AUR#645Russian Entrapment, Destabilizing & Dangerous Neo-Imperial Plan; Trading Democracy For Gas; Profile Of RosUkrEnergo; German Villagers 1915

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Mr. E. Morgan Williams, Publisher and Editor  
Washington, D.C., Kyiv, Ukraine, FRIDAY, JANUARY 20, 2006

                           ——–INDEX OF ARTICLES——–
         Clicking on the title of any article takes you directly to the article.               
Return to the Index by clicking on Return to Index at the end of each article

     The Kremlin is using Gazprom and other monopolies to take over key
                 industries and institutions in the former Soviet republics
: By Vladimer Papava and Frederick Starr
Taipei Times, Taipei City, Taiwan, Friday, January 20, 2006, Page 9

                        ENERGY AS A POLITICAL WEAPON
Associated Press (AP), Tbilisi, Georgia, Thursday, January 19, 2006 

By Heather Timmons, The New York Times
New York, New York, Friday, January 20, 2006

                           GAS WAR, TINGED WITH POLITICS”
        Gas row with Russia prompts Ukraine to seek energy independence
: By Tetyana Kovtun
Ukrayina Moloda, Kiev, in Ukrainian 12 Jan 06; p 6
BBC Monitoring Service, UK, in English, Sat, Jan 14, 2006

By Christopher Condon in London, Neil Buckley
in Moscow and Tom,Warner in Kiev
Financial Times, London, UK, Friday, January 20 2006

COMMENT & ANALYSIS: By Paolo Scaroni

Chief Executive of Eni, the Italian energy group
Financial Times, London, UK, Wednesday, January 18 2006

Open Democracy Online, Free Thinking for the World
London, United Kingdom, Tuesday, January 17, 2006

               Distance between Russia & West seems to be increasing
: By Marcin Kaczmarski, Analyst
Institute of International Relations, Warsaw University
Polish News Bulletin, Warsaw, Poland, Wednesday, Jan 18, 2006

9.                        UKRAINE RETURNS TO THE ABYSS
: Weekly Experts’ Panel
Introduced by Peter Lavelle in Moscow
Moscow, Russia, Friday, January 13, 2006

Reuters, Kiev, Ukraine, Thursday, January 19, 2006


                           WITH PRESIDENT YUSHCHENKO
Natasha Lisova, Associated Press (AP), Kiev, Ukraine, Thu, Jan 19, 2006

Ukrainian News Agency, Kyiv, Ukraine, Thu, January 19, 2006


Ukrainian News Agency, Kyiv, Ukraine, Thursday, January 19, 2006

          The Visegrad Four: Hungary, Czech Republic, Poland, Slovakia
Associated Press (AP), Budapest, Hungary, Thursday, January 19, 2006

: By Roman Kupchinsky
Organized Crime and Terrorism Analyst for RFE/RL
Radio Free Europe/Radio Liberty (RFE/RL), D-Wire
Prague, Czech Republic, Wednesday, January 18, 2006


NEW BOOK: by Ronald J. Vossler and Joshua J. Vossler
Germans from Russia Heritage Collection, North Dakota State
University Libraries, Fargo, North Dakota, Wednesday, January 18, 2006

                 Invite for applications from the Republic of Ukraine
Center for Holocaust and Genocide Studies (CHGS)
Amsterdam, The Netherlands, January, 2006

         A recent column by Prof William Reville on the Chernobyl Report
                  provoked an angry response. He answers his critics.
COMMENTARY: By Prof William Reville, Associate Professor
Biochemistry and Public Awareness of Science Officer
University Cork College (UCC), Cork, Ireland
Irish Times, Dublin, Ireland, Thursday, January 19, 2006
     The Kremlin is using Gazprom and other monopolies to take over key
                 industries and institutions in the former Soviet republics

ANALYSIS & COMMENTARY: By Vladimer Papava and Frederick Starr
Taipei Times, Taipei City, Taiwan, Friday, January 20, 2006, Page 9

Russia’s use of natural gas to exert economic and political pressure on
Ukraine has caused grave concern in the West. But Russia’s pressure on
Georgia has been even heavier — and has scarcely been noticed.

In Georgia, as in Ukraine, Russian President Vladimir Putin seeks to
implement the doctrine of a “liberal empire” put forward in October 2003
by Anatoli Chubais, the chairman of United Energy System (RAO UES),
Russia’s energy monopoly.

According to Chubais, Russia will never find a place in either NATO or
the EU, so it must create an alternative to both, a new empire of its own.

It can do this by using its huge and rich public-private monopolies to take
over the key industries and economic institutions of former Soviet
republics, thereby laying the groundwork for political domination. The
resulting empire will be liberal, according to Chubais’s definition, because
it can be built with money rather than tanks.

[1] Russia’s first step in fulfilling this plan in the South Caucasus was
directed against Armenia, its strategic partner in the region. Seizing on a
US$93 million debt that Armenia owed to Russia, the Putin administration
demanded payment in either cash or equity in Armenia’s major industries.

Cash-strapped Armenia had no alternative but to hand over the shares,

which it did in a 2002 treaty candidly titled “Possessions in Exchange for
Debt” — a reminder of the infamous “debt-for-equity” swaps of the Yeltsin
years (another Chubais invention), which spawned Russia’s oligarchs.

[2] Russia’s second step in rebuilding its empire in the Caucasus is to
unite itself and Armenia in a single economic zone. Because Georgia stands
directly in the geographical path to realizing this goal, Russia had to deal
with it first. In the 1990s, it used crude political pressure to bring
Georgia into line, but it shifted to economic leverage in 2003.

When US-based AES Silk Road failed to transform Georgia’s energy system,
Chubais’s RAO UES bought AES’s holdings and other assets that amounted
to 75 percent of the country’s electricity network.

[3] Then came Georgia’s “Rose Revolution.” Many state-owned firms were
privatized for 10 times the sums yielded in asset sales under the previous
government of Edvard Shevardnadze.

But an utter lack of transparency allowed Russian companies, and their
subsidiaries registered in third countries, to snap up most of the new
offerings. Typical was the Russian holding company Promyslennye
Investory (Industrial Investors), which managed to get a major gold
mine and then half of a plant producing gold alloys.

Russia’s main foreign policy instrument in Georgia is Gazprom, the
state-controlled gas monopoly. Gazprom’s aim is to control not only the
gas industry in Georgia, but also the only pipeline that feeds Russian gas
to both Georgia and Armenia. Had the US not intervened last year with
US$49.5 million to rehabilitate the pipeline, it would have ended up in
Gazprom’s hands.

Even then, pressure from Moscow may result in joint Russian-Georgian
control of the pipeline, if not its outright sale to Gazprom. The Georgian
government, without clear support from the West, may yet agree to such a
deal, something that Moldova, which saw its gas cut off on Jan. 1, has just

Gazprom is not the only state entity carrying out Russian policy in the
South Caucasus. In 2004, Russia’s state-owned Vneshtorgbank acquired a
controlling stake in Armenia’s Armsberbank.

The following year, Vneshtorgbank purchased a controlling stake in the
privatized United Georgian Bank, Georgia’s third largest. In effect,
Vneshtorgbank renationalized United Georgian Bank, but the new owner
was the Russian state.

Recently, Chubais’s RAO UES has had the lead role in integrating Georgia
into Russia’s “liberal empire.” When the Georgian authorities announced
plans to privatize the Inguri Power Plant and renew construction of the
long-stalled Khudoni Power Plant, slated to become Georgia’s largest,
RAO UES immediately began staking out a dominant role for itself in both

The combination of massive pressure from the Russian side and silence
from the West could leave Georgia’s entire power system — both gas and
electricity — in Russian hands.

Russia’s scheme to rehabilitate the rail line from its territory into the
secessionist Georgian province of Abkhazia similarly mixes economics with
neo-imperial aspirations. Even though it is focused on land that the UN
recognizes as part of Georgia, the main beneficiaries of this project would
be Russia and Armenia.

If the international community allows this scheme to go forward, it will
have endorsed Russia’s effort to separate Abkhazia from Georgia. Parallel
with this, Russia and Armenia are planning a new rail link to Iran.

Besides its obvious benefits to Iranian President Mahmoud Ahmadinejad’s
retrograde government, this will deftly weaken the South Caucasus’ links
with the West, which the US and Europe have spent a decade fostering.

Thus, Russia’s effort to entrap Georgia and its neighbors in the nets of its
new “liberal empire” is part of a well coordinated attempt to reorient the
South Caucasus as a whole towards the anti-Western coalition of Russia
and Iran.

Western countries, and the US in particular, must provide firm backing and
support to the South Caucasus to prevent Russia from realizing its
destabilizing and dangerous neo-imperial dream.
Vladimer Papava is a former Georgian minister of economy and author of
Necroeconomics, a study of post-communist economic problems. Frederick
Starr is chairman of the Central Asia-Caucasus Institute at Johns Hopkins
University’s School of Advanced International Studies in Washington.

[return to index] [The Action Ukraine Report (AUR) Monitoring Service]
                       ENERGY AS A POLITICAL WEAPON

Associated Press (AP), Tbilisi, Georgia, Thursday, January 19, 2006 

TBILISI, Georgia – Georgia’s Western-leaning President Mikhail Saakashvili
on Thursday accused Moscow of using its dominant position as an energy
exporter to further its political goals in the former Soviet Union and vowed
to seek other suppliers.

Georgia recently agreed to pay almost double the price for Russian gas –
$110 for 1,000 cubic meters of gas compared to the $63 for 1,000 cubic
meters it paid before.

Ukraine, whose pro-Western President Viktor Yushchenko is a close ally

of Saakashvili, also accepted a near doubling in gas prices after a bruising
dispute with Russia earlier this month that saw gas supplies cut off

“Russia practically announced that it will use its energy clout to achieve
its political goals in Ukraine and Georgia,” Saakashvili said. The Caucasus
Mountain nation’s president said that he was holding talks with Ukraine and
Central Asian countries about projects to transport energy from Central

Russia’s gas war with Ukraine was seen by many observers as punishment

for the former Soviet state’s efforts to integrate with the West under
Yushchenko.  -30-
[return to index] [The Action Ukraine Report (AUR) Monitoring Service]

By Heather Timmons, The New York Times
New York, New York, Friday, January 20, 2006

LONDON – London will be home to what may be one of the largest initial
public offerings ever later this year, when the Russian oil giant Rosneft
makes its Western debut on the London Stock Exchange. The Russian
government hopes the offering will raise as much as $18 billion, roughly the
proceeds of the biggest initial public offering to date, the 1998 debut of

The listing of Rosneft, expected in June, is one of the most visible rewards
yet for London’s financial markets, which have embraced the Russian and
central Asian companies buoyed by the boom in energy and commodities.
Even amid concerns about the Kremlin’s influence on companies and markets,
London bankers have been scrambling to increase their ties with Russian

The Rosneft deal will be led by four banks: ABN Amro, Dresdner Kleinwort
Wasserstein, J. P. Morgan Chase and Morgan Stanley, according to executives
involved in the negotiations. Total bankers’ fees for listing the company
could be more than $200 million.

Rosneft is not the only Russian and central Asian company expected to list
in London this year. The London Stock Exchange is poised to grab most of
the nearly 100 planned listings from Russia in 2006, surpassing the New York
Stock Exchange. Listings for companies from Russia, Kazakhstan and China
already have generated hundreds of millions of dollars in fees for the
world’s biggest banks in London.

But the rash of new money is prompting concerns that London owes its
competitive advantage in part to listing requirements that are less
stringent than those in the United States.

State-controlled Rosneft, in particular, has been a lightning rod for
criticism, after the company bought the biggest asset of Yukos at a
depressed price last year, as part of the government’s attempt to
consolidate natural resources and seize power from Mikhail B. Khodorkovsky,
the founder of Yukos. After the London offering, the state will retain
control of Rosneft, raising concerns about corporate governance.

“The only shareholder rights observed in Russia are the right of the state –
and would you trust that?” said Geoffrey Wood, a professor of economics at
Cass Business School in London. Recent events like Gazprom’s temporary
suspension of gas delivery to Ukraine are indicative of the unpredictability
of these companies, he said. And even if banks and investors have performed
proper due diligence, and have prospectuses that lay out minority
shareholder rights, “there is no safeguard against the rules being changed,”
Professor Wood added.

Deloitte & Touche valued Rosneft at $48 billion in November, up from a $26
million estimate by Morgan Stanley earlier last year. The increase in
valuation raised some eyebrows.

“We believe that the Kremlin is fairly desperate to raise a large sum at the
Rosneft I.P.O.,” analysts from Rye, Man & Gor Securities in Moscow wrote in
November. To be sure, investors who buy the Russian and central Asian stocks
already listed in London consider them high risk.

“We shouldn’t forget that in the end, these are risky assets, and everyone
should see that,” said Tom Kirchmaier, a corporate governance expert with
the London School of Economics. “Corporate governance is not about
de-risking equity, it is about regulating the market to see what is going

In 2005, emerging market companies raised more than $13 billion in London,
according to Dealogic. They accounted for some of the stock exchange’s
biggest listings. In New York, primary and secondary listings of emerging
market companies raised $15.4 billion in 2005, but the New York Stock
Exchange stands to lag London this year.

The New York exchange noted that many of the companies listing in London
did not meet its listing standards. “We can’t compete for them, though we do
wish them well,” said Noreen M. Culhane, an executive vice president of the

Besides Rosneft, the Kazakhstan state oil concern KazMunaiGaz and the
Russian steel company EvrazHolding also are expected to have sizable initial
offerings this year. It is not just energy and commodities companies:
consumer products businesses are joining the rush as well.

“One of the frustrations of international investors in Russia is that 80
percent of the market cap of the Russian stock exchange is energy and
natural resource stocks,” said Paul Raphael, head of Credit Suisse First
Boston’s European equity capital markets group. “People are desperate to put
money to work in Russia that gives them exposure to higher Russian growth,
and to the Russian consumer.”

Many advisers cite United States regulation as the reason that London is
getting the edge over New York.  “There is a perception that it is easier to
do an I.P.O. in London, without compromising on standards of quality and
investor protection,” said Simon F. T. Cox, a partner with the law firm
Norton Rose in London.

Worries about shareholder litigation in the United States and London’s role
as a welcoming second home for Russians also are cited as reasons for the
attraction of a listing on the London markets. The city already hums with
Russian money – wealthy Russians have bought up some of its most
expensive real estate and its leading soccer team, and its high-end
boutiques are now staffed with Russian-speaking employees.

In addition, the London exchange has engaged in an aggressive marketing
campaign to attract companies in Asia, Russia and Eastern Europe. The
exchange has employees from 14 countries who speak 17 languages, said
Tracey Pierce, head of company services at the London exchange and the
executive responsible for attracting foreign listings. Although Russia may
represent the biggest entrants this year, the London Stock Exchange has
hardly limited itself to that region.

“We’re seeing wider opportunities across Asia, in South Korea in
particular,” she said.

Most of the foreign companies listing in London, including Rosneft, plan to
trade global depository receipts, roughly the equivalent of American
depository receipts. Yet while A.D.R.’s require a company to adhere to
United States accounting standards, companies with G.D.R.’s in London

can use their local accounting standards, and do not need to file quarterly
statements. (Rosneft, however, already files according to United States
accounting standards.)

“The G.D.R.’s are basically cowboyland – you can get away with whatever
you want,” said one London-based banker who has worked on a number
of emerging market issues in the last 12 months and spoke on the condition
of anonymity because he feared for his job.

Investors contend that they do not make a big distinction between foreign
companies listed in the United States and those listed in London. “We’re
extremely comfortable with the London listings,” said Allan Conway, head

of global emerging market equities at Schroders in London. “We have no
problem with a G.D.R. rather than an A.D.R.,” he said, adding “from a
quality-of-investment point of view, there is no distinction between the
two.”  -30-
[return to index] [The Action Ukraine Report (AUR) Monitoring Service]
                         GAS WAR, TINGED WITH POLITICS”
       Gas row with Russia prompts Ukraine to seek energy independence

Ukrayina Moloda, Kiev, in Ukrainian 12 Jan 06; p 6
BBC Monitoring Service, UK, in English, Sat, Jan 14, 2006

The gas dispute with Russia at the end of December 2005 became a lesson in
defending Ukraine’s national interests, journalist Tetyana Kovtun has said
in a propresidential newspaper. Kovtun said that Ukraine should use this
momentum and continue reforming its economy and industry while looking for
alternative energy sources.

Russia’s Gazprom is being used by the Kremlin as a political weapon, and

its real goal was not to get a market price for gas but to preserve Russian
influence over Ukraine, Kovtun said.

The following is the text of Kovtun’s article published in the Ukrayina
Moloda newspaper on 12 January under the title “Hardening orange. Economic
lessons from the gas war, tinged with politics”; subheadings have been
inserted editorially:

While Ukraine was resisting in the hands of the gas octopus, neighbouring
countries watched quietly. This reminded one of a situation when one bully
controls the whole community and nobody attempts to fight back.

This is how the former European commissioner Chris Patten described the New
Year gas lightheadedness experienced by Europe. Everyone was talking about
the consequences of this crisis and what conclusions had been drawn by the
parties involved in the energy scandal.

The Ukrainian side at that point, having won a temporary break after the
signing of a protocol with Gazprom, said: “We seceded from the empire”. At
least, that was what some politicians were saying, in particular the deputy
head of the parliamentary committee for fuel and energy, Oleksa Hudyma
(Ukrainian People’s Party). However, some others were quick to say that by
signing this protocol Ukraine became energy dependent.
                           GAZPROM IS KREMLIN’S TOOL 
Gazprom’s aggressive marketing has always been coordinated by the Kremlin.
It became even more obvious after the State Duma [Russian parliament]
initiated the listing of Gazprom’s shares on international stock markets.
The law on liberalization of Gazprom shares was signed by the Russian
president on 23 December, and on 29 December last year the decree was
adopted by the Russian cabinet. This increased Gazprom’s appetite.

The liberalization of the holding’s stock envisaged a lifting of the
20-per-cent limit on the participation of funds of foreign citizens and
organizations in its authorized capital. In addition, a new resolution is
being enacted, which says that the total amount of regular shares held in
state ownership cannot be less than 50 per cent plus one share. By
preserving Gazprom as an instrument of political pressure on neighbouring
countries, the Kremlin gave a “thumbs up” to the discriminatory rampage by
the Russian monopolist.

The struggle over the redistribution of European energy markets continues,
and there is a desire to present Gazprom’s ownership rights in the best
light to potential buyers of shares. The pressured buy-ups of the gas
transit systems in Belarus and Georgia, the takeover of the Dniester
region’s gas transit system, which belongs to Moldova, and the negotiations
over Ukraine’s gas systems – these are all links of the same chain. The
price of gas for the countries that used to own these gas transit systems –
this is really an element of the maneuver.

The people in Moscow are in a hurry because they understand that
redistribution of the gas market using the gas transit systems of neighbours
is possible only in the existing political situation. Existing for now,
because when new authorities appear in the Kremlin, the room for maneuver
will be lost forever.

Even now, Gazprom has no money to buy the gas transit systems of neighbours.
MP Oleksa Hudyma pointed this out, giving an example of the insolvency of
Gazprom, which bought one third of Slovakia’s gas transit system but still
has not transferred the payment for it. In general, Gazprom works very
sloppily, not in line with European standards.

 Moscow is also feeling the consequences of its failure to sign the European
Energy Charter, which would allow Gazprom to have civilized agreements in
accordance with international rules with transit countries, with Ukraine
among them. Today Gazprom works without regard to this charter’s rules, but
still dictates European prices to countries consuming Russian gas.

It is not only Kiev who learnt its lessons from the gas fever. Moscow drew
its own conclusions. Gazprom’s deputy chief Aleksandr Medvedev recently
visited Minsk and agreed to create a working group to increase the transit
of Russian gas through the territory of Belarus.

Europe consumes 25 per cent of Russian gas, and 80 per cent of it go through
Ukraine. In order to become less dependent on Ukrainian partners, Gazprom is
looking for bypass routes. Especially since the attempts to punish “orange”
Ukraine with cold in winter proved costly to Gazprom itself.
In the first two days after the New Year, when the level of gas supplies was
falling, European countries felt absolutely unprotected in the face of this
sort of behaviour by Gazprom. When they looked at their reserves, it turned
out that the countries consuming Russian gas had only limited amounts of own
reserves – between 10 days and three months.

Because of that, an emergency meeting of experts was held in Brussels, and
the European commissioner on energy, Andris Piebalgs, said that EU countries
must have reserves sufficient for at least two months. A debate began in
Germany on whether it is worth it, taking into account Russia’s behaviour,
to build the North-European gas pipeline.

In turn, Croatia, Hungary, Slovakia and Austria decided to build a joint
transit route, separate from the Russian “pipe”. Bulgaria announced that it
is refusing to pay a higher price for Russian gas, citing an agreement valid
until 2010. Romania also insists on keeping the price for them. Ukraine’s
experience becomes an example to follow.

These several days shook Europe. Gazprom has been supplying gas there since
1968 – and all this time there have been no disruptions. Politicians pointed
out that Russia applied this gas submission hold against several countries
on the same day it became the head of G8.

Judging by the statements of the leaders of Germany and the USA, this fact
did not go unnoticed. In particular, they said that Moscow used its gas
weapons to resolve political issues. However, as Putin’s former adviser
Andrey Illarionov said, Russia is unlikely to be expelled from the G8 for
this. A different tool will probably be used against this country.

In this gas war, Russia violated the principles of free trade, The Financial
Times said, and this casts doubt on Russia’s ability to join the WTO. The
European parliament discussed the consequences of the gas conflict on 11

Observers noted that if the European community “swallows” Gazprom’s
expansion, and if the gas networks of different countries continue coming
under the ownership of this mega-monopoly, it is possible that in future
simple Russian lads from Yoshkar-Ola will be standing along the “pipe” in
camouflage uniform all over Europe.

What happened has happened. By gaining the status of a market economy on 30
December, Ukraine ran into a problem of whether or not to buy Gazprom’s fuel
at the base price of 230 dollars [per 1,000 cu.m.]. But an agreement was
reached on the price of 95 dollars for the fist six months of 2006.

This price is not shocking, at least this is what MP Kseniya Lyapina thinks,
who is the head of the council of entrepreneurs under the Cabinet of
Ministers. If the price stays at this level, there is no need to revise the
2006 state budget, the ministers of the dismissed cabinet said. Until
recently, parliamentary speaker Volodymyr Lytvyn and the acting head of the
parliamentary budget committee, Lyudmyla Suprun, have insisted on revising
macroeconomic indicators used to calculate the main financial document of
the country.

Parliament managed to dismiss the cabinet, but did not dare to cancel the
gas protocol signed by Kiev and Moscow on 4 January. However, a temporary
investigation commission on the financial activity and personnel policy of
Naftohaz Ukrayiny [Ukraine’s state energy company] was formed.

This way, nothing can prevent politicians from sitting in the “gas” sleigh
and trying to ride it all the way to the election. After MPs make sure that
gas will be supplied at an acceptable price for at least six months, they
can turn their attention to investigative activities.

In particular, to find out exactly which assets of Naftohaz were planned to
be transferred into the authorized capital of a joint venture with
RosUkrEnergo, which will be delivering gas from the Russian-Ukrainian

border to consumers within Ukraine. Hudyma said that in May, when the
new parliament is formed, many problems will resolve themselves.

Hudyma predicts that parliament will finally pass the law on the
privatization of the gas transport system, and that 49 per cent of the
shares in this enterprise will be offered to prominent gas companies from
France and Germany.

From the very beginning it was clear that the most important thing for
Gazprom in its relations with Ukraine is not switching to market prices but
preserving its influence over Ukraine. Medvedev confirmed this when he said
before the New Year that Gazprom intends to supply gas to Ukrainian
companies directly, without Naftohaz.

It is clear that a different approach to “good” (obviously eastern
Ukrainian) companies and “bad” ones (guess where) has nothing to do with
market principles. This would be a rebirth of the oligarchic type of
economy, linked to the former president’s entourage, which is now
transformed into various political blocs.

                                  ENERGY INDEPENDENCE 
The “orange” team has said on numerous occasions that it intends to move
towards an honest economy. After their victory in the presidential election,
there is less talk about that. Only because of the gas war this slogan not
only returned but has also gained new meaning. It is one thing that
“unsanctioned siphoning of gas, which was carried out by the previous
administration has been stopped”, as President Yushchenko said.

It is another thing that “the orange” plan to make the economy work “in an
absolutely different format”, as former secretary of the National Security
and Defence Council Petro Poroshenko said, when parliament, the cabinet

and the president are united. In addition, it is planed that in 2006 Ukraine
will secede from the agreement on free trade with Russia, which will help
normalize economic relations.

MP Valeriy Asadchev said that 2005 was the year of transformation of the
Ukrainian economy. It moved from an administrative and oligarchic type,
created by [former president] Kuchma’s political entourage, into an economy
which can compete on European markets.

Unfortunately, many officials in Yuriy Yekhanurov’s cabinet could not
foresee what an obstacle for these plans, and for the cabinet itself, would
arise with the liberalization of the gas price. It is ironic that just at
the moment when intentions began transforming into actions, when the
destruction of shadow schemes in the economy began, the “Our Ukraine”

team was asked to “vacate the premises”.

It was due to the envy and rancour of failed political rivals, coupled with
the upcoming election. Meanwhile, the Ministry of Industrial Policy has
already begun a campaign of energy preservation, the companies developed
plans to switch to alternative fuels and implement new technologies. A death
sentence was issued to blast-furnaces – a big blow to steelmakers, proud of
the fact that they form the bigger share of Ukraine’s exports and fill the
state budget.

However, the owners of metal plants were using cheap gas while selling their
products at market prices abroad, pocketing the difference. The Economics
Ministry is working on a differential approach to the prices for industrial
producers depending on their energy efficiency, and promised to complete
this project by 17 January.

As for the public, it was decided not to raise the price of gas for them.
“Ukraine must cut annual consumption of gas to 62bn cu.m. (from the current
77bn – author), and boost the production of coal by 120 per cent,”
Yekhanurov stressed.

No matter how much we want it, it is impossible to instantly change the
structure of energy consumption in favour of coal or nuclear fuel. For
example, experts of the Audit Chamber said that Ukraine will be able to
create its own nuclear cycle no earlier than 2020.

In addition to changing the structure of energy consumption, another way to
achieve energy independence is to diversify, meaning to make sure the
country receives its fuel from different sources. Today, the balance of gas
supplies is as follows: 20bn cu.m. are produced domestically, 23bn – direct
supplies from Turkmenistan, and 34bn – fuel from Russia and Central Asia
which Naftohaz will be buying from RosUkrEnergo [intermediary affiliated to

Of course, the best course of action would be to increase the use of
Ukraine’s own gas fields. It is planned that with the help of foreign
investment, directed, in particular, towards the development of gas fields
in the continental shelf of the Black and Azov seas, the volume of Ukrainian
gas will increase by 30 per cent before 2008.

Turkmen gas is a separate issue. If the Russians contract it all for many
years to come, we will not be able to avoid them dictating prices,
especially since the Central Asia – Centre pipeline goes through
Turkmenistan, Uzbekistan and Russia, and this “line” is the only one. That
is why, no matter how many contracts we sign with [Turkmen President]
Saparmyrat Nyyazow, they all will have to fit into one “pipe”, which has
limited capacity.

The secretary of the National Security and Defence Council, Anatoliy Kinakh,
said that a long-term agreement with Turkmenistan on cooperation in the
energy sector will be signed very soon. As for the pipeline mentioned above,
Mr Kinakh reassured that all of its capacity of 42bn cu.m. of gas will be
used exclusively for Ukraine. As for the idea of getting liquid gas from
North Africa, as mentioned by Oleksiy Ivchenko, the former head of Naftohaz,
experts consider this unrealistic.

The signing of the protocol in the early hours of 4 January in Moscow after
intense and difficult four-month talks is a lesson in defending national
interests. Ukraine now has gas.

Unfortunately, we could not avoid intermediaries in the face of
RosUkrEnergo, but it is good that possible corrupt schemes around imported
gas will remain outside Ukraine’s borders. Especially since we managed to
stop the scheme of barter payments for gas supplies.

This is not complete energy independence yet, but it is a start. To
transform the Ukrainian economy as a result of gas price liberalization is
the same as to divide history into an old and new era. That is clear. It
should be expected that Viktor Yushchenko in his address to the people,
which he will deliver in parliament, will pay a lot of attention to lessons
from the gas conflict.  -30-

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By Christopher Condon in London, Neil Buckley
in Moscow and Tom,Warner in Kiev
Financial Times, London, UK, Friday, January 20 2006

Hungary has called for a meeting of seven central and east European energy
ministers next week to discuss ways of reducing the region’s reliance on
Russian natural gas.

The move came as Russian gas exports to Europe were reduced for a second

day yesterday as Gazprom, Russia’s natural gas monopoly, continued to face
record energy demand at home amid the coldest weather since 1979.

Hungary said Russian gas supplies were 20-25 per cent below normal, while
Italy said its Russian gas supplies were set to be 12.2 per cent below
demand yesterday. Gazprom said it was working flat out to meet all
customers’ needs and still supplying more than its minimum contractual
volumes to European customers. The Russian government was dipping into
emergency reserves of gas, fuel oil and coal.

European states have said supply falls from Russia during extreme cold are
not unusual. But this week’s cuts are likely to intensify the debate on
Europe’s reliance on Russian gas, two weeks after Moscow cut off gas to
Ukraine in a pricing dispute.

“This is an unfortunate occurrence for Gazprom,” said United Financial
Group, the Moscow investment bank, in a research note. “In the long term
this may affect Europe’s plans to buy quite as much gas from Russia as
previously thought and enÃ,­courage a more positive outcome to the

nuclear debate in . . . the UK and Germany.”

Janos Koka, Hungary’s economy minister, said he hoped the Budapest

meeting could agree on joint proposals aimed at reshaping the European
Union’s long-term energy strategy and making its eastern-most members
less vulnerable to sudden cuts in Russian gas deliveries.

Mr Koka, who has invited his counterparts from Croatia plus EU members
Poland, the Czech Republic, Slovakia, Austria and Slovenia, said he would
submit any joint proposals to Andris Piebalgs, the EU’s energy commissioner,
who has separately launched an investigation into natural gas companies’ low
levels of deliveries to the UK last November.

Ukraine’s parliament yesterday stepped up pressure on the government to
reconsider a deal resolving its gas stand-off with Russia. It demanded the
sacking of Olexy Ivchenko, the head of the state energy company Naftogaz,
which plans to sign the contracts raising Ukrainian import prices tomorrow.

The parliament also dem­anded the appointment of an energy minister to
replace Ivan Plachkov and called for an investigation into Naftogaz’s
dealings with Ros­UkrEnergo, the Swiss company partly owned by Gaz­prom

that will supply Ukraine’s gas under the deal.  -30-
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COMMENT & ANALYSIS: By Paolo Scaroni

Chief Executive of Eni, the Italian energy group
Financial Times, London, UK, Wednesday, January 18 2006

The tension between Russia and Ukraine over natural gas, which briefly
sliced into Europe’s supplies at the start of the year, provided stark
evidence of the Continent’s political interdependence and fragility when it
comes to energy.

The episode also showed how sharply power has shifted from energy
consumers to energy producers and suppliers in the past three years.

Russia and other emerging countries’ growing ability to assert their
national interests has created new uncertainty within international energy

Those supplying countries operate with the full backing of a strong central
state that can bend the rules in their favour and skew competition in the
free market. The crisis between Kiev and Moscow should not be seenas an
isolated situation: there will be others.

In the case of Italy, the Russia-Ukraine dispute was more threatening than
for many countries because Italy – where nuclear power is banned – has even
more dependence on gas than oil. For some years now Italy has chosen gas as
the main fuel for all consumption not linked to transport. Three homes out
of four use gas, many core industries use gas and more than 50 per cent of
our electricity is produced using gas.

European nations must identify their national energy interests and decide
how they are to assure secure supply. In the face of more assertive policies
by suppliers, Europe risks finding itself being relegated to a weak and
vulnerable condition.

European energy markets arederegulating and opening up to competition. The
priority of governments and regulators has been to create competitive
conditions by increasing the number of players in each market. In Italy, Eni
and Enel have relinquished market share to other producers and importers.

However, with the oil price today remaining steadily above $50 a barrel,
government-controlled oil and gas companies of producing countries now

have price on their side and are understandably seeking to maximize the
value of their energy throughout the supply chain. In gas, for example, state
companies from the big gas suppliers such as Russia and Algeria aim not
only to sell to their European clients at the border, but to enter end-user
markets directly and possibly reach the consumer’s home.

Consequently, in Europe, every new drive to reduce further the influence of
the former domestic monopolists or dominant operators will open up new
opportunities for those big suppliers that already rule the market up to
European borders. In short, if supply monopolies move in to consuming
markets as retailers they will wield considerable competitive power.

I therefore believe Europe needs to adapt to this new reality. To continue a
pure application of deregulation appears inadequate to guarantee the
security and independence of gas supply. This does not mean turning our
back on deregulation, but competition must be balanced against the priority
of ensuring domestic energy security.

The measures needed to achieve greater energy independence and diversity
of supply in the coming years all require a decisive political commitment.
There are at least four essential steps required to achieve this.

First, Europe will have to increase its diversity of supply by removing
bottlenecks in existing pipelines and building new ones.

Second, more liquefied natural gas (LNG) terminals must be built so that
liquid gas can reach Europe from countries further afield, such as Nigeria,
Qatar, Egypt and Trinidad. Only by increasing the pool of suppliers can
really competitive market conditions be created without compromising the
security of supply.

Third, national energy transport infrastructures will have to remain under
national control to guarantee ultimate security of supply to the customer.

Finally, we need to debate whether it is in consumers’ best interests for
regulators to dilute further the influence of big European operators.
Creating an array of gas distributors through further deregulation will do
little to protect consumers from higher prices when two or three large
foreign suppliers dominate imports.

The events at the start of 2006 should be seen as a wake-up call. European
political leaders who do not responsibly face up to the question of
energysecurity today will be failing to fulfil their obligations to the
Europeans of tomorrow.  -30-
[return to index] [The Action Ukraine Report (AUR) Monitoring Service]
          The bitter gas dispute between Russia and Ukraine reveals the
         stark difference in the character of the two states. The European
                      Union should take note, says Alexander Motyl.

Open Democracy Online, Free Thinking for the World
London, United Kingdom, Tuesday, January 17, 2006

2006 began dramatically for Ukraine. On 4 January, Kyiv (Kiev) and Moscow
signed a deal that ended their increasingly acrimonious gas dispute and
resumed Russian gas supplies to Ukraine and Europe.

Barely one week later, on 10 January, the Rada (Ukraine’s parliament) voted
to dismiss the government of prime minister Yuri Yekhanurov, ostensibly for
having agreed to unfavourable terms in the gas deal. In turn, President
Viktor Yushchenko called the vote unconstitutional and vowed to continue

with the current government until parliamentary elections on 26 March.
                                   THE GAS EXPLOSION
The row over Russian gas supplies to Ukraine had been brewing throughout
2005. In summer 2004, Russia had agreed to unusually low gas prices – $50
per thousand cubic meters – in order to tip the balance in favour of Viktor
Yanukovych, its candidate in Ukraine’s presidential elections. But Ukraine’s
voters preferred the democratic opposition’s Yushchenko, and subsequent
regime efforts to falsify the election results sparked the “orange
revolution” that brought Yushchenko and his then ally, Yulia Tymoshenko,
to power.

Although Yanukovych lost the election, the biggest loser was Russia’s
president, Vladimir Putin. Democracy was clearly making inroads in his
self-proclaimed sphere of influence, Ukraine appeared to have been “lost”,
and Russia was saddled with a ridiculously low gas price that it granted
only to vassals, such as Belarus.

Small wonder that Russia’s state-controlled gas monopoly, Gazprom, insisted
on renegotiating the price upwards. Small wonder as well that Ukraine’s new
orange government, recognising a good deal when it saw one, insisted on
retaining the terms of the 2004 contract.

By mid-December 2005, with no revised agreement in sight, Gazprom upped
the ante, telling the Ukrainians that, unless they accepted a fivefold price
increase, it would cease pumping gas to Ukraine as of 1 January. Yushchenko
refused, insisting that a gradual increase in the price, introduced over
several years, was the only equitable and economically non-damaging way to

Gazprom ignored his arguments and, as promised, reduced gas flows on new
year’s day. Resulting gas shortages in Europe immediately led to howls of
protest and a hasty retreat by Gazprom. Soon thereafter, Kyiv and Moscow
announced a deal that doubled the price of gas and raised Ukraine’s transit

At first greeted as a breakthrough that would stabilise gas prices and
transit fees between Ukraine and Russia for five years, the agreement was
soon revealed to be full of holes.

For starters, the deal made a shadowy Russian-controlled company,
RosUkrEnergo, the sole supplier of gas to Ukraine. Since there was no
rational economic reason for its inclusion in the deal, it was hard to
escape the conclusion that RosUkrEnergo’s only role was to enrich corrupt
Russian oligarchs. Worse, RosUkrEnergo’s monopoly status vis-à-vis
Ukraine appeared to make Ukraine hostage to a criminal undertaking.

Finally, what was initially touted as a five-year arrangement turned out to
be a six-month deal to provide Ukraine with gas priced at $95 per thousand
cubic metres. That not only portended a renewed Russian-Ukrainian gas
dispute in June 2006, but it also provided the Ukrainian government’s
domestic critics with ammunition. How could it have agreed to a six-month
price on gas, they argued, while fixing transit fees for five years?
Naturally enough, Ukraine’s government argued that the deal was the best it
could get.
                            THE GOVERNMENT’S DISMISSAL
The gas deal served as the immediate pretext for the Rada’s vote to dismiss
the Yekhanurov government. But more was obviously at issue here. With
parliamentary elections scheduled for 26 March, all political parties have
begun jockeying for advantage. And the gas quarrel makes all of them look
bad. Yushchenko can legitimately be criticised for agreeing to questionable

Tymoshenko can be faulted with having neglected to anticipate the crisis in
the months before September 2005, when she was sacked. And Yanukovych
can be accused of naively claiming that Ukraine’s interests are best served
by a strong alliance with a Russia that, as the dispute made amply clear,
views Ukraine with hostility. Dumping Yekhanurov was a convenient way for
Tymoshenko and Yanukovych to try to shift all the blame to Yushchenko
and divert attention from their own failings.

Complicating things even more, the Rada’s move to dismiss the government was
made possible by a constitutional framework that only went into effect on 1
January. Accordingly, Ukraine’s presidential system became a mixed
presidential-parliamentary one.

While the president previously had the sole right to appoint the prime
minister and cabinet, under the new terms the parliamentary majority would
appoint the prime minister and certain ministers, while the president would
appoint others. That dilution of presidential power, which had been agreed
to during the orange revolution, was the price Yushchenko had to pay for the
old regime’s acquiescence in its own demise.

The problem was that, while the new constitutional framework appeared to
endow the current Rada with the authority to dismiss a cabinet, it did not
yet authorise it – or the president – to appoint a new one. Some Ukrainian
analysts had warned that introducing the constitutional arrangement three
months before a parliament endowed with the constitutional right to appoint
a prime minister was to be elected could spell trouble. It would be unclear
just what the current Rada’s prerogatives were in this interim period, and
that lack of clarity could lead to tensions with the president, whose own
prerogatives were equally unclear.

Although the consensus among experts in Ukraine appears to be that the
current Rada overstepped its authority in voting to dismiss Yekhanurov – a
view that Yushchenko and his supporters heartily endorse – the fact is that
no one knows for sure. Worse, the only body that could make a final
determination, the constitutional court, is short of several members and
therefore cannot itself make a definitive ruling.

In all likelihood, the standoff between the Rada and the president will
continue until the March elections. At the same time, the current government
will probably continue to function, whether in its full capacity or in some
caretaker role. Major policy initiatives are almost certainly not going to
take place in this time, and that means that Ukraine’s accession to the
World Trade Organisation will probably be delayed. On the other hand,
the chances of bold policy initiatives taking place in a pre-electoral
environment were probably slim anyway.

As far as the condition of Ukraine’s democracy is concerned, the news is
better than it seems at first glance. While squabbling politicians may do
little to promote democratic reform, squabbling politicians are, in the
final analysis, what democracy is about. Democracy’s supporters may be
consoled by Ukraine’s close resemblance to two of its neighbours in
east-central Europe – Poland and Hungary – where the rough-and-tumble
of democratic politics always appears to get in the way of effective

More important, although the first three months of 2006 will be a
constitutionally confusing time, Ukraine’s political actors are all playing
by the democratic rules of the game.
                                THE MARCH ELECTIONS
At present, there are three main players and their electoral blocs –
Yushchenko’s Our Ukraine, the Yulia Tymoshenko Bloc, and Yanukovych’s
Regions of Ukraine party. Although Yanukovych is currently leading in the
opinion polls with about 30%, all three will probably win comparable
shares – plus or minus 25% – of seats in the elections. As a result, the
next government will almost certainly be formed by a coalition of any two
of these players.

Programmatically, Yushchenko and Tymoshenko remain closest, as they
share a more or less equal commitment to democracy, market economics,
and a pro-western foreign policy. Personal tensions and intemperate
criticisms provoked by the gas brawl may have precluded such an alignment,
but political interests generally trump personality in politics, so that
this outcome is still most likely. It is also the option with the best
chance of being stable.

That said, the two other variants are also conceivable. Yushchenko had
signed a truce with Yanukovych in September 2004, in order to get his
party’s support for Tymoshenko’s successor as prime minister, Yekhanurov.

Although Yanukovych’s party voted to dismiss the government on 10 January,
thereby leading Yushchenko to abrogate their earlier truce, a Yushchenko-
Yanukovych coalition is surely still possible. Equally possible is a
coalition between Tymoshenko and Yanukovych. The two joined forces
with the communists to vote down Yekhanurov’s government, and this action
may herald a willingness to cooperate in the aftermath of the election.

Regardless of who forms the government in March, it’s quite possible that it
will be short-lived, leading to new parliamentary elections soon thereafter.

If that happens, Ukraine could then embark on a period of shifting and
unstable coalition governments and frequent elections. That’s not good news,
but neither is it necessarily bad. Repeated elections and the possibility of
serving in a governing coalition could have the institutionally salutary
effect of compelling Yanukovych to commit, finally and practically, to the
democratic rules of the game.
                                 WHAT IT ALL MEANS
As Ukraine’s confusing domestic politics sort themselves out in the months
ahead, it will be worth remembering that Russia’s behaviour in the gas
dispute – and not domestic politics in Ukraine – will have the most
far-reaching consequences for Ukraine, Russia, and Europe.

Although Gazprom effectively underscored just how dependent Ukraine’s
economy is on Russian gas, that’s no news. Rather more significant is that
both Gazprom and the murky provisions of the 4 January deal made it clear
that gas prices will keep rising.

At first glance, that sounds like terrible news for Ukraine. And indeed,
continued price hikes will reduce GDP growth, raise unemployment, and
increase inflation in the short term. But the medium-term impact is all to
Ukraine’s – and possibly Yushchenko’s – good.

Ukraine wastes prodigious quantities of energy, and artificially low gas
prices are the major reason. Low prices also feed corruption. Not
surprisingly, the greatest opposition to higher gas prices comes from the
corrupt oligarchs in Ukraine’s Russian-speaking eastern rust belt. With
Russia and Gazprom insisting that prices go up, Yushchenko should be able
to plead force majeure, while Ukraine’s oligarchs will have to acquiesce –
and begin investing in more energy-efficient plants.

Russia’s negotiating behaviour has also dispelled illusions about its
feelings toward Ukraine. No friend or partner would threaten a neighbour
with a fivefold price increase in the dead of winter. Ironically, not only
did Russia thereby undercut its closest Ukrainian ally, Yanukovych, who was
embarrassingly silent for most of the clash of views, but it may also have
helped consolidate the orange version of Ukrainian national identity.

Until now, Ukraine’s population has been roughly divided into three

[1] the orange half supports democracy and the market, and leans toward
the west; these voters will feel vindicated by Russia’s behaviour
[2] an ethnic Russian quarter is opposed to democracy and the market, and
thinks that an independent democratic Ukraine is, and always has been, a
bad idea; these voters will also feel vindicated by Russia’s behaviour
[3] another quarter consists of Russian-speaking ethnic Ukrainians who
have generally sided, though not unconditionally, with the Russians in their
voting patterns; this third group will now split, with a significant portion
probably concluding that it’s time to resist Moscow’s bullying by joining
forces with the orange Ukrainians.

While there is a silver lining in the gas feud for Ukraine, there is none
for Russia and Russians. The dispute showed that Russian elites view their
country as a great power entitled to pursue regional hegemony by means of
the crudest forms of 19th-century Realpolitik. Russian defence minister
Sergei Ivanov minced no words in making that point amply clear in a recent
op-ed piece (“Russia must be strong”, Wall Street Journal, on 11 January

The gas controversy, seen in this light, was rather less about the price of
gas than about Russia’s aspirations to regional domination. And indeed,
Ukraine was not the only victim of Moscow’s bullying. Gazprom also shut
off gas supplies to Moldova and raised the price for Georgia.

Energy has clearly become a political weapon in the hands of a Russian
president who recently bemoaned the Soviet Union’s collapse – and not, say,
two world wars, Stalinism, or the holocaust – as the greatest tragedy of the
20th century.
                       TRADING DEMOCRACY FOR GAS
The news gets worse. Not only is Russia acting like a regional bully, but it
has also become an authoritarian state whose elites carefully cultivate
hyper-nationalist sentiments within the population. Putin has progressively
dismantled the creaky democratic institutions he inherited from Boris
Yeltsin, silenced the media, imposed severe limitations on non-governmental
organisations and civil society, and extended state control over significant
segments of the Russian economy.

The 4 January gas deal revealed that a consortium of Putin, Gazprom, and
RosUkrEnergo had successfully imposed its terms on Ukraine. In effect, the
deal showed that Russia is ruled by a dictator in cahoots with “big gas” and
the oligarchs, and that Russian democracy is dead. That most Russians
support Putin’s policies is, alas, only more cause for alarm.

The gas dispute has thus confronted Europe with some awkward realities.
Just as the orange revolution of late 2004 had demonstrated that Ukraine
possessed democratic, pro-western aspirations, the gas argument of early
2006 showed that Ukraine is a real country that is here to stay.

The gas dispute also demonstrated that Ukraine’s problems – and especially
its problems with Russia – are also Europe’s problems. Since Ukraine will
not go away, Europe has no choice but to involve itself more actively in the
resolution of Ukraine’s domestic and especially its foreign policy
challenges. As many European analysts have argued, the European Union
must finally recognise that it needs to develop a long-term policy toward
Ukraine that is consistent with European values and Ukrainian aspirations.

That need not mean extending an invitation to Ukraine to join the European
Union, but it does mean telling the Ukrainians – clearly and in no uncertain
terms – that, if and when they meet all the requirements for membership,
they will be welcome to apply. Such a signal imposes no costs whatsoever
on the EU, while telling the Ukrainian public that continued democratic
progress could, at some undefined point in the very distant future, lead to
integration into Europe.

No less important, the gas feud showed that Europe can no longer pretend
that Russia is a benign state or – as former German chancellor, Gerhard
Schroder, said of Putin at the height of the orange revolution – that the
Russian president is an “impeccable democrat”. Russia’s behaviour during
the dispute effectively demonstrated that Russian elites have no interest in
integrating into Europe, playing by European rules, and sharing European

No modern European country would, even if contractually justified, threaten
a neighbour with depriving it of a vital natural resource. Europeans will
now have to determine just how they can balance their own commitment to
human rights, the rule of law, and democracy with their dependence on
Russian gas and their desire to live amicably with Moscow.

European policy toward Ukraine – a country that the European Union had
preferred to ignore until the orange revolution made that impossible – will
be the test of Europe’s ability to reconcile these opposing priorities. It
should now be clear that Russia is authoritarian at home and hegemonic

It should be equally clear that Ukraine is democratic at home and
pro-western abroad. Critics of the United States invasion of Iraq questioned
the legitimacy of trading blood for oil. Observers of European policy may
wonder about the legitimacy of trading democracy for gas. -30-
Alexander Motyl is professor of political science and deputy director of
the Center for Global Change and Governance at Rutgers University,
New Jersey. Among his books are Dilemmas of Independence: Ukraine
after Totalitarianism (1993) and Imperial Ends: the decline, collapse, and
revival of empires (Columbia 2001). (

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8.                        RUSSIA AND THE WESTERN WORLD:
                 Distance between Russia & West seems to be increasing

COMMENT & ANALYSIS: By Marcin Kaczmarski, Analyst
Institute of International Relations, Warsaw University
Polish News Bulletin, Warsaw, Poland, Wednesday, Jan 18, 2006

The following is a summary of an article, featured in Rzeczpospolita, by
Marcin Kaczmarski, analyst at the Institute of International Relations of
the Warsaw University.

The distance between Russia and the West seems to be increasing, writes
Kaczmarski, as Russia’s enthusiastic rapprochement with the USA, which

could be observed during the early stage of the war against terrorism, is
slowly turning into rivalry.

Russia’s assumption of G8 presidency coincided with the decision by
state-controlled Gazprom gas holding to cut back gas supplies to
neighbouring Ukraine over a price dispute. This fact clearly shows the
ambiguous nature of the present relations between the former Eurasian
superpower and the West.

Over the last 20 years, Russia has been unable to develop a coherent,
long-term foreign policy towards the Western world. The changes initiated by
Mikhail Gorbachev, the last president of the USSR, sought to improve these

However, in the following years they ranged from enthusiastic rapprochement,
which could be observed after the collapse of the Soviet Union, as well as
after 9/11, to crises and threats of a new Cold War, which were triggered by
the enlargement of NATO or the Kosovo conflict.

Nonetheless, it should be stressed that neither of the aforementioned
situations evolved into an open confrontation. After assuming presidency,
both Gorbachev’s successors,  Vladimir Putin and Boris Yeltsin, have on
numerous occasions declared attachment to Western values.

At the same time, these three rulers of Kremlin have had to deal with
Russia’s geopolitical decline. During most of the Cold War period, the West
was on the strategic defensive.

This position was a result of the containment policy, which focused on
repelling communist aggression at any place in the world. Until the
mid-1980s, the Western world concentrated on anticipating and reacting to
USSR’s moves, however, after that period the roles were reversed.

While Russia may not have officially introduced its own containment
doctrine, its post-Cold War foreign policy has had a distinctly reactive
character, as it sought first and foremost to secure its international
position, or, at best, to regain influence in areas controlled in the past.

On the one hand, in the last two decades the Russian Federation tried to act
as an independent and neutral organism in order to preserve world order. On
the other hand, however, it wanted to become a “Western power” and join
institutions such as the WTO or G8.

This hybrid thinking was accepted by its Western partners. As a result, the
West could not develop a uniform approach to Russia and decide whether the
country should be treated as a superpower or as a part of the “postmodern”
European system.

At present, the distance between Russia and the West seems to be increasing,
as its enthusiastic rapprochement with the USA, which could be observed
during the early stage of the war against terrorism, is slowly turning into
rivalry, especially in the post-Soviet area.

The adoption of several “road map” resolutions has not injected any specific
content into the country’s relations with the European Union. The
Partnership and Co-operation Agreement (PCA) between Russia and the EU
expires in 2007 and while it can be automatically extended, such situation
would in fact lower the level of their mutual relations.

There are several reasons behind the mutual alienation of Russia and the
Western world. As the Russian Federation is slowly sliding to autocracy, it
is becoming increasingly difficult to select common values which could serve
as a basis for establishing co-operation.

9/11 has re-focused the American foreign policy, as its makers have since
become primarily concerned with the so-called Greater Middle East.

After withdrawing from the Anti-Ballistic Missile Treaty (ABM Treaty), which
prevented it from building the anti-missile shield, and concluding the
Strategic Offensive Reduction Treaty (SORT), the USA has lost its interest
in maintaining a strategic alliance with Russia, especially when it turned
out that its participation in the war against terrorism is very limited.

Meanwhile, the EU has been preoccupied with internal affairs, such as its
further enlargement and ending the crisis over the Constitutional Treaty.
Therefore, for both the USA and the EU, Russia is no longer a central figure
in their foreign policies.

On the other hand, Western countries have virtually no possibility of
exerting pressure on Kremlin. Since the assumption of presidency by Vladimir
Putin, Russia has not only severed its ties with international financial
institutions, such as the International Monetary Fund (IMF) or the World
Bank, but also has been able to repay loans early due to high oil prices.

It seemed that the issues related to raw materials could be of special
importance as far as the relations between Russia and the West are
concerned, however, their influence on the current policies of the parties
in question proved to be limited.

Co-operation in energy trade, which together from the war against terrorism
was hailed as the key foundation for the Russian-American partnership,
turned out to be a failure.

Russia is not considering entering the US market and in the next fifteen
years, despite large supplies to European states, it intends to increase oil
and gas exports to Asian countries, such as China and Japan. If this
scenario becomes reality, then Kremlin will indeed be able to use its energy
policy as a means of exerting political pressure.

At present, the dependence of the Western world on Russia is ostensible, as
Gazprom is currently unable to sell its produce on other markets. The
situation could change, however, with the construction of pipelines linking
the country with the Far East.

Experts point out that the Russia lacks a coherent strategy which would
shape its relations with the West. In the cultural sense, Putin appears to
be more of a Westerner than of a Slavophile. We was also eager to join the
USA in its conflict with the Muslim world. On the other hand, it cannot be
said that he supported the cause of Russia’s integration with the Western

Moreover, Putin accuses Western countries of trying to create a sanitary
cordon around his country by interfering with the interests of the members
of the Commonwealth of Independent States (CIS) and by setting-up

American military bases in adjacent regions.

This dichotomy surfaces in Russia’s relations with the North Atlantic Treaty
Organisation (NATO). While in 2006 Russian marine units will take part in
NATO’s “Active Endeavour” operation in the Mediterranean Sea, Russian
airplanes regularly violate the airspace of the Baltic countries.

Putin abandoned his pragmatic approach to relations with the West after the
wave of “colour” revolutions. In Russia, these revolutions have brought
about a revival of bunker mentality, as well as of the idea of “external
enemy”. Democratic changes in former Soviet states were perceived as
harmful, which led to Russia’s rapprochement with China and autocratic
regimes in Asia and Europe.

At this point, Russia appears to be both unable and unwilling to develop a
strategy governing its relations with the Western world.

In the opinion of Lilia Shevtsova, a senior analyst with The Moscow Carnegie
Centre, Putin’s second term is beginning to increasingly resemble that of
Yeltsin, which was characterised by lack of strategy, sudden decisions and
strengthening of the position of the president’s most influential

Meanwhile, Russia still remains a problem for the West due to its power. The
defeat of Germany and Japan in World War II was unquestionable, which

made it possible for them to become a part of the democratic Western world.

Russia, however, is still capable of questioning the American hegemony by
supporting the so-called rogue states of Iran and Syria, regaining influence
in Uzbekistan and similar actions.

To make matters worse, the aforementioned re-focusing USA’s foreign policy
makes it even more difficult for the EU to exert pressure on Kremlin,
especially taking into account that the entry of former Soviet states into
the Union was preceded by their accession into NATO.

So far, Russia has been successful in preventing the European states from
developing a common, coherent foreign policy towards the Russian

Federation. Moreover, its current gas conflict with Ukraine can further
deteriorate Kremlin’s relations with the West.

If Russia continues to use its energy policy as a means of exerting
political pressure, the Western world may begin to treat it in the same way
it treats Saudi Arabia, as an economic partner without political

In this way, the fate of the “common European home”, a concept advanced

20 years ago by Mikhail Gorbachev and supported by Boris Yeltsin, will be
sealed.  -30-
[return to index] [The Action Ukraine Report (AUR) Monitoring Service]
9.                       UKRAINE RETURNS TO THE ABYSS

: Weekly Experts’ Panel
Introduced by Peter Lavelle in Moscow
Moscow, Russia, Friday, January 13, 2006

CONTRIBUTORS: Andrei Tsygankov, Peter Rutland,
Donald Jensen, Sergei Roy, Edward Lozansky and Ira Straus

PETER LAVELLE: Ukraine is again experiencing political upheaval, with the
dismissal of the government of Prime Minister Yuriy Yekhanurov earlier this
week. President Viktor Yushchenko’s political opponents, including former
prime minister and presidential contender Viktor Yanukovych and “orangist”
Yulia Tymoshenko, joined forces to overwhelming reject the recent natural
gas deal Ukraine made with Russia’s Gazprom.

The gas agreement that ended (for now) the bitter bilateral dispute is
widely seen as opaque, but a least an acceptable compromise for both the
Russian and Ukrainian governments.

What is interesting is Tymoshenko’s alliance with Yanukovych’s Party of
Regions. Recall that the Bloc Yulia Tymoshenko (BYT) was initially against
the appointment of Yekhanurov, but was careful not to connect itself with
Regions when it blocked his nomination in the first vote ­although at the
time it appeared that Yushchenko’s power base had reached out to
Yanukovych. BYT appears to have changed course ahead of the elections:
from running parallel with Our Ukraine to a head-on collision.

Isn’t Ukraine’s current political flare-up really about the on-going
parliamentary campaign, with the election slated for March 26, and
dissatisfaction with the gas deal that recasts the country’s energy sector
at the expense of some “oligarchs?” Additionally, many of Ukraine’s
largest industrial enterprises in the east supported dismissing the
government, angered by the prospect of high gas prices.

Lastly, what, if anything, should Russia do as events in Ukraine unfold?

[1] ANDREI TSYGANKOV, Professor of International Relations,
San Francisco State University:
The obstruction of Yekhanurov’s government may not be very significant,
in and of itself, but it is indicative of the executive branch’s lack of
legitimacy. Ukraine is approaching elections of critical importance, and
every political force is trying to use the Russia-Ukraine gas deal to score
points at Yushchenko’s expense. Tymoshenko exploits her typical
anti-corruption theme, and the recently pro-Russian Yanukovych now argues
that Russia is “robbing” Ukraine. Given the recent revolutionary legacy,
the situation of a weakening center, on the one hand, and a growing power
of populist rhetoric, on the other, may mean further destabilization in the

Yushchenko is hardly in a position to change things principally. The deal
with Russia has angered powerful industrialists, and it is sure to further
hurt the president politically. His popularity with the general public
continues to decline. In addition, some of his recent supporters in the
United States have indicated their frustration with the gas deal and are
beginning to put pressure on Yushchenko.

As a result, he is increasingly looking like a lame duck. He may still try
to consolidate his position by making some kind of a theatrical move of
symbolic significance, for instance, dismissing some key figures around
him or introducing direct presidential rule. However, he is playing with a
weak hand and is not a decisive leader in the first place.

The message for Russia is probably not to get too close to any of Ukraine’s
political players. Now that all of them are eager to win Russia’s support,
it might be tempting to build some alliances and try to extract some
concessions or promises. Although, during his meeting with Putin in Astana,
Yushchenko indicated his willingness to work with Russia, this may be
merely a new tactic in future gas negotiations, and not a change of policy.

The situation is too uncertain, and neither candidate in Ukraine looks
particularly promising at the moment. Even more importantly, in the absence
of a strong center of gravity in Ukrainian politics, it is best to maintain
a dialogue with both the present regime and the opposition.

More than anything else, Russia needs a stable and predictable Ukraine,
and not a Ukraine of warring clans or quasi-separatist states. Russia has
many strong cards to play energy and soft power being the most important
 and it should play them carefully. It should be able to increase its
economic and cultural presence in Ukraine, but only if Ukraine’s political
stability is preserved, not destroyed.

[2] PETER RUTLAND, Professor of Government at Wesleyan
University [Middletown, Connecticut]:
For all the interested parties, the most controversial aspect of the affair
is Russia’s decision to use the intermediary Rosukrenergo as part of the
Jan. 4 deal to break the deadlock.

There seem to be three possible explanations for this decision.
1) Russian policy was again hijacked by corrupt elements seeking to
make personal profit for themselves and their cronies.

2) Russia was pursuing a strategy of deliberate ambiguity and strategic
opacity ­ by hiding the dirty details of the deal in this shadowy company,
they would protect Gazprom from charges of politicization and dodgy
accounting practices ­ important as it is gearing up to increase its stock
sales to foreigners.

3) Russia is playing a two-level game. At one level, it is bargaining with
Ukraine for the best deal for Russia/Gazprom for its gas transiting to
Europe. But, at the same time, Russia is playing the Ukraine domestic
politics game ­ trying to influence the outcome of the March parliamentary

It’s hard to figure out exactly how Moscow’s actions will help the
pro-Russian Yanukovych camp. By showing the vulnerability of
Ukraine to the beneficence of their elder brother? By channeling profits
from the shady Rosukrenergo into the pockets of pro-Yanukovych

Given the disastrous outcome of Russian interventions in the fall 2004
election, (3) does not seem a wise policy. Doing nothing would probably
be the best strategy for the Kremlin. Explanation (2) sounds the most
rational. But even that doesn’t really make sense, since the reaction of
outsiders to the role of Rosukrenergo has been uniformly negative ­ more
negative than it would have been to a special price deal channeled through
Gazprom. So that pushes us back towards explanation no. (1).

[3] DONALD JENSEN, Director of Communications, Radio Free
Europe/Radio Liberty [RFE/RL] [Washington, D.C.]:
The crisis in Ukraine is the result of a “perfect storm” ­ a confluence of
factors, including the country’s geopolitical position, outside meddling,
its incomplete transition away from the Soviet past, and political
expediency by individual Ukrainian leaders. It has shaken Ukraine’s
fledgling democracy to its core and threatens to negate the democratic
gains of the so-called Orange Revolution.

Ukraine’s geopolitical position requires that it maintain good relations
with both Russia and Europe if it is to consolidate the democratic gains it
has made since 2004 elections. While President Yushchenko has treaded
cautiously while seeking those objectives, they are, nevertheless, at the
moment contradictory. The Kremlin believes Russia has a proprietary
interest in the former Soviet states and is suspicious of Kiev’s flirtation
with NATO and the European Union.

In a Wall Street Journal op-ed on Jan. 11, Defense Minister Ivanov stated
that the “internal situation” in several CIS members was of “top concern.”
Earlier, Moscow actively sought to prevent the election of Yushchenko,
whom it viewed as too pro-Western.

Moreover, as a transit zone for energy shipments from Central Asia and
Russia to the West, Ukraine has inevitably been dragged into international
energy politics as the Kremlin has more assertively used oil and gas
exports as an instrument of foreign policy.

The crisis has taken place at a delicate moment in Ukraine’s transition.
Despite the 2004 elections, business oligarchs ­ some with ties to factions
of the Russian elite ­ remain in control of key segments of Ukraine’s
economy. As the brouhaha over the gas deal has shown, they retain
considerable political clout. This situation has not only perpetuated
corruption, it has undermined the viability of Ukraine’s political
institutions, which had gained new vigor as a result of the momentum
generated by Yushchenko’s victory.

Political reforms intended to move Ukraine toward a parliamentary system
have instead contributed to the instability. The prospect of an empowered
post of prime minister has politically weakened President Yushchenko and
made currying support from the Rada critical to the ambitions of rivals
Tymoshenko and Yanukovych.

As in the systemic Soviet crisis in 1988-91, the victorious Ukraine reform
coalition has broken up as a result of squabbles over money and power,
as well as the country’s strategic course. Also as in the Soviet Union of
the early 1990s, opposition is localized in competing branches of
government, whose comity is essential for effective government.

Without agreement on either the role of key institutions or proper
constitutional procedures, the crisis is likely to continue until after the
March elections. The elections, in turn, may vault Yanukovych to the post
of prime minister and, with the Kremlin’s backing, result in the reversal
of Ukraine’s recent democratic gains.

After a string of foreign policy setbacks in the past 18 months, strategic
prudence would suggest that Moscow stay out of an unpredictable muddle. But
it is unlikely to do so with so much money at stake and its man Yanukovych
with a chance ­ unexpectedly ­ to return to real power. Even if Yushchenko
remains on top, in any case, Putin is covering all the bases. He showed in
his meeting with the Ukrainian president this week that he will even deal
with his former adversary in order to preserve a deal he likes.

[4] SERGEI ROY, Editor of [Moscow]:
On Jan. 10, the Ukrainian Rada (that serves as the parliament there)
dismissed the Yekhanurov government, which managed to serve only four
months after the dismissal of the previous, Tymoshenko cabinet. President
Yushchenko called the dismissal “unconstitutional” (among other angry
words) and threatened to appeal to the Constitutional Court ­ having
forgotten, apparently, that only five of the 19 members of that Court have
been elected so far.

Mr. Yekhanurov first accepted the dismissal but, having taken a look at
the new constitution, in effect since Jan. 1, announced that only the new
Rada, to be elected in March, would have the right to fire and hire the
government. Needless to say, the Rada disagrees and is planning certain
moves to enforce its decision.

The whole maneuver is intended to overturn the agreement on gas prices
Russia and Ukraine concluded when the Swiss-registered RosUkrEnergo
company miraculously appeared on the scene and apparently pleased
everybody ­ except, as we now see, the losers from the deal. In all, a
bloody mess with a mighty smell of gas and corruption.

Why corruption? According to the deal involving RosUkrEnergo, Ukraine
will lose 50 percent of its internal sales of gas, the right to re-export 5
billion cubic meters of gas to Europe and, most interestingly, the money
flows that will now pass through RUE ($3.5 billion in the first six months
of 2006 alone), not Ukraine’s Naftogaz.

Little wonder that Yulia Tymoshenko, along with other Orange revolutionaries
who thought they would, after their glorious upheaval a year ago, have it
all to themselves, is yelling “National betrayal!”

Having risen from zero, no, not to hero, but to even greater splendor ­the
rank of Gas Princess ­ through sweetheart barter deals reeking of kickbacks
on both sides of the border, and through barefaced theft (“unsanctioned
siphoning off” of other people’s gas is the diplomatic expression), Yulia
and her cohort will certainly be prepared to fight to the knife.

And, you know what? She ­and they ­ may win! The touching unity Putin and
Yushchenko displayed at the Astana ceremonies the other day is easy to
understand: After all, a compromise is a compromise, and Yushchenko is
certainly a pleasant change from the rank adventuress who will smile at you
ravishingly while filching your favorite handkerchief from your pocket.

Sure, both Yulia and Viktor come from a political culture that was long
presided over by the current inmate of a U.S. prison, ex-Premier Lazarenko,
and ex-President Kuchma with those miles of forensically intriguing tapes
trailing behind him. But there are nuances, apparently, and one can at
least “do business” with Yushchenko, to steal a phrase from Margaret
Thatcher. But for how long?

Yushchenko, leader of a revolution and once popular president (at least
with half of the population), promised too much and delivered disastrously

In fact, he mostly delivered verbiage about freedom and democracy,
unions with Georgia, Moldavia and Poland promising to bring those gifts of
freedom and democracy to Belarus and elsewhere, including Russia ­ and
all the while the Ukrainian economy kept tumbling, oligarchic wars raged,
recent political opponents were ruthlessly persecuted, Orangist thieves
were falling out among themselves, and Russia-bashing (including the
suppression of the Russian language) became a symbol of political faith.

This in a land in which the population is 100 percent Russian-speaking,
half the people are ethnic Russians, and half the territory has never been
part of Ukraine proper, just gifts to Ukraine from Stalin’s and
Khrushchev’s cartographers.

So Yushchenko is practically certain to lose in March ­but will the facts
of the previous paragraph go away? They won’t ­ Ukraine is an ethnically
divided country, which makes political stability a far-off dream. And,
whatever billions Tymoshenko can yet steal from the pipelines, this will
not save Ukrainian economy: It will go bust if the price of gas rises by as
little as $10, $15 or $20 per 1,0000 cubic meters. If the invisible hand of
the market has any strength left in it, that price will have to rise from
the present $95 to $230 and more.

Apparently, still-premier Yukhanurov can do the math in his head. Hence
his advice to the managers of iron-and-steel and other gas-consuming
plants:”put out the blast furnaces and change to other methods of work.”
He noted that, at most, they had three years to do that.

Mr. Yuhanurov was extravagantly optimistic, I would say.

[5] EDWARD LOZANSKY, President, American University
in Moscow:
It looks like the gas circus continues, and will do so for many weeks to
come. At the beginning of the New Year, we saw an avalanche of pretty
strongly worded accusations and close to hysterical condemnations of
Russian imperialism. Just look at some of the mainstream western media

                                PUTIN’S MAFIA POLITICS
                       PUTIN AND THE NEW COLD WAR
                         AND A TRIUMPH FOR UKRAINE
                       RUSSIA’S THUGGERY BACKFIRES
                              THE MAN WITH THE RAZOR

This is only a small sample fraction of hundreds of comments throughout
the globe defending the courageous Orange leaders from the devilish
Kremlin-KGB-Mafia troika that was trying to freeze brave Ukrainians for
their desire to join the West.

Now, let us see what the leaders of the Orange revolution are saying these
days. Yushchenko said he had a positive view of his country’s close
relationship with Russia over the last two months, and indicated he was
optimistic about the future of bilateral relations: “We have emerged with
principles that are comprehensible, transparent and clear. Ukraine will not
violate a single letter of our agreements with Russia.”

And what about those who were blaming former German Chancellor Gerhard
Schroeder who, in the words of a Wall Street Journal editorial has done “a
colossal disservice to Europe and his own country by pushing for the
ill-conceived new pipeline that will go under the Baltic Sea and bypass
Ukraine and the Baltic countries.” Some self-proclaimed experts even
compared this project to the Molotov­Ribbentrop Pact.

However, Mr. Anatoly Kinakh, Secretary of the National Defense and
Security Council, and one of Mr. Yushchenko’s closest associates, doused
Russia-bashers with a cold shower by stating that Ukraine is ready to
participate actively in the Baltic Sea gas pipeline construction.

Does this mean that we should pretty soon expect some kind of repentance
from the most arrogant commentators? I doubt it. Most likely they will now
express strong disillusionment with the Orange revolution leaders, starting
with Yushchenko.

And they sure did. As I was finishing writing this piece, the first, or one
of the first easily predicted articles has arrived via the Independent
Online from London. In it, Andrew Osborn expresses his great
disappointment with Yushchenko and, for that matter, with [Georgian
President Mikheil] Saakashvili as well.

Both Presidents traveled to Kazakhstan and, apparently, softened their
outspoken resistance to the dark Kremlin forces, which did not go down
too well with Osborn. This is what he had to say: “The moment seemed
all the more demeaning for the two leaders because Mr. Putin, a symbol
of the Russian brand of imperialism they have struggled to throw off,
was in attendance and it was painfully clear that they needed him more
than he needed them.”

What a shame, but please forgive me, isn’t it true?

Watch for more comments of this kind. One shouldn’t be surprised at all if
pretty soon the “commentariat” starts looking for new CIS revolutionaries
with more guts to stand up to the Kremlin. I wonder if we should care.

My greatest regret, though, is that some Washington officials allowed
themselves to be manipulated and took part in this gas extravaganza. By
doing so, they got their reputations badly dented ­ but will they finally
learn any lessons from the whole affair?

[6] IRA STRAUS, U.S. Coordinator of the Committee on Eastern
Europe and Russia in NATO [Washington, D.C.]:
The government crisis in Ukraine is a tragedy for Russia, even if many in
Moscow are venting their resentment of Orange Ukraine and viewing it with

After Tymoshenko’s resignation, a moderate government had emerged in Kiev
that Russia could live with and work with, yet was still legitimate and
democratic. Russia ought to have sought to facilitate the consolidation of
the Yushchenko-Yekhanurov government, by working with it and encouraging
its local clients, grouped around Yanukovych and the Party of Regions, to
do likewise. In the optimal outcome, the government would have stabilized,
relations with Russia would have become closer without the old resentments,
and Ukraine would have become a bridge between Russia and the West.

Instead, Moscow provoked a crisis over gas, breaking its old contract by
announcing a sudden five-fold price increase, and cutting supplies abruptly
when a new dispensation was not quickly agreed. This forced a compromise
accord that smells both of haste and of corruption.

The accord, in turn, provoked political dissatisfaction in Ukraine, where
democracy is taken seriously enough that something as important as this
cannot pass without parliamentary questioning. The Party of Regions joined
with Tymoshenko’s party and others in seizing upon the doubts in order
to pass a vote of no confidence in the government, raising the matter to
the level of a governmental crisis.

Russia may well hope that this will leave it with a weak and dependent
Ukraine: one in which the democratically-inclined forces are dispersed
among several weak and mutually opposing parties, the Eastern Ukrainian
clans are grouped strongly around Yanukovych to form a powerful pro-
Russian weight, and the entire political system feels the gravitational pull
of Moscow as arbiter and kingmaker.

If this is its dream, however, it may find that it turns into a nightmare.
It would mean a perpetually unstable Ukraine, which in itself would carry
no small danger to Russia’s future. And any pro-Russian policies that would
result would have a character of begrudging necessity, carrying with them a
heavy load of resentment. Russia would not get the benefits of empire, but
it would get the full burden of resentment for what would be viewed as
imperialist domination.

At this late date, while much has been lost, there may still be space for
Moscow to work constructively with the Yushchenko-Yekhanurov
government and strengthen its hand in honorable, unobtrusive ways.

That government still has two months to go before the parliamentary
elections. Those elections and the post-election coalition building will
determine the subsequent distribution of opportunities. A strong showing
by Yushchenko’s party would enable a coalition to be built around him
with some degree of stability.

The voice of wisdom in Moscow would be to encourage this. The voice of
temptation in Moscow is to undermine him and create more opportunities for
Tymoshenko and Yanukovych to yap at his heels. Thus far, the voice of
temptation has predominated. There is a high price to be paid for yielding
to it.  -30-
Peter Lavelle,,
[return to index] [The Action Ukraine Report (AUR) Monitoring Service]

Reuters, Kiev, Ukraine, Thursday, January 19, 2006

KIEV – Ukraine’s parliament on Thursday demanded the government

negotiate a new accord with Russia on gas supplies to replace an agreement
providing for steep price increases and fired top officials linked to that deal.

A total of 246 members backed a resolution just over a week after the
450-seat chamber dismissed the entire government over the Jan. 4 agreement
in circumstances denounced as illegal by West-leaning President Viktor

The latest resolution, adopted in the heat of campaigning for a March
parliamentary poll, said all deals on supplying gas should be negotiated
solely by the governments of Ukraine, Russia and other ex-Soviet states
exporting gas.

That amounted to a government order to cancel the earlier deal, concluded by
Russian gas giant Gazprom and its Ukrainian counterpart, Naftogaz Ukrainy,
days after Russia briefly cut off gas supplies to its southern neighbor.

The latest resolution also dismissed Justice Minister Serhiy Golovaty, Fuel
and Energy Minister Ivan Plachkov and Naftogaz head Oleksiy Ivchenko.

The resolution’s final version, submitted just before the vote, softened an
earlier text which called for immediate government denunciation of the Jan.
4 deal. It also asked prosecutors to determine whether that accord was

It was not immediately clear what legal consequences the new parliamentary
vote would have. Government officials were not immediately available for
comment. Yushchenko has previously pledged to respect “every letter” of

the gas deal with Russia.

Yushchenko has insisted that Prime Minister Yuriy Yekhanurov stay on as
prime minister pending the March 26 election, but ministers and senior
parliamentarians remain deadlocked in negotiations to break the
constitutional deadlock.  -30-
[return to index] [The Action Ukraine Report (AUR) Monitoring Service]

                         WITH PRESIDENT YUSHCHENKO

Natasha Lisova, Associated Press (AP), Kiev, Ukraine, Thu, Jan 19, 2006

KIEV – Parliamentary faction leaders in Ukraine failed to break a deadlock
with President Viktor Yushchenko over a bid to sack his pro-Western
government Thursday, and the president turned to the Constitutional Court
for help.

The political crisis that has severely weakened Yushchenko and his
supporters ahead of March parliamentary elections began last week when the
parliament, angered over a deal with Russia that nearly doubles the cost of
natural gas for Ukraine, voted to fire the Cabinet.

The parliamentary vote allowed the Cabinet to continue working until the
March 26 vote, but Yushchenko refused to recognize it because it would
weaken his government’s authority and he called Thursday for the
Constitutional Court to rule on the issue.

Lawmakers responded by passing a resolution to sack two ministers – the

head of the Fuel and Energy Ministry and the Justice Ministry – and express
no-confidence in the head of the state-owned gas company.

Fuel and Energy Minister Ivan Plachkov and Naftogaz head Oleksiy Ivchenko
had spearheaded Ukraine’s difficult negotiations with Russia; Justice
Minister Serhiy Holovaty led the charge, condemning parliament’s earlier
vote to the sack the government.

The impasse comes at a politically delicate time for Ukraine as it prepares
for parliamentary elections that will determine whether this former Soviet
nation pursues its bid under Yushchenko to shake off Russian influence and
integrate with Western Europe.

Discussions have proven difficult because of constitutional reforms that
gave parliament power to sack the government, but which Yushchenko’s
supporters claim contain ambiguities.

Yushchenko’s spokeswoman, Irina Gerashchenko, could not be reached for

The president hopes the elections will give him enough support in parliament
to help push his efforts at reform and goal of joining NATO and the European
Union, but the parliamentary rebellion by the opposition-dominated
legislature has left him looking weakened.

His bid to rely on the Constitutional Court looks questionable because
lawmakers have refused to vote on judicial nominees, leaving the court
unable to fulfill its functions.

Many parliamentary factions are maintaining a hard line, demanding that some
members of the Cabinet leave office, and that opposition representatives
take their place.

Yushchenko won office in December 2004 after masses of supporters took to
the streets and the Supreme Court annulled a fraud-marred vote in which his
Russian-backed rival had been declared the victor.

But his popularity has since suffered because of his failure to root out
long-entrenched corruption and bring economic improvements, and because

of an acrimonious split in his coalition of one-time opposition leaders.
[return to index] [The Action Ukraine Report (AUR) Monitoring Service]
    If you are receiving more than one copy of the AUR please contact us.

Ukrainian News Agency, Kyiv, Ukraine, Thu, January 19, 2006

KYIV – Socialist Party leader Oleksandr Moroz has suggested President
Viktor Yuschenko should admit Ukraine’s transition to a parliamentary-
presidential form of government. Ukrainian News learned this from the
SPU press service.

“Everything that happens today around the government resignation testifies
to the fact that representatives of the executive branch and, to my deepest
regret, the president cannot accept a different model of power in Ukraine,
the parliamentary-presidential form of government,” Moroz said. In his
opinion, Yuschenko must publicly admit the enactment of the political

“The President should make a speech on television and say: I accept the

new version of the Constitution and, as the guarantor of the Constitution,
I address all: Be guided by this document,” the SPU leader suggested.
Moroz stressed that the decision on dismissal of the Cabinet of Ministers
was irrational.

As Ukrainian News earlier reported, Ukraine changed to a parliamentary-

presidential system of government on January 1, 2006, when the relevant
constitutional amendments that the parliament adopted on December
8, 2004, came in force.
The Verkhovna Rada fired the government on January 10. Yuschenko
said its decision resulted from ill-considered constitutional changes. -30-
[return to index] [The Action Ukraine Report (AUR) Monitoring Service]
             Send in a letter-to-the-editor today. Let us hear from you.

Ukrainian News Agency, Kyiv, Ukraine, Thursday, January 19, 2006

KYIV – The Socialist Party’s leader Oleksandr Moroz has attributed the
refusal of the Verkhovna Rada to unblock the operations of the
Constitutional Court to parliamentary deputies’ lack of trust in the
Constitutional Court. The press service of the Socialist Party disclosed
this to Ukrainian News.

“Why has such a situation arisen around the Constitutional Court? Because
there is no trust in the Constitutional Court because it has compromised
itself through unconstitutional decisions, particularly regarding the third
presidential term (the court’s 2003 ruling that former president Leonid
Kuchma could seek a third term in office), and not only that,” Moroz said.

Moreover, according to Moroz, some parliamentary deputies doubt whether

the court has principles and fear that it will be used to abolish Ukraine’s
transition to the parliamentary-presidential form of government.

“Therefore, everyone understands that if judges of the Constitutional Court
are sworn in, they will come under huge pressure from those who want to
use them as an instrument for disavowing political reform,” Moroz said.

As Ukrainian News earlier reported, the Congress of Judges On November 3
appointed Vasyl Bryntsev, Viacheslav Dzhun, Anatolii Didkivskyi, Ivan
Dombrovskyi, and Yaroslav Machuzhak as Constitutional Court judges.

On November 14, President Viktor Yuschenko appointed Dmytro Lilak,

Volodymyr Kampo, and Viktor Shyshkin as Constitutional Court judges.
However, the parliament has not yet appointed its quota of Constitutional
Court judges.

The parliament refused in December 2005 to appoint its quota of
Constitutional Court judges. As a result, only 14 of the Constitutional
Court’s 18 judges have been appointed. According to Ukrainian legislation,
Constitutional Court judges are to be sworn in within one month of their
appointment.  -30-
[return to index] [The Action Ukraine Report (AUR) Monitoring Service]
         The Visegrad Four: Hungary, Czech Republic, Poland, Slovakia

Associated Press (AP), Budapest, Hungary, Thursday, January 19, 2006

BUDAPEST – Hungary and its Central European allies want to strongly

support Ukraine’s presence in future NATO operations, the defense minister
said Thursday.

Helping Ukraine join NATO and other alliances was seen as one of the most
urgent issues at a Budapest meeting of the Hungarian, Czech, Polish and
Slovak defense ministers addressed during talks in Budapest.

The countries – known as the Visegrad Four – plan to form a committee of
experts to foster Ukraine’s military reforms. “It is very important for
us…to help Ukraine along the path of integration and have them also become
a member state of NATO,” Hungarian Defense Minister Ferenc Juhasz said.

In the future, the Visegrad Four also plan to jointly finance strategic air
transport in their own military missions. Hungary took over the rotating
one-year presidency of the Visegrad Four on July 1. -30-

[return to index] [The Action Ukraine Report (AUR) Monitoring Service]
15.                         A PROFILE OF ROSUKRENERGO

ANALYSIS: By Roman Kupchinsky
Organized Crime and Terrorism Analyst for RFE/RL
Radio Free Europe/Radio Liberty (RFE/RL), D-Wire
Prague, Czech Republic, Wednesday, January 18, 2006

PRAGUE – At least part of the reason behind the 10 January decision by
Ukrainian lawmakers to dismiss the government was the controversial gas
deal struck a week before (4 January) between Moscow and Kyiv.

The agreement ended an impasse that threatened Russian gas supplies to
wintertime Ukraine. It also gave Ukraine a far lower price than the original
market-level demand of $230 per 1,000 cubic meters.

But the deal proved controversial in Ukraine — not least because of the
emergence of a little-known Swiss-based company, RosUkrEnergo, to

serve as the intermediary.

Under the terms of the deal, RosUkrEnergo will buy supplies from Russia’s
state-controlled Gazprom at full market price, then sell Ukraine a combined
blend of Russian and Central Asian gas at the far lower price of $95 per
1,000 cubic meters.

The 250 lawmakers who voted to dismiss Prime Minister Yuriy Yekhanurov
and his cabinet charged the original terms of the gas deal will last only
six months. They say the agreement has no inherent long-term benefit for
Ukraine — only for the officials who created RUE.

Ukrainian officials involved in the deal have tried to distance themselves
from RUE, saying Gazprom insisted the company serve as the middleman
and that Ukraine had no choice but to accept.

Yekhanurov has also said RosUkrEnergo was established by Gazprom, and
that no Ukrainian business interests were represented by RUE.
                                       RUE’S BEGINNINGS
In July 2004, the Russian newspaper “Vremya novostei” reported the approval
of “strategic agreements” between Gazprom and Ukraine’s national oil and gas
company Naftohaz.

Among the agreements — signed by Russian President Vladimir Putin and
then-Ukrainian President Leonid Kuchma, meeting in the Crimean resort town
of Yalta — was a deal to form a new, Swiss-based company.

The company was RosUkrEnergo AG. It was registered in Zug, Switzerland
on 22 July 2004, four days before its formation was officially announced by
Putin and Kuchma.

RUE was intended as a replacement for the Hungarian-based Eural Trans Gas,
which in turn had replaced a Russian company, Itera, as the middleman for
transporting gas from Turkmenistan to Ukraine.
                                       EURAL TRANS GAS
In December 2002, ETG signed contracts with Gazprom and Naftohaz
Ukrayina to act as the intermediary for gas shipments from Turkmenistan
to Ukraine. As the intermediary, ETG ensured payment of all transit costs
and duties. The Ukrainian side paid ETG with 13 billion cubic meters of
gas for its services. ETG then sold this gas on to Europe at substantially
higher prices.

It was an arrangement that raised many questions. So when Putin and Kuchma
made their Yalta announcement about the creation of RosUkrEnergo, they
presented the new intermediary as a fully transparent alternative to ETG.

Eural Trans Gas left the Turkmen gas business in January 2005 and created a
subsidiary company, EMFESZ, which works on the Hungarian gas market
and reportedly gets its gas supply from RosUkrEnergo.
                            NO “UKR” IN ROSUKRENERGO?
At the time it was registered, RosUkrEnergo was a joint project between
Gazprom subsidiary Gazprombank and Raiffeisen Investment AG, a
subsidiary of the Raiffeisen Centrobank, the investment banking arm of
Austria’s Raiffeisen Zentralbank Group.

There was no Ukrainian government state component to RUE, despite
Kuchma’s role in its creation.

Raiffeisen Investment initially claimed it was not a partner in RUE. Its
director, Wolfgang Putschek, told the “Kyiv Post” in June 2005 that
Raiffeisen Investment merely “managed the investment portfolios of a
group of Ukrainian businessmen who worked in the gas industry.” Putschek
refused to name the investors, citing Austrian confidentiality laws.

Since then, however, Raiffeisen Investment appears to have altered its
official role in RosUkrEnergo. In an RUE press release issued on 4 January
2006, Putschek says his company’s role in the joint project with Gazprom is
to ensure that RosUkrEnergo “operates in a manner consistent with Western
European standards and to oversee the company’s financial affairs.”

Putschek told RFE/RL in an e-mail on 9 January that as the chairman of
Raiffeisen Investment, he sits on the coordinating committee of RUE. The
committee consists of eight members — four from Gazprom, and four from
Raiffeisen Investment.

The Gazprom seats are held by Aleksandr Ryazanov, the deputy chairman
of the company’s management committee; Aleksandr Medvedev, the general
director of export arm Gazexport; Gazprom board member Yuri Kamarov;
and Gazprombank chairman Andrei Akimov.

The identity of the three remaining Raiffeisen Investment representatives on
RUE’s coordinating committee is unclear.
                                   A BROADER NETWORK
On the same day in July 2004 that RUE was registered, Putschek registered
another company — Centragas Holdings AG. Centragas was headed by
Putschek and had two procurists: Howard Wilson, a British subject living in
Moscow, and David Brown, a British subject living in the U.K.  Both men
were believed to have ties to ETG.

Soon afterwards, two other individuals connected to ETG were brought on
board to work for RUE. One was Oleksandr Palchykov, the former director
of the ETG Moscow office, who became the executive director of RUE.

The other was Robert Shetler Jones, who has lived in Ukraine since Soviet
times and has been involved in various business and privatization
ventures — including Denby Holdings, a Cyprus-registered company with ties
to ETG. Both he and David Brown of Centragas were principals of Denby

According to the Vienna business registry, Brown and Wilson, along with a
Russian citizen, Aleksei Serebrennikov, registered another company in
Austria in 2005 called ZanGas, which signed a contract to build a pipeline
in Turkmenistan.

This web that links RUE to a regular cast of individuals, agreements, money,
and offshore companies has raised doubts about Gazprom and Naftohaz
Ukrayina in the eyes of the media and Western investment firms.

It seems that transparency in the Russian-Ukrainian gas business is not
high on the agenda for either the Russian or Ukrainian government.
FOOTNOTE:  After this article appeared, on 19 January the Ukrainian
parliamentary committee on energy released a report stating that it had
documents showing that of the 1,000 shares issued by RosUkrEnergo, 500
were owned by ARosgas Holdings, the Gazprombank subsidiary, 1 share
was owned by Wolfgang Putschek, the director of Raiffeisen Investment,
one share was held by Windbucher, Jorge from Arosgas and 498 shares
belonged yto Centrasgas Holdings. The Interfax release stated:

“Kyiv, January 19 (Interfax) – Raiffeisen Investment A.G. managers
Wolfgang Putschek, and Jorge Windbichler are minority shareholders in
RosUkrEnergo A.G. (Switzerland), with one share each (0.1% of charter

This information is contained in materials prepared by the office of Andrei
Klyuev, chairman of the Ukrainian parliamentary fuel and energy committee,
and distributed at a committee meeting on Wednesday.

According to these materials, the RosUkrEnergo charter capital is split into
1,000 shares, which have been distributed as follows: Gazprombank
subsidiary ARosgas Holding – 500 shares, and Raiffeisen Investment
subsidiary CENTRAGAS Holding – 498 shares. Raiffeisen Investment is
the nominal holder of 998 RosUkrEnergo shares.”

This shows that Raiffeisen Investment is NOT a partner in RUE, merely

a nominal holder of shares.   Roman Kupchinsky
NOTE: Roman Kupchinsky is the organized crime and terrorism analyst
for RFE/RL Online and the editor of “RFE/RL Organized Crime and
Terrorism Watch.” He was director of the RFE/RL Ukrainian Service
for 10 years. Contact:
[return to index] [The Action Ukraine Report (AUR) Monitoring Service]

NEW BOOK: by Ronald J. Vossler and Joshua J. Vossler
Germans from Russia Heritage Collection, North Dakota State
University Libraries, Fargo, North Dakota, Wednesday, January 18, 2006

“The Old God Still Lives: German Villagers in Czarist and Soviet Ukraine
                    Write Their American Relatives: 1915-1924″
Ronald J. Vossler and Joshua J. Vossler, illustrations by Joshua Vossler

FARGO, North Dakota – At least three of four ethnic Germans living within
the Czarist Empire did not immigrate to the United States. What happened
to these German-speaking villagers is the primary focus of this volume of
letters, translated from the German, as the co-authors indicate, with an
effort made to retain the distinctive wit and phraseology of the writers.

Written by ethnic Germans to their American relatives and friends between
the years 1915 and 1924, these letters form, as the co-authors indicate, a
companion volume to “We’ll Meet Again in Heaven: Germans in the Soviet
Union Write Their American Relatives, 1925-1937″, published in 2001.

Together, these two books and the over twenty two years of correspondence
included in them surely must comprise one of the most tragic odysseys of
suffering of any ethnic group.

The letters present an intimate glance into three very different periods in
the German villages in Ukraine: the final years of the Czarist regime; a
chaotic interim period including both the Russian Revolution and Civil War;

and the first years of Bolshevik rule, marked by a devastating famine, caused,
in part, by Lenins ruthless war communism policies, when his armed
requisition squads removed grain from villages.

Some letters describe bloody episodes of almost unbelievable cruelty; the
Bolsheviks, however, weren’t the only ones who used violence. If provoked,
the German villagers sometimes retaliated, like those in Grossliebental, who
in 1919 murdered twenty five communists, bludgeoning them where they
stood with spades and pitchforks and hammers, for making unjust demands.

Joshua Vossler, one of the co-authors, illustrated the text, including the
front and back covers, with a series of simple, yet evocative drawings of
hands, as well as envelopes and letters, which depict the elaborate, and
archaic, Germanic script in which letters were originally written.

Arranged chronologically, the one hundred and fifty letters  they were drawn
from five German language newspapers in North Dakota in which they were
first published  were written by, and sent to, people with names still
common in the Central Dakotas including Boschee, Morlock, Wanner,
Schauer, Dockter, Bender, Ketterling, Ackermann, Doerr, Kurtz, Bohlander,
Schock, Mindt, Wiest, Schoepp, Schaible, Wacker, Bauer, Kessler, Frank,
Schaeffer, Rohrich, Wolf, Heinle, Stockburger, Hieb, Spitzer, Huber, Rueb,
Sauter, Ammon, Schweigert, Rohrbach, and Wenz, among others.

These letters chronicle a substantial and on-going correspondence between
the ethnic Germans who left Ukraine between 1873 and 1914, and who sent
much money, food, and clothing to those wishing that they had left South
Russia also.

There are a number of surprising revelations about the explosion of hatred
of the German minority in Czarist Ukraine during WWI, a hatred that
continued under the Bolsheviks, mainly because the German colonists in
1919 they now have a deep respect for our fighting abilities, as one writer
said—staged an unsuccessful revolt against the murder, rape, and torture
under Bolshevik rule.

There is much in this volume to interest the general reader of Russian
history, as well as those of German from Russia ancestry, who wish to learn
more about villages which were the source of one of North Dakotas most
distinct, and most numerous, ethnic groups.

This book also is a valuable source of knowledge about the first years of
Bolshevik rule which were, in effect, a training ground for genocidal
policies, like using food as a weapon, and which culminated in 1932-1933

in Holodomor: one of the greatest human rights tragedies of the twentieth
century, starving both German villagers and Ukrainians alike. -30-

NEW BOOK: The Old God Still Lives: German Villagers in Czarist and
Soviet Ukraine Write Their American Relatives: 1915-1924.

The price of the book is $35 plus postage and handling ($4 for shipping in
the U.S.; $8 for shipping to Canada; $12 for shipping outside the U.S. and
Canada). All orders must be made in U.S. dollars. Make check payable to
NDSU Library.

Please provide: Name, Address, City State/Province, ZIP/Postal Code
Daytime phone number, E-mail, Number of Books, Total enclosed $
Mail to: Germans from Russia Heritage Collection, The Old God Still Lives
Book, NDSU Libraries, PO Box 5599, Fargo, ND 58105-5599
The book can be ordered online. Click on the following link:

[return to index] [The Action Ukraine Report (AUR) Monitoring Service]
                 Invite for applications from the Republic of Ukraine

Center for Holocaust and Genocide Studies (CHGS)
Amsterdam, The Netherlands, January, 2006

AMSTERDAM – The Center for Holocaust and Genocide Studies (CHGS; ) in Amsterdam invites applications from the Republic of
Ukraine for the VWS Fellowship in Holocaust and Genocide Studies, for the
2005-2006 and 2006-2007 academic years.

Funded by the Netherlands Ministry of Health, Welfare, and Sport (VWS), the
VWS Fellowship is intended to host aspiring scholars and researchers from
Ukraine at the CHGS in Amsterdam for guided reading and focused research in
Holocaust and Genocide Studies.

The guided reading will center around trend-setting Western books, articles,
and bibliographies in Holocaust and Genocide Studies. The focused research,
on a topic selected by the fellow and the CHGS staff, aims to produce a
manuscript for an English-language article in a reputable international
scholarly journal.

During their residence, VWS Fellows will participate in the scholarly life
of the CHGS and will be able to use the library and archives of the
Netherlands Institute for War Documentation (NIOD; ),
where the CHGS is located, as well as the library system of the University
of Amsterdam.
Citizens of Ukraine living in Ukraine who have received the degree of
kandydat nauk in Anthropology, History, Literature, Political Science,
Sociology, or another relevant field in the humanities and social sciences
within the past 8 years OR:
Citizens of Ukraine living in Ukraine who are near completion of a kandydat
nauk program in Anthropology, History, Literature, Political Science,
Sociology, or another relevant field in the humanities and the social

Applicants must demonstrate an interest in Holocaust and Genocide Studies.
Prior interest or specialization in the history of the Jewish Holocaust is
not required from those applicants who demonstrate an interest in a
different twentieth-century genocide or genocidal massacre.

Candidates must be able to read and speak English. Candidates who can

also read German are particularly encouraged to apply.
The VWS Fellow receives a monthly stipend that covers the cost of housing,
living expenses, Dutch visa, air travel to and from Amsterdam, books and
other study materials, and health insurance. (Arrangement of the health
insurance is the responsibility of the Fellow.)
                                 FELLOWSHIP TENURE
The fellowship is for just under three months. Possible renewal, after an
interruption during which the VWS Fellow returns to Ukraine, will be
considered near the end of the fellowship period. The CHGS can
simultaneously host two VWS Fellows.

Those selected for the 2005-2006 academic year shall commence their stay

in April 2006. The first of those selected for the 2006-2007 academic year
shall arrive in early August 2006. Successful applicants who have August
2006 within their fellowship period will enroll in an intensive, ten-day
course of the German language.
Complete applications include the following:
[1] a curriculum vitae and (if applicable) a list of publications;
[2] a description of personal long-term career and research plans and an
indication of what the applicant hopes to gain from a stay at the CHGS
in Amsterdam;
[3] the names and updated contact information of two or three referees
whom the CHGS can contact;
[4] a writing sample in Ukrainian, Russian, Polish, English, or German.

All applications must be in English and must be sent as an e-mail attachment
in Microsoft Word. An interview may be part of the selection process.

Although the final decision rests with the CHGS, the CHGS will consult
and cooperate with the Ukrainian Center for Holocaust Studies
( in the selection process.
The deadline for those applying for the 2005-2006 academic year (tenure
from April through June 2006) is 20 February 2006.
The deadline for those applying for the 2006-2007 academic year is 1 June
2006. Decisions will be announced to the applicants and on the website of
the CHGS.
Dr. Karel C. Berkhoff, Center for Holocaust and Genocide Studies
Herengracht 380, 1016 CJ Amsterdam, The Netherlands
e-mail, fax 31-20-523-3888
phone 31-20-523-3807(direct)/3800 (Monday, Tuesday, or Wednesday)
                                    ABOUT THE CHGS
The Center for Holocaust and Genocide Studies, located in the center of
Amsterdam, was founded in 2002 by the University of Amsterdam and the
Netherlands Institute for War Documentation, which is a part of the Royal
Netherlands Academy of Arts and Sciences.

The primary activities of the CHGS are scholarly research and university
teaching, mainly through its interdisciplinary Master’s program in Holocaust
and Genocide Studies, offered at the University of Amsterdam. The Center
also aims to broaden society’s awareness of the phenomenon of genocide
through public debates and other activities. All staff members have a lively
interest in eastern Europe and two (Karel C. Berkhoff and Nanci Adler)
specifically study and teach eastern European and Soviet topics, including
the Holocaust and the Holodomor of 1933.

Further information about the Center is available at the Center website: (or

[return to index] [The Action Ukraine Report (AUR) Monitoring Service]
     You are welcome to send us names for the AUR distribution list.
18.                       CHERNOBYL – THE GOOD NEWS
        A recent column by Prof William Reville on the Chernobyl Report
                  provoked an angry response. He answers his critics.

COMMENTARY: By Prof William Reville, Associate Professor
Biochemistry and Public Awareness of Science Officer
University Cork College (UCC), Cork, Ireland
Irish Times, Dublin, Ireland, Thursday, January 19, 2006

My column of December 1st 2005 summarised the report Chernobyl’s Legacy –
Health, Environmental and Socio- Economic Impacts , which was released by
the Chernobyl Forum in September 2005. The report detailed the assessment
by hundreds of scientists, health experts and economists of the impact of
the 1986 nuclear accident at Chernobyl.

The experts who compiled the report were drawn from eight specialised
agencies of the United Nations, as well as the governments of Belarus,
Russian Federation and the Ukraine. There was considerable public reaction
to my article.

The report declares that up to 4,000 people may eventually die because of
radiation exposure from the Chernobyl accident, but, as of mid-2005, fewer
than 60 deaths can be directly attributed to Chernobyl radiation, and most
of these were rescue workers who were highly exposed to radiation shortly
after the explosion and who died within months of the accident.

Approximately 4,000 cases of thyroid cancer, mostly in children and
adolescents, are attributed to radiation exposure. At least nine children
died of thyroid cancer, but 99 per cent of cases were successfully treated.
Otherwise, the experts found no evidence of increased incidence of cancers
among affected residents.

The report is also reassuring about environmental impact. A 30-kilometre
area surrounding the reactor is heavily contaminated and remains closed, and
some forests and lakes have also been closed off, but otherwise radiation
levels have returned to acceptable levels.

Although five million people live in areas classified as contaminated, the
majority received only very low doses of radiation, comparable to natural
background radiation in many parts of the world. There is no evidence of
decreased fertility or an increase in congenital malformations that can be
attributed to radiation.

The report highlights a distressing level of “paralysing fatalism” among
residents of affected areas. The people have a grossly exaggerated
perception of the effects of the radiation to which they have been exposed
and now attribute all ill-health to the radiation. The fatalism leads to
drug and alcohol abuse, unprotected sex and unemployment.

The report recommends that, for these millions, still classified as victims,
the first priority should be to encourage self-reliance in order to
normalise their lives as soon as possible. They should be educated to
understand the minimal risks they are facing and to shed their fatalistic

However, up to 200,000 people remain severely affected by the accident –
poor people who live in the few severely contaminated areas, people who
were resettled but never settled down in the new environment or found a
job, and the thyroid cancer sufferers. These people need substantial help
to rebuild their lives.

In a letter to The Irish Times (December 8th, 2005) Patrick Crowley MB
accused me of playing down the medical impact of Chernobyl. He said he
witnessed very many congenital birth deformities when he visited the area
in 1994 and points to the 21,000 liquidators who have died since 1986.

In a subsequent letter to The Irish Times (December 28th, 2005) Adi Roche
points out that it was clear to her on a recent visit to Chernobyl that
“cancers and genetic related diseases” are greatly increased. In the
meantime a couple of letters welcoming the Chernobyl Report have also
been published.

Personal impressions of the incidence of disease on a national scale are
unreliable. Only scientifically based surveys can produce reliable data.
Such data was carefully analysed by the experts on The Chernobyl Forum.
When they conflict, the personal impressions of a few should carry little or
no weight compared with the results of careful surveys.

Roche hints that the Chernobyl Report data was presented selectively in
order to downplay the gravity of the situation. This would amount to
falsification – a mortal sin in science. Why would hundreds of scientists
conspire to do this? Indeed, how could they do this, since the true story
would certainly leak out? The idea is preposterous and such charges reflect
badly on those who make them.

And as for the 21,000 deaths among the liquidators since 1986, this is just
about the number that would have died from natural causes in this group of
200,000 people anyway had the Chernobyl accident never happened.

I have spoken to people, with varied backgrounds, who read my article on
the Chernobyl Report – accountants, civil engineers, bankers, technicians
and scientists familiar with radiation. With the exception of the latter
group, nobody believed the Chernobyl Report.

People assume that radiation from Chernobyl has caused hundreds of
thousands of deaths and interpret the report as a “whitewash” on behalf of
the nuclear industry. It is not unlikely that my personal poll would be
replicated in a nationwide survey of public opinion.

It is alarming that amateur opinion in the specialised area of health and
radiation would take such strong precedence in the public mind over the
considered study of hundreds of scientists. If these groups are right, the
integrity of science has been destroyed.

But I can assure you that the integrity of science is intact. Few harmful
agents are as well understood scientifically as radiation. The Chernobyl
Report authoritatively confirms that the health effects of Chernobyl are
far less than originally feared.

Is this not good news? Should this not encourage the people of Chernobyl
to face the future with hope and optimism? Who does it serve to encourage
people to believe they are seriously radiation-damaged, when in fact they
are not?

Economic and social help to the people of Chernobyl is of limited use when
so many believe their health is irreparably damaged. Telling the truth would
lift this awful gloom.  -30-
William Reville is associate professor of biochemistry and public
awareness of science officer at UCC –
E-mail: Irish Times,
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      Power Corrupts and Absolute Power Corrupts Absolutely.
        Be A Vice-President In The Continuing Orange Revolution 
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