Factbox: Policies of Ukraine's election frontrunners

Sun Feb 7, 2010 1:03pm EST

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(Reuters) - Ukrainian opposition leader Viktor Yanukovich and Prime Minister Yulia Tymoshenko battle for the president's post in an election runoff on Sunday that will decide the direction of the ex-Soviet state.

Analysts say both Yanukovich, a 59-year-old former mechanic, and Tymoshenko, a 49-year-old one-time gas tycoon, are practical politicians who can compromise, especially with their former Soviet master, Russia.

Here is a comparison of their policies on main issues:

* RUSSIA AND THE EUROPEAN UNION:

-- Neither is saying a choice has to be made between Russia and the rich 27-member EU next door. Both say they want to integrate with Europe while improving ties with Moscow, which deteriorated under President Viktor Yushchenko.

-- But Tymoshenko is seen as more enthusiastic about the EU, setting the ambitious goal of accession within five years and making frequent references to European standards.

-- Yanukovich has said he wants to renegotiate a gas supply deal with Russia, which set market prices for gas as of this year, but may balance that with an idea of creating a consortium with Russia's participation to manage Ukraine's pipeline system.

-- He has fudged his line on Russia's Black Sea Fleet stationed in Ukraine's Crimean peninsula which Ukrainian law states must leave in 2017. He says a solution will be found that will be in both countries' interests.

-- He has softened his line on Georgian rebel regions since his party called for their recognition as independent states, as Russia did. He repeats Russia's line that the regions are no less independent than Kosovo, recognized by most countries as an independent state but not by Serbia, to which it belonged.

-- Tymoshenko has said Georgia's territorial integrity must be respected -- indicating that recognition of South Ossetia and Abkhazia is not on the cards. She notes that the constitution forbids foreign military bases on Ukrainian land.

* THE IMF:

-- The new president will have to reopen talks with the IMF, which agreed to an unprecedented $16.4 billion bailout as the country slipped deep into recession, but suspended that program at the end of last year over broken promises.

-- Analysts have said the speed with which the IMF resumes its vital lending program depends less on the policy stance of the two politicians and more on whether a parliamentary election is called, delaying the formation of a new government.

-- Either winner may want to call an election to consolidate their power, though Yanukovich is seen more likely to do so.

-- Yanukovich also says he will stick to wage rises that were passed in parliament at the end of last year, which prompted the suspension of the IMF program because the increases would boost the budget deficit.

-- Tymoshenko has promised to keep to the IMF program -- she was against the wage rises but she would need to find a way of annulling them. She has also not fulfilled her highly unpopular promise of raising domestic gas prices.

* THE CURRENCY:

-- Tymoshenko has repeatedly attacked the central bank, accusing it of facilitating illegal speculation on the hryvnia currency and demanding that Central Bank chief Volodymyr Stelmakh step down.

-- Stelmakh, as central bank chief nominated by the president, has stayed beyond the retirement age of 60 so is likely to go.

-- Analysts have said a new central bank governor under a Tymoshenko presidency would probably come under pressure from her to strengthen the hryvnia through market intervention.

-- They say a chief under Yanukovich, could be told to leave the hryvnia at its current level, almost half its value to the dollar from a peak in 2008, because of his ties to wealthy industrialists who export the goods their companies produce.

* FISCAL POLICY:

-- Both Tymoshenko and Yanukovich have promised lower taxation and increased minimum wages, pensions and social benefits.

-- Yanukovich has said he wants to cut the Value Added Tax (VAT) to 17 percent by 2011 from 20 percent and corporate tax to 19 percent from 25 percent. He wants banks to offer mortgages with no more than 7 percent interest rates.

-- Tymoshenko wants to cut the number of taxes by a third, simplifying the system. She wants to cut VAT and offer tax breaks to importers of new technologies as well as poor regions to boost investment.

* ENERGY SECURITY:

-- Both Tymoshenko and Yanukovich believe Ukraine, site of the world's worst nuclear disaster at Chernobyl, could gain energy security through the development and construction of more nuclear power stations.

-- Tymoshenko wants to speed up exploration and extraction of oil and gas on the Black Sea shelf, to shore up Ukraine's energy security, while Yanukovich wants to modernize the coal industry, that could fuel much of steel production -- key to the economy.

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