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Factba.se: Australia DFAT Country Briefs - Ukraine
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COUNTRY BRIEFS


INTRODUCTION

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 (the 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. Shortly after, Ukraine's independence was recognised internationally, including by Australia. Ukraine's population of 45.7 million (2009 est) celebrates 24 August as the country's national day.

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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 is home port to 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 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. 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.

Viktor Yanukovych was elected President in a second-round ballot on 14 February 2010, with 48.95 per cent of the popular vote. International observers (including the Organisation for Security and Cooperation in Europe) endorsed the results as free and fair. Despite an appeal against the election results by rival Presidential candidate, former Prime Minister Yulia Tymoshenko, the results were upheld by Ukraine's courts and Mr Yanukovych was inaugurated on 25 February 2010. Mykola Azarov was appointed Prime Minister on 11 March 2010.  Mr Azarov leads a three-party coalition government consisting largely of close allies of Mr Yanukovych.

Mr Yanukovych became President after a turbulent five years in Ukrainian politics.  Former President Viktor Yushchenko came to power in January 2005. Mr Yushchenko's electoral victory was the result of a popular swell of opposition (the ‘Orange Revolution') to the alleged fraud in the November 2004 Presidential election.  Despite popular initial support, Mr Yushchenko's presidency was fraught with political gridlock and characterised by a series of short-lived coalitions. Ukraine's period of hardship during the 2008 financial crisis – exacerbated by the January 2009 crisis over the supply of gas from Russia – further weakened the Yushchenko Presidency. 

The Yanukovych government is no longer seeking NATO membership or that of any other military alliance. It defines Ukraine as a European non-bloc state. It seeks European integration, but has slowed down its push towards EU membership. It is strengthening relations with Russia, including in the gas sector, and has extended the lease of Russia's Black Sea Fleet to stay in Sevastopol for another 25 years.

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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, from 2000 the economy grew strongly, albeit from a low base.

Ukraine suffered considerably from the 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).

Ukraine has sought a further US$19 billion loan from the IMF to help restore economic growth (after a 15.1 per cent contraction in real GDP growth in 2009) and to bridge a budget gap. In June 2010, negotiations were relaunched. The IMF is considering a loan of more than US$ 14.9 billion on the condition that Ukraine moves faster in cutting the budget deficit (estimated at 6.5 per cent of GDP in 2009) by 4 per cent, reducing inflation (15.9 per cent in 2009), adopting budget and tax reform legislation by July 2010 and strengthening the powers of the National Bank of Ukraine (NBU).

In 2010, Ukraine looks likely to return to solid economic growth with the IMF predicting 3.7 per cent real GDP growth for the year as steel and chemical exports have picked up.

Ukraine's long-term economic prospects depend on improving governance, building investor confidence through acceleration of market reforms, and replacing and upgrading infrastructure.

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BILATERAL RELATIONSHIP

Ukraine opened an Embassy in Canberra in March 2003. Responsibility for diplomatic relations with Ukraine lies with the Australian Embassy in Vienna. 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 2006 Census recorded 13,665 Ukrainian-born persons in Australia. Most Ukrainian migrants to Australia arrived in the post-World War II period. Many originated from western Ukraine, where they acquired Polish citizenship when that region was part of Poland from 1920 to 1940.

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.

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.

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BILATERAL ECONOMIC AND TRADE RELATIONSHIP

Australia's trade relationship with Ukraine is modest. Merchandise exports from Australia were valued at A$69.82 million in 2009 and consisted mainly of manganese ores and concentrates. In the same period, Australia imported A$35.25 million worth of products from Ukraine, mainly fertilisers and electrical circuits equipment.

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Last Updated: August 2010

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