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10.05.2011

People First: Government denial in the face of accusations of human rights infringement

   

 

Ukraine loses court proceedings against foreign investor

The U.S. citizen Joseph Lemire, owner of Gala Radio, has recently demonstrated a new way to protect business rights in Ukraine: by winning a dispute against Ukraine in the International Centre for Settlement of Investment Disputes. The Centre ordered Ukraineto pay Joseph Lemire a penalty of 8, 717, 000 USD and an additional settlement fee of 750, 000 USD, although the initial amount in dispute was considerably larger. By creating Gala Radio and promoting it to the leading position among radio stations Joseph Lemire intended to develop a full national network but instead faced illegal interventions by various state bodies in the awarding of radio licenses and interference in the general operation of the company.

The first action of Joseph Lemire ended in a peace agreement with the Ukrainian authorities in 2000. But in 2006 the owner of Gala Radio re-filed an action againstUkraine due to violation of his rights under the U.S. - Ukraine Foreign Investment Protection and Promotion Agreement and won. An interesting fact is that Joseph Lemire has spent 1, 042, 000 USD on his lawyers while Ukraine has spent 4, 320, 000 USD which is 4.2 times more. In the case that the court decision is not acted upon by Ukraine during a two month period the owner of Gala Radio has the right to start an arresting procedure of Ukraine’s property abroad to cover his losses. This scenario may well damage the reputation and investment climate of Ukraine. 

People First Comment: The government of Ukraine have just spent UAH 110, 296, 000 ($13, 787, 000) in trying to defend their own breaches of Ukrainian law … Interestingly the fees of the governments defence lawyers were 4.2 times higher than those of the litigant which begs questions as this is the opposite of normal legal convention… One has to ask why it is that everything this government seems to touch costs appreciably more than in any other country.  

The governments lawyers seem to be making a habit of losing international law suits as this is the second of this administration, the last one being Naftogaz Ukraine verses RoUkrEnergo which cost the nation billions 

This whole matter could well have been settled over a cup of coffee if it were not for the arrogance and vested interests of a few media owners and the greed of state bureaucrats… but no, the budget had to be milked, a few had to have their troughs filled and it is all left to the Ukrainian tax payer to pick up the bill.  This is not corruption, it is institutionalised theft and those responsible should not only be fired, they should be in prison. Otherwise we will have to accept this as a part of modern Ukrainian business culture and watch the investment climate of the country completely implode. 

Government denial in the face of accusations of human rights infringement

The 2010 Country Report on Human Rights Practices annually submitted by the U.S. Department of State defines the situation in Ukraine as critical. Particular focus was placed on law enforcement officers’ infringement of the human rights of refugees, people in custody and those seeking asylum. The report also mentions an increasing number of criminal cases against oppositional politicians and restrictions on freedom of assembly, the court system’s ineffectiveness and corruption and growing levels of corruption within the government and society in general.

In response to the report, deputies from the Party of Regions and representatives of the government called this evaluation of Ukraine unreasonable and groundless. Vadym Kolesnichenko, Deputy Head of the parliamentary faction of the Party of Regions, stated that the document prepared by the U.S. Department of State had nothing to do with the reality of the situation in Ukraine. Presidential Administration Deputy Head Anna German referred to the report as hopelessly out of date. She believes the fight against corruption has progressed well compared to last year. Considering the criticism of the Ukrainian authorities by the United States of America Marietta de Pourbaix-Lundin, co-rapporteur of the Parliamentary Assembly of the Council of Europe, expressed her continued concern over a rollback of democracy in Ukraine as evidenced by the recent changes to the Constitution, a poor quality of a judicial reform, numerous violations during the last local elections, etc. Hanne Severinsen, former co-rapporteur of the Parliamentary Assembly of the Council of Europe and President of “European Media Platform”, believes that the monitoring of Ukraine’s human rights freedoms should continue due to the lack of independent judiciary, growing corruption and centralisation of power.

People First Comment: If Hanna German and Vadym Kolesnichenko were to be reincarnated they would surely come back as Ostriches.  Anybody who believes that Human Rights have improved under this administration either does not know what human rights are or has their head well and truly buried in Ukraine’s rich black soil.

Press freedom: Down…

Right of Assembly: Curtailed…

Police brutality: Increasing…

Official treatment of refugees, asylum seekers and those in custody: Well below internationally accepted standards…

Medical services: Pay up or be left to suffer…

Education: Pay up or get poor marks…

Free and fare elections: Administratively violated…

Political persecution: On the increase…

Anti-Corruption campaign: Politically motivated and highly selective…

Court system: Totally corrupt…

NGOs: New laws to limit and control their activity

Election law: Redrafted without proper public consultation

Appeals to the European Court of Human Rights: 129, 000 cases and rising

Hanna German is however right on one count.  The US report is out of date… the real situation is much worse. It is unfortunate that Mrs German’s current employment is such a waste of her considerable talent and ability.   

Misinformation on the subject of food prices

At a recent government session Prime Minister Mykola Azarov referred to accusations that the Cabinet of Ministers has been unfairly increasing the tariffs and prices for food and petroleum as unreasonable. This statement by  the Prime-Minister may have been provoked by recent criticism of the government by Yuila Tymoshenko who protested that prices for food in Ukraine were the same as in the countries of the EU, despite the clear economic differences. Having accused his opponents of lying Prime-Minister Azarov is now attempting to attribute the rise in food prices in Ukraine to a global trend for rising prices. The argument is not entirely untenable; World Bank Group President Robert B. Zoellick reported recently that the food prices index increased by 36% last year.

However, a comparison of food prices in supermarket between Ukraine, Poland and Slovakia shows that a basic food basket, including milk, meat, butter, eggs, bread, fruit and vegetables is 13% more expensive in Ukraine than its Polish equivalent and 8.5% more expensive than in Slovakia. Yet the minimum salary, average salary and state pension in Ukraine are less than a quarter than that of Poland or Slovakia – and these are far from Europe’s richest states. Perhaps if Azarov fears a hunger march of a North African scale he will suggest that Ukrainians feed themselves by retreating to their dachas to grow vegetables.

People First Comment: In the Soviet era foodstuffs were either sold in government owned shops at government controlled prices and by government employees or were produced in Dacha gardens.  In fact Dacha allotments accounted for over 40% of all the fruit and vegetables consumed.  However all that has changed and today we prefer the convenience of supermarkets.  Ukrainians may think they have adopted an international model but this is a myth.  In the west supermarkets use their buying power to drive prices down in order to attract more customers as competition is fierce. Price cartels are illegal and supermarkets can be fined millions if they are found to be cheating the consumer.  

In Ukraine supermarket chains buy direct from the manufacturer and by the container load therefore their prices are the lowest possible.  But instead of passing that saving on to the customer they agree prices amongst themselves to maximise their profit.  The net result being that the consumer pays a great deal more and here are some examples.  A bottle of British HP ketchup in theUK costs the equivalent of UAH 17.64, in Ukraine it costs UAH 147.00, a price hike of 830%... American made Tabasco pepper sauce costs the equivalent UAH 16.44 in the UK and UAH 98.00 in Ukraine, a price hike of 596%... and it’s the same for just about every imported item.  

Part of the problem is that the illegal ‘service charges’ levied by Customs officers on containers crossing the border has gone up from $5, 000 to around $40, 000 which has to be passed on to the customer.  Next the supermarkets themselves operate price fixing cartels that are not challenged by the Anti-monopoly Committee and finally the supermarket owners have used their financial muscle to prevent competitive western store groups from entering the market. ‘IKEA’ gave up trying, ‘Tesco’ have been trying unsuccessfully for years and ‘Auchen’ have a few stores but they are partnered with a Ukrainian supermarket group.  So how is this possible?  One reason may be that the principle owners of the major Ukrainian supermarket chains are all Rada Deputies…

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