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Ukraine Defence and Security Report 2013

Ukraine defence market: New market research published

In 2013, we expect Ukrainian defence spending to increase 0.43% year-on-year (y-o-y) to US$4.67bn, a less-dramatic rise than in recent years but still a massive increase on the recent low of US$3.24bn seen in 2009 at the height of the global financial crisis. The countrys economy is currently stagnating in mild recession but received a boost from the influx of foreign tourists visiting in June 2012 when Ukraine cohosted the Euro 2012 international soccer championship with neighbouring Poland. Defence spending accounts for 2.7% of GDP and has done for much of the last decade, a figure that is notably higher than that of most other economically developed nations. Ukraine has been gradually downsizing its total number of military personnel in recent years, however. From a high of 165,000 in 2006, the country had just 139,000 members of its armed forces in 2012. Theoretically, Ukraine has 48.32% of its population available for active service, with 21.6mn men and women from its total population of 45.7mn aged between 16 and 49.

Ukraine is nevertheless involved in a number of UN peacekeeping operations overseas, notably posting 133 servicemen and 35 vehicles patrolling in Kosovo and 22 servicemen in Afghanistan. It also has a number of personnel posted in an observational capacity in countries such as the Democratic Republic of Congo, Sudan and Liberia.

The country remains reliant on Russia for gas and energy imports but its relationship with its neighbour continues to be fractious. Russia cut gas supplies to Ukraine during the harsh Januarys of 2006 and 2009, demanding higher fees, and is not above demonstrating its power over Ukraine in this way to ensure its co-operation in other areas. Russian president Vladimir Putin and his Ukrainian counterpart Viktor Yanukovych most recently met in Yalta in July 2012 to discuss the latters plans for the establishment of a multilateral gas consortium in Europe. The continent currently receives around 20% of its natural gas from Russia, 80% of which passes through Ukrainian pipelines. Yanukovych took the opportunity to say his countrys current gas contract with Russia was not profitable and pressed for renegotiations.

Ukraine has been roundly condemned by governments and human rights organisations around the world in 2012 for its treatment of former Prime Minister Yulia Tymoshenko, imprisoned in 2011 on corruption charges relating to an import contract signed with Russian energy company Gazprom during her time in office. Many felt the case against Tymoshenko was politically motivated and she has since reportedly been subjected to beatings and 24-hour surveillance in her cell. New president Yanukovych and Tymoshenkos former coalition partner and rival Viktor Yushchenko both testified against her but the trial was accused of dealing in selective justice by international observers and media coverage of Tymoshenkos plight has done a great deal of damage to Ukraines reputation internationally.

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