Post card from Ukraine

This is one in a series of post cards from Reuters reporters across Europe, Middle East and Africa

Ukraine’s famous instability, verbose politicians and haphazard legislation present the investor – and the journalist – many red herrings. While talk of impeachment of President Viktor Yushchenko ring alarm bells, constitutionally it is nonsense. As CDSs go off the rails, Ukraine’s sovereign debt repayments are small and manageable. As Prime Minister Yulia Tymoshenko calls for the central bank governor’s blood, he is still at the helm. And while Yushchenko and Tymoshenko fight like Itchy and Scratchy, the country – to the amazement of some – has yet to collapse. 

Investors inside Ukraine have long known this and with good lawyers have managed to get on with business as the economy driven by steel and grain exports boomed at 7 percent annually since 2000. They follow political events constantly but are less quick to judge, because often their significance appears later or in fact does not exist. Those outside Ukraine overestimate the consistency of its politics. None of the three major parties – Tymoshenko’s, Yushchenko’s or opposition leader Yanukovich’s can be branded liberal, conservative, socialist, pro or anti Russian. Populism and pragmatism – usually at the last minute — are the key policies.

A fresh start with Russia: what’s the trade-off?

Russia has reversed its decision to station missiles in the Western outpost of Kaliningrad, next door to the European Union, according to Interfax.

The move would be the clearest signal so far of the start of a thaw in U.S.-Russia relations, which could be one of the major changes in U.S. President Barack Obama’s first year in office. We don’t know what commitment, if any, Obama may have given to Russian President Dmitry Medvedev on the missile shield (the two spoke by telephone earlier this week).

Obama’s scepticism about the effectiveness and utility of missile defence was clearly stated during the campaign. But since the Russians unilaterally made the Kaliningrad threat on the day of his election, the suspension of the deployment plan is a clear goodwill gesture. It follows NATO’s announcement, slipped out without fanfare earlier this week, that political relations with Moscow, frozen after the Georgia war, would resume within a few weeks.

Expect Georgian President Mikheil Saakashvili to foam about appeasement.

Three little words that kept Europe in the cold

The difference between Europe having Russian gas as normal and not having it came down, in the end, to three words. They were hand-written next to what looks like the signature of Ukraine’s Deputy Prime Minister Hryhory Nemyrya and they were: “With declaration attached”.

That was enough to undercut a deal hammered out by Czech Prime Minister Mirek Topolanek, whose country holds the rotating EU Presidency, to deploy monitors along the gas pipeline route — Russia’s condition for turning the taps back on.

The declaration that Nemyrya referred to set out Ukraine’s position in a dispute with Moscow over gas prices. It said, among other things, that Ukraine has no outstanding debts to Russia, an assertion with which Moscow strongly disagrees. Russia said the addition of the three words made the monitoring agreement null and void. Deal off.

Which was a shame, because the two sides came tantalisingly close to turning the gas back on. A few hours earlier, a team of European Union monitors had arrived by bus at the Sudzha gas compressor station in western Russia. They were all set to supervise the resumption of gas flows. They even had a party of journalists in tow to witness the big moment.

Always a marriage of convenience in Ukraine?

He was a suave central banker and she a “gas princess”, a young politician desperate to make her mark. In 1998 Yulia  Tymoshenko, now Ukraine’s prime minister, said she knew her destiny lay with Viktor Yushchenko, who went on to become president.

“We understood that we are a team,” she said at that time.

It’s an assertion Yushchenko disputes — a clash of views that has defined this partnership since they overturned a Soviet-style leadership in the 2004 “Orange Revolution” and vowed a modern, Western future for Ukraine’s 47 million people.

Then they stood shoulder-to-shoulder — her revolutionary speeches firing up crowd after crowd, his more academic approach comforting those who feared she was reckless in her pursuit of power.

Georgia: How close did Europe come to a wider war?

A poster at the entrance to the World War One exhibition at London’s Imperial War Museum depicts the heir to the Austro-Hungarian Empire, the Archduke Franz Ferdinand and his wife, minutes before they were shot dead as they toured the streets of Sarajevo in an open topped car. The two bullets triggered World War One. Alliances quickly came into play and an argument between Austria and Serbia drew in Russia, Germany, France, Belgium and Britain.

Europe was at war.

On August 8 this year Russia sent its forces into Georgia to repel Tbilisi’s attempt to wrest control of the pro-Russian, breakaway region South Ossetia. Georgia, like Ukraine, has been pressing to join NATO but has only been promised membership of the alliance at an unspecified future date. What would have happened if Georgia had already secured NATO membership, as it wished, at the alliance’s meeting in Bucharest back in April?

Would the conflict have dragged in fellow NATO members including the United States, Britain and Germany? By invoking NATO’s Article V mutual defence clause, the Georgians could have required other nations to come to their assistance.

Enter the new farmers

What’s with farming these days? The humble, even if slightly romantic vocation, is attracting a new breed of participants as investing in farmland and agriculture becomes the latest fad in the world of investments.   With financial markets in tumoil and commodity prices at record highs, traditional financial players such as investment banks and hedge funds, and even sovereign wealth funds of cash-rich emerging economies are increasingly looking at farm land as the next major investment avenue.

The motivations are varied — from pure financial punting to concerns about food security. Underlying all this is the belief that the rapid economic expansion of China and India could add more than a billion people between them to the ranks of consumers of meat and wheat-based products. And then there is the growing demand for land to grow crops for biofuels.

Morgan Stanley has bought some 40,000 hectares of land in Ukraine , while the New York Times reported this month that Calyx Agro, a division of the giant Louis Dreyfus Commodities, is buying tens of thousands of acres of cropland in Brazil.

Chinese firms are said to be locking up farmland and mineral reserves in Africa, while Saudi Arabia and Bahrain plan to grow strategic grains abroad to protect their countries from crises in world food supply.