Flag of Ukraine

Ukraine country brief

Overview

Ukraine is the second largest country in Eastern Europe. It borders 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. Kyiv is the capital of Ukraine.

Ukraine became an independent, democratic state following the Ukrainian Parliament’s (Verkhovna Rada) 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. Ukraine’s population of 45.4 million (2013 est) celebrates 24 August as the country’s national day.

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 is home port to the Russian Black Sea Fleet). In March 2014 Russia purported to annex the Ukrainian territory of Crimea, including the city of Sevastopol. On 27 March a majority in the United Nations General Assembly passed a resolution on the Territorial Integrity of Ukraine which emphasised that Russia’s purported annexation had no validity.

Political overview

Ukraine is a republic under a semi-presidential system with separate legislative, executive, and judicial branches. The President is elected for a five-year term and is the Head of State. Power over the security structures rests with the President. 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.

On 25 May 2014, Petro Poroshenko was elected President of Ukraine. On 27 June 2014, President Poroshenko signed the European Union (EU)-Ukraine Association Agreement which serves to deepen political, economic and trade relations between Ukraine and the EU, signaling Ukraine’s decision to pursue closer ties with Europe following recent turmoil surrounding the question of Ukraine’s political and economic future.

International focus on Ukrainian politics increased dramatically after former President Viktor Yanukovych was ousted in a popular uprising lasting from November 2013 to February 2014. At issue was the former Ukrainian Government’s announcement on 21 November 2013 that it was suspending preparations for the signing of the EU-Ukraine Association Agreement, and would instead pursue closer ties with Russia. The announcement sparked anti-government demonstrations largely centered in Kyiv’s Maidan square. On 18 February a violent government crackdown on protestors in the square, ultimately led to protestors storming government buildings and Mr Yanukovych fleeing the country on 21 February.

Mr Yanukovych was elected president on 14 February 2010, during a turbulent decade in Ukrainian politics which started towards the end of 2004 when the country underwent extensive constitutional reform. Mr Yanukovych had previously been elected President in the November 2004 presidential election, a result which was viewed as fraudulent. Riding on the back of a popular swell of opposition to the alleged fraud (the ‘Orange Revolution’), former President Viktor Yushchenko came to power in January 2005 following a re-vote. Mr Yushchenko’s presidency (2005-2010) was fraught with political gridlock and characterised by a series of short-lived coalitions. Mr Yanukovych’s presidency (2010-2014) was criticised for its human rights record and high-level corruption.

Following the ousting of Mr Yanukovych, beginning 26 February 2014 rival protests were held in Crimea, which had been a part of Russia prior to 1954. On 16 March a flawed referendum was conducted in Crimea, which led to its purported annexation by Russia. Russia also stands accused of supporting and enabling the violent destabilisation of Ukraine’s eastern regions by pro-Russian separatists, which began in April 2014.

Economic overview

The transition to a market economy has been difficult for Ukraine, stricken, as it was, with eight consecutive years of economic decline following its independence from the Soviet Union. It has since experienced periods of economic growth but has been heavily 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 1992–1998 fell to less than half the 1991 level. A financial crisis in Russia in 1998 had a depressive effect on Ukraine’s economic growth, and Ukraine suffered considerably again from the 2008 global economic crisis. In late 2008, the global slump saw demand collapse for Ukraine’s export commodities like steel and chemicals. By January 2009 industrial production had fallen by 34 per cent year on year. Fears of a run on the banks and currency collapse led the Ukrainian government to negotiate a US$16.4 billion loan from the International Monetary Fund (IMF).

In August 2010, Ukraine reached a new agreement with the IMF for an additional US$15.1 billion to put the country on the path to fiscal sustainability, reform the gas sector, and shore up the country’s banking system. The years 2010 and 2011 saw economic growth resume. However, the IMF program stalled early 2011 due to the Ukrainian Government’s lack of progress in implementing key gas sector reforms. Growth slowed to 0.2 per cent in 2012, due to a downturn in EU and Russia, and real GDP dropped by an estimated 1 per cent in 2013. This led to a severe drop in Ukraine’s foreign exchange reserves in late 2013, and fears that Ukraine could default on its sovereign debt in 2014.

On 5 March 2014 the EU announced an €11.175bn aid package for Ukraine, and on 27 March 2014 the IMF announced an assistance package of US$14-18bn to support Ukraine’s democratic transition. The signing of the EU-Ukraine Association Agreement is aimed at deepening Ukraine’s economic relationship with the EU. However the immediate prospects for Ukraine’s economy are mixed given the violent unrest in Ukraine’s eastern regions.

Bilateral relationship

Ukraine opened an Embassy in Canberra in March 2003. Australia’s Ambassador in Warsaw is accredited to Ukraine, and travels there regularly, particularly during the unrest which commenced in November 2013. Australia has a Consulate in Kyiv, headed by an Honorary Consul. Australia and Ukraine have an Agreement on Trade and Economic Cooperation, signed in March 1998. In May 2009, AUSTRAC signed a Memorandum of Understanding with Ukraine on the Exchange of Financial Intelligence.

The 2011 Census recorded 38,791 people who identify as having Ukrainian ancestry.  The active Ukrainian community in Australia plays an important role in developing bilateral relations. In 2002 the Australian Federation of Ukrainian Organisations helped establish Ukraine–Australia House in Kyiv to promote commercial ties.

In June 2012, Australia donated €1 million to the Chernobyl Shelter Fund to help transform Chernobyl into a safe and secure site. In May 2014, Australia donated $300,000 for the Organisation for Security and Cooperation in Europe (OSCE) Special Monitoring Mission to Ukraine aimed at reducing tension and fostering stability and security in Ukraine. On 19 June, Australian imposed targeted financial sanctions and travel bans on individuals who have been instrumental in the Russian threat to the sovereignty and territorial integrity of Ukraine.

Bilateral economic and trade relationship

Australia’s trade relationship with Ukraine is modest. Merchandise exports from Australia were valued at A$35 million in 2013 and consisted mainly of manganese ores and concentrates. In the same period, Australia imported A$46 million worth of products from Ukraine, mainly fertilisers, and electrical circuits equipment.

Updated July 2014