AUR#648New Moment Of Truth; Gas Intermediary RusUkrEnergo – Q&A; Roof Top Boilers; UNICEF Winning Photo; Deal To End All Barters; Opera Moses

THE ACTION UKRAINE REPORT – AUR
An International Newsletter, The Latest, Up-To-Date
In-Depth Ukrainian News, Analysis and Commentary

Ukrainian History, Culture, Arts, Business, Religion,
Sports, Government, and Politics, in Ukraine and Around the World       

 
                           
THE ACTION UKRAINE REPORT – AUR – Number 648
Mr. E. Morgan Williams, Publisher and Editor  
Washington, D.C., Kyiv, Ukraine, THURSDAY, JANUARY 26, 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
1.                                 HARD CHOICES IN KIEV
             Ukraine’s new moment of truth is approaching by the week.
EDITORIAL
: Early Warning, London, UK, Tue, 24th Jan, 2006
What value does RUE add to the Ukrainian-Russian gas deal? NONE
By Roman Kupchinsky, Investigative Journalist and Analyst
Prague, Czech Republic, Thursday, January 26, 2006

3.          PRESSURE BUILDS ON UKRAINE OVER GAS DEAL
                           To reconsider RosUkrEnergo’s role
Tom Warner in Kiev, Financial Times, London, UK, Thu, Jan 26 2006
                            
4.                                 ROOF-TOP BOILERS
Ukraine needs to fundamentally change its attitude to energy conservation
             In multi-family houses two-thirds of all energy is wasted.
ANALYSIS & COMMENTARY
: By Volodymyr Skomarovsky
President of the analytical center “Na Perekhresti”
The Day Weekly Digest in English, #1, Kyiv, Ukraine, Tue, Jan 24, 2006

5.                              UKRAINE’S UNION DAY

  Union Day is not a symbol of the past but a tragic signal from the future
          that is warning us about what can destroy the Ukrainian state.
COMMENTARY: By Ihor Siundiukov, The Day
The Day Weekly Digest in English #1, Kyiv, Ukraine, Tue, 24 Jan 2006

6.     FACE OF A CATASTROPHE: STREET CHILD IN ODESSA
                           UNICEF PHOTO OF THE YEAR 2005
UNICEF, United Nations, New York, NY, Tue, January 24, 2006

7.   EBRD CONTINUES MOVE AWAY FROM CENTRAL EUROPE
        Reported a particularly sharp increase in its investment in Ukraine
Paul Hannon, Dow Jones Newswires, London, UK, Tue, Jan 24, 2006

8.  UKRAINIAN COMPANIES FOLLOW THE RUSSIAN IPO BOOM 
Access PBN, Kyiv, Ukraine, Wed, Jan 25, 2006 Volume 1 Issue 28

9. NORWEGIAN TELECOMMUNICATIONS OPERATOR TELENOR
          APPEALS COURT RULING ON KYIVSTAR IN UKRAINE
Edited Press Release, Dow Jones Newswires
Stockholm, Sweden, Tuesday, January 24, 2006

10UKRAINE: RUSSIA BANNING IMPORTS OF UKRAINIAN MILK &

 MEAT PRODUCTS IN RETALIATION OVER LIGHTHOUSE DISPUTE
Associated Press, Kiev, Ukraine, Wednesday, January 25, 2006

11. UKRAINE: MICROSOFT SUES ALLO FOR SELLING COMPUTERS
         WITH UNLICENSED MICROSOFT SOFTWARE IN KHARKIV
Ukrainian News Agency, Kyiv, Ukraine, Tuesday, January 24, 2006

12.    KYIV-BASED SOFTWARE PRODUCER SOFTLINE UPDATES
                    SECURITY SERVICE OF UKRAINE’S WEB SITE
Ukrainian News Agency, Kyiv, Ukraine, Tuesday, January 24, 2006

13UKRAINE WISHES TO DRAW FOREIGN INVESTORS TO FUND
           NUCLEAR MATERIAL SAFETY ENHANCING PROJECTS 
Ukrainian News Agency, Kyiv, Ukraine, Tue, January 24, 2006

14.       UKRAINE FOREIGN MINISTER TARASYUK CONDEMNS

Embassy of Ukraine, Washington, D.C., Wednesday, Jan 25, 2006

15.                  UKRAINE GOVERNMENT CALLS FOR ACTION

                                     AGAINST ANTI-SEMITISM
NCSJ, Washington, D.C., Wednesday, January 25, 2006

16.                              A DEAL TO END ALL BARTER
OP-ED: By Viktor Yushchenko,The Wall Street Journal
New York, New York, Wednesday, January 25, 2006

17RUSSIA/UKRAINE DISPUTE OVER GAS SHIPMENTS INTENSIFIES
By Gregory L. White in Moscow and David Crawford in Vienna
Staff Reporters of The Wall Street Journal
New York, New York, Wed, January 25, 2006

18.     BITTER ARTIC BLASTS COOL KIEV POLITICAL PASSIONS 
By Paul Betts, Financial Times, London, UK, Wed, January 25 2006

19.            GEORGE SOROS: GAS A WAKE-UP FOR EUROPE
                         Balance of power is swinging toward Russia
             Russia is using gas factor to bring Georgia and Ukraine to heel
REUTERS, Davos, Switzerland, Wed, January 25, 2006

20EU LEADERS ‘TOO WEAK’ TO FACE RUSSIAN ENERGY THREAT
                Two words are appropriate – puzzlement and powerlessness
COMMENTARY: Excerpt from Lithuanian weekly magazine Veidas
Vilnius, Lithuania, in Lithuanian Thu, 19 Jan 06
BBC Monitoring Service, UK, in English, Wed, Jan 25, 2006

 
21. RUSSIA ILL-EQUIPPED TO LEAD ON GLOBAL ENERGY SECURITY
COMMENTARY: By Vladimir Milov, President of the Institute of
Energy Policy in Moscow and Russia’s former Deputy Energy Minister
Financial Times, London, United Kingdom, Wed, January 25, 2006
 
22RUSSIA TO UP EUROPE GAS SUPPLY: BLAMES SHORTAGES
                    ON UKRAINE SAYS UKRAINE IS SKIMMING
Associated Press (AP), Moscow, Russia, Wed, January 25, 2006
 
              Ex-Soviet nation wastes much of the energy that it receives
AFX Europe (Focus), Moscow, Russia, Thu, Jan 26, 2006
 
24.   YUSHCHENKO’S REFERENDUM THREATS RING HOLLOW
             Does Yushchenko really accept the new division of powers?
ANALYSIS & COMMENTARY: By Taras Kuzio
Eurasia Daily Monitor, Volume 3, Issue 17
The Jamestown Foundation, Wash, D.C., Wed Jan 25, 2006
 
25.      UKRAINE PRESIDENT REJECTS “BARGAINING” OVER
               APPROVING CONSTITUTIONAL COURT JUDGES
Ukrayina TV, Donetsk, in Ukrainian 1900 gmt 25 Jan 06
BBC Monitoring Service, UK, in English, Wed, Jan 25, 2006
 
By Tetiana Polishchuk, The Day Weekly Digest in English, #1
Kyiv, Ukraine, Tuesday, 24 January 2006
========================================================
1                            HARD CHOICES IN KIEV
            Ukraine’s new moment of truth is approaching by the week.

EDITORIAL: Early Warning, London, UK, Tue, 24th Jan, 2006

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

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

Now his group party is leading in the most recent polls with 25 per cent
voter support. So Yanukovych appears set fair to head the largest party in
parliament, the Rada, following parliamentary elections on 26 March.
                                        OLIGARCHS
This would not bode well for further reforms. The Donetsk based party
is backed by oligarchs, such as the Chief of Staff of the old Kuchma
regime, Viktor Medvedchuk, and the ex-President’s son-in-law, Viktor
Pinchuk.

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

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

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

Vladimir Putin will feel he has regained Ukraine after losing to the Orange
coalition.
                                         ELECTION
Tymoshenko’s Motherland party is at 13.6 per cent in the polls while
Yushchenko’s Our Ukraine party trails in third place with 11 per cent. These
figures are unlikely to change dramatically. That would leave no party with
an overall majority capable of forming an administration in March.

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

So coalition games will be the score.
                                     RECONCILIATION
There is little likelihood of Yanukovych and Tymoshenko joining forces.

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

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

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

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

However, to obtain some form of political legitimacy and muscle Yushchenko’s
party must seek out reconciliation with Tymoshenko.
                                           ONE ORANGE
This is not impossible. Tymoshenko was wounded by her dismissal in
September 2005, but will feel honour was satisfied by her dismissal of the
Yekhuranov government.

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

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

He approached reform as a technocrat, not a politician. He needs advisers
with better political instincts to translate his plans into lasting and
successful change. So far, he has achieved little, save the squandering of
much of the goodwill bred by the Orange Revolution.
                               CONSTITUTIONAL POWER
The dismissal of Tymoshenko in September ended by weakening the
President’s position – there than clearing of the air he had envisaged.

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

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

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

His choices are limited, but, if he fails to form such a coalition, there is
little chance of a reform government.
                                  MOMENT OF TRUTH
Should the parties fail to reach agreement in the spring, the country’s new
constitution holds Damoclean sword for Yushchenko to wield.

If there is no majority within a month of elections then they face
disbandment by the President and thus repeat elections and more

uncertainty that will be damaging both politically and economically.

Ukraine’s new moment of truth is approaching by the week.  -30-
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http://www.earlywarning.com/articles/2006_01_24_hard_choices_kiev
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[return to index] [The Action Ukraine Report (AUR) Monitoring Service]
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2.         GAS INTERMEDIARY: RosUkrEnergo (RUE) – Q&A

By Roman Kupchinsky, Investigative Journalist and Analyst
Prague, Czech Republic, Thursday, January 26, 2006

Q. What physical property does the Swiss company RosUkrEnergo (RUE)
own? Does it own any gas fields in Russia or Central Asia, or any pipelines
in the former Soviet Union? What services does RUE provide?

A. RosUkrEnergo does not own any property except a few bank accounts,
pens, pencils, a few computers and some very expensive Mercedes sedans.
Most gas fields in Russia belong to Gazprom which owns the licenses to
extract gas from these fields. According to Russian law, only Gazprom is
allowed to sell Russian gas outside the borders of the former Soviet Union.

In Central Asian countries, gas fields are owned by those countries. None

of these fields are leased to RUE in either Russia or Central Asia.

The pipeline from Central Asia is called the “Center” pipeline. It
transverses Turkmenistan, Uzbekistan, Kazakhstan and Russia to the

Ukrainian border and is owned respectively by the countries it goes through.
RosUkrEnergo does not own any length of this pipeline or the compressor
stations which pump the gas through the “Center” pipeline. RUE merely
manages the transport of gas going through the pipeline until it reaches
Ukraine.

The services which RosUkrEnergo performs is to sign transit documents

and customs declarations and send bank transfers to pay those countries the
customs fees and for the cost of the work they perform in pumping gas (the
transit fee). RUE does not have any technicians, any repair men or
technicians to operate the compressor stations. .

Q. How is RUE paid for signing these documents and paying bills?

A. The payment details for RUE were NOT included in the copy of the
4 January “agreement” which was released by Yulia Tymoshenko to the
press so all I can base my answer on is the old Eural Trans Gas agreement
I have a copy of and media reports.

I say “agreement” because it is not a contract and does not contain any
contractual obligations by either side. It is an expression of intent and
nothing more.

The original contracts between RUE and Gazprom and Naftohaz Ukraine,

signed in 2004, were never made public despite numerous vows on the part
of Putin, Kuchma, Yuriy Boyko, the head of Naftohaz Ukraine and Alexei
Miller, the head of Gazprom, that RUE was as pure and transparent as
mothers milk.

According to media reports, RUE is to be paid in the same manner as its
predecessor, Eural Trans Gas was paid – the Ukrainian side will give RUE

13 (or possibly 15) billion cubic meters of gas which RUE will then sell to
Europe using the services of Gazexport, the foreign sales subsidiary of
Gazprom. RUE will make a profit of close to $2 billion by reselling the gas.
This is a very hefty fee for signing documents.

Since RUE is registered in a Swiss Canton, it will only pay an agreed upon
amount of taxes to the Canton. The Russian treasury will not see a penny in
taxes from this deal.

Q. Why did Russia give RUE exclusive rights to be the sole supplier of gas
to the Ukrainian border? Was there a tender?

A. There was no tender when RUE, or its predecessor, Eural Trans Gas,

were given exclusive rights to be the middleman in this arrangement.
Gazprom simply decided on what type of  company it wanted, formed
the company, and signed an agreement with it.

It is not clear if RUE pays Gazprom for this exclusive right. In the Eural
Trans Gas contract there was no mention of any fee paid to Gazprom for

this right. In reality however, part of the huge fees which RUE is paid by
Ukraine might go back to the Russian side – but to whom and how much
is a Russian (and apparently an Austrian) state secret.

Q. Could not Gazprom or Naftohaz Ukraine have performed the same

services which RUE performs and saved a lot of money?

A. Yes, that is the main point of contention. Of course Gazprom could have
done this without RUE as well as Naftohaz Ukraine.  There was no need to
have a company registered in Zug (RUE) and two other companies registered
in Austria (Arosgas Holdings and Centragas Holdings) and an Austrian
Investment company which does nothing except hold bearer bonds and make
a lot of noise about its suspiciously clean bill of health.

There was no need to set up Eural Trans Gas in 2002 in a forlorn town
outside of Budapest, owned by an unemployed Romanian actress and a young
Romanian married couple who could not pay their own gas bills and a lawyer
in Tel Aviv who represented Semyon Mogilevich to be the owner of the

company and to have Dmytro Firtash ask this lawyer to please, do us a favor
this one time and help us transport Turkmen gas to Ukraine.

Q. What value does RUE add to the Ukrainian-Russian gas deal?

A. None. All it does is act as a transmission belt for huge sums of money
and a tax shelter for Russia’s finest. Its main assets are its bank accounts
and close contacts to the Russian elite. RUE in reality is the alter ego of
Gazprom.  -30-
———————————————————————————————
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: KupchinskyR@rferl.org
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[return to index] [The Action Ukraine Report (AUR) Monitoring Service]
========================================================
3.      PRESSURE BUILDS ON UKRAINE OVER GAS DEAL
                          To reconsider RosUkrEnergo’s role

Tom Warner in Kiev, Financial Times, London, UK, Thu, Jan 26 2006

The government in Kiev is under mounting pressure to revise the natural gas
deal it struck with Russia this month to reduce or eliminate the role of
RosUkrEnergo, the Swiss-registered company that would become sole
supplier of gas to Ukraine.

Kiev and Moscow yesterday postponed for a second time the signing of
contracts and agreements that would finalise the deal, after Ukraine’s
anti-monopoly committee said it had not received sufficient information
from RosUkrEnergo to approve a key part of the deal.

Ukraine’s prime minister, Yuri Yekhanurov, and Russia’s deputy prime
minister for energy, Viktor Khristenko, both described the problem as a
minor hitch and said they were working on a solution. But others close to
the talks said domestic and international pressure was increasing on Kiev to
reconsider RosUkrEnergo’s role.

Alex Danilyuk, an adviser to Mr Yekhanurov working on the gas deal, said the
pressure was growing with each delay, and he felt it would be better to slow
down the talks with Russia and consider the agreements more carefully.

“There’s no reason to put pressure on the government to sign a deal quickly.
We have a framework deal and it’s working,” he said.

Mr Danilyuk said the anti-monopoly committee’s position threatened only the
least important of two roles given to RosUkrEnergo in the deal and did not
threaten the overall agreement.

The deal says RosUkrEnergo will sell gas in Ukraine through a 50-50 joint
venture with the state oil and gas company Naftogaz. But that part of the
deal cannot go ahead without clearance from the anti-monopoly committee,
which is headed by Olexy Kostusyev, who is running in March parliamentary
elections for the opposition Regions party.

Bohdan Yakymyuk, a spokesman for the committee, said its specialists were
working intensively with RosUkrEnergo to help it meet the requirements but
the company had not delivered the documents needed to clarify who, or which
organisations, controlled RosUkrEnergo and what connections they had, if
any, to other participants in Ukraine’s gas market.

“The possible granting or not granting of permission depends solely on
whether we get the documents required by law,” Mr Yakymyuk said.

However, Mr Danilyuk said RosUkrEnergo could retain the more important

role of sole supplier of gas to the Ukrainian border because Gazprom, the
Russian natural gas giant, had given the company exclusive rights to transit
gas across Uzbekistan, Kazakhstan and Russia.

The delay came as Daniel Fried, a US assistant secretary of state, remarked
during a visit to Kiev on Tuesday that “little was known” about
RosUkrEnergo.

Ukrainian opposition groups have accused RosUkrEnergo of having links to
crime, which the company has strongly denied. RosUkrEnergo is owned half

by Gazprom and half by an Austrian-registered company, Centragas Holding,
on behalf of unnamed beneficiaries.

Konstantin Chuychenko, a RosUkrEnergo director representing Gazprom,
said yesterday that RosUkrEnergo wanted Naftogaz to buy the stake in
RosUkrEnergo not owned by Gazprom. However, Mr Yekhanurov told a
press conference yesterday his government had ruled out buying any stake.
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[return to index] [The Action Ukraine Report (AUR) Monitoring Service]
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4.                                   ROOF-TOP BOILERS
 Ukraine needs to fundamentally change its attitude to energy conservation
             In multi-family houses two-thirds of all energy is wasted.

COMMENTARY: By Volodymyr Skomarovsky
President of the analytical center “Na Perekhresti”
The Day Weekly Digest, #1, Kyiv, Ukraine, Tue, Jan 24, 2006

Ukraine is facing the urgent need to fundamentally change its attitude to
energy conservation policies, which should be founded exclusively on an
economic basis. The recent gas war, whether lost or won, has only made
this problem more acute. The major principle to follow here is that we must
invest funds in projects that are profitable and self-sustaining.

The old system has exhausted itself, and no European country today has
such energy-intensive industrial and private sectors as Ukraine. Gas prices
pose the biggest problem for the public utilities sector.

The reason is well known: in multi-family houses two-thirds of all energy
is wasted. In fact, heating plants are not heating buildings so much as the
soil and the air.

Back in 1999 I proposed a project for Vinnytsia, which could significantly
improve the situation. The project boiled down to building rooftop boilers
to which several multistory buildings could be connected. This approach
would make it possible to cut gas consumption by 66%, as it rules out loss
of heat on the way to consumers.

I see this as a top priority measure for resolving the energy problem in the
public utilities sector. Given the continuing technological progress,
today’s boilers are much more efficient than six years ago, which is why

the impact of this approach would be even greater today.

If a private company builds a rooftop boiler, its payback period will be
just three or four years even if gas prices go up (on condition that
consumers make timely payments for gas at the rates established by the
government). At the same time, the quality of service will increase
significantly. Consequently, this approach has a big future, which is why it
is being utilized in all new housing projects.

The government’s project to install plastic windows is praiseworthy. After
all, it takes six to eight times less energy to heat one square meter in a
building with externally foam-insulated walls and plastic windows than in an
ordinary building. This task is up to the government because state utilities
will never do this.

As for alternative energy sources, unfortunately, Ukraine is still at square
one even though it has a great potential in terms of know-how and resources.
For example, Austria, Germany, and many other European nations effectively
use wind power plants to generate energy. Ukraine has ample space to build
such plants and use them effectively.

However, such a project would require appropriate government funding.

Our water resources potential has not been fully utilized either. We cannot
continue the current practice of burning tremendous amounts of coal to
produce electricity and heat.

Of course, this is a global problem and requires both government funding
and private investments. I once spoke to Minister Baranivsky of the
Agro-industrial Complex, who said that since fuel prices have gone up, it is
now economically feasible to manufacture diesel fuel from rapeseed.

Poland has built such plants, and Ukrainian farmers are successfully
supplying them with raw materials. Therefore, we simply must find investors
to build plants of our own to produce diesel fuel from rapeseed in an
environmentally friendly way. Some 60% of agricultural lands in Vinnytsia
oblast are overgrown with weeds. Meanwhile, growing rapeseed on these
lands would benefit both the industrial and agrarian sectors. -30-
———————————————————————————————–
LINK: http://www.day.kiev.ua/156081/
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5.                                UKRAINE’S UNION DAY

   Union Day is not a symbol of the past but a tragic signal from the future
          that is warning us about what can destroy the Ukrainian state.

COMMENTARY: By Ihor Siundiukov, The Day
The Day Weekly Digest in English #1, Kyiv, Ukraine, Tue, 24 Jan 2006

Last Friday Ukraine officially observed a holiday that should (or should
have?) become a sacred symbol of the unity of our political nation from
Donetsk to Uzhhorod, from Chernihiv to Symferopol.

This was Union Day, which will always be a reminder to contemporaries
and their descendants of Jan. 22, 1919, when Kyiv’s St. Sophia Square
heard the solemn proclamation of an historic act of the official union of
the Ukrainian National Republic and the Western Ukrainian National

Republic (ZUNR).

The initiators of this act joining the Ukrainians of Halychyna with their
brethren in eastern Ukraine – Symon Petliura, Volodymyr Vynnychenko, and
Yevhen Petrushevych (president of the ZUNR) – firmly believed that from

then on and for centuries to come the once separated branches of the
Ukrainian people would be politically and spiritually united.

The path to the realization of this noble dream was a terrible and tragic
one. Two weeks later, on Feb. 5, 1919, Kyiv was captured by Bolshevik
troops, who understood the unity of Ukraine as a purely nationalistic slogan
and did their best to drown the national spirit in blood.

Yet even today the long dreamed-of goal of One Indivisible Ukraine has still
not been attained in many respects. (We must admit this honestly and frankly
because illusions, no matter how “rosy” they may be, lead to a dead end.)
Why?

To answer this question, it is necessary to determine why the Ukrainian
national revolution of 1918-1922 failed.

In spite of different views, most historians agree that the fatal role in
the Ukrainian liberation movement was played by disunity, a maniacal
aspiration of politicians to fight not so much against real enemies
(primarily, foreign ones) as among themselves for the coveted “mace,” the
symbol of power, and also by their inability to wisely and harmoniously
resolve ethnic and social problems, which are the Scylla and Charybdis
through which all revolutions must pass.

There were also tragic disagreements between the leaders of the ZUNR
(mostly liberals and conservatives) and the socialist- minded leaders of the
Ukrainian National Republic.

Dear reader, does this remind you in some way of contemporary
developments? The answer is all too obvious. For us Union Day is not a
symbol of the past but a tragic signal from the future that is warning us
about what can destroy the Ukrainian state.

Moreover, it is a very pressing problem to find the principles that could
unite western and eastern Ukrainians. (We must admit that here things have
not improved much, to put it mildly, during the year in which the Orange
government has been in power.)

I will briefly mention these principles: equality before the law for
absolutely all individuals no matter where they reside, whether in Donetsk
or Lviv, and no matter what offices they hold (Immanuel Kant said that one
should not deliver long speeches about moral politics but should just
strictly obey the law); the refusal to make lofty promises and express
agreeable but empty words (it is better to do something without superfluous
words); responsibility on the part of the topmost official all the way to a
humble housing maintenance employee; rejection of the practice whereby a
narrow circle of individuals close to “the No. 1 person” makes all the
decisions.

The final principle is a clear understanding on the part of all government
branches that people vest them with power not forever but for a certain
period of time, and the people will inevitably proclaim a just verdict (for
this is democracy).

At the same time every rank and file citizen must clearly understand: quite
a lot (as a minimum) depends on me in our (not “this”) country, because
my children, grandchildren, and I have to live here.

In my opinion, these are the principles that could bring together the
Ukrainian political nation. Readers can probably name quite a few others.
This is the beginning of a very pressing and crucial dialogue.  -30-
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LINK: http://www.day.kiev.ua/155900/

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6.   FACE OF A CATASTROPHE: STREET CHILD IN ODESSA
                           UNICEF PHOTO OF THE YEAR 2005

UNICEF, United Nations, New York, NY, Tue, January 24, 2006

NEW YORK – The British photographer David Gillanders is the winner of
this year’s international photographic contest “UNICEF Photo of the Year”.
His photo shows a street child in Odessa, Ukraine.

Yana made her way from Moldova, the poorest country in Eastern Europe,
to the Ukrainian city. She died last Christmas addicted to drugs and
infected with the HI virus. She was only 13 years old.

Yana’s fate is a typical example for a lost generation of children and
adolescents in many Eastern European countries. In no other region of the
world does the virus spread as rapidly – above all because drug addicts
often use contaminated syringes.

Approximately one per cent of the population is addicted to hard drugs. 1.4
million have already contracted HIV, primarily young people are affected: 80
per cent of all infected people in Eastern Europe are less than 30 years
old – every tenth of them is a child.

“The UNICEF Photo of the Year 2005 gives a face to the HIV/AIDS
catastrophe in Eastern Europe. It is an appeal for our compassion. We

must not forget the children who collapse in view of the breakdown of
their families and the harsh social environment”, says Eva Luise Köhler,
Patroness of UNICEF Germany at the award ceremony.

87 of the world’s best photographers from 20 countries submitted 894
photos for this UNICEF contest. The jury headed by Timm Rautert,
Professor for Photography at the Academy of Visual Arts in Leipzig,
awarded a second and third prize and gave seven honourable mentions.

For the sixth time UNICEF awards photographs of a high artistic and
photojournalistic level that illustrate the living conditions of children.
The contest is supported by the magazine GEO and Citibank.

FIRST PRIZE DAVID GILLANDERS: STREET CHILDREN IN ODESSA
          Photos: David Gillanders, Scotland / Free Lance Photographer

13 year old Yana finds her way from Moldova to the Ukraine. Her father, an
alcoholic, died early; her mother was sent to jail when Yana was eight years
old. Since, she has been living on the street, recently in Odessa. By
injecting drugs, she gets infected with the HI-Virus. During Christmas 2004,
she feels very sick, crawls into a hole and dies in the winter cold.

The Scottish photographer David John Gillanders is working on a project
about street children in Odessa since three years. His attention is directed
towards a lost generation: Children who grow up without parental protection
in the States of the former Soviet Union.

Hundreds of thousands of them are homeless. They wash cars, collect

bottles or sell stolen goods. Many of them work as prostitutes or take
drugs. More and more kids continue to become infected with HIV.

Yana’s story is not an exception. Even more, it is typical for the hardships
a growing number of children and teenagers has to endure in Eastern
European States. Nowhere in the world is the virus spreading as fast as in
this region.

Since 1995, the number of people infected with HIV increased from 160.000
to 1.4 million. In the Ukraine, the rate of infections is even twentyfold
higher than five years ago. Meanwhile, 360 000 are HIV positive.

AIDS is a silent disaster that had been pushed aside also in Eastern Europe
for too long. The virus spread almost unnoticed, mainly by drug abuse.
Addicts share dirty needles and infect each other. In the meantime, the
virus threatens all parts of the society.

In particular young people are affected: 80 percent of all HIV-infected
persons in Eastern Europe are younger than 30 years – ten percent of them
are children. Women are especially vulnerable. In the Ukraine, 40 percent
of all people living with HIV are female.  -30-
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NOTE:  To see the winning photographs click on the following link:
http://www.unicef.de/foto/2005/english/index_2005_engl.htm
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7. EBRD CONTINUES MOVE AWAY FROM CENTRAL EUROPE
           Reported a particularly sharp increase in its investment in Ukraine

Paul Hannon, Dow Jones Newswires, London, UK, Tue, Jan 24, 2006

LONDON — The European Bank for Reconstruction and Development is

continuing to shift the bulk of its new investments towards south eastern
Europe, central Asia and Russia, and away from central Europe.

In 2005 the development bank agreed to invest EUR1.1 billion in Russia,
EUR2.1 billion in South Eastern Europe, the Caucasus and central Asia, and
just EUR700 million in the eight countries of central Europe that joined the
European Union in 2004.

The share of new investments going to the E.U.’s new members fell to 16%
from 23% in 2004, while the riskier countries of the Balkans, the Caucasus
and central Asia accounted for 58%, up from 47% in 2004.

And according to EBRD President Jean Lemierre, that process of gradually
moving away from central Europe is set to continue, with new investments in
central Europe likely to fall to EUR550 million this year.

“There is a change in the geographical distribution of our investments, with
less going to central Europe, the same level going to Russia, and a
significant increase in activity in south eastern Europe, the Caucasus and
central Asia,” he told a press conference Tuesday.

The development bank reported a particularly sharp increase in its
investments in Ukraine, which almost doubled to EUR500 million from

EUR260 million, despite a considerable amount of political uncertainty.

Lemierre said that reflected a greater interest in the country among private
investors, a development that was also true of Romania and Bulgaria. “We
are driven by the market, and because the situation has improved we do
less in central Europe and more elsewhere,” Lemierre said.

That shift to the south and east was requested by the EBRD’s 60 government
shareholders when they last reviewed the development bank’s strategy in
2001.

But as shareholders prepare to decide a new five-year strategy for the bank
at its annual meeting in May, there is some disagreement over how rapidly
the bank should disengage from the new E.U. members.

The U.S. government has called on the EBRD to stop investing in the eight
E.U. members within the next two years, arguing that private sector finance
is readily available in those countries. But that’s a move that has been
rejected by most of the development bank’s E.U. shareholders.

“The U.S. reminds us from time to time that this is important for them,”
Lemierre said. “You can debate the speed of the move.”

The EBRD made investments in all 27 of its countries of operation during
2005, but Lemierre said it’s likely to have ceased investing in some central
European countries by 2010. “It is reasonable to think that by 2010 it will
happen,” Lemierre said. “But not everywhere.”

One consequence of the move south and east is that the EBRD is investing

in a larger number of smaller projects. In 2005, it backed a total of 159
projects, well above the average of 100 to 120 a year since it was founded
in 1991. It is also hiring more bankers in places like Russia, Ukraine and
Montenegro, while cutting jobs in central Europe.

The development bank is also placing more emphasis on helping to develop
local capital markets. One way of doing that is to issue local currency
bonds, giving investors a high-quality credit to cut their teeth on. The
development bank issued its first bonds denominated in Russian rubles in
2005, and expects to launch local currency bonds in Romania and

Kazakhstan in 2006.

Elsewhere it is promoting securitization, and particularly the repacking of
housing mortgages, which both enables local banks to lend more and gives
local pension companies and insurers a larger range of securities in which
to invest.

One thing shareholders are unlikely to have to worry too much about is the
financial health of the bank. Lemierre said that prior to an independent
audit having been carried out, the EBRD appears to have made a net profit

of more than EUR1 billion in 2005, up from EUR297.7 million in 2004.
——————————————————————————————–
Paul Hannon, Dow Jones Newswires, paul.hannon@dowjones.com
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8. UKRAINIAN COMPANIES FOLLOW THE RUSSIAN IPO BOOM 
 

Access PBN, Kyiv, Ukraine, Wed, Jan 25, 2006 Volume 1 Issue 28

The market value of Ukrainian companies increased significantly in 2005.

The Orange Revolution raised interest in the country in general. But it is the
transparent and fair sale of Kryvorizhstal, the acquisitions of Ukrainian
banks by foreign investors and the first successful Initial Public Offerings
(IPOs) at the London Stock Exchange’s Alternative Investment Market (AIM)
by three Ukrainian companies that heated up the price for Ukrainian assets.

The most recent and largest IPO was completed in mid-December by XXI
Century, a Ukrainian real estate developer and property manager. XXI Century
raised nearly $140 million by floating 32 percent of the company’s shares on
the AIM. The offering was 6 times oversubscribed.

The previous successful IPOs of Ukrproduct, a Ukrainian dairy company,

and Cardinal Resources, an oil and gas company – which combined raised
around $30 million – has led to a number of other Ukrainian companies
looking to the foreign exchanges to raise money in the coming years.

More than a dozen Ukrainian companies have already publicly stated their
intentions to list their shares, including Velyka Kyshenya, a leading
supermarket chain; Industrial Union of Donbas Corporation (IUD), a major
holding company with assets in the resource and engineering industries; and
OJSC Galnaftogas, an oil and gas company.
UKRAINIAN COMPANIES TURN TO FOREIGN EXCHANGES
“2005 saw Ukrainian companies’ first serious forays into the international
capital markets,” explains Oksana Monastyrska, PBN’s Deputy Managing
Director of the Kyiv office. “These three companies’ successes, as well as
those of other companies from the former Soviet Union, have significantly
increased the appetite and the interest of local companies to also make
their shares available to outside investors.”

Gross capitalization of all Ukrainian companies traded could reach $35-40
billion by the end of 2006, with daily turnovers in the $20 million to $30
million range. By comparison, the Polish securities market has a net
capitalization of $80 billion and the Czech market is valued at $50 billion.
“These numbers clearly show that the Ukrainian market has considerable

room for growth,” says Oksana.

“As key sectors of the Ukrainian economy continue to grow, more and more
companies are having to gain access to reasonable financing,” Oskana
observes. “An IPO can be financially more attractive than traditional bank
financing or strategic investors. What’s more, the development of Ukrainian
companies makes it the right time to consider IPOs. A larger number of
Ukrainian companies are embracing the principles of transparency, corporate
governance and international accounting standards.”

The option of listing on a local exchange is not a credible alternative for
most Ukrainian companies. There are more than eight regional stock
exchanges, but none with the technological sophistication or investor base
for companies seeking to raise serious capital. Efforts are underway to
consolidate and restructure these exchanges.  -30-

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Oksana: oksana.monastyrska@pbnco.com; http://www.pbnco.com/
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9.  NORWEGIAN TELECOMMUNICATIONS OPERATOR TELENOR
          APPEALS COURT RULING ON KYIVSTAR IN UKRAINE

Edited Press Release, Dow Jones Newswires
Stockholm, Sweden, Tuesday, January 24, 2006

STOCKHOLM — Norwegian telecommunications operator Telenor ASA

(TELN) Tuesday said it has appealed the court ruling in the Ukraine which
questions the validity of parts of the shareholder agreement between Storm
and Telenor and the charter of Kyivstar. Telenor appealed to the Supreme
Court and said the ruling won’t affect its consolidation of Kyivstar.

The High Commercial Court has in its ruling challenged the way the board is
nominated and elected as well as procedures for appointing chief executive
of the company, Telenor said. Today the board of Kyivstar consists of nine
members, of which five are nominated by Telenor and four by Storm.

The CEO will, according to the charter, be nominated by Telenor. The High
Commercial Court calls upon a renegotiation of these points in the Charter.

“Telenor believes that there is no discrepancy between requirements in
Ukrainian law and the way the board composition and voting requirements are
structured in the present charter. Two court instances have previously ruled
in favor of Telenor, and we will keep defending this position before the
Supreme Court,” said Jan Edvard Thygesen, executive vice-president of
Telenor.

“We do not believe the present court interpretation will prevail. However,
if so, it is important to note that it only requires the parties (Storm and
Telenor) to make adjustments to the charter to make it compliant with the
law as interpreted by the court. The changes required are only technical.

It is obvious that a shareholder must be represented with a voting power
that reflects the actual shareholding. The present board representation and
voting requirements reflects the current shareholding, as Telenor holds a
majority of the shares (56,5%),” said Thygesen.

“Based on the foregoing, speculations that Telenor’s ability to consolidate
Kyivstar is lost as a consequence of the present ruling and that Storm and
Telenor now is on equal footing, is grossly exaggerated and wrong in our
view, and has no foundation in the ruling by the High Commercial Court of
Ukraine,” Thygesen said.

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10. UKRAINE: RUSSIA BANNING IMPORTS OF UKRAINIAN MILK &
 MEAT PRODUCTS IN RETALIATION OVER LIGHTHOUSE DISPUTE

Associated Press, Kiev, Ukraine, Wed, January 25, 2006

KIEV  A top government minister accused Russia Wednesday of banning
Ukrainian milk and meat imports in retaliation for Ukraine’s efforts to
reclaim a number of disputed lighthouses on the Black Sea coast. The
accusation from Agriculture Minister Oleksandr Baranovsky is likely to
increase tension between Kiev and Moscow, which have had several disputes

in the last two months.

Earlier this month, Russia accused Ukraine of attempting to seize
lighthouses on the Crimean peninsula that were being used by Russia’s Black
Sea Fleet. Ukraine insists the lighthouses fall under its control. Days
later, Russia banned imports of Ukrainian meat and milk products, citing
violations of veterinary norms.

The ban could cause heavy losses to Ukraine’s agricultural sector.
“According to our information, this is the Russian answer to our position
regarding navigation systems on Crimea, which has been a hot topic lately,”
Baranovsky said. He added that he had met with his Russian counterpart six
days before the ban and no concerns were raised.

Russia had accused Ukraine of selling meat “of questionable quality.”
Baranovsky said the order was linked to meat that came from New Zealand

and was passing through a Ukrainian port on the way to Russia.

He acknowledged that Ukrainian veterinary officials must oversee food
products passing through Ukrainian territory, but said such questions over
particular shipments occur frequently from both sides and are usually easily
resolved.

Prime Minister Yuriy Yekhanurov, meanwhile, demanded that officials
responsible for violating rules over the shipment of meat be sacked.

Russian and Ukrainian relations worsened after President Viktor Yushchenko
defeated a Kremlin-backed candidate in the 2004 election and began a drive
to reduce Russian influence in this ex-Soviet republic. Ties between the
neighboring states were further strained during a bitter dispute over
natural gas prices over the New Year.  -30-
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11. UKRAINE: MICROSOFT SUES ALLO FOR SELLING COMPUTERS
         WITH UNLICENSED MICROSOFT SOFTWARE IN KHARKIV

Ukrainian News Agency, Kyiv, Ukraine, Tuesday, January 24, 2006

KYIV – Representatives of the Microsoft Corporation have filed a lawsuit in
Kharkiv demanding UAH 30,000 as compensation from the Allo company

for selling computers with unlicensed Microsoft software in its shops. The
Coalition for Intellectual Property Rights (CIPR) disclosed this to
Ukrainian News.

According to the disclosure, Kharkiv police inspected a local affiliate of
Allo – a major network for sale of telecommunications equipment with 153
shops throughout Ukraine – in October 2005 and seized 10 computers.
Unlicensed Microsoft software (Windows XP and Office XP) was installed

on eight of the computers. The damage inflicted on Microsoft is estimated at
over UAH 30,000.

An administrative case was launched based on a complaint filed by
Microsoft’s representatives, and the Kyivskyi district court of Kharkiv
ruled on November 11 that Microsoft’s copyrights were violated and fined

he director of the Allo affiliate a few hundred hryvnias. Additionally, a
Microsoft representative sued Allo for compensation.

According to Microsoft’s legal representative Vladyslav Shapoval, this case
demonstrates the increased understanding by the law enforcement agencies

of the need to fight copyrights violations in the corporate sector and not only
in the area of retail trade in compact discs.

“We expect the result of this change of priority in the near future, and we
believe that they are necessary for a more effective fight against such a
phenomenon as piracy,” he said.

According to CIPR, the law enforcement agencies have filed over 400 cases
connected with violation of copyrights and intellectual property rights in
the past six months.

CIPR is an organization whose activities are aimed at improving the
mechanisms for advancing intellectual property rights protection,
enforcement, and reform in the CIS countries and the Baltic States.

The coalition unites major producers of foodstuffs, medicines, beverages,
computers, software, tobacco goods, as well as the fashion industry. The
Allo company was founded in Dnipropetrovsk in 1998. It owns a network

of shops for mobile communications and telecommunications equipment.
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========================================================
12.  KYIV-BASED SOFTWARE PRODUCER SOFTLINE UPDATES
                 SECURITY SERVICE OF UKRAINE’S WEB SITE

Ukrainian News Agency, Kyiv, Ukraine, Tuesday, January 24, 2006

KYIV – Softline, a Kyiv-based software producer, has updated a web site
of the Security Service of Ukraine http://www.ssu.gov.ua. The company’s
press service reported this to Ukrainian News.

“In January 2006, a new official web portal of the Security Service of
Ukraine http://www.ssu.gov.ua was put into operation
(http://www.sbu.gov.ua is also available),” the statement reads.

According to the statement, the new site was developed on the platform
of the system of portal management Megapolis. Portal Manager. Special
attention was paid to the security system of this internet resource.

Security Service’s web portal is integrated with the official web portal of
the Cabinet of Ministers and has a unified interface.

Security Service’s site is hosted on the server of the Cabinet of Ministers’
secretariat and is part of the Data-Center system that unites the websites
of other executive government agencies, built on unified principles of
structure and design.

As Ukrainian News reported earlier, in October 2005, Softline updated
the website of the Transport and Communications Ministry
(http://mintrans.kmu.gov.ua). Softline was founded in 1995.

It develops business software for automating portals for government
organizations as well as for major and medium enterprises. It is also a
systems integrator. The SigmaBleyzer international investment company
controls Softline [through the Ukrainian Growth Funds (UGF) managed
by SigmaBleyzer].  -30-

——————————————————————————————-
CONTACT: Yuriy Sivitsky, Vice President, Marketing, Kyiv,
Ukraine, yuriy.sivitsky@softline.kiev.ua; Volia Software website:
http://www.volia-software.com/ or Bill Hunter, CEO Volia Software,
Houston, TX  77024; bill.hunter@volia-software.com.
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13. UKRAINE WISHES TO DRAW FOREIGN INVESTORS TO FUND
           NUCLEAR MATERIAL SAFETY ENHANCING PROJECTS 

Ukrainian News Agency, Kyiv, Ukraine, Tue, January 24, 2006

KYIV – Ukraine is going to offer the international community to take part in
financing of 53 long-term projects aimed at the increase of security of
nuclear materials. Chairperson of the State Nuclear Regulation Committee
Olena Mykolaichuk made the statement to the press.

According to her, during the press service devoted to control and physical
security of nuclear materials of Ukraine, which opened on Tuesday, Ukraine
will hold a presentation of projects on increase of security of the research
reactor of the Southern Ukrainian and Zaporizhia NPPs, facilities in the
alienation zone and on handling of highly active sources of radioactive
emission, projects to prevent illegal turnover of nuclear materials.

“The goal of the conference is to ask for sponsorship… We hope to receive
support both in form of finances and equipment,” Mykolaichuk said.

According to her, the overall cost of projects is over USD 20 million.
Representatives of 16 countries will take part in the conference.

As Ukrainian News reported earlier, the Cabinet of Ministers approved a
concept for a program for safe storage of spent highly active sources of
radioactive emission.

According to the approved concept, implementation of the program will

result in creation of an infrastructure for safe storage of highly active
sources of radioactive emission, including creation of a full register of
radioactive sources, analysis of their actual state, development of uniform
technologies for conditioning them, and design and construction of surface
storage for radioactive sources, etc.

Implementation of the program for safe storage of spent highly active
sources of radioactive emission will require about UAH 27.7 million from

the state budget. Ten enterprises use highly active sources of radioactive
emission in Ukraine. In the past decade, these enterprises have been
forced to store these substances in their own facilities.

Problems arose in the area of safe storage of spent radioactive sources
because of unsatisfactory material and technical support, lack of proper
conditions for their storage, and a change in the conditions for
international cooperation with Ukraine’s partners in this area. The State
Committee for Nuclear Regulation formulates state policy in the area of use
of nuclear energy and ensures implementation of the requirements of nuclear
and radiation safety.  -30-

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14.     UKRAINE FOREIGN MINISTER TARASYUK CONDEMNS
             ANTI-SEMITIC ACTIVITIES BY MAUP UNIVERSITY
 
Embassy of Ukraine, Washington, D.C., Wednesday, Jan 25, 2006

WASHINGTON – On January 23rd speaking on national television

Ukraine’s Foreign Minister of Ukraine Borys Tarasyuk strongly
condemned the anti-Semitic actions of MAUP University in Ukraine.

He confirmed that “having exhausted all efforts to convince MAUP leaders

to drop their unlawful and wrongful actions” he broke off contacts with
University a year ago. According to Tarasyuk, “there is no place for any
form of anti-Semitism or xenophobia in Ukraine”.

At the same time the Ministry of Education and Science of Ukraine issued

a press-release accusing MAUP of breaking Ukrainian law. In particular it
pointed out persistent incompliance with requirements of state licensing
rules for universities, failure to abide with legally binding decisions of
the State Accreditation Commission etc.

The press-release qualifies it as “a general negligence of law and a desire
to pursue activities inconsistent with the status of Higher Education
Institute in Ukraine”. The Ministry addresses the issue to the Ukrainian

law enforcement bodies with request to analyze to what extend the
actions of MAUP comply with Ukrainian law.  -30-
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15.            UKRAINE GOVERNMENT CALLS FOR ACTION
                                 AGAINST ANTI-SEMITISM

NCSJ, Washington, D.C., Wednesday, January 25, 2006

WASHINGTON – NCSJ applauds the positive steps taken by the Ukrainian
government to address anti-Semitism. On Tuesday, ministries of the

Ukrainian government publicly condemned the anti-Semitic activities of the
Interregional Academy of Personnel Management (MAUP), the largest non-
state university in Ukraine, and pledged to pursue legal action against it.

On national television, Foreign Minister Borys Tarasiuk called MAUP’s
actions “unlawful,” and proclaimed that “there is no place for any form of
anti-Semitism or xenophobia in Ukraine.”

At the same time, in a press release, the Ministry of Education cited MAUP
for its pursuit of activities inconsistent with higher education, and asked
Ukrainian law enforcement bodies to analyze the extent to which MAUP’s
actions can be sanctioned under Ukrainian law.

The government’s statements are in response to MAUP’s continued support

of anti-Semitism and xenophobia.  NCSJ has been in close consultation with
the government in recent months, following MAUP statements supporting
the President of Iran’s denial of the Holocaust and appeal for Israel’s
destruction. According to the Ukrainian Jewish organization Va’ad, MAUP
is responsible for much of the anti-Jewish publications disseminated in the
Ukraine.

NCSJ Executive Director Mark Levin welcomed the Ukrainian government’s
moves.  “It’s definitely an important step in the right direction,” Levin
said, “and we hope that a full investigation by the appropriate ministries
and law enforcement agencies will put a stop to MAUP’s hatred.”  -30-
———————————————————————————————
NCSJ: Advocates on behalf of Jews in Russia, Ukraine, the Baltic States

& Eurasia, is the mandated central coordinating agency of the organized
Jewish community for policy and activities on behalf of the estimated
1.5 million Jews in the former Soviet Union, including over 500,000
Jews in Ukraine. Contact: Mark Levin, NCSJ (202-898-2500)
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16.                          A DEAL TO END ALL BARTER

OP-ED: By Viktor Yushchenko,The Wall Street Journal
New York, New York, Wednesday, January 25, 2006

When Ukrainian voters elected me President last year, I promised that our
future relations with Russia would be based on national interests alone. The
time when our policy to Moscow would be dictated by the special interests

of financial-industrial groups and oligarchs was over.

The dispute that recently erupted between Moscow and Kiev over Russian
natural gas prices was a trying test of our political maturity. Corporate
players threatened our sovereignty, economic independence and freedom.

We could have contributed to the rising tensions by pursuing court action to
assert our contractual rights. Under the terms of an existing agreement
signed in 2004 between our national gas companies, prices had been fixed
until 2009.

However, we were troubled by the fact that Gazprom’s unilateral decision to
reduce gas deliveries to Ukraine also led to a loss of gas pressure in our
pipelines to the rest of Europe. Instead of escalating the conflict we
therefore sought to settle the differences with Moscow and allay the fears
of both Ukrainian and European citizens.

Fortunately, pragmatic heads on both sides prevailed. The importance of this
settlement became all too evident for Ukrainians who for the past week had
to endure double-digit sub-zero temperatures.

Together with Russia’s President Vladimir Putin, we were able to find a
workable formula for the transport of Russian natural gas to European
consumers. As was our strategic goal from the outset, the deal was based

on mutual respect for national interests and market pricing.

For Ukraine, the compromise has several advantages. First, unlike in our
neighboring countries — where Gazprom has taken control of the national

gas pipelines — our strategic gas pipelines remain Ukrainian property.

Second, and maybe most importantly, the compromise finally introduces

cash payments to our international gas trade, ending the murky Russian-
Ukrainian barter operations for energy supplies.

Previously, Ukraine contractually withdrew up to 25 billion cubic meters of
Russian gas pumped towards Europe through its pipelines in exchange of
industrial assets and the right to use our pipeline to deliver gas to the
Continent.

Now, Ukraine pays cash for the Russian gas it consumes just as Russia

pays cash for the transport of its gas through Ukraine’s pipeline.
Everything is transparent and fixed in contracts.

For fourteen years, though, international barter settlements had cost
Ukraine hundreds of strategic assets such as factories, shipping vessels

and other enterprises, which had been used as payment for Russian
(and Turkmen) gas supplies.

The practice of forfeiting strategic assets had fueled cronyism and
corruption, enriching a few oligarchs at the expense of the rest of the
nation. This intolerable practice has finally ended.

It is true that Ukraine now pays a higher price for Russian natural gas.
However, we still pay less per cubic meter than what Moscow charges our
closest neighbors, with the exception of Belarus. That’s because we now
receive more cheap Turkmen and Kazakh gas.

Moving closer to market pricing mechanisms will force our domestic industry
to improve energy efficiency and conservation. At the same time, developing
domestic gas drilling has become a policy priority and will help Ukraine
become more energy independent.

During the discussions with President Putin we also agreed to soon create a
joint venture for a more transparent international gas transporter to
fulfill the terms reached between our national gas companies. The opaque
shareholder structure of the gas transporter currently in charge has caused
concern domestically and abroad.

European businesses and consumers will also benefit. Russian gas deliveries
to Ukraine have now been contractually separated from gas designated to the
rest of Europe. Honoring these now separate agreements and their five-year
terms offer consumers in both Europe and Ukraine predictability and
stability.

Meanwhile, we intend to work with all gas producing countries to our east

on developing and diversifying natural gas supplies to Europe in order to
provide consumers with options for the future. The idea is to transport
natural gas from Turkmenistan, Kazakhstan and other central Asian countries
through new pipelines which could eventually be connected to the existing
network supplying Europe.

The gas compromise, though, caught many in Ukraine off-guard. Oligarchs
oppose it because it ends one of the largest and most corrupt international
barter schemes in Europe. Proceeds from it benefited numerous fifth column
groups at the expense of Ukraine’s national security.

The influence of these oligarchs reaches as far as to Ukraine’s parliament.
Last month lawmakers broke constitutional procedures and sacked the cabinet
of Prime Minister Yuriy Yekhanurov — only weeks before Ukrainians are set
to elect a new legislature.

Ukraine experienced a similar episode only five years ago. In 2000, as Prime
Minister, I set the goal of ending domestic barter payments for energy
supplies. Achieving that objective cost me my political job when once more
the oligarchs used their political influence to rally lawmakers against the
government.

Nonetheless, it ended corrupt barter schemes between national enterprises
and introduced competitive pricing within the economy, unleashing six years
of consecutive economic growth in Ukraine. By removing murky business
intermediaries who facilitated the flow of natural gas to Ukraine, our gas
debts to Russia became more transparent and manageable.

This benefited both Ukrainian and European consumers as it allowed a stable
gas transportation system to operate for more than half a decade. Only
Ukraine’s oligarchs were unhappy then because a grey market loophole of
hyper-profits and barter schemes was closed.

The compromise reached earlier this month over Russian gas supplies to
Ukraine and their transit to Europe attests to the pragmatic relations
developing between our two countries. Through actions rather than mere
slogans Ukraine demonstrated its commitment to regional stability and
ability to forge mutually beneficial economic relations. My country’s course
toward European integration and adherence to market principles has once
again been affirmed.

In the long-term, domestic market prices for energy will only enhance
Ukraine’s global economic competitiveness. I am convinced that Ukrainian
entrepreneurs will meet this challenge. Together we will develop our energy
diversity, strengthen domestic gas reserves and launch a long overdue
national energy conservation program. To help facilitate these goals and
develop key sectors of our national economy, Ukraine is ready and open

for strategic foreign investment.   -30-
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Mr. Yushchenko is president of Ukraine.
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17. RUSSIA/UKRAINE DISPUTE OVER GAS SHIPMENTS INTENSIFIES

By Gregory L. White in Moscow and David Crawford in Vienna
Staff Reporters of The Wall Street Journal
New York, New York, Wed, January 25, 2006

MOSCOW — Bickering over natural-gas shipments intensified between

Moscow and Kiev as reduced supplies of Russian gas to Europe led to
shortages in several countries and fueled energy-security anxieties across
a continent gripped by an arctic cold snap.

Russia, which provides a quarter of Europe’s gas, blamed Ukraine for taking
too much of the fuel from pipelines carrying Moscow’s exports to Europe.
Kiev insisted it was entitled to the extra volumes amid a winter cold snap
but officials pledged drastic measures to rein in record-high gas
consumption.

Alexei Miller, chief executive of Russian gas monopoly OAO Gazprom, said
Ukraine’s consumption has been rising over the last few days, swamping
Gazprom’s efforts to boost supplies to its frost-stricken European
customers. “We boosted supply again today,” he said.

Facing steady shortfalls in supplies, Italian officials called on the public
to lower thermostats and take other steps to reduce energy use. Italy’s
industry minister will meet Thursday in Moscow with Russian officials to
seek assurances that supply contracts would be observed. Romania, also
facing temperatures as low as -30 Celsius, appealed to Russia to boost
supplies as shortages developed and led to school and other closings.

“For most of the last 15 years there really haven’t been any concerns about
security of supply,” said Ben Hollins, a gas specialist at consultants Wood
Mackenzie. “The reality is that Europe is dependent on Russia and will
remain so.”

But the gas troubles have fueled debate about alternatives. Poland’s prime
minister plans to unveil a plan for a common approach to energy policy that
he compared to the NATO military alliance, news agencies reported.

“We want Europe to take common responsibility for energy security — all

for one and one for all. This is a brand new initiative: joint reaction to any
individual country’s problems, joint investments in energy security,” Prime
Minister Kazimierz Marcinkiewicz said in Warsaw.

Russia has sought to reassure its customers of its reliability, and
Ukrainian officials have vowed to ensure shipments to Europe are delivered.

But the two sides Wednesday failed to reach agreement on the details of
implementing the Jan. 4 compromise deal that ended Russia’s brief shutoff

of gas to Ukraine. That conflict led to sharp drops in supplies to European
customers and triggered harsh criticism of Moscow for using energy as a
political weapon against the pro-western government in Kiev.

Officials said the agreements, which would finalize the terms for shipments
to Ukraine as well as transit of Russian gas to Europe, will be signed in
the next few days. But opposition politicians in Ukraine have attacked the
deal, which calls for gas prices to jump to $95 per thousand cubic meters
from about $50 last year.

“The gas conflict isn’t over,” said Vladimir Saprykin of the Ukrainian
Center for Political and Economic Studies in Kiev.
Few analysts expect a repeat of the New Year’s gas cutoff, known in the
region as “the gas war.” But as details of the Jan. 4 deal have emerged,
doubts have grown about whether it sets the stable foundation for supplies
and exports to Europe that its backers claim.

“It’s not at all a compromise, it’s more of a time bomb that could lead to
future conflicts,” said Vladimir Milov, president of the Institute for
Energy Policy in Moscow and a former deputy energy minister.

A key element of the pact, the $95 price for Ukraine, is fixed only through
the first half of this year and analysts warn the rate could rise sharply
after that, dealing a brutal blow to Ukraine’s fuel-guzzling economy.
Already, Turkmenistan and the other Central Asian producers whose low-cost
gas is to be sold at that rate, are pushing for higher prices in the future.
Under the deal, Ukraine agreed to a price of $230 for Russian gas, although
Ukrainian officials have said they intend to sharply limit any purchases.

Rosukrenergo AG, the Swiss-registered trading company at the heart of the
Russian-Ukrainian deal also has drawn increased scrutiny. Half-owned by a
unit of Gazprom, the identities of the owners of the remainder, held by a
unit of Austria’s Raiffeisen Bank, remain secret.

“My clients say their names can’t be released at this time for political
reasons,” said Wolfgang Putschek, the Raiffeisen official representing the
unidentified shareholders. He said they have been instrumental in mediating
compromises between the Moscow, Kiev and the Central Asian suppliers.

In an interview, he said Rosukrenergo could earn as much as $1.3 billion in
profits this year thanks to the new agreement, which substantially increases
the volumes it handles and opens the way for more sales of gas to
high-paying customers in Europe. The group earned about $500 million last
year supplying Turkmen gas to Ukraine through Russia. Details of its
financials remain secret, however.

Wednesday, Ukrainian Prime Minister Yuri Yekhanurov rejected calls for his
government to buy the 50% stake in Rosukrenergo not owned by Gazprom.

The Russian company had said it would like to see Ukraine’s state oil and gas
company as its partner in the venture.

Gazprom officials have defended Rosukrenergo’s role in the Ukrainian trade
as critical to reaching the compromise deal with Kiev. Ukrainian officials
said Gazprom insisted on using the Swiss company as a supplier. Anti-trust
regulators in Kiev are probing its ownership structure.  -30-
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18.  BITTER ARTIC BLASTS COOL KIEV POLITICAL PASSIONS 

By Paul Betts, Financial Times, London, UK, Wed, January 25 2006

Moscow and Kiev are today expected to finalise the gas supply agreement
negotiated earlier this month that ended their bitter dispute but led to the
sacking of the Ukrainian government.

But this is unlikely to have much impact on the heated political climate in
Kiev, with the charismatic former prime minister Yulia Tymoshenko

pursuing her populist campaign against the deal before next March’s
elections.

Fortunately, the bitter cold spell that has hit many parts of Europe – in
Ukraine the temperatures have dropped to -25Ã,ºC – should help cool
political passions. It may knock some sense into the country’s political
establishment and avert the risk of power cuts.

The agreement is not perfect, but so far no viable alternative has been
proposed. It is all very well for Ms Tymoshenko to accuse President
Yushchenko of “betraying national interests” and to encourage the country

to terminate the deal and take as much Russian gas as it needs from the
supplies piped through its territory. But this is hardly a civilised
solution.

Not only would this play into Moscow’s hands, it is unlikely to win much
support from a Europe far more interested in securing steady Russian gas
supplies than in Ukrainian democracy.

Considering that Ukraine is still paying less than other east European
nations and former Soviet republics for Russian gas, the agreement seems,
under the circumstances, an acceptable compromise.

Rather than betraying national interests, President Yushchenko is simply
being pragmatic. He must be hoping the arctic weather holds until the

March elections.  -30-
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19.           GEORGE SOROS: GAS A WAKE-UP FOR EUROPE
                        Balance of power is swinging toward Russia
            Russia is using gas factor to bring Georgia and Ukraine to heel

REUTERS, Davos, Switzerland, Wed, January 25, 2006

DAVOS, Switzerland – Russia’s political use of its growing power as a gas
exporter should serve as a wake-up call for a Europe growing more

dependent on Russian energy imports, U.S. billionaire fund manager George
Soros said Wednesday.

“It’s a wake-up call for Europe because Russia is using the gas factor to
bring Georgia and Ukraine to heel,” Soros told reporters at the World
Economic Forum in Davos. “Russia is in the driving seat.”

The balance of power is swinging toward Russia as energy-hungry

European countries rely more on its oil and gas, Soros said.
Some of Russia’s ex-Soviet neighbors say the Kremlin is using energy
supply as a political weapon against those which have opted to shift
towards the West and away from Moscow’s sphere of influence.

Last weekend, a pipeline blast cut of Russia’s gas supply to Georgia,
triggering an energy crisis there. Russia blamed the explosion on
terrorists, while Georgian officials accused Russia of sabotage. Georgia’s
President Mikhail Saakashvili called it “outrageous blackmail.”

In early January, Russian gas monopoly Gazprom briefly cut off gas supplies
to Ukraine, demanding a fourfold price hike and heightening tensions a year
after the election of pro-Western Ukrainian President Viktor Yushchenko.

The two countries agreed a deal to raise the price, but it plunged Ukraine
into crisis as parliament later sacked the government.

The row flared up again this week as Gazprom all but accused Ukraine of
stealing gas. The dispute shook European energy policy makers, who
questioned Russia’s reliability as an increasingly important supplier.
Claude Mandil, executive director of the International Energy Agency
(IEA) on Wednesday urged Russia to reform its energy markets and
end Gazprom’s monopoly.

But Soros said the window of opportunity may be closed for this type of
reform due to Russia’s bitter experience of liberalization in the
post-Soviet era.

Europe relies on Russia for a quarter of its gas imports. Russia plans to
increase its gas exports to Europe by a third to 200 billion cubic meters a
year by 2020 but its market share will remain constant as European demand
grows.

Russia’s oil output has also grown rapidly in recent years and hit a
post-Soviet high in December 2005. The country produces one of every 10
barrels of oil in the world. It is the world’s No. 2 crude exporter after
Saudi Arabia, with supplies going mainly to Europe. Russia’s crude exports
of up to 5 million barrels per day cover more than a quarter of Europe’s oil
needs.  -30-
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20. EU LEADERS ‘TOO WEAK’ TO FACE RUSSIAN ENERGY THREAT
                Two words are appropriate – puzzlement and powerlessness

COMMENTARY: Excerpt from Lithuanian weekly magazine Veidas
Vilnius, Lithuania, in Lithuanian Thu, 19 Jan 06
BBC Monitoring Service, UK, in English, Wed, Jan 25, 2006

In trying to describe European politicians’ feelings about Russia’s New Year
attack against Ukraine, two words are appropriate – puzzlement and
powerlessness. The sluggish reaction of Europe’s powerful shows that they
simply do not know what to say or do. Actually, they know very well what

to say, but the words are such that it is too scary to express them while
voters are listening.

Once those words are said, decisive action must also be taken. However, the
term “decisive action” has disappeared from the vocabulary of European

Union politicians. The term has been replaced by the words “negotiations,”
“consultation,” and “compromise.” To put it simply, the Europeans are
prepared to talk and to negotiate forever, so that they do not have to act.

Meanwhile, in reality, the Russian Bear, which after the end of the Cold War
has been seen by the majority of Europeans as a totally harmless teddy bear
that could be used to play with, unexpectedly stood up on his two feet and
let out a loud roar.

Many, oh so many, who until now were friends with the Kremlin, and for five
years have competed to be Vladimir Putin’s best friend, do like not to hear
that roar. To hear that roar means to admit that the politics of the past
10, or maybe even 20 years, have been wasted.

Contrary to the long-lived statements (lullabies) of European leaders,
Russia does not intend to become democratic or European. Its idea of coming
together with Europe is not changing, losing Soviet era buildup, but to make
Europe (or at least a part of its leaders) more “Russian” by making Europe
play the game that is useful to the Kremlin. The name of this game is energy
cooperation. [passage omitted]

Today, when oil and natural gas prices are sky high, and the European
economy is in a decline, the situation has changed. European politicians,
who have been afraid of starting painful economic reforms, become more and
more dependent on relatively cheap Russian natural gas. Russia, meanwhile,
has used high oil and gas prices to ensnare Europe from the north and the
south, like an octopus with its suckers.

Gazprom’s incursion into Europe has been easier, because the strong hand

of the Kremlin controls all of Russia’s natural gas. Meanwhile, despite all the
European commissions and parliaments, Europe is divided. Single politicians
or commissioners can talk about alternative oil routes all they want, but
who will implement them? No single corporations, resembling Gazprom,
have been planned.

Central Asia is full of oil and natural gas, and its politicians are eager
to bypass Russia and to sell their resources to Europe directly. However,
who in Europe would start constructing pipelines that would deliver the
energy resources? The answer to this question will determine not only
Lithuania’s future, but also the future of Europe.  -30-

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21. RUSSIA ILL-EQUIPPED TO LEAD ON GLOBAL ENERGY SECURITY

COMMENTARY: By Vladimir Milov, President of the Institute of
Energy Policy in Moscow and Russia’s former Deputy Energy Minister
Financial Times, London, United Kingdom, Wed, January 25, 2006

The main topic of Russia’s current presidency of the Group of Eight leading
industrial nations is supposed to be energy security. At the end of last
year President Vladimir Putin called for a better investment climate,
improved corporate governance and innovative technologies as tools to
address international energy security challenges and claimed that Russia
deserved a status of “fashion leader” in a new global energy architecture.

Russia’s official rhetoric is a sharp contrast with reality. Recently, its
energy policies have all been about increasing state control over the
energy sector, sacrificing investment, growth and efficiency. Production
growth last year in the oil sector fell to just over 2 per cent compared
with an average of 8.5 per cent a year in 2000-2003.

The earlier impressive increases were led by private sector companies,
which served as benchmarks of growth and efficiency for the whole
country. But, by raising oil export taxes, banning the construction of
private oil pipelines and restoring control over some of the oil companies
(Yuganskneftegaz and Sibneft), the growth era was brought to an end.

Destruction of Yukos, the largest private oil company, contributed to the
decline in growth as well: in 2004-2005, Yukos lost around 270,000 barrels
a day of oil production.

In the gas sector, production growth by Gazprom, the Soviet-created
mono­poly, was below 1 per cent in 2005. Market restructuring of Gazprom
was blocked by Mr Putin in 2003. Now production at the largest mature gas
fields is sharply declining and Gazprom’s inefficiency does not allow the
company to invest enough in development of the new gas fields in the Yamal
peninsula. These are no closer to introduction than 15 years ago.

Russia holds the largest gas reserves in the world but they are stranded
and the market cannot expect significant new volumes of gas from Russia
in the next eight to 10 years.

Russia has also announced a closing of doors for foreign investors in the
oil and gas sector through new legislation. This is a particularly heavy
blow not only for international energy security but for Russia itself. Oil
and gas production is moving to new greenfield and remote areas such as
eastern Siberia and offshore, with extremely long-term, capital-consuming
and risky projects.

The weak Russian financial system and state energy companies, pressurised
by the burden of debt generated during the recent asset acquisitions, are
not ready to finance such projects – but foreigners will not be allowed to.

The era of quick recovery and success of the Russian oil sector, led by
private initiative and openness, is over. It has been replaced by a new era
of state domination, non-transparency, high risks and stagnation.

The recent gas conflict between Russia and Ukraine demonstrated what
a poor source of “energy security” Russia can be. We had been
subsidising Ukraine with cheap gas for years but Russia made up its mind
to increase gas prices more than fourfold overnight only after the election
of the new democratic leader, President Victor Yushchenko.

During the whole crisis, no Russian representative approached other
European importers of Russian gas to at least advise European partners
what to do if Ukraine was cut off and the bulk of Russian gas supplies to
western and central Europe was putat risk.

“This is not our responsibility,” Russian officials said on television,
­disengaging from the protection of European consumers. Political games
in the post-Soviet space seem to matter more.

Using the muscle of energy supply to exert more political influence and put
European energy-importing nations at risk – is that an example of the
“global architecture” the Kremlin wishes to build? Can we expect a serious
world energy security discussion under this environment?

As a Russian, I would welcome it if my country used the G8 presidency to
contribute to the improvement of global energy security, encouraging more
transparent and assured international energy markets.

But you cannot build a global energy security architecture on the basis of
non-transparent state-dominated monopolies, destruction of successful
private businesses, closing doors to international investment and using
energy as a tool of neo-imperial politics.

Russia still has a long way to go to be able to discuss the real global
energy security issues with the world’s largest industrial democracies.
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22. RUSSIA TO UP EUROPE GAS SUPPLY: BLAMES SHORTAGES
                  ON UKRAINE SAYS UKRAINE IS SKIMMING

Associated Press (AP), Moscow, Russia, Wed, January 25, 2006

MOSCOW – Russia Wednesday promised to increase gas supplies to freezing
European customers, but blamed Ukraine for shortages that forced several
countries to consider drastic measures such as suspending some industrial
operations. Romania, Italy and Ukraine itself are among the nations mulling
taking such measures.

Analysts said uncertainty over supplies would serve as yet another reminder
to Europe of its precarious dependence on Russian gas, after a bitter price
fight between Russia and Ukraine led to a fall in supplies.

“We are increasing gas supplies to the Russian-Ukrainian border on
practically a daily basis, but the shortfall in supplies to Europe is
increasing daily and correspondingly the removal of gas in Ukraine is
increasing,” Alexei Miller, chief executive of state-owned gas monopoly
Gazprom (GSPBEX.RS) said in televised comments. “Ukraine is continuing

to take gas that is being exported to Europe.”

Russian Industry and Energy Minister Viktor Khristenko was more blunt: “One
should not be resolving one’s own problems at the expense of neighbors,
especially near and dear Poland, which is freezing.”

Ukrainian Prime Minister Yuriy Yekhanurov called on the nation’s industrial
producers to cut back on consumption for the sake of households or face
measures “up to and including the suspension of production.”

With temperatures plunging to minus 25 degrees Celsius Wednesday, demand

at Ukraine’s infamously inefficient industries has reached record levels.

Despite assurances by Gazprom that it is actually over-fulfilling its
contractual obligations inside and outside Russia, the resources of the
world’s biggest gas producer appear to have been strained in the coldest
winter in Russia since 1978.

As domestic demand has soared, some Russian industries have shifted to
alternative fuel sources while European customers have clamored for
additional supplies as the bitter cold shifts its grip west.

On Wednesday, Romania asked major industrial consumers to halt their use

of gas until Friday when freezing temperatures that claimed at least 27 lives
are expected to recede.

Imports from Russia, which supplies 40% of the country’s gas needs, were
down 10% to 15%. Utility companies have been told to switch to alternative
fuels such as coal and heating oil, and cut gas deliveries to other
industrial users by 30%.

Several schools in Romania’s capital of Bucharest were closed Wednesday,
while residents who use gas furnaces to heat their homes switched to
electric heaters or stayed with relatives connected to the municipal heating
system.

Meanwhile, Italian oil and gas company Eni SpA (E), which has reported daily
shortages, said it expected natural gas supplies from Russia to be 8.1%
below requested volumes for 24 hours Wednesday.

“The emergency stems from reasons that lie outside of Italy,” Industry
Minister Claudio Scajola said Tuesday. Earlier, Italy had called on the
public to reduce heating use by one hour a day and lower thermostats to help
conserve energy.  -30-

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23. GAZPROM SAYS UKRAINE RECEIVED JANUARY GAS QUOTA 
              Ex-Soviet nation wastes much of the energy that it receives

AFX Europe (Focus), Moscow, Russia, Thu, Jan 26, 2006

MOSCOW  – Ukraine has taken all of the Russian-supplied gas provided for in
the January quota, the Russian gas giant Gazprom’s spokesman said. “As of
today, Ukraine has taken the entire January quota,” Sergei Kupryanov said,
as quoted by the RIA-Novosti news agency.

Gazprom had repeatedly charged Kiev with withholding gas meant for Europe,

a charge Ukrainian officials admitted while arguing they have no choice but to
increase energy use to counter the severe cold weather, which has left at
least 130 people dead over the past week.

And government officials insist that although Kiev has recently surpassed
daily averages it is not in breach of agreements with Russia which are based
on monthly — not daily — calculations which Ukraine says will be
respected.

“It is very hard, in my opinion, to call our daily telegrams demanding cuts
in gas consumption and return to contracted norms an agreement,” Kupryanov
shot back. Italy, Romania, Poland, Bosnia and Bulgaria have already
registered a drop in Russian gas deliveries.

The controversy surrounding Ukraine’s gas consumption is compounded by

the fact that the ex-Soviet nation wastes much of the energy that it receives.

“The energy intensity of use in Ukraine is perhaps the highest in the
region,” the World Bank said in a report recently, with the industrial
sector estimate to waste some 70 pct of energy that it receives.
(cal/bm/dg/dk)  -30-
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24.    YUSHCHENKO’S REFERENDUM THREATS RING HOLLOW
            Does Yushchenko really accept the new division of powers?

ANALYSIS & COMMENTARY: By Taras Kuzio
Eurasia Daily Monitor, Volume 3, Issue 17
The Jamestown Foundation, Wash, D.C., Wed Jan 25, 2006

President Viktor Yushchenko used the dual anniversary of Ukraine’s
unification into an independent state in 1919 and his own inauguration in
January 2005 to provide concrete suggestions to escape the political crisis
resulting from parliament’s January 10 vote of no confidence in his
government (see EDM, January 11).

In an address to the country Yushchenko outlined a long list of achievements
made in his administration’s first year in office, such as media freedom,
reducing the shadow economy, and improving social welfare and pensions
(www.president.gov.ua).

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

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

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

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

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

Earlier Yushchenko had said that the changes “were an anti-constitutional
action, hidden from the people” (Financial Times, January 13). Since spring
2005 there have been periodic threats by Yushchenko, his staff, and
then-prime minister Yulia Tymoshenko to hold a referendum about the
reforms (Ukrayinska pravda, May 8, 2005).

Over the summer threats to hold a referendum faded, and Interior Minister
Yuriy Lutsenko told Kommersant-Daily (September 26, 2005) that
Yushchenko had come around to accepting constitutional reforms.

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

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

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

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

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

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

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

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

By threatening to hold a referendum on constitutional reforms, Yushchenko
is misplacing his energy. Instead, he needs to focus on winning the 2006
elections, re-uniting the Orange camp (that he himself divided by firing
Tymoshenko in September 2005), and creating a pro-reform and
pro-presidential parliamentary majority in the newly elected parliament.
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LINK: http://www.jamestown.org
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25.      UKRAINE PRESIDENT REJECTS “BARGAINING” OVER
              APPROVING CONSTITUTIONAL COURT JUDGES

 

Ukrayina TV, Donetsk, in Ukrainian 1900 gmt 25 Jan 06
BBC Monitoring Service, UK, in English, Wed, Jan 25, 2006

[Presenter] A working group of the political council of the president will
hold a meeting tomorrow to discuss a plan to stabilize the situation in
Ukraine, which was proposed by [Ukrainian President] Viktor Yushchenko.

This was what the presidential secretariat said today.

[Correspondent] The authorities have failed to admit the existence of a
political crisis until recently. The president said in a TV address to the
nation on Monday [23 January] that the political situation required urgent
stabilization. Yushchenko proposed several steps to achieve stability.
First, the president, the prime minister [Yuriy Yekhanurov] and the
parliamentary speaker [Volodymyr Lytvyn] should sign a kind of

nonaggression pact.

[Ivan Vasyunyk, captioned as first deputy head of the presidential
secretariat] The president is proposing a moratorium on both statements

and actions by players in the political process, political dialogue which
may lead to the further destabilization of the situation in Ukraine.

[Correspondent] A viable Constitutional Court must be a guarantor of
political stability in Ukraine. The conflict between the government and
parliament is dragging on precisely because there is no-one to provide a
legal assessment of parliament’s actions. The president said that time X has
come. MPs are obliged to have Constitutional Court judges sworn in at the
next parliamentary session.

[Vasyunyk] Bargaining in this situation is simply not serious. The
Constitutional Court of Ukraine cannot be well-balanced or correct for
everyone. The Constitutional Court should be constitutional and should be
formed in line with the existing constitution and the law.

[Correspondent] The authorities should develop a consolidated position on
energy security in the country, as it was this matter that became a bone of
contention between the government and parliament. A fair election is a
guarantee of political stability, the president said. A tripartite group
will monitor the implementation of the president’s plan. It started working
yesterday.  -30-
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26.                  OPERA “MOSES” TO APPEAR IN KYIV

By Tetiana Polishchuk, The Day Weekly Digest in English, #1
Kyiv, Ukraine, Tuesday, 24 January 2006

Myroslav Skoryk’s opera Moses will premiere at the National Opera
of Ukraine on January 27. It is staged by the young director Anatoliy
Solovianenko and the distinguished musician and conductor Ivan
Hamkalo. The stage setting is by Maria Levytska, and the choir is
conducted by Lev Venedyktov. The choreographer is Aniko
Rekhviashvili.

Five years ago, the Krushelnytska Opera House of Lviv first presented
this work to the public. The premiere, which was meant to coincide with
Pope John Paul II’s visit to Ukraine, was a notable cultural event.

Moses on the Kyiv stage is the second version of this musical and
philosophical creation. The libretto was written by the poet Bohdan
Stelmakh and the composer Myroslav Skoryk. The opera is based on
Ivan Franko’s long, same-titled poem.

Last Tuesday the National Opera played host to Filaret, head of the
Ukrainian Orthodox Church of the Kyiv Patriarchate, who blessed the
cast and everyone who was involved with the production. At the request
of maestro Hamkalo, His Holiness told those present about the biblical
prophet and leader of the Jewish people, who dedicated all his energy
and life to leading his people out of captivity and to the Promised Land.

His Holiness drew parallels with modern realities, declaring: “Today we
need our own Moses, who will free Ukraine from the shackles that have
bound it for many centuries.”

“I think the opera Moses will be interesting for the Ukrainian public
because we are experiencing a period of liberation from Soviet bondage,”
Patriarch Filaret stressed in an interview with The Day, adding, “We are
aware of the spirit of freedom living in an independent country, although
there are quite a few Ukrainians who are looking back to the past, the way
the Israelites looked back to Egypt during the times of Moses.

While the latter missed meat and garlic, some of our fellow countrymen feel
nostalgic about Soviet sausage that used to sell for 2.20 rubles [per kilo].
I believe that this opera will have an impact on our society, so we will
fear no hardships, will not stop halfway, and will remember that freedom is
far more precious than cheap meat, sausage, and gas.”

The opera in Lviv was blessed by John Paul II, you blessed Moses in
Kyiv. So this opera was supported by different church confessions.

Filaret: Confessions are of no importance here because Moses is a biblical
opera, and the Holy Bible is the same not only for Christians but also for
the Jews; it unites all believers. I think this opera will occupy a worthy
place in the theater’s repertoire and will remain topical for many years,
until Ukraine firmly asserts itself as an independent country.

Myroslav Skoryk said that in Lviv the production involved 500 persons
and that the one in Kyiv will be on an even larger scale.

The choreography and setting of the stage versions are different (Lviv’s
Moses was staged by the Polish director Zbigniew Chrzanowski together
with the production designer team of brothers Tadej and Mychajyo
Ryndzak), but the basis is the same. Skoryk will be at the conductor’s
stand, but only during one act.

“I’m fond of Lviv and I remain its patriot, but the scales of the two
theaters are different,” stressed Skoryk, adding, “I don’t mean to offend
the Lviv cast, but the National Opera troupe’s professional level is
noticeably higher. They had only one cast in Lviv and Kyiv has three, all
top-notch soloists.

For example, the lead part of Moses has been prepared by the company’s
strongest basses, Mykola Shopsha, Bohdan Taras, and Serhiy Mahera;
before long a fourth singer, Taras Shtonda, will join the team.”

“Many composers, including Orifice, Rossini, Rubenstein, and Schoenberg,
addressed the Moses theme,” said the conductor, Ivan Hamkalo, adding:
“Our opera house perceives Skoryk’s opera in the light of Ivan Franko’s
poem. It as important for me to find a special intonation for every word, to
make he opera sound topical today (The Day will carry interviews with
Hamkalo nd Skoryk in upcoming issues).

Mykola Shopsha (Moses) said: “This opera is a profoundly spiritual
composition and one must perform it with a pure soul. Skoryk has written
very interesting music. I will be singing this part for the first time and
am thrilled to rub shoulders with this original composer, who is a subtle
and intellectual individual, during rehearsals.

As a singer I’ll remember this opera for a long time. It has infused a fresh
spirit into the theater’s repertoire and revealed our company’s creative
potential. I hope that from now on modern Ukrainian music will be heard
on our stage. With Moses in our repertoire we will become a national theater
in essence, not just in name.”  -30-
——————————————————————————————-
LINK: http://www.day.kiev.ua/156067/

——————————————————————————————-
FOOTNOTE: Walter Prochorenko, the new Director of Publications
for the Ukrainian National Association in New Jersey was one of the
major promoters of the Opera “Moses” when it was first performed
in Lviv five years ago.  Walter invited me to go to Lviv with him for
the last rehearsal and the first official performance.  This was one of
those special moments one does not have often enough.  For those
of you who are in Kyiv I highly recommend the opera. EDITOR
——————————————————————————————-
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