The Eurasia Center
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President@eurasiacenter.org
Ukraine: Country Report
The Ukraine Crisis; a Timeline of Rebellion, Annexation, and Unrest
Being geographically located in the middle of Russia and Europe, violent events have unfolded
this past year due to the influences of diametrically opposing forces.
November 2013 and Maidan: Protests emerge in Ukraine’s capital, Kiev, in response to former
President Viktor Yanukovych’s refusal to sign an EU trade pact and subsequently receiving a
bailout package of approximately $20 billion from Russia. Considering this EU deal to be
instrumental to the possible economic future of Ukraine, angry protesters gather at the Maidan
Square of Kiev (Euromaidan), which becomes a center for bloodshed and violence as
government involvement grows increasingly aggressive. Ukraine’s parliament votes to oust
Yanukovych from power, then promptly creates an interim government in the aftermath of the
revolution with Arseniy Yatsenyuk at its head. A new president, Petro Peroshenko, a known
Ukrainian nationalist, is later elected. However, the revolution’s damages are still quite severe,
resulting in a visible divide in the nation.
The 2014 Annexation of Crimea: With over three fourths of its population being native
speakers of Russian, being in close geographic proximity, and being rich in oil and gas resources,
Crimea has acted as an increasingly valuable asset to Russia. As pro-Ukraine protests erupt in
Kiev, pro-Russian protests begin to crop up in Crimea with Crimean residents dubbing
themselves separatists who wish to join the Russian Federation. A Crimean status referendum
was held, to which an overwhelming majority of people respond positively to joining Russia.
Due to Russian troops being displaced in Crimea prior to the vote, many organizations consider
it to be illegitimate, including NATO which declares the event a “referendum held at gunpoint”
and places the first of many economic sanctions on Russia.
Eastern Ukrainian Separatists Rebellion: Pro-Russian unrest takes hold in Eastern Ukraine,
with militant demonstrators taking control of government buildings in cities such as Donetsk in
April 2014. Due to the Ukrainian government responding, casualties were calculated to be in the
thousands from April to July of 2014 alone. The conflict escalated to a record high on July 17th,
2014 when Malaysia Airlines Flight 17 was shot down from the Ukraine-Russia border and
crashed in Ukraine, killing all passengers and flight crew aboard. Although the perpetrators of
the event are currently still unknown, various theories and biases have contributed to further
conflict between separatist and Ukrainian groups.
War in Donbass: As an ongoing result of the tumultuous events of 2014, the Donbass region
(containing the provinces or “oblasts” of Donetsk and Luhansk) continues to be the site of
violent conflict and warfare between the Ukrainian government and pro-Russian separatists
reinforced by Russian military troops. An agreement titled the Minsk Protocol to halt the conflict
and call for immediate ceasefire was signed on September 5th of 2014 by representatives from
Ukraine, Russia, and the provinces of Donetsk and Luhansk; however, violations of the
agreement were conducted soon after and it ultimately failed to halt combat.
In the Wake of a Recession, an East-West Split Emerges
After Russia, the Ukrainian republic was by far the most important economic component of the
former Soviet Union, producing about four times the output of the next-ranking republic. After
decades as a constituent republic of the USSR, Ukraine attained its independence in 1991. With
rich farmlands, a well-developed industrial base, highly trained labor, and a good education
system, Ukraine has the potential to become a major European economy.
Following the Orange revolution, the pro-West policies favored by Yuschenko led to hopes that
Ukraine might be able to join the EU in the near future. However Yuschenko’s subsequent fall,
and the cooling of Ukrainian-European relations compounded with Russia’s anger at former
USSR states attempting to join the EU, has meant that all such talks have been put on hold.
Within the Ukraine as well such sentiments have cooled, in 2004 only 16% of Ukranians were
aginst European integration; the current figure is more than double that. Ukraine experienced
large economic growth in the early 2000s, before the 2008 recession hit the country hard; the
economy shrank by 15%, among the worst in the world for that year. As of recently however the
economy has been on an upswing, but is sensitive to global pressures and more worryingly is
very dependent upon gas supplies from Russia.
Economic Indicators:
Unemployment Figures:
 The GDP per capita (PPP) of Ukraine as of 2014 stands at $8,700 per capita, and is
composed of 12.1% agriculture, 29% industry, and 58.8% services. Over the past halfdecade both agriculture and industry have decreased to make up a far smaller proportion
of the economy when compared to a decade ago, and indicates Ukraine’s transition to a
service based economy which is marketed to the EU. 1
 Ukraine’s fertile black soil generates a great amount of agricultural output, including
grain, sugar beets, sunflower seeds, vegetables, beef, and milk. It also produces
considerable amounts of coal, electric power, ferrous and nonferrous metals, machinery
and transport equipment, chemicals, and food processing (especially sugar).1
 Ukraine saw a growth rate of -6.8% in 2014, showing a sign of economic troubles created
as a result of a year of conflict and crisis, which has had a detrimental effect on the
nation’s productivity even as the interim government made attempts at stability in
February of 2014.
 Ukraine encourages foreign trade and investment. The foreign investment law allows
Westerners to purchase businesses and property, to repatriate revenue and profits, and to
receive compensation in the event that property was to be nationalized by a future
government.
 Major export commodities for Ukraine include ferrous and nonferrous metals, fuel and
petroleum products, chemicals, machinery and transport equipment, and food products.1
Political Considerations:

Ukraine is a republic under a semi-presidential
system with separate legislative, executive, and
judicial branches. The President is elected by
countrywide popular vote and is the head of the
executive branch. The Prime Minister is appointed
by the 450-seat parliament. The parliament also
approves the Cabinet of Ministers, proposed by
the Prime Minister and the President. The heads
of all central agencies and regional and district
administrations are appointed by the President.

The general corporate income tax is 25 per cent,
with income tax rates at a flat rate of 13 percent
and value-added tax (VAT) at 20 per cent.2
1 CIA World Factbook 2014
Ukraine’s Parliament in 2006

Ukraine has been locked in a struggle ever since the Orange Revolution of 2005, which led to
Victor Yuschenko winning the presidential elections in a second runoff. The revolution and
subsequent political drama, revealed deep tensions within the Ukraine, where the East of the
country is pro-Moscow and more conservative, while the West looks toward the EU for their
future.

Political turmoil has become the norm in Kiev, most disturbingly when opposition candidate
Yulia Tymoshenko (and longtime nemesis of current president Viktor Yanukovych) was
jailed on flimsy corruption charges in October of 2011. 3 The move brought near
instantaneous condemnation from the EU, and has led to concerns that the country is moving
down a path similar to Russia’s. Yuschenko defeated Viktor Yanukovych, who proceeded to
run for president again in 2010 and win, with much of the population voting for Yanukovych
due to their disgruntlement with Yuschenko and his failure to deliver economic prosperity.
This in turn has caused the Ukraine to align itself more closely with Moscow than it had been
just several years before.

Such an alignment contributed to starting the Ukraine Crisis in 2014, as Yanukovich’s
support of Russian politics and economic interests led to him being overthrown and replaced
by openly nationalistic Petro Poroshenko.
Attractions:
 Abundant resources: Ukraine is rich in natural resources. It has a major ferrous metal
industry, producing cast iron, and steel, and its chemical industry produces coke, mineral
fertilizers, and sulfuric acid. It also is a major producer of agricultural goods and has a broad
industrial base, including much of the former USSR's space and rocket industry. Although oil
and natural gas reserves are small, it has important energy sources, such as coal, and large
mineral deposits. It is one of the world's leading energy transit countries, providing
transportation of Russian and Caspian oil and gas across its territory.

Friendly Investment Environment: Ukraine encourages foreign trade and investment. The
parliament has approved a foreign investment law allowing Westerners to purchase
businesses and property, to repatriate revenue and profits, and to receive compensation if the
property is nationalized by a future government. The country also has made it through the
worst of the 2008 recession in better shape than much of Europe, and the economy is
expected to grow 5% in the next year.4
2 World Bank: “Doing Business in Ukraine”
(http://www.doingbusiness.org/ExploreEconomies/Default.aspx?economyid=194)
3
4
The Rise and Fall of Yulia Tymoshenko, The Wall Street Journal, 10/14/2011
European Business Association

Favorable Conditions: Ukraine is buoyed buy its large labor force, and consumer potential.
Over the next several years, Ukraine will have an improving tax environment: the corporate
tax rate will be cut gradually by 9pp to 16% in 2014 and VAT rate by 3pp to 17% in 2014,
one of the lowest rates in Europe.
Investment Attractiveness Index of Ukraine
Troubled Spots:
Relationship with Russia: Over the past several years the two countries have had a contentious
relationship in regards to their energy disputes. Russia has claimed that the Ukraine had been
diverting gas supplies to export for its own needs in violation of their agreements; the disputes
reached a crescendo in early 2006 when Russia cut off all gas. Since then there have been several
more incidents resulting in reduced gas supplies to Europe. With the Middle East wracked by
unrest, Europe has to hope its other source of energy displays more stability. Tensions have
escalated and grown increasingly hostile. The need for Russian influence in Ukraine has caused a
divide in the nation exemplified by the 2014 crisis.
Underdeveloped Financial Systems: According to the Economist Intelligence Unit, "All parts
of the sector—including banks, non-bank financial institutions and the securities market—are
still largely underdeveloped and suffer from insufficient capital, an unsatisfactory legal
infrastructure and limited investment opportunities." According to the U.S. Trade
Representative, "Foreign insurance firms and banks are permitted to operate in Ukraine, but they
cannot open branches, a prohibition that impedes participation of foreign businesses in Ukraine.”
Overregulation: The U.S. Department of Commerce reports that "the number of regulations,
required certificates, and inspection regimes in Ukraine impose a significant regulatory burden
on private enterprise… The [government] requires enterprises to obtain numerous permits to
conduct business. Procedures are complex, unpredictable, burdensome, and duplicative creating
confusion, increasing the cost and time to do business in Ukraine, providing opportunities for
corruption, and driving business into the shadow economy.… ‘One-stop Registration Shops'
have been introduced in several cities [for] land use and other permits.”
Confronting Environmental Challenges
In 1986, Ukraine suffered a major global catastrophe with the Chernobyl disaster, and it is
still fighting the effects of radioactive contamination. Despite the history of nuclear fallout, and
being the site of the largest nuclear accident in history, Ukraine still depends upon nuclear power
for 48% of its power needs. However in the wake of the Japanese Tsunami and the nuclear
power plant disaster, the Ukraine emphasized electricity in 2011 in order to allay the fears of the
population.
Its reliance on industries for economic development has compounded Ukraine’s
environmental woes. In terms of energy consumption per dollar of GDP, Ukraine ranks as one of
the most energy-intensive countries in the world because of its inefficient, Soviet-era industries._
Ukraine suffers countrywide contamination of water and soils, and practically all of its industrial
cities are suffering from air pollution._ The Ukrainian government has shown the will to spend on
alternative energy and increase public awareness on environmental issues; they recently finished
construction of Europe’s largest solar power plant. However, the country faces a tough battle in
restoring its environment.
Demographics:
 Ukraine boasts a largely homogenous population of 44,429,471. 77.8% of the people are
Ukrainian, and 17.3% are Russian.5
 Ukrainian (the official language) is the most common language spoken at 67.5%, while
Russian still compromises nearly a third at 29.6%
 In terms of religion, a majority of the population follows some form of Ukrainian Orthodoxy.
The rest of the population is estimated as being Protestant, Jewish, or having no religious
affiliation.6
 A small portion of the population (33%) resides in rural areas, and a majority (66%) lives in
towns and cities.7
 Life expectancy at birth is 66.81 years for males and 76.63 for females. The population is
declining, with a population growth rate of -0.6%.8
 Ukraine has an aging population, with a total median age of 40.6. The age composition of the
population is as follows: 0-14 years: 15.22%, 15-64 years: 68.98%, and 65 years and over:
15.8%.9
Education
 Although some private institutions do exist, the Ukrainian education system is mostly public.
Total governmental spending on education amounts to 5.4% of GDP.10
 Primary education is 4 years, and secondary education is 7 years, as 11 years of education is
compulsory.
 The number of students pursuing degrees is increasing. In 2004, the gross enrollment ratio for
tertiary level education was 65.5%, a 16% increase from 2000.11
5
6
8
9
“Ukraine.” 2014 CIA World Factbook. <https://www.cia.gov/cia/publications/factbook/geos/up.html>
Ibid
“Ukraine.” 2014 CIA World Factbook
Ibid
10
11
http://www.nationmaster.com/country/up-ukraine/edu-education
Ibid
Geography/Natural Resources:
 Located in Eastern Europe, Ukraine borders Belarus, Hungary,
Moldova, Poland, Romania, Russia, and Slovakia. It also
borders the Black Sea.
 Most of Ukraine consists of steppes and plateaus. The
Carpathian Mountains in the west and the Crimean Peninsula in
the South are the only mountain ranges in the country.
 Ukraine maintains a land area of 603,550 square kilometers,
which makes it slightly smaller than Texas. It is ranked 46th in
the world in terms of total area.12
 Ukraine has plentiful natural resources including iron ore, coal,
manganese, natural gas, oil, titanium, and nickel.13
 Ukraine is estimated to have 395 million barrels of oil reserves. It relies heavily on oil imports,
and in 2011, it imported more than 300,000 barrels a day.14
 Ukraine also has about 40 trillion cubic feet of natural gas reserves. Ukraine is the 6th largest
consumer of gas, and consumes more gas than the Czech Republic, Hungary, Poland, and
Slovakia combined.15
 Ukraine has 37.6 billion tons in coal reserves, which accounts for about 15% of the former
Soviet Union’s total reserves.16
Agriculture
 Agriculture employs over 24% of the workforce, and accounts for 18.7% of Ukrainian GDP. 17
 Permanent crops compose 1.5% of the land, and arable land accounts for over 53.8%, while
there is 22,080 square km in irrigated land.18
 Key crops include: grain, sugar beets and sunflower seeds.19
 In 2004, Ukraine exported over 869,000 metric tons of sunflower seed oil, 3 million metric
tons of barley, and 2 million metric tons of wheat. Sunflower seed oil was the top export from
Ukraine, accounting for $528 million.20
Relevant Environmental
Regulations:
Laws
and
Kyoto Protocol
 An international agreement in which adherents
voluntarily sign up to limit their carbon
emissions in an effort to reduce global
warming. Additionally, nations can buy and sell
emission credits in order to fulfill their pledge.
“Ukraine.” 2014 CIA World Factbook
“Ukraine.” 2014 CIA World Factbook
14
“Ukraine Energy Data, Statistics and Analysis.” U.S. Department of Energy: Energy Information Administration
<http://www.eia.doe.gov/emeu/cabs/Ukraine/Full.html>
15
Ibid
16
Ibid
17
Ibid.
18
“Ukraine.” 2014 CIA World Factbook
19
Ibid.
20
“Ukraine: Key Statistics of Food and Agriculture External Trade.” Food and Agricultural Organization of the United Nations
<http://www.fao.org/es/ess/toptrade/trade.asp>
12
13
 Although Ukraine is a non-Annex I country under the United Nations Framework Convention
on Climate Change, it signed the Kyoto Protocol in 1999, and has agreed to lower its
greenhouse gas emissions by 2008-2012.
 Since Ukraine’s emissions are already more than 30% below its 1990 levels, it can play a
major role in the trading of Carbon Credits.21
The National Power Energy Program until the Year 2010
 Adopted in 1996.
 Program designed to rehabilitate thermal power stations and mandate technological
improvements. It also calls for the use of renewable energy sources and the creation of modern,
environmentally friendly power plants.
The Law on Protection of the Natural Environment
 First enacted in 1991.
 The basic act which promotes environmental protection and conservation of natural resources.
 The law “declares the priority of environmental security requirements and the compulsory
observance of environmental standard and limits, while realizing economic, executive,
legislative and other activities.”22
The European Neighbourhood Policy Action Plan with Ukraine
 Endorsed by the EU-Ukraine Cooperation Council in 2005.
 Promoted EU cooperation with Ukraine in many policy areas including the environment.
 Led to the reactivation of the Ukraine-EU Working Group on Climate Change.
Current Funding Projects:
 The Ukrainian government has spent a considerable amount to compensate for damages
caused by the Chernobyl disaster. Between 1996-2003, the Ukrainian government has spent
14.2 billion hryvnia ($2.8 trillion) on programs related to the incident. 23
Radiation and Nuclear Safety Management Project
 Project developed by the US Environmental Protection Agency and Ukraine’s Ministry of
Environmental Protection and Nuclear Safety.
 The goal of the project was to obtain “high-quality, quick-turnaround data to identify and
assess potential health threats from various radiation sources throughout the country.”24
Wind Power Development Project
“Ukraine: Environmental Issues.” U.S. Department of Energy - Energy Information Administration.
<http://www.eia.doe.gov/emeu/cabs/ukrenv.html>
22
Kravchenko, Svitlana. “Environmental Enforcement and Public Advocacy in Ukraine.” <http://www.inece.org/4thvol1/kravchen.pdf>
23
“Financing of social protection of the citizens injured with Chernobyl accident.” Ministry of Finance of Ukraine.
<http://www.minfin.gov.ua/control/publish/article/main?art_id=41252&cat_id=41243>
Conversion to dollars taken from Yahoo! Finance
24
“Ukraine: Environmental Issues.” U.S. Department of Energy - Energy Information Administration.
21
 Started with the ordinance “Regarding the Windplant Construction in Ukraine” passed by the
Cabinet Council in 1994. It created a special fund for wind power development by increasing
consumer electricity bills by 0.75%.25
 An effort to have wind power as a source for at least 10% of the country’s total energy
production by 2020.26
 The total land area Ukraine has available for the construction of windplants is 8 thousand
square kilometers.27
Acknowledgements:
Research and Data Development Provided by: Juliana Kogan and William Guarino,
Research Intern, Under the Supervision and Coordination of Dr. Gerard Janco
“Windpower for Ukraine – A Proposal for the Coming 20 Years.” INFORSE. <www.inforse.dk/europe/word_docs/wind-ukr.doc>
Ibid
27
Ibid
25
26