Kiev Ukraine News Blog

Daily news and other information from the city made famous around the globe by the "Orange Revolution".

Friday, September 30, 2005

Ukraine: Pragmatic Interim Government

MOSCOW, Russia -- There are no surprises in the new Ukranian government, although a number of ministers, who were believed to be favorites by the press, have lost their positions. On the whole, however, the outcome is not unexpected, and testifies to the hardened pragmatism of the Ukrainian elite.

Ukraine's Prime Minister Yury Yekhanurov

Former First Deputy Prime Minister Anatoly Kinakh has left the Government but has remained in the system. Experts say that he has even been promoted to succeed Petro Poroshenko in the post of secretary of the National Security and Defense Council (NSDC).

However, this promotion appears to be purely a formality: unlike his predecessor, Kinakh cannot take part in appointing judges, Supreme Justice Council members, regional power department leaders and military rank conferment. In addition, the NSDC Secretary has lost the status of a Presidential advisor as well as the right to be present at the Council of Ministers sessions and issue orders to the executive bodies. Yet Kinakh has accepted this "high-status" position, which he probably needs as a stepping-stone for the post of prime minister.

Finance Minister Viktor Pinzenik, who had been called the Ukrainian Gaidar in the 1990s, did not hesitate between political loyalty to Yulia Timoshenko and the desire to remain a minister. While Timoshenko had offered Pinzenik the prospect of becoming the finance minister in the future, following the Rada elections, and without any guarantees (as she may never return to premiership), Yushchenko was in a position to do it now. Acting rationally, the pragmatic minister joined Ekhanurov's team.

Foreign Affairs Minister Boris Tarasyuk and Defense Minister Anatoly Hritsenko have remained in the Government. This means that the pro-Western orientation of Ukraine's defense and foreign policies will remain unaltered. Kiev Mayor Alexander Omelchenko, though not the member of the new Cabinet, is still regarded as the winner in this situation. He is the only regional leader who has kept his position since Yushchenko came to power. Now his position has become even stronger, since Fuel and Energy Minister Ivan Plachkov, his representative in the government, has kept his post. In addition, Omelchenko's old buddy, Stanislav Stashevsky, who had been Kiev's Vice-Mayor for many years, has become Vice-Premier of the new Cabinet. Some years ago Stashevsky served as Fuel and Energy Minister, but without much success.

Ivan Sakhan, another veteran politician, has become Labor and Social Policy Minister. Some years ago he held this post in three consecutive Cabinets. Lately he worked as General Director of Ukraine's Aluminum, a subsidiary of Oleg Deripaska's Russian Aluminum.

Arseny Yatsenyuk (who was member of Sergey Tihipko's team when he was Head of the National Bank of Ukraine) has become Minister of Economics. During last year's presidential election campaign Tigipko was head of Yanukovitch's election headquarters. Tigipko lost his post as the head of the National Bank as a result of the "orange revolution", and Yatsenyuk was not able to work with his successor, Yushchenko's old friend Vladimir Stelmakh. At that time experts of the stock market expressed their disappointment at the departure of a high-level market-minded professional, but now Yatsenyuk has been recruited to join Ekhanurov's team. As for who sided with whom during the revolution days, it doesn't seem important in the pragmatic atmosphere of Ukraine today.

On the whole, the new government is an odd assortment of politicians. There is Pinzenik, a classic liberal professor with an obvious taste for politics; Stashevsky, a retirement age economic manager of the Soviet mold; Sakhan, who had worked in Komsomol for many years and in the late 1980s was the Ukrainian Communist Party Central Committee inspector; 31-year-old Yatsenyuk, as well as 29-year-old Viktor Bondar, the new Transport and Communications Minister, who are young modern managers. Nothing but political pragmatism unites all these very different people.

Will this government be an efficient union of like-minded people able to handle the serious problems Ukraine is facing, such as the sharp decline of economic growth, high inflation, and inability to attract investment? Looks like the next Cabinet, which will be elected in spring, will have to deal with all these issues. The purpose of Ekhanurov's government is to get through the winter without a new government crisis or rigorous rivalry of ambitious politicians. In essence, it is an interim government, which is probably not expected to make any fundamental decisions.

Yet there are grounds to assume that even after the elections the new Ukrainian government will resemble Ekhanurov's Cabinet. New people will come to it, but the fundamental idea of the elite's pragmatic compromise, will remain. It is evident that no Ukrainian political party or even a stable political coalition will be able to form an election-based government on its own. So, it is likely that the future Ukraine's Cabinet will have the same complicated and contradictory structure as Ekhanurov's interim government.

Source: RIA Novosti

To Shut Doors Tightly

MOSCOW, Russia -- Oleg Rybachuk, head of the Ukrainian presidential secretariat, arrived on a working visit in Moscow Wednesday to hold informal talks with the staff of the Russian president. Rybachuk is the third politician of Ukraine who came to Moscow during a week.

Oleh Rybachuk

Before the departure, Rybachuk said he was heading for Moscow to gain experience. On September 8, 2005, Rybachuk moved from the vice premier office to take over the secretariat of Ukrainian President Viktor Yushchenko.

Rybachuk’s briefer Svetlana Zalishchuk said her chief intends to hold informal meetings with some Russian politicians and experts. The highlight is reorganization of the presidential secretariat, where the Russian experience is also significant.

It is the second Moscow tour of Oleg Rybachuk over a month. Moreover, he is the third influential politician of Ukraine, whom Russia’s capital welcomed during a week. Former prime minister of Ukraine, Yulia Timoshenko was in Moscow only five days ago. She settled all issues with military prosecutors of Russia and dropped in at Putin’s administration on the way. After the visit, Timoshenko’s mate and former vice premier Nikolay Tomenko hinted she was in Moscow as a leader of parliamentary election campaign, with whom it is better to make an agreement than to compete or wage war.

Oleg Rybachuk represents quite the opposite party. Before the orange split into Yushchenko and Timoshenko’s groups, today’s office of Rybachuk was held by Alexander Zinchenko, who acted as a link between Yushchenko and Kremlin. Zinchenko does the same now but for Timoshenko.

Rybachuk’s briefer blankly denied any relation of the present visit of her chief to the Moscow visit of Timoshenko. Nevertheless, it is clear that today’s top priority for Rybachuk is to enter into direct connection with Moscow, which was broken by Zinchenko’s withdrawal. In addition, it is the beginning of election fight in Ukraine, so Ryabachuk is not only to study out the structure of the Putin’s administration but also to endeavor to shut its doors for Timoshenko.

Source: Kommersant

Thursday, September 29, 2005

Ukraine’s New Prime Minister Yekhanurov Says No More Re-Privatizations

KIEV, Ukraine -- Ukraine’s new Prime Minister Yuri Yekhanurov said on Thursday, Sept. 29, that re-privatization processes launched by his predecessor Yulia Tymoshenko, are now officially over and that the authorities will conduct their relations with business in a new way, Interfax-Ukraine reported.


PM Yuri Yekhanurov (L) and President Viktor Yushchenko (R)

Speaking in Ukraine’s Dnepropetrovsk region, Yekhanurov said that it is necessary to guarantee the inviolability of private property. “That which had to be returned to the custody of the state, has already been returned.

All of the controversial issues which exist today will be solved only by negotiations and amicable agreements,” the prime minister said. The head of the Ukrainian government also added that the main task of his new cabinet is to stabilize the country’s economy.

As MosNews reported in February, then-Prime Minister Yulia Tymoshenko said that as many as 3,000 privatization deals may be reconsidered and overturned by the new government, prompting her boss, President Viktor Yushchenko to refute the statement. Yushchenko said then that “re-privatization is the politics of exception”.

The best known re-privatization action taken by the Ukrainian government after the Orange Revolution involved Krivorozhstal, Ukraine’s largest steel producer. The company was privatized in June 2004 and 93.02 percent of its shares were sold to Ukrainian consortium Investment Metallurgy Union which united the companies of Donetsk-based businessman Rinat Akhmetov and of then-President Leonid Kuchma’s son-in-law Viktor Pinchuk.

The consortium acquired the stake for $800 million, while Russia’s Severstal offered to pay $1.2 billion and LNM-US Steel — $1.5 billion for the same shares. After Kuchma lost his post, the new Ukrainian government ruled that the privatization was illegal and took the shares back into state custody. Now Ukraine plans to hold another tender for Krivorozhstal.

Source: MosNews

Ukraine's Yushchenko Slumps in Polls After Split

KIEV, Ukraine -- Support for President Viktor Yushchenko has plunged after an acrimonious split in the team that led Ukraine's Orange Revolution last year and allegations of mass graft, opinion polls showed on Wednesday.

The latest survey was published as Yushchenko proceeded with rebuilding his cabinet nearly three weeks after dismissing Prime Minister Yulia Tymoshenko -- his ally in the mass protests last year that led to his election.

Having won parliament's support for technocrat Yuri Yekhanurov as premier, he named a young central bank specialist to replace an ally of the ousted Tymoshenko as economy minister.

Some members of the outgoing team stayed on. But key appointments were still to be made, including whether to retain Viktor Pynzenyk, another Tymoshenko ally, as finance minister.

The poll by the Democratic Initiatives Fund, conducted this month, showed 61 percent of 1,803 respondents believed Ukraine was moving in the wrong direction. About 41 percent had no trust in the president compared with about 33 percent who trusted him.

Yushchenko took power in January after a re-run of a rigged presidential poll by winning over 52 percent of the vote and pledging to engineer reforms that would enable Ukraine one day to join the European Union.

Ukraine's most popular and trusted politician, he had only eight percent of voters expressing no trust in him in March.

DEEP DISAPPOINTMENT

"The situation has changed into the complete opposite. It is worse than during President Leonid Kuchma's term," Iryna Bekeshkina of the Fund told reporters, referring to the 10 years of scandal-plagued administration by Yushchenko's predecessor.

"This is the result of deep disappointment among those who had such high expectations after the Orange Revolution."

Public opinion was jolted by his dismissal of Tymoshenko and her entire cabinet on September 8 after each of the two camps in the government accused the other of involvement in graft.

The ousted prime minister, admired for her rousing speeches, vows to get her job back by beating Yushchenko's allies in an election next March to a parliament with expanded powers.

Many Ukrainians were also upset by a scandal over the extravagant lifestyle of the president's eldest son, a 21-year-old student, and reports that his family owns the copyright on slogans and symbols of the Orange Revolution.

Pollsters said with Yushchenko and Tymoshenko engaged in a war of words, a third force could emerge the winner in March.

"When two lions are fighting, other animals could get the prize," Bekeshkina said.

She singled out the Regions of Ukraine party led by Viktor Yanukovich, the pro-Moscow politician defeated by Yushchenko in the presidential election.

Polls monitoring party support put Regions of Ukraine in the lead with 20.7 percent. Tymoshenko's Fatherland party lay second with 20.5 percent and Yushchenko's Our Ukraine had 13.9 percent.

A failure to win enough seats would put in doubt Yushchenko's plan to move closer to the European mainstream as from the New Year as his powers will be reduced in favour of parliament.

Both Tymoshenko and Yanukovich have a record of making sweeping promises to voters based on stronger state interference in the economy. Yanukovich backs closer ties with Russia.

Source: Reuters

Yushchenko Reappoints Pynzenyk, Names Bondar Transportation Minister

KIEV, Ukraine -- President Viktor Yushchenko re-appointed Viktor Pynzenyk as the finance minister and appointed Viktor Bondar as the transportation minister to replace Yevhen Chervonenko, a close ally of Yushchenko, the presidential press service reported.


Finance Minister Viktor Pynzenyk

The latest appointments, which come a day later than most of other appointments, show they may be politically motivated as Yushchenko has been carefully screening the candidates.

By re-appointing the finance minister Yushchenko has been apparently seeking to win support of Pynzenyk's party, the Reforms and Order Party, ahead of the March 2006 election and to prevent its alliance with former Prime Minister Yulia Tymoshenko.

After the re-appointment Pynzenyk issued a statement where he had called on his party fellows to stop the split and to back Yushchenko.

"We came with Viktor Yushchenko not to spread hostilities, but to jointly with him overcome a difficult heritage of social problems and to build a new [society]," Pynzenyk said. "I stay to collect the stones. Let God stop those who seek to throw the stones."

Mykola Tomenko, a member of the Reforms and Order and an ardent backer of Tymoshenko, said recently that Pynzenyk will have to quit the post of the party leader if he stays in the government.

However, other party members said the matter had not been yet decided and suggested a party congress later this year may still vote to support Yushchenko, not Tymoshenko.

Yushchenko fired Tymoshenko Sept. 8 amid a wave of mutual accusations of corruption between supporters of Yushchenko and Tymoshenko.

By replacing Chervonenko, Yushchenko has been apparently responding to allegations that the former transportation minister, formerly a wealthy businessman, may have maintained hidden links to business.

Although Chervonenko repeatedly denied having any links with any businesses, the allegations could still spoil Yushchenko's party performance ahead of the vote, analysts said.

Bondar, 30, is the youngest member of the government. Until his latest appointment, Bondar worked as the first deputy transportation minister.

Yushchenko also appointed Pavlo Kachur as the construction and architecture minister.

Source: Ukrainian Journal

Wednesday, September 28, 2005

Is PORA Turning Against Yushchenko?

KIEV, Ukraine -- Pora, the non-governmental organization that played a decisive role in Ukraine's Orange Revolution, has adopted a highly critical stance towards the ten-point memorandum signed last week by President Viktor Yushchenko and the leader of the Party of Regions, former prime minister Viktor Yanukovych.


Members of "Black" PORA

An interactive poll on Pora's website found that 29.2% of respondents believed Yushchenko had "betrayed" the ideals of the Orange Revolution. Another 32.5% believed that ousted National Security and Defense Council secretary Petro Poroshenko had betrayed them, while only 10.3% believed former prime minister Yulia Tymoshenko had done so.

One wing of Pora (commonly referred to as "yellow" because of their symbols) worked closely with Yushchenko in the 2004 presidential elections. Another wing of Pora (commonly referred to as "black" for the same reason) worked independently and drew its inspiration from Serbia's OTPOR youth group.

The "yellow" wing of Pora clashed with the minister of justice when he attempted to block the registration of their new political party. Eventually, a Kyiv court ordered the Ministry to retroactively register the party as of March, so that it could stand in the March 2006 parliamentary elections.

Outgoing minister of justice Roman Zvarych will not be re-appointed to the new government headed by Yuriy Yekhanurov. Zvarych, an American-Ukrainian who exchanged his American citizenship for a Ukrainian passport in the 1990s, was embroiled in a separate scandal surrounding his exaggerated academic credentials (see EDM, May 4). Pora's relationship with Zvarych has remained lukewarm.

The Pora political party has appealed to outgoing government members sympathetic to Tymoshenko to join their 2006 election bloc. The appeal was sent to outgoing state secretary Oleksandr Zinchenko, his deputy, Markian Lubkivsky, Channel 1 state television CEO Taras Stetskiv, and MP Volodymyr Filenko. Stetskiv and Filenko played prominent roles in organizing the Orange Revolution.

"These politicians," according to the appeal, "have similar positions, political views, and moral beliefs that concur with the values and principles of Pora's activities". The appeal then called upon these four men to join the Pora party.

Zinchenko is considered to be a likely candidate to lead the Pora 2006 election bloc. At a September 27 press conference entitled "Memorandum. Betrayal. Crisis? Pora's Response," the NGO unveiled its own policy recommendations for the Yushchenko administration. The "black" wing of Pora issued a similar list of demands on the authorities four days earlier entitled, "Memorandum of the Maidan".

The Pora political party called upon everyone who participated in the Orange Revolution to form a "civic coalition" that would work "to clean up the Ukrainian authorities".

The Pora party has not garnered widespread public support until now. But the September political crisis could tip the balance, with Orange voters critical of Yushchenko flocking to either Pora or Tymoshenko's bloc.

Andriy Ihnatov, a founder of maidan.org.ua, which has close ties to the "black" wing of Pora, told Jamestown that he believed the Pora party could cross the low 3% threshold in the 2006 elections. He believes that readers of maidan.org.ua, a prominent Orange Revolution website, are likely to split their votes evenly between Yushchenko and Tymoshenko.

Vladyslav Kaskiv, head of the Pora party and an adviser to Yushchenko, theorized that the current crisis was due to the "inability of the authorities to place the interests of Ukraine above those of business groups and personal ambitions." With an eye toward attracting voters disillusioned with Yushchenko but unsure about Tymoshenko, Kaskiv also criticized the "lack of professionalism of the Ukrainian government, which sought political dividends through social populism."

Pora is especially critical of one particular clause in the Yushchenko-Yanukovych memorandum, which would expand immunity from prosecution from parliamentary deputies, who have had it throughout Ukraine's independence, to local deputies. Such a change would give them, in Pora's words, "criminal and administrative immunity."

An earlier Pora statement complained about changes to the law on local deputies that ruled out filing criminal charges against individual elected deputies without authorization from the local council. Pora complained that such a step would lead to criminal and corrupt elements seeking election to local councils in order to obtain immunity.

Such a step would violate Yushchenko's pledge to expand the campaign against corruption. Speaking on Ukraine's independence day Yushchenko admitted, "Corruption is retreating rather slowly so far. The former system often grinds the newcomers before they can change it".

The memos from both wings of Pora seek to draw attention to the Yushchenko administration's lack of progress toward implementing what they believe were the ideals of the Orange Revolution. Pora's memorandum blamed the political crisis on the authorities and the economic crisis on the government. "Ukrainian citizens went to the Maidan not for Yushchenko or for Tymoshenko, but for a normal way of life and moral authorities".

Interior Minister Yuriy Lutsenko, a Socialist, agreed, saying, "The Maidan stood not for Tymoshenko or even not completely for Yushchenko. People stood for liberty and against [election] falsification". This demand led to an unusual alliance of "socialists, nationalists, democrats, anarchists" and people of different religious confessions.

Yushchenko may come to regret signing the memorandum with Yanukovych. Serhiy Rakhmanin, a prominent commentator on Zerkalo Tyzhnia/Nedeli confessed, "I pity this person [Yushchenko]. He has no place in my own Maidan."

Yushchenko's popularity has declined from 33% in August to only 20% today. The latest poll shows that Peoples Union-Our Ukraine has collapsed in support to only 13.9%, while the Tymoshenko bloc has grown to 20.5%.

The outcome of the crisis suggests that Yushchenko will face a serious challenge from both Pora and Tymoshenko in the 2006 elections.

Source: Eurasia Daily Monitor

Police Question Akhmetov in Connection with Criminal Case

KIEV, Ukraine -- Ukrainian police on Sept. 26 questioned the country's wealthiest tycoon as a witness in several criminal cases.

Rinat Akhmetov, a coal and steel magnate, "gave full answers to all questions" of police investigators, Interior Ministry spokeswoman Inna Kisel said, refusing to elaborate. No details were available on what criminal cases Akhmetov was asked about.

The tycoon and his businesses have faced increasing pressure since Viktor Yushchenko became president in January and began a government crackdown on shady business deals dating back to the administration of former President Leonid Kuchma.

Akhmetov's U.S.-based lawyers have described all the investigations involving their client as politically motivated.

Last month, police stormed and searched the tycoon's office in his native town of Donetsk in eastern Ukraine in connection with an investigation into tax evasion and abuse of power.

In July, police summoned Akhmetov for questioning about an alleged 1988 assassination attempt, but Akhmetov did not appear. His company said he was abroad and insisted the summons was not mandatory.

Yushchenko's government has regained control over an important steel mill that was bought last year by Akhmetov and the son-in-law of former President Leonid Kuchma in a highly criticized privatization deal.

Forbes magazine lists Akhmetov as Ukraine's wealthiest tycoon, with an estimated fortune of $2.4 billion (2 billion euros). Besides steel and metals holdings, he is also the owner of a top soccer club and a major television station.

Also Sept. 26, police summoned Kuchma's one-time administration chief Viktor Medvedchuk as part of an investigation into the awarding of medals and state honors to the ex-leader's alleged cronies. Medvedchuk was not immediately available for comment.

Medvedchuk, who now heads the opposition Ukrainian Socialist Party (United), was also summoned for questioning in July. He did not appear, and his party accused police of persecuting the government's political opponents.

Source: AP

Kremlin Back in a Big Way After Ukraine Crisis

MOSCOW, Russia -- Following the miserable defeat of the candidate it backed at the Ukrainian presidential election last year, the Kremlin appears to have weathered the first shock and is now poised to come back in style.

The Kremlin

A recent political crisis, which culminated with the sacking of Prime Minister Yulia Tymoshenko on Sept. 8, created ample opportunities for Moscow to re-establish its influence in Ukraine.

The Kremlin threw all its political muscle into the election of former Prime Minister Viktor Yanukovych, a pro-Russian candidate, at the presidential vote last year, but failed. A pro-Western, Viktor Yushchenko, swept to power following a rerun vote in December 2004 and pledged to work hard for Ukraine to quickly join NATO, Russia's worst nightmare, and to seek joining the European Union within a decade.

Russia scrambled for a response by adjusting its foreign policy to new realities, seeking to economically punish countries like Ukraine and Georgia for their closer cooperation with the West.

But the answer to the challenge came from where few had actually expected: From within the ruling coalition in Ukraine.

As the Yushchenko and Tymoshenko teams bitterly split following the government dismissal, both had apparently sent messages to Moscow that may eventually produce a greater-than-expected cooperation between the two biggest states of the former Soviet Union.

Yushchenko appointed Yuriy Yekhanurov, a Russia-born ally of the president, to the post of prime minister. This is a contrast to Tymoshenko, who has been using populist anti-Russian rhetoric, such as pushing for the building of a natural gas pipeline bypassing Russia, and irritating Moscow for the past seven months. To push Yekhanurov through Parliament, Yushchenko struck an unprecedented agreement with Yanukovych, the Russian favorite, whose party had overwhelmingly backed the choice.

But the latest development in Ukraine’s political reshuffling appears to be even more surprising than anything. Tymoshenko traveled to Moscow on Sept. 24 apparently for a secret meeting with Kremlin strategists to outline her vision of a future cooperation.

The Russian authorities appeared to be so pleased with Tymoshenko's turnaround that they had immediately cancelled an international arrest warrant for her. Several Kremlin-controlled media outlets have followed with a favorable coverage of Tymoshenko in broadcasts that are widely viewed in Ukraine.

So, 10 months after Russia's fiasco at the presidential election in Ukraine, Moscow now appears to have much closer cooperation with all three major political groups that are expected to score well as the upcoming election in March 2006. The winner will become prime minister, a job that will have extended powers to shape the country's policy with amendments to the constitution coming into force on Jan. 1, 2006.

No matter who wins the election, Yekhanurov, Tymoshenko or Yanukovych, Russia seems to have already secured a favorable outcome.

Source: Ukrainian Journal Editorial

Tuesday, September 27, 2005

Ukraine President Names New Economy Minister

KIEV, Ukraine -- Ukrainian President Viktor Yushchenko has appointed a young central bank specialist as new economy minister in a revamped government, a source in the presidential administration said on Tuesday.

Arseniy Yatsenyuk, 31, a former first deputy chairman of the bank, is to replace Serhiy Teryokhin, who often quarreled with the central bank.

Yatsenyuk will symbolize the new face of the government, overhauled after a damaging split within Yushchenko's eight-month-old administration.

His new team will be charged with reversing a slowdown in economic growth and bringing consistency to economic policy in the run-up to a parliamentary election next March.

Yulia Tymoshenko, sacked by Yushchenko in early September after months of infighting, won widespread admiration among voters for her fiery style, but contradictory decisions under her stewardship have scared off many investors.

New Prime Minister Yuri Yekhanurov, approved by parliament at the second attempt last week, has a style diametrically opposed to his flamboyant predecessor. Seen as a low-key technocrat, he has pledged to pack his team with experts rather than politicians.

Teryokhin, one of Tymoshenko's key allies in the outgoing government, often confronted the central bank, lobbying for stronger hryvnia currency and more a flexible exchange rate.

Yatsenyuk headed the bank for five months in 2004 when the chairman of the time, Serhiy Tyhypko, took leave to oversee the campaign of Yushchenko's rival in the presidential election. He is well placed to improve ties with the bank.

Pro-Western liberal Borys Tarasyuk was kept on as foreign minister. Yushchenko appointed parliamentary deputy Stanislav Stashevsky as first deputy prime minister and Anatoly Kinakh, first deputy premier in the outgoing government, was named secretary of the National Defense and Security Council.

The source in the administration said talks on other ministerial posts were proceeding but most of the cabinet line-up is expected to be named by the end of Tuesday.

Source: Reuters

In Ukraine, Old Whiff of Scandal in New Regime

KIEV, Ukraine -- The allegations read like a page from Ukraine's dark days not so long ago, when graft and bribery contaminated virtually every corner of government.

President Yushchenko addressing parliament

The president says his former prime minister used her post to try to erase $1.5 billion in taxes owed by her former firm. The country's former security council head is under investigation on corruption charges, as is its former customs chief. Top government officials have traded accusations of engineering factory takeovers for private gain and pressuring judges.

What has both astounded and angered Ukrainians is that the man they equated with the promise of clean government, Orange Revolution leader Viktor Yushchenko, is now the figure whose administration is saddled with the taint of scandal.

Eight months into his presidency, Yushchenko has seen his coalition of reform-minded allies destroyed by fierce infighting and competing accusations of corruption. Earlier this month, the crisis forced him to fire Prime Minister Yulia Tymoshenko and accept the resignations of top aides, including National Security and Defense Council chief Petro Poroshenko.

The firestorm has caused Ukrainians' confidence in their new government to plummet. A poll this month by the Kiev-based think tank Razumkov found that fewer than a quarter of Ukrainians support Yushchenko or Tymoshenko.

"We didn't stand and freeze on Independence Square day after day for this," said Natalya Fedysko, 20, a nurse. "We expected far better. And I feel it's only going to get worse."

Discord between Yushchenko's circle of advisers and Tymoshenko's team had been brewing for months, but the spark for the crisis appeared to revolve around a court ruling last month to return the Nikopol Ferroalloy plant to the state.

Privatization Defended

In 2003, Viktor Pinchuk, former President Leonid Kuchma's billionaire son-in-law, acquired the eastern Ukraine plant in a privatization widely regarded as rigged. Though the plant was worth $1 billion, Pinchuk paid $80 million. Pinchuk maintains the privatization was done legally.

Shortly after taking office, Tymoshenko announced an ambitious plan to revisit 3,000 privatizations of state-owned enterprises during the Kuchma era. The plan sent chills through Ukraine's investment community, and Yushchenko later emphasized that only about a dozen privatizations would be scrutinized.

Tymoshenko focused her attention on privatizations that benefited Ukrainian businessmen with close ties to Kuchma. That included the acquisition of Ukraine's largest steel mill, Kryvorizhstal, by Pinchuk and Ukrainian oligarch Rinat Akhmetov last year for $800 million. The mill is expected to sell for more than $2 billion in a state auction next month.

Pinchuk's majority stake in Nikopol was next. Ukrainian courts initially ruled that the Nikopol privatization was lawful, but after Tymoshenko's intervention, they reversed their decision and ordered the return of Pinchuk's stake back to the state, Pinchuk said. He also accused Tymoshenko of trying to help Pryvatbank, a minority stakeholder in Nikopol and a Pinchuk rival, of wresting control of the metals plant, according to Ukrainian media reports.

In firing Tymoshenko, Yushchenko cited Tymoshenko's handling of the Nikopol case. "High officials started directing events in favor of corporate interests. Then crises appeared," The Associated Press quoted Yushchenko as saying Sept. 11.

In an interview in Kiev, Tymoshenko denied the allegations and said she has no relationship at all with Pryvatbank. She also accused Poroshenko, her nemesis within Yushchenko's circle of advisers, of fighting to block the government from taking Nikopol from Pinchuk.

In recent weeks, Russian and Ukrainian media have suggested Poroshenko was working behind the scenes to block the seizure of the Nikopol stake, so that Pinchuk could proceed with its sale to Russian magnates Viktor Vekselberg and Alexander Abramov. Poroshenko could not be reached for comment Monday.

"A real war was being waged between the wheels of justice and the president's advisers with ties to Pinchuk, and who sided with him," Tymoshenko said. "I have tried to put up obstacles to those ties, not for the benefit for private groups, but so that the country can feel a sense of justice."

Yushchenko also accused Tymoshenko of trying to secure the erasure of $1.5 billion in tax debt owed by United Energy Systems, an energy company she once co-owned. Ukrainian courts endorsed the move, but the country's prosecutor general is now appealing those rulings.

Tymoshenko dismissed the allegation as an attempt by the president to resurrect allegations long ago disproved.

"When the new president pulled out these allegations, the whole country simply laughed, because even under the Kuchma regime, these charges were cleared," Tymoshenko said. "This case has already been thrown out by the courts."

In Russia, Tymoshenko faced charges of bribing Russian defense officials during the time she headed up UES. However, on Monday Russian authorities announced they would no longer pursue her arrest, after she met with investigators in Moscow on Sunday.

Ukraine's prosecutor general has pending at least five investigations into allegations of corruption against top-tier government officials. Ukraine's Security Service has said it is investigating allegations of corruption and smuggling made against the country's customs chief, Volodymyr Skomarovsky, according to Ukrainian media reports.

`President Chose Stabilization'

Yushchenko has responded to the crisis with wholesale dismissals. They included Poroshenko, a wealthy candy manufacturer regarded as one of the president's closest advisers.

"When the president had to choose between his friends and stabilization, the president chose stabilization," said Oleh Rybachuk, Yushchenko's chief of staff.

Nevertheless, the crisis has eroded the credibility that Yushchenko's government established with Ukrainians after last winter's demonstrations on Independence Square. Ukrainians have a lot to be disillusioned about: Economic growth has slowed to 2.8 percent so far this year compared with 12.1 percent last year, industrial production is down, the country's trade surplus has disappeared.

"But it's the issue of corruption that is on top of the agenda for average Ukrainians," said Oleksander Lytvynenko, a political analyst for Razumkov. "Certainly among the people, distrust in the president has taken root."

Source: Newsday

Former Ukrainian PM Tymoshenko No Longer Wanted by Russia

MOSCOW, Russia -- Ex-Ukrainian prime minister Yulia Tymoshenko has been taken off the international wanted list, the Russian Prosecutor General’s Office said Monday.

Screenshot from www.interpol.org

The prosecutor’s office website said Russia’s Military Prosecutor’s Office had removed Tymoshenko from the list, as she had voluntarily appeared this weekend and given evidence, the RIA-Novosti news agency reported.

Tymoshenko, who had been sought over allegations of bribing Russian Defense Ministry officials, said she would continue to help investigators when necessary.

Source: MosNews

Ukraine’s Yushchenko Honored With London Foreign Policy Prize

LONDON, England -- Ukraine’s President Viktor Yushchenko was named as the recipient of the first-ever Chatham House Prize, awarded by the eponymous London-based foreign policy institute.

Ukraine’s President Viktor Yushchenko

Yushchenko will be presented with the honor by Britain’s Queen Elizabeth II at a reception in London on Oct. 17 followed by a gala dinner to be addressed by Cherie Booth, the lawyer wife of Prime Minister Tony Blair, the AFP news agency reports.

“President Yushchenko’s achievement as a statesman was to manage a domestic political revolution whilst simultaneously dealing with neighboring states who have sought to influence Ukraine’s political and economic life,” said Chatham House director Victor Bulmer-Thomas in a statement.

“His adeptness in handling relations with other states has ensured that Ukraine, as a pivotal state in Eastern Europe and Russia’s most important western neighbor, has not become the cause of a serious deterioration in relations between Russia and Western Europe.” Chatham House, also known as the Royal Institute of International Affairs, is one of the world’s best known think-tanks dealing with international relations.

Source: MosNews

Ukraine’s Richest Man Returns Home Despite Legal Probe

KIEV, Ukraine -- Ukrainian tycoon Rinat Akhmetov has returned home from abroad despite the threat of questioning by prosecutors.

Ukrainian tycoon Rinat Akhmetov

The Ukrainian Prosecutor General’s office wants to question Akhmetov, Ukraine’s richest man, about criminal cases linked to gangland violence a decade ago in the eastern Ukrainian city of Donetsk, the center of mining region. So far, no charges have been brought against him. Akhmetov’s business empire is based in Donetsk and includes steel and machine-building plants, telecom companies, banks and the Shakhtar soccer club.

Akhmetov is an ally of Viktor Yanukovich, a former prime minister of Ukraine and the rival of the current president Viktor Yushchenko during last year’s presidential elections.

Last week, before the second vote for the president’s candidate for PM in the Ukrainian parliament, Yushchenko and Yanukovich concluded a pact of guarantees for the opposition. Experts quoted by Reuters speculated that Akhmetov who has been in Western Europe for months, had been able to return as part of this deal.

“Now any legal action against Mr. Akhmetov, including those unrelated to his political activities, could be seen as a violation of the Memorandum by the authorities,” Taras Chornovil, an opposition deputy, said. “In the current situation with the president relatively weakened, he will not take any such steps.”

Akhmetov, whose fortune is estimated at about $2.4 billion, has so far failed to appear before prosecutors. He has said in the past that he has nothing to fear. Akhmetov has already lost a prominent asset —- Ukraine’s largest steel mill Kryvoryzhstal. The plant was sold to Akhmetov and his partners for a price below other offers in June 2004 in a selloff denounced by Yushchenko as “theft”. The country’s courts overturned the sale and a new one is planned for Oct. 24.

Source: MosNews

Monday, September 26, 2005

Ukraine's Prime Minister: Quiet Man In, Fiery Lady Out

KIEV, Ukraine -- In the person of Yuriy Yekhanurov, who Ukraine's parliament approved as new prime minister on September 22, President Viktor Yushchenko has acquired a quiet professional who should run the economy while Yushchenko will tackle constitutional reform and next year's parliamentary race.


Fiery Lady Tymoshenko (L) and Quiet Man Yekhanurov (R)

Yekhanurov shares Yushchenko's vision of Ukraine as a free market economy, unlike his predecessor Yulia Tymoshenko, who preferred government interference. Yekhanurov has considerable experience as a government official managing economic transition.

In contrast, Tymoshenko came to opposition politics after running, in the mid-1990s, a regional fuel monopoly that enjoyed preferences at the top -- Unified Energy Systems of Ukraine -- so she had no real experience of working under market conditions.

They will continue to play different roles in the months ahead, with Yekhanurov trying to help Yushchenko find a way out of economic stagnation; and Tymoshenko trying to torpedo his party's election campaign as the leader of a rival bloc.

Yekhanurov has played secondary roles in party politics. In the mid-1990s he joined the main pro-government party at the time, the People's Democratic Party (NDP). He was elected to parliament for the first time in 1998 not on the party ticket, but from a single-seat constituency in Zhytomyr.

His first stint in parliament lasted less than two years, as in early 2000 then prime minister Yushchenko plucked him from parliament and named him his first deputy. Yekhanurov left the NDP the same year. He returned to party politics in late 2001, as deputy head of the election headquarters of Yushchenko's Our Ukraine bloc.

The bloc won the polls in March 2002, and Yekhanurov was elected to parliament on its list. The summer of 2004 again saw Yekhanurov as deputy head of Yushchenko's campaign, this time the victorious presidential one. In March 2005 Yekhanurov took the number two slot -- head of the central executive committee -- in Yushchenko's newly formed People's Union-Our Ukraine party.

Yekhanurov's record as an economic manager has been impressive. He became director of a construction materials factory in Soviet Ukraine at the age of 26 (he is 57 now), and then worked in top positions in Kyiv city hall. When Ukraine gained independence in 1991, he came to the Cabinet of Ministers, where he headed an economic department.

In 1993 Yekhanurov became deputy economics minister, and in 1994-97 he steered the early stage of Ukraine's privatization as chief of the State Property Fund. Unlike his Russian counterpart Anatoly Chubais, who was demonized as the "father" of voucher privatization in his country, Yekhanurov managed to conduct Ukraine's privatization without scandals.

He served a brief stint as economics minister in 1997, and then tackled problems of private enterprises first as head of a relevant government committee, then on the economic committee in parliament. In 2000-2001 Yekhanurov was first deputy prime minister, and in 2001-2002 he was then president Leonid Kuchma's commissioner for administrative reform (he has preserved warm relations with Kuchma, despite belonging to Yushchenko's camp).

Yekhanurov's most recent job was governor of Dnipropetrovsk Region since April 2005.

Yekhanurov has already promised a review of Tymoshenko's revolutionary re-privatization decisions, favoring amicable out-of-court deals with the tycoons who bought large chunks of industry for cheap and not quite legally under Kuchma.

Yushchenko has instructed Yekhanurov to pay his first visit as prime minister to Russia, to settle natural gas trade problems. This is something that Tymoshenko had planned, but never accomplished, probably for fear of detention on a bribery case dating back to her time at the helm of Ukraine's Unified Energy Systems, in which Russian Defense Ministry official were involved.

For now, Tymoshenko is planning to travel around Ukraine. In a recent interview, she told Ukrayinska pravda that she is about to launch an election campaign tour across Ukraine's regions: "Nobody will see me in Kyiv until the polls," she declared.

Tymoshenko said she would not take into her "mega-bloc" for the polls "the businessmen" from Yushchenko's entourage, who she earlier accused of corruption. Another revelation that she made in the same interview was that she knew "since childhood" that she would one day be "the country's leader." The opposition United Social Democrats may become her allies in the fight for power.

Their leader, the former head of the presidential administration under Kuchma, Viktor Medvedchuk, has offered to cooperate with her on several occasions. Interestingly, the latest issue of the Kyiv-based weekly 2000, which is believed to be linked to Medvedchuk, came out full of features and interviews lauding Tymoshenko.

Following Yekhanurov's appointment, Ukrainian media have been comparing the income declarations Yekhanurov and Tymoshenko made for 2004. The differences between the two reflect not different lifestyles, as both are affluent according to Ukrainian standards, but rather a lack of openness on the part of Tymoshenko.

Yekhanurov declared an income of over $30,000, a mid-size apartment in downtown Kyiv, a land plot, and a Toyota SUV. Tymoshenko declared an income of some $12,000, a tiny studio apartment in Dnipropetrovsk, and no vehicles.

Source: Eurasia Daily Monitor

Russia Lifts Arrest Warrant for Ukraine Ex-PM

MOSCOW, Russia -- Russian prosecutors said on Monday they had lifted an arrest warrant on Ukrainian former Prime Minister Yulia Tymoshenko after she voluntarily turned up for questioning.

Russian authorities, who suspect her of trying to bribe defence ministry officials in the 1990s, suspended the warrant when Tymoshenko became premier, but restated it after Ukrainian President Viktor Yushchenko sacked her earlier this month.

However, the Russian Prosecutor General's office said on Monday it had withdrawn the warrant again.

"Such a decision was made because this weekend she (Tymoshenko) voluntarily turned up in the main military prosecutor's office and gave the evidence requested by investigators," it said in a statement.

Tymoshenko's spokeswoman confirmed the former prime minister was in Moscow on the weekend but gave no further details.

Tymoshenko, one of the leaders of the "Orange Revolution" that overturned the Moscow-backed establishment and brought the pro-Western Yushchenko to power, had denied any wrongdoing.

She has described the arrest warrant, issued in the middle of the Orange Revolution as an instrument of Moscow's pressure on Ukraine.

Yushchenko sacked his former ally this month to end a row over high-level corruption that had divided the leadership.

Source: Reuters

“There Will Be No More Revolution”

MOSCOW, Russia -- At the end of last week, Yuri Lutsenko, head of the Ministry of Internal Affairs of Ukraine, former organizer of “Orange Revolution” demonstrations, had negotiations in Moscow with his Russian colleague, Rashid Nurgaliev. Before departure back to Ukraine, Lutsenko told Kommersant correspondent Vladimir Soloviev about why there would be no more revolutions in Ukraine.


Yuri Lutsenko

After Rada disapproval’s of Yuri Ekhanurov for the prime minister position, the State Secretary Oleg Rybalchuk said that he has a backup plan –Yuri Lutsenko. Why?

Well, first of all, Oleg is a good friend of mine. Second, that was a special operation of some sort. If the candidature of Lutsenko for the position of prime minister would be offered for real, it would create a mixed reaction in Rada. The opposition factions would for sure block the tribune and would start to scream: “E-kh-a-nu-rov!” Let’s say it was a normal political joke.

What do you think about Ekhanurov?

I’ve known him for a long time and I respect him. And I wouldn’t hide the secret if I’d tell you that right after Yushenko’s victory in the corridors of Supreme Rada, I was loudly supporting Ekhanurov’s candidacy for the prime minister position. Already in that time he could become a stabilizing factor for the situation in Ukraine. He would be well received by business people in Ukraine and Russia. He would be well understood by those who were demonstrating in Kiev and Donetsk. I think he was wanted already then. However, the revolutionary situation went in a different direction and Ekhanurov was called in only six months after.

Do you think another “Orange Revolution” could happen under the leadership of Yulia Timoshenko?

Let’s speak sincerely. The people on the squares were not standing because of Timoshenko or even Yushenko. The people wanted freedom. They were expressing an anger against falsifications and against the president that they did not choose. Thus, it would be impossible to bring these people back into the streets when democracy and freedom already took hold in Ukraine. Of course it is possible to repeat some actions of the protest against certain politicians. It is not difficult. I can assure you in that as a field commander of the “Orange Revolution” (this name Lutsenko had during the mass protests –Kommersant). However, it is impossible to repeat the “Orange Revolution,” when socialists, nationalists, democrats, anarchists, non-partisans, Eastern and Western Ukrainians, Christian Orthodoxy, Catholics, and atheist – all gathered in the same city squares. They all wanted freedom. However, what is going on now is nothing more than internal party fight – the clash of ambitions. Right now the “Orange Revolution” is not possible.

Were you, as a field commander, disgusted by the union of Viktor Yushenko and Viktor Yanukovich?

God forbid… I don’t split Ukraine for enemies and friends. I was protesting not against citizen Yanukovich. I was organizing people’s demonstrations against the falsifications. For that reason, Yanukovich, who backed by 15 – 20 percent of Ukrainian voters, maybe is not my favorite, but is still a very real politician. I took absolutely normally the dialog of the current president and the politicians from the opposition. Of course, I have a negative attitude to him, but it is my civil right.

So, you think it is not part of some big game of Viktor Yushenko against Yulia Timoshenko?

Everything develops in its natural way. The cleaning stage of the revolution is over and now it is time to make a dialog within different electoral groups. In this sense, the high voiced dialog of Yushenko and Timoshenko or clenching teeth dialog of Yushenko and Yanukovich – are normal things. I think this is the right of the citizens with different beliefs to talk to each other and to remain the citizens of one country.

What do you think about the political reform?

I have pretty good opinion about it. I was parliament member from the Socialist party and this party was the initiator of the reform. I voted for these bills. And besides, I consider “orange revolution" to be a real revolution because it changed not only the president but also the powers themselves. If it would not be for the Constitutional changes, it would be just change of faces. But when Rada took the decision about the reform it was a revolution.

However, recently Viktor Yushenko suggested postponing the reform. It looks like he doesn’t really need that.

Everything is in the past now. Today, the president believes the necessity of political reform that would start from Jan. 1 of next year.

It looks like the election campaign already has started. Are Socialists and “Our Ukraine” staying friends?

I wouldn’t call that a friendship even in today’s relations. The Socialists and “Our Ukraine” have different views for many issues. They are united by common understanding of “being Ukrainian.” Yes, the election campaign has started, but I think Socialist Party, “Our Ukraine” and bloc of Vladimir Litvin (Speaker of Rada –Kommersant) will run their own campaigns. However, I think that they wouldn’t fight with each other. We have different views, but we have common strategic vision of Ukraine’s future.

When you became an interior minister, you promised within two months to purge the police from thieves and to get rid off corruption. Did you fire a lot of people already?

I did not promise to do so within two months. I said that I would start a serious campaign. For seven months of this year about 5,000 people had voluntarily resigned, about 2,000 could not pass the personal certification and about 400 were charged with crimes. To let you compare, I’d tell you that in National Security Service there were no charges brought up against anybody and the tax service has only 16 people under investigation. So, the purge was pretty radical, and that allowed me to surround myself with colleagues and allies from the right, from the left, and the main thing – from the back. In June we announce the movement to decriminalize the society. And that become possible only after internal purges within our ministry.

Does the fact that you had no connection in the past with police prevent your job? You suffered from the police, but you never work for them…

I've never suffered from the police. The communications with law enforcements were always normal. During the mass demonstrations of protests we met with our acquaintances from the police before every public action and talked about the rules of game: what we can and what we cannot do. That’s because I was responsible for hundreds of thousand my people and they were responsible for thousands of theirs. I always respected those, who kept the word and had the officer’s honor. All these facts allowed me –a civil person- without any problem to become the head of the Interior Ministry. And the fact that I was not connected with police previously is rather a plus than a minus. The outside look is always more interesting that the inside one. But, then again, I wouldn’t be the judge on that one.

What is going on now with Gongadze case?

The Prosecution Office has the case. Our job is the operative work. But, I would be lying, if I would say that is all we care about. Georgy Gongadze was not just a man, who woke up Ukraine. He was working for the newspaper where I was the editor. He gave his life for the consolidation of anti-Kuchma opposition. Coming to the Interior Ministry on the wave of “orange revolution”, I knew that I had to contribute to this case. The investigation advanced quite far already. It was me, who announce the amnesty for the low level case participants if they would just name the main figures. That turned out to be an effective tactic. The former and still active police officers, who participated in this crime, were giving the information to me in my office. Because of their accounts, the investigation group arrested three murder suspects. This is a giant step. The next question we have: who did order the murder? The society demands the truth and the truth they shall receive. Today, we know who did the killing. Tomorrow we’ll tell who ordered it. The people should not wait for years to learn the results of investigation.

Why did you come to Moscow?

First of all, it is not my first time in here. I was just riding the car with the first deputy of your Interior Ministry and was remembering my first time in here. I don’t know what caused me to think about it. Maybe it was shot of vodka, which I drank for the approval of our new prime minister, or, maybe, it was just a special mood. My father and I came here in 1980. In 5 a.m. we took our place in line to the Lenin’s mausoleum. It was minus 23 degrees of Celsius - pretty cold… Then, in the top floor of the Hotel Moscow I drank vodka for a first time. My father insisted so I’d warm up. So, for that reason Moscow is not a foreign capital for me. Our histories are too close – all our great victories and great defeats. I came here for negotiations with my colleague Rashid Nurgaliev. We have a lot of common problems and common ways to improve our relations. Only cooperation will help us. However, that was not the only reason for my visit. I came here with joy because it is Moscow and because I am from Kiev.

But, I think Ukrainian authorities have a lot of questions to the people who also found their comfort here as well…

This is temporary. Their freedom here is temporary, and they know it too. Our meeting with the minister will touch this problem also. Everything will be resolved- maybe not as fast as we want it, but it will be resolved. I am sure that Mr. Bakay, (former Head of the Presidential Administrative Office, which hides in Russia from Ukrainian authorities – Kommersant) who suddenly becomes a Russian citizen, will respond here in the same manner as he will be responding in Kiev. And other our citizens, who live in your capital understand that it’s all temporary. It doesn’t matter when they will answer for their crimes. What really matters is the idea that it’s unavoidable. Our mutual actions could be improved. And I feel mutuality there.

Did you bring to Moscow something new?

One thing for sure – I did not bring an orange tie to Moscow.

Source: Kommersant

Sunday, September 25, 2005

Yushchenko Owes Political Debt

KIEV, Ukraine -- The main news in Kiev was not the one that people voted Yuri Ekhanurov in. The most amazing was the fact of who gave their voices for Ekhanurov and thus saved Viktor Yushchenko from another political blow – the fatal one. It was not Yulia Timoshenko who changed the balance on the weights in favor of Yushchenko. It was no other than Viktor Yanukovich – the main antagonist of current Ukrainian president.

Ukrainian President Viktor Yushchenko (L) and former prime minister Viktor Yanukovich (R) meet in Kiev

This was the main news and that can effectively change today’s Ukrainian political map by mixing the orange, yellow-blue and other colors in a strange combination.

However, the combination looks strange only from the first glance. The logic of the events pushed two Viktors to this necessary for both of them union. And now, the political fates of Yushenko and Yanukovich depend on this union.

Several weeks after Yushchenko took presidential office he found out that there are many obstacles on the way of his beautiful, even if a little bit abstract, idea of making a world to rediscover a new Ukrainian nation.

If this idea, which gathered thousands of people on the streets, would die – the Yushchenko’s political death would follow right after. And it wouldn’t even matter if he still would be sitting in presidential chair or if he would keep his powers after the political reform.

Now, after receiving a chance to move forward, President Yushchenko will still remain in the eyes of Ukrainians as their national leader.

The political survival of Viktor Yanukovich also depends of Yushchenko, and not of his recent sponsor Rinat Akhmetov, Donetsk’s billionaire, or the Leonid Kuchma’s associates, or even the Kremlin.

To be in hard opposition to the president would not benefit Yanukovich or pay him political dividends. The empty niche of the number one in Ukrainian political opposition was already taken by Yulia Timoshenko.

And she was not planning to make any kind of alliances with Yanukovich. The alliance with Yanukovich would compromise former prime minister’s “orange idea.” Besides, charismatic Timoshenko is able to create her own political future without any help from the former Kuchma’s cadre.

She might need him only as a target for her electoral campaign.

Not finding a place for himself neither at the power, nor in opposition, Viktor Yanukovich ended up in political vacuum. However, now he got the leverage to influence new Ukrainian politics. Yushchenko has a debt to pay to Yanukovich and big one too.

Moscow is fine with this course of events. From now on, it doesn’t see Yushchenko as dangerous as he was during the “orange revolution.”

Source: Kommersant

Russia’s Gazprom Gives Ukraine Conditions for Keeping Gas Prices Low — Paper

MOSCOW, Russia -- Russia’s natural gas monopoly Gazprom is prepared to keep supplying Ukraine with low-priced gas in exchange for Ukrainian government’s agreement to create a consortium that would jointly manage the country’s gas pipeline system. The information was reported by the Kommersant Ukraine paper, which quoted an unnamed Gazprom official.

Gazprom pipeline

Earlier it was announced that beginning next year Gazprom plans to deliver natural gas to Ukraine for $180 per 1,000 cubic meters of gas, which is an average price for European consumers of Russian gas. This price is approximately four times higher than the present tariffs used in relations between Russia and Ukraine.

Ukraine’s new Prime Minister Yuri Yekhanurov already announced that he’s planning to make his first official visit to Russia to discuss gas delivery prices and Gazprom’s suggestion to re-create the gas pipeline management consortium. “We shall carry out the tasks given by the President to the government, in particular building good business relations with Russian Federation,” said the Ukrainian Prime Minister.

A source in Gazprom’s press service told the paper: “We are ready to re-think our proposal regarding the price of natural gas for 2006 in the course of our negotiations with Ukraine’s Prime Minister Yuri Yekhanurov. The price may be reconsidered in case Ukraine agrees to create a consortium to manage the country’s gas transportation system”.

Source: MosNews

Yushchenko Seeks to Find Way Out of Crisis

KIEV, Ukraine -- Ukraine President Viktor Yushchenko met with parliamentary faction leaders to try to find a way out of the deepening political crisis triggered by the breakup of his Orange Revolution team.


Viktor Yushchenko meets with parliamentary representatives

Yushchenko said he wants to "bury the hatchet" with ousted Prime Minister Yulia Tymoshenko, but stopped far short of accepting his former ally's proposal to return to the government.

"All political forces, including Bloc Yulia Tymoshenko, should take part in forming the government," Yushchenko said a day after parliament refused to approve his choice of acting Prime Minister Yuriy Yekhanurov for the nation's No. 2 job.

Tymoshenko took part in the meeting, along with losing presidential candidate Viktor Yanukovych, whose party joined forces with her faction to block Yekhanurov's candidacy.

"We may look at things in different ways but I am convinced that we have ideals which may unite us," Yushchenko said at the start of the meeting. He asked the participants not to do anything "that would hurt the country's image or her reputation."

Ukraine has sunk into a political quagmire since the Orange Revolution team that brought Yushchenko to power disintegrated two weeks ago amid mutual allegations of corruption and infighting. Yushchenko dismissed the government Sept. 8, a move that has left him politically vulnerable in a parliament still dominated by communists and his former foes. The opposition has grown even larger, with lawmakers expressing loyalty to Tymoshenko.

Tymoshenko told journalists she was ready to offer Yushchenko an alliance aimed at creating a new coalition government.

"I am ready to sit down with him (Yushchenko) today ... and suggest we unite forces and create a new government," Tymoshenko said.

Asked if she was proposing that Yushchenko name her prime minister again, she said: "We need to restore the status quo."

"In my heart, there are no bad emotions about the president," she said.

Asked about the offer, Yushchenko said only that he had called Tymoshenko on Monday and proposed she "bury the hatchet and not violate the ideas of Independence Square because we stood there together and at that time we elected the president of Ukraine and not the prime minister."

Yushchenko added: "I am excluding no one." But he did not directly respond to Tymoshenko's wish to be named prime minister again.

Earlier, Yushchenko's aides said he would likely forward Yekhanurov's name for a second vote. Yushchenko repeated that he thought Yekhanurov's candidacy would help "consolidate the majority of political forces." He said Wednesday, however, that he would make a final decision after the closed talks. A new vote could be held as early as Thursday.

For many Ukrainians, Tymoshenko symbolized their revolution, a charismatic orator with charm and appealing ethnic symbolism. She rallied hundreds of thousands who massed in Kiev last year to denounce fraud by the former government in the presidential election and force a new vote, which Yushchenko won.

But since her dismissal, Yushchenko has accused her of abusing her office to cancel the debt owed by a company she once headed. The Prosecutor General's office on Wednesday appealed earlier court rulings that had annulled the $1.3 billion debt of the now-defunct United Energy Systems.

Authorities loyal to former President Leonid Kuchma jailed Tymoshenko after her 2000 ouster on embezzlement charges stemming from her running of UES.

Source: AP

Saturday, September 24, 2005

Ukraine’s New PM Blames Ministries for Acting Against Country Interests

KIEV, Ukraine -- Ukraine’s newly approved prime minister, charged with reversing an economic slowdown, has castigated the outgoing economy and finance ministries, saying they had failed to act in the national interests, Reuters reported.


Prime Minister Yuri Yekhanurov

Technocrat Yuri Yekhanurov, approved by parliament at the second attempt this week, told reporters most of his new cabinet line-up would be made public next Tuesday.

President Viktor Yushchenko appointed him to replace Yulia Tymoshenko, his ally in last year’s Orange revolution, after months of infighting had split the liberal administration into rival camps, each accusing the other of corruption.

Economic growth slowed to its lowest rate in five years, with the 2005 forecast scaled back to four percent from 6.5 and more earlier. Policy uncertainty, mainly proposed reviews of “dubious” privatisations, cut sharply into foreign investment.

“The Economy Ministry gives the impression, it is sad to note, of operating under a ’made to order’ principle and not in the manner of a command centre of Ukraine’s economy,” Yekhanurov said after the first cabinet session since the assembly’s vote.

“And what happened to the professional principles of the Finance Ministry? This is a matter to be discussed separately by specialists.”

Yekhanurov is seen as a caretaker premier ahead of elections next March to a parliament with expanded powers. The ousted Tymoshenko, widely admired for her fiery style, has vowed to contest and win the poll to get her job back.

The new prime minister said this week he would shed two-thirds of the outgoing cabinet and give prominent places to technocrats rather than seasoned politicians.

Consultations on the government were proceeding, Yekhanurov said. The president had made choices for security and foreign policy portfolios, while he had made proposals for other sectors.

Source: MosNews

Up to 10 Ukraine Peacekeepers Involved in Fraud in Lebanon

KIEV, Ukraine -- Up to 10 Ukrainian peacekeepers were involved in the fuel and money fraud in Lebanon, Acting Defence Minister Anatoly Gritsenko told journalists on Friday. According to him, the guilty will be sacked and some will stand trial.

Ukrainian peacekeepers in the Middle East

"There are grounds to believe that somebody will end up in jail," the Ukrainian acting defence minister said, Kazinform quotes Itar-Tass.

The official did not specify which violations he had in mind. Experts believe the Ukrainian military were selling the fuel they received. They pointed out the Ukrainians have the smallest salaries among foreign contingents deployed in Lebanon.

In the view of Gritsenko, the incident in Lebanon shows "how several people can tarnish very serious, responsible and risky work of hundreds of people." He said the Ukrainian contingent demined during the years of stay six million square metres of the Lebanese territory. The cost of mine clearance at one square kilometre of land is estimated at 300-900 US dollars.

Gritsenko said inspections have been sent to all Ukrainian peacekeeping contingents.

Source: KazInform

Ukraine’s Yushchenko Faces Flak for Deal with Rival

KIEV, Ukraine -- Ukrainian President Viktor Yushchenko was criticised yesterday for forging a pact with his defeated “orange revolution” rival that helped him win backing for a prime minister and manoeuvre out of a political crisis.


Viktor Yanukovich (L) and Viktor Yushchenko (R)

Newspapers and political analysts said the deal with Viktor Yanukovich, the pro-Moscow candidate he defeated in last year’s election, would do Yushchenko more harm than good.

But Yushchenko’s chief of staff dismissed the criticism of the deal that swung an additional 50 members of parliament behind Yushchenko’s candidate for prime minister, Yuri Yekhanurov, six months before parliamentary elections.

“What happened has made Yushchenko the president of all Ukrainians,” Oleh Rybachuk, head of the presidential administration, told a news conference.

“The rules of the game are set out publicly for the first time. The key message is we are burying the hatchet. A united Ukraine is going into an election with European standards.”

Yekhanurov was approved on Thursday at the second attempt, winning 289 votes in the 450-seat chamber. Backing from Yanukovich’s party provided a cushion after the 57-year-old technocrat fell three votes short earlier in the week.

Yekhanurov replaced Yulia Tymoshenko, who stood alongside the president during the protests which led to a re-run of the rigged presidential poll, eventually won by Yushchenko.

Tymoshenko was sacked after in-fighting split the administration into two camps, each accusing the other of corruption. Admired by voters for her abrupt, fiery style, she has vowed to challenge Yushchenko’s camp in the election.

Analysts said the president’s deal with his rival could further alienate supporters upset by the split between the revolution’s leaders. The accord guarantees no repression of the opposition and upholds property rights and free media access.

Katya Malofeeva, analyst at Russian investment bank Renaissance Capital, said the accord’s contents posed no difficulty but its political implications “could be significant”.

“The consistency and integrity of the president’s political platform ahead of parliamentary election is likely to come under severe scrutiny.”

Most newspaper editorials were critical.

“Implementing the memorandum will essentially put paid to the authorities’ plans for a radical overhaul of Ukraine’s economy and its politics,” the daily Segodnya said.

Economic growth has slowed to its lowest pace in five years and inflation is on the rise. But most damaging to public morale were the allegations of the corruption Yushchenko had vowed to stamp out after 10 years of scandal-plagued administration under his predecessor Leonid Kuchma.

Analysts said the deal would dent confidence.

“Some people who stood in the square will see this as a betrayal,” said political analyst Volodymyr Polokhalo.

“Every compromise comes at a price. Had the country been under threat of foreign aggression, they might have been united. But a government crisis is too high a price to pay.”

Source: Reuters

Friday, September 23, 2005

EU Backs Yushchenko as Ukraine Returns to Normal

KIEV, Ukraine -- The EU is giving its full backing to President Yushchenko's regime, as Ukraine slowly returns to normality after its most serious political crisis since the Orange Revolution last year, according to a review by Andrew Rettman, Euobserver, Brussels, Belgium.

Ukrainian President Viktor Yushchenko addresses the parliament after his candidate Yuri Yekhanurov was backed by the deputies as Ukraine's new Prime Minister

"We have full confidence in president Yushchenko", EU foreign affairs spokeswoman Cristina Gallach told EUobserver on Thursday (22 September), following an EU-Ukraine meeting in New York.

"You will find in the EU an understanding of the tremendous difficulties with the reform agenda in Ukraine", she added. "You can't expect to turn around a country in six months".

Member states underlined that it is business as usual with Ukraine by agreeing this week to send 50 EU monitors to the Ukrainian-Moldovan frontier in December under Mr Yushchenko's plan to stabilise the neighbouring republic.

The European Commission will select the unarmed mobile units from existing member states' customs personnel in the next two months.

Europe's reaction comes after Mr Yushchenko sacked his government, led by powerful prime minister Yulia Tymoshenko, over corruption allegations on 8 September and installed loyalists Oleg Rybachuk (former EU integration minister) as head of the civil service and Yuriy Yekhanurov (former governor of Dnipropetrovsk) as prime minister.

Ms Tymoshenko hit back on Sunday by depicting Mr Yushchenko as an oligarch puppet, while a hostile parliament on Wednesday rejected Mr Yekhanurov's prime ministerial nomination and announced a fraud probe into the president's own 2004 electoral campaign.

But with Brussels watching the country slide into chaos, things turned around again on Thursday, when Ms Tymoshenko suddenly offered to work in parallel with the Yushchenko camp and a second parliamentary vote confirmed Mr Yekhanurov's nomination.

Russia, the US, France and Poland echoed the EU in publicly endorsing president Yushchenko during the crisis, with Poland describing the mess as a second phase in the revolutionary process while other diplomats said it was the start of campaigning for the March 2006 parliamentary elections.

One western expert indicated that nobody outside the inner circle in Kiev really knows what went on however, with foreign powers privately accepting that there are no angels in Kiev and some degree of government corruption has to be tolerated for now.

Meanwhile, the EU remains cautiously optimistic about Kiev pushing forward reforms under its 1998 EU Partnership and Cooperation Agreement (PCA) and its 2005 Action Plan (AP), which identifies some 70 areas for economic and legal improvements.

"I think Mr Yushchenko knows very well what he has to do", Ms Gallach said. "Let's get a stable government, let's get a united parliament and a prime minister who will put reforms at the top of the agenda".

She compared his 8 September government dismissal to a 9 July move when Mr Yushchenko sacked all traffic police in the 50 million-strong country over corruption, leading to a period of chaos on the roads, but with less-corrupt police emerging in its place.

Ukrainian EU ambassador Roman Shpek also pointed out that the free media coverage of the crisis, the open criticism of the president and the defiance of parliament would have been unthinkable in pre-Orange Revolution days. "Ukraine will emerge stronger from this crisis", he said.

The EU's December summit in Kiev will assess the country's progress in terms of its WTO candidature, the possibility of easing EU visa restrictions and the country's progress on PCA and AP goals.

But Ukrainian diplomats remain concerned over the tendency to speak about the country in terms of neighbourhood programmes and third country partnerships rather than as a future EU candidate.

Mr Shpek said Kiev wants to step beyond the PCA and AP structure in the next few years into a new "enhanced agreement", that could see EU aid reach the levels of Pre-Accession Strategy payments for the new eastern European member states.

Ukraine currently pockets some euro 100 million a year in EU grants, while Poland scooped over euro 1 billion a year in the run-up to accession.

For its part, the EU acknowledges that Ukraine holds special value due to its economic potential and strategic location, but says that it is still too early to create timetables for WTO, NATO or EU entry.

For now, the international community is waiting to see how Ukraine passes its next big test, the March 2006 elections - where the three competing forces of Mr Yushchenko, Ms Tymoshenko and the old pro-Soviet faction will slug it out to see who takes charge of the fledgling democracy for the next four years.

Source: Unian

Ukraine Press Fears for Revolution

KIEV, Ukraine -- A day after Ukraine's parliament approved President Viktor Yushchenko's choice of prime minister, Yuri Yekhanurov, newspapers wonder if the ideals of the Orange Revolution have been compromised.

Yuri Yekhanurov (L) receives congratulations from Ukraine's President Viktor Yushchenko after the parliament backed him as Ukraine's new prime minister

Several commentators note that the vote followed a deal between the two former election rivals, the pro-West Mr Yushchenko and the Moscow-favoured Viktor Yanukovych.

Others say Mr Yekhanurov's appointment will deepen the rift between President Yushchenko and Yulia Tymoshenko, his former prime minister and close partner during the Orange Revolution.

Oleksandr Polokhalo in pro-government Ukrayina Moloda

Today we are talking about strategic, political and tactical co-operation between the former presidential candidates - Viktor Yushchenko and Viktor Yanukovych... This alliance will dismay many supporters of both Yushchenko and Yanukovych.

One of these politicians symbolises democracy, the other authoritarianism. This means that, once more, east and west, business and power will be mixed up. Many of those who stood on Independence Square will view this as a betrayal.

Yevhen Ikhelzon and Yaroslav Malyuta in opposition Segodnya

The implementation of the deal [between the president and the opposition] in effect buries the new authorities' plans for a radical shake-up of Ukrainian politics and the economy. So, is the revolution over? That was the mood yesterday among Yushchenko's firm supporters.

Leonid Shvets in pro-Tymoshenko Gazeta Po-Kiyevski

One feels sorry for Mr Yekhanurov. It was his big day, he became Ukraine's 14th prime minister. But he wasn't the hero of the day. There were no heroes... The epoch of heroes is over. Viktor Yushchenko, who became a revolutionary against his nature, has returned to his psychological comfort zone.

Stability is on the agenda. He promises not to touch the opposition, or at least those who share the values of [former President Leonid] Kuchma. There's an amnesty for those who rigged the election. Reprivatisation? Forget it. The president forgives everyone.

Ksenia Vasylenko in Independent Den

The outcome of the parliamentary vote, which exceeded all expectations, was made possible by the [pro-Yanukovych] Regions of Ukraine faction. Some may see this as a sensation, but in Ukrainian politics it is something of a rule that yesterday's "enemies" become "friends" today. Two Viktors, two former presidential candidates, first held a heated discussion and then peacefully signed an agreement on friendship and co-operation.

Vadym Karasyov in Ukrayina Moloda

The appointment of Yekhanurov ends much of the tension... But two destabilising factors remain. First, the campaign for parliamentary elections [in early 2006]. Second, the weakness of the presidential team. The latest events have demonstrated that weakness.

To reach an agreement means to make concessions. And these agreements were reached not from a position of strength, but from weakness and indeterminacy. The radical opposition will play on this.

Source: BBC News

Ukraine Parliament Approves New Premier After Rivals' Deal

MOSCOW, Russia -- President Viktor A. Yushchenko of Ukraine won parliamentary approval of a new prime minister on Thursday on a second vote after striking a deal with his bitter rival in last year's disputed presidential elections.

Yuri Yekhanurov (R) speaks as President Viktor Yushchenko looks on, after Ukraine's parliament backed him

With his political coalition having splintered and his presidency teetering, Mr. Yushchenko turned to Viktor F. Yanukovich, the former prime minister whose party has been fiercely critical of the new government, to help salvage the nomination of Yury I. Yekhanurov, which Parliament had narrowly rejected two days ago.

"We must bury the hatchet," Mr. Yushchenko told deputies before they voted again on the nomination of Mr. Yekhanurov, as transcribed by the British Broadcasting Corporation. "We need to bury it deep and forget about it."

The vote - with 289 deputies in favor, compared with only 223 on Tuesday - ended the immediate crisis that began nearly three weeks ago with public accusations of corruption against some of Mr. Yushchenko's closest advisers.

It came at a cost politically, though, and further roiled Ukraine's political landscape six months before new parliamentary elections.

The unlikely alliance with Mr. Yanukovich - who felt cheated out of victory in last year's elections after street protests overturned a fraudulent vote and swept Mr. Yushchenko to power - isolated Yulia V. Tymoshenko, who was one of the leaders of the Orange Revolution.

Mr. Yushchenko dismissed her as prime minister two weeks ago after a turbulent seven months that disrupted the country's economy. She remains a popular leader, however, and her supporters reacted angrily.

Mykola V. Tomenko, who resigned as Ms. Tymoshenko's deputy prime minister and accused Mr. Yushchenko of tolerating corruption, said he had betrayed the Orange Revolution by allying himself with a stalwart of Leonid D. Kuchma's presidency.

"The current authorities have closed the historical period linked to the demands of and values of Maidan," he told Interfax, referring to Kiev's Independence Square, where last year's protests were concentrated. "A new period is beginning, which historians have yet to name but will definitely not be linked to the Orange Revolution."

In exchange for backing the new prime minister, Mr. Yanukovich extracted a written list of concessions from Mr. Yushchenko. They included promises to end criminal investigations that Mr. Yanukovich's supporters have denounced as political retribution and to provide his party with access to the news media before the elections in March.

Mr. Yushchenko also agreed to diminish significantly the National Security and Defense Council, a new agency that has been criticized as an unconstitutional expansion of the executive branch and has been at the center of corruption accusations. When Mr. Yushchenko announced those changes, Parliament erupted in applause. All 50 members of Mr. Yanukovich's party, Regions of Ukraine, then reversed their votes, having abstained Tuesday, as did 16 others who did not vote the first time.

Taras V. Choronovol, a deputy from Mr. Yanukovich's party, said in a telephone interview that the agreement would weaken a presidency that had grown unaccountable and susceptible to corruption. "Until yesterday, he and his administration were duplicating the old regime, grabbing and accumulating new powers and authority, powerful new functions that, among other things, resulted in pressure on judges," he said.

Mr. Yekhanurov, a liberal economist and regional governor widely seen as a moderate, announced that he would form a new government of ministers next week.

Source: The New York Times

Prez Cuts Key Positions, Curbs Security Council Powers to Please Rada

KIEV, Ukraine -- President Viktor Yushchenko abolished several key positions at his office and lowered powers of the National Security and Defense Council Thursday amid attempts to reshape the way decisions are made in Ukraine.

The changes were part of a compromise with other political groups that had allowed an approval of Yuriy Yekhanurov, his long time ally, as the country's new prime ministers.

The changes replace a system of decision making that had been introduced by Yushchenko shortly after his inauguration to the presidency late January and that had been balancing out rival groups of power.

The system anticipated three important decision making positions, such as the prime minister, the secretary of state and the secretary of the National Security and Defense Council.

The idea was to give each of these positions significant powers so enable them compete against each other and provide competitive development to select strategically correct decisions.

However, it proved to be a disaster that had led to political crisis earlier this month when the secretary of state, Oleksandr Zinchenko, resigned and accused the secretary of NSDC, Petro Poroshenko, of corruption. Zinchenko's position was later supported by the prime minister, Yulia Tymoshenko, while Poroshenko had responded accusing both of politically motivated attack.

As a result, Yushchenko sacked all on Sept. 8, arguing the team had failed to come up with an appropriate decision making that had stalled the process and led to the crisis.

Under the new plan, the post of the secretary of state will be eliminated with some of its duties to be transferred to the newly created post of the head of the presidential secretariat, the position that will be taken by Oleh Rybachuk, Yushchenko's close aide.

The secretary of NSDC will have its powers reduced, such as supervision of the process of clearing and appointment of judges and law enforcement officials. These duties will transfer to the presidential secretariat and would remove a conflict that had been so far brewing between the NSDC and the Cabinet of Ministers.

"I made the conclusion that the president begins to act as the leader, as the president," Leonid Kravchuk, a leader of SDPU(O), an opposition group in Parliament, said. "Previously there was more attention given to office bureaucracy that had not always generated transparent policy. But the president can generate such policy."

Yushchenko also abolished the post of the president top aide. The post has been so far occupied by Oleksandr Tretiakov. Tretiakov was suspended on Sept. 8 after the corruption allegations from Zinchenko, but a subsequent investigation had found nothing on him.

Source: Ukrainian Journal

Berezovsky Welcomes Ukraine Inquiry

RIGA, Latvia -- Boris Berezovsky has said he will cooperate fully with a Ukrainian parliamentary investigation into allegations he funded the political campaign of President Viktor Yushchenko, and accused outside forces, including the Kremlin, of being behind a plan to bring down Yushchenko's government.

Berezovsky, in Latvia on a two-day business trip, on Wednesday repeated statements that he had spoken by telephone to Yushchenko and met his Orange Revolution allies.

Berezovsky was in Riga with Neil Bush, U.S. President George W. Bush's brother, to promote an educational software company.

Berezovsky said the funding allegations were part of a plan by Yushchenko's opponents to bring him down.

"I think this is very simple," Berezovsky said after his arrival in Latvia. "There are groups inside the country and outside, in the Kremlin, who are very disappointed in the outcome of the election and they're trying to destroy the team that won the election."

He did not elaborate on his claims, and again refused to say whether he had directly funded Yushchenko's campaign.

Interfax on Wednesday quoted "sources in law enforcement agencies" as saying Russia had officially asked Latvia to detain and extradite Berezovsky, who is wanted in Moscow on fraud charges.

The Ukrainian parliament on Tuesday set up a commission to investigate the allegations that Berezovsky financed the campaign.

"In general, I think the investigation is good because they are trying to build an open society," Berezovsky said. "They should make a choice between an open society and a corrupt society. I am open to give them all the documents they ask from me."

Berezovsky's statements have generated a political storm in Kiev, though the furor has been overshadowed by Yushchenko's efforts to install Yuriy Yekhanurov as prime minister. Yushchenko fired Yekhanurov's predecessor, Yulia Tymoshenko, earlier this month after months of government infighting and allegations of corruption.

Former President Leonid Kravchuk accused Berezovsky of having funded Yushchenko's campaign days after the president fired Tymoshenko. Kravchuk said he believed Berezovsky had donated at least $15 million.

Yushchenko and his allies denied receiving funds from Berezovsky or any foreign source.

Berezovsky is a shareholder of Ignite, an educational software company founded by Bush in 1999 that is looking at opportunities in the Central and Eastern European markets.

Berezovsky said planned to meet with university professors as well as Latvian officials, including the parliamentary speaker and interior minister, RIA-Novosti reported.

Source: Moscow Times

Time for Justice Says IFJ as Ukraine Parliament Report Fuels Accusations over Gongadze Killing

KIEV, Ukraine -- After five years of prevarication and political hand-wringing the time has come for justice in the case of Georgy Gongadze says the International Federation of Journalists after a Parliamentary Commission in Kiev investigating the kidnapping and beheading of the journalist five years ago accused the parliament's speaker of being behind the assassination.

The speaker, Volodymyr Lytvyn, had "instigated the abduction" of Gongadze, says the commission, whose report has been sent on to the general prosecutor’s office.

Gongadze, an internet journalist who wrote about high-level corruption, was kidnapped and killed in 2000. “It’s time for justice in this case and an end to the political game-playing,” said Aidan White, IFJ General Secretary. “Ukraine must act upon this report, ensure that all the evidence is fully tested and make sure that those responsible are brought to trial.”

However, the IFJ fears that the parliamentary decision to wind up the commission and the lack of response from the prosecutor’s office may prompt a new round of delays. “Many people are rightly worried that the public outrage over this case which helped lead to the ‘Orange Revolution’ last year, may be ignored in order to save the skin of people in high places,” said White. “It’s vital that there are no further delays.”

Public concern over the case was one of the issues which brought the President Viktor Yushchenko to office.

The parliamentary commission's report is based upon tapes in which voices resembling those of Lytvyn, former president Leonid Kuchma and other officials are heard allegedly conspiring against Gongadze. But Kuchma has repeatedly questioned the authenticity of the tapes, secretly recorded by his former bodyguard. Lytvyn has dismissed the report as "a provocation aimed at diverting attention from the real culprits" for Gongadze's death and has resisted calls for his resignation.

Nevertheless, the parliamentary report says that the "authenticity of tapes has been verified.”

A month after Yushchenko's inauguration in January this year, prosecutors indicted three former policemen over Gongadze's death. A fourth suspect is at large and being sought on an international warrant.

“There is no excuse for further delay,” said White. “We need answers as to why the powerful people behind this plot have not been held to account. Those in custody today are willing pawns; the people who gave the orders and set the process in motion must be found and brought to justice, no matter how powerful they think they are.”

Source: Peace Journalism

Thursday, September 22, 2005

Yushchenko's Pick for Prime Minister OK'd

KIEV, Ukraine -- President Viktor Yushchenko won parliamentary approval Thursday to name his choice for prime minister on the second try, securing crucial support from the man he defeated in last year's bitter presidential race.

President Viktor Yushchenko (C), Prime Minister Yuriy Yekhanurov (R), and Parliament Speaker, Volodymyr Lytvyn (L), answer questions from the media in parliament

Lawmakers gave Yuriy Yekhanurov 289 votes, well above the 226 he needed to become premier.

The extra backing came from losing presidential candidate Viktor Yanukovych's Party of the Regions, help that Yushchenko needed to offset the defection of some of his Orange Revolution allies after the ouster of former Prime Minister Yulia Tymoshenko.

The parliamentary hall erupted into applause, and Yushchenko, who had come to the session to make one final plea, stood up and warmly hugged Yekhanurov.

Yushchenko dismissed Tymoshenko on Sept. 8., but he failed on Tuesday to win approval for Yekhanurov. Tymoshenko had pleaded to return as prime minister, but Yushchenko stuck by Yekhanurov, an economist and moderate.

The new vote came after a series of consultations between Yushchenko and parliamentary faction leaders. Yanukovych's Party of the Regions gave Yekhanurov 50 votes, enough to push him over the required limit. In Tuesday's vote, Yanukovych's party abstained.

Yushchenko resubmitted Yekhanurov's candidacy late Wednesday after four-hour consultations with the party leaders, and he met again Thursday morning with Yanukovych.

The president had appealed to Ukraine's diverse political forces to unite behind Yekhanurov, asking them to avoid any moves that would destabilize the country.

Yushchenko sacked Tymoshenko's government after members of the Orange Revolution team began bickering over corruption accusations.

While Yushchenko has championed the dismissals as a fresh start, the near daily accusations between the former allies and the president's inability to get a new Cabinet approved have given the appearance of grounding government work to a halt in this nation of 48 million.

Yushchenko failed to convince Tymoshenko's 40-lawmaker bloc or the 56-member Communists to support Yekhanurov, and he didn't win significant results from two smaller parties.

But Yushchenko's turn to his former foe proved decisive. Before the vote, Yushchenko promised to liquidate the post of state secretary and the first presidential aide two jobs that critics said were used to block access to Yushchenko.

The Russian-born Yekhanurov is widely seen as a moderate candidate. But with parliamentary elections that could redraw Ukraine's political landscape just six months away, some lawmakers have complained his would be an ineffective, transitional government.

When Tymoshenko was approved as prime minister after the opposition's triumph in last year's presidential race, she won a record-breaking 373 votes. For many Ukrainians, Tymoshenko symbolized their revolution, being a charismatic orator with charm and trademark hairstyle that expressed her nationalist pride.

Source: AP

Ukrainian Speaker is Accused Over Beheading

KIEV, Ukraine -- A Ukrainian commission investigating the kidnapping and beheading of a journalist five years ago has accused the parliament's speaker of being behind the killing.

Accused Speaker Volodymyr Lytvyn

The speaker, Volodymyr Lytvyn, had "instigated the abduction" of Heorhiy Gongadze, said the commission, headed by Hrihoriy Omelchenko.

Mr Gongadze, an internet journalist who wrote about high-level corruption, was kidnapped and killed in 2000.

The public outrage helped lead to the "Orange Revolution", which brought the pro-western president Viktor Yushchenko to office.

The commission's findings stemmed from recordings in which voices resembling those of Mr Lytvyn, former president Leonid Kuchma and other officials are heard allegedly conspiring against Mr Gongadze, according to a report about the commission's investigation.

Mr Kuchma has repeatedly questioned the authenticity of the tapes, secretly recorded by his former bodyguard.

In the report, Mr Omelchenko's commission said that the "authenticity of tapes has been verified" and that all findings had been forwarded to prosecutors and the state security service.

In an address to parliament, Mr Omelchenko also demanded Mr Lytvyn's resignation and a no-confidence vote for the Ukrainian prosecutor-general, Svyatoslav Piskun, who, according to the report, failed "to act in accordance with the commission's findings".

Mr Lytvyn dismissed the report as "a provocation aimed at diverting attention from the real culprits" for Mr Gongadze's death.

The reporter's death triggered months of opposition protests against Mr Kuchma's regime, which ultimately led to last year's Orange Revolution.

The opposition accused Mr Kuchma and his allies of masterminding Mr Gongadze's death, something he has repeatedly denied. A month after Mr Yushchenko's inauguration in January, prosecutors indicted three former policemen over Mr Gongadze's death. A fourth suspect is at large and being sought on an international warrant.

Meanwhile, the former prime minister Yulia Tymoshenko said yesterday she was ready to offer Mr Yushchenko an alliance aimed at creating a new coalition government.

Mr Yushchenko sacked Ms Tymoshenko and her government earlier this month, but on Tuesday parliament refused to support Mr Yushchenko's appointment of Yuriy Yekhanurov as prime minister.

"In my heart, there are no bad emotions about the president," Ms Tymoshenko said.

Mr Yushchenko still hopes to win support for Mr Yekhanurov, but a spokeswoman said: "The president wants to underline that emotions should not be an issue - for the benefit of Ukraine."

Source: Scotsman News

Wednesday, September 21, 2005

Tymoshenko Offers President Alliance, Coalition Government

KIEV, Ukraine -- Former Prime Minister Yulia Tymoshenko said Sept. 21 she was ready to offer President Viktor Yushchenko an alliance aimed at creating a new coalition government.

Sacked Ukrainian Prime Minister Yulia Tymoshenko speaks during her news conference in Kiev

"I am ready to sit down with him (Yushchenko) today ... and suggest we unite forces and create a new government," Tymoshenko told reporters.

Yushchenko sacked Tymoshenko and her government earlier this month and on Sept. 20 deputies including Tymoshenko loyalists refused to support Yushchenko's appointment of Yuriy Yekhanurov as prime minister.

"In my heart, there are no bad emotions about the president," she said.

Yushchenko planned a new round of talks with party leaders on Sept. 21 to try to win support for resubmitting Yekhanurov's candidacy.

"The president wants to ... underline that emotions should not be an issue - for the benefit of Ukraine," said Irina Herashchenko, Yushchenko's spokeswoman.

Tymoshenko also complained of political persecution after the Prosecutor General's office on Sept. 21 appealed earlier court rulings that had annulled the 6.6 billion hryvna ($1.3 billion, 1 billion euros) debt of the now-defunct United Energy Systems.

Tymoshenko headed the one-time key gas supplier in Ukraine before becoming deputy prime minister in 1999.

Authorities loyal to former President Leonid Kuchma jailed Tymoshenko after her 2000 ouster on embezzlement charges stemming from her running of UES.

"Kuchma's old accusations against me and against my family have been restored," she said.

Earlier this month, Yushchenko also accused Tymoshenko of trying to use her post to wipe out debts owed by UES.

"It's only emotions, and we need to stop them," she said. "None of the president's accusations are real."

Source: AP

Ukraine Speaker Accused in Reporter Death

KIEV, Ukraine -- A commission investigating the kidnapping and killing of a journalist five years ago has accused parliament's speaker of instigating the slaying, a Web site with the panel's findings said Wednesday.

Speaker Volodymyr Lytvyn (L) with former President Leonid Kuchma (R)

Heorhiy Gongadze, an Internet journalist who wrote about high-level corruption, was kidnapped and killed in 2000. His decapitated body was found in a forest outside Kiev.

Speaker Volodymyr Lytvyn had "instigated the abduction," said the legislative commission. Its findings stemmed from recordings in which voices resembling those of Lytvyn, former President Leonid Kuchma and other officials are heard allegedly conspiring against Gongadze, according to a report posted on a parliamentary Web site Wednesday.

The parliamentary commission also accused Kuchma and 16 of his allies and police officials, including former Interior Minister Yury Kravchenko of masterminding Gongadze's abduction and death. Kravchenko, a key witness and reportedly the one given the order to deal with the journalist, committed suicide in March, hours before he was to be questioned about Gongadze's slaying.

Kuchma has repeatedly questioned the authenticity of the tapes, secretly recorded by his former bodyguard.

In an address to parliament Tuesday, the head of the commission Hrihoriy Omelchenko demanded Lytvyn's resignation and a no-confidence vote for Prosecutor General Svyatoslav Piskun.

Lytvyn, Kuchma's former chief of staff, dismissed the commission's report as "a provocation aimed at diverting attention from the real culprits" for Gongadze's death.

In the past, Lytvyn has dismissed the allegations, saying: "I wasn't brought up that way."

The reporter's death sparked months of opposition protests that ultimately led to last year's Orange Revolution, which brought pro-Western politician Viktor Yushchenko to office.

The opposition accused Kuchma and his allies of masterminding Gongadze's death, an accusation he has denied.

A month after Yushchenko's inauguration in January, prosecutors indicted three former policemen for Gongadze's death. A fourth suspect is at large and being sought on an international warrant.

Gongadze got into what he thought was a taxi, and then was joined by three others and driven outside Kiev, according to evidence given by the suspects.

The 31-year-old journalist was beaten and strangled, and his body was doused with gasoline and burned.

Source: AP

URGENT: Tymoshenko Ready to Help Yushchenko Form New Government

KIEV, Ukraine -- Former Ukrainian Prime Minister Yuliya Tymoshenko offered Wednesday to form a new government together with President Viktor Yushchenko.

Former PM Yulia Tymoshenko said on Wednesday she was ready to offer President Viktor Yushchenko an alliance aimed at creating a new coalition government

She said she was ready to extend a helping hand to the Ukrainian president "during this hard time for the country."

The former prime minister also said she was ready to let bygones be bygones and "return to how it was a year ago."

Source: RIA Novosti

Prosecutor General Pyskun Clears Yushchenko Allies Martinenko and Tretyakov of Any Wrongdoing

KIEV, Ukraine -- Ukraine's leading prosecutor on Sept. 20 announced that investigators have opened five criminal cases against officials from the country's top security body.

Prosecutor General Svyatoslav Piskun

"The criminal cases are open, the investigation continues," said Prosecutor General Svyatoslav Piskun.

The announcement followed a 10-day investigation into corruption allegations against some of President Viktor Yushchenko's most senior aides.

Yushchenko ordered the commission to be created after his former chief-of-staff, Oleksandr Zinchenko, resigned two weeks ago and accused former Security Council chief Petro Poroshenko and other top aides of corruption.

Piskun did not specify whether investigators had opened proceedings against Poroshenko himself. But he noted that Yushchenko's two other key aides, Oleksandr Tretyakov and Mykola Martinenko, who had also been accused of corruption, "were not implicated in any wrongdoing."

"They are clean before the law," he said.

The allegations triggered the breakup of the Orange Revolution coalition. Poroshenko was questioned by prosecutors and gave evidence on Sept. 19, his spokeswoman Irina Friz told The Associated Press the next day.

She had said no charges were filed against him, denying reports in the Ukrainian media that he had been charged with impeding the work of the judicial system.

Poroshenko resigned his job on Sept. 8, saying he did not want to be accused of influencing the investigation. On the same day, Yushchenko sacked the government of his other Orange Revolution ally, former Prime Minister Yulia Tymoshenko.

Piskun said that Tymoshenko was "not the subject of an investigation."

Tymoshenko and Poroshenko had long sparred over government policy, and after being dismissed, Tymoshenko also leveled corruption allegations against Poroshenko. Yushchenko, meanwhile, said that he believed the allegations against his close friend, Poroshenko - one of the main financial backers of the Orange Revolution - were groundless. The president, meanwhile, accused Tymoshenko of abuse of office.

The commission was made up of senior investigators from the Interior Ministry, prosecutors and officials from the Security Service. Poroshenko complained, however, that it was headed by an official who had once acted as lawyer for United Energy Systems, the now-defunct energy monopoly headed by Tymoshenko in the 1990s, Ukrainian media reported.

Source: AP

Tuesday, September 20, 2005

PM of Ukraine’s Crimean Autonomy Hands in Resignation

CRIMEA, Ukraine -- The chairman of the cabinet of the Ukrainian autonomous republic of Crimea, Anatoly Matvienko, handed in his resignation on Tuesday.

Anatoly Matvienko

In his statement quoted by Interfax news agency, Matvienko said the reason of his resignation was that his party Sobor had not voted for President Viktor Yushchenko’s candidate for Ukrainian PM, Yuri Yekhanurov. Yekhanurov, a middle-of-the-road technocrat, won 223 votes in parliament on Tuesday, three short of the required majority in the 450-seat assembly.

Sobor belongs to the bloc led by the ousted prime minister Yulia Tymoshenko.

On Monday Matvienko said a “corruption coup” was planned in Crimea in order to change the main principles of rule in the autonomy. He addressed Yushchenko asking him to react to the situation in the Crimea urgently and promised to name those involved in the coup plot.

The Crimea became part of Ukraine as a Soviet republic in 1954. There is still a Russian majority on the Black Sea peninsula. The region is also home to a Russian Black Sea Fleet base. According to the Russian-Ukrainian agreement on the base in Sevastopol, Russian naval forces cannot be withdrawn before 2017. The Russian Defense Ministry plans to prolong the terms of the fleet’s stay in Sevastopol.

At least eight Russian naval subdivisions are currently based in the Crimea.

Source: MosNews

Ukraine Parliament Rejects President's PM Candidate

KIEV, Ukraine -- Ukraine's parliament on Tuesday rejected President Viktor Yushchenko's candidate to replace his former ally in "Orange Revolution" protests as prime minister, plunging his administration into further disorder.

President Yushchenko speaks in Parliament today

Yuri Yekhanurov, a middle-of-the-road technocrat and longstanding ally of the president, won 223 votes, three short of the required majority in the 450-seat assembly.

Yushchenko had proposed Yekhanurov to replace the fiery Yulia Tymoshenko, who had stood alongside him last year in the mass protests against electoral fraud that eventually catapulted him to the presidency. He sacked Tymoshenko in early September to end months of infighting within the government.

It was not certain what step Yushchenko might take after the setback. He could propose Yekhanurov a second time and hope to win more votes through negotiation, keep him on as acting prime minister or opt for a new candidate.

Yekhanurov, formerly a governor in central Ukraine, fell short after four key groups abstained in the vote -- including Tymoshenko's allies, the Communists and two parties which fought against the president in last year's election campaign.

Yushchenko had urged members to "abandon intrigues and battles" and approve Yekhanurov. He also denounced a "cynical plot to destroy" his eight-month old liberal administration.

Yekhanurov, widely seen as a pre-election stopgap, had promised deputies he would ensure stability after a spate of poor economic results.

The scandal has battered the president's image seven months ahead of key parliamentary elections.

A cynical plan has been launched in Ukraine to destroy this administration," Yushchenko said as debate got under way.

"Some of those involved were in the square and some wanted to disperse those there," he said, referring to the protests.

"INEPT" POLICY

Yushchenko said he had long backed Tymoshenko's government despite "inept" policy which led to economic slowdown and confusion over privatisation, particularly an unsuccessful attempt this month to restore state control over a metals plant.

"If we want to stabilise matters quickly and fully in Ukraine we need to approve my candidate, Yekhanurov. We need a depoliticised government," he said.

"I am certain that only a government of pragmatists can work effectively for seven months," he added, referring to the election next March.

The president had engaged in feverish negotiations to secure the necessary votes. On Monday, he met for the first time since taking office Viktor Yanukovich, his defeated rival in the re-run of last year's rigged presidential campaign.

Yekhanurov, born in Russia's far northern Yakutia region, said he would shed at least two-thirds of outgoing ministers. There would be no room for those deeply involved in business.

"The main task of the new government will be to stabilise the economy and create conditions for sustainable development," he told the chamber.

The ousted prime minister won a huge majority when she was presented to parliament as the president's candidate in February and says she was sacked as a result of intrigue.

Tymoshenko has vowed to get her job back by winning next March's election to an assembly with expanded powers. She has urged Yushchenko to "admit his mistake" and form a new alliance.

Under Tymoshenko's stewardship, growth has slowed to its lowest rate in five years, with forecasts for 2005 now standing at 4 percent compared with 6.5 percent and more previously.

Source: Reuters

Ex-Ukraine Leader's Embrace Sparks Rumors

KIEV, Ukraine -- Ever since acting Prime Minister Yuriy Yekhanurov was captured in a friendly embrace with former President Leonid Kuchma, Ukraine's political circle has been abuzz trying to decipher what "that kiss" means.

Yuriy Yekhanurov (L) and Leonid Kuchma (R)

The hug and kiss on the cheek - a traditional Ukrainian greeting - sparked rumors that this month's breakup of the Orange Revolution coalition had opened the door for the return of Kuchma, whose decade in office was darkened by corruption, a clampdown on the media and a series of suspicious deaths of politicians and journalists.

President Viktor Yushchenko's team has ruled out Kuchma's return or cooperation with him and insist there was no hidden meaning in Yekhanurov's greeting.

"Yushchenko will never work with Leonid Kuchma, just as I will never work with him," Yushchenko's new chief-of-staff, Oleh Rybachuk, told Ukraine's Channel 5 television.

Kuchma has largely remained out of public view since Yushchenko's inauguration in January. But after the Sept. 8 dismissal of Prime Minister Yulia Tymoshenko's government, Kuchma praised the president's decision.

Then the embrace with Yekhanurov, two days later during civic celebrations in the eastern city of Dnipropetrovsk, fueled this ex-Soviet republic's already lively rumor mill. Yekhanurov is governor of the region, and the city is Kuchma's hometown.

"Look at their kissing lips," Tymoshenko, the firebrand heroine of the Orange Revolution that brought Yushchenko to power, told The Associated Press.

She accused Yekhanurov of being Kuchma's man.

Yekhanurov served as deputy prime minister under Kuchma in 1993-94, and returned as economics minister in 1997. However, he has also long been a supporter of Yushchenko, and was deputy head of Yushchenko's presidential campaign last year.

"It is nonsense," Yushchenko said about allegations that the old links between Kuchma and Yekhanurov would influence his government's policies.

Yushchenko also served under Kuchma as head of the national bank and prime minister before he was fired.

"Excuse me, I worked during Kuchma's time ... (but) I haven't betrayed my philosophy or my values," Yushchenko told The Associated Press. "It doesn't give anybody the right to take an eraser and erase any name. ... Don't think like this."

Parliament Speaker Volodymyr Lytvyn echoed that, noting that "today in power, all more or less important positions are occupied by people with past links to Kuchma." Lytvyn served as Kuchma's former chief-of-staff, and even Tymoshenko was a deputy prime minister under Kuchma.

Kuchma remains deeply unpopular in Ukraine. During last year's Orange Revolution, chants of "Kuchma Out!" and "Kuchma to Jail!" echoed through the streets.

Ukraine's Den newspaper splashed a photograph of the embrace on its front page this week under the headline "Meaningful Kiss?"

"Pessimists saw in such an appearance a symbolic sign: the 'kiss' of old power and new," the paper reported.

Yekhanurov, who hasn't given a press conference since coming to power, has not commented on the furor. Kuchma also could not be reached for comment.

But he reportedly tried to quash rumors that he would be making a comeback.

"I've had my fill," Den quoted him as saying. "Many people are also tired of me. Let others work, and I'll observe from the sidelines."

Kuchma's son-in-law, Viktor Pinchuk, insisted there is still a role for his father-in-law to play, but indirectly - not as a legislator or government official.

"Like any ex-president, he has huge experience, huge knowledge, many connections," Pinchuk said, noting that former presidents Bush and Clinton have helped with fund-raising efforts for the Asian tsunami. "He could bring huge benefits to Ukraine."

Source: AP

Sacked Ukraine Prime Minister Alleges Sex Bias

KIEV, Ukraine -- Ukraine’s sacked premier Yulia Tymoshenko said yesterday that President Viktor Yushchenko fired her because he couldn’t handle political competition from a woman and that he was aware of corruption allegations against his entourage long before they became public.

Fired Premier Yulia Tymoshenko during interview with AFP

“Let’s be honest, men have a hard time competing with women on a professional level,” she told AFP.

“For a little while, this political jealousy took second place to his need for my help,” she said. “And when it appeared at first glance that this help was no longer needed, the political competition won.”

Tymoshenko said that Yushchenko dismissed her government on September 8 because the ratings of the charismatic premier exceeded his own, and in order to divert attention from allegations of corruption among his entourage.

“According to all polls, my popularity in the country is higher than the president’s,” she said. “This is simply an ‘unreadiness’ to compete fairly.”

According to one poll released a month before the government dismissal, some 41.5% of Ukrainians trusted Tymoshenko, compared with 35.8% who trusted the president.

Tymoshenko, who roused crowds during last year’s “orange revolution”, has accused the president’s team of trying to discredit her during her time in office and after her dismissal but the 44-year-old, known for her iron will, warned that she would not go down easily.

“The president’s entourage is conducting an all-out war against me,” she said.

“I would like Viktor Yushchenko and his team to remember that during eight years (former president Leonid) Kuchma with all his big guns ... could not destroy me or my political party,” she said. “And I would like for Viktor Yushchenko’s team not to choose the same course.”

During the former regime, Tymoshenko was jailed for more than a month after being charged with embezzlement and other charges as part of a lengthy criminal case, which lasted for years and was closed after Yushchenko’s inauguration.

Following her dismissal Tymoshenko announced that she was breaking with her “orange revolution” partner and since then the two camps have lobbed almost daily salvoes, accusing each other of everything from lacking professionalism to graft.

Yesterday Tymoshenko said that Yushchenko was aware of allegations that some of his closest associates were using their government posts to enrich themselves long before his former chief of staff, Olexander Zinchenko, came out in public with the accusations.

“I can say that the president knew all the nuances and absolutely knew the full picture of what was going on,” she said in her interview with AFP. Why the president did not react to the allegations “remains a question mark for me."

Source: AFP

Monday, September 19, 2005

Potential for Ukraine

KIEV, Ukraine -- Fund managers seldom react positively when political infighting gets in the way of market reform. But the dismissal of Yulia Tymoshenko as Ukraine's prime minister and the collapse of the government coalition has received an uncharacteristic thumbs up.


Canned PM Yulia Tymoshenko (R) next to a Yushchenko poster

"Tymoshenko was widely seen as a populist with one agenda, which was to collect votes, rather than work for the long-term benefit of the country," said Aivaras Abromavicius, manager of a Ukraine equity fund for East Capital in Sweden. By removing her from office this month, President Viktor Yushchenko "has strengthened his hand before parliamentary elections in March and paved the way for speedier reforms," Abromavicius said.

Matthias Siller, manager of an emerging markets fund for Raiffeisen Capital Management in Vienna, said he also viewed the removal of Tymoshenko in a positive light.

"We could see a significant pickup in foreign direct investment as investor confidence recovers," he said.

At the heart of the discord between Yushchenko and Tymoshenko was her call for a wide-scale review of recent privatizations. During the presidency of Leonid Kuchma, whom Yushchenko succeeded in January, dozens of enterprises were suspected of being privatized under dubious circumstances. Yushchenko appeared more willing to forgive and forget for the sake of stability, Abromavicius said. Katia Malofeeva, an analyst at Renaissance Capital in Moscow, suggested that the second privatization of the country's largest steel producer, scheduled for Oct. 24, could also help lift investor morale.

"It is not often a steel company of this magnitude comes to market," Malofeeva said. "Although the investment preconditions are tough, there has been significant interest from Russian and East European investors."

Despite the recent political uncertainty, Ukraine's fledgling stock market has moved up over the summer. But if the experience of Russia and Latvia is anything to go by, an investment in Ukraine is not going to be smooth.

Once voted one of the least corrupt countries in the world, Ukraine was ranked among the 20 most corrupt nations in the latest survey by Transparency International. Low levels of financial transparency and corporate accountability have hindered foreign direct investment, and doubts have been raised about the government's economic growth forecasts.

The International Monetary Fund reported last month that Ukraine's government was unlikely to reach its target of 8 percent growth in gross domestic product in 2006 because of decreasing industrial output and accelerating inflation. A more likely figure is 5 percent, the IMF said.

Malofeeva pointed to Ukraine's social welfare system as an additional cause for concern. The country has a population of 50 million, of which 14 million are retirees. A further four million are dependent on state benefits.

"Whoever wins the parliamentary elections will have to address this issue," Malofeeva said. "We have cautioned investors not to expect a capitalist economy to develop overnight, let alone within the next year or two."

Tim Ash, managing director of emerging markets for Bear Stearns in London, said Ukraine's troubled relationship with Russia, a key export market, would have to be improved if the country was to move forward.

"The Russian government never wanted Yushchenko in power, and it has gone out of its way to create difficulties for the regime, including renegotiating energy prices and instigating a trade war over fuels," Ash said. "Bridges have to be mended. The question is whether or not Russia is prepared to listen."

But despite caveats, the long-term investment case for Ukraine is hard to ignore.

"Ukraine is starting from a very low base," Abromavicius said. "Disposable income is increasing, and the country is on the cusp of a consumer boom. Any company involved in real estate, cement and construction looks attractive."

The Ukraine stock market has a tiny free float of around 7 percent, and liquidity is poor. The market is also dominated by energy and metals companies, which no longer look cheap after their strong run over the summer months.

An alternative way to play the market is through a Ukraine proxy like MTS, the Russian mobile telecommunications company that owns UMC, Ukraine's largest mobile operator.

Raiffeisen International, part of Raiffeisen Banking Group, is another company with significant exposure to Ukraine. In August, the bank, based in Austria, acquired Bank Aval, making Raiffeisen the No. 1 bank in Ukraine.

The growth potential for retail banking in Ukraine is compelling when comparing GDP with the volume of lending to private customers. In the euro zone, this ratio averages about 50 percent; in Ukraine, it is 4.5 percent.

Source: International Herald Tribune

Did Berezovsky Finance Ukraine's Orange Revolution?

KIEV, Ukraine -- The legitimacy of Viktor Yushchenko's victory in the Ukrainian presidential election last December has been called into question by reports suggesting that Russian maverick tycoon Boris Berezovsky, who lives in self-imposed exile in London, financed Yushchenko's election campaign.

Viktor Yushchenko (L) and Boris Berezovsky (R)

The allegations have even led to calls for impeachment. Yushchenko, who was on a visit to the United States when the scandal erupted, flatly denied the charges. But his and his team's reputations have been seriously tarnished. This may complicate for them the task of winning the March 2006 parliamentary polls that are expected to bring stiff competition between Yushchenko's Our Ukraine coalition and former Prime Minister Yulia Tymoshenko's bloc.

Yushchenko's allies suspect collusion between Tymoshenko and Berezovsky.

The scandal was triggered by Ukraine's first president Leonid Kravchuk, a leader of the fiercely anti-Yushchenko Social Democratic Party United (SDPUo), who announced on September 14 that Berezovsky had confirmed to him that funds from his companies' accounts were transferred to Yushchenko's entourage last year.

Kravchuk told a press conference that he had called Berezovsky in London after seeing on the Internet-Reporter website copies of documents indicating transfers amounting to $15 million from Berezovsky "to finance the triumph of democracy in Ukraine."

Berezovsky admitted that the transfers took place. Kravchuk called on parliament to impeach Yushchenko if it is confirmed that Berezovsky financed his election.

Yushchenko's close allies denied the charge and hurried to accuse Tymoshenko, who Yushchenko sacked on September 8, of plotting against him. The leader of the Our Ukraine faction in parliament, Mykola Martynenko, warned against "an anti-presidential pool that is being formed" by Tymoshenko, Berezovsky, and SDPUo leader Viktor Medvedchuk.

Emergencies Minister Davyd Zhvaniya, however, claimed that Berezovsky had financed not Yushchenko, but Tymoshenko. Reaction from Yushchenko, because of the time difference, did not reach Ukraine until September 15. "I did not discuss funding my election campaign either with Ukrainian, Russian, or any other businessmen," Yushchenko told journalists in New York.

Berezovsky was immediately available for comment to Ukrainian and foreign news outlets. He confirmed what he had told Kravchuk by phone. Berezovsky's numerous interviews, which he gave over September 14-16, can be summed up as follows:

Yushchenko personally and his trusted men Zhvaniya, Oleksandr Tretyakov (now Yushchenko's first aide), and Roman Bezsmertny (now deputy prime minister) asked Berezovsky for help in 2003-2004.

The transfer of $15 million did take place, period. Berezovsky would not say more until he learns Yushchenko's and his team's reaction.

Berezovsky "supported" the Orange Revolution, but he neither confirms nor denies that his support was financial.

The information about the transfer was leaked to the web by Russian special services.
Zhvaniya told Berezovsky that Tymoshenko would be sidelined after the Orange Revolution.

Tymoshenko's dismissal as prime minister was masterminded by Russia and was bad for Ukraine.

Tymoshenko never asked Berezovsky for help, and he never gave money to her.

Berezovsky has never concealed his support for the Orange Revolution and his lively interest in Ukrainian affairs. But it is not clear what motivates this particular interest. Berezovsky himself has said on several occasions that the Orange Revolution's success in Ukraine would help trigger a regime change in Russia, so by supporting the Orange Revolution he is helping Russia get rid of Vladimir Putin.

But the analytical Ukrainian weekly Zerkalo nedeli has suggested that Berezovsky invested in the Orange Revolution expecting dividends. As nobody rewarded him with stakes in lucrative Ukrainian enterprises in return for his support, Berezovsky organized the leak on the web about the transfer of money to people from Yushchenko's team, but abstained from openly admitting that he financed Yushchenko's victory in a hope that he still might be rewarded, according to Zerkalo nedeli. If this is the case, it amounts to blackmail.

The scandal around financing the Orange Revolution coincided with two serious attacks on Yushchenko's team by Tymoshenko's most faithful allies. On September 14, former member of parliament Mykhaylo Brodsky claimed, in an interview to Inter TV, that Zhvaniya had prepared an attempt on Tymoshenko's life at the final stage of the Orange Revolution in order to prevent her from becoming prime minister.

Brodsky claimed that Berezovsky was aware of this, yet Berezovsky denied it. On September 15, Tymoshenko's right-hand man Oleksandr Turchynov, who resigned as Security Service of Ukraine (SBU) chief after Tymoshenko's dismissal, leveled fresh accusations of corruption against Yushchenko and his team.

He accused Yushchenko's people, including Tretyakov and former National Security and Defense Council Secretary Petro Poroshenko, of pressure on courts, extortion, and lobbying for middlemen in buying natural gas from Turkmenistan. Turchynov also accused Yushchenko of stalling the investigation into his own poisoning a year ago by refusing to undergo tests.

Yushchenko, Tretyakov, and Poroshenko flatly denied the charges, and accused Turchynov of abusing his stint in the SBU in order to further his political goals.

Source: Eurasia Daily Monitor

Ukraine Backs Polish Leader for U.N. Post

UNITED NATIONS, NY -- Ukraine will back Polish President Alexander Kwasniewski to succeed U.N. Secretary-General Kofi Annan next year, the Ukrainian foreign minister said Sunday.

Polish President Alexander Kwasniewski

"Should he agree to be a candidate, Ukraine will undoubtedly support him," Boris Tarasyuk said in an interview with The Associated Press on the sidelines of the annual U.N. General Assembly debate.

Ukraine has led diplomatic resistance by Central and Eastern European nations against strong Asian demands that the next secretary-general come from that region. Kwasniewski has repeatedly been mentioned as a possible candidate.

Earlier this week, Kwasniewski acknowledged having informal discussions about the idea during the U.N. summit. Kwasniewski leaves office in December, while Annan's second and last five-year term ends a year later.

One stumbling block: Russia would be almost certain to oppose such a nomination and has the power to block candidates as a veto-wielding member of the U.N. Security Council.

In the interview, Tarasyuk said he wasn't worried about his own future after Ukrainian President Viktor Yuschenko dismissed the government of his Orange Revolution ally Yulia Tymoshenko last week.

He reaffirmed Ukraine's determination to seek closer ties with both NATO and the European Union, though it may cause uneasiness in Russia.

Tarasyuk said Ukraine's relationship with Russia affected the rest of Europe because of their geographical size and population. But he said that Russia needed to understand the two do not always share the same priorities.

"Russia has to recognize Ukraine's right, like any other nation, to pursue its own foreign policy ends," he said.

"Sadly, we have to be cautious. Sadly, we have to explain to Russia that by joining NATO or the European Union, Ukraine is not going to convert them into institutions hostile to Russia."

Tarasyuk also said that Ukraine wants to keep its peacekeepers in Lebanon despite a U.N. demand last month for their withdrawal over allegations of financial abuse.

He said Ukrainian investigators had found evidence of "illegal acts" by some of its 500-strong battalion, saying those guilty would be punished.

Source: AP

Ukraine's Orange Split

WASHINGTON, DC -- Ukraine's democratic revolution has ended the way most do, with the victorious coalition dividing into factions that are now battling each other. For the most part, this is a healthy development.

Ukraine President Viktor Yushchenko addresses the 2005 World Summit at the United Nations The embattled leader faces another tough week amid uncertainty over whether parliament will approve his new choice of prime minister and an escalating battle of recriminations with sacked premier Yulia Tymoshenko

The Orange Revolution movement that overturned a corrupt and autocratic regime last year was united by the cause of democracy and independence from Russia. Once that was achieved, ideological and policy differences were bound to surface.

In Ukraine's case, President Viktor Yushchenko, a moderate and market-oriented reformer, has finally split with Prime Minister Yulia Tymoshenko, who espouses populist and statist policies. No violence has accompanied their rupture, and a parliamentary election scheduled for March provides a good opportunity for the country to choose between them.

In the short term, the split may well help stabilize Ukraine's economy, which has been turbulent ever since the revolution. After firing Ms. Tymoshenko and her cabinet, Mr. Yushchenko nominated a respected technocrat, Yuri Yekhanurov, as prime minister.

Mr. Yekhanurov, who is likely to win parliamentary approval, probably will put a stop to the disruptive populism that the previous government frequently pursued, including huge increases in spending and attempts to control commodity prices. He will also limit the renationalization of state industries that were privatized by the previous autocratic government; though many of these transactions were corrupt, the government's seizures and plans for resale have raised their own questions.

Like last year's presidential campaign, the parliamentary elections will present Ukrainians with stark and potentially disruptive choices. Mr. Yushchenko is likely to offer continued market reforms and integration of Ukraine with Western institutions but also good relations with Russia; the more charismatic Ms. Tymoshenko will rail against big business and promise more social spending. Russian President Vladimir Putin, who could not contain his glee over the government breakdown, will hope that the pro-Moscow politicians he so aggressively backed last year will somehow seize the advantage. Western governments can hope that Ukraine continues steps toward joining institutions such as the World Trade Organization and cleans up lingering corruption.

But the most vital interest will be ensuring that, whatever the outcome, Ukraine preserves the democracy its people demanded and won.

Source: Washington Post

Sunday, September 18, 2005

Estranged Allies Trade Charges in Ukraine

KIEV, Ukraine -- A feud over a hulking steel plant controlled by one of Ukraine's leading tycoons was the tripwire for the implosion that last week destroyed the coalition that led Ukraine's Orange Revolution last year.

Yushchenko (L) and Tymoshenko (R) during the romantic days of the Orange Revolution

The breakup has become more bitter by the day as the alliance's dominant figures, President Viktor Yushchenko and former prime minister Yulia Tymoshenko, trade accusations about billion-dollar graft concerning the plant.

The unlikely third party in this political divorce is Viktor Pinchuk, who grew wealthy under the corrupt structure that Yushchenko and Tymoshenko, acting together, ostensibly toppled.

Each side professes its innocence and shouts its dismay. But the persistence of massive corruption, whoever is behind it, is now a strikingly public issue, a departure from the refusal of the old government headed by President Leonid Kuchma to discuss the issue openly.

The dispute focuses on the Nikopol Ferroalloy Plant, one of the world's leading suppliers of high-quality mixtures of metals. In 2003, Pinchuk, the billionaire son-in-law of Kuchma, acquired a majority stake in the state-owned facility for $80 million.

Earlier this year, after Kuchma left office, one of Pinchuk's business rivals, the Pryvatbank group, challenged the privatization in court.

According to Yushchenko, Tymoshenko directly pressured the courts on behalf of Pryvatbank to overturn the privatization and return the plant to the state.

His supporters said the Pryvatbank group was also seeking to buy the 1+1 television channel and promised to throw the network's editorial weight behind Tymoshenko in next March's parliamentary elections if she wrested the Nikopol plant from Pinchuk and ensured Pryvatbank got it.

Tymoshenko flatly denies any such intervention.

Source: The Washington Post

Ukraine Faces Renewed Winter of Discontent

KIEV, Ukraine -- The recent political changes at the top in Ukraine are a strong sign that President Viktor Yushchenko will take personal charge of reforms in the run-up to crucial parliamentary elections next March.

Ukrainian President Viktor Yushchenko delivers a speech after being awarded the Liberty Medal in Philadelphia

This will be his biggest test since being swept to power by the Orange Revolution. Pro-Russian politicians from the old regime will see it as a chance for revenge while Russian President Vladimir Putin will be watching the crisis with pleasure.

Yushchenko is now in the firing line after reacting to corruption scandals and growing divisions in his government by dismissing the prime minister, Yulia Tymoshenko, and her government, while accepting the resignation of the defence secretary, Petro Poroshenko.

He appears to have chosen to have a more docile prime minister in the shape of the moderate reformist Yuri Yekhanurov, an old ally who is likely to preside over a technocratic government while politics will be left to the president. Yekhanurov eschews controversy and will be loyal to Yushchenko. This will be in stark contrast to Tymo­shenko’s pugnacious style.

The crisis was sparked by the resignation of the former presidential chief of staff, Alexander Zinchenko. As he quit he levelled corruption allegations at several senior Yushchenko aides, including Poroshenko, who had formed a parallel administration to the prime minister’s and had increasingly come into conflict with Tymoshenko.

Disputes between the presidential administration and the prime minister escalated over the past four months, focused on the direction and pace of economic reform and reprivatisations of companies sold corruptly under the preceding Kuchma administration.

Forced to intervene, the president overruled the prime minister on several occasions – most notably in May when she unilaterally and disastrously set the gas price in response to rising costs from Russia.

The two also disagreed over the number of suspicious privatisations to be investigated. Tymoshenko’s initial figures of more than 4,000 had spread uncertainty among investors, and was downsized by the more pragmatic Yushchenko.

These public divisions, coupled with economic slowdown, growing inflation and inconsistency on policy have tarnished the image of Ukraine’s new leadership. Polls show a sharp decline in the popularity of Yushchenko and Tymoshenko. In April both had personal approval ratings topping 60%; this had fallen to 40% by August.

Relations were not helped by the fact that Tymoshenko had a higher popularity rating than the president, or that her Motherland party was gathering substantial support at the expense of his Our Ukraine party.

Before next year’s election, the president will have to seek to make peace with Tymoshenko. Her political weight and popularity make it unlikely she will remain in the cold for long. Political logic dictates Yushchenko must seek to keep her close, especially as she controls the third-largest block in parliament.

But the president has not proved dextrous. Part of his discord with Tymoshenko stemmed from his desire to push ahead with biting economic reforms before the election. Tymoshenko advocated a cautious approach.

The president appears to have been foolhardy in firing her at this juncture, especially as Poroshenko and his parallel administration was the major source of animus. Poroshenko’s departure alone would have removed much of the disharmony. Disposing of Tymoshenko and her cabinet smacks of capriciousness and panic.

If the two remain at odds, it does not bode well for the reform programme.

Parliament was recalcitrant and fractious enough while passing reforms aimed at World Trade Organisation membership in July. Without Tymoshenko’s support, the legislative process will be even more arduous.

Her stance as a corruption fighter will be an effective weapon should Yushchenko fail to make headway against Ukraine’s pandemic corruption. She may even stand against him for the presidency in four years’ time.

Former Kuchma cronies will be looking to exploit divisions and recapture ground lost during the Orange Revolution. They and their parties are well organised, well funded and motivated. This is precisely the sort of crisis they have been hoping for.

Moscow is likely to make any mischief it can ahead of the March polls. On Yushchenko’s present form, Putin should have ample opportunity. The authoritarian regime in neighbouring Belarus will also be pleased at any weakening of the president’s position.

Poroshenko has denied the accusations of corruption and intends to sue Zinchenko. Nevertheless it is no secret that he favoured Russian oligarchs in privatisations and has overseen deeper Russian penetration of the Ukrainian economy. His actions have tarnished Yush­chenko’s image and will have ramifications in March.

Constitutional reform that will give parliament and the prime minister more power will put Yushchenko under more pressure. These reforms must be in place by March, unless Yuschenko can bury them in constitutional court.

Should the reforms go ahead, Tymoshenko and her allies will exploit the president’s diminished authority. Yushchenko’s impetuous decision ensures that the stakes for the parliamentary election will be high and the fight will be vicious, putting him and his position under increasing strain through the winter.

Source: Global Business News

Ukrainian President Viktor Yushchenko Receives 2005 Liberty Medal

PHILADELPHIA, PA -- Ukrainian President Viktor Yushchenko, awarded the 2005 Philadelphia Liberty Medal on Saturday, said he was accepting it on behalf of millions of Ukrainians at home and abroad who fought for their country's liberation and against corruption.

Ukrainian President Viktor Yushchenko (R) is presented with the Philadelphia Liberty Medal by Philadelphia Mayor John Street during an award ceremony at the National Constitution center in Philadelphia

"It was their patience, courage and dignity that won this award." Yushchenko said through a translator as he stood in front of the National Constitution Center in Philadelphia. "I accept this medal as an oath of faith. I will pass it on to my children."

Philadelphia Mayor John F. Street presented the gold medal to Yushchenko, who was elected president in December after a contentious election. Also present were Gov. Edward F. Rendell; Rep. Curt Weldon, R-Pa., and Yushchenko's wife, Katarina, and other dignitaries.

Yushchenko was at the center of a popular uprising during which his supporters camped out in the Ukrainian capital, protesting that a Moscow-backed candidate had stolen a disputed election. Dioxin poisoning from what he has called an assassination attempt during the tumultuous campaign last year has left his face pockmarked and disfigured.

Hundreds of spectators attended the ceremony, some wearing the country's traditional embroidered cotton shirts while others sported orange T-shirts, scarves and ties, in honor of Ukraine's "Orange Revolution." Orange, the color of Yushchenko's campaign banners and signs, came to symbolize freedom and liberty for the people of Ukraine, Street told the crowd.

Some spectators said they had waited hours to see Yushchenko take the podium. Others said they had waited decades for a man like him to appear.

"It is a very big day," said Marta Ozarkiw, 72, who fled Ukraine with her parents in 1950. Ozarkiw, a retired Drexel University librarian from Philadelphia, said she has never returned to Ukraine, but still feels close to her native country despite the distance and the years.

"He really wants to make Ukraine a better state with no corruption," she said. "It was under the Russian yoke for many centuries. Now they are free. It is unbelievable."

Yushchenko has pledged to fight corruption and bring the former Soviet republic closer to the European Union and NATO while maintaining good relations with Russia.

The Liberty Medal was established in 1988 by the nonprofit Philadelphia Foundation, founded in 1918. The award, which is accompanied by a $100,000 prize, honors an individual or organization that has "demonstrated leadership and vision in the pursuit of liberty of conscience or freedom from oppression, ignorance, or deprivation." Its first recipient, in 1989, was Lech Walesa, Poland's former president.

Past recipients of the medal have included Czech President Vaclav Havel, Afghan President Hamid Karzai, U.S. Supreme Court justices Sandra Day O'Connor and Thurgood Marshall, and United Nations Secretary-General Kofi Annan.

Yushchenko's selection was announced in June. The medal is typically awarded on July Fourth, but due to a scheduling conflict, Constitution Day, celebrated this year on September 17, was chosen instead.

Source: AP

President’s Aides in Murder ‘Cover-Up’

KIEV, Ukraine -- THE split between the leaders of Ukraine’s orange revolution grew more bitter yesterday when the sacked prime minister accused officials close to President Viktor Yushchenko of obstructing an investigation into the notorious political murder of a journalist.

Ukraine's ousted prime minister Yulia Tymoshenko speaks during an interview in Kiev

Yulia Timoshenko, who was sacked 10 days ago as prime minister, said a secret operation to arrest one of the main suspects in the murder of Georgy Gongadze was sabotaged when a prosecutor close to the president’s entourage leaked details of a plan to arrest him.

Timoshenko was speaking in her first interview with a western newspaper since leaving the government which was propelled to power by last year’s revolution. She said some of those around Yushchenko were guilty of extortion and corruption.

The former prime minister, whose previous career in business made her Ukraine’s wealthiest woman, also claimed that the president was reneging on a pledge to bring Leonid Kuchma, his predecessor, to justice on corruption charges.

The prosecution of Kuchma and the punishment of Gongadze’s killers were two of the main demands from crowds during the revolution.

The seriousness of Timoshenko’s charges reflects the gulf between the former allies who are now involved in an unseemly slanging match in the run-up to parliamentary elections next spring. Timoshenko is expected to lead the political opposition to Yushchenko.

Timoshenko, 45, sporting her trademark “Princess Leia” hairdo, said that Oleksiy Pukach, who was suspected of involvement in the journalist’s killing, had been traced to Israel. Pukach, who headed the interior ministry’s surveillance department following Gongadze’s movements on the night he was abducted, disappeared before he could be seized — apparently because of the prosecutor’s leak.

Sources close to Timoshenko said they suspected the leak was part of a cover-up to protect a Ukrainian politician who they believe is implicated in the journalist’s murder. They claim that the politician is being protected in return for his support.

“It’s very strange that this very same prosecutor is well known to be close to Yushchenko’s closest aide,” said Timoshenko from her office in Kiev, the capital. “If the special operation had gone ahead we’d now have someone who knows the whole truth about the Gongadze murder.”

Timoshenko’s version of events was supported by Oleksander Turchynov, a close ally who until his resignation last week was the head of the SBU, Ukraine’s former KGB.

Gongadze’s widow, Myroslava, is also convinced that there was a cover-up. “The president must understand that solving this case is a moral issue, not only for Ukraine but the whole world,” she said.

The prosecutor’s office has refused to comment.

Gongadze, who specialised in investigating alleged corruption surrounding Kuchma, vanished in September 2000. Weeks later his decapitated body was found in woods on the outskirts of Kiev. Tapes of secret recordings later emerged in which a voice, believed to be Kuchma’s, says the reporter “should be taken care of”.

Kuchma denied involvement but sacked the then prosecutor-general when he tried to investigate claims that the killing was linked to the president’s circle.

A senior interior ministry officer who accused Kuchma of ordering the journalist’s death died in custody, apparently after being poisoned. Nobody has been convicted of the murder and Gongadze’s headless body still lies in a Kiev morgue.

The cycle of accusation and counter-accusation began days after Timoshenko’s sacking, when Yushchenko claimed that she had tried to write off $1.5 billion (£830 million) in debts run up under Kuchma when she oversaw the country’s gas resources.

Timoshenko hit back, alleging that Yushchenko’s entourage had cut a deal with Viktor Pinchuk, the former president’s son-in-law, allowing him to retain control of one of Ukraine’s largest steel plants.

Aides to the president have denied the allegations and accused Timoshenko of trying to profit from the re-privatisation of the plant — a charge she dismissed as ludicrous.

The war of words between Yushchenko and Timoshenko — nicknamed Ukraine’s “Gas Princess” — is likely to intensify before the elections.

Timoshenko, who has vowed to return as prime minister, claimed Yushchenko had been convinced by those around him that her rising popularity threatened his own position.

“Voters gave Yushchenko an unprecedented endorsement. People gave their heart and soul for the revolution. And I will fight till the end to make sure he does not disappoint the people,” she said.

Source: The Sunday Times

Saturday, September 17, 2005

Exiled Russian Tycoon Confirms He Funded Yushchenko

KIEV, Ukraine -- Exiled Russian billionaire Boris Berezovsky has given a detailed account of his contacts with Ukraine’s leaders, including telephone calls with President Viktor Yushchenko, whose aides insist he never spoke to him.


Boris Berezovsky

His interview with Reuters is likely to add to a political storm in Kiev, where accusations the president received funds from Berezovsky surfaced days after Yushchenko sacked his prime minister, Yulia Tymoshenko, last week.

The billionaire confessed he had spoken repeatedly to Yushchenko by telephone, met his top aides and agreed to help him become Ukraine’s president.

I was really surprised that the people who are around Yushchenko, who are close to him, lie so much,“ Berezovsky said.

”They are really lying, saying they didn’t know me, they didn’t visit me, they didn’t do anything with me and so on.“

Yushchenko’s aides have denied they accepted cash from Berezovsky. His chief of staff has said the president has never spoken to the exiled opponent of the Kremlin, once seen as one of the most powerful men in post-Soviet Russia.

Berezovsky said acting Ukrainian Deputy Prime Minister Roman Bezsmertny and acting Emergencies Minister David Zhvania had met him repeatedly ”in this office,“ asking for financial support and other assistance.

Although he had not met Yushchenko in person, Berezovsky described regular phone calls before, during and after the revolution.

Berezovsky confirmed that documents which emerged this week were genuine evidence of payments he had made, but declined to comment on who had received payments or what the money was for.

Yushchenko won the re-run of a rigged election after weeks of street demonstrations dubbed the ”Orange Revolution,“ becoming Ukraine’s president in January.

”I decided to help (him) because I was 100 percent sure that Ukraine would be an example for Russia to move forward to democracy,“ Berezovsky said.

Ukraine’s first post-independence president, Leonid Kravchuk, triggered uproar in the country this week by announcing he had seen documents which showed payments by Berezovsky to Yushchenko’s political movement.

Kravchuk said the accusations could be grounds for impeachment. Kiev denied them.

Berezovsky said he believed his own links to Yushchenko’s supporters had been made public because Moscow-backed opponents of Yushchenko were trying to discredit the country’s leaders and deepen a split between Yushchenko and Tymoshenko.

Source: MosNews

Behind Ukraine's Political Crisis

KIEV, Ukraine -- The Orange Revolution and subsequent election of President Viktor Yushchenko showed that Ukrainian society wanted "change." But as the Economist pointed out, the "Orange Revolution promised much but has so far delivered little."


Ukrainian President Viktor Yushchenko (C), looks up during his visit to the floor of the New York Stock Exchange

Indeed, Ukrainians believe that, eight months into Yushchenko's presidency, there has been little genuine change from the prior regime of Leonid Kuchma. Indeed, crimes committed by the Kuchma regime have gone unpunished. As one Razumkov Center analyst commented, "Ukraine gave Yushchenko a giant credit of faith, but now they want results".

One reason there have been no charges against high-ranking Kuchma-era officials is that the prosecutor's office is headed by Sviatoslav Piskun. Piskun was prosecutor in 2002-2003, fired, then reinstated on December 10, 2004, only two days after parliament voted on the "compromise package" to permit a repeat presidential runoff on December 26 and constitutional reforms in 2005 or 2006.

Was Piskun brought back to protect high-ranking Kuchma officials? To date, only low-and medium-level Kuchma officials have been charged with abuse of office, corruption, and election fraud.

Serhiy Kivalov, head of the Central Election Commission (CEC) in the 2004 elections, provides a telling example. The Yushchenko camp directly accused the CEC of open falsification in rounds one and two. But after the elections, Kivalov was allowed to return to his position as Dean of the Law Academy in Odessa. "As long as bandits are not punished, they remain examples for criminals of all types," warned Socialist leader Oleksandr Moroz.

A commission is set to investigate the charges of corruption in Yushchenko's entourage leveled by former presidential administration chief Oleksandr Zinchenko. Guilty or not, the commission poses a no-win situation for Yushchenko.

If the commission exonerates the three accused officials, the public disillusionment that the new guard is little different from the old will likely deepen, increasing ousted prime minister Yulia Tymoshenko's popularity in the 2006 elections. Already 51.3% of Kyivites, a city that staunchly backed Yushchenko in the Orange Revolution, believe the accusations made by Zinchenko.

Yushchenko has already been criticized for pre-judging the outcome of the investigation. While welcoming the creation of the commission, Yushchenko declared, "I am confident that these facts will not be found". In post-Soviet states, officials may take such presidential comments as hints on the preferred verdict.

If the commission does find evidence of corruption among Yushchenko's close allies, it would irrevocably damage his presidency. He would have to explain why he has tolerated corruption within his inner circle.

Another Yushchenko judgment error was the granting of additional power to the National Security and Defense Council (NRBO), headed by one of the accused, Petro Poroshenko. Not only was the move unconstitutional, it caused a paralysis of decision-making and in-fighting as Poroshenko turned the NRBO into a parallel government.

Disillusionment with Yushchenko is especially acute among young people, without whom the Orange Revolution would have been impossible. Younger generation politicians from the Reforms and Order Party (RiP), and young people more generally, are likely to gravitate towards Tymoshenko in the 2006 elections. RiP was Yushchenko's main political ally in the 1990s, and its defection to Tymoshenko is a potentially damaging outcome of the Zinchenko crisis.

Yushchenko's decision to remove the Tymoshenko government has four main consequences.

First, with constitutional reforms that transfer some of the executive's power to parliament due to go into effect in January 2006, Yushchenko must secure a parliamentary majority after the 2006 elections, as the legislature elects the government.

Yushchenko had intended to ask the Constitutional Court to annul the constitutional reforms this fall. Ironically, his case would have been strengthened had Tymoshenko also opposed their implementation. But now Yushchenko must rely on centrist forces, which are strong supporters of the constitutional reforms.

It would be politically disastrous if constitutional reforms left Yushchenko a figurehead facing a hostile parliamentary majority and government. This scenario would return Ukraine to the executive-parliament conflicts of the 1990s and damage progress on reforms.

Second, Yushchenko's People's Union-Our Ukraine party now polls at only 18%, while Tymoshenko's bloc draws 11.3%. To secure Yuriy Yekhanurov's confirmation as prime minister now and to establish a parliamentary majority and government after the 2006 elections Yushchenko will be forced to align himself with former pro-Kuchma centrists in parliament.

Third, after breaking with Yushchenko, Tymoshenko will now draw votes away from the hard-line opposition currently grouped in Regions of Ukraine (RU), the Social Democratic Party-United (SDPUo), and the Communists (KPU). All three are led by uncharismatic, unpopular leaders. In contrast, Tymoshenko has great media appeal, skill as a fiery orator, and popularity that matches Yushchenko's.

Fourth, Yushchenko and Tymoshenko are now expected to publicly duel over who has the right to claim to represent the "true ideals" of the Orange Revolution. Tymoshenko's bloc will campaign to separate business and politics, one of the main goals of the Revolution.

Yushchenko still surrounds himself with businessmen who supported his Our Ukraine bloc in the 2002 parliamentary elections and his presidential campaign. Their ties will be strengthened further if, as expected, the commission exonerates his close allies of corruption.

As the 2006 ballot approaches, the Tymoshenko camp will campaign on a platform asserting that the Orange Revolution is "unfinished." Ukraine needs to "commence preparations for another stage of the revolution," former deputy prime minister Mykola Tomenko argues, "as he [Yushchenko] has not used the chance that history and the revolution gave to him".

The 2004 presidential election was a struggle between the Kuchma regime's last prime minister, Viktor Yanukovych, and the Orange democratic alternative, Yushchenko. This battle sidelined the Communists, which had been the main opposition force in the 1990s. Now both the Communists and the centrists stand to be marginalized in the 2006 elections, which is shaping up to be a contest between two wings of the Orange Revolution -- Yushchenko and Tymoshenko.

Source: Eurasia Daily Monitor

Lytvyn Calls for New Team to Form Government in Ukraine

KIEV, Ukraine -- President Viktor Yushchenko should turn to an entirely new team of technocrats, not politicians, to form the next government, Parliament speaker Volodymyr Lytvyn said Sept. 16.


Parliament Speaker Volodymyr Lytvyn

He also warned that the opposition - bolstered by the addition of some of Yushchenko's former allies - will look for ways to undermine and perhaps even remove the president.

"These attempts are only beginning," Lytvyn told The Associated Press in an interview.

Yushchenko dismissed the government of his Orange Revolution ally Yulia Tymoshenko last week amid a turbulent political crisis fueled by corruption allegations and just six months before parliamentary elections. He also accepted the resignation of ally Petro Poroshenko from the powerful Security and Defense Council.

Yushchenko accused Tymoshenko of abusing her office, prompting a strong war of words between the country's two most popular political figures.

"I can predict what attempts there will be to direct political events. First is the process of criticizing and discrediting the president, with a reaction in response," Lytvyn said. Then "activity directed toward putting obstacles in the way of forming the Cabinet of Ministers and organizing the work of the Cabinet. Third will be an attempt to destroy parliament, which is the basis for society."

Yushchenko has tapped a Russian-born technocrat, Yuriy Yekhanurov, to be acting prime minister, and his confirmation vote before parliament is expected next week.

But Lytvyn, who is widely respected in Ukraine for his efforts to help mediate during last year's election crisis, predicted a tough battle for Yekhanurov to win the necessary 226 votes. He said Yekhanurov stood no chance of coming close to Tymoshenko's record-breaking 373 votes, suggesting Yushchenko's new candidate might have only a handful of votes to spare "at a maximum."

Lytvyn made it clear he continues to back Yushchenko, and said the president must be sure now to appoint professionals who put running the country above their own political ambitions. As for the former ministers, Lytyvn suggested it would be better if they bow out - and called for all new appointees to pledge not to participate in the March elections.

"If they return their definition of 'new power' will go away," he said. "They will be old power. And just as before, when they strongly criticized the previous power, the next generation of politicians will have all grounds to criticize the 'new-old ministers."'

Lytvyn said state work will be paralyzed if the government consists of people focused on the election.

"I would propose that those who will be recommended to enter the new government pledge not to take part in the election campaign," Lytvyn said. "It would allow them to concentrate on practical work. Otherwise, no work will be done, and ministers will serve political interests and political structures and not Ukrainian society."

He acknowledged, however, that such an idea was unrealistic. Lytvyn suggested there was no end in sight to Ukraine's political crisis because the opposition would redouble efforts to remove Yushchenko. But he predicted none would be successful because the procedural process of impeachment is so complicated.

Leonid Kravchuk, Ukraine's first president who is now an opposition leader, accused Yushchenko's campaign team this week of having accepted $15 million (12 million euros) from Russian oligarch Boris Berezovsky. He suggested that, if proven, impeachment proceedings could be launched.

Yushchenko's top aides strongly denied the allegation. In an interview with Ukrainian media in the United States, Yushchenko said his campaign finances had been checked repeatedly and could be checked again.

Lytvyn, a one-time chief of staff to former President Leonid Kuchma who has been touted as a possible future presidential contender, said he would try to ensure parliament played the role of the "guarantor of stability." He said he hoped to return to the parliamentary speaker's seat after the March elections.

Lytvyn's People's Party currently boasts 44 lawmakers, which would make a coalition with either Yushchenko's Our Ukraine or Tymoshenko's bloc a necessity if he hoped to win back the parliamentary speaker's post. Lytvyn was careful to avoid directly criticizing either Tymoshenko or Yushchenko personally.

But he said he was disappointed that this latest crisis erupted just as Ukraine's image was starting to change.

"Political forces have damaged Ukraine. Their aim was to strike out at each other but once again they struck at Ukraine, humiliating her," Lytvyn said. "We were just starting to be understood, starting to be respected."

Source: Kyiv Post

Ex-SBU Chief Joins Attack on Yushchenko

KIEV, Ukraine -- Oleksandr Turchynov, a former head of the SBU security service and the staunchest ally of Yulia Tymoshenko, on Wednesday tapped secret files while joining attacks on President Viktor Yushchenko.

Ex-SBU Chief Aleksandr Turchynov (L) with ex-PM Yulia Tymoshenko

Turchynov, at a press conference, alleged that some of Yushchenko's top aides had been apparently attempting to have decision making in some of the key areas, such as the natural gas sector.

Although the allegations provided little or no evidence of illegal activities, it shows that much of the security service's resources have been used since February to spy on top politicians close to Yushchenko.

Turchynov was appointed the head of the SBU in early February and had resigned on Sept. 8, hours after Yushchenko had fired Tymoshenko from the post of the prime minister.

The attack from Turchynov, perhaps Tymoshenko's biggest weapon in the emerging war of compromising material, joins a wave of massive campaigning over the past week targeting Yushchenko.

The active campaigners include the Tymoshenko team, but also SDPU(O), the Communist Party and Boris Berezovskiy, a Russian billionaire living in exile in London who has been promoting Tymoshenko.

But besides natural gas and real estate sector allegations, Turchynov went further Wednesday by suggesting there had been no reason to say that Yushchenko had been poisoned during the presidential election campaign last year.

He argued that according to Ukrainian legislation, only Ukrainian doctors can confirm the case of the poisoning, and suggested that Yushchenko had been refusing to do the tests in Ukraine.

Yushchenko, whose face is still heavily disfigured from what three independent western laboratories had described as the poisoning by dioxin, a highly toxic chemical, rejected Turchynov's allegations.

"That's rubbish," Yushchenko said in New York where he is attending a U.N. General Assembly session. "The SBU didn't have enough time for the investigation because it had been busy spying on friends."

Vadym Karasiov, the head of the Institute for Global Strategies, a Kiev-based think tank, said that the allegations made by Turchynov suggest that the Tymoshenko team has started "a lengthy and serious play to seriously weaken legitimacy of Yushchenko's election as the head of the state."

Some in the Tymoshenko's team have been suggesting launching early election in January 2006, not in March 2006, apparently trying to capitalize on Tymoshenko's high ratings.

Yushchenko's party had been leading the polls with 20%, followed by former Prime Minister Viktor Yanukovych party's 14% and Tymoshenko's 10.5% of the vote, according to a survey taken in early August. Yushchenko fired Tymoshenko last week to end a sharp political crisis that had exploded with a clash between Tymoshenko and Petro Poroshenko, Yushchenko's top security advisor.

The two seek to position themselves ahead of the crucial general election due in March 2006. The winner of the election will claim the post of the prime minister with huge powers after constitutional amendments come into force Jan. 1, 2006.

Source: Ukrainian Journal

Friday, September 16, 2005

Rice Pushes for Change in Ukraine

NEW YORK, NY -- The Bush administration said Thursday that Ukraine is "headed in the right direction," despite recent upheaval in the country's government.

President Bush turns to Condoleezza Rice, U.S. Secretary of State, during a Security Council meeting at the 2005 World Summit at the United Nations

The Orange Revolution in Ukraine won praise from the Bush administration last winter as a turn toward democracy in Eastern Europe.

But it is faltering now under the weight of reported corruption and political divisions.

Ukrainian President Viktor Yushchenko last week fired his Orange Revolution ally Yulia Tymoshenko from her job as prime minister and dismissed her government. The dismissal came after members of Yushchenko's team began publicly leveling accusations of corruption against one another.

"We continue to believe the Ukrainian government is headed in the right direction," Undersecretary of State Nicholas Burns said after Secretary of State Condoleezza Rice met with the embattled Ukrainian leader.

"What we have seen is not surprising" as the Kiev government moves away from authoritarian rulers, Burns said. The United States is a good friend of Ukraine, the U.S. official said.

Rice told Yushchenko he could count on "very strong support for Ukrainian democracy," Burns said.

In New York for U.N. meetings, Rice also met with Indian Prime Minister Manmohan Singh. She took up Iran's suspension of nuclear negotiations with the European Union and the question of how to try to persuade Tehran to end the stalemate.

The secretary has courted India in hopes of sending a "unified message" to Iran.

"We were gratified to hear India does not want to see Iran become a nuclear power," Burns said.

But he declined to say whether India would like the U.N. Security Council to take up the issue of its suspension of negotiations.

Rice indicated Wednesday the administration was backing away from referring Iran's actions to the Security Council for censure or sanctions.

Describing efforts to constrain Iran from producing nuclear weapons, Rice said "the world is not perfect in international politics. You cannot always get a 100 percent solution."

Rice last week appealed to China, Russia, India and others to support threatening Iran with penalties for refusing to halt its nuclear program.

Russia quickly made known its opposition to trying to punish Iran in the Security Council. The White House acknowledged Wednesday that President Bush was unable to get a commitment from Chinese President Hu Jintao.

Iran's new president, Mahmoud Ahmedinejad, also urged the U.N. not to bend to U.S. pressure.

He said Thursday that Iran was prepared to transfer nuclear know-how to Islamic countries.

Meanwhile, ministers from Britain, France and Germany, which have negotiated with Iran, met with Iran's new foreign minister, Manouchehr Mottaki, and its chief nuclear negotiator, Ali Larijani.

Source: AP

A Bitter Turn for Orange Revolution

KIEV, Ukraine -- In the last weeks of Leonid Kuchma's presidency, tarred with scandal, an American company reached an agreement with his government to take control of a state-owned chemical factory in eastern Ukraine under terms that have been criticized as secretive and suspiciously generous.

Viktor Yushchenko, the president of Ukraine, addresses delegates at the 2005 World Summit and 60th General Assembly of the United Nations

On Sept. 2, dozens of men dressed in camouflage and body armor stormed and seized the headquarters of the factory, the Severodonetsk Azot Association. They were accompanied by officials of a new government, carrying an order signed by a minister under Kuchma's successor, Viktor Yushchenko.

The order was based on a court case filed by a fictitious company, on behalf of a politician who stood to gain from the seizure, according to a senior government official.

"It was a very serious abuse of the system," said the chairwoman of the country's State Property Fund, Valentyna Semeniuk.

The accumulated weight of scandal and internal rifts has destroyed the political coalition that Yushchenko formed to challenge Kuchma's government and create a newly democratic, corruption-free government.

It has also raised questions about the true success of what came to be known as the Orange Revolution, as members of Yushchenko's team volley accusations of abuse of power, bribery and other forms of corruption.

"Corruption exists in different countries, but in civilized countries there is prompt action against it," said Oleksandr Zinchenko, Yushchenko's chief of staff, who resigned, coincidentally, on the same day that the company was seized. Three days later he went public with accusations of corruption among Yushchenko's senior aides, three of whom he named, and the president did nothing about it.

Zinchenko's resignation provoked a political firestorm here that shows little sign of subsiding.

Last week Yushchenko dismissed his prime minister and the rest of her government, as well as the head of the customs service. He also suspended or accepted the resignations of several members of his staff who are at the center of Zinchenko's accusations.

Even so Yushchenko has defended his aides, much as Kuchma called accusations against his own aides politically motivated.

"There is an anecdote," Yushchenko said Monday. "It does not really matter whether a man has a daughter or does not have a daughter. It is enough to say in public that his daughter does not behave herself well."

That has not stopped him, however, from accusing the departed prime minister, Yulia Tymoshenko, of corruption herself. After first striking a conciliatory note after her dismissal, Yushchenko accused her of siphoning $1.6 billion from the budget "in favor of private undertakings," coercing judges and improperly intervening in a dispute over an alloy plant, Nikopol Ferroalloys.

"It is very unpleasant for me to think what Yulia Vladimirovna could have received if Nikopol Ferroalloy would have been transferred into the hands of business groups," he said in another interview, on Tuesday, referring to Tymoshenko.

Yushchenko appointed a new prime minister, Yury Yekhanurov, and has since rallied political parties, including some that he opposed only a year ago, to form a sort of unity cabinet. He also created a commission to investigate corruption in his inner circle, but gave it only 10 days - until next week - to say whether the charges warrant further investigation. He has already suggested publicly that they will not.

The allegations, however, may prove difficult to sweep aside. Reports of bribery and corruption have swirled around Yushchenko's circle from the time of his inauguration in January. His son came under scrutiny this summer for receiving gifts and favors.

"Corruption is in the air," Tymoshenko, who was one of the most impassioned and popular leaders of last year's protests, said in an interview, citing complaints of businessmen forced to pay bribes to members of Yushchenko's administration. "This is the air we had to breathe."

A senior Western diplomat said he gave credence to reports that Yushchenko's aides had solicited payments to get access to the president, to receive appointments to government positions, to influence court cases and to win control over state enterprises.

Even an informal adviser to Yushchenko, Oleksandr Pakhavyov, said corruption was endemic in Ukraine, and the shadowy intersection of business and state made it unrealistic to expect a swift change.

He cited an effort by Tymoshenko to crack down on the smuggling of meat through customs. The contraband, he said, accounted for nearly a fifth of all meat purchased in Ukraine. After Tymoshenko's government tightened controls, prices soared, sparking one of the economic crises that have eroded Yushchenko's popularity.

Viktor Pinchuk, one of the country's wealthiest men and the son-in-law of Kuchma, said it was not government policy but commercial interest - Tymoshenko's - that was driving the legal challenge regarding the Nikopol Ferroalloy Plant. He acquired a controlling share in 2003 in a tender since criticized as rigged.

He said Tymoshenko had intervened on behalf of a minority shareholder who had close ties to her. Tymoshenko denied that, saying she was acting to seize the shares owed the state.

The dispute over Severodonetsk Azot, Ukraine's third-largest chemical plant, boiled over even as Yushchenko's coalition imploded.

Worldwide Chemical, a subsidiary of New York-based IBE Trade, agreed to invest $180 million in a new company with Kuchma's government in exchange for 60 percent of its shares.

James William Grant, Worldwide Chemical's vice president, said that within months the new investors, including Americans and Russians, had increased production, raised salaries and paid off the debts that had forced the former state enterprise into bankruptcy.

But a lawsuit filed in March challenged that deal, and the court agreed. Neither the state nor the new company had the chance to mount a defense, according to Semeniuk.

The government's role in the dispute is far from clear. In letters to American congressmen who voiced concerns, Semeniuk and Yushchenko promised that the matter would be resolved in court.

Yet, despite Yushchenko's pledges, the minister of industrial policy, Valery Shandra, signed an order late last month returning control of the plant to what was left of the state enterprise, and one of his deputies was there when the plant was seized.

The men in camouflage - Grant said it was never clear who they were or whether they were armed - occupied the plant's headquarters for four days, as workers and company executives protested outside. On Sept. 6, Yushchenko intervened, ordering that the factory be returned to Worldwide Chemical until the matter was resolved in court.

Referring to this case, as well to Nikopol and others, Yushchenko said intrigues in his circle reflected a "a very complicated metastasis in the society and in the authorities."

Source: International Herald Tribune

Thursday, September 15, 2005

Ukraine Denies Russian Magnate Funded Yushchenko

KIEV, Ukraine -- A top Ukrainian official denied allegations that exiled Russian magnate Boris Berezovsky financed the presidential election campaign last year of Viktor Yushchenko, brought to power after "Orange Revolution" protests.

Yushchenko's Chief of Staff Oleh Rybachuk

Oleh Rybachuk, Yushchenko's chief of staff, was among several of the president's allies denying any suggestion that Berezovsky, now an avowed foe of the Kremlin, had channelled funds to the president's campaign.

"Neither Viktor Yushchenko nor Oleh Rybachuk knows or has ever known Berezovsky," Rybachuk told Fifth Channel television. "Yushchenko has never even spoken to Mr Berezovsky."

Other officials denounced the allegations as an attempt to denigrate Yushchenko, who won the re-run of a rigged election after weeks of mass protests in his favour. The president last week sacked Prime Minister Yulia Tymoshenko and her cabinet after months of government infighting.

Ukraine's first post-independence president, Leonid Kravchuk, now a member of parliament, said on Wednesday he had information that Berezovsky had funnelled at least $15 million to back Yushchenko, opposition leader at the time.

Kravchuk told a news conference several of the president's top allies had acted as intermediaries. He said that if the allegations were proved true, parliament could launch impeachment proceedings against Yushchenko.

Once close to ex-Russian President Boris Yeltsin, Berezovsky fell out with his successor Vladimir Putin and has been granted political asylum in Britain, from where he regularly accuses the Kremlin leader of curbing democratic freedoms.

Berezovsky, wanted in Russia on fraud charges, told the Fifth Channel he had spoken to Kravchuk. But he said he did not tell the former president that he had provided money specifically for Yushchenko's campaign.

Impeachment procedures in Ukraine's parliament are complex, making it extremely difficult to remove the president.

Several attempts to remove Yushchenko's predecessor, Leonid Kuchma on allegations of complicity in the murder of an investigative journalist proved unsuccessful.

Source: Reuters

Berezovsky Bombshell Rocks Ukraine

KIEV, Ukraine -- Boris Berezovsky, an exiled Russian billionaire living in Britain, on Wednesday attacked President Viktor Yushchenko by suggesting that he may have contributed $15 million to finance Yushchenko's presidential campaign last year.

Russian Billionaire Boris Berezovsky

The attack comes at a sensitive time as Yushchenko tries to assemble a new government coalition that may include moderate opposition parties after dismissal of Prime Minister Yulia Tymoshenko Sept. 8.

Berezovsky, who owns Kommersant, the daily newspaper, was apparently seeking other investment opportunities in Ukraine, such as buying Nikopol Ferroalloy Plant, and has been openly favoring Tymoshenko. He called sacking of Tymoshenko Yushchenko's "biggest mistake."

Since any foreign financial contributions to presidential candidates are banned by the Ukrainian law, any evidence of such contributions would put significant pressure on Yushchenko.

Yushchenko's top aides on Wednesday dismissed the allegations, but warned an internationally coordinated campaign may have been in play to try to discredit and topple Yushchenko's presidency. The security service, the SBU, was asked to step in to check whether there was any plot.

Leonid Kravchuk, the leader of SDPU(O), the group that harbors some of Yushchenko's biggest foes in Parliament, said Berezovsky had showed him money transfer documents allegedly proving the contributions.

Kravchuk said that SDPU(O) would call for the impeachment of Yushchenko if the allegations are proved.

Berezovsky gave interviews to several television channels and spoke to several newspaper outlets Wednesday apparently seeking to give the financing allegations a maximum exposure in Ukraine.

In one of the interviews, Berezovsky confirmed that he had recently met Mykhaylo Brodtskiy, a Tymoshenko ally, "to get an update on developments" in Ukraine, before making the revelations.

Brodtskiy was the first figure to air sweeping corruption allegations against Yushchenko's aides, such as Petro Poroshenko, the national security chief. The allegations were within days repeated by Oleksandr Zinchenko, Yushchenko's chief of staff, who had resigned, triggering the worst political crisis for Yushchenko. Tymoshenko said Zinchenko will manage her party's campaign for the election.

Meanwhile, the recent meetings and talks between SDPU(O), Berezovsky and Tymoshenko group show the three have been increasingly joining forces on an anti-Yushchenko platform.

"Sensationally, SDPU(O) are suddenly favoring Tymoshenko," Anders Aslund, a senior associate at the Carnegie Endowment for International Peace, a Washington-based think tank, said.

Some in the Tymoshenko team have already called for an early general election in January 2006, not in March 2006, seeking to capitalize on her allegedly high popular support. Kravchuk's mentioning of the impeachment possibility suggests the three may also seek an early presidential election, a scenario still viewed as extremely unlikely.

Acting Emergency Situations Minister David Zhvaniya, a Yushchenko ally who personally knows Berezovsky, was alleged by Kravchuk to be Yushchenko's liaison with the Russian billionaire. Zhvaniya flatly denied the allegations.

"Berezovsky was giving money to Tymoshenko and don't get Zhvaniya involved," Zhvaniya said. "Let them figure out who was giving the money to whom within their own bunch of people."

Berezovsky, an enemy of Russian President Vladimir Putin, is living in Britain since 2000, but has been persistently seeking to settle down in Ukraine after the Orange Revolution. His relocation to Ukraine is opposed by the Ukrainian authorities as this would most likely trigger an angry reaction from Moscow.

Source: Ukrainian Journal

Wednesday, September 14, 2005

Gongadze Killers Still Roam Free in Ukraine, Say Journalists in New Call for Justice

KIEV, Ukraine -- The crisis-ridden government of Ukraine comes in for criticism today in a report published by the International Federation of Journalists and other journalists’ organisations who claim that the authorities continue to obstruct the investigation into the murder five years ago of journalist Gyorgy Gongadze.


Murdered Journalist Gyorgy Gongadze

“The people who authorised the brutal assassination of Gongadze still roam the corridors of power in Kiev,” said Aidan White, IFJ General Secretary. “There will be no real democracy in Ukraine until there is justice in this case.”

The report, published jointly by the IFJ, the National Union of Journalists of Great Britain and Ireland, the Gongadze Foundation and the Institute of Mass Information, a Kiev-based press freedom NGO, has been issued to mark the fifth anniversary on Friday of the killing of internet journalist Gongadze, whose headless body was found in a ditch in a village outside Kiev.

Those responsible for his killing – specifically powerful figures who instigated and authorised the murder – are “getting away” says the report while a handful of individuals who took part in the immediate killing are taking full responsibility.

Shortly after the headless body of Gongadze was found in 2000 tapes made by a bodyguard of former president Leonid Kuchma, on which the president and other ministers could be heard planning to harm Gongadze, were made public.

Since then there has been a series of incompetent investigations into the case. There was renewed hope for progress last year after the “Orange revolution”, when the new president, Viktor Yushchenko, promised to make solving the murder a priority.

But, today’s report asserts that the investigation continues to be marked by serious negligence and the authorities are accused of steering it away from the powerful organisers of the crime and limit it to the immediate perpetrators.

The investigation has established that Gongadze was killed by a group of serving interior ministry officers, some of whom are expected to be tried shortly. But the leader of the group, General Olexiy Pukach, has disappeared. Former interior minister Yuri Kravchenko, a key witness, has died in mysterious circumstances.

At the same time, the Ukrainian general prosecutor has failed to examine the links between the case and the operation of death squads within the interior ministry. He has also failed to get the tapes made in former president Kuchma’s office to be accepted as evidence in court.

“This brutal killing casts a long shadow over Ukraine as it struggles to create a democracy worthy of the name,” said White. “But there will be no peace or democracy in Ukraine until there is justice for Gongadze. Those who abused their power to stifle the voice of a critical journalist must be exposed and brought to trial.”

Source: PeaceJournalism

Constitution Rules in Ukraine

KIEV, Ukraine -- The Ukrainian Constitutional Court ruled yesterday that a bill introducing the political reform from January 1, 2006, complies with the constitution. The transfer from the presidential-parliamentary to the parliamentary and presidential form of government in Ukraine will increase role of the Parliament and the Government and will cut powers of the president.

Viktor Yushchenko (C) managed to convince Yury Ekhanurov (L), Vladimir Litvin (R) and most of the leaders of parliamentary factions that the future of Ukraine is impossible without unity and cooperation

The decision of the Constitutional Court to declare the bill On Amendments to the Constitution of Ukraine being in compliance with 157 and 158 articles of the country’s constitution was taken by a 10-4 vote. One more judge signed the ruling with his special opinion.

The bill amending the constitution, which was passed by the country’s parliament last December, boils down to the transfer from the presidential and parliamentary to the parliamentary and presidential form of government in Ukraine. Steps designed to drastically change the political system in Ukraine include the shaping of the Government by the coalition of parliamentary factions and the extension of the term of the Parliament between elections to five years. Powers of the Parliament are supposed to be greatly extended. The Supreme Rada will have the right to appoint the prime minister, the defense and the foreign ministers after the president’s nominations and other ministers following their nominations by the premier.

The upcoming political reform looks inevitable now that the Constitutional Court ruled positively on the subject.

Meanwhile, yesterday’s court decision was made amidst events that show that Ukrainian major politicians are getting increasingly prepared for future political battles. Following the former premier Yulia Timoshenko, who expressed the view of her political future in yesterday’s interview with Kommersant, former Secretary of the State Alexander Zincheko made a statement. Replying to the question about the political bloc he is going to join to run at the March parliamentary elections, the former Secretary of State said he is having talks with a number of parties.

The presidential team, aware of the fact that the future political reform will strip Viktor Yushchenko of main instruments to influence the political life, tries to make the most of the time left before the reform to prove that the choice of the Maydan was right. Oleg Rybachyuk, the new Ukrainian Secretary of State had already launched into the debate with Alexander Zinchenko and Yulia Timoshenko, ousted from Viktor Yushchenko’s team, and held his personal press conference. He says that while accusing the entourage of Viktor Yushchenko of corruption, Yulia Timosheko and Alexander Zinchenko showed a document case “but the prosecutors, the secret service and the police receive only two sheets”,. “If we find no concrete facts, I will doubt that it is the matter of corruption, not a new political campaign,” Oleg Rybachyuk stated adding that he was going to meet Alexander Zinchenko on Wednesday and get the documents that support the former official’s statements.

As for Viktor Yushchenko, he greatly improved his position yesterday by signing a declaration of the unity and cooperation for the sake of the future of Ukraine with the Supreme Rada chairman Vladimir Litvin, acting prime minister Yury Ekhanurov and leaders of parliamentary factions. The president emphasized that this kind of consolidation is typical of democratic states as a response to political challengers. Yulia Timoshenko’s block did not sign the document.

Source: Kommersant

Yushchenko Lashes Out at Ousted Former PM

KIEV, Ukraine -- President Viktor Yushchenko on Tuesday accused his former prime minister of abuse of office, saying he fired her as a "matter of honor" because she abandoned the ideals of last year's Orange Revolution that rallied Ukraine.


Ukrainian President Viktor Yushchenko during an interview with The Associated Press

"It was not the ideals of Independence Square — it was backstage intrigues," Yushchenko told The Associated Press in an interview five days after he dismissed Yulia Tymoshenko and her Cabinet.

He leveled sharp allegations at his one-time comrade-in-arms, accusing the popular politician of trying to use her post to wipe out $1.5 billion in debts owed by a defunct energy company she once headed. But Yushchenko said he would welcome Tymoshenko back to the government if she were to return to the principles they had shared.

Tymoshenko, in a brief phone interview with the AP, called Yushchenko's allegations a shock, saying he was trying to revive the "old repression that (former President Leonid) Kuchma had used against me and my family."

Yushchenko fired Tymoshenko on Thursday, ending a partnership that was the driving force behind the defiant protests that captured world attention 10 months ago. The dismissal came after members of Yushchenko's team began publicly leveling accusations of corruption against one another.

The president accused his team of spending more time squabbling than fulfilling the promises of the Orange Revolution. Since Tymoshenko's dismissal, the war of words between the former allies has heated up as they look to March parliamentary elections. The winning party will choose the prime minister, who after constitutional changes take effect will have powers that rival the president.

His face still badly scarred from last year's dioxin poisoning, Yushchenko said he was proud that he'd summoned enough strength to pull through, keep campaigning, and win the heated presidential race.

"But then after all this was achieved ... to act in such a way as my friends did toward each other is something not worthy of Independence Square," he said, sitting in his office and sipping from an orange mug with his campaign slogan "Yes, Yushchenko!" on it.

"It was a case of my honor not to use Ukraine's budget ... privatization ... official power to solve private problems," Yushchenko said.

He alleged that in addition to trying to have Unified Energy System's debts to the state written off, Tymoshenko also tried to cancel its debts to Russia. The company, Ukraine's predominant gas dealer, was run by Tymoshenko, her husband and her father-in-law in the 1990s.

"The behavior that Yulia Volodymyrovna demonstrated in government, and the circle of her allies, were formed on a basis contrary to state interests," Yushchenko said, using Tymoshenko's patronymic, a formal form of address.

"Many activities which the prime minister participated in were carried out behind the scenes with the aim of solving her problems," he said.

Yushchenko reiterated his previous allegation that Tymoshenko had acted in favor of certain business interests, particularly in connection with the government's widely criticized re-privatization practice. Later Tuesday, Yushchenko said in a major reversal of Tymoshenko's policy that he was putting an end to re-privatizations, adding that "private property is untouchable."

Tymoshenko told the AP that courts had long ago ruled that all the debt and fines levied against her former energy company were illegal, and she accused Yushchenko of "picking up Kuchma's baton and wanting to get rid of me in the same way."

Yushchenko, who also accepted the resignation of his close ally, former Security Council chief Petro Poroshenko, has set up a commission to investigate allegations of corruption against high officials in his circle. Poroshenko has denied the allegations, and his ties with Yushchenko remain friendly. On Tuesday, he was waiting outside the president's office for a meeting.

Yushchenko told the AP he was completely at peace with his decision to fire Tymoshenko's government.

"It's the fourth day that I'm coming to work with a calm spirit," he said.

For many Ukrainians, Tymoshenko symbolized their revolution, a charismatic orator with charm and appealing ethnic symbolism. She rallied hundreds of thousands who massed in Kiev to denounce fraud by the former government in the presidential election and force a new vote, which Yushchenko won.

"I think if we return to the values that we talked about on (Independence) Square, but not the adventurism that structures of power had begun to carry out, I will extend my hand to anyone," Yushchenko said in response to Tymoshenko's prediction that her party would win the parliamentary elections and return her to the prime minister's post.

She has said the president fired her because he feared her popularity.

Yushchenko acknowledged that his own popularity was slipping, and he blamed the high expectations of Ukrainians.

"It's because what the people expected is far from fulfilled," he said, adding that the new government had to be pragmatic and not populist.

Yushchenko asked lawmakers Tuesday to approve his choice to lead the government, acting Prime Minister Yuriy Yekhanurov, a little-known technocrat.

Source: AP

Tuesday, September 13, 2005

Yushchenko Calls for Quick Investigation

KIEV, Ukraine -- President Viktor Yushchenko, introducing Ihor Drizhchaniy as the chief of the SBU security service on Monday, called for a quick investigation into allegations of corruption that had triggered the recent dismissal of his first government.


President Viktor Yushchenko stands in his office

Drizhchaniy was appointed on Sept. 8, hours after Oleksandr Turchynov, the previous SBU chief and a close ally of former Prime Minister Yulia Tymoshenko, resigned following the government reshuffle.

The reshuffle was the culmination of a political crisis that had been triggered by allegations made by Tymoshenko loyalists of alleged corruption among some of Yushchenko's top aides. The loyalists never presented evidence to back the charges, while the aides denied the allegations.

Yushchenko explained the reshuffle as necessary due to a sharp confrontation among members of his team, but said all the allegations must be carefully investigated and reported to the president within the next 10 days.

"You should give an answer that would rely on facts," Yushchenko told security service staff while officially introducing Drizhchaniy as the SBU chief. "Officer's honor should speak from your heart."

The investigation, depending on what findings it produces, may have a devastating effect on the country's politics and possibly reshape the Ukrainian political map after March 2006 general election.

If proved, the allegations against Petro Poroshenko, the former national security chief, and Oleksandr Tretiakov, Yushchenko's top aide, would deal a major blow to Our Ukraine, Yushchenko's party, at the election. It would also boost Tymoshenko's group ahead of the vote and may even catapult her to the post of prime minister after the vote.

If disproved, the allegations could boomerang against Tymoshenko and damage her chances at the election, analysts said.

Yushchenko urged the security service to investigate these allegations, but also to look into charges that Tymoshenko may have been involved in helping rival business groups get a stake in Nikopol Ferroalloy Plant (NFP).

Tymoshenko was the driving force behind the so-called 're-privatization,' in which the government had been returning to state ownership lucrative assets that had been allegedly illegally privatized years ago.

Ferroalloys vs. Television

In one such re-privatization case, Tymoshenko teamed up with Privat Group, a major business holding co-owned by billionaire Ihor Kolomoyskiy, to try to seize control over NFP, owned by billionaire Viktor Pinchuk.

Media reports suggested that Kolomoyskiy had sought to buy a 40% stake in Studio 1+1, Ukraine's second most popular television, an acquisition that had been tailored to favor Tymoshenko and her party ahead of the March 2006 election.

Although Kolomoyskiy denied the reports, his offer of $160 million for the 40% stake far exceeded its market value, suggesting that political considerations may have been taken into account while buying the stake. The acquisition was blocked by U.S.-based billionaire Ronald Lauder, who owns a 60% stake in the television, but Kolomoyskiy pledged to defend the acquisition in courts.

Yushchenko, speaking to reporters Sunday, suggested that senior government officials may have used their power to put pressure on courts and prosecutors during the re-privatization.

"I am trying to select the right wording here. The highest government officials have started to direct developments in favor of [certain] corporate interests," Yushchenko said. "This led to a loss of feeling of independence of the courts, prosecutors."

Asked whether Yushchenko had meant to implicate Tymoshenko in alleged corruption, he replied: "I will speak of the names only after the case is investigated."

The developments show that Yushchenko and Tymoshenko, allies during the last year's popular uprising known as the Orange Revolution, have been increasingly drifting apart ahead of the general election in March 2006.

Source: Ukrainian Journal

Dismissed Ukraine PM Tymoshenko to Run for Presidency

KIEV, Ukraine -- Dismissed Ukrainian Prime Minister Yulia Tymoshenko is going to run for a seat in parliament and for the country’s presidency separately from her “Orange Revolution” ally Viktor Yushchenko, she said in an interview with Russian daily Kommersant.


Fired Prime Minister Yulia Tymoshenko

Tymoshenko and her supporters will act as an “independent force” during the 2006 parliamentary and 2009 presidential campaigns, although she confessed that she had earlier signed a cooperation agreement with President Viktor Yushchenko.

“It was not me who made this choice (to separate) — it was the choice of Viktor Andreevich (Yushchenko) made under the pressure of his inner circle,” she said. “But I have forgiven him.”

Tymoshenko, fired amid allegations of corruption, said she would be unlikely to cooperate with Yushchenko in the future. “I do not belive the president will get rid of his circle, he has made a choice between the corrupt circle and the government. And the choice was made wittingly,” she told the paper.

She also dismissed the possibility of joining the team of Viktor Yuanukovich, who lost to Yushchenko during last year’s disputed presidential elections, or with any other political groups.

Although the former PM is sure that her bloc will win the race for parliament, and it will allow her return to the PM’s office, she pointed out that the citizens have to decide who they want to be prime minister or president of Ukraine.

Source: MosNews

Monday, September 12, 2005

Tymoshenko Predicts Regaining Ukraine Post

KIEV, Ukraine - Ukraine's dismissed prime minister said Monday that President Viktor Yushchenko had become afraid of her growing popularity and she predicted she would regain her job after March parliamentary elections.


Former Prime Minister Yulia Tymoshenko

In an interview with The Associated Press, former Prime Minister Yulia Tymoshenko said she expected her new bloc to win outright in March, claiming she was upholding the ideals of last year's "Orange Revolution."

"I don't think that this is just a possibility, I am certain of it," Tymoshenko said.

Under constitutional changes to take effect by the end of the year that will weaken the president's powers, the parliamentary majority in Ukraine will pick the new prime minister, not Yushchenko, she said.

Yushchenko dismissed the Cabinet led by Tymoshenko on Thursday, accusing the government of engaging more in power fights and public relations battles than in fulfilling the promises of the Orange Revolution.

The charismatic politician was one of the key figures behind last year's protests, rallying the hundreds of thousands who massed in Kiev to denounce election fraud. But Tymoshenko's relations with Yushchenko became strained as the shaky coalition of former opposition figures in his government increasingly fell apart.

"We did a lot of things and the fact that the president speaks this way, it shows his fear of the growing rating of the prime minister," said a tired-looking Tymoshenko. "But if I were him I would not admit so frankly that such a fear exists."

Tymoshenko has pledged to lead the party under her name, Bloc Yulia Tymoshenko, on its own separate path into the elections.

"I am sure that our team will win parliamentary elections because we have honest aims," she said, speaking from her party headquarters on the ninth floor of a rundown Soviet-era building, in sharp contrast to the elaborate government office she occupied just last week.

"People know that for these seven months, they received so many more positive results than they had received for the last 14 years, because of this I am sure that our team will form the government," Tymoshenko said.

She also insisted that she - and not Yushchenko - upheld the ideals of last year's mass protests.

"I know it is so," she said.

Tymoshenko said all accusations against her of corruption or working on behalf of certain business groups were nonsense and that they were aimed at damaging her reputation.

"The main is that the whole country knows that the government didn't take a kopeck," she said. "Corruption and the government were incompatible issues, because of this I think that today the country believes me as former prime minister ... and they believe that standing on the squares was not useless. I will never kill this hope in people, never."

She said she did not want to be known as "opposition," saying her aims and goals had not changed. Tymoshenko also ruled out cooperating with the Orange Revolution's foes, including losing presidential candidate Viktor Yanukovych and former President Leonid Kuchma's former chief of staff, Viktor Medvedchuk.

Source: AP

Ukraine's Orange Revolution Under Strain

KIEV, Ukraine -- Just 10 months after being swept to power in Ukraine by the Orange Revolution, President Viktor Yushchenko has fired his leading lady Yulia Tymoshenko. Accusations of corruption are flying and the country's economy is struggling.

Fired PM Yulia Tymoshenko

The official denial was reminiscent of Soviet days. "There is no government crisis," President Viktor Yushchenko announced last Wednesday. Just one day later, Yushchenko fired his prime minister, Yulia Tymoshenko. The administration, Yushchenko said, had been suffering from a lack of "team spirit."

Only nine months after the Orange Revolution, which led to the ouster of the authoritarian regime of former President Leonid Kuchma, the new government team -- the team that had inspired hundreds of thousands on Kiev's Independence Square in November -- was shattered.

Tymoshenko, nicknamed the "gas princess" because of her successful career in the energy business, and Yushchenko, a former banker who had served as both deputy prime minister and prime minister under Kuchma from 1999 to 2001, were never able to agree on a joint political program. Whereas Yushchenko preferred dealing pragmatically with the country's shady "bisnesmeni," his prime minister, dubbed the "Joan of Arc of the Ukraine," favored taking a harsher approach against supporters of the former regime.

Although the government managed to regain control over the country's biggest steel mill, Kryvorizhstal, from the former president's son-in-law, Viktor Pinchuk, the economic growth of Ukraine plunged from 12.1 percent last year to its current level of about 4 percent. In June, industrial production declined for the first time in six years.

The fight against corruption, one of the principal promises made in the heady days of Ukraine's revolution last December, has come to a standstill. Christopher Crowley, the United States Agency for International Development's bureau chief for Eastern Europe, complains that Ukrainian businesses continue to maintain double sets of accounts -- one real and one for show.

And in July, even the president himself came under fire when Ukrainska Pravda reported on the lavish lifestyle of Yushchenko's son, Andrei. The 19-year-old's fondness for expensive cars, like a €130,000 BMW M6, had raised eyebrows, forcing the president to go on the defensive. Yushchenko, outraged by the reports, lost his cool and likened the journalists who had written the story to "contract killers."

But his composure is not the only thing Yushchenko has lost. Some of the most trusted officials in his administration are no longer loyal to the architect of the Orange Revolution. Citing corruption among high-ranking authorities in Yushchenko's government, state secretary Oleksandr Zinchenko resigned on Sept. 3. The close associate of Tymoshenko was instrumental in organizing the Dec. 2004 protests that eventually led to the success of the Orange Revolution.

At the press conference called to announce his resignation, Zinchenko accused Pyotr Poroshenko, the head of the country's Defense and Security Council and one of the most influential financial backers of the Orange Revolution, of attempting to transform Ukraine's police, judicial and intelligence agencies into an "all-powerful new NKWD" -- a secret police in the Stalin tradition. The day after the Tymoshenko government was dissolved, Poroshenko also resigned, citing plans to fight charges against him in court. But Poroshenko's political career is by no means over. After quarreling with the sharp-tongued, financially strong and popular Tymoshenko, the Yushchenko will need his strongest supporter more than ever.

Yushchenko's choice for his new prime minister shows just how limited his choices are. Yuriy Yekhanurov, governor of the Dnipropetrovsk region and director of a reinforced concrete factory during the Soviet era, headed the country's central privatization authority between 1994 and 1997. Yekhanurov survived an investigation for theft of state funds after it petered out in the post-Soviet years, and was politically rehabilitated in 1999 by then Prime Minister Viktor Yushchenko, who named Yekhanurov his deputy prime minister.

Revolution, in other words, seems to have been put on the back burner this autumn. Instead, the name of the day is restoration.

Source: Der Spiegel

Opinion: Ukraine's "Post-Orange" Order

MOSCOW, Russia -- Viktor Yushchenko's decision to fire the government of Yuliya Tymoshenko puts to an end Ukraine's "post-orange" order. The coalition of revolutionaries who stirred the imagination of millions of Ukrainians in the name of fair elections and transparent government has shown itself to consist of inept and selfish civil servants.

Their failure to deal with what plagues Ukraine most - an economy controlled by oligarchs - raises the question of whether the "Orange Revolution" has any juice left to fulfill its promise.

During the days before and immediately after Tymoshenko's government was dismissed, Ukraine's political elite engaged in a round of divisive finger-pointing. Few have been spared over charges and counter-charges of corruption and abuse of office - not even Yushchenko. The leading personalities of the revolution and Yushchenko's strongest supporters - Petro Poroshenko, Oleksandr Zinchenko and Tymoshenko - are no longer in government, and it is difficult to foresee them ever working together again on the same team. This should come as no surprise: the pillars of the "Orange Revolution" have made the same mistake as the old regime - they have used the state to pursue personal interests and political agendas at the expense of good governance and professional economic management.

Tymoshenko's claim that a parallel government headed by Petro Poroshenko competed with her official duties as prime minister is doubtless true. Nonetheless, her populist politics, short attention span and unchecked political ambitions won her few friends in government. Poroshenko's considerable business interests appear to have blinded him to any acceptable meaning of the term "conflict of interest." Both have their faults, but their greatest collective sin was to jockey for power at the expense of real economic and political reform.

Yushchenko is not blameless. Up until the government's dismissal, he showed little real leadership. Indeed, he was forced to act as a "nanny" (to use his own term) to balance competing interests in his entourage instead of leading as a president with the popular mandate needed to make hard decisions. Too busy playing nanny, Yushchenko overlooked the tasks which were most expected of him - fighting corruption, and disentangling big business from politics. He allowed Poroshenko and Tymoshenko, to name just two public figures, to act as conduits representing oligarchic economic interests, just as his predecessor did.

What is truly disappointing is how little the "Orange Revolution" has moved away from Leonid Kuchma's corrupt style of politics, and the privatization of the economy for the benefit of the few. Instead of breaking with Kuchma's oligarchic system, Yushchenko's team - due to the lack of any team spirit - has only continued it. In principle, there was never anything wrong with Tymoshenko's plans to re-visit the opaque privatizations of state-owned property under Kuchma. What was disturbing was the perception that they were simply reversing some privatizations in order to punish some oligarchs and benefit others. Instead of doing away with corrupt practices, the "orange" elite appears to be more interested in re-gigging Kuchma's failed system in its favor.

This approach now appears to be part of official policy. Acting Ukrainian Prime Minister Yury Yekhanurov has ruled out the possibility of re-privatizations. He stated that "Where there are problems caused by election campaign promises of rivers overflowing with milk and honey, there will be a negotiation process, there will be a negotiating table, and, I think, there will be out-of-court settlements... I think our friends will understand the government's policy, and we will try to conduct negotiations as professionally as to not have problems afterward. So that they should live in Ukraine and not hide away on some islands." What sounds more like deal-making behind the scenes is now official policy.

Kuchma must be laughing up his sleeve. His successor is endorsing, out of weakness, the corrupt political and economic system that he created - after all, that was what Viktor Yanukovych was supposed to do. Yushchenko needs to tear a page from Russian President Vladimir Putin's book - take the economic oligarchy head on; he should not be open to negotiations with them until they acknowledge the supremacy of the state.

Negotiations with the oligarchs will only serve to further split the "orange coalition". Allowing the oligarchs to be the most meaningful point of reference energizes the political and material ambitions of the "orange coalition", who will be courted by them as the March 2006 elections approach. No doubt, Ukraine's oligarchs welcome this arrangement.

On the upside, Yushchenko and Yekhanurov have stated that the new government will be technocratic in profile, without prominent business people. This approach is designed to keep the oligarchs and their conduits directly out of government. This is a positive first step, but may now be immaterial. The oligarchs will deal with the political opposition to Yushchenko - including Tymoshenko. Yushchenko has done the right thing, but it may be too late. The "post-orange" order is finally on track in principle; the question that remains is whether it is still relevant.

Source: RIA Novosti

Former Rivals Of Orange Revolution Heroine Tymoshenko Look To Her As Possible Ally

KIEV, Ukraine -- Ukrainian opposition parties linked to the Orange Revolution's chief enemies are starting to look to former Prime Minister Yulia Tymoshenko as a possible partner after the breakup of her political union with President Viktor Yushchenko.

"There are no eternal enemies and allies in politics, common interests are the main issue," Ihor Shurma, one of the leaders of the opposition Social Democratic Party of Ukraine (United), told the Associated Press on Sept. 11.

Yushchenko on Sept. 8 sacked Tymoshenko's government, along with Petro Poroshenko, the powerful chief of the Security and Defense Council. He said the dismissals were prompted by infighting between rival government clans, which erupted last week into sharp allegations of corruption leveled at Poroshenko and some other close presidential aides.

Tymoshenko, the firebrand Orange Revolution leader, quickly signaled that she was moving into opposition to her former comrade-in-arms Yushchenko. Tymoshenko said she would lead the party under her name as a completely separate political force from the president.

Shurma, whose party is headed by former President Leonid Kuchma's one-time chief of staff, Viktor Medvedchuk, said his party and Tymoshenko's could start negotiating about a possible coalition ahead of March parliamentary elections.

The March elections are seen as key to cementing the democratic gains of the Orange Revolution mass protests. Changes in the law also envisage that the new parliament will yield far greater powers.

The SDPU's lawmaker Nestor Shufrich, who called Tymoshenko "a new orange opposition," said a union would be possible if corruption allegations against Yushchenko's government were proven.

While addressing Ukrainians during an emotional political talk-show appearance Sept. 9, Tymoshenko clutched in her hands two ribbons - one orange, which was Yushchenko's campaign color, and blue, the campaign color of his rival, losing presidential candidate Viktor Yanukovych.

She told viewers that she would start carrying both with her, saying "I want us to combine the best we have in both our colors" - a possible hint at her willingness to cooperate with her former political opponents.

For his part, Yanukovych didn't rule out cooperation with his former foe. "There is nothing impossible in politics," he said.

But Tymoshenko allies said that Ukraine's current weak opposition needs the firebrand of last year's protests more than she needs them. Her allies called the overtures to Tymoshenko an attempt by some parties to find a strong ally ahead of the election to help them win seats.

"We can have common issues to discuss, but we are different political forces with different ideologies," said Valeriy Chechkov, who speaks on behalf of Tymoshenko's parliamentary faction.

Political analyst Mykhaylo Pohrebinsky also believes that such a coalition is "unlikely but theoretically possible."

"The situation today is extremely ill-defined. Now everything depends on the new government, who will join it, if parliament supports it," Pohrebinsky said.

Yushchenko named Yuriy Yekhanurov, a little-known technocrat apparently with no strong political ambitions, as a new prime minister. Yekhanurov has pledged to put professionalism above party loyalties when choosing his team. He said that his main goal is to bolster the economy, which has slowed after years of strong growth.

Source: AP

Dismissed Ukrainian PM Tymoshenko Named Person of Year in Central and Eastern Europe

KIEV, Ukraine -- Sacked Ukrainian Prime Minister Yulia Tymoshenko has been named person of the year at the XV International Economic Forum in Krinitsa, Poland, but claims that she was stripped of her award at the personal request of President Viktor Yushchenko, Radio Liberty reported.

The chairman of the forum Zygmunt Berdykhovsky said that Tymoshenko was due to receive the award as a “symbolic representative of all the awarded” - all people, who have changed the situation in Eastern Europe during the Orange revolution in Ukraine last year.

The awards ceremony failed to take place as Tymoshenko had to cancel her visit to Poland after her cabinet was dismissed because of the allegations of high-level corruption.

She said earlier that at the “personal request of Viktor Yushchenko” she was “stripped of her award, and it was given to another politician.”

Zygmunt Berdykhovsky expressed hope that only a lack of information made Yulia Tymoshenko make such an announcement. “No one was stripped of the award. Mrs. Tymoshenko will receive it soon,” he promised.

Source: MosNews

Ukraine's Yushchenko: Former PM Acted in Favour of Business Groups

KIEV, Ukraine -- Ukrainian President Viktor Yushchenko on Sunday accused the prime minister he dismissed of having acted in favour of certain business groups in a dispute over a metals plant.

Yushchenko strongly criticized former Prime Minister Yulia Tymoshenko's government for its handling last month of the re-nationalization of Nikopol Ferroalloy Plant.

"High officials started directing events in favour of corporate interests; then crises appeared," Yushchenko said Sunday. "It was the last straw. I decided firmly that the decision most of all should be the following: Everybody should get lost."

Yushchenko fired Tymoshenko's government on Thursday, ending his political partnership with his former Orange Revolution ally amid a growing scandal over corruption allegations levelled at another one of the president's key revolution allies, Petro Poroshenko. Yushchenko also accepted the resignation of Poroshenko on Thursday from his post as head of the powerful Security and Defence Council.

The situation around Nikopol, one of Europe's largest ferroalloy plants, came to a head at the beginning of September after Ukraine's Economic Appeals Court ordered the factory's shares returned to the state. Tymoshenko's government endorsed a speedy shareholders meeting in which one group of minority shareholders, Privat Bank, was given key management posts. Privat Bank's leaders are reportedly big supporters of Tymoshenko.

Former President Leonid Kuchma's son-in-law, who had owned the factory, accused the government of stripping him of his assets only to hand them to his competitors. Viktor Pinchuk rallied his supporters outside the factory, and riot police were called in. Yushchenko eventually intervened, praising the court decision as valid but scolding his government for getting dragged into a feud between two business groups.

"I don't want another such Friday in my life," he said, referring to Sept. 2, when he intervened in the Nikopol crisis. "It is not because of two centres working in Ukraine but because one centre acted against the rules."

Tymoshenko has insisted that she did nothing wrong.

Nikopol, which the Ukrainian court ruled had been illegally privatized in 2003, serves at least 15 of the world's largest steel producers including U.S. Steel Corp. and Germany-based ThyssenKrupp. It was considered one of the crown jewels of Pinchuk's holdings.

Yushchenko also criticized his former ally for her populist moves during her government's seven-month tenure. "The ideas of Independence Square started becoming just a legend," he said.

Yushchenko said the new government must adopt a more pragmatic course. "We are drowning in promises and in PR," he said.

Yuriy Yekhanurov, a little-known technocrat apparently with no strong political ambitions, was tapped by Yushchenko to be the new prime minister. Yekhanurov has pledged to put professionalism above party loyalties when choosing his team.

Source: AP

Kuchma Backs Yushchenko in Ukraine Turmoil

KIEV, Ukraine -- Ukraine's former president, Leonid Kuchma, gave his support to the troubled administration of Viktor Yushchenko at the weekend, in what analysts said was a signal that opponents of the Orange Revolution could be brought into the new government.

Mr Kuchma, making his first public intervention in politics since he left office in January under a cloud of allegations of corruption and election fraud, also endorsed Yuri Yekhanurov, acting prime minister, who was appointed by Mr Yushchenko on Thursday after he sacked the government of Yulia Tymoshenko.

Mr Kuchma met Mr Yekhanurov - a minor figure in Orange revolution - in Dnipropetrovsk, eastern Ukraine on Saturday. They greeted each other with broad smiles and kisses on the cheek. The meeting, though brief, was in sharp contrast to relations between the two political camps last winter when Mr Yushchenko and Mr Kuchma held tense negotiations under the watch of foreign mediators and Yushchenko supporters stood face-to-face with armed police under Mr Kuchma's command.

Mr Kuchma on Saturday called on his former supporters - who hold about half the seats in parliament - to back Mr Yushchenko's efforts to form a new government. "Don't aggravate the situation," he said.

Mr Kuchma accused Ms Tymoshenko of using her position as prime minister to take personal revenge against him and Viktor Pinchuk, his businessman son-in-law. Mr Pinchuk was recently stripped of ownership of stakes in two big metallurgy plants that he had bought from the state when Mr Kuchma was president.

Analysts said a recent outpouring of support for Mr Yushchenko from Mr Kuchma and other former administration figures reflected new political realities in which Ms Tymoshenko had become the main proponent of change and Mr Yushchenko had become a force for stability and social peace.

Parliamentary elections next March are shaping up a three-way contest between Ms Tymoshenko, Mr Yushchenko and pro-Russian centrist and leftwing groups.

Igor Burakovsky, director of Kiev's Institute for Economic Research and Policy Consulting, said Mr Yushchenko was under pressure to form a new government quickly because of talks with Russia over gas supplies and a World Trade Organisation meeting at the end of the month which will look at Ukraine's bid to join at the Hong Kong summit in December. That made him more likely to choose experienced old-guard figures, Mr Burakovsky said.

Mr Yushchenko is expected to form the government after a confirmation vote in parliament on Mr Yekhanurov next week.

Source: Financial Times

Saturday, September 10, 2005

Ukraine's Yushchenko Presses On With New Government

KIEV, Ukraine -- Ukrainian President Viktor Yushchenko, brushing off defiant criticism by his ex-premier, pressed ahead on Saturday with plans to install a new government and analysts expected a new team to be in place soon.

President Viktor Yushchenko assured Washington that Ukraine remained on a pro-Western course despite this week's government sacking which has left him facing a tough new political rival ahead of a key election

As Ukrainians digested Friday's tour de force by Yulia Tymoshenko, sacked by Yushchenko, his acting prime minister said he would assemble a team of experts rather than politicians to run the country until next year's parliamentary elections.

Yushchenko asked Yury Yekhanurov, a regional governor and liberal economist, to form a new cabinet after sacking Tymoshenko, his staunch ally in last December's "Orange Revolution", amid infighting and graft allegations.

The public bickering among the main leaders of last year's pro-Western "Orange Revolution" has seriously damaged confidence among many Ukrainians in Yushchenko's eight-month leadership.

Tymoshenko, herself a considerable force inside Ukraine, said on Friday she had been sacked unjustly and fallen victim to intriguing by corrupt Yushchenko aides who had manipulated him.

She said she was forming a parallel team that would compete with the Yushchenko camp in key parliamentary elections in March 2006 that will redraw Ukraine's political landscape.

Analysts however said they expected a quick end to the crisis, in line with Yushchenko's expectations, saying Yekhanurov stood a good chance of winning the required majority of 226 votes in the divided Rada (parliament).

"The political instability in Ukraine should soon end. We expect the new government to be finalised by next Wednesday," Foyil Securities investment house said in a research note.

SUNDAY MEETINGS PLANNED

Yushchenko planned to meet on Sunday with Yekhanurov and some parliamentary faction leaders, his chief of staff Oleh Rybachuk told reporters.

Yekhanurov said he intended to put together a team of technocrats, meaning professional experts, rather than a team of politicians as was the case with the Tymoshenko cabinet.

"Firstly, professional qualities of the candidates will be taken into consideration," Yekhanurov told reporters.

Analysts said Yekhanurov, a direct opposite to the ambitious Tymoshenko, would bring much needed consistency to Ukraine's economic policies which is key ahead of the parliamentary poll.

"Yekhanurov will head the government predictably and in a stable fashion. There is a very high chance of Yekhanurov being approved by parliament as the prime minister," respected weekly Zerkalo Nedeli said.

A foreign expert in Kiev, who did not wish to be named, said Yekhanurov would appeal to centrist forces in parliament much more than Tymoshenko with her often populist declarations and leftists political views.

Yekhanurov has been already holding talks with the president and parliament on his new cabinet but he announced no names.

Acting Interior Minister Yury Lutsenko said he had been asked by the president to stay. Local media reported many others were also likely to stay but such key ministers as economy, finance and energy would be replaced.

Tymoshenko and her allies said they would seek no role in the Yekhanurov team. She said she expected to be in government again in the future after the parliamentary poll.

Rybachuk said on Friday that the new cabinet would not include "direct representatives of business".

Some critics have said Yushchenko's administration was too close to big business, despite pledging to root out the cronyism under his predecessor, Leonid Kuchma.

Yekhanurov said he would start work on the budget draft for next year already on Monday. The government should submit the draft budget to parliament by September 15.

He also pledged to soften interventionist policies of the previous government and said there would be no reprivatisation of the sort Tymoshenko had recommended.

"If previously we were using rather tough instruments, then now they should be softer," he was quoted by Iterfax-Ukraine as saying.

Source: Reuters

Tymoshenko Signals She is Joining Opposition to Yushchenko

KIEV, Ukraine -- Former Prime Minister Yulia Tymoshenko no longer considers herself part of President Viktor Yushchenko's team, a breakdown in the political partnership that launched the Orange Revolution.

Former PM Yulia Tymoshenko watches President Viktor Yushchenko addressing a press conference on a television set in her office

She said that now she would lead a separate political force from her former comrade in arms, who dismissed her from her post on Sept. 8 following a growing crisis in his seven-month old government.

"Today we are two different teams," Tymoshenko said Sept. 9. "I think these two teams will go their own way." But with Ukraine increasingly now looking toward March's parliamentary elections, Tymoshenko promised "it does not mean it will be a war."

"Viktor Yushchenko and I will go to the elections on parallel paths," she said, adding, however, "I won't go into an election with people who have so discredited Ukraine." She was careful, however, to avoid ever mentioning the word opposition, which in Ukraine is how the deeply unpopular former allies of ex-President Leonid Kuchma are known.

Tymoshenko's move deals a huge setback to Yushchenko. Her popularity rivals his, and for many Ukrainians it is Tymoshenko - with her fiery speeches and chic style – who came to symbolize the ideals of last year's Orange Revolution.

"We will run as a separate and very powerful political force, and I think the results of our team will be very, very good," she said in a live broadcast.

Tymoshenko blamed the circle around Yushchenko for her government's dismissal, and the breakup of their union.

"I am sure it is not the president, it is his team," Tymoshenko said, but she also had harsh words for the president, accusing him of turning against her in favor of allies that she called corrupt.

Yushchenko said Sept. 8 that he had dismissed Tymoshenko's seven-month old government because it was too embroiled in internal bickering and losing sight of their Orange Revolution promises. He also accepted the resignation of his close ally, chief of the Security and Defense Council, Petro Poroshenko.

Poroshenko and Tymoshenko had clashed from the onset of Yushchenko's presidency, and Tymoshenko expressed frustration that she was sidelined, saying her popularity had apparently threatened the president's allies.

Asked if Yushchenko betrayed her, she answered obliquely: "I forgive him."

She called the collapse of her alliance "the biggest moral trauma of my life."

"Until the last minute, I made every effort to keep our unity so that it would not break down, so the ideas of our Orange Revolution would not dissolve."

Tymoshenko, a talented orator, had whipped up the crowds in Kyiv’s Independence Square last fall and winter, motivating hundreds of thousands to carry the Orange Revolution and Yushchenko to election victory.

Source: AP

Ex-PM Tymoshenko Believed to Make a Comeback

KIEV, Ukraine -- Ukraine's President Viktor Yushchenko dropped Yulia Tymoshenko, 44, as prime minister on Thursday.

Dismissed along with her Cabinet, Tymoshenko was regarded as the heroine of the Orange Revolution that swept Yushchenko to power.

Former Prime Minister Yulia Tymoshenko after her emotional televised address in which she signaled that she was moving into opposition to Ukraine President Viktor Yushchenko, her comrade in arms from the Orange Revolution

The break-up, amidst allegations of corruption, left Yushchenko looking isolated, especially in contrast to the broad coalition that joined in last year's mass protests.

But if Tymoshenko decides to move into the opposition, some believe she will become a strong challenger to the president.

"I can predict that our team, which will be headed by Yulia Tymoshenko, will win the parliamentary election (in March) and return to its position in April," former Vice-Prime Minister Mykola Tomenko was quoted as telling the Interfax-Ukraine news agency.

In 1979, Tymoshenko married Oleksandr Tymoshenko, a son of a mid-level Soviet Communist Party official.

She graduated from Dnipropetrovsk State University with a degree in economics in 1984, and went on to gain a candidate degree (the equivalent of a PhD) in economics. From 1995 to 1997, she was the president of United Energy Systems of Ukraine. At that time, she was nicknamed "gas princess."

Tymoshenko made a move into politics in 1996, and was elected as a representative of Kirovohrad Oblast. From 1999 to 2001, she was the deputy prime minister in the energy sector in the government of Yushchenko.

Tymoshenko was fired by then President Leonid Kuchma in January 2001, on charges of forging customs documents and smuggling Russian natural gas while she was the president of United Energy Systems of Ukraine between 1995 and 1997.

She was arrested in February 2001 but was released and cleared of charges several weeks later.

Following the Orange Revolution that ousted Kuchma, Tymoshenko was appointed as prime minister by new president Yushchenko on February 4, 2005.

Source: China Daily

New Govt in Kiev

KIEV, Ukraine -- Ukraine’s new prime minister yesterday held talks on forming a new government as Kiev gave assurances that President Viktor Yushchenko’s dismissal of the old cabinet would not spell an end to the ex-Soviet nation’s new, pro-Western course.

Acting Prime Minister Yury Yekhanurov

Yury Yekhanurov, a 57-year-old liberal economist and a trusted Yushchenko ally, huddled yesterday with outgoing ministers and political party leaders following his surprise appointment as acting premier the previous day.

Yushchenko sacked his seven-month-old cabinet on Thursday in a bid to quash a deepening corruption scandal sparked by a simmering battle for power among top officials of the outgoing government.

His new chief of staff, Oleg Rybachuk, vowed yesterday that the new government would be free of the big business influence that had brought down the previous cabinet.

“You will not see business representatives in the new government,” Rybachuk told reporters during a televised press conference.

The appointment of Yekhanurov, a long-time Yushchenko ally with extensive experience in the executive branch who is not known for harbouring political ambitions, was welcomed across Ukraine’s political spectrum and by investors.

“With the arch rivals now out of government, conditions may be in place for creating a new, truly united and reform-oriented cabinet,” wrote Dragon Capital, a brokerage firm in Kiev.

“In the longer term, we think Yushchenko’s abrupt move will prove justified as the post ‘orange revolution’ power struggle, exacerbated by the approaching parliamentary elections, threatened to completely relegate reforms to the back stage,” it said in a note.

Meanwhile Kiev sought to assure the international community that Ukraine would remain on its new, pro-Western course despite a change of government.

Outgoing foreign minister Boris Tarasyuk spoke by phone with European Union foreign policy chief Javier Solana late Thursday, assuring him that Yushchenko’s policy of driving Ukraine toward membership in the EU and the Nato remained on course. Tarasyuk “underlined that Ukraine’s European integration course, set by the president, remained unchanged,” said a foreign ministry statement.

Similarly, Rybachuk met with foreign ambassadors in Kiev to brief them on developments, the presidential press service said in a statement.

Rybachuk, who had previously served as a deputy prime minister in charge of European integration affairs, said he would continue such work in his new position.

As Yekhanurov consulted on forming his government, attention in Ukraine turned to ousted premier Yulia Tymoshenko and whether the ambitious, popular politician would decide to completely break with Yushchenko, splitting the “orange” camp ahead of next year’s key legislative elections.

Constitutional changes that come into effect on January 1 in Ukraine transfer many presidential powers to parliament and Yushchenko and his allies will need to score a decisive victory during the March 2006 vote in order to continue their pro-Western policies.

Source: AFP

Fired Ukraine Premier Sees End of 'Orange Revolution' Unity

KIEV, Ukraine -- Ukraine's ousted prime minister, Yulia V. Tymoshenko, said Friday that the partnership that led the "Orange Revolution" last year was over and that she would no longer support the man who fired her, President Viktor A. Yushchenko.

Ukrainian Channel 'Inter' shows the television address of sacked Ukrainian Prime Minister Yulia Tymoshenko in Kiev

When the president dismissed her on Thursday, she said on a late-night talk show: "He practically ruined our unity, our future, the future of the country. I think this step is absolutely illogical."

The dismissal capped a period of deteriorating relations between the former allies and came amid bitter infighting and mutual accusations of corruption in the president's inner circle.

Ms. Tymoshenko added to questions swirling around Mr. Yushchenko's government by accusing four of his aides of corruption. She offered no proof. But Mr. Yushchenko's former chief of staff, Oleksandr O. Zinchenko, said in an interview on Friday that he had submitted three documents to the country's prosecutor general that he said demonstrated acts of corruption.

In a final attempt at reconciliation, Ms. Tymoshenko said, the president asked her to reach out to her antagonists in the administration. "How could I reach out my hand to them when their hands were busy stealing from the country?" she said.

Now, she said, using the president's name and patronymic: "I and Viktor Andriyovych will go to the elections in parallel ways. It does not mean it is a war. There will be two different teams, with absolutely different people."

Mr. Zinchenko's resignation a week ago - and his subsequent accusations of corruption - touched off the most tumultuous week in Ukrainian politics since Mr. Yushchenko became president. The upheaval and the accusations of corruption have embarrassed Mr. Yushchenko, who led a popular uprising promising to root out graft and backroom dealing.

Parliamentary elections are set for March. A constitutional amendment that takes effect in January will transfer many presidential powers to Parliament, making the elections all the more crucial for Mr. Yushchenko.

Ms. Tymoshenko made it clear that she blamed Mr. Yushchenko's advisers, not the president himself.

"I will not go to the elections with those people who have discredited Ukraine so much," she said. "I do not mean the president but those in his closest circle."

She added: "It is the biggest moral trauma of my life. Until the last minute, I made every effort to keep our unity so that it would not break down, so the ideas of our Orange Revolution would not dissolve."

During the peaceful uprising last year against President Leonid D. Kuchma, Ms. Tymoshenko rallied the crowds in Kiev's Independence Square in support of Mr. Yushchenko's candidacy.

Now, one day after dismissing her, Mr. Yushchenko moved quickly to put his government back together, urging Parliament to endorse the man he had named to replace her, Yuri Yekhanurov, 57, a low-key technocrat who was expected by experts to be quickly confirmed.

"Our aim is to nominate the candidate for prime minister to Parliament as soon as possible, vote, and form the government team within the coming days," Mr. Yushchenko said on his Web site, www.president.gov.ua.

As Mr. Yushchenko held meetings on Friday with the speaker of Parliament, factional leaders and regional governors, Mr. Yekhanurov met with departing ministers and political party leaders and said he planned to put together a new government soon.

He told reporters that Parliament was likely to vote on his nomination after Sept. 19, when it is scheduled to meet in a full session.

The breakup of the partnership comes at a time when public discontent has been rising over the government's failure to improve the economy.

During Ms. Tymoshenko's tenure, economic growth took a sharp downturn, and her leadership was punctuated by public squabbles and policy reversals. The government's privatization program failed to earn the expected revenues, and the government is expected to face budget shortfalls at the end of the year.

The president's chief of staff, Oleh Rybachuk, said at a news conference that the breakup of the government presented an opportunity to start over. "All political forces have been invited to take part in the formation of the government," he said.

He said some members of Ms. Tymoshenko's cabinet would be retained, but not those who were "direct representatives of business."

He was addressing criticism that Mr. Yushchenko's administration was too close to big business. The allegations of corruption and of mixing business and politics echoed criticisms of the previous government led by Mr. Kuchma.

The prosecutor general, Svyatoslav M. Piskun, said Friday that he had created a commission made up of senior prosecutors and officials of the Interior Ministry and the security service to investigate the corruption charges. "This commission started work today," he said.

Source: NY Times

Dismissed PM Shuns Yushchenko

KIEV, Ukraine -- Dismissed Ukrainian premier Yulia Tymoshenko says she will take her supporters into opposition against charismatic leader and former ally Viktor Yushchenko, amid a deepening political crisis.

The dream team swept to power in the country’s peaceful ‘Orange Revolution’ less than a year ago was in tatters, threatening the success of the nation's pro-Western course.

"Today we are definitely two different teams and these two teams will go their separate ways," the Ms Tymoshenko said during a television talk show.

The former premier — a dynamic figure who helped propel Mr Yushchenko and his pro-Western political movement to victory in the January election after December’s Orange Revolution – said on television that her dismissal was unfair but said life would continue to improve for Ukrainians.

The move is a major blow to President Yushchenko ahead of a key legislative election next year that will redraw Ukraine's political landscape.

Constitutional changes on January 1 will transfer many presidential powers to parliament and Mr Yushchenko and his allies will need to score a decisive victory during the March 2006 legislative election in order to continue their pro-Western policies.

In a live TV statement Ms Tymoshenko said several Yushchenko aides were guilty of corruption and said they had schemed against her ever since she was appointed prime minister in February.

Mr Yushchenko sacked his seven-month-old cabinet on Thursday in a bid to quash a corruption scandal sparked by a power struggle between Ms Tymoshenko and the powerful former chief of the National Security Council, Petro Poroshenko.

The Ukrainian president named a trusted ally, Yury Yekhanurov, as acting premier.

Mr Yushchenko said the new government would continue with the reform policies that he set out at his inauguration in January.

He spoke with European Commission chief Jose Manuel Barroso to assure him he would continue a pro-Western course, a statement said.

Mr Yekhanurov said parliament would likely vote on his candidacy as premier after September 19.

The appointment of Mr Yekhanurov was welcomed across Ukraine's political spectrum and by investors.

Mr Yekhanurov said his government would favour negotiations to resolve disputes over past privatisation deals in the country.

Ms Tymoshenko's cabinet had been criticised for its efforts to re-nationalise several enterprises that were sold cheaply to insiders of the previous regime.

Source: SBS Media

Division Opens In Ukrainian Leadership: Will Yushchenko Fall In?

KIEV, Ukraine -- It was no secret that the alliance that brought Viktor Yushchenko to power in Ukraine had its disagreements. The alliance, forged in the second round of the 2004 presidential elections, consisted of an eclectic group that ranged from socialists through liberal businessmen, moderate conservatives, and populists.

File picture shows Ukrainian Prime Minister Yulia Tymoshenko (C) and Secretary of the National Defence and Security Council Petro Poroshenko (L) listening to President Viktor Yushchenko (R)

The main axis has always run between National Security and Defense Council (NRBO) Secretary Petro Poroshenko and Prime Minister Yulia Tymoshenko. The two camps mainly disagreed on the direction of reform, pitting Poroshenko's market economic views against Tymoshenko's state-capitalist orientation. This division has now been eclipsed by one that is potentially more damaging to Yushchenko, particularly as he prepares to visit the United States to attend the annual opening session of the UN General Assembly.

On September 5, Oleksandr Zinchenko held a devastating press conference after tendering his resignation as head of the presidential secretariat.

Zinchenko had been an important member of the Yushchenko team. Until 2003 he was a senior figure in the pro-Leonid Kuchma Social Democratic Party-United (SDPUo) headed by Viktor Medvedchuk. Zinchenko was also first deputy parliamentary speaker. Then he defected to Yushchenko's Our Ukraine after the SDPUo was implicated in violent election fraud in the Mukachevo mayoral elections. In a clever strategic move, Yushchenko appointed Zinchenko as the head of his presidential campaign.

Zinchenko used his press conference to accuse key members of the Yushchenko alliance, including Poroshenko, of corruption. Two factors explain Zinchenko's broadside.

First, the presidential secretariat has been criticized for being "totally ineffective" in terms of controlling the implementation of presidential and government decrees. When Zinchenko began to cooperate with Pora leader Vladyslav Kaskiv to improve the effectiveness of the presidential secretariat, Poroshenko claimed that Zinchenko intended to head the Pora political party for the 2006 parliamentary.

Justice Minister Roman Zvarych had blocked Pora's attempts to create a political party, but the courts ruled that the Ministry should register the Pora party and backdate the registration to before March 2005 so that it can contest the 2006 election.

Zvarych is a close ally of Poroshenko, who actively defended Zvarych during the scandal surrounding the minister's fraudulent academic credentials. Zinchenko loudly criticized Poroshenko's behind-the-scenes maneuvering and accused Poroshenko of turning the NRBO into an "all-strong and powerful new NKVD".

Prior to his resignation Zinchenko had called upon Yushchenko to "halt Poroshenko." During his press conference Zinchenko demanded Poroshenko's resignation and accused him of turning the Council into a conduit to promote cadres loyal to himself. Zinchenko also alleged that Poroshenko sought to control the judiciary and prosecutor's office. In fact, Ukrainian media have dubbed Deputy Prosecutor Viktor Shokin as "Poro-Shokin."

Second, sources close to Zinchenko have told Jamestown that a key factor propelling Zinchenko into action was the fear that Poroshenko and his allies would attempt to remove Prime Minister Tymoshenko. Poroshenko is known to covet the prime minister's job and was visibly unhappy at being denied this position in the new government. Zinchenko apparently feared that removing Tymoshenko would badly split the Yushchenko camp and decided to act.

Besides Poroshenko, Zinchenko also targeted Yushchenko adviser Oleksandr Tretyakov and the head of the Our Ukraine parliamentary faction, Mykola Martynenko. All three were, he claimed, "cynically undertaking their plans to utilize themselves being in power for their own aims". Zinchenko accused all three of corrupt dealings and claimed that they had ignored Yushchenko's election promise to separate business from politics. As evidence, Zinchenko cited Tretyakov's revival of corrupt Kuchma-era practices in the energy and telecommunications sectors. Tretyakov is also disliked for limiting access to Yushchenko.

Martynenko is a wealthy businessman from western Ukraine. When Kuchma was president Martynenko controlled the Interport-Kovel Free Economic Zone (FEZ) in Volyn oblast. Before Yushchenko shut them down, the zones could import lucrative goods such as cigarettes, alcohol, coffee, and meat duty-free.

Martynenko has a cozy deal with Minister for Emergency Situations Davyd Zhvannia for supplying nuclear fuel, a sector as corrupt as any in the energy field. Martynenko also heads the parliamentary committee on Fuel Energy, Nuclear Policy, and Nuclear Security.

Martynenko and Zhvannia backed Our Ukraine in the 2002 parliamentary election and became parliamentary deputies. They both belonged to the Razom business group, which unites politically unaffiliated businessmen and is the most influential group within the Our Ukraine bloc. Tymoshenko, like Zinchenko, has described Martynenko and Zhvannia as oligarchs and believes them to be corrupt.

The 2005 annual list of the 100 wealthiest people in Central and Eastern Europe, compiled by the Polish journal Wprost, includes seven Ukrainian businessmen. Besides six oligarchs, the list also includes Poroshenko, who ranks 95th with an estimated fortune of $350 million.

Continued association with questionable businessmen such as Poroshenko could ultimately spell the end of the Yushchenko coalition. A Razumkov Center poll found that the number of Ukrainians who believed that business was being truly separated from politics had declined from 51% in April to 34% in August. If this trend is permitted to continue due to Yushchenko's inaction, then the Ukrainian public could come to see him as little different from those in power in the Kuchma era.

Source: Eurasia Daily Monitor

Friday, September 09, 2005

Yushchenko Axes Government As Orange Coalition Unravels

KIEV, Ukraine -- The political marriage at the heart of the Orange Revolution suffered an ugly breakup yesterday, as Ukrainian President Viktor Yushchenko fired his Prime Minister, Yulia Tymoshenko, along with the rest of the government.

Ukrainian President Viktor Yushchenko (L), and Prime Minister Yulia Tymoshenko (R) at a press conference in Kiev, Ukraine

Mr. Yushchenko seemed reluctant to dismiss the woman who helped him gain power, and who now may want to oppose him for the country's top job. The President made the move only eight months after the two held hands in Kiev's central square, wearing orange scarves and triumphant smiles, cheering the demise of a post-Soviet regime widely regarded as decrepit and corrupt.

"I have spent the last three nights thinking about how to keep together that which has already separated," Mr. Yushchenko said yesterday. "The key issue was the issue of trust. If there had been a possibility to preserve team spirit, to remain together, it would have been the best answer. We had such an agreement and during the night it was changed, but not by me."

Ms. Tymoshenko's departure follows a series of defections from the team that helped Mr. Yushchenko prevail in a chaotic struggle for the presidency in December. Thousands of people flooded the streets in protest against what they described as vote rigging in favour of a candidate backed by Russia. When the election was repeated under the scrutiny of foreign observers, the pro-Western candidate, Mr. Yushchenko, took 52 per cent of the vote.

On the streets of Kiev yesterday, people were wondering what happened to their revolution.

"It is very bad," said Iryna Petriv, 24, a public-relations manager. "People believed in this team because these people promised to change their lives for the better. I do not like that today Yushchenko dismisses the cabinet and tomorrow Tymoshenko will say bad things about Yushchenko. Considering that they were going to run for next year's election together, this scandal raises many questions."

Polls suggest an increasing number of Ukrainians are dissatisfied with the new government: An August survey of 2,000 people in the country of 48 million found that 43 per cent of them agree that Ukraine is on the wrong path, a sharp increase from 23 per cent in April.

That survey was taken as voters reacted to inflation, political infighting, slowing economic growth and the sluggish pace of promised reforms. The numbers don't reflect how much worse the situation has grown in recent weeks as the government, whose central promise was a fight against corruption, has been dogged by high-profile allegations of financial impropriety.

Olexander Zinchenko, the President's chief of staff, who resigned abruptly this week, made the most damaging accusation. He accused Petro Poroshenko, Secretary of the National Security and Defence Council, of corruption, interference with the media and meddling in the justice system.

Mr. Poroshenko, a confectionery and media tycoon and staunch supporter of Mr. Yushchenko, was widely seen as the President's counterbalance to the rival Prime Minister in the new government. He denied the accusation but resigned yesterday.

Deputy Prime Minister Nikolai Tomenko also quit, saying he could no longer tolerate working among the corrupt advisers and aides to the President.

Mr. Yushchenko has asked the other ministers to stay at their posts until he can name a new cabinet. Ms. Tymoshenko is the only exception; she has been replaced in the interim by Yuriy Yekhanurov, a regional governor who is loyal to Mr. Yushchenko.

It's the climax of a long-simmering feud between Ms. Tymoshenko, a populist who favoured increased social spending and sweeping re-examination of flawed privatizations, and Mr. Yushchenko, a free-market liberal who wanted greater fiscal restraint and only limited investigations of privatization.

An adviser to the President said Mr. Yushchenko tried to broker a deal with Ms. Tymoshenko this week, allowing the charismatic 44-year-old to keep her job while axing some of the people implicated in the growing swirl of accusations that politicians profited from the dismantling of the former government.

It appears that Ms. Tymoshenko refused the invitation. She didn't make any statements yesterday, saving her comments for a news conference today.

Dan Bilak, a Canadian lawyer advising Ms. Tymoshenko on administrative reform, said that while the tensions between her and Mr. Yushchenko likely played a role in yesterday's decision, the biggest factor was probably the President's desire to end the crisis in his government.

"People will respect that a tough decision was taken, and taken quickly," Mr. Bilak said.

Six months before the parliamentary elections, analysts say, Mr. Yushchenko desperately needs to improve his popularity if he hopes to implement his ambitious program to take the former Soviet republic into the European Union. The new Ukrainian constitution is to take effect in January, devolving many powers from the President to the parliament and making it politically necessary for Mr. Yushchenko's allies to win seats.

But the 51-year-old President, who is in poor health and often travelling abroad, could face a strong challenge from the telegenic Ms. Tymoshenko. He has invited her to remain on his team in an unspecified capacity, but several observers speculated last night that she would prefer to go her own way -- perhaps launching an opposition party in preparation for the parliamentary elections in March.

"The big question is, will Tymoshenko play the role of official opposition?" asked Olexiy Haran, a professor of political science at Kyiv-Mohyla Academy.

In a commentary published on the Ukrainian Pravda website, political analyst Andriy Yermolaev suggested an answer: "Tymoshenko will be developing her own political project now."

Source: The Globe and Mail

Profile: Ukraine's Caretaker PM

KIEV, Ukraine -- Ukrainian President Viktor Yushchenko has appointed Yuri Yekhanurov as acting prime minister, after sacking the entire cabinet.

Mr Yekhanurov, 57, is one of the country's most experienced politicians and a long-time ally of the president.

He has a reputation of a low-key technocrat able to bring discipline to the country's economic policies, which under his predecessor Yulia Tymoshenko were characterised by high-profile public rows and inconsistency, analysts say.

"I have one goal... to ensure stability," the Russian-born economist said in his first comments after learning of his appointment.

"That's why my task right now is to form a government," said Mr Yekhanurov, who is currently serving as governor of the eastern region of Dnipropetrovs'k.

His new appointment still needs to be approved by Ukraine's parliament.


Experienced player

Mr Yekhanurov, an ethnic Buryat, was born in the village of Belkachi in Russia's far-north region of Yakutia.

He later moved to live in Ukraine - then part of the Soviet Union - and studied in a construction college in the capital before graduating from the Kiev Economy Institute in 1973.

Mr Yekhanurov quickly climbed the career ladder in the construction industry, becoming a deputy chairman of Kiev's construction directorate in 1988.

After Ukraine became independent in 1991, he worked in the government and also in the Kiev city administration, overseeing economic reforms.

Mr Yekhanurov's first big appointment came in 1994, when he served as chairman of the State Property Fund in charge of the privatisation programme.

In 1997, he was economics minister in the cabinet of Pavlo Lazarenko and was elected to parliament a year later.

Mr Yekhanurov joined Mr Yushchenko's team in 1999 and has been with the leader of the Orange Revolution ever since.

He was a key player in Mr Yushchenko's election headquarters during the 2001 parliamentary poll and also the controversial presidential election in 2004, which swept Mr Yushchenko to power.

Mr Yekhanurov is married, with one son.

Source: BBC News

Yushchenko Fires Revolution Mate

KIEV, Ukraine -- It isn't easy being orange. Just nine months after they rocked the world, defying a dictator by standing shoulder-to-shoulder with tens of thousands of supporters in Kiev's Independence Square, leaders of Ukraine's Orange Revolution have turned on each other.

Ukrainian President Viktor Yushchenko sacked the government of Prime Minister Yulia Tymoshenko (L), following the resignation of Petro Poroshenko (R), secretary of the National Defence and Security Council, who was accused of graft by an outgoing Yushchenko aide

Yesterday, with his administration staggering under corruption allegations and all but crippled by political infighting, President Viktor Yushchenko fired his populist Prime Minister Yulia Tymoshenko and her entire Cabinet.

The move came amidst a flurry of resignations, in which three of Mr. Yushchenko's top advisors quit after other former top government leaders accused them of wholesale corruption.

His chief of staff, Oleksandr Zinchenko, brought the long-simmering political crisis to a boil on Saturday when he resigned, saying a tight circle of advisors around the President were even more corrupt than those who ran the government under former president Leonid Kuchma.

They "use government posts to get their hands on everything they can," fumed Mr. Zinchenko, who masterminded Mr. Yushchenko's 2004 presidential election campaign and organized the street protests that ultimately swept him to power.

He singled out Petro Poroshenko, head of Ukraine's Defence and Security Council, Oleksandr Tretyakov, another of Mr. Yushchenko's top aides, and Mykola Martynenko, head of the pro-presidential faction in parliament, as the most corrupt members of the government.

His comments ignited a political firestorm as competing factions within the government turned on each other and Mr. Yushchenko's orange coalition began to disintegrate. Mr. Poroshenko's allies squared off against Ms. Tymoshenko's supporters.

Ms. Tymoshenko, a populist politician, is known as the "goddess of the revolution" for her looks, the golden braids she wears wrapped around her head like a Ukrainian peasant girl, and the crucial role she played rallying support for Mr. Yushchenko's revolution.

Mr. Poroshenko, one of the richest businessmen in Ukraine, is known as the "Chocolate King." He built his business empire around a candy and confectionery business.

He was also one of the chief financers of Mr. Yushchenko's presidential campaign and the owner of Channel Five television, the only station that was sympathetic to Mr. Yushchenko during the uprising.

Both Ms. Tymoshenko and Mr. Poroshenko are ambitious billionaires with shady reputations. Neither could work with the other inside Mr. Yushchenko's government.

In the seven months Ms. Tymoshenko was prime minister, Ukraine's government seethed with tension and constantly stumbled over policy, arguing over reforms, disagreeing on economic initiatives and fighting behind the scenes over promises to redivide spheres of economic influence.

After the fall of communism, Mr. Kuchma's government had moved to privatize Ukraine's industries through a series of corrupt sweetheart deals that saw many businesses sold to insiders for a fraction of their worth.

Mr. Yushchenko and Ms. Tymoshenko promised to undo some of the most blatant sell-offs by "re-privatizing" the economy.

But some targets of Ms. Tymoshenko's "re-privatization" are reported to be close allies of Mr. Poroshenko, who effectively controls Ukraine's military and law enforcement agencies.

Ms. Tymoshenko has considerable business interests of her own.

She amassed a fortune while running a Ukrainian gas trading company in the mid-1990s and was once rumoured to control nearly 20% of Ukraine's gross national product.

Before she fell out with Mr. Kuchma's government and became an opposition leader, she was accused of paying kickbacks to a former prime minister in exchange for her companies being given a stranglehold on the country's gas supplies.

Russia opened a criminal investigation into her business deals and ordered her arrest, accusing her of bribing Russian defence officials to pad gas contracts to the tune of $80-million.

Yesterday, as Mr. Yushchenko called on Yury Yekhanurov, a former economics minister, to become acting prime minister, the Ukraine President said he had no choice but to sideline his former partners in revolution.

"I want people to feel that the government works in harmony ... [but] they lost the team spirit and faith," he said. "The President must not be a governess who has to settle relations between them."

But Ukraine's political problems may have only just begun.

The country could come to a political standstill as factions square off in anticipation of parliamentary elections scheduled for March and constitutional changes slated to take effect in January that will shift some of the president's powers to the prime minister.

Also, Mr. Yekhanurov, the new Prime Minister, was the chief of the State Property Fund under Mr. Kuchma from 1994 to 1997.

He was responsible for the original privatization of state industries in the former Soviet republic.

Source: National Post

Thursday, September 08, 2005

EU Urges Yushchenko to Restore Stability

BRUSSELS, Belgium -- The European Union urged President Viktor Yushchenko Thursday to act fast to restore stability after sacking Ukraine's government, while saying it is sure he remains committed to western values.

PM Tymoshenko whose government was sacked on Thursday

The European Commission said it was watching developments closely after Yushchenko -- who was elected in December after the country's "Orange revolution" -- appointed a senior regional official as acting prime minister.

"President Yushchenko won the elections on a platform of commitments to reform, committments to rooting out corruption and a clean hands policy," said a spokeswoman for the commission, the executive arm of the 25-nation EU.

"We are confident that these remain the guiding principles of his administration," added spokesperson Emma Udwin.

"We hope that he will take rapid action to ensure continuity and to maintain stability."

Yushchenko said he sacked his government because infighting within his administration had begun to interfere with the goals that he had set for his administration after he took power following last year's popular uprising.

The announcement came hours after two more top officials resigned in a snowballing government corruption scandal that has left Yushchenko facing his biggest political crisis.

The EU commission downplayed any immediate threat from events in Kiev to Ukraine's relations with the EU. Yushchenko swept to power on a platform of forging closer ties with the West including the EU.

"We trust that this internal matter will not be allowed to disrupt in any way the close cooperation that we enjoy with the Ukrainians," said Udwin.

Source: AFP

Ukraine's Yushchenko Fires Government, Security Head (Update 5)

KIEV, Ukraine -- Ukrainian President Viktor Yushchenko dismissed the cabinet amid accusations of graft and accepted the resignation of his head of national security eight months after he was swept into office on promises to end corruption in government.

President Yushchenko (R) sacked Prime Minister Yulia Tymoshenko's (L) government on Thursday, September 8, 2005 and asked regional governor Yury Yekhanurov to form a new government following corruption allegations

Yushchenko named Yuriy Yekhanurov, the 57-year-old governor of the Dnipropetrovsk region, as acting premier to replace Prime Minister Yulia Timoshenko, and told him to form a new government. Yushchenko also ordered a probe after at least four officials quit in the past two weeks, citing corruption concerns.

``I have to make those decisive radical steps because the ideals of the revolution cannot be under any doubt,'' Yushchenko said on public television in Kiev today. ``The team was disintegrating.''

Yushchenko came to power in December in the wake of the so- called Orange Revolution, when millions of Ukrainians protested the outcome of a November election that he lost and the U.S. and European Union said was riddled with fraud. Yushchenko campaigned to clean up government after years of accusations about cronyism and flawed asset sales under his predecessor, Leonid Kuchma.

``This may be extremely positive for the market if the new government concentrates on developing the nation's wealth as opposed to sharing it out,'' said Kirill Dmitriev, who manages $500 million at Moscow-based Delta Private Equity Partners. ``We wanted to begin investing in Ukraine, but postponed the plan.''

Bonds Fall

The yield on Ukraine's $1 billion bond due 2013 fell for the first day in six, declining 0.018 point to 5.945 percent. The price of the 7.65 percent bond rose 0.115, or 11.5 cents per $100 face amount, to 110.447, according to ING Bank prices as of 1:11 p.m. Kiev time.

Today, Yushchenko said there was ``a lack of trust'' in his team, as Timoshenko, 44, and National Security Council head Petro Poroshenko, 39, battled over policy and relations between the government and parliament deteriorated.

Timoshenko and Poroshenko disagreed whether the administration should try to regain control over former state assets sold at discount prices to friends and relatives of Kuchma.

Timoshenko's government canceled the 2004 sale of VAT Kryvorizhtal, the No. 1 steelmaker, to a company co-owned by Kuchma's son-in-law, and planned to raise at least $2 billion for the company in an Oct. 24 tender, compared with the $800 million paid for it last year. Authorities are investigating other sales under Kuchma.

New Goals

The new government should end the ``re-privatization bloodshed as soon as possible,'' enter the World Trade Organization by year- end and begin selling assets to the highest bidders instead of to businessmen connected to the government, Dmitirev said. Delta may invest as much as 10 percent of its capital in Ukraine within a year, he said.

Timoshenko's press service said she won't comment on her dismissal for now. Yekhanurov told Ukrainska Pravda online newspaper that his primary target is ``to make government work effective.''

Disputes also led to a slowdown in the economy, Yushchenko said. The $60 billion economy expanded 4 percent in the first half, compared with 12.7 percent in the same period last year.

The reshuffle ``is a good thing,'' said Marianna Kozintseva, a New-York based vice president at Bear Stearns International, who is traveling in Ukraine. ``I'm optimistic about Ukraine in the long run and expect some turbulence in the market in the short run and recommend investor caution.''

Poroshenko quit less than two weeks after he was accused by state officials of corruption. He also said in a statement that accusations against him are ``groundless and absurd.'' Deputy Premier Mykola Tomenko also resigned, saying he quit because Poroshenko was acting on behalf of wealthy businessmen.

Election Concern

With parliamentary elections scheduled for March, Yushchenko is seeking to persuade voters and investors he can clean up the government, even as some complain corruption may be on the rise.

Yushchenko, who also rejected accusations of corruption, nevertheless set up a commission. He also suspended his aide, Oleksandr Tretyakov, 31, and said he wants Timoshenko and Poroshenko to remain on his team, though he didn't say in what capacity.

Timoshenko, a former utility executive, was one of Kuchma's staunchest opponents and led demonstrations over the years against his rule. She was one of the most vocal and photogenic personalities on stage in Kiev's Independence Square during the December rallies that led to Yushchenko's victory in the election rerun.

Yushchenko's Son

She was fired in 2001 by Kuchma as a deputy prime minister and was investigated by Kuchma's government for embezzlement and spent a short time in prison that year.

Concerns over corruption in Yushchenko's administration rose after Ukrainska Pravda newspaper reported in July that his son, Andriy Yushchenko, 19, was driving a BMW valued at about $160,000 and was living in a luxury apartment in the center of Kiev. Yushchenko said his son earned his money working at two jobs, while the car belongs to a friend.

On Sept. 3, State Secretary Oleksandr Zinchenko stepped down, saying he was concerned about corruption. Yushchenko replaced him with Oleh Rybachuk, 47, his top aide for more than a decade, on Sept. 7.

Source: Bloomberg

UPDATE 2 - Ukraine's Yushchenko Fires Government

KIEV, Ukraine -- Ukraine's President Viktor Yushchenko sacked his government on Thursday as the team which led the "Orange Revolution" less than a year ago broke apart amid infighting and accusations of mass graft.

Ukrainians watch TV in a shop during Ukraine's President Viktor Yushchenko's press conference

Yushchenko, who has pledged to stamp out the corruption widespread under his long-serving predecessor Leonid Kuchma, told a news conference he would ask regional governor Yury Yekhanurov, 57, to form a new team.

But he sought not to alienate completely the charismatic Yulia Tymoshenko, a key figure in the mass protests late last year that propelled him to power and who until Thursday had been prime minister since his election in January.

"These people remain my friends. It is very difficult but today I must to remove this Gordian knot," Yushchenko said, accusing his outgoing government of lacking team spirit.

"I set one task for the new team -- to work in a united team. I do not want any more the intrigues between two or three people that were determining the state policy."

He also accepted the resignation of close ally Petro Poroshenko from his powerful security post and suspended another aide -- both of whom had been accused of involvement in graft.

In sacking Tymoshenko, whose fiery oratory brought thousands out on the streets in last December's pro-Western "Orange Revolution", Yushchenko moved decisively to end a crisis that has threatened his credibility.

Ukraine's state security (SBU) chief Oleksander Turchinov -- another Yushchenko ally -- also tendered his resignation.

The crisis follows months of tension between Yushchenko and Tymoshenko over Ukraine's economic direction and came to a head last Saturday when his chief of staff quit alleging deep corruption in the administration.

"We need to halt the disappointment in society and make sure that the ideals (of the Orange Revolution) are not cast into doubt," he said.

The allegations of graft hurt a government already tarnished by sharply lower economic growth, rising inflation and inconsistent policies.

Yekhanurov, governor of industrial Dnipropetrovsk region, is a long-time supporter of Yushchenko. He was deputy to Yushchenko while the latter was prime minister in 2000.

He is seen as a pro-reform technocrat and occupied various government posts under former President Kuchma.

The prime minister is set to acquire additional powers, at the expense of the president, from January when changes to the constitution come into force.

A simple majority of 266 votes in the 450-seat parliament is required to confirm Yekhanurov in his post. However, pro-Yushchenko forces do not have a stable parliamentary majority.


YEKHANUROV - STOP-GAP?

Since independence from the Soviet Union in 1991, Ukraine has consistently been rated one of the world's most corrupt countries by international anti-graft bodies.

Some analysts saw Yekhanurov as a stop-gap prime minister. Others said the stage was set for a show-down between Yushchenko and Tymoshenko. There was no immediate word from Tymoshenko herself.

"Sacking Tymoshenko also sets things up for a clash between Yushchenko and Tymoshenko in the March 2006 parliamentary elections, which will split the reform camp," said Tim Ash, emerging markets analyst at Bear Stearns in London.

"With clear evidence that the economy is slowing, Ukraine needs strong government and good coordination of economic policy," Ash said.

One of the officials who resigned -- Nikolai Tomenko, a deputy prime minister -- said he could no longer stand the corruption among the president's aides.

"I do not want to share responsibility with those who have created a system of corruption," Tomenko said.

Highlighting the rift between Yushchenko and his former revolutionary ally, Tomenko said there were in effect two governments in Ukraine -- one run by Tymoshenko and the other by Poroshenko.

"In the short-term, the government's resignation is likely to increase volatility on the currency market," said Oleksander Sandul, analyst at Foil Securities.

"But in the long-term, we look at it more optimistically. It says that the Orange Revolution was not in vain, that we are moving along the path of democratic changes."

Source: Reuters

Yushchenko Fires Government

KIEV, Ukraine -- Ukraine President Viktor Yushchenko has sacked his entire 7-month-old government amid political squabbling among its members.

Ukrainian President Viktor Yushchenko speaks at a news conference after dismissing the Ukrainian government led by Yulia Tymoshenko and appointing Yury Yekhanurov, head of the eastern Dniepropetrovsk region as acting prime minister in Kiev. Yushchenko dismissed his government amid a deepening corruption scandal that had produced a string of high-level resignations and called into question the integrity of the 'orange revolution' leader's administration

Several officials have resigned from the government in recent days, citing corruption. It is the first scandal under Yushchenko, who was elected after an "Orange Revolution" protesting results of the previous vote which put Yushchenko's opposition in office.

Those fired on Thursday included Prime Minister Yulia Tymoschenko. Yuriy Yekhanurov, a member of parliament, was appointed as acting prime minister.

Saying the government had lost its "team spirit," Yushchenko added that he would ask regional governor Yuri Yekhanurov to form a new Cabinet.

"I am setting before the new team one task -- the ability to work as one ... The moment is right when (the old team) have lost their team spirit," Reuters quoted Yushchenko as saying.

"We need to halt the disappointment in society and make sure that ideals (of the Orange Revolution) are not cast into doubt," he said.

Some analysts saw Yekhanurov as a stop-gap prime minister. Others said the stage was set for a show-down between the president and Tymoshenko in parliamentary elections set for March 2006. There was no immediate word from Tymoshenko herself.

"Sacking Tymoshenko also sets things up for a clash between Yushchenko and Tymoshenko in the March 2006 parliamentary elections, which will split the reform camp," Tim Ash, emerging markets analyst at Bear Stearns in London, told Reuters.

"With clear evidence that the economy is slowing, Ukraine needs strong government and good coordination of economic policy," Ash said.

Yushchenko also accepted the resignation of Secretary of the National Defense and Security Council, Petro Poroshenko, a close ally who had been named in a corruption probe.

An opinion poll published Wednesday found that Yushchenko's popularity is on the slide.

The poll, conducted last month by Ukraine's Razumkov think-tank before the latest corruption allegations, found that for the first time since the Orange Revolution, the percentage of Ukrainians who think the country is headed in the wrong direction exceeds those who think it's in good shape.

Forty-three percent said Ukraine was on the wrong path, a jump from the 23 percent who thought that in April.

Since the break-up of the Soviet Union in 1991, Ukraine has been often rated one of the world's most corrupt countries by international anti-graft bodies.

Source: CNN

Head of Ukrainian Security Council Quits; Yushchenko to Address Country

KIEV, Ukraine -- The head of Ukraine's powerful Security and Defence Council announced his resignation on Thursday, as President Viktor Yushchenko's coalition government faced the biggest crisis of its seven-month existence.

Deputy Prime Minister Mykola Tomenko

Petro Poroshenko became the third high-ranking Yushchenko aide to quit amid swirling accusations of corruption around the president, who is expected to make a live televised address to the country on Thursday. Earlier Thursday, Mykola Tomenko said he was resigning from his post as deputy prime minister for humanitarian affairs.

"I have realized that some people steal and others resign," Tomenko told a news conference in Kyiv. "I don't want to bear common responsibility for people who have created a corrupt system."

Yushchenko's chief-of-staff, Oleksandr Zinchenko, resigned Saturday and also levelled charges of corruption against high-level officials, including Poroshenko.

Zinchenko's resignation sparked a crisis in Yushchenko's government; the president has spent the past three days huddled in marathon meetings with his top staff, and he ordered an investigation into Zinchenko's allegations.

Late Wednesday, Yushchenko said that personal conflicts between members of the government "cause serious damage not only to the team's reputation, but also to the government's image," according to his press office.

"Responsibility for this lies with everyone. ... Enough of this; it's time to work for the country."

Spokeswoman Irina Gerashchenko said Yushchenko planned to announce changes to his team of advisers on Thursday, and his press office said the president would make a live televised address to the country on Thursday.

Yushchenko has said he would take into account officials' ability to work with one another.

Poroshenko said he was resigning so as not to appear to put pressure on the investigation into Zinchenko's accusations.

"Preserving honour and dignity for me remains the chief value, more than any job," he said in a statement posted on his website.

Yushchenko rose to power on the back of last year's massive Orange Revolution protests, which both Zinchenko and Tomenko played key roles in organizing.

The coalition of opposition figures promised it would bring an end to the corruption-tainted rule of former president Leonid Kuchma.

Source: AP

Wednesday, September 07, 2005

Yushchenko's Popularity Sliding

KIEV, Ukraine -- Maria Onishchuk rushed to Kiev's Independence Square to stand shoulder to shoulder with tens of thousands last fall, waving orange flags and chanting "YU-SHCHEN-KO!" Nine months later, she's back.


But this time, the 60-year-old grandmother stands under the red flag of Ukraine's Socialist Party, demonstrating against Viktor Yushchenko, the man she helped usher into the presidency.

"We thought life would get better ... but it turns out the Orange Revolution was just a fairy tale," said Onishchuk.

Disappointment is catching up with Yushchenko, whose people-power protests were hailed in the West as proof of democracy's unstoppable march.

Prices are rising and inflation is returning as economic growth slows. Yushchenko's chief-of-staff quit, warning darkly that a corrupt circle of advisers surrounds the president. A parliamentary election that could reshape the political landscape looms six months away.

"Ukrainians gave Yushchenko a giant credit of faith, but now they want results," said analyst Andriy Bichenko of Ukraine's Razumkov think-tank.

The center's latest poll, conducted last month, found that for the first time since last year's Orange Revolution, the percentage of Ukrainians who think the country is headed in the wrong direction exceeds those who think it's in good shape. Forty-three percent said Ukraine is on the wrong path, a jump from the 23 percent who thought that in April.

The poll was conducted before the latest corruption allegations against Yushchenko's government. Those could deal an even harder blow to the president's image because he was swept to power largely on his promise to root out the corruption that thrived under former President Leonid Kuchma.

Yushchenko had promised to create a million new jobs a year, raise living standards and put Ukraine, a nation of 48 million, on equal footing with its powerful neighbor, Russia. Even supporters say he overreached.

"No government in the world could deliver on all the expectations; some were really irrational," said political analyst Inna Pidluska of the Europe Foundation. "People wanted a different life, wanted to be happy, wanted a dramatic change from what they were used to ... how could anyone do that?"

Prime Minister Yulia Tymoshenko, responsible for the government's day-to-day business, decided on a populist course of raising pensions to at least a minimum of 332 hryvna ($67, €53) a month, boosting spending and paying off salary arrears.

But the government has also had to slash projections for GDP growth, which slowed to around 6 percent compared to the 12 percent recorded last year. Parliamentary Speaker Volodymyr Lytvyn warned that Ukraine can't afford another year of such a "social budget."

Tough Reforms

Analysts say Yushchenko is likely to opt for short-term appeasement. He needs to do well in the March parliamentary elections because constitutional changes will hand many of his powers to lawmakers.

But another populist budget could derail the harder economic reforms foreign investors clamor for.

"He makes good speeches but all it is is talk, talk, talk," said a Western investor in the energy sector, who spoke to the Associated Press on condition that his name not be used because he is in the middle of sensitive business negotiations.

Ukrainians say they feel most gloomy about their personal economic situation. Rising food and utility fees, higher prices at the gas pumps, and the government's decision to strengthen the hryvna against the dollar ate away much of the salary and pension increases.

"Even salo is becoming unaffordable," complained Onishchuk, referring to the seasoned lard that Ukrainians consider a national staple. The cost of a kilogram (2.2 pounds) has jumped from 8 hryvna ($1.60, euro1.20) to 28 hryvna ($5.60, euro4.50), she said.

For all the mounting disappointment, however, Ukrainians still like Yushchenko significantly more than Kuchma, whose approval ratings were down around 10 percent. Yushchenko's vary, but most polls find that more than 50 percent of Ukrainians approve of at least some of the new president's moves -- close to the 52 percent who voted him into office.

"I can definitely tell you that before Yushchenko took the presidency, I wouldn't even consider listing (my company) in Ukraine. There was no light in the tunnel -- now, at least, there is light," said Sergey Evlanchik, CEO and owner of the dairy company Ukrproduct.

The Razumkov poll that registered a surge in people who thought the nation was heading in the wrong direction also found that Ukrainians credit Yushchenko with raising the country's international profile, boosting democracy and freedom of speech. It surveyed 2,011 people between Aug. 5-12 and had a margin of error of 2.3 percentage points.

"I'm not a romantic, I understand it takes time," said Oleh Skripka, the lead singer of the hugely popular Ukrainian band Vopli Vidoplyasova, which performed regularly on Independence Square during the Orange Revolution protests, boosting the morale of the shivering crowds.

This year, Skripka turned down a request for a repeat performance for the parliamentary vote.

"I do want to help the new government ... but (it) needs to get back in touch with the people who really took it to heart, who suffered for its success," he said.

Source: CNN

Ukraine Appoints New State Secretary

KIEV, Ukraine -- Oleg Rybachuk has been appointed Ukraine's state secretary, a spokeswoman for the Ukrainian president said Wednesday.

Prior to his new appointment, Rybachuk was a deputy prime minister for European integration.

Former State Secretary Alexander Zinchenko had sent in his resignation Saturday, September 3. Ukrainian President Viktor Yushchenko immediately signed it.

Zinchenko said he had resigned because of the unlawful, in his opinion, activities of Petro Poroshenko, the secretary of Ukraine's National Security and Defense Council, Olexander Tretyakov, the first aide to the Ukrainian president, and Mykola Martynenko, the head of Our Ukraine parliamentarian faction.

Zinchenko told a Kiev news conference Monday that the three men were "cynically and constantly implementing their plan to use power in their own interests."

The former state secretary accused Poroshenko of taking control over the courts and law-enforcement bodies, and favoritism toward certain businessmen.

Source: RIA Novosti

Ukrainian Ex-President Kravchuk Criticises Yushchenko

KIEV, Ukraine -- Leonid Kravchuk, Ukrainian ex-president and now head of the United Social Democrats parliamentary faction, believes that incumbent President Viktor Yushchenko cannot effectively run the country, and that early elections are quite probable in Ukraine. He spoke about it from the rostrum of the Supreme Rada (parliament) of Ukraine on Wednesday.

Ukrainian ex-President Leonid Kravchuk

According to Kravchuk, the nation “quickly got tired of the new rulers.” “The management system of the country has been destroyed, the personnel policy has developed into the orange-colour absurdity, and a management chaos is becoming typical of all the spheres of life. The new rulers created a lot of problems in foreign policy by demonstrating ambitions in front of Russia and by claiming the role of the teachers of democracy, and it will take a long time to improve the situation,” Kravchuk said.

“The management team of President Yushchenko resembles a bee swarm without a mother bee: they make much noise, much fuss, but do not bring in honey. Instead of keeping the power structure and the situation in the country under his control, the President got involved into squabbles between members of his team. Even an experienced person finds it difficult to understand, what job does this or that official, or what his powers are. The authorities are absolutely incompetent. The power system is falling to pieces,” Kravchuk continued. In his opinion, Yushchenko “obviously does not know what it is like to bear responsibility for the future of a big country.”

“By creating several centres of power, Yushchenko became a hostage of the situation. He does not rule the country, others keep him under their control. Yushchenko turned from the leader of the nation into a manager, a billboard,” he stressed. Kravchuk reminded that Ukraine had experience of early presidential elections.

He was removed from the post of Ukrainian president in 1994 by suggesting early presidential elections because of confrontation between himself and the parliament. It is Leonid Kuchma who won the early presidential elections.

Source: Itar-Tass

Tuesday, September 06, 2005

Lytvyn Launches Parliament Session With Sharp Criticism of Yushchenko Government

KIEV, Ukraine -- Lawmakers returned to parliament on Sept. 6 for the opening of the new session, which the parliament speaker launched with sharp criticism of President Viktor Yushchenko's government.

Parliament Speaker Lytvyn

"It seems were are doing everything in a new way, but most things are just like they were during (former President Leonid) Kuchma's regime," Lytvyn said.

He accused the government of manipulating statistics, and complained of political instability, economic stagnation and the absence of any big foreign policy achievements.

The criticism added to the troubles piling up on President Viktor Yushchenko, whose chief-of-staff resigned Sept. 3 and then accused some of the country's top officials of corruption. Yushchenko, who came to power amid a wave of popular support, has seen his own popularity drop in recent months, partly due to rising prices and bickering among members of his coalition government.

Lytvyn, who heads his own political party and was a one-time chief-of-staff to Kuchma, has flirted with the idea of joining a grand coalition with Yushchenko and Prime Minister Yulia Tymoshenko for March's parliamentary elections. But that coalition looks increasingly unlikely as the major figures openly spar with each other.

Yury Pavlenko, Ukraine's youth and sports minister, who was in parliament for the opening session, said that Lytvyn's speech was a harbinger of the fast-approaching campaign season.

"He started the campaign with big words," Pavlenko said.

The March elections are taking on added importance because of constitutional reforms due to take effect by the end of this year.

The reforms will hand many presidential powers to parliament, which will be given the right to approve candidates for the prime minister's job as well as other key positions, such as the defense and foreign ministers.

The legislature opened its session with a solemn moment of silence honoring the victims of Hurricane Katrina before launching into political debates.

The 450-member parliament has a lot on its table, with more than 1,000 bills expected to consider, including the highly controversial World Trade Organization membership legislation. Lawmakers warned ahead of the Sept. 5 session that the discord that erupted into fist fights earlier this year had not dissipated.

Lytvyn has promised to bring up for a vote the remaining legislation this ex-Soviet republic needs to adopt to join the WTO, which Yushchenko has made a priority.

Ukraine is eager to win its place in the WTO before year's end - before neighboring Russia. If Russia joins first, Moscow could impose a whole new set of difficult membership requirements on Ukraine.

The reform legislation, however, is deeply unpopular with the Communists, who repeatedly seized parliament's tribunal in July to block voting on the issue. Parliament adopted a number of key laws last session, including one on copyright protection, but 10 others were held over for this session.

Communist leader Petro Symonenko warned in televised remarks that his party would continue to fight the other WTO bills, which he said would hurt Ukrainian businesses.

Lytvyn said that he wouldn't be surprised if members of the Communist Party again tried to seize the tribunal this week.

"This session will be very strained," Lytvyn said on Ukraine's Channel 5.

Source: AP

Ex-State Secretary Started Attack Against Yushchenko’s Close Surrounding

KIEV, Ukraine -- Yesterday, former Ukrainian Secretary of State Alexander Zinchenko, who resigned on Sept 3, held a press conference where he explained the reasons for his resignation. The press conference was the scandalous one: former State Secretary accused several close allies of President Viktor Yushchenko in corruption. For instance, he demanded from the president to fire Petro Poroshenko, Secretary of Security Council, and Alexander Tretiakov, First Presidential Aide. As soon as Zinchenko left the stage, his place was immediately taken by Poroshenko, who decided to respond to the accusation in his address.

Security Council Secretary Petro Poroshenko

“The counter-revolution is growing in the country…”

According to the statements, which were published by Zinchenko’s press-service, the press conference in Interfax-Ukraine Agency was supposed to clarify everything about the State Secretary's resignation. Because of the resonance created by the biggest resignation in the history of Yushchenko’s administration, TV’s Fifth Channel decided to broadcast the press-conference live. The conference hall with 50 seats was filled by more than 100 journalists. Several dozens of other reporters, who did not have accreditation, were not let in. To help Zinchenko to get to the stage, the head of the information agency Alexander Martynenko had clear the path in the crowd.

Zinchenko read the text that was prepared earlier. And from the very first words, he brought up his accusations. “In the president’s surrounding there are many really honest people. However, the small group of political adventurers is trying to use the achievements of “orange revolutions” just for themselves,” the ex-State Secretary stated. He mentioned all corrupted officials by the name, adding that his list is not finished yet. “Petro Poroshenko, Secretary of Security Council and Defense Minister, Alexander Tretiakov, First Presidential Aide, Nikolay Martynenko, Deputy of the Supreme Rada and several their partners are using power for their personal goals,” Zinchenko said.

Zinchenko said that the mentioned politicians “monopolized” the access to the president and are exercising their influence over Yushenko in order “to grab all business in Ukraine.” The biggest complains went to Poroshenko. According to ex-State Secretary, the Secretary of Security Council uses unlawful leverage to influence the judges, covers up bribery in custom service and makes Ukrainian entrepreneurs to share with him their profits and assets.

Then, Zinchenko complained about Tretiakov. Ex-Secretary of State did not precise what was the exact guilt of Martynenko. While Zinchenko was still reading the list of accusations, Petro Poroshenko entered the conference hall. The Secretary of the Security Council came right to the stage. He stood there, smiled and silently listened to his opponent. Zinchenko was going along with his speech. “I demand to fire Poroshenko, to fire Tretiakov and to organize a normal work and normal access to the president. Only with these conditions, the team, which supported Viktor Yushchenko during the revolution, can be saved…If it will not be done immediately, decisively, and harshly, then, we should see growing counter-revolution in the country…” he stated. After those words Poroshenko stopped smiling. It was evident that he was nervous – he was often wiping off the sweat from his face.

The charges are ready and the courts are waiting…

When Alexander Zinchenko finished his speech and left the stage, his place was immediately taken by Petro Poroshenko. He rejected all accusations in his address and in turn, accused Zinchenko in groundless statements. He asked former State Secreatry to provide the proof of his, Poroshenko’s, participation in illegal activities. According to Poroshenko he did not expect the accusation in his address at all. He heard them on the air and immediately arrived to the press-center. The journalists started to whisper that such speedy arrival was virtually impossible because the road from Poroshenko’s office goes through the center of Kiev. During the peak hours the traffic jams in the center would not allow Poroshenko to “fly” in.

After the end of press conference, journalists waited for Poroshenko outside. ”Petro Alexeevich, how were you able get to the press-center in ten minutes?” Kommersant’s correspondent tried to inquire. Poroshenko stopped for a second. Then he opened the car’s door, offered Kommersant’s correspondent to get in and check the time. During the ride, the Secretary of Security Council answered the correspondent’s questions. When we arrived to one of the offices of Poroshenko, the stopwatch showed 5 minutes and 20 seconds.

However, the fast ride did not eliminate all the questions to Poroshenko. Yesterday, after Poroshenko’s press conference, ex-advisor of the Ukrainian Prime Minister Mikhail Brodsky (he resigned last week) challenged the Secretary of Security Council for open TV debates. Brodsky, mentioning Poroshenko’s readiness to defend his reputation, promised to prove the facts of corruption with documents. “I can prove that Poroshenko is a thief, corrupted politician and a scoundrel. Moreover, I am sure that the resignation is not enough for him – he must be in jail,” Brodsky said in his statement, which was published by his press-service. According to Brodsky, the same characteristics could be used in description of the presidential aide Alexander Tretiakov.

Zinchenko’s accusations were not left without a response. Nikolay Martynenko, Deputy of the Supreme Rada, who also was mentioned on Zinchenko’s corruption list, said that he is going to sue ex-Secretary of State for defamation. He called Zinchenko’s words “a lie, discrediting me as a politician.”

“The accusations in my address from Alexander Zinchenko came to me as an unpleasant surprise – not only from political point of view, but also from the moral point. I am especially upset by the fact that I was one of those, who decided to engage Zinchenko in Viktor Yushchenko’s electoral campaign. Moreover, Zinchenko made a final decision to participate in the campaign in my house,” Martynenko said in his statement, which was published by his press-service.

Yesterday, Viktor Yushchenko himself decided to make comments about the Zinchenko conflict with his close surrounding. “There were a lot of emotions. However, in the same time there were serious complaints made against several representatives of Ukrainian authorities. The law-enforcements should investigate all these accusations and come up with an answer,” Irina Herashenko, Press-Secretary of Ukrainian President, sent this Yushchenko’ statement to Kommersant. According to her, the president is ready for serious changes in his staff if the illegal activities of any state officials would be confirmed by the investigation. “There are no sacred cows in the president’s team,” Herashenko stated.

Source: Kommersant

Ex-Aide to Yushchenko Blames Corruption

KIEV, Ukraine -- A close aide to President Viktor Yushchenko who was a chief organizer of the "Orange Revolution" protests said Monday he had resigned from the government because of systemic corruption around the Ukrainian leader.

The head of Ukraine's Defense and Security Council, Petro Poroshenko (R), listens as the former chief of staff to Ukrainian President Viktor Yushchenko, Oleksandr Zinchenko, who resigned Saturday, speaks at a news conference in Kiev, Ukraine

Oleksandr Zinchenko, who resigned Saturday, said the situation had grown "even worse" than under former President Leonid Kuchma.

Zinchenko accused Petro Poroshenko, the head of Ukraine's Defense and Security Council, of being one of the most corrupt members of the government. He also criticized Oleksandr Tretyakov, a top aide to Yushchenko, and Mykola Martynenko, who heads the pro-presidential faction in parliament.

Poroshenko attended the news conference, which was broadcast live, and stood in the back frowning as Zinchenko spoke. When Zinchenko completed his prepared statement, lengthy applause broke out in the room.

Zinchenko's departure as state secretary is the first major resignation since Yushchenko took office in January, after last year's bitter and prolonged campaign in this former Soviet republic.

Zinchenko said he decided to make such a "sharp public announcement" to ensure that Ukrainians and Yushchenko understood the extent of the problem. He said he had repeatedly called on Yushchenko to fire Poroshenko.

"With my resignation, I am trying to sharply convey this danger to the president and his team," Zinchenko said.

After Zinchenko finished speaking, Poroshenko took the podium and said this was "the hardest day" of his life. Clearly angry, he accused Zinchenko of trying to "explode (Yushchenko's) team from the inside" and challenged him to find evidence to back up his allegations.

"He didn't look in my eyes the entire time he was reading his statement," Poroshenko said of his former ally.

Martynenko later threatened to sue Zinchenko for libel, according to Ukrainian news agencies. Tretyakov could not immediately be reached to comment.

Zinchenko, who had served as deputy speaker of parliament, was initially aligned with Kuchma; he was a senior party official in the Ukrainian Socialist Party (United), headed by Kuchma's former chief-of-staff, Viktor Medvedchuk.

But Zinchenko fell out with the party, and was dismissed from its ranks in 2003. He later aligned himself with Yushchenko and became a constant sight at the president's side during last year's campaign.

Source: AP

Sunday, September 04, 2005

Investment Boom

KIEV, Ukraine -- August is looking all right for Ukraine, at least as far as foreign investment goes. Another major international hotel chain, Hilton, is moving in, and at the same time Radisson SAS says they are finally going to open the doors of their Kyiv location on Sept. 1. Two new large investment funds – the Colliers-Concorde collaboration and a new 200-million-euro fund run by SigmaBleyzer – have announced plans to invest in Ukraine.

Kiev landscape filled with building cranes

It’s difficult to say how much credit Yushchenko and company should get for all this. On the one hand, President Viktor Yushchenko has been relentless in his courting of foreign investors, at times even seeming to beg. His team managed to force some WTO bills through parliament before summer recess, and the cabinet is slowly ridding Ukraine’s books of unneeded and cumbersome laws governing and restricting business.

On the other hand there are many, including the IMF, that remain disappointed in the government. Ukraine had a chance to pass laws necessary to join the WTO, but Yushchenko’s team couldn’t get everything through parliament. The government also earlier passed much-criticized tax reforms, which it later retracted.

Then there are those who consider the government’s actions nearly incidental to the actual inflow of investment. This thesis presupposes that as long as the political situation is stable, and the laws unchanging, investment will come. By this logic, the real flood of money will come next spring, when power structures become clearer after the parliamentary elections.

Each of these hypotheses has its merits, but even if the one that puts Yushchenko in the best light is true, no one should be patting the president on the back quite yet. There’s no doubt he’s done some good, but it would have been hard not to after the Orange Revolution, and he could have done a lot more.

In September he’ll have one last chance to prove himself. In the upcoming parliamentary sessions – the last before the spring elections – Yushchenko and his team need to show that they can effect serious, meaningful change in the economy – change that will cement Ukraine’s standing as a burgeoning free market and as a magnet for foreign investment. If he doesn’t, Ukraine can probably forget joining the World Trade Organization this year, or any other such body in the near future.

Source: Kyiv Post

Ukraine's "Orange Revolution" Choreographer Resigns

KIEV, Ukraine -- Ukraine's pro-West "orange revolution" choreographer, Oleksandr Zinchenko, resigned as President Viktor Yushchenko's chief-of-staff on Saturday.

Yushchenko said later that he had accepted Zinchenko's resignation, which Zinchenko announced in a terse two-paragraph statement without explanation.

Yushchenko admitted that he had "a difficult talk" with Zinchenko days before his departure.

Previously, the president held similar talks with other officials such as Justice Minister Roman Zvarych after they announced plans to resign. He eventually managed to persuade them from quitting.

Zinchenko masterminded Yushchenko's presidential campaign and became his close aide after he took power in January.

Source: Xinhua

Saturday, September 03, 2005

Ukrainian Peacekeepers Accused of Selling UN Fuel in Lebanon

KIEV, Ukraine -- The United Nations has asked Ukraine to pull its peacekeepers out of Lebanon after allegations soldiers had resold about $1 million in U.N. fuel, Reuters reported.


The misconduct was discovered by the U.N. Office of Internal Oversight Services and showed “significant financial misconduct by Ukrainian military personnel, including the commanding officer,” a U.N. statement said.

In Kiev, the Ukrainian Defense Ministry said the United Nations and Ukraine were “taking these events very seriously” and that Ukraine was sending a special mission to Lebanon to investigate.

The Ukrainian government said it was already taking disciplinary action against those involved.

The Ukrainians were part of the U.N. Interim Force in Lebanon, known as UNIFIL, which has some 2,000 soldiers, under the command of a French general. The mission has been in the south of Lebanon since 1978.

The offending Ukrainian unit of 200 soldiers had already been repatriated, a U.N. official said.

Another unit of 200 had arrived in Lebanon to replace the first contingent and was now asked to leave, the official said, speaking on condition of anonymity.

“The United Nations has initiated action to replace the Ukrainian unit in UNIFIL and is taking necessary measures to prevent recurrence,” the official U.N. statement said.

It did not give details of the offense but U.N. officials privately said it involved the reselling of fuel, worth some $1 million.

Source: MosNews

Update 1: Ukraine's PM Defends Takeover of Factory

KIEV, Ukraine -- Ukraine's prime minister on Friday defended the state's takeover of a key steel factory as legal and accused the former owner of organizing a show rally to hold onto property he stole from the state when his father-in-law, Leonid Kuchma, was president.

"There is a legal decision of the court regarding the Nikopol Ferroalloy Plant, according to which it must returned to the state," Yulia Tymoshenko told reporters.

Kuchma's son-in-law Viktor Pinchuk rallied hundreds of supporters Thursday at the plant and said he will not hand it over unless Ukraine's High Court rules that its 2003 privatization was illegal. The rally continued Friday but with a smaller number of participants.

Last month, Ukraine's High Economic Court upheld a ruling that the privatization was illegal. Pinchuk appealed that decision.

"Despite all of Pinchuk's sniffles and groans, the factory will be returned to the state," Tymoshenko said, accusing Pinchuk of organizing "a show rally."

The standoff, which pitted Pinchuk and hundreds of supporters against riot police, followed a shareholders meeting Tuesday in which new management was named.

Some of the newly elected managers are linked to Privat Bank, a minority shareholder in the factory that reportedly has the backing of Tymoshenko. The new shareholder meeting, however, was heavily criticized as illegal, including by the head of Ukraine's State Property Fund.

Tymoshenko denied Friday that she was involved in any maneuvering to seize the factory from Pinchuk and give it to Privat Bank.

"I have only the one aim for society: to feel that the justice for which it struggled is being restored," she said, denying that the new management was just a front for Privat Bank.

President Viktor Yushchenko has pledged to review the cases of dozens of enterprises suspected of being privatized under shady circumstances during Kuchma's 10-year tenure.

Tymoshenko spoke after coming under harsh criticism from Yushchenko, who accused his government Thursday of allowing the strategic enterprise to fall victim to a feud between competing business groups.

On Friday, Yushchenko ordered the Prosecutor General's office and Justice Ministry to ensure that the legal handover of the factory's shares to the State Property Fund is carried out, said Irina Gerashchenko, the president's spokeswoman, according to the Interfax news agency. She could not immediately be reached for comment.

Pinchuk, the billionaire tycoon, whom Forbes magazine has listed as the second wealthiest person in Ukraine, has seen his holdings suffer significantly since Yushchenko defeated his father-in-law's hand-picked presidential candidate last year. A court earlier this year stripped Pinchuk and Ukraine's richest man, Rinat Akhmetov, of their ownership of the nation's biggest steel factory, Kryvorizhstal.

Pinchuk's Interpipe Corp. bought its initial 25 percent stake in the Nikopol factory in 2003 and won the right of first offer to buy another 25 percent plus one share stake in a later auction that no other bidders were allowed to participate in. Both stakes were sold for a total of 410.5 million hryvna (US$81 million; euro68 million).

"We are asking the president and the prime minister to explain under what law, on what basis can you seize this property," Inna Bogoslovskaya, the vice president of Ukrainian Lawyers Union said in remarks shown live on ICTV. She said the government must first allow all appeals to be exhausted.

Tymoshenko called the fate of the factory "a test to show who supports the Ukrainian people and who is corrupted and supports Kuchma and his son-in-law."

Source: AP

Ukraine: Government Throwing Apples After Oranges

KIEV, Ukraine -- A survey by the Razumkov Center polling agency from 5-12 August confirmed what was signaled earlier by other Ukrainian pollsters -- namely, that the new government of President Viktor Yushchenko is gradually losing its popularity, following its installation in February on a nationwide wave of enthusiasm incited by the November-December 2004 Orange Revolution. In an April poll, the Razumkov Center found that 52 percent of Ukrainians thought that the new authorities were better than the old ones; in August this indicator fell to 37 percent.

Has Viktor Yushchenko's government lost its revolutionary shine?

It appears that apart from any other consequences, such a public mood primarily indicates that the probability of any radical socioeconomic reforms being launched by President Yushchenko prior to the parliamentary elections due at the end of March 2006 is virtually nil. The government will almost certainly focus on short-term measures, both economic and propagandistic, to keep the electorate from turning against the new authorities completely, rather than make any reformist steps that would require everyday austerities.

As reported by the "Zerkalo nedeli" weekly in its 24 August-2 September issue, the Razumkov Center found in August that for the first time since the Orange Revolution more Ukrainians think that things in the country are going in the wrong direction rather than the right one -- 43 percent versus 33 percent. In April the analogous indicators in a similar poll were fairly upbeat -- 23 percent versus 54 percent.

Moreover, the number of respondents who think that the country's economic situation under the Yushchenko government has deteriorated is more than double the number who think that it has improved -- 41.5 percent versus 20.5 percent (19 percent versus 27 percent in April). Ukrainians' confidence in the future has also shrunk considerably -- a mere 12 percent of respondents now think that prospects for the future improved versus 48 percent of those who believe that they have worsened (in April the proportion was 32 percent to 26 percent).

On the positive side, Ukrainians in August still tended to believe that the level of democracy and media freedom under Yushchenko's rule increased rather than decreased -- 38 percent versus 20 percent and 46.5 percent versus 14.5 percent, respectively.

The Razumkov Center confirmed that the popularity of the ruling parties is also sliding. In August six political parties were potentially able to overcome the 3 percent vote threshold to qualify for parliamentary representation. The Our Ukraine People's Union was supported by 20 percent of those polled, the Party of Regions by 14.2 percent, the Fatherland party by 10.5 percent, the Communist Party by 5.5 percent, the Socialist Party by 4.2 percent, and the People's Party by 4.1 percent. In a similar poll conducted in May, Yushchenko's Our Ukraine People's Union and Prime Minister Yuliya Tymoshenko's Fatherland were backed by notably larger electorates -- 31.6 percent and 15.5 percent, respectively.

The results of the survey are rather surprising, given the government's reports on the allegedly improving financial situation of Ukrainians. According to the government, real incomes rose in January-June by some 27 percent. And the average monthly wage in Ukraine by the end of June officially stood at some 820 hryvnyas ($160), exceeding by 80 percent the country's subsistence minimum. Hence, why should people be dissatisfied?

Former Prime Minister Viktor Yanukovych criticized the Yushchenko government as early as April, saying that it was sacrificing the country's economic development for temporary social benefits. Ukraine's economic growth in 2005 slowed to some 5 percent from the 12-percent growth reported in 2004 by Yanukovych's cabinet. According to Yanukovych, the pension and wage increases that the new government "thoughtlessly" introduced to reinforce the postrevolutionary enthusiasm in the country were actually devoured by a subsequent inflation jump. And Yanukovych argued that in April Ukrainians already had to pay three times more for food and other necessities than a year before.

Tymoshenko's cabinet has officially admitted that inflation in Ukraine in the first half of 2005 was 6.7 percent. However, International Monetary Fund experts estimate it to be 15 percent. The latter figure may explain why Ukrainians now tend to believe that their economic situation has worsened rather than improved, particularly if we take into account that most of them spend their incomes almost completely on food and other essentials.

"Zerkalo nedeli" also points to another potentially hazardous misstep that the Yushchenko government has made in bestowing its postrevolutionary generosity on the populace. The weekly argues that Yushchenko's pension and wage hikes embraced generally pensioners and the poorest segment of Ukraine's workforce, that is, the people who categorize themselves as the "lower class" (approximately 30 percent of Ukrainians). However, this largesse -- the weekly adds -- did not produce any lasting shifts in this group's political sympathies. In April Yushchenko was backed by 45 percent of lower-class voters and opposed by 25 percent of them, but in August support for the president in this social group fell to 32 percent, while opposition rose to 35 percent.

But the most dismal indicator appears to be a drop in enthusiasm for Yushchenko among those Ukrainians who classify themselves as the "middle class" (some 60 percent of the population). According to the Razumkov Center, in April Yushchenko was backed by 51 percent of middle-class voters and opposed by 21 percent of them, whereas in August these indicators were 34 percent and 29 percent, respectively.

According to sociological surveys, more than 70 percent of Ukrainians supporting Yushchenko at rallies during the Orange Revolution belonged to the middle class. Arguably, representatives of this social group are the most likely candidates to form the backbone of a future society that could wholeheartedly accept a market economy and parliamentary democracy. For them time-serving state charity seems to be not so important as a purposeful policy to recast the current mix of Soviet-era socialism and post-Soviet oligarchic capitalism in Ukraine into a transparent and civilized market-economy system with a strong middle class as its stabilizing core. Regrettably, Yushchenko has so far failed to show or even convince the public that he intends to make any steps in this direction.

Source: Radio Free Europe

Friday, September 02, 2005

Supporters of Ukrainian Steel Plant's Ex-Owners Hold Protest Rally

KIEV, Ukraine -- Former President Leonid Kuchma's son-in-law staged a massive rally on Sept. 1 at a steel plant that the government claims he no longer owns, pledging not to relinquish control.

Nikopol Ferroalloy Plant

Viktor Pinchuk said he will not hand over the Nikopol Ferroalloy Plant unless Ukraine's High Court rules that its 2003 privatization was illegal. The government, citing an August ruling by Ukraine's Economic Court, claims it already has the court order it needs to retake the plant.

The standoff, which pitted Pinchuk and hundreds of supporters against riot police, followed a shareholders meeting on Aug. 30 in which new management was named.

Some of the newly elected managers are linked to Privat Bank, a minority shareholder in the factory that reportedly has the backing of Prime Minister Yulia Tymoshenko. The new shareholder meeting, however, was heavily criticized as illegal, including by the head of Ukraine's State Property Fund. Tymoshenko defended it.

The factory "is still under my full control, and any attempts to seize it will be theft of property - pure and simple," Pinchuk told The Associated Press in a phone interview from the southern city of Nikopol.

Pinchuk's supporters pleaded with police to leave, read out letters of support that they said were flooding in from across the country and handed out flowers to police. Police officials called on their forces to act professionally.

The rally was broadcast live on Pinchuk's three television networks, which repeatedly warned of an impending police storm. Interior Minister Yuriy Lutsenko warned all sides not to trigger any violence.

President Viktor Yushchenko intervened late on Sept. 1 and ordered the Cabinet and the State Property Fund to find a solution to the conflict, complaining that two business groups were fighting over a strategically important enterprise and that Tymoshenko's team had shown its inability "to secure stability and order in Nikopol."

Yushchenko insisted the state now controls the factory, but said a manager must be found who is "independent, effective and professional, not connected to either business interest."

Nikopol is a major producer of ferroalloys and serves at least 15 of the world's largest steel producers. It was a key asset in Pinchuk's Interpipe Corp.

In July, Interpipe lost control of the factory when the appeals division of Ukraine's Economic Court ruled that Nikopol's 2003 privatization was illegal, and shares must be returned to the state. Last month, that ruling was upheld. Pinchuk has appealed to Ukraine's High Court, but a hearing has not yet been set.

"I tell you now I am ready to accept the High Court's decision, whatever it is, but let's do this according to the law," Pinchuk said.

The billionaire tycoon, whom Forbes magazine has listed as the second wealthiest person in Ukraine, has seen his holdings suffer significantly since Yushchenko defeated his father-in-law's hand-picked presidential candidate last year. A court earlier this year stripped Pinchuk and Ukraine's richest man, Rinat Akhmetov, of their ownership of the nation's biggest steel factory, Kryvorizhstal.

Pinchuk's Interpipe bought its initial 25 percent stake in the Nikopol factory in 2003 and won the right of first offer to buy another 25 percent plus one share stake in a later auction that no other bidders were allowed to participate in. Both stakes were sold for a total of 410.5 million hryvnya ($81 million).

Pinchuk's lawyer, Serhiy Vlasenko, urged the government to wait until all legal appeals are exhausted before taking any action. Some Ukrainian media reported that Pinchuk had ordered employees of his other businesses to flood to the factory, but Pinchuk denied the charges.

"They are not here to defend my property. They are here to defend democracy, to defend their rights," he said.

Yushchenko has pledged to review the cases of dozens of enterprises suspected of being privatized under shady circumstances during Kuchma's 10-year tenure.

Source: Kyiv Post

European Official Claims Newborn Babies Stolen in Ukraine

KIEV, Ukraine -- A probe launched by the Parliamentary Assembly of the Council of Europe found that newborn babies had been stolen from Ukrainian maternity homes, PACE rapporteur Ruth-Gaby Vermot-Mangold said Friday, RIA-Novosti news agency reported.

PACE rapporteur Ruth-Gaby Vermot-Mangold

I am convinced that newborns were stolen, she told the Kommersant-Ukraine daily. The official said she did not initially know how true the baby theft claims were, but later saw evidence suggesting babies really were taken away at birth.

Mangold intends to involve the Ukrainian general prosecutor personally in the investigation.

During her stay in Ukraine from Aug. 29 to Sept. 1, Mangold studied five cases of baby thefts at maternity home No. 6 in Kharkov. But she said similar instances had happened in other Ukrainian cities.

Earlier this week, PACE said it was probing allegations of newborns being stolen for organ removal in Ukraine. Ruth-Gaby Vermot-Mangold, a delegate to the Parliamentary Assembly of the Council of Europe arrived in the former Soviet republic to oversee the probe.

The visit came as prosecutors in Ukraine were examining the accusations that three babies were stolen from mothers at Maternity Hospital No. 6 in Kharkov. Activist Tayana Zakharova said she feared the infants had been stolen for organ removal. People are afraid to even give birth now, Kharkov activist Tatyana Zakharova told BBC News.

The hospital denied the allegations.

The alleged baby thefts attracted attention in Europe after authorities alerted PACE to newspaper advertisements in Moldova encouraging single mothers to sell a child for $3,687, UPI news agency reported.

Source: MosNews

Forked Tongues

KIEV, Ukraine -- Judging by opponents' rhetoric in the presidential elections, Yushchenko was set to launch a linguistic revolution in Ukraine. So far, he hasn’t.

There was a time, a Soviet time, when language was never an issue in Ukraine, at least in public. Soviet citizens were expected to know Russian, the official language of the “Soviet peoples” and that was that. Ukrainian was the language spoken at home by most families, but they would often switch to Russian at work and almost always to Russian at school (in 1987, for example, 72 percent of the schools in Ukraine taught in Russian and only 16 percent in Ukrainian).

The countryside and villages, in particular, remained a forepost for Ukrainian in the east (producing, as it happens, one of the country’s greatest Ukrainian-language poets of modern times, Vasyl Stus). In large swathes of central, southern and eastern Ukraine, the languages intermingled. Ukrainian-speaking locals mixed in Russian words with such frequency that observers claimed they were speaking a new language, surzhik, or “mixture.” But there was no doubt that Russian was the language of state, the public language.

That changed in the 1990s. Ukrainian became the official language. Russian was no longer a state language. Ukrainian became the primary language of tuition in schools. Broadcasters were required to produce a certain proportion of programs in Ukrainian; all national television programs were expected to be in Ukrainian. Ukrainian was the language spoken at home by an increasing number of families, but they would often switch to Russian at work. Over the decade, use of Ukrainian rose grew both absolutely and relatively. According to a 2001 census, 67.5 percent of Ukrainians considered Ukrainian their native tongue, while 29.6 percent were native Russian speakers. Somewhere in that number were the 20 percent of Ukraine’s populace who regularly speak surzhik.

But that paints an unrealistic picture of Ukrainian’s progress. Though most books printed in Ukraine are in Ukrainian, their print runs are typically small. Moreover, imports account for a large part of the total book market: while the exact number is unknown, vast numbers of books cross the border from Russia onto the Ukrainian market. Those anxious about Ukrainian now talk about a market-driven russification of publishing. Publications in Russia are freed from most taxes, which is not the case in Ukraine. The number of newspapers printed in Ukrainian dropped from 68 percent in 1990 to 39.6 percent in 1998, with publishers switching to printing in Russia and in Russian to avoid duties. During that same period, the percentage of Ukrainian-language magazines dropped from 90.4 percent to 11.5 percent. And for all the regulation, a mere 18 percent of all television broadcasts in 1999 were in Ukrainian. Ukrainian may have dominated the home, but Russian dominated the media.

It was against this mixed backdrop that language became such a divisive issue in the presidential elections in late 2004. Promoters of Ukrainian looked to Viktor Yushchenko, a Ukrainian-speaker with a base of support in the Ukrainian-speaking west of the country, to nurture the language. In the Russian-speaking east, he was portrayed as a nationalist (though that is a milder term than was usually applied) who would relegate Russian from public life.

It already looks clear that language will again be a prominent issue when parliamentary elections are held, in March 2006. Even an ally of Yushchenko in the Orange Revolution – the leader of the Socialist party Oleksandr Moroz – is seizing on the status of Russian to win political points. Since the Socialists are grabbing defectors from the once-mighty Communist party, who are strongly pro-Russian, Moroz has apparently staked out his position on the left and in opposition to Yushchenko’s policies, on language included. That was demonstrated in January 2005 when Moroz introduced an ultimately unsuccessful bill that would have granted Russian the status of an “official” language alongside Ukrainian.

But what are Yushchenko’s policies? And has anything actually changed since the revolution?

Going into the elections, there were voices on both sides – from Russian-speakers and Ukrainian-speakers – demanding a change in the status quo. Promoters (or ‘defenders’) of Russian wanted official status for Russian and argued that Ukraine, as a signatory of the European Charter for Regional or Minority Languages, should do more to ensure that Russian-speakers had the right to use Russian in schools, courts, and government offices.

Promoters (or ‘defenders’) of Ukrainian argue that this would, in one fell swoop, entrench Russian’s status as the dominant public language, giving them carte blanche to justify the exclusive use of Russian across large parts of Ukraine’s territory and relegating Ukrainian in all spheres of life even in western Ukraine, where Ukrainian is freely heard. Instead, they argue, the government should take special measures to loosen the grip of Russian on public life, and television in particular.

However he might choose to change the status quo, Yushchenko will be making treading on sensitive toes as the roles of the Ukrainian and Russian languages are, of course, part of a broader theme, the debate about Ukraine’s national identity. Language therefore touches on raw issues, including the touchiest of all, history.

There is much to be touchy about. Following the Russian empire’s gradual conquest of Ukraine, largely complete by the end of the 18th century, the Ukrainian language was severely restricted. In 1720 Peter the Great forbade the use of Ukrainian. In 1863, the empire’s interior minister, Count Petro Valuyev, decided that “there never was, is not and cannot be” a Ukrainian language, and issued a decree restricting it. In 1876, the Emsky Decree prohibited the use of Ukrainian in literature, theatre and science. And in the Soviet era, Stalin decimated Ukraine’s cultural elite in his ‘red terror’ and ravaged the largely Ukrainian-speaking countryside in the man-made famine of 1932-33, which killed six to ten million people. Those deaths halted a revival in the use of Ukrainian, but could not wipe it out. If he could not stop people speaking Ukrainian, Stalin could, though, “russify” Russian, which he did by changing traditional Ukrainian orthography to make Russian and Ukrainian closer in style and syntax. Over the Soviet era Ukraine’s population was also russified: encouraged by official government policy and the need for manpower for huge industries in the east, Russians flooded into Ukraine, raising the percentage of Russians from 8.2 percent in 1926 to 22.1 percent in 1981.

Amid those setbacks, there were moments of revival and relative liberalism. For example, in order to win the support of the peasantry and consolidate their rule, the Bolshevik leaders of the young Soviet Union embarked on a program of “Ukrainization” in the early 1920s and, until Stalin arrived, the use of Ukrainian was encouraged; and the perestroika and glasnost of the 1980s brought a significant relaxation of russification policies. Indeed, Ukrainian became Ukraine’s sole official language in 1989, even before the Soviet Union collapsed.

Nonetheless, the calls for the promotion of Ukrainian are rooted in the bitterness of that history. That is not surprising since the language issue has left a deep stamp on the nature of the country: the national poet, Taras Shevchenko, came to the fore in the struggle against russification, and the strength of Ukrainian in the west and its weakness in the east is attributed to the difference between the laissez-faire language and cultural policies of the Austro-Hungarian Empire in the west and the repressive policies of the Russian Empire in the east. Unsurprisingly, the most fervent and vocal of lobbyists for the Ukrainian language are the “Sixtiers,” former dissidents who spent time in the prison camps of the Soviet gulag for their patriotic devotion to Ukraine. They include figures such as Ivan Dziuba, who was sentenced to five years in prison in 1968 for writing Internationalism or Russification, a book that is probably the primary work setting out the agenda of those who opposed the roll-back of the use of the Ukrainian language during the Soviet period.

“We fought for an independent Ukraine and the revival of the Ukrainian language and we will not give up our goals now,” says one of them, Les Taniuk, who now chairs the Ukrainian parliament’s Committee on Culture and Spirituality.

In practice, the proposals of the Sixtiers are vague: eloquent in their support of the Ukrainian language, they rarely propose concrete steps to further their goals. But politicians like Yushchenko have little chance to be vague since much of the challenge of promoting Ukrainian is legal – to introduce new legislation or to ensure that existing legislation is observed. All potential moves are politically fraught. And past efforts to pass laws that would seriously help Ukrainian, such as freeing book publishing of taxes (as Poland and Russia both did in the mid-1990s), have failed to be adopted.

Still, despite those in-built political obstacles, there were reasons to expect Yushchenko to take action. "I think the Ukrainian language is still hugely under threat," Yushchenko said soon after the revolution, for example. "The previous administration didn't think there was a problem but if we lose our language we lose our culture."

But, just like every government before it, Yushchenko’s team has not given serious consideration to a national program encouraging the use of Ukrainian (though that would seem to be a constitutional requirement: the constitution, adopted in 1996, says the state should “provide for the all-encompassing development and functioning of the Ukrainian language in all areas of societal life across all the territory of Ukraine”). Indeed, the government has chosen to do nothing to promote the use of Ukrainian. In the years before the revolution, Yushchenko’s prime minister, Yulia Tymoshenko, learnt Ukrainian to add to her native Russian. She has not, though, made the promotion of Ukrainian – and getting other state officials to follow her lead – a public issue. The government itself continues to use a mix of languages. Ministers such as Transport Minister Yevhen Chervonenko and the minister for emergency situations, David Zhvania, an ethnic Georgian, speak only Russian. Yushchenko himself has said nothing on the topic that would produce headlines.

The issue of language has, it seems, fallen by the wayside, apparently in the hustle and bustle of economic reform, the struggle with corruption, and the tricky task of handling Ukraine’s international relations. In fact, in some ways, Yushchenko’s supporters pay less attention to language now than they did before the elections. Previously, his Our Ukraine faction in parliament had regularly stood very strongly against the introduction of Russian as a second state language and in favor of legislation favoring Ukrainian. Now, they are saying and doing nothing on either front, even about the removing taxes on Ukrainian-language books.

In effect, Ukrainian is being promoted by inertia, not policy. Its advance – if there is one – is in “stealth mode.” Gradually, its status as the country’s official state language and a number of legislative provisions are probably making Ukrainian a slightly greater presence in daily life (bureaucrats, for example, are obliged to know the state language, Ukrainian, though their use of Ukrainian is left largely up to them).

The same too applies to education, though more actively. Schools can choose their language of instruction, though they also have to teach pupils Ukrainian. There are, for example, Hungarian-language schools funded by Budapest and Romanian-language schools supported by money from Bucharest. Ukrainian is the language used in most schools across Ukraine, with the notable exceptions of the Donbas and the Crimea, where teachers regularly favor Russian. This means that in places there are different patterns of language use in and out of school. In the capital, Kyiv, schools overwhelmingly teach in Ukrainian – though, as any stroll through the center indicates, it is not an overwhelmingly Ukrainian-speaking city. On balance, there seems at present to be a wavering in the policy of using Ukrainian in schools.

In higher education, the situation is theoretically better still for Ukrainian, since the law requires teaching to be conducted in Ukrainian. But this rule is routinely ignored in the south and east of Ukraine. Even in central Ukraine and in Kyiv, there are instances of college professors switching to Russian for their lectures, at times at the request of students. Still, education is perhaps the area of life where the Ukrainian language is establishing itself most firmly outside the home.

The Ukrainian language, though, has one intangible advantage: since the revolution, more Ukrainian has been heard on the streets of Kyiv, an indication perhaps that national pride and political allegiance are translating into a switch in language.

For the time being, an uneasy truce prevails in public life. Everyone is simply using the language they wish to, with small, occasional flare-ups, such as demands by students that a professor switch to Russian or a demonstration in the Crimea in favor of introducing Russian as the second state language or a congress held on 16 July by the Russian Movement, an NGO whose stated goals include Ukraine’s integration into a union with Russia and Belarus and “granting Russian a status equal to that of Ukrainian.”

In the long run, Yushchenko may choose to be more active. That, at least, is suggested by a nationwide television address that Yushchenko made in May, in which he said that “in contrast with the past, this government understands the significance of the state language and we will form a state policy to support the state language... The problem is more or less understood, [as is] the direction in which we should move.”

However, with elections coming up, it seems certain that Yushchenko will want the language issue to lie dormant at least through the middle of 2006.

Whether it remains dormant is another matter. The issue is undoubtedly explosive, with small groups on both sides geared towards confrontation and politicians already taking up positions. And, while a large proportion of the population is uninterested in the issue, the role of the Ukrainian language is among the most consistently hot topics on Internet forums. These debates will continue, in whatever language.

Source: Transitions OnLine

Ukraine's Rabbis, Jewish Organizations Launch Joint Appeal in Wake of Anti-Semitism

KIEV, Ukraine -– Rabbis from throughout Ukraine have launched an appeal in light of recent anti-Semitic manifestations that have been occurring in this country. The Chief Rabbinate of Ukraine, the Federation of Jewish Communities of Ukraine, and other Jewish organizations have made this special effort in order to draw the attention of both local and state authorities to anti-Jewish propaganda and manifestations, which have become all too frequent in Ukraine. Unfortunately, the reaction by state authorities to such appeals have been minimal, as it resulted in official responses aimed at reassuring Jewish leaders that there is no anti-Semitism in Ukraine.

"We are deeply convinced that the seeds of anti-Semitism and xenophobia are extremely dangerous and may result in highly severe consequences," reads the joint statement issued by these numerous rabbis and headed by the Chief Rabbi of Ukraine Azriel Chaikin. This anxiety has been supported by an extremely tragic recent event that occurred on August 28th, when a group of young Fascists brutally beat a Jewish student in the Ukrainian capital of Kiev. "Although Ukrainian authorities, including President Yuschenko, displayed an immediate reaction to this event, this incident cannot be regarded as an unforeseen event, since dozens of Jews have been outraged and assaulted in the streets of Kiev and other Ukrainian cities over the past few months".

Seeking an adequate response in the face of this threat to society in Ukraine, the rabbis' appeal demanded that a number of necessary conditions be met. They demanded the thorough investigation of this incident and that the guilty be brought to justice; that legislative measures be taken to prohibit xenophobia in Ukraine; the prohibition of the free distribution of literature aimed at inciting national hatred towards national and religious groups; and, finally, the rabbis demanded that state authorities provide an immediate response to each manifestation of xenophobia, racial and national hatred – including anti-Semitism – that occurs in Ukraine.

"Ukrainian Jewry, as part of the multi-national population of Ukraine, is certain that the state is able to protect them, while providing the conditions for their safe, dynamic and comprehensive development," the appeal reads, "Ukrainian Jewry is also convinced that society in Ukraine is mature enough to realize that a threat aimed at one part of the society is equally dangerous for the entire nation".

Source: FJC