status (Kyiv, its capital, and Sevastopol, which houses the Russian Black Sea Fleet). Ukraine is a republic under a semi-presidential system with separate legislative, executive, and judicial branches.

At the end of 2004, the country underwent an extensive constitutional reform. The President is elected for a five-year term and is the Head of State. Power over the security structures rests in his or her Office. Ukraine’s parliament – the Verkhovna Rada – has 450 seats, with members also serving five year terms. The Rada adopts legislation, ratifies international agreements, and approves the budget. The Prime Minister heads the Cabinet.

The current President, Viktor Yushchenko, was elected following three rounds of elections in October-December 2004, in what became known as the ‘Orange Revolution’. The first round in October 2004 resulted in neither of the frontrunners, Mr Yushchenko and then-Prime Minister, Viktor Yanukovych, gaining an outright majority. A run-off vote between the two was held in November 2004 but the result, which gave victory to Mr Yanukovych, was annulled by Ukraine’s Supreme Court following large protests in Ukraine and reports by international observer missions of widespread voting irregularities and fraud. A re-run of the second round of elections, held on 26 December 2004, was won by Mr Yushchenko. International and Ukrainian election monitors assessed the outcome of the re-vote to be credible. President Yushchenko was inaugurated on 23 January 2005, after the Supreme Court had considered and rejected a number of appeals by the Yanukovych side.

President Yushchenko dismissed his Cabinet in September 2005, citing infighting in the Cabinet and its inability to function as a team. Mr Yuri Yekhanurov was appointed Prime Minister, replacing Ms Yulia Tymoshenko. In January 2006, the Rada voted to dismiss Prime Minister Yekhanurov and his cabinet following a controversial deal on natural gas imports from Russia negotiated by Cabinet earlier in January. Mr Yekhanurov and his Cabinet remained in place until Parliamentary elections were held on 26 March 2006.

On August 4, 2006, the Rada approved the nomination of Viktor Yanukovychas Prime Minister of Ukraine. Following the protracted power struggle, President Yushchenko in April 2007 dissolved the Rada and called a snap election. No clear winner immediately emerged. On 18 December 2007, Ms Tymoshenko was approved as Prime Minister by the Rada and named her key objectives as tackling corruption and implementing economic, judicial and political reforms.

Economic overview

The transition to a market economy has been difficult for Ukraine, stricken with eight consecutive years of economic decline following its independence from the Soviet Union. It has since experienced economic growth but remains reliant on Russian energy imports, especially natural gas. Following independence, the Ukrainian Government freed up most prices and began a program of privatisation. These policies met with considerable domestic resistance. Industrial production in the period 1992-98 fell to less than half the 1991 level. A financial crisis in Russia in 1998 had a depressive effect on Ukraine's economic growth. However, since 2000 the economy has been growing strongly, albeit from a low base. Ukraine’s real GDP growth in 2007 was forecast to be 6.7 per cent.

Ukraine’s long-term economic prospects depend on building investor confidence through acceleration of market reforms, including addressing corruption.

Bilateral relationship

Ukraine opened an Embassy in Canberra in March 2003. Australia’s Ambassador in Moscow is accredited to Ukraine. Australia and Ukraine have one bilateral treaty: an Agreement on Trade and Economic Cooperation, signed in March 1998.

The small but active Ukrainian community in Australia plays an important role in developing bilateral relations. In 2002 the Australian Federation of Ukrainian Organisations helped establish Ukrainian-Australian House in Kyiv to promote commercial ties.

The 2006 Census recorded 13,665 Ukrainian-born persons in Australia. Most Ukrainian migrants to Australia arrived in the post-World War Two period. Many originated from western Ukraine, where they acquired Polish citizenship during the Polish occupation of 1920-1940.

Parliamentary delegations from Ukraine visited Australia in 1995 and 1997, and a joint parliamentary business delegation visited in an unofficial capacity in 2004. An Australian Parliamentary delegation, led by Mr Graeme Campbell, visited Ukraine in 1995, and another, led by the Speaker of the House of Representatives, Mr Neil Andrew, visited in June 2004. In December 1996, the former President of Ukraine, Leonid Kravchuk, undertook a private visit to Australia.

Bilateral economic and trade relationship

Australia’s trade relationship with Ukraine is modest but growing. Merchandise exports from Australia were valued at A$88 million in 2006-07 and, in the same period, Australia imported A$33 million worth of products from Ukraine. Australia’s main exports to Ukraine in 2006-07 were manganese ore and concentrates and aluminium ores. The main imports were rubber tyres and fertilisers.