Crisis of Ukraine's State Institutions

KIEV, Ukraine -- The Kremlin's "gas attack" on Ukraine exploited an ongoing crisis of state institutions in that country and exacerbated the crisis almost to the point of meltdown.

Viktor Yushchenko (L) turns to Moscow to rescue his government
This situation undermines the country's and its president's capacity to resist Moscow's emerging strategy to recapture key economic and political positions in Ukraine, one year after the Orange Revolution.

The signing of the January 4 gas agreement with Russia illustrated the dangers stemming from the growing weakness of Ukraine's state institutions. Basically, just two individuals, Fuel and Energy Minister Ivan Plachkov and Naftohaz Ukrainy chairman Oleksiy Ivchenko, negotiated and signed a dubious agreement in complete secrecy in Moscow, without the support of experts from government agencies that are traditionally involved in such negotiations, without consultation with the cabinet of ministers, and without public accountability even after the highly controversial agreement had been signed.

Their briefings afterward to the media proved misleading, and they then declined to testify to the parliament, in effect setting up Prime Minister Yuriy Yekhanurov to take the fall. (Yekhanurov initially also dissembled on the gas agreement, but eventually distanced himself from it.) Meanwhile, President Viktor Yushchenko continues describing the gas agreement as an unqualified success even crediting Russian President Vladimir Putin for contributing to the purported success despite massive domestic and international criticism of key parts of the agreement.

The gas agreement provided the parliament with the political excuse to exercise its right to dismiss the government, although the parliament itself will only have the constitutional right to install another government after the March elections. Yushchenko disputes the legal validity of the parliament's no confidence vote and insists that the government has not been reduced to "acting" status, but that it continues to operate with full authority.

Nevertheless, the president and government are looking for legal avenues to establish that the government has the standing required for signing international agreements. A determination on that issue cannot be reached, however, because Ukraine does not have an operating Constitutional Court. The parliament and the president are accusing each other over failures to fill and swear in their respective quotas of seats on the Court. Each side fears that the other might use the Constitutional Court as a tool in the conflict between president and parliament over implementation of constitutional reforms.

By all accounts, the president is attempting to renege on his December 2004 agreements with parliament on constitutional reform that would transfer certain presidential powers to the parliament and government. Yushchenko now claims that the procedure of reaching those agreements was hidden from the public and that the substance of the constitutional reforms was not debated or understood prior to their adoption by parliament.

Such claims are factually unsustainable. The procedure was highly publicized at the time; the parliament held detailed debates before passing the constitutional reforms; and the pro-presidential bloc Our Ukraine voted for the reforms as well.

Because of his differences with the majority of deputies over the no confidence vote in the government and the constitutional reforms, Yushchenko has launched a war of words on the parliament. He has recently been describing the majorities that oppose him on those issues as "destabilizers," "anti-state," "destructive," "fifth column," "parasitical"; he describes their decisions as "illegal," "anti-people," and the parliament's composition itself as unrepresentative ("lost the people's ideological support").

The president warns that he would call a popular referendum (either before or after the upcoming parliamentary elections) in order to cancel the constitutional reforms. This course, if continued, would cause Yushchenko and his Our Ukraine bloc to lose their remaining or potential allies in this parliament and that to be elected in March. On a fundamental level, it reflects inadequate understanding of political and state institutions as such.

While that inadequacy seems common to a wide range of political forces and interest groups in Ukraine and beyond, it becomes all the more debilitating when it afflicts the top level of the executive branch.

Immediately after the Orange victory, de facto parallel governments emerged in the National Security and Defense Council (NSDC) and the Presidential staff, in addition to the constitutionally empowered cabinet of ministers. One year later, laws have yet to be adopted on the functioning of those institutions. After NSDC's first head, Petro Poroshenko, had vastly exceeded his prerogatives, Poroshenko's successor, Anatoly Kinakh, does so selectively on key issues. During the gas crisis, for example, Kinakh publicly proposed entrusting the management of Ukraine's gas transit pipeline system to Russia.

Simultaneously he declared that Ukraine would no longer tolerate infringements of its national sovereignty, such as giving up lucrative contracts for its turbines (an allusion to Washington's earlier demand that Ukraine abandon the turbine contract for Iran's Bushehr nuclear power plant). Both of Yushchenko's appointees as NSDC heads have no background in national security, and both have played the Russia card while in that post. Despite such dysfunctionalities, the NSDC seized a number of portfolios from the Ministry of Foreign Affairs. Meanwhile, for a year after the Orange Revolution, Ukraine had no ambassador in Washington and other key capitals.

In sum, Ukraine is traversing an institutional and a constitutional crisis, as well as a deficit of competence at the top. Against this backdrop, Yushchenko's unofficial meeting with Russian President Vladimir Putin on January 11 in Astana initiated a potentially wide-ranging rapprochement. An embattled Yushchenko feels that he needs that relationship to shore up his presidency and improve his bloc's electoral prospects.

For their part, influential Kremlin advisers calculate that a weakened and isolated Ukrainian president might be used, particularly in the post-election period. Risky under any circumstances, a personal rapprochement with the Kremlin could prove especially dangerous for Yushchenko to undertake without the backing of effective democratic institutions and a functioning government.

Source: Eurasia Daily Monitor

Yushchenko Blames Officials For Week-Long Heating Outage

KIEV, Ukraine -- Ukrainian President Viktor Yushchenko yesterday blamed local officials in an eastern Ukrainian city for mismanagement that left tens of thousands of residents shivering in unheated apartments during last week's record-breaking cold spell.

Ukrainian President Victor Yushchenko inspects the remains of a shattered heating system in a school in Alchevsk, 750 km (466 miles) east of Kiev
"These people don't deserve respect, they deserve to be sacked," Yushchenko said, referring to local officials in Alchevsk in the Luhansky region. Some 60,000 people have been without heat for more than a week in the city.

The shutdown occurred on January 22 when one of the main pipes pumping hot water from a central boiler into apartment houses, schools and other municipal buildings froze and broke down. Yushchenko called for a criminal investigation, and pledged that his government would do whatever it took to get the heat flowing again.

"For a week already, Alchevsk ... resembles the frozen side of the moon," Ukraine's Gazeta Po-Kievskiy declared. Ukrainian media broadcast images of residents sitting around kitchen tables bundled up in winter hats, coats and gloves.

WORKERS DISPATCHED

Ihor Krol, spokesman for the Emergency Situations Ministry, said that some 3,600 workers from across the country had been dispatched to Alchevsk to restore the heating supply. Gradually, buildings were being hooked up to the system.

A first allotment of 2.5 million hryvna (US$494,000; euro 409,000) was being sent to the city to fund repairs, Yushchenko's office said. He said that a special emergency headquarters was now in charge in the city, Ukraine's Unian news agency reported.

Last week's cold snap caused a record jump in gas consumption in Ukraine and led to the deaths of some 220 people as this country's ageing and inefficient heating systems struggled to cope. Most of the deaths occurred in the Luhansky region; the Health Ministry has said many were homeless and intoxicated people.

Temperatures have since risen to more normal winter levels in Ukraine, with many schools and other businesses that had closed last week reopening Monday.

Source: AP

Ukrainian Agriculture Minister Denounces Trade War Over Russian Ban

KIEV, Ukraine -- Ukraine's agriculture minister on Monday threatened to start a trade war with Russia over its refusal to lift a ban on Ukrainian meat and milk imports in the latest angry volley to be exchanged between the bickering neighbors.

Ukraine's Agriculture Minister Oleksandr Baranovsky
"We have enough levers," Agriculture Minister Oleksandr Baranovsky was quoted as saying by Ukrainian news agencies. "But all the same, we hope Russia will reconsider its decision".

Russia banned imports of Ukrainian meat and dairy products starting Jan. 20, citing violations of veterinary standards. Ukraine has called the move retaliation for its efforts to reclaim a number of disputed lighthouses on the Black Sea coast.

Ukrainian officials have tried for a week to have the ban lifted, so far to no avail. Baranovsky planned to travel to Moscow on Monday for talks, but canceled the visit after reportedly being told the Russians couldn't guarantee a meeting with his counterpart.

Prime Minister Yuriy Yekhanurov noted this Monday when asked about when he planned to visit Moscow. Yekhanurov said there were no plans, adding "you see, our veterinarians can't even manage to get in there."

The Russian ban has threatened to cause serious losses to Ukraine's agriculture sector, and further strain relations between the ex-Soviet republics.

Baranovsky said Monday that Ukraine bought some US$355 million (294 million euros) worth of agricultural products from Russia last year, and US$102 million (84 million euros) worth of animal products.
He noted trade wars never lead to anything positive, but said the option couldn't be ruled out.

Ukraine also planned to appeal to the World Trade Organization, the Agriculture Ministry said. Neither Ukraine nor Russia, however, are members of the WTO.

Russian-Ukrainian relations worsened after President Viktor Yushchenko defeated a Kremlin-backed candidate in the 2004 election and began a drive to reduce Russian influence. Ties were further strained during a bitter New Year's dispute over natural gas prices, and by Ukraine's complaints that Russia's Black Sea Fleet has usurped land that it isn't entitled to in a Ukrainian port, reports the AP.

Source: Pravda

Gazprom 3Q Net Profit Rises 68 Percent

MOSCOW - Russia's state-controlled natural gas monopoly OAO Gazprom said Monday its third-quarter net profit surged 68 percent from the same period a year earlier, boosted by an extraordinary gain from sales to Ukraine.

A Russian specialist checks pressure at Russian gas monopoly Gazprom gas storage facility near the town of Kasimov 330 km (198 miles) south of Moscow
Gazprom, the largest gas company in the world, said that third quarter net profits were 79.32 billion rubles ($2.82 billion) up from 47.124 billion rubles in the same period a year earlier, according to a statement on its Web site.

It said its net profit for the first nine months of 2005 was 232.13 billion rubles ($8.25 billion), up from 139.38 billion rubles for the first nine months of 2004.

Analysts were surprised by an extraordinary gain generated by the sale of more than 140 billion cubic feet of gas in storage in Ukraine, at prices three times higher than agreed contract prices.

Gazprom's contract price for deliveries to Ukraine last year was $50 per 1,000 cubic meters, although a large barter element in the agreement makes exact calculations difficult, Dow Jones Newswires reported.

Gazprom said Monday it had sold gas in Ukrainian storage to RosUkrEnergo, a joint venture in which it owns 50 percent with partners whose identities aren't public, at a price of $150 per 1,000 cubic meters.

Russia briefly cut off gas supplies to Ukraine at the start of the year over a bitter pricing dispute. The two sides struck a complicated compromise under which the former Soviet republic agreed to pay twice the price for a blend of Russian and cheaper Central Asian gas.

RosUkrEnergo emerged as the exclusive importer of natural gas to Ukraine under the deal.

The company's sales in the first nine months of 2005 rose 37 percent on the year to 291 billion rubles ($10.34 billion). Gazprom, which provides half of Europe's gas imports, controls 20 percent of world gas reserves.

Source: AP

Malevich Painting Allegedly Found In Ukraine

MOSCOW, Russia -- An artist from western Ukraine said he had found a painting by Ukrainian-born Kazimir Malevcih, a leading figure in the Russian Avant-Garde, or by one of his students.


Kazimir Malevich. Self-Portrait. 1933.
Anatoly Fedirko, known in his home town of Chernovtsy for his uncommon artistic enterprises, said experts had confirmed the picture could have been painted by Malevich, a pioneer of geometric abstract art and the founder of Suprematism in Russia, or one of his students.

The painting will not be less valuable if the latter version is confirmed. Experts said it dated back to the early 20th century and mimicked the artist's legendary style.

The finding is currently being kept in a Kiev bank. Fedirko said he would display the painting in Chernovtsy February 1.

Malevich is best known for his works 'Black Square' (1915) and 'Black Cross' (1916-1917), renowned for their previously unseen geometrical simplicity.

Malevich, who studied art in Kiev and Moscow and experimented with various modernist styles, including Cubism and Futurism, turned to teaching in 1922 in Petrograd (later Leningrad and now St. Petersburg).

Under Stalin, Malevich was sent to a prison camp because his work was in opposition to official ideology at the time. He died in poverty in Leningrad in 1935.

Source: RIA Novosti

Ukraine’s Unsanctioned Gas Taking Angers Russia

MOSCOW, Russia -- From January 19 to 25, Ukraine took 326 million cubic meters of Russian gas intended for European consumers, Gazprom’s press service said.


The figure was announced on Friday at a meeting of Gazprom managers who discussed measures to ensure Gazprom’s gas supplies to Europe in connection with the cold weather. The meeting was chaired by Gazprom’s Deputy CEO Alexander Ananenkov.

Ukraine is taking up to 80 million cubic meters of gas a day without Russia’s sanction. Gazprom managers decided to send another telegram to Ukraine’s national oil and gas company Neftegaz asking it to stop taking Russian gas without permission and to observe the Russian-Ukrainian contract on gas deliveries.

“With much of Europe gripped by cold weather, Ukraine is taking advantage of its position as the country through which Russia transports its gas to Europe, not only exceeding its consumption levels, but also taking Russia’s additional supplies to Europe. Of all the countries through which Russia transports its gas, Ukraine is the only one to blatantly violate international norms of gas business. In fact, this means there is no control at all in Ukraine’s energy sector,” Ananenkov stressed.

Gazprom increased its deliveries to European partners through the Yamal-Europe and Blue Stream pipeline networks, it was said at the meeting. From January 16 to 25, Gazprom increased gas supplies to Russian consumers by 2.2 billion cubic meters.

Meanwhile, some industrial consumers failed to observe their schedule for switching to alternative fuels. They were supposed to reduce their consumption of gas by 211.5 million cubic meters a day, but it was only 45 million cubic meters in reality.

Igor Ivanov, Secretary of Russia’s Security Council, said earlier on Friday that Russia had a long-term strategy for energy cooperation with European countries, including Ukraine. “Ukraine is no exception, it was included in our long-term strategy,” Ivanov said, noting that Russia planned to increase its energy exports to Europe.

Anatoly Kinakh, Secretary of Ukraine’s National Security and Defense Council, said the creation of a joint Russian-Ukrainian gas company was not discussed at his meeting with Ivanov on Friday.

“Ukraine is interested in successful negotiations, so that all gas companies operate within the law, based on transparent financial schemes and performing their obligations both on the transportation and delivery of energy, and this work is continuing,” Kinakh said. “Ukraine and the Russian Federation are proving to the whole world that they, as two friendly countries, can solve these problems without external arbiters,” he said.

Source: RBC

Death And The Donetsk Miner

DONETSK, Ukraine -- When the drill reached the methane pocket more than 500 meters underground, a large flame lit up the pitch-dark coal mine, raising a cloud of steam and dust and coming within a whisker of the miners.


"The heat singed our faces, but fortunately it disappeared as quickly as it came," said Dmitry, 47, who works in one of Donetsk's state-owned coal mines. "I felt death caressing me, but for the first time in my life I welcomed the uncertainty. We looked at each other. We cried for joy, we were alive."

In the mines, methane is an ever-present danger, and Dmitry said that when he drill was switched off, miners heard the gas hissing. "The gas concentrates in air pockets, or between the fissures of the coal. As it's
lighter than air, it's extremely explosive," Dmitry said, looking at the bruises left by the explosion on his calloused hands.

Dmitry and the other miners with him escaped with just a few burns and a lot of stress, but said they were determined to keep working. They earn $200 per month.

"I thought that I was going to die -- or worse, that I would be injured and not be able to go to work again. I need the money to feed my family," Dmitry said.

Dmitry asked that his last name and the name of the mine where he works in Donetsk not be published, saying he was afraid he could lose his job.

The 450,000 miners who work in Ukraine's official coal industry have some safety protection, unlike their counterparts who work in the country's illegal mines, but it is still poor. Their lives depend on good ventilation systems that pump out the deadly methane, but numerous safety violations, negligence and worn-out equipment make the Ukrainian mining industry one of the world's most dangerous after China.

According to Mykhailo Volynets, the head of the country's Confederation of Trade Unions and a member of the parliament's energy committee, more than 75 percent of the country's 200 coal mines are classified as dangerous. Since 1991, about 4,300 miners have been killed in mining accidents in the country.

Ukraine's coal industry, which has been in a critical state since the Soviet collapse, survives mainly due to subsidies from Kiev, despite having reserves of 37 billion tons. Subsidies in 2003 and 2004 totaled $2 billion but were insufficient to maintain safety standards.

In November, President Viktor Yushchenko said some state-owned mines would be privatized this year as part of an $800 million rescue plan. The Donetsk miners, however, said the money would not be enough.

Dmitry, with dozens of others from his mine, went to a rally in Kiev in October to demand more investment in the industry. "We tried to make our voices heard, but Kiev doesn't care about what happens in our region," he said.

The industry suffers from extremely low productivity, according to the World Bank. Under a 1996 World Bank-funded program to reform the coal industry, many of the country's profitable mines were privatized, but the result was dozens of mine closures and mass unemployment in many areas.

“The program should have restored order in the industry and helped the country to privatize the mines, but more than 50 mines were closed and the money just disappeared in the pockets of our bureaucrats in charge of the restructuring," said Svetlana Samoilyuk, an expert with the Association of Donbass Mining Cities, a nonprofit lobby group.

According to the World Bank, the $14 million allocated for the creation of new jobs for former miners was misused.

"According to the program, Ukraine should have created stock companies and the miners should have been given shares in the industry, but this never happened," Samoilyuk said. "People were left with nothing." As a result, Volynets said, most mines are now outdated, and prospective private buyers are scarce.

"Reforming the mines is one of the main problems faced by Yushchenko. The government cannot close them, since unemployment would soar, but it cannot keep them all open, either," one government official said, on condition of anonymity. "The mines just keep swallowing money."

Dmitry said that he did not like his job, but that after 27 years of digging coal, he had few prospects in Donetsk.

"I know I put my life in danger every day I go down the mine, but I have no choice," he said. "I'd be very unlikely to find anything else."

Source: Unian News

Cold Front Takes High Toll In Europe

WARSAW, Poland -- Europe’s Arctic cold front loosened its deadly grip Thursday, but not before claiming at least 60 more lives overnight in Ukraine, Poland and half a dozen other countries battered by a week of below-freezing temperatures.


In Ukraine alone 40 people died overnight as a result of extreme cold, bringing to at least 181 the number of deaths since temperatures plunged last week.

In Poland, the most recent 24-hour toll was 10, for an eight-day total of 63 dead. There were also deaths reported in Croatia, the Czech Republic and Romania, which registered 45 weather-related fatalities in six days.

The situation in Georgia remained critical Thursday due to massive electricity failures and a fifth day without natural gas supplies from Russia, which were abruptly cut when an explosion Sunday burst the main pipeline.

Most homes in the capital of this former Soviet republic were without gas as overnight temperatures fell as low as minus 10 degrees Celsius (14 degrees Fahrenheit).

The country’s problems were compounded by power cuts across the capital Tbilisi and the rest of eastern Georgia caused by snowstorms and excessive demand. Only key installations such as hospitals were being supplied with emergency electricity, a spokesman for the state-run power company told AFP.

Especially hard hit during the last eight days have been Eastern Europe’s homeless people, accounting for roughly half of all the freezing deaths reported. The dangers of exposure are often compounded by the consumption of alcohol.

The aged are also at risk, such as an 85-year-old man from a village near Dobrich, Bulgaria and an 84-year-old woman from another Bulgarian town, both found dead outside their homes Wednesday.

In Moscow, at least 500 homeless children are roaming the streets at any given time, according to Emma Bell of Doctors Without Borders, an organization that provides emergency medical care around the world.

There are no firm statistics, but officials estimate that just under half of the 100 or so people killed by cold weather in Moscow over the last eight days were living on the streets.

Across most of France, authorities stepped up their vigilance of the homeless. The city of Paris set up shelter for 300 more people on Thursday.

In Albania, where three people died overnight, a 37-year-old mentally disabled man who had gone missing on Monday was found frozen to death near his house in Durres, northwest of the capital Tirana. Two other people, in their late sixties, died of heart attacks provoked by the cold.

Even as the death toll for the weeklong deep freeze continued to climb, temperatures eased across most of eastern and central Europe, with normal winter weather forecast for Friday and the weekend.

Russia, where hundreds were estimated to have perished in the weeklong freeze, was relatively balmy as the thermometer climbed toward zero degrees C (32 degrees F).

Conditions also improved in Germany and Greece, where schools reopened and air and sea traffic slowly recovered some semblance of normalcy.

Road conditions, however, remained dangerous almost everywhere, with hundreds of accidents reported, some of them fatal.

Turkish authorities battled to open blocked roads on Thursday as snow continued to fall on the country’s biggest city Istanbul. Roads leading to several suburbs on the European side of the Bosphorus Strait remained blocked, the Anatolia news agency said.

But city authorities underlined that the main arteries were open as some 3,000 municipal employees worked round the clock to clean up the snow, which has disrupted already chaotic traffic.

Education Minister Huseyin Celik announced late Wednesday a one-week extension of the mid-term holiday for schools across the country.

The weather also continued to bedevil air and maritime traffic, with several domestic flights to the east of the country cancelled and ferry services across the Bosphorus in Istanbul disrupted.

Some 10,000 small villages have been cut off from road transport, and several hundred are without electricity or telephone service

Source: AFP

39 More Dead From Cold In Ukraine

KIEV, Ukraine -- Another 39 people have died of cold in Ukraine, bringing to at least 220 the number of deaths since temperatures plunged last week.

A Ukrainian woman with a puppy begs for money in the centre of Kiev. Ukraine is in the grip of extremely cold weather with temperatures in the capital Kiev plunging to about -23 degrees Celsius (-9.4 Fahrenheit).
In addition to the latest death toll -- recorded over a 24-hour period -- at least 292 people have been hospitalized as a result of the cold, the health ministry said Friday.

Most were suffering from frostbite and various stages of hypothermia.

According to the ministry's figures, 220 people died and 2,563 people have been hospitalized as a result of the cold since last Saturday, several days after temperatures first began to plunge in the east of the country.

Friday's double-digit daily death toll came even though the extreme cold that gripped Ukraine for more than a week has let up across the country for two days.

Like neighboring Russia, Ukraine was gripped by severe temperatures starting last week, with the mercury dipping to minus 35 Celsius (minus 31 Fahrenheit) in some parts of the country.

Source: AFP

Chernobyl Overshadows Push For N-Power

KIEV, Ukraine -- As Ukraine looks to nuclear power to fuel its increasing energy needs, critics have warned that the lessons of the 1986 Chernobyl reactor meltdown may have gone unheeded.

Images of the town Pripyat, near Chernobyl
Ukraine's dispute with Russia over gas supplies in early January caused panic in Europe - and even the eventual defeat of the government in Kiev.

With high oil prices and increased demand continuing to dominate international markets, interest in nuclear power has resurged as securing energy sources becomes a key issue for many European countries.

Ukraine is planning to boost its nuclear sector, and Viktor Yushchenko, the president, has even floated the idea of using the old Chernobyl site as a new dump for nuclear waste

Paulius Kuncinas, a Kiev-based energy analyst, says: "In 2004, Ukraine commissioned two large new reactors.

"The government plans to build up to 11 new reactors by 2030. The rationale is that it is a cheap way to replace gas. Ukraine also has large uranium deposits."

But the move towards nuclear energy may be lingering in Chernobyl's shadow.

Fatal meltdown

The result of an experiment that went horribly wrong, the Chernobyl nuclear plant's reactor number four exploded on 26 April 1986, releasing large amounts of radioactivity into the atmosphere. A radioactive cloud affected people as far away as Scotland.

The nuclear sector in Europe took a plunge in the wake of the disaster.

Many countries moved to decommission existing nuclear power stations and - except in France and Finland - cancelled plans for new ones. Low oil prices and fears over nuclear safety were key factors in this loss of public trust.

Today, the reactor sits at the heart of a 30km exclusion zone, an area still dangerous for visitors.

"It's something of a wildlife sanctuary," says Maxime Orel of the Ukrainian Ministry of the Catastrophe, a special government unit set up to manage and monitor disaster relief at the site.

"The reason is that hunting is banned, because the animals are laced with Strontium 90, a deadly radioactive isotope. They get it from eating the plants, which are also radioactive."

Nobody knows how many people died in the disaster, particularly as effects such as cancers may not appear for years. Official estimates, which are widely disputed, from the three former Soviet countries affected - Ukraine, Belarus and Russia - say about 25,000 had died by the year 2005.

"At the time, no one wanted to believe this disaster had happened," explains Orel. The Soviet authorities covered up much of what had happened.

Ghost towns

We are walking in the abandoned city of Pripyat, 1km from the reactor and once a home to more than 40,000 people.

"The residents of Pripyat say they heard only a small noise when the reactor blew - a hand clap, nothing else - at about 2am," continues Orel. "The following morning, people, mothers with children, went about their daily business. No one told them what had happened, but the radiation level was already extremely high. There was radioactive dust in the air and it covered all the buildings and streets."

The entire town was evacuated some days later. Because residents were told they would return in three days, they left clothes, furniture and pets behind.

"When they came back, all the pets were dead," Orel told Aljazeera.net.

Now the town stands deserted, its miles of apartment blocks, shopping centres, wide boulevards and amusement parks too radioactive to be lived in again. With the wind and snow, followed by spring rains and summer heat, the concrete buildings will likely have long since cracked and eroded away before the radiation levels become safe.

Yet this natural process of decay is also a growing cause for alarm.

Growing alarm

"Chernobyl is one of the most complex sites, geologically, of any nuclear power station," says Jan Vande Putte, the nuclear campaigns coordinator for environmental activists Greenpeace International.

"Several million cubic metres of radioactive waste were dumped around the reactor in ditches, most of it in the 12 months after the disaster and in an emergency situation. They did this next to a river which regularly floods."

"Chernobyl is one of the most complex sites, geologically, of any nuclear power station"

The fear is that radioactive material could get into the water table and seep down river into the Kiev Reservoir, which lies north of Ukraine's capital. Kiev lies two hours' drive downstream from Chernobyl.

In the immediate aftermath of the 1986 explosion, thousands of soldiers, firemen and rescue workers - known as liquidators - also rushed to the site to pour thousands of tons of lead and sand around the reactor. Many of them died or received severe radiation burns in the process, but eventually they contained the reactor in what has since become known as "the sarcophagus".

Yet this structure too is now causing alarm.

"Inside the sarcophagus, in one second you can take a fatal dose of radiation," says Orel. "Yet its north wall is unstable. Ground water is undermining the cement and sand dropped by the helicopters during the emergency, it's a mess. Highly polluted and very unstable."

Containment hopes

French company Framatom is working fast onsite to build a new sarcophagus to contain the old one. Orel hopes it will be completed as soon as possible.

Nuclear sector companies have been busy recently elsewhere in Ukraine too. Reactor number four was just one of several at Chernobyl, yet all these have been closed since 2000.

To compensate for the loss, the Ukrainian government commissioned two new Russian designed reactors, Khmelnitsky 2 and Rivne 4, and received financial backing from a string of European, US and Russian authorities.

"There is pressure on the Ukrainian government to find new energy resources," Kuncinas told Aljazeera.net.

"Coal-fired power plants and nuclear plants are the two options being considered. Coal is not very popular as it enjoys little support outside Ukraine."

Cheap energy production

Tony Blair, the British prime minister, announced late last year that his government would be reviewing "the development of a new generation of nuclear power stations".

Elsewhere, countries from Lithuania to China have also announced nuclear plans.

Advocates argue that it is a way of producing cheap energy that does not harm the environment by producing greenhouse gases.

A return to nuclear power has also been welcomed by Western business groups. They fear that uncertainty over energy supplies - such as that recently shown in Russia's spat with Ukraine - coupled with rising gas and oil prices will have a major impact on their future competitiveness.

Yet back in the snows of Pripyat, such considerations seem a long way away.

"Once, they thought of this as a paradise," says Orel. "The people who lived and worked here at the reactor were all young - the average age was 25. They were paid much more than normal Soviet citizens and had everything they wanted. Now who knows how many are still alive."

Source: Aljazeera

Russians And Ukrainians Develop Mutual Hatred Because Of Gas Conflict

MOSCOW, Russia -- Opinion polls conducted in Russia and Ukraine showed that both Russians and Ukrainians changed their attitudes to each other because of the gas dispute.


Russian and Ukrainian sociologists say that the level of sympathy between the brotherly Slavic nations has reduced considerably lately. The number of those Russians who treat Ukraine positively has dropped in comparison with December 2005: from 60 to 54 percent. Consequently, the share of those who describe their attitude to Ukraine and Ukrainians as negative has raised from 29 to 34 percent.

This information was revealed by the Analytical Center of Yury Levada, specialists of which polled 1600 Russians all across Russia. The poll included questions about the recent gas dispute between Russia and Ukraine.

Forty percent of Russians believe that the gas crisis between the two countries took place because of Ukraine's fault. One-third of the polled said that both Ukrainian and Russian administrations were guilty of the crisis. Russians split in their opinions regarding the end of the gas conflict. Twenty percent of respondents said that Russia managed to win the fight, whereas 12 percent believe that the victory in the dispute belongs to Ukraine. Twenty percent said that no one won the natural gas war.

Ukrainian sociologists conducted a similar poll. The research also revealed a certain coolness in the relations between the two Slavic nations. Over 26 percent of the polled Ukrainians said that their attitude to Ukraine worsened after the gas conflict with Russia. The respondents acknowledged that they did not have any negative feelings about Russia before the scandal. More than 41 percent of the polled Ukrainians said that their attitude to Russia remained unchanged, positive that is.

Almost 30 percent of the polled believe that the gas conflict occurred because of Russia's wish to influence the results of the forthcoming parliamentarian elections in Ukraine. Others (25.4%) think that Russia simply wanted to earn more money on natural gas. Twenty-three percent of respondents believe that Russia wanted to punish Ukraine to its independent policies. Twenty-two percent of the polled Ukrainians acknowledged, however, that the gas crisis with Russia occurred because of the incorrect position of the Ukrainian administration during the talks.

The poll was conducted on January 15th across major Ukrainian cities.

Andrei Zorin, an Oxford University professor of Russian history, believes that the worsening of relations between the two brotherly nations is based on historical reasons. "It seems that the population of Russia and its administration start to realize that the state organization in Ukraine is inevitable. This painful process evokes certain complexes," the Kommersant newspaper quoted the professor as saying.

Source: Pravda

Official: Ukraine to Pay for Gas It Uses

DAVOS, Switzerland — Ukraine will pay for all the Russian natural gas it uses, the country's economy minister, Arsenii Yatsenkiuk, said Friday.


He also denied that the country was stealing from pipelines that cross the country, carrying about 25 percent of Europe's gas supplies.

"The situation has returned to normal," he told Dow Jones Newswires on the sidelines of the World Economic Forum's annual meeting in Davos. "Gas is flowing, and at the end of the month, Russia will calculate how much gas has traveled through Ukraine, and we will calculate how much gas we have used."

Russia's natural gas monopoly OAO Gazprom said Thursday that Ukraine had siphoned off 326 million cubic meters of natural gas over the past week.

Ukraine's Prime Minister Yuri Yekahanurov said earlier that the country had increased its gas consumption as a cold snap gripped eastern Europe.

Ukraine's state-owned oil and gas company Naftogaz earlier this week also acknowledged taking more gas than planned, but said that total January imports would be unchanged.

Accusations of gas theft follow a fight over pricing earlier this month that saw Russia cut off all gas deliveries to Ukraine for two days.

As result of that shut-off and current Ukrainian demands, western European countries have complained about falling import levels.

Source: AP

Europe Short Of Gas As Russia, Ukraine Wrangle

MOSCOW, Russia -- Much of Europe and parts of the former Soviet Union battled energy shortages on Friday as Russia failed to pump enough gas to meet demand that was boosted by unusually cold winter weather.


Russia supplies a quarter of the region's gas needs and, until this year, had been a dependable supplier.

But a pricing row with Ukraine, transit route for 80 percent of Russia's gas exports, and a cold snap persisting in major consuming nations, has hit supplies to industry and households across the continent.

Worst off was the ex-Soviet state of Georgia, where mystery explosions on gas export pipelines in southern Russia have cut supplies. Many people on Friday could not cook a hot meal or heat their homes.

Schools and factories closed, while high winds downed a power line serving the east of the Caucasian state, forcing people to hunt for fuel.

"I've spent several hours in a queue for kerosene and wood this morning. But I'm happy I've finally got it," said Maya Khubuluri, a 49-year-old resident of the capital Tbilisi.

Parts of Russia's war-torn southern region of Chechnya were cut off too. Many people there live in homes damaged during 11 years of civil conflict, leaving them exposed to temperatures as low as minus 15 Celsius (5 Fahrenheit).

Big consumer Italy turned down heating in offices, factories and apartment blocks to conserve supplies. People disregarding an order to save energy face an 800 euro ($975) fine.

Industry Minister Claudio Scajola rushed to Moscow for emergency talks on the energy crisis with Russian Energy Minister Viktor Khristenko.

Italy plans to present a paper on energy security at next month's meeting of finance ministers from the Group of Eight industrialised nations, being hosted by Russia in Moscow.

A top European Union official threw his weight behind that initiative. "It is crucial," the bloc's monetary affairs commissioner, Joaquin Almunia, told Reuters on the sidelines of the World Economic Forum in Davos.

Russia has made energy security a major theme of its first annual presidency of the G8, but the angry reaction of the West to the gas supply disruptions has turned the initiative into a political boomerang.

RUSSIA-UKRAINE ROW RUMBLES ON

Russia stunned Europe by cutting gas supplies to Ukraine for two days over the New Year in its drive to get its former Soviet neighbour to pay nearly twice as much for gas imports.

But a deal struck on Jan. 4 triggered a constitutional crisis in Kiev, pitting parliament against President Viktor Yushchenko's government.

With political life in Ukraine paralysed, expert-level talks in Kiev on finalising a contract are making slow progress.

Meanwhile, temperatures remain below average for the time of year, with parts of eastern Europe gripped by a freeze which sent the mercury below minus 30 Celsius (minus 22 Fahrenheit).

Russia's gas monopoly Gazprom (GAZP.MM: Quote, Profile, Research) has accused Ukraine of "illegally taking" more gas than contractually allowed. Peak daily offtake by Ukraine has reached 80 million cubic metres in recent days -- equal to Italy's consumption.

The resulting shortages in transit supplies cut deliveries to Poland this week by as much as 38 percent this week. Polish distributor PGNiG (PGNI.WA: Quote, Profile, Research) said demand was still outstripping supply, forcing cuts in sales to industrial users.

Turkey on Thursday briefly limited the flow of gas to 21 factories in the northwest, including plants run by Ford Motor Co., Goodyear Tire & Rubber Co. and Hyundai Motor Co.

END IN SIGHT?

Russia's customers said on Friday that supplies could soon get back to normal, however, with the shortfall to Italy recovering to 2.7 percent from 5.4 percent on Thursday, according to oil and gas firm Eni (ENI.MI: Quote, Profile, Research).

In the Balkans, Serbia said supplies should be fully restored by Sunday after a 25 percent cut earlier this month.

Alexander Medvedev, head of Gazprom's export arm, told Serbian Deputy Prime Minister Miroljub Labus in Belgrade that supplies would return to the agreed levels of 10 million cubic metres a day by the end of the week.

"Medvedev gave assurances that the normalisation of supplies will start from today," Labus' office said in a statement.

Source: Reuters

Human Face

KIEV, Ukraine -- Amid the greater freedom of expression that Ukraine has been enjoying since President Viktor Yushchenko took office a year ago, another sign of progress has hardly been noticed in the country’s private sector. Corporate social responsibility is the newest fad among Ukraine’s business elite.

Ukraine's richest man, Rinat Akhmetov
As a Post article this week points out, Donetsk billionaire Rinat Akhmetov is offering workers at one of his metallurgical plants preferential mortgage loans. Fellow business peer Viktor Pinchuk is earning himself a reputation as a patron of the arts. These are but two examples.

It doesn’t, in a way, matter what the main motivation of these powerful tycoons is, be it improving the value of the public stocks they issue abroad, or bolstering their support among the masses in an attempt to feather their political nests. The main thing is that they keep doing it and inspire others like them to follow suit.

It might not be too naive to assume that Akhmetov, Pinchuk and a few others now better recognize that the next step after advertising and image making is really giving something back to the people on the backs of whom they make their money.

We highlight such developments as further evidence that Ukraine is moving toward greater civic responsibility, freer markets and more respect for the individual as opposed to the faceless state.

So far this trend has been tentative and isolated. These baby steps should be applauded in the hope that they will one day become giant strides toward creating a society in which the privileged feel an obligation toward those less so.

Source: Kyiv Post

Ukraine To Eliminate Last Strategic Backfire Bomber

KIEV, Ukraine -- Ukraine will eliminate on Friday the last strategic Backfire bomber Tu-22M3 and its X-22 cruise missiles.

Strategic Backfire bomber Tu-22M3
After the collapse of the Soviet Union Ukraine inherited 60 Tu-22 bombers (17 Tu-22M2 and 43 Tu-22M3) and 423 X-22 cruise missiles.

Their elimination began in 2002 according to the 1993 agreement with the United States on the elimination of strategic nuclear weapons and nuclear non-proliferation. The elimination program cost some 11 million dollars.

The elimination “confirms the course of Kiev at an unconditional fulfillment of international obligations, in particular, the voluntary refusal of nuclear weapons and the reduction of strategic offensive armaments”, the defense ministry told Tass.

The Tu-22M3 bomber has a range of 7,000 kilometers and can carry three air-to- surface cruise X-22 missiles

Source: Itar-Tass

Ukraine Has No Gas Left

KIEV, Ukraine -- Gazprom said yesterday Ukraine had used by January 25 all the natural gas it was to receive this month. Gaz Ukrainy, a subsidiary of Naftogaz Ukrainy, is suspending the deliveries to insolvent enterprises.

Gazprom said yesterday morning that Ukraine had already consumed the Russian and Turkmen gas it was to receive in January.
Naftogaz Ukrainy is set to economize the gas as much as possible cutting off the supply to 500 companies. The contracts resuming the gas deliveries to Ukraine are not signed yet, therefore, formally, there is no one to provide the country with gas.

Sergey Kupriyanov, the spokesman for Gazprom, said yesterday morning Ukraine had already consumed the Russian and Turkmen gas it was to receive in January. “Ukraine has used the January quota for gas and keeps on siphoning off Russian gas that is intended to be exported to Europe,” Mr. Kupriyanov told Rossiya TV channel. Gazprom’s press service said, however, that they had no plan on further steps so far.

The record-high daily consumption of gas (407 million cu. meters compared to the usual 300 million cu. meters in wintertime) was registered on January following a severe frost. Italy, Hungary and Poland reported that they had not received their gas shares in full. Gazprom’s deputy chair of the board Alexander Medvedev claimed that “the gas is staying in Ukraine.”

Naftogaz Ukrainy admitted to removing the gas and came up with a few schemes to pay for it. However, the agreement between Naftogaz Ukrainy and Gazprom of January 4 has not been turned into contracts with RosUkrEnergo and a joint venture to sell the gas in Ukraine has not been set up yet. Nominally, no one is in charge for the gas supply of Ukraine now.

Gaz Ukrainy, a subsidiary of Naftogaz Ukrainy, circulated a statement yesterday announcing suspensions of the supply to more that 50 insolvent enterprises in Ukraine.

Source: Kommersant

Yushchenko Receives Telamone Prize in Italy for Development of Peace

KIEV, Ukraine -- Ukraine’s president has received the International Telamone Prize. The prize founded in the Italian city of Agrigento has been granted to Viktor Yushchenko for his role in favor of Europe.

Ukraine President Viktor Yushchenko
The statement made by the Ukrainian embassy to Italy quoted by Ukrainian media said the prize points to Yushchenko’s “inestimable role and significant endowment in the development of ideas in support of solidarity, cooperation and peace.”

The Telamone Prize was founded in 1977. It was granted to the Czech leader Vaclav Havel and to the lower house of the Russian parliament, the State Duma, the Ukrainian media pointed out.

Yushchenko has received several foreign awards. For instance, Britain’s Queen Elizabeth II granted him with a new award founded by the Chatham House (the Royal Institute of the International Affairs), for the endowment in the development of international relations. Earlier, Yushchenko received the John F. Kennedy Profile in Courage Award.

Source: MosNews

Bitter Cold Kills 181 In Ukraine

KIEV, Ukraine -- A bitter cold wave has killed 181 people in Ukraine over last five days, the Health Ministry said Thursday. Another 3,000 people have been treated in hospital as temperatures plunged to minus 25 C (minus 13 F), the ministry said in a statement.

Women walk in the street in Kiev. The fierce cold gripping Ukraine for the past week has killed 181 people, left thousands of others shivering and in the dark, sparked yet another row between Kiev and Moscow
The majority of those who died were homeless and intoxicated people, it said.

Temperatures were warming in Ukraine on Wednesday.

The toll came one day after Ukraine's prime minister threatened to turn off gas supplies to industry and temporarily halt industrial production in an effort to limit consumption.

At the same time, Russia mounted pressure on Ukraine to stop siphoning gas intended for a freezing Europe.

Ukrainian Prime Minister Yuriy Yekhanurov said such a move, which could cripple Ukraine's already fragile economy, might be necessary to ensure that residential and other consumers are fully supplied if the cold continues.

"The population must receive gas at a full level," Yekhanurov said. If industry "will not hear normal people's voices, we will have to use administrative measures. The government has the tap in its hands."

Russia's state-controlled monopoly OAO Gazprom complained that Ukraine was tapping into transit pipelines pumping gas to Europe, which is also suffering from a cold snap. Russia warned Ukraine on Wednesday that it would be charged for its extra usage and said it was to blame for reported shortfalls in Europe.

"We are increasing gas supplies to the Russian-Ukrainian border on practically a daily basis, but the shortfall in supplies to Europe is increasing daily and correspondingly the removal of gas in Ukraine is increasing," Gazprom's chief Alexei Miller said in televised remarks.

Ukraine's Kommersant newspaper also reported Wednesday that the European Union had called on Ukraine to stop using more than its fair share of gas. Some 80 percent of Gazprom's gas supplies to Europe go through Ukraine.

The Ukrainian government first called for a reduction in consumption on Tuesday, but Gazprom said it hadn't seen any change.

Meanwhile in Georgia, strong winds and heavy snows have downed power lines in the western part of the country, cutting power to millions of Georgians already suffering a heating outage due to a natural gas shortage.

Snow was falling in the capital, Tbilisi, as residents stood in long lines to fill kerosene canisters for portable heaters.

Some brought jewelry and other valuables to pawn shops to scrape together enough money to buy heaters and fuel.

With temperature hovering just below freezing in Tbilisi -- and markedly colder in mountainous regions -- Georgia is suffering through its worst energy crisis in years.

Source: CNN

Hard Choices in Kiev

LONDON, UK -- Despite the recent parliamentary tribulations in Kiev following the vote of no confidence in Yuri Yekhuranov's administration inspired by his predecessor, Yulia Tymoshenko, there are ways in which the reformers could move head - if they see clearly the future of Ukraine's troubled revolution.

Prime Minister Yuri Yekhuranov
The fractiousness that has been the hallmark of relations between the triumphant Orange revolutionaries has allowed Viktor Yanukovych's Party of the Regions back into the electoral frame barely a year after its leader appeared to be politically buried.

Now his group party is leading in the most recent polls with 25 per cent voter support. So Yanukovych appears set fair to head the largest party in parliament, the Rada, following parliamentary elections on 26 March.

Oligarchs

This would not bode well for further reforms. The Donetsk based party is backed by oligarchs, such as the Chief of Staff of the old Kuchma regime, Viktor Medvedchuk, and the ex-President's son-in-law, Viktor Pinchuk.

Rinat Akhmetov, owner of System Capital Management and reportedly Ukraine's richest man, will join the party as a prospective member of the Rada.

Backers such as these will ensure that the line between business and politics remains blurred.

The stable and predictable business environment these oligarchs claim they wish to see restored is most probably the baleful cronyism of the Kuchma era. Meanwhile The Party of the Regions is far closer to Moscow than Yushchenko's beleaguered reformers.

Vladimir Putin will feel he has regained Ukraine after losing to the Orange coalition.

Election

Tymoshenko's Motherland party is at 13.6 per cent in the polls while Yushchenko's Our Ukraine party trails in third place with 11 per cent. These figures are unlikely to change dramatically. That would leave no party with an overall majority capable of forming an administration in March.

On these figures, the Party of the Regions will gain some 175 seats in the Rada while Tymoshenko will receive 95 seats and Our Ukraine 79. Socialists, the ultra left Vitrenko bloc, the Popular Party and the Communists should receive some 25 or so seats apiece should they poll over the 3 per cent threshold to obtain Rada seats.

So coalition games will be the score.

Reconciliation

There is little likelihood of Yanukovych and Tymoshenko joining forces.

Her party would not support such a move. Ideological differences aside, neither leader would be satisfied with anything less than the Prime Minister slot. Their recent unity on the No Confidence vote was a short lived marriage of convenience.

From Tymoshenko's point of view it was a chance to remind Yushchenko that he needs her to push through his policies. For Yanukovych it was a splendid chance to further embarrass Yushchenko ahead of the March elections.

It is unlikely that Our Ukraine would seek an alliance with Yanukovych.

Many of its members would defect to an opposition led by Tymoshenko. Our Ukraine could team up with the Socialists who supported Yushchenko during the Orange Revolution and possibly Rada Speaker Lytvyn's Popular Party.

However, to obtain some form of political legitimacy and muscle Yushchenko's party must seek out reconciliation with Tymoshenko.

One Orange

This is not impossible. Tymoshenko was wounded by her dismissal in September 2005, but will feel honour was satisfied by her dismissal of the Yekhuranov government.

There were solid alliance talks at the end of 2005 - and the parties' positions do not seriously diverge. Both believe broadly in the direction of reforms. Tymoshenko has said she will regard the Party of the Regions as her main opponents. She still regards herself as being on Yushchenko's side.

The sticking point will be whether Yushchenko will show similar political nous. This has not been a feature of his administration so far.

He approached reform as a technocrat, not a politician. He needs advisers with better political instincts to translate his plans into lasting and successful change. So far, he has achieved little, save the squandering of much of the goodwill bred by the Orange Revolution.

Constitutional Power

The dismissal of Tymoshenko in September ended by weakening the President's position - there than clearing of the air he had envisaged.

Tymoshenko had a valid point when she claimed that the recent gas deal with Russia that sparked the no confidence vote would only be valid for six months, and in no way represented a long term solution to this vexed issue.

No one knows better than Tymoshenko, a former energy billionaire, the temptations and potential corruption inherent to the barter capitalism represented by gas agreements with Russia.

Simply, Yushchenko must swallow his pride in March and ensure that his Our Ukraine party works with Motherland under Tymoshenko as Prime Ministership.

His choices are limited, but, if he fails to form such a coalition, there is little chance of a reform government.

Moment of Truth

Should the parties fail to reach agreement in the spring, the country's new constitution holds Damoclean sword for Yushchenko to wield.

If there is no majority within a month of elections then they face disbandment by the President and thus repeat elections and more uncertainty that will be damaging both politically and economically.

Source: Early Warning

OSCE Opens Election Observation Mission in Ukraine

KIEV, Ukraine -- The Organization for Security and Cooperation in Europe (OSCE) has opened an election observation mission in Ukraine for the upcoming parliamentary vote.

OSCE headquarters in Vienna, Austria
OSCE Ambassador Lubomir Kopaj of Slovakia is heading the mission, which consists of 12 members in Kiev and 50 others deployed across Ukraine. They will observe the electoral process and campaigns for compliance with OSCE standards for a democratic vote.

The OSCE has also requested another 600 observers for election day to monitor the opening of polling stations, the voting, and ballot counting.

Ukraine's parliamentary elections are scheduled for March 26.

Source: Voice of America

Ukraine Threatens To Turn Off Gas

KIEV, Ukraine -- Ukraine's prime minister threatened on Wednesday to turn off gas supplies to industry and temporarily halt industrial production in an effort to limit consumption, as Russia increased pressure on Ukraine to stop siphoning gas intended for a freezing Europe.

A Ukrainian man gets into his car in the centre of Kiev. Ukraine is in the grip of extremely cold weather with temperatures in the capital Kiev plunging to about -23 degrees Celsius (-9.4 Fahrenheit).
Prime Minister Yuriy Yekhanurov said such a move, which could cripple Ukraine's already fragile economy, might be necessary to ensure that residential and other consumers are fully supplied if the cold continues.

"The population must receive gas at a full level," Yekhanurov said. If industry "will not hear normal people's voices, we will have to use administrative measures. The government has the tap in its hands."

But, Volodymyr Shandra, minister for industrial politics, dismissed the idea of halting industrial production.

"We are not talking about stopping enterprises," he said, adding that industry might, however, be asked to rely on reserves and energy-saving technology.

Ukraine has been consuming record amounts of gas as temperatures have plunged to minus 25 Celsius (minus 13 Fahreheit).

Russia's state-controlled monopoly OAO Gazprom complained that Ukraine was tapping into transit pipelines pumping gas to Europe, which is also suffering from a cold snap. Russia warned Ukraine on Wednesday that it would be charged for its extra usage and said it was to blame for reported shortfalls in Europe.

"We are increasing gas supplies to the Russian-Ukrainian border on practically a daily basis, but the shortfall in supplies to Europe is increasing daily and correspondingly the removal of gas in Ukraine is increasing," Gazprom's chief Alexei Miller said in televised remarks.

Ukraine's Kommersant newspaper also reported Wednesday that the European Union had called on Ukraine to stop using more than its fair share of gas. Some 80 percent of Gazprom's gas supplies to Europe go through Ukraine.

The Ukrainian government first called for a reduction in consumption on Tuesday, but Gazprom said it hadn't seen any change.

Russia's Industry and Energy Minister Viktor Khristenko called on Ukraine to take urgent action.

"One should not be resolving one's own problems at the expense of neighbors, especially near and dear Poland, which is freezing," Khristenko said, according to Russian news wires.

Ukrainian factory heads insisted that they had already reduced consumption as much as possible.

Andrei Syomich, deputy chief executive at Dniproazot, a large producer of nitrate fertilizers, said the plant had already reduced consumption, but couldn't go much lower.

"We can't run the plant at a much lower rate of capacity utilization without damaging the equipment," he told Dow Jones Newswires. "It's beyond our possibilities."

Ukraine's factories are hugely energy inefficient, as are its power stations, which use 66 percent more gas than in Western Europe to generate the same amount of power. All stations have been working overtime in recent days to cope with the cold.

The dispute between Ukraine and Russia over gas echoes a spat earlier this year over the price of supplies. After Russia temporarily cut supplies to Ukraine, sparking outrage in Europe, the two sides agreed to a complicated, face-saving scheme whereby Ukraine would buy a blend of Russian and Central Asian gas at double the previous price via an intermediary.

Source: AP

Yushchenko's Referendum Threats Ring Hollow

KIEV, Ukraine -- President Viktor Yushchenko used the dual anniversary of Ukraine's unification into an independent state in 1919 and his own inauguration in January 2005 to provide concrete suggestions to escape the political crisis resulting from parliament's January 10 vote of no confidence in his government.

Ukrainian President Yushchenko addressing the nation
In an address to the country Yushchenko outlined a long list of achievements made in his administration's first year in office, such as media freedom, reducing the shadow economy, and improving social welfare and pensions.

Yushchenko also claimed, "Together we have proved that the Ukrainian nation is capable of building a modern, independent, and democratic state." He continued, "Today we say: Yes, I am a citizen of Ukraine and I am proud of it. This is the main achievement of the first year of my presidency."

Yushchenko also stressed Ukraine's democratic breakthrough under his watch. The New York-based Freedom House upgraded Ukraine from "partly free" to "free" in 2006. Yushchenko declared, "The year of 2005 was, first of all, the year when our community revised its values. And this is its historical significance. We have taken a new look at ourselves and our country, its history and its future."

On the day of his address, Yushchenko also issued a long decree outlining steps to ensure that the March 26 parliamentary elections will be free and fair. He called upon Ukraine's political forces to sign a memorandum in support of free and fair elections.

Ukraine has not held free and fair elections since 1994, before the reign of former president Leonid Kuchma. The 1998 and 2002 parliamentary elections used a mix of proportional and majoritarian voting, and the contests for the 250 majoritarian seats saw abuse of "state-administrative resources" that helped propel pro-Kuchma officials and businessmen to victory. The 2006 elections will be held using a fully proportional law that reduces the opportunities for such abuse.

Yushchenko's address heeded the call of many politicians to accept the legitimacy of the constitutional reforms that went into effect on January 1. "But, I do not regard them as ideal." Yushchenko reiterated that the amendments had been made without the input of Ukraine's citizens and therefore, "society should give its views regarding constitutional changes".

Earlier Yushchenko had said that the changes "were an anti-constitutional action, hidden from the people". Since spring 2005 there have been periodic threats by Yushchenko, his staff, and then-prime minister Yulia Tymoshenko to hold a referendum about the reforms.

Over the summer threats to hold a referendum faded, and Interior Minister Yuriy Lutsenko told Kommersant-Daily that Yushchenko had come around to accepting constitutional reforms.

This apparent shift of presidential opinion failed to reduce fears that Yushchenko would call a referendum. Parliament has deliberately stalled the swearing in of Constitutional Court judges for this very reason. Currently the Court does not have the quorum necessary to function, thus Yushchenko is unable to appeal to the Constitutional Court over the legality of the December 2004 constitutional changes.

Yushchenko's threats to hold a referendum are unlikely to materialize for at least five reasons.

First, Yushchenko did not agree to the constitutional reforms under duress. The changes were proposed during the December 2004 roundtable negotiations, a time when over a million Orange supporters had filled the streets of Kyiv. During those days, Yushchenko also had the support of the military, the intelligence services, and elements of the Interior Ministry, while both Kuchma and then-prime minister Viktor Yanukovych were increasingly powerless.

Second, unlike the Yulia Tymoshenko bloc, Yushchenko's Our Ukraine bloc always supported constitutional reforms. Our Ukraine differed from the centrist Kuchma camp and the political left (Communists, Socialists) only on timing. Our Ukraine insisted they should come into effect after the March 2006 elections, while the Kuchma camp and the left supported their introduction after the 2004 elections.

Third, Yushchenko did not avail himself of the president's extensive powers contained in the constitution that was in effect through until 2005. Why call a referendum to restore powers he had squandered?

Fourth, if Yushchenko had agreed on the constitutional reforms merely a tactical ruse to overcome the December 2004 presidential crisis, he could have scheduled a referendum immediately after coming to power in January 2005. Tymoshenko, then prime minister, would have wholeheartedly supported such a move at a time when the opposition was still in disarray. But since being removed as prime minister in September 2005, Tymoshenko has moved towards support for constitutional reforms.

Fifth, Yushchenko cannot risk alienating the Socialists by calling a referendum, as he will need them in any coalition in the 2006 parliament. The Socialists will abandon Yushchenko if he goes ahead with a constitutional referendum.

These five arguments suggest that a constitutional referendum would only be called if the March elections go badly for Yushchenko. Like Kuchma in 1996, Yushchenko would seek a referendum because he did not like the political configuration of the new parliament.

By threatening to hold a referendum on constitutional reforms, Yushchenko is misplacing his energy. Instead, he needs to focus on winning the 2006 elections, re-uniting the Orange camp (that he himself divided by firing Tymoshenko in September 2005), and creating a pro-reform and pro-presidential parliamentary majority in the newly elected parliament.

Source: Eurasia Daily Monitor

Signature Of Ukraine-Russia Gas Deal Put Off Again

KIEV, Ukraine -- The signature of agreements sealing a deal on supplying Russian gas to Ukraine at sharply increased prices has been postponed again pending further study, Ukraine's Prime Minister Yuri Yekhanurov said on Wednesday.

Gazprom's headquarters seen in Moscow
Russian gas giant Gazprom briefly cut supplies to Ukraine in the New Year during a tense contract dispute, affecting shipments to anxious customers throughout Europe.

"It looks today as if the agreements will not be signed. Experts are continuing to work on this, Russian experts are here and working," Yekhanurov, who had suggested the deal might be signed on Wednesday, told a cabinet meeting.

"Unfortunately, we are not yet going ahead with the signature. Consultations with Gazprom are proceeding."

The Kremlin makes no secret of its dislike of the West-leaning stand of Ukraine's President Viktor Yushchenko who rose to power a year ago after mass protests forced a rerun of an election initially won by a Moscow-backed candidate.

In Moscow, a Gazprom official linked the postponement to differences over the future activity of a new joint venture agreed under the January 4 deal to supply the gas.

Officials had originally hoped to sign documents last Saturday pertaining to the agreement, hotly debated as Ukraine gears up for a March 26 parliamentary election.

The deal, which prompted Ukraine's parliament to dismiss the liberal government of Yushchenko, provides for gas to be supplied at $95 per 1,000 cubic metres instead of the previous price of $50.

Yekhanurov told the cabinet efforts were being made to cut record gas consumption amid a prolonged cold snap and allegations by Gazprom that Ukraine was exceeding agreed levels.

He said if the weather persisted, he would urge industrial users to cut levels "even if it means suspending their main production".

Last weekend Yekhanurov said Ukraine wanted clarification on pricing mechanisms and on how long prices would remain valid.

The premier also said questions had been raised over whether ministers who had been formally dismissed were empowered to sign the deal.

The dismissal of the government, on grounds that the gas deal betrayed Ukraine's national interest, has plunged Ukraine into a constitutional crisis ahead of the March 26 election. Yushchenko refuses to recognise the government's dismissal.

Source: Reuters

Ukraine Admits Withholding Russian Gas Meant for Europe

KIEV, Ukraine -- A Ukrainian Naftogaz official has admitted Kiev has been withholding some Russian natural gas exports meant for customers in Europe, where several countries have reported falls in gas supplies amid a severe cold weather snap.

A worker checks gas pipelines in the Transit Divison Velke Kapusany by the Slovakia-Ukraine border
“We have in fact allowed the withholding of gas in excess of the contract during the past day,” an official with Ukraine’s state-owned energy company, who wished to remain anonymous, told AFP.

However, he declined to say how much gas Ukraine — which transports the vast majority of Russian gas exports to Europe — was using over and above its agreed contract with Moscow.

“But we are certain that according to monthly totals, Ukraine will withhold exactly the volume agreed with Gazprom,” the official said.

Earlier, a spokesman for Ukraine’s Prime Minister Yury Yekhanurov denied charges by Russia’s state-owned Gazprom giant that Kiev was withholding European supplies.

Although gas consumption in Ukraine has risen to record levels because of a severe cold snap gripping the country, “the increase of gas use in Ukraine has not at all affected the carrying out of our transport obligations,” spokesman Valentin Mondrievsky told AFP.

Russia’s state-owned Gazprom monopoly on Monday admitted for the first time that it was not entirely fulfilling its contractual obligations to clients abroad because Ukraine was retaining some of the exports.

“You can call it withholding or taking, legal or illegal — call it whatever you like,” Gazprom’s deputy chief Alexander Medvedev said.

“But what is happening is that gas is remaining in Ukraine at higher volumes than envisioned. This prevents us from fully fulfilling our obligations to our foreign customers,” he said.

Around 80 percent of Gazprom’s exports to Europe pass through a pipeline network located on Ukrainian territory.

Temperatures in some parts of the country have plunged to lower than minus 30 C (minus 22 F), placing the country’s energy systems under enormous strain.

The Ukrainian premier said Ukraine had consumed a record 407 million cubic meters of gas in the past day, some 43 percent more than during an average winter day when temperatures hover around 0 C (32 F).

Tensions between Russia and Ukraine have persisted over a new gas pricing deal signed by the two sides on Jan. 4 that resulted in the near-doubling of the price Ukraine pays for natural gas.

European countries including Italy, Austria, Poland, Hungary, Croatia, Slovakia and Romania have recently reported drops in supplies of gas shipped to them by Gazprom.

Bosnia said Monday its supplies had been curtailed by one-fourth for the past five days.

Gazprom’s travails were compounded Sunday when explosions on a section of pipeline in southern Russia halted gas supplies to another ex-Soviet republic, Georgia, where President Mikhail Saakashvili accused Moscow of deliberate disruption to his country’s energy supply.

The company used an alternative pipeline route through neighboring Azerbaijan to restore some supplies to Georgia on Monday.

Gazprom had previously stated that it was fulfilling all of its basic gas delivery obligations to clients in Europe but was not in a position to meet their demands over and above those obligations, due to severe cold weather gripping Russia and soaring demand at home.

Source: MosNews

Yanukovych Blasts Yushchenko Speech

KIEV, Ukraine -- Ukraine's Regions Party leader Viktor Yanukovych said President Viktor Yushchenko's recent televised speech did not give an in-depth analysis of the 2005 developments in Ukraine or present an effective plan for overcoming the consequences of the economic and political crisis.

Viktor Yanukovych
"Being extremely concerned over the general decline of the situation in the country, the public expected to hear an in-depth analysis of what happened over the last year, and, primarily, a real plan of actions to overcome the consequences of the crisis in the political and economic spheres," says Yanukovych's statement distributed by the Regions Party's press service.

Yanukovych accused the Ukrainian authorities of worsening relations with Russia, which, he said, led to the gas crisis.

"The president claims that Ukraine is seen as a predictable partner. I do not think so. The concerns of Europe's Russians gas consumers that arose as a result of the decline in the Russian-Ukrainian relations indicate the opposite.

The ill-considered steps of the Ukrainian authorities in the foreign policy area led to serious complications developing in the gas transit area for the first time since Russia began shipping gas through Ukraine," the statement says.

Yanukovych's party does not approve Russia's decision to raise gas prices for Ukraine.

Yanukovych also expressed doubt over Yushchenko's claims that upcoming Ukrainian parliamentary elections will be fair.

Source: Interfax

Yushchenko's First Year Reviewed

KIEV, Ukraine -- Ukrainian President Viktor Yushchenko receives mixed reviews from the country's press on the first anniversary of his inauguration.

President Yushchenko talking to reporters
Newspapers that generally support the president look kindly on his first year in office, but others express views ranging from disappointment to outright rejection.

The pro-presidential Ukraina Moloda praises Mr Yushchenko's leadership style.

"It is the style of a free person, a free politician, not tied to corporate interests as his predecessor Leonid Kuchma was, but one who is tied exclusively to the national interest," it says.

It also pays tribute to the president's "openness, honesty and self-critique".

"No other statesman in Ukraine", it goes on, "has even one per cent of Viktor Yushchenko's sincerity with the people".

It also perceives a balanced political approach "which unites two things organically: a high level of social security for citizens and a civilized market economy for Ukrainian business".

Culture change

The government paper Uryadovyy Kuryer welcomes what it sees as a culture change since Mr Yushchenko came to power.

In a front-page article headed "A year of democratic choice", it observes that "the majority of our citizens support the democratic order, and thus Ukraine's European vector".

"What is important from the point of view of the unity of the country and the nation is a refusal to support extreme radical political forces," it continues.

"In the Ukrainian system of values first place is gradually being taken by people's ability to live in new social conditions, their knowledge of legislation and independence in resolving day-to-day problems," it adds.

Disappointment

But other sources are less positive about the past year.

Oleksandr Levtsun, writing on the independent Ukrayinska Pravda website, recalls that "right after the Orange Revolution there were a lot of expectations and a lot of public trust in the new government".

However, he adds, "after just six months, the situation changed dramatically".

"The level of expectations crashed, and the public mood is now predominantly one of disappointment," he concludes.

A similar mood of regret is expressed in Gazeta po-Kiyevski, a newspaper that supports Mr Yushchenko's rival and dismissed prime minister, Yulia Tymoshenko.

"I have always sympathised with Yushchenko and have not changed my view," says Kiev historian Stanislav Kulchytskyy:

However, he goes on, "Mr Yushchenko has failed to get tougher on his opponents".

"His mistakes", Mr Kulchytskyy believes, "stem perhaps from the fact that he trusts people too much".

"He adheres to democratic principles, but his opponents often abuse democracy."

Russia unforgiving

Writing in its own voice, the newspaper believes Mr Yushchenko has little to show for his foreign policy efforts.

"Yushchenko started by looking for 'comrades' abroad," it says, "but Russia has not forgiven such demonstrative attention even to Poland and Georgia, let alone to the US, France and Britain."

"The 'elder sister' has not tired of sending signals that one shouldn't behave like that and that things should change," it warns.

The most hostile assessment comes, predictably, from Kiyevskiye Vedomosti, a daily controlled by businessmen close to the anti-Yushchenko and pro-Russian United Social Democratic Party.

"Everything has changed" in the past year, it believes.

"There are no more smiling people in the metro, united by trust in a better future, and the colour orange is seen only in fruit shops," it observes, concluding:

"The illusion which warmed the people during the events that went down in history as the 'orange revolution' has burst like a bubble."

Source: BBC News

Ukraine Takes Extra Russian Gas

KIEV, Ukraine -- Ukraine has admitted withholding some Russian gas intended for other European countries, but said it will still meet its contractual obligations.


A spokesman for Ukraine's state-owned energy firm Naftogaz said the excess gas was needed to cope with the especially cold January weather.

Earlier Russia's gas monopoly Gazprom said Ukraine was preventing Russia from meeting its international obligations.

Gazprom supplies a quarter of Europe's gas - most of it via Ukraine.

Supplies have been stretched in recent days amid plummeting temperatures in parts of Europe and Asia.

Ukraine's deep freeze

On Monday the Ukrainian Prime Minister, Yuri Yekhanurov, said his country's consumption of gas had exceeded 400 million cubic metres in the past 24 hours - a record level.

It amounts to about 43% more than during an average winter day.

Temperatures have fallen lower than minus 30C in Ukraine, severely straining its energy infrastructure.

Gazprom said it was compensating for the missing volumes by using underground storage facilities in European countries.

The energy giant said it was extracting nearly 85 million cubic metres of gas above-plan daily to meet the demand.

Tensions persist between Russia and Ukraine over a new gas pricing deal which doubles the amount Kiev has to pay for its gas.

They have postponed the signing of the deal, which was reached on 4 January.

Under the five-year deal, Ukraine will buy Russian and Central Asian gas for $95 per 1,000 cubic metres on average.

The gas dispute - which involved Gazprom temporarily turning off Ukraine's supply - disrupted supplies to a swathe of European countries.

Source: BBC News

Gazprom Reignites Dispute With Ukraine

MOSCOW, Russia -- Russia reopened its natural gas dispute with Ukraine on Monday as the Russian state monopoly Gazprom all but accused Kiev of stealing gas and reducing onward supplies to Europe amid an intense cold wave across Eastern Europe.

Gazprom deputy chairman of the board Alexander Medvedev
"We can call it gas shrinkage, offtake, legal or illegal, whatever," Gazprom's export chief, Alexander Medvedev, said during a sharp attack on Ukraine broadcast on Russian state television.

"But what is happening in reality is that gas is being held by Ukraine above agreed levels, which is not allowing us to fully meet our obligations with international buyers," he said. "We can't work like that."

Ukraine, a critical transit route for Russia's huge supplies to Europe, said that it was meeting its obligations.

But Prime Minister Yuri Yekhanurov of Ukraine also acknowledged the country was burning more domestic gas because of the cold weather in which temperatures in Kiev alone slumped to minus 25 Celsius, or minus 13 Fahrenheit, on Monday.

If Ukraine is consuming more natural gas, European importers might find supplies stretched further later this week since it will take several days before they feel the impact.

Gazprom supplies one quarter of Europe's gas needs and several of its customers, including in Italy and Hungary, have complained about reduced supplies over the past week.

"We will do everything to cut our domestic consumption," Yekhanurov said.

"Yesterday, Ukraine consumed 407 million cubic meters of gas and our Russian partners are nervous because of it," he told reporters, referring to consumption on Sunday.

Ukraine was using around 280 million cubic meters, or 9,900 cubic feet, a day at the start of the year, when temperatures were much milder.

Source: International Herald Tribune

Yushchenko Offers Plan To End Deadlock

KIEV, Ukraine -- Ukraine's President Viktor Yushchenko, his first anniversary in power clouded by a constitutional crisis, offered to break the logjam on Monday by striking a deal to hold a trouble-free election in March.

Ukrainian President Viktor Yushchenko addresses the nation in a television speech in Kiev January 23, 2006.
Parliament's dismissal of the cabinet over a New Year deal sharply raising the price of Russian gas imports has produced deadlock. Government activity is in confusion as politicians gear up for the election to an assembly with expanded powers.

The pro-Western Yushchenko, his allies trailing in opinion polls for the contest, has ignored parliament's dismissal of his cabinet and accused rivals of engaging in "dirty" politics.

In a televised address a year after his triumphant inauguration, Yushchenko called for a "moratorium on all decisions or actions by the legislature and executive which could lead to instability in Ukraine."

"The president, government and parliament must together create conditions so that honest elections are held, a new parliament is elected, a new majority formed and a new government appointed," the president said.

Gripping a lectern, he called for quick appointment of new judges to the Constitutional Court, blocked for months by parliament. He also proposed setting up a group of experts to examine constitutional reforms in place since the New Year broadening parliament's powers at his expense.

Yushchenko has criticised the reforms, part of a deal to end confrontation in the 2004 "Orange Revolution" that led to his election, and suggested he might submit them to a referendum.

"I recognise that from January 1, a new constitution is place," Yushchenko said. "But I do not consider it ideal."

CHANGING THE SYSTEM

Yushchenko said his pledge to uproot corruption and poverty had achieved some success, with higher salaries and pensions and a free press. "The first steps in this direction have been made. The election must underpin them and dismantle the old system."

But with the first year in office buffeted by turbulence, the address was a far cry from his inauguration speech in which he proclaimed that Ukraine was unequivocally a part of Europe and would move resolutely towards European Union membership.

Nine months into his tenure, he fired his first prime minister, former Orange Revolution ally Yulia Tymoshenko, to end infighting between rival camps in his team.

With the president now pitted against parliament, all opinion surveys for the March election give the lead to the Regions Party of Viktor Yanukovich, his defeated rival in 2004.

Fighting for second place are Yushchenko's Our Ukraine Party and a group led by Tymoshenko -- who now opposes the president at every turn and voted for the government's dismissal.

Yushchenko's proposals contained few concessions and were unlikely to meet a favourable response in parliament.

Furious at the president's refusal to recognise the government's dismissal, the chamber went further last week, demanding negotiation of a new gas deal and sacking officials linked to the initial agreement.

The chamber's action prompted authorities to postpone the signing of the gas accord at the weekend as the legal status of ministers due to sign the document was uncertain.

Parliament's speaker has offered a compromise to end the deadlock, proposing changes to the chamber's resolution provided some ministers step down during the election campaign.

Source: Reuters

US Restores Ukraine Benefits After Piracy Crackdown

WASHINGTON, DC -- The United States has removed a second layer of sanctions on Ukraine because of that country's progress in fighting piracy of U.S. music and films, the U.S. Trade Representative's Office said on Monday.

U.S. Trade Representative Rob Portman
"I commend the government of Ukraine for its sustained efforts to crack down on copyright piracy and urge the government to continue their efforts," U.S. Trade Representative Rob Portman said in a statement.

Portman said Washington was reinstating Ukraine into the Generalized System of Preferences program, which allows developing countries to export a long list of goods to the United States at low or zero duties.

Concern over high piracy rates prompted the Bush administration to suspend Ukraine from the program in 2001. At that time, Ukraine was the largest producer and exporter of pirated CDs and DVDs in Europe, USTR said.

The United States also imposed 100-percent import duties on $75 million worth of Ukrainian exports in 2002 to punish Kiev for piracy. It removed those sanctions in August after Ukraine approved several amendments to its anti-piracy law.

"Since the legislation passed, Ukraine has been actively inspecting plants licensed to manufacture optical discs, conducting raids against businesses involved in commercial distribution of IPR (intellectual property rights)-infringing products, and imposing fines against infringers," Portman said.

The latest U.S. move restores trade benefits for important Ukrainian exports such as iron and steel articles, electrical and railway products, snow skis, protein products such as casein and certain mineral and metal products, USTR said.

Washington also has been negotiating with Kiev on Ukraine's entry into the World Trade Organization. Although those talks are continuing, Portman said on Friday a deal could be done in time for Congress to vote on it this year.

Source: Reuters

Yushchenko Bares Almost All After A Year In Office

KIEV, Ukraine -- Just days before the one-year anniversary of his presidency, Ukrainian leader Viktor Yushchenko was standing on the frozen Dnipro River in his swimming trunks, steeling himself to celebrate the Orthodox Christian holiday of Epiphany.

Ukrainian President Viktor Yushchenko dives into icy water at sub-zero temperatures in Kiev, to celebrate the holiday of the Epiphany
It was a particularly non-Soviet media moment, even for Yushchenko. His scarred face was without its normal protective make- up, and his moderate paunch was, once he shucked his robe, there for television cameras and the entire nation to see. Yushchenko's predecessor, by comparison, was a man notorious for owning an entire wardrobe of leisure clothes used only for media appearances.

Yushchenko slid into the icy water (along with several members of his cabinet), and after a minute or two of breathless paddling, they emerged, a bunch of middle-aged Ukrainian men, florid and flushed but apparently none the worse for the plunge, their winter ritual of faith complete. Then they all went to work.

Viktor Yushchenko's first year as president of Ukraine has seen a healthy share of failures, and has chalked up a few clear-cut victories. But the biggest success of the Yushchenko presidency was visible, in a small way, on the Dnipro ice. For the first time in Ukrainian history, the country has a leader interested in open and responsible government.

It was clear early on, of course, that wanting to clean up government corruption - one of Yushchenko's top campaign promises before the Orange Revolution propelled him into office - was a lot easier that actually getting the job done. By summer half his administration was accusing the other half of using their public office roles to generate private income.

Yushchenko later admitted he shilly-shallied, waiting until September to sack the worst offenders. Critical time was lost to push reform legislation through parliament.

Efforts to clean up the dirtiest of Ukraine's government agencies, organizations like the customs and traffic police, were initially so feeble, that Yushchenko himself famously was hit up for bribes repeatedly in July, while driving an automobile from Kiev to the Carpathian Mountains.

Tellingly, Yushchenko's response was a departure from the time- honoured approach to Ukrainian corruption, which is to replace the man in charge and then pretend reform has taken place, while in reality the corruption carries on as before, just under the supervision of a new man.

Yushchenko abolished the traffic police to the last cop, and told the nation to drive without supervision until a new corps could be recruited. The purge was one of the worst ever to hit a Ukrainian government agency, with provincial and even district and village traffic police getting the boot. Traffic fatalities are up in Ukraine these days by about 25 per cent, but the replacement agency is up and running, and it's now harder to bribe a Ukrainian traffic cop.

Transparency was the name of the game when it came to the biggest Ukrainian government racket of them all, privatization, which over the last decade has piled up some of the largest personal fortunes in Europe. The biggest prize of the year was a steel mill worth at least 2 billion dollars, but sold by Yushchenko's predecessor to a corporation owned by relatives and friends for 800 million dollars.

Yushchenko's government cancelled the sale, put the mill up on the block on live television, and handed it over to India's Mittal Steel for a cool 4.8 billion dollars. The sale was worth more than the collective value of all of the foreign investment received by Ukraine, in its entire history as an independent state.

And it was the Yushchenko campaign to replace insider deals running on barter into verifiable contracts for countable cash, that sparked the biggest foreign conflict of the year: a fracas with Russia over natural gas prices.

Brinksmanship was used by both sides, including cutting off natural gas shipments to Europe for a day. But when the dust had settled Ukraine wound up with a five-year contract for gas at a price twice what the Ukrainians had been paying, and more than half what the Russians had been demanding. There is no barter, it's all for money.

Parliamentary elections are scheduled for March in Ukraine, and right now the political fashion in the country is to blame the Yushchenko government for all that is wrong with the country, and for not fixing it in its first year in office.

'That's to be expected,' Yushchenko pointed out during a holiday speech to the country. 'We have no more censorship, please, criticize any one you like. So of course you hear more people complaining. In my opinion that's good - bad is when people are unable to complain.'

Source: Deutsche Presse

The Cattle Quarrel

MOSCOW, Russia -- Now it is the trade dispute that is escalating between Ukraine and Russia. With the gas war not over yet, all statements to the contrary notwithstanding, beef and dairy clashes are coming up to take its place.

Moscow shopper looks over the selection of steaks at a grocery store
After banning import of animal products from Ukraine January 20, Russia has not only hit the economy of Ukraine but may also trigger a surge in inflation in its own country.

The government of Ukraine takes the incident as misunderstanding, Alexander Baranivsky, minister of agriculture of Ukraine, said January 20, when commenting on the beef and dairy war. According to the minister, Russia’s veterinary services notified him about closed borders for beef and dairy on January 19 and he was ready to send a delegation to Moscow on the same day. But the meeting was denied by Russia’s Agriculture Minister Alexey Gordeev, Baranivsky specified.

Statistics differ when it comes to import of Ukrainian animal products by Russia. Ukraine is not covered by Russia’s quotes for meat import and the quoting has not been discussed so far. On the other hand, the efforts of Russia’s lobby resulted in reducing deliveries from 110,000 tons of beef in 2002 to nearly 50,000 tons in 2005.

Russia’s authorities are apparently in no mood to negotiate, adding even positions strongly needed by Russia (cheese, for instance) to the list of quarantine products. The decision is too simple and too large-scale not to signal to some political backdrop.

Besides, the reasons for opening the second, beef and dairy front in Russia’s-Ukrainian relations are numerous. Despite the declared peace in gas war and an agreement of January 4, 2006, the countries do clash when it comes to gas. Last week, for example, Energy Minister Ivan Plachkov said Ukraine would insist on fixing the price at $95/ths cubic meters for five years for shipping gas via RosUkrEnergo (RUE). Moreover, Plachkov confirmed Ukrainian intention to revive long-term direct purchase of some portion of gas in Ukraine, by passing RUE.

As a result, the Ukrainian drafts of gas agreements submitted to Russia’s Industry and Energy Ministry and Gazprom have not been approved so far with the signing of contracts with Gazprom, Naftogaz Ukrainy, RUE and Turkmenistan put off from January 20 to January 25. By rumors, Plachkov talked to Turkmenistan President Saparmurat Niyazov in Moscow yesterday. Niyazov will meet President Putin today to canvass the gas issues.

Source: Kommersant

Ukraine Defence Minister Against Referendum On Accession To NATO

KIEV, Ukraine -- Ukrainian Defence Minister Anatoly Gritsenko is of the view that in judicial terms Ukraine does not need a referendum on its accession to the North Atlantic Treaty Organization.

Ukrainian Defence Minister Anatoly Gritsenko
“The matter of joining NATO is decided at the level of the country’s top political leadership -- the president, government and parliament,” he said at his talks with his Hungarian counterpart on Sunday.

“A majority prevails in the political elite of Ukraine that supports the country’s accession to NATO, and a decision at this level has been already made” Gritsenko said.

He called on political forces “not to speculate on the question of the referendum about the accession of Ukraine to the North Atlantic alliance”.

“When Ukraine joined the CIS and its joining the common economic space was planned, anybody did not conduct and was not going to conduct a referendum,” Gritsenko said.

The admission to NATO will “warrant the fulfilment of criteria oriented towards people, and not the protection of state structures”, he said.

“I support this course as a citizen and as a minister,” he said.

Last year in April, Kiev and NATO began a dialogue on Ukraine’s accession to the Western alliance and the introduction of respective reforms.

Ukrainian President Viktor Yushchenko said in May that the “question of Ukraine’s membership in NATO and the European Union will be decided in a referendum”.

Ukraine’s leading politicians prognosticate the admission to NATO in 2008.

Polls show that 40 percent of citizens are “categorically” against Ukraine’s joining NATO, another 15 percent “rather disagree” and 9 percent fully agree with the accession to NATO.

Another 13 percent “rather agree”.

Source: Itar-Tass

Ukraine's Yushchenko, Fighting for Government, to Woo Investors

KIEV, Ukraine -- Ukraine's embattled President Viktor Yushchenko today will seek to convince international investors that the $6.4 billion they pumped into the former Soviet republic during his tenure are safe.

Embattled President Viktor Yushchenko
Yushchenko, whose government was ousted by lawmakers this month following a dispute over natural gas prices with Russia, is campaigning for a second parliamentary vote. Presidential aide Mykola Poludennyi said Yushchenko, who will speak at a conference in Kiev today, will emphasize investment opportunities.

The stakes are high. Margarete Strasser, who helps manage $423 million in central and eastern European bonds for Capital Invest in Vienna, says she will sell her Ukrainian Eurobonds ``within days'' unless Yushchenko, who took office a year ago today, delivers the assurances she seeks.

``The prognosis for Ukraine is really bad, compared with other countries in the region,'' she said in a telephone interview on Jan. 19. ``The most important factor is political stability for investors and Ukraine has to solve this crisis soon.''

Legislators have resisted the president's demands to rescind the ouster of the government three months before parliamentary elections. Yushchenko on Jan. 19 took the case to the Constitutional Court. Meanwhile, the premier and the cabinet have stayed in office.

Yushchenko's rise to power in the Orange Revolution of 2004 raised optimism he would change Ukraine's international image from a corrupt former communist nation under Russia's sway to a country aligned with the European Union and western economic policies.

Political Decline

Instead, he fired his first prime minister, Yulia Timoshenko, amid accusations she failed to stamp out graft in government and bolster economic growth. His second premier, Yuriy Yekhanurov, was dismissed by a parliamentary vote because of the Russian gas dispute.

``Everything will be stabilized and Yushchenko guarantees it,'' said Poludennyi, the aide. ``Investors will not lose their money.''

The biggest investments in Ukraine's post-communist history have taken place during Yushchenko's tenure. Mittal Steel Co., the world's biggest steel company, agreed to pay $4.8 billion for Ukraine's VAT Kryvorizhstal on Nov. 25 and Vienna-based Raiffeisen International Bank-Holding AG bought Bank Aval for $1 billion on Oct. 20.

Yushchenko, 51, needs to win more foreign capital to catch up with other former communist countries in eastern Europe. Since its 1991 break from the Soviet Union, Ukraine attracted $9.5 billion, compared with about $50 billion by the Czech Republic and $47 billion that have flowed into Hungary since communism collapsed in 1989.

Declining Inflows

The inflow of cash from abroad will decline to about $2.1 billion in 2006, compared with about $6.4 billion in 2005, Capital Invest's Strasser said, citing Bank Austria Creditanstalt research.

Yushchenko said on Nov. 29 he will try to sell more of the country's biggest companies to investors this year, including phone company VAT UkrTelecom, whose sale has been delayed for a decade.

``Instability is very high,'' said Katya Malofeeva, an economist at Renaissance Capital in Moscow. ``While some big companies, with strong government connections and a better understanding of what's going on, may still invest, smaller companies remain very cautious.''

Ukraine's opposition Regions Party, whose leader Viktor Yanukovych lost the disputed presidential vote in 2004 to Yushchenko, has the backing of 24.7 percent of voters before the March 26 parliamentary election, according to a Jan. 12-17 survey of 2,290 people by the Kiev-based Razumkov Center for Economy and Politics Studies. The poll had a margin of error of 2.1 percent.

Slowing Economic Growth

Yushchenko's Our Ukraine party has the backing of 15.4 percent, while former Prime Minister Timoshenko's alliance is ranked third with 12 percent, the poll showed. Yushchenko is losing voter support as the economy slows.

The $65 billion economy expanded 2.4 percent last year, the State Statistics Committee said Jan. 19, from 12.1 percent in 2004.

The outlook for economic growth worsened after Russia raised gas prices. The World Bank in Washington said on Dec. 16 that the government's forecast of growth between 5.5 percent and 7 percent will have to be lowered by at least 4 percentage points.

The Ukrainian government agreed on Jan. 4 to pay an average $95 per 1,000 cubic meters of Russian gas in the first half of 2006, compared with the $50 Ukraine paid previously and the $230 demanded by Russia's state-controlled gas company, OAO Gazprom.

``The key issue is politics and the relationship with Russia,'' said Timothy Ash, managing director at Bear Stearns International in London. ``Ukraine needs a stable government and a clear strategy in terms of its relationship with Russia.''

Source: Bloomberg

Georgia’s President Accuses Russia Of Blackmail Following Gas Supply Cut

TBILISI, Georgia -- Georgia’s President Mikhail Saakashvili on Sunday accused neighboring Russia of cutting gas supplies to his country and triggering an energy crisis just as sub-zero temperatures hit the tiny Caucasus state, Reuters reported.

Natural gas pipeline, which supplies Georgia, Armenia, ruptured by blast
Russian officials blamed anti-Moscow insurgents in its southern region of North Ossetia, where explosions knocked out the main pipeline that exports gas across the border to Georgia and onward to its neighbor Armenia.

But Saakashvili, who has irritated the Kremlin by pushing his ex-Soviet state closer to the West, said he did not believe the Russian explanation.

“This morning there was a serious act of sabotage on the part of Russia on Georgia’s energy system,” he told a news conference.

“Basically what happened is totally outrageous and we are dealing with an outrageous blackmail by people who do not want to behave in a civilized way,” Saakashvili later told Reuters.

He said he believed it was an attempt by Russia to force Georgia to surrender ownership of its domestic gas pipeline network to Moscow — the subject of long-running negotiations.

Neither he nor Georgian officials offered any evidence for the accusations.

And the chief spokesman for Russian gas monopoly Gazprom, Sergei Kupryanov: “We believe this situation should not be politicized.”

He said there was a criminal investigation into the blasts and that Gazprom was doing all it could to restore gas supplies as soon as possible.

A Gazprom official in Tbilisi said Russia would send extra supplies through another pipeline to neighboring Azerbaijan so it could ship it to Georgia.
Georgian officials are in talks with Azerbaijan for emergency supplies of gas.

The pipeline to Georgia was knocked out overnight by two explosions in quick succession on two sections in a mountainous part of North Ossetia. Officials said it will be at least two days before gas starts flowing again.

“The flow of gas through the pipeline has been stopped,” said Vladimir Ivanov, a spokesman for the Emergencies Ministry in North Ossetia. “The main version prosecutors are working on is that the pipeline was blown up deliberately.”

Russian news agencies quoted unnamed security officials as saying they suspected anti-Moscow insurgents, who periodically carry out attacks in the mainly Muslim Russian side of the Caucasus that includes Chechnya, were to blame for the blasts.

Saakashvili said Georgia was suffering the same fate as Ukraine, which had its supply of Russian gas cut off earlier this month in a contract dispute, and in the process reducing supplies to major European states.

Ukraine’s pro-Western leadership said Moscow was using its huge energy resources as a political weapon.

“I think the world should wake up to this kind of behavior. Yesterday it was Ukraine, today it is Georgia and tomorrow it might (reach) everywhere where Russia sells its gas and electricity,” said Saakashvili.

Within hours of Georgia’s gas supplies being cut off, the high-voltage electricity line linking it to Russia was also severed at a point inside Russia about 200 km (120 miles) west of the pipeline blasts.

Russian officials said a pylon had been blown up, news agencies reported. Georgia imports Russian electricity to supplement its own supplies.

Georgia has for years suffered from chronic energy shortages but the latest crisis comes during unusually cold weather.

The temperature in the capital Tbilisi on Sunday was minus 5 Celsius (23.00 Fahrenheit), bitterly cold for a country known for its sub-tropical Black Sea seaside resorts.

Energy officials said Georgia’s gas reserves would run out by 5 p.m. (1300 GMT) on Sunday evening. Queues formed outside shops selling kerosene, firewood and gas canisters. School children were told to stay at home on Monday.

Armenia receives all its gas via the same pipeline as Georgia, though a nuclear power station generates much of its electricity.

“Gas is not reaching Armenia after the explosions but consumers are receiving gas drawn from our reserves,” said Shushan Sardarian, a spokeswoman for Armenia’s Armrosgazprom gas supplier.

Source: MosNews

Russia, Ukraine Reach Agreement on Nuclear Sector Cooperation

MOSCOW, Russia -- Ukraine and Russia have reached a number of agreements on cooperation in the nuclear sector for the coming years, the Ukrainian Fuel and Energy Ministry’s press service was quoted by Interfax.

Ukrainian Prime Minister Yuriy Yekhanurov
At a meeting in Kiev on Saturday, Ukrainian Fuel and Energy Minister Ivan Plachkov, the head of the Russian Federal Atomic Energy Agency, Sergey Kiriyenko, and the chairman of the State Committee for Nuclear Regulation of Ukraine, Olena Mykolaychuk, exchanged information on the development of the nuclear energy sector for the next 10 years, the progress of and plans for creating new projects for nuclear power plants, BBC News reported.

The meeting participants discussed cooperation and ties between Ukrainian and Russian companies in nuclear fuel production, including the development of a raw material base by raising the extraction and production of uranium in Ukraine.

The sides said that the joint use of scientific, technical and production potential, and also of the raw material base enables the two countries to develop the nuclear energy sector.

The sides said that one of the main areas for developing cooperation and ties in the nuclear energy sector between Russia and Ukraine is stepping up the safety of nuclear power plants currently operating in Russia and Ukraine, their upgrading and extending their service life.

Following the meeting, the Enerhoatom Ukrainian national energy company and the Russian TVEL company approved methods of pricing fresh nuclear fuel for 2006 and the following years.

The sides agreed to set up a high-level group within the framework of the subcommission for nuclear energy and nuclear materials by 1 February 2006 to coordinate their activities in boosting cooperation and ties in the nuclear energy sector between Russia and Ukraine.

The meeting participants also agreed to help create economically beneficial conditions for companies and scientific and design organizations which will promote the development of Russian- Ukrainian relations in the nuclear energy sector.

The sides agreed to hold a conference in Crimea in June 2006 to present Russian and Ukrainian nuclear complexes.

Agreement was also reached to hold a meeting in Moscow on 10 February to set prospects and draft plans for cooperation in mastering uranium extraction techniques.

A protocol was signed following the meeting.

Source: MosNews

Ukraine-Russia Gas Deal Faces New Threat

BRUSSELS, Belgium -- The European Commission is playing down the risk of further gas supply problems to the EU, despite a new twist in the row over prices in Ukraine and an ongoing cold snap in Russia.

Some elements in the commission are more relaxed than member states over gas dependency
"The commission expects that Russia will fulfill its commitments as a gas supplier and that Ukraine will stick to its commitments as a transit country," energy spokesman Ferran Tarradellas Espuny indicated on Friday.

His remark followed a Ukraine parliamentary resolution tabled on Wednesday by Yulia Tymoshenko's opposition bloc to dissolve the 4 January price deal between Ukrainian distributor Naftogaz and Russian monopoly Gazprom.

The resolution also calls for the sacking of the Ukrainian energy minister and the CEO of Naftogaz.

The January price row saw Russian deliveries to Europe drop by up to 40 percent, with the price deal up for renegotiation by July in any case.

Meanwhile, freezing conditions in Russia continue to claim lives and to strain Gazprom's resources with supplies to Austria, Finland, Hungary, Slovakia and the Czech republic down by some 20 percent this week.

Long term supplies safe

The recent developments have caused a watershed in thinking on Russian energy dependency in some central European member states, especially Hungary and Poland.

But some people in the commission believe neither Russia nor Ukraine would block EU gas again, for fear of causing further damage to their commercial reputations as well as losing income.

Brussels is also treating the cold-related gas shortages as "normal seasonal variations," saying member states' energy grids have back-up plans in the event of swings in weather conditions.

Europe can afford to be "sanguine" about its long term energy relations with both Moscow and Kiev, insiders say, barring a major collapse in political relations between the trio of countries.

Russia-Ukraine price disputes have occured at this time of year for at least three years and are known as the "rites of Spring" in commission circles.

Political dimension

But many analysts see a new political dimension in the current Russian-Ukrainian price dispute, with Ukraine foreign minister Boris Tarsyuk recently hinting the row is aimed at damaging the post-Orange Revolution regime in the run up to 26 March elections.

Ukraine is currently in the midst of a constitutional battle between president Viktor Yushchenko and parliament, which sacked his government over the gas price deal last week.

On top of this, Paris based journal Ukraine Intelligence wrote on Thursday that president Yushchenko's brother, Piotr Yushchenko, stands to make millions from dodgy deals surrounding Rosukrenergo, the Swiss-based firm involved in January's Gazprom-Naftogaz agreement.

"We want to know if this is true, or if it is just an attempt to destabilise the political situation before the elections," Ukrainian MP Ihor Szurma said, Polish daily Rzeczpospolita writes.

Russia and Ukraine are also embroiled in a dispute over whose officials have the right to occupy lighthouses in the Crimean peninsula - a semi-autonomous chunk of Ukraine home to Russian naval bases.

Source: EU Observer

Betting on a Gusher

MOSCOW, Russia -- Vladimir Putin is betting big on oil and gas. for the first time in its 40-year history, the state gas giant Gazprom plans to allow foreign investors to buy its stock directly, perhaps as early as the end of January, on the St. Petersburg Stock Exchange.

A rig in Siberia
This month's offer was to be the first step in a campaign to make Gazprom the ExxonMobil of Russia, one of the world's great energy companies. Indeed, Putin had installed his old friend Alexey Miller, 43, as CEO of Gazprom in 2001, with a mandate to rid the former state monopoly of the privateering, corruption and cronyism that had overtaken it after the fall of the Soviet Union. And Miller and his new lieutenants have vowed to make Gazprom "the largest energy business in the world" by 2010.

It certainly has the potential. Gazprom is the top global supplier of natural gas, controlling 16 percent of the known reserves, and a top-20 oil company. It's aggressively expanding into lucrative new markets in Western Europe with a $5 billion new pipeline project under the Baltic, and eying schemes to export liquid gas to the United States. Just two weeks ago Gazprom shares rose 23 percent, on news of rising world energy prices. Yet even so, its market capitalization is just $1.3 million per billion barrels of proven reserves (compared with $17 million at ExxonMobil), making it one of the cheapest energy stocks in the world.

The Gazprom discount is a function of politics and Putin. Investors will remain wary so long as he treats Gazprom above all as a tool for enforcing his political will, rather than a real private company, in the Western sense. For all Putin's efforts to reform Gazprom, a recent spat with Ukraine demonstrated that the company is still run as a branch of the Kremlin. On New Year's Day, in an attempt to force Ukraine to pay full European market prices for its gas—and, diplomats say, to punish the Orange Revolution that brought an anti-Russian team to power in Kiev—Gazprom shut off Ukraine's gas supplies. European customers farther down the pipeline immediately felt the pressure drop and complained loudly. Within days a complex deal with Ukraine restored pressure, and though both sides claimed victory, the damage was done.

Russia's reputation as a reliable energy partner was shaken—and with it, Gazprom's ambition to become the country's first brand-name multinational in good global standing. U.S. Secretary of State Condoleezza Rice criticized Russia for the "politically motivated" cutoff and warned that if Moscow wants to be "a part of the international economy" it should "play by its rules." Gazprom says that's unfair. "It would be naive to think that economic issues can be separate from politics," says Alexandr Medvedev, Gazprom's deputy CEO. "Lenin used to say that politics is a concentrated expression of economics."

Perhaps. But most investors hardly see Lenin, the late father of Soviet communism, as a guiding light for modern multinationals. "Can you imagine ExxonMobil or Chevron switching off the pump to Canada or Mexico because these countries disagreed with Bush on Iraq?" asks Karina Litvack, head of governance at F&C Asset Management in London. Gazprom is about to go on worldwide sale at a time when its senior managers seem sharply at odds with the free-market world view that dominates global financial markets.

Putin has been trying to have it both ways, pushing Gazprom to attract foreign money without loosening Kremlin control. Miller, an economics Ph.D., worked alongside Putin in the early 1990s in the office of leading reformer Anatoly Sobchak, then the mayor of St. Petersburg. Ever since, say investors, Miller's been doing a good job of cleaning up the monopoly's endemic corruption and inefficiency, stamping out the kind of asset stripping that placed Gazprom execs among Russia's richest men. And Miller is popular among the new generation of Westernized young managers he brought in with him—several have framed beer ads on the walls of their offices in Gazprom's giant skyscraper on the outskirts of Moscow, proclaiming it's miller time!

But according to a source close to the Gazprom senior management, who did not wish to speak on the record, Miller couldn't have tackled the old Gazprom regime on his own; Putin also had a hands-on role in the makeover: "Putin runs Gazprom in critical situations, and makes many of the day-to-day decisions too." All top managers have been personally appointed by Putin, and all major projects, especially those involving negotiations with Europe, are Kremlin-approved.

Putin has also begun to seek out famous Western names to help make over the image of Russian energy businesses: former U.S. Commerce secretary Donald Evans turned down an offer, but former German chancellor Gerhard Schroder now heads a Baltic pipeline project for Gazprom. According to a source close to Gazprom, Schroder was in regular touch with Putin through the Ukraine crisis, and even placed calls to Polish President Aleksander Kwasniewski and Ukrainian President Viktor Yushchenko to urge a speedy resolution. To Vadim Kleiner of Hermitage Capital Management, the biggest current foreign investor in Gazprom, the Kremlin role is both perfectly legit, since the state remains the largest shareholder, and an improvement over the old Gazprom regime, which managed the company "as a private vehicle for benefits and assets divestitures to the relatives of management."

Now, reckons Eric Kraus, the American chief strategist at Moscow-based SovlinkSecurities, Gazprom "is increasingly being run as a for-profit operation." Miller has launched a legal campaign to regain gas fields lost by Gazprom in dodgy sell-offs between 1997 and 2001; so far, nearly three quarters of the lost assets have been recovered. And gas supplies to international clients (other than Ukraine) are now delivered directly by Gazprom, rather than by shady middlemen as in the past. Overall, the company is "speeding up the move toward getting full market value for its gas in the former Soviet markets," says Anatoly Romanovsky, Hermitage's investment director.

Russian investors certainly agree—corporate Moscow is rolling in oil dividends, and a lot of those rubles have been pouring into Gazprom. The company's shares have risen from 51 cents to $8.44 since 2000, and spiked recently due in part to Russia-based investors' buying the stock in anticipation of the first broad sales to foreigners, says Pharos Russia Fund president Peter Halloran. Mainly, says Halloran, "everyone wants to be in energy stocks now." Gazprom stock is now available to foreigners through special American Depository Receipts issued by the Bank of New York, but will soon go on sale through St. Petersburg and ultimately on international exchanges such as London.

Not so long ago Gazprom seemed an unlikely candidate for foreign sales of any kind. Considered a Russian national treasure and strategic asset, it was defended by a "ring fence" of protectionist barriers, backed by the increasingly nationalist regime of President Putin (who reportedly aspires to lead Gazprom when he retires). Yet the ring fence was recently ripped down, out of necessity. Though Gazprom has begun to talk of charging market rates, less than a quarter of its gas is now sold at the market price of about $230 per thousand cubic meters. The rest is sold cheaply inside Russia and former Soviet republics, and Gazprom needs money. Simply to maintain current output, Gazprom officials say, they will need foreign investment of $173 billion to $203 billion over the next 15 years.

It's still not clear how much foreign money will be forthcoming. There are plenty of doubters. Roland Nash, chief strategist at Renaissance Capital in Moscow, says the market has priced in the "ring-fence removal," leaving Gazprom poised for a fall: "The company has a lot of issues, such as huge cost overheads which it has been unable to cut." Jerome Guillet, a banker who worked with Gazprom in the 1990s, says the deal with Ukraine "is obviously shady" because Ukraine will buy not from Gazprom but from RusUkrEnergo, the last in a line of shell companies that traded on the difference between low gas prices in the former Soviet Union and the higher European price. "What is obvious is that these deals are not driven by the best interests of Gazprom or of Russia, but by the interests of people in power in both" Russia and Ukraine, says Guillet.

Those doubts are mirrored by Western governments. European energy officials are rethinking their growing reliance on natural gas, and Russia as their gas supplier of choice. Many Europeans note that Putin, the 2006 chairman of the G8 group of industrialized nations, wants energy security to top this year's G8 agenda. But energy markets won't be more secure if Gazprom remains a political cudgel for the Kremlin. Gazprom officials complain that their embargo on Ukraine was misunderstood—all they wanted was a fair market price—but even investors who are buying the stock don't buy that argument. How can they, when Putin still calls the final shots?

Source: Newsweek

High Support for Party of Regions in Ukraine

KIEV, Ukraine -- The Party of Regions (PR) remains the top political organization in Ukraine, according to a poll by the Razumkov Center. 24.7 per cent of respondents would vote for the party headed by former prime minister Viktor Yanukovych in this year’s election to the Supreme Council.

Election 2006 front runner Yanukovych, according to poll data
The People’s Union-Our Ukraine (NS-NU) coalition of current president Viktor Yushchenko is second with 15.4 per cent, followed by the Yulia Tymoshenko Bloc—which includes the Batkivshchina (Fatherland) Party of former prime minister Yulia Tymoshenko—with 12 per cent. Support is lower for the Communist Party of Ukraine (KPU) and the Socialist Party of Ukraine (SPU), and the People’s Party of speaker Volodymyr Lytvyn.

Ukrainian voters are set to renew their legislative branch on Mar. 26. In the 2002 ballot, Yushchenko’s Our Ukraine (NU) bloc received 23.6 per cent of the vote and elected 112 members to the 450-seat legislative branch. Parties require at least three per cent of the vote to qualify for proportional representation seats in the Supreme Council.

Yushchenko won the December 2004 presidential election in Ukraine, with 51.99 per cent of the vote in an unprecedented third round against Yanukovych. Last September, Yushchenko sacked his entire cabinet, substituting Tymoshenko with Dnipropetrovsk governor Yuri Yekhanurov.

On Jan. 10, the Supreme Council dismissed the government after 250 members backed a no-confidence motion following Yekhanurov’s decision to pay almost twice as much for Russian gas imports. Yushchenko has asked Ukraine’s Constitutional Court to review whether the actions of the lawmakers are legal.

Polling Data

Which party would you vote for in the next parliamentary election?

Party of Regions (PR) - 24.7%

People’s Union-Our Ukraine (NS-NU) - 15.4%

Yulia Tymoshenko Bloc - 12.0%

Communist Party of Ukraine (KPU) - 4.6%

Socialist Party of Ukraine (SPU) - 4.6%

People’s Party - 3.0%

Nataliya Vitrenko "People’s Opposition" - 2.5%

Civil Coalition Pora-PRP - 1.2%

Kostenko-Plyushch Bloc - 0.7%

Oppositional bloc "Not Yes!" - 0.6%

Poll conducted by the Razumkov Center. Methodology: Interviews with 2,290 Ukrainian adults, conducted from Jan. 12 to Jan. 17, 2006. Margin of error is 2.1 per cent.

Source: Angus Reid

Russia’s Black Sea Fleet Defends Lighthouses

MOSCOW, Russia -- Kiev accused Moscow yesterday of violating the accords of the stationing of the Russian Black Sea Fleet in the Crimea after Russia's Black See Fleet Headquarters beefed up the security of lighthouses blockading them by Russian military hardware.

Russian marines stand guard by the lighthouse at the Cape of Sarych
Ukrainian Foreign Minister, in his turn, demanded that Russia stop authorized movement of military unites through the country, and the Defense Ministry threatened to join the NATO soon.

The Russia-Ukrainian row over lighthouses and hydrographic objects in the Crimea is still raging on. Russian Defense Minister Sergey Ivan ordered yesterday to tighten the security of the Russian military’s lighthouse and blockade the approaches to some of them by armored vehicles.

Kiev’s reaction was immediate. The spokesman for the Ukrainian Foreign Minister Vasily Filipchyuk slammed Moscow for violating the accords on the deployment of the Russian troops in Ukraine. “The unauthorized movement of military units of another state in our territory is a serious violation of the inter-state agreement on the terms of the Russian Black Sea Fleet’s presence in Ukraine.

Any movement of military units outside the place of their deployment is possible only with a sanction of Ukraine’s state bodies,” Filipchyuk said.

Ukraine has an important trump against Russia in the navigation property dispute. As Ukraine’s Defense Minister Anatoly Gritsenko stated during his visit to Hungary, his country “has entered the final stage of gaining the status of NATO member-country.”

The Ukrainians thus made it clear whose military are to replace Russia marines in the Crimea.

Source: Kommersant

Russia-Ukraine Gas Deal On Hold

KIEV, Ukraine -- Russia and Ukraine have postponed the signing of a controversial gas deal, planned for Saturday, until next week. The reason given for putting off the signing was that some details needed to be finalised.

Europeans are concerned about disruption to gas supplies.
But the BBC's Helen Fawkes in Ukraine says it is likely that there were also political reasons for the delay.

The deal was reached earlier this month after Russia suspended gas supplies to Ukraine on New Year's Day, a move that affected several other countries.

Opposition to the deal in Ukraine led to political deadlock, and questions over whether the government had the authority to sign the agreement, which will double the price Kiev pays for gas.

Under the five-year deal, Ukraine will buy Russian and Central Asian gas for $95 per 1,000 cubic metres on average.

Since the agreement was reached, members of parliament have voted to sack the fuel and energy minister and the government, as well as passing a vote of "no confidence" in the head of the state gas company - although the authorities have said that these actions are illegal.

European worries

Our correspondent says this latest development will send a shiver across Europe, some parts of which have experienced a shortfall in gas supplies in recent weeks.

It is also feared that the delay could worsen the already strained relations between Russia and Ukraine.

Moscow is renegotiating gas deals with several of its neighbours.

The spat with Kiev led to disruption to European supplies, which run through Ukraine.

And this week, Italy said it was dipping into its gas reserves amid reports that Russia was holding back gas for its domestic markets because of cold weather at home.

Source: BBC News

Great Russian Freeze Spreads West

KIEV, Ukraine -- Severe cold weather gripping large parts of Russia has now spread west, causing chaos in Ukraine, Belarus, the Baltic states and Scandinavia.

Smoke from a power station rises in the sky over Kiev. A severe cold snap spreading west from Russia has killed seven people in Ukraine, forced the closure of schools and mines, and strained the nation's electricity grid, officials said.
Officials in those countries say there is growing pressure on energy supplies, with power shortages as Russia cuts deliveries to fight the freeze at home.

Dozens have died of the cold, with temperatures as low as -33C (-27F) recorded.

Forecasters have said that the freeze will last several more days, and could intensify in places.

Strained grid

In eastern Ukraine, seven people have died as a result of the cold.

Miners in the area have been told not to work as conditions underground have become treacherous.

The weather has strained Ukraine's national grid, with power cuts reported in hundreds of towns.

The BBC's Helen Fawkes in the capital Kiev, where it is several degrees warmer, says some people are complaining that their homes feel chilly, saying that their heating, which is run on gas, has been reduced.

Demand is believed to have risen by 20%.

Meanwhile six people died in Latvia, where temperatures of -27C were recorded, the lowest in 100 years, AFP news agency reported.

Heavy snowfalls, high winds and cold caused problems across northern Europe, causing major disruptions to transport and power supplies.

Flights from Copenhagen airport in Denmark were suspended for two hours on Friday evening as aircraft were de-iced. Traffic is not due to return to normal until Sunday.

New cold

In the Norwegian Arctic city of Tromso more than 20,000 people were left without power after heavy snow brought down electricity cables.

Five more people died overnight in Russia's capital, Moscow, bringing the total number of dead across the country since Tuesday to more than 70.

Temperatures are expected to ease slightly over the weekend, but forecasters say more cold air will arrive from the east next week bringing a further drop.

The weather is the coldest to affect the country in more than 25 years.

Energy consumption has hit new highs as Russia struggled to keep warm in the severe winter conditions.

Many schools and businesses remained shut, electrical billboards turned off, cars were unable to start and trolley buses put out of action by snapped cables.

Source: BBC News

Top Ukraine Court Upholds Challenge To Steel Mill Sale

KIEV, Ukraine -- The Ukrainian Supreme Court on Friday declared that the 2003 privatization of a major Ukrainian steel factory was illegal, giving the government what many expect to be its final victory in a policy of challenging murky privatization deals.

Viktor Pinchuk
The court's ruling, which is not open to appeal, is a major setback for one of the country's wealthiest businessmen, Viktor Pinchuk, son-in-law of the former president Leonid Kuchma.

Interpipe, a company controlled by Pinchuk, bought a 25 percent stake in the Nikopol factory in 2003 and won the right of first offer to buy another 25 percent plus one share in a later auction that no other bidders were allowed to participate in.

The stakes were sold for a total of 410.5 million hryvna, or $81 million.

In upholding a lower court decision that judged the sale to be invalid, the Supreme Court effectively returned the factory, a major producer of ferroalloys, to state control.

Pinchuk could not immediately be reached for comment.

President Viktor Yushchenko in September abandoned his government's policy of reversing past privatizations but said some of the more egregious examples should not be allowed to stand. He cited the Kryvorizhstal steel mill and Nikopol.

Kryvorizhstal, which was bought by Pinchuk and another tycoon, Renat Akhmetov, in 2004, was resold by the state in October. Mittal Steel purchased the mill in a highly competitive auction for $4.8 billion - more than five times the original sale price.

Source: AP

The Real Ukraine

KIEV, Ukraine -- The plight of Viktor Yushchenko in Ukraine reminds us of the many other politicians in the post-Soviet world who raised large expectations in the West only to disappoint in the end - Mikhail Gorbachev and Boris Yeltsin come to mind.

President Viktor Yushchenko
Perhaps it's time to take a more realistic look at what's going on in the former Soviet Union.

At the time of Ukraine's so-called Orange Revolution in 2004, many in the West saw largely what they wanted to see: a people rising up against corruption, manipulated politics and crude Russian pressures in the name of moving closer to democracy, free markets and the West.

Yushchenko, survivor of a dastardly murder attempt, and his running mate, Yulia Tymoshenko, were the stars. Vladimir Putin of Russia was the villain, scheming to deny the Ukrainian people their freedom.

What the West chose not to see was that Yushchenko is more a technocrat than a leader, and that Tymoshenko was at best a tactical ally whose suspect fortune and populist politics were bound to come in conflict with Yushchenko's plodding pragmatism.

More to the point, many in the West chose to overlook the fact that Ukraine, like most other former Soviet republics (with the exception of the three small Baltic states), remains intricately intertwined with Russia and the other republics.

In Ukraine, part of the Slavic core of the old Soviet empire, half the residents still identify closely with Russia, both ethnically and nationally.

So to believe that Yushchenko could single-handedly shift Ukraine into the Western orbit was naïve. Not only was Russia interfering, but Europe was, and is, far more interested in Russian gas than in Ukrainian democracy.

Fifteen years into the process, the dismantling of the Soviet state is still a work in progress and politics is still largely a bald power struggle, with countless players and alliances. In Ukraine, thousands of candidates and 45 parties are slugging it out for 450 seats in the March 26 parliamentary elections.

It is typical, and predictable, that incumbents have pounced on Yushchenko for having been forced to accept doubled gas prices from Russia.

Oddly enough, Putin is achieving what Yushchenko failed to do. By punishing Yushchenko for trying to pull Ukraine away from Russia, Putin is pushing Ukraine away from Russia.

Source: International Herald Tribune

Russia Says Ukraine Threatens National Security

CRIMEA, Ukraine -- Commandeering of Russian Black Sea Fleet infrastructure in Ukraine should not be left unanswered.

A view of Sarych Lighthouse, Crimea
As reported by RIA News, Constantine Kosachov, Russia's Foreign Affairs committee chairman, announced.

According to Kosachov, commandeering of the lighthouses is not just a matter of interstate relations between Russia and Ukraine, but it is a question of Russian national security.

“We cannot leave such actions unanswered. We must adequately react to them, including harsh measures,” said he.

According to Kosachov, the issue is not about going to war against Ukraine, “but Russian rented infrastructure until 2017, must be defended by all available means.”

Kosachov voiced hope that the use of harsh methods can be avoided and the situation will solve itself after the March elections take place in Ukraine.

The Russian Federation’s Black Sea Fleet military headquarters moved four marine units – each consisting of 15 soldiers armed and with provisions – inside the four main lighthouses on the Black Sea coast.

The Sarych lighthouse was reinforced with an armored personnel carrier. Additionally, perimeter zones were established at each of the four lighthouses.

Source: Ukrayinska Pravda

Viktor Yushchenko Sues Parliament

KIEV, Ukraine -- Ukrainian President Viktor Yushchenko ignored the invitation of Supreme Rada deputies and did not come to the parliament to settle the conflict over the dismissal of the government. He asked the Constitutional Court to consider the legality of the parliament’s decision instead.

Supreme Rada’s speaker Vladimir Litvin failed to convince the parliament to endorse his anti-crisis plan.
The deputies responded by sacking Energy and Justice Ministers for the second time. Thus, the political crisis in Ukraine is unlikely to be resolved before the parliamentary elections on March 26.

The president’s appeal to the Constitutional Court on the legality of the no-confidence motion against the government is only a political move since the Court has not been shaped and is unable to hand down decisions.

Supreme Rada deputies dismissed Fuel and Energy Minister Ivan Plachkov and Justice Minister Sergey Golovaty once again and passed the vote of no-confidence in the head of Naftogaz Ukrainy, Alexey Ivchenko.

Deputies are to go for holidays until February 7 but the joint council of factions leaders will keep on working to find a compromise. The parliament’s speaker Vladimir Litvin suggested that Constitutitional Court judges be sworn in but Yulia Timoshenko’s Bloc and Viktor Yanukovich’s Party of Regions apparently won’t have him do this.

The opposition is afraid that the new line-up of the Constitutional Court will amend the political reform which will come in force after the elections granting the Rada with presidential powers. President Yushchenko has repeatedly stated that he would seek the abolition of the reform either at the Constitutional Court or at the referendum.

Moscow’s gas war against Kiev turned out to be quite successful. Viktor Yushchenko lost all his trumps signing a debatable contract with Moscow, while Naftogaz Ukrainy got involved in shadowy financial schemes.

The rating of Russia-friendly Party of Regions came to 27 percent, Yulia Timoshenko’s Bloc could muster 16 percent of votes and Our Ukraine could hope for 15 percent before the gas crisis, according to a poll held by Kiev-based International Sociology Institute in December.

Source: Kommersant

Delta To Start Flights To Kiev

ATLANTA, USA -- The U.S. Department of Transportation has granted approval for Delta Air Lines Inc. to add 11 new routes from the Unites States to Ukraine starting in June.


Atlanta-based Delta plans to offer customers non-stop flights five days a week between New York's John F. Kennedy International Airport and Borispol Airport in Kiev, Ukraine, starting June 5, subject to Ukrainian government approval.

"Kiev will be the latest destination in Delta's expansion into the key business and leisure markets of Eastern Europe," said Bob Cortelyou, Delta vice president of Network Planning. "Delta will be the only U.S. carrier to serve Kiev, and business travelers on both sides of the Atlantic, as well as friends and family of Ukrainian heritage in the United States, will look forward to this new non-stop service between New York-JFK and Kiev."

Delta operates its second-largest hub at the Cincinnati/Northern Kentucky International Airport.

Source: Cincinnati Business Courier

Russian Colonel Who Averted Nuclear War Receives World Citizen Award

MOSCOW, Russia -- Retired Russian colonel Stanislav Petrov received a special World Citizen Award at a UN meeting in New York on Thursday. Petrov was honored as the “Man Who Averted Nuclear War”.

Retired Russian Colonel Stanislav Petrov
In a meeting held at the UN’s Dag Hammarskjold Auditorium on Jan. 19, the Association of World Citizens (AWC) presented the retired officer with his award.

The inscription on the award, which has a granite base with a solid glass hand holding the earth, read: “The single hand that holds the earth symbolizes your heroic deed on September 26, 1983 that earned you the title: The Man Who Averted Nuclear War.” The back of the award read: “May the hand now symbolize humanity united to save our world by eliminating nuclear weapons from the face of the earth.”

Back in 1983 Petrov made a decision that prevented a war that could have destroyed the planet. He was the duty officer at Russia’s main nuclear command center in September 1983 when the system indicated a nuclear missile attack was launched by the U.S. on Russia.

It was just after midnight, Sept. 26, and 120 staff were working the graveyard shift in Serpukhov-15, the secret USSR command bunker hidden in a forest 30 miles northeast of Moscow, WorldNetDaily reported.

In the commander’s chair was Lt. Col. Stanislav Petrov, 44, looking down from his mezzanine desk to the gymnasium-sized main floor filled with military officers and technicians charged with monitoring any U.S. missiles and retaliating instantly.

Petrov was highly aware that Cold War tensions were acute, as USSR fighters had shot down a Korean airliner on Sept. 1. But he was completely shocked when the warning siren began to wail and two lights on his desk console began flashing MISSILE ATTACK and START. “Start” was the instruction to launch, irreversibly, all 5,000 or so Soviet missiles and obliterate America.

A new, unproven Soviet satellite system had picked up a flash in Montana near a Minuteman II silo. Then another — five, all told.

Petrov recalls his legs were “like cotton,” as they say in Russian. He stared at the huge electronic wall map of the United States in terror and disbelief. As his staff gawked upward at him from the floor, he had the thought, “Who would order an attack with only five missiles? That big an idiot has not been born yet, not even in the U.S.”

The Soviet procedure manual was inflexible, and it demanded he notify his superiors of the attack immediately. But relying on his intuition, Petrov disobeyed. For almost five minutes, he stalled, holding his hotline phone in one hand and his intercom in the other, barking orders to his personnel to get back to their desks.

Then he made the decision that saved the world. Summoning up his firmest voice, he called his Kremlin liaison and said it was a false alarm. But today he admits, “I wasn’t 100 percent sure. Not even close to 100 percent.”

Months later, it was determined that sunlight reflecting off clouds in Montana had caused a faulty satellite computer assembly to report a missile launch flash. But by that time, Petrov’s excellent military career had been sidetracked. He wasn’t fired, but he was transferred — and never got any medals or recognition. When his wife was found to have a brain tumor in 1993, he retired to take care of her. When she died, he borrowed money to give her a funeral.

Because of Stanislav Petrov’s actions that day in 1983, the Earth was spared what could have become the most devastating tragedy in the history of humanity. Stanislav Petrov has said he does not regard himself as a hero for what he did that day. But in terms of the incalculable number of lives saved, and the overall health of the planet Earth, he undeniably is one of the greatest heroes of all time.

There is yet something else unsettling about this incident. Stanislav Petrov was not originally scheduled to be on duty that night. Had he not been there, it is possible a different commanding officer would not have questioned the computer alarms, tragically leading the world into a nuclear holocaust. As it turned out, this incident ended fortunately for America and for the world. But unfortunately for Stanislav Petrov, it ruined his career and his health, and it deprived him of his peace of mind. This is one debt the world will never be able to repay.

Today, Petrov, 67, lives in Moscow on a monthly pension of less than $200.

Source: MosNews and Bright Star

Ukraine Sacks Ministers Involved In Gas Deal

KIEV, Ukraine -- The Ukrainian parliament on Thursday passed a resolution dismissing two top ministers linked to the new gas deal with Russia.

Justice Minister Serhiy Holovaty
The resolution, which won 246 votes in the 450-seat chamber, demands the sacking of Justice Minister Serhiy Holovaty, and Fuel and Energy Minister Ivan Plachkov. A no-confidence vote was also passed on Oleksiy Ivchenko, head of the country's gas giant Naftogaz Ukrainy, reported Interfax-Ukraine, the nation's news agency.

In a bid to end the disputes over the Russian gas price, Ukraine and Russia clinched a new deal on gas supplies on Jan. 4.

The parliament has proposed exercising legal action against the new deal and an investigation into the behavior of those officials involved in it.

It also required the national audit office to examine the financial condition of Naftogaz in the 2004-2005 period and in early 2006.

Under the new deal, Kiev is to pay 95 U.S. dollars per 1,000 cubic meters of gas in 2006 compared with the previous 50 U.S. dollars. The purchases will be conducted through the RosUkr Energo trading company.

The new gas deal led to the Ukrainian parliament's vote for a complete dismissal of Prime Minister Yuri Yekhanurov's cabinet last Tuesday, which was condemned by Holovaty as being illegal.

Source: Xinhua

Bandits To Prison Turning Into Bandits To Parliament

KIEV, Ukraine -- Following the Parliament of Ukraine's no confidence vote against the government of President Viktor Yushchenko, it is still unclear who will be emerge as frontrunner in coming elections-Yushchenko, or the Orange (Yulia Tymoshenko) and Blue (Viktor Yanukovych) opposition.

Who will be the winner in 2006? - Yushchenko (L), Tymoshenko (C) or Yanukovych (R)
The ratings of Regions of Ukraine had already been steadily rising since the Orange camp imploded in early September.

Central to this issue is whether the new January 4 gas contract with Russia was a "victory" or a "defeat" for Ukraine. Ukrainian leaders had been expecting a gas price rise from the 2003 agreed price of $50 per 1,000 cubic meters to $110-120, the price charged to other post-Soviet states, excluding Belarus. The final agreed price was $95 for 6 months. The price after that cannot be changed unilaterally by either side.

Most of the critical focus has been on the intermediary Rosukrenergo that Russia insisted should be involved. Rosukrenergo, replacing Eural-Trans Gas, was created in July 2004 by Presidents Vladimir Putin and Leonid Kuchma.

A parliamentary vote on January 13 was supported by 280 deputies to investigate Rosukrenergo, its investors and if the organized crime leader Semyon Mogilevich was involved. The vote was supported by the former Kuchma camp, Tymoshenko bloc and the Communists.

It is supremely ironic that the investigation was supported by former Kuchma factions who backed the creation of the non-transparent Rosukrenergo in 2004. The anonymous Ukrainian businessmen who control half of Rosukrenergo were appointed at that time and therefore are also from the former Kuchma camp.

It is also ironic that the Tymoshenko bloc has criticized the use of an intermediary. As Prime Minister she lobbied for Rosukrenergo to be replaced by her favorite intermediary Itera, which had been edged out by Eural Trans Gas in 2003.

The Ukrainian businessmen have adopted a practice of investors remaining anonymous by using banks or legal firms as a cover. Evidence proving this is a criminal or corrupt relationship is unavailable.

Both Regions of Ukraine and the Tymoshenko bloc, according to the Russian political consultant Stanislav Belkovskiy, hoped that the gas conflict would drag on without a new contract until the March 26 elections. Tymoshenko and Yanukovych therefore sought to gain favors in Moscow by prolonging the gas conflict to harm Yushchenko's election chances.

In the end, both Putin and Yushchenko needed a quick solution to the crisis. Putin had turned Western governments and media wholeheartedly against Russia on January 2- 3, and the continuing conflict for Yushchenko was causing serious political harm.

Fending off this challenge in the short term, Yushchenko has to deal with a more difficult issue of the upcoming elections. His threats to hold a constitutional referendum are a product of failing to carry through his rallying cry in the 2004 elections and Orange Revolution of "Bandits to Prison!" The only "bandits" to have suffered this fate have been lower and middle level officials. As in the Kuchma era, senior officials have again escaped justice.

In this regard, Yushchenko's choice of Roman Zvarych as Justice Minister and the maintenance of Kuchma era left-over Sviatoslav Piskun as Prosecutor until September-October 2005 caused considerable political blowback. Not a single high ranking "bandit" that Yushchenko pointed to in the Orange Revolution has been criminally charged.

Instead of "prison," these "bandits" will be running on the Regions of Ukraine list and thereby obtain immunity for the duration of the five-year 2006-2011 parliament. Piskun is on the Regions of Ukraine list, as are a multitude of ancient regime high-ranking officials who escaped charges.

Whereas Tymoshenko is likely to lose votes because of her activity in the energy crisis, this will not harm Regions of Ukraine. Recent polls suggest Regions of Ukraine is set to have the largest faction in the 2006 parliament.

Yanukovych is promoting Ukraine's wealthiest oligarch, Renat Akhmetov, who is standing on the Regions of Ukraine list, for Prime Minister and President. In Kyiv, 30% of the population regard Akhmetov as a "criminal authority of the Donetsk mafia." Similar numbers see him as an "oligarch" and the "political boss of Viktor Yanukovych and the Party of Regions".

Regions of Ukraine's favorability ratings have steadily risen, especially since the September 2005 government crisis and split in the Orange camp. A new poll gave Regions of Ukraine 31%, an increase of over 10% in the last four months. Other polls give Regions of Ukraine closer to 23% or even higher ratings of 34%.

In the most recent poll the two halves of the Orange camp (Peoples Union-Our Ukraine [NS-NU] and Tymoshenko bloc) have a total of 29.2%. Together with the Socialists, the combined Orange camp could rise to 34%, only three percent higher than Regions of Ukraine.

Yushchenko remains optimistic that these polls will not translate into an election defeat. Speaking to the Financial Times, Yushchenko said NS-NU will obtain the largest seats in the 2006 parliament.

Based on current polls, this seems unlikely. The poll cited by UNIAN gave Regions of Ukraine 31% and NS-NU only 13%. KIIS gave Regions of Ukraine 34%, Tymoshenko 21% and NS-NU 18% (or 39%).

The Tymoshenko bloc has called for the signing of a three-way joint election alliance between NS-NU and the Socialists. Such an alliance could lay the foundation for a parliamentary coalition that would re-unite the Orange camp after the elections.

The stumbling block will be who would become Prime Minister. NS-NU and the Tymoshenko bloc have informally agreed that the winning faction will have the right to nominate the prime minister. In many polls, the Tymoshenko bloc comes ahead of NS-NU.

President Yushchenko has stated on a number of occasions that there will be no "revenge" from supporters of the former Kuchma regime. "Talk of any kind of revenge is not on. Yesterday's forces will remain yesterday's".

Yushchenko, very surprisingly, also refuses to acknowledge that there is public disappointment in his policies. A new survey by the International Foundation for Electoral Systems says otherwise. One of the public's major sources of discontent is his weak efforts to confront high-level corruption.

Although Yushchenko has emerged the main winner from the gas crisis, he has to take the blame for his election slogan of "Bandits to Prison!" turning into "Bandits to parliament," in which Regions of Ukraine may reside as the largest seat-holders.

Source: Eurasia Daily Monitor

Vitali Wants To Be Kiev's Mayor

KIEV, Ukraine -- Former world heavyweight boxing champion Vitali Klitschko, who backed president Viktor Yushchenko during mass Orange Revolution protests, said on Thursday he would run for mayor of Ukraine's capital Kiev.

Vitali Klitschko
Klitschko announced his retirement last November after a leg injury prevented him from defending his WBC title. He is highly popular among Ukrainians and is seen as a post-Soviet role model for young people.

"I have prepared for this step and am fully aware of the responsibility," Ukrainska Pravda, Ukraine's leading internet publication, quoted him as telling reporters.

"I want to become Kiev mayor because I love my city very much and want to make life better here."

Elections to parliament and local councils take place on March 26.

The vote is seen as the first test of enduring popularity for Yushchenko's administration. His first year in power was plagued by a split among liberals who had joined forces during three weeks of street protests to help propel him to office.

An economic slowdown has fuelled disillusion among backers of the revolution, now split into rival camps accusing each other of corruption.

Klitschko, 34, is already running in the parliamentary election on the ticket of a coalition grouping economic liberals and activists who backed the revolution.

The ex-champion said the mayor's job was more important. He pledged to fight corruption and use his international contacts to boost Kiev's prosperity.

Klitschko will be challenging incumbent Oleksander Omelchenko, 68, who has run Kiev for nearly 10 years. Omelchenko backed Vitaly and his younger bother Vladimir in the early stages of their boxing careers.

Klitschko, who holds a PhD in sports science, made his professional debut in 1996 and won the WBC title in April 2004 by defeating South African Corrie Sanders. He had 35 wins in 37 fights before his retirement.

Source: SuperBoxing

Is A Soviet Chill About To Bite?

KIEV, Ukraine -- Visa regulations for foreign nationals may be toughened in Russia. This is to be discussed in the near future by the Russian State Duma. The new version of the laws on entering and leaving the country and on the position of foreign nationals in Russia mentions tighter restrictions.

Will Russia reinstate the Iron Curtain?
These documents suggest that those deemed “reliable” will have the greatest chances for getting into Russia, while those foreigners considered to have done damage to Russia’s international prestige will not fall into this category.

Other such outcasts will be those who “talk in a derogatory manner about State symbols, executive bodies and cultural and social values which have developed through history”.

Those in the wrong category may have their visa applications rejected.

True, what exactly the harm is that could be done to the country is not specified. However several experts believe that the amendments to the law are directed most of all against foreign journalists publishing information not to the Kremlin’s liking.

Among amendments already passed, incidentally, during the first reading, was a ban on entry to Russia of people “having caused the State significant material damage”, and “presenting a danger”, including danger of infection.

Human rights activists have already sounded the alarm, warning that very soon in Russia we could see the Iron Curtain reinstated.

If this happens, only official delegations and individuals who are “loyal” in their attitude to the regime’s politics will be allowed into the country, according to the radio station “Ekho Moskvy”.

Source: Maidan

Yushchenko, Lytvyn In Talks To End Crisis

KIEV, Ukraine -- President Viktor Yushchenko and Parliament Speaker Volodymyr Lytvyn have been holding talks Wednesday on ways of ending a political crisis that had aggravated last week following a no-confidence vote in the government.

Yushchenko (L) and Lytvyn (R)
The talks, which continued late Wednesday, have been focused on whether a panel of Constitutional Court judges can be sworn in Thursday in Parliament to finally make the court operational.

The court may be instrumental in resolving an escalating dispute between the president and Parliament over a number of disputes, ranging from the recent government’s dismissal to constitutional amendments.

“The dialog on this matter still continues,” Anatoliy Kinakh, the secretary of National Security and Defense Council, said late Wednesday. “Based on its results there will be the final decision on whether the president can join the parliamentary session on Thursday.”

Lawmakers on Tuesday invited Yushchenko and Prime Minister Yuriy Yekhanurov to join the parliamentary session on Thursday in order to exchange views on the resolution of the political crisis.

The crisis escalated Jan. 10 when Parliament had approved the no-confidence vote in the government, while the president and the prime minister had refused to accept the vote. Both, Yushchenko and Yekhanurov said the vote had violated the constitution.

Kinakh said Yushchenko and Yekhanurov could join the session in Parliament under two conditions, namely if the judges are sworn in and if Parliament cancels its no-confidence vote in the government.

The crisis has been worsening as the only court that could resolve the dispute, the Constitutional Court, had been out of service as terms of most of its judges had expired last month.

Parliament, which was supposed to approve its portion of the judges to the court, had failed to do so. It has also refused to sworn in judges that had been earlier nominated by Yushchenko and by an independent panel of judges.

Analysts said Lytvyn had probably sought to delay the appointment of the judges amid concern that the court could also cancel controversial constitutional amendments that had been pushed through by then-President Leonid Kuchma in December 2004.

The amendments reduce powers of the president and increase powers of Parliament, making the parliament speaker a key position in the country’s political system.

Yushchenko has been criticizing the amendments as not well thought-out and even dangerous to the country’s political system.

He has repeatedly threatened to appeal to the Constitutional Court to derail them before working out a new constitution that would be widely debated in the society.

Source: Ukrainian Journal

Quo Vadis: Wither Russia?

KIEV, Ukraine -- In the process of regaining its Soviet-era power, Russia has shot itself in the foot many times over. On Aug. 12, 2000, its nuclear submarine, the Kursk, sank following an onboard explosion in the Barents Sea, killing 118 crew members.

The Kremlin
The cause of this tragedy was attributed to a lack of proper training and maintenance. Western news commentators noted at the time that if Russian authorities had timely requested rescue assistance from the West, many of the lives of the Kursk sailors could have been saved.

In October 2003, Russian authorities arrested and imprisoned Mikhail Khodorkovsky, the owner of the giant Yukos Oil company, on what many said were drummed-up charges of tax evasion and fraud. Since his trial was not transparent, many private Russian entrepreneurs have been trying to develop their talents abroad.

Last December, the Russian State Duma passed a bill severely curbing the freedom of activities of non-governmental organizations operating in the country. Many political commentators around the world wondered what Russia was up to, since any truly democratically elected government is only as strong as the civic society it represents.

In contrast, the majority of people in the United States applauded President Richard Nixon for his foreign policy initiatives, but had no problem with their state leader being pressured into resignation when he was charged by the U.S. Congress with obstruction of justice and abuse of power, which would have likely led to his impeachment anyway.

Russia’s legendary defender of human rights, Andrey Sakharov, was the first to congratulate the American people for exercising their civic responsibilities, declaring loudly and clearly to his fellow Soviet citizens that democracy worked.

But the worst nightmare that the inhabitants of the Kremlin experienced was the election of Viktor Yushchenko as the president of Ukraine. Russia appeared to have coached its candidate, Viktor Yanukovych, to take the top post in Kyiv and become Moscow’s obedient servant. But here again, Russia shot itself in the foot – quite severely. Russian President Vladimir Putin declared his protege president of Ukraine before all of the votes had even been counted.

The United States, as well as other foreign governments, reacted very harshly to this announcement. Putin was humiliated and became the laughing stock of the world. Ukraine’s northern neighbor neither understood nor appreciated the resolve of Maidan demonstrators, who were demanding the right to choose their own leaders. More than three million protesters passed through the streets of Kyiv demonstrating to a captivated world that Ukraine stood for universal human values.

The birth of a truly democratic state in Ukraine became for Russia another time of troubles. Under Soviet rule, an army would have been sent to squash independent thinking, as happened in Czechoslovakia in 1968, but regrettably for Moscow, these traditional Russian approaches are things of the past. By preserving Russian language and pop culture, and devising new economic schemes on post-Soviet territory, the Kremlin’s saviors of the Russian Empire are maintaining hope that these methods can become a template for all former Soviet nations to copy. This is a rather naive expectation, since in our time people are very educated and can think for themselves, regardless of their cultural, political or religious affiliations.

American tycoon Armand Hammer, appearing on American TV networks in 1980, told of his collaboration with Vladimir Lenin in 1920 to help Russia develop trade with the United States. He even laid out his own $1 million to procure equipment for loading and shipping a huge quantity of asbestos to America.

But Lenin wanted more than to just do business with the United States. He perceived this trade as a means of spreading his political vision in North America and began using the commercial channel to send emissaries to educate Americans about the happy life under Communism. Hammer became a liaison in sending money to the United States for the American Communist Party. And, conversely, he once brought $34,000 in the other direction – money very badly needed to buy food for starving Russians.

The Kremlin’s present rulers learned their lesson well from Lenin. They punished Ukraine’s first president, Leonid Kravchuk, for having the audacity to visit the United States in 1994 without their blessing by turning off the gas supply to Ukraine. Though this lasted only one day, the entire world understood what could lay ahead in dealing with Russia. Last year, President Putin became more sophisticated by threatening to charge Ukraine quadruple the price for gas, or else Russia would shut it off starting on the first day of 2006. No one in the world doubted that Russia would do it. Historically, such behavior has been its favored practice: possibly as many as 10 million Ukrainians were starved to death in the 1930s. Numerous others built prison camps in Siberia, or were imprisoned in the camps themselves. Russia’s newest tactic has been to threaten freezing Ukrainian children by raising gas prices to an unrealistic level.

This was the last time that Russia shot itself in the foot, and it may have been a fatal shot at that. The entire world finally realized what a wicked bunch of characters occupy the Kremlin. Every news network commented on Russia’s behavior in the most negative way, while financial consultants around the globe advised against including Gazprom stock in investment portfolios. Russian gas clients immediately began looking for other suppliers as well as alternative sources of energy. Energy conservation has become a key slogan wherever Russian gas is used.

The United States lived through a similar crisis in 1973, and it learned to cope with the problem almost overnight. Transit points where motorists could pick up riders on their way into the city sprang up along suburban highways, buses received special lanes to move passengers into the metropolis at much faster speeds, while home improvement stores offered a large variety of weather-proofing materials. Small communities reverted to traditional sources of heating their homes.

All of these energy-saving measures could be on their way to most spots of the former Soviet Union, which could cut the use of Russian gas quite significantly.

Gas and oil are what Russia has the most of. Politically it has not only not establish good relations with its neighboring independent states, but with its own autonomous republics either. Chechnya is one example of a distraught, anonymous Soviet republic. There are other conflicts brewing out there too. Russia, with its lack of other industries to gainfully employ its citizens, will continue limping toward self-destruction as a nation that could otherwise become a leading state if it abandoned its traditional imperialistic ambitions.

Source: Kyiv Post

Yushchenko Seeks Compromise With Parliament

KIEV, Ukraine -- Ukraine's parliament will hold a joint session with President Viktor Yushchenko and his Cabinet aimed at finding compromise after lawmakers last week decided to sack the government in a dramatic show of no-confidence in the Orange Revolution leader.

President Yushchenko (L) with Prime Minister Yekhanurov
Yushchenko's office said the joint session, scheduled for Jan. 19, was agreed to Jan 17 after consultations with Parliament Speaker Volodymyr Lytvyn, who won wide respect for his mediation efforts during the 2004 presidential election crisis.

Lytvyn has said the lawmakers' decision to sack the government, while allowing it to keep working until parliamentary elections in March, was a warning to

Yushchenko that his government was not living up to its responsibilities.

The dismissal came after an angry dispute with Moscow over the price of gas, which resulted in a nearly twofold increase in the price that Ukraine must pay for a mix of Russian and Central Asian gas. Critics warn that the rise could severely hurt Ukraine's export-driven economy, which has remained competitive largely due to cheap energy costs.

The government's dismissal didn't appear to paralyze its work, but did leave the president looking severely weakened and increasingly isolated. That is a dangerous position ahead of the March 26th elections, which could determine whether Ukraine continues on its pro-western course.

Yushchenko has called the parliament's decision to fire his government unconstitutional and demanded it be rescinded. That, however, looks unlikely to happen.

While the announcement of the joint session indicated Yushchenko was pushing dialogue, there was no sign he had softened his view about the lawmakers' action. In his statement, Yushchenko called on political leaders to "show respect to the constitution and the law, and to be guided by, above all, national interests."

The joint session will include Prime Minister Yuriy Yekhanurov and the rest of the Cabinet, the president's office said.

Source: AP

Ukraine Goalkeeper Shovkovsky Out For Two Months

KIEV, Ukraine -- Ukraine's first-choice goalkeeper Olexander Shovkovsky will be out of action for two months after breaking a collar bone in a friendly game, his club Dynamo Kiev said on Wednesday.

Ukraine's goalkeeper Olexander Shovkovsky
"The loss of a key goalkeeper, who was in perfect form, is like a bolt from the blue for us," Dynamo president Ihor Surkis told the club's website.

"Doctors believe that Sasha may miss about two months."

Shovkovsky, 31, played in all of Ukraine's 12 World Cup qualifiers, helping his side secure a first finals appearance. He will return to Kiev later on Wednesday and will undergo surgery on Thursday.

The goalkeeper sustained the injury after colliding with an opposing player in a game against Russian side FK Moscow on Tuesday.

Ukraine were paired with Spain, Tunisia and Saudi Arabia in their first round group at the World Cup finals in Germany in June.

Source: Reuters

Ukraine May Charge More For Russian Navy Base

KIEV, Ukraine -- Ukraine might increase by fourfold the price it charges Russia to base its Black Sea Fleet in a Ukrainian port, Ukraine's defence minister said in a newspaper interview published yesterday.

Defence Minister Anatoliy Gritsenko
"If in the very important energy sector ... relations have moved from the category of 'brotherly' to the category of 'fair market,' it's fully logical to consider that such a step will be carried out in other sectors of Ukrainian-Russian relations," Defence Minister Anatoliy Gritsenko said in an interview published in Ukraine's Kommersant newspaper.

A fierce dispute with Russia over the price of gas led to Ukraine's gas supply being cut off for three days and it paying almost double for gas imported from Russia and Central Asia. The spat also cast doubts on a series of other issues, including the status of a Russian naval fleet.

Ukraine's Security Council chief Anatoliy Kinakh said the council would hold a special session early next month to discuss the fleet, and that another meeting, under the auspices of a Ukrainian-Russian presidential commission, would be held on February 16 at the level of deputy foreign ministers.

Under a 1997 agreement, Russia and Ukraine divided the Soviet Black Sea Fleet and Ukraine allowed the Russian navy to remain in the Sevastopol port until 2017, charging an annual rent of US$93 million. The fleet provides the Russian navy with its only convenient access to the Mediterranean.

Gritsenko said it is "fully possible" that the price Russia pays for its Crimean Peninsula base could jump to US$400 million.

"Crimea is a vacation zone, demand for land is huge and supply is limited," Gritsenko was quoted as saying by Kommersant.

Ties between Moscow and Kiev have been increasingly tense since pro-Western President Viktor Yushchenko came to power last year and launched a drive to move closer to the West. The latest dispute has centred around a Ukrainian lighthouse used for navigation by Russia's Black Sea Fleet.

Russia accused Ukraine of attempting to seize the lighthouse last week and bar Russian navy personnel from entering. Ukraine's Foreign Ministry has countered that Russia had no right to control access to this and other lighthouses on the Crimean coast.

In Moscow, Russian Foreign Minister Sergei Lavrov said yesterday that Ukraine was sending mixed signals about the seizure of the lighthouse, comparing the Ukrainian Foreign Ministry position with what he said was an explanation from Yushchenko's office calling the move a provocation possibly carried out by activist youths.

"It is hard for us to understand who is behind this and who is speaking for Ukraine," Lavrov said. "We are awaiting an official, clear explanation."

Ukrainian Parliament Speaker Volodymyr Lytvyn said on Monday that he had asked the Foreign Ministry and the Defence Ministry to clarify the situation.

According to Lavrov, the 1997 agreement placed the lighthouse and nearly 100 other navigation facilities in the hands of the Russian fleet and stipulated that they be jointly used by Russia and Ukraine but it also called for a second agreement listing facilities belonging to the fleet. Ukraine balked at signing that deal, and Ukrainian courts have since unilaterally ordered dozens of facilities returned to Ukraine, he said.

Source: China Daily

Ukraine Urges Russia to Stop Dredging Work in Kerch Strait

MOSCOW, Russia -- Ukraine has demanded that Russia stop unsanctioned work in Kerch Strait, the UNIAN news agency reports.


Ukrainian First Deputy Foreign Minister Volodymyr Ohryzko told a briefing in Kiev Tuesday that over the past two weeks the Urengoy dredger has repeatedly entered Ukraine’s territorial waters to carry out bottom deepening work in breach of Ukraine’s sovereignty.

Ohryzko said that Russia’s charge d’affaires was summoned to the Ukrainian Foreign Ministry to be handed an appropriate note.

“Ukraine has demanded that urgent measures be taken to stop work in the aforementioned waters,” Ohryzko said. He said that the work could be carried out at Ukraine’s consent only. “We are expecting the Russian Federation to take adequate measures to stop the violations as soon as possible,” Ohryzko said.

Source: MosNews

A Vendetta Becomes a Foreign Policy

MOSCOW, Russia -- Russian state media had a field day trashing Ukrainian President Viktor Yushchenko last week by airing the pronouncements of his domestic political rivals, including Volodymyr Lytvyn, the speaker of the parliament, and former Prime Minister Yulia Tymoshenko.

Ukraine President Yushchenko (L) and Russian President Putin
As I watched the reports joyously predicting that Tymoshenko would manage to get the recent gas agreement annulled in court I started to wonder about the goal of Russia's policy toward Ukraine. The evidence suggests that this policy boils down to President Vladimir Putin's personal vendetta against Yushchenko.

It's not enough that he didn't die after being poisoned; he went and won the election! Putin's only human, after all. And it's a lot easier to forgive someone who's done you wrong than it is to forgive someone you've wronged yourself.

The giddy coverage of Yushchenko's difficulties at home at least makes sense if psychology, not politics, is behind it -- a complex process of one politician gratifying his dislike for another politician by cooking up conspiracies and machinations, a little poison and turning off the gas.

But if we're talking about official Kremlin policy, and not just a personal feud, then this coverage makes no sense at all. Russia's political interests in Ukraine would be best served by drawing Ukraine into our sphere of influence.

But the Ukrainian opposition leaders we see on television are all speaking out against Russia. Yushchenko caved in to the Russians, they say, but we won't. We'll overturn that agreement.

The Kremlin has accomplished the impossible: Ever since the gas scandal, once-respectable Ukrainian politicians have been spouting the kind of rabidly anti-Russian rhetoric that was once limited to the most diehard nationalists.

Previously, a pro-Russian opposition seemed possible in Ukraine. Now opposition leaders compete to prove that they hate Russia even more than Yushchenko does.

The Russian state media broadcast all of this in reports about domestic opposition to Yushchenko, and the Kremlin takes credit for it.

Try to imagine that Palestinian leader Mahmoud Abbas had a personal falling-out with the prime minister of Israel. And that Israeli television was ordered to drag Abbas through the mud.

And that the leaders of Islamic Jihad and the Al-Aqsa Martyrs Brigades came out against Abbas, declaring that he had betrayed the interests of the Palestinian people by negotiating with Israel and calling for his ouster -- all on Israeli television. And that the Israelis then invited these same leaders to Tel Aviv for talks, and gave them money -- anything to get rid of Abbas.

And that after all this the talking heads on Israeli news programs declared with evident satisfaction that Abbas' days in power were numbered.

It couldn't happen, right? No democratically elected leader who decided to indulge his personal dislike for a foreign leader at the expense of his own country's national interests would hold on to his job for more than a month. Right?

Well, this is exactly what is happening in Russia today. And it offers grim evidence that the Kremlin no longer regards foreign policy as a policy of defending our national interests. We are now left with another kind of foreign policy, according to which wars are started because the princess of a neighboring kingdom rejects an offer of marriage, or the favorite of a neighboring king has a roll in the hay with our queen.

Lord Palmerston once said that Britain had no eternal allies, but that its interests were eternal and perpetual. The current denizens of the Kremlin no longer seem to have eternal interests, just the perpetual desire to rule.

Source: The Moscow Times

`Painful Transition' In Ukraine

KIEV, Ukraine -- Freedom from Kremlin influence was a cornerstone of the Orange Revolution. And yet, the politician building speed before pivotal parliamentary elections this spring wants his nation to cozy up to Russia, which recently shut off gas to Ukrainians in the dead of winter.

Yushchenko (L) and Yanukovych (R)
A year ago, Viktor Yanukovych's push for stronger ties with Russia would have been seen as a political death wish in a country awash in Orange Revolution euphoria.

Today, however, withering confidence in Ukraine's postrevolution leadership has made the unthinkable distinctly possible. The dismissal last week of President Viktor Yushchenko's prime minister and Cabinet was the result of the unlikeliest of collaborations: Yanukovych's bloc and lawmakers loyal to Orange Revolution leader Yulia Tymoshenko.

With parliamentary elections set for March 26, it is Yanukovych who leads in opinion polls.

Chaos within the Orange Revolution leadership has opened the door for Yanukovych to re-emerge as a potent force in Ukrainian politics.

Tymoshenko and Yushchenko complemented each other on stages during revolution rallies. Yushchenko was authoritative and measured, and Tymoshenko's fiery rhetoric inspired legions of demonstrators to blockade government buildings.

The chemistry disappeared

But once they were in power, the chemistry disappeared. Yushchenko gave her the post of prime minister but fired her in September amid corruption allegations that claimed other top Yushchenko aides. Tymoshenko embarked on her own opposition movement.

"If Yanukovych does well and Tymoshenko and Yushchenko cannot agree, that will mean the demise of the Orange Revolution," said Volodymyr Polokhalo, a Kiev political analyst.

Polokhalo and other experts fear the movement's dissolution would set the stage for a return to the kind of prerevolution governance that allowed corruption to flourish and the country's moneyed elite to dictate politics. Former President Leonid Kuchma's government was regarded as one of Europe's most corrupt, and Kuchma was implicated in the disappearance of a Ukrainian journalist later found slain in 2000.

The U.S. and Europe are major stakeholders in the parliamentary elections' outcome. Yushchenko's pro-West agenda would draw Ukraine closer to NATO and the European Union, and farther from the Kremlin's influence. Washington has cited Ukraine as an example of the kind of peaceful democratic change it would like to see in other former Soviet states.

"They're going through a painful transition," said Pavol Demes of the German Marshall Fund, an organization that promotes U.S.-European relations. "But I believe that the Ukrainian political scene will find a way to work through this period in a way that will not divert their course."

Many experts believe Russia's handling of natural gas price negotiations with Ukraine had the sole aim of punishing Yushchenko for pushing a pro-West agenda. The deal reached between the two countries' state-owned gas enterprises calls for the price of gas coming to Ukraine to double, to $95 per 1,000 cubic meters.

For the time being, Yushchenko's government has minimized the impact on household users. However, Ukraine's natural gas-reliant metals and chemical industries--as well as companies that buy supplies from those industries--will be hit hard by the price increase. Under the deal, prices could rise even more after six months.

"If prices grow, my company simply would not be able to compete," said Grigory Peredery, director of a cement manufacturer in the eastern city of Zaporozhye. "We probably would have to shut down."

The gas price increases are expected to weigh down an economy that has slowed considerably since Yushchenko's team took over. In 2004, Ukraine's gross domestic product growth was 12 percent; in 2005 GDP growth was just 3 percent.

Ukraine's poor economic outlook, coupled with the fierce infighting between the Yushchenko and Tymoshenko camps, have overshadowed dramatic changes in Ukrainian society brought about by the revolution, including the development of a free, robust media and a strengthening of civil society.

Ukrainians relish their new freedoms, but many say they expected much more from Yushchenko's first year.

"It seems that the Yushchenko team only had enough energy for the revolution itself, and none for the job that came afterward," said Volodymyr Babyak, 58, a Kiev computer technician. "Now it's clear that not much has changed at all."

That's the message Yanukovych is taking to voters as he crisscrosses the country. "The government in place now has not met the expectations Ukrainians had," he said last week.

A recent poll conducted by Kiev's Razumkov Center showed Yanukovych's party receiving 24 percent of the public's backing, compared with 16 percent for Tymoshenko and 13.4 percent for Yushchenko.

Parliament's powers expanded

But while Yanukovych is faring well in opinion polls, no party appears to have enough support to gain control of parliament. Parliamentary elections are crucial because a change in Ukraine's Constitution enacted Jan. 1 gives parliament the authority to hire and fire the prime minister and Cabinet.

Power in parliament will depend on what coalitions are built after the elections. Though Tymoshenko's bloc and Yanukovych lawmakers banded together to fire Yushchenko's government, Yanukovych last week ruled out any coalition with Tymoshenko.

A leading lawmaker for Yushchenko's Our Ukraine bloc also doubted that Yushchenko loyalists could work with Tymoshenko's camp.

"We see that she joins up with Yanukovych," said Our Ukraine lawmaker Ksenia Lyapina. "I cannot call Yanukovych orange, which means I cannot call Tymoshenko orange."

Source: Chicago Tribune

Recent Outcast Is Back in Favor in Ukraine Race

KIEV, Ukraine -- A campaign ad, broadcast repeatedly on television here, shows a man basking in the adulation of flag-waving crowds reminiscent of the protests that overturned the fraudulent election for president in 2004.

Viktor F. Yanukovich
But he is not Viktor A. Yushchenko, who rode those protests to the presidency, vowing to turn Ukraine into a free and prosperous democracy.

He is the man Mr. Yushchenko defeated, Viktor F. Yanukovich, the chosen heir of a discredited and unpopular government, who would have been president but for those huge street demonstrations and international diplomatic pressure.

A year ago, Mr. Yanukovich appeared disgraced, abandoned even by his own supporters. Now he leads a party predicted to win the most seats in the parliamentary elections that are only a little more than two months away.

Mr. Yushchenko, on the other hand, has been discredited by scandals, a worsening economy and internal disputes over policy that led him to fire a popular prime minister.

At a minimum Mr. Yanukovich could have a decisive role in choosing the new - and newly empowered - prime minister. He could even become prime minister himself, sharing power with his bitter rival. "We have set this goal: to win the election," Mr. Yanukovich said in an interview at his party headquarters in a 19th-century mansion here.

The March 26 election, in which thousands of candidates from 45 parties are competing for 450 parliamentary seats, will be the first electoral test of the political changes that Mr. Yushchenko promised during what became known as the Orange Revolution. But after a year of turmoil that culminated in popular anger over his handling of a dispute with Russia over natural gas, the prospects for Mr. Yushchenko's coalition are not promising.

In a poll released Friday by the Democratic Initiative Fund, Mr. Yanukovich's Party of Regions was favored by 31 percent of those who responded, compared with 13 percent for Mr. Yushchenko's bloc, led by the faction Our Ukraine. That is 3 percentage points behind the bloc of Yulia V. Tymoshenko, who served as his first prime minister until Mr. Yushchenko dismissed her in September amid mutual accusations of corruption.

"The work of the authorities has been ineffective," Mr. Yanukovich said, when asked about his striking reversal of fortune. "Everything that happened this year worsened the economic levels, increased instability inside the country and worsened the image of our state in the world. For those in Ukraine that supported Mr. Yushchenko, it was a year of disappointment. For the part that did not, it was a year of trial, including for myself."

The rebound of Mr. Yanukovich is, in fact, less about his successes than Mr. Yushchenko's failings since he was inaugurated a year ago.

While Mr. Yushchenko is often portrayed abroad as a reform-minded democrat seeking to realign Ukraine toward Europe and the United States, his reputation at home has suffered from one problem after another.

"He has a Gorbachev syndrome," said Mychailo Wynnyckyj, a professor of sociology at the University of Kiev-Mohyla Academy, referring to the former Soviet leader, Mikhail S. Gorbachev. "He looks better abroad than he does at home."

In the gas dispute, for example, Mr. Yushchenko appeared to have emerged victorious, having resisted Russia's demands for a nearly five-fold increase from the $50 per thousand cubic meters Ukraine was paying under a 2004 agreement.

But critics soon pounced on the new deal, which set the price on average at $95, publicizing details that the government had not, including the fact that the price was fixed for only six months and is likely to rise again. Members of Parliament and industrialists warned of harm to an already feeble economy and questioned the role of a murky gas-trading company with ties to Russia's energy monopoly, Gazprom.

Last Tuesday, Parliament voted to oust Mr. Yushchenko's prime minister and the rest of the government. At the time of the vote Mr. Yushchenko was in Kazakhstan, where he met with President Vladimir V. Putin of Russia to praise the deal as mutually beneficial to both countries.

In a televised interview on Friday night, Mr. Yushchenko called those who voted against the government "the fifth column, for which a petty corporate or party interest is superior to stability in Ukraine now."

The political turmoil has, for now, worsened his split with Ms. Tymoshenko, the charismatic populist whose public role in the Orange Revolution was second only to his.

Coalitions in Ukraine, however, are ever shifting, and one of her advisers, Hyrhory M. Nemyrya, said Ms. Tymoshenko still hoped for an accommodation that would reunite the forces that defeated Mr. Yanukovich, President Leonid D. Kuchma's chosen successor.

Mr. Yanukovich, in contrast to Mr. Yushchenko, has succeeded in holding together his supporters, predominantly Russian speakers in the industrialized east and south, areas where Mr. Yushchenko has been unable to gain support.

Mr. Yanukovich, a former mechanic who rose through the ranks of regional government in Donetsk before serving as prime minister, remains his party's leader despite his defeat and other liabilities, including having served almost four years in prison after a conviction for robbery and assault as a young man.

In the 2004 election Mr. Yanukovich had strong support from the Kremlin. He still vows not to change Ukraine's foreign policy at the expense of Russia, though he had to distance himself in the gas dispute.

"It was wrong to try to corner Ukraine," he said of Russia.

Mr. Yushchenko's foreign minister, Boris I. Tarasyuk, contends that despite Mr. Yanukovich's seemingly stronger position, Ukrainians overwhelmingly support the course Mr. Yushchenko has set: integrating the country into the European Union and NATO, while building a democratic society and a market economy.

He predicted a pro-Yushchenko majority in Parliament, saying, "There will again be a coalition that supports the president."

Ukraine's new Parliament will have expanded powers, including the role of electing the prime minister, who has been appointed by the president.

Mr. Wynnyckyj, the professor of sociology, predicted a different outcome: a chaotic period of political instability like Italy's ever-revolving Parliaments in the 1970's and 80's.

He said that even if a new government could be formed, it would soon collapse, forcing new elections by 2007, if not sooner.

"There's no chance of a coalition because the personalities are getting in the way," he said.

Much depends on the fate of smaller parties, 9 or 10 of which could each clear the 3 percent threshold for winning seats. A new one is an alliance of the Party of Reforms and Order, a liberal party that was once Mr. Yushchenko's, and Pora, the youth group that provided much of the zeal during the protests of 2004.

One of Pora's leaders, Vladyslav V. Kaskiv, even works as a presidential adviser, but decided to run independently out of a belief that Ukrainian politics needed a new generation of leaders. He said the three most prominent ones these days all possessed "the same values."

Mr. Kaskiv was optimistic, however, about one thing.

"Politics cannot return to what it was before," he said, articulating perhaps the greatest success of the Orange Revolution. "It could be better or worse, but it will be a democratic process."

Source: The New York Times

Ukraine's Parliamentary Speaker Says Reversal Possible

KIEV, Ukraine -- Ukraine's parliamentary speaker, Volodymyr Lytvyn, says last week's vote to fire the Cabinet could be revoked. But only if President Viktor Yushchenko agrees to replace a number of loyalist ministers with members of other political parties.

Volodymyr Lytvyn
That, he says, to ensure broader representation of popular opinion.

The vote to dismiss the Cabinet came last Tuesday, following a fierce dispute over natural gas prices with Russia.

The vote left Yushchenko and his supporters appearing severely weakened ahead of legislative elections in March. Yushchenko's party will need a strong showing in the polls to be able to form the next government.

President Yushchenko insists the lawmakers' decision to sack his Cabinet was illegal. And that parliament rescind the vote, or the decision will be ignored. He also says his government will carry no prefixes, such as "acting".

Yushchenko won office in December, 2004. His popularity has suffered though, since he's been unable to root out long-entrenched corruption and bring economic improvements.

Ukraine speaker Lytvyn plans to field his own party in the March elections. Polls show he could play a key role in any talks to form a coalition government after the vote.

Initially, Lytvyn was seen as a likely ally of Yushchenko. But Lytvyn's party strongly supported last week's sacking of Yushchenko's cabinet.

Source: CCTV

The Struggle for Power

KIEV, Ukraine -- Ukrainian President Viktor Yushchenko has announced hat he will hold a referendum on canceling the constitutional reform that will cut down his authority. However, even if a referendum is held, it won't help him.

Ukrainian President Viktor Yushchenko (L) is trying to stop power from slipping out of his hands.
The parliament is determined to reduce the presidency to a ceremonial function and Yushchenko is not in a position to prevent that power from slipping from his hands.

The Ukrainian president was exceptionally busy last week. On Friday, Yushchenko he was somewhere to be seen on television all day and, on Saturday, he made a speech on he radio.

His message mainly concerned the crisis of state that arose after the parliament passed a no-confidence vote against prime minister Yury Ekhanurov. The crisis was possible only because of the constitutional reform that began on January 1, he argued. He made it clear that he would cancel the reform that is undermining the foundations of the Ukrainian state.

Yushchenko said that he intends to put that reform up for a popular referendum. He did not name a date for that vote, however, add to the complexity of an already difficult situation before the parliamentary elections.

Former president Leonid Kuchma initiated the reform in his second term 2003. Kuchma wanted to weaken his successor and move into the prime minister's position. The country's Supreme Rada confirmed the reform, which would change the country from a president republic to a presidential-parliamentary republic, while in the throes of the Orange Revolution, on December 8, 2005.

Its passage was the result of a compromise reached between Kuchma and the opposition. Under the constitutional changes that came into effect on January 1, the parliament's authorities became significantly wider. The prime minister, ministers of defense and foreign affairs and all the rest of the administration is to be appointed by the parliament. In addition, governors will no longer be appointed by the president, but will be chosen by him after being proposed y the parliament.

Kuchma's reform never suited Yushchenko. However, he had to accept the changes during the Orange Revolution to avoid further conflict with the outgoing authorities. For almost a year, he did not attempt to dispute the reform. Then conflict with Yulia Timoshenko began and led to the dismissal of her government.

Yushchenko did not motivate the cancellation of the reform with objections to them, but with procedural violations in the way they were carried out. “With such changes and such procedures, Ukraine will have a complicated future,” he said.

Under the current Ukrainian constitution, the president's initiative is enough for the holding of a referendum. However, Yushchenko is most likely bluffing. Only the Constitutional Court can establish that there were violations in the way the reform was passed and the results of a referendum can only be recommendations for the government. Therefore, political scientists say, a referendum would have no legal consequences.

Yushchenko came up with the idea of a referendum for lack of alternatives. He cannot cancel the reform legally, in the Constitutional Court. The Constitutional Court is now inactive in Ukraine. Only six of the necessary 18 judges have been appointed and the parliament has been refusing to appoint the remaining members since last year. The opposition parties allied to block the appointment of four judges last Thursday.

Acting Minister of Justice Sergey Golovaty proposed that the president get around the opposition by appearing in the parliament along with the chairman of the Supreme Court and the members of the Constitutional Court and swear in new judges “against the will of [Speaker of Parliament Vladimir] Lirtvin.”

Members of the opposition threatened Golovaty with the loss of his position in return. “The president and the chairman of the Supreme Court could find themselves in an inconvenient position when they are not allowed into the camber,” Litvin warned.

The conflict between the president and the parliament seems insolvable. It is useful for the opposition because it allows it to weaken the president's position. When asked at the end of last week if she would run for president, Timoshenko answered “Not under any conditions.

After January 1, 2006, the position of president will be on the level of the manager of the city architectural authority. I plan to carryout a policy so that the people understood sooner or later that they can depend on me in the most complex circumstances and elect me their prime minister.”

The current political situation in Ukraine is reminiscent in its essence of position of Russian authorities in October 1993. The Orange Revolution and Yushchenko's rise to power was analogous to Russia in 1991. However, a year after the Maidan, the victors' team fragmented and the parliament, controlled by former allies of the president, is hindering him at every step in its efforts to wrest power from his hands.

For lack of legal instruments in this fight, Yushchenko has been forced to appeal to the people. He can theoretically keep his power by dissolving the Rada and passing a new constitution without it. In reality, he does not have the strength to do that. He has no broad support in society, because neither the Orange forces nor their opponents will accept such a move.

The security forces are not loyal either. The biggest of the, Interior Minister Yury Lutsenko, is a representative of Alexander Moroz's socialist party, and political reform has always been a propriety for that party. The transition to parliamentary republic was a condition for Moroz's support of Yushchenko during the presidential elections. That means that the Ukrainian 1993 will not turn out the way the Russian one did.

Source: Kommersant

Kiev In A Squeeze

KIEV, Ukraine -- Victor Yushchenko, Ukraine's president, is looking increasingly isolated in his efforts to restore confidence in his country's fragile democracy. With the supporters of the Orange Revolution disillusioned and divided, its enemies are rushing to take advantage.


Leading the charge is Moscow, which longs to overthrow the pro-west president and bring Ukraine back into Russia's orbit.

Mr Yushchenko's main difficulty is that, under the deal that saw his predecessor Leonid Kuchma surrender office peacefully just over a year ago, power is being transferred from the presidency to parliament. In theory this should strengthen Ukrainian democracy by reducing the possibility of a future president establishing a Kuchma-style authoritarian regime.

In practice, the reform is moving power from Mr Yushchenko - the one man who was able to rally Ukraine's democratic forces - to an assembly riddled by corruption and self-interest and easily exploited by the Kremlin. With parliamentary elections due in March, deputies are more concerned about saving their seats than saving the country.

It comes as no surprise that Mr Yushchenko's opponents in the Orange Revolution and their supporters in the Kremlin are seeking revenge. Victor Yanukovich, the defeated challenger in the disputed presidential election, tasted power as Mr Kuchma's prime minister and wants more. Russian president Vladimir Putin disdains the freedoms that Mr Yushchenko represents.

The recent attempt to put pressure on Kiev in the gas dispute showed Russia was ready to sacrifice other interests - such as the trust of its European gas clients - to punish Ukraine.

The real shock of the last year lies in the failure of Mr Yushchenko and his former ally Yulia Tymoshenko to capitalise on the Orange Revolution. It is true, as Mr Yushchenko argues, that Ukraine has been transformed by the advance of liberty. The fear of the secret police has gone.

But the split between Mr Yushchenko and Ms Tymoshenko, who was sacked last summer as prime minister, has stymied efforts to advance reforms.

It is of vital importance to the European Union that Ukraine remains a functioning democracy in which the influence of the authoritarians in the Kremlin is kept to a minimum. Russia, as a powerful neighbour, has legitimate interests in Ukraine. But it should pursue them without undermining Ukrainian sovereignty.

The EU should last year have replied more warmly to Mr Yushchenko's overtures. If it could not have offered the promise of future membership, it could at least have hinted at the possibility. But even a glowing EU responsewould have made little difference to Mr Yushchenko.

Ukrainian democracy must be built mainly by Ukrainians themselves. Just as they won the Orange Revolution largely by their own efforts, so they must now safeguard its legacy.

Source: Financial Times

12,000 Rally to Support Yushchenko

KIEV, Ukraine -- Some 12,000 supporters of Ukrainian President Viktor Yushchenko rallied in two western cities Sunday, criticizing his former ally, Yulia Tymoshenko, for pushing to oust the Cabinet over a hike in gas prices.

President Viktor Yushchenko
The rallies in Lviv and Ivano-Frankivsk were organized by the Our Ukraine party, which Yushchenko headed before his election in December 2004 on the wave of the Orange Revolution protests.

The TV5 television channel showed a crowd of some 10,000 Yushchenko supporters in his western stronghold of Lviv on Sunday waving orange flags and holding banners that read: "Yulia, get away! Yushchenko -- yes!"

Tymoshenko's "personal ambitions turned out to rise above national interests," Yushchenko's representative in the parliament, Yuriy Klyuchkovskiy, told the rally in Ivano-Frankivsk, Interfax reported. Some 2,000 people attended the rally.

Last week, the parliament voted to fire the Cabinet following a fierce dispute with Russia over its bid to more than quadruple the price for gas supplied to Ukraine. The dispute ended with a deal that nearly doubled the price Ukraine is paying for Russian and Central Asian gas.

Tymoshenko and other Yushchenko opponents united in condemning the deal for allegedly violating the country's interests.

"That was not a gas agreement, that was a deal against Ukraine's independence," Tymoshenko told reporters during her brief visit to Lviv on Sunday.

Yushchenko called the parliament vote "illegal" and reiterated that Ukraine has a "fully fledged" government that would work until a new Cabinet is appointed after the March 26 vote.

Yushchenko fired Tymoshenko as prime minister in September, complaining that her economic policy had driven the country to the brink of collapse.

Tymoshenko, who was a driving force behind the Orange Revolution, is hoping that her bloc will win enough votes in the parliamentary elections to recapture the prime minister's post.

Source: The Moscow Times

Russian Navy Warns Ukraine Not To Capture Any New Naval Facilities

MOSCOW, Russia -- Russian Navy today warned Ukraine not to capture any new facilities of the hydrographic service of the Russian Black Sea Fleet.

Russian Navy Capt Igor Dygalo
The Russian navy will not permit any new seizures or penetration of other facilities of the hydrographic service of the Russian Black Sea Fleet, spokesman for the Russian Navy Capt Igor Dygalo told Itar-Tass news agency.

He was commenting on a statement by the Ukrainian Ambassador Viktor Semenov which said Ukraine intended to establish control over all facilities of the hydrographic service of the Russian Black Sea Fleet in the Crimea over the next few months.

The Russian navy will not permit a seizure or penetration of other facilities of the Fleet’s hydrographic service, Mr Dygalo said, adding,''for this purpose, we have reinforced protection of these facilities. If attempts are made to penetrate them, protection will be reinforced in compliance with the Regulations of Garrison and Patrol Service." "The position of the main headquarters of the Russian Navy concerning the seizure by the Ukrainian side of the Yalta lighthouse on Friday remains the same. It must be returned to the hydrographic service of the Russian Black Sea Fleet," he noted.

Mr Dygalo said the command of the Russian Navy was sure that all questions surrounding the Ukraine’s seizure of the Yalta lighthouse, would be settled only through negotiations and in compliance with operating acts.

Any other way of settling problem will aggravate the situation, he pointed out.

The Russian and Ukrainian delegations could not reach any agreement during their talks yesterday at Sevastopol, the base of the Russian Black Sea Fleet.

"Naval officials will continue efforts to settle the situation in a civilized way through negotiations proceeding from the agreement on the Black Sea Fleet's stationing in the Crimea," Mr Dygalo said.

Source: WEbIndia

Russia Navy Action On Ukraine Outpost

MOSCOW, Russia -- Russia’s naval command ordered its Black Sea fleet yesterday to take control from Ukraine of the Yalta lighthouse, a disputed outpost on Ukraine’s Crimean shore and the object of the latest clash between the rival neighbours.

“The position of the Russian naval headquarters is firm: the Yalta lighthouse must be returned to Russian hydrography services and must function normally in order to ensure the security of navigation in the Black Sea region,” Russia’s naval commander-in-chief Vladimir Masorin said.

“I have given the order to the commander of the Black Sea fleet to take back control of the lighthouse, by use of methods of civilised discussion,” Masorin was quoted by Interfax as saying.

The move to seize control of the beacon intensifies a larger dispute about Russia’s lease of Ukrainian territory for its Black Sea warships, and amid intense rancor over a price hike Russia recently imposed on its natural gas sales to Ukraine.

Under a lease agreement signed in 1997, Moscow pays Kiev just under $100mn (83mn euros) annually to lease land and property for its Black Sea headquarters in Sevastopol, the southern Crimean port where the fleet was based in the Soviet era.

Last month Ukraine talked of quadrupling the cost of the lease payments. Russia has said the lease cannot be revised.

Russia accused Ukraine of “seizing” the Yalta lighthouse on Friday during a maintenance trip to the beacon.

Captain Igor Dygalo, a Russian navy spokesman, said an eight-member team from the Ukrainian transport ministry “illegally entered the Yalta lighthouse under the pretext of maintaining the site and equipment, and then blocked access to Russian personnel”.

He described the move as one of “pure provocation”.

A Ukrainian foreign ministry spokesman rebuffed the charge, saying that “all hydrographic sites and navigation equipment on the Crimean coast, including the beacon for the Yalta commercial seaport, are the property of Ukraine”.

He said the lease allowing the presence of Russia’s fleet did not also include the “lease” of surveying and navigation equipment in place.

“What is more, this is outlawed by the laws of the country,” the spokesman added.

In a parallel, long-running dispute over natural gas pricing, Russia earlier this month cut off gas supplies to Ukraine after sharply hiking its rates and triggering panic throughout Europe, which relies on Russian gas shipped through Ukrainian pipelines.

The two countries agreed on a complex new deal on January 4 that virtually doubles Kiev’s rates but leaves them far below Moscow’s demand of a four-fold hike.

The agreement has been fiercely condemned by Ukraine’s political opposition.

Source: AFP

Russia, Ukraine In Lighthouse Spat

CRIMEA, Ukraine -- Russia has ordered its Black Sea fleet to use "civilised discussion" to secure the return of a Crimean peninsula lighthouse claimed by Ukraine, and end the latest diplomatic spat between the two neighbours.

Russian Admiral Vladimir Masorin
Vladimir Masorin, the commander in chief of Russia's navy was quoted by Interfax news agency as saying: "The position of the Russian naval headquarters is firm: the Yalta lighthouse must be returned to Russian hydrography services and must function normally in order to ensure the security of navigation in the Black Sea region,"

"I have given the order to the commander of the Black Sea fleet to take back control of the lighthouse, by use of methods of civilized discussion."

A Russian navy spokesman said that a group of seven unidentified people had tried to enter another lighthouse in Crimea. The report offered no further details and could not be immediately confirmed.

'No legal basis'

Ukraine's foreign minister, Boris Tarasyuk, insisted that lighthouses in Crimea belonged to Kiev.

"You can't seize something that's yours," he told Interfax. "Russia has unlawfully held onto all hydrographic sites... There is no legal basis for Russia to insist that these sites are part of the Black Sea fleet."

A top foreign ministry official later told reporters that Russia today "unlawfully" controls 35 out of the 100 hydrographic sites in Crimea.

Russia accused Ukraine of "seizing" the Yalta lighthouse during a maintenance session on Friday.

Captain Igor Dygalo, a Russian navy spokesman, said that in a move of "pure provocation," an eight-member team from the Ukrainian transport ministry "illegally entered the Yalta lighthouse under the pretext of maintaining the site and equipment, and then blocked access to Russian personnel."

The dispute over the lighthouse is the latest episode in an ongoing dispute over Moscow's lease of Ukrainian territory for its Black Sea fleet.

Under a lease agreement signed in 1997, Moscow pays Kiev just under 100 million US dollars annually to lease land and property for its Black Sea headquarters in Sevastopol, the southern Crimean port where the fleet was based during the Soviet era.

Gas row

The latest spat also comes after Russia recently imposed a price hike on its natural gas sales to Ukraine.

During the standoff over the gas price, Ukraine suggested that it could put up the cost of lease payments to bring them in line with what other governments pay to house military bases abroad. Russia has said the lease cannot be revised.

Russia earlier this month cut gas supplies to Ukraine after sharply hiking its rates and triggering panic throughout Europe, which relies on Russian gas shipped through Ukrainian pipelines.

The two countries quickly agreed on a complex new deal on 4 January 4 that virtually doubles Kiev's rates but leaves them far below Moscow's original demand of a four-fold hike. The agreement has been fiercely condemned by Ukraine's political opposition.

Relations between Russia and Ukraine have deteriorated after the 2004 "orange revolution" presidential election saw Viktor Yushchenko, who has vowed to drive the ex-Soviet republic toward membership of the European Union and NATO, defeat the Moscow-backed candidate Viktor Yanukovych.

Source: AFP

Russia and Ukraine Embroiled In Fresh Conflict Over Lighthouse

MOSCOW, Russia -- Moscow and Kyiv headed into a fresh conflict Saturday over the status of a Ukrainian lighthouse used for navigation by Russia's Black Sea Fleet, fuelling tensions between the two former Soviet countries after their recent gas dispute.


Russia's navy chief insisted that Ukraine return the lighthouse in the Crimean city of Yalta. Moscow says it was seized illegally from its Black Sea Fleet, based in Ukraine under an 1997 agreement that divided up the old Soviet Black Sea Fleet.

But Ukraine's Foreign Ministry insisted that Russia had no right to control access to this and other lighthouses on the Crimean coast.

Employees of Ukraine's state hydrography company entered the lighthouse on Friday and barred their Russian counterparts from access to the site according to Russian officials.

Adm. Vladimir Masorin, commander of the Russian navy, demanded its immediate return.

"The Russian navy command's position is firm: the Yalta lighthouse must be reincorporated into the Black Sea Fleet's hydrographic service and function properly to ensure safe navigation in the Black Sea region," Masorin was quoted as saying by the Interfax news agency.

The Russian Navy's Black Sea Fleet, based in the port of Sevastopol, provides the Russian navy its only convenient access to the Mediterranean.

Ukrainian Foreign Ministry official Viktor Semenov dismissed the Russian demands, saying that Kyiv intended to reclaim control of all lighthouses currently occupied by the Russian navy.

"Lighthouses located on the Crimean seashore were, are and will remain Ukraine's property beginning from the moment of obtaining independence," with the break up of the Soviet Union in 1991, Semenov said.

"All these facilities will be returned to Ukraine's property in the nearest future," he added.

He said that there are 100 lighthouses on the Crimean seashore, and only 65 of them have been returned to Ukraine since 1997.

The remaining 35 are still operated by Russian naval personnel, which is "illegal," he told reporters in Kyiv.

Later, the Russian navy announced that a group of Ukrainians had tried unsuccessfully Saturday to break into a second lighthouse in Sevastopol. Russian state television said they were from nationalist youth organizations.

After years of bitter arguments, Russia and Ukraine signed a 1997 agreement on the division of the Soviet Black Sea Fleet that allowed the Russian navy to remain in the Crimean port of Sevastopol until 2017.

During a recent fierce dispute over the price for Russian natural gas supplied to Ukraine, Ukrainian officials said they could consider raising the $93 million US annual rent Moscow pays for the use of Sevastopol.

Ties between Moscow and Kyiv have been increasingly tense since pro-Western President Viktor Yushchenko came to power last year and launched a drive to shake off Russian influence in the former Soviet republic and integrate with western Europe.

Source: AP

Ukraine Wants To Produce Own Nuclear Fuel

KIEV, Ukraine -- Ukrainian President Viktor Yushchenko said Friday that his country should produce its own nuclear fuel for power plants, part of the West-leaning leader's effort to reduce its reliance on Russia following a dispute over natural gas prices.

We must change our uranium policy - our policy on the use of uranium for peaceful purposes," Yushchenko said on national television. "We must cooperate with international allies on a serious political and economic level so that we can have a full cycle of processing and production of nuclear fuel."

Yushchenko's call could put his Western allies in an awkward position as they seek to balance the desire to help Ukraine shed Russian influence with concerns about nuclear weapons proliferation and their campaign to contain Iran's nuclear ambitions.

The announcement came after Moscow and Kiev ended a public fight over natural gas with a deal last week that nearly doubled the price of gas for Ukraine and drew protests from Yushchenko's opponents ahead of March parliamentary elections.

The compromise was reached only after Russia briefly cut off gas supplies to Ukraine, whose pipelines pump most of the gas Russia exports to Europe.

Ukraine is the site of the world's worst nuclear accident, the 1986 explosion and fire at a reactor at the Chernobyl plant, which has been shut for good. Nearly two decades later, the nation of 47 million relies on four operating nuclear power plants for about half its electricity production - and it depends on Russia for fuel that feeds them.

Ukraine supplies Russia with raw uranium, then buys it back after enrichment; a full nuclear cycle means that Ukraine would be enriching uranium by itself. Uranium enrichment is a possible pathway to the development of nuclear arms, but Yushchenko insisted his country - a member of the International Atomic Energy Agency, the U.N. nuclear watchdog - had only peaceful intentions.

Yushchenko's announcement came amid a mounting international standoff over Iran's refusal to give up uranium enrichment, and against the background of calls to halt the spread of enrichment facilities.

IAEA chief Mohamed ElBaradei has proposed a moratorium on the construction of any new enrichment plants, and President Bush has proposed principles that would limit enrichment technology to countries that already carry it out.

Yushchenko's call for a nuclear cycle poses "a dilemma for the Bush administration," said Edwin Lyman, senior staff scientist at the Union of Concerned Scientists, a private nuclear proliferation watchdog group. "This is an ally. They want to support an independent Ukraine that can stand up to Russia ... but it would violate this policy that Bush has proposed."

Ukraine is not barred from enriching uranium under the Nuclear Nonproliferation Treaty or IAEA rules, and the nation that inherited the world's third-largest nuclear arsenal with the 1991 Soviet collapse has proved trustworthy in proliferation matters. It renounced nuclear weapons and transferred some 1,300 nuclear warheads to Russia for disarming.

But while Yushchenko - who beat a Russian-backed candidate in an election struggle just over a year ago - has friendly ties with Europe and the United States, Lyman said the potential for further political turmoil in Ukraine could raise concerns about what future leaders would do with a fuel cycle, warning that enrichment facilities can be retooled for weapons purposes relatively easily.

IAEA officials said they had no comment late Friday.

Yushchenko said providing Ukraine the capability of producing its own nuclear fuel was part of his plan for creating "an independent energy balance" within five years. He also said the nation should diversifying gas supplies and developing its own gas fields.

His call for a fuel cycle could face major financial obstacles in the economically struggling country. At least in part, it may have been meant as a public display of independence and industriousness ahead of the parliamentary elections - and a message to the West that Ukraine needs more support for its effort to cut reliance on Russian energy.

Source: AP

Ukraine's Parliament Extends Session Amid Turmoil

KIEV, Ukraine -- Ukraine's parliament has extended its session by one week as the row with the President over the terms of a costly gas deal with Russia rumbled on.

Ukrainian Prime Minister Yuriy Yekhanurov gestures during an interview with the Associated Press in his office in Kiev, Ukraine.
The Parliament and President Viktor Yushchenko are each accusing the other of violating the constitution after deputies voted to dismiss the government over the deal, just two months before a parliamentary election.

Speaker Volodymyr Lytvyn said the session would be prolonged until January 20 following Mr Yushchenko's request for parliament to stay on to pass a number of laws that were key to supporting the economy.

It had planned to go into recess on Friday and reconvene on February 17.

"The President wants the passage of another 30 laws," Mr Lytvyn told deputies during the discussions.

A total of 241 deputies in the 450-seat chamber backed the move.

Ukraine was plunged into a constitutional crisis when parliament voted on Tuesday to sack the Government of Prime Minister Yuri Yekhanurov over the deal under which Ukraine will pay almost double for its natural gas imports from Russia.

Mr Yushchenko says the vote was unconstitutional and has demanded parliament retract it.

He has also said Mr Yekhanurov will stay on as premier until the March 26 elections.

Mr Yushchenko's one-time ally and now rival, former prime minister Yulia Tymoshenko, said the President's demands were unconstitutional and told him to "rethink his role".

The parliamentary election, the first since the West-leaning Yushchenko came to power after the "Orange Revolution" of mass protests in December 2004, will usher in a new system which shifts some powers to parliament from the presidency.

Analysts say the chances of parliament reversing its vote against the government are slim since Ms Tymoshenko has joined forces with the opposition representing the administration ousted in 2004.

Mr Yushchenko allies have less than one third of votes at the moment.

The extension of the session will also provide parliament with time to push the government for more details on the gas deal with Russia.

Ukraine and Russia agreed on higher prices for gas imports this year following months of bitter disputes which peaked on January 1 when Russia's gas giant Gazprom cut off supplies to Kiev, briefly hurting its customers in Europe.

Under the new deal, Ukraine will start paying $US95 per 1,000 cubic meters of gas compared with $US50 previously. The increase is much lower than $US230 initially demanded by Russia but deputies remain angry over the plan.

Source: Reuters

Russian and Ukrainian Leaders Confirm the Gas Deal

MOSCOW, Russia -- Russian President Vladimir Putin met Ukrainian President Viktor Yushchenko in the Kazakh capital of Astana on Wednesday. The Ukrainian leader said after the talks that his country would not violate “a single letter” of the gas agreement with Russia.

Russian President Vladimir Putin (R) was happy to say that there had never been a more professional group of people in office in Kiev than Viktor Yushchenko's (L) team.
Russian President Vladimir Putin met Afghan President Hamid Karzai in Astana, after the swear-in ceremony of the newly elected Kazakh President Nursultan Nazarbaev. These days Astana welcomed high-ranking delegations from neighboring countries, including Russia and Ukraine whose leaders and top energy officials met in the Kazakh capital to confirm their adherence to the new gas deal.

Russia and Ukraine made “difficult but mutually beneficial decisions”, as Russian President Putin underscored. Ukrainian President said that the two countries had gone “one of the toughest paths” over the last two months and congratulated his counterpart on the accords that were signed.

The Russian president would not comment on the recent anti-governmental vote at the Ukrainian parliament but his Ukrainian counterpart said that the gas crisis was just a pretext for the decision of the Supreme Rada’s to sack the government.

Russian President Putin called the gas agreement “a shared choice of the two nations in favor of new relations”. “We are happy to state that we are finally dealing with the people in Kiev who know their minds and business,” Putin lauded Yushchenko’s team. Viktor Yushchenko, in this turn, ruled out any review of the deal. “I am ready to confirm each article of this agreement,” he declared.

Source: Kommersant

Yushchenko Takes Steps To Restore Authority

KIEV, Ukraine -- Ukraine’s political crisis ratcheted up several notches on Thursday as President Viktor Yushchenko challenged parliament to withdraw its vote of no confidence, and put an end to his four-month truce with the opposition.

Ukrainian President Viktor Yushchenko speaks at a news conference in Kiev, Ukraine, Thursday, Jan. 12, 2006. Yushchenko demanded Thursday that parliament rescind its call to dismiss the government, calling it an attempt to destabilize the country.
At a cabinet meeting Mr Yushchenko accused the parliament of seeking to destabilise the country and insisted his government would continue in office.

He told the meeting: “Today I signed an appeal to parliament with a demand to cancel the unconstitutional decision to sack the government. This government will form and implement executive policy ... until a new cabinet is appointed after the parliamentary election in March.”

The justice minister Serhiy Holovaty issued a statement on Thursday saying that Tuesday’s vote was invalid because it fell short of the two-thirds majority required – only some 56 per cent of deputies voted in favour.

Mr Yushchenko also tore up the memorandum of cooperation that he signed with the main parliamentary opposition in September. The move raises the possibility that Mr Yushchenko may once again seek to pursue political opponents in the courts for their part in the electoral fraud that sparked the “Orange Revolution” in November 2004.

“Today I withdraw my signature from the memorandum of cooperation between the government and the opposition, which we signed in September, because the other side has broken the fundamental principle of this agreement: cooperation in developing joint efforts to stabilise the internal political situation in Ukraine,” Mr Yushchenko said.

In a further sign of the president’s intention to regain the political initiative, the administration hinted at a national referendum on the constitution, which would seek to restore to Mr Yushchenko powers that he relinquished to parliament on January 1 under a key settlement during the Orange Revolution which cleared the ground for a political resolution to the crisis.

In an interview reported on Bloomberg News, Oleg Rybachuk, the head of Mr Yushchenko’s secretariat, said the National Security and Defence Council would meet to discuss a referendum “in the very near future”.

Mr Yushchenko also vowed to challenge the vote in the Constitutional Court, but in a further twist to the crisis parliament on Thursday refused to ratify nominees for judges, effectively paralysing the court.

In response to Mr Yushchenko’s decision to renege on the memorandum of understanding, opposition leader Viktor Yanukovych raised the spectre of separatism which threatened to split the country between its pro-western north-west and pro-Russian south-east during the Orange Revolution.

Mr Yanukovych said that Mr Yushchenko had demonstrated that he was president of “only one half of the country”.

“When we signed the memorandum we put the interests of the people, of unity, above party interests. It’s a pity the president has ended this process, but it is he who did so, not us,” he said, according to his press office.

Mr Yanukovych’s opinion poll rating has improved markedly since the gas dispute with Russia broke out.

Mr Yushchenko emphasised his intention to observe the terms of the agreement with Russia on gas imports to Ukraine, signed last week.

In a thinly-veiled attack on his former prime minister, the populist Yulia Tymoshenko, who is alleged to have made a fortune from trading gas in the 1990s, Mr Yushchenko said: “I know how those people who now want to become advisers on avoiding a gas crisis used to steal billions [of dollars worth] of gas.”

Source: Financial Times

Yushchenko Demands MPs Rethink

KIEV, Ukraine -- Ukrainian President Viktor Yushchenko said on Thursday he had demanded parliament cancel its vote to dismiss the government, deepening the political crisis over a costly new gas contract with Russia.

Ukrainian President Viktor Yushchenko speaks to Cabinet members in Kiev, Ukraine, Thursday, Jan. 12, 2006.
"Today, I signed an appeal to parliament with a demand to cancel the unconstitutional decision to sack the government," Yushchenko told the opening of a government meeting.

Expressing support for the government of Prime Minister Yuri Yekhanurov, he said: "Today Ukraine has a full-fledged government in the center and in the regions."

Tuesday's vote by parliament was led by opposition MPs who analysts said were using anger over the new gas contract with Russia last week with Russia to undermine Yushchenko's supporters ahead of a March 26 parliamentary election.

Yushchenko said he was withdrawing his signature from a memorandum of cooperation with the political opposition because he said it had violated the agreement.

Under the memorandum, the authorities pledged to halt criminal prosecution of some opposition figures alleged to have been involved in rigging the 2004 presidential election.

The West-leaning Yushchenko came to power after an "Orange Revolution" of street protests overturned the result of that disputed poll that had produced a pro-Moscow winner.

Credit ratings agency Fitch meanwhile downgraded its outlook for Ukraine to stable from positive on the political turmoil, saying it could put the brakes on vital economic reforms. Fitch kept its BB- rating for Ukraine, which is below investment grade.

"The formation of the next government could be a prolonged affair and ... the outcome may be a weak coalition vulnerable to splits," Sharon Raj, sovereign ratings analyst at Fitch in London, said in a statement.

Ukraine's hryvnia currency earlier on Thursday eased to a new 9-month low, with the central bank offering no support, after it stepped in with dollar-selling intervention on Wednesday.

Yield premiums on Ukrainian bonds widened by 5 basis points to 192 basis points over U.S. treasuries, according to JP Morgan's EMBI+ index.

It was not clear how parliament would react to Yushchenko's demands.

His allies do not have a majority in parliament where his onetime ally, but now rival, Yulia Tymoshenko joined forces with factions representing the ousted administration in the "Orange Revolution".

Parliament closes for winter holidays on Friday and will reopen again on February 7.

Source: Reuters

Ukraine Unstable: Yushchenko

KIEV, Ukraine -- Ukraine's President Viktor Yushchenko has warned that the sacking by the country’s parliament of his pro-Western government over a controversial gas deal with Russia would destabilise the country.

Ukrainian President Viktor Yushchenko
The unprecedented move came less than three month’s before a key Ukraine’s parliamentary election.

"This decision is incomprehensible and illegitimate," Mr Yushchenko told reporters in Kazakhstan, where he attended the inauguration of President Nursultan Nazarbayev.

"This decision means only one thing: the destabilisation of the situation" in the country, he said.

Mr Yushchenko spoke a day after the parliament passed a resolution of no confidence in Prime Minister Yury Yekhanurov's government amid criticism of a deal that the cabinet struck with Russia.

This nearly doubled the price of the gas that Ukraine buys to meet most of its annual energy needs.

The agreement ended a standoff that disrupted gas supplies and sent shudders through Europe, which receives nearly one fifth of its annual gas imports from Russia via Ukraine.

Election reasons

Most analysts and many politicians in Kiev said the gas deal was only an excuse for the opposition to wound the pro-Yushchenko forces ahead of a March 26 parliamentary poll, which will decide the future of the pro-Western course that the president has set for the former Soviet republic.

"Any deal would have made the government the object of attacks," said Olexander Dergachyov, the editor of a political magazine in Kiev.

Andriy Yermolayev, a political analyst, agreed: "The main reason for the sacking is the upcoming parliamentary election."

The sacked premier heads the election list of the pro-Yushchenko Our Ukraine bloc and the opposition is counting on it losing credibility in the eyes of the voters, analysts say. But bloc officials dismissed the possibility.

"I think that we will only win as a result... because we have demonstrated tolerance and professionalism," Roman Bezsmertnyi, a top leader of the bloc said in televised comments.

Our Ukraine currently trails the party of the victim of Mr Yushchenko's "Orange Revolution", former premier Viktor Yanukovich by 10 to 15 percentage points in opinion polls.

With parliament due to close for its three-week winter recess on Friday, most pundits and politicians expected Yekhanurov's government to continue in a caretaker capacity up until the March poll.

"Yekhanurov will continue to run the country until the elections," the
Segodnya newspaper wrote.

Tuesday's vote passed with 250 votes, well above the 226 needed in the 450-seat Upper Rada.

Unusual coalition

The resolution was supported by an unusual coalition that included the parties who opposed Mr Yushchenko during last year's "orange revolution" and the bloc of Yulia Tymoshenko, the fiery revolution heroine who split with the Ukrainian leader after he fired her government in early September.

Tuesday's vote to sack the government followed a deal that Mr Yekhanurov's cabinet struck with Russia on January 4 to end a bitter standoff over natural gas prices.

Under the accord, Ukraine agreed to buy natural gas from Russia and
Turkmenistan, which accounts for nearly 75 percent of its annual energy needs, at a price of 95 dollars per 1,000 cubic meters.

Previously it bought Russian gas under a barter system for 50 dollars per 1,000 cubic meters, and Turkmen gas for between 44 and 60 dollars per 1,000 cubic meters.

The price reached under the accord was well below the 230 dollars per 1,000 cubic meters that Russia had been demanding.

But the complex accord, which still has yet to be officially released by either side, appears to set the price of 95 dollars only for the first six months of 2006, with the later price to be set by an as yet undetermined formula.

Source: World News Australia

The Gongadze Trial

KIEV, Ukraine -- With word that there’s been a two-week delay called in the trial of three former city policemen fingered in the murder of muck-raking journalist Georgy Gongadze, we again beg the question: Will justice in this case ever be done?

Typical small Ukrainian courtroom
Kyiv Appeals Court Judge Irina Hrihoriyeva abruptly called a halt to the proceedings Jan. 9, which finally began after many delays, citing a medical condition of one of the defendants.

Rumor has it she’s looking for a larger courtroom in which to have the closed-door proceedings continue, but being known as a stickler for the rules, it’s more likely she called for the delay because word got out that too many journalists had snuck into the courtroom.

Despite the obvious implications this case has for free speech and the justice system in Ukraine, journalists have been given restricted access to the tiny courtroom, an irony that likely isn’t lost on Gongadze’s widow, Myroslava Gondadze, or Gongadze’s lawyer, Andriy Fedur, who said the courtroom’s size seems chosen to effectively bar the general public and media from following what’s going on.

Whether that’s true or not, the whole affair doesn’t help President Viktor Yushchenko’s image in this matter, what with his promises to reform the justice system and calling the matter of solving Gongadze’s murder “a matter of honor.”

Enough is enough, we say. Find a bigger courtroom, bring in some doctors to soothe the defendants, let justice be done, and find a way for the press to report on what is likely the most important criminal case in Ukrainian history. The world is watching, even if Ukraine’s public can’t.

Source: Kyiv Post

Putin, Yushchenko Defend Gas Deal

ASTANA, Kazakhstan -- Barely a week after Moscow and Kiev were accusing each other of theft and blackmail, President Vladimir Putin and his Ukrainian counterpart, Viktor Yushchenko, hailed the controversial deal that ended their tense standoff over gas supplies as fair and in line with "market economy principles."

Russian President Vladimir Putin(R) welcomes his Ukranian counterpart Viktor Yushchenko to a meeting in Astana. Yushchenko warned that the sacking of his pro-Western government by lawmakers over a controversial gas deal with Russia would destabilize the country, less than three months before a key parliamentary election.
During a news conference Wednesday in Astana, where the two leaders attended the inauguration of Kazakh President Nursultan Nazarbayev, Putin and Yushchenko stood side by side and sought to put a positive spin on the deal, both saying it was "mutually beneficial."

Yushchenko's comments came a day after his government was thrown into turmoil by a parliamentary vote for the ouster of his Cabinet over the deal, with his former Orange Revolution ally Yulia Tymoshenko accusing him and his government of striking a deal that was unfavorable to Ukraine.

Wednesday's briefing followed a meeting, part of which was televised, where the two leaders sat in armchairs and swapped what appeared to be light banter, good-naturedly interrupting each other mid-sentence.

Putin began the news conference by praising the deal, under which Ukraine will pay an average of $95 per 1,000 cubic meters for gas in 2006, nearly double the price it paid last year. Gazprom had demanded that Ukraine pay $230 instead.


"This choice was made with full respect and taking the interests of both sides into account," Putin said.

"I would like to say that we are very pleased that after many years of relations with Ukraine we finally have people in Kiev who do what they say," he said.

Yushchenko said that the fierce dispute had even served a useful purpose, as the deal reached was "mutually beneficial" for Russia and Ukraine.

"Over the last two months, we went though a rather difficult and turbulent period, but I believe it was mutually beneficial," Yushchenko said. "We came to principles that are clear and transparent."

He added that the deal would "get rid of suspicions that Russia sells gas to Ukraine for half of the price and that Ukraine pumps it farther for [the other] half of the price."

The gas dispute has tarnished Russia's reputation as a reliable energy supplier in the eyes of the West and has led several European countries to look into alternatives to getting their gas supplies from Russia. The deal has been widely criticized for giving secretive Swiss-registered middleman Rosukrenergo the potential to export gas from Ukraine and to divert profits from Gazprom.

On Jan. 1, Gazprom reduced gas supplies going through Ukraine, and spokesman Sergei Kupriyanov bluntly accused Ukraine of stealing Russian gas from the transit pipelines that deliver supplies to Europe through Ukrainian territory.

But 10 days later in Astana, Putin struck an altogether softer note.

"Ukraine is our closest neighbor and partner, and I reckon that one should pick polite words when speaking about such a country," Putin said.

Yushchenko said Wednesday that the agreement put an end to "feudal relations" between Russia and Ukraine.

Under the deal, Gazprom will sell gas to Rosukrenergo for $230 per 1,000 cubic meters and add cheaper Central Asian gas to the mix. Ukraine will then buy gas from Rosukrenergo for $95 per 1,000 cubic meters.

Rosukrenergo is 50 percent owned by Gazprombank. The other 50 percent is nominally held by Austria's Raiffeisen Zentralbank on behalf of investors that it has refused to identify.

Putin said Wednesday that Gazprom's sale price of $230 could rise or fall depending on global market prices. "And we will certainly agree [to lower the price], if it goes down," Putin said.

Putin said he and Yushchenko had also discussed the conditions under which the Russian Black Sea Fleet uses the naval base in Sevastopol, as well as nuclear energy cooperation between the two countries.

As the gas dispute escalated late last month, some Ukrainian politicians called for a hike in the rent Russia pays for its use of the Crimean port. Yushchenko later assured Putin in a telephone call that the rent would not be reviewed unilaterally.

During their armchair meeting, Putin at one point lightened the tone, saying that he would like to take up Yushchenko's invitation to go skiing in the Carpathian Mountains.

When Yushchenko laughed, Putin joked, "Incidentally, they say that there's no snow there, unfortunately, I mean ..."

"There's frost, frost," Yushchenko cut in.

"There's frost, but there's no snow," Putin shot back.

The dispute came after what Putin has described as "a year of lost opportunity" in Russian-Ukrainian relations.

Strains appeared with the disputed presidential elections in late 2004, and relations further soured after Yushchenko beat the Kremlin's favored candidate, Viktor Yanukovych, in the December 2004 presidential election rerun, vowing to build closer ties with Europe.

The ostentatious display of mutual understanding and sympathy between Putin and Yushchenko in Astana appeared to be prompted by the need to defend the Rosukrenergo deal against its Ukrainian and international critics, said Maxim Dianov, head of the Institute for Regional Problems think tank.

Putin also needs the agreement to hold up because it is very beneficial to Gazprom and Russia, said Sergei Markov, a Kremlin-connected political analyst.

"Putin needed to stress the good relations between Russia and Ukraine to calm down the West, which became concerned about its energy dependence on Russia during the gas scandal with Ukraine," Markov said.

Source: The Moscow Times

Yushchenko Says Parliament Destabilizes Ukraine

ASTANA, Kazakhstan -- President Viktor Yushchenko accused Ukraine's parliament on Wednesday of destabilizing the country by sacking his government, a move that sent the local currency tumbling to its lowest in nine months.

Russian President Vladimir Putin (L), and Ukrainian President Viktor Yushchenko (R), walk during a meeting in Astana, Kazakhstan, Wednesday, Jan. 11, 2006. Ukrainian President Viktor Yushchenko told Russian President Vladimir Putin on Wednesday that their countries had weathered some of the most trying times in their relationship over the past two months but that the trials were mutually useful.
The vote was led by opposition MPs who analysts said were using anger over a costly gas deal last week with Russia to undermine Yushchenko's supporters ahead of a March 26 parliamentary election.

"Yesterday's decision was incomprehensible, illogical and wrong," he told reporters in the Kazakh capital Astana where he is on a visit. "It simply serves to destabilize the situation."

But he added: "I don't see this as a tragedy. It's an experience that will increase the quality of Ukrainian politics."

Financial markets were less sanguine and the normally tightly controlled hryvnia currency dropped to its lowest level since April 2005.

"We are all bewildered," one currency dealer said. "There has been no central bank in the market for two days as (dollar) demand has been rising. The market has started to panic."

MEETING PUTIN

Yushchenko met Vladimir Putin for the first time since the Russian president ordered gas taps to be turned off to his ex-Soviet neighbor at the new year in a bitter dispute over prices that briefly disrupted supplies to the rest of Europe.

Both men are in Astana for the inauguration for a new term of Kazakhstan's long-serving President Nursultan Nazarbayev.

Putin has made clear his discomfort with the Western leanings of Yushchenko who came to power on a wave of popular protests in the 2004 "Orange Revolution", defeating the Kremlin's preferred candidate.

Last week, Moscow and Kiev finally agreed a new contract under which Ukraine would pay nearly twice as much for its gas.

That, and allegations by former Ukrainian Prime Minister Yulia Tymoshenko that it was only a six-month deal and not the five years heralded by both governments, fueled the parliamentary no-confidence vote.

Analysts said it was another blow for Yushchenko who has struggled in the face of corruption scandals and a faltering economy to hang on to the euphoria that marked his rise to power.

The vote was led largely by Tymoshenko, Yushchenko's ally in the Orange Revolution who turned ferocious opponent after he sacked her as premier in September amid a corruption scandal.

She has sided with Yushchenko's pro-Moscow opponents whom analysts said were politically damaged when Russia turned off the gas and who wanted to try to use the new, costlier contract to claw back that lost ground before the election.

PM TO STAY ON

Yushchenko has said Prime Minister Yuri Yekhanurov will stay in office until the March election.

"We have a clear and complicated task to secure managing the country and I want to assure everybody -- allies and rivals -- that this task will be fulfilled," Yekhanurov said at the opening of a cabinet meeting in Kiev.

"We are obliged to fulfill our duties until a new government starts working. It means no caretakers."

Ukraine is now facing constitutional deadlock.

Yushchenko plans to challenge the vote in the Constitutional Court, which is itself paralyzed by not having enough judges because parliament blocked Yushchenko's nominees.

Some analysts doubted the political battle would make all much difference to policy.

"While this development increases the political instability ... it will have a limited effect on the course of government policy," Renaissance Capital Ukraine analyst, Katya Malofeeva, said in a research note.

"Yesterday's vote is largely a result of increasingly active pre-election campaigning, but it changes little of substance: with only two and a half months left before elections, the government could not act freely to carry out reforms any way."

Source: Reuters

Political Crisis in Ukraine Worsens

MOSCOW, Russia -- Ukraine's parliament voted Tuesday to dismiss the government, escalating the political crisis sparked by a doubling of natural gas prices.

Ukrainian President Viktor Yushchenko speak to media on his arrival to Kazakhstan's capital Astana, January 10, 2006.
President Viktor Yushchenko quickly moved to appeal in court what he called the "illegal and unconstitutional" dismissal and seemed to resist his party's call for imposing direct rule, at least until the March presidential election.

Analysts said it would be difficult to get a new government in place before the balloting.

"No one has the right to dismiss the government. It's utter lawlessness," Prime Minister Yuri Yekhanurov told reporters in Kiev, Ukraine's capital.

The 250-50 vote in the 450-seat parliament followed controversy over government negotiators' signing of an agreement last week to nearly double the price Ukraine pays Russia for natural gas and hand over control of gas sales to a little-known company half-owned by the Russian gas giant Gazprom.

Parliament deputies also voted to freeze consumers' electricity and natural gas prices through 2006.

The contract was a compromise with Russia, which had vowed to end long-standing below-market sales to Ukraine and charge prices equal to those paid by Europe — which would have quadrupled gas rates.

But even with the smaller increase, "the Ukrainian economy may fall into paralysis, and the country may lose markets," leaders of some of the country's top industries warned Tuesday.

Viktor Yanukovich, the former prime minister whose initial victory in the 2004 presidential election was turned over by Yushchenko during a nonviolent popular uprising known as the Orange Revolution, called for immediate consultations between the president and the parliament to form a new government.

Yanukovich, whose party has a significant lead in the polls, did not rule out himself as a possible nominee for prime minister. "We are prepared to discuss this issue together with the parliament. A specific decision will be made after such discussions," he said in remarks posted on his party's website.

Experts were mixed on whether the parliament acted legally in dismissing both the premier and the Cabinet and whether either can be done before the election. A constitutional amendment that took effect Jan. 1 calls for parliament, not the president, to appoint the government.

Yushchenko, who was on a working trip in Kazakhstan, accused the parliament of "doing everything to create chaos in Ukraine."

He said he would not "resort to pressure on parliament," an apparent reference to his party's calls for imposing direct presidential rule.

Analysts said the parliament was attempting to gain political leverage in an election whose outcome will determine the makeup of the next government.

"The pretext was the [gas] contract which was much worse than all the previous contracts. But the main reason, I think, is the desire of the parliament speaker to gain hold of the main levers of the election campaign," Socialist Party deputy Mikola Rudkovsky, who sat out the vote, said in a telephone interview.

Vladimir Fesenko, director of the Kiev-based Penta Center for Applied Political Studies, predicted any change of government would come after the election.

"The fact is that Yekhanurov leads the election list of the presidential bloc, Our Ukraine, and the parliament took the opportunity to show that a majority of political forces in the country do not support the policies of Yekhanurov," Fesenko said.

Source: LA Times

Murder Trial Tests Yushchenko's Ukraine

KIEV, Ukraine -- Three policemen accused of killing a high-profile investigative journalist went on trial in Ukraine yesterday as the wife of the dead man claimed the defendants were being used as scapegoats.

Myroslava Gongadze is seen in the Kiev's Appeals Court before the trial about the 2000 killing of her husband Heorhiy Gongadze, a prominent journalist, in Kiev on Monday, Jan. 9, 2006. Three former police officers went on trial Monday for their alleged involvement in the killing of muckraking Ukrainian journalist Heorhiy Gongadze, a high-profile case that authorities have vowed to solve.
The murder of Georgy Gongadze, who was decapitated and buried in a shallow grave, was one of the flashpoints that provoked the orange revolution that brought President Viktor Yushchenko to power last winter. Ukraine's handling of the case is being seen as a test of the country's democratic credentials as it grooms itself for European integration.

Mr Yushchenko has said that solving the case is a priority, but he and other public figures have been forced to deny hindering the investigation to protect allies who knew about the murder plot.

Secretly recorded tapes that appeared after the journalist's death seemed to suggest that the former president Leonid Kuchma had ordered the killing because of the 31-year-old reporter's reports about corruption. Mr Kuchma denies such suggestions.

Gongadze's corpse was found soaked with acid in a forest outside Kiev in November 2000, several weeks after he was abducted. The police officers Mykola Protasov, Valery Kostenko and Alexander Popovych were formally charged yesterday with killing the reporter, who worked for the Ukrayinskaya Pravda website. They were arrested last February. Another ex-officer, Oleksiy Pukach, is being sought.

Speaking outside court in Kiev, Gongadze's widow, Myroslava, said his mother was not attending the hearing because "she is certain that the men who sit in the court today are scapegoats, and not the real people who ordered this crime". She added: "These people had no personal motives for killing Georgy. The next step will be when the organisers of this crime are brought to justice. Their identities are known and they must be punished along with the people sitting in the dock today."

Last March the former interior minister Yuri Kravchenko was found dead on the day he was to be interrogated about the murder. He had apparently committed suicide, but sceptics suggest he was forced to kill himself to protect politicians who are now allies of Mr Yushchenko.

In September a commission of MPs concluded that the parliamentary Speaker, Volodymyr Lytvyn, had "instigated the abduction" of Gongadze, but no criminal charges were brought. He denies the allegation. A month later the general prosecutor, Svyatoslav Piskun, was sacked, in part for his allegedly poor handling of the case.

The return to Ukraine in November of the bodyguard who made secret recordings of Mr Kuchma raised hopes of a breakthrough, but no senior official has yet been charged, and the validity of the tapes has always been disputed. Yesterday's hearing was adjourned until January 23.

Source: Guardian Unlimited

Ukraine Steel Faces Price Squeeze

MOSCOW, Russia -- Faced with higher gas prices that could hit their profitability, Ukrainian steelmakers may resort to challenging their Russian rivals on the more lucrative European market.

Lakshmi Mittal
As Ukraine's recent gas dispute with Gazprom escalated, the country's leading steelmakers indicated they would cut back on their gas consumption -- a step that will likely eat into their profits and play into the hands of Russian steelmakers.

Ukraine's biggest steel mill, Kryvorizhstal, which produces 20 percent of Ukraine's metal output, said Tuesday that it would switch to using more coke and higher-grade iron ore and less gas. The plant was bought at an auction in October for $4.8 billion by the world's largest steelmaker, Mittal Steel.

"Kryvorizhstal is currently fine-tuning technologies that will partly replace the use of natural gas with solid fuel in the production process," Kryvorizhstal energy director Vladimir Romanenko said Tuesday in an e-mailed response to questions about the impact of higher gas prices.

At present, 7 percent of Kryvorizhstal's production costs are gas-based, he said.

In Moscow, however, some industry analysts cast doubt on the company's figure.

"Considering how uneconomic most Ukrainian metallurgy plants are, a 10 percent to 12 percent figure is much closer to the truth," said Denis Nushtayev, an analyst with brokerage Metropol. The higher price of gas would likely increase steel production costs by up to 15 percent to over $185 per ton, he said.

Given the price Mittal Steel Germany, a subsidiary of Lakshmi Mittal's steel empire, paid for Kryvorizhstal, the company's profitability could almost disappear, said Eric Kraus, chief strategist at Sovlink Securities.

The plant's profitability "would disappear with gas prices above $100" per 1,000 cubic meters, Kraus said in an e-mailed comment.

A loss in profitability for Kryvorizhstal would work to the advantage of Russian steelmakers making foreign acquisitions, said Timothy McCutcheon, a metals and mining analyst at brokerage Aton.

"Ukrainian steel companies are pretty similar to their Russian counterparts -- they are cash-rich, low-debt and with aggressive management. They posed major competition to Russian acquisitions in EU countries, but that will change once they take less profit at home," he said.

Ukraine has been the largest steel importer into Russia, selling at knockdown prices thanks partly to Ukrainian government subsidies, cheap labor and cheap energy.

"In effect, the Russian government through Gazprom was subsidizing Ukrainian steel companies with cheap gas. To add insult to injury, Ukrainians were then dumping their steel in Russia at knockdown prices," McCutcheon said.

Although Ukrainian producers have tended to fill gaps left by domestic steelmakers, their Russian competitors lobbied against cheap Ukrainian imports as damaging to the Russian steel industry.

In April 2005, four of Russia's top five steelmakers called on the government to maintain a customs duty of 21 percent on Ukranian steel rods that was due to expire in mid-2005, citing unfair competition, said Alexei Sotskov, a spokesman for the No. 5 steelmaker, Mechel.

"The Ukrainian government obviously used to subsidize its producers, in part with tax breaks, the effects of which are still being felt," Sotskov said.

Facing a future without government subsidies and higher gas costs, Ukrainian steel mills will need to modernize, cut staff and divert exports from Russia to Europe, where steel prices are higher, Nushtayev said.

"Yet even then, Europe's wallet is not elastic," he said.

Ukraine could lobby the EU to reduce Russia's steel imports quota in an effort to give Ukrainian steelmakers a bigger slice of that market, Nushtayev said.

"Either way, if you believe that gas prices will remain high, Ukrainian steel mills are less interesting than before. And this is forever," McCutcheon said.

Source: The Moscow Times

Ukraine Denies Existence Of Secret CIA Detention Facilities

KIEV, Ukraine -- Ukraine today vehemently denied the existence of secret prisons allegedly run by the US Central Intelligence Agency on Ukrainian soil.


“The very raising of that issue is absurd,” said Vasiliy Filipchuk, a spokesman for the Ukrainian Foreign Ministry.

Filipchuk’s remarks followed a report by a Swiss weekly newspaper about a purported Egyptian government message on the existence of secret CIA prisons in Ukraine, Romania, Macedonia, Bulgaria, and Serbia’s southern province of Kosovo.

The Council of Europe, the continent’s top rights watchdog, and several European Union countries are investigating reports of CIA-run detention facilities and flights over their territories.

A Justice Ministry official who refused to identify himself also dismissed the report as “ridiculous,” and said that Ukraine “is not some banana republic where some clandestine organisations can do whatever they want”.

On December 16, Ukraine’s President Viktor Yushchenko met CIA director Porter Goss in Kiev. No public statements were made following the meeting.

At a news conference four days later, Yushchenko noted only briefly that “the sides discussed co-operation between security services” and the settlement of the crisis in neighbouring Moldova’s breakaway Trans-Dniester province.

Source: Ireland On-Line

Ukraine's Parliament Votes Out Government

KIEV, Ukraine -- Ukraine's parliament voted on Tuesday to sack Prime Minister Yuri Yekhanurov's government over a controversial gas deal with Russia.

Ukraine's Prime Minister Yuri Yekhanurov (C) and members of his cabinet watch parliament deputies voting in Kiev, January 10, 2006. Ukraine's parliament voted on Tuesday to sack Yekhanurov's government over a controversial gas deal with Russia.
A no-confidence motion was backed by 250 deputies in the 450-seat parliament, angry over the deal with Moscow which will force Ukraine to pay nearly twice as much for its gas imports this year.

Yekhanurov will remain as acting prime minister until President Viktor Yushchenko names a new premier. Ukraine is due to hold a parliamentary election in March.

Former Prime Minister Yulia Tymoshenko, sacked by Yushchenko last September after the partnership that swept them to power in Ukraine's Orange Revolution turned sour, was the driving force behind the no-confidence vote.

Tymoshenko is competing against Yushchenko's allies in the March 26 parliamentary polls, and has seized every opportunity to criticize the government of technocrat Yekhanurov which replaced her.

She has vowed to fight the five-year gas deal signed by Moscow and Kiev last Thursday after a dispute which peaked over the New Year when Russia's gas monopoly Gazprom cut supplies to its ex-Soviet neighbor for two days.

Tymoshenko joined forces with opposition parties representing the pro-Moscow administration ousted at the end of 2004 in the binding no-confidence vote, which required a simple majority.

Source: Reuters

Putin May Increase Pressure On Ukraine's Yushchenko Before Vote

KIEV, Ukraine -- Relations between Russian President Vladamir Putin and his Ukrainian counterpart, Viktor Yushchenko, may be about to go from bad to worse.

Yushchenko (L) and Putin (R)
Following this month's showdown between Russia and Ukraine over natural-gas prices, Putin is likely to step up pressure in the weeks leading up to Ukraine's March 26 elections in an effort to keep the former Soviet republic under Russian influence.

``The relationship couldn't be worse,'' Rainer Lindner, head of the Eastern Europe department at the Berlin-based Foundation for Science and Politics, said in an interview. ``The very dirty part of the game is still ahead.''

The March 26 elections will be Yushchenko's first voter test since he was swept to power in the Orange Revolution of 2004, when he overcame a candidate backed by Putin. Analysts say Russia may now be trying to tilt the vote in favor of candidates who favor closer ties with Moscow rather than the West.

``Russia will try to indicate its displeasure with the Yushchenko team and will try to get its people elected,'' said Ariel Cohen, senior fellow at the Heritage Foundation in Washington. He says Putin may even engineer a ``last-minute'' confrontation with Yushchenko to emphasize to Ukrainian voters the risks of straying too far from Russia.

Russia restored natural gas supplies to Ukraine on Jan. 4, following three days of international brinksmanship rarely seen since the Cold War ended 15 years ago.

Double the Price

Ukraine, located along Russia's southwestern border, agreed to pay an average $95 per 1,000 cubic meters for fuel coming from Russia and Central Asia. While the price is almost double the $50 Ukraine was previously charged, it is far less than the $230 that OAO Gazprom, Russia's state-controlled gas monopoly, had been demanding before cutting the gas on Jan. 1.

``Western perception is that Ukraine has won; that is bad for Putin,'' Lindner said. ``Putin himself was damaged by Yushchenko.''

Putin, 53, took over the year-long presidency of the Group of Eight leading industrialized democracies on Jan. 1, just as the natural-gas dispute was raising questions about Russia's reliability as an international partner.

Yushchenko, 51, has pursued pro-Western policies, aimed at getting Ukraine into both the European Union and the North Atlantic Treaty Organization, and away from Russia's sphere of influence.

The NATO Question

Ukraine's possible membership in NATO is a particularly sensitive question for Russia, which has leased facilities at the Ukrainian port of Sevastapol for its Black Sea fleet since the breakup of the Soviet Union in 1991. The day Ukraine and Russia agreed to end the gas crisis, Ukraine's Economy Minister Arseniy Yatseniuk called for a review of the Russian fleet's $98 million leasing agreement.

Ukrainian and Russian analysts say the March 26 elections will be pivotal for Urkaine's orientation between East and West.

The Russian government will support any party or politician ready to pursue a `` strategic partnership'' with Russia, said Andriy Ermolaev, director of the Sophia Center of Social Research in Kiev.

A strategic partnership would involve giving priority to economic and trade ties with Russia, as well as cooperating on a common energy policy, Ermolaev said.

The Oil Weapon

Some analysts say Putin's next step may be to take further advantage of Ukraine's energy dependence to exert pressure. ``It can be oil'' next time, Cohen said. Ukraine imports 80 percent of the oil it consumes, mostly from Russia, and Russia-based companies OAO Lukoil, TNK-BP and NK Alliance Group control three of Ukraine's four largest refineries.

Sonal Desai, an economist at Dresdner Kleinwort Wasserstein in Milan, said, ``I don't think oil would be the route for them to go.'' She said Russian efforts to influence the vote may be more subtle. ``Russia would not commit the same errors that they did the last time round,'' she said. ``I wouldn't expect overt influence on the Ukrainian election as we saw for presidential elections. On the other hand, the timing of the flare-up of the gas issue is probably not a coincidence either.''

Desai said Russia may seek to exert pressure through ``small irritants,'' citing as an example its Jan. 1 ban on imports of uncooked meat from Ukraine. The Interfax news agency reported yesterday that Russian authorities said the meat was barred because its origins were unknown.

A Wide Net

``This time, the Kremlin's policy is to cast its net wide, and support those who support closer ties to Russia, '' Ermolaev said in an interview. ``In 2004, the Kremlin didn't hide its sympathy. This time it is taking a more flexible, subtle line.''

The heightened tensions with Russia come at a time when Yushchenko's popularity has sunk since September, when a split opened up in the ranks of the Orange Revolution. A Dec. 10-18 poll of 2,000 people conducted by the Sophia Center showed the ``Party of the Regions'' led by Viktor Yanukovych, the Putin favorite Yuschenko defeated in 2004, with the support of 31.1 percent; 17.9 percent backed Yushchenko's ``Our Ukraine'' party and 17 percent supported a party led by former Prime Minister Yulia Timoshenko.

Another survey by the Kyiv International Institute of Sociology, conducted between Dec. 9 and Dec. 20, showed Yanukovych's party with 34.5 percent to 21 percent for Timoshenko's party and 18.4 percent for Yushchenko's. Under the new Ukrainian constitution, power in the new government will shift from the president to a prime minister.

Harmful to Ukraine

Timoshenko, who was fired in September, has gone further into opposition against her former ally Yushchenko, saying she would bring a legal challenge to the agreement signed by Ukraine and Russia ending the gas crisis. At a press conference on Jan. 5, she said the deal was harmful to Ukraine's interests.

Ukrainian efforts to straddle between Russia and the West won't work in the end, Konstantin Zatulin, director of the Moscow-based Institute of CIS Studies, which focuses on relations among the former Soviet states, said on Russia's state-owned RTR channel on Jan. 4.

``The people of Ukraine have constantly been kept away from this question, and told that Ukraine would be in both camps,'' he said. ``Now the people of Ukraine face this choice.''

Source: Bloomberg

Ex-Police Officers on Trial in Ukraine

KIEV, Ukraine -- The trial of three former police officers charged with killing a high-profile journalist opened Monday, but judges abruptly postponed proceedings after a defendant complained of a health problem.

Former police officers Mykola Protasov (L), and Valery Kostenko listen to proceedings during the trial about their alleged involvement in the 2000 killing of Heorhiy Gongadze, a prominent journalist, in Kiev on Monday, Jan. 9, 2006.
The case stemming from the 2000 death of Hrihory Gongadze, a muckraking Internet journalist, is being closely watched as a test for this ex-Soviet republic's new Western-leaning government and its commitment to the rule of law.

Gongadze, 31, was abducted and his decapitated body was found in a forest outside Kiev in 2000. Months of protests erupted against former President Leonid Kuchma after a key witness later released tape recordings in which voices sounding like those of Kuchma and his then-chief of staff Volodymyr Lytvyn are heard conspiring against Gongadze.

Both have repeatedly denied any involvement.

President Viktor Yushchenko has vowed to solve the politically charged case, in which Kuchma and a number of other high profile officials have been questioned. Experts, however, have criticized authorities for not identifying the organizers of the crime.

Dozens of people, including lawyers, relatives and prosecutors, packed the tiny courtroom at the Kiev Appeals Court to watch the first substantive hearing in the case against Valery Kostenko, Mykola Protasov and Alexander Popovych. All are charged with murder and abuse of office. Another former police officer, Oleksiy Pukach, is being sought.

The three did not enter any pleas during Monday's proceedings.

Dozens of reporters were barred from the courtroom due to the room's small size.

About two hours after the start of proceedings, a crowd of journalists managed to break through police lines and enter the tiny courtroom while judges were in an adjacent room considering a motion by Gongadze's lawyer, Andryi Fedur.

Under Ukrainian law, the prosecution side may be represented not only by state prosecutors, but also by victims and their lawyers.

At one point, the judges called a 45-minute recess, during which court officials said an ambulance was rushed to treat Protasov for an ailment related to high blood pressure. The court then abruptly postponed the next hearing until Jan. 23, citing Protasov's health.

Judge Irina Hrihoriyeva said the court would find better location to accommodate spectators when the trial resumed.

Fedur suggested the trial may have been postponed because journalists broke in, and he criticized the fact that the proceedings were held in such a small courtroom, effectively barring the media from observing.

"It is being done so that nobody would understand what had happened," he said. "The principles of openness aren't being observed."

For many Ukrainians, solving the Gongadze case is a crucial test for Yushchenko's government, which came to power following the Orange Revolution mass protests on pledges to fight corruption and bring Ukraine closer to Europe.

Source: AP

Gas Dispute Prompts European Questions About Russia's Reliability

PARIS, France -- Europeans once feared Russian warheads; now they’re wary of Russian gas taps—and wonder about Russia’s viability as a strategic partner.

Russian President Vladimir Putin
In language reminiscent of the Cold War, European observers and consumers castigated Russia on Monday for shutting off gas supplies to Ukraine over a price dispute, threatening shipments throughout Europe. The cutoff, Russia’s critics say, was Ukraine’s punishment for reaching out to the West.

Beneath the criticism lay deeper questions about Russia’s role in today’s Europe. The gas shutoff came the same day Russia assumed the leadership of the G8, after years of seeking a full-fledged place in the elite group of rich nations.

“The novelty of 2006 is Russia’s reappearance on the map of world threats,” said the Italian daily La Stampa. “Only its tool has changed: Instead of nuclear warheads and the international communist movement, today there is the gas tap.”

“In the year of the Russian G8, the West must decide, for the umpteenth time, how to act toward a Russian czar with a claim not anymore on their lives, but on their stoves.”

In the wake of the European criticism, Russian officials said late Monday they would increase the amount of gas shipped to Europe to make up for gas they claimed was being siphoned off by Ukraine.

Most analysts expect Russia and Ukraine to reach agreement soon, since Russia needs European consumers as much as they need Russian gas.

Still, the crisis is the latest sign that Russia has its own idea of where it fits in the global marketplace and political arena. And that idea doesn’t always match the dependable, predictable Russia that Europe dreams of.

“Russia is saying clearly to its partners that it is an energy superpower, saying, ‘We are actors on the world stage. You should listen to us,’” said Thomas Gomart, an expert at the French Institute of International Relations, a Paris think-tank.

Beyond re-igniting European concerns about energy security, the crisis threatened to revive anti-Russian sentiment that last flared in Europe a year ago, during Ukraine’s democratic revolution.

Russian President Vladimir Putin has also been worrying Europe by clamping down on foreign nongovernmental organizations and with his perceived backsliding on Russian democracy.

“Seeing Russia use this weapon is bound to have a political impact on the image of Russia as a well-behaved neighbor,” Philip Hanson, a Russia expert at Birmingham University in England, said of the gas shutoff.

The gas dispute has simmered since the early 1990s, prompting questions of why Russia chose to cut off supplies now—just months before sensitive parliamentary elections in Ukraine.

Moscow “is trying to satisfy its imperial ambitions, paying little attention to the fact that the way it has chosen undermines its reputation as a trade partner,” commentator Slawomir Popowski wrote Monday in Polish daily Rzeczpospolita.

In Poland, the crisis reinforced fears that Russia will play rough to maintain influence over its former satellites. Germany, which depends on Russia for 30 percent of its gas, is also nervous.

“Russia is using unrestrained monopoly power to discipline a politically insubordinate neighbor,” said Werner Hoyer, a senior lawmaker for Germany’s Free Democratic Party.

“Who can guarantee that Russia won’t one day use the gas tap as a way to exert pressure or impose discipline on other countries, such as Germany?”

Russia insists it is only enforcing its commercial rights, demanding that Ukraine pay market price for the gas.

European government officials were cautious about casting blame and alienating Putin. But the cutoff has continent-wide implications and European Union energy ministers will meet Wednesday to discuss it.

Amid the criticism, Russia won a bit of indirect support from Pascal Lamy, the director of the WTO: “Whatever the political or legal problems are, in the short term, these countries should pay for their energy at today’s energy prices to improve the efficiency of their economies.”

Source: AP

Russia-Ukraine Gas Deal Too Murky For Comfort

KIEV, Ukraine -- Europe may have breathed a collective sigh of relief after Russia and Ukraine signed a long-term gas supply deal, averting a possible repetition of the New Year supply cutbacks that unnerved the continent.

An employee of Ukrainian gas firm UKRTRANSGAZ checks equipment in the Boyarka village, near Ukrainian capital Kiev. A deal ending Ukraine's "gas war" with Russia was denounced by influential ex-prime minister and "orange revolution" leader Yulia Tymoshenko as well as supporters of the previous pro-Moscow leadership intent on pressing their case ahead of parliamentary polls.
But after a closer look at the complex pact signed on Wednesday, outsiders may yet have cause for concern about the region's energy security, especially after Ukraine's ex-premier Yulia Tymoshenko launched a legal challenge to stop the deal.

The accord uses as middleman a little-known Swiss-based joint venture called RosUkrEnergo, owned half by Russia's gas monopoly Gazprom and half by Austria's Raiffeisen Zentralbank.

Sources familiar with the five-year gas deal say Raiffeisen is representing a group of mainly Ukrainian investors but their identity is shrouded in secrecy.

"We represent a group of international investors knowledgeable in the gas business who don't want to reveal their identity," Wolfgang Putschek, of the Austrian bank's investment arm, told Reuters by telephone from Vienna.

Until it is clear who is behind the company's business, uncertainty remains over who stands to profit from it and how exposed it might be to political interference.

"Ukraine cannot sign a contract where the middleman ... is a commercial structure when it declares it is a democratic and transparent European country," said Mykola Rudkovsky, a leader of Ukraine's Socialist Party, which is in the ruling coalition.

"Such schemes are very vulnerable to political changes," he told the Ukrainska Pravda Web site.

Putschek estimated RosUkrEnergo's 2005 sales at $3.5 billion (2.0 billion pounds) and profits at $500 million. He said its gas sales would rise in 2006 by 35-40 percent from last year's 40 billion cubic metres (bcm), making RosUkrEnergo one of Europe's top gas marketers.

CORRUPTION RISK

Critics say the non-transparent structure could easily lead to corruption, with money being siphoned off to private pockets, and that it would be better both for Ukraine and Gazprom -- the world's largest gas firm -- to deal directly.

RosUkrEnergo was set up by former Ukrainian President Leonid Kuchma's government shortly before it was ousted from power by a popular revolution after flawed elections, leading critics to fear also that it could be linked to political interests.

Within months of appearing from nowhere it had taken control of Ukraine's gas imports from Turkmenistan by the start of 2005.

During her brief tenure as premier of the reformist government swept to power in Ukraine's 2004 "Orange Revolution", Tymoshenko denounced RosUkrEnergo as a "criminal canker on the body" of state energy firm Naftogaz.

She vowed on Thursday to fight the deal in the courts, saying: "This agreement has put Ukraine into a situation of unstable gas prices. All these agreements should be cancelled."

PROBE

Tymoshenko and her ally and former security service chief, Oleksander Turchinov, investigated whether Semion Mogilevich -- a Ukrainian-born Russian businessman wanted by the U.S. Federal Bureau of Investigation for racketeering, fraud and money laundering -- was behind the Ukrainian side of RosUkrEnergo.

Mogilevich has, through his lawyer, denied any link and the investigation petered out after Tymoshenko and Turchinov lost their jobs last autumn.

Putschek also denied any connection to Mogilevich, saying RosUkrEnergo's backers were reputable. "Our standard procedure for accepting customers is that they have to undergo rigorous compliance checks, and they passed them," he said.

Ukraine is the transit route for 80 percent of Russia's gas exports to Europe. Polish gas company PGNiG is one customer of RosUkrEnergo, buying 2 bcm of Poland's annual needs of 13 bcm, industry sources in Warsaw say.

DEALING DIRECTLY

Under the deal, RosUkrEnergo will this year handle gas supplies to Ukraine from Russia and Central Asia, to be sold at an average $95 per 1,000 cubic metres -- up from around $50 now.

But the venture will buy from Gazprom at $230 per 1,000 cubic metres, meaning that part of its business will lose money. Sources said it would market gas to Hungary and Romania independently to make good the shortfall.

"In general we believe this is positive for Gazprom because the prices are higher. But at the end of the day it would be better if Gazprom did this business itself," said Vadim Kleiner at Hermitage Capital Management in Moscow.

Officials at Gazprom and in the Russian government say Russia's side of the bargain is sufficiently transparent, but they cannot influence the way the Ukrainians choose to operate.

"We know who owns the Russian side and we would rather the Ukrainians switched to direct state ownership," one Russian source said. "But that's how they wanted to structure the deal."

That would change, said Putschek, if RosUkrEnergo goes ahead with a planned initial public offering in the next 12-18 months, as it would have to disclose its owners in its issue prospectus.

"Then it would become clear," he said.

Source: Reuters

Trial To Open Over Ukraine Murder

KIEV, Ukraine -- The trial of three former policemen charged with killing one of Ukraine's most prominent opposition journalists is due to start on Monday. The killing of Georgiy Gongadze five years ago sparked widespread popular protests which ultimately culminated in last year's Orange Revolution.

Murdered journalist Georgiy Gongadze
Mr Gongadze was an outspoken critic of the former regime led by Leonid Kuchma.

President Viktor Yushchenko, who came to power when the old regime fell, says the case is a top priority for him.

Secret recordings

Mr Gongadze was abducted and his headless body was discovered later in a forest.

Valeriy Kostenko, Mykola Protasov and Oleksandr Popovych are accused of carrying out the actual killing in September 2000, but no-one has been charged with giving the order for Mr Gongadze's murder.

Mr Kuchma was later alleged to be implicated through secret recordings.

Last year a parliamentary commission examining the killing claimed the former president was one of the organisers of Mr Gongadze's kidnapping. He denies any involvement in the death.

When President Yushchenko came to power, he said investigating the murder was a matter of honour for him, but solving the case has subsequently proved to be difficult.

Last year, a former interior minister who was supposed to testify in the case committed suicide only a few hours before he was due to give evidence.

Ukraine's prosecutor-general has been sacked for making slow progress.

Source: BBC News

The New Crimean War: How Ukraine Squared Up To Moscow

SEVASTOPOL, Ukraine -- For 200 years, the Black Sea has been a haven for the Russian fleet. Now, thanks to the dispute over gas, the first salvoes have been fired in the battle to rid Ukrainian waters of Moscow's presence.


Atop one of the highest points in the Black Sea port city of Sevastopol the white, blue and red Russian flag ripples gently in the Crimean wind. Far below, much of Russia's Black Sea Fleet bobs up and down in one of the world's most serendipitous natural harbours.

Welders cling like barnacles to the side of a ship being repaired in a cavernous dry dock, young sailors smoke on the prows of ships bristling with rockets, and in the distance one of the fleet's most precious assets, the missile-cruiser Moskva, treads water on the grey January waves.

It is a scene that has remained broadly unchanged for more than 200 years since Sevastopol became the home of the Russian fleet in this strategically vital region, giving Moscow's ships access to the Mediterranean and a warm water port that never freezes over. But though Sevastopol in 2006 looks every inch a Russian naval town, complete with radar stations and pimply Russian sailors clad in greatcoats, technically it isn't.

In fact it's not even in Russia but in Ukraine and if powerful members of the Ukrainian establishment get their way the Russian tricolour will soon be run down the flagpole for the last time and replaced with the blue and yellow Ukrainian flag.

Indeed the Ukrainian navy already has its own headquarters there. Sevastopol, one of Russia's most famous naval bases, is under threat and the first salvoes in the battle to wrest control from Moscow have already been fired.

More than 30 Russian ships are moored here, with an estimated 14,000 sailors, but for how much longer? The collapse of the USSR in 1991 left the Soviet Black Sea Fleet, which was largely inherited by Russia, stranded in a newly independent Ukraine. That did not pose a problem while Ukraine was ruled by a Moscow-friendly government. But since Viktor Yushchenko's assumption of the Ukrainian presidency in 2004 Kiev has tried to distance itself from its former imperial master and embrace the West instead.

Moscow's dispute with Kiev over gas, with Russia turning off the tap for a while, stoked anti-Russian feeling. And the fact that Ukraine is making overtures towards Nato further complicates the Sevastopol situation. Russia's continued presence is not seen as compatible with the country's membership of a US-led military alliance.

Pressure on Moscow to get out of Sevastopol has been mounting since Mr Yushchenko came to power but during the gas crisis that pressure hit gas mark eight. At the apex of diplomatic hostilities senior Ukrainian government members reopened the Sevastopol question. It was high time to review Russia's 20-year lease of the port which expires in 2017, they argued, with a view to raising the rent from the current $98m a year, possibly by a factor of four. It was made clear that Ukraine wanted to hike the price Russia pays for leasing radar stations in the area too and there was even loose talk of giving the Americans access to those same facilities.

To increase Moscow's discomfort an overtly hostile inventory of the facilities used by the Black Sea Fleet is under way and Kiev has accused Russia of illegally occupying some facilities and of illegally sub-letting others to private businesses.

Kiev's message is clear; Russia is no longer wanted in Sevastopol. In an interview with Ukrainian media, the Foreign Minister, Boris Tarasyuk, has said as much. "Tell me, why on earth are there other states' prosecutors' offices and courts acting on the territory of our state? Why are there Russian flags waving everywhere? Why are there Russian patrols with personal authorised arms blocking whole streets, walking about the city? It's abnormal," he raged.

Moscow's response to such talk has something of the Cold War about it. Sergei Ivanov, Russia's Defence Minister and one of the powerful Kremlin officials tipped to succeed Vladimir Putin as president, said any revision of the 1997 treaty concerning Sevastopol would be illegal, impossible and "fatal". In comments that prompted media in both countries to refer to the row as a "New Crimean war", he hinted that such a move would give Moscow carte blanche to review Ukraine's borders.

Sevastopol is best known in Britain for the Crimean War, which began in 1854. But for Russians Sevastopol occupies more emotional territory, having been purloined for them by Catherine the Great in the18th century. Russian defenders held out against the British and French for 349 days in the Crimean War and during the Second World War resisted the Germans and Romanians for 250 days, a feat that saw Sevastopol named a Russian hero city.

"Sevastopol, Sevastopol, beloved of Russian sailors," goes an old song and during the Soviet era the area was deemed so militarily important that it was closed to the public and foreigners, a position that did not change until 1996. Indeed Russia's conviction that Sevastopol is part of Russia was enhanced by the quintessentially Russian novelist Leo Tolstoy. He was one of the defenders of Sevastopol during the Crimean War and wrote about his harrowing experience in his three-part Sevastopol Sketches.

Russians are also convinced that Moscow was cheated out of Sevastopol and indeed the entire Crimea. In 1954 the Crimea was given to the Ukrainian Soviet Socialist Republic by the Russian Soviet Socialist Republic. The occasion was the 300th anniversary of Russia's co-operation with Ukrainian Cossacks and nobody batted an eyelid since the USSR was regarded as eternal and one big happy family where citizens' nationality carried little importance.

Half a century later, feelings are very different and Moscow's Mayor, Yuri Luzhkov, has suggested that the former Soviet president Nikita Khrushchev made the decision after a drinking binge.

Russian nationalists want the return of Sevastopol and the Crimea, a favourite holiday destination, while Ukrainian nationalists want the Russians out and the area "de-Russified". Modern-day Sevastopol, a city of almost 400,000 people, feels deeply Russian, however, and even ethnic Ukrainians here talk of it as being part of Russia, not Ukraine. Three-quarters of its inhabitants are classified as Russian and an even higher proportion speak Russian as their first language and have a rudimentary or no grasp of Ukrainian. Nor are the leaders of the orange revolution popular in these parts.

During the 2004 presidential election that swept Mr Yushchenko to power, he and his supporters won just 7 per cent of the vote in Sevastopol. Most people gave their vote to Viktor Yanukovych, Mr Yushchenko's pro-Russian rival, who was toppled after his supporters were found guilty of vote rigging.

Many of Sevastopol's residents are former sailors and are steeped in the city's unique history. Leonid, a pensioner whose right hand is tattooed with a large anchor, served in the Soviet navy for all his working life and although he is Ukrainian he seems ardently pro-Russian. "This is Russian soil," he says. "Russians fought for this place."

Like many here he is fiercely anti-Nato. When German and American warships visited last year, locals gathered on the quayside to protest.

Considering Sevastopol and its military inhabitants regarded Nato as enemy number one for decades, perhaps it is no surprise that anti-Nato feelings still run high.

That those feelings are encouraged by pro-Moscow forces as a device to secure Russia's presence here is also clear. In the Sevastopol offices of the Progressive Socialist Party, an offshoot of the Communist Party, a poster urges voters not to let Ukraine become a "US colony".

The message is stark. A large hand with Nato tattooed on its knuckles and a swastika on its fist is pictured protruding from a shirt patterned with the US flag as it possessively claws at a map of Ukraine with blood dripping from scary-looking finger nails. Mikhail Pushia, 35, a party activist, says it would be a terrible mistake for Ukraine to join the Western alliance. "Yushchenko wants to join Nato so that he can get his hands on credit from the West. But that money will disappear into his own personal bank accounts."

Like almost everyone else who lives in Sevastopol there is no doubt in his mind that the city is Russian. "If they held a referendum today Crimea would go straight back to Russia. People here regard the Ukrainian language with hostility. It evokes unpleasant sentiments," he says.

Even members of the Ukrainian police force in Sevastopol said they would be happy to become part of Russia.

"We would probably be better off as part of Russia," said one officer, who declined to be named. "Our wages would be higher. At the moment we only get $120 [£68] a month. You can't live normally on that; only survive." Another officer argued that it was only politicians who had tried to put up artificial barriers between Russian-speaking Ukrainians and Russians. "Here in Sevastopol we are all the same. Russian naval officers are married to Ukrainians and there is no difference between us except the colour of the uniforms we wear and who pays our wages. Putin seems like a normal leader and at least Russia looks like it has a future. I'm not so sure about Ukraine."

Alexander Chervinsky, 46, an activist for Julia Tymoshenko's Ukrainian Motherland party cuts a lonely figure as he campaigns ahead of parliamentary elections on Sevastopol's streets.

He knows that he and his party with their pro-Western views are unlikely to do well in this part of the country but firmly believes that Ukraine's future lies in the European Union not with Russia. "It's a battle of civilisations. Turning back towards Russia is a dead end," he says. Although Mr Chervinsky may be in the minority in Sevastopol it is a very different story in Kiev and western Ukraine where distrust of Russia and dislike of its continued presence on Ukrainian soil is stronger.

Seated at his desk behind a Russian flag, Gennady Basov, 35, chairman of the Russian Bloc Movement in Sevastopol, complains bitterly about such anti-Russian sentiment.

He argues that the fleet helps protect the area's Russian-speaking population from encroaching Ukrainian nationalism.

Gloomily he talks of hundreds of Russian-language schools being shut since Mr Yushchenko came to power, and of Russian-language advertising being banned. "The [Russian] fleet is a factor of stability and a bulwark against harsh Ukrainisation," he argues. "It gives people here a signal that their compatriots have not abandoned them to their fate." It also provides around 20,000 local jobs, he adds, and a stable income for local people.

Ukrainian nationalists see things rather differently. Such claims are vastly exaggerated, they argue. In recent months a nationalist organisation called the Student Brotherhood has stormed lighthouses and picketed Black Sea Fleet facilities.

As Ukraine heads for crunch parliamentary elections in March the Sevastopol issue is bound to come to the fore again.

Russia has already started to fight back. Extra funds have been promised to towns that host fleet facilities, Russian nationalists have promised to raise the matter in the Duma - the Russian parliament - and senior Kremlin officials have been dispatched to the region to rally pro-Russian forces.

Meanwhile construction work at Novorossisk in Russia-proper, a possible alternative site for the Black Sea Fleet, continues apace. But relocation would be a last resort, for, at a time when Russia is trying to recapture some of its greatness from the Soviet era, giving up Sevastopol, the pride of first the Soviet and now the Russian navy, is just not an option.

Source: The Independent

View: Ukraine Comes In From The Cold —Yuliya Tymoshenko

KIEV, Ukraine -- The issues raised by the gas dispute between Ukraine and Russia go beyond energy security, reviving questions about Ukraine’s place in Europe and the world. As this struggle shows, Ukraine has been obliged to assume a higher-profile role in European affairs. It must consider where and in what sort of Europe it fits.

Former Prime Minister of Ukraine, Yuliya Tymoshenko
Europe’s sigh of relief at the supposed end of the dispute between Russia and Ukraine over gas pricing was audible here in Kyiv. But the settlement raises more questions than it answers. By placing Ukraine’s energy needs in the hands of a shadowy company linked to international criminals, the agreement has planted the seeds of a new and perhaps more dangerous crises.

As a result, I am challenging this deal in court. Let a public hearing before a judge reveal exactly who will benefit from this deal.

The settlement between Ukraine and Russia’s state-owned gas monopoly, Gazprom, is intolerable because Ukraine’s energy future has been placed in the hands of RosUkrEnergo, a criminal canker on the body of our state gas corporation. RosUkrEnergo was established in the last months of the regime of our former ruler, Leonid Kuchma. Yet it miraculously gained control of all of Ukraine’s gas imports from Central Asia. Under the deal agreed this week, it retains that control.

As one who worked in the gas industry before entering politics, I know that the gas trade in the countries of the former Soviet Union is riddled with corruption. During my premiership, my government sought to investigate RosUkrEnergo — to discover who precisely its owners are, how it gained a virtual monopoly on the import of Central Asian gas, and where its profits go. Now that I am not in government, that investigation has been shelved. Ukraine’s energy needs, and thus the certainty of energy supplies across Europe, will never be secure as long as gas transit is in the hands of secretive companies with unknown owners.

But the issues raised by the gas dispute between Ukraine and Russia go beyond energy security, reviving questions about Ukraine’s place in Europe and the world. As this struggle shows, Ukraine has been obliged to assume a higher-profile role in European affairs. It must consider where and in what sort of Europe it fits, what balance it should strike between Russia and the European Union, and how it should find the self-assurance needed to play its full part in world affairs.

It would be sheer folly to suggest that the Ukrainians start with a blank slate. Centuries of being part of the Russian and Soviet empires have, in different ways, shaped how Ukrainians view their country and its interests. One consequence of this is that Ukrainians are often shy about asserting Ukraine’s independent interests plainly — exemplified by Ukraine’s acceptance of a deal that leaves its energy future so insecure.

Like any country, Ukraine’s relations with the world are determined by four interlocking factors: history, patriotism, national interests, and geography. Each factor has special resonance here. True, Ukrainians rightly feel like citizens of a normal, independent country, and want to be treated that way. But this does not mean we want to bury history and our historic ties. We are a normal country with an abnormal history.

Indeed, Ukraine’s interests form a comfortingly familiar triangle of economic, political, and strategic priorities: free trade and open markets across the globe; prosperous and democratic neighbours; and not being on the front-line of a conflict, still less a potential battleground, between Russia and the West. Our goal is thus a democratic Ukraine located between prosperous like-minded neighbours to east and west.

Of course, the risk of tyranny, turmoil, and war within the so-called “post-Soviet space” is large, leaving Ukraine keen to limit its vulnerability. Ukrainian enthusiasm about the EU is based on the idea that European security is indivisible.

We recognise, of course, that few of even the most fervent supporters of European integration want to help Ukraine quickly become a member. But the risk to EU gas supplies shows that our fates are linked. Europe must play its part as Ukraine redefines its historic ties to Russia, and its actions must do nothing to undermine Ukraine’s national independence — or, indeed, that of any of the countries that emerged from the Soviet Union’s break-up.

The proposed Baltic Sea pipeline, which would bring gas to Germany directly from Russia, bypassing Poland, Ukraine, the Baltic states, and the rest of Central Europe, is dangerous in this regard, because it may allow Gazprom the freedom to cut gas supplies to customers without endangering supplies to its favoured western markets. That is a recipe for renewed threats, not only to Ukraine, but to EU members like Poland, the Czech Republic, Hungary, Slovakia, Slovenia, and the three Baltic states.

In broad terms, Ukraine seeks security and stability, and it should be remembered that our record here is strong. Our decision more than a decade ago to surrender Ukraine’s status as a nuclear nation is the clearest sign of our good-neighbourly intentions and political maturity.

Today’s crisis over gas supplies must not be overblown. Objectively speaking, Ukraine today is more secure as a nation than at any time in its history. But Ukrainians do not feel as secure as they should.

The way to deal with uncertainty and complex situations is to think clearly and act decisively, not cut deals that place Ukraine’s future in the hands of shadowy businesses. Only by clearly articulating and defending Ukraine’s national interests can today’s dispute over gas supplies establish our role in a transformed Europe.

Source: Daily Times

President Putin – Get Your Hands Off Ukraine

LONDON, England -- “One day Russia will stand alone and become destabilised…it is acting out of fear of the enemies that will surround her. That’s why they tried to block the gas.” Yuri Yakimenko. Director of Political Affairs, the Razumkov Centre.

Russian President Putin
With the male life expectancy rate, in Russia, plummeting down to 56-years-of-age, all due to chronic unemployment, alcoholism – vodka consumption is four times the West’s at plus 12-litres a year, and this applies merely to the moderate drinkers – and its bordering countries becoming more hostile to the Putin regime, Russia is turning in on itself and employing a new weapon.

Having dumped its nuclear arsenal, along with highly toxic munitions into various seas, and into the atmosphere - the Chernobyl case in point - Russia is now using its natural resources - oil and gas – to assert its dwindling global influence by temporarily halting gas supplies to Ukraine, and squeezing other EU countries, into the bargain. All a sign of the present Russian government running scared.

Yet, turning off the gas tap could be Russia’s most powerful weapon of decades past. It is a perfectly legal weapon, one that cannot be retaliated against, and it would arm-lock the West as never before.

As for the oil – lest us not forget that dozens of US drilling companies are sucking ‘the Black Stuff’ out of the ground – because the Russians lack even the most basic technology to obtain it for themselves – and getting rich into the bargain - as are the pro-Putin mega-rich oligarch businessmen, and ‘New Russians’, who bleed this wonderful country dry.

But, the name ‘Ukraine’ means ‘The Edge’, or ‘The Border’, has always been, an enviable land of riches in an enviable land of riches without natural defences.

”Vikings, Cossacks, Kaisers, Red Guards, White Guards, Commissars, and Nazis – they come and go and sometimes they come back again after everyone thinks they have gone for all time. And, for the Ukraine people – their rustic life replete with village duck ponds and overloaded horse-drawn carts – life is pretty unsettling to have Mother Russia next door.

If they wished, the Russians could turn of the gas tap, shut down Ukraine industries and freeze the Ukraine people in their own homes.

This is the sleety wind of economic reality. So, welcome to the new world order, where a complacent West has exposed its windpipe to the muddy boots of Russia and the dusty sandals of the Arab Muslim world – and does not yet realise just how serious its mistake is.

Of course the US oil and gas drillers care not a jot for the long-term consequences of Ukraine, nor the West. This weapon doesn’t turn any city into vapour, and nobody, allegedly, dies. This is no H-bomb, but the row over gas in Ukraine is not just a spat between two neighbours, it IS the beginning of a Russian campaign to become a world power once again. Yet the US of A does not give a damn.

There is no doubt that the past, and present Ukraine government is riddled with corruption thru-and-thru. On a suitably dreary morning, the world was entranced by the Orange Revolution, in which smiling young people took to the frozen streets to protest against the evil, corrupt ballot-riggers who had taken over their country. And, I was there, too.

The loser, Viktor Yanukovich, was portrayed as straightforwardly bad, unpopular and wrong and supported by Russians. If only the winners, the poison-scarred Viktor Yushchenko and his then ally, the beautiful Yulia Tymoshenko, had been as perfect and wonderful – and independent – as Westerners seemed to believe, as I did… alas this is not so.

There are those who portray Ukraine as a dreary, slushy country, more so with its over-ambitious plans to join the West, the EEC and EU, bless their humble souls.

And, this is also a country where it is hard to see where the money, or the justice will come from in a land where - like Russia - millionaire oligarchs gamble in kitschy casinos while the poor struggle by on shrivelled pensions, and the carefully husbanded produce of allotment gardens.

Nevertheless, Ukraine is rich in culture and soil. The people of Ukraine are among the most hospitable folk on this planet. Generous to a fault, meeting real Ukraine people is like stepping back into romantic postcard time, and the country’s prizes are the same as ever: black, fertile farmlands, strategic routes, ports and, of course, the gas and oil of the Caucasus, now far more important than they have ever been before.

These are increasingly dark times. The West’s true friends, and comrades are Ukraine – not Russia – and it is about the right moment for the West to show its appreciation of a small country that had the nerve, the spirit and the foresight to split from Russia, and tread an unknown path, alone.

Source: New Criminologist

Eastern Ukraine Tightens Gas Consumption Regime

KIEV, Ukraine -- The Dnepropretrovsk Region in eastern Ukraine has introduced a strict gas consumption regime for its enterprises, a Ukrainian television channel said Sunday with reference to the local administration.


The Ukrainian 5th TV channel said the local enterprises were urgently looking for alternative energy sources, mostly increasing coal and electricity consumption, after the authorities reduced gas consumption limits and gas prices started to rise steeply in the country.

The owners of Kryvorizhstal, Ukraine's metals giant, purchased last October by the world's biggest steel mill, Mittal Steel, in a bid of $4.79 billion, announced their plans to switch from gas to coke in steel production.

The Ukrainian NTN television channel said the industry of Ukraine's eastern coal-rich Donbass region was also experiencing the shortage of gas.

Transition from gas to other types of fuel will increase the prime cost of metal products and make Ukrainian enterprises less competitive, NTN said.

The critical situation with gas in the country arose a week after Russia started charging the country market prices for its natural gas, switching from the previous $50-60 per 1,000 cubic meters to $230.

Ukrainian Prime Minister Yuriy Yekhanurov said shortly after the new gas agreement was signed January 4 that Ukraine would reduce gas consumption from 76.5 billion cu m to 47 billion cu m annually in the next few years.

Source: RIA Novosti

The Man With The Razor

MOSCOW, Russia -- Power is a double-edged weapon, Vladimir Putin once told NEWSWEEK, likening it to a razor in the hands of a drunk. Wield it clumsily and you'll be hurt. Lately, Putin himself has played the drunk. And he's bleeding.

The Ukraine crisis is a post-Soviet tale of Jekyll and Hyde. By day, good Dr. Putin tries to remake Russia as a modern country. By night...
The crisis in Ukraine is only the latest in a series of self-inflicted wounds, ranging from the bungled takedown of the Yukos oil company to last year's disastrous meddling in Kiev's Orange Revolution. With Moscow assuming leadership of the G8—a long-sought validation of Russia's standing in the Western world—the Kremlin might have been on best behavior.

But no. By cutting Europe's gas supplies, only to see the tactic backfire, Putin & Co. once again showed themselves to be "the gang that can't shoot straight," as Stephen Sestanovich, a former U.S. ambassador to Russia, bluntly puts it.

It's puzzling. Like him or loathe him, Russia's president is anything but a klutz. Critics accuse him of rolling back democracy and seeking to resurrect an empire of Soviet Lite. But they rarely deny his accomplishments. Almost singlehandedly, he imposed order on the chaos of the post-Yeltsin years.

New tax laws have filled the state treasury; the economy is booming. After leaving the KGB, Putin even wrote a part-time grad-school thesis on how Russia could use its energy resources to regain its global sway. As president, he's done just that. So the question: how does he so often get things so wrong? The explanation lies in the nature of his regime, a self-defeating coupling of arrogance with paranoia, power with weakness.

Begin with the Ukraine debacle. Cliff Kupchan at the Eurasia Group in Washington describes it as a sort of post-Soviet tale of Jekyll and Hyde. By day, the good Dr. Putin seeks to remake Russia as a modern European country. Hence, he intends to clean up Gazprom and open it to foreign investors. (Never mind that, along the way, he'll enrich Kremlin cronies who'll get stakes cheap and later sell out for big money.)

He promises that Russia can be counted on as a secure, reliable energy supplier, in contrast to the uncertain Middle East. But then night falls. Almost despite himself, Putin succumbs to dark inner urgings: a desire to punish Ukraine, perhaps a determination to show Europe (and others) that a resurgent Russia can no longer be taken for granted. "They are drunk on petrodollars," says Kupchan. "That inebriation caused them to miscalculate." And what a miscalculation. Not even during the cold war did Russia resort to using energy as a weapon. It was the ultimate un-European and antimodern act, undermining Russia's progress on all other fronts.

Closer to home, the same dynamic is at work. The story of how Putin rebuilt the Kremlin's power is familiar. He is a Russian Pinochet, or Marcos, tolerant of divergent views as long as they do not intrude on politics. Yet within the Kremlin itself the picture is weakness, not strength, as factions compete for money and power in an elite bureaucratic free-for-all that checks the president's latitude.

Paranoia and isolation rule the Kremlin roost, says Pavel Felgenhauer, a prominent Moscow political commentator. Surrounded by spinmeisters, Felgenhauer argues, Putin trusts no one fully—neither their motives nor the information they bring him. Thus he delays decisions until forced by events, and then he often overreacts.

Frequently the result is some variation on Ukraine—a nightmare of unforeseen and ugly consequences. Think of the mishandled Beslan and Moscow-theater hostage crises, with their needless civilian casualties, or the ham-handed meddling in Kiev's "colored revolution" —which Kremlin extremists fear will spread to such neighbors as Belarus if not Russia itself, abetted by Western "spies."

A potentially even bigger mess is brewing to the south, unnoticed by most Russians—let alone the outside world. Contrary to Moscow's story line, its brutal war in Chechnya is spreading. For years Putin and his men indulged a fantasy that the fighting was the work of a small minority of Islamic "terrorists" who could sooner or later be crushed by raw military power.

Now a virtual civil war rages, with Chechens preying on one another, led by Kremlin satrap Ramzan Kadyrov and his personal army of mercenaries specializing in kidnapping, extortion and murder. Fearing Islamic insurgencies elsewhere in the region, Moscow has cracked down on the population at large, closing mosques and detaining hundreds (if not thousands) of suspected troublemakers while condoning corruption and abuse by local securit