Thursday, June 30, 2005

Ukraine Will Not House Nuclear Weapons If It Joins NATO: Minister

KIEV, Ukraine -- Ukraine will not allow the deployment of nuclear weapons on its territory by NATO members if it joins the alliance, Defense Minister Anatoly Hrytsenko said June 30.

”If someone is convinced that after Ukraine joins NATO there will be nuclear weapons on our territory, I want to assure them: there will be no nuclear weapons on our territory,” Interfax quoted Hrytsenko as saying.

Ukraine's Defense Minister Anatoly Hrytsenko

The administration of President Viktor Yushchenko, who came to power last year vowing to steer ex-Soviet Ukraine toward membership in both the North Atlantic Treaty Organization and the European Union, has been struggling to overcome deep public mistrust of the Cold War-era alliance.

A May opinion survey showed that 55.7 percent of the Ukrainians were against their country joining NATO, up from 48 percent in February.

NATO chief Jaap de Hoop Scheffer, who visited Kiev earlier this week, sought to reassure skeptical Ukrainians, saying that the alliance had changed since its Cold War-era beginnings.

”I know that many people here in Ukraine still think of the Cold War when they think of NATO,” Scheffer said June 27. But the alliance today “is a different NATO than the NATO of the Cold War... Today’s NATO is designed to help provide security in a new world.”

Separately, Hrytsenko said that NATO members were ready to give Ukraine up to 10 billion euros toward a program to decrease its weapons stockpiles and that Kiev hoped to destroy up to 20,000 tons of weapons with the funds.

Details of the program were still being worked out and would have to be approved by the Ukrainian government, he said.

Source: Defense News

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Picking Up The Trash

KIEV, Ukraine -- It takes only a few minutes walking down Khreshchatyk after a weekend of festivities and general merrymaking to know that Ukrainians don’t share the same sense of responsibility, obligation and duty that other Europeans or Americans do. That litter underfoot doesn’t belong to them; never did. As soon as whatever piece of trash left their hands, it became someone else’s responsibility. Someone else has the job to clean up that mess. Ukraine is a society of thought without consequence.


If the Soviet Union gave anything to Ukraine, it was the robotic mentality of a socialist worker. Everyone knew exactly what they were supposed to do – and that’s all they did. No thinking outside the box. Thus the socialist paradise on which modern Ukraine was founded absolved people of responsibility. The prodovshchitsya will not sell you milk at the next counter over – she’s only responsible for bread and baked goods. The beat cop has no idea where the nearest gastronome is – his job is to keep law and order. The average Ukrainian doesn’t think about carrying his empty plastic bottle to a garbage can a further thirty feet away because he doesn’t have to – it’s someone else’s job to pick it up wherever he dropped it.

Today, Ukraine’s socialist past imposes upon it consequences more serious than that of failing to secure foreign investments or acceding to the World Trade Organization: a lack of responsibility. And without that, there is no hope for the future and modernity, let alone for WTO accession this year. To Ukrainians, everything from economic prosperity to traffic problems to putting away the trash is for someone else to deal with, not them. The problem with this way of thinking is it relies on the Soviet logic that the government or someone else will always be there for them. Kyiv pensioners picking through the trash to put food on the table or to supplement their income know this fallacy better than anyone. Ukrainians must reshape their minds and take the country into their own hands so that they can fashion their own future and go beyond this mere robotic existence.

Put another way, Ukraine needs leaders to emerge. This can mean even one person who carries his trash a little farther to put it away properly. It means getting a buddy to pick you up in the morning rather than taking the car to work. It means doing a job, like putting trash in its place, though you haven’t been told to do it. It means thinking independently, showing leadership. That’s where the likes of President Viktor Yushchenko should come in.

Of all Ukrainians, Yushchenko should espouse and embody leadership. Instead, time and again, he has dragged his feet and spoken not as a leader, but as a follower.

When speaking, anyway, Yushchenko – whether in front of big American investors in Washington or international financiers here in Kyiv – has only offered platitudes to his audiences as to why they should invest here: Help us. We need the money. It’s a great time to be in Ukraine. He’s pandering to them like children. There’s no rationale behind it; it’s just a lot of hot air.

Investors, and Ukrainians themselves, want to know what exactly Yushchenko is prepared to do to lead them – to convince them why they should bring their investment dollars into Ukraine, to tell them what everyone needs to be do to build the country’s future. Save the bleeding heart stuff for Hallmark, Mr. President. To quote an old campaign slogan of yours, “Ni slovom, a dilom.” (Not words, but actions.)

Yushchenko’s leadership role has all kinds of trickle down effects. His prime minister, Yulia Tymoshenko, seems content to play the populist by holding the line on price increases in key sectors of the economy. And the average citizen throws trash on the ground rather than putting it away. All of these people play a role in building and reshaping Ukraine’s future. The trash doesn’t get put away by itself, nor should it be only for others to do so. Picking up after yourself is not only about esthetics, it’s about pride, decency, respect and responsibility. So is helping a blind man to cross the road. So is making it on one’s own. So is making an informed choice at the ballot box.

Yet Ukrainians still look to others to do virtually everything for them, be it to put away the trash, to provide them with a job, or for their politicians to provide them with money and a home and even more besides. All of this forms a conscious thought process in Ukraine whereby no one looks to themselves for the answers. I’ve heard many arguments to counter my attacks: There aren’t enough trash bins for the trash. It’s too hard to start a small business here. Why work if I don’t have to? There’s an excuse for everything around here, it seems.

But what is their excuse? What is Ukrainians’ excuse for not wanting to take personal responsibility for their future? The government? The government, and the president, has a huge say in the future of this country, true, but so do ordinary people. The government doesn’t force anyone to litter.

Ukrainians are often fond of pointing out that they are not truly Western European; they are somewhat eastern-oriented as well. Given that attitude, it might also help them to take some lessons from the East. A well-worn Chinese proverb goes “A journey of a thousand miles begins beneath one’s own feet.”

The people of Ukraine have a job to do. They must take the future into their own hands. It is for them to decide whether Ukraine remains a trash heap or retools itself to become part of a modern Europe.

Source: Kyiv Post

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The Communist Party of Ukraine Promises to Fight on Three Fronts

KIEV, Ukraine -- The popularity of Communist Party in Ukraine is decreasing in arithmetical progression. They even lost to socialists at the last presidential elections. According to sociological data they can expect 7% of votes instead of 19% they had in 2002. On Saturday and Sunday, having gathered for XXXIX congress, the communists had an excellent opportunity to think about that miserable situation they’re in. But the hope for the better future has won.

Communist Symonenko (2nd from left) at this year's May Day parade

"Do you know where the entrance is" - asked some grandpa in a nice suit, approaching KPI concert hall. Indeed, the congress took place without special tokens – no flags, no music; just a greeting at the entrance and bags with a red stick “XXXIX CPU congress” and Lenin’s portrait on them indicated the cause of meeting.

A babushka in shabby breeches and a beach hat, with a cigarette stuck in her teeth, sold “the last books on Marxism” – “Modern Stalinism in Europe”, “Marxism nowadays” and “Labor Russia”. Young fellows in Che Guevara T-shirts were selling “New Monday”.

There was a lot of similar garbage at the entrance and in the corridor of the concert hall. People looked it through but never bought. This literature could hardly make the long 14 hour meeting more exciting.

Having gone through the ritual of various secretariats and account commissions, the Communists could listen to their party leader.

Mr. Symonenko briefly and self-critically told about the last two years in party’s life.

“Despite political repressions, problems within the party and insane pressure from outside, severe class struggle during presidential elections, hesitation of certain comrades, the Communist Party of Ukraine has survived and kept promoting socialistic values…”, he started.

He underlined that pre-election campaign showed: the Communist party is now a brand new, powerful dynamic political force that has a scientifically worked out program…”

According to Symonenko, “the party took up the only correct decision to run for the president alone”.

“Unmistakably, we have foreseen that Kuchma, under US government pressure, will do everything possible to make Victor Yushchenko the president of Ukraine. Yanukovych was kind of a technical candidate”, CPU leader repeated his hackneyed thesis.

The rest is rhetoric. All the same for a hundred years already. Just changing the names:

“Ruling regime, personified by Kravchuk at first, then by Kuchma and Yushchenko now has concentrated unlimited authority in its hands and now, in fact, has reached total monocracy”…

“Kuchma has retired (with the full board though) but Kuchmism is still alive, moreover it has mutated and is still developing in this political system”….

“…new authorities obediently fulfill commands of their foreign masters selling property that has been constructed for years by our long-suffering people”…

“…the government is the most “business oriented” Cabinet of Ministers ever”…

“The screenplay of colored revolutions worked out by western spin doctors under ideological cover-up of banana revolt of millionaires against billionaires was just another rotation of teams of the same formation. The trough is the same, the pigs are different!”…

“Orange revolutionists gave people hope by their populist promises; they presented illusion of quick recovering, thus preserving inertia of people’s unjustified trust”…

“…pre-election babbling about fighting corruption and organized crime, bringing back illegally privatized enterprises and other important issues still remain just babbling”.

The key point of Symonenko’s report was the fact that Ukraine is going to be turned to NATO bridgehead and the place of showdown between comprador Ukrainian bourgeois and Russian oligarchs.

The term “comprador Ukrainian bourgeois” was repeatedly substituted by “nashists” or “fascist sonder-team”.

And of course, the immortal phrase of communists for the last 100 years: “Existing social-political system is decaying. It should be broken and altered”.

Symonenko also mentioned his brothers-in-arms in left front. CPU leader even set a problem of fighting those “werewolves” and exposure of “collaborationist” tops of SPU and Vitrenko’s PSPU.

“Today, SPU representatives neglected their voter’s interests. In terms of ideology they tend to veiled SDPU politics and collaboration with chauvinistic-anti-Semitic like Rogozin’s “Motherland”. SPU fraction in parliament openly defends interests of capital, having accepted Kuchma’s relatives and Lazarenko team’s members to their fraction”, Symonenko denounce SPU.

According to CPU leader, his party will fight on three fronts at the parliamentary elections: against “American nationalists”, “right-wing oppositionists” and “opportunists” from SPU and SPPU.

Symonenko is going to change old slogans (he didn’t specify them) and will work with youth. He warned that “Our Ukraine”, Yulia Tymoshenko’s Block and SPU “had secretly divided CPU votes”.

Thus, under clan dictatorship, to achieve maximal representation of workers’ class in local councils and the Verkhovna Rada, Symonenko is going to nominate 230 000 candidates. He warns that “victory or defeat in every region will determine the future of Ukraine”.

Symonenko’s report lasted for almost two hours and consisted of 67 printed pages. CPU members, being unable to take it, often dozed off. The 26th minute was a critical one for them when even the front row fell into light sleep. Presidium board members were a bit more enduring.

The chairman Adam Martynuyk pretended he was busy – he constantly looked through some papers. Valeria Zaklunna openly read party press and the guest from Moscow Gennady Zuyganov read some book. Mr. Grach propped up his head and Politburo just discussed their problems.

Hardly had Symonenko finished his report when people rushed to have a bite. And that’s clear – they were brought there at 7 AM and Symonenko was done at 1 PM. In general, people were eagerly waiting for each of the eight breaks during the two days of congress.

- Oh, I see our folks gladly seep beer, - said Politburo member to his friend.
- Huh, as well as vodka. You have in Balaklava that nice cafe, they have real meat there, - the switched to cuisine topics, which, together with impressions form Kyiv, were predominant talks at the breaks.

At the sittings it was rather difficult to get what almost 30 foreign guests from Moldova, Russia, Cuba, France and other countries were trying to say.

Mostly local party members confessed less people entered CPU; some of them confessed some CPU members served two masters (Symonenko and Yanukovych). They requested transportation and means of communication so that people’s deputies visited villages.

Socialists and Nasha Ukraina were repeatedly cursed. The latter was mentioned more often. Some grandma organized hunting for a 18 year old lad, who, having entered SPU, came to communist congress with a friend. Having written 7 notes to presidium she didn’t calm down till the “spy was asked to leave”.

“They stole our slogans”, somebody uttered complain. “We don’t need any real program, we do need social revolution”, the man persuaded the audience.

Comrade from Luhansk was really bothered with Yushchenko’s proposal to reconcile UPA and Red Army veterans. He offered to count UPA victims as the answer to accusations of communists’ guilt of starvation in 1933.

“They accuse us of starvation – we have UPA”, he offered without realizing that the number of victims can’t be even compared.

Another ordinary communist offered “to correct mistakes in history textbooks” and “oppose Bologna process to recognize Ukrainian diploma abroad”. Although, he supported fighting bribery in higher educational establishments.

Recognizing the work of central party committee satisfactory and approving report of controlling council was a must for each speaker.

Despite Symonenko’s work was not praised, his brothers-in-arms do not have alternative to him. Leonid Grach, having spent three years in parliament has lost his authority. That’s why his speech criticizing CPU tops, who came down to collaboration with Nasha Ukraine in 2002, was frostily met.

“Yeah, you criticize, and what have YOU done?”, sounded from the back of the hall.

Having dismissed about two thousand members for collaboration with Yanukovych and Yushchenko (the latter was especially popular in Donetsk and Crimea), communists don’t rush to carry out reforms within the party.

The main specialty of the congress – people’s deputy Kateryna Samoylyk, whose work in the Ministry of Youth and Sport, in unlikely to be included in the Central Committee.

As to the party leader, he should be re-nominated at the closed party meeting after the congress. The procedure was to go off smoothly and without excesses.

So, for 12 years Petr Mykolayovych will run the party and maybe just defeat at the election might shake his positions.

For the time being ordinary communists estimate their chances as from 5% to 50%. At the same time they do realize that their only chance is that either the “new administration will undermine its authority” or the old regime will restore authority it never had”.

Source: Ukrayinska Pravda

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TeliaSonera International Carrier Delivers IP Solutions to Ukraine

STOCKHOLM, Sweden -- TeliaSonera International Carrier has once again been selected by Ukrtelecom, the leading provider of telecommunications solutions in Ukraine, as their provider of global IP transit services. The agreement strengthens TeliaSonera International Carrier's position as one of the leading IP solution providers in Eastern Europe.


Ukraine is one of Europe's fastest growing countries in terms of economic growth. The need for IP solutions is increasing as a result of this. The multi-million Euro agreement signed with TeliaSonera International Carrier will provide Ukrtelecom with fully diverse and geographically redundant IP solutions to access the Internet. This will allow Ukrtelecom a direct connection to e.g. Russian IP content.

"A fruitful and long-run cooperation with TeliaSonera International Carrier enables us to meet the needs of the most pretentious Ukrainian customers in advanced, high-quality Internet services and thus enhances the integration of Ukraine in the information space of the united Europe and the whole world," says the Deputy Chairman of the Board on Marketing and Sales Mr. Igor Syrotenko. "Today Ukrtelecom is the number one Internet-provider in Ukraine and to the great extent we owe this to our partnership relations with TeliaSonera International Carrier."

"We are very pleased about the renewed confidence that Ukrtelecom has shown in TeliaSonera International Carrier," says Magnus Sjolund, VP and Head of Sales at TeliaSonera International Carrier. "With this agreement we strengthen our relationship with Ukrtelecom. It is an honour for us to be a part of the IP expansion in this very interesting region and to contribute to the continued growth."

Source: TeliaSonera Press Release

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Kasparov’s Political Gambit to Bring Down Putin Regime

MOSCOW, Russia -- Former chess champ and chairman of the Russian Opposition Organization Committee 2008 - Free Choice, Garry Kasparov has announced that he is going to set up a united civil front in Russia. Following is an interview he gave to MosNews.

Garry Kasparov

Why did you form the United Civil Front? Are you waging a war?

The ruling authorities have declared a war on the people. The number of people dissatisfied with the state of affairs in the country is growing. After the country’s second presidential election, or rather after Putin’s appointment, this tendency has been increasingly apparent. The regime is toughening its policy line. True, the majority of these people are still showing only passive dissatisfaction, but whereas during Putin’s first term in office, their discontent could not be measured mathematically, now it is there for everyone to see.
Today, the dividing line in Russian society should not run traditionally between rightists and leftists; it should point to the extent to which people are ready to make tough demands upon the current regime. All of today’s political organizations have a narrow focus; it is useless to talk now about the political program we will have in 2007. When the results of elections are falsified, it doesn’t matter who is five degrees more to the left or to the right.

Who will be your followers?

There is great potential both from the left and from the right. That is the rank-and-file activists who are not always content with their political leadership. Negotiating with the Kremlin is always part of the political game of that leadership, part of the political process. We don’t think there is any sense in holding such talks. The Kremlin accepts an opposition political organization only if it fits its current plans and its general conception.

What harm has the ruling establishment done to the people?

It has abolished gubernatorial elections, sharply toughened legislation regarding the registration of political parties and holding of processions and demonstrations. It has virtually banned referendums. Voting in elections is becoming a rubber stamp for decisions made elsewhere.

How does the presidential appointment of governors affect you personally?

At first glance, it is hard to see the link between worsening living standards and the abolition of gubernatorial elections. But just consider this: first, the people are stripped of power — they can no longer elect governors and they can no longer vote for single-mandate candidates. Next, the people are stripped of money. More and more people are beginning to see the connection.

One should also understand that, having liquidated elections in Russia, the regime will not stop. We will see how it guarantees its self-reproduction. The Khodorkovsky case is a landmark we have passed. The regime has developed a grasping conditional reflex. A regime that uses its administrative lever not to falsify election results but to steal an oil company must fight for its self-preservation.

If we have a pyramid of power in which officials of all levels are appointed, then the top cannot be elected as well. Once the regime has decided on self-reproduction, it won’t consult anyone. But if the regime breaks the law, it must be dismantled.

You want to dismantle the present regime. But Putin has the support of the majority. Does it really matter if his supporters amount to 60% or 65% of the population?

We are in the year 2005, not 2004. Today we are witnessing regular demonstrations that demand Putin’s resignation. The tendency is obvious: 70 percent of the citizenry used to support Putin; now the figure is 40 percent. One more point: if you ask people about their attitude toward the war in Chechnya, the growing crime rate, and the state of the economy, then the rating of the present regime becomes quite different. Either people don’t look upon Putin as a politician who wields real influence on the country’s life, or they don’t want to be frank on this matter.

What exactly are you going to do?

There is a wide variety of possible protests — walkouts, hunger strikes, demonstrations. It’s difficult to incite a hunger strike — that’s a measure people resort to when they can’t bear to be downtrodden any longer. But we can unite all these people into a broad anti-regime front. They must feel that they are not alone.

We want to unite all of them — from the radical activists of SPS, who denounce the party leadership’s conciliatory policies, to Limonov’s followers, who exist in the form of “free radicals” and go by the principle of “protest for protest’s sake.” The problem with the Communist and Rodina parties is that they simply can’t get rid of their Kremlin birthmarks. Rodina chairman Dmitry Rogozin uttered many nice words at his party congress but he hasn’t yet learnt to say “Down with Putin!”

Apart from everything else, we will help people who are dissatisfied with the present regime by giving them advice or doing something practical for them. We intend to organize an alternative system of information so that people have a single informational space.

What do you expect to achieve after doing all that?

We could hope for a miracle of course — that life will suddenly become wonderful, with the ruling establishment suddenly changing its mind and building a paradise on earth for us. If that comes true, nothing will be left for us to do, and we’ll let Putin proclaim himself tsar and rule the country for ever.

But we believe there will be no miracle. A social protest will start turning into a political one involving 40-50 percent of the population rather than 5-10 percent. In response, the ruling authorities will toughen its regime, revealing its true face, and start gradually losing its supporters.

Who funds all your programs?

Alas, we live in a country where the lives of our sponsors would be in danger if we named them. All well-known right-wing liberal sponsors of the past are now either abroad or in jail. I can only tell you that we are short of funds. We will not even hide the fact that we have far less money than the amount needed to get our movement going, far less than the democrats spent. However, we are learning to work in such conditions, trying to get the best returns on our investments, counting every kopek.

The tougher the Kremlin’s actions, the greater are our chances of getting help — the number of discontented people grows and more of them wish to help us. In fact, the main potential of our Front is that it exists while the regime is what it is, as long as it engenders discontent.

Why do you think that in fighting the Kremlin you stand a better chance of winning than others?

Unlike the majority of players on the Russian political scene, I have a reputation, and I will retain it in any case. Many politicians found our manifesto too tough for them to sign. They all need to consult someone before making a decision, since they all have so-called “political partners of priority.” As for me, I always make decisions by myself, and no one can make me change my mind once I have made a firm decision. My decision as to the present situation is this: with the present regime, we can only negotiate its capitulation.

Will you also participate in the parliamentary — not street — battle?

We will take part in it with pleasure when it makes sense to do so.

Source: MosNews

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Ukraine Moves toward the European Economy

GDASNK, Poland -- The VIII Ukraine–Poland economic forum opened yesterday in Gdasnk, where the presidents of Ukraine and Poland, Viktor Yushchenko and Alexsander Kwasniewski, will arrive today to take part. Kiev is pinning particular hopes on cooperation with Poland, relations with which have significantly strengthened since the Orange Revolution, which received support from Warsaw.

Ukraine's President Viktor Yushchenko (R) and his Polish counterpart Aleksander Kwasniwski

Last year's Ukraine–Poland economic summit was held in Yalta two months after Poland's entry into the EU. Polish President Aleksander Kwasniewski and then Ukrainian President Leonid Kuchma took part in the proceedings. At that time, relations between the two countries were difficult. However, this past year, Ukraine and Poland have become close allies. The new Ukrainian President, Viktor Yushchenko, who said his ultimate goal during his term in office was see Ukraine join the European Union, is steadfastly counting on Poland's help in this. Talks between Yushchenko and Kwasniewski are planned within the framework of the present summit. The presidents last met a week ago when they opened a memorial in the Polish military cemetery in Lviv; in Kuchma's time, the opening was repeatedly postponed due to political differences.

The recent strengthening of ties between Kiev and Warsaw has already had a favorable effect on Polish public opinion. Results of the latest polls published just before Yushchenko's visit to Poland show that Poles have started to think better of Ukraine. For the first time since Ukraine became independent, Poles have a greater liking for it than Germany (8 percent more). However, Poles consider Czechs and Slovaks their best neighbors, and Russia and Belarus as their worst.

Working meetings went on yesterday as part of the forum, which was organized by the Polish Chamber of Commerce. The concluding documents and agreements will be signed today; the most important of these is an agreement on the privatization of the Warsaw auto plant FSO (Fabryka Samochodow Osobowych) by the Ukrainian corporation AvtoZAZ. The Polish plant, set up in 1948, first put out the Polish versions of the Pobeda (Warszawa and Syrena) and then produced cars under license of the Italian company Fiat (Polish Fiat and Polonez). Today, the plant produces mainly Daewoo products. According to Kommersant's information, after the plant is modernized in 2007, a new car model will be introduced. This will be a cross between the Zaporozhets and the Tavria costing up to 8000 zloty (€2000) each. There are plans to output 150,000 cars, which will be sold in Ukraine, Central Asia, and maybe even Poland itself.

Source: Kommersant

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Wednesday, June 29, 2005

Ukraine: Country's Biggest Steel Mill, Re-Nationalized, Prepares To Be Re-Privatized

PRAGUE, Czech Republic -- The Ukrainian government plans to sell some 93 percent of the shares in the country's biggest steel mill, Kryvorizhstal, which was re-nationalized earlier this month. Kryvorizhstal, Ukraine's most profitable mill, was sold last year to a consortium owned by the son-in-law of former President Leonid Kuchma -- amid complaints about the artificially low price.

After coming to power, Ukrainian President Viktor Yushchenko pledged to reverse the sale. This month a Ukrainian court upheld an earlier ruling nullifying the mill's privatization. Prime Minister Yuliya Tymoshenko says the new privatization of the mill will be the first transparent sale of state property in the country.

The Kryvorizhstal story is a complicated affair.

Even as the Ukrainian government moves to re-privatize the mill, courts are continuing to mull legal challenges to the step that came before -- Kryvorizhstal's re-nationalization.

Courts had already ruled in favor of a decision to nullify the mill's first sale to private owners. But the Supreme Commercial Court is currently considering an appeal.

Serhiy Vlasenko, a lawyer representing Kryvorizhstal's former owners, told RFE/RL the government is being too hasty in putting the mill on the auction block.

"I don't agree with the government that all the legal matters are finished, Vlasenko said. "The legal matters are far from being finished. The Ukrainian prime minister allows herself to make a declaration [on privatization] as if knowing what decision the Supreme Commercial Court will make. I personally have no idea what decision the Supreme Commercial Court will make."

In addition, Vlasenko said a Ukrainian Supreme Court decision in late December upholding the legality of the first privatization has yet to be annulled.

He says the government should wait for all legal matters to be concluded before they take any further steps toward privatization.

Kryvorizhstal's controversial first sale took place last year.

Rinat Akhmetov, considered one of the wealthiest businessmen in the Donetsk region, paired up with Vikor Pinchuk, the son-in-law of former President Leonid Kuchma, and purchased the mill for $800 million.

The government says the sum was significantly lower than those offered by other bidders.

Viktor Yushchenko and other leading figures of last year's Orange Revolution pledged to investigate shady privatization deals. One of the new administration's first steps was to re-nationalize Kryvorizhstal earlier this month.

But some outside observers aren't impressed.

Stuart Hensel of the London-based Economist Intelligence Unit, says Kryvorizhstal is not a success story for the Yushchenko administration:

"I think the obvious thing about this is that the government has handled this very badly," Hensel told RFE/RL. "I think it's taken far longer than anyone expected. The government has proved far less able to send out a coherent, timely message about what its intentions are regarding re-privatization. And this has turned out to be a major distraction for the government, and a significant source of concern for potential investors."

The government has so far failed to specify which pre-Yushchenko privatization deals it intends to investigate. This uncertainty has left many potential investors nervous. In the end, Hensel says, the Kryvorizhstal affair may backfire:

"I think [the government], unfortunately, hasn't gone about it in a very good way," Hensel said. "So that even though putting Kryvorizhstal back in private hands will boost budget revenues and will be seen by many as increasing social justice, I think the government has created as many problems as it is solving by going about it in the way that it has."

But Volodymyr Horbach of the Kyiv-based Institute of Euro-Atlantic Cooperation says the government has no choice but to look into dubious privatization deals from the past.

Ukrainians supported Yushchenko and Tymoshenko precisely because they pledged to instill a sense of justice, Horbach said. A majority of the public was in favor of the mill's re-nationalization.

"The public thinks that it is normal to return the property back to the state," Horbach said. "They see it as an objective and fair process."

Horbach says that with parliamentary elections due next year, many politicians are keen to stay on good terms with their electorate, and therefore may back more re-nationalization plans.

But would Kryvorizhstal's re-privatization prove an equally popular move?

Horbach says no. After a decade of rampant corruption and nepotism, he says, most Ukrainians feel a deep distrust for private business.

A recent poll by the Ukrainian Institute of Economics indicated that only 20 percent of Ukrainians support privatization. A majority of respondents said they would prefer to work in a state-owned company.

Source: Radio Free Europe

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U.S. Businessman Regrets Showing Diamond Ring After Putin Pockets It

MOSCOW, Russia -- Robert Kraft, owner of the New England Patriots football team claims he may have lost a priceless keepsake when he handed his Super Bowl ring to Russian President Vladimir Putin during a meeting in the Kremlin on June 25.

President Vladimir Putin (C), at right is head of the Kraft group of companies Robert Kraft

Kraft reportedly showed his diamond-encrusted 2005 Super Bowl ring to Putin at a meeting of American business executives in Russia, and after trying on the ring the Russian president pocketed it and left the meeting, Associated Press reported.

It was not immediately clear whether Kraft intended for Putin to keep the ring. A Patriots spokesman said the owner is still traveling in Europe and was not available for comment.

Kraft handed out Super Bowl rings to players and coaches during a gathering at his Brookline home two weeks ago. The team would not say how much each ring is worth, other than it cost much more than $15,000.

Source: MosNews

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Where Eaglets Lie

POZNAN, Poland -- After 87 years, thousands of young Polish soldiers may finally be truly able to rest in peace following a ceremony in which the Polish and Ukrainian presidents tried to bury a controversy that says much about the two nations’ tortured and deeply entwined histories.

The hope is that the ceremony in Lviv’s Lychakivske cemetery will transform the soldiers’ graveyard from a symbol of national heroism for some Poles and a symbol of subjugation for some Ukrainians into a symbol of reconciliation.


At the heart of the controversy is the complex history of Lviv itself. Before World War I, Lviv was a Polish town surrounded by Ukrainian villages, ruled from Vienna by the Habsburg emperor. In November 1918, the same month that Poland re-emerged as an independent state, the Ukrainian National Council declared Ukraine an independent country and laid claim to Lviv. Nearly 3,000 Poles died successfully defending the city in a brief but fierce battle. Lviv remained part of Poland through the interwar years and the burial site of the Lviv’s Polish defenders – the grandly designed Eaglets Cemetery, so named because many of the dead were teenagers – became one of Poland’s most prominent symbols of patriotism. For Ukrainians, it became a symbol too, though of a lost cause and of Polish supremacy.

After World War II, Lwow became Lviv (or, in Russian, Lvov) after the Soviet Union extended its borders far to the west. The Soviet authorities – who had no time for nationalism in Poland, a key satellite state, or in Ukraine, a key republic – deliberately neglected and in 1971 bulldozers flattened much of the cemetery. But for Poles, the graveyard remained a symbol and in 1989, in the era of glasnost introduced by the Soviet leader Mikhail Gorbachev, the Soviet authorities began to protect the site from further ravages.

After the collapse of the Soviet Union, Poland swiftly recognized Ukraine as an independent state. An opportunity for reconciliation seemed to open up and, in 1994, the Ukrainian and Polish governments agreed to rebuild the cemetery. However, as the years passed, the disputes seemed to increase, rather than decrease. The problem – in essence, how to commemorate Polish fighters who fought Ukrainians and ultimately helped foil the idea of an independent Ukrainian state – centered on the inscription on the cemetery’s main monument. In 1997, Ukrainian officials halted renovation work on the cemetery, arguing that the Polish-only inscriptions on the graves glorified the Polish past by saying the Polish soldiers died heroically. In 2000, the city council suggested alternative wording, reading simply (in Ukrainian as well as Polish): "For the unknown Polish soldiers who died for Poland in 1918-1920." Polish officials refused to step down, demanding the word "heroically" be re-inserted, as the Polish and Ukrainian governments had agreed. However, Lviv’s city council stood firm, forcing Poland’s President Aleksander Kwasniewski to cancel the re-opening of the cemetery.

His Ukrainian counterpart, Leonid Kuchma, blamed the impasse on local officials, apologizing to Kwasniewski for the delay.

THE REVOLUTION AND RECONCILIATION

Despite Kuchma’s stance, many commentators believe it was the defeat of Kuchma’s supporters in Ukraine’s Orange Revolution, in December 2004, that ultimately made reconciliation possible. In an interview for the Polish daily Gazeta Wyborcza, the Ukrainian historian Bohdan Osadczuk argued that “without the Orange Revolution … the controversies [about history] would still be dragging on. Since then, new values and new possibilities have emerged.”

Echoes of past disputes emerged just days before the ceremony, when a nationalist member of the Ukrainian parliament, Oleh Tiahnybok, managed to persuade fellow MPs to pass a resolution calling for the ceremony to be cancelled until the Polish words on the monument were removed. Yushchenko and his prime minister, Yulia Tymoshenko, persuaded parliament to annul the resolution on 23 June.

After years of debates in which single words could often cause nationwide controversies, the final inscription says straightforwardly (in Ukrainian as well as Polish): “Here lie Polish soldiers who fell for their homeland.”

In another corner of the cemetery lie the bodies of some of the Ukrainians whom they killed during the struggle for Lviv, a point highlighted in his speech by President Yushchenko. "This cemetery holds the remains of former fellow students, schoolchildren, neighbors and relatives,” he said. “Some of them [fought under] the Ukrainian trident, others under the Polish eagle. One people's defeat never was another people's victory.”

The opening ceremony itself attracted thousands, most of them Poles, and was broadcast live on Radio Polonia, Poland’s national broadcaster. The local press in Lviv, though it described the event as a crowning moment in efforts to bring the two nations together, also indicated that it was more of a Polish ceremony than a Ukrainian or joint Polish-Ukrainian event. Still, Ukrainian papers welcomed the official stance of the Polish government, that the event could not be seen as anyone’s victory. “Peace, not truce” was one Lviv daily’s summary of the importance of the occasion. Polls revealed 75 percent of Lviv inhabitants welcomed the ceremony.

Though the ceremony marks the symbolic start of a new partnership between Poland and Ukraine, in Ukraine as a whole the response was muted. That may partly be because the start of the real partnership came late last year, when Poland was in the vanguard of international efforts to mediate in the revolution that brought Yushchenko to power. The rationale for Poland’s engagement during the Orange Revolution was echoed in Lviv by Yushchenko, who said that "there can be no free Poland without a free Ukraine, and there can be no free Ukraine without a free Poland."

Warsaw swiftly dubbed 2005 the Year of Ukraine, arranging a range of events to bring the two countries together. But Poland’s most important, self-appointed role since December has been to act as Ukraine’s main advocate as it seeks to gain membership of the European Union.

Poland’s own admission to the EU in May 2004 has affected day-to-day contacts between Poles and Ukrainians, obliging Ukrainians to apply for visas to enter Poland. However, both countries are anxious to prevent the border from becoming too sealed. Ukrainians can get Polish visas free of charge, while Poles can travel to Ukraine without visas. Lviv is a particularly popular destination.

Accession to the EU has also posed obstacles to cross-border trade, but economic ties between the countries are gaining rapidly in strength. In 2003, trade was greater than in any year since 1990, and in 2004 trade rose by another third, to $3 billion. Major new investments are also pending, with Ukrainians set to take over the Polish carmaker FSO and the steelmaker Huta Czestochowa. Alongside the United States, Poland is the biggest foreign investor in western Ukraine. There is plenty of scope for further investment. In total, Poland is estimated to have invested roughly $200 million in Ukraine, a fraction of the accumulated $8.8 billion in foreign direct investment that Ukraine has attracted. The volume of foreign investment in Ukraine is low by the standards of the region.

THE CHURCHES AND RECONCILIATION

The cause of healing historical rifts has also recently been taken up by the institution with perhaps the greatest single cross-border influence, the Catholic Church. On 19 June, the leaders of the Polish Roman Catholic and Ukrainian Greek Catholic churches called for reconciliation. "Let us go beyond politics and history, beyond our religious denominations, even beyond our Polish and Ukrainian nationalities, and remember that, first of all, we are children of God,” Polish and Ukrainian bishops wrote in a letter read out to an audience of roughly 500 priests and chiefly intended to encourage parishioners to lay aside any animosity. The letter was expressly designed to echo a similar call for mutual forgiveness made by German and Polish bishops in the 1960s.

The Ukrainian Greek Catholic Church – also known as the Uniate Church – follows the rites of the Eastern Orthodox Church but recognizes the Catholic pope in Rome as its head.

For historian Bohdan Osadczuk, settling the controversy about the Eaglets Cemetery is a watershed. “The question of the cemetery is the last unresolved problem of our historic disputes and the whole issue is now coming to an end,” he told Gazeta Wyborcza. In recent years, there have been similar acts of reconciliation on a number of thorny issues. In 2002, Poland expressed “regret” over a post-war resettlement program, known as Operation Vistula, in which Poland’s communist government uprooted roughly 150,000 Ukrainians and Lemkos from southeastern Poland and settled them in northern and western areas formerly populated by Germans. In 2003, Kwasniewski and Kuchma commemorated the killing in the Volhynia region of many thousands of Poles by Ukrainian forces fighting for an independent Ukraine during World War II.

A number of sore points in the 20th-century history of Poland and Ukraine remain outstanding. The hope now, though, is that these issues will now become a focus of attention for historians rather than politicians. First, however, Poland may need to live up to its promise to help renovate and reopen graveyards of Ukrainian soldiers in Poland. There are many of them, though none as controversial as the Eaglets Cemetery, and efforts to improve their condition have only really begun to make headway in recent years.

Source: Transitions on Line

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Ukraine's Uphill EU Struggle

BRUSSELS, Belgium -- "Ukraine is clearly committed to reform and shares our fundamental values. There is still a lot of work to do to promote democratic and economic reforms. Ukraine and the EU know that this won't happen overnight," said European Commission Vice-President Siim Kallas ending a two-day visit to Kiev.

Following the rejection of the Constitution by French and Dutch voters, a growing number of politicians from richer old EU Members, the latest being French Interior Minister Nicolas Sarkozy, have called for enlargement to be frozen. "We must hold up enlargement at least until institutions have been modernised. Europe cannot enlarge for ever," Sarkozy said on Monday after meeting newly installed French Prime Minister Dominique de Villepin. The meeting was aimed at fleshing out a new EU strategy following the rejection of the Constitution.

As for Kallas, he is the fifth European Commissioner to travel to Kiev in the six months following the election of President Viktor Yushchenko. That shows the level of commitment by EU institutions to implementing cooperation plans framed in an EU-Ukraine Action Plan and signed in February. Hailing from a former Soviet republic himself, Estonian Kallas is fearful that the EU's drawing a line on further enlargement may encourage new democracies in eastern and south-eastern Europe to backslide.

But despite the amount of flying between Brussels and Kyiv, the EU door is definitely closed for Ukraine. "Yushchenko was very wise not to send a premature application for membership," admitted Enlargement Commissioner Olli Rehn, speaking last week at a breakfast event organized by the Brussels-based think-tank, the European Policy Center.

"Enlargement has been stretched to its limits," said Rehn. "We want to bring the Ukraine closer to the EU by concrete measures like free trade, market economy status, enhancing market functioning, better dialogue, improving the opportunities for Ukrainians to study and work in the EU," continued Rehn. "The Ukraine is indisputably a European country. The Treaties say that any European country that respects European values may apply to join."

In Kyiv, Kallas also concentrated more on practical steps. "The Commission fully supports Ukraine in its efforts step by step to implement the EU Ukraine Action Plan and the complementary conclusions on Ukraine of the General Affairs and External Relations Council of 21 February," said Kallas. "I am confident that Ukraine’s government and people will rise to challenges that include reform of the administration and the judiciary, in particular with a view to ensuring the rule of law and to strengthening the confidence of investors."

Kallas, who is responsible for administrative reform, audit and anti-corruption in the Brussels administration also met with Deputy Prime Minister Roman Bezsmertnyi in charge of administrative reform, Interior Minister Jury Lutsenko, and other top officials. Ukraine is facing an uphill struggle to maintain a clear separation between business and politics and ensure security of domestic and international investment. Extensive administrative reform is needed in the former Soviet Union republic as well as stronger policy aimed at fighting corruption and eliminating red tape.

Earlier this month top Ukraine officials were in Brussels for the Ukraine-EU Council. "Now is the moment to get down to work and this is the goal of the Action Plan," EU External Relations Commissioner Benita Ferrero-Waldner told them at the time. "We want to see the Ukraine get closer to the EU. An important question is visa facilitation. I can say a mandate will be given before the summer."

On 1 May, Ukraine unilaterally introduced a visa-free regime for EU nationals and Swiss citizens, partly to facilitate travel before and after the Eurovision song contest held in Kyiv. Although, the visa-free regime remains in effect until 1 September 2005, Yushchenko wants to further extend the visa-free regime.

Source: Euro-Reporters

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Tuesday, June 28, 2005

Ukraine President Viktor Yushchenko to Receive 2005 Philadelphia Liberty Medal

PHILADELPHIA, PA -- Viktor Yushchenko, the President of Ukraine, whose courageous fight for free and fair elections inspired millions in his country and around the world and led to the end of a corrupt government, has been named the recipient of the 2005 Philadelphia Liberty Medal by its distinguished International Selection Commission. President Yushchenko will accept the Medal and its accompanying $100,000 at the National Constitution Center in Philadelphia on September 17, America’s Constitution Day.

The Philadelphia Liberty Medal, established in 1988 to heighten recognition of the principles that founded this nation and to serve as a lasting legacy to the 200th anniversary of the U.S. Constitution, honors an individual or an organization from anywhere in the world that has “demonstrated leadership and vision in the pursuit of liberty of conscience or freedom from oppression, ignorance, or deprivation.” It is administered by the non-profit, non-political, Philadelphia Foundation, the region’s foremost community foundation.

Professor Martin Meyerson, Chairman, since the Medal’s inception, of its International Selection Commission and President Emeritus of the University of Pennsylvania, said, “President Yushchenko’s courageous leadership in guiding the “Orange Revolution” is reminiscent of the heroism of Vaclav Havel in Czechoslovakia and is likely to inspire other freedom-seeking, democracy-loving people. Now, as a charismatic political leader, he is transforming his country into a modern civil society. As a shaper of a new nation, he merits being seen as the Ukraine’s George Washington.”

H. Craig Lewis, Chairman of The Philadelphia Foundation, commented, “We are delighted to make the announcement of President Yushchenko’s selection on June 28, Ukraine’s Constitution Day, and will welcome him to Philadelphia on our national Constitution Day, September 17. The National Constitution Center is an ideal venue and partner for this year’s presentation because it so ably teaches the same values of freedom and democracy that President Yushchenko stands for.”

Viktor Yushchenko was born in 1954 in the Sumy region of northeastern Ukraine. After studying economics at the University he began a financial career, starting as a rural accountant and progressing in 1993 to head the national bank of the newly independent Ukraine. There he played an important role in overcoming hyperinflation in the country and establishing a stable national currency. His success led to his appointment as prime minister in December 1999 by President Leonid Kuchma. Dismissed by Kuchma in 2001 because of his rising popularity, Yushchenko became head of the Our Ukraine opposition bloc, and, as Kuchma’s term ended in 2004, he announced his independent candidacy for president.

The presidential campaign was contentious. Yushchenko had great popular support, but the state-run television channels and Russian President Vladimir Putin continually touted his major rival, Prime Minister Viktor Yanukovych. Among the “dirty tricks” was dioxin poisoning of Yushchenko, allegedly by government officials, which left his face disfigured and pockmarked just weeks before the election. The official tally awarded a narrow victory to Yanukovych, but allegations of widespread fraud prompted Yushchenko and his supporters to refuse to recognize the results. There were massive popular protests around the country, and thousands camped out in the main square of Kiev in bitter winter weather while wearing orange as a sign of solidarity. Finally the Supreme Court overturned the election results, and Yushchenko won the repeat ballot.

As President he has begun to expose the massive corruption of Kuchma’s regime, replacing thousands of bureaucrats, and pledging financial reforms, new jobs, and a higher standard of living. He is also aggressively pursuing membership in the European Union.

Mayor John F. Street will present the 2005 Liberty Medal on Saturday, September 17 at the National Constitution Center on Independence Mall in Philadelphia. Mayor Street said, “Viktor Yushchenko is an inspiration to people all over the world because of his brave and powerful reform movement in Ukraine, leading to his election as President in 2004. I salute the Liberty Medal Commission on his selection as the winner of the Liberty Medal for 2005, and look forward to welcoming President Yushchenko to our city in September for the presentation ceremony.”

Past recipients of the Philadelphia Liberty Medal are: Polish Solidarity founder--and then President--Lech Walesa in 1989; former U.S. President Jimmy Carter in 1990; former Costa Rican President Oscar Arias and the French medical and human rights organization Médecins Sans Frontières (Doctors Without Borders) in 1991; the late U.S. Supreme Court Justice Thurgood Marshall in 1992, South African Presidents F.W. de Klerk and Nelson Mandela in 1993; Czech President Václav Havel in 1994; the United Nations High Commissioner for Refugees, Sadako Ogata, in 1995; former Israeli Prime Minister Shimon Peres and the late King Hussein of Jordan in 1996; the global news network CNN International in 1997; Irish Peace Negotiator Senator George Mitchell in 1998; South Korean President Kim Dae-jung in 1999; Doctors James Watson and Francis Crick, co-discoverers of the structure of DNA, in 2000; United Nations Secretary-General Kofi Annan in 2001; United States Secretary of State Colin Powell in 2002; U.S. Supreme Court Justice Sandra Day O’Connor in 2003; and, in 2004, Afghan President, Hamid Karzai.

Six former recipients of the Liberty Medal have subsequently won the Nobel Peace Prize.

Source: PR Newswire

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List of Former Ukrainian Top Officials Accused of Hiding

KIEV, Ukraine -- In the months following Ukraine's Orange Revolution, many former top officials were summoned for questioning over various abuses. Some of them failed to turn up for questioning, provoking accusations of hiding from prosecutors. In many cases, the reported reason for their failure to appear for questioning was that they were receiving medical treatment, often in Russia.

Viktor Yanukovych

This gave rise to suspicions that Russia is harbouring many Ukrainian politicians who backed Viktor Yanukovych, the defeated pro-Russian rival of Western-minded liberal Viktor Yushchenko in the 2004 presidential elections. Subsequently, the Ukrainian Interior Ministry asked Moscow to help track down several former top officials.

The list includes former chairman of the Ukrainian Central Electoral Commission Serhiy Kivalov, former Ukrainian Interior Minister Mykola Bilokon, former Sumy regional governor Volodymyr Shcherban and former Odessa mayor Ruslan Bodelan.

The following are details of charges facing some of Ukraine's most prominent former top officials, as well as their reported whereabouts.

Ihor Bakay

Ihor Bakay, the former head of the Ukrainian Directorate for State Affairs under former President Leonid Kuchma, is wanted on charges of abuse of power and involvement in crime. Bakay is widely accused of mismanaging state property as head of the presidential directorate.

He is reported to be currently resident in Moscow, where he had a meeting with Ukrainian Transport Minister Yevhen Chervonenko.

It has also been reported that Bakay applied for Russian citizenship and sought to give up his Ukrainian citizenship. The Russian immigration authorities, however, said that Bakay does not hold Russian citizenship.

Mykola Bilokon

Former Interior Minister Mykola Bilokon is wanted for questioning on suspicion of abuse of office, including financial abuses committed while building a dacha in Lviv Region. He has also been accused in the media of orchestrating a clampdown on human rights and media freedoms.

It was reported that Mykola Bilokon is currently a resident of Moscow, where he has frequent contacts with Russian businessman Maksim Kurochkin and Ihor Bakay. There have also been reports that Bilokon underwent medical treatment in Moscow, although it is not clear what he was treated for.

Ruslan Bodelan

Ruslan Bodelan, who was ousted as Odessa mayor in April 2005, is wanted in Ukraine on charges of abuse of power which caused losses of about 120,000 dollars. The case involves advertising space being sold to a private company at an artificially low price. In June, a court in Odessa sanctioned Bodelan's arrest.

Following the fiercely disputed presidential election in late 2004, Bodelan underwent a heart operation at the Russian Defence Ministry's Vishnevskiy hospital outside Moscow. Subsequently, he spent at least one month there undergoing a rehabilitation course, according to his press secretary. In late May, she said that his return to Odessa "was not on the agenda".

In April it was reported that Bodelan was undergoing in-patient treatment in Odessa, which was said to be the reason why he failed to turn up for questioning at Interior Ministry's directorate in Odessa Region.

Volodymyr Satsyuk

The former head of the Security Service of Ukraine (SBU), Volodymyr Satsyuk, is wanted on charges of abuse of office, forgery and causing material damage to the state in especially large amounts. He is also the owner of the dacha where Viktor Yushchenko dined immediately before being taken to hospital with poisoning which disfigured his face.

Former SBU head Ihor Smeshko told journalists on 9 June that Satsyuk had left Ukraine. In a recent newspaper interview, however, Satsyuk denied this, saying that he was still in Ukraine, where he is being treated in hospital for a heart condition. Events over the past few months have had a "negative effect" on his heart, Satsyuk said.

Current SBU head Oleksandr Turchynov said that "there is no information" that Satsyuk had fled Ukraine. Turchynov also said that Satsyuk has not been formally charged with involvement in Yushchenko's poisoning.

Volodymyr Shcherban

The former Sumy Region governor and a close ally of former President Leonid Kuchma, Volodymyr Shcherban, is wanted by Ukrainian prosecutors on charges of extortion, abuse of office and vote- rigging.

There have been reports that he is hiding in Russia or Turkey, and on 4 May, the Ukrainian Interior Ministry asked Russia for assistance in locating Shcherban and establishing his citizenship.

A Ukrainian progovernment daily also said that Shcherban may be in the USA, after being granted a US visa for "investing" 5m dollars in the American economy. Shcherban's son Artem has stayed behind and is busy selling off the family's stakes in numerous companies in Ukraine prior to joining his parents in Miami, the paper said.

Serhiy Kivalov

The former chairman of Ukraine's Central Electoral Commission, Serhiy Kivalov, was questioned over the alleged embezzlement of property at the Odessa law academy, which he heads. There have been no reports that Kivalov was put on a wanted list, or that he was charged with involvement in vote-rigging during the 2004 presidential election.

In a newspaper interview by phone in May, Kivalov said he was undergoing medical treatment for hypertension and therefore could not be questioned at the moment. Kivalov denied that he was hiding from investigators, but refused to disclose his whereabouts, saying he would turn up for questioning when he is well.

Kivalov reportedly stayed in Moscow in early 2005, but in an interview, he dismissed reports that he was seen while visiting a Moscow restaurant.

In a TV interview in May, Ukrainian Interior Minister Yuriy Lutsenko said Kivalov had returned from Russia and was questioned in Odessa. On 9 June, Kivalov was seen attending Russia Day festivities in Kiev.

Source: BBC Monitoring Service

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Ukrainian General Wanted for Journalist Murder Located in Israel

KIEV, Ukraine -- Gen Oleksiy Pukach, wanted on charges of murdering journalist Heorhiy Gongadze, has been located in Israel, a Ukrainian newspaper has said. It said that special Security Service and Interior Ministry groups rushed to Israel as soon as they learned the news, but extradition procedures are very complicated.

The following is the text of the article by Oleksandr Korchynskyy entitled "Gen Oleksiy Pukach found in Israel! SBU and Interior Ministry special groups are after him" published in the Ukrainian newspaper Segodnya on 23 June; the subheading is as published:

Segodnya learned that on Friday [17 June] sensational news came to Ukraine that Police Gen Oleksiy Pukach, who is on the international wanted list, has been discovered in Israel. We remind you that Pukach is sought by our country's law-enforcement agencies on charges of direct participation in the murder of journalist Heorhiy Gongadze. Our paper, by the way, at one time expressed the theory that Pukach might be in hiding in Israel. And now, as far as we know, he has been found there by Israeli special services.

According to unconfirmed reports, they are just watching, not detaining him. Segodnya's sources reported that having received information about the stay of Pukach in Israel, a group of several SBU [Security Service of Ukraine] officers left for that country in haste on Saturday [18 June]. A day later, on the Sunday, a group of Interior Ministry staff left for the same destination (evidently they got the news later).

If it is going to be a question of the extradition of Pukach, then according to Ukrainian legislation, the Prosecutor-General's Office [PGO] is the only agency that can officially demand the return of the accused. However, our sources reported yesterday that neither the Interior Ministry nor the SBU told the PGO anything about their visits to Israel.

It is not being ruled out that in this case the recently heightened competition between the security departments came into play; each of them has an interest in being the first to bring President Viktor Yushchenko news of the capture (by their own forces) of the main person accused of the Gongadze murder, who may also talk about those who ordered the killing.

Be that as it may, it is unlikely that the Interior Ministry and SBU special groups will come back from the Promised Land with Pukach in handcuffs. The extradition procedure from Israel is extremely complicated, especially if Pukach has managed to become a citizen of the country, and could drag on for years. Although, theoretically speaking, the general could simply be kidnapped, brought to Ukraine illegally somehow and sort of "accidentally" discovered here (but later at a future trial juridical questions will arise).

It is no secret that our operational service in the past "treated themselves" to similar things. In this way, for example, according to this paper's information, at one time one of the contract killers involved in the shooting of people's deputy Yevhen Shcherban was brought from Russia to Ukraine in the boot of a car. True, it is easier to do this from Russia than from Israel.

In 2000 Oleksiy Pukach occupied the post of chief of the criminal search directorate (in plain speech - the visual surveillance service, "the visuals", "the seven") of the Ukrainian Interior Ministry. Pukach is now in the same case with those accused of murdering Heorhiy Gongadze - police colonels Mykola Protasov and Valeriy Kostenko. The fourth accused, who on that fateful evening was driving the car that had taken Heorhiy away, police officer Popovych, is out on bail.

On 16 September 2000 Pukach and the aforementioned three took the journalist to Bila Tserkva District [Kiev Region] and killed him there. What is more, according to the inquiry's theory, the general himself allegedly strangled Heorhiy with his own belt. Then the killers buried the body and went to a cafe to "mark" the event.

We also remind you that Pukach had already been detained by the PGO on 22 October 2003. At that time the court originally authorized his arrest, but on 5 November 2003 (shortly after the dismissal of the then prosecutor-general, [Svyatoslav] Piskun) the court replaced the detention by a bail order, after which Pukach was not seen in Ukraine.

THREE MAIN QUESTIONS ABOUT PUKACH

FIRST, what importance does the capture of Pukach have for solving the Gongadze case? If Pukach admits his part in Gongadze's murder, as the ringleader of the group of killers, he may lead to the people who ordered the crime, who gave him the order to sort out the journalist. Apart from that, Pukach may say how Gongadze's body was beheaded and reburied in Tarashcha [forest where it was found] (although it is not an established fact that the general was in the know about this story).

And this, in turn, may lead to the people who ordered the "cassette scandal". Meaning the people who organized the recording of conversations in [former President Leonid] Kuchma's office on the so-called Melnychenko tapes [allegedly recorded by former Ukrainian state guard Mykola Melnychenko], and who later organized their publication.

SECOND, who can Pukach name as the person who ordered the killing of Gongadze?

There are two options. The first is that Pukach will say that he got the criminal order from former Interior Minister Yuriy Kravchenko (now deceased) and that he does not know who gave the order to Kravchenko (so the thread leading to the real people behind the crime will be broken, perhaps forever). The second is that he will name the people who gave the orders to Kravchenko. In that case, the tangle may unravel to the end.

THIRD, how likely is it that Pukach will admit his part in the killing of Gongadze? The answer directly depends on what other proof the inquiry has about Pukach's participation in the murder of Gongadze apart from the evidence of the men already arrested in the case (after all, in theory the accused could specify both themselves and Pukach).

If there is such proof, then the inquiry will probably find it not difficult to incline Pukach to making a "frank confession". If not, then the inquiry should not expect Pukach to make a confession of his guilt and hence not get evidence from him about the people who ordered the crime.

Source: BBC Monitoring Service

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Ukraine Calls for NATO Help in Destroying Outdated Ammunition

KIEV, Ukraine -- Ukrainian President Viktor Yushchenko on Monday called for help from NATO and the European Union (EU) in destroying his country's weapons and ammunition left from World War I and World War II.

According to the Ukrainian Interfax, there are 2 million tons of outdated ammunition stored in ammo depots throughout the country. However, Ukraine can only destroy 60,000 tons each year.

Ukraine is incapable of dealing with such a large amount of ammunition, said Yushchenko when meeting with NATO Secretary-General Jaap de Hoop Scheffer.

Yushchenko said his country hopes to carry out special projects with NATO and the EU to resolve the problem and reduce accidents in the ammunition depots.

An ammo depot in Khmelnitskiaya caught fire and injured nine people in May. A year earlier, explosions in another ammo depot in Zaporozhskaya killed five people and lasted for one week. About 10,000 people living nearby were evacuated due to the accident.

De Hoop Scheffer said it is necessary for the two sides to cooperate in destroying the old ammunition, adding that NATO has a 5 million-US-dollar special fund for eliminating ammunition and missile fuel.

De Hoop Scheffer arrived in Kiev on Monday for a one-day visit. During his visit, he met with Ukrainian Prime Minister Yulia Tymoshenko and other officials, pledging NATO's full support for Ukraine's efforts to push forward the European integration process.

Source: Xinhua

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Monday, June 27, 2005

Ukraine: Ghost Town An Eerie Reminder Of Chornobyl Legacy

PRIPYAT, Ukraine -- The Ukrainian town of Pripyat has been abandoned since May 1986, when its residents were hastily evacuated in the days following the Chornobyl nuclear disaster. The town, located 20 kilometers from the plant, was once home to Chornobyl workers and popularly known as the "city of roses." Now, nearly 20 years after the world's worst nuclear accident, Pripyat's only residents are dogs and wild animals. RFE/RL's correspondent traveled with a guide to Pripyat and files this report on what has become a Ukrainian ghost town.

Classroom in Kindergarten #7, Pripyat (photo by Robert Polidori).

We are in Pripyat -- once a flourishing Soviet town, but now a silent, empty place haunted by Chornobyl's nuclear legacy.

It is raining heavily as our driver parks his old Zhiguli in what used to be a children's amusement park. "It's good," he says, looking at the rain. "It will wash away some of the radioactivity."

Our guide is Serhiy Chernov, a local journalist. He lived in Pripyat as a student, and says he had hoped to make it his permanent home.

"There were flowers everywhere. Of all the cities I've seen in Ukraine -- of course, I haven't seen all of them -- it was the best. My wife and I celebrated our wedding here, and I wanted very much to be sent to work here after I graduated from Kyiv University. But half a year before I graduated, the catastrophe took place," Serhiy says.

Nearly two decades later, Pripyat is a ghost town. A gloomy atmosphere hangs over the abandoned amusement park. Grass grows through cracks in the asphalt. Raindrops splash on empty park rides.

A large Ferris wheel remains a vivid shade of yellow, as though it had been painted yesterday. Erected just days before the 26 April 1986 disaster, it has never carried a single passenger.

We get back in the car and drive through the rain to what Serhiy says was once the heart of Pripyat.

"This is the main square of the city. The regional headquarters of the [Communist] Party was based here. Look at the building over there. There was a restaurant and a hotel. It was the center of town. In the past, roses were growing everywhere. Now you see only bushes. On the top of some houses you can see birch trees growing," Serhiy says. Over the years, the town has been picked clean by thieves who took whatever they could and sold it.

We walk into the Communist Party building. Portraits of once-prominent Politburo members lie scattered on the floor. There are empty chairs, books by Lenin, and posters bearing Communist slogans.

"No souvenirs," Serhiy warns -- everything is radioactive. He says contamination levels vary from place to place. But it will be hundreds of years before Pripyat is safe to live in.

In the rush to evacuate the city, few residents had time to take more than a few small possessions with them. But over the years, the town has been picked clean by thieves who took whatever they could and sold it.

Oleksiy Dolia, an ethnographer, says people throughout Ukraine may be unwittingly living with contaminated furniture and other property stolen from Pripyat.

"There's nothing left there. The houses are empty. Nearly everything was left in these houses -- furniture, [audio and video] equipment. Everything was there. But now there's nothing left," Dolia says.

Once a year, on 26 April, onetime Pripyat residents return to the town. Serhiy says it is a chance for many to remember what their lives were like before the accident.

"Some of them haven't been here for 10 or 15 years. Some more, some less. They meet here. Sometimes they set up a table with food, they kiss one another, they take pictures, remembering what their lives were like in this town. They think back on the times they went to a certain restaurant, or to the swimming pool. There was a wonderful pool here, a wonderful stadium," Serhiy says.

As we leave Pripyat, we stop and say goodbye to a sole policeman manning the checkpoint on the road leading in and out of the town. But after a wrong turn, we find ourselves once again in the main square, with no police to stop us. It seems anyone can enter the radioactive zone and not be detected.

Source: Radio Free Europe

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Open Source Battles Microsoft in Ukraine

KIEV, Ukraine -- A battle for software supremacy within the public and private sectors of Ukraine has begun. Recently, the Ukrainian Parliament registered a "project of law" (the equivalent of a bill in U.S. terms) that may radically alter the manner in which the Ukrainian government procures software. If adopted, it will require government agencies, along with all state-owned or state-controlled companies, to give preference to open source software.

Microsoft Founder Bill Gates

However, the proposed legislation still offers ample opportunity for competition by legitimate proprietary software. It requires giving preference to an open source product only when the open source feature set is analogous to that of a commercial product, and justifies using proprietary products if the open source counterparts are more expensive.

The open source project contains nearly the entire OSI definition of open source, translated into the language of the Ukrainian legal system. It stipulates that all source code developed by public authorities is to be of an open nature, constrained only by the requirements of national security. And the bill does not limit itself to just software. Among its key elements is the requirement for state authorities to incorporate open standards in their work. Another provision requires public authorities to open the source code of the software they develop, except in cases when national security considerations requires the contrary.

Social and economic ramifications of an open software policy

The adoption of the open source project is more than a software issue; it is critical to the well-being of the Ukraine economy. Today, more than 90% of the million-plus computers in Ukraine run pirated software. If we assume that the average cost of the software installed on these computers runs to at least a thousand dollars each, the funds that would be required to legalize all this proprietary software would run into the billions of dollars.

In addition, there are issues that extend beyond Ukraine itself. Specifically, Ukraine has declared its willingness to join the European Union and must therefore remove the stigma of being a violator of intellectual property rights by legalizing its proprietary software. Such a move could financially strangle the country. According to estimates by the Centre for Constitutional Studies, a Ukrainian think tank, the overall expenditures necessary to legalize the currently installed government and commercial proprietary software could cost the country as much as $523 billion. Those costs include both anti-piracy campaigns and license fees. The magnitude of the problem is clear when you consider that Ukraine's state budget for 2005 is just over $100 billion.

Proponents of the open source law point out, and rightfully so, that instead of wasting money on licensing proprietary foreign software, funds could be better invested into the local IT industry. It is easy to see why this logic makes sense, particularly when you take into account the potential burden of just acquiring the necessary Microsoft licenses.

To see why software piracy has taken hold and become such a grave problem, consider the income levels of most Ukrainians. In country's capital, a salary of $500 per month is considered excellent. That number drops to between $200-300 in the regional centers. Therefore, Ukrainians simply cannot afford legal proprietary software. Until recently, their only solution has been to opt for piracy, although now some are switching to open source.

The same logic holds true for the government. The country's budget is unable to provide the billions of dollars necessary to legalize software via licenses, given that trying to improve the social condition of its citizens has a much higher priority.

Simply enforcing harsh sanctions against the suppliers of pirated software, without giving those vendors a viable alternative, would result in the addition of thousands of Ukrainians to the unemployment rolls -- not to mention the ripple effects throughout the Ukrainian economy as falloff in demand for pirated software adversely affects peripheral industries, such as the CD recording facilities, and thereby aggravates an already difficult situation.

Switching to open source software would not only allow for a dramatic reduction in the number of intellectual rights violations, as is already happening in China and Brazil, it would also encourage the creation of new software jobs, an attribute that is in line with social policy priorities of the Ukrainian government.

The Empire strikes back

Microsoft responded promptly to the potential shift to an open source philosophy by announcing an agreement with Ukraine's Ministry of Education. Ukraine agreed to acquire 120,000 licenses for Microsoft Windows and 120,000 licenses for Microsoft Office by the end of 2006.

Needless to say, this announcement raised a lot of questions, the most important among them being the issue of why spend millions of dollars for poorly localized software when open source provides a wide range of Ukrainian-language software?

There is also the issue of secretiveness. Signed on May 1, the agreement with Microsoft was not made public until after May 20, and then only by a press release from Microsoft's representatives in Ukraine. Moreover, a copy of the agreement is available only at www.legalgovernment.org, a Web site that belongs to the software vendors' representatives.

The Microsoft agreement should attract the interest of the Ukrainian State Anti-Monopoly Committee, given that it not only creates a long-term monopoly by Microsoft, but also limits the number of service suppliers to nine official representatives of Microsoft in Ukraine.

The secretive negotiation process between Microsoft and the Ministry of Education continues to worry the Ukrainian open source community. Although the open source bill would give open source software a higher legal standing than the Microsoft agreement, it has yet to be officially adopted. Twice the open source project has been submitted to the Ukrainian Parliament and both times Microsoft's lobbyists were able to prevent its adoption.

According to the agreement with the Ministry of Education, Microsoft is to provide some significant rebates. I tried to determine the price at which Windows will be provided to state institutions, but representatives of Microsoft said that this kind of information can only be granted during a personal meeting. The only piece of information they made available upon my request is that the price for Windows XP will not drop below $150.

Among the principles set forth by the recent Orange Revolution in Ukraine were those demanding that the actions of government authorities remain in full and open view of the public. To many open source advocates, the Ukrainian government's IT policy remains veiled, thereby reminding them of the corrupt Kuchma regime.

Lobbyists and bureaucracy versus open source

Although to the Ukrainian open source community the issues involved are clearcut, the bureaucrats view the problem somewhat differently. For the most part the majority acquired their management styles during the Soviet era, and their current understanding is that computers equate to "Wintel." Another trait of the Soviet era, and inherited by the Ukrainian bureaucracy, is a fundamental lack respect for intellectual property, along with one of duplicity. For example, over 90% of the computers in government offices run pirated software. However, to appease the rest of the world, the government periodically organizes sanctions against software pirates by publicly crushing hundreds of pirated CDs.

Although the same attitudes towards intellectual property were at one time rampant within the business community, the situation has improved as a result of what is referred to as the "mask show" -- a software legality check that can result in the confiscation of all computers containing pirated software. Though not as common now as it was in 2004, the mask show still remains a threat to Ukrainian businesses using pirated software.

Many Ukrainian bureaucrats have a fear of change within their IT world because they themselves have not kept abreast of current developments. As such, they believe that they will not be able to compete with their younger counterparts and will therefore lose their jobs should the proposal to mandate open software become law.

At the same time, it's often hard to prove the existence of Microsoft's heavy lobbying against the open software bill in Ukraine. The facts stated in this article could be interpreted to be simply the result of inefficiency of government procurement policy. Yet it's also true that every public administration official involved with IT periodically receives a CD of "Microsoft solutions for government." Maybe that's just good marketing. It's harder to explain away the fact that some of the parliamentary documents opposing the adoption of the open software project contained text derived directly from Microsoft's official site.

The authors of the open source bill that may force the Ukrainian bureaucracy to make friends with Linux, Borys Olijnyk and Mykhajlo Syrota, represent the left wing of Ukrainian political spectrum. Syrota is also considered to be among the "founding fathers" of the Ukrainian Constitution of 1996. Now Syrota and Olijnyk may well become the founding fathers of a major shift in the way their country looks at IT.

Source: NewsForge

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Japan Suspects Iran-N.Korea Missile Link-Report

TOKYO, Japan -- Japan is worried that technology for a long-range cruise missile that can carry nuclear warheads may have been leaked to North Korea from Iran, a Japanese daily said on Sunday.

At issue is technology used in cruise missiles known as Kh-55s that Ukraine exported to Iran in 2001 under former Ukrainian President Leonid Kuchma, the Sankei Shimbun daily said, quoting Japanese government and ruling party sources.

A TU-160 Launching a KH-55 Cruise Missile

"They are linked by a network beneath the surface regarding the development of weapons of mass destruction," Sankei quoted a Defense Ministry source as saying about Iran and North Korea.

The possible leak of technology was conveyed to Japan by a U.S. intelligence agency, said Sankei, a conservative daily.

Developed in the late 1970s in the former Soviet Union, the Kh-55s have a range of 3,000 km (1,864 miles), long enough to hit any part of Japan if deployed by North Korea, Sankei said.

The Financial Times said in March that Ukraine had acknowledged exporting 12 such cruise missiles to Iran and six to China in 2001 without any nuclear warheads.

Japan has made inquiries with Ukraine and has expressed concern to Iran about the possible leak of missile technology and urged it not to hand over such missiles to North Korea, Sankei said. The only reply from the Ukrainian and Iranian governments so far has been that the issue is being investigated by Ukrainian authorities, the newspaper said.

Japan has grown increasingly concerned about the nuclear and missile programs of North Korea, which declared in February that it possesses nuclear weapons.

Worries increased after North Korea shocked the world in 1998 by firing a ballistic missile across Japan, prompting Japan's decision in December 2003 to buy a U.S.-made missile defense system. It is expected to be partially deployed from 2007.

Such missile defense systems, however, are aimed at thwarting ballistic missiles and are not designed with low-flying cruise missiles in mind, Sankei said.

Source: Reuters

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Five Coal Miners Killed in Explosion in Ukraine

KIEV, Ukraine -- An explosion ripped through a coal mine in Ukraine’s western Lviv region Sunday, killing five miners and seriously injuring three others, the Ministry for Emergency Situations said in a statement.

Three miners were killed instantly, and two others later died in a hospital. Another three miners were badly injured, the statement said.


Ukrainian Miners on a Break

The methane gas explosion at the Lesnaya mine near the town of Silets occurred when 56 miners were working 550 meters (1,800 feet) underground.

Ukrainian prosecutors launched an investigation into the accident, the ministry’s statement said.

Since the 1991 Soviet collapse, nearly 4,300 miners have died in Ukrainian coal mines, which are considered among the world’s most dangerous.

The mines are plagued by high concentrations of methane gas, safety violations, negligence and old equipment. More than 75 percent of Ukraine’s 200 coal mines are classified as dangerous.

Last week, two miners died in another incident in Ukraine’s east. Last July, a methane explosion in the eastern Donetsk region killed 31 miners in the country’s worst mine accident in years.

Source: AP

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Sunday, June 26, 2005

The Fairest Premier of Them All?

KIEV, Ukraine -- Yulia Tymoshenko helped Ukraine’s president topple a sinister regime. Now the two are heading for a political rift. So what does the future hold for the heroine of the orange revolution?

"Starwars" Princess Leia (L) and Ukraine's PM Yulia Tymoshenko

We can expect happy endings in fairy tales. But in politics? Well, perhaps, sometimes, in snowy landscapes far, far away. Last winter, two equally heroic figures dominated Ukraine’s orange revolution, the peaceful uprising in which pro-democracy protesters overturned their country’s corrupt regime. The first, Yulia Tymoshenko, brought a mesmerising passion to events. A firebrand political orator, she addressed almost daily the demonstrators thronging the Kiev streets in support of the second, the opposition leader Viktor Yushchenko. The government had tried to prevent him from winning the presidential election by organising massive fraud; it had also allegedly poisoned him, leaving his face disfigured.

The demonstrators, sometimes a million strong, draped in orange flags and clothing, fell a little in love with the beautiful Tymoshenko and the once-handsome Yushchenko, who promised to rid Ukraine, a country larger than France and with a population of 50m, of an authoritarian regime that mingled the stagnation of its Soviet past with banana-republic ruthlessness. Persevering in the cold, they forced an election that Yushchenko won.

Tymoshenko’s reward was her appointment as prime minister. To many Ukrainians, the Yushchenko-Tymoshenko partnership promised their country an inspiring new story. But fairy tales can disguise a more complex narrative. Today the pair still display a public show of harmony, declaring they will stand united in next spring’s parliamentary elections to reinforce Ukraine’s journey towards democracy. Yet tensions between them are evident, exacerbated by her rising popularity even as his support slowly ebbs. Both their parties – Yushchenko’s Our Ukraine and Tymoshenko’s eponymously named grouping – have similar agendas: strengthening democracy and human rights, economic reform, ending corruption, and joining the EU and Nato. But this political harmony is marred by personal rivalries: the premier’s position is coveted by some of Yushchenko’s political coterie, and even members of his camp are dismayed by his occasional envy of Tymoshenko’s poll ratings. This is a story in which the heroine, though she would never admit it, seems more interested in sitting on the throne than being the power behind it. But does that cast her in a good or bad light? Is she offering Ukraine a magic wand or a poisoned apple?

We begin to answer that question in her office on the seventh floor of the cabinet building in Kiev, as her team awaits her 9am arrival. An eastern European version of a West Wing team, there are 10 of them, all men, from different backgrounds – academia, business, politics, journalism and the intelligence services. Their mission is to remodel Ukraine for the better, and with over 18,000 state officials from the old regime sacked in the first weeks of the new administration, between February and April, there is much to assess. They agree privately, with comments by her opponents, that unless rifts are healed, Tymoshenko’s party may break the orange coalition and contest the parliamentary elections to secure a pivotal role for itself, one that would provide the springboard for her own bid in the next presidential election, scheduled for 2009.

It is a surprise to hear her greet staff and guests in a quiet, almost self-effacingly polite voice. With a few exceptions, as we observe her over the following days, she uses the same gracious tones with everyone. It’s a different but equally effective tone to the strident one used in public oratory, suggesting she has the strength not to strive to continually impress. She laughs easily and often blushes if given praise. Does the fairy-tale heroine have grace? Apparently so.

The friendliness is genuine but it is obvious she works hard on her image. She employs a photographer who has chronicled her looks and life for the past seven years, and likes to keep fit, usually starting her day with a run. She said: “I used to run 10 kilometres a day but I’ve had to do less since I became prime minister.” Breakfast is a cocktail of vitamins and fruit juices, and she does not seem to eat anything during her working day, which often lasts late into the night. She is often dressed in expensive designer clothes and high heels.

She says she does not like being photographed, yet in recent months she has appeared on the cover of some of Elle magazine’s European editions and Poland’s May issue of Playboy, where she appeared – fully clothed, of course – because readers had said she was the woman they most respected. Many view her as a sex symbol, and Tymoshenko admits she sometimes exploits her femininity, but claims her best weapons are sound and persuasive arguments.

One morning is devoted to presiding over a meeting with the French ambassador, some of the top executives from one of France’s most prestigious companies, several of her ministers and representatives from Ukrainian business. Tymoshenko is the only woman in the room with 18 men. It’s clear that her intellect and glamour hold a fascination for most in the meeting.

Another day, Tymoshenko discovers that her government’s attempt to regain control of a large smelting plant that had been auctioned off at cut-price rates to an ally of the former regime is being undermined, minutes ahead of a crucial board meeting. She telephones the state official who is scuppering her plans. Dissatisfied with his explanation, she tells him to reconsider for 10 minutes, after which time she will talk to him again: “You’re supposed to be serving the state, not helping out a crook.” During the interval she furiously works the three phones on her desk and two mobile phones to get information about him.

It emerges that the official was appointed by the former president Leonid Kuchma, the procedure for firing him has to be approved by parliament, and he is probably in league with the businessman. When Tymoshenko calls him again, he prevaricates. Without raising her voice she says: “If you continue to side with this criminal who’s been ripping off Ukraine, things will end badly for you. I’m going to adjourn the meeting for one hour to let you change your mind.”

After finishing that conversation she phones one of her staff and says of the errant official: “The man is corrupt and is not going to change his mind. Find out how we fire him.”

A conversation for our benefit? Probably not. After a few seconds she resumes our interview, perfectly composed, and talks about her early life. Does the fairy-tale heroine have a rags-to-riches story? Of course. She was born Yulia Hryhyan in 1960 in one of Ukraine’s biggest industrial cities, Dnipropetrovsk, when the republic was part of the USSR, an only child raised by a mother she adores. Tymoshenko is reluctant to talk about her father, except to say he was not around to bring her up. Even by the then prevailing Soviet standards, she says she and her mother were considered poor and able to afford few comforts in their tiny flat in a dilapidated high-rise. She did well at school and went on to study economics at Dnipropetrovsk University. And it would seem fate played a part in her story. She said the course of her life was changed by a chance phone call made by a man who had misdialled. She was pleased when he rang again, this time deliberately. After a series of conversations, the two agreed to meet. They swiftly fell in love and married in 1979. Her husband, Oleksandr Tymoshenko, was also an impecunious student. When their daughter was born the next year it was a mixed blessing. The couple continued their studies and took back-breaking jobs for paltry wages in their spare time to get money to buy food and clothes for their baby. One of Yulia’s jobs was shifting and stacking huge tyres, twice the size of a man, in the factory where they were made.

In the second half of the 1980s, things were changing as the Soviet leader Mikhail Gorbachev embarked on his perestroika reforms to liberalise the centralised economy that had forbidden private endeavour and enterprise.

The Tymoshenkos grabbed the chance to work for themselves. They borrowed cash from Oleksandr’s father, a well-connected communist official, and set up a number of modest sites where the paying public could see videos of Hollywood films. The “video salons” gave them the cash to start trading in petrol and diesel, and the connections and money they made turned them into Ukraine’s largest electricity provider. At least, this is the tale as Tymoshenko would have it told – it clashes with the version not only provided by her detractors but also by some of her friends. One of the senior opposition politicians in the orange coalition, who is still friendly towards Tymoshenko, said of her dealings: “To ordinary people, the way she and other oligarchs conducted their business seemed crooked, and morally it probably was. But it ’s been hard to prove the deals were illegal, as they were usually done within laws that had been created to enable the chosen few to exploit them.”

The energy sector was, and still is, the most lucrative and corrupt segment of business in the former Soviet Union. Those with connections to Ukraine’s then president, Kuchma, exploited loopholes that meant the state budget paid for electricity manufacture, but Kuchma’s cronies made huge, no-risk profits by selling electricity to local authorities and nationalised industries. Tymoshenko says that as head of a company called United Energy Systems of Ukraine – once credited with an annual turnover of $10 billion – she never made more than $5,000 per month and worked with Ukraine’s interests at heart.

At that time she was believed to be the wealthiest woman in the former USSR. She was able to send her daughter to be educated privately in Britain, first at Rugby, then at the LSE. Her main residence in Ukraine remains a palatial abode she had built in her home city. Her story captured the popular imagination and the media dubbed her “the Gas Princess”. She was known for generous donations to charities and to churches. Contributions to sports charities led to a local youth football team being named after her.

Among her closest business collaborators was Pavel Lazarenko, an oligarch crony of Kuchma’s, whom Kuchma later made prime minister. Kuchma and Lazarenko became fabulously wealthy, with the latter buying luxury homes in the US, including Eddie Murphy’s Hollywood mansion. But the two fell out when Lazarenko exhibited an ambition to become president. In 1999 he fled Ukraine and was arrested trying to enter the US on a Panamanian passport. He was held in prison on accusations of money-laundering and other financial misdeeds. Lazarenko told the US authorities that Kuchma had taken a cut of every dodgy deal the former president was involved in. Lazarenko was found guilty of financial misdeeds by a court in San Francisco last year, but is yet to be sentenced.

In 1996 “the Gas Princess” decided to run for parliament and won her seat with a huge majority. “Every normal person who saw what was going on in government could not be on the same side of the barricades as Kuchma,” she says. “He was destroying our national interests. There was complete deception, complete corruption, and an absolute absence of any justice.” She said the Kuchma government used the courts and intimidation against her family and colleagues to persuade her to fall in line. Knowing Kuchma would declare war against her, she formed her own party and became one of Kuchma’s fiercest critics.

In 1999, to bring respectability to his administration, increasingly attacked by western governments, Kuchma appointed as prime minister a man who enjoyed a reputation for honesty and economic competence inside and outside Ukraine: Viktor Yushchenko. Yushchenko appointed Tymoshenko as his deputy. He knew that the success of his government, and his pledge to make good on hundreds of millions of dollars in wage arrears to state employees and pensions, depended on curbing rampant corruption in the energy sector. Tymoshenko was the person who had the poacher-turned-gamekeeper expertise to do that. She interrupted some of the most lucrative scams, which resulted in more than a billion dollars becoming available for back pay and pensions. But the anti-corruption campaign hurt some of Kuchma’s top associates, and the president moved to protect his friends. Tymoshenko’s husband was arrested on trumped-up fraud charges. Soon after, in 2000, Kuchma fired Tymoshenko, who was arrested on faked charges. “They put me in a filthy cell that hadn’t been cleaned for years,” she says. “I demanded a rag and bucket of water. I cleaned my cell thoroughly, then hung the rag over the spyhole. I told the wardens that if they took away that rag, I’d go on hunger strike.” The wardens obeyed her, but she stayed in prison for six weeks until a Kiev court ordered her release, saying there was no case to answer.

Soon after Tymoshenko’s imprisonment, Kuchma engineered a vote of no confidence in Yushchenko to eject him from the prime minister’s job. But in its short term in office, the Yushchenko-Tymoshenko team had gained huge popularity, and in the following years they laid the groundwork for an opposition coalition of democratic parties. Meanwhile, Kuchma’s standing at home and abroad fell after he was implicated in the murder of a journalist and the sale of weapons to Saddam Hussein. Unable to stand for president again, Kuchma first appointed as prime minister and then nominated as presidential candidate Viktor Yanukovych, a man twice convicted of robbery and linked to Ukraine’s wealthiest, most sinister oligarch.

In 2004, long before the coalition opposition officially chose its presidential candidate, Tymoshenko announced she herself would not stand, but would throw her weight behind Yushchenko. Opinion polls showed Yushchenko would win in a fair election, but Kuchma’s administration would never allow that to happen. It organised massive voting fraud in the first and second election round, where Yushchenko and Yanukovych faced each other in a runoff.

It was after the second round, in November 2004, that protesters took to the streets. Tymoshenko’s eloquence enthralled the crowds, and while her opposition comrades counselled restraint and negotiations, she led protesters to surround key government buildings where demonstrators faced special police with helmets, riot shields and guns. After protesters surrounded the presidential administration offices, she agreed to go inside the heavily defended building to negotiate with Kuchma. Many advised her not to go in, because they feared the regime would arrest her or worse. She walked in and everyone waited in the night as heavy snowflakes fell on riot police and demonstrators. When Tymoshenko emerged she was greeted with a great cheer. The fairy-tale heroine had displayed courage, confronting the beast in its lair and returning triumphant.

And yet there’s always another monster to slay. And some aren’t easy to pin down. Tymoshenko has stated she still wants Kuchma – who is currently lying low in Ukraine – brought to justice. Law-enforcement agencies are working to untangle what happened during his time in office, whether he has foreign accounts and where they are. In challenging Russia’s oil monopoly, she brought on a petrol crisis in May. For a few days, Russia stopped oil supplies, causing shortages throughout the country.

A fairy-tale heroine doesn’t always win universal admiration. One of her deputy prime ministers, Anatoly Kinakh, went on TV to criticise her, saying she was more interested in gaining popularity than making vital changes to the economy. Other senior members of the government encouraged stories that she was not only behaving frivolously but had engineered the fuel crisis and economic crises involving the currency and the price of meat, to the advantage of some of her corrupt associates. Another accusation levelled at her is that her eagerness to review most of the thousands of privatisations conducted during the Kuchma era has created a climate of uncertainty that has discouraged much-needed foreign investment. In May it was reported that, during an argument, Yushchenko told Tymoshenko she should resign. Both later denied this and said Yushchenko made the comment in jest. But privately, Tymoshenko’s aides say that heated exchanges between her and Yushchenko have left her shaken, and that her opponents have thwarted her plans to hit hard at corruption because some of her opponents are corrupt themselves.

The Ukrainian president holds the lion’s share of political power, but changes in 2006 will devolve much of it to the prime minister. Tymoshenko says she does not want extra power, and wants Yushchenko to continue as leader. However, Tymoshenko’s party has been growing in strength, with defectors joining from other parties. Under Ukrainian law, she cannot be forced out until she has served a year, but some predict she will resign this year to distance herself from the government before next spring’s elections.

The prospect of such a split dismays those who braved harsh weather and possible violence to support Yushchenko and Tymoshenko last year. Yet, if you close your eyes and make a wish, a fairy-tale outcome may still be possible. Why? Because the heroine believes in it herself, though in politics sincere belief is not the same as true knowledge: “My life and my faith are completely linked. I have faith in love, goodness, justice and, as in the fairy tales, I believe in the end, good always triumphs.”

Source: Sunday Times Magazine

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NATO Chief to Ukraine for Talks on Reforms

KIEV, Ukraine -- NATO Secretary General Jaap de Hoop Scheffer heads to Ukraine on Monday for talks on reforms that the new pro-Western authorities in the ex-Soviet nation have pledged to carry out with an eye to eventually joining the alliance.

Scheffer is due to arrive in Kiev at 11:00 am (0800 GMT) Monday for a one-day visit during which he will meet with President Viktor Yushchenko, Prime Minister Yulia Tymoshenko, Defence Minister Anatoliy Grytsenko and other senior officials in parliament and government.


NATO Secretary General Jaap de Hoop Scheffer

Topping the agenda will be progress on reforms that Yushchenko’s administration — which came to power after a toppling a pro-Russia regime during last year’s “orange revolution” — has undertaken to make as part of its drive for membership in the North Atlantic Treaty Organization and the European Union.

“We and the Ukrainian authorities have to concentrate our attention above all on reaching the main goal — carrying out necessary reforms,” Scheffer said in an interview with the Zerkalo Nedeli weekly in Kiev.

Yushchenko’s inauguration has boosted Ukraine-NATO ties — in April he reinstated the objective of joining NATO as part of Ukraine’s military policy, after former pro-Russian leader Leonid Kuchma dropped it ahead of last year’s presidential elections.

The relationship received a further impulse in April, when NATO foreign ministers agreed on a three-page package of “short-term actions” designed to help Kiev carry out reforms necessary for closer cooperation with the alliance.

Scheffer called that agreement “a clear signal from the alliance member countries of support for your country’s aspirations to integrate into Euroatlantic structures,” according to the Russian translation of his interview with Zerkalo Nedeli.

“But much of the success of this process will depend on Ukraine,” he said. “NATO will be ready to support and consult it along the route.”

Ukraine has long been a member of NATO’s Partnership for Peace program of closer ties with former Communist states, but Yushchenko wants the nation to eventually join the West’s former Cold War-era military bloc.

Such plans, however, face several major obstacles.

For one, most Ukrainians oppose their country joining the alliance — a May opinion survey showed that 55.7 percent of the population were against it, up from 48 percent in February.

Moscow, Kiev’s traditional powerbroker which today supplies it with most of its energy needs, also opposes Ukraine’s NATO ambitions as it would enlarge the alliance’s borders with Russia and remove a major parts supplier to the Russian military.

“The attempts by Ukraine’s new authorities to drag that country into NATO are a direct threat to Russia’s national security,” Communist party leader Gennady Zyuganov said recently, expressing an unofficial but widely-held view.

Finally, NATO membership would have a serious effect on Ukraine’s Defence industry which sells much of its production to Moscow — Kiev supplies engines for Russian helicopters, gas turbines for Russian ships, parts for Russian anti-aircraft systems and Russian military satellites are today sent into orbit on Ukrainian rocket launchers.

Scheffer sought to allay such concerns ahead of his visit.

“I can’t imagine a situation where Ukraine’s tighter relations with the alliance would negatively affect its Defence industry,” he said in the Zerkalo Nedeli interview.

“At the same time, Ukraine can expect new markets and real possibilities of participating in joint projects with industrial representatives from European and North American countries.”

Source: AFP

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Ukrainian Police Seize Large Collection From Scherban Apartments

KIEV, Ukraine -- The police have seized paintings, antique icons, collection of samovars, arms and ammunition from the apartment of Volodymyr Scherban, former chair of the Sumy regional state administration. Ukrainian News learned this from the report of the liaison department of the Ministry of Internal Affairs.

According to the police report, officers of law-enforcement agencies seized 159 paintings and antique icons of historical and artistic value, 178 samovars, 22 cold steel arms, 33 firearms and 6,000 cartridges from Scherban's apartments.

Upon consent of the Prosecutor General's Office, the Ministry of Internal Affairs put part of seized items on exhibition in the Ministry 's Center of Culture and Arts. While the opening of the exhibition of seized items, the Minister of Internal Affairs Yurii Lutsenko said that the aim of this exhibition is to demonstrate the corruption of the old power.

Lurtsenko said the legal wage of governors reached UAH 1,000-2,000 while items found in Scherban's apartments cost more than thousands of dollars. "I did this (exhibition) to show people that police is not persecuting politicians. Police struggles against those who had been plundering the state and robbing people," Lutsenko made a statement.

He said that all seized items now have a status of material evidence in cases filed against Scherban. Lutsenko said that seized valuables will be handled differently. Part of them was stolen from museums and thus can be returned to these museums after court decisions, and the other part may be returned to owners of these valuables in cases they were stolen. Exhibited items are valued from UAH 1,000 to several thousand hryvnias.

Lutsenko mentioned that experts made such evaluation to prevent accusations that police overestimated the price of these items for political reasons. At the same time, the minister said, if these valuables are sold on auctions, their price may grow by 5-10 times.

According to the data of the police, Sumy regional prosecutor's office is investigating four criminal cases against Scherban. On April 26, prosecutor's office filed a case based on article 189, clause 2 of the Criminal Code into the fact of extortion of shares in Interregional Center of Stock Market Technologies from heads of enterprises of light and processing industry.

On May 4, prosecutor's office filed a case based on Article 365, clause 1 of the Criminal Code into the fact of abuse of office, namely, threats to representatives of local power aiming to force them to vote for presidential candidate Viktor Yanukovych on election.

On May 19, prosecutor's office filed the case into Article 364, clause 2 of the Criminal Code based on the fact that Scherban forced representatives of local power to canvass in their constituencies to ensure Yanukovych's victory on election in August-October 2004.

On May 27, prosecutor's office filed a case based on the same article for illegal use of charter flight services of Aerostar company in 2004-2005. As Ukrainian News reported, the Internal Affairs Ministry launched an international search for Scherban and located him.

Source: Ukrainian News Agency

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Eurocar to Begin Assembly of Volkswagen Passat B6 in Ukraine

UZHHOROD, Ukraine -- Eurocar company (Uzhhorod, Zakarpattia region) is going to begin a large-scale assembly of Volkswagen Passat B6 by September.

Eurocar general director Oleh Boiarin made this announcement. He said the assembly of the new model will begin on August 26. At the moment, the company assembles Volkswagen Passat B5.


Volkswagen Passat B6

"It is going to be a car on the new platform, more electronics, a different engine. It is going to be an absolutely different car," Boiarin said. Apart from that, Eurocar plans to begin assembly of Volkswagen Bora under the name VW Getta.

As Ukrainian News earlier reported, the company reduced production by 3.9% or 96 cars to 2,382 cars in January-May compared with the same period of 2004. In 2004, Eurocar increased production by 59.69% or 3,323 cars over 2003 to 8,890.

According to the Agency for Development of the Stock Market's Infrastructure, 68.8% of CJSC Eurocar shares belonged to Atoll Holding (Kyiv) as of December 2004. The same agency reported in April 2004 that 30.4% shares in Atoll Holding belonged to two private investors each, and one more individual held 14.2%.

Source: Ukrainian News Agency

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Saturday, June 25, 2005

Russian Web Site Sells Data From Biggest Ever Credit Card Scam

MOSCOW, Russia -- CardSystems Solutions Inc. admits it made a huge mistake after some 40 million credit card accounts ended up in the wrong hands. Some of those account numbers are already being sold on a Russian Web site and some consumers have already found fraudulent charges on their statements, TheDenverChannel.com reports.


Barry Edmonds noticed the fraudulent charges after his bank called and alerted him to suspicious activity in Canada, England and China. “I know somebody got it somewhere, somehow. I try to not use it on the Internet and try to get all my receipts and look at them and make sure it’s not the whole number,” Edmonds said.

Edmonds is just one of thousands if not millions of people who has had his credit card data stolen after a hacker gained access to CardSystems Solutions’ network. CardSystems Solutions processes credit card and other payments for banks and merchants.

Credit card data is being bought and sold on what is now a profitable black market. “We saw a lot of chatter in Russian chat rooms over the weekend talking about this as a big win for the good guys, you know, the electrical crime groups,” said John Watters with iDefense.

Sellers of credit card data can make a bundle. Online fraud analysts estimate a basic Mastercard number is worth more than $42. A premium card, such as a platinum or gold card with a high limit, is almost $70.

Barry Edmonds’ bill shows questionable charges credited to foreign accounts. Those prices will most likely drop now that the scam has been made public, Watters said. But for those affected, the damage is already done. Edmonds has a long road ahead to clean up his accounts.

“It’s real frustrating,” Edmonds said. “To eliminate all of it, you got to close every account that you got.” The FBI is investigating what it calls the largest security breach of credit card information.

Visa and Mastercard estimate that 40 million accounts could be affected, but CardSystems Solutions said that less than 68,000 credit cards are at “high-risk”.

Everyone is advised to keep a close eye on their statements and to notify their bank or credit card company as soon as they see anything suspicious. Cardholders can dispute purchases that were not made by them and will not be held liable for any purchases determined to have been made fraudulently.

The compromised data included names, banks and account numbers, but not addresses or Social Security numbers, so the information could be used to steal money, but not identities.

Source: MosNews

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Disputed Polish Cemetery Reopens

LVIV, Ukraine -- The presidents of Ukraine and Poland have paid tribute to countrymen who died fighting each other 85 years ago. Ukraine's Viktor Yushchenko and his Polish counterpart Aleksander Kwasniewski were attending ceremonies to remember those killed in 1918-1920.

Polish sailors stand at attention during a service to commemorate soldiers that perished in the Polish-Ukrainian war between 1918 and 1919, at Orlyats cemetery in Lviv

A memorial to Ukrainians killed fighting Poland was unveiled before a Polish war cemetery in Lviv, now part of Ukrainian territory, was reopened.

Since the end of the USSR, relations between the neighbours have got better.

The Lviv graveyard, built when the city was part of Poland, had always been a contentious issue, as it became a symbol of Polish victory in territory that was fought over for centuries.

The BBC's Helen Fawkes said ties improved significantly after many people in Poland backed the Ukrainian opposition protests of the Orange Revolution last year, which led to Mr Yushchenko becoming president.

Shared Loss

More than 2,000 Polish soldiers are buried at the Lychakivske cemetery. Many of them died fighting Bolshevik and Ukrainian forces in the years following the Russian revolution of 1917.

More than 3,000 people attended the ceremony - which Mr Yushchenko praised as an act of reconciliation between the neighbouring countries.

"It is very important that the free Ukraine is now honouring slain Ukrainians together with a free Poland," he said.

"This cemetery holds the remains of former fellow students, schoolchildren, neighbours and relatives. Some of them [fought under] the Ukrainian trident, others under the Polish eagle. One people's defeat never was another people's victory.

"The fact that the two presidents visited the Lychakivske cemetery together shows that Ukraine and Poland are brave enough to look the past in the eye."

He said the main conclusion from history was that "there is no free Poland without a free Ukraine, and there is no free Ukraine without a free Poland".

Mr Kwasniewski said Ukraine and Poland should cherish the gift of freedom that both nations received amid the dissolution of the Soviet Union.

"Now we are building relations of dialogue and partnership," AP quoted him as saying.

Inscription Row

Our correspondent says the official opening has been delayed for years due to disagreement over how to honour the Polish soldiers.

Following Ukraine's Orange Revolution last year, the two countries were able to come to a compromise. But a new row erupted this week.

Ukraine's parliament called for the service to be cancelled until the inscriptions on the graves were changed from Polish to Ukrainian.

Mr Yushchenko's office condemned the move. On Thursday, the resolution was annulled, allowing the ceremony to go ahead.

Source: BBC News

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Ukraine Resists Integration Into Union

KIEV, Ukraine -- Ukraine on Friday resisted integration into an economic union of four major ex-Soviet republics dominated by Russia, refusing to sign up for anything beyond a free trade zone.

"Ukraine is not prepared to talk about a union," Ukraine's Economics Minister Serhiy Teryokhin said after the end of high-level talks between Ukraine, Belarus, Russia and Kazakhstan in the Ukrainian capital.

Teryokhin said that a planned meeting at the presidential level in July "will make clear the positions and future development of that project."

Ukraine's new pro-Western government has been hesitant to pursue the Moscow-led project, dubbed the Common Economic Space, amid fears that it would hurt its chances of someday joining the European Union.

Instead, Ukraine, which is seeking to throw off the influence of its giant neighbor Russia, is pushing hard for a free trade zone.

Source: AP

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Ukrainian Hacker Detained After Stealing $300,000 From Western Bank Accounts

KIEV, Ukraine -- Ukrainian police have detained an Internet conman who devised a scheme that allowed him to transfer money from other people’s accounts to his own. Altogether, he stole $300,000 from U.S. and European citizens, the Gazeta website reported Friday.


Back in 2003 the conman, an IT specialist from the Ukrainian town of Khartsizsk, came up with a way of making some easy money. Using cracked credit card pincodes, he transferred small sums of money from the U.S. and European accounts to his own.

The hacker then received cash from different banks with a counterfeit passport and spent it on real estate and cars.

He also used “on-line” cash in U.S. and European-based Internet shops to buy office equipment and mobile phones.

Over a period of two years the man managed to steal $300,000.

Source: MosNews

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Friday, June 24, 2005

Ukrainian Authorities File Criminal Charges of Separatism

KIEV, Ukraine -- On June 22-23 the Ukrainian Prosecutor-General's Office finally introduced the first criminal charges of separatism against two eastern Ukrainian leaders: Viktor Tykhonov, head of the Luhansk oblast council, and Yevhen Kushnariov, the former governor of Kharkiv oblast. Both men opposed Viktor Yushchenko in the 2004 presidential election. The charges relate to Section 2, Article 110 of the criminal code, which deals with threats to Ukraine's territorial integrity and the inviolability of its borders.

Yevhen Kushnariov

The charges relate to their organization and high-level involvement in a separatist congress held near Donetsk on November 28, a week after round two of the presidential election. The event was organized by supporters of presidential candidate Viktor Yanukovych, who seemed to feel betrayed by his Kyiv allies, particularly President Leonid Kuchma and Parliamentary Speaker Volodymyr Lytvyn.

The main organizer of the separatist congress was the Party of Regions, which Yanukovych himself leads. Yanukovych will therefore most likely face questioning, although his involvement may be difficult to prove in court. Many of Kyiv's political analysts suspect that Kuchma himself may have given a nod to the separatist congress, as it was held on November 28, the same day that Interior Ministry troops were dispatched to Kyiv to squash the Orange Revolution.

Both events could have been part of a two-pronged effort by Kuchma to pressure Yushchenko in the round-table negotiations then being brokered by Poland, Lithuania, and the EU. Kuchma may have hoped to turn the Orange Revolution and election stalemate to his advantage by forcing Yushchenko to agree to constitutional reforms. These changes were finally agreed as part of a "compromise package" that included amendments to the law on presidential elections and holding a repeat second round of the election on December 26. Not coincidentally, the Donetsk oblast council rescinded its decision to hold a separatist referendum after the "compromise package" was agreed.

Kuchma had played a duplicitous role throughout the 2004 election, calling for free-and-fair elections while doing nothing to ensure them. As early as May 2004 Kuchma had warned that there might be attempts to pit eastern Ukrainian voters against western voters. His close adviser Anatoliy Halchynsky, then director of the National Institute for Strategic Studies, the presidential think tank, wondered who was stoking regional tensions that "have long passed the permissible point".

Kuchma, Halchynsky, and Yanukovych may feign innocence over the growth of east-west tension during the 2004 election, yet Yanukovych was the authorities' candidate and his campaign deliberately inflamed regional tensions by using anti-nationalist and anti-American rhetoric against Yushchenko.

While 4,000 regional officials in eastern Ukraine attended the November 28 congress, they are unlikely to all be targeted. Charges will be most likely directed at the organizers of the South Eastern Autonomous Region (known by its Ukrainian abbreviation of PSAR) rather than the participants.

The charges also affect relations with Russia, as Moscow Mayor Yuri Luzhkov attended the separatist congress. Luzhkov has an odious reputation in Ukraine because of his long-term support for Crimean separatists. In hindsight, the Donbas separatists erred by inviting Luzhkov to attend and support them at the congress.

Surprisingly, the charges represent the first instituted against separatists in post-Soviet Ukraine. Separatists in the first half of the 1990s in the Crimea and Donetsk were undermined by the intelligence services, economic pressure, and parliamentary and presidential actions. No criminal charges were ever laid.

The current separatism charges may be difficult to prove. During the congress there were calls for separatism, particularly in the Donbas. But most calls were for regional autonomy and the transformation of Ukraine into a federal republic. At the time, the Donetsk oblast council and the Donetsk Party of Regions were headed by Boris Kolesnykov, who was arrested in April on extortion charges. In these positions he initiated a vote on December 1 on whether to hold a referendum on January 9. The vote was adopted 155-1.

The two questions to be posed in the referendum concerned transforming Ukraine into a federal republic and, within this new federal structure, upgrading Donetsk to an autonomous republic along the lines of the Crimea. On December 16, the Donetsk oblast council rescinded its decision to hold a January referendum. If it had gone ahead, the results would not have been legally binding and would have been overturned by Kyiv.

The separatist congress was as much generated by hostility to the Orange Revolution as it was by fears of a Yushchenko election victory. The congress statement claimed, "If the coup d'etat is being developed further and an illegitimate president comes to power, participants in the congress reserve the right to take adequate actions and self defense".

Tykhonov and Kushnariov's supporters claim the charges against them are politically motivated. This is not surprising, as the Yushchenko team is forcing members of the former pro-Kuchma camp to finally take responsibility for their actions, whether for corruption, election fraud, or separatism.

Ukraine's new opposition is now not only reeling from charges of massive corruption and widespread election fraud, but also treasonous charges of separatism. They will have to survive these three sets of accusation to remain a serious political force by the 2006 election.

Source: Eurasia Daily Monitor

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Pilots Jailed After Ukraine Airshow Disaster

LVIV, Ukraine -- A military court on Friday jailed for up to 14 years pilots and organisers connected with an airshow disaster in 2002 in which a fighter jet ploughed into a crowd in western Ukraine and killed 77 people.

The court found four defendants guilty of failing to fulfil orders, negligence and violating flight rules linked to the world's worst airshow disaster at an airfield outside Lviv on July 27, 2002.

The two pilots of a Sukhoi Su-27 craft, which clipped the ground and cartwheeled into the crowd, were sentenced to 14 and eight years. The crew had ejected shortly before the plane hit the ground.

The accident happened when the fighter failed to pull out of a difficult rolling dive manoeuvre causing the deaths which included more than two dozen children.

The deputy commander of the local air force division was jailed for six years and the deputy head of flight operations received five years. The crew's main flight trainer was acquitted for lack of evidence.

Source: Reuters

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Color Revolutions and Fate of Former Leaders

MOSCOW, Russia -- The treatment of leaders ousted in the recent "color revolutions" in some CIS states is directly related to the way in which power was seized.

Kyrgyzstan has meted out the most brutal treatment, followed by Ukraine and Georgia.


Yulia Tymoshenko during Orange Revolution

The fate of the former leaders in these countries depends on three factors: the degree of brutality in seizing power, the degree of confrontation between the old and new leaders, and the political and social base of the overthrown regime.

The Kyrgyzstan variant has proved cruelest, and in fact is close to that of classic revolutions: A seizure of administrative buildings by force and activists prepared to shed blood. The success of this revolution was predetermined solely by the moral weakness and exhaustion of Askar Akayev's regime: First, he could not decide about a transition of power at the upcoming presidential election (whether to appoint a successor or seek constitutional permission for the president to run for another term); second, he did not dare to use force to put down the riots. Otherwise, Kyrgyzstan would have forestalled the events in Uzbekistan, where the radical opposition might have decided against an upheaval in such a situation.

Akayev's capitulation was quick and uncompromising. He did not bargain with the opposition: Only after arriving in Moscow did he try to get some political guarantees, but the Kyrgyz parliament soon deprived him of many of his privileges.

Now Akayev and other representatives of his regime do not pose any political threat to the new authorities. However, it is in Kyrgyzstan that the new leaders are the cruelest towards the old ones.

So far Askar Akayev has not dared to return to his homeland. Immediately after his overthrow, the new Kyrgyz leaders did not rule out demanding his extradition (at the time he was thought to be in Kazakhstan), while people in the streets demanded his immediate arrest.

Two factors saved him: Firstly Moscow's unequivocal protection - and the new regime did not want to spoil relations with Russia - and the new leaders' need to legitimize their authority quickly. Thus, they began bargaining with Akayev: He was given minimal guarantees of immunity (passed with difficulty and in reduced form by parliament) in exchange for his voluntary resignation.

At the same time, the overthrow of Akayev's regime was not a pure victory. Politically, Akayev's supports pose virtually no threat to the new leadership. But the clannish character of the system may lead to a quick and easy absorption of the old regime's assets. For this reason the new leaders have taken decisive steps against representatives of the old system.

Kyrgyz Prosecutor General Azimbek Beknazarov issued an arrest warrant for former Prime Minister Nikolai Tanayev on charges of abuse of power. According to the prosecutor, the former president's son-in-law, Kazakh businessman Adil Toigonbayev may also be put on trial. Thus, in Kyrgyzstan persecution of the former regime is determined by the clan struggle for political and economic resources, as well as by populist motivation.

The situation in Ukraine is very different. The former elite was closely connected to the new one. During the "Orange Revolution" Leonid Kuchma held talks with the opposition. Moreover, he was prepared to transfer power to the opposition in advance, having passed constitutional reforms that noticeably weakened the president's post.

His support for Viktor Yanukovich as his chosen successor was conventional and not based on a consensus (politicians who comprised the coalition were prepared to run on their own in the elections). The revolution did not overthrow Kuchma, but counteracted the succession scheme. And although Yanukovich lost the elections, he still enjoys solid political support in the east of the country, so he is primarily a political rival for the new leadership.

Thus, the attitude of the new rulers to the old ones is dictated mainly by political competition: In these circumstances Kuchma is almost immune, while Yanukovich has found himself involved in a number of criminal cases.

At the same time, Ukraine has something in common with persecution of former leaders in Kyrgyzstan: An affinity for populist moves and confrontation between clans. For example, the arrest of Boris Kolesnikov, head of the Donetsk regional administration, is most likely an attempt by the new authorities to tighten their grip on all levels of power, ousting the remnants of the old clan and depriving it of administrative resources.

Finally, in Georgia the confrontation between the old and new leaders is minimal compared to Ukraine and Kyrgyzstan. The main difference is that former President Eduard Shevardnadze gave up his power almost without a struggle, and the new elite was closely connected to the old one, while confrontation between clans was weakened significantly. So the former president poses neither a political nor a clan danger for the new authorities. In fact, Georgia is an example of what could have happened in Ukraine if the latter had not had the politically ambitious and relatively influential Yanukovich.

Source: Ria Novosti

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Ukraine President Wants Closer Ties With Bern

KIEV, Ukraine -- Ukrainian President Viktor Yuschenko has said that he is interested in cooperation from Switzerland on decentralisation.

Both he and Swiss Foreign Minister Micheline Calmy-Rey, who is on an official visit, said they were in favour of promoting bilateral ties, particularly in technical and economic areas.


Ukraine's President Viktor Yushchenko (L) welcomes Switzerland's Foreign Minister Micheline Calmy-Rey

Before meeting Yuschenko, Calmy-Rey attended a conference of Swiss ambassadors who are posted in the region.

A diplomatic advisor to Calmy-Rey, Simon Geissbühler, said Kiev was "very interested" in the question of cooperation on decentralisation and Bern would examine the possibility.

He added that the Swiss Agency for Development and Cooperation (SDC) and the Swiss State Secretariat for Economic Affairs (Seco) already had a programme of SFr10 million ($7.82 million) in Ukraine.

Swiss investment

Switzerland is the eighth-largest investor in Ukraine, putting $430 million into the country.

As well as meeting Yushcenko, the Swiss foreign minister held talks with her Ukrainian counterpart, Boris Tarasyuk, and the president of Ukraine's parliament, Vladimir Litvin.

Calmy-Rey, who is scheduled to remain in the country until Saturday, is the 20th foreign minister to have visited Ukraine since February.

During her visit she discussed the forthcoming vote in Switzerland on the extension of an accord with the EU on the free movement of people to include the new members of the European Union.

She also underlined Switzerland’s respect for Ukraine's "orange revolution" in November and December last year, as well as for the country's peaceful political transition.

Support

Yuschenko thanked Switzerland for its support during the presidential election. Bern sent observers to Ukraine and financed exit polls.

He repeated his wish for his country to become a member of the EU and stressed his attachment to democracy and human rights. Kiev also showed support for a Swiss proposal to establish a permanent human-rights council at the United Nations.

Before meeting Yuschenko, Calmy-Rey took part in a regional conference of Swiss ambassadors posted in countries of the Commonwealth of Independent States and the Balkans.

She used the occasion to drive home the need to avoid abuses in issuing visas and spoke about crisis management.

About 15 ambassadors are attending the conference, which is due to end on Friday evening. Besides the visa issue, the discussions are expected to centre on corruption and migration.

Source: SwissInfo

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11 Killed in Ukrainian Fishing Boat Fire in Uruguay Port

MONTEVIDEO, Uruguay -- 11 people were found dead aboard a Ukrainian-flagged fishing vessel that caught fire in the port of Montevideo. Firefighters on Thursday recovered their badly burned remains, The Associated Press reported. One of the victims is a Ukrainian national.

Uruguayan army ships battle to control a fire on a Ukranian fishing vessel

The “Simeiz,” carrying a crew of 39, caught fire before dawn Wednesday in the harbor in the Uruguayan capital. But authorities said they had to wait until flames were out to board the vessel for fear that flammable refrigerants used in onboard freezers might explode.

A spokesman for the firefighters, Jorge Roqueta, said the victims were found in their bunks and that the bodies were so badly burned that it was difficult to identify the remains.

Roqueta said the dead included nine Chinese, an Indonesian and a Ukrainian. Other crew safely accounted for included Peruvians, Spanish and Russian workers, he added.

The fire on the ship, a modern vessel nearly 200 feet long, sent black plumes high over Montevideo’s harbor.

Roqueta said authorities were only beginning to investigate the fire, which swept through about 40 percent of the vessel but did not reach the engine room or the command deck.

The ship arrived in port on Monday. Montevideo is a busy port for ships heading to and from fishing grounds off the southernmost point of South America.

Source: MosNews

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Ukraine Fears the Rise of New Oligarchs

KIEV, Ukraine -- At first sight, the Bentley dealership, which joins other luxury car showrooms displaying Porsches and BMWs, suggests that times are good for Ukraine's super rich, yet scratch the surface and it becomes clear that the fortunes have changed for some of them.


Following the Orange Revolution, which led to Viktor Yushchenko taking power, it seems life has become harder for Ukraine's exclusive club of oligarchs.

Many of them had supported the blue coloured campaign of the pro-government candidate Viktor Yanukovych. Now they have to face the music.

"To start with they thought it was just a bad joke," says deputy prime minister Oleg Rybachuk. "They underestimated how things would change."

Severed links

It was the controversial privatizations of state enterprises in the 1990s that led to many leading Ukrainians making vast fortunes.

These groups of business people, which are based in the industrial East and in Kiev, contain some of the wealthiest and most influential people in the country, including former President Leonid Kuchma and many of Ukraine's oligarchs.

During his 10-year rule, Mr Kuchma was accused of cronyism and presiding over one of the most corrupt countries in Europe.

"The old system was all corrupted," says Mr Rybachuk. "Business and politics were interconnected. People would just walk around with kilos of cash and they used to believe they could do what they liked."

New auction

For many of the business elite, the link to the top political office was severed when Victor Yushchenko was elected president in December.

His government vowed to crack down on corruption and has been reviewing many of the privatisation deals.

"We have a sense that the power of the oligarchs has been reduced, in terms of privileged access, influence on public policy, and non transparency in business," says the World Bank's Ukraine director Paul Bermingham.

Earlier this month, two of the country's most successful oligarchs lost one of their most prized assets - the Ukrainian steel giant Kryvorizhstal.

Viktor Pinchuk, the son-in-law of the former president, and Ukraine's richest man Rinat Akhmetov bought it from the state for $800m last year. Analysts believe it could be worth up to $3bn.

Following a series of court cases, Kryvorizhstal is now owned by the government again and is to be put up for re-auction, despite protestations from Mr Pinchuk and Mr Akhmetov that this is illegal.

No Yukos here

Some investors fear that Ukraine may follow Russia in jailing oligarch opponents like Mikhail Khodorkovsky who headed the Yukos oil company and was convicted on tax and fraud charges.

A number of officials linked to the opposition are being investigated by the police about a variety of alleged offences.

And President Yushchenko has made loud pledges to continue to his campaign to target those who turned Ukraine into a "criminal nation".

Untainted tycoons

But not all Ukraine's tycoons are connected with the previous administration.

Some of the current cabinet ministers, including Prime Minister Yulia Tymoshenko, are also considered to have been oligarchs in the past.

It is not clear what they own now since a declaration of their business interests has not been made public.

The pace of economic reform has been slow since Mr Yushchenko became president and there is concern that some of the power of the oligarchs will just be transferred to others.

"We could see a new type of oligarch emerging with links to the government," predicts Mr Pinchuk.

For many of those who took part in the Orange Revolution, many of them ordinary Ukrainians living in poverty, this would be failure, since a key demand of the protestors was for a European style economy not controlled by oligarchs of any colour.

Source: BBC News

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Bush and Company Visit Ukraine

KIEV, Ukraine -- Neil Bush, younger brother of George Bush, arrived in Kiev yesterday. His plane landed in Borispol airport. He is not a politician; however, his actions are always coordinated by the White House and the Congress.

Neil's visit demonstrates the serious attention of the US administration to the events in Ukraine.

Neil Bush


Some experts reckon Neil Bush to be far from decisive role in the White House. However, every American knows about "family values" of the Bushes. They say that the present president, George Bush, was not involved in politics and did not influence on his father’s decision for 40 years.

The formal reason of the visit is the activity of the innovation corporation headed by Neil Bush. His company is the expert of the new methods of the distant education.

The plans of the company include large investments in creation of the educational centers for hi-tech specialists in Ukraine. The participation of Ukrainian scientists in researching of educational programs will be planned as well. The charitable and enlightened aspect is implied in such activity. That will help to establish close relations between Bush's brother and the first lady of Ukraine who leads the Charitable Fund "Ukraine-3000." In the future it will contribute the relationship between Neil Bush and the first authorities of Ukraine.

Ed Fraser, the representative of Trinity Capital Company, accompanies Neil Bush in this trip. He reported that Neil Bush would go to Crimea where he would be expected to meet Crimean premier, Anatoly Matveenko. After the meeting, Neil Bush will depart to Georgia and meet Georgian authorities, including the president of Georgia, Mikheil Saakashvili.

Source: Forum

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Another Poisoning Seen In Death Of Ukraine's Pluzhnikov

NEW YORK, NY -- Another alleged poisoning is rocking Ukraine on Thursday: Politician and businessman Ihor Pluzhnikov died after the onset of a mysterious illness. Pluzhnikov, the majority owner of the nation's main TV channel, Inter, was well connected to "The Group of Seven," a circle of influential Ukrainian businessmen.

He was also key in the opposition Social Democratic Party that supported the losing candidate in last year's presidential elections. Reports speculate that Pluzhnikov may have been strong-armed into selling his Inter stake, so buyers could make the channel more regime-friendly. Not much more is known about the share sale. But by mid-June, Pluzhnikov was in a coma, reportedly from "toxic hepatitis," sparking eerie flashbacks to last fall's "illness" of now President Victor Yushchenko.


The latter's gray pockmarked face and deteriorating health were originally dismissed as food poisoning; later, an Austrian clinic confirmed Yushchenko had elevated levels of dioxin in his blood.

Two Ukrainian billionaires continue to control their TV channels--for now. Viktor Pinchuk leads ICTV, STB, and Novyi Kanal and Rinat Akhmetov has TRK Ukraine. The two collaborated in last year's $800 million purchase of Kryvorizhstal when they underbid Mittal Steel and Pittsburgh-based United States Steel. Ukrainian courts have handed the steel company back to the state.

Meanwhile, Pinchuk and Akhmetov have filed a complaint in the European Court for Human Rights. The official probe of Pluzhnikov's death continues.

Source: Forbes

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Thursday, June 23, 2005

Ukraine Seeks Bigger Role in Europe

PARIS, France -- President Viktor Yushchenko of Ukraine used a visit here to defend his country's ambition to be part of Europe, even as further expansion of the European Union was being called into question.

Arriving in Paris on Wednesday, less than a month after French voters rejected the European constitution, he carefully avoided explicitly mentioning the goal of joining the Union.

During his first official trip to Paris since being elected in December, Yushchenko met with President Jacques Chirac for talks on subjects like stability in the EU's eastern neighborhood and energy security.

"Nobody can deny Ukraine the right to be part of Europe," Yushchenko said after meeting Chirac. "Whatever our status - member of the European Union or not - we are European."

Chirac expressed understanding for Ukraine's aspirations and pledged his support for its bid to join the World Trade Organization by the end of the year, according to the president's spokesman, Jérôme Bonnafont.

After Yushchenko was swept to power last year in a democratic uprising dubbed the Orange Revolution, the EU offered Ukraine a strategic partnership but shied away from giving it any prospect for membership.

The main reason for being cautious was concern that consideration of Ukraine for accession would upset Russia, Ukraine's bigger neighbor and an important source of energy for Europe.

But the crisis in the EU over the constitution has added a domestic dimension to the debate over expansion. Unease about the expansion last year that added 10 mainly East European countries and widespread opposition to Turkey joining the Union were thought to have played major roles in the opposition to the constitution.

In Kiev's efforts to attract investment and establish closer strategic and business ties in Europe, France has received particular attention this month.

A string of Ukrainian military officials came to Paris at the beginning of June. Ten days ago, Prime Minister Yulia Tymoshenko came for talks with the new prime minister, Dominique de Villepin, and a visit to the air show at Le Bourget.

Tymoshenko left two days later with 11 cooperation agreements in the fields of aviation, infrastructure and energy.

On Wednesday, Chirac and Yushhenko decided to put their foreign ministers in charge of drawing up a "road map" for cooperation in those areas. Chirac accepted an invitation to visit Kiev, though no date was set.

Ukraine, a former Soviet republic, wants to reduce its dependence on Russia for energy, notably by building up its nuclear energy sector, an area where France has expertise.

In a bid to join the North Atlantic Treaty Organization in 2008, Kiev also wants to improve strategic ties with France, one of the two main EU military powers.

Source: International Herald Tribune

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Bubka Elected Ukraine's Olympic Chief

KIEV, Ukraine -- Former Olympic pole vault champion Serhei Bubka was elected president of Ukraine's national Olympic committee Thursday.

Bubka defeated Viktor Yanukovych, Ukraine's former prime minister and loser of last year's presidential election. Bubka received 80 out of a possible 110 votes.


Olympic Pole Vault Champion Serhei Bubka

Bubka, 41, won the pole vault gold medal at the 1988 Seoul Olympics and was a six-time world champion. He set world records - outdoors or indoors - 35 times.

Bubka is also a Ukrainian politician and sits on the executive board of the International Olympic Committee. He is chairman of the IOC's athletes commission.

The Ukrainian committee also voted Thursday to accept Yanukovych's resignation, allowing him to remain an acting member

Yanukovych, who lost last year's presidential race to opposition leader Viktor Yushchenko, is under investigation for the use of budget funds to reward Ukraine's Olympic winners last year.

Source: SLAM! Sports

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Ukraine Govt May Bring Charges Against Top Insiders of Kuchma Regime - Official

KIEV, Ukraine -- Ukrainian authorities could bring criminal charges against two major insiders of the previous regime, former prime minister Viktor Yanukovich and the country's reputedly richest man Rinat Akhmetov, a top official said.

'I am deeply convinced that it will happen,' Serhiy Kornich, the chief of the interior ministry's organized crime unit, told Interfax when asked if a criminal case could be launched against Yanukovich.

Yanukovich, who lost a protracted presidential election to President Viktor Yushchenko during last year's 'orange revolution', was questioned by police early this month as part of a probe into alleged government corruption during his term in office.

Yanukovich has called his summons a political witch hunt.

Kornich added that charges are likely to be brought against Akhmetov, widely believed to be Ukraine's richest tycoon and a former close associate of the entourage of former president Leonid Kuchma.

'I am deeply convinced that Akhmetov is the leader of an organized criminal group,' he alleged.

Last year a consortium headed by Akhmetov and Kuchma's son-in-law, Viktor Pinchuk, won a bid to buy the country's largest steel mill, Krivorozhstal, for a below-market price during a controversial auction.

In April a court found that the privatisation was unlawful and ordered the consortium to return its 93 pct stake in the steelworks to the government, which plans to conduct a repeat auction for the factory by the end of the year.

Yushchenko's administration has made fighting corruption a top priority. However, the nation's new opposition says the authorities are using the guise of an anti-corruption battle to settle scores and clear the electoral field ahead of next year's crucial parliamentary elections.

Source: AFX

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Ukraine Seeks Civil Role in Iraq After Troops Leave

BRUSSELS, Belgium -- Ukraine will continue to play a civilian role in the reconstruction of Iraq after the last of its 1,600 troops leave later this year, Foreign Minister Borys Tarasyuk said on Wednesday.

Ukraine was one of the biggest troop contributors to the U.S.-led effort to stabilise Iraq after Saddam Hussein's 2003 removal from power. But former President Leonid Kuchma's decision to deploy them was deeply unpopular.

"We will transform our presence into a non-military presence, having in mind cooperation on such projects as water supply, transportation, the oil and gas industry, the areas where Ukrainians have been known for decades in Iraq," Tarasyuk told reporters at an international conference on Iraq.

"The Ukrainian troops were sent to Iraq by the Kuchma authorities and it was not accepted by society," he said, adding that President Viktor Yushchenko had campaigned on a promise to withdraw Ukrainian troops.

The first 150 troops left on March 15, with another 500 following on May 15, he said. The rest will leave by the end of the year.

"We consulted with our major allies in Iraq, that is the United States, Poland, the United Kingdom and the Iraqi government. And we found full understanding of this step. So there is no drama in our withdrawal."

But he said Ukraine would continue to participate in the NATO mission in Iraq training the military and police.

Iraqi Prime Minister Ibrahim al-Jaafari will visit Kiev at the end of July, and Tarasyuk said the Ukrainian government and businesses hoped to win reconstruction contracts from the Iraqi government.

He said cash-strapped Ukrainian companies should team up with wealthier foreign firms to win business.

"We are capable of winning contracts concerning restoration of communal services, water supply, road construction, electricity supply, oil and gas," he said. "These are the areas where Ukrainians are quite competitive."

Source: Reuters

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Another Dead Body

KIEV, Ukraine -- The suspiciously timed June 22 death of hugely influential Ukrainian media mogul Ihor Pluzhnikov reminds us that there are safer things to do for a living than to be a member of the Kuchma-era elite.


Ex-Ukrainian President Leonid Kuchma

Ukrainians who wielded power and influence during the notoriously corrupt administration of former President Leonid Kuchma have wound up dead with a startling frequency since last December. First there was Yuriy Lyakh, chairman of Ukrainian Credit Bank, who at the height of the Orange Revolution last December was found dead in his Kyiv office. The cause of death was a series of paper-knife wounds to his neck.

Lyakh was a member of the so-called Big Seven, an inner circle of business associates and friends close to Viktor Medvedchuk, the powerful head of the Social Democratic Party of Ukraine (united) and Kuchma’s Presidential Administration chief. A suicide note was reportedly found at the scene, but we’re probably not the only ones who were suspicious. Who kills himself with a paper knife?

Next, Transportation Minister Heorhiy Kirpa was found shot to death at his house on Dec. 27. Kirpa’s ministry, like others, was rumored to be burdened with financial improprieties. The day before, Viktor Yushchenko had been voted in as Ukraine's new president. Kirpa's death was also ruled a suicide.

Then, in February, a Donetsk businessman named Roman Nikoforov was killed in what was called a freak accident at his home. He allegedly shot himself with his own gun. Nikoforov was a close associate of Donetsk businessman Rinat Akhmetov, reportedly Ukraine’s richest man.

In March, former Interior Minister Yury Kravchenko was found dead at his country house just before he was to give testimony in the case of Georgy Gongadze, the opposition journalist whose murder became a Kuchma-era cause celebre.

Now comes Pluzhnikov’s death, which is at least as shocking as any of the others. Pluzhnikov is one of the most influential people in Ukraine. He's a politician, a businessman, and the owner of Inter, one of the country's most popular TV channels. In Western terms, it is as if Rupert Murdoch mysteriously died – and at a very crucial moment in his career. It is being alleged that Pluzhnikov was coming close to selling a controlling interest in Inter to interests supportive of President Viktor Yushchenko.

Rumors are already spreading that Pluzhnikov was poisoned. They’re just rumors, of course, but nobody familiar with the behavior of those who set the tone in Kuchma-era Ukraine will be surprised if they turn out to be true. The stakes here – who controls a powerful means of communication, and with next spring's important parliamentary elections on the horizon – are very high.

This latest strange death comes as Kyiv cleans up in the wake of the World Economic Forum at Ukraine House – an event many hoped would serve as a harbinger of this country’s closer integration with the West. Mysterious deaths of politically connected power-players are not a phenomenon we associate with the West, however, but with the Third World.

This speaks to a strange dichotomy in Ukraine's identity at this point. On the one hand, its leaders are lionized in the West, where they speak to legislative bodies, win prestigious awards, pose with top politicians, and talk up the possibilities for Western investment in their newly fashionable country. On the other hand, back home things go on too much in the same way they always have. Riffraff like David Duke continue to hobnob with members of the president’s political faction. The judicial system continues to be a mess. Policemen and bureaucrats continue to be on the take. Parliament continues to vote down legislation necessary to Ukraine's World Trade Organization bid. Whoever poisoned Yushchenko continues to get away with it. The Gongadze murder continues to be unsolved. And powerful people keep dying suspiciously.

President Viktor Yushchenko has to do more about these latter events – or talk about them, which under the circumstances would amount to much the same thing. What does Yushchenko think about this series of deaths? Is he willing to personally manage investigations into them, and demand results from his underlings? Or, like the Gongadze case, is this another Ukrainian mystery destined to remain unsolved by a passive and still corrupt government? Is he willing to tolerate this? Does Yushchenko understand that all his hobnobbing in the West about closer ties and more investment remains empty as long as such strange deaths keep happening, and remain unexplained?

This is crazy. Yushchenko might not be able to expunge Ukraine's residual craziness, but he can more loudly struggle against it. As the cliche goes, that’s what leadership is all about.

Yushchenko’s job is to a large extent symbolic, and the more closely he’s associated with coming to grips with all this nonsense, the better a symbol of a new Ukraine he’ll be. His strong voice now, and his stout promise that he’ll see a real Pluzhnikov investigation through to the end, would be healthy for the country. We’d love to see it happen.

Source: Kyiv Post

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France Backs Ukraine's European Ambitions

PARIS, France -- Ukrainian President Viktor Yushchenko claimed Wednesday after meeting his French counterpart Jacques Chirac that Paris backs his country's international ambitions.

France "supports Ukraine's European aspirations and its wish to join the World Trade Organisation (WT0)," he told a news conference after the 90 minute meeting at the Elysee Palace.


Ukrainian President Viktor Yushchenko (L) with his French counterpart Jacques Chirac

"We are Europeans, the status we are given doesn't matter," Yushchenko said.

"But without Ukraine Europe will not be complete, and less interesting," he said in a reference to his ambitions for European Union membership one day.

Chirac was less forthright, saying only that "he understood the aspiration of Ukraine to go towards Europe," according to an Elysee spokesman.

He said Chirac "wanted cooperation to develop in this respect on both the European and bilateral levels."

He confirmed that Paris backed WTO membership for Ukraine.

Yushchenko, 51, said that "in the next two or three weeks our foreign ministers should work out an action plan... to strengthen cooperation in the energy field, that is gas, oil and nuclear."

A conference on energy is planned for September in Kiev with major French companies attending, Yushchenko said.

Ukraine, a former Soviet republic, wants to diminish its dependence on Russia for energy supplies.

Yushchenko, who came to power last year after the so-called 'orange' revolution, said in an interview with the Le Figaro newspaper he was optimistic that the current crisis in the EU -- caused by the rejection in France and the Netherlands of the new constitution -- would not deter the bloc from future enlargement to the east.

"I am persuaded that with time, things will calm down and the European project will get a second wind," Yushchenko said.

Before meeting Chirac he had celebrated the memory of a Kiev-born French queen in the town of Senlis -- 60 kilometres (40 miles) north of the French capital -- inaugurating a bronze statue of Anne of Kiev, who married King Henri I of France in 1051.

"Ukraine and France meet at Senlis to build new bridges between the banks of our history," he said.

Anne lived out the end of her life in Senlis, which has now been twinned with a historic quarter of the Ukrainian capital.

Source: The Tocqueville Connection

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Wednesday, June 22, 2005

Ukraine Hit on Gas

MOSCOW, Russia -- Russia, Ukraine, and Turkmenistan are on the brink of a full-scale gas war. On June 20, Saparmurat Niyazov, the president of Turkmenistan, demanded that Ukraine switch to paying for deliveries of Turkmen gas in cash, calling the present practice of payments in kind an unprecedented fraud and a default on obligations. Gazprom has also demanded that Ukraine switch to cash payments. In response, the Security Service of Ukraine (SBU) has announced an investigation of the activities of RosUkrEnergo (the agent for sales of Turkmen gas in Ukraine) and its shareholders. According to the SBU's information, these activities probably involved the overlapping interests of high-ranking Ukrainian and Russian bureaucrats.


Ukrainian President Viktor Yushchenko (L) and President of Turkmenistan Saparmurat Niyazov

A strained situation in trilateral relations between Russia, Ukraine, and Turkmenistan has developed in the course of two processes. On the one hand, since the beginning of 2005, Turkmenistan has been trying to get Ukraine to pay more for gas and, starting in 2006, to get better offers for gas purchases, which could compete with offers already agreed upon with Gazprom in 2003 for purchases of all Turkmen export gas starting in 2007. On the other hand, during negotiations with Naftogaz Ukraine, Gazprom has been trying to get either a switch to cash payments in full at European rates for purchases and transit of gas from Russia or long-term strategic concessions in the gas sector from the Ukrainian company. After the latest unsuccessful round of negotiations between Naftogaz Ukraine and Gazprom on June 13, relations between the parties were heated to the boiling point.

The situation boiled over on June 20, when Saparmurat Niyazov, the president of Turkmenistan, publicized the content of negotiations with the Ukrainians in a strongly worded speech on national television after a meeting in Ashkhabad with Aleksey Ivchenko, the head of Naftogaz Ukraine. According to President Niyazov, Turkmenistan was demanding immediate payment of $600 million in debts on deliveries of clearing goods as payment for Turkmen gas in 2004. He accused Naftogaz Ukraine of unprecedented fraud in settlements with Turkmenistan and announced that, starting in 2006, the country would insist on cash payments only for gas delivered to Ukraine.

“You're making a fine lot of fools out of us, while money is swirling around you. We will not agree to this now or in the future. If you have no goods, don't make commodity agreements. Switch to currency-only payments,” Turkmenbashi [as Niyazov is known] said to the Ukrainian authorities on Turkmen national television after a telephone conversation with Ukrainian President Viktor Yushchenko.

We note that Gazprom is making more diplomatically worded but similar demands on Ukraine in negotiations on a gas transit and delivery schedule for 2005. Gazprom is proposing to increase prices for gas deliveries and transit to average European levels (to $160-170 per thousand cubic meters from the present $50), a switch to full cash payments instead of payments in kind for transit, and a change in the method of calculating gas prices.

Deputy Prime Minister of Ukraine Anatoly Kinakh responded to these proposals yesterday at the Ukraine–Russia 2005 investment forum in Kiev. In his words, both the Russian and Turkmen proposals are absolutely unacceptable to Ukraine. According to Kommersant's information, the government of Ukraine is now insisting on an extension to 2013 of the regime of gas agreements with Russia and Turkmenistan in force until 2006. Recall that this regime assumes that Ukraine will settle by means of goods clearing; it also assumes payment for gas transit with gas deliveries in the $40-60 range and the operation of intermediate companies on the gas market.

Yury Boiko, the former head of Naftogaz Ukraine, commented on the situation in a different tone at a special press conference yesterday. “In the last several months, people who want to return to the old business ties and old gas delivery and payment plans have appeared in country. This primarily concerns Itera,” he said, without naming any names.

Boiko's insinuations apparently refer to Ukrainian Prime Minister Yulia Timoshenko, who last week accused the former management of Naftogaz Ukraine of complicity in the affair of “sales” of 8 billion cubic meters of Gazprom's gas in the winter of 2004/2005. According to Kommersant's information, Itera representatives, who worked with structures owned by Timoshenko in the mid-1990s, have recently been negotiating for the company's return to Ukraine's gas market. Boiko claimed that a large-scale gas crisis is looming as a result of the actions of Naftogaz and the Ukrainian government.

Ukraine has no effective economic resources to protect it from pressure from Russia and Turkmenistan. Therefore, as Kommersant predicted earlier, the Ukrainian government has started to play one of its main trump cards – information on Russian–Ukrainian agreements in the summer of 2004 concluded with the assistance of then prime minister of Ukraine Viktor Yanukovich, the Russian government, Naftogaz, and Gazprom, within which the intermediate company RosUkrEnergo.

In an interview with the local weekly Zerkalo Nedeli on June 21, Security Service Chairman Aleksandr Turchinov said that his agency had instituted a criminal case in the activities of the former management of Naftogaz. He named the activities of the Swiss company RosUkrEnergo, a trader in Russian–Austrian capital guaranteeing gas deliveries to Ukraine and the successor to Itera and Eural Trans Gas in the delivery schedule in effect since the mid-1990s, as some of the interesting features in the case. Gazprombank and Raiffeisen Investment (RI), an investment subdivision of Raiffeisenbank, each own 50 percent of RosUkrEnergo's capital. Turchinov confirmed Kommersant's earlier speculations that RI is only the nominal owner of the stake in RosUkrEnergo. “RI is merely a nominal shareholder, but the real shareholders are hiding behind this nominal mask,” he said, noting that, according to his information, private individuals are hiding behind Gazprombank's stake (he called Gazprombank a Gazprom affiliate). Turchinov, like Boiko before him, did not name any names, hinting only that he thought there was a particular interest in the activities of this company [RosUkrEnergo] at the highest level in both Ukraine and Russia.

Gazprom representatives reacted rather inarticulately to Turchinov's accusations. Aleksandr Medvedev, the president of OOO Gazexport, said only that claims of RosUkrEnergo's involvement in clearing payments for Central Asian gas was contrary to fact. Meanwhile, Kommersant sources close to Gazprom made it clear that the company was trying to distance itself from the dispute between Ukraine and Turkmenistan and considered that the situation with Gazprombank's nonexistent stake in RosUkrEnergo did not concern it.

However, Turchinov's statement may be only the start of the conflict. The Russian–Ukrainian transit business has always been a focus of the most secret and nonpublic connections between Ukrainian and Russian businessmen with close ties to the government, and the publication of information on the real motive for the gas agreements of the summer of 2004 could become a political bomb in both Ukraine and Russia. The list of names that Turchinov apparently had in mind may include bureaucrats and businessmen involved in the formation of RosUkrEnergo and Eural Trans Gas from both presidential and governmental structures of both countries, Vneshtorgbank and Vneshekonombank, Gazprom, Itera, the Russian Embassy in Ukraine, and businessmen from Central Europe and Israel. It is also not inconceivable that the SBU will look into other aspects of the pre-election agreements of 2004. The internal political struggle in Ukraine and the situation around Naftogaz Ukraine leaves little hope that the conflict will die down by itself.

Source: Kommersant

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Ukraine’s Yushchenko Does Not See Major EU Crisis

KIEV, Ukraine -- The constitutional crisis in the European Union will be temporary and will not impede Ukraine’s European vocation, the country’s President Viktor Yushchenko said in an interview with the Le Figaro daily ahead of his one-day visit to Paris.


President Viktor Yushchenko

“I am persuaded that with time, things will calm down and the European project will get a second wind,” Yushchenko said. “In addition, I am convinced that Europe cannot be reduced to the European Union. Ukraine is an ambitious country, and I do not want to waste my time in demonstrating that the Ukrainians are also Europeans,” said Yushchenko, leader of the Western-backed democratic “Orange revolution” last year.

Yushchenko has made accession to the European Union a top priority of his administration and Kiev’s EU ambitions were top of the agenda during his talks with President Jacques Chirac.

“History reminds us that we have always been an integral part of the continent,” Yushchenko said. “No one has the right to exclude or not to exclude this or that country.”

He praised the role that Poland and Lithuania, both EU members, had played in supporting the orange revolutions, saying that the older members of the EU and the Organization for Security and Cooperation in Europe would have acted more cautiously.

At the same time the western-oriented Ukrainian president stressed that Europe should not treat Russia as its enemy. “I think that finally Russia will join Europe,” he said adding that before Moscow has to accept the European “political alphabet”.

Source: MosNews

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Ukraine Bends Market Economics for Energy Supply Diversification

KIEV, Ukraine -- Ukrainian officials continue what looks like almost frantic attempts to diversify oil and gas supply sources in order to reduce dependence on Russian supplies. Driven mainly by reasons of state, these efforts seem to overlook market economic criteria such as commercial profitability and return on investments, and they may well founder on these criteria.

Ukrnafta oil company president Ihor Palytsa has made public a proposal to develop an oilfield in Kazakhstan as a joint venture with that country's KazMunayGaz state company. Palytsa expects this field, as yet unexplored, to produce 1 million tons of oil annually within three years of the start of development work. Meanwhile, Ukrainian officials consider involvement in Azerbaijan at some onshore oilfields, also with meager potential, to be technologically uncomplicated, and commercially unattractive to other companies.

It seems, however, difficult to envisage that the ventures could be profitable at this level of output, or that this volume could begin to make a difference in terms of supply diversification for Ukraine. The state holds 50% plus one share in Ukrnafta through Naftohaz Ukrainy, with 42% held by a group of companies linked to Pryvatbank, which also controls the Prikarpattya oil refinery in Nadvirna.

Prime Minister Yulia Tymoshenko proposes construction of a pipeline from Iran via Turkmenistan, to carry gas from both countries to Ukraine. Speaking at a press conference in Kyiv, Tymoshenko called on Azerbaijan and Georgia to join a gas transit consortium that would build such a pipeline, and assumed aloud that Gaz de France would take part in such a consortium. The French company signed on June 14 an agreement with the Ukrainian government to form a joint planning group on developing alternative routes for supplying gas to Europe.

Tymoshenko's proposal is a modified version of President Viktor Yushchenko's two proposals to Turkmenistan President Saparmurat Niyazov, in Ashgabat in March and at the CIS summit in Moscow in May. Both political leaders as well as top executives of the state energy sector underscore the need to extricate Ukraine from dependence on Russia, but they stop short of addressing funding and commercial issues in connection with such projects.

At the moment, Ukraine is falling deeply into financial arrears to Turkmenistan for gas. On June 20 in Ashgabat, Niyazov presented the visiting chairman of Naftohaz Ukrainy, Oleksiy Ivchenko, with a $562 million bill for unpaid gas. The new Ukrainian government incurred most of this debt in January-May 2005. Under the bilateral contracts, Ukraine pays 50% of the Turkmen gas bill in cash and the other 50% in goods (mainly steel pipes and other metallurgical articles) and services (mainly construction works, again involving steel inputs). In May, Yushchenko promised Niyazov to find ways of settling the debt before the end of that month. This has not been accomplished, however.

As one method to offset those arrears, Ivchenko now suggests that Ukraine would deliver steel this year to Turkmenistan at last year's prices, i.e., at a significant discount, in the barter half of the gas bill. Both Yushchenko in March and Ivchenko in June have suggested that the barter portion of the payment be increased, and the cash portion correspondingly decreased. Niyazov has turned down these proposals, describing them scathingly as Soviet relics incompatible with market economics. Naftohaz Ukrainy now intends to prospect and possibly to develop gas fields in Turkmenistan in order to supply Ukraine. Whether the company or the Ukrainian state budget can provide the necessary investment seems far from certain.

Meanwhile, Russia's Gazprom claims to have identified some hitherto unknown Ukrainian arrears to the tune of $1.2 billion, for past deliveries of 7.7 billion cubic meters of Russian gas to Ukraine. Russian President Vladimir Putin seized the occasion to upbraid Ukraine publicly for this. Ukrainian State Security Service chief Oleksandr Turchynov has launched an investigation targeting former officials of Naftohaz Ukrainy as well as two gas trading companies that had handled the transit of Turkmen gas to Ukraine, serving as Gazprom fronts with links to Kyiv officials.

Source: Eurasia Daily Monitor

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Landslide Hits Beach in Ukraine, Kills 1

KIEV, Ukraine -- A landslide swept down on a beach on Ukraine's Black Sea Tuesday, killing at least one Russian sunbather and burying as many as four other people, emergency officials said.

The landslide, which occurred around noon, sent hundreds of cubic yards of rain-soaked soil onto the beach near Sevastopol, said Dmytro Boguslavskiy, a spokesman for the Emergency Situations Ministry.


Ukrainian rescue workers sift through piles of sand at the site of a landslide at a beach near the Black Sea port of Sevastopol

The body of a Russian was pulled from under the soil, and four other people were pulled out alive, said Valentyna Pedos, another spokeswoman for emergency services. A witness told officials that he and others saved themselves by running into the sea, the emergency ministry said in a statement.

Russian news agencies quoted the Russian consulate in Sevastopol as saying the victim was a 16-year-old girl from the southern Volgograd region.

Pedos said emergency officials believed another four people were still buried beneath the mud, based on accounts of those rescued.

She said days of heavy rain were likely to blame for the landslide.

The official also said the isolated beach was supposed to be off-limits to vacationers. Black Sea beaches are popular summer vacation destinations for Ukrainians and Russians.

Also Tuesday, landslides along a stretch of railway on the Black Sea coast in southern Russia derailed 15 cars of an empty freight train, causing delays for thousands of passengers. No injuries were reported.

Source: AP

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Tuesday, June 21, 2005

Yushchenko Encourages Murdoch to Invest

KIEV, Ukraine -- Ukrainian President Viktor Yushchenko met Tuesday with Rupert Murdoch, and encouraged the media magnate to invest in Ukraine's media.

Yushchenko told Murdoch, the chairman of media giant News Corp., that Ukraine is looking for serious investors, and called his government's commitment to freedom of the press "steadfast," Yushchenko's office said.


President Yushchenko (L) and Media Magnate Murdoch

Murdoch's visit comes amid widespread rumors that two popular television stations, Inter and 1+1, may go on the market. Both are currently controlled by Viktor Medvedchuk, an opposition leader and former chief-of-staff of former President Leonid Kuchma.

Ukraine's television market is still dominated by figures linked to the former government, including Kuchma's son-in-law Viktor Pinchuk. But since last year's Orange Revolution helped usher Yushchenko to power, most stations now offer more balanced coverage.

Yushchenko has made media freedom a central tenant of his presidency, saying he will never resort to the hands-on control that predominated under Kuchma.

Under Ukrainian law, foreigners are barred from owning more than 30 percent of shares in a television company.

Shares of News Corp. rose 5 cents to $16.94 in midday trading on the New York Stock Exchange, where they have traded in a 52-week range of $15.01 to $34.03.

Source: AP

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Ukrainians Aim at Deripaska

MOSCOW, Russia -- The first Russian businessman to lose the Ukrainian assets he acquired during ex-President Leonid Kuchma's regime could be Oleg Deripaska, the Moscow oligarch who controls Russian Aluminium (Rusal), one of the world's leading producers of aluminium. At stake is Rusal's umbilical cord to the Nikolaev Alumina Refinery, in the Ukrainian port city of the same name.

The Ukrainian move to cut that cord also affects the rivalry among Russian, Chinese, American, and local groups to mine bauxite in the Republic of Guinea. If the ownership of the Nikolaev refinery is unravelled by the authorities in Kiev, that will rebound on the Rusal-controlled Guinean bauxite mines, which have supplied Nikolaev since the Soviet period.

Sources in Kiev today told The Russia Journal that the Ukrainian Prosecutor-General's office has filed a high court claim accusing the former Ukrainian government of violating the law in allowing Deripaska to change the investment conditions he undertook, when he first acquired the state's 30% stake in the refinery in the year 2000. The privatization auction which Deripaska won ended a bitterly contested tussle for control of the refinery with the Trans World metals and the Reuben brothers of London. The stake cost Deripaska about $100 million. But the additional investment conditions obliged him to spend much, much more.

The latest action is not a direct attempt to invalidate the original privatization. A source close to Deripaska told The Russia Journal earlier this month that he was confident this would not happen. Ukrainian government officials had also said as much in public statements. However, the latest action by the prosecutors could have a similar impact if the court rules that the previous government acted unlawfully to favour the Rusal group. A spokesman for the Prosecutor-General's office in Kiev told The Russia Journal that an order of the former Ukrainian government, no. 550p, issued on August 10, 2004, violated Ukrainian law. That order, they claim, unlawfully changed the financial terms which Deripaska's acquisition of the Nikolaev refinery obliged him to meet.

Nikolaev currently produces more than 1.3 million tons of alumina per year, feeding Rusal's four Russian smelters which, altogether, produced 3.1 million tons of primary aluminium last year. Nikolaev's output comprises more than a third of Rusal's Russian smelter requirement. Without it, Rusal's pledges to build new smelters in Irkutsk and Khakassia and increase annual output of metal to 5 million tons, would be difficult to achieve, if not impossible.

A Ukrainian government source, who has been close to Rusal's attempts to hang on to the refinery, but change the investment requirements, told The Russia Journal, on condition of anonymity, that a court review of the issue, which began in 2003, is still under way. The source expressed surprise at the prosecutors' independent court action.

Asked if this had been prompted by Ukrainians seeking to recover the refinery from the Russian group, the source said " Honestly, I don't know the background for their decision. It shows their initiative." She confirmed that Deripaska had earlier agreed with Yushchenko's ministers not to put the Nikolaev refinery on the government's black list of privatization deals that are to be reviewed, possibly cancelled, or put for fresh sale.

Last year, while Leonid Kuchma was President and Victor Yanukovich , his Prime Minister and designated successor, Rusal's Ukrainian affiliate Ukral had appeared to be in an impregnable position, following a shift in policy at the Ukrainian Fund of State Property.

A year earlier, in June 2003, Mikhail Chechetov, Chairman of the Fund, had announced publicly that Ukral had failed to commence construction of a new aluminium smelter at Pervomaisk, in the eastern Kharkov region of the Ukraine. As this project was one of several conditions Rusal and Ukral had agreed to, when they acquired the state shareholding in the Nikolaev refinery, Chechetov claimed his agency would go to court to decide whether to reverse Rusal's acquisition of the asset.

After Deripaska had defeated the Trans World group for control of the refinery in 1999, he then agreed with the government in Kiev that within two years he would expand alumina output at Nikolaev to 1.3 million tons; halt tolling operations at the plant; and start building a new 100,000-ton capacity smelter at Pervomaisk. But he dragged his feet on all three.

In 2004, according to Ukral's spokesman, "we are proceeding with expansion of production capacity of the plant [up to 1.3 million tons per year] at full speed, and we plan that production capacity of the plant will be increased to the agreed level in the first quarter of 2004. For the second year now, Nikolaev is working on a regular import-export basis and doesn't use tolling schemes." The promised upgrade to 1.3 million tons of output had been the subject of a negotiation with the Ukrainian government, which agreed in August of 2002 to postpone the deadline until 2004.

Chechetov had earlier said that, because the new smelter project had not started, the government in Kiev would insist on cancelling the transfer of the state's shares in Nikolaev, and reprivatize them. Then in a change of tone, Nina Burlyuk, spokesman for the Fund, announced last year: "Currently, the Nikolaev refinery is the property of Ukral, and we see no changes to be made to that. What's happening is [that] currently there is a discussion at the government level about removing the condition of building the Pervomaisk plant, because it's absolutely economically ineffective, and changing that condition to something else [requiring] equal investment."

In the past, Rusal sources have told The Russia Journal that energy costs in the Ukraine have been too high to make the new smelter project economically viable. Ukral, according to its spokesman, tried to negotiate a lower energy tariff regime with the government in Kiev to improve the proposed plant's commercial prospects. But when that proved impossible, Ukral said it would propose modifying the terms of the original investment agreement. Burlyuk's announcement signaled that this was the approach that senior Ukrainian government officials wanted to adopt, mollifying Deripaska ahead of the presidential election campaign.

What has now been confirmed by the Prosecutor-General's office is that Kuchma and Yanukovich agreed to issue order no. 550p, allowing the Pervomaisk smelter plan to lapse. Instead, Ukral undertook to lift the capacity at Nikolaev by another 300,000 tons, or a 23% increase on the current level.

Burlyuk of the State Property Fund told The Russia Journal: "There was a first order to build a plant in Pervomaisk with a capacity of not less that 100,000 tons. There was nothing more exact. The ministerial cabinet decree number 550-p was the basis for Ukral and the Property Fund to sign a change of investment conditions from new plant construction to existing plant expansion. Unfortunately, I am not an expert, so I am not available to calculate the costs for both variants. I am not sure that anybody in the Fund will be able to do that. It's actually not our business – we do privatization procedures."

An international industry source said that in current international practice, the cost of the refinery expansion would be $1,000 per ton of increased capacity, making a total of $300 million. The source also told The Russia Journal that the cost of building the new smelter would be roughly $4,000 per ton of capacity, making $400 million in all. The cost difference, saved for Deripaska, appears to have been not less than $100 million.

There is no sign of the "equal investment" proviso in the official change of agreement. Prosecutors in Kiev confirmed that order no. 550p did not require "equal investment", and they added that this is an aspect of the legal violation they are now investigating. Asked if they are investigating whether any of the money saved by order 550p may have found its way into the bitter Ukrainian election presidential campaign, a spokesman said: "We are not investigating this matter."

Victor Demodenko, the press spokesman for Ukral, told The Russia Journal: "Ukraine Aluminium [Ukral] is managing and completing all the required investment obligations." Officials at Rusal in Moscow declined to comment. Speaking at an investors' conference on the Ukraine last Friday, Rusal's deputy general director for international relations, Alexander Livshits, sounded a hopeful note, and did not refer to the Nikolaev dispute. "Ukraine's investment climate is typical for the first year after a revolution. Ukrainians will improve their investment climate if the government actually does what it promises."

Source: The Russian Journal

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U.S. Donated $2.7 Million to Ukraine to Struggle with Corruption

KIEV, Ukraine -- The United States has given US$2.7 million (2.25 million euros) to Ukraine to help the new government fight corruption and strengthen the rule of law, the U.S. Embassy said June 21.

U.S. Ambassador John Herbst and Ukrainian Interior Minister Yuriy Lutsenko signed a protocol on June 17 concerning the allocation of U.S. law enforcement assistance funds.

The funds will go toward technical assistance, training, and equipment to combat corruption, human trafficking, money-laundering and strengthening the independence of Ukrainian courts. President Viktor Yushchenko has vowed to crack down on corruption, which plagued former President Leonid Kuchma's decade-long tenure. He has pledged to hold former officials accountable for any proven misdeeds.

Lutsenko underscored the aid's importance, given "the special attention paid by the government of Ukraine to the fight against organized crime, drug-smuggling, and trafficking in persons." Critics of Ukraine's former government have blamed corruption for the ease with which criminals operated in this ex-Soviet republic.

Source: AP

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Ukraine IT Outsourcing Myths Dispersed

KIEV, Ukraine -- While Ukraine is becoming a new popular IT outsourcing destination, there are still many myths about it and no clear understanding of the opportunities outsourcing to Ukraine can present. Let us look closely at some of those myths and find out whether there is any truth behind them.



Ukraine is politically unstable

This myth has seen its rise in November-December 2004 during the events around the presidential elections that led to the Orange Revolution. However, presently there are no grounds for concerns. During the Orange Revolution, the Ukrainian people have shown their devotion to the democratic ideals and prevented the worst scenario from happening, bringing the legitimately elected president to the power. The new Ukrainian government has clearly voiced its intentions to move towards the goal of joining the EU and is making logical steps in that direction. The overall political situation in the country is stable and predictable. Unlike some popular Asian outsourcing destinations, there have never been any threats of terrorist acts in Ukraine.

But even during the most critical events in November and December, no threat existed for the clients of the Ukrainian outsourcing services providers. There were no power shortages, Internet and telephone lines functioned as usual, and no danger was posed to the outsourced project. Many companies did join the national strike that was going on, but the most urgent tasks could still be done uninterrupted. Ukraine has proved that it is a civilized 21-century European nation.

Ukraine’s IT infrastructure is poorly developed

Ukraine’s IT infrastructure is rapidly developing. As the recent research conducted by the Ukrainian Democratic Initiatives Fund and Kiev International Sociology Institute has shown, 13.1% of Ukrainians have a computer. 14% use Internet and/or email either at home or at work. Internet connectivity, being one of the primary concerns, is also developing rapidly. Telecom is one of the fastest growing markets in Ukraine, and fibre optics are continually being laid and new companies are continually opening new connectivity services, which continually lowers cost. For example, monthly fees for a DSL connection are lower in Ukraine than in India. It is considered indispensable for an IT company to have a broadband Internet connection and several telephone lines. Furthermore, there is no shortage in high quality hardware, and IT companies provide their development teams with powerful, modern computers and servers.

Ukraine is software pirates’ paradise

WTO ascension is a top 2005 priority for Ukraine’s government. As Ukraine moves towards this, its intellectual property laws are being revised to comply with WTO standards. While a lot of private users may still be using the cheap pirated copies of the most popular software products on their home computers, companies specialized in software development are under severe control, and to avoid problems with law, switching or have switched to licensed products. Those companies who can’t afford the price of more expensive software products choose Open Source solutions, but the problem is being tackled in one way or another anyway. Ukrainian companies are looking to work legally and don’t want to risk their good reputation.

Moreover, a large part of professional software aimed specifically at software developers has never been available as pirated copies in Ukraine, hence it has always been used in its legal, licensed form ( take IBM RationalTM products as an example, as well as many others ).

Ukraine is not secure when it comes to sensitive information

Special measures must be taken to protect sensitive information no matter where your project is developed. However, according to the recent reports, India is much more dangerous than Ukraine when it comes to sensitive information leaks or theft. While it is reported that it is difficult to run background checks on employees in India, it is not that problematic in Ukraine. It has become a common practice in Ukraine for the outsourcing customers to sign NDAs with every member of the development team. Additional security policies can also be implemented to protect your sensitive data.

Ukraine’s IT sector lacks support from the government

The new Ukrainian government is showing its extreme interest and support to foreign investments into the country's economy and international cooperation. While Ukraine moves towards joining the EU and WTO, the laws, including those covering the IP issues, are being revised to create better environment for the economy’s development and growth. This applies to the software development as well, IT being the most rapidly developing sphere of the Ukrainian economics.

According to the reports, the volume of export of Ukrainian IT services and products rose by US$ 40 million or 57% to US$ 110 million in 2004. The export of the IT sector of the Ukrainian economy is the most dynamically developing. At the same time, the total number of IT specialists operating on the market reached 15,000 toward the end of 2004. This was an increase of 50%, compared with 2003.

Ukraine’s IT workforce is cheap

Ukraine’s IT salaries level used to be low, but as the country’s economy develops and integrates into the European and world market, it is growing, even though it is still lower than the salaries of EU and US IT specialists. The Ukrainian programmers possess high level of education and skills, as the IT sphere of the Ukrainian economy develops the demand for them increases, hence their highly intellectual labour cannot be cheap. However, outsourcing customers need to realize that cheap workforce is not a good reason to choose an outsourcing provider, as it is likely to cause problems in the long run that will lead to an increase in expenses instead of savings. The reason behind many outsourcing failures is actually the customers going for cheap workforce and overseeing the quality and efficiency issues.

Outsourcing is seen as a way to cut down the development costs, but this should not be done at the expense of the developers’ salaries and therefore, quality. There are better and more effective ways to save. If a company employs methodology allowing for faster development, better quality source code, automated code generation, less developers involved, etc., this actually does reduce the development costs while still providing a satisfactory software solution.

The language and cultural barrier

It is certainly important to be able to communicate with your outsourcing development team on a level allowing for a smooth development process, and the language and culture differences can be an obstacle.

However, Ukraine is a European nation, and the mentality of people does not differ greatly from that of your country, be it anywhere in Western Europe or the US. There is no striking difference as you would encounter in some Asian countries. Besides, before outsourcing software development came to Ukraine on a large scale, many Ukrainian IT specialists used to go to the Western Europe and USA and work for IT companies there, which means they are familiar with the approach traditional for Europe and America and the procedures used for software development in those companies. Moreover, different international agencies are now offering courses in management providing necessary management skills to the Ukrainian specialists. Thus, all the business processes in a development team can be organized according to the international standards.

While English is not the native language to the Ukrainian developers, this issue is also being actively dealt with. English is the language of choice in the universities and in the schools it is now required from an early age. Several universities are conducting their entire programs in English. Oral and written comprehension is high among software engineers, given the amount of text they have to read for their degree and work programs and the amount of English language programming available in the country. Communicating with the Ukrainian developers through online chats, instant messaging and e-mail in English should not be a problem. While not all the development team members might be completely fluent in English, those who communicate directly with the international customers will speak, read and write in English at the proper level. Many companies conduct in-house English language training programs to improve the language skills of their personnel. Specialists speaking other languages, such as French or German, can also be found, though these languages are not as popular as English.

Source: i-Newswire

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Congratulations to the Customs Service

KIEV, Ukraine -- Congratulations to the State Customs Service for making it easier to get in and out of Ukraine.

Back in the Soviet days, you went through customs in Kyiv basically under gunpoint. The situation eased a little with independence, but not by much. We have vivid memories of entering a “free” Ukraine by train in 1992 and being subjected to a totalitarian gamut of invasive search techniques, as smirking post-adolescents in border guard uniforms barked orders, dumped out people’s suitcases and dragged elderly men and women into the corridor to pat them down. In recent years, the border regime hasn’t been brutal, but it has been illogical, inept, inefficient, slow and probably ineffective. Getting out of Boryspil airport has been an anxiety-producing pain.

According to Customs Service chairman Volodymyr Skomarovsky, border control will now start to conform to international practices and standards, and one of the results will be less waiting at border points. Travelers will now be allowed more latitude in declaring goods at Boryspil, as part of a liberalized system that the government expects to come into effect eventually at other Ukrainian airports.

In addition, each Ukrainian customs point will now operate according to a one-window system, which means an end to the sometimes confusing business of choosing which portal – the red or the green – to pass through.

This is all excellent news, since it need not be repeated that the way people are treated at a country’s borders disproportionately determines what they think of that country. For a long time, people coming into and going out of Ukraine were subjected to bother, inefficiency, stress and sometimes contempt and corruption. As Ukraine tries to turn the corner and live up to European standards, it’s fitting that that should change. The Customs Service’s move is a very healthy step in the direction of a strengthened civil society in Ukraine.

Source: Kyiv Post

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Ukraine Encouraged to Carry Out Fast Reforms to Capitalize on Interest

KIEV, Ukraine -- Investors called on Ukraine's new government June 17 to use the momentum from last year's Orange Revolution to make fast, effective and irreversible reforms, saying the top of the list needs to be a commitment not to meddle in business.

The two-day World Economic Forum on Ukraine began to wrap up with investors giving an upbeat assessment of what they'd seen from the government's first five months in power: a balanced budget, reduced inflation, the scrapping of some regulatory hurdles and a willingness to listen.


From left to right: Georgia's President Mikhaail Saakashvili, President Viktor Yushchenko, Azerbaijan's President Ilham Aliev, Estonia's President Arnold Ruutel and Moldova's President Vladimir Voronin

"Ukraine has a very good image in the world after the Orange Revolution. There are high expectations," said Klaus Schwab, executive chairman of the World Economic Forum, which is best known for its annual meeting in the Swiss resort of Davos. "But the challenges for Ukraine are tremendous, let's not forget it."

The forum's participants, which included five presidents and dozens of business leaders, prepared recommendations for President Viktor Yushchenko's government. They included protecting shareholder rights, fighting corruption, eliminating red tape and speaking with one voice.

Investors said it was important for the government of this former Soviet republic to clearly outlaw price controls and put an end to the confusing messages over its plans to revisit some of the old administration's privatization deals.

"The government must make a clear, binding and coherent statement about the handling of past privatizations," the proposal reads.

Other tasks include passing all the legislation necessary for entry to the World Trade Organization before parliament's summer break, setting up a one-stop procedure for starting new businesses, implementing international accounting standards and reducing social and business profit taxes.

Participants acknowledged the list is daunting, but emphasized that they were also pleased with progress the new government, which is striving to join the European Union, has made since the mass protests against election fraud helped usher it into power.

"Ukraine's investment climate is typical for the first year after a revolution," said Alexander Livshits, former Russian finance minister and deputy general director of Russian Aluminum. Russia is one of Ukraine's main investors.

"Ukrainians will improve their investment climate if the government actually does what it promises."

Yushchenko and his underlings spent the past two days pitching the positive, citing Ukraine's geographic position, its highly educated and experienced work force and its technological skills in rocket and plane-building.

Ukraine had one of Europe's fastest growing economies last year, registering gross domestic product growth of above 12 percent. This year, officials are predicting around 6 to 8 percent growth, a result of falling prices for metals, which remain Ukraine's main export, and the turmoil of last year's election and the new government's transition.

Foreign investment, however, has always been low. Last year, Ukraine received $1.7 billion (1.4 billion euros) in direct foreign investment, a figure that economists consider a minuscule amount compared to its $65 billion (53 billion euros) GDP.

Prime Minister Yulia Tymoshenko, delivering a speech June 17, encouraged investors to explore Ukraine's insurance, banking and aerospace sectors.

"We are ready to open doors for you, to open windows for you, to lay down the carpet so that you come to Ukraine," she said. "We have only one demand for you: Pay our taxes honestly."

She tried to stem concerns that the privatization probes signaled the start of a campaign to re-nationalize the properties.

"I ask you not to have any fear about this," Tymoshenko said. "We don't have such a philosophy. We don't have such an ideology. We don't have money in the budget for this."

She noted, however, that many Ukrainians support rescinding some of the past deals that were completed "with very crude violations of the law and very dishonestly."

But she said courts must decide and the government would support allowing the current owners to pay additional money to hold onto the businesses.

"The speeches are great but big businessmen want to see things happen on the ground level," said James Gallagher, senior vice president for Nestle SA's central and eastern Europe division.

Source: AP

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SBU Launches Criminal Investigation in Regard to RosUkrEnergo

KIEV, Ukraine -- The State Security Service (SBU) has launched probes into alleged violations by gas trading firms that allegedly siphoned more than a billion dollars from state coffers when they worked as intermediaries handling Turkmen gas supplies to Ukraine.

SBU chief Oleksandr Turchinov told the Post on June 17 that an investigation has been launched into the activities of Swiss-registered RosUkrenergo and intermediaries that handled Turkmen gas supplies to Ukraine in previous years.


SBU Chief Oleksandr Turchinov

Like its predecessors, RosUkrEnergo acts as an intermediary in transiting gas from Turkmenistan across Russia and other former Soviet states to the Ukrainian border. Its shareholder structure remains a bit cloudy.

Company officials have said that affiliates of Russian gas giant Gazprom and Austria’s Raiffeisen Investment AG own parity 50/50 stakes in the venture.

Turchinov told the Post that Raiffeisen Investment AG, according to his information, acts as a nominal shareholder representing private interests of individuals whom he declined to name for fear of revealing inner workings of the investigation.

Turchinov said RosUkrEnergo, a company which has an annual turnover of more than a billion dollars, could not have been created without the approval of the most influential people in Russia and Ukraine. Severe infringements were discovered in the company’s dealings, he said, adding that such schemes involve siphoning of funds which should have flowed into the state budget, rather than having been diverted into private hands.

A RosUkrEnergo top manager revealed to the Post in an interview last week that Raiffeisen Investment’s role in RosUkrEnergo was bound to contractual arrangements with Ukrainian clients, which he could not identify.

On June 16, Oleksy Ivchenko, chairman of Ukraine’s state oil and gas company Naftogaz Ukrainy, told the Post that he does not know whose interests Raiffeisen Investment represents. His announcement has fueled speculation that private business interests, not the state, are receiving gains from the transit of gas from Turkmenistan, which supplies Ukraine with more than half of its gas.

Turchynov believes the “actual shareholders are hiding behind this structure [Raiffeisen Investment].”

Also, in Turchinov’s words, the SBU is investigating wrongdoings pertaining to Eural Trans Gas, a Hungarian-registered firm which earned more than a billion dollars in annual turnover by handling Turkmen gas supplies to Ukraine before RosUkrEnergo was appointed as intermediary this year.

Officials at Russian gas giant Gazprom and Naftogaz Ukrainy have in recent years distanced themselves from Eural Trans Gas, whose ownership structure remains hazy to this day.

RosUkrEnergo and Eural Trans Gas were chosen as intermediaries for the transfer of Turkmen gas into Ukraine when Yuriy Boyko headed Naftogaz. Boyko, appointed chairman by former Ukrainian President Leonid Kuchma, was removed from his post earlier this year by President Viktor Yushchenko.

Turchynov said the SBU investigation also centers in on alleged wrongdoings committed by former top managers at Naftogaz.

“There were a lot of violations which pertain to the intermediaries, and also to the administrators,” Turchinov said.

Intermediaries such as RosUkrEnergo and Eural Trans Gas generate billions of dollars in revenues annually transporting gas they don’t own through pipelines, which they also do not own. They are essentially paper companies granted lucrative privileges whose existence has proven difficult to explain for top managers at Gazprom and Naftogaz. Minority shareholders at Gazprom insist that their company could handle the transit itself; some Ukrainian officials insist that Ukraine should also have a share in the business.

Gazprom and Naftogaz announced in July 2004 that Eural Trans Gas would be replaced by the newly established RosUkrEnergo starting 2005. ETG has acted as intermediary in the previous two years, having replaced Florida-registered Itera, which handled the transit earlier.

In the July 2004 statement, Naftogaz and Gazprom insisted that the Swiss company was 50 percent owned by a subsidiary of Gazprombank and 50 percent owned by Raiffeisen Investment AG, a subsidiary of Austria’s Raiffeisen Banking Group.

RosUkrEnergo officials told the Post back then that other parties could be brought into the venture in order to raise investment needed for projects involved with modernization of pipelines and other areas.

At the time, Boyko said Naftogaz could in the future become a shareholder in RosUkrEnergo.

Married to the mob?

It remains unclear who the beneficiary shareholders of ETG and and RosUkrEnergo are, and whether Gazprom and Naftogaz Ukrainy control the company. Gazprom and Naftogaz Ukrainy have repeatedly denied owning ETG, but ETG officials say their company does not operate independently of the Ukrainian and Russian gas companies.

Press reports have linked ETG with Ukrainian-born reputed mobster Semion Mogilevich. Mogilevich is wanted by the FBI on money laundering, racketeering and fraud charges.

Several of the media outlets that alleged those links were forced to retract their claims after they lost lawsuits brought against them by ETG.

Former U.S. Ambassador to Ukraine Carlos Pascual last year called upon Ukraine and Russia to modify the Turkmen gas supply arrangement, citing reports that Mogilevich has ties to ETG. Pascual said that ETG’s influence over Ukraine’s gas supplies is a serious threat to the country’s energy security.

Ukraine consumes more than 70 billion cubic meters of gas annually, producing about 19 billion cubic meters and importing the rest from Turkmenistan and Russia.

British-born Robert Shetler-Jones, who first came to Ukraine in late Soviet days, has links with both ETG and RosUkrEnergo.

A report produced by Moscow-based Hermitage Capital Management, itself a minority shareholder in Gazrpom, lists Shetler-Jones as director of companies which are shareholders in ETG.

Shetler-Jones serves as an advisor to RosUkrEnergo. It’s a position which puts him side-by-side with some of the most influential executives involved in lucrative gas dealings between Ukraine, Russia and Turkmenistan.

Shetler-Jones told the Post earlier this year that he no longer has any affiliation with ETG, which has been linked by press reports to Mogilevich.

In early 2004, a company he owns acquired a controlling stake in the lucrative Crimean Soda Plant (Crimsoda), in Krasnoperekopsk, Crimea. Hamburg-registered RSJ Erste early last year paid $70 million for Crimsoda. Last year, RSJ Erste also established a joint venture with Ukraine’s government, which gave RSJ nearly half of Krymsky Titan, a lucrative titanium business.

Shetler-Jones has refused to reveal where he raised funding for the acquisitions, for fear of linking his creditors with Mogilevich. He insists that he is the owner RSJ Erste, and that he is not acting as a shell for others.

“I am the owner of RSJ Erste. I have no other partners in the business,” he said, adding that he acquired the factories using credit lines.

Source: Kyiv Post

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Ukrainian Deputy PM Tomenko Supports Giving Russian Status of Second Official Language

KIEV, Ukraine -- Ukrainian Deputy Prime Minister for Humanitarian Affairs, Mykola Tomenko, has said in a live TV interview that he supports giving Russian the status of a second official language. This will ensure that the human rights of the Russian-speaking population are observed.

"There is a need for solving this problem. Opinion polls clearly show that there is a problem," Tomenko said. "The authorities should think how to protect the rights of those whose native language is Russian."

"We should change our stance. If elderly people cannot learn the Ukrainian language they should have the right to use Russian in official documents. There is also a problem with education. I think we should look for a compromise here as well and take into account the views of these people," he said.

Speaking about dual citizenship with Russia, Tomenko said the government should solve real problems of people rather than make political declarations. What people really want - free movement between Ukraine and Russia and the possibility to work in both countries - can be achieved without dual citizenship, Tomenko said.

Source: ICTV Television

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Ukraine and Austria Seeking to Enhance Cooperation in Tourism and Culture

KIEV, Ukraine -- Culture and Tourism Minister Oksana Bilozir announced this at a press conference that she gave jointly with Austrian Ambassador Michael Miiss to conclude her June 6-8 visit to Austria. Bilozir said that Ukraine used to make accent on international tourism rather than developing domestic tourism, but today her ministry considers cultural and countryside tourism a priority.

To attract foreigners, transport and hotel services must be improved to European standard and Austrian companies are ready to help here, she added. For example, the European Training Center For Hospitality And Tourism called Modul will assist in personnel training and organization of tours.

According to Bilozir, Austria is interested in aiding sky resorts for children in the Carpathian Mountains. She went on saying that tourism agencies of countries situated in the Carpathian region are studying the possibility to reopen the Carpathian Tram tour.

Speaking about cultural cooperation between the two countries, Bilozir noted that Austrian specialists are willing to help Ukraine restore castles, monasteries, churches, and museums that have historical value.

Additionally, Ukraine plans to open a Ukrainian Cultural Information Center in Vienna and buy, with assistance of sponsors, a number of pianos and grand pianos from the famous Austrian firm Bosendorfer (at UAH 100,000 per piece) for philharmonic societies in order to be able to invite well-known pianist to perform for Ukrainian audience.

Ambassador Miiss informed that the Austrian Embassy has built tight cooperation with the Ukrainian Ministry of Culture. Among the upcoming international events, he mentioned the Vienna Opera Ball that will be held in Kyiv on October 21.

Apart from that, the embassy is looking for sponsors to reconstruct the stele that marks the geographical center of Europe, which is on the Ukrainian territory in the Carpathians. The embassy plans to reconstruct the stele and organize a folklore festival in that area in the second half of 2006, the time when Austria will be holding the European Union rotating presidency. Miiss said this action will remind everyone that Ukraine is part of Europe.

As Ukrainian News earlier reported, President Viktor Yuschenko is expected to visit Austrian on June 12 and 13. Bilozir said that in conjunction with Mr. Morak, Austria's State Secretary for Culture, she plans to prepare a detailed plan needed to implement the cultural cooperation memorandum and request Yuschenko to sign it during his visit.

Source: Ukrainian News Agency

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Ukrainian Justice Minister Zvarych Discusses Legal Reform with US Ambassador Herbst

KIEV, Ukraine -- The Ukrainian Justice Ministry shares the USA's concern over excessive use of arrest at the stage of pre-trial investigation and the use of arrest as an investigative method. The ministry's press service told UNIAN this was discussed during talks between Ukrainian Justice Minister Roman Zvarych and US Ambassador to Ukraine John Herbst on 14 June.

Herbst said reform of the Criminal Code is important not just for improving the human rights situation in Ukraine, but also for combating corruption and organized crime. They also discussed the development of bilateral cooperation, in particular consultation and technical assistance from the USA in implementing reform of the courts and the legal system in Ukraine.

Herbst said the USA was ready to support a project to create a single website for the publication of Ukrainian court rulings. The Americans also emphasized the importance of approving a new Criminal Code for the consolidation of the primacy of the law in Ukraine.

Zvarych told Herbst Ukraine's new draft Criminal Code was designed to continue integrated court reform and takes into account the flaws that have been shown up by practice in the rules introduced under the so-called "small court reform".

The draft contains a number of fundamentally important new things aimed at ensuring quick and just court proceedings, on one hand, and ensuring the rights of those involved in criminal cases, on the other. The draft increases guarantees for the protection of victims and civil plaintiffs. A special chapter is devoted to ensuring the safety of individuals taking part in cases.

It also proposes depriving courts of the right to send criminal cases back for further investigation. This will allow courts to be "freed" from carrying out the function of the prosecutor and introduce the principle of competition [between prosecution and defence].

Source: BBC Monitoring Service

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Yushchenko's Disappearing Moment

KIEV, Ukraine -- Six months after the revolution, Ukrainian politics is surprisingly mundane – which is both encouraging and a little disappointing.

Within months, their country had emerged from international isolation, sanctions had been raised, it had become a member of organizations such as the United Nations and the OSCE, and EU membership had become a prospect, albeit distant.



Yes, Serbians swiftly had reason to believe that their democratic revolution in 2000 really had revolutionized the country. Ukrainians can feel the same. Isolated by the scandals surrounding President Leonid Kuchma presidency, subject to restrictions on aid from the United States for illegally selling weapons to Iraq, and a no-go area for all but the most risk-averse companies, Ukraine is now on the best of terms with the United States and most of Europe’s leaders. It is making strides towards membership of NATO and – until the French referendum on 29 May at least – it seemed to be making the first small steps on a long journey towards the EU. Investors may not yet be putting in much money, but they are looking seriously.

Still, disappointment has tinged many of the international (and Ukrainian) commentaries about post-revolutionary Ukraine. Domestically, there has not been enough of a revolution yet, they feel. Many of those hopes were, however, unrealistic from the start. Even when it provides the kind of relatively clean slate that Central Europe enjoyed after 1989, a revolution is not just an event, but a chaotic, incoherent, and dangerous process. The inevitable price of a democratic revolution – a revolution achieved through elections and by the law book – is that the new government does not have a clean slate. Parliaments remain packed with opponents. The old regime’s placemen in the bureaucracy and state organizations cannot be removed as simply. A new economic and political system cannot be built from scratch; the old system has to be dismantled slowly. Deals cut to establish a united opposition ensure that people with very divergent ideas sit behind the same cabinet table. Deals cut with the former powers to ease the peaceful transfer of power can slow down reform.

In Ukraine, those problems common to the revolution in Serbia (and Georgia and Kyrgyzstan) were compounded by a legacy of fear from the election campaign: a fear that the country could fall apart and a fear that Yushchenko, already a victim of poisoning, could fall victim to assassination, just as Serbia’s Zoran Djindjic did.

Six months later, the notion that Ukraine could split in two is barely mentioned. Ukraine’s government is split but less so than the 18-party coalition that led Serbia. Its political scene is very fragmented but less acrimoniously so than Serbia’s was. Nor do the differences between Yushchenko and Tymoshenko stand comparison with the divisions between Djindjic and Kostunica. Investigations into one touchstone case of the Kuchma era – the murder of the journalist Georgi Gongadze – have cost fresh lives, but, beyond that, there is less sense of political violence in the air than there was in post-war Serbia. The Ukrainian military, long more interested in closer ties with NATO than with Russia, seem to pose no threat, and the secret services and special units seem under the government’s control. That was not the case in Serbia.

In fact, Ukrainian politics now looks surprisingly mundane. There have been political crises about price-capping, a protracted dispute about privatization and other evidence of deep differences over economic policy, and fear that the government’s policies could stoke inflation – but Ukrainians can look at that list, compare it with pre-revolution scenarios and the precedent set by Serbia, and feel happy.

A few years of such mundane politics could make a big difference. In five years’ time, Ukraine may well have progressed as far – or farther than – Serbia has since 2000. It should, since it has not been ravaged by war. Conceivably, it could even look like other countries in the western Balkans – countries that, as it happens, are knocking on the doors of the EU.

The problem for Yushchenko and Tymoshenko, of course, is that neither commentators nor ordinary Ukrainians will judge them by the example of Serbia or by the dangers they have avoided. When parliamentary elections come in March 2006, what ordinary Ukrainians will want to see are signs of tangible change and a sense that the government understands the intangible wishes expressed in the revolution. Somehow the government has to achieve that while pursuing its key strategic aims: to make the revolution safe, and – as both Yushchenko and Tymoshenko have made absolutely clear is their wish – to take the country westward, a strategy that goes well beyond geopolitics to fundamental economic and institutional reform.

In this context, victory in the elections is of paramount importance. Again, Serbia offers a warning: In 2003, Milosevic’s supporters made a near-comeback both in presidential and parliamentary elections.

At the moment, the possibility of electoral defeat looks remote, partly because the government can reasonably expect some political dividend from the past six months. Most obviously, many Ukrainians will have very direct, self-interested reasons to feel good about the government, because in March the government passed a budget that raised welfare spending by 50 percent, giving pensioners, public-sector workers, and young families (among others) more money. Arguably, politically Tymoshenko had little choice but to make these huge hikes, since Yushchenko’s rival in the presidential elections, Viktor Yanukovych, had as prime minister promised most of these increases. Yushchenko’s government was therefore not so much trying to buy votes as attempting to defuse the residual antipathy felt towards Yushchenko in eastern Ukraine and the chances of the old leaders making a political comeback.

The danger is that Ukrainians could find their new money eaten into by inflation. Prices are rising fast (14.7 percent year on year in April), though not much faster than in 2004 (a little over 12 percent). But Yushchenko made his international name as a central banker; he can safely be expected to act to prevent the economic costs of electoral victory becoming long-term. There are other insurance policies against inflation spinning out of control: the budget slashes government investment and probably understates the revenues it might make from privatization. Even if Tymoshenko has miscalculated, extra borrowing may be bearable since Ukraine’s debt is relatively low.

The government’s biggest budget gamble may have been to assume that tax cuts will reduce tax evasion and so raise enough revenues to cover the extra spending. That may prove overly optimistic. Still, at least this tax-cutting sends the attractive political message to the electorate that the government wants to lower taxes.

There is another danger: Ukraine’s economy will not grow as fast in 2005 (1Q 2005: 5.4 percent) as it did in 2004 (12.1 percent). How important is that? For economists and potential investors, it may be very important. For ordinary Ukrainians, economic growth coupled with a sense of an improvement in the overall economic climate may be more important. And if Ukraine’s deeply corrupt big businesses are forced to tighten their belts, they will feel that the climate is improving. That seems to be the logic that Tymoshenko followed in her budget: she argued the government could invest less and still receive the same benefits since procurement processes were previously wildly corrupt; and she has cut most of the tax privileges that Kuchma gave to his friends.

That approach is populist but has some rational justification. Viewed in the same political light, even one of the biggest problems of the government – the dispute over re-privatization – may have its benefits. The capitalism of Kuchma’s Ukraine was crony capitalism. The capitalism that Yushchenko promotes – and that Ukraine will eventually have to adopt if it is serious about applying for the EU – is a liberal form of capitalism. Tymoshenko’s current position – leaning more towards re-nationalization rather than re-privatization – has been likened by some to “state capitalism.” Whatever the outcome of that dispute, the government may win rather than lose votes. It may win votes since Ukrainians who associate liberalization with the wild privatization and wild capitalism of the 1990s may be glad to see that there are some strong statist tendencies in the government; it may not lose votes, because the debate reduces the risk that Ukrainians will feel the new elite is simply interested in taking possession of the old elite’s property.

Beyond that, voters should also sense numerous changes in other aspects of Ukraine’s life. Though many reforms have barely started, a report published in mid-June by Freedom House, the U.S.-based NGO that monitors governance around the world, noted improvements in all but two aspects of Ukraine’s public life (the two exceptions, with unchanged ratings, were local governance and – surprisingly – corruption).

Cumulatively, these improvements and policies (plus residual revolutionary sentiments) should be enough to ensure victory in parliamentary elections in March 2006. In April, over 50 percent of Ukrainians where happy with the new government’s performance; just 16 percent were unhappy. Moreover, the government’s key strategic aim – to join the EU – has the backing of two-thirds of the population. Tymoshenko is rising in popularity (she was popular with 55.3 percent of Ukrainians in April), while Yushchenko’s rating remains high (60 percent in May, though his popularity is dropping). Together, they will make a formidable team in the elections.

If they deliver victory, their parties will also benefit from a new political system that Yushchenko agreed to in negotiations during December’s Orange Revolution. A system where politics was largely a matter of factional maneuvers around a central figure, the president, will be replaced by a party system clearly recognizable to the EU. That will, hopefully, gradually lay the institutional foundations for a political system that is more comprehensible and that makes national and local politicians more accountable for their policies and for their corruption.

That look on the bright side indicates that the Ukrainian government is giving people reasons to vote for them in March 2006. But, unfortunately, the government is also giving Ukrainians too many reasons to feel disappointment and doubt.

The doubts are particularly important since many of the reasons for optimism are based on assumptions – that Yushchenko will impose economic discipline, that the differences between Yushchenko and Tymoshenko will not develop into deeper problems, that anti-corruption efforts will yield rapid economic results. But the disputes over privatization and about price caps on oil, for example, have already scuppered Ukraine’s hopes of being recognized by the EU as a market economy in June, and have created the impression of a leadership at odds with itself and incapable of resolving tensions at the discussion stage. What might go wrong next is a very legitimate question.

Moreover, the government, largely made up of men and women who once had ties to Kuchma, is not doing enough to lift the inevitable doubts that it is truly different from the previous government. Legal cases against the oligarchs close to Kuchma have been fairly limited in number, but it is always going to be accused of selective justice unless there is reform of the judiciary and unless government ministers set a good example. Critics say judicial reform is too slow. Moving faster here needs to be a priority, because unless there is a clear sense that Ukraine’s law and institutions are being improved, trials against oligarchs and re-privatization (or re-nationalization) will either be a mess or be interpreted as the Yukos case has been in Russia: as a vendetta rather than as a legal correction of past distortions.

The government already has a potential sacrificial lamb it could use as an example. Justice Minister Roman Zvarych has been embroiled in one scandal after another, first for threatening to resign over a bill that would have hurt the interests of the oil company for whom his wife works, then for misrepresenting his educational credentials, and then for alleged bigamy. Yushchenko calls these “intrigues.” Tymoshenko published an open letter accusing journalists of behaving like “hired killers.” The combined effect is to create the impression of a government that refuses to recognize a problem and acts like a bully.

Ultimately, the disappointment is that Yushchenko has failed to make full use of the brief months in which he will enjoy the sweeping powers that Kuchma enjoyed. Working in tandem with Tymoshenko, he could have used that time to give the impression of decisiveness and unity, to push forward reform rapidly, to leave his progressive imprint more clearly on policy, and to lay the foundations for long-term improvements. Moreover, it is his tenure as governor of the central bank that lends the government much of its economic credibility; he and the government are losing some of that credibility.

In Yushchenko, Ukraine has a unique advantage over Serbia and Georgia. In Serbia, Vojislav Kostunica acted as a somewhat gray figurehead for the revolution, while the more revolutionary ideas came from Djindjic. In Georgia, Saakashvili led with fieriness, but relied on the gravitas of Zurab Zhvania in particular. In Ukraine, Yushchenko needed Tymoshenko’s fieriness, but the leader of the revolution and the person with the more revolutionary – or, at least, progressive – ideas was also the one with the greatest credibility and gravitas, Yushchenko. Ukraine has a unique moment and its president has unique virtues: a man with moral authority but also great constitutional powers, a man with both expert knowledge and popularity, cautious yet courageous, revolutionary but self-effacing. Yushchenko should seize his days of real power with greater strength and urgency.

Source: Transitions Online

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Monday, June 20, 2005

Chair Shaky Under Ukraine's Chief Prosecutor

KIEV, Ukraine -- "I will go! I am fed up!" Ukrainian Prosecutor-General Sviatyslav Piskun declared during a call-in at the Fakty newspaper on Friday, June 17. "I think one should discuss things like that with the president before making statements," President Viktor Yushchenko said, reacting to Piskun's words on the same day.

Piskun, who claims to have come closer than any of his predecessors to solving journalist Heorhiy Gongadze's September 2000 murder, and who Yushchenko has entrusted with hunting down corrupt former top officials, is in trouble. His position has never been easy, as the forces defeated in the December 2004 presidential polls view him as a traitor, while many in Yushchenko's team mistrust him for serving as chief prosecutor under the former president, Leonid Kuchma, in 2002-2003. Piskun has been attacked from many sides recently, and his sensational interview to Fakty may be a sign that he is succumbing to the enormous pressure.

In June "Ukraina kriminalnaya," a muckraking website, launched an offensive against Piskun, running a series of articles accusing him of crimes ranging from running business activities, which is forbidden to state officials, to involvement in drug trafficking. The website also ran what it claimed to be the audio files and transcripts of secretly recorded conversations of Piskun with U.S. Ambassador to Ukraine John Herbst and "oligarch" Viktor Pinchuk.

In one of the recordings, a voice resembling Piskun's thanks somebody sounding like Herbst for moral support in 2003, when Kuchma fired Piskun, and promises to fire a local prosecutor for persecuting a certain religious activist. If the other recording is to be trusted, last year Piskun asked Pinchuk for help in reinstating him as chief prosecutor, and promised Pinchuk not to work against him in return when Yushchenko becomes president.

On June 8, commenting on the scandalous publication, Piskun said that he had been warned that the recordings would be made public if he refused to pay money for them ($100,000, Piskun would tell Fakty on June 17). Piskun said that he had informed Yushchenko about the blackmail. He called the recording involving Pinchuk "nonsense" and denied that the voice on the tape belonged to him. But he did not deny the conversation with Herbst, and on June 8 the Prosecutor-General's Office (PGO) opened a criminal case "into the fact of illegal wiretapping of a telephone conversation" between Piskun and Herbst.

Finally, in the June 17 interview with Fakty, Piskun admitted that the conversation with Herbst did take place. According to Piskun, the "faked" conversation with Pinchuk was published together with the "real" conversation with Herbst in order to make the former one sound trustworthy.

Either the president or parliament, according to the constitution, can fire the prosecutor-general. The Regions of Ukraine and United Social Democratic Party opposition factions in parliament, whose several representatives have been arrested on orders from Piskun (including Donetsk council head Borys Kolesnykov and former Trans-Carpathian governor Ivan Rizak, see EDM, April 11, May 18), have several times failed to put to vote in parliament a no-confidence motion against Piskun.

They may be more successful next time, as the scandalous recordings are sure to make Piskun less popular. His conversation with Herbst was hardly a crime, but it will not go down well with the traditionally anti-American Communists, who control the second-largest faction in parliament. And if the scandalous conversation with Kuchma's son-in-law Pinchuk really took place, the radical elements in the Yushchenko camp, such as the nationalists from the Ukrainian People's Party and the populists from the Yulia Tymoshenko Bloc, will never forgive Piskun.

The most recent blow to Piskun has come from the Security Service (SBU). In an interview that the Zerkalo nedeli weekly, published on June 18, SBU head Oleksandr Turchynov accused the PGO of obstructing plans to arrest SBU former deputy chief Volodymyr Satsiuk, who is suspected of involvement in Yushchenko's poisoning. According to Turchynov, the PGO did not allow the SBU to arrest Satsiuk several months ago, but by the time the prosecutors eventually gave the go-ahead to detaining Satsiuk, the SBU had lost his whereabouts. It is widely known that Yushchenko was admitted to an Austrian clinic with serious poisoning last September shortly after a dinner with SBU officials at Satsiuk's dacha.

Piskun is in trouble also because he has failed to justify the high hopes Yushchenko pinned on him. In early March Piskun announced that Gongadze's murder was solved, but nobody has yet been sentenced, and it has not been found who ordered the policemen arrested in the case to kill Gongadze. No former top official has so far been punished for corruption, which thrived under Kuchma, neither has anybody been brought to book for the mass fraud during the first and second rounds of last year's presidential polls.

Source: Eurasia Daily

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UMC to Improve the Quality of Its Network With Motorola's Services

KIEV, Ukraine -- Motorola Inc. and UMC, a 100 percent affiliated company of OSJC "Mobile Telesystems", today announced a three-year contract for the managed optimization of the operator's wireless network in eight major cities of Ukraine.



The optimization services managed by Motorola will help UMC improve its network, currently serving more than nine million subscribers nationwide and growing at a rate of several million subscribers a year. The operator also services the majority of Ukraine's corporate subscribers, for whom quality is paramount.

The vigorous growth of UMC subscriber base spurred a need for implementing the latest in optimization technology in order to maintain and improve a high quality of service. UMC selected Motorola's multi-vendor optimization service on the basis of a successful pilot project completed earlier this year in Kharkiv.

The subscribers' experience is expected to be enhanced as Motorola applies its technology to help improve the existing UMC network. According to the terms of the contract, UMC network will undergo continuous monitoring and enhancement for the next three years, in addition to an ongoing expansion of coverage.

"UMC has the largest mobile network in Ukraine, with over nine million people talking an average of 130 minutes per month. There is no other network like that in Ukraine. Our tremendous growth over the past years has taken a big strain on the organization, prompting us to look at new cost-effective ways to improve the quality of our service. This is why we decided to work with Motorola, which has a huge worldwide experience with the most modern and sophisticated tools available in the present market," said UMC CEO Eric Franke. "The managed network optimization project carried out by Motorola is an important step toward providing our customers throughout Ukraine with a world-class communication experience."

The technology behind the quality improvement is Motorola's multi-vendor GSM Radio Access Network (RAN) Optimization Service successfully trialled earlier in the Kharkiv region. The pilot project resulted in a remarkable improvement in network quality: the number of dropped calls decreased by 26 percent and the mean time between dropped calls increased. In addition, the volume of traffic across the network grew considerably, contributing to increased call revenue(1).

The three-year managed optimization service by Motorola will cover eight cities with highest concentration of mobile users throughout Ukraine - Kyiv, Donetsk, Lviv, Dnipropetrovsk, Odesa, Kharkiv, Simferopol and Lugansk.

"Motorola's managed RAN optimization service, based on actual user data, provides an innovative and proven alternative to traditional optimization methods and particularly helps to improve performance in a multi-vendor environment," said Margaret Rice-Jones, corporate vice president Motorola Inc., and regional manager of Motorola Networks EMEA. "Motorola is delighted to be working with UMC for the next three years bringing our experience and knowledge of optimizing multi-vendor networks to Ukraine's leading mobile operator. Together we will offer a greater quality of service to UMC's customers and subscribers."

Source: Yahoo News

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Mexican President Visits Ukraine to Boost Business Ties

KIEV, Ukraine -- Mexican President Vicente Fox arrived in Kiev Sunday for a two-day visit with focus on boosting business ties between the two countries.


Mexican President Vicente Fox (L) tastes traditional welcoming bread and salt presented by Ukrainian girls in national costumes upon his arrival at Kiev airport

Fox, accompanied by a group of Mexican business leaders, is expected to meet with Ukrainian President Viktor Yushchenko, Prime Minister Yulia Tymoshenko and parliament speaker Volodymyr Lytyvn.

After the visit to Ukraine, the Mexican president will travel to Russia for a two-day visit, the first by a Mexican president since the collapse of the Soviet Union in 1991.

In Moscow, Fox is scheduled to hold talks with Russian President Vladimir Putin and other officials as well as business leaders.

Source: Xinhua News

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Ukraine Plans to Build More Pipelines to Break Russia’s Grip on Fuel

KIEV, Ukraine -- Ukraine, a former Soviet state that depends on Russia for 80% of its energy needs, plans to build new oil and gas pipelines to secure supplies from the Caspian Sea and Iran and counter Russia’s fuel grip.

Naftogaz Ukrainy, Ukraine’s state-owned natural-gas company, is seeking Gaz de France SA’s help in planning a pipeline from Iran. Ukraine also wants to extend its oil pipe to stretch from the Black Sea to the Baltic to secure supplies for itself and ship Kazakh or Azeri crude to states like Poland and beyond. Chevron Corp has said it’s interested in the oil link.

“We should be developing new gas pipelines, new projects like Russia’s’’ pipeline to Turkey under the Black Sea, Ukrainian Prime Minister Yulia Timoshenko said on Friday in the capital, Kiev. “We should be able to ship gas from Turkmenistan and Iran to Europe and this would be a diversification of energy supplies to Europe itself.’’

Ukraine serves as a gateway for most of Gazprom’s supplies to Europe, the biggest consumer of Russian gas. Gazprom last week accused Ukraine of hoarding some gas and on June 9 gave the nation two weeks to agree on price increases for next year.

The pipeline from Iran would cross Armenia and Georgia and pass under the Black Sea to Ukraine and may be extended to Europe, Dmitry Marunich, a spokesman for Naftogaz, said this week. The project may need an $18bn investment, he said, citing industry analysts’ estimates.

“We depend on Russia for 80% of our oil and gas needs and for 100% of our nuclear fuel needs,’’ Timoshenko said. “This is why the government plans to reconstruct the country’s thermal power plants so that the plants would use coal, rather than gas and fuel oil, to produce electricity.’’

Ukraine is examining plans to extend its $500mn pipeline, which runs from the port the Black Sea of Odessa to the Ukrainian town of Brody, further north to the Baltic Sea. The Odessa-Brody link was built by Ukraine in 2001 to compete for the business of hauling Caspian oil.

The Ukrainian government had planned to ship crude through the link to Brody, where it joins the Druzhba pipeline from Russia to Germany. The pipeline had been idle until BP Plc’s Russian venture, TNK-BP, started using it last year to transport Russian oil in the opposite direction, to the Black Sea. Chevron, the second-largest US oil company, may use the Odessa-Brody pipeline to Europe to bypass the Turkish straits, which sometimes delay tanker traffic because of storms and accidents.

Source: Maidan

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Russia Starts Blackmailing Ukraine

KIEV, Ukraine -- Ukraine’s entry into the European Union or the WTO under existing conditions will result automatically in its refusal to join the SES.

This was announced by the deputy of the State Duma of Russia, the Chairman of Committee on Foreign Economic Relations for the Russia’s Chamber of Commerce, Sergey Glasyev at a press conference.


Sergey Glasyev

“When your Economy Minister declares, that it is possible to enter the WTO while saving the agreements on free trade with Russia, this is either the deceit of public opinion or self-delusion. Double standards are inadmissible in foreign affairs”, he marked.

"When Ukraine joins the EU, it will buy gas at the same prices, as Germany, for example. It will also result in introduction of visa regime between Ukraine and Russia", stressed Glazyev.

"By my information, a few months ago the Ukrainian colleagues, when negotiating with the WTO, drastically yielded their positions, foremost Ukrainian delegation agreed to cut import tariffs for several thousands of trade positions", he noted.

According to Glazyev, it affects the protection for the Ukrainian markets of agricultural, chemical metallurgical and forestry products.

"Ukraine jumped to open its market in 18 major economic fields to follow out the negotiations on joining the WTO. By our information, Ukraine also agreed to sign practically all optional WTO agreements, including on aeronautical engineering trade", he proclaimed.

According to Glazyev, while Russia has succeeded to limit opening of service market, Ukraine practically completely opens this market for foreign companies.

Glazyev commented that "members of the Russia’s Chamber of Commerce were shocked at that fact". "They consider terms of Ukraine’s entry into the WTO unacceptable, and if it occurs, they plan to waive agreements on free trade", marked Glazyev.

Source: Ukrayinska Pravda

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'Orange Opposition' Demonstration in Baku

BAKU, Azerbaijan -- Three prominent opposition parties of Azerbaijan, the Musavat, the People's Front of Azerbaijan (PFPA) and the Democratic Party of Azerbaijan, which from the Azatlik (Freedom) Group held a demonstration in the capital Baku Saturday. Thousands chanted slogans like "Freedom", "Democratic Elections" and "Resign".

Referring to the orange revolution in Ukraine, wearing cloths and holding orange flags, demonstrators often caused tension between the police and themselves. Some young demonstrators, however, handed out carnations to the police officers.

Many of the banners written in English demanded primarily support of the US and its president George W. Bush and the Western world in democratization process in the region. Ali Karimli, leader of the PFPA described President Ilham Aliyev's administration anti-democratic and claimed it was approached its end.

Indicating that if the current government does not resign, they would carry out a democratic revolution, Karimli said: " If attempts are made to falsify the parliamentary elections, using our constitutional rights, we will call on the people to rise in peaceful struggle against the current regime."

Musavat Party's Deputy President Arif Hacili, on the other side, called on the people to vote for democracy in the parliamentary elections.

Source: Zaman Daily

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Sunday, June 19, 2005

Ukraine Deserves EU Membership

KIEV, Ukraine -- Longtime members of the European Union now seem to doubt the EU's future, but we in Ukraine look at the EU with hope and admiration. To join in the EU's progress is the basic object of our foreign policy for Ukraine has discovered that nationhood is not an end but a beginning.


Kiev's Maidan - The Center Of This European City

Indeed, European unity is indivisible: when one nation is ostracized, all are not free. We Europeans are caught in an inescapable net, tied in a single garment of destiny. Every aspect of our shared culture, if not the last century of shared suffering, confirms that for us. Whatever affects one European directly, affects all indirectly.

Never again can we afford to live with the narrow notion of two Europes, of haves and have-nots, of insiders and outsiders. Anyone who lives within the European continent cannot - indeed, must not - be considered a stranger to its Union. Today's great Pax Europa and today's pan-European prosperity depend on this.

Of course, some people mutter that Ukraine is not Europe. Let them come to Kyiv and speak to the people, young and old, factory worker, farmer's wife, the lawyers and doctors and teachers who stood and stayed in the cold and snow for weeks on end last winter to defend their freedoms.

Are they not united with those who stood alongside General de Gaulle in the French Resistance? Are they not one with those who died fighting for the Spanish Republic in the 1930s, who liberated Budapest in 1956 and ended fascism in Spain and Portugal in the 1970's? Are they not animated by the same spirit as Poland's Solidarity and the peaceful masses that created Prague's Velvet Revolution in 1989? That is the true European spirit, and no doubts can crush it.

To those who say that Ukraine is too backward for EU membership, I say, let them, too, come to my country and see the mothers who stay late at night at work teaching their children to use their workplace computer. Let them come to the language classes in every village and city where young people are readying themselves for Europe by learning French and German and English. Those who doubt Ukraine's European vocation should understand that Europe is not a matter of hardware and superhighways; it is the unquenchable desire for freedom, prosperity, and solidarity.

I believe that our future is as promising as Europe's past is proud, and that our destiny lies not as a forgotten borderland on a troubled region, but as a maker and shaper of Europe's peace and Europe's unity. Self-determination no longer means isolation, because achieving national independence nowadays means only to return to the world scene with a new status.

New nations can build with their former occupiers the same kind of fruitful relationship that France established with Germany - a relationship founded on equality and mutual interests. That is the type of relationship that my government seeks with Russia, and achieving it is how we can help extend the zone of Europe's peace.

Of course, it is premature to do more than indicate the high regard with which we view the prospect of EU membership. We know that our part in that great edifice will not be built overnight. We know that the great works of European unification lay not in documents and declarations, but in innovative action designed to better the lives and insure the security of all Europeans.

Building a Ukraine worthy of EU membership will not be easy, cheap, or fast. But, like the EU itself, it will be built and it will be done. We know the challenge is great, but the prize is worth the struggle, and Europe should know that this is our goal.

Part of the work of renewing Ukraine is a creative battle to put an end to a nightmarish century during which fascism and communism - ideologies born in the heart of Europe - battled for mastery. Only a few months ago, in cities throughout Ukraine, our children and our parents confronted armed troops, snarling dogs, and even death. Only a few years ago, a young journalist, Georgi Gongadze, seeking to inform the public about our old regime's corruption, was brutalized and beheaded by that regime's thugs.

But our Orange Revolution last winter shows that Ukraine's people prevailed. Despite today's doubts and difficulties, I retain an abiding faith in Europe. I refuse to accept despair as the final response to the ambiguities and horrors of Ukraine's history. I refuse to accept the view that Ukraine is so tragically bound to the starless midnight of communism's legacy that we can never see the bright daybreak of peace and true European unity.

When the EU's citizens ponder Ukraine's place in Europe, they should look both beyond and more closely at the face they see. They should look beyond the ravaged wastelands that communism inflicted, beyond the poverty, and beyond the social divisions through which our discarded ex-leaders sought to prolong their misrule.

Instead, they should look closely at the face of our president, Viktor Yushchenko, ravaged by poison during last year's election campaign, and recall the words of the great Frenchman Andre Malraux, for whom "the most beautiful faces are those that have been wounded."

Source: The Korean Herald

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For Sale On-Line: Ukrainian Tanks, Surplus Weapons

MOSCOW, Russia -- An Internet auction of military hardware will test Ukraine's new openness, experts say, as the former Soviet republic prepares to sell off enough equipment to outfit an army of three million soldiers.

Ukraine's Defence Ministry plans to launch a website next week, where prospective buyers can browse through hundreds of military products, from tanks and armoured personnel carriers to more prosaic items such as trucks, tents, tarpaulins, medical equipment and field kitchens.


Ukrainian T-84 Tank

"Any weapons could be for sale without any restrictions," said Andrei Sparuk, an aide to deputy defence minister Vyacheslav Kredisov.

Mr. Sparuk also said the on-line sales will help Ukraine establish what has been missing for years in its large military industry: openness and accountability.

"We want to use Internet to reach transparency of the deals," he said.

Ukraine was notorious for violating arms-control agreements under the regime of former president Leonid Kuchma. The disintegration of the Soviet Union left the young country with one of the largest armies in Europe, the world's third-largest nuclear arsenal and many conventional-weapons factories that manufactured battle tanks, combat vehicles, attack helicopters, warships and missiles.

Although Ukraine signed on to the Wassenaar Arrangement, which controls the export of conventional weapons, many sales were kept quiet. Only recently did Ukrainian prosecutors acknowledge that 12 cruise missiles capable of carrying nuclear warheads were sold to Iran and China over the past five years.

"Public oversight of this sensitive sphere is actually absent," said Leonid Poliakov, then-director of military programs for the Ukrainian Centre for Economic and Political Studies, in a 2003 study. "In such a situation one cannot rule out violations and abuses involving grave consequences for the country."

Critics such as Mr. Poliakov have found themselves working for the new government, after Ukraine's so-called Orange Revolution brought President Viktor Yushchenko to office last winter. Mr. Poliakov now serves as first deputy defence minister.

Next week's massive garage sale of military equipment will serve as a major test of whether Ukraine has actually changed, analysts say.

Oleksandr Sushko, director of the Centre for Peace, Conversion and Foreign Policy, a think-tank in Kiev, said he believes that using the Internet is a positive step.

"It's a very progressive approach," Mr. Sushko said. "Arms export used to be the most secret industry in Ukraine. The military thoroughly concealed all the statistics. This Internet project would make arms sale more transparent and consequently would allow [officials] to control it and to fight corruption. The risk of arms getting into the wrong hands will be reduced."

But the new website is only expected to list the items for sale, and their starting bid prices, while the auction process happens off-line. The information really needed for accountability is details about the buyers, said Wade Boese, research director for the Arms Control Association in Washington.

"This looks like a halfway measure, because we won't necessarily know who's behind the deals," Mr. Boese said.

Under the Wassenaar Arrangement, participants such as Ukraine are required to report their arms exports to non-Wassenaar countries. Participants also agree to restrict their exports to "states of concern" and to avoid "destabilizing" deliveries.

United Nations arms embargoes also outlaw arms shipments to some countries.

Whether or not Ukraine follows those rules under its new leadership will be telling, Mr. Boese said. "This will be a good measure of whether Ukraine has left its past behind."

Source: Globe and Mail

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Saturday, June 18, 2005

Ukraine Hopes to Secure WTO Membership in October

KIEV, Ukraine -- President Viktor Yushchenko said on Friday Ukraine hoped to secure membership of the World Trade Organisation by October and intended to complete all legal requirements to meet that deadline, Reuters reported.

“Our aim is to secure membership at the October session of the WTO. To do that, 21 more laws must be adopted. All the rest is done,” Yushchenko told the closing session of a meeting of the World Economic Forum.



“All 21 laws are on the agenda of (parliament’s) chairman. I am not saying the procedure is easy. But the formal part is completed. Only the political part remains and we see this as a homework assignment to be completed.”

Ex-Soviet Ukraine sees acquiring international status as a market economy and WTO membership as the first stages in a long process of moving closer to Europe and eventually joining the European Union.

A senior WTO official this month said neither Ukraine nor neighboring Russia stood much chance of winning membership this year. But he said final documents for both could be prepared for the WTO’s bi-annual ministerial conference in December in Hong Kong, Reuters adds.

WTO working groups on the accessions are to report on the status of both applications in September.

Source: MosNews

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Ukraine Pushes Mass Sell-Off Plan

KIEV, Ukraine -- Ukraine's new government has signalled its willingness to press ahead with the mass sell-off of state-owned companies.

Deputy Prime Minister Oleg Rybachuk said the government planned to offer for privatisation "everything but a few strategic businesses".

He told investors in Kiev that the new sell-offs would meet international standards for transparency.

Uncertainty still surrounds several privatisations undertaken by the previous government of Leonid Kuchma.

'Clear ruling'

Chief among those was the controversial sale last year of the Krivorizhstal steel mill for $800m (£440m) to a group whose members included the son-in-law of former President Kuchma.

Ukraine's new administration plans a rerun of the sell-off, after declaring the previous deal illegal.

But Prime minister Yulia Tymoshenko has now ruled out any out-of-court settlement in the disputed case.

"There is already a court ruling. This is a clear ruling that the privatisation was illegal," Ms Tymoshenko said on Thursday.

"There can be no out-of-court settlement. I know of no other way than conducting a new, open privatisation auction."

The government of President Viktor Yushchenko, who came to power after winning a rerun of the disputed 2004 election, has said it plans to review several deals in which state assets were allegedly sold at below-market prices.

However, officials have yet to release a final list of companies.

Source: BBC

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Business Leaders Deliver Plan for Decisive Action to President Yushchenko

KIEV, Ukraine -- A ten-point action plan for rapid economic progress has been presented to President Victor Yushchenko of Ukraine on the final day of the World Economic Forum's Ukraine Roundtable. Some 250 participants in the Roundtable proposed a framework for the urgent measures to improve investor confidence.

"The participants are impressed with the remarkable reforms the new government has already undertaken and their expectations are now high," said Professor Klaus Schwab, Founder and Executive Chairman of the World Economic Forum. "The Ukrainian government must seize this window of opportunity to deliver reforms in a fast, decisive and comprehensive manner."

"Based on infrastructure, location and people, Ukraine has the potential to become the key production site of Eastern Europe but the challenges are tremendous," he said. "If the Ukraine were to achieve a growth rate of 6-7% - which would require massive foreign investment - Ukraine would need 15 years to catch up with income levels of Hungary ," Professor Schwab noted.

The ten-point action plan contains broad policy issues which participants said must be driven forward by a coherent government programme. The areas participants highlighted included improved corporate governance, extensive reform of the public administration, concerns over state intervention in business - particularly regarding the issue of privatizations, clearer government policies and a strengthening of Ukraine 's international role.

The plan outlined specific steps some of which must be implemented before 1 July 2005, the planned start of the Ukrainian Parliament's two-month summer vacation, in order to push for the earliest possible WTO accession, increase foreign direct investment and improve the general business environment in Ukraine.

The ten points can be summarized as follows:

1. Enact all legal changes needed for WTO entry before the parliament's summer break.

2. Create a unit of specialists to support foreign investors.

3. Implement the foreseen one-stop procedure for starting new businesses.

4. Eliminate excessive and overlapping regulation.

5. Repeal the Economic Code and enact the Commercial Law Reform.

6. Enact the Financial Securities Law which is essential for shareholder protection.

7. Implement international accounting standards (IFRS).

8. Pass necessary tax reforms to increase Ukraine 's competitiveness and generate, in the long run, higher tax revenues.

9. Make efforts to enhance management and business skills and to encourage the transfer of knowledge and technologies from abroad.

10. Fight corruption.

Participants in the World Economic Forum's Ukraine Roundtable had other pieces of advice for Ukraine 's new government: " Stop trying to reinvent the wheel. Stop any arguments that Ukraine is different than other countries and that you need to find a specific 'Ukrainian Solution' to everything. Ukraine and its citizen are just as normal as everyone in the Euro-Atlantic world. Copy the successful reforms of the Baltics, Eastern Europe and Georgia, and use now the experience and know-how of those who have already defined solutions and already made proposals for drafting legislative reform needed for economic growth and job creation," the communiqué said.

"Also, do not accept as an excuse for avoiding tough reform measures the fact that Ukraine 's economy is already growing substantially. One essential factor for this growth has been the favourable external situation, notably the rise in commodity prices. It is only comprehensive reforms which will create sustained high growth rates."

In an earlier address to the participants, Prime Minister Yuliya Tymoshenko, sought to woo investors by detailing a raft of political and economic reforms the government is implementing. The prime minister promised to respect private property and the rule of law.

"Ukraine is ready to open the door wide to you, and I appeal to all business in Ukraine that we operate in a fair way with no conditionalities," she said.

Prime Minister Tymoshenko addressed the controversial issue of privatizations saying that they would be conducted "according to the constitution and laws". Regarding the re-privatization of Ukraine 's largest steel mill, Kryvorizhstal, Tymoshenko said it had been "returned to state hands and will be privatized again in a model way."

Energy independence from Russia is a strategic goal of the new government, Tymochenko said, and invited business leaders at the Roundtable to invest in oil, natural gas and nuclear power projects.

Source: World Economic Forum

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Friday, June 17, 2005

Ukraine PM Appeals to Foreign Investors

KIEV, Ukraine -- Prime Minister Yulia Tymoshenko told foreign investors Friday that the new government of this former Soviet republic was ready to pursue necessary reforms and would make only one demand in return: Pay taxes.

Tymoshenko told dozens of business leaders during the final day of the World Economic Forum on Ukraine that the government had balanced the budget, reduced inflation, is canceling bureaucratic hurdles and had created equal tax conditions for all businesses.


Prime Minister Yulia Tymoshenko

"We are ready to open doors for you, to open windows for you, to lay down the carpet so that you come to Ukraine," she said. "We have only one demand for you: Pay our taxes honestly."

The two-day gathering is aimed at attracting foreign investment and bolstering the pro-Western government that came to power after last year's Orange Revolution mass protests.

The peaceful protests captivated the world, but little new foreign investment has come in and the country's economy _ once one of Europe's fastest growing _ is slowing.

Ukraine received $1.7 billion in direct foreign investment last year, a figure economists consider tiny compared to its $65 billion gross domestic product. There are no figures for foreign investment this year, but Tymoshenko acknowledged that investment is down.

"We had a very hard political crisis, very tough presidential elections ... now the situation is coming back to normal," she said.

"Investors are just collecting money, it takes some time but after a short period they will be here with their money," she said.

Tymoshenko proposed investors focus their attention on Ukraine's insurance, space, banking and aircraft-building sectors. Russians have been Ukraine's prime investors.

She also said Ukraine is ready to offer a new list of businesses for privatization, adding that the government believes "only the private sector can be trustworthy and effective owners."

Government officials have been making the rounds of the forum's sessions, promoting the country and trying to explain some of the missteps that have left investors wary.

Addressing what has become one of the new government's most contentious moves, Tymoshenko assured investors that the probes into some of the last decade's murky privatization deals were not the start of a campaign to re-nationalize the properties.

"I ask you not to have any fear about this," Tymoshenko said. "We don't have such a philosophy. We don't have such an ideology. We don't have money in the budget for this."

She noted, however, that many Ukrainians support rescinding some of the past deals that were completed "with very crude violations of the law and very dishonestly."

But she said courts must decide and the government would support allowing the current owners to pay additional money to hold onto the businesses.

At the forum's opening session, President Viktor Yushchenko appealed to investors to come to Ukraine, citing its proximity to the European Union, a highly educated and professional work force and experience in high-technology fields.

"The speeches are great but big businessmen want to see things happen on the ground level," said James Gallagher, senior vice president for Nestle SA's central and eastern Europe division.

On Friday conference participants were also discussing relations with the European Union, which Ukraine wants to join, and with Russia, its giant neighbor, major trading partner and main energy supplier.

Tymoshenko said Ukraine values its relations with Russia, but emphasized the need for the country to achieve energy independence.

Joaquin Almunia, European commissioner on economic and monetary affairs, said a decision to grant Ukraine the status as a country with a market economy could come in the next few weeks.

On Thursday, a senior Ukrainian official said the government's attempt to cap gasoline prices earlier this year had delayed such a designation. The price limits had been endorsed by Tymoshenko.

Yushchenko later ordered his government to let the market decide prices.

Source: AP

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Ukraine: Government Attempts To Get Grip On Corruption

Prague, Czech Republic -- During the last two months of 2004, as the Orange Revolution was changing the face of the Ukrainian body politic, approximately $1 billion left Ukraine. Some of this money was reportedly private and some belonged to the Ukrainian treasury. The people responsible for transferring this money out of the country have been identified, according to a spokesman for the Ukrainian Interior Ministry (MVD), and investigations into the matter are under way, Interfax reported on 1 June.


Interior Minister Yuriy Lutsenko

This announcement was the latest in a series of statements made by Ukrainian law enforcement agencies on the promised postelection cleanup of corruption and crime in Ukraine. According to Interior Minister Yuriy Lutsenko, some 18,000 criminal cases have been initiated by the MVD since the new government took power at the end of January.

Governors Arrested

The most widely publicized cases so far have been the arrests of two regional governors, Borys Kolesnykov from Donetsk Oblast and Ivan Rizak from Transcarpathian Oblast. Both men are in prison while investigations of their cases continue. Kolesnykov was arrested on charges of extortion while Rizak was charged with "inducing suicide." The Prosecutor-General's Office claims that he did so by harassing an individual to the point that the person committed suicide. Both men were known as supporters of former President Leonid Kuchma and their arrest has led the opposition to declare that they are being "politically persecuted."

In mid-June, Rizak's two assistants were also charged with crimes and put on a wanted list.

Another Kuchma-appointed regional governor, Volodymyr Shcherban from Sumy, has been indicted on a number of charges, including extortion, and is being sought by the police. He is alleged to have fled to Russia. Shcherban, originally from Donetsk, was the leader of the Liberal Party of Ukraine prior to being indicted.

Former SBU Deputy Sought

On 7 June, Interfax-Ukraine reported that the former deputy head of the Ukrainian Security Service (SBU), Volodymyr Satsyuk, was being sought in connection with "grave crimes." According to Prosecutor-General Svyatoslav Piskun, Satsyuk reportedly left Ukraine and an Interpol red alert will be posted for him.

Satsyuk has often been mentioned in connection with the poisoning of President Viktor Yushchenko in 2004. The dinner party during which many suspect that dioxin was administered to Yushchenko took place in Satsyuk's summer home.

However, after the 7 June announcement, Interfax quoted a "source close to the investigation of the poisoning" as saying that Satsyuk was being sought for misuse of SBU funds and not in connection with the Yushchenko poisoning.

Former Official Sought In Gas Case

One highly visible case is that of Ihor Bakay, the former head of the presidential property-management department in Kuchma's administration. Prior to holding that position, Bakay was the head of Naftohaz Ukrayiny, the state oil and gas monopoly, from which he was forced to resign in 2001 after being exposed for having conducted a series of suspicious transactions. After leaving Naftohaz, Bakay was elected to parliament, though according to numerous parliamentarians, he only appeared once in the session hall -- to be sworn in.

Bakay was indicted in March on charges of defrauding the state of tens of millions of dollars in a series of illegal real-estate transactions and an Interpol warrant for his arrest was issued. At that time, Russia's ambassador to Ukraine, Viktor Chernomyrdin, announced that Bakay had obtained Russian citizenship. Apparently Bakay had fled to Moscow during the 2004 election campaign and obtained citizenship, but it remains unclear if he received it in Kyiv from Chernomyrdin or in Moscow. Chernomyrdin has denied issuing Bakay a Russian passport.

The Ukrainian authorities have asked the Russian Foreign Ministry for Bakay's extradition to stand trial in Ukraine, but there has been no response to the request so far.

In May, Ukrainian Transport Minister Yevhen Chervonenko met with Bakay in Moscow. Chervonenko told the "Ukrayinska pravda" website that Bakay travels around Moscow freely, accompanied by armed bodyguards.

A number of other wanted Ukrainian suspects are believed to be hiding in Moscow, including former Odesa Mayor Ruslan Bodelan, former Interior Minister Mykola Bilokin, and former MVD General Oleksiy Pukach.

Pukach is wanted on suspicion of involvement in the murder of Heorhiy Gongadze, an Internet journalist killed in September 2000. Two other MVD officers have already confessed to taking part in the killing and are presently in jail in Kyiv.

Suspicion Falls On Former Administration

Former Prime Minister and presidential candidate Viktor Yanukovych was asked on 1 June to appear for questioning by the Prosecutor-General's Office in conjunction with a case involving the improper use of state funds when he was prime minister. Yanukovych did not appear on the date he was requested to and was said by his office to be in Moscow. He did, however appear the following day.

The consequences of a possible indictment of Yanukovych, the leader of the Party of the Regions, could be disruptive for the government and might polarize Ukrainian society once again, since Yanukovych did obtain almost half the votes cast in the final round of the elections.

On 3 June, SBU head Oleksandr Turchinov was quoted by Interfax as saying that in 2004 alone, over 3 billion hryvnyas ($594 million) was stolen from the budget in different value-added-tax (VAT) repatriation schemes. The individuals and companies responsible for the different VAT rackets are being investigated, Interfax reported on 3 June. One such company allegedly involved in VAT schemes is the charitable foundation for children run by former President Kuchma's wife, Lyudmyla.

Another major investigation centers on the activities of the state-owned railways operated by the Transport Ministry. It's former head, Heorhiy Kirpa, was often mentioned as a potential presidential candidate in 2004. Kirpa committed suicide during the election campaign.

The Transport Ministry was apparently involved in large-scale fraud and on 3 June Interfax reported that 13 managers of the railways company were facing charges.

Gongadze Case Casts Long Shadow

The most prominent case, however, remains that of Kuchma and his alleged involvement in the kidnapping and murder of Heorhiy Gongadze. Kuchma has been called in for questioning twice since leaving office. According to SBU head Turchinov, Mykola Melnychenko, Kuchma's former bodyguard who made secret audio recordings in the president's office, has agreed to be interviewed by the U.S. FBI. The FBI has also agreed to authenticate Melnychenko's recordings, specifically those passages where Kuchma is alleged to be telling his subordinates to "take Gongadze, turn him over to the Chechens," which could constitute an order to kidnap the journalist.

If the FBI authentications show the recordings to be genuine, Kuchma is liable to be arrested on kidnapping charges. It would be an event which many Ukrainians have waited five years for.

Source: Radio Free Europe

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Ukraine: Gongadze Killers Confess, But Who Ordered Murder?

PRAGUE, Czech Republic -- Ukraine's Prosecutor-General Svyatoslav Piskun says two detained police colonels have pleaded guilty to murdering investigative journalist Heorhiy Gongadze five years ago. Piskun told national television on 13 June that the confessions prove the investigation is moving in the right direction. But Piskun also said he is certain the officers were not acting on their own. Who bears ultimate responsibility for ordering the murder remains unclear. Will the case ever be resolved?

When President Viktor Yushchenko came into office this year, he promised a fresh start for Ukraine.

Resolving the case of murdered journalist Heorhiy Gongadze was seen as a litmus test for the new administration. That's because Gongadze's killing -- for many Ukrainians -- had come to symbolize the rot within the administration of former President Leonid Kuchma.

Gongadze, founder of the "Ukrainskaya Pravda" website, was well known for his articles about alleged high-level corruption. He was abducted in Kyiv, in September 2000. His decapitated body was later found in a forest outside the capital.

Weeks later, recordings said to be made by one of Kuchma's bodyguards were released in public and played in parliament. The so-called "Melnychenko tapes" shocked many who heard them.

On the recordings, a voice resembling Kuchma's tells another man, who sounds like the then-interior minister Yuri Kravchenko, to have Gongadze "removed and thrown to the Chechens."

Kuchma denied the authenticity of the tapes. But the lack of any progress in the investigation only fueled suspicions that Kuchma's conscience was not clear.

Last March, a break in the case seemed at hand with the announcement that Gongadze's killers -- two police colonels -- had been detained.

On 13 June, Ukraine's Prosecutor-General Svyatoslav Piskun said the two men had confessed to the killing. But as Piskun admitted, investigators seem no closer to resolving the central question in the case: Who ordered Gongadze's killing?

The lack of an answer is fueling speculation in Kyiv that the truth may never be uncovered. As RFE/RL analyst Jan Maksymiuk explains, some people are wondering if this may have been the price for Ukraine's peaceful Orange Revolution.

"There are a lot of unconfirmed rumors that Yushchenko made a deal with Kuchma during the 'Orange Revolution' -- that in exchange for a peaceful transition from one regime to another, he would try to shield Kuchma from any possible lawsuits, including the Gongadze case," Maksymiuk said.

These rumors have never been proven. But the fact that Kuchma continues to lead an undisturbed existence in Kyiv and that Yushchenko recently pronounced the Gongadze case "solved" appears to indicate the investigation may end with only the conviction of the killers. That should be seen as a partial victory, says Maksymiuk. But it would stop short of what many had hoped for.

"Several months ago, Yushchenko declared that the case was 'solved.' So, he badly needs a trial and he needs convictions and I'm sure there will be guilty parties and there will be such convictions," Maksymiuk said.

That is likely to happen in July, when Ukraine's prosecutor-general says he wants the confessed killers to appear in court.

As for the broader picture, former Interior Minister Yuri Kravchenko, whose voice was alleged to be on the Melnychenko tapes, could have been a key witness. But he was found dead of gunshot wounds in March at his country house outside Kyiv, just before he was due to speak to investigators. His death was ruled a suicide.

Another key player in the puzzle is Mykola Melnychenko himself, who along with Gongadze's wife, has also found refuge in the United States. Ukrainian investigators say that in order for his tapes to be considered as evidence, Melnychenko must return home to answer investigators' questions.

Sergei Taran, of the Kyiv-based Institute of Mass Information, tells RFE/RL that Melnychenko appears to fear for his safety and has so far not been forthcoming.

"He has announced contradictory intentions. Representatives of various international organizations, including us, have tried to get in touch with him. But he refuses any contact that could allow him to clearly express his position to the international community and citizens of Ukraine. I believe he does not want to tell the whole truth about how exactly the tapes were made and about what structures stand behind him and cooperated with him," Taran said.

Gongadze's widow, who now lives in the United States, has said that until her husband's murder is fully explained, Ukraine has no hope of developing "into a normal country."

Source: Radio Free Europe

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EU and Ukraine Launching Project on the Destruction of Landmines

KIEV, Ukraine -- Following the ratification by the Ukrainian Parliament of the Mine Ban Treaty in May 2005, the European Commission and the Government of Ukraine have just successfully concluded the negotiation of the terms of reference of a €6 million project on the destruction of PFM-1 landmines stockpile in Ukraine. This will allow the project to be launched by the end of this year. Article 4 of the Treaty commits every State Party to destroy all stockpiled landmines within a 4-year period after the Treaty enters into force.


PFM-1 Landmine

Stockpile destruction is a major component of the European Community’s mine strategy and action to improve human security. It is in fact crucial to ensure that landmines stockpiled after clearance or stored in deposits are not replanted or transferred to be used elsewhere. It is also the responsibility of affected countries and the international community to protect populations from the threat of such stockpiles.

Within this objective, the Commission already took in 2004 the financial decision to support the destruction of the PFM-1 antipersonnel landmines stockpile in Ukraine. The PFM-1 is the only known antipersonnel landmine containing toxic liquid explosive. The Commission consistently put pressure on Ukraine to ratify the Mine Ban Treaty before any release of the funds could take place. In this context, the decision made by the Ukrainian Parliament is a milestone of the co-operation between Ukraine and the Commission and for the Commission’s policy in promoting universal adherence to the Treaty.

As a result of the break-up of the USSR, Ukraine inherited more than 10 million stockpiled anti-personnel landmines, of which the PFM-1 represents the large majority. The shelf-life of the PFM-1 landmines have since long expired, which poses particular risks to the safety of the population and environment in Ukraine, as well as risks to neighbouring countries, including EU Member States.

Therefore, the destruction of the PFM-1 is an urgent matter, which requires not only specific technical solutions, but also financial commitments of the magnitude which Ukraine can not face alone. Furthermore, the EC support is of the utmost importance because of the close geographic proximity of Ukraine to the EU Member States and her European integration aspirations.

Source: European Commission

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Five European Presidents Praise Ukraine and Call for a New European Vision

KIEV, Ukraine -- The presidents of five European countries have joined together in support of the newly democratic Ukraine and its reform programme. At the opening plenary of the World Economic Forum’s Ukraine Roundtable in Kiev, they called for a new vision of Europe founded on closer ties.


European Union Comissioner Joaquin Almunia (L), Estonian President Arnold Ruutel (2L), Georgian President Mikhail Saakashvili (3L), Klaus Schwab, Executive Chairman of the World Economic Forum, Ukranian President Victor Yushchenko (4th R), Polish President Aleksander Kwasniewski (3rd R)

“Ukraine is prepared to ensure its place in the modern world,” declared President Victor Yushchenko to more than 250 participants – the vast majority of them business leaders – from 32 countries. He outlined the government’s economic and political reform programme to raise the effectiveness of the state and ensure Ukraine “is the most beneficial place for investment”.

Yushchenko announced new a memorandum on privatizations. “The people of parliament and the cabinet have signed a memorandum on privatization and the authorities recognize private property. There will be no re-privatizations,” he said, promising that it would be left to the legal system to deal “fairly” with any investigations of past privatizations.

Other reforms on the agenda include fighting corruption; eliminating unnecessary regulations; upgrading the securities market and social benefits. “From the youngest to the oldest, our aim in 2005 is that social benefits would be felt by each Ukrainian citizen. Real income in the first quarter has grown by 25 percent,” Yushchenko said in a keynote address.

The Ukrainian president reiterated the country’s strategic goal of European Union membership. He noted that the “European choice of Ukraine cannot be an obstacle to relations with Russia… and the development of ties (with Russia) is in the interest of all Europe,” he said.

President Aleksander Kwasniewski of Poland, Mikheil Saakashvili, President of Georgia, Ilham Aliyev, President of Azerbaijan, Arnold Rüütel, President of Estonia, Vladimir Voronin, President of Moldova all spoke in the plenary in support of Ukraine’s EU membership bid.

“Ukraine needs Europe, but Europe needs Ukraine,” declared Kwasniewski. He called on the EU to “keep the doors open to new countries and believe in the European project and values.”

The EU is developing close ties with European states beyond its borders through its “good neighbourhood” policy, assured Joaquín Almunia, Commissioner, Economic and Monetary Affairs, European Commission. The message he will take back to Brussels, he said, is that “we need to build a common vision of Europe among all Europeans.”

The president of Georgia echoed calls for greater European solidarity. Ukraine and Georgia are two nations that are “proving that democracy in this part of the world works,” Saakashvili said. He drew participants’ attention to Belarus whose population also “deserves to be in a free democratic society.”

“Today we need solidarity for Belarus and hope that soon we can have a new conference of what we can learn the Belarus democratic experience,” he said.

Source: WEF Press Release

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Update: Yushchenko Woos Investors to Ukraine

KIEV, Ukraine -- President Viktor Yushchenko appealed to investors to pour money into this former Soviet republic, pledging that the Orange Revolution's promises of a business-friendly market economy are irreversible.

"I have grounds to tell you that Ukraine is a very profitable field for investment," Yushchenko said Thursday, delivering the keynote speech before six fellow presidents and a hall packed with dozens of top business leaders.


Georgian President Mikhail Saakashvili (C), flanked by Ukrainian leader Viktor Yushchenko (R) and Polish President Aleksander Kwasniewski

The two-day conference organized by the World Economic Forum, at Yushchenko's request, is aimed at showing the world that the nation's new government remains on a market-oriented path - even if the transition has been a bit bumpy.

Yushchenko left the apologizing for some of his government's missteps to lower officials and instead took on the role of salesman, making an aggressive and upbeat pitch. He said investors should be attracted by Ukraine's proximity to the European Union, its highly educated and professional work force, and its experience in high-technology fields.

"I would like for each person and each country to take this forum as proof that Ukraine is extending a hand to you," Yushchenko said.

The peaceful Orange Revolution mass protests last year that helped usher the pro-Western opposition into power captivated the world. Yushchenko has been feted around the globe, but so far, little new foreign investment has poured in and the country's economy is slowing.

In what appeared to be a carefully timed move, Prime Minister Yulia Tymoshenko and Parliament speaker Volodymyr Lytvyn signed a memorandum Thursday in the presence of Yushchenko that commits them to uphold property rights.

Yushchenko told investors the memorandum shows that the government's probes into some of the past decade's murky privatization deals will not lead toward re-nationalization. Yushchenko also emphasized that all "quarrels regarding privatization will be solved only by the court," and he said he supports peaceful settlements with the current owners.

The first months of the new Ukrainian leadership have left some investors disappointed - and confused about the new government's commitment to a market economy.

First Deputy Prime Minister Anatoliy Kinakh admitted before the forum began that some mistakes have been made.

"Revolution is a very complicated thing, but the test of power is even more difficult. Now we are at the first stage of that test," said Kinakh, who also heads a political party for entrepreneurs and industrialists.

"The Orange Revolution is an unique chance for Ukraine and this chance won't be wasted," he said.

Deputy Prime Minister Oleh Rybachuk blamed a government decision setting price limits on gasoline earlier this year for helping delay a decision to bestow market economy status on Ukraine.

"The government is obligated not to meddle in price politics ... (but) you saw that interference," he said - but added that the lesson was learned. Yushchenko later ordered his government to let the market decide prices.

In an acknowledgment of some of the stifling bureaucracy that still slows investment in Ukraine, Yushchenko told the forum that 1,300 regulatory documents would be canceled. Earlier, officials also responded to investor complaints about delays in returning value-added tax on exports by apologizing and saying the government was working hard to rectify it.

Kinakh also admitted it had been a mistake by the government to scrap its previous commitment to free economic zones.

Silviu Popovici, general manager of Coca-Cola Beverages, Ukraine, said the nation has great potential but needs real reforms in its tax, regulatory and legal systems.

Conference participants were tackling those topics as well as Ukraine's metals and mining industry, which is the sixth-largest in the world in production capacity, and agriculture. Ukraine was known as the bread basket of the Soviet Union because of its rich black soil.

On Friday, participants will discuss relations with the European Union, which Ukraine wants to join, and with Russia, its giant neighbor and major trading partner. However, Russian President Vladimir Putin declined an invitation to attend, said Felix Howald, an official with the World Economic Forum.

Polish President Aleksander Kwasniewski said that Ukraine's desire to join Europe should be welcomed. "Ukraine needs Europe, but Europe also needs Ukraine," he said, citing the countries big market, geographic position and cultural and historic ties to Europe.

Yushchenko said Russia's push toward the EU remains on the agenda, but he added "the development of Ukraine and Russia relations is profitable not only for both of our countries but for the whole of Europe."

In addition to the Polish president, the presidents of Moldova, Lithuania, Estonia, Georgia and Azerbaijan also were participating.

Source: AP

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Thursday, June 16, 2005

Pro-West President Yushchenko Woos International Investors Into Ukraine

KIEV, Ukraine -- President Viktor Yushchenko appealed to international investors Thursday to pour their money into Ukraine, saying the Orange Revolution's promises of a business-friendly market economy are irreversible.

"I have grounds to tell you that Ukraine is a very profitable field for investment," Yushchenko said, delivering the keynote speech before six fellow presidents and a hall packed with dozens of top business leaders.


President Viktor Yushchenko addresses a roundtable of the World Economic Forum in Kiev

The two-day conference organized by the World Economic Forum, at the request of Yushchenko, is aimed at showing the world that this former Soviet republic's new government remains on a market-friendly path - even if the transition has been a bit bumpy.

Yushchenko left the task of apologizing for some of his government's missteps to lower officials, and instead took on the role of salesman, making an aggressive and upbeat pitch. He said investors should be attracted by Ukraine's proximity to the European Union, its highly educated and professional work force, and experience in high-technology fields.

"I would like for each person and each country to take this forum as proof that Ukraine is extending a hand to you," Yushchenko said.

The peaceful Orange Revolution mass protests last year that helped usher the pro-western opposition into power captivated the world. Yushchenko has been feted around the globe, but so far, little new foreign investment has poured in and the country's economy is slowing.

In what appeared to be a carefully timed move to reassure investors, Prime Minister Yulia Tymoshenko and parliament speaker Volodymyr Lytvyn signed a memorandum Thursday in the presence of Yushchenko that commits them to uphold property rights.

Yushchenko told investors the memorandum shows government investigations into some of the past decade's murky privatization deals will not lead toward renationalization. Yushchenko also said all "quarrels regarding privatization will be solved only by the court," and he said he supports peaceful settlements with the current owners.

The first months of the new Ukrainian leadership have left some investors disappointed and confused about the new government's commitment to a market economy. First Deputy Prime Minister Anatoliy Kinakh admitted before the forum began that some mistakes have been made.

"Revolution is a very complicated thing, but the test of power is even more difficult. Now we are at the first stage of that test," said Kinakh, who also heads a political party for entrepreneurs and industrialists, and is considered one of the new government's most business-friendly members.

"The Orange Revolution is a unique chance for Ukraine, and this chance won't be wasted," he said.

Deputy Prime Minister Oleh Rybachuk blamed a government decision setting price limits on gasoline earlier this year for helping delay a decision to bestow market economy status on Ukraine.

"The government is obligated not to meddle in price politics . . . (but) you saw that interference," he said, but added that the lesson was learned. Yushchenko later ordered his government to let the market decide prices.

In an acknowledgment of some of the stifling bureaucracy that still slows investment, Yushchenko told the forum 1,300 regulatory documents would be cancelled. Earlier, officials also responded to investor complaints about delays in returning value-added tax on exports by apologizing and saying the government was working hard to rectify this issue.

Kinakh also admitted it had been a mistake by the government to scrap its previous commitment to free economic zones.

Silviu Popovici, general manager of Coca-Cola Beverages, Ukraine, said the nation has great potential but needs real reforms in its tax, regulatory and legal systems.

Conference participants were tackling those topics as well as Ukraine's agriculture, metals and mining industry, which is the sixth-largest in the world in production capacity. Ukraine was previously known as the breadbasket of the Soviet Union because of its rich soil.

Participants Friday will discuss relations with the European Union, which Ukraine wants to join, and with Russia, its giant neighbour and major trading partner.

Russian President Vladimir Putin declined an invitation to attend, said Felix Howald, an official with the World Economic Forum.

The presidents of Poland, Moldova, Latvia, Estonia, Georgia and Azerbaijan were among the participants.

Source: Canadian Press

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Ukraine's Government

KIEV, Ukraine -- Six months after the heady “orange revolution”, what has Ukraine's new government actually achieved? Some things have changed forever. Many Ukrainians say that, since the huge street protests last November and December that culminated in Viktor Yushchenko's victory in the presidential election on December 26th, they are much freer. The new government's critics, unlike the old one's, happily give their names to journalists. There have been more tangible advances: some businesses have been corralled out of the shadow economy, boosting tax and customs receipts, and helping to pay for higher pensions and public-sector wages. But there have also been disappointments—and not all were inevitable.


Yulia Timoshenko (L) and Viktor Yushchenko

Amid all his rhetoric about driving the bandits out of government, Mr Yushchenko made a few specific pledges. One was to review the dodgiest of the privatisations done by his predecessor. The Ukrainian (and a few Russian) owners of the likely targets have, predictably, resisted. But prevarication by Mr Yushchenko and his prime minister, Yulia Timoshenko, is more surprising. The number of firms, the criteria for choosing them and the mechanics of re-privatisation are all unclear. The government hoped to give investors more clarity at a World Economic Forum meeting in Kiev this week, but the impression of incompetence will linger.

Another imperative should have been to allay anxieties about a Yushchenko presidency in southern and eastern Ukraine, which overwhelmingly backed his rival, Viktor Yanukovich. Mr Yanukovich's supporters still cannot muster the verve of Kiev's orange-clad masses in the winter snows. But in Donetsk, at least, resentment of Mr Yushchenko persists.

The east's suspicions were sharpened by the arrest in April of Boris Kolesnikov over the allegedly violent takeover of a Donetsk department store. Mr Kolesnikov is an ally of Mr Yanukovich, and of Rinat Akhmetov, Ukraine's richest man, who jointly controls a big steel mill that is a candidate for re-privatisation. Nobody thinks Mr Kolesnikov is a saint; but his detention is seen as a show of power against the eastern oligarchs. In Russian-speaking Donetsk, Mr Yushchenko's talk of cleaning up government sounds disingenuous. When asked if the new regime is as corrupt as the old, one Donetsk businessman says: “not yet, but it will be soon.”

There have been sins of commission too, especially on economic policy. “They've been screwing up,” comments one western diplomat in Kiev. The most egregious example came when Ms Timoshenko—a formidable revolutionary, but a rash prime minister—imposed price caps on fuel, alleging an anti-Ukrainian conspiracy by Russian energy firms. Predictably, this measure led to fuel shortages. Mr Yushchenko's intervention to remove the caps provoked a contretemps; the president was rumoured to have suggested that the prime minister might consider resigning. Other missteps include a failure to pass the measures needed to get Ukraine into the World Trade Organisation.

To some, Mr Yushchenko's bigger goal—to get Ukraine into the European Union—looks imperilled by the recent French and Dutch referendums. But that gloomy view rests on an overly optimistic premise. However enthusiastic the West is about Mr Yushchenko, EU membership was always a long way off. Relations with Russia, meanwhile, have been civil but fragile. The need to preserve civility may explain why the poisoning that debilitated Mr Yushchenko during the election campaign, and scars him still, has not yet been publicly solved: some sort of Russian connection is widely assumed in Kiev. The solution of another infamous mystery—the murder of Georgi Gongadze, a journalist, in 2000—has been hampered by the inconvenient deaths of key witnesses.

Revolutions may change governments, but they cannot instantly transform a country. And Mr Yushchenko should not be blamed for some of Ukraine's most intractable problems. The biggest, as in most post-Soviet countries, is corruption. Some businessmen say things are improving, albeit confusingly. “Six months ago I knew who, when, how much,” says one Russian visitor to Donetsk. “Now I don't.” Petro Oliynyk, the new governor of the Lvov region, says that 200 of the local tax administration's 3,000 employees have been replaced. But the clean-up has had unintended consequences: post-revolution bribes are said to have gone up, thanks to a risk premium added by unreconstructed mid-level officials. “We could make a book of taxation jokes,” says Yaroslav Rushchyshyn, a pro-Yushchenko Lvov businessman. The beautiful city of Lvov is still crumbling; as Ukraine's growth slows, many young people from the countryside around it prefer to work illegally over the border than earn a pittance at home.

If some of the disappointments of Mr Yushchenko's short tenure can be put down to inflated expectations after last year's drama, others stem from the exigencies of the revolution. Various bits of the alliance that propelled Mr Yushchenko to the presidency had to be paid back with government offices. The result has been contradictions and cleavages, both ideological—eg, between the economic liberals and the socialist who oversees the state property fund—and personal. A sub-plot to the Timoshenko-Yushchenko tension has been Ms Timoshenko's rivalry with Petro Poroshenko, a businessman-politician who wanted to be prime minister but became head of the national security and defence council instead.

Parliamentary elections next March are exacerbating tendencies to populism. Under a reform agreed last December, some powers are due to shift from president to parliament and prime minister, though this change may yet be repudiated. After the elections, will the president and—if she is still in office—Ms Timoshenko learn from their mistakes and vindicate the orange revolution? Both remain popular. And Ukrainians have learnt to be patient. But Mr Yushchenko must be steelier if he is to overcome the corrupt, fractious pathologies of Ukrainian politics.

Source: The Economist

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Business Leaders Gather in Ukraine

KIEV, Ukraine -- Ukraine welcomed presidents from neighboring states and dozens of business leaders Thursday to a forum that the new government hopes will convince investors that last year's Orange Revolution has set the country on a business-friendly path.

The World Economic Forum agreed to hold a special round-table in this former Soviet republic at the suggestion of new President Viktor Yushchenko, who spoke this year at the group's annual meeting in Davos, Switzerland.

Yushchenko's team is hoping to use the two-day conference to sell the country to the international community and to hear firsthand what changes investors are looking for.

The peaceful Orange Revolution mass protests last year that helped usher the pro-Western opposition into power captivated the world. Yushchenko has been feted around the globe, but so far, little new foreign investment has poured in.

Investors attending a pre-conference breakfast meeting complained about recent government moves to set price controls, delays in returning value-added tax on exports and the decision to scrap its previous commitment to free economic zones. The breakfast was hosted by beleaguered tycoon Viktor Pinchuk.

"Revolution is a very complicated thing, but the test of power is even more difficult. Now we are at the first stage of that test," said Anatoliy Kinakh, a deputy prime minister who also heads a political party for entrepreneurs and industrialists.

"The Orange Revolution is an unique chance for Ukraine and this chance won't be wasted," said Kinakh, who said the government's goal was to give job-creators and tax payers "the highest status in our society."

Robert Bensh, head of Cardinal, an oil and gas producer, said he wanted to hear from the government that the Orange Revolution's promises to safeguard a liberal, market economy "are moving forward, albeit moving slowly."

Participants include the presidents of Poland and of former Soviet republics Moldova, Estonia, Latvia, Georgia and Azerbaijan. Some 145 business leaders, including officials from Microsoft Corp., the Royal Dutch/Shell Group of Cos., Mittal Steel Co. and Severstal, were also expected.

"There is a real sense that Ukraine is on the move, and these are the people who want to be in at the beginning," said Felix Howald, director of the World Economic Forum's Europe division.

A couple dozen protesters from opposition parties gathered outside the Ukraine House, a former Lenin museum, holding signs such as "Welcome to the Orange Ghetto" and "No to political repression."

During the conference, special sessions will be held to discuss the metals and mining industry, which is the sixth largest in the world in production capacity, as well as agriculture. Ukraine previously was known as the bread basket of the Soviet Union because of its rich black soil.

Participants will also discuss relations with the European Union, which Ukraine wants to join, and with Russia, its giant neighbor and major trading partner. Russian President Vladimir Putin declined an invitation to attend, Howald said.

Criticism is expected. The new government's efforts to undo some of the murkier privatization deals of the past decade have raised investor concerns about its commitment to ownership rights.

Yushchenko has ordered his government to limit the scope of their challenges, but the lack of clarity about how many and which deals will face scrutiny has added to uncertainty.

The Cabinet is due to meet Thursday to continue its discussions about the Kryvorizhstal steel mill, which the government seized last week from Pinchuk, the son-in-law of former President Leonid Kuchma and another tycoon.

The tycoons bought it last year for US$800 million (euro665 million) - a price that critics said was a giveaway. The government has said it will begin the process on Thursday of putting the mill back up for sale.

Source: AP

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Put Your Fears Aside And Your Money Here, Ukraine Tells Foreign Investors

KIEV, Ukraine -- Ukraine’s new leadership Thursday will kick off an intensive two-day marketing campaign as it tries to convince foreign investors to put aside their fears and invest in the ex-Soviet nation now set on a pro-Western course.

Some 250 business and political heavyweights — including presidents of seven countries — converge on Kiev Thursday for a conference organized by the World Economic Forum that has been dubbed a “mini-Davos.”


President Viktor Yushchenko

Ukrainian President Viktor Yushchenko — a former central banker who last year won a protracted vote on promises to Westernize the strategic former Soviet republic of 48 million — hopes the gathering will jumpstart investment that the ailing economy badly needs.

“Ukraine has unique potential, profitable enterprises and entire industries — aviation and shipbuilding, high-tech and transportation — that can become the real trailblazers of the Ukrainian economy and a real “Klondike’ for foreign investors,” he was quoted as saying in an interview with the WEF posted on its website.

Yushchenko is due to address the gathering late Thursday.

Helping him carry the message will be leaders of other former Soviet-bloc nations that firmly back Yushchenko’s vow to bring Ukraine out from its centuries-old domination by Moscow and turn it toward the West — the presidents of Estonia, Georgia, Lithuania, Moldova and Poland are all due to attend the two-day forum in central Kiev. Azeri President Ilham Aliyev is also expected to attend.

But Yushchenko and his team face an uphill battle.

“The investment climate is really bad. It stinks,” said Olivier Descamps, a director at the European Bank for Reconstruction and Development (EBRD), in another interview posted on the WEF’s website.

The list of ills ailing the Ukrainian economy is long — corruption, bloated bureaucracy, confusing legislation, an antiquated banking system.

Indeed Ukraine came 86th on a recent list that ranked 104 countries for their competitiveness, with tax regulations, corruption and tax rates the largest obstacles to doing business, according to a WEF study.

And although investors welcomed Yushchenko’s victory late last year and his promises to make the economy and the running of business more transparent, many are waiting for concrete results before putting their money on the table.

Nevertheless, some are already taking the plunge — one Russian investment bank has just set up shop in Kiev and another one plans to do so in a few months, a French firm has agreed in principle to build roads in Ukraine and Kazakhstan is interested in helping build a section of a strategic oil pipeline.

Ukrainian officials hope that the two-day roundtable in Kiev will spark more of the same.

“The forum is not an investment fair,” Volodymyr Ignashchenko, a deputy minister of economics, said this week. “But we hope that informal contacts made during it... will boost contacts between the leaders of Ukraine’s business community and the leaders of the world’s financial and industrial communities.”

Source: AFP

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Putin Prods Ukraine on $1.3bn Gas Debt

MOSCOW, Russia -- Russian President Vladimir Putin has urged more action to settle the issue of Ukraine’s debt for Russian gas, noting that what is owed should not cloud contact between the two nations.


Russian President Vladimir Putin

“About 7.7 billion cubic meters of Russian gas are being kept in Ukraine’s storage facilities, documents show,” Putin told Vladimir Litvin, chairman of the Ukrainian parliament, after officials from fuel monopoly Gazprom returned from Ukraine. Putin was addressing Litvin in comments made at a meeting in St. Petersburg on Tuesday.

“By European prices, this is $160 per 1,000 cubic meters, which makes up more than $1.3 billion. Of course, we are not asking for this debt to be paid immediately but experts should sort out the problem,” Putin said, quoted by Channel One television. “This should not overshadow our relations, though” the head-of-state said.

Underground tanks have been holding Gazprom fuel but Ukraine has been unable to say what has happened to it. Paperwork suggests it could not have been exported.

Russia’s Gazprom insists Ukrainian national oil and gas company Neftegaz should buy the supply at European prices, not at $50 per 1,000 cubic meters, the price at which Gazprom sells to Ukraine as payment for transit services across its territory. This year, Gazprom will send between 23 billion and 28 billion cubic meters of gas to its neighbor.

In related developments, Ukraine’s fuel and energy ministry and French firm Gaz de France signed a cooperation deal during Ukrainian prime minister Yulia Timoshenko’s visit to France. Among slated areas of cooperation are the construction of pipelines taking Iranian gas to Europe, storing French gas in Ukraine’s underground facilities and supplies from Gaz de France.

The two sides looked towards joint work in the Romanian market, where Gaz de France had bought pipelines, said Alexei Ivchenko, CEO of Neftegaz Ukrainy, and a French role in a Ukrainian gas consortium.

“We discussed the issue of the consortium with Gazprom, have a clear idea of what it should be like and are considering the activities of the consortium in the light of new projects, not necessarily in Ukraine,” Ivchenko added.

Source: Gateway to Russia

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Washington Concerned Ukraine May Not Join WTO This Year

WASHINGTON, DC -- During President Viktor Yushchenko's April visit to Washington, he enumerated three goals to be achieved this year: joining the WTO, lifting the Jackson-Vanik trade restrictions, and obtaining free-market economy status. The prospects for attaining the first two goals are doubtful, at least by the end of 2005.



On May 31 the Ukrainian parliament narrowly failed to pass important changes to legislation to combat CD piracy and protect copyright, changes that would make Ukraine eligible for membership in the World Trade Organization. The Ukrainian parliament must pass this law before its summer recess, which lasts until early September. There are another 21 bills that still need passage before the WTO meets in the fall.

The Yushchenko team has attempted to differentiate itself from former president Leonid Kuchma's regime by promoting Ukraine's WTO membership separate from Russia's. Psychologically, it is important for Ukraine to enter the WTO ahead of Russia. The Kuchma camp supported a plan whereby all four members of the CIS Single Economic Space (Ukraine, Russia, Kazakhstan, Belarus) would synchronize their drive to achieve WTO membership.

It is not surprising that former pro-Kuchma centrists in parliament and the Communist Party did not vote in favor of the changes to legislation. As Yushchenko pointed out publicly, the son of former prime minister Vitaly Masol (a former high-ranking Communist) allegedly owns the largest counterfeit CD operation in Ukraine.

What is more surprising is that 26 of the votes against the bill came from Yushchenko's own Our Ukraine faction. The bill failed by only 17 votes. Similarly, only six out of 17 members in the other pro-free market group within the Yushchenko camp (Deputy Prime Minister Anatoliy Kinakh's Party Industrialists and Entrepreneurs) supported the bill. Other pro-Yushchenko factions (the Socialists, People's Party, Yulia Tymoshenko bloc, Ukrainian People's Party) largely voted in favor. Ironically, the majority of the left and right populists (all 26 Socialists and 18 of 25 Tymoshenko deputies), whom Western critics have accused of being against free market policies, voted in favor.

On this occasion, at least, the mishandled vote does not reflect divisions between populists and free-market reformers in Yushchenko's camp, but rather weak executive control over important policy issues to be raised and voted on in parliament, where pro-Yushchenko forces have a majority. But, since Yushchenko's inauguration on January 23 he has been unable -- or unwilling -- to exercise his authority as president.

Consequently, a new poll by the Razumkov Center found Tymoshenko more popular (61%) than Yushchenko (60%). Yushchenko's reticence to use his extensive array of executive power is all the more surprising because the constitutional reforms agreed in December 2004 -- but likely to go into effect only after the March 2006 election -- will reduce the power of the president.

The failed copyright vote is also linked to the confusion that continues to exist over the division of powers between different institutions that deal with Euro-Atlantic integration. These include Petro Poroshenko's National Security and Defense Council, Borys Tarasyuk's Foreign Ministry, Oleh Rybachuk's position as deputy prime minister for European integration, and the presidential secretariat. Yushchenko apparently has not designated which institution should take the lead on WTO matters.

Another blockage lies with the failure to replace Kuchma-era personnel at key Western embassies in Brussels, London, and Washington. Their continued presence sends the wrong signal about whether Ukraine has really increased its commitment to Euro-Atlantic integration compared to the empty rhetoric of the Kuchma era.

Senior Washington-based U.S. officials are dismayed at the failure of Ukraine's parliament to vote for the necessary changes. They point to four additional complicating factors:

First, the U.S. Office of the Special Trade Representative declared two months ago that U.S. economic sanctions against Ukraine would remain in place until Ukraine improves its policies on copyright infringement and CD piracy.

Second, as a WTO member, the United States will insist on a separate bilateral agreement. Ukraine has signed bilateral agreements with 31 of the WTO's 148 members, while another 17 WTO members seek such agreements. But Washington refuses to sign such an agreement until Ukraine addresses CD piracy and other copyright issues.

Third, the Soviet-era Jackson-Vanik restrictions, which Yushchenko mentioned during his Washington visit, are unlikely to be removed this year. The Senate Finance Committee, one of two committees that would have to discuss this issue before a vote to lift the restrictions, does not have this issue included on its agenda this year.

Fourth, Kyiv has sent several negative signals to foreign investors, international organizations, and governments with its contradictory or anti-free market government policies. These include price controls, the fuel crisis, the sudden removal of 24 free-economic zones, an inflationary social budget, and the well-known disputes over re-privatization.

Yushchenko's third goal looks more realistic. Deputy Prime Minister Rybachuk remains confident that the EU will grant Ukraine free-market economy status in the fall. Russia was granted this status in 2002. Market-economy status requires parliament to adopt legislation on VAT and bankruptcy and to alter its pricing policies.

Although two months have passed since Yushchenko's highly successful visit to the United States, there has been little progress in three important areas that both sides then outlined as strategically important.

Source: Eurasia Daily Monitor

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Wednesday, June 15, 2005

The Odd Couple Of Kiev

KIEV, Ukraine -- When Viktor A. Yushchenko was waging his Orange Revolution bid for Ukraine's presidency late last year, he had no more loyal or effective ally than Yulia V. Tymoshenko. The charismatic 44-year-old businesswoman and politician tirelessly rallied supporters for weeks, giving Yushchenko the time he needed to persuade Ukrainians -- and the world -- that the first round of elections in November was a sham. With Tymoshenko -- her trademark braids circling her head in the traditional Ukrainian style -- at his side, Yushchenko swept the second round in December and became President. In February, he appointed her Prime Minister.


Yushchenko (L) and Tymoshenko during "Orange Revolution"

Four months on, the honeymoon is over. While both politicians are determined to root out corruption and make the government more transparent, they seem to have differing economic visions. Yushchenko, a market liberal, has spent much of his time in office trying to convince the European Union that Ukraine will do whatever it takes to integrate with the West. Tymoshenko, in contrast, is pushing Ukraine along a more socialist path. "She favors a strong government backed by strong control over the economy. They are inherently different in this respect," says Vadym Karasiov, director of Kiev's Global Strategic Institute, an independent think tank.

Things came to a head in late May, when Yushchenko came close to firing Tymoshenko over her decision to cap fuel prices. Yushchenko ordered the caps lifted and urged Tymoshenko and other government ministers to avoid Soviet-style command economics.

The President won that round. But the strong-willed Prime Minister has plenty of cards to play. Tymoshenko's iron-fisted management style has been effective in cleaning up the corruption-ridden economy. And her declarations that the state could and should retain its majority shareholdings in steel plants and oil companies appeal to cash-strapped Ukrainians who despise the tycoons who grabbed state assets in the past decade.

Uncompromising protectionist management has, in fact, helped boost Tymoshenko's approval rating in recent months to 55.3%, according to an April poll by the Kiev International Institute of Sociology. Her nationalist Fatherland party is now a part of Yushchenko's coalition. But Ukraine faces parliamentary elections in just nine months, so if Yushchenko fired Tymoshenko, he would risk turning Fatherland into a dangerous challenger to his Our Ukraine bloc. Says Mykhailo Dobkin, owner of a poultry-processing business and a parliamentary member from the Social Democratic Party of Ukraine: "Tymoshenko's rating is rising sharply, and she smells power."

DIRTY WORK

There's one other reason Yushchenko didn't fire Tymoshenko over the fuel-cap fracas: He needs her to run the government. While the President has spent much of his time abroad appeasing investors with liberal free-market talk, the dirty work has been left to Tymoshenko. Painful challenges, such as reform of a complex tax system, still lie ahead. It's especially important that the government wipe out the special tax breaks secured by the tycoons who struck it rich under the country's previous leadership.

Yet passage of such politically charged reforms requires parliamentary support. Ukraine's legislative house is splintered among Yushchenko's allies, Communists, and tycoons eager to protect their privileges. If Yushchenko can keep his coalition together in next March's elections, he and Tymoshenko could take full control over the new Parliament. If Tymoshenko challenges him, major political battles will emerge. "The government will attempt to keep her in place as Prime Minister rather than face her as a political foe," Karasiov says. Yushchenko put her in her place once, but the fiery Tymoshenko is still a force to be reckoned with.

Source: Business Week

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MP Zatulin: Ukraine To Try And Oust Russian Black Sea Fleet From Sevastopol

MOSCOW, Russia -- Ukraine will try to create unbearable conditions for the Russian Navy's Black Sea Fleet in Sevastopol, Konstantin Zatulin, a State Duma deputy and director of the Institute of CIS Countries, said in his interview with RIA Novosti on Wednesday.

"Ukraine will try and create unbearable conditions for the fleet or try and get more money from it [Russia] for the fleet's basing in Sevastopol," he said.

"The Ukrainian authorities have tasked their secret services with provoking incidents involving Russian servicemen in Sevastopol to compromise them and subject them to a media smear campaign that would later cause revision of the agreement governing the Black Sea Fleet's basing," the State Duma member said.

Zatulin noted that the Russian Navy "has been named the culprit of the environmental problems facing the Black Sea". "Unless we pay attention to that, I am sure that the pressure exerted on Russia as far as the matter is concerned is to keep on increasing," he remarked.

Ukrainian Foreign Minister Boris Tarasyuk in his interview with the Vremya Novostei said on Wednesday that Ukraine did not question the Russian Black Sea Fleet's term of basing in the Crimea but would like revise the lease payment.

In particular, the current $97.75 a year lease payment for land and installations "is inadequate to their actual cost", the Ukrainian minister said. "We want to know the lease payment amount proceeding from domestic and world prices. To this end, installation and land inventory should be taken and the state of environment should be assessed," Tarasyuk explained.

Source: RIA Novosti

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Leonid Kuchma: “I’m Still With You, Ukraine”

KIEV, Ukraine -- After the election campaign of 2004/2005 the second president of Ukraine rarely gives interviews. He made an exception to Komsomolskaya Pravda journalists whom he met in the office of fund Ukraine, chaired by him.


Leonid Kuchma on the cover of his book - "Ukraine is not Russia"

Leonid Kuchma came to meet them in a light striped shirt, without tie. He gave a sincere smile, shook hands. Having noticed the camera, he put on a jacket and offered them to sit down on a couch: “Well, shall we start?”.

Ukrainians didn’t become richer after my retiring

During the second stage of presidential elections of 2004 you told you wanted to “look at Ukraine without Kuchma”. So, do you like it, Ukraine without Kuchma? What are the chances, in your opinion, of the current administration?

First of all, Ukraine hasn’t lost Kuchma. It had, has and will have me at its service. I live and work in my country and won’t go anywhere. If to talk about Ukraine without president Kuchma, I think I shouldn’t make any comments concerning the current administration.

After 10 years in power I can see the processes deeply, i.e. I see the root of the matter. People might find my comments too pessimistic.

I don’t want to be blamed for malignity and gloating over new authorities. Besides, too little time has passed to make any comments.

Are you trying to duck out?

Nothing of the kind! If you insist I’ll answer as an ordinary Ukrainian citizen, not like an ex-president. An ordinary citizen doesn’t make complicated analysis, he just assesses obvious and evident things.

Recently one of informational channels has informed that China decided to slowly revalue its currency – yuan. Absolutely correct decision. What’s more important is that’s done slowly.

You shouldn’t be too rough and destroy everything. Both the people and the country suffered from the USD rate drop. The main reserves of the National Bank of Ukraine are in USD. 60% of the national produce is export…

Export-oriented economics might be seriously damaged and its recovery will take a long time. So, the decision to revalue the UAH was premature.

By the way, I seriously doubt that such an experienced specialist as Stelmakh (NBU head) suddenly took up the decision at night and stated his position in the morning. I’m glad Yushchenko gave the right evaluation of this decision.

Finding enemies is another matter. Like they needed a scapegoat during the gasoline crisis. The price of gasoline in Russia is the same. Before prices increased, gasolien was more expensive in Russia and Belarus. Russian doesn’t enhance the price but excludes profits from petroleum refining companies: the prices abroad are increasing, so why should the country suffer? Such a decision would be taken up by every country.

So, you don’t have to look for enemies both abroad and in the country, just look around. The pipe line Odessa-Brody keeps counter functioning; there’s no Caspian oil. The United Economic Space doesn’t contradict national interests any more. Believe me, I can keep talking further and further.

It’s not reproach but rather food for thought: maybe president Kuchma wasn’t always wrong? As to the prospects, we’ll see. If the new authority doesn’t ruin everything done by the predecessor I think both the country and the authority itself will profit from that.

Is the country changing?

It’s difficult to give a definite answer since little time has passed. I think there are no fundamental changes.

Dnepropetrovsk clan is a myth

According to Dnepropetrovsk natives who aren’t presently in power, they can’t forgive you and Valeriy Pustovoitenko for demolishing the “Dnepropetrovsk team”.

President Victor Yushchenko said he wouldn’t let the Dnepropetrovsk clan reign Ukraine. Did it ever exist? I’ve got an impression that when somebody has nothing to talk about he talks about the Dnepropetrovsk clan. It’s a fact of common knowledge that the conscious mind of soviet and post-soviet people is pretty much influenced by myths and tales.

Dnepropetrovsk clan seems to be one of these myths. Although, myths never appear without certain reasons for that.

Maybe we should talk not about clan but about Dnepropetrovsk personnel phenomenon which can be scientifically accounted for. The thing is that the Dnepropetrovsk region was a specific territorial unit both in the former USSR and in the independent Ukraine.

The enormous industrial, scientific and educational potential is concentrated here, as well as qualified personnel, technical and financial resources. The city has strategically importance. All of these factors make Dnepropetrovsk the leading city.

No wonder that back in soviet times Dnepropetrovsk became the main center supplying personnel, since the city represented a country in miniature. So, experience in this town was really appreciated.

That’s why Dnipropetrovsk inhabitants (but mostly those who worked or studied there) were always larger in number in government, as compared with representatives of the other regions; percentage wise.

The fact that these people, as a rule, knew each other and soon found a common language doesn’t mean that we’re talking of a team here, not to mention the word “clan”.

By the way, when I picked up personnel, I tried not to hire compatriots. I was afraid people would say: “Look, another one from Dnepropetrovsk”. Obviously we might talk about the Dnepropetrovsk school of personnel. For example, the construction department “Yuzhnoye” and “Yuzhmash” always had natural selection at their service.

Lots of specialists came from all over USSR, and everyone had the chance to move up. The best got to the top. The Dnepropetrovsk region gave the country brilliant managers of the highest rank. You should respect that.

Now let’s talk about status of this region. Well, we helped a couple of times, that’s true. For example Leonid Brezhnev sponsored the construction of a highway to the regional center. The city possessing one of the largest metallurgical plants in Ukraine didn’t have a decent road…

Concerning the demolishing of this “team”…I won’t speak for Valeriy Pustovoitenko, I think he can give a decent answer to the “clan” himself. As for me, I think you can’t destroy anything non-existent.

But Dnepropetrovsk still remains a “personnel center”?

Now Verkhovna Rada is the “personnel center” . The Soviet system of training personnel, which wasn’t that bad, declined. Under that system a cook never ruled the country. The new system hasn’t been established.

What we do have ia a Verkhovna Rada consisting of regional representatives. It became the school of personnel. Economics, brilliant specialists and creative processes are born in the provinces.

Talented people do not necessarily come from capital. It’s a fact. No one thought about that before. But the personnel problem still exists. And it badly needs to be solved.

”Yuzhmash” is different and I’ve have changed

Do you have more free time now?

Plenty. To be quite serious, there is always enough work to be done.

Have you ever though of running “Uzhmash”?

You know, ancient people said: “You can’t enter the same river twice. It’s not about my desire or reluctance. It’s about new realities which appeared in course of time.

I understand them well enough not to have any illusions. The plant is different now, and I’ve changed. Although, sometimes I think that period of life was the the happiest in my life. Presently, I’m worried about the rocket and space branch in Ukraine.

What does you fund Ukraine deal with?

Mostly with charity, cultural and educational projects. It’s everything declared a strategic task for the country but never given proper financing. We get a lot of letters with requests.

We do everything possible to help people. Now we are dealing with village libraries…

Literary

Leonid Kuchma:”We’ve got a purely Soviet attitude to our history: “Everything done before is wrong. We’re good guys and we’ll rebuild everything”. The new General Secretaries came and defamed their predecessors. I think it is an utter fallacy.

We need qualitative analysis to take everything positive and to eradicate negative. But we’ve got Soviet symptoms instead. It doesn’t promote a normal psychological climate in the country. When people are in high spirits their attitude towards the job is different. They do their job without thinking who might blame them and who they might be labeled.

Parting with Leonid Kuchma we presented him our trade-mark T-Shirt. Having seen its color (it was orange) he wasn’t embarrassed. We’ve got this color before Yushchenko’s staff got it…- we started to explain.

Nice color, - Kuchma smiled. – I’ll give you the book.

He took a heavy volume from the bookcase, sat at the table, and signed it. The book was “Ukraine is not Russia”. – Read it!

Source: Ukrayinska Pravda

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Ukrainian Deputies to Listen to Piskun Talking in Private

KIEV, Ukraine -- Ukrainian Supreme Rada’s committee for organized crime fighting will go through a possible ouster of Prosecutor General of Ukraine Svyatoslav Piskun. The formal cause is telephone conversations unveiled via Internet. But the analysts say the true reason is the witch-hunt unleashed by Piskun that may materially hinder reputation of President Viktor Yushchenko.


Prosecutor General of Ukraine Svyatoslav Piskun

Criminal cases in today’s Ukraine are multiplying like clones. For instance, arrest of Commander of Ukrainian Peace Forces in Iraq Major General Sergey Savchenko was announced Monday. The General is accused of $300,000 cross-border fraud. The money was discovered in Borispol Airport when checking a special flight that delivered a body of a slain officer from Iraq.

On the same day, June 13, the prosecutors initiated a criminal case against Vladimir Satsyuk, former 1st deputy head of Security Service of Ukraine. Despite that Victor Yushchenko was allegedly poisoned in his summer cottage on September 5, 2004, the charges brought in against Satsyuk have nothing to do with it but stipulate abuse of office, forgery by an official, usage of forged documents.

Many in today’s political elite say the infinite activity of the prosecutors does no good to the image of Ukrainian authorities, and first of all, to the reputation of President Yushchenko.

Despite speculations, Supreme Rada’s committee for organized crime fighting has put forward quite different claims to the prosecutor. Internet audience got the chance last week to enjoy reading the recorded telephone conversations between Piskun and John Herbst, U.S. ambassador in Ukraine, and between Piskun and Viktor Pinchuk, businessman and son-in-law of Ukrainian former president Leonid Kuchma. In particular, Herbst asks Piskun to help a certain clergyman against whom a criminal case was initiated, in exchange for every possible assistance. As to Pinchuk, to-date of the conversation, Piskun has been reinstated in the office of Prosecutor General and needed Pinchuk’s backing to prevent opposition of his farther-in-law, then the president of Ukraine.

Source: Kommersant

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IMF Recommending That Ukraine Step Up Efforts To Lower Inflation

KIEV, Ukraine -- The International Monetary Fund is recommending that Ukraine step up its efforts to lower the rate of inflation and stabilize prices.

This stated in a statement that the International Monetary Fund issued at the end of the IMF mission's visit to Ukraine that took place from June 1 to 7.


National Bank of Ukraine

"From the mission's point of view, restoration of a low and stable rate of inflation is the most pressing macroeconomic challenge facing Ukraine," the statement said.

The IMF is concerned about the rise of inflation in Ukraine since 2003.

"This indicator is presently about 15% in annual terms," the statement said.

The International Monetary Fund is recommending that Ukraine take the following measures in order to keep the inflation rate in single digits: step up its monetary policy, including a more flexible exchange rate; implement a fiscal policy aimed at implementing the budget; accelerate the implementation of structural reforms aimed at building a market economy and creating a favorable investment climate.

The fund is also recommending that the government and the National Bank of Ukraine implement a coordinated economic policy and avoid contradictory public statements.

The IMF believes that delay in adopting such measures increases the risk of a further acceleration of inflation, which may complicate the prospects for economic growth in Ukraine in the medium-term.

As Ukrainian News earlier reported, President Viktor Yuschenko focused attention on the need for investments in eradication of the shadow economy, fighting corruption, entrenching the rule of law, and raising social standards in Ukraine during meetings with delegations from the International Monetary Fund.

Source: Ukraine News

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Ukrainian Police Go After Yanukovych, Medvedchuk

KIEV, Ukraine -- As Ukrainian Interior Minister Yuriy Lutsenko promised several months ago, investigators have finally targeted the very top figures from the previous government. Police have summoned former Prime Minister Viktor Yanukovych and former presidential administration head Viktor Medvedchuk for questioning over several graft cases. Earlier the police got hold of Yanukovych's close ally, Donetsk regional council head Borys Kolesnykov, charging him with extortion, and a friend of Medvedchuk, former Trans-Carpathian governor Ivan Rizak, who is suspected of official abuse. Both are now in prison, awaiting verdicts from the courts.


Viktor Medvedchuk (L) and Viktor Yanukovych (R)

President Viktor Yushchenko was the first to signal to Yanukovych that he might become the next target of corruption investigators. Speaking on live television on May 12, Yushchenko said that the National Olympic Committee -- headed by Yanukovych -- had embezzled the hryvnia equivalent of $20 million. The Olympic Committee denied the charge the following day, yet on June 1 Yanukovych tendered his resignation from the committee over "persecution" for his decision last year to "award Olympic champions from the state's reserve funds."

On May 26 the Interior Ministry delivered its first serious blow against Yanukovych, summoning him for questioning over alleged illegal donations of almost $1 million to the airport in his hometown of Donetsk. According to the police, the sum was transferred to Donetsk, apparently on orders from Yanukovych, last year. But because the Donetsk airport is a municipal property, it may not be financed from state coffers. Another blow came the following day, from the western Ivano-Frankivsk region. The local police summoned Yanukovych to explain why and how a plot of land in a local nature reserve had been sold to him. Speaking to journalists on May 31, Yanukovych admitted that he had indeed bought a tract near Ivano-Frankivsk for his "ailing mother-in-law" in 2000, but she refused to leave Donetsk, and the plot has remained unused ever since.

Yanukovych, however, offered no comment on the accusations that the tract was illegally taken from a nature reserve. Nor did he offer any comment on the Donetsk airport deal. Moreover, he failed to turn up for questioning either on the airport case on May 30 and June 2, or on the land-misappropriation case on June 1. Yanukovych explained that he had not received a proper summons, and that calls to appear for questioning released through the mass media are not legally binding. The head of the Kyiv city anti-organized crime directorate, Valeriy Heletey, explained to journalists that no written summons had been sent to Yanukovych "because he travels a lot," so his exact whereabouts were unknown, and it had been decided to inform him about the questioning via the media. He threatened to have Yanukovych escorted for interrogation by the police if he continued to ignore the summons.

But instead of going to the police, Yanukovych flew to Moscow, which had firmly backed his presidential bid last year. Moscow has recently become a refuge for former Ukrainian officials wanted by the police, such as former Odessa mayor Ruslan Bodelan and the former manager of Kuchma's office, Ihor Bakay. Yanukovych spent at least four days in Moscow, and his press service reported that he was meeting Russian politicians, drumming up support for "the wave of indignation rising across the country" over the detention of his ally Kolesnykov. It is unclear which wave of indignation Yanukovych meant, unless it was the pathetic march of his supporters in Kyiv on May 19, and a rally near the Donetsk Court of Appeals on June 3, in which 150 people participated.

Along with Yanukovych, Ivano-Frankivsk investigators on May 27 also invited former presidential administration head Viktor Medvedchuk to explain "the illegal allocation of land" for the construction of a recreation facility in the Carpathian Mountains. And on June 1, the Interior Ministry summoned him and his crony, energy and media tycoon Hryhoriy Surkis, for questioning over the construction of a training facility in Trans-Carpathian Region for the Dynamo Kyiv soccer club, which is controlled by the Surkis family. The investigators believe that funds for the project were taken from the state budget. Medvedchuk chose Yanukovych's line of behavior: he did not turn up for questioning either, explaining that he did not receive a proper summons. Medvedchuk also denied that he or his family have ever owned land plots in either Ivano-Frankivsk or Trans-Carpathia. In a separate statement, he accused the authorities of neglecting the legal principle of presumption of innocence and of "brainwashing" ordinary Ukrainians by portraying "the opposition forces as the bad guys."

Yanukovych and Medvedchuk are indeed in great trouble politically, as the official accusations of corruption may irrevocably taint their reputation ahead of next year's parliamentary polls.

Source: Maidan

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Ukraine: Government Attempts to Get Grip on Corruption

KIEV, Ukraine -- During the last two months of 2004, as the Orange Revolution was changing the face of the Ukrainian body politic, approximately $1 billion left Ukraine.



Some of this money was reportedly private and some belonged to the Ukrainian treasury. The people responsible for transferring this money out of the country have been identified, according to a spokesman for the Ukrainian Interior Ministry (MVD), and investigati