Author Topic: The Ukraine wobbles  (Read 13277 times)

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Offline hotbmw

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Re: The Ukraine wobbles
« Reply #30 on: 12:08 23-Oct-2008 »
oh great, so this is your actual field of expertise/profession? Ok i will get you to do mine also.

the one for $22,000, was it small in size or bigger than my intention of 40-50sqm?
sounds like i may need to set aside 20k.

do i need any permits or council approval for non structural renovations inside? i guess not if no structural? if i do need approval, is it a quick process?

also how long does it take on average to exchange contracts in purchasing a property? if i bought in march can i start renovating in april as the owner?


Offline P-N

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Re: The Ukraine wobbles
« Reply #31 on: 16:46 23-Oct-2008 »
The one for $22,000 just short of 65 sqm and was complete standard decoration, new bathroom suit and kitchen, a little rewiring and plumbing and a few metal stud partitioned walls.  Ripped out and refitted in effect.

If you change the internal layout (even with stud wall partitioning which is not permanent) the techical passport of the apartment has to be amended to reflect the new divisions/rooms.

This is not a major issue (but takes about a month via "standard routes") to get the remeasurements done and new updated technical passport back.  Obviously this can be accomplished much faster  ;).

It is possible to buy a property in a matter of days.  The process is as follows:

The seller will show you proof of ownership and existing technical passport.  You and the seller then go to a notary and checks are made that they are still the owner and it is theirs to sell with the BTI for apartments, land registry for land and houses .

Upon confirmation you then empty your plastic bag full of cash on the table and it is counted and checked for counterfeit notes.

The seller will then write a letter in the presence of the notary stating they have sold the apartment to you.  The notary will then produce documents for the BTI to state that you are the new owner.  The old ownership documents are retained by the notary so the seller cannot sell again to someone else later that day  ::) ::) ::) 

You then take these documents to your local BTI who will make copies and confirm the sale with the central BTI in Kyiv.  New documents of ownership are produced and technical passport updated to state you are the owner.

That is it.

You can start your refurbishment at any time after the notary period, however it may be wise to wait a day or two (depending how fast you can get into your local BTI office) before you start.......with your updated paperwork in hand if necessary.

As for it being my profession - I have put up a building or two in my time  ;)
« Last Edit: 16:52 23-Oct-2008 by P-N »
"When surrounded by the dark void of the willfully blind, it does not excuse those that are a spark of light their duty to shine" - Me

Offline hotbmw

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Re: The Ukraine wobbles
« Reply #32 on: 12:17 24-Oct-2008 »
Thats great P-N, i definitely will go with u when i buy.

Last renovation question, how hard is it to get approval to knock down a wall in a floor plan? is it usually a no no in UA based on support structure issues or is 1 wall in general usually ok?

Now that the UAH is sitting around 6.00 to 1 USD, and it seems the expectation is that it will settle around 6.00 to 6.50 how does this affect apartment prices?

Meaning, lets use a $100,000 apartment for simplicity reasons.

2 months ago if someone sold a $100,000 apartment that would equate to about 500,000 UAH

Now it equates to about 600,000 UAH and could be up to 650k in the near future.

If UA is really hurting in the coming months & there is an influx of properties on the market not selling and the UAH is sitting consistantly at 6.00 or 6.50,  do you think apartment prices sold in US$ may adjust inline with the UAH?

i.e. 100k US could be 650,000 UAH but not selling
in turn previous expectation of 500,00 UAH which was 100k is now only $77,000 to get a return of 500,000 UAH.

do u know what i mean?
do u see this as another reason why prices may fall?
could this affect the market also?
it would also have to push up inflation if the UAH keeps dropping to the US wouldnt it?

thoughts?

 


Offline P-N

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Re: The Ukraine wobbles
« Reply #33 on: 13:25 24-Oct-2008 »
I only work in Odessa and although I can give you advice, if you buy in Kyiv look to azzice for both guidance and doing the work (if it falls within his remit/interest).  If not he will know locals in Kyiv who will do it for certain.

You will find it (depending on your language skills) of huge assistance to have a builder who speaks English not simply to answer your questions regarding how and why, but who will also understand your "desires" when it comes to the materials and finish you require in your apartment.

With regards to the removal of internal structural (supporting) walls, the official way is to take your plans and technical passport to the BTI and inform them of the plan.  The city architect and structural engineers will then tell you what you must do in respect of reinforcement where the wall is to be removed.  They will come out and check that these changes have been made in accordance to their guidelines (officially but seldom do) and provide you with an updated and certified technical passport in respect of these changes.  The fee is in the region of $6000.

This is however Ukraine, and any law and regulation is enforced "ad hoc" and not necessarily understood by the enforcing bodies leaving matters open to interpretation.  What is ok in Odessa, may not be ok in Kyiv or Lviv or vice versa.

In Odessa the "general rule" is that structural reinforcement is supported by a column every 5 meters should you want to make a large open plan by removing an entire internal supporting wall.  This is well within the critical forces for a 20 centimetre concrete floor.  If the apartment is new, then the floor will have a concrete floor in excess of 20 centimeters providing very safe parameters.  If it is old, it may have wooden beams/joists as per traditional houses in the USA.  Depending upon the condition and size of these beams 5 meters is about maximum.  Again, the builder, city architect and structural engineer will keep you right.

It is common (but not lawfull) for people to knock a whole through a structural wall for a doorway without informing the BTI.  The reprocussions (as long as the doorway is reinforced by an RSG/RSJ) are normally zero UNTIL they want to sell it and have a technical passport which does not have the doorway listed or the work is substandard and will lead to fines and costly repairs.  This can delay the sale considerably.

Ukraine is a strange place when it comes to market forces.  Many Ukrainians will think of a figure in their head (justified or not) and stick with it regardless.  Others are much more pragmatic and will allow a little room for maneouvre (whether it be due to personal circumstance or financial awareness on an international scale).

At the moment, the market is in favour of the buyer, rather than the seller (which is how it was for the past few years).  That said, Ukrainians are a very practicle race and used to delaying plans due to external circumstance for years on end.  It is difficult to predict if someone selling would take their apartment off the market in these times and decide to stay put, rather than continue with a sale and achieve less than they wished for.  The biggest savings (as stated) will be on new build due to builders trying to release captial for the immediate term.

Outside of the economic factors the only other real reasons that I personally could see having an effect on price would be the extremely unlikely event of agression by Russia (or another) or the split of Ukraine internally due to the east and west facing factions therein should NATO membership or another eastern facing block be entered into against the will of the populous.  The later is also unlikely but is more probable than any external agression IMHO at present.  That said things can change as rapidly here as anywhere.

Lastly, prices for new build may also fall due to the lack of metal exports and world demand.  As it is a major contributor to the GDP of Ukraine and therefore plentiful, lack on external demand may make internal demand cheaper to purchase due to the surplus which will build up.  That will also be true of concrete (due to the falling price of cement if demand slacks).  These factors will not have an immediate effect on older apartments unless those occupants see the chance to buy a new apartment cheaply if they can sell their own.  Time alone will tell on that issue.

"When surrounded by the dark void of the willfully blind, it does not excuse those that are a spark of light their duty to shine" - Me

Offline free spirit

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Re: The Ukraine wobbles
« Reply #34 on: 08:21 26-Oct-2008 »
It is interesting to compare the ex-Communist countries and the West. In some ways, the ex-Communist countries are not as poor as GDP figures would show.

What I mean is that the UK would seem on paper to be very rich per capita. But most young people are starting from zero when they go looking for property. The average wage in the UK is not enough to get a mortgage to buy a property (maybe for a back-to-back property with a downstairs bathroom in a northern industrial town), and even a couple both on the average wage are struggling to get anything decent. We are taxed to high heaven - yes we get free healthcare as a result and more security.

In China, where I am, and I think the cities of Russia and the Ukraine are the same - most people in the cities have flats they got in the Communist era. In China they paid truly peppercorn rates to buy their old-style flats in the 1990s - and so they begin half-way up the property ladder. They have something to sell, which might be valued at $70,000 now that a market in property has opened up. They have no mortgage on it. They pay no council tax. They don't even pay property insurance like we do in the UK. They generally pay no tax. True, they have to pay for their healthcare - but as a young person who probably won't need much healthcare for decades, you can just buy cheap insurance in case of true emergencies and leave that to chance. All their money can be saved or spent. If they save up for a few years, given the value in their old-style flat given to them by the government, they can easily trade up to a new-built modern apartment. They are not starting from zero like we are in the UK.

The Ukraine may have a GDP per capita of $2,000 or $3,000 - I am sorry I have not looked up what it is, please correct any false figures - but I expect it is the same as in China. Most people got virtually given a Soviet era flat. They didn't work to pay for that flat - it just fell into their laps, and puts them a few rungs up in the property ladder. Now, it may be different for the peasants, but that is another story. The urbanites' wages are low, but tax non-existent. What was given them for nothing could be worth $200,000 today or more.

So looking at salary alone, you can't really grasp that in terms of assets the ex-Soviet countries' citizens are not starting from zero. If you look at our industrial revolution in England, we had to drag ourselves up slowly. I suppose the clearest equivalent to what has happened in E. Europe is the sell off of the council houses in the UK. If you were lucky enough to have liven in a £70,000 council house for 20 years, the council might sell it to you for very, very little. My grandparents lived in a council house for many years, and were offered it by the council for £12,000 - it was worth £60,000 back then, and my granddad kept begging the grandchildren to raise very little money each to buy it for him from the council and then inherit it when he passed away, but we were too clueless to do so. So some proportion of the English working class had assets just fall into their laps, but it was by no means universal, and the amount you paid depended on how long you had lived there.

This is the way I can understand the Ukraine, China and other countries in the East. Their wages are low, but a greater proportion of it is disposable. Chinese people never understand when I try to say "yes, our wages are on paper much higher than yours, but tax consumes at least one-third, then there is the rocketing council tax, then there are rocketing utility bills, because the UK govt does not intervene like the Chinese to protect domestic users of power, then there are rocketing train fares, then there is the fact that almost everything is priced roughly twice the US price, and in the end... a large number of UK citizens have huge personal debts". The Chinese generally have squirrelled away significant savings - how can we English in asset terms often be poorer than they?

Offline BritKyiv

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Re: The Ukraine wobbles
« Reply #35 on: 10:06 26-Oct-2008 »
Your observations are about right.
I too have had this kind of discussion with Ukrainians. Most people in Kyiv are "Property Owners" and obtained this property at a very low price (although some of it is really crap). They fail to understand that in developed countries in the west, you do not get given a property for a few hundred dollars.
Although those days are long gone in Ukraine, you are right that it has given many people a big step up the ladder. I know many Ukrainains aged between 35-45 who own more than one apartment in Kyiv plus a land plot. I point out to them that most people in the UK would be "cock a hoop" about owning more than one of any property.

Even my wife recently "forgot' that she owns the apartment her grandmother lives in :o

I am one of those you refer to coming from " a northern industrial town" and I can honestly say that NO ONE ever gave me anything. My parents had the opportunity to buy their council house from the government in the early 1980's for UKP 7,000 ($14,000), but didnt have the money. They only bought it because yours truly stuck his neck out for a mortgage.

BUT, its also a similar situation in Ukraine now, mainly in Kyiv and the other five major cities.
The aspiring 'middle class' put their heads above the parapet and obtained big mortgages to buy better apartments/houses and they took the money in USD. Now they are suffering some.

However, in my opinion (and many people in banking agree), that Ukrainians do not worry so much about credit as it is all a new expereince to them. They have never been through it before. They have no moral obligations. If they cannot pay.......its someone else's problem.

The next few months willbe interesting in Ukraine.
I escaped. Now in Sunny Cyprus

Offline P-N

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Re: The Ukraine wobbles
« Reply #36 on: 10:22 26-Oct-2008 »
You are quite correct FS - it is a situation I am constantly explaining to the good lady.  She has no concept of a 25 - 30 year debt for a home which you will eventually own (if the wind is blowing the right way) or the concept to trading up and increasing that debt.

She also does not truely grasp the fact that even as little as $100,000 in the bank, in the UK is deemed a lot of money.  Here, if truely in the sh*t, I could go around all the family and most have between $5,000 and $20,000 in cash in the apartments at any given time on any given day - I could therefore raise that amount of money from them in an evening should circumstances put me in such a desperate position.......and it would be given no question.

To her (and many Ukrainians like her) $100,000 is NOT A LOT of money although it is not to be "sneezed at".  

That said, Ukraine and much of the FSU is a cash not credit economy since the collapse and as you rightly point out, given almost free housing, ineffective tax collection and therefore little in the way of outgoings for those who benefitted from this at the time (and as you say many also did not), transfering the "paper wealth" of the west into the "cash wealth" of the FSU and China is a difficult concept which needs consistant reminding in our house.

I have to laugh at BK's comment too - Anechka owns the apartment her mother lives in and never mentioned it to me for 2 years........until I had a foreign friend in Odessa who needed an address to be registered at for the OVIR - it has now become a bit of a cash cow with half of the English speakers in Odessa registered at the apartment for a fee  :D :D :D :D



"When surrounded by the dark void of the willfully blind, it does not excuse those that are a spark of light their duty to shine" - Me

Offline free spirit

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Re: The Ukraine wobbles
« Reply #37 on: 17:48 26-Oct-2008 »
I like the idea of the freedom from government control a cash economy gives. I downloaded this attachment from the UK HM Revenue and Customs site, and it sets out UK public finances. See tab C4.

Actually, if government revenue had not been hiked so much in the UK, you can see it would have been possible to eliminate income tax entirely. In 2001/02 UK revenue (central and local government) was £389.4bn, and this has been hiked to £547.2bn in 2007/08 - don't tell me there has been a corresponding improvement in the quality of services. A lot of this extra spending has gone on admin and nothing. It is only a six-year period - and the difference of £157.8bn exceeds income tax revenue. Alternatively, just by setting expenditure back to where it was 6 years ago, you could wipe out national insurance and the council tax and cut corporation tax by two-thirds in one go!

We have got used to being "done" in the UK. People who have no pension have to pay tax to keep retired civil servants, penpushers at taxpayer largesse during their careers, in a comfortable retirement on 100% pensions. Apparently all the parties agree with this - including the Tories.

Any chance that you could put expenditure back a few years by wiping out bureaucracy has been torpedoed by the financial crisis of course, as we have now "invested" hundreds of billions in various banks...

But I like to fiddle with the XLS and imagine a better way of running society!

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Re: The Ukraine wobbles
« Reply #38 on: 18:23 26-Oct-2008 »
Now that is a post that I can identify with having had my private pension screwed along with many others. God alone knows how those retiring shortly will be hit since most UK private pensions are unit-linked and invested in stocks and shares.

The spreadsheet very clearly shows the mess the current government has made of UK plc.
« Last Edit: 18:33 26-Oct-2008 by Carlushika »

Offline azzice

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Re: The Ukraine wobbles
« Reply #39 on: 22:38 26-Oct-2008 »

The Ukraine may have a GDP per capita of $2,000 or $3,000 - I am sorry I have not looked up what it is, please correct any false figures - but I expect it is the same as in China. Most people got virtually given a Soviet era flat. They didn't work to pay for that flat - it just fell into their laps, and puts them a few rungs up in the property ladder. Now, it may be different for the peasants, but that is another story. The urbanites' wages are low, but tax non-existent. What was given them for nothing could be worth $200,000 today or more.



To her (and many Ukrainians like her) $100,000 is NOT A LOT of money although it is not to be "sneezed at".  


Sorry guys. But reading your messages it seems like ukrainians are privileged by comparison with westeners...

This is totally wrong.

First of all we lived in communism. I dont think you can imagine what really was and how it was hard. Then Perestrojka, again i m not sure you can imagine what kind of sacrifices during that period. Then our nation literally collapsed...

I m sorry, but absolutely NOTHING fell in our laps. As many others in this country i ve lost EVERYTHING i had. Step by step we ve rebuilt something decent, working hard day and night.

Maybe for THIS reason we are today stronger and we dont worry that much about this situation, and not because ( i quote) They have no moral obligations. If they cannot pay.......its someone else's problem...

Unlike what is happening in Western Countries we were not responsible for our situation. If people ask for a credit for holidays and cars and Banks grant money for such whims...the system is sick and fated to collapse..

always in my humble opinion of course

Phasar

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Re: The Ukraine wobbles
« Reply #40 on: 22:50 26-Oct-2008 »
Sorry Azzice I have to disagree with one of your comments

Quote
always in my humble opinion of course

Your opinions are always valued and I think you raise some valid points  ;D

Offline P-N

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Re: The Ukraine wobbles
« Reply #41 on: 07:45 27-Oct-2008 »

The Ukraine may have a GDP per capita of $2,000 or $3,000 - I am sorry I have not looked up what it is, please correct any false figures - but I expect it is the same as in China. Most people got virtually given a Soviet era flat. They didn't work to pay for that flat - it just fell into their laps, and puts them a few rungs up in the property ladder. Now, it may be different for the peasants, but that is another story. The urbanites' wages are low, but tax non-existent. What was given them for nothing could be worth $200,000 today or more.



To her (and many Ukrainians like her) $100,000 is NOT A LOT of money although it is not to be "sneezed at".  


Sorry guys. But reading your messages it seems like ukrainians are privileged by comparison with westeners...

This is totally wrong.

First of all we lived in communism. I dont think you can imagine what really was and how it was hard. Then Perestrojka, again i m not sure you can imagine what kind of sacrifices during that period. Then our nation literally collapsed...

I m sorry, but absolutely NOTHING fell in our laps. As many others in this country i ve lost EVERYTHING i had. Step by step we ve rebuilt something decent, working hard day and night.

Maybe for THIS reason we are today stronger and we dont worry that much about this situation, and not because ( i quote) They have no moral obligations. If they cannot pay.......its someone else's problem...

Unlike what is happening in Western Countries we were not responsible for our situation. If people ask for a credit for holidays and cars and Banks grant money for such whims...the system is sick and fated to collapse..

always in my humble opinion of course

If it seems as though Ukrainians are seen to have it easy from our posts then, certainly from my part it has been misinterpreted.

I will stand by my statement you quoted as for Anechka, many of her friends and family and many of the business people we do business with, it is absolutely true.  I did not of course say "Ukrainians" or "All Ukrainians" in the statement but "her and many Ukrainians like her" - there will be many Ukrainians who are not like her also.

Anybody who lives here, even now,  would not say Ukrainians have it easy.  Every day everybody here has to be a fight to get anything done which involves the services provided by Ukraine or the city they are in with the exception, in most cases, of public transport which runs like clockwork 99% of the time.  Even posting a letter can be a nightmare.

Many "logistical and state run institutions" have not seemingly changed whatsoever since communist times, neither has the mentality of those who control it more often than not, during their working day.

My good lady, although she did not lose her apartments during the time of the collapse of communisim, lost every kopec she had in the bank collapse of 1998, as did Carl's wife and probably yourself and millions of others.

You are right, the next day she, and probably many throughout the FSU, just rolled up her sleeves and went back to work but this time worked half as long again, every day, to recover what she had lost and even relocated to Moscow to achieve this (even though she doesn't like Moscow as a place to live).

I am not saying anything fell into the lap of any Ukrainian, even the most corrupt, as everything has to be worked for, even if the work involves positioning yourself to make the most of a system in disarray for the purpose of effective corruption.

FS was making the point that the collapse of communism in the FSU and the slow relinquishing of the power of the state in China, led to many people having the opporunity to own property at a price way below market value.  This value has now been realised by the owners in the much more capitalist system the FSU and China are in.

For my part, this is not a critisism, neither does it belittle the grief and struggle under the communist system.  It is an opportunity which was given to the citizens of the FSU which was not given to those of the West, as many have never lived under a system close to that of the FSU.  Most would probably prefer to have their 25 years mortgage debt than to have lived within the FSU system.

It could be morally argued that the property bought at little cost in recent years had been mortgaged by the suffering and hardships of the generations preceding those who benefitted, making the human cost (rather than financial cost) far higher in many cases. 

Nobody gets anything for nothing, there is always a price to pay, be it a communist, fascist, socialist or capitalist society.  The difference maybe how we measure that cost.
"When surrounded by the dark void of the willfully blind, it does not excuse those that are a spark of light their duty to shine" - Me

Offline free spirit

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Re: The Ukraine wobbles
« Reply #42 on: 08:01 27-Oct-2008 »
Well, your saying how people after the 1998 crash just had to roll up their sleeves and start again, reminds me that in England we traditionally admired people who, in the words of Rudyard Kipling, "lost everything in one game of pitch and toss, and never breathed a word about the loss". I am afraid we are much more whiny now!! If anyone lost anything, you would never hear the end of it. These headlines in the UK press screaming "Doom from  now on! House prices down by another 1%!" typify it! No one thinks that the trebling of house prices over a few years recently will be reversed, but the fact that there has been a 12% fallback in all is deemed to be a disaster... We don't seem to be able to take losses in perspective any more, let alone roll up our sleeves and start life anew...

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Re: The Ukraine wobbles
« Reply #43 on: 08:48 27-Oct-2008 »
Fair point but not so for the pensioners and the not so young.  :'(

Offline P-N

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Re: The Ukraine wobbles
« Reply #44 on: 09:00 27-Oct-2008 »
Well, your saying how people after the 1998 crash just had to roll up their sleeves and start again, reminds me that in England we traditionally admired people who, in the words of Rudyard Kipling, "lost everything in one game of pitch and toss, and never breathed a word about the loss". I am afraid we are much more whiny now!! If anyone lost anything, you would never hear the end of it. These headlines in the UK press screaming "Doom from  now on! House prices down by another 1%!" typify it! No one thinks that the trebling of house prices over a few years recently will be reversed, but the fact that there has been a 12% fallback in all is deemed to be a disaster... We don't seem to be able to take losses in perspective any more, let alone roll up our sleeves and start life anew...

I would agree that we have become a very "whiny nation" and our perspective as a nation has become "skewed".  That of course does not apply to every individual but to the general collective.

We have followed down the path of "ambulance chasing", "political correctness" and "service industry" to the point where the nation has become "soft" compared to those like Ukraine which is, at present, diametrically opposed with little service industry compared to its production and manufacturing industries, minimal political correctness and the system "to chase the ambulance" is so difficult to accomplish that it is seldom persued.

If the government in the UK fell apart like it has in Ukraine, there would be chaos, riots and anarchy.  Ukraine carries on regardless as indeed it should.  The fact that a house price in the UK has fallen 12% makes (realistically) little difference to those who bought it to live in it, as long as they can make the repayments.  It is first and foremost a home, somewhere for you and your family to shelter from the elements and have some form of privacy.  It is laterly an investment.

That is how I view my home in Ukraine - home.  I personally am not in the least bit concerned if it depreciates in value 50%, as I have no intention of selling it now or in the forseeable future.  It is not mortgaged, I have no loans or credit of any kind.  Therefore it is mine with nothing secured against it.  It was not a bought and built as a financial investment but for somewhere to put me and mine.

I know the intrinsic value will go up and down several times before I die and it will eventually become an asset to the children but I have no control over the value it will have when it does.  It is no reason for the world to end because it has lost value today, when tomorrow it could gain in value.

Unlike Ukraine, the UK (as well as many other nations) has lost perspective on many things and everything is viewed from an "asset/investment value" perspective rather than its "practical value" during a life time.  There are a massive raft of reasons for this change in physcy of course and they are probably better discussed in another thread as they have little direct and current relevance to the situation in Ukraine today, though that I expect will change in the future.

I am not a socialist by nature, neither am I a neocon.  Both major parites in the UK today are not "socialist", neither are the two presidential candidates in the US.  None of them display or proport socialist policy.  In my view Labour (and the Democrats in the US) are just right of centre, the Tories (and GOP are right of centre) but none are recognisably left or socialist.

The same can be said of Ukrainian politics.  Yushenko is nationalist and right of centre, Yucanovich is nowhere near socialist in policy and dependent upon individual policy is either right or left of centre but with no central bias and Tymoshenko is hard to read and at best (aside from her own personal profiteering) is centre.  What they cannot change is that Ukraine, because of it's resources, for the forseeable future will be a "dirt and grit" economy where life for those involved does not make for a "whiny" electorate.





"When surrounded by the dark void of the willfully blind, it does not excuse those that are a spark of light their duty to shine" - Me