Ukraine, Poland Seek Pipeline Progress

KIEV, Ukraine -- The Ukrainian and Polish presidents on Tuesday called for progress on getting the stalled Odessa-Brody oil pipeline up and running, saying the project could help enhance Europe's energy independence.

Odessa-Brody oil pipeline
Ukraine built the 667-kilometer (413-mile) pipeline in 2001 but it has remained largely idle because of bickering about whether to accept oil from Russia or to pump oil from Caspian Sea countries northward to Poland and on to the rest of Europe.

President Viktor Yushchenko has thrown his support behind pumping Caspian Sea oil, and recent plans have called for extending the line from the western Ukrainian town of Brody to Plotsk in Poland and, eventually, to Gdansk.

After Ukraine's dispute with Russia over gas prices earlier this year led to supply disruptions in Europe, the European Union began taking another look at its heavy dependence on Russian supplies. Poland, which receives most of its supplies from Russia, has taken a leading role in pushing for a kind of Euro-Atlantic energy security pact that would guarantee vital supplies of gas and oil. Poland has suggested the pact could encompass EU or NATO countries.

"The project Odessa-Brody and Brody-Plotsk-Gdansk could become one of the most interesting new projects in the European oil market," Yushchenko said after talks with his Polish counterpart, Lech Kaczynski.

Kaczynski said he hoped that issues concerning extending the pipeline would be resolved within three months.

The pipeline has started generating new interest recently. Kazakhstan, which possesses the largest oil deposits in the energy-rich Caspian Sea, wants to join the project in a bid to get its oil resources to consumers in the Baltics, and Yushchenko said a deal was signed a few months ago to build a large new oil refinery in Brody.

Source: AP

New Polish President Arrives In Ukraine For First Official Visit

KIEV, Ukraine -- Poland's new President Lech Kaczynski arrived in Ukraine Tuesday for a visit aimed at reinforcing the two neighbors increasingly close ties and shoring up this ex-Soviet republic's pro-Western path.

Ukrainian President Viktor Yushchenko, (R) and his Polish counterpart Lech Kaczynski during a press conference in Kiev, Ukraine, Tuesday, Feb. 28, 2006.
Kaczynski was scheduled to meet with President Viktor Yushchenko on the first day of his two-day trip, which will also take him to Kharkiv in Ukraine's Russian-speaking east, where many still consider Moscow to be Ukraine's most important partner.

He told journalists at the airport that he planned to discuss Ukraine's European ambitions, questions of energy security and, possibly, relations with Russia, Ukraine's Interfax news agency reported.

Kaczynski's visit comes just weeks before parliamentary elections that could determine whether Ukraine continues to push for speedy membership in the European Union and NATO or tilts back closer to Russia.

Kaczynski's predecessor, former President Aleksander Kwasniewski, angered Moscow with his support for Ukraine's Orange Revolution protests in 2004 which helped bring Yushchenko to power over a candidate backed by Moscow.

Poland, once Ukraine's enemy, has become one of Kyiv's closest allies in Europe, pushing for its membership in NATO by 2008 and calling on the EU to leave the door open to new members.

While NATO membership is championed by Yushchenko, the majority of Ukrainians remain deeply suspicious of their former Cold War foe and fear that the involvement in the alliance would drag Ukraine into new conflicts. Entering NATO has become a top campaign issue ahead of the March 26 election with a number of parties saying they would block any effort to join.

Meanwhile, Poland has also taken a leading role in pushing for a kind of Euro-Atlantic energy security pact that would guarantee vital supplies of gas and oil. Russia's move to temporarily turn off supplies to Ukraine last month over a gas pricing dispute renewed fears in Poland that Moscow is exercising political power through energy supplies.

Ukraine and Poland are currently in negotiations about the use of the Odessa-Brody pipeline to bring the Caspian Sea oil through Ukraine to Poland and the rest of Europe.

Source: AP

German Foreign Minister Visits Ukraine

BONN, Germany -- Germany 's foreign minister visits Ukraine on Tuesday, just weeks before parliamentary elections that will determine whether this former Soviet republic pursues its Western path.

German Foreign Minister Frank-Walter Steinmeier
Frank-Walter Steinmeier meets with President Viktor Yushchenko, Prime Minister Yuriy Yekhanurov and Foreign Minister Borys Tarasyuk, the Foreign Ministry said Monday. The talks are expected to focus on the political situation in Ukraine before the March 26 vote and on the country's European aspirations.

Steinmeier will also deliver a speech on Ukraine 's relations with Germany and the European Union at a Kiev university. The elections are seen as a crucial test for Yushchenko as he seeks to obtain enough support in parliament to pursue his goal of Ukraine joining the European Union and NATO. But the party of his pro-Russian rival, Viktor Yanukovych, is leading in opinion polls.

Under recent constitutional reforms that weaken the presidency, the parliament will assume some of the powers held by the president, including the right to name the prime minister and some Cabinet ministers. Yushchenko, an opposition leader, came to power after mass protests over election fraud that became known as the Orange Revolution. He won a court-ordered repeat vote in December 2004 after the Kremlin-backed victory by Yanukovych was annulled because of massive vote-rigging.

After taking office last January, Yushchenko promised to nudge this nation of 47 million closer to Europe and shake off Russian influence. But the hopes of many Ukrainians have given way to disillusionment because of his failure to make rapid progress in tackling poverty and corruption.

Ukraine 's economic growth plummeted from 12.1 percent in 2004 to 2.4 percent last year, and business leaders widely condemned the government's efforts to challenge past privatization deals and manage prices. The president's position has also been weakened by a January vote in parliament to sack his government, which Yushchenko has refused to recognize, over a controversial deal that ended a gas price dispute with Russia . The agreement almost doubled the price of gas imported by Ukraine , reports the AP.

Source: AP

Crimea Puts Out Russia’s Tongue

CRIMEA, Ukraine -- For Yanukovich! election bloc of Crimea that endeavors to win the state language status for Russian in Ukraine is ready to stage civil protest rallies in Crimea.

An activist of For Motherland! movement holds a poster reading: "Crimea is the lighthouse of Russia!" during a rally staged near the embassy of Ukraine
This militant sentiment of the bloc activists stems from the protest of Crimean prosecutors against resolution of Crimean Supreme Rada re: convening the consultative referendum on the Russian language status in the republic.
In the Supreme Rada of Crimea, the issue of referendum was spearheaded by For Yanukovich! bloc of the Party of Regions and Russian Bloc. The bloc gathered around 300,000 signatures in referendum’s support from January 5 to February 5.

The issue faced severe opposition of Crimean PM Anatoly Burdyugov and the deputies of pro-president’s Our Ukraine People’s Union. Nevertheless, of 62 deputies present at that parliament’s sitting, 53 deputies voted for holding the referendum on March 26, just in time of the parliamentary elections. During the referendum, respondents will be offered to answer whether they back up assigning to Russian the status of the second state language.

Straight after voting, Crimean Prosecutor Viktor Shemchuk lodged a protest to the parliament of Crimea, saying “determining and changing the constitutional system in Ukraine is the exclusive right of the people,” and that holding the local referendum on any changes in the state language is beyond the authority of the Autonomous Republic of Crimea, and that results of such referendums will be acknowledged invalid.

Russia’s President Vladimir Putin and Ukrainian President Viktor Yushchenko talked over the referendum in the phone conversation on February 23. Yushchenko said Ukraine has no problems with development of languages and emphasized that the state language in Ukraine is exactly the Ukrainian language.

Source: Kommersant

Ukraine's Supreme Court Starts Considering Appeal by Victims Of 2002 Air Show Crash

KIEV, Ukraine -- Ukraine's Supreme Court on Monday began hearing an appeal filed by relatives of those killed in a 2002 air show seeking harsher sentences for the pilots of a plane that crashed and demanding adequate compensation, officials said.

Lviv, Ukraine Air Show Tragedy July 27, 2002
Seventy-seven people were killed when the pilots' Su-27 jet fighter sliced into the crowd on the ground at a Lviv air field and exploded.

Last June, a military court sentenced the pilot and co-pilot, who ejected and survived, to prison terms of eight and 14 years, and ordered them to pay a total of some US$2 million (-1.6 million) to be used for compensation.

However, the average military pilot earns the equivalent of just US$100 (euro80) a month and there appears little chance they could meet the payment order.

The victims' families have received no compensation and filed an appeal in August, seeking harsher sentences for the pilots and demanding compensation of US$200,000 (-180,000) for each fatality.

The court started hearing the case on Monday, said court spokeswoman Natalia Sarapyn.

Source: AP

Official Says Russian Accused Of Weapons Smuggling Extradited To Ukraine By Czech Republic

BORYSPIL, Ukraine -- A Russian national wanted on illegal weapons trading charges, was extradited Saturday to Ukraine from the Czech Republic, Ukrainian authorities said.


Oleg Orlov arrived on a flight to Boryspil airport outside the capital, Kyiv, Interior Ministry spokeswoman Olena Melnyk said.

Ukrainian authorities have accused Orlov of smuggling an unspecified number of missiles of at least two types to China in May 2000, using falsified documents. In January 2002, he allegedly also smuggled at least one radar system to Eritrea using fake documents which stated the recipient should have been Romania.

In both cases, Orlov allegedly delivered the weapons with state-run company Ukrspetseksport, Ukraine's weapons exporting agency.

Orlov was arrested in the Czech Republic in 2004, shortly after a warrant for his arrest was issued in Ukraine. His request for asylum was rejected, and a court ruled last year that he could be extradited.

Source: AP

A Ukraine-Georgia Split?

TBILISI, Georgia -- The Georgian and Russian media is currently speculating about a kind of a "splitting" in the revolutionary friendship between Ukraine and Georgia.

Yushchenko (L) and Saakashvili (R) - can old frienships survive politics?
Analysts observe that it seems as if President Yushchenko of Ukraine, on the eve of the forthcoming parliamentary elections in Ukraine, is trying not to further irritate Russia and in doing so he is trying to keep a distance from Georgia. The Georgian media has observed that President Saakashvili seems to have become a little upset about this.

However, hurt feelings over that the fact that Ukraine seems to be keeping its distance from Georgia has no basis in common sense as every country acts according its national interests and politics is not a field for personal sentiments.

Against the background of Georgia's and Russia's deteriorating relationship, brought on by Georgia's demand for the removal of the Russian peacekeepers from the Tskhinvali, the Ukrainian foreign ministry expressed its readiness to deploy Ukrainian peacekeepers in the conflict zone. However, this prospect remains in the realm of fantasy as Ukraine has stated that it would require an official UN mandate to carry out such activities (while Russian peacekeepers are operating under a CIS mandate). In order for a UN mandate to be activated it would need to be approved by the UN Security Council, of which Russia is a permanent member with a veto right. Changing the existing CIS mandate is even less likely as Russia is undoubtedly the dominant power in this organization.

Meanwhile Russia constantly tries to provoke a confrontation between Georgia and Ukraine. Russian political scientist Sergey Markov has suggested that the purpose of Saakashvili's slated visit to Ukraine that was postponed last week would be to gauge the level of Russophobia among Ukrainian politicians. According to Markov, Ukrainian political circles would be wise not to play to the Georgian president's caprices, because those who forge anti-Russian bonds with Georgia could do irreparable damage to their relations with Moscow. Sakartvelos Respublica has also quoted Markov as saying that both Yushchenko and Saakashvili are failed politicians and their friendship is based on a mixture of democracy tainted with Russophobia.

This pressure from Moscow seems to be working to an extent as according to the newspaper Rezonansi representatives of Yushchenko's "Our Ukraine" party in the Rada/Parliament recently announced that they would not support the idea of sending Ukrainian peacekeepers to Tskhinvali region during the hearings.

Clearly Ukraine has decided to choose a softer approach for carrying on its relationship with Russia than the Saakashvili administration has. This has several reasons. First of all the nature of the confrontation between Ukraine and Russia is not of the same character as the one that is currently being played out between Georgia and Russia. Moscow and Kyiv may have broader economic issues at stake, but Russia's presence in the Caucasus has always been volatile and the situation in the conflict zones poses a very real threat of violence. Secondly the president of Ukraine is very different from President Saakashvili. Yushchenko is more moderate, less straightforward, and does not wear his emotions on his sleeve. The third argument is that before the forthcoming parliamentary elections Yushchenko does not need to further irritate Russia.

As Georgian analyst Paata Zakareishvili points out, if Yushchenko feels that, at the moment, a relationship with Saakashvili will irritate Russia he will keep his distance. Moreover, Zakareishvili believes that the Georgian president's recent bluster make him something of an international political liability. According to him, Saakashvili's recent stance has been so inflammatory that most probably Yushchenko feels uncomfortable next to him. Some observers speculate that maybe Yushchenko is, at this point, not so happy to be constantly reminded by Saakashvili of his extreme role in the Orange Revolution. "At the moment, standing alongside Saakashvili is somewhat discrediting," Zakareishvili explained in an interview with Rezonansi.

Saakashvili had high hopes for enlisting Ukraine as a staunch ally after the Orange Revolution. He speculated about the possibility of establishing a new geo-political reality. He wanted to use Ukraine as an engine to help fulfill his plans for Georgia and to integrate the country into European structures. However, it seems clear at this point that Europe is not willing to place Ukraine and Georgia in the same boat and that, from the European perspective, the two countries actually belong to different geo-strategic entities.

Georgian media has commented on a certain personal tension between Yushchenko and Saakashvili. Ukraine's retreat on the peacekeeping issue so irritated Saakashvili that he decided to cancel his trip to Kyiv and did not congratulate Yushchenko personally on his birthday on February 23. Georgian analysts predict a further rise in tension between Georgia and its current friends as Tbilisi's call to arms against Russia becomes increasingly cacophonous. "The more we confront Russia, the more our friends will turn their backs on us," said Ramaz Sakvarelidze in an interview with Rezonansi.

We must hope that it hasn't come to that and that our good friends will not forsake us in order to curry favor with Moscow; however a common sense approach on the part of our government would be much appreciated by our friends. The Georgian administration should start measuring its statements and actions and work to make sure that we do not get left out in the cold metaphorically, because physical cold is bad enough.

Source: The Messenger

An Explosive Gas Deal

WASHINGTON, DC -- Sometimes the stumbling blocks in international affairs are glaringly obvious -- such as the victory of Islamic fundamentalists in Palestinian elections, which has at least temporarily paralyzed the Bush administration's policy of promoting democracy in the Middle East.

Russian President Vladimir Putin
Sometimes, though, they are complicated, confusing or simply opaque, and thus barely reported on by the press or understood beyond a small circle of experts.

That might explain why there has been so little discussion in Washington of a gas deal between Russia and Ukraine this winter that, in its own way, may be as significant as the Palestinian vote.

Here is a terribly dense tangle of a half-dozen contracts that involves hidden partners, disputed pricing arrangements, and esoteric side agreements about transit fees and storage facilities. It is mind-numbingly boring -- and it may tip the balance against democracy in much of the eastern half of Europe.

The story surfaced briefly at the beginning of January, when Russian President Vladimir Putin made the mistake of partially halting gas deliveries to Ukraine -- and to much of Western Europe, which receives Russian supplies through a Ukrainian pipeline.

Chastised by big customers such as Germany, Putin -- who had been trying to force Ukraine to accept a 400 percent price increase -- quickly turned the gas back on. A couple of days later a deal was announced in Moscow and Kiev that appeared to resolve the dispute more or less equitably: The nominal price of Ukraine's gas rose by a mere 90 percent.

It was not until more than a month later that the Bush administration and other key allies of Ukraine's pro-Western government -- elected after the popular Orange Revolution of 2004 -- learned more about what was in the Russian-Ukrainian contracts. When they did they were stunned. Ukraine's president, Viktor Yushchenko, and Prime Minister Yuriy Yekhanurov had agreed to purchase Ukraine's gas through a Swiss trading company whose owners and beneficiaries are publicly unknown -- but are rumored to include senior officials and organized crime figures in both Russia and Ukraine.

They granted this same shadowy company a 50 percent share in the business of delivering gas to Ukrainian consumers. They accepted a price deal on gas delivered to Ukraine lasting only a few months but guaranteed that rock-bottom rates charged by Ukraine for the storage and transit of Russian gas to the West would be frozen for 25 years.

What does this have to do with democracy in Europe? In effect, some U.S. experts concluded, the Ukrainians may have sold to Putin that which he was prevented from stealing: a Kremlin stranglehold on Ukraine's government. The Russian leader poured money and men into his huge neighbor in late 2004 in a blatant bid to install a pro-Moscow strongman as president and make Ukraine's political system a mirror of the new authoritarian Russian order.

His overreach triggered the Orange Revolution and the subsequent democratic election of Yushchenko, whose goals include leading Ukraine to membership in NATO and the European Union.

Putin sees the fragile new democracy in Ukraine, and an allied government in the tiny Black Sea nation of Georgia, as dire threats. If Western-style freedom consolidates and spreads in the former Soviet republics of Eastern Europe, his own undemocratic regime will be isolated and undermined. What's more, Ukraine and its neighbors are likely to integrate with Europe rather than remaining economic and political vassals of Russia.

After a turbulent year of free politics, Ukraine has another crucial election, for a newly empowered parliament, scheduled for March 26. This time Putin has avoided open intervention in the campaign. Instead he triggered the gas crisis and presented his Ukrainian enemies with a choice: Swallow a mammoth midwinter price increase for the fuel Ukrainians use to heat their homes, just weeks before the election, or hand Russia a commanding long-term stake in Ukrainian energy infrastructure -- and the ability to trigger a gas supply crisis at any time.

Yushchenko and Yekhanurov chose the second option, while also agreeing to divert some of the huge profits to undisclosed beneficiaries. When confronted by U.S. officials, they claimed that they had no choice; until now they have denied knowing who owns the shell company through which Ukraine will channel billions of dollars.

How to save democracy in Ukraine, and the chance it will someday spread back to Russia? As in the Middle East, the Bush administration faces some difficult choices. If pro-Western parties lead the next government -- something that is far from certain -- President Bush could press them to scrap the gas deal as a condition for taking the first step toward membership in NATO, a "membership action plan."

But that would probably lead to a new face-off between Ukraine and Putin, in which Kiev would require U.S. and European support -- at a moment when those same allies are pleading for the Kremlin's help with the Palestinians and Iran.

Or the administration could decide to sidestep Putin's gas-fired imperialism, leaving a complicated issue to its present obscurity. The Ukrainians might eventually find a way to free themselves from Russia's chokehold. But they also might allow one of the signal democratic breakthroughs of the Bush years to suffer a crippling reverse.

Source: The Washington Post

Ukraine To Boost Gas Output By 50% To Cut Dependency

KIEV, Ukraine -- Ukraine, facing price increases from natural gas suppliers Russia and Turkmenistan, will seek to raise its extraction of the fuel 50 percent this year to reduce its dependence on Russia, PM Yuriy Yekhanurov said.


"We can extract at least 30 billion cubic meters of gas per year,'' Yekhanurov said Saturday in the central city of Poltava in remarks broadcast by Ukraine's Channel 5 television.

Ukraine depends on fuel imports, mostly from Russia, for about 80 percent of its energy needs.

President Viktor Yushchenko, whose election in 2004 soured Ukraine's relations with Russia, is eager to reduce his country's reliance on companies such as Gazprom and Transneft by attracting foreign investment to develop local fields and spending government money on foreign energy projects.

Ukraine wants to invest in gas and oil extraction in Libya, Egypt and the Black Sea together with international oil companies.

Ukraine will spend $100 million exploring for gas and oil this year, according to the government's budget.

Gazprom cut natural gas supplies to Ukraine on Jan. 1-3, forcing Yekhanurov's government to agree to pay almost twice as much for gas as in 2005. Ukraine's parliament last month voted to oust Yekhanurov's government because of the gas-price agreement. Yushchenko has asked Ukraine's Supreme Court to annul the vote and ministers have remained in their posts.

"Ukraine has at least 500 gas wells, but only 50 wells are in use," Yekhanurov said.

The government will auction licenses to extract oil and natural gas in the Black Sea on March 24, seeking $2 billion in investments, Yekhanurov said Feb. 10. Twelve companies, including Royal Dutch Shell and some Turkish companies, have already expressed interest in extracting gas and oil on Ukrainian territory, Yekhanurov said Feb. 10.

Ukraine, with 47 million people, consumes 76 bcm of gas annually. Half of that is imported from Turkmenistan through Russia, 20 bcm is extracted in Ukraine and another 16 bcm comes from Russian producers.

Source: Bloomberg

Yushchenko’s Party Demands Renunciation of Anti-Semitism

KIEV, Ukraine -- The Our Ukraine bloc, the party of President Viktor Yushchenko, has issued a demand that the Interregional Academy of Personnel Management (MAUP) renounce its policy of anti-Semitism, the Ukrainian news agency UNIAN reported.


Yushchenko himself had previously condemned MAUP, which is the largest private higher education institution in Ukraine, with tens of thousands of students in several campuses. Not all the students share the ideas of the rector and his cronies.

According to a statement issued by the bloc and received by UNIAN, the incitement of inter-ethnic enmity, anti-Semitism, and xenophobia by individual MAUP leaders on the pages of press MAUP controls constitutes a serious violation of human rights and casts a shadow on Ukraine, which after the events of the Orange Revolution set out on the path of democratic change.

"Our Ukraine believes that such activity is inadmissible in our country, especially in a period when the creation of an open civil society is taking place," Our Ukraine's statement declared.

"After the Orange Revolution, which in the eyes of the international community confirmed Ukraine as the heart of a new democracy, anti-Semitic attacks by MAUP have a destructive influence on the image of our country and are a hindrance for relations on the basis of trust with the biggest partner countries in the world."

Source: Israel National News

Polish Ambassador To Ukraine: We Expect A New Stimulus

WARSAW, Poland -- Since the Ukrainian state emerged, relations with Poland have become very close. Poland and Canada were the first countries to recognise Ukraine's independence in December 1991.

Viktor Yushchenko (L) with Jacek Kluczkowski, Polish ambassador to Ukraine (R)
Relations were also good between the former heads of states Lech Wałęsa and Aleksander Kwaśniewski of Poland and Leonid Kravtshuk and Leonid Kuchma of Ukraine. Traditionally, lively contacts were developing between regions, university schools, educational and cultural organisations. Which all proves that the quality of our relations has not been based exclusively on events of 2004, although the Ukrainiansĺ bid for democracy in that year met with wholehearted support from the Polish people.

Have these hopes come true? It is known that people had great expectations. It is unrealistic to expect that they all could come true within a year or two. But today Ukraine is different than is was a year ago. Probably a more objective assessment will be possible from the perspective of more years.

Surely, freedom of speech is now a fact and the oligarchs do no longer have such direct power as before. Present-day Ukraine is a democratic country. It pursues the road of democracy and market economy. This is to a large extent attributed to president Victor Jushtchenko. He is a man who has his values and ideals.

General elections will shortly be held and if Ukrainian electors will be consistent, Ukraineĺs democratic progress will continue. I do not think, however, that the situation has changed radically. Almost half of the electorate still supports one camp and the second half the other.

In certain sense, this reflects the defeat of the democratic forces. For since that time they have had the task of increasing the ranks of their allies. But the result of the elections, whatever the outcome, will not be disastrous for Ukraine and it will not affect relations with Europe and in particular with Poland.

As member of the EU, Poland is the spokesman of Ukraineĺs rapprochement with Europe. In terms of so-called European standards, Ukraineĺs situation has changed last year. Ukraine has scored a big success. It has proved to the world that it is a democratic state. Those in power do not threaten the electoral process and freedom of speech.

I do not think that the international community expected more than what had happened. Admittedly, the issue of Ukraineĺs EU membership was not placed on last yearĺs agenda yet. And it will probably not be placed this year either. Ukraineĺs most important task is to bring itself closer to European standards and to raise the competitiveness of its economy.

A new stimulus in Polish-Ukrainian relations is expected from the first visit to Ukraine by president Lech Kaczyński at the end of February. The new president seeks to activate foreign policy and attaches great importance to personal contacts. Hence establishing a personal contact with Victor Jushtchenko will become one of the priorities of the visit.

The talks between the presidents will also deal with Ukraine's relations with the European Union and the coordination of tasks in energy policy.

Poland as well as the European Union are interested in energy security. Both have been content that Ukraine and Russia reached an agreement. A situation such as that of Russia stopping gas supplies should not happen again. It was undreamt of till then that gas supply might simply be cut off.

Generally, such a policy is unacceptable. Deliveries of energy carriers should not serve as instruments of political pressure. Energy security must remain beyond politics. Now we have received a second lesson, another proof that energy carriers have become part of politics.

It has never been so good that it could not be better, And although trade turnover and investments are still rising we know that the growth dynamics in recent months might have been higher if the investment climate in Ukraine was better and if not for administrative obstacles and unfavourable decisions affecting Poland and which can hardly be understood.

Such clashes of interests, so it seems, are unavoidable. The elimination of reliefs in special economic zones was not aimed against Polish investors. The move was intended to hit the grey zone, the off-share investors who manipulated the rules to avoid en masse paying taxes.

Professor Marek Dąbrowski, a Polish economist serving as advisor to the authorities here told me that this was the only successful move in the economic policy of the former government of Julia Timoshenko. Alas, the baby was emptied out with the bath, and harm was done to honest investors, including those from Poland. It is now our task to seek compensation for losses incurred. We have succeeded in that only in part.

We are also speaking of bigger and spectacular actions such as the joint application to UEFA on organising European football championships, plans of extending the oil pipeline from Brody in the Ukraine to Płock, linking the wide gauge railway line connecting Silesia with Ukraine with Federal Russia's railway system which - when combined with the construction of a reloading terminal in Poland - would bring us into the Euro-Asian railway transportation system.

We are talking about that all and collaborating with Ukrainian partners.

Source: Polish Market

Ukraine Euro 2012 Bid In Doubt Over Stadium-Soccer Boss

KIEV, Ukraine -- Ukraine's bid to co-host the 2012 European Championship is in serious doubt because of a row over a construction site next to the ex-Soviet state's main stadium, the country's top soccer official said on Friday.


World governing body FIFA has told Ukraine's soccer federation it will withdraw permission for international matches to be played at Kiev's 84,000-seat Olympic stadium because of the construction of a nearby shopping and entertainment complex.

"The Ukrainian soccer federation views our bid now with serious doubt because the problem around the Olympic stadium remains unresolved," federation president Grigory Surkis said in a statement.

"The authorities are not doing everything they can to settle the future of our country's main stadium."

Ukraine's joint bid with Poland was a surprise inclusion on the shortlist of candidates to hold the 2012 tournament along with Italy and a joint entry by Hungary and Croatia.

The stadium, built in 1923, has undergone reconstruction several times and was used for the soccer tournament at the 1980 Moscow Olympics. It remains the centre of soccer in the country and draws huge crowds for major matches.

Construction has proceeded at the adjacent site despite objections from members of parliament and a restraining order by prosecutors. FIFA says the site would violate safety and public order regulations.

Surkis has demanded a halt to the project and threatened to bring soccer fans into the street to confront building workers. The project's backers deny any violation of safety regulations.

The federation president is running for parliament next month on a ticket opposed to liberal President Viktor Yushchenko -- as is national soccer team coach Oleg Blokhin.

Yushchenko last year issued an order to his government to take whatever measures are necessary to facilitate the 2012 bid.

Source: Reuters

Kiev Seals Gas Pact With Turkmenistan

KIEV, Ukraine -- The Ukrainian government settled a dispute with Turkmenistan over natural gas supplies, debts and payments, allowing direct deliveries of Turkmen gas to Ukraine, which imports about 80 percent of its gas.


Turkmenistan has not directly supplied gas to Ukraine since January, said Ukrainian Prime Minister Yuriy Yekhanurov. Instead Turkmen gas has come through RosUkr-Energo, a Swiss gas trader, which in turn bought it from Gazprom, Dmytro Marunich, spokesman for Ukraine's state-owned gas company, said Thursday in Kiev.

Ukraine and Turkmenistan "settled disputable questions in a natural gas agreement,'' Yekhanurov said in remarks broadcast on television.

Ukraine, Turkmenistan and Russia have been entangled in a gas dispute since last year, after Gazprom, which supplies about one-quarter of the gas consumed in Europe, decided to raise prices for Ukraine. Ukraine refused to pay, and gas supplies to some European countries fell as much as 40 percent in the first two days of this year when Gazprom stopped gas deliveries to Ukraine.

Gazprom officials said last month that Ukraine took some gas pumped through Ukrainian pipelines for clients in Europe. Gazprom ships about 80 percent of its gas exports to Europe through Ukraine.

Ukrainian officials, including spokesmen at Naftogaz Ukrainy, the state-run gas company, denied Gazprom's accusations. "There has been no unauthorized diversion of gas," Ukrainian Energy Minister Ivan Plachkov said Jan. 2. He said Ukraine was using its own gas and fuel from Turkmenistan "in strict compliance with the signed contract."

Turkmen President Saparmurat Niyazov said Feb. 17 that Ukraine owed his country $159 million for earlier gas supplies, complicating Ukraine's effort to ensure gas prices for this year.

The Ukrainian government denied it owed the money. It planned to sue Turkmenistan at the Stockholm International Court if it refused to renew direct shipments and if it raised gas prices, Naftogaz CEO Oleksiy Ivchenko said last month.

Ukraine will reduce its natural gas consumption 35 percent by 2030 and import no more than a quarter of its needs, Plachkov said Wednesday.

Source: The Moscow Times

Death And Taxes

KIEV, Ukraine -- “Nothing is certain but death and taxes,” wrote Benjamin Franklin in 1789. His words speak to everyone living in Ukraine today.

Benjamin Franklin on $100 banknote
While progress has been made, Ukrainians remain highly taxed. We all feel it every day, regardless of the type of taxation: VAT, import, telecommunications and the list goes on.

Taxation is so high and complicated to abide by at times that millions of Ukrainians have chosen to break the law rather than comply with the punitive nature of the tax regime in Ukraine today.

Surprisingly, there is not a single political party that has come out with a clear promise to lower taxes, letting Ukrainians keep more of their hard-earned money.

Meanwhile, influential businesses continue to bypass the complications and weight of Ukraine’s tax system using loopholes and clout, while millions of voters continue to lurk in the shadows.

Most political parties on the scene are pushing agendas appealing to emotions, not policies.

The populists and pundits in Ukraine’s political arena have failed to speak on concrete issues that affect everyday voters, opting often to focus on regional gas wars, pledging unrealistic salary and pension raises, etc.

Nice ideas and pretty pictures. But if any party wants support from the average Ukrainian, just promise to stop taking so much of their hard-earned money.

Not only will you win their votes, but if you succeed in reducing taxes, you will also clean up the country’s large shadow economy and fuel economic growth.

Source: Kyiv Post

Ukraine: Timoshenko the Kingmaker?

KIEV, Ukraine -- Ukraine is set to hold parliamentary elections March 26. While the results will reflect the influence of Russian interests, the West is too busy elsewhere to put up much of a struggle.

Yulia Timoshenko
At present, polls put all three parties with roughly equal shares of the vote. No matter who wins, however, the choice of Ukraine's next prime minister probably lies in the hands of former Ukrainian Prime Minister Yulia Timoshenko.

Analysis

Ukraine will hold elections for its parliament, the Verkhovna Rada, on March 26. The main competitors are familiar from the Orange Revolution. They include the Russian-backed Viktor Yanukovich and the Party of Regions, the bloc led by former Prime Minister Yulia Timoshenko, and President Viktor Yushchenko and his Our Ukraine party. Polls, albeit with a large margin of error, show the three in a tie with about 20 percent each; many voters remain undecided.

Under the new Ukrainian Constitution, Rada deputies will be elected under a purely proportional scheme using party lists and setting a threshold of 3 percent of the national vote to gain seats. The 450-member parliament will turn over completely.

No party will gain more than half of the seats in this race, so whichever wins the most seats will not necessarily form the next government, since other two could partner against the winner to form a majority. In this case, likely third-place candidate Yulia Timoshenko will decide which party gets to name the next prime minister, via her ability to choose which party to join in a coalition.

Generally speaking, Ukraine is split between a pro-Russian east and south and a nationalist, pro-Western center and west. The Party of Regions controls the pro-Russian part of Ukraine while Timoshenko and Our Ukraine share the nationalist vote.

The Party of Regions looks likely to win the most votes, but that does not mean it will form the next government. Yanukovich and his party are backed by powerful oligarch Rinat Akhmetov, who sponsored Yanukovich's 2004 presidential campaign and is believed to operate major criminal enterprises in eastern Ukraine. Akhmetov, who has ties to Russia, is on Party of Regions list.

Russia has shown that it will go far to keep Ukraine under its control to serve as a buffer, as exemplified by Moscow's recent natural gas cutoff. With increasing aggressive activity by Russia on the Crimean Peninsula, and Moscow keen on retaining control over natural gas transit, Russia will seek to influence the elections. It will go about this more quietly than it did in 2004. Whereas Putin personally supported Yanukovich's presidential candidacy before, this time Moscow is sticking to financial support, mostly routed through figures such as Akhmetov.

The Our Ukraine party does not have the votes to win, and Timoshenko's candidacy hurts rather than helps its chances. Timoshenko's popularity has fallen significantly since her denunciation of the natural gas delivery contract between Ukraine and Russia. In her concern for her personal and financial interests, Timoshenko miscalculated the degree of support for the deal, which Yushchenko backs.

Nevertheless, she is a charismatic populist, and still stands poised to pull votes away from Our Ukraine, though her party probably will not win the most votes. After the election, she will partner with whichever party gives her the best deal, despite her recent negotiations with Our Ukraine.

Meanwhile, Yushchenko's behavior, including the dismissal of Timoshenko as prime minister in September 2005, has not put him in the best light with the West. As with Russia, Western involvement in Ukraine's elections is also more circumspect than in 2004.

After the natural gas cutoff, the European Union has come to realize that seeking to pull Ukraine too far out of the Russian orbit jeopardizes its own energy supply. Washington still supports Yushchenko, but U.S. foreign policy has trouble focusing on more than one thing at a time, and has priorities beyond Ukraine at present.

The next prime minister will thus likely be a compromise candidate. And while the Rada elections could be seen as a referendum on Yushchenko and Our Ukraine's performance, they are really a contest between Russia and the West -- and the West is not trying very hard.

And while the Party of Regions may win the vote, this might not translate to the controlling the office of prime minister, unless perhaps Akhmetov is willing to make Timoshenko a very nice offer.

Source: Stratfor

The Real Secret Of Khrushchev's Speech

MOSCOW, Russia -- Many of those who were present recall the "deathly silence" that fell across the hall. It was the evening of February 25 1956. Unexpectedly, delegates at the 20th congress of the Communist party had been ushered into a final, closed session at central committee headquarters in Moscow.

Nikita Khrushchev delivering his "secret speech" denouncing Stalin
When the Soviet leader, Nikita Khrushchev, took the tribune and began to speak, some members of the audience fainted. Others clawed their heads in despair. Most could not believe their ears.

Without warning, Khrushchev had launched a fierce attack on his predecessor, the revered Joseph Stalin. The great vozhd (chief) who had guided the country through the second world war and died three years earlier was a "capricious and despotic character", Khrushchev said. In a four-hour indictment he condemned Stalin for creating a personality cult and unleashing "brutal violence" on anyone who stood in his way.

Uttered 50 years ago today, this was Khrushchev's secret speech: a coruscating indictment of Stalinism that would roll out across the world; the beginning of the "thaw" and the end of terror in a country where hundreds of thousands had been shot or sent to the gulags.

In the west, the speech has mostly been interpreted as a brave and moral step that changed the fate of the country. Earlier this month Khrushchev's granddaughter Nina, a lecturer who lives in the US, lauded him in the Washington Post for "outing Stalin as a monster".

Yet in Russia, amid muted celebrations of the anniversary, there is growing evidence that Khrushchev's speech was a cynical ploy to save his skin and that of his party cronies. "Khrushchev was trying to dump all the blame on Stalin when his own hands were drenched in blood," says Yuri Zhukov, a historian from the Russian Academy of Sciences who has studied newly declassified archives on the period.

The re-evaluation comes as critics accuse President Vladimir Putin of leading a drift towards an authoritarianism that resembles the rule of the communist strongmen who dominated the 20th century. New measures have included increased state control over broadcast media and the replacement of elected governors by appointees.

While he is not actively promoted by the Kremlin, Stalin remains hugely popular, with higher approval ratings than Khrushchev. Few politicians dare criticise his legacy despite pleas to do so from victims of his oppression. A survey by the All-Russia Centre for the Study of Public Opinion found that 50% of Russians believe Stalin played a positive role, up from 46% in 2003.

In 1956 Khrushchev's speech was certainly a rent with the past. Stalin, he said, had committed "serious and grave perversions of party principles" and triggered the "cruellest repression" by inventing the concept of the "enemy of the people". In 1937 and 1938, 98 of the 139 members of the central committee had been shot on Stalin's orders, Khrushchev revealed.

Many of the 1,400 people at the congress had only heard innuendo about such events and their shock was real; as was the fury of Stalin's supporters. "My impression was very negative," says Nikolai Baybakov, 94, then head of Gosplan, the Soviet central planning agency, and whose voice is still dark with fury at the insult meted out to his hero. "Yes, negative. Compared to Stalin, Khrushchev was a zero."

No debate was allowed, however, and the delegates went home in awe. Many were sunk in depression; two committed suicide within weeks.

Almost immediately, changes began. Although the full text of the speech was not published in the Soviet Union until the late 80s, excerpts were passed to local party officials and read at meetings. Political prisoners were rehabilitated, the press was given limited freedom and ties were re-established with foreign powers such as France and the US. Khrushchev's political enemies were sidelined, but they escaped the death sentence that would have been automatic under Stalin. Abroad, the speech sparked intense interest after it was leaked by foreign communists. The Observer devoted an entire issue to the 26,000-word text.

But while Khrushchev set unstoppable changes in motion, experts say he concealed his own role in bloody repressions. Only in the past five years has the full extent of his complicity in Stalin's terror become evident.

A telegram discovered in Politburo archives by Mr Zhukov shows that Khrushchev sent a request to Moscow to kill or imprison 30,000 people when he took over the leadership of Ukraine in 1938. A brutal purge of intellectuals and "hostile elements" was soon under way.

The year before, when he was party chief in the Moscow region, documents show Khrushchev asked permission to shoot 8,500 anti-Soviet "traitors" and dispatch almost 33,000 to camps. "These persecutions were real and they were carried out on Khrushchev's orders," Mr Zhukov says.

Dima Bykov, a young Russian intellectual, says Khrushchev was a willing servant of Stalin. "When I was a teacher I explained the 20th congress to my pupils using an analogy: imagine Himmler giving an anti-fascist speech at a Nazi congress after Hitler's death."

The limits of Khrushchev's thaw were evident a few months after the speech when he sent Soviet tanks to crush the Hungarian uprising. And while he allowed Alexander Solzhenitsyn to publish a novel about the gulags, he banned Boris Pasternak's Dr Zhivago for its unsympathetic portrait of the aftermath of the Bolshevik revolution.

Nikita Khrushchev, 46, a journalist who was named after his grandfather, admits the Soviet leader was not the hero he is often made out to be. "Of course, grandpa participated in the repressions," he says. "Of course, you can see his signatures on the lists of those to be dealt with. And, of course, many documents have yet to be released from the archives. But the fact that he dared to expose Stalin was his own courageous step. It was a real feat ... It meant he had overcome the Stalinist inside himself."

Mr Bykov says Khrushchev was a brave man who recognised his faults and attempted reform, but lacked the will to smash the system completely. "Khrushchev was half dictator, half liberal," he says. "Putin is just the same. The difference is that in Khrushchev's time the main movement was towards freedom. Now it is backwards. Krushchev initiated freedom. Putin is its graveyard."

Corncob Nikita

· Khrushchev was best known as "corncob Nikita" for his attempts to plant vast tracts of maize

· His Khrushchev's "secret speech" in 1956 took four hours to deliver and the full text - not published in the Soviet Union until 1989 - was 26,000 words long. In it, he said Josef Stalin had "practised brutal violence, not only towards everything which opposed him, but also towards that which seemed, to his capricious and despotic character, contrary to his concepts"

· The speech included details of a furious letter from Vladimir Lenin to Stalin in 1923 in which the former leader accused Stalin of insulting his wife

· Politburo archives show that Khrushchev concealed that he had requested permission to shoot or imprison about 70,000 people himself as a party boss in the late 1930s

Source: Guardian Unlimited

President Visits Bukovel

BUKOVEL, Ukraine -- Oleksandr Shevchenko, Director of Skorzonera, the company that owns Bukovel, told the President the resort would soon host up to thirty thousand tourists.

Ukrainian President Viktor Yushchenko (2L) with his wife Kateryna (C) son Andriy (2R) daughters Sofia (L) and Khrystyna (R) and son Taras pose at the Bukovel ski resort in western Ukraine.
They plan to build new ski lifts and ski runs. The development of the resort, funded by Ukrainian and foreign investors, will help create nine thousand additional jobs.

Ukrnafta also pledges to boost employment in the region. Its director, Ihor Palytsya, presented a 2006-2015 development plan to the President.

He said the company planned to increase the production of oil and intended to introduce new technologies in order to explore new oil fields. They believe this will help reduce municipal energy prices for the poor.

Mr. Palytsya also said they were going to build more gas stations. At the moment, Ukrnafta owns 588 stations.

Source: President Yushchenko's Website

More Carrot, Less Stick

KIEV, Ukraine -- Last week, a top official from the U.S. Commerce Department came to Ukraine to announce that his country had finally recognized the former Soviet republic as a market economy.

David A. Sampson, the Deputy Secretary of the U.S. Department of Commerce, in Kiev last week
Up until then, Ukraine was vulnerable to various U.S. trade restrictions, which it could not appeal in court with the argument that the country’s economy was market-oriented.

Many of these trade restrictions are still in place by the EU, Russia, the U.S. and other countries as Ukraine is still not a member of the WTO. But now Ukraine has a chance to defend its export rights to the U.S. in court without having to prove it’s a market economy.

We congratulate Ukraine on this accomplishment and welcome everything that it will mean for its dynamic economy. However, much more remains to be done before Ukraine takes the much more important step of becoming a WTO member.

Ukraine has worked hard convincing other WTO member countries one by one to accept it as a member. President Viktor Yushchenko’s administration has been active in pushing much of the necessary legislation through parliament.

The process, however, is certain to continue being painful, as a large portion of the legislature – communists and lawmakers loyal to business interests keen on keeping protection laws in place – continue to block the rostrum whenever WTO-friendly bills are discussed. “Protection of the domestic producer” is their self-serving battle cry. Spoiled by sweet inside deals which gave them monopolistic control over a large share of Ukraine’s economy, they have no desire to face competition, which fuels growth and quality in any open market.

It is probably no coincidence that the factions in parliament which oppose WTO membership often voted in line with Russian interests on issues such as an official status for the Russian language and joining a trade union with Russia.

Moscow, which has urged Ukraine to join the Single Economic Space and hammered its southern neighbor with higher gas prices, also wants to join the WTO, but doesn’t like the idea that Ukraine could get in first. Being first would give either country an enviable advantage over the other: setting conditions for aspiring members. The U.S. Commerce Department seems to be eager to avoid such a conflict by suggesting Ukraine and Russia join simultaneously.

We salute any proposal that would allow Ukraine to join at least as early Russia, which has more than once displayed its desire to pressure Ukraine into becoming more compliant to its interests.

Moving on, the U.S. and EU need to continue rewarding Kyiv’s reform efforts. And the next step for Washington should be Congress’s annulment of the Cold-War era Jackson-Vanik amendment, which authorized trade restrictions intended to pressure the Soviet authorities into letting Jews emigrate.

This goal has long been achieved. The Senate removed Ukraine from the list last November. The bill has yet to be approved by the House of Representatives. If the U.S. is serious about helping Ukraine, be it for geopolitical reasons or honest desire to aid an aspiring democracy, it should ensure that this is accomplished soon.

Source: Kyiv Post Editorial

Top Ukraine Diplomat Says Call For Referendum On Joining NATO Is A "Provocation"

KIEV, Ukraine -- Ukrainian Foreign Minister Borys Tarasiuk on Friday called opposition parties' call for a referendum on whether or not to join NATO a provocation.

Foreign Minister Borys Tarasiuk
"Given the political forces proposing the referendum, it looks like an attempt to stage a full-scale national provocation," the Interfax news agency quoted him as saying during a trip to the northern city of Chernihiv for public hearings on Ukraine's Euroatlantic integration.

The hearings are part of a state program informing people about the alliance.

President Viktor Yushchenko has made NATO membership a top goal, but many Ukrainians, particularly in the Russian-speaking east, still have a negative attitude toward their former Cold War foe.

Viktor Medvedchuk, leader of the opposition Socialist Democratic Party of Ukraine United and former President Leonid Kuchma's chief of staff, has called for a referendum to let voters decide whether or not Ukraine should join the alliance.

Ukraine's NATO ambitions are strongly supported among the 10 former communist nations that have already joined the alliance. Some other NATO members insist Kyiv must first push through reforms to underpin a fragile democracy, tackle widespread corruption and streamline the outdated Soviet-era military apparatus.

The alliance has said it will help Ukraine push through the necessary reforms, but has dodged questions about when it might offer membership.

Source: AP

The First Nail In The Coffin Of Communism

PRAGUE, Czech Republic -- Fifty years ago this month, Soviet leader Nikita Khrushchev delivered to a closed session of the 20th Congress of the Communist Party of the Soviet Union remarks about his predecessor Josef Stalin and the latter's "cult of personality" that have passed into history as "the secret speech."

Soviet leader Nikita Khrushchev
On the basis of his later comments, Khrushchev appears to have decided to deliver that speech as both a tactical move against his opponents within the Soviet leadership and as a broader effort to enhance the legitimacy of the communist system. But whatever his intentions, his remarks on 24-25 February 1956 had a far broader and deeper set of implications. Indeed, by what he said in that speech and even more by what he left unsaid, Khrushchev, in the words of Anatoly Chubais, drove "the first nail into the coffin" of that system.

Himself one of Stalin's closest lieutenants, Khrushchev [born in Kalinovka, Ukraine] faced an impossible task, even in his own terms. In order to reassure his party comrades that there would be no going back to the arbitrary violence of the past, he had to blame Stalin for all the evils of the system over which the late Soviet dictator had presided for so long without implicating himself and his supporters in those crimes or disowning the accomplishments of the system -- the collectivization of agriculture, the construction of a powerful industrial base, and the defeat of Nazi Germany in World War II.

Khrushchev devoted almost all of his speech to the ways in which Stalin arbitrarily and brutally destroyed Lenin's legacy and the cream of the Communist Party, forcing party leaders to confess to crimes they had not committed and then executing them. All of the cases that the party had examined after Stalin's death, Khrushchev said, were found to have been "fabricated," and consequently he and the leadership were moving to "posthumously rehabilitate" them -- perhaps guaranteeing that that term will be as closely linked to Khrushchev as the phrase "enemy of the people" that Khrushchev insisted -- incorrectly -- that Stalin had invented is with him.

Throughout that part of his speech, Khrushchev repeatedly insisted that "Stalin decided everything." But as he documented the crimes of his predecessor -- the torture, the forced confessions to crimes no one had committed, and the killing of so many leading party members -- Khrushchev in 1956 was not able to avoid mentioning those who had been Stalin's henchmen: Khrushchev talks about one official who served Stalin loyally as having "the brain of a bird and being completely degenerate morally," and he describes as especially evil Stalin's secret police chief, Lavrenti Beria.

Khrushchev was obviously aware that some in his audience would be asking themselves just where Khrushchev and other members of the Politburo had been when all this was taking place. And not surprisingly, Khrushchev went to great lengths to address that as-yet unspoken question. Pointing out that Stalin was prepared to kill anyone he suspected of resisting him in any way, Khrushchev suggested that senior officials were thus put in "a difficult position" whenever they in fact disagreed with the dictator.

Another section of the speech was devoted to demolishing Stalin's efforts to promote himself as an equal of Lenin and as a brilliant wartime leader. Neither is accurate, Khrushchev said, and again he provided details about Lenin's now famous testament calling for the party to remove Stalin as party secretary because of his "rudeness," about Stalin's editing of his own biography and that of others concerning the revolution, and his failure to prepare the Soviet Union for the war with Hitler that so many people had warned him of -- and then his disastrous involvement in the planning of military actions.

And in yet a third section of his long speech, Khrushchev detailed Stalin's increasing suspiciousness and capriciousness in the postwar years, a period when members of the Communist Party and the Soviet people expected that their remarkable and heroic efforts in that conflict would be rewarded. But instead of doing that, Stalin dreamed up conspiracies that never were, from the Leningrad Affair to the Doctors' Plot, to justify a return to the kind of repression he had overseen before 1941.

In only two places, however, did Khrushchev even mention the consequences of Stalin's crimes for those other than the party and state elite itself. He did discuss Stalin's baseless and criminal decision at the end of World War II to exile entire peoples from the Caucasus to Central Asia. And he suggested that Stalin's capriciousness had unsettled many Soviet citizens and meant that they worked less effectively for the party and the common cause of building communism.

But those few remarks had the effect of calling attention to what Khrushchev had avoided talking about -- the party's lack of concern for the people in whose name it ruled and its willingness to try to defend its own members regardless of what happened to others. Thus, Khrushchev did not mention the millions of deaths from the Soviet dictator's "terror famine" in Ukraine and elsewhere. He did not talk about the millions of ordinary Soviet citizens who were swept up in the terror of the late 1930s and sent to build the factories in which Khrushchev took such pride. And he did not talk about the destruction of the culture and way of life of all the peoples of the Soviet Union, Russian and non-Russian alike.

Khrushchev was clearly aware at the time of the danger of any broader discussion of the issues he had raised and not raised. At the end of his speech, Khrushchev told his comrades, "We cannot let this matter get out of the party, especially not to the press.... We should not give ammunition to the enemy; we should not wash our dirty linen before their eyes." But within hours of the moment at which his remarks were received with what the transcript describes as "tumultuous applause," Khrushchev's "secret speech" had been leaked to the West and, thanks to the efforts of international broadcasters like Radio Liberty, Radio Free Europe, and the Voice of America, reached the peoples of the Soviet bloc and the Soviet Union in particular.

Their reactions were rather different than those of Khrushchev's fellow party members, and as a result, the man who only a few years later would claim that Communism would "bury" the West had taken the first step on a road that ultimately meant that he, like others who tried to save that system or who now hope to revive it by posing only some questions while ignoring others, is now recognized as one of the most important gravediggers of that system.

Source: Radio Free Europe

Why English Should Be Ukraine's Second Language

KIEV, Ukraine -- On January 29 Dmytro Pavlychko again warned Ukrainians about the threat of Russian becoming the official second language.


At a time when the educated in every country in the world, including China and Russia, are learning English as a second language, because English is the de facto world-language, Ukraine's neo-soviet Russophile politicians threaten to isolate the country from the rest of the world with their Russian language legislation and throw Ukraine back culturally 100 years.

Continued use of Russian for business and in the public sphere would send the message that "capitalism speaks Russian;" it would reinforce Russophile orientations and the notion that Ukrainian is only suitable for domestic use. Russian as a second language would mean educated Ukrainians who want contact with the world would have to learn a third language.

Although the language issue is overshadowed in the domestic media by well-merited concern over poverty and corruption, and foreign neo-liberal commentators ignore cultural issues because they think them irrelevant, the economics and politics of public language-use in Ukraine should not be overlooked as language-use is related to political orientations.

Fifteen years after independence public life, business and the media is still Russian-speaking outside Ukraine's three westernmost provinces. At the beginning of this century, In a country where 20% of the population were Russian speaking Russians, 33% were Russian speaking Ukrainians and 47% were Ukrainian speaking Ukrainians; 10% of Ukraine's annual published book titles, 12% of its magazines, 18% of its TV programs and 35% of its newspapers were in Ukrainian.

The government does not enforce its language legislation. All government employees must speak Ukrainian, but most don't and continued to be paid nonetheless. Whether or not foreign corporations use Ukrainian inside their stores is ignored. MacDonald's does use Ukrainian on its menus. Baskin Robbins does not.

As of 2004, teachers still used Russian in "Ukrainian language" schools, some of which also had separate Russian language classes. Much more than the legally permissible 50% of TV programming is in Russian. The neo-soviet Russophile dominated parliament, for its part, has refused to follow the lead of the Russian government and abolish taxation on domestic publications, thus keeping Russian-language products in Ukraine cheaper than Ukrainian - or English-language products.

The fact that Ukrainian speakers buy fewer books and audio visual products than Russian speakers because they are poorer also plays a role here. Perhaps Ukraine's moguls could produce and sell Ukrainian-language audio-visual products and books for less than Russian- language products and finance a Ukrainian- language mass culture, but they do not seem to have tried.

It is thought that as much as 80% of Ukraine's media is owned either by Russians or Russophile Ukrainian citizens. Sixteen years after independence, however, no one really knows who owns Ukraine's media. In 2006 the Ukrainian Helsinki Union, funded by Soros's Renaissance Foundation, was able to reveal partial information about 10 stations.

Foreign companies, of which 3 are Russian, own all or part of at least 9, individuals unknown own all or part of 3, and one is partly owned by a Russophile Ukrainian oligarch.

Mass-circulation Russian-language dailies like Bulvar, Kievskie vedomosti and Fakty i kommentarii are not merely sympathetic to neo-soviet Russophile politicians. They regularly belittle, ridicule and mock things Ukrainian, and highlight Russian rather than Ukrainian pop- stars, movies and television programs.

Ukrainian-language anti-Russian opinion is limited to low-run fringe publications. Russian popular newspapers and domination of the public sphere, however, does not promote political loyalty to Russia. What it does do is promote Russophile/CES orientations thereby reinforcing the old imperial Russian tie and impeding the creation of new ties with the rest of world -- which speaks English.

Logically, there is no necessary correlation between language-use and loyalties. Scots, Irish, Indians, Americans, Australians, and Canadians, have all expressed their nationalisms in English. Corsicans and Bretons have used French, and Latin Americans have used Spanish. Ianukovych and Ukraine's Communist Party leaders even speak Ukrainian when they must, and use it as a medium for neo imperial/ neo-soviet ideas.

On the other hand, no one can ignore that few of Ukraine's Russian speakers support political reincorporation into Russia and that almost none have emigrated to Russia since 1991. Ukrainian Russian- speakers can be as pro- EU as Ukrainian -speakers, Russian -speaking Ukrainians can be Ukrainian patriots, and Russian-speaking eastern Ukrainian political leaders sooner see themselves as representing a territorial region than a Russian-speaking population.

Russian-speaking Kiev voted overwhelmingly for Yushchenko in 2004 and Russian speakers were as critical of Putin's gas price-rise policy as were Ukrainian speakers. Historically, however, Russian was not a medium for Ukrainian national ideas and today Russian is rarely used to publicly promote Ukrainian national ideas or integration with the EU.

Consequently, to the degree that the correlation between Russian language-use and pro- Russian political/cultural orientations, though not political loyalties, remains high, Russian as Ukraine's second language would reinforce Russophile/CES orientations.

Russian language-use in business and the public-sphere will return Ukrainian to its pre- 1991 status a second-rate medium suitable only for folk-culture and market-place bartering.

Russian language-use, in short, impedes Ukraine's integration with the EU and the rest of the world. Teaching Russian as a second language in Ukraine's schools will isolate it from the rest of the world. Teaching English would not.

Source: The Action Ukraine Report

Ukraine's Crimea Calls Vote On Russian Language

SIMFEROPOL, Ukraine -- The parliament in Ukraine's Crimea peninsula, a region populated mainly by ethnic Russians, on Wednesday called a referendum on granting official status to the Russian language alongside Ukrainian.

Swallow's Nest Castle, Crimea
But public prosecutors in Crimea said they would contest the move, the subject of heated disputes in the early years of post-Soviet independence, as unconstitutional.

A total of 53 members of the 100-seat parliament in the region, which enjoys self-government, voted to hold the plebiscite alongside Ukraine's March 26 parliamentary election.

The issue of equal status for Russian invariably becomes an election issue as does the state of relations with Russia, a focus of the 2004 "Orange Revolution" mass protests which helped propel liberal Viktor Yushchenko to power.

Opposition parties in the current campaign are demanding equal recognition for Russian while calling for close ties with Russia and opposing the president's call for NATO membership.

Under the post-Soviet constitution, Ukrainian is the sole state language, though the country remains split between its nationalist Ukrainian-speaking west and Russian-speaking east, more sympathetic to Moscow.

"A decision on holding a referendum has no grounding in law as Crimea has no jurisdiction over such issues," said Crimea's chief prosecutor, Viktor Shemchuk.

Crimea, once the playground of the Soviet elite, was under Russian control from the late 18th century until it was handed to Soviet Ukraine as a "gift" by Kremlin leader Nikita Khrushchev in 1954, when communism's collapse was unthinkable.

Russian nationalists held power for a time in Crimea in the 1990s, but authorities in Kiev took steps to curtail calls for the peninsula to revert to Russia. Some nationalist politicians in Moscow still demand renewed control over the peninsula.

Independent Ukraine has consistently tried to promote Ukrainian in schools and the work place. But as Ukrainian was subjected to pressure in both communist and tsarist times, many ethnic Ukrainians still speak Russian as their first language.

Source: Reuters

Activists Irate Over Deportation Of Uzbek Refugees

KIEV, Ukraine -- Ukraine’s decision to deport 10 asylum seekers from Uzbekistan seeking refuge in Crimea has fueled protests in the halls of the United Nations and has human-rights activities crying foul, alleging that due process was violated.

An Uzbek man covers himself with a rug in a refugee camp outside the Kyrgyz village of Barash on the Uzbek-Kyrgyz border, 40km from Andizhan.
Their deportation also raises concerns that the refugees will face torture back home under the totalitarian regime of Uzbekistan President Islam Karimov, who last year used the military to crack down on pro-democracy protests resembling Ukraine’s Orange Revolution.

The Uzbek citizens were detained by Ukraine’s State Security Service (SBU) on Feb. 7 in the Crimean towns of Nizhnygorsk and Belogorsk. They were put on a flight to Tashkent, the capital of Uzbekistan, a week later.

Nine of the Uzbeks had already registered with the United Nations High Commissioner for Refugees (UNHCR) as asylum seekers. The other one, according to UNHCR, was intending to register, but Ukrainian officials deported him before they could complete the procedure.

“UNHCR learned about the deportation of the Uzbek asylum seekers from the media,” said Natalia Prokopchuk, the spokeswoman for UNHCR’s Kyiv Office.

“We knew that they had been arrested, and our representatives were holding negotiations with the Security Service of Ukraine.”

Prokopchuk said SBU officials assured the UNHCR that legal procedure would be followed. The next day, the asylum seekers were deported.

SBU spokeswoman Marina Ostapenko said that the deportation was perfectly legal.

The process of obtaining refugee status involves two stages. First, a person applies to Ukraine’s Migration Service. If the migration service denies the asylum seeker, the applicant can appeal against the ruling. While the asylum seeker is waiting for a court decision, he is protected by law from deportation.

But, the Interior Ministry says, the Uzbeks waved their right to appeal the refusal and thus had no right to stay in the country.

Human rights activists disagree.

Alexander Petrov, deputy director of Human Rights Watch in Moscow, said Ukraine broke at least three international agreements, including the International Refugee Convention, the European Convention on Human Rights and the U.N. Convention against Torture.

“This event will negatively impact the image of Ukraine,” Petrov said. “This means that Ukraine does not abide by its obligations.”

Petrov does not think that the deportations were a mistake, recalling that the last time Ukraine deported opposition politicians back to Uzbekistan was in 1999, during Leonid Kuchma’s presidency.

UNHCR officials, speaking on condition of anonymity, said the Uzbek authorities requested extradition of the asylum seekers because of the latter’s involvement in last May’s Andijan protests, which turned violent when Uzbek police and soldiers allegedly fired on a crowds. Hundreds were allegedly killed.

The [Uzbek] government has denied all responsibility for the killings. It claims the death toll was 173 — including law enforcement officials and civilians killed by so-called attackers. The government claims the attackers were “Islamic extremists,” who initiated “disturbances” in the city.

“Uzbek authorities did everything to hide the truth behind the massacre and have tried to block any independent inquiry into the events,” according New York-based Human Rights Watch.

Home sweet home

An activist with the Uzbek opposition Birlik (Unity) Party, Ismail Dadajanov, denied that the deported asylum seekers had anything to do with Andijan.

“[The charges] are not true,” Dadajanov said.

“Eight of them came to Ukraine six months before the Andijan events,” he added.

Tolib Yakubov, the head of the Society for Human Rights Protection in Uzbekistan, told the Post in a telephone interview that the Uzbek authorities often use the Andijan incident as a pretext to persecute people.

“Many people are trying to flee the country now,” Yakubov said, “and the authorities are branding every one of them as a criminal.”

According to him, the practice is widespread, and most cases are heard behind closed doors. Even the relatives of the defendants are not informed about the outcome of the trial.

Yakubov said that of about 500 members of his organization, seven are currently in prison, all serving terms from between five and seven years.

According to Dadajanov, the SBU actually detained 11 Uzbeks, but one of them, a 29-year-old named Khanzaev, disappeared.

“Our sources in Uzbekistan say that all 10 of them were arrested when they landed in Tashkent,” Dadajanov said adding “we have no idea what happened to Khanzaev. We are afraid that something bad has happened to him.”

Dadajanov ruled out media reports that Khanzaev had managed to avoid deportation, adding that Khanzaev has a heart condition and diabetes.

Unanswered questions

Yakubov said that on behalf of his organization, he personally appealed to the Ukrainian embassy in Uzbekistan to block the extradition of four well-known Uzbek opposition figures. But he didn’t get a response, and weeks later all four were deported to Uzbekistan and are currently in prison.

“They were all sentenced to 15 years imprisonment,” Yakubov said.

“After that I gave up on Ukraine,” he added.

Dadajanov says up to 2,000 Uzbeks have fled their home country and come to Ukraine, but only around 2000 are registered officially. The rest, according to him, are too scared to apply.

“Many questions remain unanswered,” said Ihor Semivolos, Executive Director of Ukraine’s Association for Middle East Studies.

“One of them is why the Uzbeks were deported in such a hurry.”

Semivolos thinks that after the asylum seekers were registered with the Ukrainian authorities, their information was sent to Uzbekistan for verification. The Uzbek security services then opened criminal cases and requested their extradition.

But he doesn’t blame Ukrainian President Viktor Yushchenko or the authorities in Kyiv.

“This was decided on the level of a certain region, a certain institution, and was due to the historical ties between the security services of the former [Soviet] republics,” Semivolos said.

On Feb. 21, Vasyl Fylypchuk, the head of the press service of the Ministry of Interior, backed the deportations, arguing that the Uzbek nationals had criminal ties.

Uzbek refugees living in Ukraine no longer feel safe here, Dadajanov said adding that they have begun asking UNHCR to find them asylum somewhere else.

Source: Kyiv Post

Ukraine Threatens To Take Gas Debt Dispute With Turkmenistan To Court

KIEV, Ukraine -- Ukraine threatened Wednesday to seek international arbitration over a gas dispute with Turkmenistan if the Central Asian country does not observe a deal on gas supplies.

Oleksiy Ivchenko, head of the state-run Naftogaz
"If they intend to talk with us outside the framework of the agreement, we will respond, including going to Stockholm," said Oleksiy Ivchenko, head of the state-run Naftogaz gas company.

He was referring to the Arbitration Institute of the Stockholm Chamber of Commerce, which is responsible for settling such disputes if both parties agree to its mediation.

Turkmenistan on Sunday accused Ukraine of owing it US$160 million (-134 million) for past gas supplies. Ukraine's Naftogaz countered, however, that Turkmenistan owed Ukraine US$11 million (-9.2 million) because Kyiv had paid for gas it had not received.

Turkmenistan is the second-biggest gas producer in the former Soviet Union after Russia, and is Ukraine's biggest supplier. The country's gas supplies took on a greater importance last month after a bitter dispute between Ukraine and Russia over gas prices.

Under a face-saving agreement, Ukraine agreed to pay nearly double the price for gas by blending Russian gas priced at US$230 (-193) per thousand cubic meters with purchases of much cheaper Turkmen and other Central Asian gas.

The cheaper price was made possible because Ukraine was already locked in a deal to receive about 40 billion cubic meters of Turkmen natural gas this year, with the price set at US$50 (-41) per thousand cubic meters in the first half of the year and US$60 (-50) in the second half.

As part of the Kyiv-Moscow deal, intermediary company RosUkrEnergo took over responsibility for transporting that Turkmen gas to Ukraine and mixing it together with Russian and other supplies for a rate of US$95 (-80) per 1,000 cubic meters.

Ivchenko also said that Turkmenistan had accused Ukraine of being in debt to justify a gas price increase.

"We will not compromise," he said. "We believe there are no grounds to raise the price."

In January, Turkmenistan warned it may seek to nearly double the cost of its gas, sparking concern in Ukraine.

Source: AP

Orange Camp Coalition Talks Collapse

KIEV, Ukraine -- Coalition talks between two leading political forces that backed President Viktor Yushchenko during last year’s Orange Revolution appeared to have collapsed Feb. 22, after Yushchenko rejected a call by Yulia Tymosheko’s Bloc to ink a coalition agreement she drafted.

Yulia Tymosheko
Days earlier, both sides expressed their eagerness to reach an agreement on the formation of a coalition that would appoint a new government after the March 26 parliamentary election.

Tymoshenko’s camp claimed they would no longer seek a coalition, blaming Yushchenko-loyal blocs of holding secret talks with Regions of Ukraine, led by Viktor Yanukovych, who squared off with Yushchenko in 2004.

Rising tension

On Feb. 21, the political blocs representing Tymoshenko and Yushchenko publicized their own draft versions of an agreement that was purported to bring an end to months of bickering within the so-called Orange camp, which succeeded in lifting Yushchenko to the presidency in the midst of mass protests against election fraud in late 2004.

The political bloc of Tymoshenko, who turned critical of Yushchenko and parties loyal to him after her ouster as prime minister last fall, posted a draft agreement already signed by Tymoshenko on the bloc’s website Feb. 21. Yushchenko, on Feb. 22, criticized Tymoshenko for signing it herself, calling the move a PR stunt.

The Yushchenko-loyal Our Ukraine bloc followed suit, posting its own draft agreement later on Feb. 21.

In both draft agreements, the parties pledged to form a parliamentary majority that would go on to establish a government. Constitutional reforms adopted in the midst of the 2004 Orange Revolution stipulate that a majority formed within the next parliament will select the prime minister and most members of the government, with the president to select the ministers for defense and foreign affairs.

The draft accords of the Yushchenko and Tymoshenko blocs are similar in that they include a condition that yields the coalition member gaining the highest number of votes the right to submit a candidacy for the post of prime minister, and deny other coalition members the right to veto the candidacy.

Current opinion polls show nearly 30 percent voter support for Regions of Ukraine. Our Ukraine trails with almost 20 percent of the electorate. Tymoshenko has 15 percent. About 20 percent of voters remain either undecided or express their intention to vote against all candidates.

Both draft agreements also call for the re-privatization of strategic enterprises “illegally” privatized in the past, a major campaign agenda of Tymoshenko. Some analysts have criticized the former prime minister’s mass privatization reviews, pointing to diminished investor confidence in Ukraine. Lastly, both agreements advocate Ukraine joining the European Union.

The draft agreements differ in several key aspects. Tymoshenko’s draft calls for the controversial natural gas agreement reached this year with Russia to be cancelled. Our Ukraine, whose list is topped by Premier Yuriy Yekhanurov, proposes only improving the gas agreement.

Political analysts have in recent weeks played down the chances of a coalition agreement being reached before Mar. 26.

Political analyst Andriy Yermolaev told the Post on Feb. 22 that if both sides come to an agreement it would be “largely symbolic,” expressing the intentions of the political allies-turned-foes to unite.

Voter approval for Yushchenko and Tymoshenko has dropped since early last year, as supporters became disheartened by internal bickering, which culminated in last fall’s ouster of the government.

Other parties still crucial

Meanwhile the Socialist Party, a key constituent in Yushchenko’s government, is refusing to sign any pre-election coalition accord.

Party leader Oleksandr Moroz told journalists on Feb. 21 that it was naive to sign such agreements ahead of the elections, adding that it only makes sense to bargain after voting, when it becomes clear how many seats in the legislature each political force has mustered.

The Socialists crucially expect about seven percent of votes, making it unlikely that another “Orange” coalition could be formed without their participation.

The bloc headed by Parliament Speaker Volodymyr Lytvyn currently has almost four percent voter support, just above the three-percent barrier set for entry into parliament. Lytvyn’s bloc is also a potential member of the “Orange” coalition. For that matter, Yanukovych’s Regions of Ukraine could cut a deal with one of the major blocs as well.

Our Ukraine deputy Volodymyr Stretovych has called on other members of the former governing coalition to join for the good of the country.

“Most citizens viewed [last fall’s] split of the ‘Orange’ team as negative,” Stretovych said, adding that a coalition would guarantee Ukraine a solid future.

The Pora-PRP bloc, a tandem of the youthful “Yellow” Pora organization, which played a big part in galvanizing support for the Orange Revolution, and the Yushchenko-loyal Reform and Order Party, called for an agreement to be finalized by Feb. 23.

Political analyst Dmytro Vydrin, a candidate for the Tymoshenko bloc, predicted that a final agreement may never be signed, as Our Ukraine has refused to include key conditions in the agreement, such as the canceling of the gas supply agreement.

Source: Kyiv Post

Confusion Spreads After Tymoshenko’s Move

KIEV, Ukraine -- Confusion spread Tuesday among five groups seeing to form a future government backing President Viktor Yushchenko’s policy after former Prime Minister Yulia Tymoshenko had unilaterally signed an undisclosed alliance agreement.

Former Prime Minister Yulia Tymoshenko
Five parties that have played a role in catapulting Yushchenko, a pro-Western leader, to the presidency last year, apparently made progress during their two-week talks over the coalition, but no one was sure which agreement had Tymoshenko signed.

“In the morning, a draft agreement has been sent to all leaders of parties holding the talks,” Tetiana Mokridi, the head of information department at Our Ukraine, a pro-Yushchenko group, said Tuesday. “I hope this is the draft that had been signed by Tymoshenko.”

Party leaders have not issued any comments on the agreement. Our Ukraine leaders have been holding a meeting late Tuesday to discuss the latest developments, politicians said.

The talks between Our Ukraine, the Tymoshenko group, the Socialist Party, Pora-PRP and the Kostenko-Pliushch bloc focused on the coalition agreement that would allow the groups to form the government after March 26 general election.

The matter became extremely important after a split of the pro-Yushchenko coalition in September 2005 had helped the Regions Party, a pro-Russian opposition group, to gain leadership in opinion polls ahead of the election.

A massive victory by the Regions Party could slow down Yushchenko’s pro-Western policy and economic reforms, analysts said. But the agreement discussed by the five groups during the past two weeks could prevent this scenario, analysts said.

The draft agreement anticipated that a group, a member of the coalition, gaining most votes at the election would nominate the prime minister, a position that has huge economic and political powers.

Most of the opinion polls indicated that Our Ukraine had been leading other potential coalition partners, suggesting that incumbent Prime Minister Yuriy Yekhanurov could keep the post.

But one of the most controversial issues that could deal a blow to the coalition was Tymoshenko’s criticism of natural gas deal signed between Ukraine and Russia on Jan. 4.

Tymoshenko called on the deal to be cancelled and set this as a precondition for the coalition agreement. The agreement that has been signed by Tymoshenko on Tuesday apparently contained a clause promising canceling of the deal.

Our Ukraine and other likely members of the coalition as of early Tuesday have not supported the cancellation of the deal.

Pora-PRP, a group led by Finance Minister Viktor Pynzenyk, who himself criticized the gas deal, stressed the issue should absolutely not be mentioned in the agreement.

“The Tymoshenko’s statement [on the gas deal] jeopardizes not only the agreement but further democratic development of Ukraine,” Pora-PRP said. “The coalition agreement must not contain any preconditions.”

Source: Ukrainian Journal

Tymoshenko Attacks Russian Gas Agreements

KIEV, Ukraine -- Former Prime Minister Yulia Tymoshenko said Monday her group may join President Viktor Yushchenko’s Our Ukraine in a coalition government only after recent natural gas agreements with Russia are cancelled.

The always-beautiful Yulia Tymoshenko
The demand may effectively undermine ongoing talks over the future coalition between these two and three smaller parties that had hoped to form the government after March 26 general election.

“We leave only one condition for this coalition: Denouncing all [recent] gas agreements and returning to those agreements that had existed before,” Tymoshenko said at a press conference.

The talks have been underway for more than two weeks to re-create the alliance of parties that had played a key role in catapulting Yushchenko, a pro-Western leader, to the presidency last year.

Our Ukraine, as well as the Tymoshenko group, played the leading role in the Orange Revolution, a popular uprising against election fraud in November 2004.

But partnership between Our Ukraine and Tymoshenko group collapsed in September 2005 after Yushchenko had dismissed Tymoshenko from the post of the prime minister due to corruption scandal. The collapse hammered their ratings and boosted the Party of Regions, a pro-Russian opposition group that now may win the election and challenge Yushchenko’s pro-Western policy.

Ukraine accepted a 90% hike in natural gas prices on Jan. 4 in the agreement with Russia that had ended a bitter gas dispute between the two. Ukraine also agreed to replace Russian gas monopoly Gazprom with RosUkrEnergo, a controversial Swiss-based gas trader controlled by Gazprom officials, as the key gas supplier to Ukraine during the next five years.

Both positions have been sharply criticized by Tymoshenko and by other politicians insisting that Ukraine should have defended original agreements with Russia that had anticipated gas prices unchanged through the end of 2010.

Prime Minister Yuriy Yekhanurov, who leads Our Ukraine for the election, defended the agreements as a chance to prevent Russia’s gas supply blockade and looming gas supply shortages.

Tymoshenko’s demand to cancel the gas agreements as a precondition for the coalition makes the future alliance with Our Ukraine increasingly difficult, analysts said.

“I have to be very cautious while making comments because any unbalanced word can be used to depart from the talks, but I want to believe that Yulia Volodymyrivna [Tymoshenko] simply got too excited,” Roman Zvarych, an Our Ukraine representative, said.

“The coalition without the Tymoshenko group is possible, but such development would be very undesirable,” Zvarych said.

Source: Ukrainian Journal

Ukraine: Ten Asylum-Seekers Forcibly Returned To Uzbekistan

NEW YORK, NY -- Amnesty International is extremely concerned about the fate of 10 asylum-seekers from Uzbekistan, who had been seeking international protection in Ukraine, but were forcibly returned to Uzbekistan by Ukrainian authorities during the night of 14-15 February 2006.

Andijon residents collecting the bodies of relatives killed by security forces on 13 May 2005
They are at risk of serious human rights violations, including incommunicado detention, torture or other ill-treatment, a flagrantly unfair trial followed by either long prison sentences or even the death penalty.

The Uzbekistani authorities reportedly issued extradition warrants for 11 asylum-seekers on the grounds that they allegedly participated in the Andizhan events in Uzbekistan on 13 May 2005. The remaining man was reportedly allowed to stay as he has relatives in Ukraine.

On 7 February the Security Service of Ukraine (SBU) allegedly detained the 11 men in two different locations in Crimea based on the extradition warrants issued by the Prosecutor General of Uzbekistan. They were reportedly transferred to a Ministry of Interior detention facility in Simferopol, Ukraine, and 10 of them were forcibly returned to Uzbekistan on the night of 14-15 February.

The men are believed to be held in detention by the Uzbekistani authorities, but their exact whereabouts remains unknown.

Nine of the 11 men were registered asylum-seekers while the remaining two had not applied for asylum in Ukraine but had expressed their intention to do so.

Between 7-14 February, the United Nations High Commissioner for Refugees (UNHCR) contacted the Ukrainian authorities “requesting official guarantees that no asylum-seeker would be forcibly returned unless they had been determined not to be a refugee, after going through full and fair asylum procedures, including the right to appeal”.

However, the Migration Service of Crimea rejected their asylum applications on the basis that they were considered to be “manifestly unfounded”. They faced immediate forcible return and were not given the right to appeal. The remaining two men were returned without being given the opportunity to apply for asylum.

Amnesty International strongly condemns the Ukrainian authorities for violating their obligations under international human rights and refugee law to uphold the principle of non-refoulement, as enshrined in the 1951 Refugee Convention, the International Covenant on Civil and Political Rights and the Convention against Torture, which prohibit the return of a person to a country or territory where they would be at risk of persecution, torture or other forms of ill-treatment

The systematic use of torture and ill-treatment and the systemic and fundamental flaws of the criminal justice system result in widespread violations of international standards for fair trial in Uzbekistan and there are significant risks faced by these 10 men given the context and nature of the crimes of which they are accused.

Source: Amnesty International

Yushchenko Vetoes Law Barring Privatization Of Big Steel Factory

KIEV, Ukraine -- President Viktor Yushchenko on Monday vetoed a law that would have barred the government from selling Nikopol steel factory to the private sector.

The Nikopol Plant
Yushchenko sent the bill back to parliament, which now would have to amass 300 votes to override the presidential veto.

Earlier this month, some 287 lawmakers voted to include the Nikopol factory on a list of enterprises that cannot be privatized.

The mill was returned to the state in January when Ukraine Supreme Court ruled that its 2003 sale to Viktor Pinchuk, the son-in-law of former President Leonid Kuchma, was illegal. Yushchenko had called for the mill to be put up for sale in an open auction in the hope of repeating last year's highly profitable sale of another giant steel mill, Kryvorizhstal.

Kryvorizhstal was snapped up by Mittal Steel last year for 24.2 billion hryvnas (US$4.8 billion, -4.1 billion) in Ukraine's biggest and most profitable privatization auction. The price was nearly six times what it initially was sold for under Kuchma in a deal later canceled as illegal.

Yushchenko said that parliament's move to bar the privatization of Nikopol was illegal because the Cabinet was not involved in the decision and the factory's activity did not put it under the category of those businesses which must be owned by the state.

Source: AP

Hortitsea Vodka Plans Expansion In Ukraine

LONDON, England -- Hortitsea, the Ukrainian vodka brand, is planning more expansion after being voted the most popular vodka in Ukraine.


Danish citizen Bo Patrick Richter, who launched Hortitsea in Ukraine in 2003, said he would invest another $35m to help the brand achieve the same success in Ukraine as it has in Russia. Hortitsea had already planned to double its output to 40m litres of vodka in 2005.

Ukrainians voted it their favourite vodka brand in a poll conducted by MEMRB-IRI at the end of 2005.

And Hortitsea's modern production facilities, based near Zaporojie, is thought to have protected the brand against alcohol fraud; something that has caused problems in both the drinks industry and consumer confidence across Ukraine, as in Russia.

Hortitsea, in fact, is listed as the only vodka brand that fraudsters have never tried to illegally copy, according to the Department for the Protection of Consumer Rights.

The brand has now risen to lead Ukraine's vodka market accounting for 15 per cent of sales. Rival brand Nemiroff sits second with a 12 per cent share of sales volume, while Soyuz-Victan and Medoff come next with a nine per cent share each. Two other brands, Bilenika and Hlebnyi are tied on a seven per cent share.

Analysts estimate Ukraine's vodka market to be around 350m litres, with a third of production exported.

Source: CEE Food Industry

Ukraine's Richest Man Says He Will Give Up Business For Politics If He Wins Seat

KIEV, Ukraine -- Ukraine's richest man said Sunday that he is ready to give up business for politics if he wins a seat in next month's parliamentary elections, but denied he had any ambitions to become prime minister.

Billionaire Rinat Akhmetov
Rinat Akhmetov, a coal and steel magnate, is No. 7 on the party list of former prime minister and losing presidential candidate Viktor Yanukovych - virtually assuring him a seat after next March's parliamentary elections.

Ukrainian news agencies quoted him as saying during a rare campaign appearance in eastern Ukraine that he would hand over control of his business assets to the team that manages his company, System Capital Management.

"I don't plan to work in the government, I plan to work in parliament," said Akhmetov, whose fortune has been estimated by Forbes magazine at US$2.4 billion (-2.0 billion).

His business empire also includes the country's third-largest steel producer, a popular daily newspaper and the Donetsk Shaktar soccer club.

"I'm a guy who takes responsibility, responsibility before society, before my 160,000 employees and responsibility before fans," he was quoted as saying by Interfax and Unian news agencies.

Yanukovych had suggested that he might tap Akhmetov to become prime minister if Yanukovych's Party of the Regions won enough support to form the governing coalition after the elections. That would make him No. 2 to President Viktor Yushchenko.

After Yushchenko took office last year, Akhmetov lost control over the country's largest steel mill, which he had bought in 2004 with the son-in-law of former President Leonid Kuchma. A Ukrainian court later ruled that the sale had been illegal, and the mill was resold.

Source: AP

Call For EU To Boost Energy Security

LONDON, UK -- Western Europe's growing dependence on Russia and other energy suppliers means the European Union will have to use aid and trade policies to bolster its energy security, a long-awaited report has concluded.


A green paper by the European Commission, a draft of which has been seen by the Financial Times, says the EU will have to put energy security at the heart of its relationship with the outside world and strive to avoid greater dependence.

The report, requested by EU leaders last year, has been extensively revised since Russia shocked much of Europe by cutting off gas passing through Ukraine at the start of the year. "The recent events have been a wake-up call," said Benita Ferrero-Waldner, external relations commissioner.

Last week she discussed energy security with both Sergei Lavrov, Russian foreign minister, and governments in the Caucusus. She added: "We have to use all our instruments . . . to bring internal and external policy together to bring about a safe, affordable and sustainable energy supply for our citizens and industry. This is not about choosing one partner rather than another; it's about maintaining diversity of energy supply."

Last week, Neelie Kroes, EU competition commissioner, said she would step up action to rid the EU electricity and gas market of "real market distortions", but the report reveals other initiatives to safeguard the sector.

The draft says the European Investment Bank, an EU institution with a total lending portfolio of €47.4bn (£32.4bn), should focus more on projects that boost the EU's energy security by improving infrastructure. It adds that the EU needs to "make better use of trade policy tools" through the World Trade Organisation's dispute settlement system and give greater emphasis to energy in the EU's "neighbourhood" agreements with nearby countries.

Many Commission officials say the EU missed an opportunity in 2004 when it asked for only minor reforms to Russia's gas sector in return for backing the country's bid to join the WTO. Russia, Norway and Algeria meet half of the EU's gas needs and dependence is set to increase. The report says investments of €600bn will be needed over the next 20 years to meet future EU energy demand. It is scheduled to be issued next month.

Andris Piebalgs, energy commissioner, added the Commission was ready to take a number of EU governments to court next month for failing fully to implement EU legislation to open up the sector and increase its efficiency.

Source: Financial Times

ESCO Condemns Ukraine's Expulsing 11 Uzbek Refugees

BRUSSELS, Belgium -- The European Security and Collaboration Organization (ESCO) condemned Ukraine for the expulsion of 11 Uzbekistan born refugees, who were captured in an operation at the beginning of the week, conducted by the Crimean Autonomous Republican security teams.

An Uzbek refugee receives bread at a refugee camp outside the Kyrgyz village of Barash
In his statement ESCO Term President Belgium Foreign Minister Karel De Gucht said “This forcible repatriation of asylum seekers constitutes a serious violation of the principle of non-refoulement and of international commitments undertaken by Ukraine, namely the 1951 UN Refugee Convention and the 1984 Convention Against Torture to both of which Ukraine is signatory “

Gucht, expressing that he was sad Ukraine did not keep the promises it made to the United Nations, asked Ukraine to give information about the expulsion of the 11 Uzbekistan refugees.

On the other hand, National Refugees Working Group “Pro “Asyl” asked the European Union and German Government to end all relations with Ukraine.

In an operation by the security teams towards illegal people at the beginning of the week, 11 people, who were claimed to take part in the Andican events in Uzbekistan, were arrested. They had been expelled with the “Simferopol-Tashkent” aircraft because of allegedly entering the country illegally.

Source: Zaman Online

Turkmenistan Accuses Ukraine In Gas Debts

ASHGABAT, Turkmenistan -- Turkmenistan on Sunday accused Ukraine of taking an "unconstructive approach" during talks over Ukraine's multimillion-dollar debts for natural gas supplies.

Turkmenistan gas depot
The Foreign Ministry said that during the Feb. 17-18 negotiations with Ukrainian Fuel and Energy Minister Ivan Plachkov and the head of the state-run company Naftogaz Ukraine, Alexei Ivchenko, Ukraine had "an unconstructive approach and did not take the necessary measures for deciding the question of full payment for Turkmen natural gas supplies."

According to Turkmenistan, Ukraine owes US$159.9 million, nearly 90 percent of which comes from last year.

"Even during the course of the last negotiations, the delegation from Naftogaz Ukraine expressed no particular wish to constructively examine the questions of Turkmen natural gas supplies," the ministry said in a statement. "Instead, there were attempts to complicate the calculation of the debts."

"Such an unconstructive position by Naftogaz Ukraine complicates the conduct of negotiations from the perspective of cooperation between Ukraine and Turkmenistan in the gas sphere in 2007 and following years," the ministry said.

Ukrainian President Viktor Yushchenko later called his Turkmen counterpart, Saparmurat Niyazov.

There was no immediate comment from Ukraine on the talks.

Turkmenistan is the second-biggest gas producer in the former Soviet Union after Russia, and its vast gas resources are playing an increasingly important role in the geopolitics of the region.

Source: AP

PM Of Ukraine On Pro-European Course Of Ukraine

WARSAW, Poland -- Ukraine will continue its course towards Europe after the parliamentary election on March 26, Ukrainian Prime Minister Yuriy Yekhanurov said in Warsaw on Friday.

Ukrainian Prime Minister Yuriy Yekhanurov (L) with EU President José Manuel Barroso (R)
All parties except the communists support the course towards Europe, Yekhanurov told a meeting at the Centre of International Relations, Europap informed.

Yekhanurov said there was near-unanimity in Ukraine on seeking closer relations with the European Union but views remained divided over joining NATO.

NATO's membership has been supported by not more than a third of Ukrainians. Many people do not understand why the membership of the alliance is important for Ukraine and some political forces take advantage of these moods, the Ukrainian prime minister said.

Ukraine has changed. The level of democracy has gone up, the Ukrainian PM said and expressed the hope that the years after the forthcoming elections will give the occasion to conduct necessary reforms.

Yekhanurov appealed to the EU to simplify visa procedures for Ukrainians, especially young people, tourists and businessmen. EU citizens do not have to apply for a visa while travelling to Ukraine, he said and stressed Ukraine expected appropriate steps from the EU.

Source: ForUm

Consumer Confidence On The Rise

KIEV, Ukraine -- Consumer confidence in Ukraine has crept back up into the positive, following a sharp decline last September, when political instability in the country was at a high for the year.

Kiev's Metrograd Shopping Center
According to a survey-based quarterly study conducted by the market research firm GfK-USM and the Kyiv-based International Center for Policy Studies (ICPS), the Consumer Confidence Index (CCI) rose to 103 in December, which is 7.6 points higher than figures from three months earlier.

“A CCI value above the 100-mark shows that positive consumer confidence prevails in Ukrainian society,” reads a statement released by the study team.

The surge follows the slip in consumer confidence that occurred last fall, when the government of Yulia Tymoshenko was dismissed. The December study figure is only four points lower than the all-time high reported last spring, when Ukrainians felt optimistism in the wake of the Orange Revolution.

It involved polling 1,000 individuals aged 15-59, an age group that represents 61.3 percent of Ukraine’s population and the country’s most active consumers. A representative sample is selected on the basis of gender, age and place of residence. The margin of error is 3.2 percent.

Experts say different factors have influenced the lift in Ukraine’s consumer spirit.

Evheniya Akhtyrko, senior economist with ICPS, attributes the surge to relative political stability and a seasonal factor: people generally have more positive expectations at the end of the year, she explained.

According to Akhtyrko, consumers are also more inclined to react sharply to short-term political changes, as happened during the fallout between President Yushchenko and the government last August.

“The rapidly renewed positive trend in the CCI indicates that the steep decline in September 2005 was more based on emotions than on real economic conditions,” said Akhtyrko.

The consumer confidence index, Akhtyrko suggests, was additionally influenced by a significant increase in Ukrainians’ disposable incomes. According to the State Statistics Committee, disposable incomes jumped almost 20 percent between January and November of last year.

According to the survey, the highest consumer confidence was registered in Western Ukraine and Kyiv, and the lowest in the country’s eastern regions, where the highest inflation forecasts and growing unemployment were also reported.

The positive trend primarily reflects the moods of families with average and above-average incomes. Among poorer Ukrainians, consumer confidence continues to deteriorate, the survey showed.

Akhtyrko predicts that consumer confidence will decline in the next couple of months due to the New Year’s gas crisis between Moscow and Kyiv, and volatile prices expected in the run-up to the March parliamentary elections.

Source: Kyiv Post

Turkmenistan Asks Ukraine to Settle Gas Debts

ASHGABAT, Turkmenistan -- President Niyazov told Friday the Ukrainian delegation that further mutual cooperation, especially in the natural gas sphere, was dependent on how soon Ukraine could settle the debts incurred last year on account of gas purchased from Turkmenistan in 2005.

Turkmenistan President Saparmurad Niyazov
The Ukrainian delegation, consisting of Ivan Plachkov, minister for fuel and energy, and Olexi Ivchenko, head of NaftohazUkrainy, landed in Ashgabat Friday morning in the hope of inking the gas supply agreement for the volumes that Turkmenistan has committed for 2006.

Turkmenistan has promised 40 billion cubic meters of gas to Ukraine in 2006. However the Turkmen side has made it clear repeatedly that although the volumes were available for Ukraine, the transportation arrangements must be sorted out with Gazprom that holds the monopoly rights on Central Asia – Centre pipeline --- the only gas conduit between Central Asia and Ukraine.

Ukraine promised on three separate occasions last year to settle the gas debts accumulated between January and June 2005 but the actual delivery fell far short of the promises.

As was evident after Friday’s meeting, Turkmenistan has deferred the signing of formal gas supply agreement to Ukraine pending settlement of previous debts. The deputy prime minister of Turkmenistan responsible for oil and gas sector has been asked to coordinate with the Ukrainian side to determine the exact size of the outstanding debts and examine the proposals of Ukraine to settle it.

Source: News Central Asia

Ukraine Ready To Participate In Peacekeeping Mission

TBILISI, Georgia -- Gela Bezhuashvili, Foreign Minister of Georgia, states that Ukraine’s readiness to consider its participation in peacekeeping mission in the Georgian-Ossetian conflict zone was not unexpected for official Tbilisi.

Gela Bezhuashvili, Foreign Minister of Georgia
Bezhuashvili told journalists on Saturday that Ukraine is Georgia’s partner country and it is ready to substitute peacekeeping forces deployed in the conflict zone.

“At the present we have to create corresponding mandate and define within the frameworks of which international organization the peacekeeping operation will be performed,” Bezhuashvili stated.

The Ministry of Foreign Affairs of Ukraine states that official Kiev is ready to consider its participation in peacekeeping operation in the Georgian-Ossetian conflict zone.

“Ukraine is ready to consider issue on participation in the international peacekeeping mission in South Ossetia only with availability of the OSCE and UN mandate and corresponding decision of the Parliament.” – reads the statement widespread by the press service of Ukrainian Ministry of Foreign Affairs.

The document underlines that Ukraine will continue support peaceful resolution of the conflicts on Georgian territory with observance of Georgia’s territorial integrity principle.

Georgian parliament has adopted a resolution on ‘Present situation and performance of the peacekeeping process in former South Ossetian autonomous republic” on February 15.

Source: Prime News

Investment, Tourists Pour Into Ski Resorts

IVANO-FRANKIVSK, Ukraine -- An influx of tourists eager to ski in Ukraine’s Carpathian Mountains is fueling investment into the region like never before.

Carpathian Mountains Ski Resort
Standards for comfort and capacity remain low compared to ski resorts elsewhere in Europe, but tens of millions of dollars have been invested in the region in recent years, expanding in the wake of increasing numbers of tourists from across Ukraine, Russia and elsewhere.

Volodymyr Tsaruk, director of tourist information at the state-owned National Tourist Organization, said that investments into Ukrainian tourism have grown forty-fold since 2000, totaling Hr 2 billion ($400 million) in 2005.

Tsaruk said that 63 percent of investments in the resorts have come from private sources, the rest from direct foreign and Ukrainian investors and local state institutions. The bulk of the money has arrived in just the past three years, Tsaruk said, adding that much more money and tourists are expected in the years to come.

“This winter the number of foreign tourists coming to the Carpathians increased by more than 10 percent compared to last year,” Tsaruk said adding that most of the foreign tourists are coming from Russia.

Resorts in the Carpathians were booked during the Christmass and New Years period. Tsaruk said that official figures show that up to 150,000 tourists visited the region during this period, but the real number could be much higher as many opted to rent rooms from villagers and were not accounted for.

The largest investment has clearly been flowing into the Bukovel resort, in the Ivano-Frankivsk region. The founder of the resort, Skorzonera, registered in town of Yaremche in the same region, has already invested $52 million in Bukovel since 2001.

Now Skorzonera plans to invest even more in the complex. Like the earlier round of development, the investment will be made with the firm’s own funds and credit from Dnipropetrovsk-based Privatbank. Ukrainian News reported Feb. 2 that some $100 million will be invested, though the company representatives refused to give any exact figures.

In 2005 Skorzonera invested only half of a planned $80 million due to a problem the company had with local authorities on the leasing of additional land that the project required.

The development plan for Bukovel in the next five years is to transform the resort into a European-styled recreation and health center. The plan envisions the construction of additional hotels and cottages to accommodate up to 20,000 people, completing a full entertainment and sports infrastructure, constructing 26 chairlifts able to carry up to 25,000 people at the same time and developing 116 kilometers of fully-equipped ski runs.

The complex currently accommodates a mere 300 people, has seven chairlifts able to give service to 8,000 people simultaneously and has 20 km of ski runs.

Skorzonera has also invested in the reconstruction of roads leading to the site.

Officials said that the Yaremche region serviced two and a half times more tourists during this winter than in previous years. Last winter alone saw 190,000 tourists visiting Bukovel, while the combined Yaremche area hosted 300,000 people. This year Yaremche authorities expect half a million tourists to come, and Bukovel officials say that a large part of them will visit their resort.

According to Ivano-Frankivsk based Carpathian Tourist Board almost 332,000 tourists visited Ivano-Frankivsk region in 2004. The amount of tourists visiting the region has almost doubled during the past twelve months.

Bukovel differs when compared with other big resorts in the Carpathian Mountains as it is backed by strategic investors who have pumped tens of millions of dollars into financing construction of western-styled accommodations and basic infrastructure needs such as roads. Skorzonera representatives said their resort will in coming years attract an increasing amount of middle-sized business travelers, green tourists and others.

“This is the way many European skiing complexes developed,” said Skorzonera’s director, Oleksandr Shevchenko.

According to Ukrainian News, Skorzonera was registered in 2000, and founded by Maveks Ltd, based in Lutsk, and Halychyna Tsukor Ltd, based in Halych, a town also in the Ivano-Frankivsk region.

Local officials said investors are eyeing the possibility of building a brand new Bukovel-like ski resort at Dzembronia Mountain, also in the Ivano-Frankivsk region.

Other developing resorts

Other Carpathian skiing resorts are also flooded with larger waves of tourists, but backed with less investment leaving them trailing behind in terms of accommodations, yet smaller private investments are in the works across the mountain range.

Roman Nazarovets, director of the tourist association in Slavske, Lviv oblast, said the popular ski resort in his town is expecting a facelift and new investment. Nazarovets, who also serves as board director of Hotel Perlyna Karpat, a mini resort in the village, that a new Austrian-type lift capable of carrying 1,200 people per hour, was constructed on the highest of the five Slavske Mountains, Trostyan. It has helped to shorten lines, he added.

Meanwhile, a new ski mountain has been constructed just a few kilometers from Slavske called Vysoky Verkh, on the edge of Volosyanka village.

A 2,800-meter-long chairlift was built with the capacity to move 500 people per hour. The project cost Ukrainian investors about $3 million, though technical problems linked to the installation of the lifts has kept this resort largely closed this year, he added.

Three new hotels and fifty private-sector homes open to tourists were built last year in Slavske, he said adding that a small bowling alley, entertainment and sport facility was also built.

Currently, Slavske has about 28 medium-sized hotel complexes and 200 private country houses which can accommodate around 8,000 people in total. While the lion’s share of tourists visit the Carpathians during the winter season, investors and local tourist businesses are eager to find new niches which will bring more business during warmer periods.

Nazarovets said investment plans in Slavske for the near future include the development of four new lifts costing some $5 million, which will be provided by Ukrainian investors.

“For now, most of the investments projects are being backed by Ukrainian capital,” Nazarovets said adding that the lack of larger funds from private and state sources has left many problems, such as poor road conditions and water supply, unsolved.

Source: Kyiv Post

Ukrainian Beauty Without Legs Has Returned To The Stage

KIEV, Ukraine -- She is the Ukranian aerobics champion, a student at drama school who fell under a train. But she has not become an invalid and still continues to shine on the stage.

Elena Chonka
Elena walks along the road – confident and voluptuous. Men lust after her. She is bright and successful. She has everything; beauty, talent, a good job, loving relatives and friends. She just does not have any legs.

Life before

She recalls that it was a happy summer, one full of hopes and dreams. Her career in the theatre had just taken off, she had presented a choreography exhibition “Helios” to judges at a national competition and had met her Prince Charming. They went to Crimea together and returned home happy having become man and wife. In Simferopol the train stood at the station for half an hour and then without any warning set off. Elena was holding on to the handrails, jumped onto the step and at this moment she was fiercely hit from behind.

The scene is etched in her memory: the screeching of the braking train, the burning smell and she sitting on the platform and her legs lying on the rails separately with new trainers on.

Doctors at Simferopol Hospital struggled for four hours to save her life. Her recovery was very tough amidst the white walls of the ward, the blinding light from the lights, and the burning pain in her legs. “I lay there feeling completely empty, not crying or getting angry or scared but simply feeling helpless. I was simply unlucky.” Her partner appeared in the evening. “His eyes were inquisitive, his face gaunt and his nose pointed. I do not know why but at the time he reminded me of a ground squirrel who wants to hide in his burrow. That’s when I got scared that I might end up completely alone.” “My God, how can it be. . .” he said covering his face with his hands.

“If you came here to cry, then you had better go. “

And so he left, having said that he would help her with money but he did not come to the hospital again. He phoned once from Kiev to say that he didn’t have any money to give her.

Friends rallied around to help the brilliant, successful and easy going Elena Chonka. However, having ended up in hospital, she feared meeting her friends. At the start they did not visit her.

“It didn’t occur to us that Elena was confined to her bed,” one of her friends recalls. “When I came to the ward and saw her eyes, open, daring and ironic, I felt relieved and rushed up and hugged her.”

One evening Elena decided to phone Andrei. She suddenly had the urge to muse over the wonderful summer, to see the photographs from Hersones where life had seemed full of unlimited happiness. He had all the films “Is it you?” asked a shocked Andrei. “How are you? Perhaps you will be able to walk with crutches?...” “Me? With crutches?” exclaimed a bemused Elena. “Never! I will walk again like before, you’ll see!”

Life afterwards

“Within a year we will try to get you walking with prosthetic limbs,” predicted the doctors. Within a month, however, Elena could stand up even though her wounds had not yet healed. She had not got used to not having any legs and keeping her balance was a problem. She has to learn not only how to walk again but how to get back on the stage. She did not give in to the feelings of pain, suffering and weakness.

The repercussions of her misfortune have been far-reaching. Her partner has left her, she has had to leave the theatre and “Helios” with not having a choreographer is on the verge of breaking up.

Autumn and winter have gone and Elena has managed to leave the house. She went out alone without crutches. She managed to walk in a trouser suit around the courtyard. She had to hurry though because she had so many things to do.

She entered the Journalism Faculty at university and received a first-rate degree, has restored her reputation in the theatre and has learnt how to drive. She now has a fixed routine to her life: morning – television (editor of a popular programme), evening – choreography and aerobics. She has long been popular, as a model of famous designer Yuri Solomko and as leader of a children’s dance group. She has won the prize “Pride of the Ukraine´ which is awarded for bravery and excellence.

When people ask her how she has managed to do all this, Elena jokes, “I know one magical phrase ‘I will be able to do it’.” She has conquered all her complexes although the path has not been easy. “I went to the beach and to relax in the sea. . .I agreed to pose for the Yuri Solomko’s shocking exhibition ‘Regeneration’”. These pictures have created a furor. One loved it whilst others criticized me for it saying that I had overstepped the mark. I simply wanted to say that beauty is not just arms and legs; it is the fire that burns within.

“How did you cope with depression?” I asked

“Depression?” says Elena surprised “There is not such a word in my vocabulary.”

One evening the phone in her flat rang.

“I saw you in the photo, you’re inspirational!” exclaimed the unfamiliar voice. “I am called Igor, I am a Moscow businessman and would like to give you a bouquet of red roses.”

“And how do you intend to do this?” said a surprised Elena.

“I am on the road now and will be in Kiev tomorrow!” he replied.

The unknown man was not lying and he turned out to be quite an interesting chap.

“But . . . it was not my other half,” smiles Elena. “I would, however, like to thank the man for his very kind gesture.”

We walk around Kiev at night: the lights, snow-covered trees.

“Why did you celebrate the New Year outside?”

“I wanted to see the stars. I phoned friends and asked who wanted to join me. They all gladly accepted the offer. A real Christmas tree, the sky, the snow – it’s cool!”

“I have already become well known,” she laughs, “and I have found a really good vocation in life – to help those who are in despair. They write to me and come to see me.

Source: Pravda

Ukraine’s Aerosvit Announces Tender For Aircraft

KIEV, Ukraine -- Aerosvit, the largest airline of Ukraine, has announced a tender for purchasing aircraft, deputy general director Yevgeny Treskunov told a Friday press conference.


The company’s strategic development plan approved last December stipulates the leasing and purchase of 14 medium-range and six long-range aircraft.

Aerosvit will start modernizing its hardware in 2008. U.S. Boeing and European Airbus will be invited to the tender. Russia’s IL-96-300 will hardly be invited because of the recent temporary ban on its operation due to technical defects and the limited production.

The airline employs 1,721 people and has ten Boeing 737 and two Boeing 767. It is planned to enlarge the company hardware to 42 pieces, including ten Ukrainian-made An-148, by the year 2011.

Aerosvit services 66 routes, including 55 international to 27 countries, and eleven domestic.

Source: Itar-Tass

Ukraine Waiting For Answer From Russia On Replacing RosUkrEnergo

WARSAW, Poland -- The Ukrainian government is waiting for an answer from Russia concerning a proposal to replace Switzerland's RosUkrEnergo as the supplier of gas to Ukraine, Prime Minister Yuriy Yekhanurov told reporters on Thursday in Warsaw.

Yuriy Yekhanurov
"I have sent a letter to the head of the Russian government Fradkov requesting that if Russia, which offered us RosUkrEnergo all the time, is not satisfied with RosUkrEnergo, we would happily wait for a replacement.

The best replacement would be Gazprom. I am waiting for an answer to this question," he said.

Industry and Energy Minister Victor Khristenko said earlier that Turkmenistan is planning to increase gas prices in the fall to $100 for 1,000 cubic meters and change the formula for gas prices for gas supplied to Ukraine.

Yekhanurov said he did not see any connection between increasing the price of Turkmen gas for Russia and gas prices for Ukraine.

"I don't entirely understand the connection between what the price will be for Russians," he said.

A Ukrainian delegation will visit Turkmenistan on Saturday to hold talks with the government and Turkmengaz representatives, Yekhanurov said. "We are more interested in the Ukrainian price.

The price of $50 which we signed with Turkmenistan for the first half of the year and $60 per 1,000 cubic meters for the second half," he said.

Source: Interfax News

People In Crimea Protesting Over Ukraine's Pro-NATO Plans

SEVASTOPOL, Ukraine -- US destroyer Porter, which called into the port of Sevastopol Friday, was met by a picket of people protesting over Ukraine's plans to join NATO.

DGG 78 USS Porter
"Say No To NATO", "Say Yes To CIS Common Economic Space", read the posters that the protesters had brought to the port.

"We won't let anyone turn our city into a NATO base or ourselves into its attending staff," a protester said.

The press center of Ukraine's Naval Force said the Porter will stay in Sevastopol until February 20. Its commanding officers will make a visit to the Main Staff of Ukrainian navy, where they will be received by Vice-Admiral Ihor Knyaz, the Ukrainian navy commander, and Sevastopol Mayor Sergei Ivanov.

Next Monday, the Porter and the Ukrainian flagship Slavutich will go out to sea for joint maneuvering.

Source: Itar-Tass

Ukraine's Endangered Revolution

KIEV, Ukraine -- Ukraine, Europe's second largest country, lurches on toward democracy as an election looms that may change its course.


When Viktor Yushchenko rises each dawn to begin the longest days of his life, he stares hard in the mirror. "The president doesn't recognize himself," an aide in his inner circle confides. "For him, it's impossible to square the face in the glass with the man inside."

For millions of his compatriots, however, Yushchenko's face—bloated, pockmarked, and deeply discolored—is a fitting symbol of their long-suffering land, scarred by the past yet surviving against all odds.

For years Yushchenko bided his time. Throughout the dark era of former President Leonid Kuchma, Ukraine, a nation of 46 million in a land larger than France, devolved into a fiefdom of regional clans and robber baron oligarchs.

Reformers mounted feeble assaults on the halls of power, but the country was held captive by a criminal regime atop a foundering post-Soviet state. For Ukrainians who yearn to escape Russia's shadow and join the rest of Europe and the West, Yushchenko stood as the last great hope.

Then, almost on cue, came Yushchenko's brush with death. During the tense days leading up to the 2004 presidential election, then candidate Yushchenko fell gravely ill and had to be spirited out of the country for emergency treatment.

Austrian doctors discovered the cause of his near-fatal sickness: dioxin poisoning. Yushchenko survived, but with a disfigured face that fueled outrage at the old regime, believed by many to have ordered Yushchenko's assassination.

Instead of killing him, however, his rivals became unwitting handmaidens of his revolution.

A declaration echoed across Ukraine in the wake of Yushchenko's ascent: Ya stoyav na Maidani! It means "I stood on the Maidan," Independence Square in the heart of Kyiv. It also means, I was there, I stood up for freedom, I have a right to expect change.

During those tense wintry weeks when the old regime tried to hijack the election and the future hung in the balance, Ukrainians young and old flooded the capital, setting up a tent city on the Maidan and taking over the Kreshchatyk, Kyiv's central avenue that doubles as Ukraine's main street.

For weeks the world watched the standoff, wondering if civil war would erupt between western Ukraine, Yushchenko's stronghold, and the country's eastern half, home to most of Ukraine's eight million ethnic Russians.

It didn't happen. Surrounded by riot troops, the protesters stood their ground in peace. Their only weapons were banners, T-shirts, scarves, and balloons, all the same orange color.

The Orange Revolution was born.

Source: National Geographic excerpt

Ukraine Economy: Gas trouble

KIEV, Ukraine -- Ukraine's finance minister, reportedly unhappy over the terms of the gas deal with Russia signed at the start of the year, has left the government. In the weeks since the deal was signed, Ukrainian dissatisfaction with the terms has grown considerably.


As a result, there is a growing likelihood that after the March parliamentary election there will be an effort to revise itwith potentially serious implications for Russian gas monopoly Gazprom, Ukraine, and Gazproms European customers.

According to a report by news agency Ukraiynski Novyny, Ukrainian Finance Minister Viktor Pinzenyk resigned on February 16th in protest at the January 4th gas agreement signed with Russia. This was refuted by the presidential administration, which said that Mr Pinzenyk had temporarily left the government in order to campaign ahead of the March 26th parliamentary election.

Mr Pinzenyk's press service was unavailable for comment, although a statement from the finance ministry said he was taking a short leave of absence (for the election). There is speculation that Mr Pinzenyk had offered his resignation but that the president, Viktor Yushchenko, refused to accept it. By stepping down, Mr Pinzenyk has more scope to criticise the government for failing to live up to the ideals of the Orange Revolution.

The deal reconsidered

At the time, the January 4th agreement appeared to be a reasonable compromise. Russia had cut supplies at the start of the year in order to force a change in the existing barter regime, whereby Ukraine took approximately 15% of the 145bn cubic metres of gas sent to central and Western Europe via its pipeline network. The notional prices within this trade US$50 per 1,000 cu metres for gas and US$1.09 per 1,000 cu metres per 100 km for transit.

The January deal provided for the monetisation of the gas trade. The transit fee was set at US$1.60 per 1,000 cu metres per 100 km for five years, while the price of Russian (Gazprom) gas was set at US$230 per 1,000 cu metres. Yet the average import price promised to Ukraine was a much more reasonable US$95 per 1,000 cu metres, on the basis that all its gas would be supplied by intermediary RosUkrEnergo, which would source most of Ukraines gas from central Asiaat a price of around US$60 per 1,000 cu metres.

As more details of the deal have come to light, it has become clear that the deal is far more favourable to Gazprom and Russia than it is to Ukraine. Although the deal brought Gazprom no closer to its strategic goal of gaining control or part-ownership of Ukraines export pipelineswhich are vital for the export trade which finances the rest of the gas monopolys businessit nevertheless broke the formal link between gas supplies to Ukraine and transit fees.

The US$1.60 transit fee set for five years is very reasonable compared with the rates that apply in eastern Europe and the CIS, not to mention to the EU. Furthermore, Gazprom has largely extricated itself from the Ukrainian market, which is much less lucrative than the markets further west and it no longer has any obligation to supply Ukrainethat responsibility now rests with RosUkrEnergo. Moreover, any gas that Gazprom sells to RosUkrEnergo for Ukraine will be highly profitable.

Uncertainty and opacity

For Ukraine, the deal now appears a poor one. The country has agreed to a relatively modest hike in the gas transit fee that does little to offset the sharply higher import bill. Moreover, the US$95 per 1,000 cu metres price for gas is only guaranteed for the first half of 2006. Thereafter it could rise substantiallyand is likely to do so, since the Turkmen government has understandably responded to the sharp rise in Russian gas prices to Ukraine by demanding that it too receive more for its gas; US$100 per 1,000 cu metres is the price most often mentioned, and this does not include any transit fee that Gazprom may apply.

It is conceivable, moreover, that Gazprom could restrict volumes of Turkmen gas going to Ukraine via its pipelinesciting capacity constraintsand thereby force RosUkrEnergo to buy more Russian gas priced at US$230 per 1,000 cu metres.

In this case, it seems implausible that RosUkrEnergowhich is 50% owned by Gazprom subsidiary Gazprombank, and 50% owned by unnamed individuals represented by Raifeissen Bankwould consent to subsidise gas prices for Ukraine.

As a result, it is highly probable that the price of gas imports to Ukraine (are needed to meet 75% of domestic consumption) will rise even higher. For this reason, Mr Pinzenyk warned on February 14th that Ukraine was in danger of failing to meet its budgetary targets; he estimated that an increase in gas import prices after June would cost the budget at least US$600m.

Ukrainian dissatisfaction with the deal is not solely focused on price. The role of RosUkrEnergo has also attracted considerable criticism. Until the price of Turkmen gas rises, RosUkrEnergo will be making a profit of at least several hundred million dollars on the gas trade. If the intermediary was a joint venture between Gazprom and Ukraines gas utility, Naftohaz Ukrainy, half of that profit would flow into the Ukrainian company.

Instead, it will flow into the bank accounts of RosUkrEnergos unnamed beneficiaries, some of whomaccording to speculationare close to senior Naftohaz managers. After insisting for weeks that the January 4th deal was good and transparent, Mr Yushchenko has recently been forced to admit its failings. Government efforts to reveal the identities of the non-Gazprombank beneficiaries of RosUkrEnergo have failed. So too, thus far, have the authorities call for RosUkrEnergo to be sidelined in favour of a new Gazprom-Naftohaz Ukrainy venture that would fulfil the same role.

With the benefit of hindsight, it thus appears that the January 4th agreement offered some significant gains for Gazprom without equivalent advantages for Ukraine. Indeed, it seems odd that Ukrainian negotiators, if they focused beyond a six-month horizon, could have agreed to the deal. The most generous conclusion to be drawn from their performance is that they did not expect the January agreement to last beyond the March parliamentary election.

Not nearly settled

Further Russian-Ukrainian gas agreements have reportedly been signed since January 4th; the details of these have not been released. However, it seems improbable that they could change the fundamental problemsnamely the role of RosUkrEnergo and the prospect that Ukrainian prices will rise significantly after June.

If RosUkrEnergo had been sidelined, there would be no reason to keep that a secret; and if its anonymous owners had been replaced by Naftohaz Ukrainy, the Ukrainian government would be desperate to publicise the fact and so dispel notions that it has tolerated, or is in some way complicit in, corruption.

Likewise, it is not clear how subsequent deals could give Ukraine a multi-year price guaranteethere is little reason for Turkmenistan to guarantee five years of low-priced gas, nor for Gazprom. And without a price guarantee from suppliers, RosUkrEnergo cannot profitably supply gas to Ukraine at an average price of US$95 per 1,000 cu metresand why should its owners be prepared to make a loss on the deal?

For these reasons, there is a growing likelihood that Ukraine will seek to renegotiate the terms of the gas deal after the parliamentary election. Such a negotiation is unlikely to be easyalthough it could, conceivably, be smoothed by the emergence of a more pro-Russian government in Ukraine.

The initial indications from Russias government are that Moscow is not prepared to sideline RosUkrEnergo; rather, it prefers to see Gazprom replace Gazprombank as the Russian representative and has suggested that Naftohaz should buy out the Ukrainian shareholders to become Gazproms partner. Yet it is not clear that the investors represented by Raifeissen are prepared to sell; even if they were, the political and financial price may be too high for the Ukrainian government to accept.

Moreover, to improve Ukraines prospects with regard to gas prices would involve Gazprom giving up some of its gains from the January 4th agreement and would require Turkmenistan to forgo future price rises. Here too the prospects seem grim. It is quite conceivable that, in the search for greater leverage, Ukraine would try to reopen the question of transit fees.

This would be badly received by Gazprom, as the transit fee element is arguably Gazproms greatest achievement in the January 4th agreement, and thus it would set the stage for a renewed stand-off that could threaten supplies to Western Europe. The one consolation is that this would not happen during the coldest winter seen across Europe in decades.

The longer-term difficulty for Ukraine arising from this situation is that the economy remains hooked on under-priced gas and the country is dependent on Russia to provide it. Although Ukraine is unlikely ever to be able to do without Russian gas supplies, the relationship would be fundamentally different if the gas trade was fully transparent and conducted on a cash basis at a market price.

The fact that Ukraine remains dependent on cheap gas that Russia supplies or controls gives Russia leverage over Ukraine, and the terms of the current trade are an invitation to corruption. While this remains the case, the stability in the Ukrainian-Russian relationship that Gazproms EU customers yearn to see is likely to remain beyond reach.

Source: ViewsWire Eastern Europe

U.S. Helps Nudge Ukraine To WTO Membership

KIEV, Ukraine -- The United States has given Ukraine a boost in its quest to become a World Trade Organization member, a senior U.S. official said Friday, handing a shred of good news to President Viktor Yushchenko's pro-Western government even as the country's economy falters.

Ukraine's Foreign Minister Borys Tarasyuk (L), and Deputy U.S. Commerce Secretary David Sampson are seen as they talk to media in Kiev, Ukraine, Friday, Feb. 17, 2006.
Deputy U.S. Commerce Secretary David Sampson said that as of Feb. 1, the U.S. has designated Ukraine as a market economy. "We are pleased to announce that Ukraine has been granted market status as a result of economic, legal and institutional reforms," he told reporters.

Ukraine's Foreign Minister Borys Tarasyuk said the designation would benefit Ukrainian companies, potentially protecting them from any antidumping sanctions in the future.

He also said he hoped it would increase Ukraine's credit rating, giving it access to lower borrowing costs and encouraging foreign investment.

Being recognized as a market economy by the United States will also help Ukraine in its bid for World Trade Organization membership.

Ukraine's President Viktor Yushchenko had pledged that the ex-Soviet republic would join the WTO last year, but the government repeatedly failed to win support among lawmakers for changes to the country's laws.

"While there is no direct link between receiving market economy status and entering the WTO, this is evidence that Ukraine is moving closer to that goal," Tarasyuk said.

The European Union also declared Ukraine a free market economy in December, making it easier for the former Soviet republic to trade with the 25-nation bloc.

Yushchenko said the U.S. decision showed "the world that (it) recognized changes in Ukraine and the irreversibility of the reforms that were launched."

Since Yushchenko came to office last year, the economy has slumped with the government lowering its GDP forecast three times. The economy has become a campaign issue in the run-up to crucial March parliamentary elections.

Source: AP

Is Yushchenko Backtracking On The Notorious Gas Deal?

KIEV, Ukraine -- Ukrainian President Viktor Yushchenko finally has noticed the internal and international critique of the January 4 and February 2 gas deals with Moscow that he authorized and has been praising.


Signaling a possible turnabout, Yushchenko's press service announced on February 14, "The President said that all attempts to obtain the necessary information about the RosUkrEnergo [gas trading] company have remained fruitless. … The government can, if necessary, seek other ways of cooperating with Russia on the Ukrainian gas market.

The President shares the concerns voiced by the public, political and business representatives, and international institutions, including the European Union. … Ukraine[‘s] business reputation is being damaged by the controversy involving RosUkrEnergo". Although the president did not speak up himself, and his press service did not mention Washington's serious concerns, the words attributed to him suggest that the gas deal may now be on hold.

An embarrassed Yushchenko could hardly avoid taking a stand after Russian President Vladimir Putin told the press in Moscow that the "Ukrainian side" has a 50% stake in the shadowy RosUkrEnergo and advised journalists to inquire in Kyiv about those stakeholders' identities.

According to Putin, he had suggested to Yushchenko that Naftohaz Ukrainy create a joint venture with Gazprom to handle gas supplies to Ukraine directly, without RosUkrEnergo as intermediary; but, he said, the Ukrainian government wanted RosUkrEnergo to be the supplier, and Moscow went along with this in the agreements.

Since the day of signing, Yushchenko has characterized those agreements as promoting market economics and Ukraine's interests, although the deal would in fact leave Ukraine for many years at the discretion of Gazprom's transit monopoly, RosUkrEnergo's supply monopoly, and the joint venture UkrGazEnergo with a large share of Ukraine's internal gas market.

These arrangements, if implemented, would defeat Ukraine's declared goals of supply diversification, cementing instead its dependence on Russia. Nevertheless, Yushchenko defended the package of mostly secret agreements as a professional achievement of his negotiators, claimed detailed familiarity with the documents, and credited Putin with a fair understanding of Russian and Ukrainian national interests.

On February 3, Yushchenko telephoned Putin to share in his satisfaction with the signing of the agreement to create the joint venture UkrGazEnergo; and as late as February 11, the Ukrainian president's weekly radio address praised the two gas agreements.

It was only at this juncture, after the agreements' signing, that Yushchenko and the head of the Presidential Secretariat, Oleh Rybachuk, promised that full information would be made available to experts and the public. This is not being done, however, notwithstanding the fact that the agreements' content has by now leaked to the press.

Aside from commercial terms, the most contentious issue in these agreements is the Gazprom offshoot RosUkrEnergo's involvement, which is now double: 1) exclusive supplier of Central Asian gas, and 2) parity owner with Naftohaz in the newly created UkrGazEnergo, on Ukraine's internal market, as exclusive supplier of gas to Ukraine's industry.

Prime Minister Yuriy Yekhanurov, Fuel and Energy Minister Ivan Plachkov, and Naftohaz chairman Oleksiy Ivchenko have interchangeably claimed to be unconcerned by RosUkrEnergo's repute, or to have been pressured into accepting it as partner despite that repute, or even to be unaware of the identity of its real or nominal beneficiaries on the "Ukrainian" side.

Yushchenko only asked Ukraine's Security Service to determine whether official Ukrainian structures were involved in RosUkrEnergo, and he professed to be content with the negative answer to his narrow query.

As to RosUkrEnergo's 50% "Ukr" side, Yekhanurov attempted to take the issue in stride, declaring on February 8 that any Ukrainian stake would, if identified, be auctioned by Ukraine's State Property Fund at a starting price of one hryvnia (a fraction of one U.S. dollar).

In immediate response, the Washington-based Project on Transitional Democracies announced an all-cash bid for that one hryvnia stake: if it can be acquired, then "PTD representatives would be able to attend the secret board meetings in Switzerland and St. Petersburg with FSB and mafia bosses who have stolen the future of Ukraine," according to a PTD press release.

Finally on February 14 -- the day when Yushchenko at last acknowledged that problem -- Yekhanurov declared in parliament that Ukraine is willing to replace RosUkrEnergo with another company as intermediary.

That proposal would amount to far less than a half-measure, however. With the heating season's end, Ukraine gains a respite and a chance to scrap these two agreements. Assisted by the European Union, it can hold new talks with Russia on a time-limited, transparent agreement, while launching in parallel its first serious initiative toward supply diversification.

Source: Eurasia Daily Monitor

Reports: Ukraine Gets Market Econ. Status

KIEV, Ukraine -- The United States has granted Ukraine market economy status, giving a new victory to President Viktor Yushchenko's pro-Western government, Ukrainian news agencies reported Friday.

Deputy Commerce Secretary David Sampson
The Unian and Interfax news agencies, citing unnamed sources, reported that the status would take immediate effect.

Deputy Commerce Secretary David Sampson was in Ukraine holding talks with top officials. The U.S. Embassy refused to comment on the report.

The European Union agreed in December to declare Ukraine a free market economy, making it easier for this ex-Soviet republic to trade with the 25-nation bloc.

Receiving market economy status from the U.S. would help Ukraine significantly in its bid for membership in the World Trade Organization.

Source: AP

Kyiv Housing Scam Raises Questions, Fuels Distrust

KIEV, Ukraine -- At least 1,500 apartment buyers were left with nothing but worthless deeds this month when the organizers of a $100 million real estate investment scheme fled the country in late January.


But the documents they were left with lead back to the Kyiv Mayor’s Office, indicating top officials were either negligent or complicit in the alleged scam.

Oleksandr Volkonsky, the director of Elite-Center, and his deputy Oleg Shestak, fled Ukraine on Jan. 30, according to Ukrainian police. Some of the people who had partially or fully paid in advance for apartments in one of eight projects promoted by Elite-Center had already begun to ask for their money back when the two fled.

One building, at 34/32 Otto Schmidt Street, in Shevchenkivsky district, was to be completed in the second quarter of this year, but just over 20 percent of the work has been completed to date.

The Elite-Center investment-construction group, which heavily advertised all over the capital, never actually existed as a legal entity. Instead, it worked through at least 14 other companies, some of which were set up over night and run by Volkonsky or Shestak.

One of these companies is called the Building & Engineering Company, or BIK, which was registered in 1994 but only acquired by Volkonsky in 2004. Along with BIK Volkonsky got the all-important city permits to build an office center at 34/32 Otto Schmidt.

But instead, Volkonsky decided that it would be more profitable to build an apartment block, especially as he and his associates apparently intended to sell the same flats to more than one buyer.

Another likely motivation in Volkonsky’s decision was the skyrocketing price of real estate in the capital.

“Volkonsky took advantage of the unstable political situation, when people didn’t know where to put their money,” said Ihor Tsygonok, who acknowledged selling Volkonsky 50 percent of BIK, and claims to hold a 20-percent stake in the Otto Schmidt building.

A company that Tsygonok currently heads, Elite Center Limited Liability Financial Construction Group, is listed as one of the 14 companies under Volkonsky’s unregistered group. However, ever since Volkonsky and Shestak disappeared, Tsygonok has made an effort to distance himself from the two men.

For example, Tsygonok said that he didn’t found BIK but rather bought and resold the 50 percent share package to Volkonsky, who got the other 50% from a different company that he (Tsygonok) has no connection to.

Regarding the inclusion of his company in Volkonsky’s group, Tsygonok said he wasn’t concerned at first “but then I wrote him some letters.”

“I never gave him permission to use the name,” Tsygonok emphasized, but couldn’t do much about it, as he hadn’t registered it as a trade mark himself.

“I have also been deceived, along with other investors … and I lost more than anyone else,” said Tsygonok.

According to the Committee of Investors, a group of bilked apartment buyers who has banded together at one of the former offices rented by Volkonsky to analyze contracts and coordinate their actions, much of the estimated $100 million collected by Elite Center was sunk into the Otto Schmidt project alone.

Tsygonok now says that he would like to take over development of this project, keeping on the original general contractor hired by Volkonsky. According to his estimates, it should cost another $10 million to complete. But the offer goes - buyers must invest another $250 per square meter, which isn’t unreasonable, as they bought into the project at below market rates in the first place.

As late as November of 2005, Volkonsky’s group web site was offering an 11 percent discount in return for a 100 percent down payment on flats. But not everyone is convinced that Tsygonok’s recent offer is in their interest.

“You can’t say that they offered us a particularly good deal,” said Natalia Stoyko, who invested $30,000 into an Elite Center project on Heroyiv Stalinhrada Street.

“The price was lower because construction hadn’t been started yet. Other developers had been making similar offers at the time,” she added.

According to Tetyana Zagorodnya, who invested in a different Volkonsky project, any developer who would take on one of the eight Elite Center projects stands to earn a profit without receiving any additional payments from those bilked, as many of the flats in other building projects still haven’t been sold. However, the Kyiv Mayor’s office would have to support the project, that is to say, not charge the developer for permits.

One Kyiv developer, who preferred to remain anonymous, said a building in the center of the city costs around $700 per square meter in production costs. Of this, around $200 goes to bribes for permits. If you already have the paperwork, as Volkonsky did with the Otto Schmidt site, you can start offering the public to buy in advance at a reduced price, with the understanding that the price will keep going up.

But Volkonsky apparently lacked complete paperwork for almost all of his projects, including the Otto Schmidt site, as he had changed it from an office center to an apartment block almost immediately. Nevertheless, documents obtained by the Post show that the Mayor’s office had allowed some paperwork to go forward.

“These companies (in Volkonsky’s group) existed legally,” said Zagorodnya, “receiving no small amount of documentation from the city of Kyiv.”

Banks like Aval and Prominvestbank, two of the country’s largest banks, were forthcoming with consumer credits and mortgage loans. On average, investors sunk around $70,000 into each apt. About 70 percent was paid in cash, committee members reported. Volkonsky and his associates then funneled the money through various bank accounts.

At least one of these associates, one A.V. Terentyev, listed on documents as an accountant at one company and the director of another, has been detained by police, who reported that a warrant has since been filed with Interpol for the arrest of Volkonsky and Shestak.

Kyiv Mayor Oleksandr Omelchenko has come across less sympathetic to the fate of defrauded buyers. Ukrainian media quoted the mayor as blaming investors for being too trusting. However, the Committee Of Investors counts top police officials and prosecutors among those who signed deals with Elite Center.

People like Stoyko and Zagorodnya are working together to make sure their claims count for no less. They believe that the Mayor’s office and even some law-enforcement agencies may be implicated.

Tetyana Zagorodnya, for example, said she received a letter from the Interior Ministry’s economic crimes department last month stating that they had found nothing wrong with the Elite Center’s operations.

In fact, it was only Jan. 14 – just two weeks before Volkonsky and Shestak left town - that a law was passed making it illegal for construction companies to raise their own financing for building projects. Another law passed in 2005 stipulates that construction funds must henceforth obtain licenses.

“They should have signed that law (of Jan. 14) a year ago, and the mayor’s office had every opportunity to help this along,” said Oles Dovhiy, a spokesperson for Parliament deputy Leonid Chernovetsky, a foe of Kyiv mayor Omelchenko.

“The law prevents the mayor’s office from handing out plots of land by hand to an inner circle of people who have no intentions to build houses, but simply sell the permits to investors in shady deals,” he added.

“I know one man with a wife and four kids who sold his flat to buy another place for cheaper, and now he can just torment himself for putting his family in such a predicament,” said Andriy Farada, who himself invested $40,000 into an Elite Center project back in 2004.

Source: Kyiv Post

High Level U.S. Department of Commerce Team Arrives in Kyiv

KIEV, Ukraine -- Ukraine has been working to receive Market Economy Status from the U.S. government for several years. From all indications around Washington this may actually happen very soon, according to The Action Ukraine Report.

Deputy Secretary David Sampson
A high level U.S. Department of Commerce team, headed by the number two person at the department, Deputy Secretary David Sampson, was reported to have left Washington on Wednesday afternoon and will arrive in Kyiv today.

Experts in Washington on Ukrainian matters believe that this is a very positive sign that Market Economy Status could be granted to Ukraine even yet this week.

At a press conference in Dnipropetrovsk, Ukraine, yesterday, President Victor Yushchenko said in a few weeks the United States would recognize Ukraine as market economy, according to the President's press- office.

The president reiterated that Ukraine had observed all necessary procedures and answered all questions posed by the American side. "Professional comments about economic materials received from Ukraine make us hope Ukraine will be recognized as market economy in a few weeks," he said.

News reports from Kyiv Wednesday said that presidential advisor, Kostiantyn Tymoshenko, chief of the main service of external policies of the Secretariat of the President of Ukraine, also stated that Ukraine hopes the United States of America will grant it the market economy status in March.

According to Tymoshenko, "the American side didn't forget the matter and the US Department of Commerce is working it out". "According to the information we possess the issue will be shortly settled", he said.

The U.S. Department of Commerce delegation from Washington was reported to have included, in addition to Deputy Secretary David Sampson and his chief of staff, the Assistant Secretary for Import Administration, David Spooner, and his senior advisor, and the Commerce Department's top Ukraine specialist, Christine Lucyk, Senior Policy Advisor, Office of Russia, Ukraine and Eurasia for the International Trade Administration (ITA).

The U.S. Department of Commerce team will have a series of meetings with top officials in the Ukrainian government.

The American Chamber of Commerce in Ukraine (ACC) will host the Deputy Secretary of the U.S. Commerce Department Dr. David A.Sampson at a general membership meeting on Friday, February 17, from 5:00 p.m. to 6 p.m. in Kyiv.

According to the American Chamber of Commerce in Ukraine website, "Dr. Sampson will brief the membership about trade and economy related issues from the perspective of the United States. Deputy Secretary Sampson is the most senior Commerce Department official to visit independent Ukraine sending a signal that the United States stands ready to work closely with Ukraine to further develop strong trade and economic ties."

Ukraine was expecting to be granted the market economy status by the USA by Thursday, February 16. Maybe that will happen soon thereafter.

Source: The Action Ukraine Report

Ukraine Deports 11 Uzbeks In Breach Of Law: UNHCR

GENEVA, Switzerland -- The United Nations refugee agency accused Ukraine on Thursday of forcibly deporting 11 Uzbek asylum-seekers to their homeland in violation of international law and said it feared they may be tortured there.

Uzbek asylum-seekers in Kyrgyzstan
Uzbekistan requested the extradition of the men for alleged involvement in protests in the eastern town of Andizhan last May. Witnesses say 500 people, mostly unarmed civilians, were killed there in a bloody government crackdown.

The Uzbek government says its troops put down a rebellion by foreign-funded Islamist militants and killed 187 people, mostly "bandits" and "terrorists".

The office of the U.N. High Commissioner for Refugees (UNHCR) said the 11 Uzbeks, arrested about a week ago in Crimea, had been forced home on Tuesday night without going through full and fair asylum procedures, including the right to appeal.

"We deplore this action, which the (Ukrainian) authorities carried out in contravention of their international obligations," said Pirkko Kourula, director of the UNHCR's bureau for Europe.

The UNHCR, which had sought access to the detained Uzbeks to assess their asylum claims, said in a statement: "Being the subject of an extradition request does not remove an asylum seeker or refugee from international refugee protection".

The practice of "refoulement" -- forcibly returning a refugee or asylum-seeker to their homeland -- contravenes the 1951 U.N. Refugee Convention, signed by Ukraine, the Geneva-based U.N. agency said.

It is also a breach of the U.N. Convention against Torture to send persons back to countries where they may face torture or mistreatment.

"With a regime like Uzbekistan, it is very likely they could be subjected to torture, that is why we are so concerned," UNHCR spokesman William Spindler said.

Earlier on Thursday, Kyrgyzstan's top court rejected an asylum claim by two Uzbek refugees who fled Andizhan and have U.N. refugee status, paving the way for their extradition.

"Despite this decision by the Kyrgyz court, we hope that none of these people will be extradited to Uzbekistan," Spindler said.

The UNHCR flew 439 Uzbek refugees, who fled to Kyrgyzstan after the Andizhan shootings, to Romania last year and more than 100 of them have since left for resettlement in third countries, Spindler said.

Source: Reuters

Italy's Berlusconi Says Ukraine Took 70 Mln Cubic Metres/Day Of Gazprom Gas

MILAN, Italy -- Italy's Prime Minister Silvio Berlusconi said the Ukraine has siphoned off 70 mln cubic metres of gas per day of Gazprom supplies sent to the west.

Italy's Prime Minister Silvio Berlusconi
Berlusconi said that cold weather in Russia has also hit Russian exports, but this factor is not sufficient to explain the shortfalls in gas received in Italy by Eni SpA in the last weeks.

'In addition to the cold that hit Russia, the energy crisis in Italy has been due to the fact that the Ukraine has taken way in an independent and arbitrary manner 70 mln cubic metres of gas per day without having a contract with Gazprom,' he said in a Canale Italia TV interview to be aired tonight.

'The Ukraine...took away first 35 mln cubic metres, and then when the Russian federation increased distribution by 35 mln, the other 35 mln,' he said.

The cold weather, which saw Russian temperatures fall to minus 60 degrees, has been responsible for 8 pct of the shortfall, he said.

Today, Eni said its shortfalls in Russian gas is expected to fall to 9.5 pct, from the normal 74 mln cubic metres, against yesterday's 10.8 shortfall, after last week being up to 16 pct.

Berlusconi said he has spoken many times with Russian President Vladimir Putin on the issue, adding there has been 'maximum cooperation'.

Source: AFX

NATO Expresses Support for Ukraine’s Entry Efforts

WARSAW, Poland -- NATO’s Secretary General has expressed support for Ukraine’s efforts to join the alliance. He refused however to give a specific date.

Ukrainian President Victor Yushchenko (L) and NATO Secretary General Jaap de Hoop Scheffer (R)
Speaking in Warsaw after a meeting with Polish Prime Minister Kazimierz Marcinkiewicz, Jaap de Hoop Scheffer said “NATO supports Ukraine’s euroatlantic drive and will continue to do so. It is important that dialogue between Ukraine and NATO be intensive. We will continue to support the process and the road chosen by Ukrainians,” Poland’s PAP news agency reported. He added that he “cannot give an answer” for dates.

Ukrainian President Viktor Yushchenko has made membership in NATO and the European Union a strategic goal of his country. But Russia has expressed concern about the expansion of NATO to include the former Soviet republic.

Earlier this month, Russian Defense Minister Sergei Ivanov said that NATO’s expansion to include former Soviet republics was “not a pleasant thing” to Russia. He said that for Russia, the accession of Ukraine to this alliance is “especially sensitive” because of shared historical and cultural values, the unity of interests and numerous family ties give a special character to relations between the two peoples.

In January, Scheffer mentioned Ukraine among the countries that might join the alliance in 2008. However, he said, Ukraine’s success in achieving the goal of joining NATO will depend on the success of Ukrainian reforms. Scheffer said the entry terms were connected with practical achievements and not the terms of the NATO summit in 2008.

Source: MosNews

Lawyer Asks Ukrainian Court To Reverse Decision Barring Media From Journalist's Killing Trial

KIEV, Ukraine -- A lawyer representing the family of a prominent slain journalist appealed on Thursday to the court trying the alleged killers to open the proceedings to the media, saying it was disgraceful to hold the high-profile trial behind closed doors.

Lawyer Andriy Fedur
Three former policemen went on trial last month in connection with the 2000 killing of Heorhiy Gongadze, a muckraking Internet journalist who wrote about high-level corruption under former President Leonid Kuchma.

The ex-president has denied allegations that he ordered the journalist's murder. The claims of official involvement in Gongadze's death sparked mass demonstrations against Kuchma's authoritarian rule.

Lawyer Andriy Fedur, who represents Gongadze's mother, accused authorities of failing to properly investigate the crime.

The long-awaited trial, closely watched as a litmus test for this ex-Soviet republic's new Western-leaning government, was closed to the media last month after prosecutors supported a defense request to bar the public during key testimony, arguing that their case included state secrets. Journalists are now rarely permitted inside the tiny courtroom in Kyiv's Court of Appeals.

"Special forces kill people and authorities say this is a state secret ... this case is absurd," said Fedur.

The court on Thursday ordered the Interior Ministry to study which material constituted a state secret, and report back. No timeframe was given for when this might happen, and the trial went into recess in the meantime.

Fedur's request won the support of President Viktor Yushchenko, who has expressed his disappointment with the court's decision to work behind closed doors. Yushchenko promised during his 2004 presidential campaign to solve the politically charged case and pledged the trial would be open to the media. His chief-of-staff joined protesters last week who gathered outside the courthouse to complain about the closed door hearings.

Gongadze, 31, was abducted in 2000 and his beheaded body was found in a forest outside Kyiv. Months of protests erupted against Kuchma after a key witness later released tape recordings in which voices resembling those of Kuchma and his then chief-of-staff Volodymyr Lytvyn are heard conspiring against Gongadze. Lytvyn has also denied involvement.

The trial has been beset by problems since it began Jan. 9 in a courtroom so cramped that journalists unable to get inside broke through police lines and shoved their way into the room, eventually forcing a recess.

Since then, the trial has regularly faced postponements as defendants complained of health problems.

"I am not a doctor ... but I have the suspicion that such an epidemic of illness is not an accident," Fedur told The Associated Press in an earlier interview.

Gongadze's family has accused the government of going after the police officers, while failing to find who ordered the killing. Fedur asked the court to question Kuchma, Lytvyn and the former presidential bodyguard who made the secret recordings but said prosecutors told him it wasn't necessary.

He also wanted Yushchenko to be questioned because Yushchenko's voice is heard on the tapes. Yushchenko isn't involved in discussions about Gongadze, but if he were to confirm that the conversations were real, it could help verify the accuracy of the recordings, Fedur said.

"As the case is being presented now, it is a motiveless killing, not for anything or any reason ... just four police officers got together and this is the result," Fedur said. A fourth officer allegedly linked to the case has been put on the international wanted list.

Source: AP

Ukraine's FinMin Tenders Resignation

KIEV, Ukraine -- Ukraine's Finance Minister Viktor Pynzenyk has tendered his resignation in protest over a costly gas deal with Russia, leading Internet news site Ukrainska Pravda said on Thursday, quoting government sources.

Finance Minister Viktor Pynzenyk
Pynzenyk has criticized the agreement, which nearly doubled gas import prices for Ukraine, saying it endangered the 2006 budget. He is also running for parliament in the March general election as leader of a centrist political party.

Officials in the government and in the party contacted by Reuters declined to confirm or deny the report. Officials said Pynzenyk was at a meeting.

The departure of Pynzenyk, a reformer and defender of strict monetary and budget policies, may undermine Ukrainian financial markets, analysts said.

"This is a blow to this credit as Pynzenyk is seen as an orthodox market reformer, who has held the budget together in 2005-06 despite the deteriorating macro situation," Tim Ash, emerging markets analyst at Bear Stearns, said in a note.

Pyzenyk said earlier this week that the gas deal with Russia also threatened the solvency of state oil and gas company Naftogaz due to concerns the gas price could further increase.

Ukraine and Russia signed the new gas deal in the New Year. The accord raised import prices for Kiev to $95 per 1,000 cubic meters from $50 previously. Gas will be sold at $110 inside Ukraine to cover tax and transportation costs.

Kiev and Moscow are still wrangling on the details of the agreement.

Source: Reuters

Europe Scrambles to Curb Bird Flu

BRUSSELS, Belgium -- European Union veterinary experts on Wednesday backed plans to boost surveillance of migratory birds and stricter bans on imports as officials scrambled to find ways to curb the spread of deadly bird flu in Europe.

A laying hen is seen under a lamp at a poultry farm near Duesseldorf, western Germany. European leaders took urgent new action to counter fast-multiplying outbreaks of bird flu, ordering poultry indoors to avoid infection but urging consumers not to panic.
With Austria and Germany saying wild birds in their countries tested positive for deadly H5N1, the European Commission approved more than $2.26 million for surveillance programs and added testing to ensure early detection of bird flu outbreaks.

The panel of veterinary experts also backed plans to suspend the import of untreated feathers from all non-EU countries.

"The aim of these national surveillance programs is to provide early detection of cases of avian influenza, particularly in wild birds and poultry in the European Union," said EU spokesman Philip Tod.

He said samples need to be taken from both wild and domestic birds. The plan foresees testing 60,000 wild birds and 300,0000 domestic birds.

The experts, meeting for two days of bird flu talks, focused on additional measures EU governments can take to stop the spread of the virus, including boosting checks at farms and wetlands, Tod said.

All 25 EU governments last year signed up to guidelines to help prevent the spread of bird flu, including setting up protection zones in outbreak areas to halt the movement of farmed poultry or hunting of fowl. Culling is also carried out if needed.

On Wednesday, Gudjon Magnusson of the World Health Organization warned that five countries in or bordering western Europe have recorded large outbreaks: Ukraine, Russia, Kazakhstan, Romania and Turkey.

"It is up to us to see that avian flu doesn't become an epidemic in Europe," he said in Kiev, Ukraine.

David Nabarro, the U.N. coordinator for combatting bird flu, warned that Ukraine _ where H5N1 has spread to 24 villages, with suspicious bird deaths in 18 others _ is at high risk of further outbreaks.

"The threat is still there," he said in Kiev. "Avian influenza will continue to come to Ukraine ... health services must be ready and prepared to deal with people who are infected with avian flu and to be ready for the possible arrival of human-to-human transmission."

Elsewhere Wednesday:

_ Experts in Germany said further testing found H5N1 in two dead swans found on the Baltic Sea island of Ruegen _ the country's first known cases. Authorities were awaiting officials results from an EU reference laborabory in England. Preliminary tests on a dead hawk also indicated H5N1, German experts said.

_ Denmark said at least nine wild swans turned up dead on a Danish island near Ruegen, and Poland said three swans died in Krynica Morska on its Baltic coast. Both countries were carrying out further tests to determine if the swans died of bird flu.

_ An Austrian laboratory said two swans tested positive for H5N1. Samples have been sent to the EU reference lab.

_ Italy said its tests confirmed H5N1 in two more birds, in addition to the six announced last weekend. Consumption of poultry dropped 70 percent in two days in Italy, the agricultural association Fedagri said.

_ Concerns about bird flu blocked 2.2 tons of Brazilian poultry from coming into Albania through Italy, Albanian officials said. The World Bank pledged $5.95 million to help Albania fight bird flu, the government said.

_ Three swans in southern Hungary have tested positive for an H5 subtype of bird flu, and further tests were being carried out in Britain to determine the exact strain, the European Commission said.

_ France ordered all poultry either vaccinated or confined indoors as a precaution against the spread of bird flu. Sweden and Denmark also required farmers to keep poultry indoors, and Norway banned outdoor poultry in eight southern counties.

_ The Dutch agriculture ministry urged commercial poultry farmers to get their birds indoors as soon as possible _ before the Feb. 20 order goes into effect, if possible.

_ Farmers in Switzerland also will be required to keep poultry in roofed enclosures starting Feb. 20.

Source: AP

Horror Crash For Ukraine Luge Team

TURIN, Italy -- Ukraine doubles luge slider Roman Yazvinskyy was injured in a horrific crash as the notorious Cesana Pariol Olympic Winter Games track claimed another victim.

Another Ukrainian luge doubles team - Andriy Kis and Yuriy Hayduk
Yazvinskyy took a heavy blow to the head when his sled plunged into the roof of the final curve at high speed, tipped sideways and ploughed into another wall, snapping a runner into pieces.

"He is conscious but he hit his head so you have to be careful about his condition," a policeman at the scene said, adding that Yazvinskyy would be taken for immediate treatment at a medical centre.

Yazvinskyy's partner, Oleg Zheberetskyy, limped away in obvious pain.

The crash was just the latest in a series of chilling spills on the course where America's Mark Grimmette and Brian Martin also saw their Olympic dream end in tatters.

The US pair, gunning to complete their Olympic medals collection with a gold, strayed too high up a left wall on their opening run and were dumped on to the track at high speed in another spectacular wipeout.

The US stars, who won bronze in Nagano 1998 and silver in Salt Lake City four years ago, did not appear to be badly injured and walked away from the crash.

Dmitriy Khamkin and Vladimir Boitsov of Russia also fell victim to the daunting course.

Source: Agence France-Presse

Italian Bank Reaches Agreement To Buy 86.4 Percent Of Ukrsotsbank

ROME, Italy -- Italian bank Banca Intesa has reached an agreement with the controlling shareholder of Ukraine's Ukrsotsbank to buy an 85.42 percent stake of the bank, Intesa said Tuesday.


Banca Intesa has expressed hope that the move will help it play a major role in central and eastern European banking.

Following the completion of a pending capital increase worth $US60 million (about -50 million), Intesa will increase its stake to 88.1 percent, the Italian bank said in a statement.

Banca Intesa is Italy's second-largest by market capitalization.

Ukrsotsbank is Ukraine's fourth largest bank, with a network of 527 branches and more than 660,000 customers.

Banca Intesa said that it values the Ukrainian bank at US$1.3 billion (-1.09 billion) and that its total investment would amount to US$1.61 million, including the share capital increase.

Intesa is already present in the region, controlling Privredna Banka Zagreb d.d, Croatia's second largest bank, and Vseobecna uverova banka, Slovakia second-largest bank.

It also owns Banca Intesa Beograd, formerly known as Delta Banka, Serbia and Montenegro's second-largest bank, and Hungary's fourth-largest bank Central-European International Bank.

Source: AP

Ukraine, Russia Discuss Future Of Russian Black Sea Fleet

KIEV, Ukraine -- Ukraine and Russia met Tuesday to discuss the presence of Russia's Black Sea Fleet in a Ukrainian port, amid complaints from Kyiv that the Russian navy is paying too little and taking over lighthouses that belong to Ukraine.


The talks are being held under the auspices of a new joint presidential commission set up to deal with the thorny disputes that frequently arise between the two ex-Soviet neighbors.

After years of bitter argument, 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. Under the agreement, Russia paid an annual rent of US $93 million.

Ukrainians have suggested recently that the price should reflect market rates, warning it could increase by up to 20 times to US $1.8 billion.

Ukrainian Deputy Foreign Minister Volodymyr Ogryzko, who is leading the Ukrainian delegation, noted at the start of talks that Ukraine and Russia recently agreed to adopt a "European formula to define prices in the gas sphere."

"In our opinion, such an approach can be made in other spheres, including in the cost of the temporary presence of the Black Sea Fleet on Ukrainian territory," he said in remarks broadcast on Ukraine's Fifth Channel.

Kyiv has also demanded that Russia surrender lighthouses and other property along the Crimean coast that Ukraine claims were not part of the Black Sea Fleet agreement; Moscow has accused Ukraine of trying to seize the lighthouses and warned that it would defend Black Sea Fleet property.

A group of about 20 Ukrainian student activists maintained a tent camp vigil Tuesday outside the Black Sea Fleet base in Sevastopol while police stood by, Ukrainian media reported.

The latest sparring came after last month's furious dispute between the neighbors over gas prices earlier, which resulted in a nearly twofold increase in prices for Ukraine. One of Russia's main arguments was that there was no reason for it to continue to subsidize the Ukrainian economy and that the time was right to start charging market prices. The Ukrainians are now attempting to use the same argument over the Black Sea Fleet, while Russia demands that the earlier agreement over prices remain in force.

"Ukraine has a unique chance to move our bilateral relations with Russia into a wholly new level of development, beginning with mutual respect, the strict observance of existing agreements and taking into account the interest of both nations," President Viktor Yushchenko said on the eve of the talks.

Ties between Moscow and Kyiv have been increasingly tense under the pro-Western Yushchenko, who has tried to shake off Russian influence since coming to power early last year.

Source: AP

Yushchenko Seeks Unlikely Ally

KIEV, Ukraine -- Ukrainian President Viktor Yushchenko, facing a likely humiliation in parliamentary elections at the hands of the man he ousted in the 2004 Orange Revolution, is looking for salvation from the woman he spurned: former Prime Minister Yulia Tymoshenko.

The 'dream' team during better days. Can they be together again?
Disillusionment among his supporters and disarray within his government have left Mr. Yushchenko's Our Ukraine bloc trailing badly in polls for the March elections behind the Party of the Regions led by Viktor Yanukovych, the man whose suspect election in November 2004 was reversed after weeks of street protests.

Third place -- and potentially the balance of power -- is expected to go to Mrs. Tymoshenko, Mr. Yushchenko's photogenic ally throughout the revolution and his first prime minister. She and her entire Cabinet were fired last summer in the face of burgeoning complaints of continuing corruption.

The prospect that Mr. Yanukovych, a protege of the discredited former President Leonid Kuchma, could become prime minister has sent Our Ukraine scurrying into talks with Mrs. Tymoshenko to try to patch up the alliance.

Mrs. Tymoshenko, reportedly bitter over her firing, is keeping her intentions private.

It has been a short, hard fall from the heady days of the Orange Revolution, when Mr. Yushchenko and Mrs. Tymoshenko stood hand in hand before tens of thousands of idealistic young supporters in Kiev's Independence Square.

The protesters set up tent camps in defiance of police and the city's bitter winter, eventually prompting the courts to overturn the suspect election of Mr. Yanukovych and order a new election, which was won handily by Mr. Yushchenko on Dec. 26, 2004.

"There's a lot of disappointment in the government," said Vasyl Mospan, 23, one of those who spent three weeks in the cold that year. He says he is proud he participated in the uprising, but has concerns about his country's political leadership.

"People wanted greater changes, and that's what they were told they would get. So far, though, that hasn't happened," he said.

Other former protesters complain that Mr. Yushchenko has not carried through on his most vocal promises: to end corruption, to prosecute former officials involved in suspected fraud and to bring about economic growth.

The sense of disillusionment is fed further by infighting among the forces that shaped the revolution.

"There have been a lot of mistakes, even in relation to Yulia," said a government worker who agreed to discuss the matter on the condition of anonymity.

Mr. Yushchenko fired Mrs. Tymoshenko's government less than eight months after he appointed her as prime minister, saying he no longer could tolerate backbiting by political allies.

Although anticipated by many analysts, the firing created open warfare between the president and Mrs. Tymoshenko. The two publicly appeared amicable during the campaign, although they share a private enmity, insiders say.

The political bickering has picked up steam in recent weeks.

The government worker complained that the Cabinet has become a revolving door of ministers. "What we have is chaos, and with the upcoming elections, it's only getting worse."

As a concession to his political opponents, Mr. Yushchenko agreed last year to constitutional changes that transferred some of the presidential powers to the parliament. As soon as the changes took effect, the parliament fired the Cabinet that had been named to replace Mrs. Tymoshenko's.

Source: The Washington Times

Ukraine Ready To Drop RosUkrEnergo

KIEV, Ukraine -- Ukraine said Tuesday it is ready to replace RosUkrEnergo, which imports a mix of Russian and Central Asian gas to Ukraine, with a different firm.

Prime Minister Yuriy Yekhanurov
"Given that Russia has started having certain reservations about RosUkrEnergo, the intermediary it proposed, the Ukrainian government will send a letter to the Russian prime minister today," Prime Minister Yuriy Yekhanurov told Parliament.

"In particular, the letter expresses (Ukraine's) agreement to replacing this intermediary if Russia is no longer happy with it."

Earlier this year, the firm won rights to import gas to Ukraine following a bitter pricing dispute between Ukraine and Russia's gas monopoly Gazprom. Half the Swiss-registered company was owned by Gazprom and the other half by a group of unidentified investors.

Russia said the investors were linked to Ukraine, a charge Kiev denied.

Earlier this year, Russia cut off gas supplies to Ukraine, also affecting supplies to Europe. The spat was resolved after a pricing compromise. Under the deal, Ukraine will pay $95 per 1,000 cubic meters to Gazprom, nearly double the previous amount.

Source: UPI

Yushchenko's Orange Revolution Foe Blames President For Economic Slowdown In Ukraine

KIEV, Ukraine -- The former Ukrainian prime minister who lost his presidential bid following the Orange Revolution mass protests criticized President Viktor Yushchenko on Tuesday for the country's economic slowdown.

Viktor Yanukovych
Viktor Yanukovych also pledged to restore stronger growth within six months if his party triumphs in next month's crucial parliamentary election.

"Yushchenko has turned out to be unable to conduct a rational and intelligent policy," Yanukovych said in a key campaign speech. "It will take us probably six months to eliminate the consequences of the damage."

The economy has slumped since the Yushchenko came to power, but he has insisted that the situation was turning around.

In 2004, when Yanukovych was prime minister, Ukraine recorded 12 percent economic growth, which earned the ex-Soviet republic accolades, though some have doubted the accuracy of the economic data.

Yushchenko's government has made some progress in fighting corruption and creating jobs, but many Ukrainians feel disappointed. In election maneuvering before the March 29 vote, Yushchenko's allies have demanded that Yanukovych explain several murky privatization deals, including the 2004 sale of flagship steel mill Kryvorizhstal.

Meanwhile, Yushchenko risks losing influence in the elections, which will see some presidential powers being transferred to parliament, under constitutional reforms adopted earlier. Among the powers parliament will have will be the right to name the prime minister and some Cabinet members.

Numerous polls have suggested that Yushchenko's party Our Ukraine could finish a distant second behind Yanukovych's Party of the Regions.

Source: AP

Ukraine Tells Russia to Pay More for Black Sea Fleet Base

KIEV, Ukraine -- Ukraine and Russia clashed anew Feb. 14 as Kiev called for a hike in the rent the Kremlin pays to station its Black Sea fleet in Crimea and said Moscow would have to move the naval base when its lease runs out in 2017.

Russian Black Sea Fleet
”Today we are talking about a transition to market methods in our relations,” Volodymyr Ogryzko, Ukraine’s first deputy prime minister, said at the start of an intergovernmental meeting over the fleet in Kiev.

”In our relations with Russia, say in the gas sphere, we agreed to review contracts that were in force so that we could switch to a European formula of determining the price,” Ogryzko said in televised comments.

”We think the same approach should be applied in other spheres, including the calculations for the temporary basing of the Black Sea fleet on Ukrainian territory,” Ogryzko said.

He was referring to a bitter dispute early in the year, when Russia said it was ending gas subsidies for Ukraine and demanded a four-fold-plus increase in the gas price. The dispute ended in a deal that saw the price of Kiev’s gas imports nearly double.

The head of the Russian delegation, however, reiterated Moscow’s position that the rent for the Black Sea fleet was set in a 20-year lease agreement that the two nations signed in 1997.

”We came here with an absolutely clear mandate to confirm the stability of the 1997 base agreement and to resolve practical problems brought up by the Ukrainian side,” said Russia’s Deputy Foreign Minister Grigory Karasin.

Russia currently pays just under 100 million dollars (83 million euros) to lease land and property for the fleet headquarters in Crimea, where the fleet has been based ever since its founding in the late 18th century under Catherine the Great.

Kiev wants to hike the price to bring it in line with what other governments pay to house military bases abroad.

Last week national security council chief Anatoly Kinah estimated that a new “market” price for the base -- located in the middle of the nation’s top tourist destination -- could be some 1.8 billion dollars.

Meanwhile Ukraine’s Foreign Minister Boris Tarasyuk said that Moscow would have to move the fleet once the current lease runs out in 2017.

”Our position is well-known,” he said in an interview with the Interfax news agency. “We of course will abide by the agreement... until 2017.”

”But Ukraine’s constitution forbids the presence of foreign military bases on our territory. We call on the Russian Federation to work consistently and systematically to gradually relocate the Black Sea fleet from our nation’s territory.”

The row over the fleet is the latest dispute to further strain the tense relations between Russia and Ukraine since pro-Western President Viktor Yushchenko defeated a Moscow-backed candidate last year in Ukraine’s “orange revolution” election.

Since the beginning of the year, Kiev and Moscow have clashed over gas, control of hydrography sites in Crimea, meat and dairy imports, and naval traffic in disputed waters.

The dispute over the fleet in the Crimea is a particularly sensitive one. Crimea was part of the Russian Federation until 1954, when Soviet leader Nikita Krushchev transferred it to Ukraine -- a move that had no practical consequences during the Soviet era but that laid the foundation for a hot dispute after Ukraine gained its independence following the Soviet breakup in 1991.

Source: AFP

Gas Deal Endangers Ukraine's 2006 Budget

KIEV, Ukraine -- A deal with Russia sharply raising the price of imported gas is endangering the 2006 budget and threatening the solvency of the state oil and gas company Naftogaz, Finance Minister Viktor Pynzenyk said on Tuesday.

Finance Minister Viktor Pynzenyk
With Ukraine facing a parliamentary election next month, Pynzenyk told parliament the increases nearly doubling the price of gas meant around $600 million in additional state spending to offset higher costs for consumers.

That jeopardised budget targets and Naftogaz's ability to service credits and to invest.

"More serious is the risk related to covering losses from gas deliveries to thermal power stations. The finance ministry estimates these at 3.3 billion hryvnias, about $600 million," Pynzenyk told deputies.

"If other conditions do not change, this will allow us to cover operational expenditures of Naftogaz but there are no opportunities to service credits and make investments. It will have a considerable impact on the budget balance."

Parliament was discussing the gas deal between Ukraine and Russia signed in the New Year to end months of wrangling. The accord raised prices for Kiev to $95 per 1,000 cubic meters from $50 previously.

Gas will be sold at $110 inside Ukraine because of taxes and transport costs.

Pynzenyk said the government would be able to meet budget targets in the near future but risks would rise later in the year due to concerns that the gas price could further increase.

"Given that maximum prices will remain unchanged for consumers and the economy at large at $110 we can say that there is the chance to keep the budget balance under control in the months to come," Pynzenyk said.

"But we want at the same time to point out risks that could emerge by the end of the year."

Source: Reuters

Rice Skeptical Of Future Of Democracy In Russia

WASHINGTON, DC -- Citing troubling behavior by the Kremlin, U.S. Secretary of State Condoleezza Rice expressed skepticism on Sunday about the future of democracy in Russia.

U.S. Secretary of State Condoleezza Rice
"We are very concerned, particularly about some of the elements of democratization that seem to be going in the wrong direction," Rice said.

Russian President Vladimir Putin, while on good terms personally with President George W. Bush, has been criticized for centralizing political power and rolling back democratic gains.

Rice, appearing on CBS television's "Face the Nation," pointed to severe limits on nongovernmental organizations begun this year and Russia's use of energy as a weapon in a dispute with Ukraine this winter.

"I think the question is open as to where Russia's future development is going," Rice said.

Nothing can be gained by isolating Russia from institutions that demand democratic values from its members, she said.

Rice said the U.S. and Russia cooperate in fighting terrorism, opposing Iran's efforts to restart its nuclear programs and on other areas.

"In general, I think that we have very good relations with Russia, probably the best relations that have been there for quite some time," she said.

Rice added that, in spite of concerns about democracy in Russia, "This is not the Soviet Union. Let's not overstate the case."

Rice said she believes that Putin supports a more open Russia than existed at the center of the former Soviet Union.

Putin, as the leader of the Group of Eight nations, hosts a summit for heads of state in St. Petersburg in July. Some critics have questioned whether he should lead the organization because of the rollback of freedoms in Russia.

Other nations and human-rights groups have expressed concern as the Putin-guided Kremlin has established control of parliament, ended popular elections for regional governors, placed new rules on political parties, and cut back on the independence of national media.

Russia and Ukraine feuded over natural gas prices, a battle that grew more bitter when Russia briefly turned off its gas supply to Ukraine and other parts of Europe. That heightened concerns that energy supplies were not secure for the continent. An agreement reached earlier this month resolved the differences.

Russia has been at odds with Ukraine's reformist President Viktor Yushchenko who has sought to align the former Soviet republic away from Moscow and toward NATO and the European Union.

Putin upset Israel by inviting members of the militant Islamic group Hamas to talks in Moscow. Hamas, considered a terrorist organization by the U.S. but not Russia, has refused to moderate its anti-Israel stance since winning last month's Palestinian elections.

Rice said she has been assured that the Russians would continue to abide by the positions of the Mideast peace negotiators - Russia, the U.S., the European Union, the United Nations. They support the so-called "road map" to peace as well as Israel's right to exist and the end to violence by Hamas.

Source: AP

Vimpel Sets Bid For Top Telecom In Ukraine

MOSCOW, Russia -- Vimpel-Communications, a Russian mobile phone company on an aggressive expansion drive in the former Soviet Union, said Monday that it had offered to buy the largest telecommunications operator in Ukraine for $5 billion in stock and the assumption of debt.

VimpelCom Chairman of the Board David J. Haines
Vimpel, which in 1997 became the first Russian company to trade on the New York Stock Exchange, is in a race for market share in former Soviet republics that has put the company's two principal shareholders in conflict over expansion plans and issues of corporate governance. They are the Russian company Altimo and the Norwegian company Telenor.

Vimpel's offer marks another move in their intricate duel of lawsuits and acquisitions being played out in several countries.

At issue are Altimo's expansion plans in Ukraine, with a population close to 50 million and one of the hottest cellphone markets in Europe. Complicating the offer, Telenor and Altimo's parent company have stakes in the Ukrainian and Russian companies.

Vimpel is 27 percent controlled by Telenor and 33 percent by Altimo, a holding company for the telecommunications assets of the Russian company Alfa.

In Ukraine, Kyivstar is 56 percent controlled by Telenor and 44 percent by Alfa. Telenor issued a statement Monday suggesting that it would not immediately accept the offer for the Ukrainian company.

"Telenor and Altimo, both being major shareholders in Vimpel and Kyivstar, have important unresolved governance issues," Telenor said in the statement, attributed to Jan Thygesen, the vice president and head of Central and Eastern Europe operations for Telenor. "Telenor is ready to work constructively with Altimo and all other shareholders but insists that proper corporate governance must be re-established and that contractual obligations must be respected."

Vimpel said in a statement that the purchase would address Telenor's concerns about its expansion plans in Ukraine through a smaller, competing operator, Ukrainian RadioSystems.

"The combination of Vimpel and Kyivstar is compelling from a strategic and financial perspective," Vimpel said in a statement issued in Moscow.

It said the offer of $5 billion reflected Kyivstar's growth potential in one of Europe's fastest expanding cellphone markets, while most of the Western European market is saturated. The Russian market is also approaching saturation, sending domestic companies looking to other nations for expansion.

Vimpel said a merger could "generate significant synergies, as well as significant operating efficiencies."

In Oslo trading Monday, Telenor's stock closed at 67.25 kronor, or $9.91, down 1.75 kronor. Vimpel, traded on the New York Stock Exchange as American Depository Receipts, was at $44.81, up 7 cents, in afternoon trading.

If Telenor accepted the offer for Kyivstar, Telenor would lose operational control of its Ukrainian asset to the Russians. In exchange, it would increase its exposure to the larger Russian market - though as a minority, foreign shareholder in a tough market where Alfa is a dominant player everywhere but Moscow.

Source: The New York Times

Russia Asks Ukraine For Dialogue On Fleet

MOSCOW, Russia -- Russia has called for a constructive dialogue with Ukraine over disputed naval facilities on the Black Sea, RIA Novosti reported.

Black Sea Fleet - Sevastopol, Ukraine
The Russian Foreign Ministry said in a statement Monday that Russia 'seeks mutually acceptable solutions on all issues related to activities of the Russian Black Sea Fleet on Ukraine`s territory.'

Under a contract that expires in 2017, Russia is renting facilities from Ukraine for its naval fleet, which has remained in the country since the collapse of the Soviet Union but has been a cause of friction recently as bilateral relations have deteriorated.

The deputy foreign ministers of Russia and Ukraine are scheduled to meet Tuesday in Kiev, Ukraine`s capital, to discuss issues related to the normal functioning of the Black Sea Fleet -- including the Jan. 14 seizure by Ukrainian officials of a lighthouse in Yalta belonging to the fleet.

Relations between the two nations have worsened since Russian energy giant Gazprom turned off supplies of natural gas to Ukraine Jan. 1, when the latter refused to pay market prices for the gas. The dispute officially ended Jan. 4 with the signing of an agreement, but tensions remain.

Source: UPI

Candidate Returns Contributions From Trump Fundraiser Attendee

TAMPA, FL -- A $500-a-plate fundraiser hosted by Donald Trump at the New York billionaire's West Palm Beach estate earlier this month turned up a couple of potential contributors that have created some embarrassment for gubernatorial candidate Charlie Crist's campaign, Herald Today reported referring to AP.

Billionaire Donald Trump (L) and fugitive Volodomyr Shcherban (R)
One came from a former Ukrainian government official once charged with corruption in his home country who was in the U.S. illegally, and another from a businessman being investigated on complaints of deceptive advertising by the attorney general's office headed by Crist.

A campaign spokeswoman told The Tampa Tribune that neither man, Volodomyr Shcherban of Ukraine or Cape Coral businessman Russell Whitney, made contributions at the fundraiser.

However, two of Whitney's companies previously had made $500 contributions, the maximum allowed. The newspaper was then told by the campaign that those contributions would be returned.

A donation was required for admission, Crist campaign spokeswoman Vivian Myrtetus said, but one donor could have brought a guest by giving both a personal contribution and from a company. Florida law allows corporate political contributions.

Reports of donations at the Trump fundraiser won't be available until April, but Myrtetus said the campaign didn't find any from Whitney or Shcherban.

Myrtetus said Crist does not know Shcherban and had his photograph taken with hundreds of attendees at the event and that Crist had met Whitney at an earlier fundraiser.

Shcherban, who formerly held a position in Ukraine equivalent of that of a state governor, came to the United States last April after being charged with abuses of his office.

In October, he was arrested in Orlando and charged with immigration violations for overstaying his visa, according to Pam McCullough, spokeswoman for the Tampa office of the U.S. Immigration and Customs Enforcement agency.

On Jan. 20, she said, Shcherban posted bail of $2 million in cash.

McCullough said there no longer are charges pending against Shcherban in his home country because of a new law passed there prohibiting criminal charges against government officials.

Some 400 guests, at $500 a head, attended the Feb. 3 fundraiser for Crist at Trump's Mar-A-Lago estate.

Crist is opposed by Florida Chief Financial Officer Tom Gallagher in the Republic primary for governor while state Sen. Rod Smith of Alachua and U.S. Rep. Jim Davis of Tampa are the Democratic contestants.

Source: ForUm

Russian Official Says Ukraine Has No Right To Increase Fleet Rent

MOSCOW, Russia -- A Russian official said Sunday that Ukraine does not have the right to demand that Russia pay more money to base its Black Sea Fleet in a Ukrainian port.

Russian Black Sea Fleet
Ukraine has said it plans to start charging a market rate for the Black Sea Fleet base. Some officials suggest Moscow could be asked to pay up to 20 times as much.

Vladimir Dorokhin of the Russian Foreign Ministry said that a 1997 agreement that divided up the Soviet Black Sea Fleet between Ukraine and Russia and granted Moscow a 20-year lease on the base until 2017 could not be violated.

"These fundamental points - the length of time the fleet can be based in Ukraine and the amount of rent, are not negotiable," he said in a Foreign Ministry statement. He called for the two countries' discussions on the Russian Black Sea Fleet to be "depoliticized."

Under the 1997 agreement, the Russian navy was allowed to remain in the Sevastopol port until 2017, charged an annual rent of US$93 million.

Ties between Moscow and Kyiv have been increasingly tense under Ukraine's President Viktor Yushchenko, who has tried to shake off Russian influence in his former Soviet nation since he came to power early last year.

Last month, Ukraine agreed to pay double the price for gas after a bitter pricing dispute with Russia, which briefly cut off supplies to its neighbor.

A special commission set up between the presidents of both countries to deal with bilateral issues is due to discuss the Black Sea Fleet's status this week.

Source: AP

VimpelCom Offers To Buy Ukraine's Kyivstar For $5 Bln (Update1)

MOSCOW, Russia -- OAO VimpelCom, Russia's second- biggest mobile-phone company, offered to buy Ukraine's VAT Kyivstar for $5 billion as it seeks to expand in the former Soviet state.


VimpelCom made the offer for Kyivstar, Ukraine's second- largest mobile-phone company, to owners Telenor ASA and Altimo, the Moscow-based company said in a PRNewswire statement. Telenor, Norway's largest phone company, owns 57 percent of Kyivstar, and Altimo, Alfa Group's telecommunications arms, owns the rest.

Telenor and Alfa, which are also the two largest shareholders in VimpleCom, have been in a dispute over their assets in Russia and Ukraine for the past year. Alfa has sought to merge the two companies, an idea blocked by Telenor because it wouldn't have a controlling stake in the merged company.

VimpelCom has been seeking to expand in Ukraine, the second- largest country in the former Soviet Union, where subscriber growth rates are higher than in Russia. VimpelCom last year bought Ukrainian Radio Systems, a mobile-phone company that owns the WellCom brand.

VimpelCom spokesman Valery Goldin didn't answer his phone when contacted by Bloomberg. Kirill Babayev, a spokesman for Altimo, couldn't immediately comment on the offer. Dag Melgaard, a spokesman for Telenor in Oslo, could not be reached.

Alfa owns about 32 percent of VimpelCom and Oslo-based Telenor has about 26 percent.

Shares of Telenor fell as much as 1.5 krone, or 2.2 percent, to 67.5 kroner, and traded at 68.25 kroner as of 11:33 a.m. in Oslo. VimpelCom shares fell 0.3 percent in New York on Friday to $44.74, valuing the company at $9.2 billion.

Source: Bloomberg

Russia Under Pressure To Guarantee Gas Supplies After Shortage In Ukraine

MOSCOW, Russia -- The Group of Seven leading industrial countries put pressure on Russia at the weekend to ratify an energy supply charter in the wake of the supply scare last month when it briefly turned off the gas taps to Ukraine and western Europe.

Russian finance minister Alexei Kudrin
After a sometimes fractious meeting, Russian finance minister Alexei Kudrin said his country, the world's biggest gas producer, was keen to be a stable supplier and help develop a world market for gas but refused to comment on the framework charter, which Russia has already signed but not yet ratified.

Several countries, especially France, think that getting Russia to ratify the charter would help ensure security of energy supplies, greater transparency of markets and clearer rules over transit pipelines. The charter, drawn up by European countries and Russia in the early 1990s, has been signed by over 50 countries, although not the United States or Canada.

Russia is now the world's second-biggest oil exporter and holds the world's biggest gas reserves. It supplies a quarter of the European Union's gas and its actions in early January, just as it assumed the presidency of the Group of Eight (G7 plus Russia), sent shockwaves throughout the EU and the US, both of which are heavily dependent on imported energy.

Russian gas giant Gazprom also caused jitters in Britain recently when it suggested it could buy British power companies such as Centrica or Scottish Power.

The ministers released a communique after their meeting saying that energy security had now moved to the top of the agenda for their next meeting and pledged to work on improving the dialogue between oil producers and consumers and private sector companies.

Mr Kudrin said Saturday's talks had been tense. "Each minister represents his own country's interests. But our aim is to be one of the most stable suppliers," he said. If Russia were to ratify the charter, Gazprom may have to allow smaller local producers access to its huge pipeline network and the country would have to open up its energy business to foreign oil and gas companies.

French finance minister Thierry Breton said all countries needed greater visibility in energy markets, better rules over pipeline transit and reliability of supply. All of these were covered by the energy charter, he said. "The recent Ukraine affair showed that the dialogue between Europe and Russia could function better. Russia has signed the charter, now it must ratify it."

Russian president Vladimir Putin struck a conciliatory tone, telling ministers: "We need to develop a civilised strategy which will reliably secure the world with energy at reasonable prices and with minimal damage to the environment."

The chancellor, Gordon Brown, who has long called for greater dialogue between the Opec oil cartel and oil consuming countries, said gas should now be brought into the same discussion. "I believe we should now enhance the dialogue with Opec and other energy producers, extend transparency, agree to bring gas as well as oil into the initiative to improve data and move forward with incentives for investment in new sources of energy and energy efficiency," he said.

The ministers also discussed a Russian offer to repay a further $11bn-$12bn (£6.3bn-£6.9bn) of its debt to so-called Paris Club creditor nations this year, on top of the $15bn repaid last year after surging oil and gas prices brought it a revenue windfall. Russia urged the rest of the G8, the key Paris Club creditors, to use the money to bolster the balance sheets of the World Bank and African Development Bank, allowing them to make good on a pledge made at last year's Gleneagles summit to write off $37bn of debts owed by the world's poorest countries. Not all countries were keen on Russia establishing that link, however.

Firms suffer

Britain's smaller manufacturers are seeing their costs increase because of higher fuel prices but are unable to pass them on to customers because of weak consumer demand, according to a CBI survey. Thirty-nine per cent of those questioned said costs rose in the final three quarters of 2005 compared to the previous three months. Small and medium-sized businesses appear to be harder hit by rising energy prices than their larger rivals. "The relative weakness of the domestic economy is undermining demand so business cannot pass on the increased costs, in the form of higher prices, to their customers," said the CBI's Steve Sharratt.

Source: Guardian Unlimited

Police Seize Magic Mushroom Chocolates In Kiev Nightclub

KIEV, Ukraine -- Ukraine police have stumbled upon a delectable type of drug during a nightclub raid -- chocolates laced with a hefty dose of hallucinogenic mushrooms, an official said.

Ukraine police have stumbled upon a delectable type of drug during a nightclub raid -- chocolates laced with a hefty dose of hallucinogenic mushrooms
Officers made the discovery overnight when they detained several drug dealers at a Kiev nightclub, Vitaly Yarema, a top official with the Kiev police was quoted as saying Friday by the Interfax news agency.

During the arrests, police seized several kilograms of chocolates that turned out to be 25 percent hallucinogenic mushrooms, he said.

Police think the chocolates were manufactured in Switzerland and transported to Ukraine through Poland.

Source: AFP

Russia Seeks Better Gas Flow

MOSCOW, Russia -- The world's largest natural gas supplier, may reduce Gazprom's lock on the country's pipelines and is seeking more gas links to Europe, which was hit over the past month by fuel shortages amid a dispute between the state-run Gazprom and Ukraine.


Russia plans to ensure equal access for producers to the nation's gas network, Finance Minister Alexei Kudrin said at a press conference in Moscow on Saturday after the meeting of the Group of 8 leading finance officials. Russia also wants to build more gas pipelines to Europe, which receives a quarter of its gas needs from Russia.

"Some countries in Europe still experience disruptions of gas supplies from Russia via Ukraine in January and in February," Kudrin said. "It's not Russia that is the reason for the delayed supplies."

Gazprom, the world's largest gas producer and Russia's export monopoly for the fuel, cut gas deliveries to Ukraine last month amid a dispute over prices, resulting in a cut in supplies to Europe. About 80 percent of Russian gas exports currently cross Ukraine. The dispute has cut deliveries to European countries including Italy, Hungary and France.

Industry Minister Claudio Scajola of Italy, who is preparing to draw on strategic gas reserves amid a shortage of Russian supplies, on Saturday gave himself extra powers over the energy industry in the event of an emergency.

Ukraine is taking more gas than is allowed for in its contract with Russia from gas transportation pipelines that carry the fuel to Europe, he said.

More gas pipelines to Europe would ensure gas supplies, Kudrin said.

Russia's independent gas producers have called on the nation to ease access to its pipelines. Gazprom's reluctance to let outsiders use its network forces some oil producers to burn off or store gas they extract with crude.

Source: Bloomberg News

Jordan, Ukraine Sign Tourism Agreement

AMMAN, Jordan -- Jordan and Ukraine have signed on Sunday an agreement to increase the bilateral cooperation in the field of tourism and antiquities.

Petra, Jordan - lost city of stone
The agreement, which is the first of a kind, was signed by Minister of Tourism Muneer Nassar and His Ukrainian counterpart Ihor Likhovyi in the presence of the Ukrainian Ambassador to Jordan.

According to the agreement, the two sides must take the needed steps and procedures to encourage the tourism cooperation and to establish relations and communications among all tourism organizations, institutions and travel agents of both countries.

The two sides also agreed to exchange information, media data, and statistics related to tourism and its development, to train its cadres and to enhance the bilateral cooperation in the field of producing tourism promotion films on the tourism sites in both countries.

Nassar said that Jordan and Ukraine are enjoying distinguished relations, pointing that the agreement comes to strength the cooperation between them. He added that the tourism has witnessed a tangible development during the last year which indicates that there will be a further development between the two countries in the future.

For his part, Likhovyi pointed at the marvelous tourism capabilities that Jordan has, adding that the Jordan's history is great in its civilization and sites of tourism and antiquities.

Source: Jordan News Agency

Ukrainian Ambassador: China's Development Poses No Threat

BEIJING, China -- Ukrainian Ambassador in China Sergei Alekseevich Kamyshev said recently that China is taking a path of peaceful development, which will pose no threat to the world, and he hopes the two countries to strengthen technological cooperation.


Making the remarks in an exclusive interview with Xinhua, Kamyshev said China and Ukraine enjoy smooth cooperation in such areas as politics, economy, culture and technology in recent years. The two countries maintain close contacts of high level and develop a stable political relationship.

The government change of Ukraine didn't retard but promote the development of bilateral relations, and bilateral trade last year registered a record-high volume of 3 billion U.S. dollars.

The Ukrainian government believes that the two countries will score new development in political, economic and cultural areas inthe new year, as well as new growth in bilateral trade, Kamyshev noted.

China is paying more and more attention to the role of high andnew technology in its development, and the Chinese leaders put forward the concept of scientific development, he said, adding that Ukraine, with some advantages in science and technology, has a great potential in cooperation with China in science and technology, especially in aerospace and peaceful utilization of atomic energy.

Kamyshev said Ukraine is helping the Ukrainian companies participate in the construction of Chinese nuclear power plants. The two countries can strengthen cooperation in this regard since Ukraine has abundant experience in nuclear power plants building and world-level nuclear power technology including the technology to build turbines.

A seminar on China-Ukraine nuclear power cooperation will be held in the Ukrainian embassy in April this year, according to theambassador, which will attract scientists and businessmen of both countries. The embassy also plans to hold four to five seminars onhow to strengthen China-Ukraine cooperation in such areas as metallurgy, oil and gas exploration, investment and infrastructure construction.

Kamyshev hopes China to invest more in Ukraine, and invites Chinese companies to join the oil and gas exploration in the Black Sea and the Sea of Azov, and to participate in the bid of oil and gas exploration programs in these areas.

Kamyshev also hopes China and Ukraine to cooperate in educationand tourism. There are more than ten thousand overseas Chinese students in Ukraine. He said Ukraine welcomes more Chinese to study in Ukraine, and hopes to sign the agreement promoting Chinese group traveling in Ukraine as early as possible.

As for the so-called "China threat", Kamyshev said he thought the name of "peaceful development" is more suitable. China is not developing its economy at any costs, but focusing more on the quality of growth with highly attention on the protection of environment and social security.

China is taking a right way and a peaceful path, whose development will impose no threat to the world, Kamyshev stressed.

Source: Xinhua

Experts See Upside in Russia-Ukraine Gas Dispute

WASHINGTON, DC -- Experts at a Washington forum on the recent row between Russia and Ukraine over gas say it will take time to assess the long-term effect of the dispute. But some see an upside to what analysts agree was a political saber rattling by Russia.


At the forum sponsored by the Jamestown Foundation, a Washington research organization, there was a general sense that by cutting off shipments, Russia used its energy resources as a political tool. Both Adrian Karatnycky, a scholar at New York's Freedom House, and Harvard University professor Marshall Goldman agreed that Gazprom and President Vladimir Putin wanted to remind Ukraine of its economic dependence on Russia.

Goldman says Russia believes that it is the winner in the dispute, having made Ukraine pay twice as much for gas as it did before, even though the new price is still well below world market levels. Karatnycky says, while the doubling of prices will shave one to two percent off Ukrainian economic growth this year, it will have the positive effect of making gas-dependent Ukrainian industry more efficient.

"It is moving the Ukrainian government to create conditions for energy exploration and energy efficiency. That, I think, is a very important thing," said Karatnycky. "It is reminding most of Europe that its interests, and its energy needs, are all part of a broader context in which Ukraine is an integral European factor."

Goldman emphasized that western Europe relies on Russia for a very large percentage of its oil and gas imports. Several of those pipelines transit Ukraine. Goldman said a newly assertive President Putin probably assumed that Europe would blame Ukraine and not Russia for the hardships associated with the brief cut off of Russian supplies.

"Europe is locked in. They'll back Putin," he said. "This is the reasoning, I think, that he [Putin] is going through. They'll back Putin because they want that energy. It's cold in Ukraine. It's going to be even colder in western Europe. Besides, [former German chancellor Gerhard] Schroeder is there. He's now been made an official in the consortium that is going to build the Baltic sea pipeline [to bring Russian energy to western Europe] and he is going to speak out in our behalf."

Goldman says Russia probably did not anticipate the more critical European response, in which the west Europeans are seeking to diversify their energy supplies.

Both speakers did agree that a troublesome aspect of the new price accord is the emergence of a shadowy middleman or broker that will oversee the Ukraine Russia energy deal. Details of the pricing accord are still not known and the brokerage firm, they say, probably includes criminal or Mafia elements.

Source: Voice of America

MTV To Launch In Ukraine

KIEV, Ukraine -- MTV will launch a Ukrainian version of the popular global music channel later this year. "MTV Ukraine will be joining the family," Dean Possenninskie, a vice president who oversees developing markets for MTV Europe, told a press conference in Kiev on Friday.


He did not specify the date of the launch.

The 24-hour channel will be broadcast in Ukrainian and will feature both local and international music acts, officials said.

"We will try to maximize the percentage of videos and shows that will be made by Ukrainian talents while at the same time showing Ukrainian youth what has been done throughout the world," Gennady Borisov, general manager for MTV Ukraine, said.

The MTV music channel debuted in the United States in August 1981 with the video of the hit song "Video Killed the Radio Star" by the British duo The Buggles.

It is now broadcast in 22 languages in 167 countries throughout the world.

Source: AFP

G8 Ministers Discuss Russia-Ukraine Gas Relations With Putin

MOSCOW, Russia -- The G8 finance ministers discussed the natural gas situation in Russian-Ukrainian relations with President Vladimir Putin, the French minister said Saturday.

Russian President Vladimir Putin speaks during a meeting of G8 finance ministers and international financial officials in Moscow's Kremlin
Thierry Breton said the topic had been raised on the Russian leader's initiative. Breton said Putin had explained Russia's position on the issue and said he was satisfied with the issue's resolution both from the standpoint of European consumers and Russia.

Breton said France had proposed resolving such problems in the framework of the Energy Charter, which Russia has signed but has not ratified yet.

Russian Finance Minister Alexei Kudrin said the conclusion of a new contract with Ukraine had made natural gas deliveries to Europe independent of its supplies to Ukraine.

Earlier, he said, the price of transit to Europe depended on the volume of supplies to Ukraine, and thus supplies to Ukraine conditioned supplies to Europe.

"Today this contract has been divided into two contracts, and supplies to Europe take place in line with one formula and do not depend on the volume of supplies to Ukraine," the minister said at a news conference after the G8 finance ministers' meeting in Moscow.

Kudrin said the ministers had asked him to clarify the situation, as not everyone in Europe knew that Russia was not to blame for shortfalls in gas deliveries.

The Russian minister also said that in its relations with Ukraine Russia had switched to the price formula used in relations with European consumers, and now the country no longer influenced the gas price for Ukraine.

Russia and Ukraine were involved in a bitter dispute over natural gas prices at the end of last year, which led to Gazprom turning off supplies to the neighboring country on January 1 after Ukraine failed to agree to pay market prices. The spat was officially settled on January 4, but Russia has since said Ukraine has continued to siphon Europe-bound gas. Gazprom put the figure at 550 cu m in January alone.

Source: RIA Novosti

Our Ukraine, Party Of Regions Look For Coalition Allies

KIEV, Ukraine -- Just a year ago, the idea of a union between president-elect Viktor Yushchenko and his arch-rival Viktor Yanukovych, defeated and disgraced by vote-rigging accusations, would have been bizarre.

A possible strange union between Yushchenko (L) and Yanukovych (R)
But current realities make quite possible a coalition between Yushchenko's Our Ukraine and Yanukovych's Party of Regions (PRU) after the March parliamentary election. This is because of the constitutional amendments that came into force on January 1, according to which a majority in parliament, rather than President Yushchenko, will appoint the cabinet after the election. Our Ukraine and PRU may well form the majority, unnatural as it may seem.

The PRU is the undisputed leader going into the elections, but its lead is not as comfortable as to ensure control of more than half of the seats in the next parliament. The chance of forming a majority with natural anti-Yushchenko allies like the United Social Democrats, Volodymyr Lytvyn's Bloc, or the Communists is low because those allies are so unpopular that it will be hard for most of them to even clear the 3% vote barrier. This means that the PRU will have to seek partners in the opposite camp in order to form a cabinet.

PRU's strength grew out of the crumbling of the Orange coalition, particularly following the dismissal of Yulia Tymoshenko's cabinet in September. Our Ukraine has been trying to revive the Orange Revolution coalition, but obstacles to this process look more and more insurmountable as time goes by.

Our Ukraine has offered a coalition accord to the other parties that used to form the Orange camp, but are now running in the race separately: Tymoshenko's Bloc, the Socialist Party, the Kostenko-Plyushch bloc, and the Pora-Reforms and Order bloc (Pora-PRP). An agreement on the distribution of posts in the future cabinet has been part of this draft, Our Ukraine campaign manager Roman Bezsmertny told the Lviv-based Expres daily.

The would-be partners reacted to the draft coldly. Socialist leader Oleksandr Moroz called the idea of sharing portfolios before the election "nonsense," and Pora leader Vladyslav Kaskiv said Our Ukraine should first "cleanse" its ranks.

Tymoshenko has made it clear that her bloc would be party to the accord only if she were offered the prime minister's post. Other conditions put forward by Tymoshenko included revision of the gas trade accords with Russia reached this year and resumption of reprivatization. Bezsmertny and Prime Minister Yuriy Yekhanurov have dismissed Tymoshenko's conditions as inadmissible in principle.

Our Ukraine can safely ignore the objections from players like Pora-PRP and Kostenko-Plyushch, whose chances of passing the barrier to parliament are slim anyway. The Socialists will have to eventually agree to the role of a junior partner, as they are no political heavyweights.

But Tymoshenko's refusal to cooperate on Our Ukraine's conditions sounds the death-knell of a new Orange majority, as Tymoshenko's bloc is among the three favorites in the race, the other two being the PRU and Our Ukraine. Our Ukraine, especially its liberal business wing, will never agree to another Tymoshenko cabinet, remembering her infamous reprivatization campaign and attempts to purge the Yushchenko team of "the businessmen."

Those "businessmen want a compromise with PRU," the pro-Tymoshenko weekly Svoboda warns in its latest issue. It mentions former cabinet ministers David Zhvania and Yevhen Chervonenko, both from Our Ukraine's business wing, among those seeking the compromise. Also according to Svoboda, the leader of the PRU parliamentary faction, Raisa Bohatyryova, recently suggested forming "a political council along the Yanukovych-Yushchenko axis for the sake of national security."

Bezsmertny and Yekhanurov are apparently not against some kind of an agreement with the PRU. Yekhanurov admitted in a recent interview with Glavred that Tymoshenko might be a more serious enemy for Our Ukraine than the PRU, because Tymoshenko and Our Ukraine fight for the same electorate. And Bezsmertny, speaking in the interview with Expres, did not rule out the idea of forming a cabinet together with PRU, if his efforts to revive the Orange coalition failed.

Vadym Karasyov of the Institute of Global Strategies has opined in Ukrayinska pravda that a coalition between Our Ukraine and PRU may have positive consequences for Ukrainian statehood, such as "legitimizing the national government across all Ukraine" -- as the PRU-dominated southeast has not accepted Yushchenko as true leader of the nation -- and "removing the issue of Ukraine's federalization from the agenda." Federalization, which is firmly rejected by Our Ukraine, has been among the PRU's main campaign slogans along with giving official status to the Russian language.

On February 6, Serhy Ratushnyak, an ally of parliamentary speaker Volodymyr Lytvyn, claimed that Our Ukraine and PRU have already concluded a secret accord, according to which Yanukovych would get the post of prime minister in the would-be coalition government, and Yekhanurov would be relegated to his first deputy, while Bezsmertny would replace Lytvyn as speaker. Ratushnyak's statement was dismissed as a dirty trick by former justice minister Roman Zvarych of Our Ukraine and Taras Chornovil of PRU.

Source: Eurasia Daily Monitor

Making Change From Revolution To Powerful Elite

WASHINGTON, DC -- Just over a year ago, Yuri Lutsenko was manning the barricades and firing up the crowds in Kiev as a key tactician of Ukraine's "Orange Revolution."

Minister of internal affairs Yuri Lutsenko
This week, he was in Washington, meeting top U.S. officials and think tank scholars as the new government's minister of internal affairs, the most powerful law-enforcement post in the country.

"I was always sure that our democratic revolution would someday succeed, but I have to say never in my dreams did I consider that I would be one day sitting in this chair," Mr. Lutsenko said, speaking through an interpreter in an interview at the Ukrainian Embassy in Georgetown.

"I also think that a lot of the police officers who dealt with me when I was in the opposition never expected this either," the 42-year-old former electrical engineer added with a smile.

Mr. Lutsenko, a longtime activist against former President Leonid Kuchma, emerged as one of the most charismatic figures of the 2004-2005 Orange Revolution, which overturned a fraudulent presidential vote and vaulted pro-Western reformer Viktor Yushchenko to power.

With a street-rebel reputation and little administrative experience, Mr. Lutsenko was not the obvious choice to head one of the country's most powerful ministries, charged with everything from fighting corruption, terrorism and illegal immigration to overseeing Ukraine's widely resented traffic police.

"Frankly, it was absolutely unexpected for me when the president asked to take this post," he said.

He said the ministry has made good progress since he took over last February. Among his first acts were to dismiss the ministry's second in command, who heads the internal security forces, and the administrator of the traffic police.

About 2,500 police officers have been dismissed for failing to meet ministry standards and more than 600 criminal cases against officers have been referred to prosecutors, Mr. Lutsenko said. The ministry is also aggressively targeting official corruption.

Last month, three former Ukrainian police officers went on trial in the 2000 slaying of investigative journalist Georgy Gongadze. The long-stalled case proved critical in tarnishing Mr. Kuchma's rule both at home and abroad.

Mr. Lutsenko's Washington trip, which included meetings with top State Department, FBI and Department of Homeland Security officials, focused on joint cooperation on issues such as terrorism, immigration and narcotics trafficking. Kiev is also pressing for a bilateral extradition treaty, which the U.S. side has been reluctant to sign.

His trip came at a difficult moment for Mr. Yushchenko. In a nasty public break, his Orange Revolution ally, Prime Minister Yulia Tymoshenko, was fired as prime minister in August and is leading an independent bloc in hotly contested parliamentary elections next month.

Mr. Lutsenko acknowledged the uncertain political climate, but said he had no fears that the democratic, pro-Western ideals of the Orange Revolution were in danger.

"Politicians of every stripe in Ukraine now say they support those ideals," he said. "We have crossed the Rubicon and there is no going back."

Source: The Washington Times

NATO Enlargement Unpleasant To Russia

MOSCOW, Russia -- The expansion of NATO to include former Soviet republics is "not a pleasant thing" to Russia but it is "not so disastrous either," Defense Minister Sergei Ivanov said in an interview.

Russian Defense Minister Sergei Ivanov
"The Russian leadership takes the line that each sovereign state has the right to decide for itself how to build its own security," Ivanov told the Italian newspaper La Stampa in an interview, which was posted on the ministry's website.

"However, such moves should not weaken the security of its neighbors and nearby states, including, of course, Russia," Ivanovsaid.

Ukrainian President Viktor Yushchenko has made membership in NATO and the European Union a strategic goal of his country. The Caucasus Mountain nation of Georgia has also opted for accession to NATO.

Ivanov described Ukraine and Georgia's bids to join NATO as "their legitimate right," but said that for Russia, the accession of Ukraine to this alliance is "especially sensitive" because the shared historical and cultural values, the unity of interests and numerous family ties give a special character to relations between the two peoples.

But Ivanov also said: "We are not dramatizing the situation by relying on Cold War stereotypes, based on a standoff between blocs, as these are becoming a thing of the past, while cooperation between Russia with NATO is becoming more extensive year by year."

Ivanov flew to the Italian island of Sicily on Thursday for a defense ministers' meeting of the Russia-NATO Council.

Russia has also sent warships to join a NATO-led anti-terrorist operation in the Mediterranean.

Source: Xinhua

Ukraine: Repeating Russia's History

MOSCOW, Russia -- Ukrainian President Viktor Yushchenko announced in the parliament on Thursday his plans to prepare a new constitution that would be adopted on a referendum.

Ukrainian President Viktor Yushchenko during his annual 'state of the nation' address in Kiev
Trying to find a way out of the legal deadlock, created last year when he was elected president, Yushchenko risks provoking a new wave of political instability in the country.

One of the reasons for "color" revolutions in former Soviet republics is that the reform process in Russia's neighbors is lagging far behind. This means that they are now experiencing what Russia has already gone through. There are almost inevitable confrontations between parliaments and presidents that are unable to divide terms of reference.

The most recent example is today's Ukraine. It has experienced its Orange Revolution, which can be compared to the August 1991 attempted coup in Russia. It was then that the last remnants of the Soviet regime became a thing of the past. Afterwards, Ukraine, like Russia in the past, entered the period of power distribution. It is enough to recall the standoff between President Yushchenko and former Prime Minister Yulia Tymoshenko (cf. Boris Yeltsin and Alexander Rutskoi), who used to fight against the regime of former President Leonid Kuchma together.

Then, just like in Russia, came the period of a confrontation between the president and the parliament, when they were literally tearing apart the country's constitution. Speaking of today's Ukraine, no expert in constitutional law can prove the legitimacy of the country's parliament, government, president and prosecutor general's office. Theoretically, the Ukrainian Supreme Court could unravel the knot of contradictions, as such cases are within its jurisdiction, but it cannot do anything because it does not have the required quorum due to the political confrontation between the parliament and the president.

President Yushchenko, who under the political reform lost most of his powers on January 1, decided to cut the Gordian knot in a pure Yeltsin style, swiftly and decisively. Today he raised the question in the parliament of a comprehensive constitutional reform that should bring real power back to the president. Even the decision-making mechanism follows Russia's example: there will be a national referendum.

Given that the explosive proposal came ahead of March parliamentary elections and that Yushchenko's chances for a legitimate victory are slim, judging by opinion polls, the president decided to play all or nothing, aggravating the political situation in the country and perhaps even trying to disrupt the election, replacing them with a referendum.

Russia saw all of this in 1993. It led to a long confrontation between the parliament and the executive power, which ended in the onslaught on the parliament, arrests of the opposition and, finally, the victory of the new Yeltsin constitution on the referendum, which has remained in force ever since.

If Yushchenko intends to follow suit, it will be a bold move. He will not necessarily be able to repeat Yeltsin's feat. No one in Kiev, neither the president, nor his rival Viktor Yanukovich or Timoshenko, knows which way the crowds that made the Orange Revolution will sway. What's more, the crowds don't have the answer either. So it will not be too easy to repeat Russia's 1993 history in Ukraine in 2006.

Source: RIA Novosti

Ukraine To Go Nuclear

KIEV, Ukraine -- Ukraine's prime minister stated overnight that the ex-Soviet state and former nuclear power intended to produce its own nuclear fuel within a dozen years.

Nuclear fuel rods
"We need 12 years to develop the (full) nuclear cycle," Prime Minister Yury Yekhanurov said while on a visit to the western city of Lviv.

Producing nuclear fuel is part of the strategy of the new pro-Western leadership to lessen Kiev's dependence on Russia, which supplies Ukraine with much of its oil, gas and nuclear fuel.

Ukraine currently "depends 100 per cent on fresh nuclear fuel from Russia" for its nuclear power plants, Mr Yekhanurov said.

Kiev's nuclear ambitions risk putting the West in an awkward position, as it is eager both to help Ukraine shed Moscow's traditional influence and to stem nuclear proliferation in the region.

Tensions between Ukraine and Russia have steadily increased since President Viktor Yushchenko came to power last year, vowing to steer Ukraine toward membership in the European Union and the North Atlantic Treaty Organisation (NATO).

The tense relations came to a head in early last month, when Russia shut off Ukrainian gas supplies amid a dispute over prices, which ended after Kiev agreed to a near doubling of the price that it pays for its gas imports.

Mr Yushchenko has said that diversifying from Russian energy supplies would be among the top goals of his administration.

Ukraine was a top nuclear power when it became independent following the breakup of the Soviet Union in 1991 and was the site of the world's worst nuclear accident at the Chernobyl power plant in 1986.

Kiev agreed to give up its nuclear weapons and capacities in 1994 in exchange for security guarantees from the world's nuclear powers.

Source: AFP

Suspicious Gas Dealings With Russia

PRAGUE, Czech Republic -- After following and writing about gas deals between Ukraine and Russia for the past four years, I feel confident in stating that the agreement to create a joint venture between state oil and gas company Naftogaz Ukraine and Swiss-registered RosUkrEnergo is a setback for Ukraine. I say this without any hesitation or reservations.

Executive chiefs of joint venture RosUkrEnergo Oleg Palchikov (R) and Konstantin Chuychenko (L)
This deal could come back to haunt Ukraine and President Viktor Yushchenko one day. It could also destroy his reputation and the reputations of those who were party to this unnecessary and murky transaction. In my opinion, it is one big mistake.

Beginning in December 2002, Eural Trans Gas (ETG) was registered in Hungary and awarded a contract to supply Ukraine with gas from Turkmenistan. RosUkrEnergo has since replaced ETG as the firm handling transits from Turkmenistan, and most recently importing gas from Russia and Central Asia. It is a lucrative business through which such firms generate hundreds of millions of dollars annually for unclear services.

Nobody in the top echelons of government or the companies involved has been able to adequately explain why state-owned gas companies like Ukraine’s Naftogaz and Russia’s Gazprom, which controls gas pipelines stretching to Ukraine’s borders, can’t handle the transit themselves. There are many other unanswered questions.

Nobody in the Russian or Ukrainian governments has explained the role of ETG’s Romanian shareholders.

What value did ETG add to the transport of Turkmen gas to Ukraine? Yuriy Boyko, the then-head of Naftogaz, claimed that everything was “transparent” and that Eural was saving Ukraine a great deal of money. This doesn’t appear to be the case.

Former Ukrainian President Leonid Kuchma didn’t attempt to stop the deal, maintaining silence throughout while he was in office. The bottom line was that Eural was awash in cash.

Nobody could answer why such little-known companies should be given such lucrative contracts and what role they played. Equally important, nobody could explain where the profits earned ended up. As far as I have been able to ascertain, it didn’t go into the pockets of the Romanian shareholders.

Then, for reasons still unknown, mysterious beneficiaries, or those who really controlled the lucrative business, got rid of the Magyars, Romanians and an Israeli lawyer. In July 2004, RosUkrEnergo was set up, replacing ETG as the operator of Turkmen gas supplies to Ukraine.

“A model of transparency” Boyko proclaimed at the founding ceremony in Yalta. Still, RosUkrEnergo, owned half by Gazprom subsidiary Gazprombank and half by unknown parties, appeared to be a continuation of the old Eural scheme, as well as the proclivity of top brokers in the region’s gas business to conduct opaque transactions.

To show how “transparent” everything was, they brought on board Raiffeisen Investments – a company that added a respectable name to the murky deal. Raiffeisen appears to do nothing except act as a nominee shareholder on behalf of the unknown owners of Centragas Holdings, which owns half of RosUkrEnergo. Its beneficiaries have not been disclosed. Thus, Raiffeisen Investment appears to have fulfilled the role of attractive packaging.

Nobody in Ukraine made any serious objections at the time. In the case of Eural, millions of tax-free dollars piled up on company accounts and it remains unclear where they ended up.

When the new administration took over in Ukraine, its members vowed to fight corruption and the remnants of the Kuchma era. An investigation was launched by the Ukrainian State Security Service (SBU) into the operations of Eural and RosUkrEnergo.

Russian President Vladimir Putin was in a potentially uncomfortable position. It appeared that Yushchenko was doing his bidding. Oleksandr Turchynov, then head of the SBU, said he’d been told to wrap up the investigation, and to stop pestering “our boys.” Then Yushchenko fired Turchynov’s political ally, Yulia Tymoshenko and brought in a new team.

The gas deal appeared to be too profitable to fold up. When the time came this year to negotiate a new gas sales deal with Ukraine, RosUkrEnergo ended up gaining a bigger role, gaining control of gas shipments not only from Turkmenistan, but also from other Central Asian states and Russia. The joint venture established last week also gives RosUkrEnergo a piece of the business of supplying gas on the Ukrainian market.

The Ukrainian government conducted the negotiations as best they could, but could have done better. They misled the Ukrainian people over and over, insisting it was a transparent deal.

President Yushchenko scolded the press for writing “fairy tales” (‘Bajky’) about RosUkrEnergo, while disassociating the state from the firm. He insisted that no government company had a share in it.

The head of the Anti-Monopoly Committee of Ukraine last week concluded that the creation of a joint venture between Naftogaz and RosUkrEnergo didn’t violate Ukraine’s antimonopoly laws. But regulations and commercial secrets forbade him from revealing the names behind RosUkrEnergo. Committee head Oleksy Kostusev did say, however, that these names should be made public. Why should the names of shareholders in a commercial venture remain secret, when it is the government that owns part of the venture?

What prevents President Yushchenko from telling the Ukrainians clearly who owns 50 percent of RosUkrEnergor? Is he covering for someone?

If Ukraine expects to join Europe and the World Trade Organization, then this is not the way to go about it.

If blame is to be apportioned for the Ukrainian side of this fiasco, then most of it can be placed on the doorstep of the current authorities. President Yushchenko’s approach to governing, his choice of personnel and his difficulty in keeping electoral promises to fight corruption are largely responsible for this mess.

Yulia Tymoshenko must also be held accountable for her actions after the gas affair began. By arguing that the old price of $50 per 1,000 cubic meters could be maintained was pure nonsense. By making wild and unsubstantiated claims, Yulia has only created more confusion and uncertainty than what already exists.

Influential power brokers in the region, possibly including Russian President Vladimir Putin, appeared influential in this deal. This, however, does not excuse the president of Ukraine and the government from concealing the truth from their own people. It would have been far better to rely on honesty and tell it like it is. Most reasonable people would have believed President Yushchenko. Instead, he chose the path of least resistance.

Source: Roman Kupchinsky (RFE/RL)

Ukrainians Freeze In Eastern City

ALCHEVSK, Ukraine -- Maria Sutkovska has been living in her black cap, several wool sweaters and a bulky coat since a massive utility breakdown cut off heat to her eastern Ukraine city 18 days ago, plunging some 60,000 people into what they are calling "The Ice Age."

A worker repairs pipes cracked during a bout of cold weather in Ukraine's eastern town of Alchevsk
"At night, I am scared that I'll die from the cold," said the 68-year-old retiree, who lives alone in an apartment that is a bone-chilling 3 degrees Celsius (37 Fahrenheit).

The outage began Jan. 22 during a cold snap when temperatures plunged to a record low of -38 C (-36 F). The breakdown was unprecedented even in this ex-Soviet republic, where aging communal heating and electricity systems suffer frequent problems, particularly when forced into overdrive.

A 4,500-person repair team has been working round-the-clock to get the heat back on since President Viktor Yushchenko visited last week, but some 20,000 people remained shivering in unheated apartments Thursday, warmed primarily by hot-water bottles. Yushchenko set the deadline for Saturday, but few were optimistic.

Military tents have been erected, where residents can come to warm up and receive some hot tea. Some 11,000 of the city's children have been evacuated to other Ukrainian cities, and many political parties have raced to outdo each other by donating money, boilers and tickets out of the city, apparently eager to win support ahead of the March parliamentary elections. Churches are handing out hot meals as rescue workers beckon the shivering into the government's tents.

"But then they have to return to their frozen apartments," said worker Volodymyr Oleinikov as he picked dry rot from a small stove set up between the tents. He's sick himself, and eager for his shift to be over so he can return to his home, which has heat.

Ukraine suffered heartily during last month's cold snap, with more than 700 dying across the country. The victims were primarily homeless and intoxicated people.

"Hundreds and hundreds of our residents have died this winter," opposition lawmaker Nestor Shufrych said in parliament Thursday. "Tell me ... why is cold killing our people?"

Doctors in Alchevsk said they've seen four times as many patients suffering from the cold as usual over the last month. "In their cold apartments, people don't notice the frostbite in time," said doctor Viktor Prudnikov.

"We've lost this war with the cold," said Oleksandr Antipov, 52, recovering in a hospital after having his fingers amputated. His wife stood next to him, also injured when the pair tried to fix a boiler in their home at the height of the cold spell.

Gradually heating has been restored in one apartment building after another. But some 270 buildings remained without heat Thursday, and even those switched back onto the system were uncomfortably cold, with temperatures only around 12 C (54 F). Some residents lugged firewood home, and others depended on small space heaters.

"We aren't planning to carry out huge repairs in these homes, we're just managing to extinguish the fire," said Oleksandr Kobityev, head of the repair effort.

There were also no guarantees that another massive accident wouldn't happen again. Viktor Guz, who heads a civic group, said that one of the main problems was that the heating pipes which pump hot air throughout the city have different owners: One organization is responsible for the pipes in the homes, and another for those outside. "As a result, there is no one person in charge and these pipes have gone for a decade without repairs," he said.

Sutkovska shivered in her home, bundled in as many clothes as she could manage.

"I'm scared I won't live to the next winter," she said, tears swelling in her eyes and her skin discolored by the cold. "I don't have the strength to fight this cold."

Source: AP

Ukraine Leader Faces Opposition on NATO Drive

KIEV, Ukraine -- Ukrainian President Viktor Yushchenko, faced with a rebellious parliament and a bitterly split society, pledged Thursday to keep his nation on a pro-Western course despite resistance by opponents of that policy.

Viktor Yushchenko following his address to Parliament
He also called for a national referendum to undo new curbs on presidential power that he agreed to under pressure as a candidate more than a year ago.

Swept into office on a wave of public support as part of Ukraine's Orange Revolution, Yushchenko spoke in an annual address to parliament just hours after lawmakers rebuked his efforts to move the country toward membership in the North Atlantic Treaty Organization.

The rebuke came when parliament voted down a bill that would have granted permission for foreign troops to enter the country for training exercises. Such approval is required on an annual basis, and is usually a formality. But the measure failed Thursday, with only 215 of the 226 votes required.

Last year, Ukraine hosted a major NATO security exercise, and it has been expected to host various international training exercises this year.

Ukraine is headed toward a March 26 parliamentary election in which no party is expected to win a majority, and the shape of possible governing coalitions remains unclear. The new parliament could approve the training exercises in a fresh vote.

In a mark of rising political tensions, Yushchenko's speech was preceded by a fistfight in parliament between his supporters and Communist deputies who had attempted to display a placard charging that Yushchenko had not fulfilled campaign promises.

Yushchenko declared that the nation was threatened by political deadlock as a result of constitutional revisions strengthening parliament and weakening the presidency, approved in December 2004 and effective from Jan. 1 of this year. The measures had been a key part of a compromise package of laws that strengthened safeguards against electoral fraud and paved the way for Yushchenko to win the presidency in a revote after a ballot count that favored a rival was ruled invalid.

In his speech, broadcast live on television, Yushchenko called for the establishment of a commission to draft constitutional revisions, which would then be presented for public debate and a nationwide vote.

At a news conference after his speech Thursday, Yushchenko criticized the way that the curbs on presidential authority were enacted under pressure at the peak of the 2004 political crisis.

"Why was compulsion used?" he said, in comments reported by the Russian news agency Itar-Tass. "Why was everybody summoned to the presidential office and lectured on how to vote?"

Oleksandr Ryabchenko, a Kiev-based analyst who heads the International Institute of Privatization, said Yushchenko's concerns about the revised constitution's division of powers have grown in recent months as the opposition has recovered its morale and his hold on parliament has loosened.

"After he was elected a year ago, all his opponents were so demoralized that he could have gotten any powers for himself had he then sought power for the sake of power," Ryabchenko said. "Now the situation is different. Yushchenko is faced with a serious opposition in parliament, and many of his opponents have raised their heads and are ready to challenge him."

Yushchenko has refused to heed a parliamentary vote Jan. 10 sacking Prime Minister Yuri Yekhanurov and the Cabinet, arguing that the action was illegal. He said Thursday that more such standoffs would be inevitable if the constitution were not reworked again.

Ryabchenko said the constitutional revisions enacted in 2004 were a step forward for democracy in Ukraine because they ended the concentration of power in presidential hands.

"But the changes were made hastily and are not ideal," he said. "Some changes were not quite democratic. That is why the president is right in saying that the changes were part of working out a compromise but were not the result of a balanced effort to build an ideal model of power."

A recent opinion poll by the Razumkov Research Center showed 30% support for the pro-Russian Party of Regions led by Viktor Yanukovich, who lost to Yushchenko in the 2004 election. Our Ukraine, a bloc that backs the president, placed second with 20% support, while a bloc led by former Yushchenko ally Yulia Tymoshenko took 14%. The Communist Party had 7% support and the Socialist Party 7%.

While polls show Yanukovich's party in first place, it is far from clear that he would be able to win power in the March balloting, as efforts are being made to reunite former allies in a coalition of the parties that united behind Yushchenko in 2004.

Source: LA Times

U.S. Hits Corruption In Russian Gas Deals

WASHINGTON, DC -- U.S. officials say Russia has been using its control of Soviet-era pipelines to squeeze Central Asian sellers of natural gas while setting up corrupt trading intermediaries whose only apparent purpose is to milk huge profits.

The Most Dangerous Mobster in the World - According to the FBI and Israeli Intelligence, Semyon Mogilevich Rules Over an Arms Trafficking, Money Laundering, Drug Running, and Art Smuggling "Red Mafia"
Alarmed by a recent price dispute between Russia and Ukraine that disrupted vital gas supplies to Europe, the Bush administration raised doubts about Russia's fitness to chair the Group of Eight leading industrialized countries, beginning with a finance ministers' meeting in Moscow this week.

The State Department has been talking to Russia and its European customers seeking to change Moscow's practices, but European officials said they are reluctant to interfere in Moscow's trading policies.

U.S. officials noted a huge gap between what Russia pays to import gas from Central Asia and what it charges for the gas in Europe, while middlemen rake off vast profits.

"It's a fascinating story, because it combines corruption with economic reform and Russia's ambition to dominate its neighbors," said a senior State Department official who asked not to be named because of the sensitivity of the matter. "It's a great story, but it's an ugly one, too."

Gazprom, the Russian natural gas monopoly, buys gas from Central Asia for less than $50 per 1,000 cubic meters and then sells it to European countries at prices as high as $260.

Even though Gazprom could handle transactions at both ends, much of the trading is carried out by middlemen, said U.S. officials who briefed The Washington Times in an attempt to call attention to the problem.

"These mysterious shady trading firms have no purpose," the senior official said. "They have been a source of corruption for years. They are instruments for arrangements by which some people buy cheap and sell expensive."

The official singled out RosUkrEnergo, established in 2004 as an intermediary between Gazprom and the Ukrainian state gas company Naftohaz. RosUkrEnergo was at the center of an agreement between Russia and Ukraine last month that ended their bitter price dispute.

"It's said to be run by people with organized criminal ties, as well as good Kremlin connections," the official said of RosUkrEnergo, which is co-owned by Gazprom and an Austrian-registered company, Centragas.

Ukrainian intelligence thinks that Semyon Mogilevich, an official in the administration of former President Leonid Kuchma who is wanted by the FBI and Interpol for money laundering, has a stake in RosUkrEnergo.

Mr. Mogilevich, who is said to be living in Moscow, has denied any links to RosUkrEnergo, as has Centragas CEO Wolfgang Putschek.

Under the January deal, RosUkrEnergo sells gas to Ukraine for $95, up from the previous $50. It is a mixture of Russian gas priced at $230 and Turkmen gas priced at less than $60.

The pipeline from Turkmenistan to Russia runs through Uzbekistan and Kazakhstan, whose exports to Russia are much smaller than Turkmenistan's, said Jerome Guillet, a French investment banker who worked on a $3 billion loan for Gazprom several years ago.

He agreed with the senior State Department official that the middlemen firms "are there to create non-transparency," but said that Washington's demands are not realistic.

"The Central Asians are stuck and totally dependent on the Russians" because of the pipeline infrastructure built by the Soviet Union, said Mr. Guillet, who also edits the European Tribune, an Internet magazine.

The Central Asian countries cannot sell their gas directly to the Europeans, so they will take any price the Russians offer them, he said.

The Europeans criticized Russia for cutting off their supplies over the dispute with Ukraine, but they have not been as tough on Moscow as Washington has in recent weeks.

"Russia is going through a very difficult transformation process, and that takes time, so our policies must be cautious," a senior European diplomat said.

The diplomat, as well as several other Europeans officials, agreed that corruption exists and should be fought, but they questioned the criminal accusations against some intermediaries and declined to join the U.S. call to eliminate the intermediary companies.

Some European diplomats even suggested that the Bush administration was divided over what tactics to pursue in dealing with the issue.

The senior State Department official played down the differences with the Europeans -- as well as those within the administration -- saying the United States would work with its allies and Russia to guarantee Europe's energy
security.

"We are not anti-Russia," the official said. "We simply want fair and transparent trade."

Source: Washington Times

Embattled Ukraine Leader's Speech Preceded By Legislators' Brawl

KIEV, Ukraine -- Ukraine's president pleaded with the country's legislature Thursday to drop internal battles and unite - a familiar appeal from the embattled leader, who risks losing influence in next month's election.

Ukraine's President Viktor Yushchenko, center, is seen during his annual address to lawmakers in the parliament in Kiev, Thursday, Feb. 9, 2006.
Opposition Communist party legislators, however, exchanged blows with members of President Viktor Yushchenko's faction before his annual address when they attempted to put up banners criticizing the president for unfulfilled campaign promises.

"Enough arguing: There is enough work for everybody," Viktor Yushchenko said in his annual address before the 450-member legislature, which just weeks ago voted to fire his cabinet.

The bitter accusations that followed last month's vote, which Yushchenko ignored, prompted Speaker Volodymyr Lytvyn to advise Yushchenko to put off his address, which initially had been planned for the anniversary of his Jan. 23 inauguration.

The ill will persisted Thursday, with many legislators in a partisan mood before the March 26 election, which could herald a power shift and will determine whether it pursues the path of integration with the West set by Yushchenko. Opinion polls suggest Yushchenko's party is poised to finish a distant second to the party led by his pro-Russian rival, Viktor Yanukovych.

The president said his top priority will be improving the quality of life for Ukraine's 47 million people. He pledged to reform the decaying housing projects that dot Ukrainian cities. The apartments have suffered particularly during this winter's cold spell, as heating and electricity systems repeatedly broke down.

"Today it is fashionable to be Ukrainian but that's not enough," Yushchenko said, referring to the worldwide attention Ukraine received after last year's so-called Orange Revolution.

"Today, we must do everything so that it will also be interesting and profitable to be Ukrainian."

He pledged to continue government measures, including plans to hold a referendum to alter constitutional changes that came into force this year, setting off heckling. Those changes greatly increase parliamentary powers at the expense of the presidency, allowing the parliamentary majority to name the prime minister and some cabinet members.

Yushchenko said, however, he would not attempt to force any changes in the constitution before the elections.

"I haven't done and won't do anything that would breach it," he said, as legislators muttered in opposition.

A nervous-looking Yushchenko read most of his speech without looking up. There was little applause.

Opposition legislator Nestor Shufrych criticized the speech as "a sad fairy tale."

"He forgot to tell us when everything he said will be accomplished," Shufrych said.

"It seemed to me that he didn't even believe what he said."

Yushchenko reaffirmed his government's commitment to its pro-western path but added it is also important to have good relations with neighbouring states, based on Ukraine's national interests.

In a move likely to anger Russia, however, he reaffirmed his support for a united Ukrainian Orthodox church that would operate independently of the Moscow Patriarchate.

Yushchenko also said he believes Ukraine, sandwiched between Russia and the EU, has a key role to play "in the integration process of Central and Eastern Europe."

Source: AP

Ukraine Leader Wants New Constitution, Referendum

KIEV, Ukraine -- Ukrainian President Viktor Yushchenko, seeking to overturn curbs on his powers, called on Thursday for a new constitution to be drawn up and put to the people.

Pro-presidential lawmaker Mykola Martynenko, (C) in brown jacket, and an unidentified Communist lawmaker, (L), fight in the parliament in Kiev, Thursday. Communist Party lawmakers exchanged blows with members of President Yushchenko's faction when they attempted to put up banners ahead of Yushchenko's address to lawmakers, criticizing the president for unfulfilled campaign promises. The banner reads 'Where are the steps toward people', referring to Yushchenko's presidential program slugged 'Ten steps toward people'. Martynenko, the head of Yushchenko's parliamentary faction, suffered a blow to the nose and had to receive medical help.
The pro-Western president has been vying for authority with parliament after ignoring a January 10 vote sacking the government. He says constitutional amendments in force since the New Year handing more powers to the assembly are a recipe for deadlock.

Yushchenko's allies trail in opinion polls in the run-up to a March 26 parliamentary election in the ex-Soviet country. The vote could produce a chamber keen to use new powers giving it more control over the choice of prime minister.

"I propose a plan to carry out real mass political reform -- create a constitutional commission ... with the aim of drafting a new version of the Ukrainian constitution," Yushchenko told parliament in his state of the nation address.

"The completed draft would be submitted to country-wide discussion ... and would then be put to a country-wide referendum."

Yushchenko, looking tense, vowed never to "take a single step" against the constitution, but said the recent changes "amount to only partial reform of the system of government."

It was now unclear, he said, how government could function without a majority in parliament. Existing laws took no account of the changes.

"Unless these laws are changed, the government system cannot function in the new conditions. I believe reforms must go deeper and not simply involve a redistribution of powers...," he said.

"Limiting reforms in this way threatens to produce constant parliament-government crises as we have already seen."

PATH TO PROSPERITY

In his hour-long address, the president also pledged to invigorate the economy, now in a slowdown, raise living standards and promote cultural values and national identity.

"We must complete the path to economic prosperity over five to seven years -- 10 at the most," he said.

Yushchenko was propelled to power just over a year ago on the back of "Orange Revolution" mass protests against electoral fraud in November 2004.

His first year in office had sought to focus on a drive to emerge from Russia's shadow, move closer to the West and eventually join the European Union. But his team was riven by divisions into two camps, each accusing the other of corruption.

The split culminated in the dismissal of his radical, charismatic prime minister, Yulia Tymoshenko, last September, generating disillusion among the revolution's supporters.

Tymoshenko, once Yushchenko's closest ally, joined the president's longstanding rivals in voting to sack the government on grounds that an agreement increasing the price of imported Russian gas betrayed the national interest.

The constitutional changes were pushed through parliament in late 2004 as part of proposals by international mediators to end the standoff over the contested poll. Yushchenko initially backed the amendments, but turned against them as he encountered difficulty pushing his program through parliament.

Source: Reuters

Ukraine Gun-Ho On Nuclear Power, Despite Chernobyl

ATHENS, Greece -- Not even the world's worst nuclear power accident, Chernobyl, has fazed Ukrainian enthusiasm for nuclear power. Despite hundreds dead and thousands chronically ill from the April 1986 accident, Kiev fervently believes in the future of atomic energy.

Zaporizhia, Ukraine nuclear power plant
The former Soviet republic operates 15 reactors in four plants to generate 53 percent of its electricity needs. Six of the reactors are in the east Ukrainian city Zaporizhie, the largest nuclear power station in Europe.

The country placed two new reactors on the grid in 2004, and construction of another three is in progress. The country's national atomic energy agency Energoatom plans to build up to eleven more reactors by 2030, and by that time to generate at least 75 percent of the country's electricity with nuclear power.

Ukraine possesses its own uranium ore mines, and is technically capable of producing yellow cake, and of enriching uranium to fuel grade. At present, Kiev exports raw ore for processing in Russia, and receives finished fuel rods in return.

Nuclear science remains a top choice at the country's technical universities. A Ukrainian nuclear engineer earns between USD 300-500 a month; roughly four times the national average. Ukrainian nuclear scientists are, for practical purposes, the best-paid technicians in government.

Almost without exception, and despite hundreds of square kilometres of irradiated terrain in the heavily-guarded "Dead Zone" surrounding the remains of the Chernobyl reactor, Ukrainian scientists say nuclear power is safe.

"The process of generating power with nuclear energy is the same as any other system: abuse it and you can have disaster," said Dr. Arkady Shilko, a physicist. "The Chernobyl accident was caused by people not machines, and the conditions for people to repeat that catastrophe no longer exist."

According to Shilko and most modern Ukrainian history books, Chernobyl exploded because Soviet engineers turned off safety equipment in an attempt to push power production past maximum capacity.

The prevailing opinion is that Soviet-style pressure to increase economic output at any cost and even at the risk of the population is a government policy now as obsolete in modern Ukraine as the sickle-and-hammer flag.

"A modern plant has no reason to turn off the safety devices and push past 100 percent," Shilko argued. "I think Ukrainian nuclear power is perfectly safe, and what's more, from a technical standpoint it always was."

Ukrainian nuclear reactors in 2004 operated at around 80 percent capacity, according to a World Nuclear Association report.

Ukraine's gung-ho attitude towards nuclear power, and the legacy of Chernobyl, unsurprisingly has international monitors of the industry nervous. The International Energy Agency in recent years has tried to improve Ukrainian reactor safety, and to rein in uncontrolled building, by offering Kiev loans to finance the construction of new reactors, but at the same time making European technologies a loan condition.

The Brussels-led effort fell fairly flat in 2004, after the Ukrainians raised almost all the needed money with domestic bonds, telling the international community its help wasn't needed, and completing a pair of reactors using for practical purposes only Ukrainian technology.

Ukraine has more than a dozen more reactors planned, and at present, all the international community can do about them is watch, senior Ukrainian officials have said. "It is Ukraine's policy to achieve energy independence, and we will not let anyone stand between us and this goal," said Ukrainian President Viktor Yushchenko in a speech last week.

How set are the Ukrainians on nuclear power? International pressure forced Ukraine to shut off the last functioning reactor at Chernobyl, a twin of the ancient RBMK unit that exploded, in 2000. Off-line to this day, it is regularly maintained and remains functional, and could be hooked back onto the grid if Ukraine really needed the electricity, Energoatom officials said.

Source: New Europe

Yushchenko Faces Hostile Parliament

KIEV, Ukraine -- President Viktor Yushchenko is preparing to deliver his annual address to a hostile Ukrainian parliament.

President Viktor Yushchenko
Just weeks ago, parliament voted to sack his Cabinet and is now in an even more partisan mood ahead of next month's elections.

The speech had originally been expected last month, but the bitter accusations between the president and parliament caused the speaker, Volodymyr Lytvyn, to advise Yushchenko to stay away.

The MPs returned from a mini-break this week, but for many, their eyes are focused solely on the March 26 election, which could herald a power shift in the ex-Soviet republic and will determine whether it pursues the path of integration with the West set by Yushchenko.

The vote will usher in constitutional reforms that greatly increase parliamentary powers at the expense of the presidency, allowing the parliamentary majority to name the prime minister and some members of the Cabinet.

"The president will make a very short analysis of Ukraine's current political and economic situation, but his focus will be on Ukraine's future, its prospects for 2006 and the next few years," said Yushchenko's spokeswoman, Irina Gerashchenko.

Yushchenko came to power last January after winning a court-ordered revote against a Kremlin-backed candidate. The revote was ordered after hundreds of thousands of pro-Yushchenko protesters swarmed into the capital, Kiev, to protest their stolen votes in what became known as the Orange Revolution.

At the time, Yushchenko's popularity was sky high, but disappointment over his failure to fight corruption and his acrimonious falling-out with former allies have hurt him.

Opinion polls suggest that Yushchenko's party is poised to come in a distant second to the party led by his pro-Russian rival, former Orange Revolution foe Viktor Yanukovych.

However, with no single party expected to capture a majority, the country appears to be heading for a coalition government. Yushchenko's party has been in talks with former allies in the hopes of revising their former union.

Source: Scotsman

Tell It Like It Is

KIEV, Ukraine -- As we move closer to the March parliamentary elections, Ukrainians are being bombarded with political advertising. In its campaign, the pro-presidential Our Ukraine bloc reminds its countrymen not to give up – not to betray – the ideals for which millions of Ukrainians took to the streets during the 2004 Orange Revolution.


Listening to the exhortations of Ukrainian President Viktor Yushchenko, one is reminded of the statements he made last November during celebrations in the capital to mark the one-year anniversary of the beginning of the Orange Revolution.

Yushchenko said he was surprised to see how his fellow citizens had so quickly lost their revolutionary zeal, returning to the same attitudes and practices that had characterized the country under former President Leonid Kuchma.

At this point it should be clear to President Yushchenko and everyone else that the Ukrainian people are the last ones who should be faulted for compromising on principles. It was the folks on Maidan who captured the attention of the world by enduring sub-zero temperatures until their democratic demands were met.

For their troubles, they were hit with rising food and fuel prices, while their orange-clad leaders debased themselves and the new image of the country in their fight for power, and in some cases, prized assets.

Trying to build a democracy from an oligarchy is not easy, and President Yushchenko has to work with what (or who) he’s got. Moreover, his enemies, mostly representing the values of the old guard, are as determined and underhanded as ever.

But the days of motivating the masses with moralistic slogans have passed.

Whether you agree with his policies or not, front runner Viktor Yanukovych does command a strong following in the country’s southern and eastern regions. Moreover, many of Yushchenko’s former Orange allies are now among his toughest electoral opponents.

It might be convenient to present voters with a black and white, or rather blue and orange choice. But now the colors have faded, blending into a more familiar political landscape, where there is no moral high ground.

Ukrainians have greater access to unbiased information than ever before, and the president deserves a lot of credit for this. But like a parent confronted by an ever more inquisitive child, Yushchenko’s Our Ukraine bloc should put aside the silly slogans and start telling it like it is.

Source: Kyiv Post Editorial

The Poisoning Of Ukraine's President

LONDON, England -- Under the radar, in early December, tests came back from three undisclosed labs in Belgium, Britain and Germany, confirming what many scientists already suspected: In September, 2004, Ukrainian President Viktor Yushchenko had been poisoned.

The Ukranian leader in front of a picture of his former, unblemished face.
His blood samples did indeed contain an abnormally high level of dioxin, 1,000 times the accepted level. One year later, Yushchenko's face—with its strong jaw and movie-star features, perfect politician material—remains badly pockmarked.

Dioxins are normal byproducts of industry and waste incineration. Most people have been exposed to them in small doses. For example, anyone who eats animal fat has a little dioxin in their bodies. But, in higher quantities, the chemicals can cause cancer, organ disease, miscarriages, menstrual ailments, low birth weight, abnormal hair growth or a severe form of acne called chloracne. This same skin condition plagued the locals exposed to a chemical spill in Seveso, Italy, in 1976 and now Yushchenko suffers the same fate.

Most experts believe Yushchenko ingested the dioxin on the night of September 5, 2004, in the midst of a neck-and-neck presidential race, after dining with General Igor Smeshko, the former head of Ukrainian intelligence. Shortly after dinner, Yushchenko complained of sickness and vomited. Bad sushi, the state-run media claimed at the time.

No one has been charged with the president's poisoning and, like most criminal cases in the former Soviet Union, it is unlikely to be solved. But that has not stopped scientists in the Ukraine from assembling their own version of events.

In the days following the dinner, Yushchenko fell gravely ill. He underwent three weeks of detoxification treatment while being sequestered at an Austrian clinic. Doctors diagnosed him with acute pancreatitis and symptoms of edema. But, two weeks later, his face developed pockmarks.

"We knew right away he was poisoned because his skin symptom was very symptomatic of this kind of dioxin," said Mykola Prodanchuk, one of Ukraine's top toxicologists and the director of the Kiev-based Institute of Eco-Hygiene and Toxicology.

Tasteless but highly toxic, the dioxin Yushchenko ingested was administered in a dose probably less than 1 mg. A drop in a bowl of soup would have gone undetected, said Prodanchuk. Yushchenko was served a rather large dose, roughly a quarter of the lethal quantity for rhesus monkeys. Once ingested, the dioxin—a fat-soluble chemical—moves from the blood to fatty tissues. The body then tries to eliminate the dioxin through its sebaceous glands, which are what causes skin to grow oily or pimply. Half a dose of dioxin gets eliminated every few years but never completely rids itself, Prodanchuk said.

The dioxin found in Yushchenko's blood—pure 2,3,7,8-TCDD—is "the most potent of all the dioxins," said Daniel Hryhorczuk, professor of environmental and occupational health sciences at the University of Illinois. "I doubt someone could have been sophisticated enough to give a dose in the range where you'd be guaranteed to maim and not kill," added Hryhorczuk, implying that the intent was most likely Yushchenko's death, not disfigurement. Hryhorczuk said the dioxin was probably not a homegrown concoction made in Ukraine, but rather, the work of a foreign laboratory. "To make a compound this pure requires a lot of sophistication."

The early suspect: Russian intelligence. After all, it is no secret that Yushchenko, a pro-Western reformer, was not the Kremlin's preferred candidate in 2004. Moreover, Russia's KGB has a long history of failed assassination attempts of political figures, stretching as far back as the time of Rasputin, Tsarina Alexsandra's mystic who was nearly poisoned in 1916 by pastries laced with cyanide.

During the 69 years of Soviet rule, the KGB took poison assassination plots to a new level of sophistication. In 1957, for instance, a Soviet agent assassinated Ukrainian émigré leader Lev Rebet in Munich using a cyanide gas pistol. In 1978, a Bulgarian agent at a London bus stop used an umbrella loaded with ricin pellets to inject a Soviet defector with poison. But dioxin poisoning is un-chartered territory, even for Russian spooks.

If this poisoning was an attempt on Yushchenko's life, why did the assailant not use a stronger substance like strychnine? After all, dioxin is not commonly used as a tool for assassination and the substance can be detected in the blood for years after initial contact.

"Dioxin poisoning is not a good way to [kill someone]," said Hryhorczuk. "No human we know of has died from acute dioxin poisoning." [doesn't this quote contradict his earlier one?]

Scientists say the Ukrainian president survived the attempt on his life for two main reasons: his immediate therapy and his strong health attributed in part to the fact that Yushchenko doesn't drink or smoke. While his presidential campaign was set back by his absence, he nevertheless drew international sympathy and went on to win the election in December after Ukrainians poured into the streets. It prompted a runoff and resulted in what became known as the Orange Revolution, named after the color of Yushchenko's political party.

A full investigation into the poisoning did not begin for another year. Despite the fact that Ukrainian law requires that tests be conducted within the country, under supervision by Ukrainian investigators, the work of examining Yushchenko's blood samples was outsourced to European laboratories. Scientists say Ukraine's labs lacked high-resolution chromatographs and spectrometers to detect traces of dioxin in the blood with specific sensitivity, not to mention its labs were not certified by the World Health Organization to conduct dioxin tests.

Investigators remain baffled by the case. Scientists are still studying Yushchenko's symptoms in a search for answers. Meanwhile, Ukraine's president seems to have accepted his fate—and disfigured face—as the price for trying to reform his country's rough-edged politics, a system yet to shed its Soviet past.

Source: Seed

Poland’s Kaczynski Backs Ukraine’s NATO Bid, Seeks Better Ties With Moscow

MOSCOW, Russia -- Poland’s new president said his country hopes to see neighbor Ukraine join NATO in 2008 and wants better relations with Russia while urging Moscow to drop ideas of having a “zone of influence” in the region, Lech Kaczynski told The Associated Press.

Poland's President Lech Kaczynski
President Lech Kaczynski, a social conservative, took over in December from former communist Aleksander Kwasniewski, who had served the maximum two terms. Kaczynski travels Wednesday to the U.S. for his first meeting with President George W. Bush.

Poles have been eager to win more U.S. investment and easier access to visas, but Kaczynski stressed that strategic issues like Iraq and hopes for further NATO expansion would be a priority during his meeting with Bush on Thursday. Many of his comments looked to Poland’s immediate neighborhood in Eastern Europe.

“The main issue of the talks will be related to our political-military alliance, NATO, the enlargement of NATO,” Kaczynski, 56, said in an interview with The Associated Press on Tuesday. “Poland is very much interested in the enlargement of NATO.”

He indicated that Poland would push for building stronger Western ties with Ukraine — a former part of the Soviet Union where Russian influence is still strong. “Poland is very deeply interested in Ukraine joining NATO. We would very much like that to happen in 2008,” he said, reiterating Polish support for Ukraine eventually joining the European Union as well.

Poland, where memories of domination by Moscow during the Cold War are still fresh, angered Moscow with its support for Ukraine’s so-called “Orange Revolution,” in which pro-Western President Viktor Yushchenko won election over a candidate backed by Moscow.

He said Poland would continue efforts to diversify its sources of oil and gas to reduce its dependence on Russia, and would focus on efforts to obtain more natural gas from Norway and plans to build a terminal on the Baltic Sea to take delivery of gas by ship from sources such as Algeria and Qatar. “We never know what fate may bring,” he said. “We must have the possibility of getting gas from many sources.”

Kaczynski won the election in October after his twin brother, Jaroslaw Kaczynski, led their Law and Justice Party to victory in parliamentary elections the month before. Both are former activists in the Solidarity trade union movement that helped topple communist rule in 1989-90. Jaroslaw Kaczynski decided not to seek the prime minister’s job because the brothers believed many people wouldn’t want identical twins in the two top political posts. Law and Justice’s Kazimierz Marcinkiewicz became prime minister instead.

After talking tough about Moscow during the election campaign and immediately afterward, Kaczynski’s remarks Tuesday were nuanced. He declined to criticize Russia for briefly turning off natural gas to Ukraine in a dispute that underlined fears that Moscow may use its energy reserves as a lever to enhance its influence over other countries.

“As far as Russia is concerned, we are interested in good cooperation and we are also interested in Russians forgetting that there is a sphere of influence here,” he said. “I am aware that this is particularly difficult for the Russians. But for the sake of good European cooperation, they should forget about it, and be aware that Poles are eager for cooperation with Russia.”

He said Russia’s campaign against separatist rebels in the Muslim Chechen region did not meet standards of democracy. But he added that not all President Vladimir Putin’s efforts to centralize political control were bad.

“Putin is consolidating the state in a very strong manner. Some of his actions truly fit in the true standards of democracy,” Kaczynski said. “But people who think that every centralization is anti-democratic and every decentralization is pro-democratic, will always say ... that are many anti-democratic processes there. I don’t share this opinion.”

“But if we are dealing with actions aimed at curbing the opposition, then that does not fit the standards of democracy and certainly the issues of Chechnya cannot be reconciled with the standards of democracy.”

Source: MosNews

Ukraine Still Wary Of ‘Gas War’ Deal With Russia

KIEV, Ukraine -- An agreement between Russia and Ukraine ending a recent gas price war between the two neighbours has attracted fresh criticism from analysts who doubt it holds the guarantees President Viktor Yushchenko’s government has claimed.

General view of the Russian gas monopoly Gazprom gas storage facility near the town of Kasimov 330 km (198 miles) south of Moscow
A new round of secretive talks between Russian and Ukrainian officials that ended Thursday has done nothing to reassure those who fear further instability after Moscow abruptly cut supplies in a “gas war“ in January.

“The Ukrainians can’t be considered a nation – they have allowed a group of adventurers to conclude... doubtful agreements with doubtful persons,“ the online newspaper Ukrainska Pravda said.

The three-day cut of gas supplies to this ex-Soviet nation at the start of January sparked debate across Europe as knock-on disruption was felt in several European countries for which Ukraine is a gas transit route.

Since then much attention has been paid here to RosUkrEnergo, a joint venture half owned by Russia’s Gazprom energy giant and half owned by Austria’s Raiffeisen Bank on behalf of unidentified investors.

Under an agreement that at least provisionally resolved last month’s stand-off, RosUkrEnergo will be responsible for all Ukraine’s gas imports from both Russia and ex-Soviet Central Asia.

But suspicions about the deal mounted as a new joint venture was set up at the latest talks in Kiev: UkrgazEnergo.

This company is jointly owned by Gazprom and Ukrainian utility Naftogaz and will be responsible for selling gas on the Ukrainian market once it has been shipped in by RosUkrEnergo.

Following Thursday’s talks, Ukrainian officials said the price agreed in January for gas imports –95 dollars per 1,000 cubic metres – would remain in force for five years.

Source: Agence France-Presse

Putin Faces Spain Press On Iran, Ukraine, Cartoon Row, Extremism

MOSCOW, Russia -- Vladimir Putin commented on pressing international issues Tuesday, urging extremists to lay down arms, calling on Muslim governments to peacefully solve the cartoon row, and welcoming the UN watchdog's decision on the Iranian nuclear issue as balanced.

Russian President Vladimir Putin smiles as he meets Spanish journalists in the library of the Moscow's Kremlin, February 7, 2006.
Speaking with Spanish media ahead of his visit to the country, Putin also outlined his views on Spain's possible membership in the elite Group of Eight club of industrialized nations and commented on his clout with the Russian parliament, which has been repeatedly mentioned in the media.

When asked about possible negotiations with extremists, Putin said Russia was open to a dialogue if they first rejected violence and surrendered their weapons.

"If one or another [terrorist] structure laid down [its] arms and firmly stated that it rejected any form of armed resistance to the authorities and the state, then, of course, they would deserve a dialogue," he said. "But we have to consider what kind of a dialogue, and with whom it is to be conducted, in each separate case."

However, in comments echoing his more familiar tough line on terrorism, Putin said: "Not a single civilized country can allow itself the luxury of conducting negotiations with terrorists because any talks with terrorists weaken the state and strengthen the terrorists."

The president firmly stated that Russian authorities would never negotiate with terrorists whose hands were covered with the blood of Russian people. Several cities in the country, including Moscow, have been the targets of terrorists in recent years in attacks that have killed hundreds.

"Nevertheless, we are ready to allow any opposition forces, including Chechen militants who have not been involved in murder or blatantly criminal activities, to participate in politics," he said.

The president said that about 50% of law enforcement personnel in the Chechen Republic were former militants, though he cautiously added that the figure had to be checked.

"We must involve them [former extremists] in normal life, otherwise they will be excluded from this process," Putin said. "Whenever people abandon extreme forms of resistance and become involved...in political activity, this is an enormous plus."

In other peace-seeking comments, the Russian president urged Muslim leaders to resolve the scandal over the publication of cartoons of the Prophet Mohammed in European media, which have sparked a wave of violent protests across the Arab world.

"We very much hope that Muslim religious figures and leaders of the Muslim world will be able to take the situation under control," he said, adding that any provocations in this sensitive area were unacceptable.

"We condemn any such actions, whichever side they may come from. We also condemn such [provocative] cartoons, which add to the division between religions, insult the feelings of believers and provoke them," Putin said.

The Russian leader said the publication of offensive images could not be justified by invoking slogans of free press and that the states where the Mohammed cartoons had been printed or reprinted should at least apologize for failing to prevent the actions.

When asked to elaborate on another sensitive issue in current global politics, Iran's nuclear program, Putin said the UN nuclear watchdog's decision on the issue was balanced.

"We are cooperating with the European trio and our American counterparts. We consider the decision made by the IAEA Board of Governors to be balanced," he said.

The 35-nation Board of Governors of the International Atomic Energy Agency (IAEA) adopted a resolution Saturday in Vienna that IAEA Director General Mohammed ElBaradei would inform the UN Security Council on the Iranian nuclear program. The resolution sent a serious message to Iran, urging the country to resume the nuclear moratorium it unilaterally lifted on January 11.

In a separate comment on another controversial international subject, the Russia-Ukraine gas agreement, Putin said he was unaware of who owned the Ukrainian stake of a joint venture with Russia that came to the forefront in the deal to end the dispute over natural gas prices at the start of the year.

Russian energy giant Gazprom is known to own 50% of the shares in Russian-Ukrainian joint venture Rosukrenergo and Austria's Raiffeisenbank holds the other 50%, but Putin added to the mystery of ownership: "Rosukrenergo is a Russian-Ukrainian joint venture. The Russian partner holds 50%. This partner is Gazprom. Neither you nor I know who owns the other 50%."

In the end, the Russian president redirected the question to Ukraine.

He also said the two countries had been discussing the transition to market prices of natural gas for 15 years.

"Last March [President Viktor] Yushchenko himself virtually offered me a transition to market relations in the energy sphere," Putin said, adding that he had agreed to this proposal.

He said that after that incident the Ukrainian side had been avoiding any talks on this issue with Russia.

"After this, they did not enter into any negotiations with us on the corporate level, they simply avoided meetings, hid," Putin said. "Even when Gazprom representatives arrived in Kiev for talks, they simply ran away. They went off to Brussels, and others went somewhere else. There was no one to talk to. They dragged out [the process] on purpose, I'm certain, until November and then raised a fuss."

The two countries were involved in a bitter spat at the end of 2005, when Gazprom sought to raise the prices Ukraine paid for natural gas from about $50 per 1,000 cubic meters under a barter agreement to $230 per 1,000 cu m. The dispute was formally ended on January 4 when an agreement was signed, but tensions have continued to mar bilateral relations as Ukraine, according to Gazprom's figures, siphoned 550 million cu m of Europe-bound gas in January.

On the subject of Spain, the president said the European country could potentially join the elite club of the world's most industrialized nations, the Group of Eight.

"Spain is a country that could bid for a full membership in any international organization, including the G8," Putin said.

However, he immediately qualified his statement, adding that as Russia had only recently joined the G8 - in 1998 - it would be incorrect for him to make any proposals in terms of expanding the organization.

Russia is presiding over the G8 for the first time this year. Moscow is due to host a meeting of the organization's finance ministers on February 10-11, and St. Petersburg will be the venue for the G8 summit of leaders in July.

Putin also said that Spain "directly influences the G8 decisions as a member of the European Union."

As for his clout in Russia's lower house of parliament, where pro-Kremlin party United Russia holds the majority of seats, Putin said it had been grossly exaggerated. "My influence on the [State] Duma is naturally substantial, but it is overly exaggerated because parliamentarians have their own opinion on some issues."

He said the deputies had to run in the next elections in 2007, and therefore also had to heed the public's views and the opinion of their voters.

When asked why he was not pushing for the ratification in parliament of a protocol banning capital punishment, Putin said Russia had a moratorium on the death penalty.

As for his personal opinion of capital punishment, the president said: "Any punishment pursues several goals: correction and punishment. The death penalty does not lead to any correction, but is merely punishment, and it is even unclear of whom. The person who the state kills does not feel anything, unlike society, which assumes the right to claim a human life." Besides, the judicial system often makes mistakes, he said.

Putin said he would seek a ban on capital punishment but "carefully, in harmony with public sentiments," and with respect for parliament's opinion.

Unlike other countries that are considered civilized and democratic, Russia does not apply the death penalty, Putin said.

Source: RIA Novosti

Parliament Opens Final Session

KIEV, Ukraine -- Ukraine's parliament opened its final session Tuesday before next month's highly charged elections, with the speaker pleading for civility from the country's rabble-rousing deputies.

Parliament Speaker Volodymyr Lytvyn
"I call on you to maintain the professional code and be honest and decent," Parliament Speaker Volodymyr Lytvyn said, addressing a body of lawmakers, who have occasionally resorted to fist fights and personal insults to express their views.

Lytvyn acknowledged that "political issues will dominate" as lawmakers prepare for the March 26 race to fill the 450-seat parliament, but said "the main task is to prevent any unrest."

The election will usher in political changes in Ukraine that give far more power to parliament, including the right to name the prime minister and Cabinet members.

With opinion polls showing that no one party will win a majority, the ex-Soviet republic is headed for its first ever coalition government. The makeup will determine whether Ukraine maintains the pro-western path adopted by President Viktor Yushchenko after the Orange Revolution or slides back into Russia's orbit.

The changes mean that "the government will be formed in a legitimate way for the first time," Lytvyn said.

The session opened with the singing of the national hymn in the presence of Yushchenko's prime minister and Cabinet - the same people who parliament last month voted to sack in protest over a gas price deal with Russia. Yushchenko has ignored the vote and defended the deal, which saw prices for Ukraine rise nearly twofold.

Source: AP

Ukraine To Seek $2 Bn In March By Selling Black Sea Oil Fields

KIEV, Ukraine -- Ukraine will seek at least $2 billion by auctioning licences to extract oil and natural gas in the Black Sea, tapping into rising international demand for fuel to help fund the national budget.


Ukraine wants to raise money and cut its dependence on neighbouring Russia by auctioning exploration licences at the end of March, Prime Minister Yuriy Yekhanurov said.

"We expect to get at least $2 billion as 12 companies have already expressed interest," Yekhanurov said on Sunday in Simferopol, Southern Ukraine, in remarks broadcast by Ukrainian TV channel 1+1 Studio. "We may have another auction in October."

Ukraine depends on fuel imports, mostly from Russia, for about 80% of its energy needs. President Viktor Yushchenko, whose election in 2004 soured relations with his Russian counterpart Vladimir Putin, is eager to reduce Ukraine’s reliance on companies such as Moscow-based OAO Gazprom and OAO Transneft by attracting foreign investment to develop local fields and spending government money on foreign energy projects.

Russia’s OAO Gazprom cut natural-gas supplies to Ukraine last month, forcing Yekhanurov’s government to agree to pay almost twice as much for gas as in 2005.

Source: Bloomberg

Gazprom On The March In Ukraine

MOSCOW, Russia -- Russia's gas war with Ukraine is far from over, as agreements signed last week appear to fudge on the issue of a long-term price, raising the risk of further upheaval along the main route for shipping gas to Europe.

Gazprom headquarters in Moscow
The continuing standoff is starting to undermine Ukrainian President Viktor Yushchenko's push to lessen his country's dependency on Russia as Gazprom bids to win back Soviet-era control over Ukraine's gas industry as well as all routes to Europe.

Ukrainian and Russian officials signed off on a number of agreements last week to give legal force to the deal reached Jan. 4, which aimed to end fierce brinkmanship over price. After cutting off supplies for two days, Gazprom won an almost twofold increase in what Ukraine pays for gas.

But the details of what was signed late Thursday in Kiev are still murky, and the two sides still appear to disagree on the single biggest issue -- the length of time for which the price is set.

In the meantime, additional protocols are still being discussed, Ukrainian Prime Minister Yuriy Yekhanurov said Monday, Interfax reported.

Ukrainian gas monopoly Naftogaz Ukrainy said Friday that the agreements had fixed a price of $95 per 1,000 cubic meters for the next five years. But its co-signees and the sellers in the deal -- executives from the Rosukrenergo middleman, which is owned jointly by Gazprom and unknown beneficiaries -- said that the $95 price could be raised at any time.

"Everything is extremely unpredictable," former Ukrainian First Deputy Foreign Minister Olexander Chaliy said by telephone from Kiev. "This is leading to huge uncertainty. This is all very bad for Ukraine." Chaliy coordinated talks with Russia on gas issues from 1998 to 2004.

The Ukrainian parliament is expected to ask some tough questions and to call for the details to be disclosed on Tuesday in its first session since the agreements were signed last week.

The confusion is adding even more uncertainty to a situation that raised doubts over the security of Russian gas supplies when the two-day cutoff to Ukraine in early January led to cutbacks to Europe, which receives 25 percent of its gas from Russia, mostly via Ukraine.

Just one year after he was brought to power in the Orange Revolution, the standoff is weakening Yushchenko's push to align his country with Europe, and it is weakening his political standing as Ukrainian politics descends into chaos.

The gas deal has become a touchstone issue in the run-up to parliamentary elections on March 26. The elections will usher in a new system under which the winning party will appoint a prime minister with more powers than the president. The ratings of Yushchenko-backed parties have been falling as the ratings of his pro-Russian rival Viktor Yanukovych have been rising on the back of his criticism of the deal.

"This is a big problem for Yushchenko," said Peter Bobrinsky, head of equity sales at Kiev-based investment bank Concorde Capital. "When you swim with the sharks and you start bleeding, you're in trouble."

As it stands, the deal also looks likely to weaken the finances of state-owned Naftogaz Ukrainy. It takes away a lucrative business, the re-export of gas to Europe, and gives away half of one of Naftogaz Ukrainy's main sources of revenue, the domestic gas distribution business, to Rosukrenergo.

The battle comes as a newly resurgent Gazprom, backed by President Vladimir Putin as a symbol of the country's newfound clout as an energy superpower, embarks on a bid to win control of all gas routes to Europe. Its main target is Ukraine.

For Gazprom, and for Russia, the stakes are high in an industry where extracting gas from the ground costs as little as $4 per 1,000 cubic meters, while the sale price can vary widely, from as little as $32 in Russia to $60 in Turkmenistan and Uzbekistan and upward of $230 in Europe.

But as Gazprom, via Rosukrenergo, bids for control of the vast profits to be won from arbitrage, its sudden desire to make Ukraine pay as much as Europe not only exposed the arbitrary nature of fixing prices in the region, but could spark a new round of price wars and hikes with other key suppliers such as Turkmenistan.

Gazprom's sudden move to breach a five-year contract signed with Ukraine in August 2004 that set the gas price at $50, on top of a decision by Turkmenistan in early 2005 to insist on price hikes also in breach of agreements, is raising questions about the sanctity of contracts in the region, analysts say.

"Agreements have essentially become meaningless," said Michael Lelyveld, a senior adviser to PFC Energy, a Washington-based think tank. "Now, no one trusts anyone, and a deal is just not a deal.

"From an energy security point of view, this is dreadful."

Turkmenistan has become a vital supplier to Ukraine under the New Year's agreement, which lowered the overall cost of gas for Ukraine by mixing in cheaper Central Asian gas. But now any push by Turkmenistan to raise prices again could upset the fragile balance.

Turkmenistan is already reportedly seeking to raise the $65 price Russia currently pays to $85. Under the Ukrainian gas deal, most of the gas Russia buys from Turkmenistan is to be resold to Ukraine via Rosukrenergo.

Russia appears to be seeking to ensure that Ukraine carries the can if Turkmenistan decides to join the drive for higher prices, basically undermining the value of the agreements it only just signed. Rosukrenergo executive Konstantin Chuychenko, who is also the head of Gazprom's legal department, said Friday that Ukraine's $95 price could be raised at any time.

Another Rosukrenergo executive, Oleg Palchikov, said the contract signed by Ukrgaz-Energo, the newly created domestic gas distribution joint venture it owns jointly with Naftogaz Ukrainy, contained no formulas for the gas price, Interfax reported. Instead, he said, the price will be set by market conditions for Central Asian gas. Palchikov could not be reached for additional comment.

Naftogaz, however, insisted that the price had been locked in for five years. "We signed a contract for a price of no more than $95 for five years," said Naftogaz spokesman Dmitry Marunich. "This is the official position of the company."

Neither side would publish the contents of the agreements. Chaliy, however, said Monday that he had obtained a copy of the agreements, and cited one of the provisions as allowing either side to change the price if there was significant change in external market conditions. He declined to make it available to The Moscow Times. "In my view, conditions on the external market can change very rapidly because the difference between the price of Russian and Turkmenistan gas is huge," Chaliy said.

Furthermore, no Central Asian government has signed off on the Ukraine agreement, making it easy for the parameters to change, he said.

But for Ukraine, getting the price locked in for five years looks crucial if Naftogaz is going to stay independent or even survive.

Already, as things stand, Naftogaz Ukrainy has been severely weakened by the deal, opening the way for Gazprom to get greater leverage in the Ukraine gas market.

Naftogaz Under Fire

Even at $95, its finances will be hit by the huge increase in the price it will pay for its gas. It also stands to be hit by a major loss of revenue from the domestic gas distribution business, a sector worth billions of dollars. Under the deal, Naftogaz Ukrainy has agreed to give half of the market to Rosukrenergo by handing over domestic sales for the 32 bcm to the joint venture, Ukrgaz-Energo.

It could be giving away a lot of potential revenues. A Naftogaz Ukrainy daughter company is expected to bring in $3.2 billion in sales on the domestic market for 2005, Marunich said.

For Gazprom, entering the domestic market is a coup. "This deal gives Gazprom access to a market we never had access to before," Gazprom spokesman Sergei Kupriyanov said.

Meanwhile, it is aiming to eradicate Naftogaz Ukrainy as a competitor on the European export market completely. The Ukrainian gas company is expected to make between $300 million and $400 million from the re-export of about 3 bcm to Europe last year, Marunich said. But under the new deal, it will not be allowed to re-export gas to Europe at all. Marunich said Naftogaz Ukrainy was seeking ways to sidestep that provision, but Gazprom appears determined to keep it out.

According to Gazprom, Rosukrenergo will be the only other entity selling gas to Europe, and Gazprom seems unconcerned about that middleman's role. "All Rosukrenergo's exports will be handled through Gazexport," Kupriyanov said, referring to Gazprom's export arm. "There will be no more independent exports by Naftogaz."

If the $95 price is not indeed fixed for five years, Naftogaz Ukrainy could sustain huge losses. While uncertainty hangs over the price it will pay, it has agreed to a transit price of $1.60 per 1,000 cubic meters per 100 kilometers for the next five years for Russian gas crossing its territory into Europe. This price is about two-thirds the amount Georgia, for instance, receives from Gazprom, said Grigory Nemyria, a foreign policy adviser to former Ukrainian Prime Minister Yulia Tymoshenko.

While international ratings agency Fitch revised its outlook for Naftogaz Ukrainy's finances to "negative" in the wake of the deal, opposition politicians such as Tymoshenko have branded the deal "a betrayal of Ukraine's national interests."

Political Backlash

As Gazprom counts its winnings so far, the gas deal looks likely to be issue No. 1 for next month's parliamentary elections. Tymoshenko has vowed to overturn the deal, while potential disclosures over the murky ownership structure of Rosukrenergo could become a powerful weapon in the parliamentary race.

Even before the standoff, an investigation by security service chief Oleksandr Turchinov, a Tymoshenko ally, into the company's possible links with organized crime over the summer appeared to be part of the calculation over the Cabinet purge in September. Rosukrenergo has denied any such links. "There are questions that sooner or later will come out into the open, and this could lead to a huge corruption scandal," Chaliy said.

As Ukrainian politics appear to be moving back to square one following what appeared to be a decisive bid for independence in the Orange Revolution, Gazprom's price war has drawn a slew of criticism from the West amid fears that Russia is using one of its most strategic resources -- gas -- as a weapon to win political gains and bring Ukraine back into Russia's sphere.

Even Gazprom deputy CEO Alexander Medvedev cannot deny the company's political power. "It is too naive to say that the energy business can be completely separated from foreign policy," Medvedev told The Guardian in an interview last month. "Politics is always there, maybe not directly but indirectly."

Belarus pays just $46.68 per 1,000 cubic meters for its gas in a deal Gazprom says is a reward for allowing it to keep control over the Yamal Europe pipeline that runs through Belarussian territory. Gazprom also is continuing negotiations for a stake in a joint venture to run the rest of the country's gas distribution network, Beltransgaz.

"Belarus is the exception," said Matthew Sagers, director for energy economics, Eurasia and Eastern Europe at Cambridge Energy Research Associates. "Gazprom is doing this to make a point: You be nice to us and we'll be nice to you."

Some analysts like Sagers say it is only natural for Gazprom to want to redraw the price map in the CIS and raise prices in line with European prices, especially as former republics such as Ukraine seek to escape Moscow's orbit. "The same thing happened in Eastern Europe after the collapse of Comecon," Sagers said, referring to the Soviet economic bloc.

"Russia is pushing very hard on an issue that has troubled it since the Soviet collapse: control of transit routes to Europe," PFC Energy's Lelyveld said. "It was a brutal gamble, and to the West it looks like [Putin] overplayed it.

"But it's not clear that he's lost. That's not clear at all."

But other critics say Gazprom has pushed too far, too fast, opening up a can of worms in Ukrainian politics. Many say that no matter who ends up in power after the March elections, the current agreement will be redrawn.

"This agreement is only as good as the value of the paper," Concorde's Bobrinsky said.

For Chaliy, the fight is only just starting. "After the elections, the new government will call for the agreement to be reviewed," he said. "Ukraine has lost the first round, but the gas war isn't over yet."

Source: The Moscow Times

K-19 Submariner 'Saved The World', Gorbachev Tells Nobel Committee

MOSCOW, Russia -- A disgraced Soviet submarine captain played by Harrison Ford in the Hollywood thriller K-19: The Widowmaker has posthumously been put forward for the Nobel Peace Prize for averting a Chernobyl-style nuclear explosion at the height of the Cold War.

Captain Nikolai Zateev
The nomination, for Captain Nikolai Zateev and the crew of K-19, is being supported by Mikhail Gorbachev, a past winner of the prize. Mr Gorbachev, the former Soviet leader, argues that the submarine crew averted what would have been an appalling nuclear accident and possibly a third world war.

Details of the accident, which took place on 4 July 1961 in the Atlantic Ocean off the Norwegian Coast, remained an embarrassing secret for the Soviet authorities for almost 30 years and were only disclosed in 1990 under Mr Gorbachev's policy of glasnost or openness.

When launched, K-19 was the first Soviet submarine to carry three nuclear ballistic missiles and was regarded as the pride of the USSR's Northern Fleet.

It had been hastily built, however, as a riposte to America's "George Washington" class of nuclear submarines, as its crew found out to their cost during an infamous exercise called Polar Circle.

Large amounts of coolant leaked from the vessel's nuclear reactor that had overheated - which, unchecked, would have led to a powerful nuclear explosion.

Captain Zateev, who died in 1998, ordered the crew to repair the leak. After about two hours, the situation was brought under control but not before many of the crew, who knew the risks they were taking, had received large doses of radiation

Eight crew died of radiation sickness and less than 60 of the 139-strong crew survive today.

Mr Gorbachev has written to the Nobel Committee praising "the personal courage of these heroes," which, he says, "averted a thermal explosion of the reactor and a subsequent environmental disaster".

"The explosion onboard the K-19 could have been dozens of times more powerful than that at the Chernobyl power plant," he said. "At that complicated period of the Cold War ... an explosion could have been seen as a military provocation by the USSR. A response from the US and Nato could have come quickly. It is hard to imagine what this could have led to," wrote Gorbachev, who won the prestigious Nobel Peace Prize in 1990. "All ... deserve to be recognised by humankind as people who did all they could to save the world."

So obscure is the incident within Russia, the result of a three decade-long cover-up, that many modern-day Russian submariners know nothing about it. Details were only disclosed in 1990 in the Communist party daily Pravda.

Instead of being thanked for what he had done Captain Zateev was considered an embarrassment by the Soviet authorities and was quietly discharged.

Source: The Independent

Tymoshenko Bloc Offers Yushchenko Coalition Ahead Of March Vote

KIEV, Ukraine -- Former Ukrainian Prime Minister Yuliya Tymoshenko said Monday that her political bloc had drafted blueprints for building a parliamentary coalition following the March 2006 ballot and offered them to its allies for consideration.

Former Ukrainian Prime Minister Yuliya Tymoshenko
The Bloc of Yulia Tymoshenko's press office said the draft envisaged a coalition with President Viktor Yushchenko's Our Ukraine party and the Socialist Party of Ukraine and that it compelled each of its prospective members to abstain from teaming up with the Party of Regions, led by Viktor Yanukovych, Yushchenko's opponent in the 2004 election, when the incumbent president had been swept into power on the back of "Orange revolution" protests.

"I'm ready to give public assurances that [as long as] I'm involved, no such coalition [with the Regions Party] will ever be formed; no circumstances will make me [ally with the party]. I'd like both Yushchenko and [Socialist Party leader Oleksander] Moroz to sign up for this commitment, as well," the press office quoted Tymoshenko as saying.

Tymoshenko also proposed that the privilege of nominating a prime minister be given to the pro-revolution party that would win the largest number of seats in parliament.

Under Ukraine's new constitution, which came into effect January 1, parliament enjoys broader authority, including the power to appoint the cabinet and the prime minister.

Source: RIA Novosti

Russia ’s New Political Weapon: Energy

STANFORD, CA -- Much like the strong Russian boxer Ivan Drago in Rocky IV, Vladimir Putin is continuing his quest to break the spirit of his democratic challengers by forcefully asserting his nation’s newest political weapon: energy.


Particularly, in the past month Russia has cut off gas supplies to a freezing Ukraine— and, consequently, the rest of Europe— and is now suspected of sabotaging its own gas pipelines to the Republic of Georgia. Whether or not the allegations of sabotage are true, the mere fact that Georgia is pushing the charge is indicative of the hostile political atmosphere that has prevailed between Russia and its newly-democratic neighbors since the Orange and Rose Revolutions.

While Russia has always possessed enormous energy resources in oil and natural gas, its ability to use these supplies as a political weapon has previously been limited. It was not until the recent sharp increase in energy prices that their utility as a bargaining chip increased.

Coincidentally, and perhaps ironically, the increase in energy prices began at the time democratic revolutions opposed by Russia were taking place. Now, both the Ukrainian and Georgian presidents accuse Putin of trying to do what he couldn’t in 2003 and 2004: undermine popular support for their governments by sowing discontent among populations that are used to receiving inexpensive, subsidized energy supplies.

The conflict closely resembles the situation the United States faces when it comes to oil supplies. Just as America is dependent on hostile Arab nations and countries like Venezuela to supply oil,Ukraine and Georgia depend on Russia to provide cheap energy resources. This dependency likely forces Georgia and Ukraine to alter their foreign policies toward Russia in order to accommodate Russian demands.

Georgia , for example, has previously demanded that Russia immediately remove Soviet-era military bases located within Georgian territory. Mikhail Saakashvili, the Georgian president, accuses its northern neighbor of using these bases to support separatists in the provinces of Abkhazia and South Ossetia. Despite the demand for immediate removal, Georgia reluctantly agreed to a phased withdrawal plan that many analysts believe will never be completed.

With Ukraine, the world witnessed the most brazen use of Russia’s energy resources as a political tool when Russia cut off natural gas supplies to Ukraine in the midst of a deadly winter freeze. Russia claimed Ukraine wasn’t paying a fair price for the gas and that it was even stealing it—an allegation that later proved to be true. Gazprom, the state-owned Russian energy giant, demanded that Ukraine begin paying $230 per thousand cubic meters of gas, up from $50—a very large sum for a country with a per capita income of $6,300.

Ukraine did acknowledge the need to pay more for the gas, but believed that a sudden sharp increase would severely damage its economy and leave many of its poor citizens without heat during the cold winter. And that’s precisely what Russia intended to do, according to some Ukrainian government officials and political analysts. If the economy were to recede and if citizens suffered during the winter, it would have caused even greater hardship for a Ukrainian government that is already combating severe internal conflicts.

And because Ukraine is scheduled to have parliamentary elections in March, in which it is unclear whether President Viktor Yuschenko’s party, born from the Orange Revolution, will be victorious, Putin viewed the gas dispute as another opportunity to deal further political damage to his pro-western rival.

What Russia did not expect, however, was that the cuts would also severely affect the rest of the European continent that is dependent on Russian energy and would create an international backlash.

Several European nations, including Germany and the United Kingdom, responded angrily and demanded that Russia resume piping gas. The United States also joined the criticism. Secretary of State Condoleeza Rice condemned the actions, saying Russia was using its vast energy wealth as a weapon against democracy.

After international threats and condemnations, Gazprom and Russia relented and resumed gas flows. The incident, however, threw into question the reliability of Russia as an energy supplier.

But are Europe and the EU impotent in their ability to prevent Russia from again using its resources as a political weapon?

Anders Aslund, a Russian foreign policy expert at the Carnegie Endowment, says that the European Union’s dependency on Russian energy makes it “a passive taker of policy.” That is, it is difficult for the countries of the EU to make credible, rational demands of Russia on market, military, and human rights matters. Russia can simply gather enormous wealth from the current high gas prices and then withhold energy whenever it’s politically convenient to do so.

Such action, especially during cold winters, would cause enormous economic damage and suffering among Europeans. And Europe fully knows this, which helps explain why they take an extremely reserved and cautious foreign policy attitude when dealing with Russia.

There is an alternate side, however. The problem for Russia is that it is dependent on Europe to import its energy supplies. Unlike many Arab countries that spread their oil exports among several different importers, Russia’s primary consumer of energy is Europe itself. Sixty percent of Russian export revenue comes from energy, and approximately half of that is from exports to the European Union. So, if Europe doesn’t buy the gas and oil, Russia’s energy revenue plummets, depriving it of much-needed cash and capital.

In its energy relations with its closest European ally, Russia displayed its reluctance to engage in a type of diplomacy that fully utilizes the energy factor. Germany, who is the biggest consumer of Russian gas, recently signed a multi-billion dollar deal with Russia to increase its imports, but warned that the plans would suffer if Gazprom did not resume supplies to Ukraine and Europe immediately. Again, Gazprom relented, refusing to suffer the financial repercussion Germany was threatening.

Yet, it appears the growing policy burden will be on the European Union, not Russia.

The EU is predicted to have increased energy dependence in the next few decades. Official forecasts predict that the EU will have to import 70% of its energy by 2030. “For the EU, the problem isn’t too much energy,” Aslund says. “It’s that the EU won’t be able to import as much Russian energy as it likes.” For Russia, this means they will always have a consumer in the West which requires their product to sustain growth and living standards.

Clearly, we are currently witnessing the development of a new, important Russian foreign policy dimension. It remains to be seen whether the potency of energy as a political weapon can withstand the fluctuations in prices and demand, but if the future growth and energy consumption of China and India are accurate indicators, it portends that Russia will possess an extremely important and vital strategic foreign policy tool for the foreseeable future.

Whether or not President Putin will be able to break the democratic backs of its Ukrainian and Georgian counterparts with this weapon remains to be seen.

Source: The Stanford Review

Telenor: VimpelCom Could Enter Ukraine

OSLO, Norway -- Nordic telecoms company Telenor said Friday that it would support a move into Ukraine by VimpelCom, in which it has a large stake, in the form of an alliance with an established operator.

Telenor headquarters in Oslo, Norway
But Russia's No. 2 mobile firm said it was not convinced of Telenor's sincerity, as the Norwegian company had rejected a number of suggestions to resolve a dispute over its expansion into Ukraine.

Telenor and Alfa Group, the two major shareholders in VimpelCom, are locked in a conflict over VimpelCom that has been dragging on since August 2004 and deepened last November when VimpelCom management, supported by Alfa, bought small Ukrainian company Ukrainian RadioSystems for $231 million.

Telenor opposed the deal at the board level, saying the price was too high, but on Friday the head of Telenor's Eastern Europe operations, Jan Edvard Thygesen, said there was a way around the problem.

"Telenor believes a strategic alliance between VimpelCom and one of the established Ukrainian mobile operators could be one way for VimpelCom to enter the Ukrainian market," Thygesen said.

Telenor is the largest owner of Ukraine's biggest mobile operator, Kyivstar. Analysts say that Telenor's motive in opposing the URS deal is to limit competition for Kyivstar, though Telenor denies this.

VimpelCom spokesman Mikhail Umarov said Telenor's statement gave no grounds for new talks.

"We have many times suggested different variants to Telenor, including a joint use of the network, the creation of a virtual operator, the creation of a mutual fund," he said.

"Telenor has rejected these suggestions. We doubt the sincerity of the company's suggestion."

Umarov was talking after VimpelCom's board meeting, which for a second time failed to approve the 2006 budget. The company said it would continue to operate normally despite the failure.

It said in a statement that the board also did not approve separate country budgets.

"Given differences of opinion on the acquisition and operation of URS, Telenor suggests approving an individual budget for URS work on the Ukrainian