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

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

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

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

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

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

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

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

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

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

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

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

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

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

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
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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

'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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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 investigations into the matter are under way, Interfax reported on 1 June.

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

A Grim Tourist Hot Spot: Chernobyl

PRIPYAT, Ukraine -- Sometime after visiting the ruins of the Polissia Hotel, the darkened Energetic theater and the idled Ferris wheel, the minivans stopped again. Doors slid open. Six young Finnish men stepped out and followed their guide through a patch of temperate jungle that once was an urban courtyard.

Branches draped down. Mud squished underfoot. A cloud of mosquitoes rose to the feast. The men stepped past discarded gas-mask filters to the entrance of a ghostly kindergarten. They fanned out with cameras and began to work.



Much was as the children and their teachers had left it 19 years ago. Tiny shoes littered the classroom floor. Dolls and wooden blocks remained on shelves. Soviet slogans exhorted children to study, to exercise, to prepare for a life of work.

Much had also changed. Now there is rot, broken windows, rusting bed frames and paint falling away in great blisters and peels. And now there are tourists, participating in what may be the strangest vacation excursion available in the former Soviet space: the package tour of the Chernobyl exclusion zone, scene of the worst civilian disaster of the nuclear age.

A 30-kilometer, or 19-mile, radius around the infamous power plant, the zone has largely been closed to the world since Chernobyl's Reactor No. 4 exploded on April 26, 1986, sending people to flight and exposing the Communist Party as an institution wormy with hypocrisy and lies.

For nearly 20 years it has been a dark symbol of Soviet rule. Its name conjures memories of incompetence, horror, contamination, escape and sickness, as well as the party elite's disdain for Soviet citizens, who were called to parade in fallout on May Day while the leaders' families secretly fled.

Now it is a destination, luring people in.

"It is amazing," said Ilkka Jahnukainen, 22, as he wandered the empty city here that housed the plant's workers and families, roughly 45,000 people in all. "So dreamlike and silent."

The word Chernobyl also long ago became a dreary, shopworn joke, shorthand for contaminated wasteland. But contamination here is uneven. And most of the zone is far cleaner than it was in 1986, when radiation levels were strong enough in places to kill even trees.

A lethal exposure of radiation ranges from 300 to 500 roentgens an hour; levels in the tour areas vary from 15 to several hundred microroentgens an hour.

A microroentgen is one-millionth of a roentgen, and Chernobylinterinform, the zone's information agency, says its chaperoned tours do not carry health risks. Dangers lie in long-term exposure.

Still, the zone has many more radioactive spots than those where tourists typically go. So there are rules, which Yuriy Tatarchuk, a government interpreter who served as the Finns' guide, listed.

Don't stray. Stay on concrete and asphalt, where exposure risks are lower than on soil. Don't touch anything. (This one proved impossible. Tours involve climbing cluttered staircases and stepping through debris. Handholds are inevitable.)

No matter its inconveniences or potential for medical worry, the zone possesses the allure of the forbidden and a promise of rare, personal insights into history. Its popularity as a destination is increasing. Few tourists came in 2002, the year it opened for such visits, according to Marina Polyakova, of Chernobylinterinform. In 2004 about 870 arrived, and an equal number is expected this year, she said.

One-day group excursions cost from $200 to $400, including transportation and a meal.

The tour on Saturday began with a drive through meadows, marshes and forest, a belt of green broken by glimpses of gap-roofed houses and crumbling barns.

It is what Mary Mycio, a Ukrainian-American lawyer in Kiev and author of a soon-to-be published book, "Wormwood Forest: A Natural History of Chernobyl," calls a "radioactive wilderness," an accidental sanctuary populated by wolves, boars and endangered birds. Its beauty cannot be overstated.

Soon reminders of the grim history appeared. The tour stopped at a graveyard of vehicles and helicopters used to fight Chernobyl's fires.

Roughly 2,000 radioactive machines are parked here - fire trucks, ambulances, armored vehicles, trucks, aircraft. Two tourists slipped through the barbed wire and wandered the junkyard, taking pictures for a Web site they plan to make of the trip. The rest roamed the edge, awed.

"I cannot find words," said Juha Vaittinen, 22.

The minivans then headed to Chernobyl proper for a briefing on the accident. Next stop: the nuclear plant and "sarcophagus," the concrete-and-steel shell built to contain Reactor No. 4's radioactive spew. Tatarchuk held up a radiation detector - 470 microroentgens an hour.

The Finns posed for a group shot.

The most popular destination came last: Pripyat, a city left behind.

"Heralded as the world's youngest city when it opened its doors in the mid-1970s," Mycio writes in her book, "Pripyat also turned out to be its shortest lived."

The city was encased on this day in a silence broken by breezes sighing through rustling trees. A heavier hush resided in buildings, where drops of water plopped loudly into puddles, and glass squeaked as it broke underfoot. Built on marshes, the place smelled of peat.

Its contamination has become uneven. At the amusement park, near idled bumper cars, Tatarchuk's monitor registered 144 microroentgens an hour. He moved a meter away, to a mat of damp green moss. It read 823. "Stay off the moss," he said.

The moss is all around. Pripyat, both a time capsule of the Soviet Union and a monument to its folly and pain, is being consumed. What looters have not sacked or stolen succumbs now to the elements and to time.

A café patio atop the Polissia Hotel, offering views to the reactor that ruined this place, has been colonized by birch trees. One stands roughly two meters tall, climbing skyward from a crack between the high-rise's tiles.

Fine views of Pripyat are available from among these misplaced trees, including one in the direction of the reactor that reveals an empty clinic bearing an enormous sign.

"The health of the people," it reads, "is the wealth of the country."

Tatarchuk, looking down over buckling rooftops, repeated those words in Russian, then allowed himself a knowing, head-shaking smile.

Source: International Herald Tribune

Yushchenko Pushes for Ownership Rights

KIEV, Ukraine -- Ukrainian President Viktor Yushchenko on Tuesday called on lawmakers and his government to approve a memorandum that safeguards ownership rights, a move aimed at reducing concerns about the re-nationalization of already privatized companies.


Ukrainian President Viktor Yushchenko (R) and Czech Republic President Vaclav Klaus
"Signing this document, (we'll) show readiness to work from the basis that the law on reprivatization cannot be reconsidered," Yushchenko said during a business forum with Czech investors.

Yushchenko also said he hopes within a year to have a new list of state enterprises that are ready for privatization. He said the list may include Ukraine's telephone monopoly, Ukrtelekom.

Yushchenko's comments come amid government efforts to undo some of the privatization deals conducted during the decade-long rule of former President Leonid Kuchma. Last week, the government announced it had assumed control of the giant steel mill, Kryvorizhstal, which was bought last year by Kuchma's son-in-law Viktor Pinchuk and another tycoon.

Currently, officials are preparing a list of other privatizations they plan to challenge. Yushchenko has criticized his government for casting its net too wide, saying that it has sparked fear among investors. He said the list of deals to be challenged should be small, and those not on it should receive immediate guarantees that their business is safe.

Yushchenko was joined at the forum by Czech President Vaclav Klaus, who came to Ukraine for an official visit to discuss investment opportunities for Czech business leaders in Ukraine.

Source: AP

Ukraine's Political Change Unnerves Investors

KIEV, Ukraine -- An apparent divergence of economic thinking at the heart of government has unsettled the private sector and foreign businesses. The leaders of Ukraine's Orange Revolution hoped that the country's political change would stimulate a wave of inward investment, especially from the west.


State Secretary Oleksander Zinchenko
But so far it has not happened. Many business people are coming to Kiev to investigate the potential, but few have put down much hard cash. “It is slower than we hoped,” says Oleksander Zinchenko, the state secretary and one of President Viktor Yushchenko's key political allies. “Of course we are a bit dissatisfied.”

Mr Yushchenko intends to make a fresh appeal to international business this week at a meeting in Kiev of the Swiss-based World Economic Forum, which is bringing in more than 100 executives. Mr Yushchenko and his officials will emphasise their promises to open Ukraine to business especially western business that felt excluded under his authoritarian predecessor, Leonid Kuchma. But he will have to clear up doubts about government policy, notably the confusion surrounding plans to review some of Mr Kuchma's privatisations. He said yesterday he would wind down the privatisation review but did not say how. He promised to launch new privatisations including Ukrtelecom, the national fixed-line phone operator.

Mr Yushchenko will also face questions about his relations with Yulia Tymoshenko, the tough prime minister, who seems to be promoting a larger role for the state in the economy than the more market-oriented Mr Yushchenko. As Mr Zinchenko says: “The majority of investors don't like the political situation too much.”

Jorge Zukoski, president of Kiev's American Chamber of Commerce, said that in spite of Mr Yushchenko's strong statements on foreign investment, his government had made many contradictory decisions that had caught his group's members by surprise and left them confused about what the administration's direction would be.

A big mis-step was a budget law adopted in March that broadened the application of value-added tax and applied the changes retroactively, he said. “What we'd really like to hear is a reaffirmation that the government will have an organised and consistent dialogue with the private sector,” Mr Zukoski said. Business people accept that the country's economic growth is unlikely to match last year's record level of 12.1 per cent, which was partly fuelled by high world prices for steel, Ukraine's main export commodity. They say this year's forecast figure of 5 per cent is reasonable, given the upheaval of the revolution. However, they fear that investment policies may remain unsettled, at least until after next spring's parliamentary elections.

Ukraine has one of the lowest rates of foreign investment in eastern Europe, with $8.8bn (€7.5bn, £5bn) of accumulated foreign direct investment (FDI), or $187 per capita, as of the end of March. New FDI in January-March, at $444m, rose 54 per cent over the same period last year but the figure largely represents reinvestment by established companies.

Some new investors are starting to spend money, notably Ikea, which announced plans last year to invest $300m. But other well-publicised deals have yet to go ahead, for example the Austrian bank Raiffeisen's plans to buy a second local bank for up to $600m.

Russia's business groups, the biggest investors in Ukraine, were initially enthusiastic about the new government but they too are having second thoughts. Russian oil companies TNK-BP, Lukoil and Alliance Group, which own large refineries in Ukraine, were hit with temporary price caps on petrol in April-May and have since had to compete with imported oil products after the government lifted import duties. Lukoil, tyre maker Amtel and aluminium companies Rusal and Sual are also being threatened with revision of the privatisation deals through which they acquired some of their assets in Ukraine. Russia's National Reserve Bank, a private commercial bank, announced last week that it was freezing its investments in Ukraine after two of its projects a joint venture with Kiev's Hotel Ukraina and a waterfront resort in Crimea fell under investigation.

Ms Tymoshenko is hoping to announce at the conference that Ukraine's largest steel mill, Kryvorizhstal, will be reauctioned.

The mill was sold last year for $800m to Viktor Pinchuk, Mr Kuchma's son-in-law and two other Ukrainian businessmen, in a tender the new government says was manipulated.

Source: Financial Times

Gongadze Case to be Forwarded to Court Less Crime Initiators

KIEV, Ukraine -- The policemen detained in March of 2005 on suspicion of having murdered investigative journalist Georgy Gongadze have admitted guilt, announced Ukrainian Prosecutor General Svyatoslav Piskun. The prosecutors intend to forward the case to the court, although they have no evidence against crime initiators.


Prosecutor General Svyatoslav Piskun
It is not the first report of the prosecutor general to the president about Gongadze case. Piskun told Viktor Yushchenko as far back as two months ago that the killers had admitted guilt. On May 30, Yushchenko declared that investigators had found “vital evidence,” and it was particularly important to find General Alexey Pukach, former head of the criminal surveillance. Pukach, who is believed to have choked to death the reporter by using a belt, is on the wanted list from January 2005.

According to the recent statement of Piskun, “the accused pleaded guilt to the charge of murder. Acknowledgement of the guilt confirms that we are moving in the right direction.” The policemen “couldn’t have made it independently,” but investigation has not enough evidence against crime masterminds, Piskun pointed out, adding the prosecutors will forward the case to the court in July.

To add to detaining General Pukach, Ukrainian prosecutors want to interrogate Major Melnichenko, former bodyguard of former president of Ukraine Leonid Kuchma. Melnichenko has got political asylum in the United States and will hardly answer any of 92 questions made out by the prosecutors concerning Gongadze case.

Source: Kommersant

Lytvyn Thinks Kuchma Will Enter Parliament

KIEV, Ukraine -- The Speaker of Parliament (Verkhovna Rada) Volodymyr Lytvyn does not exclude the possibility that former President Leonid Kuchma could become a deputy in parliament.

“Today I do not see him in high politics, although becoming a parliamentarian is a possibility,” said Lytvyn in an interview with the Kontrakty weekly, Novosti-Ukraine reports.


Volodymyr Lytvyn (L) and Leonid Kuchma (R)
At the same time, the speaker noted that “there is no political party that would offer him a spot on their election list.”

Lytvyn underscored that he would not “criticize Kuchma out of moral reasons, in spite of the fact that it has become fashionable to do so.”

“Time is needed to weigh the pros and cons of his activities. Everything will depend on the direction and speed of Ukraine’s development. If life gets worse, Kuchma will be remembered more. If it goes in a positive direction – less,” said the head of the parliament.

By his own account, he does not meet with Kuchma anymore. “Although, I would like to tell him that everything happened as I predicted,” he said.

“There was no reason to treat me like an enemy. There was no need to attempt to disrupt the activity of the Parliament, and to discredit me as its head,” he added.

In addition, Lytvyn voiced the opinion that administrative resources will be utilized during the 2006 parliamentary elections.

“I would be lying if I said I did not think there would be attempts made to use administrative resources. This is happening right now,” said Lytvyn.

“There are many instances where people are being forced to enter the party associated with the president,” said Lytvyn by way of example. At the same time, he said he was sure that this was not the president’s position.

“This pressure is a peasant habit, stemming from a desire to do well by your master,” Lytvyn contends.

He expressed his surety, that during the 2006 parliamentary elections, “people will vote for the government,” since “according to the constitutional reform [passed during the Orange Revolution], the prime minister will be chosen based on the make-up of the parliament.”

Source: Ukrayinska Pravda

Tuzmen Says Ukraine Asks Turkey's Support To Mass Housing Projects

ISTANBUL, Turkey -- Turkish State Minister Kursad Tuzmen said on Wednesday that Ukraine particularly asked Turkey's support to mass housing projects and opening of branches of Turkish banks in Ukraine.


Turkish State Minister Kursad Tuzmen
Speaking to reporters after the luncheon hosted by Turkish-Ukrainian Business Council in Istanbul, Tuzmen said that commercial relations between Turkey and Ukraine grew by 50-60 percent in the last two years and their bilateral trade volume reached 3 billion dollars in 2004.

Tuzmen stressed that the two countries would carry out great work in iron-steel, energy and industry areas. Tuzmen noted that the two countries would sign soon a free trade agreement which would provide free movement of goods, services and capital.

Tuzmen indicated that Ukrainian President Viktor Yushchenko would meet representatives of Turkish companies which thought of cooperating with Ukraine.

Tuzmen noted that Turkish construction companies should work more in Ukraine.

Source: Turkish Press

Gazprom To Help Ukraine Deal With Gas Shortages In 2005

KIEV, Ukraine -- Russia’s Gazprom will help Ukraine’s Neftegaz Ukraine find three to five billion cubic metres of gas to keep the country’s gas supplies stable in 2005.

“We can see that Ukraine has a shortage of gas and needs three to five billion cubic metres of gas,” Gazprom board deputy chairman Alexander Ryazanov said on Monday.


Gazprom Headquarters in Moscow
“We will help our Ukrainian partners find this gas. But I would like this help to be reciprocal, so that we could solve questions connected with gas in underground storage facilities,” he said.

The two companies had decided earlier to consider the possibility of using Central Asia gas from Turkmenistan, Uzbekistan, and Kazakhstan to make up for the shortage. “I think it would be better and cheaper for Ukraine than to buy additional gas in Russia,” Ryazanov said.

Gazprom and Neftegaz set up a working group to deal with 7.8 billion cubic metres of gas currently held in Ukrainian underground storage facilities.

According to Rauyzanov, the gas is stored in 12 different places, and Neftegaz plans to use it during the next two winters. “But this is unacceptable to us,” he said.

Gazprom insists that this gas be considered a payment for the transit of Russian natural gas to Europe through Ukraine. However Neftegaz objects, saying this will break the country’s gas balance.

Earlier, Ukraine’s First Deputy Fuel and Energy Minister Alexei Ivchenko, who is the Neftegaz board chairman, said his company would insist that Gazprom pay for the transit of gas to Europe through Ukraine till 2013 with gas, not cash, as provided for in the bilateral agreement.

He told journalists after talks with Gazprom CEO Alexei Miller that the Russian side had first offered to pay for the transit with gas at a meeting of the two countries’ presidents who decided to work on this issue “some other time”.

Asked what will happen if Gazprom withdraws from the agreement unilaterally, Ivchenko said, “The consequences will be deplorable not for Ukraine but for Russia”.

“It is my deep conviction that the Russian side is not going to break the contract unilaterally,” he said, adding, “In this case Russia will have to deal not with Ukraine but with European companies that use Russian gas and that have bilateral obligations with Gazprom for dozens of years.”

If Gazprom backtracks on the agreement, Neftegaz Ukrainy will buy gas from other countries, Ivchenko warned. “It may so happen that we will not buy Russian gas at all,” he said.

In 2002-2004, Neftegaz Ukrainy received 23-26 billion cubic metres of Russian natural gas annually from Gazprom as payment for transit. The price of the Russian gas was 50 U.S. dollars per 1,000 cubic metres, and the transit tariff was 1.09 U.S. dollars per 1,000 cubic metres for 100 kilometres.

In 2005, Russia will supply 23 billion cubic metres of gas to Ukraine.

Source: ITAR-Tass

There Is No Problem Between Turkey & Ukraine, Yushchenko

ISTANBUL, Turkey -- There are not any problem between Turkey and Ukraine, Ukrainian President Viktor Yushchenko said on Wednesday.


Ukrainian President Viktor Yushchenko (R) meets Greek Orthodox Ecumenical Patriarch Bartholomew
Making a keynote speech at the working lunch hosted in his honor by Turkish-Ukrainian Business Council in Turkish commercial hub of Istanbul, Yushchenko said, ''two countries have same strategic goals in their relations with the EU (European Union). Also, Turkey's support to Ukraine's EU membership bid is appreciated.''

Yushchenko said that Ukraine was not a neighbor of Europe, but situated in the middle of Europe, and stressed, ''we are genuine Europeans, and I am a European. I believe that both Ukraine and Turkey have contributed to the making of EU values.''

''We want to sign a free trade agreement with Turkey. During our bilateral meetings, we decided to prepare a road map for 2005-2006,'' said Yushchenko.

Yushchenko pointed out that construction and housing development would be a part of this road map, and said, ''we can see how successful Turkey is in the area of housing development.''

Noting that they were also interested in areas such as oil, electricity, gas and energy, Yushchenko said that Ukraine proposed to sell electricity to Turkey via Black Sea.

PROBLEMS OF TURKISH COMPANIES

Touching on problems of Turkish companies in Ukraine, Yushchenko said, ''we will try to solve those problems,'' and called on Turkish businessmen to the Conference to be held in his country between June 16th and 17th.

Source: Turkish Press

Ukraine Troop Leader Accused of Smuggling

KIEV, Ukraine -- Authorities arrested the former head of Ukraine's peacekeeping troops in Iraq on charges of smuggling, prosecutors said Monday.

The allegations against Maj. Gen. Serhiy Savchenko stemmed from his time as head of the forces, the Prosecutor General's Office said in a statement.


Ukrainian Soldiers in Iraq
No one could be reached to comment at the Prosecutor General's Office.

In February, Ukrainian authorities said they had detained several soldiers on leave from Iraq on charges of smuggling $300,000 in cash. Ukrainian media have reported allegations that money intended for operations in Iraq has been illegally diverted, and prosecutors were investigating.

The deployment in Iraq is deeply unpopular among Ukrainians, and President Viktor Yushchenko's new government has begun a phased pullout of the 1,650-person contingent. The withdrawal is expected to be complete by the end of the year.

Source: Newsday

Ukraine Halts Foreign Adoption Petitions

KIEV, Ukraine - Ukraine will temporarily stop accepting applications by foreigners to adopt children, the government said Monday, calling the move necessary while it creates a new department to better protect children's rights.

Applications that have already been submitted will continue to be processed, said Ukraine's Ministry of Youth and Sport.


Orphanage No. 3 in Zaporizhzhia, Ukraine
The new department is expected to be operating within two months, at which time applications will be accepted again, said ministry spokesman Mykola Yabychenko.

Parliament is expected to consider the measure to create the new department and to ratify Ukraine's participation in The Hague Convention treaty on international adoptions this week.

"We will do everything possible to guarantee that not even one child will suffer," said Youth and Sport Minister Yury Pavlenko. "Our main task is to make this process clear and just."

Last year, 2,081 foreigners adopted Ukrainian children, compared with 1,536 domestic adoptions, according to government statistics.

Foreign adoptions are generally accepted among Ukrainians; however, cases of abuse draw extensive media attention. Ukrainian couples would traditionally not consider adoption except in cases in which they cannot have their own children for medical reasons.

Visiting U.S. Health and Human Services Secretary Michael Leavitt told journalists after a meeting with Pavlenko that Washington supports Ukraine's decision to join the Hague convention.

Leavitt also invited a Ukrainian delegation to visit the United States, where many Ukrainian orphans have found homes, to become acquainted with U.S. adoption standards, Pavlenko said. He accepted the invitation and said a delegation would head to the United States in December.

Source: AP

The European Union’s Doors Are Open To Ukraine -- Timoshenko

PARIS, France -- The European Union’s doors are open to Ukraine even though France and the Netherlands have rejected the European Constitution in referendums, Ukrainian Prime Minister Yulia Timoshenko said.

“We have already felt the support of the European Union for our plans to join the World Trade Organisation and acquire the status of a market economy,” Timoshenko said at a press conference after talks with Prime Minister Dominique de Villepin on Monday.


French Prime Minister Dominique de Villepin (L) greets Ukrainian Prime Minister Yulia Tymoshenko (R)
“But most importantly we could feel that despite the results of the referendums in France and the Netherlands, the European Union’s doors are not closed to us,” she added.

At the same time, she admitted, “It is hard to speak about the date of Ukraine’s accession to the European Union”. Local analysts note that 14 years after gaining independence this former Soviet republic has not received the status of a market economy yet.

But Timoshenko believes that Ukraine’s accession to the European Union would strengthen Europe’s energy security.

“I am confident that if Ukraine joins the EU, it will not create any problems for the EU, but on the contrary it will provide opportunities for solving its problems. Ukraine is an important hub of cargo, oil and gas transportation routes, which will ensure the energy security of the West,” Timoshenko said in an interview with Europe-1 radio earlier in the day.

She believes that “Ukraine’s isolation for several years created a situation where Ukraine has no reliable economic partners”.

Timoshenko, who is in France on an official visit, stressed the economic aspect of the visit. She said the agreements to be reached and signed in Paris would bring Ukraine further along the road of integration with the EU.

In her words, at least 15 documents on trade and cooperation would be signed during the visit.

Speaking ahead of her visit to the Le Bourget air show, Timoshenko said Ukraine had a unique transport plane, which is ready for use and “has no analogues in the world”.

Source: ITAR-Tass

Top Ukrainian Lawmaker Backs Return of Jewish Property, Condemns Anti-Semitism

KIEV, Ukraine -- Ukrainian Parliament Speaker Volodymyr Lytvyn said Monday that parliament supports returning property that was seized from Jews by the government during the Soviet era.

Lytvyn is expected to ask President Viktor Yushchenko, Prime Minister Yulia Tymoshenko and Kiev officials to find a practical resolution to the issue, his office said. He said the process would involve not only adopting new laws but also strictly enforcing existing laws.


Parliament Speaker Volodymyr Lytvyn
Lytvyn also will call on parliament to publicly condemn anti-Semitism in Ukraine, his office said. Lytvyn spoke after a meeting with Robert Meth, head of the Union of Councils for Soviet Jews, who criticized recent anti-Semitism in Ukraine.

"Lytvyn reassured Robert Meth of support from the Ukrainian parliament of the process of returning land to Jewish citizens," Lytvyn's office said. His party controls 26 of the parliament's 450 seats.

Ukraine is home to about 100,000 Jews. Hundreds of thousands of Jews perished over the centuries in pogroms staged by Ukrainian nationalists, and millions died during the Holocaust. Anti-Semitic feelings still linger, particularly in western Ukraine, where nationalism has the strongest roots.

Many Jews were among the millions of Soviet citizens sent to labor and detention camps under Soviet dictator Josef Stalin.

Source: AP

Top Police Official Says He Has Many Questions For Former President Kuchma

KIEV, Ukraine -- Ukraine's top police official said June 12 that he had many questions for former President Leonid Kuchma, warning that the longtime leader could face charges.

"Kuchma knows everything, remembers all his sins, and the time will come when prosecutors will summon him as a witness or in some other capacity," Interior Minister Yury Lutsenko told Ukraine's NTN television.

Kuchma was already questioned as a witness in March about the 2000 slaying of an Internet journalist, and many of his former allies have been summoned in recent weeks as part of probes into alleged corruption.

"I have had, still have and, I'm afraid, will have for a long time questions for Mr. Kuchma," said Lutsenko, a longtime political adversary of the former leader.

He mentioned, in particular, the charity fund, Ukraina, that Kuchma set up after his retirement from politics. But Lutsenko said that his questions didn't only concern the fund. He didn't elaborate.

Kuchma's spokeswoman could not be reached to comment the evening of June 12.

Kuchma's decade-long grip on power ended in December with the election of new President Viktor Yushchenko, whose victory came after mass opposition protests dubbed the "Orange Revolution."

Kuchma's critics accused him of presiding over a corrupt government in which his cronies made fortunes through government connections.

The Ukrainian media have since speculated that a secret immunity deal was given to Kuchma in exchange for his decision not to use force against the protesters. Both Kuchma and Yushchenko have denied this.

Lutsenko told NTN that police "at the present time have a lot of information for which Kuchma might be invited to give evidence as a witness."

Ukraine's opposition has accused the new government of using the media to taint the reputations of opposition leaders by raising the prospect of criminal charges and announcing publicly that they are wanted for questioning, saying it amounts to political persecution.

Source: Kyiv Post

Ukraine Takes Step to Void Privatization

KIEV, Ukraine -- Ukraine's government took a first step toward seizing another major asset owned by the son-in-law of former president Leonid Kuchma, the tycoon's lawyers said Monday.

The Cabinet of Ministers canceled the conditions in the 2003 privatization tender held for the Nikopol Ferroalloy factory, according to a decree signed Thursday but made public only Monday. The move could eventually lead to the cancellation of the entire privatization deal.


Nikopol Ferroalloy Factory
Viktor Pinchuk's Interpipe Corporation bought a 25 percent stake and won the right to control the government's 25 percent plus one stake in the factory in a 2003 tender in which no other bidders were allowed to participate. The tycoon paid 205 million hryvna ($40.6 million; euro33 million).

As part of the tender conditions, the buyer received the right of first offer to buy the government's stake at a later date, which Pinchuk's company did later that year for 205.5 million hryvna ($40.7 million; euro33.1 million).

Pinchuk is Kuchma's son-in-law. Allies of new President Viktor Yushchenko have called the process by which he acquired the profitable factory deeply suspicious.

Pinchuk's lawyer Serhiy Vlasenko, however, criticized the government's latest move as "just another political step ... which has no legal consequences."

But Vlasenko didn't exclude that the government might use the order as a means to pressure the court.

Interpipe produces steel pipes and its key asset, the Nikopol Ferroalloy plant, serves at least 15 of the world's largest steel producers.

Kiev's Pecherskiy court currently is considering two appeals against the privatization filed by the head of the State Property Fund, Valentyna Semeniuk, as a private citizen and by the private company "Ukrenergosbut."

Officials were not available for comment.

Yushchenko has repeatedly criticized some of the past decade's privatization deals as theft of state property by Kuchma's cronies, and promised a review.

Last week, the government seized control over Pinchuk's Kryvorizhstal steel factory.

Source: AP

Rock's Revolutionary Influence

PRAGUE, Czech Republic -- Last year, the Ukrainian pop artist Ruslana, a brunette scantily clad in a leather and fur ensemble, won the Eurovision song contest with a song featuring traditional Ukrainian instruments. At this year's contest, another Ukrainian group, GreenJolly, vied for the top honor on home turf in Kyiv. But the trio of pale, plumpish men from Ivano-Frankivsk placed only 20th out of 24 with their rap song "Razom Nas Bahato." Contributing to their weak finish were poor marks from the Russian and Belarusian judges who awarded the group two and zero points, respectively.


GreenJolly at the Orange Revolution
Journalists speculated that the judges panned the song not because they didn't find it catchy enough but because of its role as anthem for Ukraine's Orange Revolution. Its original lyrics, "Machinations, No. Falsifications, No. Yushchenko, Yushchenko," had to be changed for the Eurovision contest to the ostensibly less political, "We won't stand for this -- no! The revolution is on! Because lies are the weapons of mass destruction!"

Following the Orange Revolution, rock music, like many things associated with young people, is being subjected to new scrutiny in Russia."They have learned from the events in Ukraine that popular music can be a very powerful force. And they hope to cooperate with this force. Therefore they are trying to attract to their side our rock elite, which is up for sale."

Ukrainian rock musicians played an energizing role not only by singing anthems to tent dwellers on Kyiv's Independence Square during the Orange Revolution but also during the presidential campaign.

According to the lead singer of Vopli Vidoplyasova, Oleg Skripka, the band's music soothed raucous crowds in eastern Ukraine that supported presidential candidate Viktor Yanukovych during a 30-stop campaign tour by eventual winner Viktor Yushchenko.

Skripka told "The Irish Times" on 22 January that "we would go out and there were young guys in the front row throwing stuff at us.... Luckily they were too drunk to throw straight." "Those guys were bandits -- but they like hard music. So we played a very strong concert and the problem was solved," Skripka recalled.

In an interview with "Novye izvestiya" on 12 November 2004, Skripka said that "businessmen" tried to pressure him to participate in the Ukrainian election campaign on the side of then-Prime Minister Yanukovych. According to Skripka, they tried to use "contracts, threats, courts" to coerce him to side with them. He also said he had to engage in two court battles to prevent the seizure of his apartment, which was the only property he had that the businessmen could go after. The band resisted, and Vopli Vidoplyasova's efforts on behalf of Yushchenko eventually extended even to Moscow. Three groups gathered in front of the Ukrainian Embassy in Moscow last November to show their support for Yushchenko: Yabloko, the Union of Rightist Forces, and members of Vopli Vidoplyasova's Moscow-based fan club, gazeta.ru reported on 28 November.

In March, Vladislav Surkov, deputy presidential administration head and putative mastermind behind the new youth group Nashi, summoned a dozen of Russia's best known contemporary musical artists to his office for a meeting. Details of the gathering remain sketchy, as it was held behind closed doors and none of the participants have spoken about it on the record. However, a variety of sources reported that Boris Grebenshchikov, founder of Akvarium; Zemfira; Sergei Shnurov of Leningrad; Vyacheslav Butusov of Yu-Peter; Vladmir Shakhrin of Chaif; and Chaif's producer, Dmitrii Groisman, were among those in attendance. Writing in "Afisha" on 28 March, journalist Oleg Kashin reported, citing meeting participants who wished to remain anonymous, that Surkov did not ask for anything specific. Surkov allegedly said that the authorities wanted to help musicians decide any problems they may have, and to be able to count on them to keep neutral, at the least, in the event of an uprising of the people.

Kashin, who reported on the birth of the Nashi movement for "Kommersant-Daily," linked Surkov's interest in rock-music elite with his broader project of preventing revolution in Russia, of which the creation of Nashi is just one part.

According to Kashin, one participant at the meeting couldn't figure out why some of the others were invited: "These people have been interested in nothing besides money for a long time." In an interview with RFE/RL's Moscow bureau on 2 April, music critic Artem Troitskii agreed: "It's a big illusion that our so-called rockers are somehow different from our poor beleaguered pop-music professional in terms of their attitude toward the powers that be. They are such conformists, so dependent on the authorities. I do not see any principled difference between Iosif Kobzon and Andrei Makarevich, Boris Grebenshchikov and Filipp Kirkorov, Irina Allegrova and Zemfira. All of them cave in to the maximum extent. As regards the presidential administration, naturally they have learned from the events in Ukraine that popular music can be a very powerful force. And they hope to cooperate with this force. Therefore, naturally, they are trying to attract to their side our rock elite, which is up for sale."

According to RFE/RL Moscow bureau's music observer Aleksandr Borokhovskii, Surkov's meeting last March was not an outgrowth of a new policy but a continuation of an old one.

According to Borokhovskii, Kremlin officials conducted negotiations with musician Konstantin Kinchev, actor/director Sergei Bodrov, and even writer Eduard Limonov to involve them in the Walking Together movement, but those talks failed to bear fruit. On other occasions, Kremlin offers have attracted takers. For example, Yu-Peter's Butusov appeared in concert with Iosif Kozon and Oleg Gazmanov in Sukhum in October 2004 at a concert celebrating Abkhazia's Day of Independence, "Kommersant-Vlast," No. 47, reported. Local residents interpreted the concert as a show of support for the Moscow-backed candidate Raul Khajimba in Abkhazia's presidential elections.

Soon after Surkov's meeting, a rock concert in St. Petersburg was cancelled two days before the event was to be held, "The St. Petersburg Times" reported on 5 April. The concert, labeled "Peterskii Maidan" to echo Kyiv's "Maidan nezalezhnosti," featured a number of the "stars" of the Ukrainian revolution such as Vopli Vidopolyasova and Okean Elzy. Dozens of concert posters were vandalized. The concert's producer, Olga Konskaya, told the newspaper that she had received threatening phone calls. An official at the sports hall where the concert was going to be held said that the performance was cancelled because of poor ticket sales, "Kommersant-Daily" reported on 5 April. However, Konskaya told the daily that one of the concert's sponsors, a branch of a Moscow bank, whose name she declined to provide, pulled out of the project at the "recommendation" of the intelligence service. The concert promoter, Dream Scanner, told "The St. Petersburg Times" that the concert's main sponsor withdrew "under political pressure from the power structures."

Ukrainian authorities learned from Vopli Vidoplyasova's behavior that threats and pressure do not always have the desired effect. But Russian authorities may have to learn the same lesson themselves. After hearing of Surkov's meeting with rock luminaries such as Butusov and Grebenshchikov, the leader of the group Poslednye Tankov v Parizhe (PTVP), Aleksei Nikonov, decided to turn the band's performance at the 2005 FUZZ magazine awards into a political statement, "The Moscow Times" reported on 29 April. Nikonov said, "The day before the FUZZ concert, I heard that the musicians went cap in hand to the Kremlin and I felt really angry about this. I hoped to hear at least one question about it from journalists at the news conference, but nobody seemed to care."

At the awards ceremony performance, Nikonov performed a punk music rendition of Vladimir Mayakovskii's antiwar poem, "Vam!" rewritten as a commentary about Chechnya. Never a band to shy away from controversy, its 2001 album "Hexogen" questioned the government's version of what happened during the string of apartment-building bombings in Moscow and Voronezh in 1999. According to "Afisha" on 8 November 2004, "several concert organizers prefer to stipulate in advance to PTVP before their performances not to break the microphone stand and leave politics out." But Nikonov finds the latter demand difficult to obey: "I'm concerned about social questions. I am simply trying to reflect reality."

Source: Radio Free Europe

U.S. Citizen Agitates for His Incarcerated Stepson

EVPATORIA, Ukraine -- Whatever illusions U.S citizen Joe Hendershott had about human rights in Ukraine evaporated when he saw how the country’s justice system treated a member of his own family.

Last week, Hendershott’s Ukrainian stepson was sentenced to four years in prison – a verdict that followed a months-long process that he alleges was marred by corruption and violation of the detainee’s human and constitutional rights.

Jail time

It all started last December for Hendershott, who lives in Evpatoria with his Ukrainian wife of four years. That’s when his 18-year-old stepson Artur Zheludkov was arrested outside Mykolaiv after getting into a fight with a taxi driver. The altercation was over a fare, which Hendershott said his stepson refused to pay. The driver was left with a lacerated throat.

Zheludkov was taken to the Mykolaiv central police department, where the cops, according to Hendershott, “hung him from a broom stick, placed a gas mask on his head and beat him until he told them what they wanted to hear.”

Hendershott claims the police also got from Zheludkov the PIN code for his credit card; shortly after, he says, money was taken out on the card without Zheludkov’s authorization.

Hendershott said a police detective prevented him and his wife from seeing Artur for almost a month after the detention – in order, Hendershott alleges, to let the signs of torture fade away.

When the court hearings started, Hendershott alleges that he and his wife were advised by their lawyer to bribe the judge and prosecutor to secure a better verdict. Artur was convicted of assault and attempted robbery.

“We ended up giving a little more than $3,000, and it turned out to be only enough to get him four years in prison,” Hendershott said.

Under duress

But according to Hendershott, the court’s ruling is invalid anyway, because the confession was obtained under duress.

“Even if he admitted the crime to the police, it cannot be accepted as evidence, because it was gained under torture,” Hendershott said, referring to the International Covenant Against Torture, signed by Ukraine 20 years ago. After such a violation of a detainee’s rights, there could be no trial and no admission of any evidence, Hendershott said.

Hendershott says he has no other option but to protest. He says he is determined to bring international attention to the case, to free his stepson and punish those responsible for breaking the law and violating international conventions on human rights.

“I am quite serious [that] this case will gain the attention of interested parties in Ukraine, Europe, and the U.S.,” Hendershott says.

“We want our son to be freed immediately and the people who committed the crime against him should go to jail,” he says.

Yury Krasnikov, a police detective at Mykolaiv central police department who dealt with the case, denied Hendershott’s accusations.

“Police never beat the arrested unless they resist,” Krasnikov said. He also dismissed allegations of theft and guessed that Hendershott is making his accusations because “parents want to rescue their child.”

“In cases like this, it is practically impossible to reverse the verdict.,” Krasnikov noted. “It’s only because the guy is an American that he can possibly make a fuss out of it.”

Valentyna Valkova, a lawyer for Zheludkov, refused to comment on the case over the phone.

Widespread problem

Meanwhile, human rights advocates say the torture of detainees remains a widespread practice in the country. They maintain it will take years to eliminate the problems that infect all levels of the law enforcement hierarchy.

Yevgeniy Zakharov, head of the Kharkiv Human Rights Protection Group, which investigates cases of torture and ill-treatment from all over Ukraine, says there has been no noticeable progress in fighting the problem since the government of President Viktor Yushchenko took office in January.

“We continue to receive information about the systematic violation of human rights of the arrested, including torture by police officers who need confessions from detainees,” Zakharov said.

“The only difference is that the punishers are more careful now. If earlier they tormented a victim openly, now they are putting masks on or covering the victim’s face,” he said.

Zakharov says that people are often afraid to report such cases, fearing even worse abuse. This makes calculating even rough statistics practically impossible.

Still, the Group’s Center for Professional Protection Against Tortute has opened more than 40 criminal cases against law enforcement officers since its foundation in 2003, Zakharov said.

Some response

Hendershott’s appeals are already getting responses from human rights activists and international organizations, like Amnesty International, which is looking into the case.

U.S. citizen Terry Hallman, a Kharkiv-based human rights advocate who has been contacting local anti-corruption committees regarding the case, says that for him helping Artur is “a matter of principle.”

Hallman has been keeping an eye on corruption in Ukraine since last year, when he halted his economic development project in Crimea because he was not willing to spend money on bribes for corrupt officials. He decided to wait for better times and felt like this could be the right moment to invest. But learning about Artur’s case may make him wait more.

“I see it not as Artur being on trial, but as Ukraine being on trial,” said Hallman.

“I want to check if it’s really possible to obtain justice in this country now. After all, the Orange Revolution was all about justice and anti-corruption, wasn’t it?” he asked.

Source: Kyiv Post

Ukraine to Launch Repeat Auction of Steel Giant Next Week: PM

KIEV, Ukraine -- The Ukraine government plans to start proceedings for a repeat auction of the disputed steel giant Krivorozhstal next week, Prime Minister Yulia Tymoshenko said.

Speaking to reporters during a break in a cabinet meeting, Tymoshenko said the government planned to adopt a resolution that would launch the proceedings on Thursday.


Prime Minister Yulia Tymoshenko
The new auction is expected to take place within a 100 days of the official announcement.

The fate of Krivorozhstal, Ukraine's largest steelworks, is being closely watched by investors as a litmus test of the new authorities' approach to questionable privatizations under the previous regime of president Leonid Kuchma.

The size of the stake to be offered at the new auction would be announced within days and the government expected the sale price to be up to 2.4 billion dollars, news agencies quoted Tymoshenko as saying.

"A 93-percent stake of Krivorozhstal was unlawfully sold (last June) for 3.59 billion hryvnas (800 million dollars, 617 million euros at the exchange rate at the time)," she said.

"We expect to receive a considerably larger sum. The minimum... is 10 billion to 12 billion hryvnas," she said.

She pledged that the new privatization would be transparent.

"We guarantee that we will put Krivorozhstal on auction without any deficiencies," she said.

Earlier the chief of Ukraine's state property fund, which would organize the auction, said the government had ordered the justice ministry to ensure that the steelworks' present owners, who bought the firm at a below-market price during its privatization last year, return their stake to the government.

A 93-percent stake in Krivorozhstal was purchased last June for 800 million dollars (617 million euros) by a group called the Industrial Mettalurgical Union (IMC) -- headed by Ukraine's richest man, Rinat Akhmetov, and Viktor Pinchuk, Kuchma's son-in-law.

The IMC bid won despite offers of 1.2 billion dollars by the Russian steel giant Severstal and 1.5 billion dollars from the British-US consortium of LNM Group and United States Steel Corporation.

Two weeks ago an appeals court in Kiev confirmed a lower court's April ruling that Krivorozhstal's privatization was unlawful and ordered the IMC consortium that bought it to return the shares to the government. IMC has said it would appeal the decision.

Source: AFP

Russian Government Sets Sights On 'Subversion'

MOSCOW, Russia -- A creeping crackdown is underway in Russia as the Kremlin has accused nongovernmental organizations (NGOs) of spying, moved to restrict political parties, and is considering measures that would weaken its print media.

Earlier this month Nikolai Patrushev, head of the state's FSB security service, charged that NGOs - including the US Peace Corps, the British Merlin medical relief foundation, and the Arab Red Crescent Society - were vehicles for "conducting intelligence operations under the guise of charity" activities. All the named groups issued angry denials.


FSB security service head Nikolai Patrushev
Tough talk of limiting Russia's foreign-funded civil society, coupled with a new election law to limit the political field, does not represent a sudden shift, but rather a trend begun under President Vladimir Putin to tighten control over the country's press and public politics, experts say.

"We are returning to the Soviet system of governing, when all was officially under control, although in practice nothing was actually under control," says Dmitri Oreshkin, an expert with Merkator, an independent think tank. "The state being constructed through this process will be unitarian [have a single power center] and will, to a great extent, be an authoritarian
state."

Individual NGOs have frequently been accused of spying by the FSB in the past, but Mr. Patrushev went further by alleging that even many think tanks were using legitimate educational exchanges and civil society projects to work for "regime change."

Demands by the security service chief that NGOs must be curbed are seen as an official reaction to recent popular revolts around Russia's periphery - Ukraine, Kyrgyzstan, and Uzbekistan.

"To accuse NGOs of subversion is something new, and it is a sign the FSB is returning to the role of the former KGB," says Andrei Soldatov, editor of Agentura.ru, a website devoted to studying the intelligence services. "The FSB has recently reconstituted the KGB's 'anti-subversion' department. It is actively returning to old methods of surveillance over the whole society."

Many NGOs say the atmosphere is becoming chillier by the day and worry that a new law governing their activities, currently being drafted, could make life impossible. "International foundations are being actively pushed out of Russia," says Alexei Simonov, director of the Glasnost Foundation, an independent media watchdog. "Financing is becoming much harder; we already feel it."

Says Alexander Shuvalov, deputy director of Greenpeace-Russia: "We are being squeezed out of the mass media, and government agencies are actively thwarting our attempts to work. This is a continuation of policies we've felt for some years."

The new election law, passed in first reading by the Duma two weeks ago, has been planned since the terrorist attack on a school in Beslan last September. Experts say it will easily pass the needed two more readings in September. The law would prohibit coalitions of small parties, raising the threshold for entry into the Duma from 5 to 7 percent, making it easier for officials to disqualify candidates and ban independent observers from polling stations.

"The essence of these changes is to eliminate checks and balances and to distance citizens from real participation in the political process," says Nikolai Petrov, an expert with the Carnegie Center in Moscow.

Some experts suggest the Kremlin's goal is to ensure that only one or two big, officially approved parties will remain. "This is an attempt to create a one-party state," says Yury Levada, head of the Levada Center, an independent polling agency. "We are being pushed into the past, back to the state we previously inhabited."

Gleb Pavlovsky, who advises the Kremlin on political strategy, said this week that Russia's existing opposition parties are "useless" and that the Kremlin's goal will be to build a better opposition before the next Duma elections, slated for December 2007.

"Paradoxical as it may sound, it is a task for Putin's allies, not his opponents, to set up a functioning opposition," Mr. Pavlovsky said. He warned that existing Russian opposition parties may be working with outside forces to engineer a Ukrainian-style revolution against Putin. "That would rob Russian rule of legitimacy, while the decision-making center would shift to another force - one outside Russia," he said. "No one wants an opposition like that."

Experts say the Kremlin recently added several tough amendments to the draft electoral law to control the way media outlets cover elections.

According to the version passed by the Duma, journalists and editors will be held legally accountable for any false or unverified information, even if they have reprinted it from another source, such as a wire service. "This is a very dangerous law," says Andrei Kolesnikov, deputy editor of Izvestia, one of Russia's largest daily newspapers. "It will enable bureaucrats to take control over the media, especially newspapers."

During Putin's first term the Kremlin squeezed out independent TV networks, but largely left print alone. "Now the authorities are showing an interest in newspapers. The trend is to over-regulate everything; and it's a very bad trend," says Mr. Kolesnikov.

Source: Christian Science Monitor

Ukraine Lifts Ban on Privatization of Strategic Enterprises

KIEV, Ukraine -- Ukraine's government on Saturday lifted the ban on the privatization of strategic enterprises imposed in February, but made such privatization subject to government approval, said State Property Fund chief Valentyna Semenyuk.

Property worth a total of 6.9 billion hryvni (more than $1 billion) is to pass into the private sector under the 2005 privatization plan, Semenyuk told reporters.

The government has given various ministries two weeks to compile a list of facilities to be privatized, she said.

Too few facilities had been earmarked for privatization to enable the government to fulfill its privatization plan, so much depends on whether individual ministries are ready to have enterprises they control privatized, Semenyuk said.

Source: Black Enterprise

Ukrainians Try to Block $15 Million Putin Holiday Villa

KIEV, Ukraine -- Ukrainian officials are trying to reverse the sale of an $15 million villa on the country’s Black Sea coast for use by Vladimir Putin, the Russian president, as his official summer residence.

The Glitsiniya property on the Crimean peninsula was bought last year by a Russian bank on behalf of the Kremlin. Boasting an Olympic-sized indoor swimming pool, huge gardens and a private beach, it was built in 1956 as a summer dacha for Nikita Khrushchev, the former Soviet leader. It has more recently been used as a sanatorium and requires considerable work to make it suitable for presidential use.

Ukrainian prosecutors have filed a complaint with a court in Kiev, the capital, claiming the villa was illegally privatised, rendering its sale invalid.

The dispute threatens further to sour relations between Putin and Viktor Yushchenko, Ukraine’s pro-western president who came to power after the orange revolution last year. The Kremlin had backed Yushchenko’s rival, Viktor Yanukovich.

“The villa should not have been privatised and sold,” said Natalia Boyarkina, of the prosecutor’s office in Crimea. “According to the law, it cannot belong to anyone other than the state of Ukraine. We have passed the necessary documents to Kiev and are waiting for the courts to act.”

The resort was used during the Soviet period by Khrushchev’s successors, Leonid Brezhnev, Yuri Andropov and Mikhail Gorbachev. In Brezhnev’s day, the villa even had a rooftop tennis court. It was converted into a restaurant once the Soviet leader’s entourage became too frail to play.

The Ukrainian move comes amid attempts by Yushchenko’s government to revisit the privatisation of state enterprises and property under Leonid Kuchma, his predecessor.

“A dispute over his holiday home is the last thing Putin needs at a time when he is trying to establish normal relations with Yushchenko,” said one Russian diplomat involved in relations with Kiev.

“We have had to swallow our pride over the orange revolution. To have this villa sold to the Kremlin and then taken away is just the sort of petty row which will infuriate him.”

Source: The Sunday Times

Only Communists Can be Regarded as Opposition in Ukraine - Supreme Rada Speaker

KIEV, Ukraine -- Speaker of the Supreme Rada (Ukrainian Parliament) Vladimir Litvin believes only Communists can be regarded as opposition in Ukraine, because "they conduct more or less consistent policies."

"Others make more noise rather than action," the speaker said in an interview with Kontrakty (Contracts) weekly publication, the Novosti-Ukraina agency reports.


Supreme Rada (Ukrainian Parliament)
Litvin, who heads the People's Party of Ukraine, said, "today we can speak about a situational opposition to certain legislation or actions of the authorities."

Calling a strong opposition "a blessing for the country," Litvin pointed out that until the 2004 presidential elections "it was extremely hard to work, but we adopted compromise decisions, those that satisfied the Ukrainian society. Today, any decision can be enforced."

At the same time, the speaker predicts that closer to the 2006 parliamentary elections "many politicians who maintain neutral positions at present will attempt to distance themselves from the government and the president in order to build their platforms on the criticism of the authorities."

Litvin does not discount the possibility that ex-president Leonid Kuchma might become a deputy.

"I do not see him getting involved in big politics, but he might become a deputy," he said. At the same time, the speaker pointed out "there is no political force that might offer him to participate in the elections."

Litvin said he would not "criticize Kuchma for moral reasons, despite it became a modern trend."

"It will take time to evaluate all positive and negative aspects of his activities. It all depends on in which direction and how fast Ukraine will progress in the future. If the quality of life deteriorates, Kuchma will be remembered more. If it improves - he will be remembered less," the speaker of the Ukrainian Parliament believes.

"I would not be sincere with you if I said there will be no attempts to use the administrative resource during the elections. It is widely used even today," Litvinov conceded.

"There are many cases when people are forced to join the party that is associated with Viktor Yushchenko's name," the speaker underlined. At the same time, he expressed hope it was "not the policy approved by the President."

"Such coercion is a habit of being a lackey, a desire to please the master," Litvin believes.

In his opinion, during the 2006 parliamentary elections "people will vote for the government," because "according to the main provisions of the political reform, the composition of the parliament will determine the candidature for Prime Minister."

The reform envisions the transition from the presidential-parliamentary form of government to the parliamentary-presidential form, the formation of the government by the coalition of parliamentary factions, and the extension of the parliamentary term from four to five years.

The authority of the Supreme Rada will be extended, as well. It will receive the right to appoint the prime minister, defense and foreign ministers on recommendation of the president, and to appoint other members of the Cabinet on recommendation of the prime minister.

The amendments to the Constitution will come in force on September 1, 2005.

Source: RIA Novosti

New Ukraine Government Continues In The Global War On Terror

KIEV, Ukraine -- More than 100 days have passed since the President of Ukraine Yuschenko, in Brussels, reaffirmed his country's desire to integrate into NATO and other European and world structures. The notorious “multi-vector policy” of the former Ukrainian government has been left behind. On behalf of the new Ukrainian government the Foreign Minister of Ukraine, Borys Tarasyuk, stated that the days when Ukrainian officials reported about different country’s intentions in Washington, Brussels, and Moscow, are gone. By now there is no other aim for Ukraine than to move towards Euro-integration in both domestic and foreign policy.

Back in Kyiv, political and military officials of the country warmly appreciated the line of a new Ukrainian government. Head of Verkhovna Rada (Supreme Council of Ukraine), Volodymyr Lytvyn, has offered full congressional support for joining NATO and the EU. But rather than initial integration, people of Ukraine are interested in implementation of common democratic values in the country. The widespread fight against corruption and oligarchs in Ukraine meets resistance from the former “regime elites” from time to time. But the Ukrainian people who once surprised the world with their firm will, will not let the society return back to how things were before.

On the path to EU, Ukraine is drawing up a “Road Map” (the basic action plan) for the current year. President of Ukraine Victor Yushchenko has outlined this following his speech in the European parliament in Strasbourg. According to the Ukrainian President, among key provisions of the plan is to obtain a market economy nation status in the first half of the current year; to hold talks and to complete technical procedures for Ukraine’s entrance in World Trade Organization by November; to begin consultations on setting up a free trade zone between Ukraine and the EU; to sign agreements on a simplified visa regime; and to conform Ukrainian border and customs procedures with EU standards.

The initiatives of the new Ukrainian government were widely supported by the world community of nations. Ukraine appreciates understanding of its aspiration by all European leaders and U.S. President George Bush, who had signaled his country’s desire to see Ukraine in NATO and in the European community.

For Ukraine, the striving for democratic values also means acceleration in achieving its ultimate aim in Iraq – training the Iraqi troops as fast as possible to replace the Ukrainian peacekeeping contingent. By the mid of May 2005 Ukrainian military instructors manned and trained two infantry battalions for Iraqi Armed Forces’ 27th Infantry Brigade (totally more than 1,000 Iraqi soldiers), and about 350 personnel for the frontier guard, who already augment the Iraqi 3rd Frontier Guard Division.
That let Ukraine downsize the peacekeeping contingent since its last rotation in April. Now 864 soldiers of the 81st Detached Tactical Group (DTG), and 41 military advisors who serve in multinational headquarters of different military organizations, represent Ukraine in Iraq.

81st DTG includes administration staff, four airmobile, one reconnaissance and one military police companies, a mortar battery, engineering and chemical warfare platoons. Administration additionally includes units for government institutions’ support and military assistance, and two officers for religious issues. Apart from patrolling, cargo escort and camp defense, activity of the 81st DTG will be mainly focused on the enhancement of training for Iraqi troops. As Ukraine reduces its peacekeeping contingent little by little, coordinating this planning with other Coalition members, first of all Poland and the U.S., it will remain part of the Coalition until the mission in Iraq is accomplished.

In his first speech to the local population (Ukrainian peacekeeping contingent is located in Al Kut, Province of Wazit) Commander of 81st DTG, Major General Serhii Goroshnikov, in particular thanked the personnel of the recently rotated 7th Detached Mechanized Brigade (DMB) for the huge contribution made in maintaining peace and stability in the region.

The 7th DMB of about 1,500 personnel and 370 military vehicles commenced fulfilling its tasks in Iraq on September 22, 2004. During more than six months staying in Wazit its soldiers carried out 800 convoys and 4,500 patrols. Each of military drivers covered about 10,000 km (6,250 miles) of Iraqi roads, in total vehicles of 7th DMB covered more than 2,000,000 km (1,250,000 miles).

Additionally, 47 persons suspected of participation in terrorist activity were detained and passed to the local law enforcement organizations. A significant amount of weapons and ammunitions were confiscated. Acting together in cooperation with a Kazakhstan field engineering detachment, which was included in structure of 7th DMB, Ukrainian soldiers defused and destroyed more than 80,000 items of ammunition and unexploded ordnance that included shells, self-propelled and hand grenades, field mines, and air and mortar bombs.

The 7th brigade Civil-Military Cooperation detachment developed and completed more than 100 significant civilian projects, at a cost of more than $U.S. 3,7 million. Ukrainian soldiers helped Iraqis repair and refurbish schools, hospitals, kindergartens, and monuments; restore water-supply lines and sewer systems, supplied the local population with drinking water, provided local government organizations and media with furniture and office equipment. The Ukrainian military doctors from the brigade medical company treated more than 5,500 patients.

At the same time it must be remembered that nine Ukrainian soldiers of 7th Detached Mechanized Brigade have lost their lives, which extended Ukrainian losses in Iraq to a total 18 personnel.

Source: MNA Press

Prosecutor: 778 Criminal Cases Opened Into Fraud in Ukraine's 2004 Vote

KIEV, Ukraine -- Ukrainian prosecutors have opened 778 criminal cases against people suspected of falsifying ballots in last year's fiercely contested presidential election, the chief prosecutor's office said Friday.

Prosecutor General Svyatoslav Piskun told Ukraine's Channel 5 television that the cases involved "not those who cast ballots but those who organized the falsification."

Widespread reports of fraud after last year's presidential race triggered mass protests, which became known as the Orange Revolution. Ukraine's Supreme Court threw out the results and ordered a new vote, which pro-Western opposition leader Viktor Yushchenko won.

Observers said the fraud in this ex-Soviet republic included using absentee ballots to cast more than one vote, voting at multiple stations, ballot box stuffing and manipulations of the voter list. Piskun said that prosecutors were also preparing to open charges against members of the old Central Election Commission whom allegedly participated in the fraud.

"We will discover who put pressure on them," Piskun said.

Meanwhile, ex-President Leonid Kuchma's former chief-of-staff, Viktor Medvedchuk, denied Friday that he had put any pressure on Central Election Commission members. "I personally ... didn't apply any pressure in relation to the 2004 presidential election on anyone, including members of the Central Election Commission," Medvedchuk told journalists.

He added that "that's why I am calm about any such declaration," such as the prosecutor general's.

Kuchma's hand-picked successor, former Prime Minister Viktor Yanukovych, was declared the winner last year, but the court's decision to throw out his victory paved the way for the opposition's eventual win.

Source: AP

Inside the Orange Revolution

KIEV, Ukraine -- It was one of those moments when the world seemed simple and beautiful again. Hundreds of thousands flooded on to the streets, calling for an end to dictatorship and corruption, demanding truth and democracy instead. They listened, rapt, to their hero, Viktor Yushchenko, whose handsome face had been ravaged by a recent dose of dioxin. It felt like a fairy tale: the bad king had poisoned the people's champion and tried to stop him from taking power, but the people had gathered in the capital and shouted with one voice that they would not leave until they were given justice.



There is some truth in this version of Ukraine's "orange revolution", but it is a half-truth. What the world thought it saw, last November, was a spontaneous protest which grew, of its own accord, into a challenge to the country's post-Soviet power structure. For most of the people gathered in Kiev's Independence Square, the demonstration felt spontaneous. They had every reason to want to stop the government candidate, Viktor Yanukovich, from coming to power, and they took the chance that was offered to them. But walking through the encampment last December, it was hard to ignore the evidence of meticulous preparation - the soup kitchens and tents for the demonstrators, the slickness of the concert, the professionalism of the TV coverage, the proliferation of the sickly orange logo wherever you looked. It was surprising how few journalists commented on what was so obvious.

In reality, the events in the square were the result of careful, secret planning by Yushchenko's inner circle over a period of years. The true story of the orange revolution is far more interesting than the fable that has been widely accepted. It tells us, not just about what went on in Ukraine in 2004, but how the border between politics and entertainment is dissolving in the 21st century.

According to one of the main organisers of the revolution, Roman Bessmertny - Yushchenko's campaign manager and, currently, vice-prime minister - the aim was, effectively, to carry out a peaceful coup d'état: "We created a system parallel to the state, because only a system could defeat an opponent backed by the whole state."

More than two years before the 2004 presidential election, Bessmertny's team set up a massive operation to combat election fraud, and to capture it on camera where it happened. In some 30 months, they put as many as 150,000 people through training courses, seminars, practical tuition conducted by legal and media specialists. Some attending these courses were members of election committees at local, regional and national level; others were election monitors, who were not only taught what to watch out for but given camcorders to record it on video. More than 10,000 cameras were distributed, with the aim of recording events at every third polling station. As the orange revolutionaries saw it, election fraud was inevitable because any government-sponsored candidate would have to take votes from the built-in opposition majority in the west and centre of the country. The orange plan was to turn election fraud to their advantage, using it as a trigger for a mass protest in Kiev.

Their plan relied on volunteers such as Yuri Kolivoshko. A small-time property developer in his early 30s, he had formerly been politically apathetic, but by the second round of the election he was monitoring activity at the polling booth, camcorder in hand. "I'm the kind of person who believed that things had been decided on our behalf a long time ago, that's all, and whether I went to vote wouldn't make any difference to me or Ukraine." Once Kolivoshko had voted, like millions of others, he began to believe that Yushchenko's movement offered a chance of change. "In the second round of voting I worked as an observer at a polling station until 6am. My task was to monitor violations, and I filmed everything. Then I went to Kiev, with the clothes on my back."

Kolivoshko's conversion backed up the confidence of the orange movement that large numbers of people would rally to the cause, if they were given a chance to protest effectively. You didn't have to spend long in Ukraine to understand why. The regime run by former President Kuchma and his cronies was a cynical kleptocracy spiced up with sporadic brutality. A new generation had grown up since the end of the Soviet Union, and many had worked abroad. They knew that life could be different. The gamble of the orange team was that, if they could attract tens of thousands of people to protest against election fraud on the streets of Kiev and keep them there for long enough, they could break the government, forcing it to concede to their demand for fair elections, and then replace it.

Their plan of campaign was original and ambitious: they would organise a marathon rock concert, playing 10 hours daily in the city centre. This, in turn, would become the focal point for a huge continuing demonstration, that would bring the city to a standstill. Beside Independence Square, where the concert would play and opposition leaders would make speeches, there would be an encampment, large enough to make it difficult for the authorities to clear it without a humiliating and risky show of force.

Above all, the whole event would be covered on television, pulling in a national audience and generating a stream of images for international news reports. If the event was compelling, entertaining, watchable, then this would be the perfect revolution for the 21st century, a combination of "sit-in" and Live Aid. Any step the authorities took to act against it would be in the full glare of live television.

There was one evident problem: how could the orange revolutionaries hope to surprise the government, when there was no chance of keeping the operation secret? It was just too big, and involved far too many people. Part of the answer was to keep information about the operation in distinct compartments, so that very few grasped the complete picture, but the main inspiration was that every step should be taken in conformity with the law: "We ensured that the state had no reason to complain," says Bessmertny.

The orange team submitted the first notice of the event on Independence Square on November 15 2004, giving the authorities advance warning that the revolution would begin on November 21. The government didn't know the real agenda behind the concert and, even if it had, it would have found it hard to stop it.

By November 21, following the second round of the election, Bessmertny's team had a good idea of how many would arrive in the square: "We knew from our events that, if we distributed half a million invitations around Kiev, 8,000 people would come. We knew that if FM stations transmitted 100 announcements every day for a week, saying that a meeting would take place, then 200,000 people would come. So if we brought 35,000 people from the regions, and added the people from Kiev, we believed we would have a minimum of 100,000 people in the square. The figures weren't random, they were taken from our experience."

The numbers game was crucial, because it determined whether troops might be used against the demonstrators. One of the most sensitive, and secret, aspects of the orange revolution was the attempt to bring the army on side. For 18 months, a special contact unit was putting out feelers to army commanders, trying to understand their contingency plans and to persuade them to remain neutral. The arithmetic, it turned out, was quite simple: there were 15,000 troops available to the Kiev command, and the army would not act, with that number of troops, if there were more than 50,000 people in the square. The task of the opposition, then, was to keep enough demonstrators together in and around the square to forestall an attack. As it turned out, there were hundreds of thousands in the square and, at some points, up to a million.

The task of the demonstrators was to endure the cold and discomfort of the streets. They were barely aware of the support-system sustaining their efforts, unless they plugged into it directly. Igor Radkov, an advertising agency manager from Donetsk, eastern Ukraine, decided to join the orange revolution when he was beaten up by Yanukovich heavies while working for the opposition in his home town. As a former military officer, the experience didn't deter him but only made him more determined. In Kiev, he found what he was looking for: "I have never in my life seen such unity. I used to be indifferent, but when I stood on the square, hand on my heart, and sang the national anthem, I'll never forget it. I was sure truth would win."

As the demonstrators arrived, at first from Kiev and then from the rest of the country, they found that everything was ready for them: "You have to understand," Bessmertny says, "that the square wasn't just the beautiful things you saw on television. It was also almost 300 toilets, which had to be drained daily. And you had to feed people. We provided 5,000 tonnes of porridge and 10,000 loaves of bread a day. And you had to keep people warm. Every day we needed some 200 gas canisters, one or two heaters per tent, and foam pads and sleeping bags. And we drove away 11 trucks of rubbish each day."

The demonstrators, holding out in sub-zero temperatures, received impressive medical support, and they needed it: the doctors received more than 5,000 calls a day. And if the concert wasn't enough, the organisers had prepared teams of psychologists and therapists to work with the protesters. They also invited in churches - the Scientologists were, apparently, particularly good at spreading a positive vibe. Sometimes, however, the best efforts of the support staff failed, and a group would be written off. They would be put on buses, waiting to take them home.

The success of the orange revolution has promoted a kind of democratic inebriation, in which random demonstrations around the world are each sold as a new dawn of freedom in the Ukrainian tradition. Yet what Yushchenko's team achieved requires more than a sense of grievance and the hope of change. It needs large sums of cash (in this case, much of it American - the US state department has said that it spent $64 million in Ukraine over the past two years; it is estimated that the Russians, by the by, contributed up to $291 million to the other side).

Along with the money, a democratic revolution on the orange model demands long-term planning, superb organisation and charismatic leadership. It also, of course, has to be addressed to a people who are ready to understand and support it. In the words of Bessmertny: "The people were so sick of the authorities, they were ready to give everything, ready to give their last things so that people would carry on standing there, on the square. Because everyone understood that, if the people dispersed nothing would ever happen."

Source: The Guardian

Increase of Russian Gas Price Will Bring Ukraine to its Knees

KIEV, Ukraine -- The former head of the national oil and gas stock company "Naftogas Ukrainy," Yurii Boiko, notes that the Ukrainian side will agree to the overpriced gas deliveries in no circumstances.

In particular, he is convinced that $160 dollars per one thousand cubic meters will bring Ukraine to its knees. The maximum price that our industry can withstand is $80-$90 dollars.



More of that Mr Boiko noted that "gas, which belongs to the Russian 'Gasprom', is annually pumped into the Ukrainian storage in order to enlarge gas imports to Europe at the period of winter seasonal peak demands. There will be no changes this year, I am sure, the gas has not disappeared, and there are about 8 milliards of cubic meters."

The former head of the national stock company "Naftogas Ukrainy" also informed that police has finished examining the activity of "Naftogas." "After the head have retired, some shortcomings can always be found, but they are just shortcomings," noted Boiko.

We remind, the prices on gas, imported to Ukraine from Russia, can be changed from $60 dollars up to $160 dollars per one thousand cubic meters in 2006. The Ukrainian side studies this information at the moment and is preparing some quotations for the possible transit prices.

Source: ForUm

Fledgling Political Party Mimics GOP

WASHINGTON, DC -- Kostyantyn Gryshchenko began his career in the Soviet diplomatic corps, served as Ukraine's ambassador in Washington, and rose to be his country's foreign minister during the tumultuous days of December's Orange Revolution.

But in Washington yesterday for meetings with senior State Department officials, Mr. Gryshchenko was wearing yet another hat: politician.


Kostyantyn Gryshchenko
"For Ukrainian diplomats, our frustration was always that what we tried to achieve abroad was being held back by the realities of our own country," Mr. Gryshchenko said in an interview. "Forming a political party was the way I saw to change that."

Mr. Gryshchenko said his fledgling Republican Party of Ukraine is named after and patterned on its American counterpart: a pro-business, low-tax, small-government party that favors individual initiative, community values and decentralized political power.

"We took the basic core idea from the ideas of the U.S. Republican party," he said.

The Orange Revolution, in which massive, peaceful protests overturned a questionable election and led to a victory for pro-Western President Viktor Yushchenko, electrified the world.

But Mr. Gryshchenko, who stepped down as foreign minister Feb. 4, argued the revolution had been far from complete. U.S. and European support and pressure, he said, were still needed to keep the new government on the path to needed reforms.

"In many ways there has been no visible break with the way the country was governed before," he said.

"The outward declarations and statements of the government are much more positive, but the power structures -- dealing with the media, with local governments, with the economy -- have seen no real change."

The Orange Revolution "opened a window of opportunity that should be exploited to the maximum for reform, but that is not happening now," he added.

President Yushchenko and Prime Minister Yulia Tymoshenko have clashed over energy policy and other issues, reminiscent of the paralyzing fights that occurred throughout the two terms of former President Leonid Kuchma.

Most local officials are appointed by the central government in Kiev, and business "oligarchs" continue to dominate many of the main industrial and media properties.

Mr. Gryshchenko said many of the bureaucrats and ministers from Mr. Kuchma's time remain in place, and government officials still have trouble accepting the need for a critical and independent press.

He said his new party hopes to meet the 3 percent vote threshold to qualify for seats in parliament in next spring's vote, seeking support in both Ukraine's European-oriented west and its Russian-speaking eastern regions.

He acknowledged the vast change between his former life of international conferences and high-level diplomacy to a politician's lot shaking hands, slapping backs, striking deals and trolling for votes.

"I have gotten to see a lot more of my own country than I did before," he said.

"But cutting deals is something I have had to do for a long time. Any negotiation is a delicate balance between what is achievable and what is in the best interests of everybody in the room."

Source: The Washington Times

Moldova: Parliament Approves Kyiv's Plan For Transdniester

CHISINAU, Moldova -- With a vote of 96 deputies of the total of 101, the Moldovan parliament on 10 June passed a declaration endorsing the plan for the Transdniester conflict settlement that was proposed by Ukrainian President Viktor Yushchenko nearly two months ago.



Subsequently, in an appeal addressed to the Organization for Security and Cooperation in Europe (OSCE), the Council of Europe, the United States, Russia, Ukraine, and Romania, Moldovan lawmakers called on Russia to withdraw its military contingent from the separatist region of Transdniester by the end of 2005 as well as to remove and/or destroy the armaments and ammunition stored in Russian-controlled depots in Transdniester. In yet another resolution, the Moldovan legislature appealed to the OSCE and the Council of Europe for assistance in democratizing the breakaway region."We have long said and continue to say that we are ready to pull our troops out, but unfortunately Transdniester's leadership is preventing us from doing it because it sees Russia's military as a guarantee against...military actions by the opposite side."

Before the votes, the parliament was addressed by President Vladimir Voronin, who urged deputies to adopt Yushchenko's plan as the "most interesting and promising" of all the conflict settlement schemes that have ever been discussed between Chisinau and Tiraspol. "The plan, in a very subtle and intelligent way, sidesteps those sharp problems that have always impeded the settlement process -- the pullout of foreign troops from the territory of Moldova, the delineation of powers between the central authorities and Transdniester, ways for ensuring stability in the security zone, and the establishment of legal control over the Transdniester stretch of the Moldovan-Ukrainian border," Infotag quoted Voronin as saying.

According to Voronin, the most crucial provision of Yushchenko's plan is that it provides for the future of Moldova as a territorially and politically integral state. "Ukraine focuses the attention on a major settlement mechanism that is being proposed to Moldova for the first time as a path toward achieving its territorial integrity -- the democratization of Transdniester. Even if the plan had included this one provision alone, Viktor Yushchenko's proposal should have been welcomed warmly," Voronin asserted.

The Moldovan president recounted the main stages of Yushchenko's plan for reintegration of Moldova. The first step is to be made by the Moldovan parliament, which needs to pass a bill on the "main principles" of Transdniester's autonomous status within the Republic of Moldova. According to Voronin, this document should simultaneously determine electoral procedures for Transdniester's legislative bodies, including its Supreme Soviet. In the next step, an international election commission operating under an OSCE mandate is to organize elections to Transdniester's Supreme Soviet by the end of 2005. If the elections are deemed democratic, newly elected Transdniester deputies should join their colleagues in Chisinau in finalizing the bill on Transdniester's autonomous status -- its final version is to be approved by the legislatures in both Chisinau and Tiraspol.

Touching upon the issue of Russian troops in Transdniester, Voronin said the Moldovan people see no "political or geostrategic" reasons for their deployment there. "We think that the armed people in Moldova's security zone should be replaced with observers operating under an international mandate," he stressed. "There can be no realistic reintegration, no strengthening of mutual trust in the region with the help of armed people. We want the OSCE to vigorously support our position on this."

The first Russian reactions to Moldova's parliamentary endorsement of Yushchenko's plan were rather inauspicious for the further progress of the Transdniester settlement process. "The parliament of Moldova should take into account the opinion of Transdniester, and there should be no such situation where only Voronin and Yushchenko regulate the situation in the unrecognized republic. They have taken too much upon themselves," Russian State Duma First Deputy Speaker Lyubov Sliska said.

At the same time the head of the Duma's Committee for International Affairs, Konstantin Kosachev, signaled that there may be other problems as well, aside from Moscow's apparent dislike of Kyiv's prominent role in the settlement process. "Our troops are not stationed in Transdniester by Russia's own will," Kosachev said. "We have long said and continue to say that we are ready to pull our troops out, but unfortunately Transdniester's leadership is preventing us from doing it because it sees Russia's military presence [in Transdniester] as a certain guarantee against the resumption of military actions by the opposite side."

In mid-May, representatives of Chisinau and Tiraspol met in the Ukrainian city of Vinnytsya and -- in the presence of mediators from Russia, Ukraine, and the OSCE -- discussed Yushchenko's plan, effectively resuming their talks that were broken last summer. Media reports on that meeting suggested that both Chisinau and Tiraspol were favorable toward the plan. However, to make any further progress, the plan needs to be endorsed by the Kremlin, which has so far remained silent on it. The official backing of the Ukrainian plan on 10 June by the Moldovan parliament apparently does not make any breakthrough in the Transdniester conflict settlement, but surely makes it very problematic for Moscow to restrain from taking an official stance on the plan any longer. Now it is obviously Moscow's turn to make a move in the Transdniester game.

Source: Radio Free Europe

Media Bias Decreases in Ukraine, but Through Dubious Means

KIEV, Ukraine -- Six months into the Viktor Yushchenko presidency, the media and information situation in Ukraine remains mixed. The good news is that oligarch control over electronic media is on the decline. The bad news is that the tactics of the newly elected authorities are not always different from those used under former president Leonid Kuchma.

Ukraine's media played a negative role in the 2004 presidential election. According to the OSCE's Election Observation Mission's final report, "Most media outlets failed to provide impartial and fair coverage… and few TV stations provided the opposition with airtime".


The Director and Journalists at 1+1 Channel Rebellion During Last Year's "Orange Revolution"
The main oligarch clan to lose in the presidential election is linked to the Social Democratic Party-United (SDPUo). During Kuchma's second term in office, the SDPUo controlled two television channels: the U.S.-Ukrainian joint venture "1+1" and the Russian-Ukrainian joint venture "Inter." State Channel 1 also came under the executive control. Inter and 1+1 have the largest number of viewers in Ukraine, and they are regionally concentrated in the west and center (1+1) and east and south (Inter). Most Ukrainians receive their information from television.

In the first week of the Orange Revolution, censorship disintegrated. The director and journalists at 1+1 Channel rebelled and refused to follow guidelines sent by the authorities. Although the SDPUo had never controlled 1+1, its directors had been warned that if they did not follow the guidelines, the channel would be shut down.

Following Yushchenko's election, State Channel 1 automatically transferred to his control. Taras Stetskiv, a long-time Yushchenko ally and organizer in the Orange Revolution, became the channel's president.

With two of the SDPUo's three TV channels taken away, only Inter remained under their control. Information was recently leaked to the investigative news site Telekritika claiming that the SDPUo has now lost Inter channel. National Security and Defense Council secretary Petro Poroshenko, who has business interests in Russia, is acting as an intermediary for a Russian businessman who wants to purchase Inter channel. The Russian is reportedly "loyal to the Orange Revolution."

The president of Inter channel is Ihor Pluzhnykov, deputy head of the SDPUo, who controls 79% of its shares. Russia's Channel 1 controls the other 21%.

When Pluzhnykov initially refused to sell, he was subjected to a well-known tactic to persuade him to change his mind. As reported by Telekritika, "certain delicate factors forced him to begin negotiations…in a way, he was forced to choose between liberty and the TV station".

Yale University scholar Keith Darden dubbed this proven method of persuasion the "blackmail state." Beginning under Kuchma, officials and businessmen were permitted to indulge in corruption in return for political loyalty. To ensure this loyalty, the government collected files documenting the illegal activities.

The files collected by the "blackmail state" are now being turned against former Kuchma supporters. Inter channel President Pluzhnykov is the second known target; the first was Crimean Prime Minister Serhiy Kunitsyn. Kunitsyn, head of the Crimean branch of the pro-Kuchma People's Party of Ukraine (NDP), was forced to resign or face criminal charges. His replacement, Anatoliy Matvienko, is head of the Sobor Party, which is part of Prime Minister Yulia Tymoshenko's bloc.

The SDPUo's loss of control over three television stations and the loss of its power base in Trans-Carpathia give little optimism for its future. A new Razumkov Center poll gave the SDPUo only 1% support, down from 6% in the 2002 and 4% in the 1998 parliamentary elections. Ukrainian experts do not expect the SDPUo to scrape past the 3% threshold in the March 2006 election.

Ukraine's other oligarchs continue to control their television channels, at least for the time being. Dnipropetrovsk oligarch and Kuchma son-in-law Viktor Pinchuk controls ICTV, STB, and Novyi Kanal, while Donetsk oligarch Renat Akhmetov controls TRK Ukrayina, which mainly broadcasts in the Donbas oblasts of Donetsk and Luhansk.

Pinchuk and Akhmetov are battling the authorities over the sale of Kryvorizhstal, Ukraine's largest metallurgical plant, which they bought in June 2004 at the under-valued price of $800 million. The current authorities, with court backing, are seeking to transfer the plant back to state property to likely be re-sold in an open tender for $3-4 billion.

Inter channel's shift to political forces loyal to Yushchenko dramatically changes the media situation in eastern and southern Ukraine ahead of the 2006 election. Former pro-Kuchma centrists are in disarray after the defeat of their presidential candidate, Viktor Yanukovych. This crisis is also tantamount to a crisis of the pro-Russia idea in Ukraine as centrists, particularly the SDPUo, were the driving force behind Ukraine's re-orientation toward Russia in Kuchma's second term.

The pro-Russian Communist Party is also in crisis with 4.8% support (down from 20% in the 2002 election). This would give the Communists only 36 deputies in the 2006 parliament, down from its current 55 and 120 at its peak in the 1998-2002 parliament.

With access to Inter channel, the Yushchenko camp can now freely spread its message in eastern Ukraine. It can also deny a platform to pro-Russian forces in the 2006 election and thereby reduce the opposition's ability to block Ukraine's new Euro-Atlantic drive.

Source: Eurasia Daily Monitor

U.S. Trade mission to Ukraine

CONCORD, USA -- On a trade mission to Europe planned for October, Gov. John Lynch will make news as the first U.S. governor to visit Ukraine, a former Soviet republic that underwent its famous "Orange Revolution" last year.

Lynch, who will be leading the Oct. 8-19 trade mission to stops in Germany, the Czech Republic and the Ukraine, said he will use the trip to help New Hampshire businesses find new customers and increase their sales in global markets.


Gov. John Lynch (R) and his wife Dr. Susan Lynch (L)
"Trade missions offer an affordable way for small New Hampshire companies with great products to break into new markets, and then create new jobs here at home," said Lynch.

Also as part of the mission, Lynch will be promoting travel and tourism to New Hampshire.

Karen Wyman, an international trade specialist with the state International Trade Resource Center, said the itinerary for the trip emerged out of results from a survey of more than 2,000 state businesses seeking to expand their exports of goods and service.Germany, the Czech Republic and Ukraine were the top three choices, said Wyman.

In 2004, N.H. companies exported $143 million of goods to Germany, $4 million to the Czech Republic, and $2 million to Ukraine. Since 2002, N.H. exports to Germany have grown 12 percent, to the Czech Republic by 314 percent, and by 691 percent to Ukraine.

This will be the first time a N.H. trade mission has traveled to the Czech Republic and Ukraine. Wyman explained that, unlike on previous trade missions, businesses taking part this time will have more flexibility to visit one, two or all three countries.

Ukraine’s "Orange Revolution" last year, which came in the wake of disputed presidential elections, peacefully rejected the pro-Moscow establishment candidate and vaulted challenger Viktor Yushchenko to the president’s office.

Source: Portsmouth Herald

Putin, Yushchenko Discuss Missing Gas

MOSCOW, Russia -- Russian President Vladimir Putin spoke with his Ukrainian counterpart Viktor Yushchenko on Friday about natural gas Russia's gas monopoly says went missing from storage tanks in Ukraine, the Kremlin said.


Viktor Yushchenko (L) and Vladimir Putin (R)
In a telephone conversation that also touched on broader bilateral ties and international affairs, "the problem of relations between the two countries in the gas sphere was discussed at the initiative of the Russian side," Putin's press service said in a statement.

Russia's state-run Channel One television said that was a reference to some 8 billion cubic meters (282 billion cubic feet) of Russian natural gas that Gazprom, Russia's state-connected gas monopoly, says disappeared from underground storage tanks in Ukraine.

Gazprom wants Ukraine to pay export prices for the missing gas, which was supposed to be stored in Ukraine for eventual shipment to Europe.

"This gas was meant for export, so the starting position for negotiations is the export price," Gazprom deputy chief executive Alexander Medvedev said in a comment televised on Channel One.

Relations between Russia and Ukraine have been tense since the election of the Westward-leaning Yushchenko, who beat the Kremlin-backed candidate in a presidential rerun last December after the ex-Soviet republic's Supreme Court threw out the results of a previous vote amid protests dubbed the Orange Revolution.

Also Friday, Russia's Foreign Ministry issued an angry statement saying a bust of the beloved Russian poet Alexander Pushkin was broken in what it called "the latest act of vandalism" against a Russian cultural center in Lviv, a city in western Ukraine where anti-Russian sentiment is strong.

Source: MSN Money

Ukraine is Considering the Possibility of Supplying Military Goods to Afghanistan

KIEV, Ukraine -- Ukraine is considering the possibility of supplying military goods to Afghanistan, the Press Service of the Ukrainian Defence ministry reported on Friday with reference to its minister, Anatoly Hritsenko.

Ukraine is backing NATO’s peacemaking operations in Afghanistan, Hritsenko noted. “There were already more than 7,500 flights of NATO planes over the Ukrainian border, carrying different freight to Afghanistan,” the minister added.

Ukraine is ready to open a ground corridor for non-military cargoes that are needed to help the peacemaking mission in Afghanistan, Hritsenko divulged, commenting on the results of the meeting of the Ukraine-NATO Commission in Brussels. Moreover, he added, Ukraine is prepared to train Afghan servicemen at its military schools and to help train them in Afghanistan, too.

Source: ITAR-Tass

Spotlight: A Banker's Victories Across Europe

VIENNA, Austria -- On a late summer day in 1989, Herbert Stepic found himself writing an impromptu opus that became, in short order, the blueprint for the most important phase in his career.


Banker Herbert Stepic
Stepic, then a managing director of Austria's Raiffeisen Zentralbank, was in the Tyrolean hamlet of Alpbach, where a gathering of economic, political and cultural elite from the German-speaking world had set him to thinking privately about the future. Amid the peaceful revolutions of 1989 across Communist Eastern Europe, Stepic sensed business opportunities on Austria's doorstep.

On his hotel balcony, overlooking a bucolic scene of grazing cows in the Alpine meadow below, Stepic scribbled roughly 20 pages on how RZB, as it is known, could conquer the East European market - a document he later presented to his board.

"I started making notes in the afternoon and was still at it by 9 p.m.," Stepic recalled in an interview.

The plan foresaw a two-pronged geographic approach to creating a network of banks in the region, first across Europe's midsection before turning southeast toward the Balkans. First the bank would sell financial services to Austrian and East European companies before making the more expensive but also more lucrative investments in a retail network.

The board's approval of Stepic's plan set in motion 15 years of bustling commerce between its headquarters in central Vienna and subsidiaries from Warsaw to Belgrade. Although Raiffeisen International, as RZB's international operations are known, has turned a profit for some years now, on April 25 stock marketeers handed Stepic confirmation of his success when the bank raised €1.1 billion, or $1.34 billion, in an initial public offering of 28 percent of its shares and drove its stock price up 20 percent on the first day.

The stock's appeal was anchored in the medium-term growth prospects for the region, according to Steffen Grutschka, a fund manager with the Frankfurt-based DWS Investment, which bought shares in the IPO. Banking depends heavily on the overall health of an economy, so that companies demand financing, and consumers borrow and spend, Grutschka noted.

In pitching the stock to investors, Stepic brandished slides comparing the meager economic growth of 2.3 percent in Western Europe in 2004 with rates of more than 5 percent to the east and 7 percent in Russia alone. Against this backdrop, Raiffeisen International's pretax profit soared from €343 million to €706 million last year.

Though employees speak openly of Stepic's demanding management style, his heavyset figure, gregariousness and neatly trimmed beard combine with a rollicking Austrian accent - and, usually, a Cohiba cigar nearby - to create an amiable impression.

Stepic, 58, dabbles heavily in African art: his office, overlooking Vienna's Cathedral of St. Stephen, brims with dark wooden sculptures from Congo, Ivory Coast and Cameroon. But when it comes to business, his attention focuses on Eastern Europe.

Part of that naturally flows from his base in Austria. For centuries, the Hapsburg Empire dominated the region, leaving a melting pot of names - Stepic has Croatian roots - and lasting cultural ties.

During the cold war, Austria was a neutral country. Stepic, like many compatriots, was able to travel behind the Iron Curtain, and he developed an intuitive feel for the region, said Peter Kohlmann, the top investment banker at Merrill Lynch for Germany and Austria.

"Not many people understand the difference between a Russian and a Belarusian, or a Czech and a Slovak," said Kohlmann, who helped underwrite the IPO. "Stepic does."

He managed that without any special training. Apart from German, he speaks English, Raiffeisen's house language, and no other tongues. Nor is he an expert in the region: Stepic studied business and economics.

Sometimes Stepic has landed in situations that made less political than business sense.

Last September, the Ukrainian autocrat Leonid Kuchma awarded Stepic a medal for his early engagement in that country's banking sector, only months before Viktor Yuschenko won a hard-fought victory for democracy. In 2003, Raiffeisen acquired a bank in Belarus, where Alexander Lukashenko, widely described as Europe's last dictator, still holds sway.

But don't look for apologies from Stepic. By helping to bring foreign businesses into Ukraine, and expose the country to outside influences, Stepic believes Raiffeisen contributed to the Orange Revolution, as Yuschenko's victory has become known.

"Standing on the outside and saying 'We have to boycott these countries' is never going to work," he said.

Using the money that investors poured into Raiffeisen with the IPO, the company will seek to enlarge its network still further to the east and south, Stepic said.

The former Soviet republics of central Asia might be a collection of crudely authoritarian states, but Stepic is headed there next.

Source: International Herald Tribune

Ukraine May be Ready to Join NATO in 2006 – Hritsenko

BRUSSELS, Belgium -- Ukraine may be ready to join NATO within the next two or three years, the Press Service of the Ukrainian Defence Ministry reported on Friday with reference to its minister, Anatoly Hritsenko.


Ukraine's Defence Minister Anatoly Hrytsenko addresses a news conference at the end of a NATO-Ukraine joint meeting at the NATO headquarters in Brussels
“The final time for Ukraine’s membership in NATO should be determined by a political decision of the two sides. Due to the purely military aspect of such cooperation, Ukraine may be theoretically prepared to join NATO within two or three years,” Hritsenko noted. The temporary difficulties, which have now occurred within the European Union, should not interfere with Ukraine’s progress towards the European Union and the North Atlantic Alliance, he added.

The meeting of the Ukraine-NATO Commission, which is being held at Brussels at the level of defence ministers, is considering the possibility of reforming Ukraine’s security and defence sectors. The Ukrainian peacekeepers will remain posted in Kosovo and the republic is prepared to back up NATO peacemaking operations in Afghanistan and Iraq, Hritsenko declared.

Source: ITAR-Tass

Ukraine PM to France for 3-Day Visit

KIEV, Ukraine -- Ukrainian Prime Minister Yulia Tymoshenko will arrive in France on Sunday for a visit during which she is due to meet with her French counterpart Dominique de Villepin and attend the opening of the Le Bourget air show, the foreign ministry said Thursday.

It will be Tymoshenko's first visit to France since she took office in the ex-Soviet republic following last year's "orange revolution."

"The goal of the prime minister's visit is to launch a new stage in relations between Ukraine and France in the spheres of economy, education and culture," a foreign ministry spokesman told AFP.

In addition to holding talks with de Villepin, Tymoshenko is also expected to meet with Interior Minister Nicolas Sarkozy and other top officials, he said.

"Topping the agenda will be discussion of economic cooperation in nuclear energy, agriculture and space," he said.

Tymoshenko is also due to attend the opening of the Le Bourget air show, which kicks off north of Paris on Monday.

Source: AFP

Police Summon Yanukovych for More Questioning

KIEV, Ukraine -- Authorities in western Ukraine on June 8 summoned former Prime Minister Viktor Yanukovych for questioning amid growing pressure on the one-time presidential candidate.

The Interior Ministry said that its Ivano-Frankivsk office delivered the summons to Yanukovych's former campaign headquarters in the Ukrainian capital, ordering him to appear for questioning on June 12, but Yanukovych's office denied receiving it.

"Neither Viktor Yanukovych, nor his lawyer nor any relatives" have received the summons, said a statement posted on Yanukovych's Web site. Yanukovych's spokesman referred all questions to the statement.

The latest summons concerns a plot of land in a forest reserve that police say Yanukovych received illegally to build a country house on.

Yanukovych has said that he had no intention of going to Ivano-Frankivsk to face questions. Yanukovych acknowledged that some land in the region was offered to him, but said that he never saw it and doesn't even know precisely where it is located.

On June 5, Yanukovych spent more than three hours in a Kyiv police station being quizzed as part of a separate investigation into the mishandling of government funds. He is accused of illegally transferring 4.8 million hryvna ($950,000; 740,000 euros) from the state budget to the airport in his hometown of Donetsk. He has denied the transfer involved any wrongdoing, and was not charged with anything.

Yanukovych's victory in last year's election was thrown out due to election fraud after mass pro-democracy protests dubbed the Orange Revolution; the pro-Western Viktor Yushchenko won the court-ordered revote.

Yanukovych has accused Yushchenko of waging a political vendetta against his foes. The former prime minister is also under investigation for the use of budget funds to reward some of Ukraine's Olympic athletes and for allegedly fostering calls of separatism during last year's election. He has said all the charges are part of efforts to cripple the opposition ahead of next year's parliamentary elections.

Source: AP

Ukraine to Press Ahead in Drive to Join EU

BRUSSELS, Belgium -- Ukraine intends to stick with its plans to prepare for future membership of the European Union, despite growing public concern in western Europe about future enlargements.


Ukraine's State Secretary Oleksander Zinchenko
Oleksander Zinchenko, the state secretary and President Viktor Yushchenko's chief of staff, on Thursday insisted Kiev would not change its policies in response to the recent No votes in the French and Dutch constitutional treaty referendums, even though the results reflected worries about the Union's eastward expansion. “We have decided that it is better to remain consistent and we have not changed our working plan,” said Mr Zinchenko.

The authorities would press ahead with reforms designed to transform Ukraine into a country with modern EU standards ready to take advantage of future opportunities for integration with the EU, he said. “So when the time comes when the EU integration issue can be raised, Ukraine will be a different country.”

Mr Zinchenko, one of the leaders of the Orange Revolution, the popular movement that brought Mr Yushchenko to power, was speaking amid considerable uncertainty about the EU's enlargement policy.

Romania and Bulgaria have been promised membership in 2007, or 2008 at the latest, although their entry still requires ratification by the existing 25 member states.

Croatia has been told it can start accession talks once it satisfies Brussels it is co-operating fully with the International War Crimes Tribunal. Turkey hopes to get the go-ahead for entry talks later this year.

Ukraine is in a weaker position because it has received no official assurances about its possible EU entry. But Mr Zinchenko said Kiev would stick with its previous plan to apply for associate membership in 2008.

Mr Zinchenko said that even if the EU turned its back on Ukraine, the political changes involved in the Orange Revolution and its aftermath were irreversible. “Ukraine will never go back to where it was,” he said.

Mr Zinchenko said the government had yet to make a decision on a key economic issue the review of state assets privatised by the administration of former president Leonid Kuchma, which were often sold in untransparent ways to government allies.

However, he played down the possible extent of the review. He said that while government agencies had proposed 29 companies for investigation, this did not mean that the ownership of all 29 would necessarily be challenged. The cabinet could choose fewer 16, say, or 20. “We don't want to rush this decision,” said Mr Zinchenko.

Source: Financial Times

Russia May Face a Ukraine-Style Revolution

MOSCOW, Russia -- Nobel Prize-winning author Alexander Solzhenitsyn has emerged from his jealously guarded obscurity to decry the state of Russian politics and to warn that the country may be on the brink of a Ukraine-style revolution.

Now 86 and in frail health, the former dissident rarely makes public appearances, let alone public statements, so this latest outburst has generated considerable interest.

The fiercely private author of One Day in the Life of Ivan Denisovich, his semi-autobiographical account of his 10-year stint in the Soviet gulag system, did not pull any punches.

Solzhenitsyn was deported from the USSR in 1974 after the KGB discovered a manuscript for The Gulag Archipelago.

He first settled in Switzerland before moving to America. He returned to Russia in 1994, his Russian citizenship having been restored by then Russian president Mikhail Gorbachev four years earlier.

Known for his ultra-conservative views and vehement Russian nationalism, he has urged the Government to change course or else face a revolution of the kind that convulsed Ukraine last year.

He told Russian state television that a Ukrainian-style "Orange Revolution" may take place if tension between the public and the authorities flared and money began to flow to the opposition.

He also said Russian democracy was not under threat because insufficient time had passed for it to really take root.

"It is often said that democracy is being taken away from us and that there is a threat to our democracy. What democracy is threatened? Power of the people? We don't have it," he told Rossiya, the state-run channel.

"We have nothing that resembles democracy. We are trying to build democracy without self-governance. Before anything, we must begin to build a system so that the people can manage their own destinies."

In an apparent sideswipe at the West's attempts to impose democracy from above in places such as Iraq, he warned that such attempts were doomed to failure.

"Democracy is not worth a brass farthing if it is being installed by bayonets," he said. "Democracy should grow slowly and gradually."

He also made it clear he had little time for Russia's oligarchs who grew fabulously wealthy in the 1990s, not least former head of the Yukos oil company, Mikhail Khodorkovsky, who was jailed recently for nine years on fraud and tax evasion charges.

"The world has never seen such rapid privatisation," he said. "The world has never seen such idiots. They gave away our God-given resources at lightning speed - oil, non-ferrous metals, coal, production. They fully robbed Russia.

"From scratch, from nothing, we bred billionaires who have done nothing for Russia."

His comments have been tacitly welcomed by the Kremlin, which gave him ample air time and newspaper space to make his points, whose uniquely Russian interpretation will find favour with President Vladimir Putin.

Source: The Age

Ukraine Gov't Ordered to Cut Company List

KIEV, Ukraine -- President Viktor Yushchenko on Thursday ordered his government to cut the number of companies whose privatizations might be reversed, warning that too long a list would send the wrong signal to investors.

Only companies that were appropriated in blatantly illegal tenders should have their privatizations reconsidered, Yushchenko told reporters.

"Regarding all the others, we must say that ... the state must take the position of defending this business," Yushchenko told reporters.

Yushchenko's campaign promise to review some of the murky privatization deals under former President Leonid Kuchma was popular among Ukrainians, but the mixed signals from the new government over how many companies will be affected has spooked investors. Officials have suggested the number could range anywhere from 29 to thousands.

The government has also repeatedly delayed a public announcement of which companies will become targets, adding to the uncertainty.

Yushchenko told reporters that he had been given a list by his government which "to put it mildly, wasn't acceptable to me." He said he gave it back to the government and ordered them to come up with another, smaller list. Yushchenko said he expected the new list to be ready soon.

Calling the government's list "rather big," Yushchenko said that his task was to ensure that only "those enterprises, which were illegally appropriated during so-called privatization, especially recently" fall on the list.

"If we take another decision ... I'm convinced it will send a bad signal to the market," said Yushchenko.

A former opposition leader, Yushchenko won the presidency last year after tens of thousands of his supporters held mass rallies to protest election fraud, leading to the cancellation of his opponent's victory and a court-ordered rerun. Yushchenko pledged to fight corruption and end the favoritism and cronyism that tainted Kuchma's 10-year rule.

Source: MSN Money

Berezovsky: Nemtsov Seeks to Set Yushchenko Against Timoshenko

KIEV, Ukraine -- Well-known Russian politician Boris Nemtsov, the Ukainian president's adviser outside the staff, is seeking to foil relations between Viktor Yushchenko and Yulia Timoshenko, according to the run-away Russian tycoon Boris Berezovsky. In A Segonya newspaper interview, the Novosti-Ukraina agency quotes Berezovsky as calling Nemtsov "the fifth column".


Russian Tycoon Boris Berezovsky
Indeed, Nemtsov who would harshly criticize Timoshenko as prime minister was quoted at the end of May as saying that Timoshenko would bring Ukraine to a break-down."

The Ukrainian parliament (Supreme Rada) qualified Nemtsov's words against the prime minister as interference in Ukraine's internal affairs and declared on June 3 for his resignation. But on the same day, Yushchenko's press-secretary Irina Gerashchenko said the president did not plan to remove Nemtsov from the consultant post.

Berezovsky is quoted by the Segodnya newspaper as expressing his desire to invest in the Ukrainian economy billions of US dollars he received from the sale of his property in Russia. Berezovsky is known for numerous statements about his intention to move to Ukraine for permanent residence in the near future and to open there a foundation to support civil rights. At a Riga press-conference on February 25, 2005 he explained his idea of moving to Ukraine by the change of the political regime in the republic.

It was in the autumn of 2003 that the Russian businessman Berezovsky who is being prosecuted in Russia on charges of fraud in aggravating circumstances got political asylum in Britain.

Source: RIA Novosti

Russia, Ukraine WTO Membership in Doubt for 2005

EVIAN, France -- Russia's bid to win entry into the World Trade Organization by the end of the year is not in good shape, and Ukraine's is not much better, a WTO official said on Wednesday.

Cato Adrian, number two in the WTO's accessions division, told Reuters on the sidelines of the 6th annual Eurasian Business Summit that Russia and Ukraine were a long way from completing all the necessary stages. But if a big push were made by September, there was still hope, he added.



"It doesn't look all that good (for Russia), but you don't want to say it is hopeless. You want to push the negotiations as hard as you can. If you cannot make it by Hong Kong, you would certainly try to do it in 2006," Adrian said.

The WTO holds its bi-annual ministerial conference in Hong Kong in mid-December, and Russia, the largest economy outside the Geneva-based WTO, has said it hopes to get the green light for entry there.

Asked who was ahead in the process, Adrian said: "At the moment I would say Ukraine is ahead of Russia."

Ukraine had reached more bilateral agreements on goods and services, approximately 30 signed, and has another dozen or more to go. Bilateral deals must be struck with any of the WTO's 148 members who demand one.

WTO working groups on the accessions are due to report on the status of the applications in September. If the majority of issues had been resolved, then final documents could be prepared in time for the December meeting, said Adrian.

ISN'T BUZZING

But both Russia and Ukraine face uphill battles to finalize negotiations, Adrian said.

"The impression I get from my colleagues is that there is very little yet in the report on Russia which can be considered finalized," he said.

"If Russia were in the end-game for Hong Kong, then I would see a real buzz of activity, both in Geneva as well as in certain capitals ... and I don't see that," he added.

Of three other applicants to join -- Vietnam, Saudi Arabia and Tonga -- Vietnam was in a similar position to Russia and Ukraine, but Saudi Arabia and Tonga had a better chance of making it in this year, he said.

"That meeting in September, which we have not fixed a date for yet, will be decisive in terms of making it clear whether Hong Kong is doable or not (for these countries)," Adrian said.

Among outstanding issues in Ukraine's application were the time period to be used for measuring agricultural activity and fixing its future commitments, and a two-tier value added tax system which could be seen as favoring domestic producers.

On Russia, dual pricing of energy remained a sticking point with many WTO members.

"The Russians supply energy at low prices to domestic industries. That allows them to have low tariff protection, but they say they are just exploiting a domestic natural resource to create jobs," explained Adrian.

"Members see this as perhaps an unfair advantage given to industries. It is a hard nut to crack," he added.

Source: Reuters

The Sorry State of the PGO

KIEV, Ukraine -- Five months after President Viktor Yushchenko took office, little has changed in Ukraine’s justice system. Too much of the system is still corrupt and politically interested; crimes still go unpunished, and cases still go deliberately unsolved.


Prosecutor General Svyatoslav Pyskun
Or so alleges Oleksiy Donsky, a senior prosecutorial investigator at the Crime Investigatory Unit at the Kyiv Prosecutor’s Office. Donsky tells the Post (see story on Page 3) that his agency is a mess. “We had high hopes that things would change after the Orange Revolution, but the same people have remained in top posts and nothing has changed in reality,” he says.

Donsky’s allegations paint a depressing picture. Investigations into cases that could be politically sensitive are repeatedly sabotaged by top prosecutorial brass. The latter are particularly allergic to looking into the outrageous pilfering of funds from state-owned Naftogaz Ukrainy during the Kuchma era. “Why are those involved in these crimes still not brought to justice?” Donsky asked.

Good question, and one Ukrainians should start asking of President Viktor Yushchenko. It’s obviously too much to ask that Yushchenko should have rid Ukraine of corruption in five months. But he should be acting much more aggressively than he has been. Ukraine is still a country in which you can be quite sure that sensitive political cases will never be solved.

The first thing Yushchenko should do is come down hard on Prosecutor General Svyatoslav Pyskun, the Kuchma-era hack whom Yushchenko kept on in office. No touchy Ukrainian case, including the Gongadze murder, will be solved on Pyskun’s watch unless someone stronger than him is looking over his shoulder. Pyskun is part of the problem. He’s the fox guarding the hen house.

For his implication in various Kuchma-era grotesqueries Pyskun long ago deserved dismissal. He won’t get it. But Yushchenko should summon up the courage to start demanding that Pyskun do his job effectively, now.

Source: Kyiv Post

Ukraine Sticks to Membership Target Despite EU Crisis: Yushchenko

ANKARA, Turkey -- The turmoil the European Union is facing over the EU constitution has not discouraged Ukraine from trying to join the bloc, Ukrainian President Viktor Yushchenko said here Tuesday.

"We see our future in integration with Europe," Yushchenko, on an official visit in Turkey, told a conference.



"Ukraine is an indivisible part of the European civilization and European Union membership is a strategic objective for Ukraine.

"The developments related to the rejection of the European constitution have not discouraged Ukraine," he said. "United Europe is a unique and extraordinary project. I want to see these developments not as a rule but as an exception."

After coming to power in the so-called "Orange Revolution" in December, Yushchenko began diplomatic moves to have his former pariah state more widely accepted in the West.

But while the European Union and NATO have pledged to boost ties with the new Ukrainian leadership they say it is too early to talk about membership.

Yushchenko also lent support to Ankara's EU accession bid, saying that both Turkey and Ukraine would contribute to Europe's unity.

The Ukrainian leader also emphasized that his country's orientation towards Europe would not weaken its traditionally close ties with Russia and the other countries of the former Soviet bloc.

"Kiev sees Moscow as a good neighbor and a reliable partner," he said. "Improving further our relations will be to the benefit not only of our two countries but the whole world."

Following talks with Turkish leaders in Ankara on Monday and Tuesday, Yushchenko wrapped up his visit after meetings with Turkish business leaders in Istanbul on Wednesday.

Source: Turkish Press

Ukraine Stun Greece With Late Win

ATHENS, Greece -- Ukraine stunned European champions Greece with a late second-half goal to edge closer to a World Cup finals place.

The win puts them firmly on course for automatic qualification from Group Two, leaving Turkey, Greece and Denmark to fight it out for second place.

Ukraine need only one win from their three matches to secure qualification for their first major tournament.

Greece, looking for a win that would help them tighten their grip on the group's second spot, dominated throughout the encounter but failed to convert several good chances.

But Ukraine, boxed in their half for most of the match, managed to score when Andriy Gusin intercepted a ball outside the box eight minutes from time and curled it past helpless keeper Antonis Nikopolidis.

Michalis Kapsis came close in the 22nd minute when he connected inside the box with a curling free kick from Stelios Giannakopoulos but his header flew wide.

The Greeks' best chances came a minute later. Yannis Goumas fired a shot two meters from goal but only managed to hit Shovkovsky.

Karagounis picked up the ball after the defence had cleared, dribbled past three Ukrainians but his shot floated just over the crossbar.

Ukraine striker Andriy Shevchenko, who had to shake off two or even three defenders throughout the game, managed only one shot on target in the 60th minute but his powerful free kick was blocked by Nikopolidis.

Greece were again denied in the 66th when Takis Fyssas' low cross found Giannakopoulos whose shot in front of goal was deflected above the crossbar.

Source: CNN International

Gazprom Suggested Ukraine to Join Europe

MOSCOW, Russia -- Yesterday in Moscow there was a continuation of the negotiation between Gazprom and new leadership of Naftogaz Ukraine. This negations on the subject of Russian-Ukrainian contracts started month ago. According to Kommersant information the sides were discussing the cancellation of natural gas transporting consortium of Russia and Ukraine, new gas prices for Ukraine and Gazprom’s gas transit through the Ukrainian territory. So far, Gazprom is offering to Naftogaz unacceptable conditions: the price for the gas, according to Russian company, should grow almost threefold.



Let’s remind that the negotiations about the new natural relationship between Russia and Ukraine opened in the end of March in Kiev. During the first round of negotiations the sides got agreed to switch to “European” pricing for the natural gas supply. This meant that Gazprom charges Ukraine higher rates for the gas and in return Ukraine charges Gazprom the “European” type price for the gas transit through its territory. As Gazprom press-serviced informed Kommersant, the Naftogaz‘ board of director chairman Alexei Ivchenko flew yesterday in Moscow to talk with the head of Gazprom Alexei Miller. The subject for the talks was “collateral aspects of the relationships” due to the new prices for the gas and transit starting from 2006.

Neither Naftogaz nor Gazprom are making any comments about the course of the negotiations. However, Kommersant found out from the source close to the negotiation process that there is no progress achieved. So far, Gazprom offers Naftogaz too tough conditions.

According to Kommersant, Miller offered to his counterpart to calculate the price using the “net back” principle, i.e. benchmarking the European price level minus cost of the transportation. Thus, the net back prices in 2005 for Ukraine would be $160 per one thousand of cubic meters (cub.m) of gas. Right now Ukraine pays $55 per thousand of cub.m.

The Gazprom transits should be increased by more than twofold. However, Naftogaz Ukraine doesn’t have much leverage to increase the prices. The net back principle considers automatic price increase of the gas supply into the country itself. According to Kommersant information, Naftogaz is intended to analyze these proposals and prepare its own by the next meeting.

It looked like that Russian-Ukrainian gas consortium, created in the summer of 2004, was killed and buried yesterday during the negotiation between Ivchenko and Miller. So far, it wasn’t decided which side will be making the formal termination of the venture. Kommersant had learned that Gazprom insists that Naftogaz has to announce the end of the consortium. The reaction of the Ukrainian side is not known yet.

Finally, the sides discussed the problem of disappeared 3,5 billions cub.m (about $400 million worth) of the gas belonging to Gazprom. The gas vanished in the winter of 2004-2005 from the Ukrainian underground storage facility. Gazprom one more time offered Naftogaz Ukraine to pay for the vanished quantities, because this natural gas was never delivered to Europe. The decision about this problem was not made.

It looks like the final decision about the main positions of Russian-Ukrainian gas trade will not be made anytime soon. The Gazprom proposals are not attractive to Ukrainians –the threefold price increase might lead to another energy crisis in Ukraine. From other side, Gazprom cannot reject Ukrainian transit services. The country allows through more than 66 percent of Russian gas export. Most likely, the final decision will not be made in Ukraine or Russia, but rather in Turkmenia. It will depend if the second (after Gazprom) largest natural gas supplier will provide Russian consortium with the fixed price gas in 2005 -2007 or would prefer to sell it to Naftogaz Ukraine. This decision will definitely affect whole specter of Russian-Ukrainian gas relationships.

Source: Kommersant

ODS Set to Help Ukraine's Right on Path to Election Success

PRAGUE, Czech Republic -- The Czech right-wing senior opposition Civic Democrats (ODS) are determined to help Our Ukraine, the coalition of politicians around Ukrainian President Viktor Yushchenko, achieve victory in the March 2006 general election, Hospodarske noviny said yesterday.

ODS chairman Mirek Topolanek staged a conference in Prague on Monday where he, along with other right-wing politicians from Slovakia, Hungary and Poland, lobbied in support of Ukraine's interests, including a quick EU entry.


ODS chairman Mirek Topolanek
The ODS was the senior coalition party from 1992 until 1997 when its second government collapsed, partly because of the ODS's suspicious financial deals. It has been an opposition party since that time, and has not concealed its resentment against the EU structures.

"We are interested in what lessons you've drawn from your own mistakes. We need help with visas, student education and workforce migration," said Roman Bezsmertny, head of Our Ukraine and the minister for territorial and administrative reform, whom Yushchenko asked to unite the Ukrainian right-wing before the elections.

"We can help them organise campaign and prepare psychologically effective slogans," said Jan Zahradil, an ODS MEP and shadow foreign minister.

"As for the lessons we've drawn from our own mistakes, we offer our conclusion from 1997 that it pays to have the party organisation and finances in order. As an opposition party, we can hardly help the Ukrainians with visas and student education now," Zahradil said.

As a long-standing front-runner in party popularity polls, the ODS is widely expected to win the Czech Republic's general election next year.

Source: Prague Daily Monitor

Security Cold-War Tight as Ukraine Trains to Face Greece

KONCHA-ZASPA, Ukraine -- Guards at the secluded soccer training camp Koncha-Zaspa, hidden in a pine forest near Kiev, never had a reputation for friendliness.

But these days, with Ukraine preparing to face Greece in a critical World Cup 2006 showdown, security at the Sovietorts center is Cold War-frigid.

"No outsiders are allowed to the team! It's forbidden!" barked a gate officer to a prospective visitor on Sunday. "You can wait until the game!"

Ukraine is within an ace of qualifying, for the first time in its history, for the finals of an international tournament. They have 20 points in their World Cup 2006 group, five ahead of their nearest rival and next opponent -- European champions Greece.

For Otto Rehhagel's Greeks the June 8 match is make-or-break. They must win or, quite realistically, face the humiliating prospect of not even qualifying for Germany.

This is perhaps why Ukraine coach Oleg Blokhin, in his day one of the finest strikers the Soviet Union ever produced, has in the run-up to Greece clamped an iron curtain -- even the Kremlin would be proud of -- around his team.

Last Saturday evening, after the side, led by reigning European Footballer of the Year Andrej Schevchenko, breezed to a 2-0 victory over hapless Kazakhstan in Kiev, the Soviet-style security net already was pulling tight.

The team spent more than ninety minutes in the dressing room and prior to the players' exit, a national team spokesman gave assembled journalists the bad news: "Blokhin has ordered the players not to speak a word to any of you. So go home," reported Kiril Pankratov from the authoritative GOL! television show.

The only refusniks from the gag order turned out to be veteran midfielders Anatoly Timoschiuk and Andrei Husin, and Bayer Leverkusen forward Andreij Voronin, who after a few neutral remarks about the Kazakhs scuttled onto the team bus saying "If I don't get on board now [Blokhin] will leave without me."

The bus took the players behind the 3m high walls of the Koncha-Zaspa camp. Since then, what little the world has heard about the team's preparations for the match have come from Blokhin's grudging public remarks.

At the post-Kazakhstan press conference, Blokhin declared the upcoming fight against Greece "our biggest test yet."

Characteristically, Blokhin made clear the seriousness of the impending contest by singling out his star Schevchenko for light- hearted criticism. (The AC Milan striker in the dying minutes against Kazakhstan had visibly abandoned the game plan and to all appearances was playing for fun.)

"At the end of the game Andrei [Schevchenko] started being a bad boy. You can't do the corner kicks, and penalties, and throw-ins all yourself. I asked him ,Andriusha, what, next you're going to play in goal against Greece?'"

Voronin, usually the offensive engine of the team but less than fully fit against Kazakhstan due to the end of Bundesliga season last month, received two full barrels of Blokhin's trademark bluntness and high performance standards.

"I am going to have a very serious talk with Voronin -- five days of rest [after the end of the Bundesliga season] did him no good," Blokhin griped. "I hope we can put him into shape."

Blokhin in comments prior to the Kazakhstan game said barring injuries (and there were none) he expected no major changes to his line-up against Greece.

Ukrainian sports pages on Monday were almost unanimous in suggesting Blokhin replace his talented but youthful defensive midfielder Oleksander Radchenko with the veteran Husin.

Blokhin appeared to hint he was considering the switch, saying "Nervousness is normal, but Oleksander [Radchenko] needs to learn to control that. He was worrying against Kazakhstan, and in a big game like against Greece something like that isn't forgiven."

Source: Taipei Times

Itching to Sell Krivorozhstal Again

KIEV, Ukraine -- Ukrainian PM Yulia Timoshenko ordered the State Property Fund yesterday to proceed to arranging the tender for repeated privatization of Krivorozhstal, with no limits imposed for any bidders, including today’s owners of the country’s largest mining and metal enterprise. Sources with Ukrainian Cabinet stake on the companies backed up by Donbass Industrial Union.


Ukrainian PM Yulia Timoshenko
Investment and Metallurgical Union (IMU) bought out last June 93.02 percent in Krivorozhstal for 4.26 billion hryvnias (around $800 million) vs. the starting price of 3.8 billion hryvnias. IMU is controlled by Donetsk businessman Rinat Akhmetov and Viktor Pinchuk, son-in-law of the Ukrainian former president Leonid Kuchma. The second bidder authorized for the action – Industrial Group (controlled by Donbass Industrial Union) - offered 4 billion hryvnias. Kiev Court of Appeal seized 93.02 percent in Krivorozhstal on June 2, overruling the IMU motion against the award of April 22 that invalidated privatization deal for the company.

Timoshenko told reporters Monday she ordered to launch privatization tender for Krivorozhstal in no time and under reduced procedure. The provisions are to take into account the national interests of Ukraine, Timoshenko specified. “I would like the tender to be held within a month to prevent certain groups from using Krivorozhstal to earn under-the-table money,” Timoshenko told Kommersant.

Timoshenko said the appearance of a new owner seems logical, though no restrictions would be imposed, including for today’s holders. The only requirement is high qualification to weed out incidental participants with no knowledge of metal production, the PM pointed out.

Timoshenko opposed sealing amicable agreement with Krivorozhstal owners.

UK Mittal Steel said it would take part in another auction. The company was intending to pay more than $2 billion at the previous tender but was not allowed to bid. Russian Severstal Group and Evrazholding were offering more than $1 billion. Evrazholding spokesmen said previously they may study the chances of bidding should the terms be clear and understandable.

The so-called clear and understandable terms have given particular concern already. A source with the Cabinet specified to Kommersant the companies that would bid in tandem with Donbass Industrial Union are the forerunners. Vitaly Gaiduk, one of the co-owners of the Union, is favored by the prime minister. For him, it will be easy to agree on taking part in privatization, the source said on condition of anonymity.

Source: Kommersant

Yanukovich Gets Eloquent after the Moscow Visit

MOSCOW, Russia -- Near the walls of the Kiev Department for Organized Crime Fighting, Ukrainian former PM, leader of the Regions' Party Viktor Yanukovich rebuffed Monday any and all accusations in illegal transfer of around $1 million in budget funds and called the respective investigation politically ordered.


Ukrainian former PM, Viktor Yanukovich en route to the Kiev Main Department for Organized Crime Fighting
It was the second attempt during the past week to interrogate the former prime minister under the criminal case concerning illegal transfer of 4.8 million hryvnias (around $1 million) in budget funds to acquire special equipment for Donetsk airport. Yanukovich was due to appear on May 30 but might have preferred to put off the visit, saying he had not been served the notice. Another notice was securely handed in to his lawyer and delivered to the Regions’ Party headquarters.

Perhaps to get ready for impending meeting with investigators, Yanukovich rushed to Moscow at the end of the past week. Obviously encouraged, he appeared at investigators’ at 11:38 a.m., Monday, too soon for the 12:00 a.m. interrogation.

On the eve of interrogation, the former prime minister and presidential candidate reiterated to reporters the reasons for interrogation were political. As to the 4.8 million hryvnias allocated from the reserve fund to acquire equipment for Donetsk airport, Yanukovich said the case was some kind of the cover-up. “There was an emergency storage of equipment in the airport and the authorities had to decide fast because of emergency,” Yanukovich said.

During yesterday’s meeting with reporters, Yanukovich was eager to shed light on one more issue – illegal allocation of land for summer cottages’ construction in the Western Ukraine and Crimea. Yanukovich specified he sees no reason for going to the police of Ivano-Frankovsk, Crimea or Transcarpathian Region, as “he had violated nothing” and is always ready to provide information by any other means.

Interior Minister Yury Lutsenko announced May 27 the police of Crimea, Transcarpathian Region and Kiev have certain questions to the former head of the presidential staff Viktor Medvedchuk and Region’s Party leader Viktor Yanukovich. “With regard to their hobby for summer cottages’ construction, I’m afraid they will have to make a tour around Ukraine,” Lutsenko pointed out.

Source: Kommersant

Turkey, Ukraine Vow to Strengthen Bilateral Ties, Cooperation

ANKARA, Turkey -- Leaders from Turkey and Ukraine vowed here Tuesday to deepen bilateral ties and promote cooperation between the two countries in fields of energy, anti-crime, railway transportation and science and technology.

Following talks between Turkish President Ahmet Necdet Sezer and his visiting counterpart Viktor Yushchenko, six agreements were inked.


Turkish President Ahmet Necdet Sezer (L) and his Ukrainian counterpart Viktor Yushchenko (R)
Ukrainian President Yushchenko arrived here late Monday for a three-day official visit to Turkey.

Sezer said he is pleased with the current level of political and economic relations between the two countries.

Turkey is Ukraine's fifth largest trading partner and third largest market for its exports. Trade volume between the two countries increased by 70 percent to 3 billion US dollars in 2004.

"I believe that President Yushchenko's visit will accelerate bilateral trade and investments," Sezer said.

Sezer also expressed appreciation for Ukraine's efforts to develop democracy and market-oriented economy, pledging Turkey's support for Ukraine's integration into the European-Atlantic institutions.

Terming Yushchenko's visit as "the beginning of a new era", Sezer said "our developing cooperation with Ukraine will also have a positive impact on efforts in securing stability and prosperity in our region."

On his part, Yushchenko said a plan will be in place to boost bilateral trade to 10 billion dollars before 2010, with special focus placed on the energy field.

Yushchenko will also meet Parliamentary Speaker Bulent Arinc, Prime Minister Recep Tayyip Erdogan and representatives of the Foreign Economic Relations Board and Turkish businessmen in Istanbul.

Turkish officials have said the relations between the two countries have grown to a level of strategic partnership, adding Ukraine was seeking Ankara's help in establishing alternative routes for transportation of oil and natural gas.

Ties between the two countries have embarked on a steady path of improvement since Ukraine won independence from the now-defunct Soviet Union in the early 1990s.

The two countries signed a joint action plan in 2004 to develop cooperation in all fields.

The two countries, however, have been unable to resolve disagreements in fisheries despite two years of negotiations.

The issue is expected to be taken up in Yushchenko's visit and Turkish officials have voiced optimism that the new administration in Ukraine would provide momentum to resolve the issue.

Source: People's Daily

Ukrainian President Says He Will Push Forward With EU Aspirations

ANKARA, Turkey -- Ukrainian President Viktor Yushchenko met with Turkish leaders Tuesday and said the two Black Sea powers would press forward with their European aspirations.

Yushchenko's push comes on the heels of the rejection of the new EU constitution by French and Dutch voters last week, which threw EU enlargement plans into disarray.


Turkish President Ahmet Necdet Sezer (foreground) and his Ukrainian counterpart Viktor Yushchenko (background) review honour guards
Both Turkey and Ukraine have, however, said they remain committed to eventual membership.

"On the subject of integration with Europe, the two countries' political will is the same," Yushchenko said following his meeting with President Ahmet Necdet Sezer.

Yushchenko, who came to power in a pro-western "Orange Revolution" in December, has vowed to lead Ukraine in a more free-market direction, while Turkey's Prime Minister Recep Tayyip Erdogan has largely staked his prime ministership on Turkey's success in its EU bid.

Yushchenko met with President Ahmet Necdet Sezer Tuesday, a day after meeting with Prime Minister Recep Tayyip Erdogan.

"President Yushchenko's visit will be the beginning of a new era in friendly relations and cooperation between Turkey and Ukraine," Sezer said.

Yushchenko and Sezer signed cooperation agreements covering energy, nuclear, railway, law enforcement, and science and technology sectors.

They also discussed the Crimean Tatars, a Muslim Turkic group with whom Turkey has close ties. The Tatars inhabited the Black Sea peninsula for more than seven centuries, but were expelled by Stalin at the time of World War II and were not allowed to return to their homeland until around the time of the Soviet collapse in 1991.

Turkey is currently Ukraine's fifth largest trading partner and third largest export market. The two countries have trade ties of around US$3 billion, which Yushchenko said he hoped to raise to US$10 billion by 2010.

But Yushchenko's visit follows a potentially huge setback in European expansion, with French and Dutch voters having rejected the EU constitution in national referendums. Those votes raised questions about whether the EU is still eager to expand eastward.

Turkey and Ukraine, with a combined population of 120 million, represent to some degree what EU voters fear.

They are both large, poor countries whose citizens, it is feared, could migrate in large numbers to western Europe, taking advantage of Europe's generous social programs and increasing local unemployment. The two countries also represent a threat to stagnating EU economies as more and more businesses move eastward in search of competitive cost advantages.

Both Ukraine and Turkey have historical antagonisms to western Europe as well, with Ukraine once a part of the Soviet Union and Turkey the heir to the Ottoman Empire, which reached into the heart of Europe and set siege to Vienna twice.

Source: AP

Ukrainian Government Regulated SUAL's Revenues

MOSCOW, Russia -- On Friday, senior managers of the Zaporozhye Aluminum Plant (ZalK, Ukraine), which is controlled by SUAL Group, announced that its company was unprofitable as a result of the present Ukrainian government's policy on power rates. The new government abolished the special rate tying power purchases by ZalK to the price of its production on the London Metals Exchange (LME). Now the plant's owners say that if this position doesn't change, they will have to raise the subject of changing ZalK's owners.



In the fall of last year, SUAL acquired 95 percent of AvtoVAZ-Invest (AVI), which by then had consolidated 93.1 percent of the shares of the only aluminum smelter in Ukraine. SUAL acquired problems along with it. For example, since 2001, AVI has been battling with the Ukrainian company ZAO VTF KRAZ, trying unsuccessfully to challenge the results of ZalK's privatization. In spring, the plant appeared repeatedly on various blacklists for return to the balance of the State Property Fund (FGI) of Ukraine [see Kommersant of May 18]; and on April 27, Kommersant talked about claims against ZalK submitted to the FGI regarding the fulfillment of investment obligations.

But ZalK's troubles did not end there. As the president of the plant's union committee said on Friday, the company “has been put in a position where its operations are unprofitable.” After the change of power in Ukraine, the government of Yulia Timoshenko abolished the differentiated power rate for ZalK (delivered from DneproGES) introduced on July 10, 2002. Under it, payments for power were directly dependent on the price of aluminum on the LME.

Since March 1, ZalK has been shifted to the general terms for paying for power deliveries. According to Yury Moiseev, ZalK's technical director, the rate increased from 13.64 Ukrainian kopecks to 20.43 kopecks (from $0.027 to $0.04) per kWh. According to Kommersant's calculations, the cost of power for aluminum plants is $0.003 to $0.01 in Russia, $0.013 in Japan, $0.016 in the United States, and $0.022 in Western Europe.

We note that the proportion of electric power in the production of primary aluminum is up to 40 percent in the former CIS (in Western countries with more up-to-date equipment, it is up to 30 percent). According to SUAL's information, as a result of the abolition of the special rate and a drop in aluminum prices on the LME, the Ukrainian plant's profitability has fallen into the negative range (-2 percent) since the beginning of the year.

As Aleksey Prokhorov, SUAL Holding's public relations director, told Kommersant, under these conditions, “the plant is forced to minimize losses.” If the situation doesn't change, the plant will be forced to cut production, that is, to decrease power purchases from DneproGES (ZalK is its largest user) and lay off personnel, which regional leaders and the Ukrainian government have already been warned about. Nearly 600 employees out of 6000 have already been sent on vacation; and the company's managers are talking are talking about the need for unpaid leave for half the staff in future. But in Prokhorov's opinion, cutting expenses will not solve the problem. “We believe that if Ukraine's cabinet of ministers is interested in preserving the company, it must reconsider its decision and give ZalK the opportunity of operating in competitive conditions.”

However, Ukrainian bureaucrats are examining the present situation as a means of returning to the topic of reprivatizing ZalK. At a Ukrainian government press conference, they told Kommersant that “laying off the staff of an entire plant is a serious problem for both the government and the owners. This will almost certainly result in the conditions around ZalK's privatization being reconsidered. Then we will find a new owner for it.”

Source: Kommersant

Ukraine Pipeline Trouble Hits Regal

LONDON, England -- Regal Petroleum, the controversial oil company, yesterday admitted that a million-dollar pipeline to export gas from its main producing developments was still not being used - more than 18 months after its construction.


Gas processing plant, Ukraine
There could be no guarantee when supplies would start flowing through the 12-kilometre pipeline in Ukraine that joins a main trunk line operated by Russian gas giant Gazprom, it admitted.

London-based Regal completed the transport link in late 2003, but said it had been concentrating since then on its Greek operations, which have been hit by their own problems.

Confirmation of the latest setback came as the oil company fended off allegations that its executive chairman and founder, Frank Timis, had been named in three separate criminal investigations under way in Romania.

A Regal spokesman said Mr Timis intended to contact the Romanian authorities to obtain a "copper-bottomed" guarantee that there were no such investigations going on under laws against organised crime and drugs.

"Mr Timis categorically denies these claims and says he has not been contacted by the authorities and is not aware of any criminal investigation going on," said a spokesman for Regal.

The allegations stemmed from information in a document signed by an official in the judiciary, but last night Romania's anti-corruption prosecutor's office told Reuters that Mr Timis was "not currently being investigated". Shares in Regal - once worth 511p - fell more than 4% to 67.5p yesterday. Romanian-born Mr Timis has already had brushes with the law, with two convictions for drug offences in Australia.

The company believes some of the lurid claims against it are coming from non-governmental organisations "trying to implicate him [Mr Timis] in business he is not engaged in".

This was a reference to a commercial plan to turn the oldest documented settlement in Romania - Rosia Montana - into the largest opencast gold mine in Europe.

The contentious scheme, which could have a massive environmental impact, has been put forward by Toronto-based Gabriel Resources, a company established by Mr Timis.

The Regal spokesman said the Romanian entrepreneur was no longer involved in Gabriel and therefore should not be linked with a project which also threatens to destroy an archeological site deemed "unique" by Unesco.

Regal hit the headlines last month when it revealed that much-publicised plans to produce oil in Greece had run into serious problems.

The failure raised eyebrows because it was confirmed just three weeks after Regal raised £45m from new investors, partly on the back of hopes for this scheme.

The Greek business has taken the focus away from Ukraine, where Regal has been producing around 800,000 cubic metres of gas a day from four wells.

The company said it had always made clear that it would provide gas to the local market and not start exports until it had built up volumes to more than 1m cubic metres a day.

Asked whether it was not inefficient to build a pipeline and then not use it, the Regal spokesman replied: "We have not been focused on getting the production of gas up in Ukraine because we have been concentrating on Greece."

Source: Guardian Unlimited

Lifting Yushchenko's Log

MOSCOW, Russia -- Official Soviet ideology contained a legend about Vladimir Lenin pitching in to clean up the Kremlin grounds during a communist subbotnik. A photographer even snapped Lenin helping his comrades to carry a log. According to unofficial folklore, when the authorities began to collect reminiscences of the event they soon learned that several thousand people had helped Lenin to shift that log.

At the 11th Kiev International Television and Radio Fair last week, I first heard the expression "Yushchenko's log." I had been invited to the fair to receive an award for several of my articles. The three main points of these articles were criticism of Russia's policy in Ukraine, whose one-sidedness threatened to open a rift between the people of the two countries; support for the protesters on Independence Square who rallied against the excesses of the Leonid Kuchma regime; and a skeptical approach to the notion that things would change for the better once a new president was elected.

I tried to test this last hypothesis by looking into the fate of regional television stations that had opposed the Orange Revolution. Strange as it may sound, I didn't manage to find any. The heads of two private television stations in eastern Ukraine -- Yanukovych country -- both told me that her station had been the only one in the region to support Yushchenko. I put the same question to the head of a private television station in Crimea, an area known for its strong pro-Russian (and anti-Kiev) stance. "We were the only station in the region to support Yushchenko," she said.

These days you're considered pro-Yushchenko if you gave Yushchenko's people a couple minutes of live airtime, some colleagues in Kiev told me. Yet none of the media executives I interviewed was willing to speak on the record. But I did come across a frank assessment of the issue in a Ukrainian professional magazine, Teleradiokuryer. "The political situation in our region is such that it's now fashionable to be orange. And it has already become somewhat dangerous not to be orange," opined Vladimir Vedernikov, deputy director of LiK-TV, a radio and television station in Lisichansk, eastern Ukraine.

After Yushchenko's victory, new governors were appointed across the country. The heads of state-owned television stations are being replaced. The top executives at UT-1, a nationwide state-owned television station, were obviously appointed by the new regime for political reasons. There have been reports of regional authorities putting pressure on local state-owned media outlets. But a number of my colleagues, people who stood on Independence Square during the revolution not so much to support Yushchenko and oppose Yanukovych as to defend democracy and protest corruption in politics, tell me that this isn't the most dangerous thing. The government is allowing journalists more freedom than they know what to do with, they say. These are people who under the previous regime developed the habit of kissing up to the leadership regardless of political affiliation.

What we're seeing in Ukraine is the normal and inevitably difficult birth of democracy and freedom of speech in a country with a weak democratic tradition. The success or failure of this process will depend less on the benevolence of the authorities than on the readiness of society and the media themselves to stand up for their rights.

As Gennady Sergeyev, director of the Chernovtsy television company in western Ukraine, told the Russian service of Radio Liberty at the time, the main thing is that "things haven't gotten any worse."

Source: Moscow Times

Yanukovych Questioned Over Funds

KIEV, Ukraine -- Ukrainian investigators questioned former Prime Minister Viktor Yanukovych on Monday in connection with the alleged mishandling of government funds, an interrogation the opposition leader said was politically motivated.

Yanukovych was summoned before anti-organized crime investigators to testify about last year's transfer of 4.8 million hryvna ($950,000) from the state budget to the airport in his hometown of Donetsk.

He turned up more than half an hour late for his scheduled questioning, and entered the police building with his lawyer, Olena Lukash.

"In my opinion, authorities use such methods to distract society's attention from the growing problems in our country," Yanukovych said as he entered the building, adding that he considered his summons "a political order."

He emerged after more than three hours of questioning, repeating that he has nothing to fear "because I don't consider myself guilty."

No charges were filed against him, though Yanukovych acknowledged that he could be summoned again "at any time, on any day."

Police declined to comment.

Yanukovych had ignored two previous summons, complaining that the first was issued via the media. He didn't explain why he skipped the second summons, but this time Interior Ministry officials sent the notice to Yanukovych's lawyer and to the headquarters of his political party, Party of the Regions.

Yanukovych lost a bitterly contested presidential election last year after the Supreme Court annulled his victory on grounds of massive fraud and ordered a revote that was won by pro-Western Viktor Yushchenko.

He remains the main figurehead of the opposition.

Last month, Ukrainian prosecutors questioned Yanukovych over the business dealings of Borys Kolesnikov, a jailed regional official, but no charges were brought.

Yushchenko, inaugurated in January, has pledged to hold his former adversaries accountable for the corruption and links to organized crime that plagued former President Leonid Kuchma's decade-long tenure.

Yushchenko has pointed to Yanukovych's native Donetsk region, where voters turned out in force to support Yanukovych in last year's presidential race, as having one of the worst records of corruption.

Source: AP

Ukraine, EU Seal Galileo Deal

BRUSSELS, Belgium -- Ukraine has reached agreement with the EU to join the bloc’s US$3.1 billion satellite radio navigation program, Galileo, launched by the 25 member states in association with the European Space Agency (ESA).



The agreement is expected to boost industrial cooperation between Ukraine and other participating countries. It details cooperation on satellite navigation in a wide range of sectors, including science and technology, industrial manufacturing, service and market development, standardization, frequency, and certification.

The Ukrainian space industry is among the world’s leaders in the design and production of launchers and Global Navigation Satellite System GNSS components.

Ukraine is the third non-EU country to join Galileo, after Israel and China. India is expected to follow soon and negotiations are under way with a number of other countries, including Russia, Morocco, Brazil, Mexico, South Korea, Canada, Argentina, and Australia.

The EU’s Galileo program - which will have a web of 30 satellites and will reduce European reliance on the US Global Positioning System (GPS) - will be fully operational in 2008 at the latest, with signal transmissions beginning as early as this year.

According to the European Commission website, “Galileo aims to ensure European economies’ independence from US and Russian systems, which could deny access to civil users at any time, and to enhance safety and reliability.”

The European consortium iNavSat, which is building Galileo, is made up of German, French, British, Italian, and Spanish companies, as well as contractors from some smaller European countries. The consortium’s main companies include European space giant EADS, France’s Thales, and Britain’s Inmarsat.

Galileo is a civilian application that will remain under civilian control, but will be used to enhance the EU’s military capabilities and to enhance European independence in the commercial and scientific spheres.

Galileo will serve transport networks, such as airlines and rail and shipping companies, as well as search and rescue teams and other emergency services.

The US and Russian systems are militarily financed and controlled.

In a sign of high confidence in the Galileo technology, EU member states have been vying to carry the main financial burden of the satellite system in order to ensure that production is based in their country.

The growing interest of third countries in the Galileo project represents a big boost for the GNSS market, which is potentially considerable. According to a European Commission press release, the GNSS market will have 3 billion receivers and revenues of some €275 billion per year by 2020 worldwide. The project is also expected to create more than 150,000 highly qualified jobs in Europe alone.

Currently, Germany is the forerunner, and the Galileo headquarters are likely to be situated in Ottobrunn, just outside of Munich in Bavaria.

The US$3.1 billion Galileo project will be financed by the EU’s common budget and by member states. The 25-nation EU and other nations aim to provide one-third of Galileo’s funding, while the private sector will finance the remaining two-thirds.

The EU says Galileo will complement Washington’s GPS and Moscow’s GLONASS system, but the US has traditionally viewed the project as a rival. The US has tried to discourage the EU from developing Galileo, arguing that it was unnecessary and might complicate matters in space if the two systems proved to be incompatible.

Last year, the Galileo project won a small victory when EU and US officials agreed on radio frequencies that would allow the European system to work alongside the GPS. Washington had feared that Galileo might interfere with military signals from US satellites.

Source: International Relations & Security

Iron Maiden: the Protector of the Homeland

KIEV, Ukraine -- The idea was that of a Muscovite by the name of Yevgeniy Vuchetich, a famous Soviet sculptor renowned for his major works dedicated to World War II. The monuments to the Warrior-Liberator in Berlin (1946-1949) and the “Compleks Rodina Mat” (Motherland Complex) in Volgograd (1963-1967) gained the sculptor world fame.



Historians say this statue was initially proposed to be built atop Mount Poklonnaya in Moscow, but the proposal was rejected. Then the sculptor decided to build it in Kyiv. Unlike his previous projects, Vuchetich decided to raise a metal sculpture overlooking the Dnipro River. This decision was prompted by the fact that his sculpture in Volgograd, which was made completely out of concrete, cracked very soon after its unveiling.

Whatever the case, the construction of the statue made of titanium in Kyiv turned out to be a complicated task. Employees of the Kyiv-based ProektStalKonstruktsiya R&D Institute, which was hired to design the complex, studied world practice. Specifically, the institute’s employees were interested in the experience regarding the reconstruction of the Statue of Liberty in New York.

Taking into account the fact that the construction of the Museum of the Great Patriotic War (the official name of the complex on the slopes of the hills of the Dnipro River) was delayed, a decision was made to open it temporarily in the Klovskiy Palace on October 17, 1974. As a result, Kyiv had its own war museum by May 1975, when the country celebrated the 30th Anniversary of Victory.

When Vuchetich passed away in 1974, the job was offered to Moscow sculptor Nikolai Tomskiy. But he turned down the offer, claiming that he was overloaded with work. As a result, Vasyl Borodai became the leader of the team of sculptors.

Vuchetich planned to have the main entrance on a quay of the Dnipro River. Passing through an alley lined with the figures of soldiers, visitors would have found themselves in a special tunnel with the most tragic images of war — concentration camps and mass executions. Only after passing through this alley would the visitors reach Victory Hall. A transparent dome was to make this hall bright and optimistic.

However, the key entrance is in fact at the side of Kyivo-Pecherska Lavra and the so-called “tunnel of horror” was never built.

The construction of the memorial was given great importance. The book entitled Kyiv: City of Heroes published in Moscow in 1975 read: “The memorial complex — State Museum of the History of the Great Patriotic War 1941-1945”, which is planned to be built on the high hills of the Dnipro behind the Kyivo-Pecherska Lavra, will be an outstanding phenomenon in the architectural outlook of Kyiv... This complex has great importance not only in terms of the aesthetic skyline of Kyiv, but also for instilling ideological and patriotic feelings in the country’s citizens and serving as a tribute to the protectors of the Motherland.”

Construction of the museum began with developing the hill. Specifically, the ravines and surface imperfections were covered with soil, the top was removed and inside the hill a huge concrete barrel 32 meters in diameter and 16 meters high was built. The entire museum complex is situated on this hill.

There were proposals to make the monument less military in style by giving the “iron maiden” a bowl with an eternal flame to hold in her hands. In the end, the concept Vuchetich proposed was accepted with the lady holding a shield in one hand and a sword in the other. Interestingly enough, there were many problems with the sword. Initially, the idea was to make it flat. However, after tests in an aerodynamic tube conducted in Moscow, the decision was made to make it faceted. Besides that, the patriarchs of the Pecherska Lavra were concerned that the tip of the sword would end up being higher than the cross atop the Bell Tower and requested that it be made shorter. As a result, the height of the sword was made three meters shorter.

The Victory Complex is on a territory of 20 hectares. Besides the metal statue, it has a museum premises (18 halls and almost 8,000 exhibits), the Fire of Glory, Alley of Cities’ Heroes, display of military machines at the time of the Great Patriotic War (in most history books known as World War II), and 7 compositions symbolizing the heroic struggle located at the front and the rear of the museum (approximately 100 bronze figures).

The monument itself is 62 meters high and 102 meters together with the pedestal. In fact, it is the largest sculpture in the country and made it into the Ukrainian Book of Records. The plans were to finish construction by the 35th Anniversary of Victory, celebrated in May 1980. However, due to many changes and other problems, work was only completed a year later on May 9, 1981. Soviet leader Leonid Brezhnev paid a special visit to Kyiv for the unveiling of the great monument.

Speaking at a ceremonial gathering Brezhnev said, “The Soviet people have shown that they can take advantage of the goodness of peace... The living proof of this is your beautiful Kyiv — the city of heroes, rebuilt from ruins and more beautiful than ever before.” Brezhnev also gave the museum a bronze sculpture by Vuchetich called “Let Us Re-forge Swords into Plows”.

Source: Kyiv Weekly

Russia to Enhance Military Capacity if Ukraine Joins NATO: Ivanov

MOSCOW, Russia -- Russia will make more investments in enhancing its military capacity to safeguard the country's sovereignty and security if Ukraine joins NATO, Russian Defense Minister Sergei Ivanov said on Monday.

"The military-industrial complexes of Russia and Ukraine have been closely integrated up till now," Ivanov said at a press conference in St. Petersburg.

But if Ukraine joins the North Atlantic Treaty Organization (NATO), Russia will have to channel additional financial resources into its military-industrial complex, including its high-technology sectors, he was quoted by the Itar-Tass news agency as saying.

Ivanov added that Ukraine is a sovereign country, and it is for the Ukrainian government and the Ukrainian people to decide what organization to join in.

On the withdrawal of the two Russian military bases from Georgia, Ivanov said two light mountain infantry brigades will be formed along the Russian-Georgian border to enhance protection from terrorist penetrations after the withdrawal.

"The decision has been made already at all levels and billions of rubles have been allocated for the creation of the two brigades," he said.

Following months of wrangling, Russia agreed last month to begin pulling its two Soviet-era bases out of Georgia by the end of this year and complete the pullout over 2008.

In the next four years Russia will withdraw 2,500 personnel, 2,500 pieces of heavy military equipment, 80,000 tons of ammunition, and other military assets from Georgia.

Most of the military hardware will be shipped back, while some will be redeployed to the Russian military base in Armenia, said Ivanov, who explained that the bases in Georgia has long lost their importance.

The equipment to be relocated to Armenia will not be handed over to the Armenian side, but deployed at the Russian military base, Ivanov said, adding that "Georgia will take over all fixed assets vacated by the Russian military."

Source: China View

Orange Revolution's Hero Yushchenko Visits Turkey

ISTAMBUL, Turkey -- Pro-western Ukrainian President Victor Yuschenko who came to power after the "Orange Revolution" in Ukraine pays an official visit to Turkey.

Yushchenko who arrived last evening (June 5) will meet with Turkish President Ahmet Necdet Sezer and Speaker of the Turkish Parliament Bulent Arinc in Ankara today. Diplomatic sources viewing mutual relations as "unproblematic" say Turkey and Ukraine will sign five different agreements at the end of the contacts. The topic that will prevail during the contacts will be energy, as the Ukraine is no longer willing to depend on Russia to meet its energy requirements hopes to access Iranian natural gas and Middle Eastern oil via Turkey.

To improve the cooperation on nuclear energy, the Turkish Atomic Energy Commission (TAEK) and Ukrainian National Regulation Council will sign an understanding memorandum. In the memorandum, the legal groundwork for issues such as the security of nuclear plants, radioactive material and equipment safety in addition to security against nuclear contamination will be completed, bearing in mind the Chernobyl Nuclear plant that exploded within the Ukrainian borders and that has been defined as the biggest nuclear disaster of the century. Solution for the "turbot problem" will be sought

Another topic to be discussed during the contacts of Ukrainian President will be fishing. The "Turbot" fishery in particular has for many years caused problems between the fishermen of the two countries, both with coasts along the Black Sea. In order to solve the conflict, both countries will try to eliminate the differences between the legislations of both countries. Quota implementation and the forming joint fishery companies will be implemented to form the foundation of the solution.

It was stressed that there is no political problem between Ukraine and Turkey. Ankara aims to continue its close relationship with Ukraine of which Turkey is included in the regional constructions such as the Organization for the Black Sea Economic Cooperation and the Black Sea Naval Cooperation Task Group (BLACKSEAFOR) within the region and Europe. In Ukraine, population of Turkish-decent citizens is realistically estimated at about 850,000, of whom 265,000 are Crimean Tatars. The other ethnic groups living in the country include the Kazan Tatars, Azeris, Ahiska Turks, Uzbeks, and Turkmen. Turkey is Ukraine's fifth biggest commercial partner. Foreign trade volume between the two countries is about $3 billion annually and there is a trade deficit against Turkey. Turkey's exports to Ukraine in 2004 were $564 million and its exports totaled $2,447 million. The difference arises from the scrap iron imports to Turkey.

Source: Zaman Daily

Ukraine 'Ready for Steel Resale'

KIEV, Ukraine -- A controversial steel sell-off is to be rerun in Ukraine, the country's prime minister has said. Yulia Tymoshenko told reporters she had signed an order to repeat the auction of the Krivorizhstal steel mill.

The mill was sold for $800m (£440m) in 2004 to a group whose members included the son-in-law of former president Leonid Kuchma.

Mr Kuchma's anointed successor lost to Viktor Yushchenko in an election in December after weeks of protest.

Crony Sale?

Krivorizhstal was the most high-profile of the privatisations carried out by the Kuchma administration.

Its resale was an urgent priority, Ms Tymoshenko told reporters.

The sell-off was ruled illegal by a court earlier this year. An appeal against the ruling was rejected in June.

The original buyer was a consortium led by Viktor Pinchuk, Mr Kuchma's son-in-law, and Rinat Akhmetov - often reported to be Ukraine's richest man.

But, other bidders - including international steel group LNM and Russia's Severstal - have argued that they offered more money.

Ms Tymoshenko said the resale would be open to all "qualified" bidders, including the current owners.

But despite losing the court cases, lawyers for the current owners continue to insist they own the firm.

"Regardless of court cases, the consortium still holds the shares," Oleksiy Reznikov, a lawyer for the current owners, told Reuters.

"Tymoshenko, for the moment, is selling something that does not belong to her."

Command Economy

In the months since the election, different members of the new government have announced widely differing estimates of the number of sell-offs which will be repeated, with one estimate as high as 3,000.

Many of the higher estimates have come from the office of Ms Tymoshenko - a businesswoman accused by Russia of trying to bribe officials there over a gas contract in 1996.

She argues that her businesses were damaged by President Kuchma's government.

Mr Yushchenko, in contrast, has quoted a figure of "dozens" of privatisations to be re-examined.

In all, some 90,000 businesses were sold off in the process of creating a private sector out of the old state-run command economy, from massive corporations to tiny shopfronts.

Source: BBC News

Ukrainian Dilemma

KIEV, Ukraine -- Ukraine is now in a deep ethical and geopolitical crisis solving of which depends on what security agencies (the Office of Public Prosecutor, SSU and MIA) actually can do to fight criminality in Ukraine.


Ukraine's Ex-President Kuchma (L) and Russia's President Putin
How far would the president go to keep his promises of turning Ukraine into a modern, European-oriented, wealthy, jural and democratic state?

Will Victor Yushchenko and Yulia Tymoshenko be able “to build up democracy in a single state” (paraphrasing Stalin) when it’s surrounded by anti-democratic regimes, when criminal clans, pretending to be opposition, lead guerilla warfare against the president, government and own people?

These are complicated academic questions difficult to be given definite answers. Although, if Herculean job of turning Ukraine into jural state isn’t over, it will be very difficult, if not impossible, to eradicate those perversions inherited from former criminal, incompetent and corrupt authorities.

The three cases, listed below, show baffling complexity of task not only for Victor Yushchenko but for Ukrainian society as well.

Case#1 Melnychenko-Gongadze Drama

Mykola Melnychenko, the owner of the most popular phone taps in the world has been exculpated from the charges as to legality of tapping in the president’s office. On his behalf, he has to testify to American FBI.

Suppose he’ll tell everything to FBI, and will name the person (Mr. X) who’s got the idea to tap the president’s office, and motives for that. Sure, if he didn’t act on his own.

If Melnychenko behaves like that what will happen to Mr. X? Will he be prosecuted and put behind the bars, Like Kolesnikov and Co.?

The justice will not triumph under such course of actions.

Suppose Mr. X charged Melnychenko with tapping of Kuchma’s office. As a result, there appeared tapes showing bribery and corruption of Kuchma’s regime.

These tapes caused Orange Revolution and made Victor Yushchenko the president of Ukraine. They have turned into weapon in the hands of those who overthrew Kuchma’s regime and wiped out Kuchma’s favorite candidate Victor Yanukovych.

The tapes, having undergone numerous expert examinations seem to prove Kuchma and company’s taking part in Gongadze’s kidnapping. The kind of crime which presupposes long-tern sentence.

The murder wasn’t originally planned. But now, when the murderers are detained and plead guilty, the “customers” of the murder must be detained and prosecuted.

So, what’s then Mr. X’s fate? My suggestion is, as well as Melnychenko, to decorate him with an order, the highest state award in Ukraine.

Kuchma has already honored Fidel Castro and Jassir Arafat with such an order. I doubt, Melnychenko and Mr. X did less for Ukraine. Are they worth such an award?

It’s clear that the mentioned above “customers” of Gongadze’s kidnapping: Kuchma, Leonid Derkach and the late Yuriy Kravchenko pinned their hopes on Yanukovych to avoid imprisonment for the crime.

Vladimir Putin is the only president who sympathized with them and was ready to help. He proved that having taken an active part in Yanukovych’s pre-election campaign.

Putin almost instructed his Ambassador in Ukraine, Victor Chernomyrdin, how to become associate of what might be called flawed elections. Chernomyrdin helped to organized criminal “Russian Club” in Kyiv which openly ignored Ukrainian laws and did everything possible to aid Yanukovych.

One of its founders, Maxim Kurochkin, who safely lives under Putin’s protection in Russia, is under retrieval of Ukrainian security agencies.

Consciously or not, Putin promoted elections fraud and later on went further, sheltering Ukrainian criminals.

Those, believing that MIA General Olexiy Pukach (one of the main suspects in Gongadzegate) is hiding somewhere in Israel, are mistaken.

Is it possible that self-assured, with a childish smile, Ihor Bakai is hiding in Russia without Putin’s ok? Bakai, on his behalf, tells Ukrainian people he is inviolable under protection of Russian security services and Putin’s shelter.

How would Ukrainian laws overcome these obstacles? Will the gossips come true? Is that true that Bakai paid Russian Security Services $1 million to find there shelter? Why does Ukrainian Minister easily meet Bakai in Moscow? Such meeting do not take place in jural states.

Why do Victor Medvedchuk, Victor Yanukovych and Nestor Shufrych shed tears for Kolesnikov, Pukach and Bakai? Are these people victims of Yushchenko’s regime?

This revolting question arouses another one, and far more serious: how long will the administration bear the opposition members of which have criminal records resulting in enormous material losses for the country?

Who are they? Loyal opposition of just a criminal clan trying to get back the lost power and sources of income?

There are a couple of Kuchmagate figurants, Volodymyr Lytvyn, Olexandr Volkov and Andrew Derkach, who played tricky to find Yushchenko’s political shelter for the sake of their families and own political future.

What will happen to them? Should Leonid Derkach be forgiven ‘cause his son backed up Orange revolution in a proper time? Will that be a fair decision?

Even Yushchenko can’t give them absolution. He’s just empowered to amnesty prisoners. In such a way he represents authorities’ function of acquitment.

Case#2: “Naftogaz” and ”Gazprom”

After a many-week investigation that is still in process, The Office of Public Prosecutor seem to considerably advance in the case of managers of “Naftogaz Ukraine”, Leonid Kuchma is believed to run.

This group has worked out secret scheme together with “Gazprom” to cheat and steal from Ukrainian and Russian people.

The scheme implied offshore company serving as operator for transporting of Turkmen gas in Ukraine. This operation, the investigators and Yulia Tymoshenko testify, resulted in a $1 billion loss for the budget.

No one knows where the money is. But many people believe part of it was given to one criminal magnate who safely lives in Moscow. This person is said to buy protection from Federal Security Service.

The dilemma is: how far will the prosecution go; will they contents themselves with just Ukrainian participants of the case or will they declare the case international and prosecute people from “Gazprom”, who worked out illegal schemes as well as offshore company managers who now live happily somewhere in central Europe?

If Ukrainian prosecution makes the case international they will have to find out Putin’s role in this scheme. Did Putin command the head of “Gazprom”, Alexei Miller, to stick to the scheme?

It’s not likely that Miller acted on his own. It’s not clear if Putin got his reward for participating in the project. Have they got the “dough” from offshore companies? Or did Kuchma bring them in a “Gucci” leather brief-case?

Is Ukrainian government ready to move that far? Will it make the case opened and will it announce the names of Russian officials, involved in the project?

It’s a pity but there are still some people in the president’s circle who still doubt in their devotion to president and who refuse to tidy up corrupt power and energy branch.

Moreover, they seem to be satisfied with the existing scheme of Turkmen gas transportation to Ukraine. The company “RosUkrEnergo”, Ukraine has nothing to do with, has the same shady schemes as the previous one and it gets enormous profits.

Ukrainian business should be run by those who knows it pretty well but not by those who profit from it.

Case#3: Poisoning of Victor Yushchenko

It’s the most delicate secret case that is being investigated at the moment. It’s the most complicated and involved as well.

Victor Yushchenko was poisoned by overdose of dioxins supposedly added to his meal when having dinner with Volodymyr Satsyuk, SSU officer, fired after the accident. Satsyuk is believed to be involved in poisoning. Although, Satsyuk denies it.

There is also evidence that dioxins were brought to Ukraine from Russia and that Russian Federal Security Service is involved in this crime. There were serious accusations in mass media that the highest officials personally supervised it.

Is it really possible that a criminal gang consisting of Putin, Kuchma and Yanukovych, worked out the plan of murdering Yushchenko to make Yanukovych the president of Ukraine?

Was this plan connected with criminal structures in Ukraine, this group profited from?

When criminality and government unite their efforts and constitute one whole, the legal system is destined to decline, as it was in Ukraine back in Kuchma’s times and as it is now in Putin’s Russia.

Although, there is a strong tendency to slow down the case and keep it from its logical end. There are different reasons for that, but the main thing is realization that it will be extremely difficult to prosecute murderers and “customers” without spoiling Ukrainian-Russian relations for decades.

That’s why it’s quite possible that people responsible for Yushchenko’s poisoning won’t be found and tried whatever administration is at power.

Some Hypothetical Conclusions

Experience shows that Putin and his team are not quite honest and decent people. They issued themselves an unreal challenge to create “a new liberal empire” no matter what.

Are today’s Russian leaders capable of creating a new empire? Every modern politician, who believes that USSR breakdown was the most tragic thing ever happened on Earth, is either ignorant or pathological fibber.

Such a leader can’t create any empire, even more or less liberal. Thus, attempting to implement this crazy project in life he will spread horror in the whole world.

The recent five years showed that Ukrainian-Russian relations won’t become better while Putin is Russian president.

Russia insists on demonstrating its doubtful power; it tries to intimidate, sometimes bluffing, Ukraine and Baltic countries to let them know it is still capable of dominating over post soviet countries. Ukrainians have to acquire Polish and Baltic experience to understand that such form of blackmail of just ineffective.

Russia is no more a superstate. It’s reach in energy supplies and resources but even with that it can’t impose its will or monopolize Euro-Asian space. With its demoralized army, corrupt MIA and FSS, Russia look like “Paper Tiger”, the way Mao Dze Dun called Soviet Union.

At the same time, one should keep in mind that greed and money rule the Kremlin. It’s not patriotism of Russian chauvinism. Greed makes them dangerous and self-assured enemies capable of making irrational steps to reach their objectives.

This greed makes them approve and maybe support guerilla was led by former authorities against Yushchenko; greed causes economic sabotage and provocations against Yushchenko’s administration.

Greed ruled Russia in Yeltsin’s times, greed prevails in Putin’s kingdom.

Though true Russian patriots are always ready for dialogue, they are in petty opposition. At the same time, Kremlin’s masters do not understand the meaning of the word “patriotism” and smile cynically when they hear this word. The only thing they understand is “dough”, US bucks.

Try to recollect “patriotism” of any Russian Minister of People’s Deputy and you’ll see a vacant look. They do not trust you.

They look like Kuchma’s supporters who yell about “police state” after years of robbing this country. Having begun fight against criminality Yushchenko and Tymoshenko have to stick to this course. They promised that to their voter and now can’t turn back. The country is too weak to stop and forget the past crimes. That would be not just a dreadful precedent but weakness of the new administration. The present guerillas like Shufrych wouldn’t spare them.

As to Putin’s supporters, they will fight, bite and yell. They were so sorry to see their secret-service network demolished in Ukraine. But all in all, if Ukraine sticks to the course, Putin’s supporters will be absolutely isolated and will have to realize they should find common language with Ukrainian authorities and learn manners if they want to sit at the table.

Source: Ukrayinska Pravda

Ukraine Virtually Through

LONDON, England -- A dramatic day of action in Europe ended with Ukraine, Holland and Croatia all eyeing a place in next year’s World Cup Finals but Ireland were left frustrated by an astonishing fight-back by Israel.

The Czech Republic, Switzerland, Sweden and Poland also boosted their chances on a day of 22 qualifiers, ahead of another 13 European games scheduled for Wednesday.

But it was a bleak day for Brazil’s 1970 World Cup winning captain Carlos Alberto, now the coach of Azerbaijan.

He was ordered from the dugout after a furious exchange with the fourth official during his side’s 3-0 home defeat to Poland in Baku.

That result lifted Poland two points clear of England at the top of Group Six, but they have played one more match.

Elsewhere in the eastern side of the continent it was a good day for Ukraine who ended it with the biggest lead in any of the eight European groups, going five points clear at the top of Group Two after a 2-0 win over Kazakhstan while their nearest rivals Turkey and Greece drew 0-0 in Istanbul.

Ukraine, bidding to reach the Finals for the first time, have 20 points from their eight matches, five more than European champions Greece (15) and seven clear of Turkey (13).

They will take another huge step towards the Finals if they win in Greece on Wednesday.

Holland also took a significant step forwards with a 2-0 win over Romania in Rotterdam which kept them at the top of Group One.

Arjen Robben and Dirk Kuijt scored for Holland, but Adrian Mutu, back in the Romania side after the end of his seventh-month ban for cocaine use, had a poor match and never looked like scoring.

The Dutch stayed one point clear of the Czech Republic who crushed Andorra 8-1. Jan Koller’s 29th-minute goal for the Czechs made him his country’s all-time top scorer with 35 goals, beating the record of 34 set by Antonin Puc in 1937.

In Sofia, Croatia effectively killed off Bulgaria’s hopes of a place in Germany next year with a 3-1 win in the Bulgarian capital to consolidate their place at the top of Group Eight.

That result, coupled with second-placed Sweden’s 6-0 home win over Malta, leaves Bulgaria, semi-finalists in 1994, trailing the leading pair by seven points with only four matches to play and out of contention.

In the very tightly-bunched Group Four, Switzerland moved top on 12 points from six matches after a 3-1 win in the Faroe Islands thanks to two second half goals from Alex Frei.

Ireland looked set to overtake them later in the evening when they raced into a 2-0 lead over Israel in Dublin with goals from Ian Harte and Robbie Keane in the first 12 minutes.

But Israel staged an astonishing fight-back with goals from Avi Yechiel and a twice-taken penalty by Avi Nimni to force a 2-2 draw, despite almost constant Irish pressure in the second half.

Ireland’s Andy O’Brien was sent off seven minutes from time for what appeared to be an innocuous clash with Israeli keeper Dudu Awate and, despite seven minutes of stoppage time, Ireland could not get their third goal.

Switzerland now lead the group by one point from Israel with France and Ireland on 10, but the Israelis have played one more game. Ireland are the only one of the leading quartet in action on Wednesday when they travel to the Faroe Islands for a must-win match.

Not all those with aspirations of qualifying for the finals had matters all their own way. Group Five leaders Italy dropped two points in a 0-0 draw in Oslo, but still lead their section by four points from Norway and Slovenia, who drew 1-1 away to Belarus.

In the same group, Scotland, who had scored only one goal in their opening four qualifiers, improved their slim chances of a possible playoff place with a 2-0 win over a stubborn Moldova side at Hampden Park in Walter Smith’s first competitive match as coach.

Christian Dailly opened the scoring after 53 minutes and fellow substitute James McFadden added a second a minute from the end to give Scotland five points from their five matches.

Russia, playing under new coach Yuri Syomin for the first time, also won 2-0 against Latvia in St Petersburg and moved joint second in Group Three, level on points with Slovakia.

Slovakia, though, lost ground on leaders Portugal who beat them 2-0 in Lisbon to go three points clear at the top on 17 points. Fernando Meira (22nd) and Cristiano Ronaldo (42nd) scored for the home side.

Estonia also kept up their hopes of an unprecedented playoff spot in the same group with a 2-0 home win over Liechtenstein which moved them up to 11 points, just three behind the Russians and Slovakians.

Spain, who missed out when the Finals were held in West Germany in 1974 and are determined to be in Germany next year, joined Serbia & Montenegro on 12 points at the top of Group Seven when they beat Lithuania 1-0 in Valencia.

The Serbians maintained their record of not conceding a goal in the qualifiers, but were held 0-0 at home by Belgium.

Source: The Star

Ukraine Plans to Import Oil From Saudi Arabia

RIYADH, Saudi Arabia -- Ukraine's prime minister has told a visiting Saudi delegation that her country is willing to import oil from the Kingdom and take other measures to correct the balance of trade which tilts heavily in Ukraine's favor.

It is the first time ever that Ukraine has offered to import Saudi oil as part of its move to diversify its sources of oil supply, which was mainly from Russia. The new direction in its foreign and economic policy has come in the wake of the recent elections in Ukraine, whose new President Viktor Yushchenko has pledged to follow an independent foreign policy.

In an interview with Arab News, Oleg Todchuk, head of Trade and Economic Mission at the Ukrainian Embassy, said Ukraine's offer to bolster economic and political relations was extended during a landmark meeting that Prime Minister Julia Tymoshenko had in Kiev recently with a Saudi delegation led by Abdulrahman Al-Jeraisy, chairman of the Council of Saudi Chambers of Commerce and Industry.

He said the meeting was significant, since it resulted in the signing of a Memorandum of Understanding (MoU) for the establishment of Saudi-Ukrainian Business Council. "The Ukrainian chapter of the Joint Business Council (JBC) was set up last year. Very soon there will be a Saudi chapter of the JBC," Todchuk said.

He added that such a step could go a long way in giving a boost to bilateral trade that stood at $ 244.1 million last year. Saudi exports to that country — mainly chemical and petrochemical products — were valued at $2.5 million. Ukraine's exports to the Kingdom, worth $241.6 million, comprised barley, steel and construction material.

According to the diplomat, the main bottleneck in the trade imbalance is the absence of full-fledged diplomatic relations between the two countries. While Ukraine has its own embassy in Riyadh, the Kingdom does not have diplomatic presence in that country, which is served by Saudi embassy in Moscow. The absence of direct diplomatic contacts between them, together with the lack of direct air links between the two capitals, has hamstrung the growth of bilateral trade, besides jacking up the cost of imports and exports in both directions. "Both sides are aware of the problem and recognize the need to remedy the situation. This message was also conveyed to the Saudi business delegation," Todchuk said.

Asked about the measures that Ukraine is willing to adopt to boost Saudi exports to his country, he quoted the Ukrainian prime minister as saying that Saudi Arabia could set up a trade center in Kiev exclusively to promote its trade with her country.

The scope for expanding bilateral relations was enormous. "Very few are aware of the fact that Dnepr launch vehicle was used for propelling Saudi satellites into space. Dnepr LV launch services are provided by the Ukrainian-Russian company Kosmotras."

Todchuk cited the launch by Ukrainian-built rocket-launchers of Saudi satellites as an example of Ukraine's strength in high technology in space, besides aviation (mid-size passenger aircraft) and oil and gas transportation across far-flung areas. "We are also very strong in the foodprocessing sector and could help the Kingdom in import substitution, especially in the manufacture of processed food that is currently being imported."

Another area of interest is higher education, particularly medicine, engineering and space technology, where Saudi students would be most welcome, he added.

Source: Arab News

Ukraine on Course for World Cup Berth

LONDON, England -- Ukraine squeaked out a 2-0 victory at Kazakhstan on Saturday, keeping the former Soviet republic on course to land its first berth in the World Cup finals.


Ukraine's Andriy Shevchenko (C) reacts after scoring a goal against Kazakhstan
Croatia, the Czech Republic, the Netherlands, Portugal and Russia also picked up key wins on a crowded day of 21 World Cup qualifying games across Europe.

When the regular phase of qualifying ends in October, the eight group winners advance automatically to the 2006 finals in Germany. The top two second-place teams also qualify. The other six second-place teams play off for three berths.

AC Milan striker Andriy Shevchenko scored for Ukraine in the 18th. Ukraine clinched the victory when Igor Avdeyev scored an own-goal in the 83rd. Kazakhstan remained winless in six games.

Turkey finished with 10 men after Yildiray Basturk was sent off in the 89th for his second yellow card.

Ukraine plays at Greece on Wednesday. If Ukraine wins that game, it can be assured of qualifying by winning only one of its final three games. Ukraine finishes qualifying with matches against Georgia, Turkey and Albania.

Croatia stayed on course in Group 8 with a 3-1 victory at Bulgaria. The loss all but eliminated Hristo Stoichkov's side. Croatia improved to 16 points to top the group, behind goals from Marko Babic, Igor Tudor and Niko Kranjcar.

In the same group, Sweden moved up to 15 points with an easy 6-0 win at home against Malta.

The Czechs hammered Andorra 8-1 in Group 1, improving their point total to 18. Meanwhile, the Netherlands stayed on top with 19 points after a 2-0 victory at home over Romania.

Vratislav Lokvenc scored two for the Czechs. Andorra was reduced to 10 men when Justo Ruiz was sent off in the 63rd on his second yellow card. Arjen Robben and Dirk Kuijt scored in the Dutch victory.

In Group 3, Portugal took charge with a 2-0 victory over Slovakia in Lisbon. Fernando Meira and Cristiano Ronaldo scored in the first half for Portugal, which improved to 17 points. Slovakia stayed on 14.

Russia kept itself in contention for a spot in Germany, defeating Latvia 2-0 in the group to improve to 14 points. Andrei Arshavin scored in the 56th, and Dmitri Loskov added the decider on a penalty in the 77th. It was Russia's first game under new coach Yury Syomin. He replaced Georgy Yartsev in April.

Spain moved into a first-place tie atop Group 7 with a 1-0 win over Lithuania in Valencia. Alberto Luque scored for Spain in the 68th. Serbia-Montenegro, which plays Italy in a friendly in Toronto on June 11, managed only a 0-0 draw in Belgrade against Belgium. Serbia improved to 12 points, and Belgium moved up to eight. In the other group game, Bosnia-Herzegovina defeated San Marino 3-1.

Poland moved ahead in Group 6 with a 3-0 victory over Azerbaijan. Poland improved to 18 points, two ahead of idle England. Tomasz Frankowski, Tomasz Klos and Maciej Zurawski scored for the Poles.

Italy stayed in the Group 5 lead, playing to a 0-0 draw with Norway. Italy tops the group with 13 points with Norway on nine.

Slovenia also improved to nine points after a 1-1 draw with Belarus.

At the bottom of the group, Scotland maintained its slim hopes of qualifying, beating Moldova 2-0 in Glasgow. Christian Dailly and James McFadden scored. It was Scotland's first group win. It was also new manager Walter Smith's first game at home since taking over in November from fired German Berti Vogts.

Switzerland scored an important 3-1 victory at the Faeroe Islands, behind two goals from Alexander Frei. The Swiss lead Group 4 with 12 points. In the other group game, Israel rallied for a 2-2 draw at Ireland. Israel has 11 points and Ireland has 10. France has 10 points, but was idle.

Ian Harte and Robbie Keane gave Ireland a 2-0 lead after 11 minutes. But Israel rallied on a 39th-minute goal from Avi Yehiel and converted penalty in first-half injury time by Avi Nimni.

In other games, it was: Estonia 2, Liechtenstein 0; Armenia 1, Macedonia 2; Albania 3, Georgia 2; and Iceland 2, Hungary 3.

Source: AP

Foreign Funds Moving to Ukraine

KIEV, Ukraine -- Ukraine is becoming more and more attractive for foreign banks, which have demonstrated an enhanced interest in opening representative offices and branches. Naturally, this means the country can expect to see a large influx of financial resources.

The number of foreign financial structures in Ukraine is on the rise. Over the past month, several foreign banks have announced plans for opening a representative office or branch here. Local banking experts anticipate the new foreign banks will show interest in the acquisition of Ukrainian banks. There will also be talk about providing loan resources and in larger volumes than previously.

Moreover, it is not just the newest European banks that plan to “open shop” in Kyiv.
Indeed, the French BNP Paribas S.A., to which the National Bank of Ukraine gave permission to open a local branch last week, is the largest French bank with structural subdivisions in over 85 countries around the world. The total assets of the BNP Paribas group as of January 1, 2004 totaled 783 bn euro.

The German Commerzbank is one of the largest banks in Germany. Its president, Claus Peter Mueller, announced last week the bank’s desire to open a branch in Ukraine (N.B. a representative office of the bank has been operating in Kyiv for several years now). At present, this financial structure services over 20% of foreign economic relations between Ukraine and Germany.

Be that as it may, Ukraine’s parliamentarians have not yet passed the NBU bill permitting the opening of subsidiaries of foreign banks in the country. For this reason, it can be safely predicted that the Germans will only be able to carry out their plans by the end of 2005.

Meanwhile, Baltic banks also have plans of expanding their presence in Ukraine. Two Latvian banks announced their plans last week. Regionala Investiciju Banka (Regional Investment Bank) plans to open its first representative office in Kyiv, while Parex Banka will open a branch in Dnipropetrovsk. While RIB is considered in its native country to be a medium-sized bank, Parex Banka is considered one of the largest in Latvia.

It suffices to say that the latter has assets exceeding 1.5 bn euro and that it is represented in 10 countries around the world, including Great Britain, Germany, Sweden, Japan and Russia. The Latvian giant also has the affiliates AP Anlage und Privatbank in Switzerland and Parex Bankas in Lithuania.

Source: Kyiv Weekly

No Dispute Unsolvable Between Ukraine, Russia: Ukrainian PM

TBILISI, Georgia -- Ukrainian Prime Minister Yulia Tymoshenko said Friday that Ukraine shares lots of common ground with Russia on many international issues and there is no dispute between the two countries that could not be resolved through dialogue.


Ukrainian Prime Minister Yulia Tymoshenko (L) talks to Russia's Prime Minister Mikhail Fradkov during their meeting in Tbilisi
Tymoshenko met with her Russian counterpart Mikhail Fradkov on the sidelines of a Commonwealth of Independent States (CIS) summit held in the Georgian capital Tbilisi on Friday.

Tymoshenko said there is great potential for cooperation between Ukraine and Russia.

The Ukrainian prime minister said she is optimistic that the talks to be held between the two countries will help resolve the existing issues and substantiate plans for bilateral economic cooperation.

Fradkov said that an early take-off of Ukraine's economy will be to a great extent in the interest of Russia as well.

As neighbors, the confrontation between Russia and Ukraine will be "of no significance," said the Russian prime minister.

Tymoshenko had planned to visit Russia on April 15-16, but the visit was postponed because of her country's spring sowing campaign and other issues.

Tymoshenko said her visit to Russia is expected to take place before the end of summer.

Last September, a Russian military court issued an arrest warrant for Tymoshenko on charges that she tried to bribe Russian military officials when she was in charge of Ukraine's electricity grid. Tymoshenko denied the charges.

Russia backed incumbent Ukrainian President Viktor Yushchenko's opponent during last year's presidential elections in Ukraine.

Yushchenko's installment to power has changed the country's original orbit around Russia and the new Ukrainian government has announced its intentions to join the European Union and the North Atlantic Treaty Organization.

Source: China View

Ukraine Rethinks Plan to Reverse Sell-Offs

KIEV, Ukraine -- Viktor Yushchenko, Ukraine's president, may drop plans to renationalise and auction dozens of companies that he believes were sold too cheaply by the former government, according to one of his advisers.

Faced with mounting concerns over the re-auction plan among foreign investors, and the prospect that his government would become bogged down in years of court battles, Mr Yushchenko is weighing alternative proposals that would seek to forge "voluntary" settlements, according to Olexander Paskhaver, a liberal economist who is advising the president on the issue.

The compromise plan, still being drafted, faces strong resistance from people close to the president, according to Mr Paskhaver.

But it comes amid an outbreak of peacemaking gestures from both Mr Yushchenko's administration and the "oligarchs" who dominated privatisation under his predecessor, Leonid Kuchma.

Mr Paskhaver said he believed Mr Yushchenko was looking for a way to scale down his plans without dropping them altogether.

"I'm actively against compulsory revision, which I think would decrease confidence in property rights and cause long-term damage to Ukraine's image," Mr Paskhaver said.

Yulia Tymoshenko, prime minister, said yesterday she saw room for a "peace agreement" over the largest disputed privatisation - last year's $800m (€655m, £442m) sale of the Kryvorizhstal steel mill - but only if the buyers allowed the government to re-auction the mill in an unrestricted tender.

Mr Yushchenko made similar comments on Thursday.

The two main business groups involved in the consortium that bought Kryvorizhstal said they welcomed the offer to start talks. Both System Capital Management (SCM), controlled by industrialist Rinat Akhmetov, and Interpipe, controlled by Mr Kuchma's son-in-law, Viktor Pinchuk, are worried that other companies they acquired separately through privatisation could be taken away if the re-auction plan goes forward.

Mr Paskhaver said Kryvorizhstal was being treated separately from the other sales, since a court challenge to the Kryvorizhstal sale was already under way before Mr Yushchenko came to power.

On Thursday Kiev's Economic Appeals Court upheld a lower court ruling that declared the sale illegal. SCM and Interpipe said they would appeal to the Supreme Court.

Source: Financial Times

Presidents of Moldova and Ukraine Asking European Union to Help Monitor the Border

CHISINAU, Moldova -- The Presidents of Moldova and Ukraine, Vladimir Voronin and Victor Yushenko, have stood up with a joint address to European Commission Chairman Jose Manuel Durao Barroso and the EU Foreign & Security Policy Chief Javier Solana concerning the European Union's participation in technical equipping of the Moldo-Ukrainian border and organization of international monitoring of the border's Transnistrian segment.


Presidents Victor Yushchenko (L) and Vladimir Voronin
The two Presidents signed the Joint Address on Thursday during their meeting held at the Yaski border-crossing station in the Odessa oblast of Ukraine. They achieved an accord on demarcation of the Moldo-Ukrainian border, and on unfolding, starting from July 1st 2005, five joint customs and border-guard stations outside the Transnistrian segment. Within 10 days, the two Governments will re-assess existing bilateral problems, including the export of Ukrainian electricity to the Balkans via Moldova, said Vladimir Voronin.

In his opinion, the bilateral problems, which have accumulated during the 14 years of each other's independence, "are quite soluble in a constructive way, with observance of each other's interests, proceeding from the friendly relations existing between the Presidents of Moldova and Ukraine".

Vladimir Voronin highly appreciated the Ukraine-offered Plan of Transnistria problem settlement, pointing out that by acting jointly with Kiev and international organizations, the chances to resolve the conflict will indeed increase.

He said the Moldovan Parliament, to sit together with Government next week, will consider a detailed report on the Transnistria conflict. Voronin is going to take floor at that assembly and present a report on the Yushenko Plan.

The Ukrainian President said at the final news conference yesterday, the Yaski meeting reaffirmed the two countries' political will to settle the Transnistria conflict and other problems remaining between Moldova and Ukraine. Victor Yushenko voiced content that his Plan found understanding both by Moldova and international organizations.

"The Transnistria conflict is a political conflict, so it has to be solved by using political means. I've got an impression that Tiraspol authorities are assessing the Ukraine's initiative positively", said President Yushenko.

On his request, the Secretary of the Ukrainian Council of National Security and Defense, Peter Poroshenko, is visiting Tiraspol today, discussing the Yushenko Plan with Transnistrian leader Igor Smirnov.

The two Presidents signed a Protocol-Agreement "On Reciprocal Access of Commodities to the Markets of Moldova and Ukraine". The official Kiev presumes that "by signing the Protocol, the Moldovan side has revoked its former claims to Ukraine". This has brought Ukraine substantially closer to accession to the World Trade Organization (WTO). Earlier, Victor Yushenko strongly criticized his Cabinet of Ministers for too slow a preparation to joining the WTO. Ukraine strongly hopes that the European Union will grant to it the full status of a market-economy country yet before the EU-Ukraine Cooperation Council to be held on June 13.

The Republic of Moldova, a WTO member since 2001, has many times voiced discontent that Ukraine restricts access of Moldovan goods to the Ukrainian market in contravention of the bilateral Free Trade Treaty. In conformity with the latest accords, the restrictions will be lifted from the moment of Ukraine's joining the World Trade Organization.

Source: Moldova Azi

President Yushchenko Of Ukraine Due In Turkey

ANKARA, Turkey -- President Viktor Yushchenko of Ukraine will pay his first foreign trip since taking office earlier this year, to Turkey on June 6th and 8th.

President Yushchenko will meet Turkish President Ahmet Necdet Sezer, Parliament Speaker Bulent Arinc and Prime Minister Recep Tayyip Erdogan.


Turkish President Ahmet Necdet Sezer
He is also scheduled to hold talks with representatives of the Foreign Economic Relations Board and Turkish businessmen in Istanbul.

During the visit of Yushchenko, a series of agreements will be signed to further improve the bilateral relations between Turkey and Ukraine.

The agreements are ''Cooperation Agreement for Energy'', ''Cooperation Agreement for Railway Transportation'', ''Scientific & Technical Cooperation Agreement'', ''Additional Protocol to Cooperation Agreement for Fight Against Crimes'', ''Agreement for Re-acceptance of People'' and ''Memorandum of Understanding for Nuclear Cooperation''.

Meanwhile, Turkish State Minister Kursad Tuzmen and Ukrainian Deputy Prime Minister Oleh Rybachuk will preside the Turkey-Ukraine Joint Economic Commission meeting.

During the visit, Ukrainian side will express its desire to develop its cooperation with Turkey in transportation and energy.

Problems between the two countries in fishery are expected to be brought onto agenda during the meetings. Talks have been under way for two years to resolve the problems stemming from the differences in regulations of the countries.

Diplomatic sources said that the new government in Ukraine could speed up the solution process.

The relations between Turkey and Ukraine were set up with an agreement on establishment of diplomatic relations in 1992.

Turkey attributes importance to its relations with Ukraine in regard to regional stability and targets to further improve those relations in every area.

In 2004, a ''Joint Action Plan'' was signed to determine a comprehensive frame of cooperation areas between the two countries.

Turkish Foreign Minister & Deputy Prime Minister Abdullah Gul paid the first official visit to Ukraine after the change in the administration following the presidential elections in 2004.

President Yushchenko's visit is expected to improve the current atmosphere of dialogue and the bilateral relations which have risen to the level of strategic partnership.

Turkey became the fifth biggest trade partner of Ukraine and the third biggest export market.

Crimean Tatars living in Ukraine constitute an element enriching the friendly relations between the two countries.

Source: Turkish Press

Tempers Ran High

KIEV, Ukraine -- Kiev Court of Appeal upheld yesterday the award of the Business Court that invalidated Krivorozhstal privatization. Owner of 93.02 percent in Krivorozhstal, Investment and Metallurgical Union (IMU) was denied revision of award. On the other hand, the Ukrainian authorities might be just trying to negotiate more advantageous terms of the amicable agreement.


Viktor Pinchuk (L) and Rinat Akhmetov
Kiev Court invalidated Krivorozhstal privatization April 22. IMU bought out last June 93.02 percent in the company for $804 million. Russian Severstal Group and Evrazholding had offered more than $1 billion, transnational Mittal Steel – over $2 billion but were unable to bid.

IMU is controlled by Donetsk businessman Rinat Akhmetov and Viktor Pinchuk, son-in-law of the Ukrainian former president Leonid Kuchma.

2004 revenues of Krivorozhstal reached $1.9 billion.

IMU challenged the award in the Court of Appeal but its motion was overruled. Now the consortium intends to go to the Supreme Business Court.

The court seized Krivirozhstal stocks and banned IMU to make any transactions with them or dispose of Krivorozhstal assets.

IMU spokesman Alexey Reznikov said the actual target of the award that invalidated Krivorozhstal privatization is to win more advantageous terms of the deal for the government.

Viktor Pinchuk told Kommersant he is ready to put forward several drafts of the amicable agreement that could interest the government but denied to specify them before official talks with the authorities are launched. Pinchuk said his Nikopolsky Works of Ferroalloys is eyed by Privat Group (partner of Alisher Usmanov), so he forecasts one more attack on his property.

Ukrainian President Viktor Yushchenko backs up the amicable agreement on Krivorozhstal but insists on transparency of the talks.

Nearly all potential bidders of last year’s tenders – Severstal, Evrazholding and Mittal Steel and Indian Tata Group have announced they will bid for Krivorozhstal again.

Source: Kommersant

Bank Agio First to Lend Under $200m Ukraine SME Facility

KIEV, Ukraine -- The EBRD is extending a $10 million line of credit for SME lending to Bank Agio, which becomes the first Ukrainian bank to lend under a new $200 million framework for financing private-sector micro, small and medium enterprises. The framework will be put to work through credit lines to local commercial banks, without sovereign guarantee and without the National Bank’s participation.

Agio, owned by Skandinaviska Enskilda Banken (SEB) of Sweden, became an EBRD partner in 1995 and has been one of the best performing banks under the SME credit line programme.

The new credit line will not only enhance Agio’s position in the SME market by providing it with long-term financing, but it should also have a wider effect on small-business lending, given that this sector is rather underfinanced in Ukraine, said Jean Marc Peterschmitt, EBRD Director of Bank Debt.

“The new credit agreement with the EBRD, which will simplify access to financing, is an important step in strengthening Agio’s strategy aimed at SME development and the provision of competitive long-term financing,” said Agio Chairman of Board Stanislav Arzhevitin.

Bank Agio and its clients have actively participated in the EBRD’s SME Business Project Competitions, designed to improve the management and strategic planning skills of local companies and to promote small and medium-sized business lending in Ukraine. In 2004 Agio’s client Exar, one of Kiev’s best and longest-standing photo labs, won this competition.

Since the launch of the SME credit line programme in 1994, the EBRD has financed 235 SMEs for $205 million and more than 47,000 micro enterprises for $304 million of aggregate financing.

The Bank’s cumulative investments in Ukraine stand at €1.6 billion through 65 projects.

Source: Harold Doan Associates

Kalam Visits Missile Factory in Ukraine

DNIPROPETROVSK, Ukraine -- President A P J Abdul Kalam was on his home turf as the first citizen of the country, also known as 'India's missile man', visited the Yuzhnoye, an establishment in Ukraine engaged in manufacture of space rockets.


President Abdul Kalam (L) with President Yushchenko
A day before ending his 14-day sojourn to four countries, the President arrived in this town, 500 kms from Kyiv, in a special IL-62 aircraft where he was received by the Governor and Mayor of the city.

The President, who was accorded a traditional welcome, drove straight to Research production enterprise Yuzhnoye, where he attended a briefing by scientists.

The delegation of Kalam consisted of senior scientists including Chairman of Indian Space Research and Organisation G Madhavan Nair.

The President received a briefing from the scientists here about their new projects.

Yuzhnoye was established in 1954 and shot into prominence after the development of a missile based on radically new technologies of hypergolic propellant components and use of self-contained guidance and control system.

After the breakup of erstwhile USSR and declaring the denuclearised status of the country, the establishment was assigned a new programme of the missile weapons development which includes anti-aircraft missile defence system, air-borne, sea-borne, sea-based and surface-deployed missile systems.

The establishment is also engaged in development of various liquid-propellants for space rockets and has the distinction of being a pioneering company in aerospace industry to set up a mechanism to facilitate a solution of important problems while carrying out the flight tests of strategic missile and launch vehicle.

The company, where 50,000 scientists and experts were employed, is presently working on Okean-O oceanographic satellite, Koronas-F solar observation satellite, Zenit 3SL three-stage launcher for sea launch project and Dnepr launch vehicle.

Source: Outlook

Soros Says Putin Urged Ukraine to Use Force Against Protestors

MOSCOW, Russia -- U.S. businessman George Soros has said that Russian President Vladimir Putin had advised his then Ukrainian counterpart Leonid Kuchma to use arms against protestors during the country’s presidential elections in 2004.


George Soros
“President Putin advised that President Kuchma fire at the protesters during the Orange Revolution. Fortunately, Kuchma did not take his advice,” Soros was quoted by Interfax as saying at a news conference in Kiev on Friday.

The wave of protests in Ukraine was caused by reportedly falsified election results. After the rerun, opposition leader Viktor Yushchenko became president. There was speculation that Russia planned to use troops against Ukrainian protestors.

“Putin offered the same piece of advice to (Uzbek president Islam) Karimov, who accepted it,” Soros said in reference to the clashes between the army and protestors in Uzbekistan in May.

Source: MosNews

EU and Ukraine Seal GALILEO and Aviation Agreement

Brussels, Belgium -- Negotiations on Ukraine’s participation in Europe’s satellite radionavigation programme finally reached approval. The agreement was initialled today in Kiev by François Lamoureux, Director-General for Energy and Transport at the European Commission, and by Oleh Shamshul, deputy Minister of Foreign Affairs of Ukraine. A first agreement between the EU and Ukraine in the field of civil aviation was also initialled today. The agreement will give any European airline access to the Ukrainian market from any Member State of the EU and is a first step towards the creation of a Common Aviation Area with Ukraine.


EGNOS
The Galileo agreement initialled today with Ukraine provides for co-operative activities on satellite navigation in a wide range of sectors, particularly in science and technology, industrial manufacturing, service and market development, as well as standardisation, frequency and certification. It also represents the first step towards the extension of EGNOS (European Geostationary Navigation Overlay Service) to Ukraine and the participation of the country in the programme through a stake in the GALILEO Joint Undertaking.

Ukraine is one of the eight countries within the world space community with significant technological knowledge on space programmes and important achievements on GNSS (Global Navigation Satellite System) applications, equipment, user segment and regional technology. The Ukrainian space industry is among the world’s leader in the design and production of launchers and GNSS components.

The Galileo agreement with Ukraine confirms the European Union’s ambition to further stimulate international cooperation. Ukraine is the third country formally joining the GALILEO programme after China and Israel. Discussions are under way with India, Morocco, Brazil, Mexico, Chile, South Korea, Canada, Argentina and Australia. The ever growing interest of third countries to participate in the GALILEO programme represents a big boost for the GNSS market, which is potentially considerable: 3 billion receivers and revenues of some €275 billion per year by 2020 worldwide, and the creation of more than 150,000 highly qualified jobs in Europe alone.

The aviation agreement is the first agreement in the field of civil aviation between the European Union and Ukraine. The agreement brings existing bilateral air services agreements between the Member States and Ukraine in line with EU legislation. It ends the national provisions that do not authorise European carriers to fly to Ukraine unless they leave from their countries of origin. All 25 bilateral agreements between EU Member States and Ukraine will remain in force with the exception of those provisions changed by today’s agreement. The Commission has initialled similar agreements with 15 countries worldwide including Australia, New Zealand, Bulgaria, Romania, Morocco as well as Georgia and Azerbaijan.

Source: Europa

Ukrainian MPs Demand Resignation of Yushchenko’s Russian Aide

KIEV, Ukraine -- The Ukrainian parliament has passed a statement demanding the Russian aide to President Viktor Yushchenko, Boris Nemtsov, be sacked for criticizing Prime Minister Yulia Tymoshenko, Itar-Tass reported.


Boris Nemtsov
MP Oleg Tyagynbok, who made the proposal, claims Nemtsov, the former leader of the Russian liberal party The Union of Right Forces, who campaigned for Yushcenko during the Orange Revolution in the fall of 2004, is interfering in “Ukrainian internal affairs” without limit and his remarks “compromise Ukraine as an independent state.”

On May 30 Boris Nemtsov criticized Tymoshenko by saying that the “investment climate in Ukraine is getting worse due to mistakes made by Tymoshenko’s cabinet.”

“Yulia Vladimirovna (Tymoshenko) is an outstanding and courageous person, but her management methods are dangerous for Ukraine,” Nemtsov said.

Boris Nemtsov was appointed as Yushchenko’s economic adviser in February 2005. Upon receiving his post he said that his main aim would be to arrange an influx of Russian investors into the Ukrainian economy.

On Friday he added that only the president could dismiss him. “I will never lie saying the policy of the Ukrainian government leads to success and prosperity. Quite the contrary, it is extremely dangerous and may cross out all the achievements of the Orange Revolution,” the aide went on. He stressed that in spite of everything he will remain Yushchenko’s associate.

Source: MosNews

India, Ukraine Target $5 Billion Trade by 2010

KIEV, Ukraine -- India and Ukraine on Thursday discussed several areas where the two countries could cooperate and collaborate to take bilateral trade from the current $700 million to $5 billion by 2010.


Ukrainian President Viktor Yushchenko (R) and India's President Abdul Kalam Inspect the Guard of Honour
In one-on-one talks characterised as "extremely friendly and warm", visiting Indian President APJ Abdul Kalam and his Ukranian counterpart Viktor Yushchenko reviewed 15 ongoing joint projects.

The leaders said there were several areas where bilateral cooperation could be enhanced, including space and defence.

Calling for the development of an "action plan for the next two years", the two leaders said efforts should be made to take bilateral trade to $1 billion by 2006 and to $5 billion by 2010.

Following delegation-level talks, the two sides signed on a framework agreement on cooperation in the peaceful use of outer space and a pact on standardisation of specifications, a move that will facilitate trade.

At Ukraine's behest, India has also agreed to collaborate in the design, production and marketing of a 100-150 seater aircraft.

Three other agreements - culture, education and science and technology - are on the anvil.

Kalam, a rocket scientist himself, is slated to fly out in an IL 62 aircraft on Friday to visit a missile facility in Dnipropetrovesk city, apart from meeting with academics and students at the National Academy of Sciences.

Kalam, who is on a fortnight-long, four-nation tour of Europe, arrived in Kyiv after visits to Russia, Switzerland and Iceland.

He returns to New Delhi on Saturday.

Source: Indo-Asian News Service

Waiting for the Next Tipping Point in the Former Soviet Union

NEW YORK, NY -- In the past year and a half, three "people power" revolutions - Orange in Ukraine, Rose in Georgia and Tulip in Kyrgyzstan - have shaken the existing order, prompting the question of whether a new wave of democratization is under way in the former Soviet Union. Recent events in repressive Uzbekistan suggest that average citizens in that restive country of 25 million also may have reached their tipping point.



After years of consolidation of authoritarian or semi-authoritarian regimes in the former Soviet states, citizens are pushing back against those who govern them, in some cases roundly turning them out.

So what is afoot in the former Soviet Union? And given the potential for political ferment in other repressed and impoverished lands there, what are the prospects that future cases will follow the course of those of the recent past?

In Georgia, Ukraine and Kyrgyzstan, popular resistance against corrupt and unresponsive political leadership enabled a rotation of power and, with it, the opportunity for a degree of democratic reform not experienced in the post-Soviet era. Seriously flawed elections served as a catalyst for the public reaction in these three countries, resulting in the removal of entrenched leadership from power.

Since the implosion of the Soviet Union, hopes for institutionalization of free and fair elections and functioning succession mechanisms largely slipped from reach.

Instead, controlling regimes have engineered lopsided political campaigns, sham elections and extended presidential terms in office. Heavy-handed economic control and dreadful social conditions, meanwhile, conspire to create conditions ripe for change.

In many ways, Georgia, Ukraine and Kyrgyzstan represent the region's "low hanging fruit" for change. Each enjoyed relatively more political space than former Soviet neighbours, as well as benefiting from other characteristics capable of allowing democratic opening. In comparison, Uzbekistan and other closed states will present some very thorny challenges.

In Georgia, fraudulent parliamentary elections in November of 2003 led to a peaceful popular uprising -the Rose Revolution - that ultimately dislodged Eduard Shevardnadze, brought to power the charismatic Mikhail Saakashvili, and opened the door for a new brand of democratic politics.

Ukraine's Orange Revolution was driven by a reform-minded, charismatic opposition leader, Viktor Yushchenko, who oversaw a peaceful mass movement that contested the handpicked successor of then president Leonid Kuchma. Mr. Yushchenko survived an assassination attempt, weathered a gruelling campaign and overcame the gross manipulation of the election process by the then incumbent powers. In November and December of 2004, hundreds of thousands of orange-clad Ukrainians took to the streets to demand free and fair elections, leading to Mr. Yushchenko's election in a fresh vote held in December.

Kyrgyzstan enjoyed more political space relative to its Central Asian neighbours but nonetheless was a highly repressive environment. The regime of Askar Akayev controlled the news media, limited political opposition and had its hands into much of the country's economic life. The Akayev family distinguished itself by its rapaciousness, taking over strategic industries and, through massive corruption, reportedly became fabulously wealthy. Protests in Kyrgyzstan emerged on the heels of marred parliamentary elections in February of 2005. Unlike the peaceful uprisings in Georgia and Ukraine, the response to the Kyrgyzstani vote resulted in several days of rioting and violence.

It should not come as a surprise that the Kyrgyzstani experience has been most difficult. The country's civil society and supporting institutions were not as mature or as organized as those in Ukraine and Georgia. Moreover, Kyrgyzstan does not possess an opposition leader or opposition force that could distinguish itself and offer a clear democratic alternative around which the public could rally.

To the extent that Kyrgyzstan was less equipped than either Georgia or Ukraine to meet these transition tests, other worse performing ex-Soviet countries whose citizens are also deeply dissatisfied by the rampant corruption and repression they face on a day-to-day basis are even less prepared. Average citizens, meanwhile, are becoming more restive.

In Uzbekistan, where there is virtually no space for political opposition, civil society or basic voice for average citizens, the environment may be coming to a boil.

Of course, Uzbek President Islam Karimov and other autocrats in the region have prepared for their citizens' resistance. Unfortunately, the further closing of political space in countries such as Azerbaijan, Belarus, Tajikistan and Uzbekistan is precisely the wrong response in such febrile environments, and bound to generate far more alarming problems. Mr. Karimov's use of indiscriminate force against civilians in eastern Uzbekistan last month is a particularly heinous example.

The very forces that helped advance the peaceful civic movements in Georgia and Ukraine are also playing integral and constructive roles in these countries' post-revolution rebuilding. Due to the denial of political space by the autocratic regimes that dominate the landscape, such reform forces are in short supply in so many of the other ex-Soviet countries, a factor that will limit these countries' ability to successfully manage the next wave of transition.

It is crucial that the United States, Canada and the European Union continue investing in the success of post-revolution Georgia, Ukraine and Kyrgyzstan. But they must also prepare for the far more daunting challenges presented by the other, unreformed ex-Soviet states. Given the high level of frustration that already exists among the population in so many of these lands, this suggests that far more unpredictable and potentially volatile transitions are in the offing.

Source: Globe and Mail

Ukraine Offers 100,000 Euros to Gongadze’s Wife Miroslava for Amicable Deal

KIEV, Ukraine -- The Ukrainian government has said it is prepared to pay 100,000 euros to the widow of opposition journalist Georgy Gongadze for an “amicable settlement of the case in the European human rights court.”


Miroslava Gonadze (L) with Georgy Gongadze and Children
In the statement Miroslava Gongadze’s lawyer is expected to sign on behalf of her client says the government admits that improper investigation of the case abuses a number of clauses of the convention on the protection of rights and basic human freedoms.

The Cabinet of Ministers pledges to take every measure to “continue thorough investigation of Gongadze’s murder and to bring to justice all persons responsible for that crime.”

The European human rights court early last April said that it had accepted for consideration a lawsuit filed by Gongadze’s widow, Miroslava against the state of Ukraine.

The widow argues that her husband had died as a result of kidnapping and the authorities had failed to guarantee his right to life.

Source: ITAR-Tass

Freight Train Crashes Into Passenger Bus in Southern Ukraine, Killing 13

KIEV, Ukraine -- A freight train crashed into a passenger bus in southern Ukraine Thursday, killing at least 13 people, emergency officials said.



The accident happened near the village of Novoselovka at a railroad crossing that did not have crossing gates. Emergency Situations Ministry spokesman Oleh Oleksandrov said two of the dead were children and preliminary reports suggested between seven and nine people were hospitalized with injuries.

Four were in serious condition, he said.

Emergency crews were still working at the scene of the crash in the Odessa region, about 480 kilometres south of the capital, Kyiv.

A similar accident last May involving a freight train and a passenger bus in the same region killed 15 people.

Source: CBC News

KIEV, Ukraine -- The Ukrainian State Property Fund wants to renationalize stakes in 194 companies whose owners failed to meet their investment obligations, the fund's head said Thursday.

Valentyna Semenyuk, head of the agency overseeing privatizations, said that legal proceedings had been started to challenge the sales, which include mostly small and midsize companies.

Kiev's appeal court, meanwhile, upheld an earlier ruling declaring illegal the sale last year of Ukraine's largest steel mill, Kryvorizhstal.

Ukraine's new leaders have denounced as "theft" the sale of the mill for $800 million - below other offers - to a group of businessmen linked to former President Leonid Kuchma. The case was one of several under way, and the owners vowed to appeal again.

The administration of President Viktor Yushchenko has pledged to review a slew of privatizations conducted in dubious circumstances under his predecessor and has tightened controls over how investors meet their obligations.

"Now this process has accelerated. I want the property fund to control how investors meet their investment obligations," Semenyuk told a news conference. "If an investor meets his obligations, he has nothing to fear."

Semenyuk gave no details on the 194 companies. She said nothing of whether it included the 29 major state companies Yushchenko said last month might be subject to review.

Yushchenko had promised to make the names of 29 companies public last week.

But no list has been disclosed, and officials have not explained the delay in presenting one.

Privatization has proved the most divisive issue for the government since it took office in February, weeks after Yushchenko won a presidential election in the aftermath of mass "Orange Revolution" protests that helped oust Kuchma.

Government officials are locked in discussions over the extent of any privatization review and whether to put up companies for new tenders or oblige current owners to make additional payment.

Both Yushchenko and Prime Minister Yulia Tymoshenko singled out Kryvorizhstal as the most notorious case.

Source: International Herald Tribune

Ukraine Yushchenko Appoints AC Milan Forward Shevchenko Presidential Aide

KIEV, Ukraine -- Ukraine’s President Viktor Yushchenko has appointed the soccer star Andriy Shevchenko as his aide, the presidential press-service reported Thursday.



Shevchenko is a striker for A.C. Milan and the Ukrainian national team. He started off his career with Ukrainian side Dynamo Kyiv. In 1999 he joined Italian side A.C. Milan for $26 million and has been one of their key players. In December of 2004 Shevchenko was named the European Footballer of the Year. He was also named by Pele as one of the top 125 greatest living footballers in March 2004.

During the summer of 2004, Russian tycoon Roman Abramovich, the owner of Chelsea, offered a record sum of $61 million and striker Hernan Crespo to A.C. Milan in exchange for the Ukrainian star. Milan refused but took Crespo on loan.

Ukrainian President Yushchenko has already made box star Vitali Klitschko, who campaigned for him during the “Orange revolution” in the fall 2004, his adviser.

Source: MosNews

Ukraine Probes $1 Billion Scam

KIEV, Ukraine -- Prosecutors are investigating how $1 Billion of private and public funds were taken out of Ukraine during last year's Orange Revolution, said officials on Wednesday.



Spokesperson Oleksiy Bebel said six criminal cases had been launched in connection with the capital flight, which occurred last November and December at the mass protests that came to be known as the Orange Revolution.

He did not identify the targets of the probe and said most of the money was private capital acquired illegally.

Anna Tsyhanenko, a money-laundering investigator with the prosecutor general's office, said high profile Ukrainians officials were being investigated, but she refused to identify them.

Tsyhanenko said the money was taken out of the country through banks and other financial institutions involved different schemes. She did not elaborate.

The Orange Revolution protests for election fraud led to a presidential revote, won by then-opposition leader and anti-corruption crusader Viktor Yushchenko.

His government earlier complained about a mass exodus of money by officials then in power and their wealthy backers as the opposition came to power.

Source: News24

Ukraine Doesn't Need Its Own Khodorkovsky

KIEV, Ukraine -- With the outrageous May 31 sentencing of Russian businessman Mikhail Khodorkovsky to more than seven years of prison, Russia has taken a step backwards into a dark past we all hoped it was leaving behind.



Now that the Yukos chief is headed for jail on a variety of fraud and tax evasion charges, property and free speech rights are on the ropes in Russia. Moreover, if there were any doubt that the Russian legal system is a political tool for the Kremlin, this travesty of justice has dispelled it.

This is justice Soviet-style. As Ukraine considers reprivatization, it must avoid Russia’s mistakes.

Soviet Justice

Not that the result of the Khodorkovsky case was a surprise. The oil billionaire, Russia’s richest man, had been a thorn in President Vladimir Putin’s side for years before he was arrested by masked gunmen in the autumn of 2003.

Khodorkhovky made a name for himself in the 1990s, building the oil company Yukos up into a powerful force. But it was when Khodorkovsky, now 41, started supporting liberal and opposition candidates against Putin’s power bloc that he got in trouble. In a society ruled by law, it’s natural that a citizen would use his own money to participate in politics and make his voice heard. But Russia is not such a society. In a case of selective justice, the government went after the enemy of the people Khodorkovsky, even while other top businessmen were left alone – as long as they supported the Kremlin, or stayed out of politics.

And even as the government was trying Khodorkovsky and his partner Platon Lebedev, it was seizing lucrative parts of the Yukos empire – stealing property, Bolshevik-style.

Now the whole world knows that Russia is a society where the rule of law doesn’t apply, anybody who criticizes the government is a target, and property can be seized by the state. The international outcry at this mockery of justice is already loud. United States Congressman Tom Lantos, for example, called the case a “political trial, tried before [a] kangaroo court” and brought to a “shameful conclusion” that was “predetermined politically.”

Comments like that will only grow more common in the days ahead. That’s not good for Russia. The country is already experiencing serious capital flight as investors who don’t trust the Russian government or legal system head for the exits.

The Khodorkovsky outrage will accelerate that flight. It will also chill all entrepreneurship and free enterprise in Russia, with bad consequences for that country’s business environment and outlook for economic growth. There’s nothing to say that the Kremlin won’t go after small and medium-sized businessmen, too. No one is safe.

Ukrainian View

What does all this mean for Ukraine?

Plenty. The last thing Ukraine needs is to end up in Russia’s position, with foreign money escaping, instead of waiting at the door to see if it’s safe to come in. Another thing it doesn’t need is a government that destroys businessmen for political reasons. Ukraine stands at the threshold of a great future – but that future will be jeopardized if it doesn’t prove to investors that it’s safe to do business here. Ukraine has to reaffirm that property rights and human rights are sacred.

Unfortunately, Ukraine has not been good enough at proving and reaffirming these things under President Viktor Yushchenko. Led by Prime Minister Yulia Tymoshenko, the government is still threatening to carry out its destructive threats to renationalize hundreds of former state properties. But doing so would be terrible for the financial environment here, and a potential human rights disaster.

True, a number of privatizations should indeed be reviewed. But wholesale reprivatization will open up a Pandora’s Box, giving the government a mandate for simply destroying businessmen it doesn’t like, and stealing their property. No democratic government should ever have that type of power, and Tymoshenko should drop the talk of massive reprivatization now, before she makes Ukraine’s investment situation even more unattractive to foreign businessmen.

If Ukraine plays its hand right, it could provide a safe home base for capital fleeing its northern neighbor. If it succumbs to cheap populism and starts going after capital, it will shut down the good times before they even begin. Ukraine needs investment and a growing economy, not its own Khodorkovsky case.

Source: Kyiv Post

France's No - And Ukraine

KIEV, Ukraine -- President Viktor Yushchenko’s attitude toward Europe was remarkable during last year’s presidential campaign and remains so now that he is in office. He has repeated to everyone who will listen a familiar litany: Ukraine is a European country; it belongs in the European Union; it deserves attention from Brussels; its destiny is inevitably with Europe; and so on.



We never quite figured out what Yushchenko was up to with all this. Maybe he was being sly, demanding of Europe the moon and then taking what he could get. But then, maybe he was sincere, and thus a bit naive. It seemed to us that Europe has its own problems, and Ukraine should be no less careful in pledging itself to Europe than to anyone else. Besides, it was impossible to tell what the EU would even be by the time Ukraine potentially got around to joining it in a decade, at least, from now. Maybe it wouldn’t even be worth it. Things change.

Do they ever, if this weekend’s earthquake of a vote in France is any indication. That the French – the French, at the very heart of the EU project! – should massively reject the EU constitution means that much is up for grabs in the transnational body’s future. Who can say what will happen to the EU?

What the momentous event necessitates for Ukraine is a cool and self-interested approach toward its neighbors to the West. Again, if Yushchenko’s persistent bowing and scraping at the back door of the European mansion is crafty politics, more power to him – we’ve underestimated Yushchenko before. But if he really is motivated by a starry-eyed desire to join the European club, he should douse his head with cold water. What if someday there’s no club to join, or no club worth joining?

The fact is that Ukraine, famously situated on the borders of empires, is well-situated to form intelligent, self-interested relationships with various other countries. It ought to use the independence it so recently achieved to do so. Sometimes this will mean cultivating relationships with Brussels and the other capitals of the West; other times it will necessitate working closely with Russia, a country with which Ukraine is thoroughly intertwined, and will be for the foreseeable future. Still other times it will mean pairing up with other post-Soviet countries, such as its fellow GUUAM members, with whom supposedly “European” Ukraine shares deeper cultural ties than it does with, say, France or Spain.

George Washington famously warned the young American republic against “entangling alliances.” Now that even Europeans are showing signs of not being happy with the EU, Ukraine should beware of embracing such alliances, too.

Source: Kyiv Post

Moscow Surprised by Kiev Statements on Border Treaty

MOSCOW, Russia -- The Russian Foreign Ministry is perplexed with Ukraine’s claims of an allegedly illegal and non-constructive position and double standards in connection with the signing of the Russian-Estonian border treaty.

The Ukrainian Foreign Ministry made a statement on results of the consultations on the delimitation of waters in the Azov and Black Seas and the legal status of the Kerch Strait.


The Kerch Strait
“It is against diplomatic practices to comment on current work of experts, the more so to give inappropriate assessments,” the Russian Foreign Ministry said. Yet Kiev “again demands the recognition of the Soviet administrative border between the Russian Soviet Federative Socialist Republic and the Ukrainian Soviet Socialist Republic in the Kerch Strait and its use in the current delimitation of the border between Russia and Ukraine,” the ministry said. Kiev claims that this principle was used in the delimitation of sea borders between Russia and Estonia.

“This comparison is a deliberate distortion of facts,” the Russian Foreign Ministry said. “True, the border between Russia and Estonia is delimitated by the administrative border between the former Russian Soviet Federative Socialist Republic and the former Estonian Soviet Socialist Republic but that is the land border,” the ministry said.

“As for the division of waters in the Gulfs of Narva and Finland, the state border between Russia and Estonia goes along the medium line, which meets the international sea law. There were no sea borders [between republics] in the Soviet times,” the ministry said.

Russia “is holding negotiations with Ukraine on the basis of the international law, including the bilateral treaty on cooperation in the Sea of Azov and the Kerch Strait of December 23, 2003,” the ministry said. “This document does not envisage the state border in the Kerch Strait but says that the settlement of water issues shall be done by consent of the sides. The publicly announced position of the Ukrainian Foreign Ministry hampers the achievement of this settlement,” the ministry said.

Source: ITAR-Tass

Dioxin Becomes Most Dangerous Man-Made Poison

MOSCOW, Russia -- Human beings have had an immense interest in poisons since most ancient times. People have been using poisons for centuries already, while methods of poisoning have become rather diverse as a result of such an extensive experience. In addition to a traditional method of injecting a portion of poison in blood, poisons were used in candles, for instance - the smoke of such candles was lethal.

Poisonous evaporation rose up from bed sheets, as the victim was warming the bed up while sleeping. There were quite exotic methods of poisoning concocted as well: a person could die from a kiss of a concubine. Female sex slaves were adapted to poison since early childhood. When they were growing up, the poison concentration in their saliva was extremely dangerous to their clients. Poisonous substances were used in skincare creams, shampoos, lipsticks, etc. Adding poison to food is still reputed to be the most traditional way of poisoning.


Viktor Yushchenko Before (L) and After Dioxin Poisoning
Scientists have always been looking for the strongest poison. Dioxin has become one of such achievements: this substance ranks third on the list of most toxic poisons known to modern science. Dioxin made front pages of world's leading newspapers and magazines last year, after the Orange Revolution in Ukraine.

Scientists discovered dioxins a short time ago. Specialists cannot boast of having a lot of information about the poison: the substance is quite complicated. There are quite contradictory opinions about dioxins too: scientists say that they can be found in fossilized relics as a product of burning, volcanic and even bacterial activities. The majority of dioxins appear in environment as a result of human life. Burning trash, smelting steel, making paper, chemicals and a variety of other products that human beings use in their every day live produces small, albeit dangerous, amounts of dioxins.

Dioxins are formed as a result of incomplete combustion of organic materials in the presence of chlorine. The burning of fuel in a car engine produces dioxins as well. Our civilization produces only several kilograms of dioxins a year in the whole world. However, even such a small amount of the highly dangerous poison is enough to exert considerable negative influence on mankind.

Dioxin is currently reputed to be the most dangerous toxic poison that has ever been made by the hands of man. It follows two poisons of natural origin: the botulism toxin and the diphtheria toxin. Dioxin is 60 thousand times more toxic than cyanide. A dose of only 50 micrograms of dioxin is lethal for a human being: the volume of the dose can be compared to a tiny microscopic piece of a 50-gram pill, cut into 1000 particles.

Modern science does not have enough knowledge of dioxin's toxic properties. There can be only several laboratories found on the territory of the former USSR, which can analyze dioxins. The poison affects human skin, deteriorates liver, stomach and ruins the nerve system. Dioxins are said to be strong carcinogens: scientists believe that the poison acts as an accelerating agent of cancer, the substance, which suppresses the human immune system, similar to AIDS virus. It is extremely difficult to remove dioxins from a living organism. Being lipophilic compounds, the poison accumulates in the adipose tissue and liver and may manifest its harmful effect in 15 or even 25 years.

Furthermore, dioxins possess a horrible ability to alter the genetic structure of a living cell, which may lead to congenital disorders and defects. There were several occurrences in the Soviet Union and other countries of the world, when dioxins polluted the environment as a result of industrial breakdowns. The most recent criminal story with dioxins occurred during the presidential election in Ukraine, when Viktor Yushchenko, the incumbent Ukrainian president, suffered from the dioxin poisoning.

Source: Pravda

When Will the Russian Fleet Pull Out of Ukraine?

MOSCOW, Russia -- In 1997, Russia and Ukraine signed an agreement on the Russian Black Sea Fleet base in Sevastopol that would run until 2017.

That same year, the two countries signed agreements on the conditions of the fleet's deployment in Ukraine and its status.



These documents clearly formulated the status of the former Soviet Black Sea Fleet and formalized the deployment of Russian troops in Ukraine in an interstate treaty. Before that, uncertainty in these matters provoked periodic "local wars," when the "common" undivided ships of the fleet left for Russian ports, while the Ukrainian municipal authorities cut the electricity and water supplies to the "pro-Russian" ships of the formally united fleet.

The Black Sea Fleet mirrored the situation in the CIS countries and their property: The "divorce" of the former Soviet republics was sullied by fierce disputes over property, most of which ended with the signing of the delimitation agreements.

As "the first among equals," Russia formalized its right to a part of property located in the territory of neighboring states. It owned and used it calmly as long as the political regimes in the said countries accepted the "bribes" of cheap Russian energy resources without paying for their deliveries.

But when openly anti-Russian forces came to power in these countries, they raised the question of Russian property in their territory. This happened to the Russian military bases in Georgia, which will be pulled out by 2008 under pressure from President Mikhail Saakashvili. The current Ukrainian leaders are also trying to create a situation where the legality of Russian military presence in Ukraine would be questioned.

The new Ukrainian cabinet formed early this year immediately launched a massive attack at the Russian Black Sea Fleet.

On February 24, Foreign Minister Boris Tarasyuk and Vice-Admiral Igor Knyaz, Chief Commander of the Navy, appeared on Ukrainian television to denounce the Russian fleet as an occupier and usurper of Ukrainian property.

On March 25, Alexander Turchinov, the head of the Security Service of Ukraine, said that the deployment of the Russian fleet in Ukraine clashed with national interests.

On March 28, President Viktor Yushchenko called for checks to be made to verify that the Russian naval bases in Ukraine were deployed in compliance with the "big" Russia-Ukraine treaty of 1997.

The latest complaints were voiced by Dmitry Svistkov, chief spokesman of the Ukrainian Foreign Ministry, who is particularly worried by "the categorical refusal of Russia to return to Kiev the navigation and hydrographic instruments that ensure the safety of navigation off the Crimean coast."

Admiral Igor Kasatonov, a former deputy chief commander of the Russian navy and commander of the Black Sea Fleet in the early 1990s, commented on this situation: "The navigation and hydrographic instruments - lighthouses, beacons and the like - were not covered in the agreement on the temporary deployment of the fleet in the Crimea. We simply forgot about them when we signed the agreement."

So, Ukraine has found a pretext, and will surely find many more, for accusing its Russian partners of violating the 1997 agreements.

However, the tone of Ukrainian politicians has changed of late. Judging by the statement made by Anatoly Gritsenko, Ukraine's defense minister, they no longer demand the early withdrawal of the Russian fleet. This means that the issue of the fleet will be raised or abandoned depending on the general mood in Russia-Ukraine relationship.

Changes in this relationship, as well as possible changes in the Ukrainian leaders' assessment of their foreign policy outlook, will determine the future of the Russian fleet. The favorable statement by Gritsenko was the reaction to Russia's concession (it agreed not to demand world prices for Russian gas delivered to and via Ukraine).

And lastly, an awareness that it is unlikely to join either NATO or the EU any time soon (especially after the French said "No" to the European Constitution) will dampen Kiev's desire to get rid of a foreign base without delay given that these foreign bases could hinder its admission to NATO.

And yet, the "calm" period seems to be over for the Russian Black Sea Fleet in Sevastopol. We will see more attempts to push it out of Ukraine, just as Georgia did with regard to the Russian military bases there.

Anatoly Beliayev is chief analyst at the Center for Current Politics in Russia

Source: RIA Novosti

Blue-Collar Region Suspicious of Yushchenko Regime

DONETSK, Ukraine -- For Igor Prasolov, the chief executive of Ukraine's biggest industrial group, the first months of Viktor Yushchenko's presidency have been worrying times. Mr Prasolov is general director of System Capital Management, the holding company that manages the assets of Ukraine's richest tycoon, Rinat Akhmetov.

Based in the eastern industrial city of Donetsk, SCM is primarily a vertically integrated steel producer and also an important player in Ukraine's beer market, mobile telephony, banking and insurance. Another of its assets is Donetsk's football team, Shakhtar, of which Mr Akhmetov is president.


Ukrainian Communists Protest in Donetsk
From its formation in 2000 until last year, SCM grew in parallel with the rising career of the Donetsk region's former governor, Viktor Yanukovich, who was prime minister in 2002-2004 and would have become president if not for the Orange Revolution. Now Mr Akhmetov and his team are struggling to distance themselves from old allies and adapt to a new government and new conditions.

Mr Prasolov invited the Financial Times to SCM headquarters to deliver what boiled down to an appeal to Mr Yushchenko not to allow any revenge taking against his company and a promise that SCM would be a force for rapid economic development and a model of corporate good behaviour.

"We want to move at maximum speed to make Ukraine a country where people simply live happily, where Americans and Europeans will look at us and say, 'that's a country that became civilised in such a short period'. In that respect our goals and the goals of the government fully coincide," Mr Prasolov said.

Meanwhile he expressed confidence that SCM would win out in its battle with Mr Yushchenko's government to remain the largest shareholder of Kryvorizhstal, Ukraine's largest steel mill. SCM owns just under 50 per cent of the consortium that paid $800m for the mill last year, a deal Mr Yushchenko likens to theft and is determined to cancel the sale and re-auction the mill to foreign firms.

"From the point of view of a market economy and European integration, the institution of private property should be inviolable. Without that, there won't be any market economy," Mr Prasolov said. Mr Prasalov said he was sure accusations by local prosecutors against one of SCM's ore mines - accused of making false claims for VAT refunds - "will be proven to be a mistake."

Mr Prasolov was speaking before a ceremony where Donetsk business leaders and the local government signed a joint declaration of co-operation and mutual understanding. The ceremony, organised by SCM and Mr Yushchenko's administration, demonstrated their common interest in keeping Ukraine's industrial heartland running smoothly.

The Donetsk region accounts for one-tenth of Ukraine's population but about one-fifth of the economy, reflecting a concentration of heavy industries including coal, steel, chemicals and machine building.

The region is also the centre of popular opposition to Mr Yushchenko's pro-western administration, with Mr Yanukovich and his Regions party drawing overwhelming support. In a blue collar region where much of the population was brought in from Russia during Soviet times to work in the coal mines and factories, Mr Yushchenko's pro-western liberalism is regarded with deep suspicion.

"Let's declare war on Russia - and surrender immediately!" says one of the placards pinned up by the Ukraine Without Yushchenko campaign on Donetsk's central square. Campaigner Malkhaz Yeresyuba says the appeal to be taken over by Russia is "just a joke" but reflects the real sentiments of Donetsk region residents, who he said would prefer to be in a union.

The camp's main purpose, however, is to agitate for the release from prison of Boris Kolesnikov, a prominent local politician and one of Mr Akhmetov's business partners. Mr Kolesnikov was taken into custody in April and accused by prosecutors of directing a campaign of threats and violence, including two bombings and a spray of machine gun fire, that allegedly convinced the former owners of a Donetsk department store to sell out cheaply.

Mr Kolesnikov is vice-president of the Shakhtar football team, chairman of Donetsk's regional council and head of the local branch of Mr Yanukovich's Regions party. Mr Kolesnikov is not involved in SCM but his company Ukrinvest took part with SCM in the privatisation of Kryvorizhstal, taking a 6.5 per cent stake in the consortium that bought the mill. SCM controls just under 50 per cent of the consortium and the rest is controlled by Viktor Pinchuk, son-in-law of the former president, Leonid Kuchma.

Mr Akhmetov has defended the deal, in which his brother and other associates figured as buyers, but he has distanced himself from Mr Kolesnikov, saying he will accept the court's verdict.

Mr Prasolov said he was confident Mr Kolesnikov's arrest did not signal the start of an all-out attack on Mr Akhmetov and that there would be "no Kremlinesque tactics" used against his company.

In spite of some similarities, there are many things that make Mr Akhmetov's story different from Mr Khodorkovsky's and likely to take a different course. Ukraine's smaller economy gives relatively greater weight to tycoons such as Mr Akhmetov, who have the capital resources Mr Yushchenko badly needs to upgrade the economy.

The FT visited SCM's Donetsk brewery, a showcase of state of the art technology and high productivity in a country plagued by inefficient equipment and overstaffing.

Most importantly, Mr Akhmetov has a powerful local base in the Donetsk region. While Mr Yanukovich and the Regions party distance themselves from Mr Akhmetov and insist he gives them no support, they continue to speak up for him and his interests.

Artem Yatsenko, a student who said he belonged to the "5 per cent" in Donetsk who support Mr Yushchenko, said he was confident the new president would learn to get along with Mr Akhmetov. "He's such an influential person, not just for our region but for the whole country," Mr Yastenko said.

Source: Financial Times

Ukraine Parliament Grants Amnesty to 17,000+ Prisoners

KIEV, Ukraine -- The parliament has granted amnesty to over 17,000 prisoners. The relevant draft law entitled "On Amnesty," which is registered as No. 5629-2 and was proposed by President Viktor Yuschenko, was approved by 286 votes. Only 226 votes were required for its approval.

Yuschenko proposed granting amnesty to prisoners who were minors when they committed their crimes, parents with minors or disabled children, pregnant women, women over the age of 50 and men over the age of 55, war veterans, group 1-3 invalids, prisoners with active tuberculosis, prisoners with oncological illnesses, and those infected with AIDS.

The law provides for releasing people convicted of small crimes and crimes of medium severity as well as those convicted of serious crimes if they have served half of their prison terms. The amnesty also provides for reducing the prison terms of prisoners.

According to the law, the amnesty does not apply to persons serving life sentences, prisoners with two or more convictions, those who violated prison regimes, and those whose crimes resulted in the deaths of two or more people. No prisoners were amnestied in 2004.

As Ukrainian News earlier reported, the parliament approved a new version of the law on amnesty that included proposals by former president Leonid Kuchma in July 2003. According to the Ukrainian Constitution, amnesty is granted through adoption of a law of Ukraine.

The law entitled "On Application of Amnesty in Ukraine" was approved in October 1996. This law stipulates that the parliament has the right to adopt a law on amnesty not more than once per year.

Source: Ukrainian News Agency

When Will They Get It?

KIEV, Ukraine -- The Ukrainian short film Wayfarers has won the Palme d'Or in Cannes. Of course, everybody knows this, but it feels great to say it again.

The film director Ihor Strembitsky turned out to be a principled individual. When he appeared on stage to receive the award, he refused to speak Russian, despite the interpreter's request, saying, "I'm Ukrainian and I will speak my language."


Film Director Ihor Strembitsky Holds the Palm d'Or Award
This immediately made headlines in Russia. Some Russian media people had advised Ihor to do some quick studying even before the awards ceremony.

After the ceremony all hell broke loose. For some reason, even Moscow film critics whom I know personally, all of them intellectual and stable individuals, are very tense when they talk to me these days.

They ask me why the young film maker couldn't have said a few words in French on stage. So he can't, so what? I can't either, nor can many other winners in Cannes and Venice, and nothing ever happens. Besides, you can always take language courses. In contrast, the situation with the Russian channel NTV appears to be irreparable.

In conjunction with what happened in Cannes, this television company, after reporting the Wayfarers' victory, offered what it believed was a sarcastic commentary, saying that Ihor left the podium with his award but without being understood. How about all those Russian film directors who are well understood, year in and year out, but somehow never appear on stage to receive any awards?

And do we really need understanding from NTV, this "world's most truthful" channel, which last winter, at the peak of the Orange Revolution, thought nothing of playing archival footage showing an empty Maidan in Kyiv, and telling audiences that the people had long ago left the place?

Another question: When will they begin to understand things?

I address this question not to the Russians but to the French, Germans, and Brits. When will they finally realize that there is a country called Ukraine and that it wouldn't hurt to know the difference between Ukraine and Russia, and to have interpreters who know Ukrainian? After all, they closely followed the Orange Revolution, and they must have an aversion to all that garbage on the air.

This isn't your average question, but it has an answer. They will get it when we become fully aware that we are a class act, talented, and cool - and by we I mean not all but some of us, because most of us, being many and invincible, realized this in November (some did even in 1999).

They will get it when, for example, the members of the administration of the Cinema, Theater and Television University, instead of supplying students with defective film or telling them how underfunded they are, arm themselves with chains and handcuffs, and chains themselves and the minister of culture (who refused to help Ihor Strembitsky even with tickets to Cannes) to the doors of the presidential secretariat and the cabinet, threatening to stay there unless they are given funds to develop our cinema.

But if the university administration continues to place major emphasis on creating wall newspapers, attending physical education courses, and staging skits in the run-up to holidays, one is bound to ask what they are being paid for out of the taxpayers' pockets.

They will get it when the government starts crawling before our celebrated film director Kira Muratova, and then her productions will be promoted as Ukrainian films, not Russian ones.

They will get it when our number-one "humanitarian millionaire," instead of financing amateur videos made by professional screwups mistakenly regarded as "artists," launches a cinematography relief fund and subsidizes the next production by Muratova or Strembitsky, or Ihor's teacher, the brilliant documentary film maker Bukovsky.

If this happens, there will be Ukrainian interpreters in Cannes for the awarding of the Palme d'Or, or the Lion in Venice, or the Leopard in Locarno, or the Bear in Berlin.

Source: The Day

Borrower Beware!

KIEV, Ukraine -- The main objective of the new mortgage programs banks will offer this year is to dupe their customers.

Instead of the advertised 10-12% interest rate on loans in dollars for purchasing real estate, the banks have decided to raise the rate to 14-15% p.a.. The bankers attribute the introduction of this new approach to consumer lending to stiffer competition on the market. “When a bank wants to work openly with borrowers, it simply loses them.

Who would go today to a bank if it offers loans at 14%? Nobody. A person is more likely to go to the mortgage center of a large bank in the system that will offer them 12% or even 10% on loans in hard currency and only later will they understand that, including all surcharges, they will actually end up paying 14% and often even 15-16%. This is why banks with programs that initially were not attractive, in comparison with competitors, began to switch to a new mechanism — that is, cheating borrowers like the rest of the lot,” the chairman of the board of one of the banks in Kyiv explained to KW.

Naturally, the banks will not admit that they are trying to dupe their customers in order to profit from the naivete of people that don’t know the nuances of mortgage lending programs, rather their approach is due to a psychological factor. They argue that Ukrainians are simply ready to overpay without even being aware of this fact. Not many banks offer customers the right of choice, though there have been some cases.

Ukrgasbank Vice Chairman Yegor Rusin explained, “We proposed a fair scale. A customer can choose: they will pay 15% annual interest including the commission and insurance policies, or 11% without them. Practice shows that so far borrowers prefer the lower interest. Out of the 150 loans issued over the past two weeks, only one customer did a calculation and decided that a higher interest rate without additional commissions is a better deal.”

Expenses for registering a mortgage loan may increase for varying reasons. Sometimes they can even be objectively justified. For example, mandatory life insurance could be an additional requirement in real estate financing. This is done so that in case of death or severe injury (as a result of which the person will not be able to work or pay off the loan), the insurance company would repay the loan to the bank. For example, a 30-year-old woman will have to pay US $50-60 every year for this.

In addition to that, a bank often simply sets an additional fee that the borrower must pay back over the term of the mortgage without justifying the fee. On paper this could be described as servicing the loan. This is precisely how the interest rates of 10-12% that banks advertise actually add up to 14-16% with all the additional fees. Borrowers must understand that banks simply cannot afford to give out loans at cheaper rates.

The only exception to this rule could be programs for young adults. They are financed by money from the national budget and the rate could go as low as 10% for loans in hryvnia, though as practice shows it is not so easy to qualify for such a program. The fact is that the unprotected strata of the population (the disabled, orphans, families with multiple children, etc.) are given priority in such lending programs. The only consolation to borrowers is the gradual increase in the accessibility of loans, namely an increase in their term to 15-20 years.

But there’s a trick in this as well. On the one hand, the benefits of longer term loans is that monthly payments are reduced. But they will also entail large expenses. When taking out a mortgage for buying an apartment that costs US $30,000 (at the standard 14% interest rate) for five years, the payments to the bank start at US $567 and end at US $297. If you borrow for ten years, your monthly payment will start at US $400 and gradually go down to US $147 in the end. The only difference is in the amount you will end up paying to the bank: for five year loans you will pay around US $15,000 and for ten-year loans slightly more than US $17,000.

In present conditions, banks offer their customers universal advice. “One should ask a loan officer to show all the expenses connected with registering and servicing of the loan and study the terms of the loan agreement. Then there won’t be any tricks,” said Privatbank Vice Chairman Yuriy Kandaurov. In addition to that, bankers advise against taking loans out with banks that do not allow you to take a standard loan agreement home to study the details.

This is the first sign that something is amiss. Besides that, it is a direct violation of Ukrainian legislation. According to the laws, bank agreements are public documents that must be provided at a customer’s request. As the saying goes, “the customer’s always right”! In this particular case, the question arises “Are they?”

Source: Kyiv Weekly

IFC to Support Improved Corporate Governance Practices in Ukraine’s Banking Sector

KIEV, Ukraine -- Yesterday, the International Finance Corporation, the private sector arm of the World Bank Group, launched its Ukraine Banking Corporate Governance Project. The project is funded by the State Secretariat for Economic Affairs of Switzerland (seco).

The project’s goal is to improve the corporate governance practices in Ukrainian banks. Better practices should raise the flow of investment and improve access to capital for the banks. An enhanced capital structure is in turn expected to stimulate business lending to the country’s small and medium enterprises.


Ukraine's National Bank
The project will focus on enhancing the internal controls of Ukrainian banks as well as on applying a standardized corporate governance approach to assessing the creditworthiness of the banks’ corporate clients. These objectives will be accomplished through seminars and workshops, as well as direct consultations with the banks on best practices in corporate governance. In addition, the project will work with selected Ukrainian banks to carry out a full corporate governance assessment, as well as provide support in implementing the recommended changes.

To foster sustainability and promote self-regulatory initiatives within the banks, the project will work with industry associations to strengthen their activities and their client base. Public-private dialogue on banking reforms is on the agenda as well. IFC will advise on the drafting of new domestic legislation, drawing on international best practices. The main participants in this undertaking are the National Bank of Ukraine, the Ukrainian Securities and Stock Market State Commission, the Association of Ukrainian Banks, and the First Securities Trading System.

Speaking at the project’s launch ceremony, Christian Faessler, Switzerland’s ambassador to Ukraine, noted, “There is heightened interest in investing in Ukraine following the Orange Revolution, and now is an ideal time for banks to strengthen their international relations and integration into international capital markets. To do this requires adherence to international standards, and banks that raise their corporate governance standards clearly have a better opportunity to raise international capital. It is this access to capital that will determine the winners in the Ukrainian banking sector.”

Source: Harold Doan and Associates

Cargill Intends to Acquire Sunflower Seed Crushing Facility in Ukraine

KIEV, Ukraine -- Cargill has announced its intention to acquire a sunflower seed crushing facility in Ukraine from Ukrainian consumer food company Chumak. The deal is subject to Ukrainian regulatory approval.



The facility is located in Kahovka in southern Ukraine and has a capacity of 1,200 MT per day. The acquisition would complement Cargill's existing oilseed crushing facility in Donetsk in eastern Ukraine.

"Our interest in acquiring the Kahovka sunflower seed crushing facility marks the latest step in our strategy to strengthen our oil crushing capabilities in Ukraine," comments Andreas Rickmers, Cargill's country manager in Ukraine. "The new facility has an excellent geographic location for both the national and export markets. Together with our existing facility in Donetsk and our network of grain elevators, this acquisition would provide a platform for future growth. It would also support the national agricultural community as we would source our sunflower seeds from farmers in Ukraine."

The sunflower seed crushing facility in Kahovka is part of Chumak's industrial complex that also includes an oil refinery and bottling plant. Neither of these is included in the proposed acquisition.

Chumak is one of Ukraine's most well-known consumer food brands with a strong market position in a range of categories including tomato ketchup, bottled sunflower oil, mayonnaise, pickled vegetables and tomato paste. The company markets its products in 16 countries.

Cargill is an international provider of food, agricultural and risk management products and services. With 105,000 employees in 59 countries, the company is committed to using its knowledge and experience to collaborate with customers to help them succeed.

Cargill began its activities in Ukraine in 1991 and works directly with agricultural producers all over the country in supplying inputs or providing financing for agricultural production. With more than US$100 million invested in the Ukrainian agricultural and food processing sectors, Cargill is one of the leading foreign investors in the country. In total Cargill employs over 600 people in the Ukraine.

Chumak is one of Ukraine's most well-known food companies, known for its expertise in marketing natural high quality food products produced in the Kherson region - the Ukrainian agricultural heartland by the Black Sea coast.

Source: AK&M News

Recognizing Ukrainian Students in Europe

KIEV, Ukraine -- The dream of academics in Ukraine’s system of higher education is apparently being realized with the country finally joining the Bologna Convention. Now, Ukraine will participate together with other countries in defining priorities in the establishment of a unified European system of higher education by the year 2010.

Just before Ukraine was accepted to the Bologna Process, the presidents of technical universities in Ukraine, Poland, Germany and Canada met in Lviv to once again discuss the prospects and problems of higher education on Ukraine’s path to European integration. The meeting was held at the Lviv Polytechnical National University, the teaching faculty of which has long been participating in reform of the country’s higher education. A credit-modular system, which is one of the basic principles of the Bologna Process, was recently launched as an experiment.

As LPNU President Yuriy Rashkevych told our special KW correspondent, “It was planned that, during the meeting, our Polish colleagues would share with us the experience of universities in Poland in implementing the principles of the Bologna Convention.” As it turned out, Ukrainians also had something to share with their foreign colleagues. Indeed, they were pleasantly surprised to learn that the level of teaching at many leading Ukrainian universities meets European standards and in some universities it even exceeds the level in Europe. Specifically, a system of multi-level education has been introduced in many Ukrainian universities and the modular system of knowledge evaluation has been approved.

Still, the members of academia in Ukraine must learn from their foreign colleagues how to set up a new system of classifying teaching positions, form a list of university departments and degrees and establish new national education standards. Ukraine must reconsider the norms that determine the number of students per one teacher, improve living conditions in student dormitories, increase stipends and introduce many other changes in the country’s system of higher education. Also, it must be proven that Ukrainian professors meet European standards in terms of the form and level of knowledge.

The department chairs of universities in Ukraine realize that the implementation of the Bologna principles of education could, to a certain extent, result in a “brain drain” from the country. But, as the president of the Warsaw University of Technology, Professor Wlodzimierz Kurnik stressed, one should not be concerned about this trend. He explained, “This is a natural process of globalization to which there is no alternative. Ukraine truly has something to offer to Europe and at the same time will see its return.”

Poland has participated in the Bologna Convention from the very start; since 1993. The majority of Polish universities have enhanced the level of studies in English language. Thanks to this, Kurnik believes that the students from Poland’s higher learning institutions “have become more mobile and there is reciprocal recognition of graduate certificates of all member countries of the Bologna Convention. Now, thousands of young Poles find jobs and have an opportunity to continue their education in other European countries.”

Source: Kyiv Weekly

Between us “Americans”

MINNESOTA, USA -- The scandal surrounding the educational documents of Minister of Justice Roman Zvarych is gaining even broader international resonance and naturally is tainting the global image of Ukraine as a democratic state. But let’s return to that issue a little later. First, I would like to try and clarify the deliberate or unintentional confusion regarding specific educational terms to which Zvarych has resorted.

I belong to those Ukrainians whom Mr. Zvarych addressed during his speech on May 10 with the following contemptuous words: “Can they with their college diplomas and degrees of candidate and doctor of sciences, be given even a teaching position in American high schools if not at American universities?”

I tried this and succeeded. With a candidate of physics and mathematics degree, over 60 published works and the academic title of associate professor in my portfolio, I left for the U.S. in 1994, where I’ve been working as a teacher for more than ten years in American higher learning institutions. Having extensive experience in teaching at Ukrainian and American institutions of higher education, helping students from my place of birth to set off on their studies in the U.S. and having a clear understanding of the definitions of the equivalents of Ukrainian and American educational terms, I believe I have a moral right to express my expert opinion regarding the education of Mr. Zvarych. Unfortunately, he has not shown to journalists or the Ukrainian public the documents verifying his education. Therefore, one can only pass judgment on him based on his rather disputable statements.

Let’s start from the fact that Zvarych graduated from high school. This term can be interpreted in Ukrainian as higher educational institution. Though, the equivalent of this term in Ukrainian is actually secondary school. According to Zvarych, he received his bachelor’s degree from Manhattan College. A bachelor degree means an additional four years of study after graduating from high school and, according to modern Ukrainian education terminology, it corresponds to Ukraine’s baccalaureate.

A four-year higher education in Ukraine was considered and is still considered incomplete higher education. Unfortunately, Mr. Zvarych is not saying what he majored in. Regardless of this, he does not have an education in law, since the college he graduated from does not offer courses in law on its curriculum.

Meanwhile, Zvarych’s statement that he “enrolled in one of the best higher educational institutions — Manhattan College” is also quite arguable. According to the information of Princeton Review, this educational institution is not on the list of the 357 best colleges in the U.S. The next place in Zvarych’s education was Columbia University, which is considered a truly prestigious educational institution.

According to Zvarych, the “education he received at Columbia University is the equivalent of a Master’s Degree”. But this is a false statement, to put it mildly. In fact, according to the prerequisites of the School of International and Public Affairs at Columbia University, a student needs to earn 54 academic credits in order to be conferred a master’s degree, which corresponds to 12-15 courses. The courses that Zvarych attended amount to 30 credits at best. By the way, courses at the 4000-6000 level are considered graduate courses required for receiving a master’s degree, not the post-graduate level that Zvarych claims.

These are courses for earning a PhD, which is also known as a doctorate. But this seems to be a minor inaccuracy compared to other mistakes and slip-ups he has committed. But for some odd reason it seems as though Zvarych is committing errors in his favor. Just like a sales clerk in a Soviet shop weighing his fingers together with the candies to up the price and miscalculating the change owed. I think that the majority of Ukrainians would like to be confident in the complete honesty of the current minister of justice and that he does not “weigh his fingers on the scales of justice” in favor of his family interests.

Further in his speech, Zvarych asserts that “without having the recognition of the level of his knowledge equal to that of a master’s degree he would not have received a position at New York University, where students referred to him as professor”. Mr. Zvarych worked at New York University from September 1989 (and not from 1987 as he asserts) till May 1992 as a part-time adjunct lecturer. This is the lowest ranking position in higher learning institutions in the U.S. and which in the Ukrainian educational system is the equivalent of a part-time lecturer. Certain universities, including the one I’m working at, employ people with a bachelor’s degree in such positions taking into account financial expediency. Students may have really called Zvarych a professor, but it is not ethical for him to refer to himself that way without having a PhD and without holding the position of professor.

And there’s one more thing. Mr. Zvarych said that even without having a law education, “he feels like a lawyer”. But even an inexperienced lawyer knows that when giving an interview to any newspaper, a politician must demand from the journalist the final laid-out version for approval. Then, after the article is published, the author must read it once again and request that any erroneous or false information be retracted.

Everyone must review any document they sign, especially if it is a job application form so that in the future this person does not have to call a lie a mere mistake. As for me, all these facts cast doubt on Zvarych’s qualifications as a lawyer. At the same time, there are serious doubts that such a minister of justice is capable of fostering the process of introducing to Ukraine real, rather than declarative, accountability after providing false data on official forms. By the way, such accountability is common practice in many democratic states.

To sum it up, one can draw the conclusion that Mr. Zvarych either deliberately (if it really is deliberate, then it qualifies as fraud) or unintentionally (if this is the case then it is major legal illiteracy) has his terminology mixed up. Instead of saying that he has a bachelor’s degree from an American college, he uses the Ukrainian term “higher education”, which is practically not used in the U.S. In reality, he has an incomplete higher education.

Zvarych’s personal assessment of his knowledge, being equivalent to that of a doctorate or master’s degree, combined with statements that he considers himself an expert, have no legal effect and simply look unethical. Such statements can be made to enhance one’s image in family circles, but not at the level of official post in a country’s ministry.

I know many cases where students of U.S. universities for one reason or another abandon their master’s studies. None of them admitted that they quit their studies due to the inability of coping with their level of difficulty, but at the same time none of them referred to themselves as a master or professor. Indeed, for such a false statement one can be thrown in jail in America. As it turns out, in order to fulfill one’s ambitions and give oneself a pat on the back for having knowledge that doesn’t exist, it appears that one only needs to leave U.S. borders and travel to some poorly developed country.

And, finally, back to the issue of image. Can a person without a law education and with an incomplete higher education in a field that is far from law, occupy the post of the minister of justice? Especially if this person spreads false information about having a law education, a master’s and doctor’s degree and experience working as a professor before being appointed to such a high position. The answer is evidently yes. And needless to say, when the international mass media got hold of this information the rest of the world painted for itself a corresponding image of a country like Ukraine.

Not so long ago, the former president of Ukraine, Leonid Kuchma, impudently ignored the so-called “tape” scandal, which would have resulted in the resignation of any other politician in a democratic country. Kuchma managed to retain his presidential post for a couple of more years and tarnished the image of Ukraine, which for some time now has been described as a semi-dictatorial country of thieves and prostitutes, where the government kills journalists. Fortunately, the “orange” revolution laid the foundation for cardinal changes in the global perception of Ukraine.

The positive image of Ukraine is not just special receptions and honors during visits by the country’s government officials abroad, but also respect for the average Ukrainian citizen, for business and a guarantee of the attraction of major investments into the country’s economy. Naturally, it is for President Viktor Yushchenko to decide whether he should dismiss one of his allies, who unfortunately proved to be unworthy of those principles of honesty and openness proclaimed on Maidan Nezalezhnosti, or should he continue to refrain from commenting on the numerous publications in Ukrainian and international mass media about the country’s current Minister of Justice.

Mr. Zvarych does not have an education that corresponds to his post and is thereby sacrificing the image of the highest authority in Ukraine, the president, who is now laying a democratic path of development and bears responsibility before those who elected him and gave him victory.

Source: Kyiv Weekly