Independent financial advisors should prepare for rises of 50 percent – or even more – on their professional indemnity insurance, according to a broker who has been working in the market for more than 25 years. Jamie Newell, managing director of IFA Solutions, says that he has already seen significantly higher prices for policies that have gone for renewal in the last few weeks.

Newell comments, “For a mid-sized IFA with an annual income of £400,000 or more, rates that had been around 1-1.2 percent of turnover previously are now coming in at 1.6 or 1.7 percent, or even 2 percent depending on the record, and I see no reason why this upward trend will not continue throughout 2012.”

One of the main reasons for these price hikes is that the insurance market capacity for IFA business has been contracting since the collapse of Quinn Insurance in 2010. Recently, two major London market underwriters have indicated that they will not renew IFA policies this year. This leaves most brokers working with a smaller pool of insurers.

Already concerned about the repercussions of the Keydata collapse, insurers see the potential for additional claims if IFAs secure trail commissions in an imprudent manner ahead of the RDR January 2013 deadline. Underwriters also fear that continuing difficult investment conditions could increase the likelihood of mis-selling claims from disgruntled clients.

Professional indemnity insurers also face a number of external cost pressures, again reflected in increased premiums. Weak investment returns and relatively high inflation are particularly worrying for insurers writing liability business where claims may arise years after they’ve received the premium income. Many insurers perceive instability in the eurozone as a threat to the value of their assets which may, in turn, force them to raise further capital to meet Solvency II requirements.

Jamie Newell comments, “At IFA Solutions, we anticipate that 2012 would be difficult, which enabled us to reserve high levels of capacity together with the ability to provide one and two year policies, specifically for IFAs. Our underwriting experience also enables us to offer discounted terms to those IFAs with robust systems and controls.

“We urge IFAs to prepare well in advance for renewal to get the very best terms and conditions in 2012.”

About IFA Solutions:

IFA Solutions is a division of The Underwriting Exchange, an independent Lloyd’s insurance and reinsurance broker. It specialises in arranging liability, property, professional indemnity and medical malpractice, and reinsurance protection from offices in London and Dublin. http://www.theunderwritingexchange.com/

For further information, contact:

Jamie Newell of IFA Solutions at 0207 398 8100 or jamie.newell@ifapi.com
Or Parm Evans at 07024044114 or at parm@parmevanspr.com

Business practices of Russia’s Life Financial Group were highly appreciated by “The Financial Times” and financial advisers of leading international consulting organizations such as WODW and 9SENSES. This is proven by the inclusion of select business-cases from the Life Group in the new edition of the bestselling business book «Reinventing Financial Services What Consumers Expect from Future Banks and Insurers».

The Life Financial Group, which comprises seven financial organizations operating on the Russian market, became the only Russian company, whose business cases have been included in the book “Reinventing Financial Services: What Consumers Expect From Future Banks And Insurers».
This fact underlines once again the high standards of customer focused business of the Group, the excellent work of its management team and the successful implementation of leading technologies to build the qualitatively new “Bank-Client” paradigm in Group’s banks.
The participation of the Life Group in the new edition of the book in the capacity of a leading expert on the Russian financial market is not only recognition of the achievements of the Group’s team, but also reflects one of the basic tendencies of the world and Russian financial market: the very conservative business sector is re-orienting its focus towards the client.
Sergey Leontiev, President of the Life Financial Group:
«A client-centered, open, mobile and innovative company with whom it is easy and pleasant to work – that is the bank we’re aiming to be. In Russia banks are usually perceived as clumsy, slow, hierarchical organizations that are not aware of their clients’ needs and make decisions bureaucratically, listening only to its own departments and employees, not consumers. We want to destroy this stereotype! The bank should have a human face».
How to build a successful and effective team of like-minded people is the message of one of the Group’s cases, published in the book and devoted to their unique system of the personnel assessment. In addition, the book also includes best practices surrounding reconsideration the Mystery Shopper concept by the Group’s management from the client-centered point of view. The story about using an essentially new WOW-approach to build a corporate culture in a wide retail network with the help of professional competence new to the Russian market completes the list of best practices from the Life Financial Group in the new edition of «Reinventing Financial Services What Consumers Expect from Future Banks and Insurers».
According to Sergey Leontiev, President of the „Life” Financial Group, «companies which are not focusing their attention on the client, in the long-term perspective will always lose out to those who develop strong partner relations with them. From a customer-oriented model of business you can receive stable, long-term effect only building a special culture based on customer-values at all levels of the company. It is also very important to have a special control system integrated in all business processes which lets you reveal, realize and scale the best ideas, the best management practices for improving your client’s and partner’s loyalty».
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The „Life” Financial Group – is a Russian financial holding company that unites 7 independent commercial banks with significant market share in their regions where they are present. The banks of the Group have been working on the Russian financial market more than 16 years. The Group is represented by 500 offices in 65 regions of Russia. The total number of Group employees exceeds 8,500. On April 1, 2011 FG “Life” was serving 33,000 businesses and 1,2 million persons. According to the consolidated financial statement, at the end of 2010 the assets of the Financial Group Life amounted to 2,67 bln euro and the credit portfolio for the same reporting period stood at over 1,25 bln euro. The group holds 11th place in the volume of unsecured loans issued in 2010 and 11th place in the number of loans granted to small and medium-sized businesses in Russia. The Life Financial Group has the international award BSC Hall of Fame as an innovator in retail banking products. In four years, its assets grew 329%, and operating income increased more than six fold. With strategy formulated at the top and executed from the bottom by all employees, FGL has made strategy everyone’s job, enjoying growth rates exceeding the overall market. The Group has a strong partnership with leading international financial organizations such as Wells Fargo, Standard Chartered, Commerzbank etc.
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The book «Reinventing Financial Services: What Consumers expect from Future Banks and Insurers» is a well-known bestseller who was published 4 times in UK. The presentation of the first Russian edition is going to be held December, the8th. The forward was written by Sergey Leontiev, the President of the „Life” Financial Group. The authors of the book are Roger Peverelli и Reggy de Feniks. Roger Peverelli is a partner at VODW, a leading strategy consultancy operating out of The Netherlands, and an expert in strategy, innovation and building customer centric organisations in financial services. Reggy de Feniksis founding partner at 9senses, strategy and marketing consultants, based in Barcelona, Spain. VODW was founded in 1983. With 100 professionals VODW occupies a leading international position in strategy consultancy, dedicated to helping clients dramatically improve their market performance. VODW is based in the Netherlands, and operates worldwide. 9senses is a strategy consultancy based in Barcelona, Spain and working worldwide in various industries, amongst which financial services. 9senses is an international partner of VODW.

Handelsbanken, which launched on Newcastle’s Grey Street in 2002, will soon celebrate its 10th anniversary in the region with the announcement of two new branches, one on Saville Row in Newcastle and one in Hexham. The fast-growing relationship bank has also announced the appointment of a new branch manager for its Grey Street branch, Tom Ramshaw. The Saville Row branch will be managed by Mike Brunskill who previously held the role of corporate banking manager in the Grey Street branch.

When Handelsbanken opened its doors on Grey Street, it was the eighth Handelsbanken branch in the UK. Now there are 117 branches up and down the country and over 750 branches spread across 22 countries. Handelsbanken has built its success around a unique combination of decentralisation, customer satisfaction, and prudent financial management. The bank was recently rated top for customer satisfaction for the third year running in an independent survey of British banks’ personal and business customers*.

The bank’s policy of decentralisation and branch autonomy sees managers making decisions at branch level. Handelsbanken has a saying, ‘the branch is the bank’, and this autonomy allows managers to get close to their customers. This relationship-focused approach to banking has led to the great popularity and success of the bank, according to Tom Ramshaw.

Tom joined the Stockton branch of Handelsbanken in 2007 and is a huge advocate of the bank’s decentralised approach. He explains the rationale behind the opening of the second city centre branch:

“We aim to have more satisfied customers than other banks. We achieve this by offering first class service, competitive products and by always providing our best advice for the customer, not what is most profitable for the bank at the time. Whilst the economic climate is still difficult, we continue to welcome new customers who tell us they are delighted with the service we provide; and this growing demand convinced us to open a second branch in Newcastle on Saville Row, off Northumberland Street.” Despite the recession, the performance of Handelsbanken has continued to go from strength to strength. Mike Brunskill on Saville Row comments:

“The bank does not compromise on quality. We do the basics well and our success is centred on a high degree of accessibility, which is an inherent and absolutely essential component of our everyday world-class service. “As a bank, we do not follow trends, fads or business cycles and our decentralised business strategy has not changed for over 40 years. I am delighted to have been part of Grey Street’s success and am looking forward to the challenges the new branch on Saville Row will no doubt bring.” The bank’s regional expansion marks the end of what has been another particularly successful year for Handelsbanken. The bank was recently rated the second strongest bank in the world** by global financial provider Bloomberg, as a result of having run the bank with the same prudent long-term approach for 140 years.

The branch in Hexham will be opening in early 2012 and an announcement is expected soon about its branch manager.

Now in its 11th year, SMi’s Nordic Card Markets Conference provides a fantastic opportunity to learn from leading experts in this innovative area. The Nordic Card Markets are as vibrant as ever, but have to adapt to novel technology trends such as mobile payments, and progress the market alongside these new developments. This conference offers and in depth analysis of the Nordic Card Markets. This is achieved through a combination of focused analyses and case study examples. You will be able to increase your understanding of the subject and learn how to apply this knowledge to your business.
This market-leading event will bring together key experts from across the Nordic Payment marketplace. This year being hosted in Copenhagen, the event will provide a fantastic networking opportunity for all those involved in the Payments industry. You will be able to make face to face contact with new business partners and catch up with associates. Just Announced: Keynote Presentation from Danmark Nationalbank
Kristian Kjeldsen, Head of Payment Systems, Danmark Nationalbank

Leading Keynote addresses from:
Norbert Bielefeld, Deputy Director – World Payment Systems, World Savings Bank
Anneke Kosse, Policy Advisor, Payment Systems Divison, De Nederlandsche Bank
Bent Bentsen, Senior Advisor Group Payments, DnB NOR
Michael van Doeveren, Senior Policy Advisor, De Nederlandsche Bank
Mette Grimm Munck, Senior Manager, Cards Emerging Payments, NETS
Thor Ragnar Klevstuen, Business Developer, Cards and Payments, SpareBank
Ugo Pietro Bechis, Chairman of the Cards and Payments Working Group, EPC
Pekka Markkula, Head of Service Enablers, TeliaSonera Päivi Heikkinen, Head of Division, Bank of Finland
Hermant Bijal, Payment Systems Development Group, The World Bank
Andreas Melan, Group Payment Card Manager, IKEA
Kurt Gjesten, Senior Vice President, Pan-Nordic Card Association
Jes Rasmussen, Strategy and Business Development, SEB Cards
Arne Vidar Haug, Business Development Manager, Signicat Mikko Haikonen, Senior Manager, Nokia
Visit http://www.smi-online.co.uk/2012nordiccards22.asp for more details.

This year there is also an Interactive Workshop hosted by Savantor
Making the Most of the EMV Chip 17th January 2012, Copenhagen Marriott, Copenhagen

~ Network-based solution to ensure financial services companies
compliance with FSA mobile voice and SMS recording regulation ~ Gloucestershire, UK – 1st November 2011 – XL Telecom and TeleWare today announce a partnership to provide TeleWare’s network-based recording service for mobile devices, designed to ensure that UK financial organisations meet new Financial Services Authority (FSA) call recording regulations, which come into effect on November 14th, 2011.

XL Telecom, a supplier of affordable, flexible business telephony is pleased to add the TeleWare proposition to its existing portfolio of fixed line and bespoke IVR solutions. This addition will allow XL Telecom to assist its FSA regulated customers to meet the new call recording regulations which come into effect very soon.

“The addition of the TeleWare Mobile Compliance call recording solution to our extensive portfolio of fixed line bespoke IVR and recording solutions is a natural partnership” explains Nicholas Mutton, Senior Partner at XL Telecom. “The TeleWare solution provides full compliance with the Financial Service Authority’s regulations for mobile call recording, as well as trouble-free use for all financial institutions” continues Mutton.

XL Telecom will offer the TeleWare managed service with immediate effect to record and store mobile voice and SMS (short message service) traffic with no impact on the user call experience and without limiting the mobile’s functionality. The solution supports a wide range of handsets, including Blackberry and iPhone, with calls and texts to and from mobile phones routed through, and recorded by the TeleWare network-based solution. As there is no software to be installed on the mobile device, delays in call connections and potential circumvention of recording are avoided.

The recording solution needs only a simple change of SIM (subscriber identification module) to a TeleWare SIM to make the service instantly available to all institutions needing to be compliant.

“The FSA compliance deadline of November 14th for recording of mobile voice calls and SMS messages is fast approaching and any financial institution missing the deadline could face some very large fines” concludes Mutton.

Call and SMS recordings are made available via a secure online portal.

“We are just 14 days from D-Day for the FSA recording regulations coming in to effect, so availability of solutions from partners who understand the market requirements is critical, particularly for the smaller more dynamic FSA regulated banks and institutions,” explained Steve Haworth, CEO at TeleWare. “The TeleWare Mobile recording solution is a good fit with XL Telecom’s business” added Haworth.

- ENDS -

About XL Telecom

XL Telecom is owned and operated by two industry professionals with almost 40 years of combined experience within the telecoms industry and corporate business across a number of sectors. Providing a full spectrum of telephony services including physical fixed & mobile line and service audits, call centre voice solutions, telephone numbers, voice call queuing and IVR, XL Telecom has the ability to fulfil all business telephony requirements.

For further information

All press releases can be accessed at our web site: http://www.xltelecom.co.uk/about/xl-news

Dave Hartnett, the Revenue’s Permanent Secretary for Tax, is Under Fire for Relieving Goldman Sachs of Paying out 10m Interest on an Unsuccessful Tax Avoidance Scheme…

Documents leaked by Private Eye magazine recently revealed that HMRC had let Wall Street investment bank, Goldman Sachs, off from paying 10m in interest on a failed tax avoidance scheme.

In the 1990s Goldman set up an offshore company named Goldman Sachs Services Ltd that allowed his UK employee bonuses to remain confidential by ‘employing’ them on a secondment.

To avoid paying national insurance on UK employee’s six figure bonuses; Goldman bought blueprints for a failed tax avoidance scheme named the employee benefit trust (EBT).

The EBT diffused UK employee bonuses into complex share investment schemes and was found out by the Revenue in 2005 to be nothing more than an illegitimate tax avoidance scheme.

Another 21 firms involved in the EBT tax avoidance scheme came forward and paid HM Revenue and Customs (HMRC) the tax they had avoided through the scheme; Goldman Sachs refused.

The tax avoided amounted to 30.81m, over the last five years and refusal to pay the bill has accumulated interest to a total sum of 40m.

Due to a deal between HMRC’s permanent secretary for tax, Dave Hartnett, and Goldman Sachs, the Revenue is only going to receive 30m, instead of 40m, from the investment bank.

Hartnett has admitted to making a ‘mistake’ that allowed the global investment banking and securities firm to avoid paying 10million in interest to tax authorities.

Hartnett came under fire for closing the five year interest free deal with Goldman Sachs yesterday, during a meeting with the HOC Public Accounts Committee, 12 October 2011 from 15:21 – 17:02 UKST.

Chair of the Commons Public Accounts Committee, Margaret Hodge, opened the meeting by accusing Hartnett of lying to MPs, on the 12th of September 2011, when saying he was not involved with Goldman Sachs’s tax affairs:

“You lied when you told the Treasury select committee that quote ‘I do not deal with Goldman’s tax affairs’.”

Hodge then brought to the attention of the Commons Public Accounts Committee minutes from an HMRC lawyers’ meeting, 8 December 2010, that said Hartnett had “shaken hands” with Goldman Sachs and settled a deal on his tax affairs.

Hartnett responded to these accusations by saying “I did not lie” and that he had “no deep knowledge of Goldman’s tax affairs” as he had not worked on Goldman’s taxes in a routine way.

Discussing the day of the HMRC lawyers’ meeting in question, Hartnett said that himself and Goldman Sachs had reached a settlement, but he had no recollection of shaking Goldman’s hand.

Hartnett said he was only brought into the dispute with Goldman Sachs after relationships had broken down between both HMRC and the investment banks representatives.

Responding in defence to Chairwoman Hodge’s persistent accusation of lying, Hartnett said that what he had meant was:

“I do not deal, as my colleagues deal on a regular basis, with Goldman’s tax affairs.”

Many have voiced their opinion that Hartnett should be sacked for his involvement in the deal with Goldman Sachs with has resulted in a loss of around 10m in tax for the Revenue.

Tory MP on the Treasury select committee, Jessie Norman, who was lied to by Hartnett on 12 September 2011, said:

“This settlement with Goldman Sachs is the last straw. He [Hartnett] strongly implied he was not involved in the Goldman Sachs case. He told me the Revenue never charged less than the tax owing. The…case shows this to be false.”

Admitting that he had made a ‘mistake’, Hartnett said:

“We have made sure that a mistake like that can’t be made again.”

Sources from HMRC have said that a ‘technical mistake’ had been made by an anonymous official at the Revenue, who is a junior to the secretary of tax [Hartnett], and that their misinterpretation of the law had led to losing 10m of taxpayers’ money.

The National Audit Office (NAO), who are responsible for auditing HMRC operations, has apparently accepted the situation, sources say.

Kevin Kinsella, of KinsellaTax Investigations, said:

“I do not think I want to make a comment about this matter.”

Tax avoidance is a complex issue; If you are under tax enquiry from HMRC then you need to seek professional help.

For those who are looking for suitable Travel Insurance policy, usure.hk can be of great help. This website offers one of the biggest networks of insurance providers in Hong Kong. The online system offered by this site helps you to find the best policy, whether you want protection for home, travel, or domestic helper. The best thing is that this site also helps you to find the best prices when it comes to policies. Whether you stay in Hong Kong or you are planning for a trip, you must buy travel insurance policy from this site. Even if just a day is left for your departure, you can buy such a policy on this site.

Once you have a proper policy in hand, you can enjoy your trip to Hong Kong without any worries or risk concerns. You can search for different kinds of policies and can select the best one out from them. The admin says, “We offer a trustworthy network of companies to help you find apposite policy, which can fulfill all your requirements and provide you the best coverage as well.”The companies that offer policies on this site are all reputable as well as dedicated companies and make sure that you get the best of the service. You can avail of the online service on this website round the clock. If you have any problem then you can also call the customer care representatives to resolve all your queries. The consultants are also very professional and make sure that your needs are taken care of. Regardless of which product you are looking for, this website offers you many possibilities and provides you all the services that you need. With such an efficient online service, not only can you save a lot of money, but also some a good amount of money as well.

The admin says, “We try to provide you the best offers, so that you can save almost sixty percent of the cost and can benefit from such offers.”You can also gather all the information pertaining to insurance and the types and features of different kinds of policies. You can get a comprehensive policy, especially when it comes to travel. You can choose from different plans. The plans normally offer you an all-inclusive coverage that includes health care, accident, personal property protection, and other kinds of security.

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If you are satisfied with the features and coverage offered by a plan, then you can also fill up the online application form on this site only. You can also find a number of useful forms that you need to learn about travel insurance policies and apply for them at the same time. The booklet will also help you to gather more information. Contact: – http://www.usure.hk/

Consumers are being urged to check their loan, credit card and mortgage agreements by Fast Track Reclaim who are finding more and more evidence of illegal lending practices by banks and financial institutions.

Many of these agreements were executed with Payment Protection Insurance (PPI) products tied to them, a practice which has now been outlawed by the Courts, allowing many wronged consumers to get a refund on this product from their lender.

Colin Hartness, MD of Fast Track Reclaim said ‘People are completely unaware of just how prevalent the practice of selling PPI was. We speak to hundreds of customers every week, many of whom were unaware that they even had the policy. Many people don’t realise that they can get their money back which they have wrongly paid out.’

Fast Track Reclaim have recently managed to claim over £18,000  in missold credit card ppi for just one client, Mr Sanderson of Durham. Mr Sanderson had paid £5,500 on premiums on his policy, and Fast Track were able to claim further monies of £13,000 relating to interest on the premiums that had been paid, due to the fact that Mr Sanderson had not been given any option to purchase this product independently.

Mr Hartness commented ‘We find that customers are often shocked and amazed at the amounts that can be reclaimed, and PPI claims such as Mr Sandersons are by no means isolated instances. We would urge anyone who feels they may have been misled by their lender to come forward to find out if they are entitled to a refund.

Many families are struggling to make their monthly wages last due to the increased cost of living and inflation, and an unexpected additional financial burden one month could be just too much.

There are a number of short term loan options available to families who need a little bit of extra cash one month.

One option that many people find suits their requirements best is a doorstep loan. Doorstep loans are a form of borrowing that is very accessible and, as the name suggests, can be delivered right to your door.

Different companies offer different amounts, but doorstep lenders typically offer loans of between £50 and £2500 and payment schedules between 20 – 52 weeks. The repayment rate and payment schedule will be set out when you apply for your loan, so you know exactly how much you will be borrowing.

www.doorsteploans.co.uk provides you with detailed information about doorstep loans, including how much APR you can expect to pay and a guide to choosing a reputable provider, so if you do decide that this method of borrowing money is the most suitable for you make sure you visit the website first to get all the facts and help you make the correct decision.

The Ukrainian government and oligarchy seek to improve investment attractiveness and their reputation in the West, failing to appreciate the extent to which they are blemished by the national lack of democratic principles, freedoms and transparency.

The future of big business directly depends on the development of democracy

Under President Yanukovych the interests of big business remain Ukraines primary concern. This may explain why Cyprus was neglected from the recent Cabinet of Ministers list of offshore taxation clampdowns; Cyprus is a primary route for capital outflow from Ukraine. Party of the Regions and the current government continue to repay their debt to the oligarchs who pushed them through the 2010 elections. To some the gas seized by the previous Prime Minister is being returned. Others receive export monopolies or an opportunity to privatise grossly undervalued strategic state assets. The most attractive way to settle scores now is to involve the services of the blind justice. Not far behind is Russian capital which receives preferential treatment and access to the Ukrainian asset market.

With strengthening of his authority and the broadening of his powers, it is projected that the President will want to substantially decrease his obligations to the oligarchy. What is the future of Ukrainian big business? The conflict between Ukrainian and Russian oligarchs is already visible through contradictory privatisation decisions, an example being "Luganskteplovoz" or Ukrtelecom. Initiatives to insulate Ukraine from the penetration of Russian capital will only increase in number and potency, adding further tension to the relationship between Yanukovych and the Putin – Medvedev tandem. The Ukrainian authorities struggle against the Kremlins appetite may prove to be inhibited as the Oligarchy attempts to increase their power over the President, ensuring protection of their influence.

Ukrainian foreign policy is likely to remain Europe-oriented as the route through Cyprus ultimately settles in European financial establishments. Ukrainian oligarchs should consider the protection of such interests worth the cost of lessening pressure on democratic freedoms in Ukraine.

People First Comment:
The problem for the oligarchy of Ukraine today is that they are all becoming fish that are too big for this rather murky pond. Whilst they had little choice but to support Victor Yanukovich in his election bid, as many considered Tymoshenko to be the greater of the two evils, they now recognise that the publicity surrounding this government and administration is seriously damaging their prospects to expand and legitimise their earnings. Reputation today is as important as financial strength and power. People simply do not invest in companies they do not trust and it is becoming extremely difficult to be associated with companies originating from Ukraine simply because of the negative smell attached to the national reputation.

Donetsk businessmen have already lost patience taking the matter into their own hands by successfully using services of leading international PR firms in Brussels to lobby on behalf of their energy interests. The gas conglomerate Rosukrenergo has sought to clean up its name via the English Courts rather than using the route of good PR. Others have used philanthropy to great effect in building their personal reputations and Yulia Tymoshenko has used international PR for years, unfortunately she does not have the track record to back up her PR claims.

It is very likely that more oligarchs will start to go it alone and will invest million in trying to convince the world that they are not as greedy as they seem. It would be much cheaper for them to convince the government to change course so that the government spin doctors had something real to promote.

New national budget of Ukraine: For the many or the few?

The end of 2010 saw the national budget go through Verkhovna Rada nearly as quickly as the President signed it. Its authors professed that it constituted a watertight crisis solution. Akin to many European neighbours, the crisis required cuts. The total 2011 budget income accounts for 281 billion UAH. Budget spending is at 321 billion UAH, creating around 40 billion UAH in deficit. There are also plans to take over 90 billion UAH in national and international loans.

So what was cut? Education expenditures were reduced from 20 to 18,5 billion UAH; Funding of international research and technology programmes was reduced ten-fold; Development projects reduced five-fold; Expenses for the publication of Ukrainian language books were cut by 40% – from 33 to 20 billion UAH; Of most concern the financing for disease control was reduced by 58 million UAH to 577 million UAH, despite the fact that Ukraine has the highest infection rate in Europe for tuberculosis, AIDS and cancer.

According to members of the opposition state institutions close to the support structure of the President received increased financing amid the national crisis. In particular: the budget of the General Prosecutor Office has been increased from 1.218 billion UAH to 2.201 billion UAH; The budget of the Ministry of Foreign Affairs has increased from 11.807 to 13.656 billion UAH; The expenses for state administration and health care for state officials were increased by 397 million UAH. Almost every opposition call for revision of the draft budget was ignored. The new budget provides well for top-ranking officials and representatives of the national security services but ordinary citizens will feel the pinch of rapid inflation and rising unemployment. Experts agree that the structure of this newly adopted budget is characteristic of an authoritarian and undemocratic state; this will only widen the divide between the impoverished majority and the wealthy minority, setting the scene for potentially uncontrollable mass social protests later this year.

People First Comment:
If you are a state prosecutor, state administrator or you work for the Ministry of Foreign Affairs then this was a pretty good budget. If however you are a student, a scientist, a driver or you are in need of serious medical care then you are going to have a very difficult year in 2011. Borrowing money from the IMF has come at a very heavy price, a price that is going to be borne by every man women and child in the country, that is unless you happen to be a senior government official. But we have to ask whether this government realises just what sort of rod they are making for their back and that of the President.

According to research carried out in late 2010 by the People First Foundation the key issues for the average Ukrainian family are: jobs, food prices, education, medical care, corruption, representation in government and the rule of law, the very things this budget seeks to attack. This does not bode well for the popularity ratings of the President and unless the government change tack drastically his chances of re-election are slim as the Ukrainian public have very long memories.

Ukraine shows no reduction of investment risk

Ukraine remains a high-risk investment according to the Political Risk Atlas 2011 published by Maplecroft. The nations index did improve between 2009-2010, moving from 62nd to 74th place, positioning it between Burkina Faso and the Republic of Timor-Leste. Experts however suggest that investment climate in Ukraine has recently taken a turn for the worse, blaming the deterioration of corporate management and macroeconomic stability, violation of human rights by the law enforcement agencies as well as a critical drop in the quality of education. Although government rhetoric regarding controls over private business is ever on the rise, the environment remains nonviable for the majority of foreign investors.

British experts also mentioned some positive developments: increased stability in the political arena, increased general citizen stress tolerance and a decrease of terrorist threat. The World Bank predicts a continued recovery of the Ukrainian economy in 2011; however, it notes that the speed of recovery in Ukraine is significantly lower than that of equivalent developing countries. Martin Raiser, the World Bank's Director for Ukraine, Belarus and Moldova, observed that Ukraines failure to implement structural economic reforms could trigger a local economic crisis with dire consequences. The governing powers should take heed, and recognise that a maintained investment-attractive environment requires the continuity of a stable democratic system. Nevermore clearly could policy reform translate into nationwide profit.

People First Comment:
Ukraine, the second largest state in Europe is now wedged between the Saharan state of Burkino Faso and the tiny South East Asian island state to Timor Leste in terms of risk of doing business. Thats quite some achievement for the first year of reforms in light of unprecedented increase of power for the current administration.

There was a time, some year back, when foreign direct investment was nudging $10 billion a year, this year it is unlikely to top $4 billion as investors, fearful of the association find other places to develop. The main investor in Ukraine is Cyprus which implies that most of the current investment is either Russian money buying up assets or Ukrainian money coming home. The international community seem to have completely given up on the country.

You would imagine that the government would take note of this deplorable position and change their policies particularly as foreign investment is one of the fastest sources of new jobs but no. They simply carry on with the same policies that bankrupted the Soviet Union only this time they burden the poor people of this country with a simply massive level of debt that will take decades to repay.

Looking at the current policies of the government one would have to question whether anybody in the whole financial team has ever owned a small company or worked in a modern western style company. Clearly they have not and it will be left up to the people to clear up the results of their ineptitude. The same can be said for the opposition who have yet to demonstrate any ability to plan a national economy. Perhaps it is time for Ukrainians to accept that all their politicians have succeeded in achieving is 3rd world status for a potentially major European power.

Ukrainian authorities attempt to "clean" their reputation by parading a fairytale Ukraine before the knowing eyes of Europe

Whilst the country marches towards becoming an authoritarian state, with a puppet democracy and grievous social deprivation, the government and the presidential administrations western PR professes of a nation in reverence for their faultless governors. The strategy involves public appearances, promotional videos and editorial articles; validated by careful positioning in respected communication channels. For example, CNN (broadcast and online) recently featured an interview with Prime-Minister Andriy Klyuev professing of Ukraines investment attractiveness; this platform will also be utilised for a pro-government advertisement campaign promoting Ukraine as successful and attractive country. The President has been attempting to charm international leaders at the recent economy forum in Davos; it remains to be seen whether or not this was successful.

The blatant disparity between the idyllic PR Ukraine and the internationally observable reality is bound to ring alarm bells. According to the report of International Living, Ukraine ranks 73rd in the world rating of quality of life among Namibia, Botswana, Tunisia and Morocco. The State Statistics Committee reports over 500 thousand unemployed; experts expect this figure to rise to 2 million before 2012. The rise in inflation currently tops record levels sentencing hundreds of thousands of Ukrainian families to poverty. These factors combined paint a bleak picture for social stability. Any PR programme initiated in the west should only focus on genuine national achievements other promotional efforts can only foster further distrust.

People First Comment:
As the government of Ukraine embarks on an international PR drive with lobbying in Brussels, paid news features on CNN, advertising on BBC World and inserts into a major UK newspaper, one has to wonder what its spin doctors hope to achieve. Good PR is the result of achievement, not what you hope to achieve or worse still what you think the world might like to hear. Unfortunately the gap between the spin and reality is either a blatant attempt to mislead the international community or of a wider misunderstanding of the moral and ethical basis of democracy.

The government talks of fighting corruption but does little to address a problem. The traffic police continue to abuse their powers to extort millions from drivers (which under current circumstances is the mildest form of state-condoned banditry), whilst by the financial watchdog Global Financial Integrity lists Ukraine as the 3rd worst in Europe for illegal international money transfers. The government talks of austerity and fiscal responsibility cutting millions from the healthcare and education budgets, yet they increase the budget for governmental administration. Its the same for democratic practice, freedom of speech and assembly, support for industry, the SME sector and job creation. The new tax law alone has already destroyed 800,000 small companies.

Sadly, Ukraine is not adopting European values and the authorities need to think again. The export of democracy from the west looks to have failed and has been overrun by the export of questionable social and political practices from the east where money buys anything and anybody with, of course the exception of the future

Quote of the week:

For the first time in human history almost all of humanity is politically activated, politically conscious and politically interactive… The resulting global political activism is generating a surge in the quest for personal dignity, cultural respect and economic opportunity in a world painfully scarred by memories of centuries-long alien colonial or imperial domination… [The] major world powers, new and old, also face a novel reality: while the lethality of their military might be greater than ever, their capacity to impose control over the politically awakened masses of the world is at a historic low. To put it bluntly: in earlier times, it was easier to control one million people than to physically kill one million people; today, it is infinitely easier to kill one million people than to control one million people.

Zbigniew Brzezinski

Former U.S. National Security Advisor
Co-Founder of the Trilateral Commission
Member, Board of Trustees, Center for Strategic and International Studies