AUR#649Steel Industrialists Speak Out: Plants Could Be Stopped; Moroz Interview; Anti-Ukrainian Histeria; Do Not Forget Belarus; An Artist

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       
Mr. E. Morgan Williams, Publisher and Editor  
Washington, D.C., Kyiv, Ukraine, FRIDAY, JANUARY 27, 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
                            No one knows where Ukraine is going
                 We chose the socialists, because that’s our ideology.
: Volodymyr Boyko, Steel Plant Industrialist
INTERVIEW BY: Serhiy Leshchenko, Ukrayinska Pravda web site,
Kiev, Ukraine in Ukrainian Monday, 23 January 06
BBC Monitoring Service, UK, in English, Thursday, Jan 26, 2006
UT1 State TV, Kiev, in Ukrainian 1630 gmt Wed 25 Jan 06
BBC Monitoring Service, UK, in English, Thu, Jan 26, 2006

        Ukrainian steel magnate warns of plant stoppages due to dearer gas
: Serhiy Taruta, Manager & Co-Owner
Industrial Union of Donbass steel holding
INTERVIEW BY: Serhiy Leshchenko, Ukrayinska Pravda web site
Kiev, Ukraine, in Ukrainian Wednesday, 18 January 06
BBC Monitoring Service, UK, in English, Thursday, Jan 26, 2006

                 Ukrainian Socialist Leader Calls For More Democracy
: With Socialist Leader Oleksandr Moroz
INTERVIEW BY: Oleksandr Oleksandrovych
Kiyevskiy Telegraf, Kiev, in Russian 20 Jan 06; p 1, 4
BBC Monitoring Service, UK, in English, Thu, Jan 26, 2006


                                        OF FEAR OF RUSSIA’ 
ANALYSIS & COMMENTARY: By Gleb Pavlovskiy,
President, Effective Policy Foundation, under the
“First Person” rubric: “Ukrainian Export of Spokes in Wheels”
Izvestia, Moscow, Russia, Tue, January 24, 2006

                     Russian pollsters set up shop again in Ukraine
By Oleksandr Mikhelson, Glavred website, Kiev, in Russian 19 Jan 05
BBC Monitoring Service, UK, in English, Wed, Jan 25, 2006


Interfax-Ukraine news agency, Kiev, in Russian 0757 gmt 26 Jan 06
BBC Monitoring Service, UK, in English, Thursday, Jan 26, 2006

By Andrew E. Kramer, The New York Times
New York, New York, Thursday, January 26, 2006


By Adam Smallman & Ben Winkley, Dow Jones Newswires
Davos, Switzerland, Thu, January 26, 2006 .


                                       MOLDOVA & ARMENIA
Argumenty i Fakty, Moscow, in Russian 24 Jan 06
BBC Monitoring Service, UK, in English, Thu, Jan 26, 2006

US Deputy Assistant Secretary of State for Europe & Eurasia, David Kramer
Moldovan Radio, Chisinau, in Russian 1200 gmt 26 Jan 06
BBC Monitoring Service, UK, in English, Thursday, Jan 26, 2006

Interfax, Kyiv, Ukraine, Thursday, January 26, 2006

                         Misery deepened for Georgians on Thursday
By Misha Dzhindzhikhashvili, AP Worldstream
Tbilisi, Georgia, Thursday, January 26, 2006


Interfax-AVN military news agency website, Moscow, in Russian 26 Jan 06
BBC Monitoring Service, UK, in English, Thursday, Jan 26, 2006


AP Worldstream, Moscow, Russia, Wed, Jan 25, 2006


Belarusian opposition presidential candidate Milinkevich tells Polish paper
INTERVIEW WITH: Alyaksandr Milinkevich,
Belarusian opposition presidential candidate
INTERVIEW BY: Waclaw Radziwinowicz
Gazeta Wyborcza newspaper website, Warsaw, in Polish 25 Jan 06
BBC Monitoring Service, UK, in English, Thu, Jan 26, 2006

                        Black Sea odyssey with Odessa at its heart
         In his 80th year, artist Yuri Yegorov presents powerful canvases
          that echo his reverence for the Black Sea, writes James Brewer
By James Brewer, Lloyds List, London, UK, Friday, Jan 27, 2006

                            No one knows where Ukraine is going
                   We chose the socialists, because that’s our ideology.

INTERVIEW WITH: Volodymyr Boyko, Steel Plant Industrialist
INTERVIEW BY: Serhiy Leshchenko, Ukrayinska Pravda web site,
Kiev, Ukraine in Ukrainian 23 January 06
BBC Monitoring Service, UK, in English, Thursday, Jan 26, 2006

The director of the Mariupol-based Illich steel plant, Volodymyr Boyko, has
decided to stand for parliament on the Socialist Party list. Speaking in an
interview with a Ukrainian website, he said his decision is based on the
fact that the party is neither pro-government nor pro-opposition.

He said he sees little difference between President Viktor Yushchenko and
opposition leader Viktor Yanukovych. He also criticized the Ukrainian
government for being economically inept: increased gas price and railway
rates are ruining steel production, which is falling significantly each
month, Boyko added.

The following is an excerpt from the interview Boyko gave to Serhiy
Leshchenko published on the Ukrainian website Ukrayinska Pravda on 23
January; subheadings have been inserted editorially:

The appearance of Volodymyr Boyko on the list of the SPU [Socialist Party of
Ukraine] was one of many confirmations that serious changes have taken place
in the party. Big money is coming to the socialists, money that used to
support the former authorities politically and that now is not frightened of
moving into the camp of their fiercest enemies.

At the previous elections Volodymyr Boyko was in fourth place on [former
President Leonid] Kuchma’s For a United Ukraine. However, at the same time
he says that he was almost a communist by conviction.

Boyko, who received the order of Hero of Ukraine under the old regime, is
building his socialism in Mariupol. He is head of the Illich metallurgical
combine, the country’s biggest after Kryvorizhstal.

                            IT IS A STATE WITHIN A STATE
It is a state within a state – they have their own airline, agricultural
land, fish canneries and dairies, a clothing factory, a pharmaceuticals
network, an insurance company, fifty-odd public catering establishments
and the Uman agricultural engineering plant.

Boyko’s position at the plant is unshakeable thanks to the law on special
features of privatization, which in 2001 without competition gave the plant
over to Illich-stal, created by the workforce.

Boyko claims that because of that he had to come into conflict with Kuchma.
“He did not want such a scheme, but I got what I wanted. I said that I would
take 200,000 people to Kiev and that we would defend that right.”

Considering the lack of alternative, in Mariupol Boyko can allow himself the
luxury of being radically frank. And considering the fact that he does not
often give interviews, and does not like public politics, his conversation
with Ukrayinska Pravda often verged on the edge of folly.
[Leshchenko] The first question is very traditional: what do you, as one of
the country’s biggest directors, think about the new gas price?
[Boyko] But nobody knows the new gas price even this month, not a single
factory! Our steel plant is operating, we have been given a limit, but no
contracts have been signed with anyone.
Everyone says that last year we bought gas at 50 dollars [per 1,000 cu.m.]
and this has become embedded in the average person’s thinking. I assure you
that nobody bought gas at 50 dollars! The price without transport and VAT
was 76.6 dollars.
In 2004 the price really was 50 dollars. And I am asking where did the other
26.6 dollars go that we paid for the whole of last year?!
Today the profitability of steel plants has fallen five- to ten-fold. I
don’t understand what the country is going to live on! In January the drop
in GDP will amount to between 3 and 10 per cent. And a drop in GDP means a
collapse in the economy. We are repeating 1983!
[Prime Minister Yuriy] Yekhanurov phoned me saying that we should meet.
Colossal decisions now need to be made how to save everything! Yesterday, I
listened to the head of Ukrainian Railways, and I nearly dropped! Where is
there such a country? They make colossal losses on passenger transport and
compensate it all by industrial transport; the state gets money from
Ukrainian Railways in the form of dividends and is virtually not developing
its transport.

[Leshchenko] Last week saw the publication of a demand by the directors of
all the major plants in Ukraine to dismiss Fuel and Energy Minister [Ivan]
Plachkov and the head of [oil and gas monopoly] Naftohaz, [Oleksiy] Ivchenko
over the gas accords with Russia. The signature of the head of the Mariupol
Illich steel plant was also on it.
[Boyko] Let’s say I did sign it. They rang and asked, but I didn’t sign the
statement… [ellipsis as stated]
My position is simple – we should not have gone for that gas agreement that
throws us who knows where. The new authorities have made lots of mistakes.
If they had done nothing at all, it would be easier today with the gas
But the authorities were unlucky. Metal prices fell by 35-40 per cent, which
is a colossal amount of money! And they additionally increased the price for
the manufacture of metal. And prices for rail transport have increased not
by 50 per cent, but by much more!

[Leshchenko] But in spring 2005 you were at a news conference together with
the then prime minister [Yuliya] Tymoshenko when she announced a rise in the
rates for transport, and you supported her!
[Boyko] Yes, she took me by the hand and led me to the news conference! But
we agreed then that the new rates were being introduced for two months and
we would then review them.

[Leshchenko] But the then transport minister, [Yevhen] Chervonenko, said
that we had the lowest rates in Europe.
[Boyko] Let them not tell lies, please! They are much lower in Russia. They
have enormous distances there and everything is calculated in such a way as
to protect the producer.
When they made the decision to raise the rates for railway freight
transport, I spoke in the Cabinet of Ministers and said: “I don’t understand
this government at all. How can a decision be taken at the Cabinet of
Ministers to raise rail transport rates when there is 40 per cent
profitability on industrial haulage? Transport affects everything, and there
will be an immediate rise in prices for meat, milk, butter and bread. As a
result, it leads nowhere.”
In February [President] Viktor Andriyovych [Yushchenko] presented us with
the new governor of Donetsk Region, [Vadym] Chuprun and I arranged a

meeting with him and drew up a report where I wrote down everything that
would happen. However, I thought that the metals market would fall in July,
but it fell in March.
The new authorities were unlucky! I’ll quote the example of our plant: in
April last year we produced commercial metallurgical output worth 300m
dollars, in June – 220m. Minus 80m!
In January this year we will produce output worth at most 220m. In January
last year the figure was 290m. And that’s just one plant!
And the 14 metallurgical plants throughout Ukraine this January will produce
metallurgical output worth 650-700m less than in January last year!
Today there are far higher expenses in the cost price. Profitability has
fallen. The payments that we used to make from profits are no longer there.
I’m confident that in a month or two they’ll start conserving investments.
If people took out credit, they’ll lose confidence in the banks, because
there is a huge growth in the risk of that money being returned.
No-one knows where we are going! The worst thing is that nobody has a
programme and nobody knows what tomorrow will bring!
Everyone talks about the market and doesn’t understand one thing: there is
no unregulated market anywhere! Nowhere! In the countries of Europe and
America laws strictly operate, primarily anti-monopoly laws. And if anyone
transgresses them, he’s immediately torn to pieces!
With us people do as they please. With us capitalism resembles the beginning
of the 19th century. The new authorities have lost their credit of trust. I
myself am from the east, but I meet with people in Cherkasy Region.
Milkmaids say to me in Uman, “Mr Boyko, how can we understand this?
We voted for the new authorities! What are they doing?”
How can one explain to them? There’s no difference between the new regime
and the old… [ellipsis as published]

[Leshchenko] For a milkmaid there’s no difference between the old regime

and the new, but for you has it got better or worse?
[Boyko] It’s got a lot worse! Under the old authorities at least there were
professionals at whom you could swear, squabble and make your point,
whoever was the president, prime minister or deputy prime minister…
[ellipsis as published] But here, who is there to talk with?
Nobody is thinking about human beings in Ukraine. Why did I not vote at the
presidential election either for Yushchenko or Yanukovych? Because there’s
no difference!

[Leshchenko] You didn’t go to vote at the presidential election?
[Boyko] I voted only in the first round. I voted for Yanukovych. But when
the events started in Kiev, I went to a meeting of the Regions of Ukraine
faction and said: “Mr Yanukovych, remove your candidacy, we’ll crush
[Leshchenko] How would you crush Yushchenko?
[Boyko] Like this! We’d find another candidate who would work for Ukraine!
That’s all history now. But today we see clearly that everyone was deceived!

[Passage omitted: Yushchenko’s unpopularity in east Ukraine; recapping
distaste for both presidential candidates]

[Leshchenko] They say that when Kuchma was president, you were one

of his favourites.
[Boyko] Favourite? At one time in 2000 I couldn’t get through to him for
eight months. And there was persecution of us.

[Leshchenko] But in 2002 you were an MP on the list of the pro-presidential
For a United Ukraine.
[Boyko] Yes, I could have become an MP at any convocation, but I never
wanted to enter parliament. And only at the request of Leonid Kuchma did I
come here. But I don’t regret it, although at first I had a different
opinion. I understood how difficult it was to work there. [Passage omitted:
expanding this]
But the most important thing for me is work at the plant because it is there
that the state’s might and wealth is forged.
[Passage omitted: Boyko attacks Yushchenko’s arrogance]

Ukraine’s main misfortune today is that nothing is changing, there’s no
normal ideology, no programme in which people can believe. If you look
at the programmes of all the parties, they’re identical, apart from the
communists and socialists.

[Leshchenko] But Tymoshenko and Yekhanurov conduct policy differently!
[Boyko] What’s the difference in their policy?
                              AGAINST PRIVATIZATION
[Leshchenko] Well, for example, Tymoshenko carried out reprivatization

and Yekhanurov doesn’t.
[Boyko] And what about this privatization? Let’s sell everything, and then
what? I was against privatization in general. And from the very outset I
said privatization must not be started from the basic industries.
But today everyone understands that we created a lot of calamities with
privatization. [Passage omitted: expanding this]
[Leshchenko] You don’t like the fact that Indians have come to
[Boyko] It’s bad. They are already suggesting that they will bring
refractory materials from China, and our refractory materials plants have
already started suffering from this. If the Indians also get hold of the
Kryvyy Rih ore-enrichment plant of oxidized ores and take the ores, I can’t
imagine at all what will happen to Ukraine.
Nobody understands one thing: they paid that money and will do everything
to get it back. They aren’t interested in the country, in people, even their
workers. [Passage omitted: expanding this]

[Leshchenko] When you were invited to stand for the SPU, were you not
embarrassed that this party for many years fought against Kuchma and was
even the instigator of the cassette scandal [recordings made by former guard
Maj Mykola Melnychenko in Kuchma’s office apparently implicating him in
serious crimes]?
[Boyko] What have the Melnychenko tapes got to do with it?! Yes, [Socialist
Party leader Oleksandr] Moroz was brave enough to go ahead and make those
tapes public… [ellipsis as published]

[Leshchenko] But the socialists carried the flag of the Melnychenko tapes
for four years!
[Boyko] They are no longer carrying it. I went to the faction and explained
my position to them. How can it be that an officer of the SBU [Security
Service of Ukraine] recorded the president; after all, he had sworn an oath
of loyalty to his homeland! [Passage omitted: expanding this]

[Leshchenko] If there is a trial where the Melnychenko tapes are used in
evidence, will you consent to confirm that your voice is on the tapes?
[Boyko] Listen, what rubbish… [ellipsis as published] I know that if I am
recorded on those tapes, I was always talking about the interests of the
state. My attitude to this story is very simple: I consider Melnychenko to
be a traitor!
How would they have acted in the USA if they had discovered that
conversations had been recorder in Bush’s office? They’d probably have
sentenced such a person to the electric chair, eh? [Passage omitted: Boyko
believes there is no evidence of crimes on the tapes]
                           SOCIALIST IDEOLOGY APPEALS
[Leshchenko] Why did you agree to stand at the elections with the SPU?
[Boyko] Everyone wanted to have [MP Serhiy] Matviyenkov and me on

their election list – just ask [parliamentary speaker Volodymyr] Lytvyn, for
But I understand one thing: we have to stand as ourselves or with
the socialists or communists. We chose the socialists, because that’s our
Although it’s difficult for us. I constantly defend Moroz in Mariupol,
because everyone tells me that he is orange [propresidential]. And I say to
them, “What sort of orange person is he? He’s a normal person.” The flag
outside our Mariupol Illich steel works is raspberry-coloured and the
Socialist Party’s flag is also raspberry-coloured. A normal flag and a
normal ideology.

[Leshchenko] You constantly criticize the new authorities. But your
socialists themselves are in power!
[Boyko] I can say one thing: I’m sure that both [Education and Science
Minister Stanislav] Nikolayenko and [Agriculture Minister Oleksandr]
Baranivskyy, with their little mistakes, and [Interior Minister Yuriy]
Lutsenko and [State Property Fund chairwoman Valentyna] Semenyuk are

in the right place.
There is not a single socialist in the government’s economic bloc.
[Passage omitted: Boyko praises Donetsk governor Chuprun]

[Leshchenko] Did the Party of Regions not get upset that you didn’t join
their list?
[Boyko] They did. But what is there to get upset about if they expelled me,
an associate member of the Party of Regions faction, when I voted to confirm
Yekhanurov as prime minister? What is more, they expelled Matviyenkov and
me, but not [Yukhym] Zvyahilskyy, who also voted “for”… [ellipsis as
Well, not to worry, it’s all right… [ellipsis as published] I would have
stood at the elections with the socialists anyway.

[return to index] [The Action Ukraine Report (AUR) Monitoring Service]

UT1 State TV, Kiev, in Ukrainian 1630 gmt 25 Jan 06
BBC Monitoring Service, UK, in English, Thu, Jan 26, 2006

[Party of Regions election candidate and former Kharkiv Region governor,
Yevhen Kushnaryov, in Russian] We are a force! We are reliability! We are
confidence in tomorrow!

[Party of Regions election candidate and MP Taras Chornovil] We are a true
team, a team of winners.

[Party of Regions election candidate and Donetsk tycoon Rinat Akhmetov,

in Russian] We must build a strong economy and create jobs.

[Party of Regions election candidate and parliamentary ombudsman Nina
Karpachova, finishing Akhmetov’s sentence] In order to unite our country
into a united Ukraine, together with you.

[Party of Regions leader Viktor Yanukovych, in Russian] We will win

together for the sake of the whole of Ukraine.

[The advertisement was run after the news bulletin. Video shows a blue sky,
a yellow field and a blue-and-yellow map of Ukraine, with the words
“Ukraine. Party of Regions” in the middle.

Video also shows Kushnaryov, Chornovil, Akhmetov, Karpachova and

Yanukovych speaking against the background of crowds of people waving
blue and white flags (blue and white are the party’s campaign colours).

The words they are pronouncing appear in Ukrainian at the bottom of the
screen. All of them are then shown together. A slogan is shown on the
screen: “Improving your lives now! Party of Regions. Ukraine.”]

[return to index] [The Action Ukraine Report (AUR) Monitoring Service]
                                    Turuta Voted for Yushchenko
        Ukrainian steel magnate warns of plant stoppages due to dearer gas

INTERVIEW WITH: Serhiy Taruta, Manager & Co-Owner
Industrial Union of Donbass steel holding
INTERVIEW BY: Serhiy Leshchenko, Ukrayinska Pravda web site
Kiev, Ukraine, in Ukrainian, Wednesday, 18 January 06
BBC Monitoring Service, UK, in English, Thursday, Jan 26, 2006

Serhiy Taruta, the manager and co-owner of the Industrial Union of Donbass
steel holding, has said that the recent gas deal with Russia will have
disastrous consequences for Ukraine. In a rare interview, Taruta warned that
with the new gas price, four of his company’s steelworks will be loss-making
and will have to be shut down.

He says that an “energy lobby” including Fuel and Energy Minister Ivan
Plachkov and Naftohaz Ukrayiny state energy company chairman Oleksiy
Ivchenko persuaded President Viktor Yushchenko not to sign a decree
appointing IUD co-owner Vitaliy Hayduk deputy prime minister for fuel and
energy, adding that Yushchenko relies only on those promoting the gas deal
for information.

Taruta said that Donetsk-based tycoon Rinat Akhmetov is not linked to IUD as
a shareholder, though they worked on joint projects in the past.

The following is an excerpt from Taruta’s two-part interview with Serhiy
Leshchenko posted on the Ukrayinska Pravda website on 18 and 19 January
under the title: “Serhiy Taruta: President Yushchenko listened to only those
people who led to disastrous gas agreements”, subheadings have been inserted

It took us several months to arrange this interview with the director and
co-owner of the Industrial Union of Donbass, Sehiy Taruta. [Passage omitted:
Description of Taruta’s office, background on gas talks with Russia]

[Leshchenko] You were against the revision of gas agreements from the start,
but it all ended with a vote on the dismissal of [Prime Minister Yuriy]
Yakhanurov’s cabinet. Are you satisfied?
[Taruta] I think everyone understands that an acting prime minister bears
less responsibility while having the same powers. The first task was to
figure out the essence of the gas agreements.
The fact that this issue was raised so sharply – is good!.. [ellipsis as
published] But then instead of the real problem of gas supplies attention
was shifted to playing the election cards.
We should form an expert commission on gas to find out why this

unfavourable agreement had been signed! We are prepared to provide our
representatives as experts, to work for free on this commission.
I would also advise that the Audit Chamber inspect Naftohaz jointly with
independent multinational auditing companies.

[Leshchenko] You said that the gas deal should be annulled. How can this be
done now that the document had been signed?
[Taruta] You see, two parties sign an agreement, and one of them does not
have authorized rights to sign this document. In legal terms, this document
is not a contract. The chapters signed by [Naftohaz chairman] Mr Ivchenko
are beyond his pay grade.
The charter of Naftohaz does not provide its chairman with the function of
changing transit tariffs… [ellipsis as published]
The tariffs are not within Naftohaz’s remit, that is the level of
intergovernmental agreements.

[Leshchenko] But if your scenario is accepted, the Russians can sue you
after the signed agreement is ignored!
[Taruta] No! Because a treaty is a form of accord, which later must be put
into the specific legal form of a contract.
In this case, the negotiators exceeded their remit, they did not have the
authority of the Cabinet of Ministers to touch upon these issues. Especially
because there were three parties involved in the agreement. For some

reason, the bilateral talks were always attended by representatives of the
RosUkrEnergo [Gazprom-affiliated intermediary company].
Now Ukraine must think not about how Russia will react to the breach of
the contract but about national interests. It is hard to expect Gazprom
approving it, and that is why we witnessed Russia boasting about the
agreement which had been reached.
De facto the price of gas and transit is a purely political part of the
question. Market relations cannot exist between two monopolists.
                     HIGHER GAS PRICES HIT ECONOMY
[Leshchenko] But you are also thinking about your own interests: you will
lose from high gas prices.
[Taruta] Right now I am talking about the country. This agreement will have
negative consequences for Ukraine as a whole. We are a doing business in
this country and we are inseparably linked to hundreds of other businesses.
Of course, we can diversify some parts of our business, engage in less
energy-consuming projects… [ellipsis as published] The real problem is
that the Ukrainian economy will fall into depression. The stagnation will be
felt in the next few months.

[Leshchenko] On the other hand, you are motivated by resentment: they did
not appoint your Hayduk deputy prime minister as promised.
[Taruta] Our group did not show any initiative concerning his advancement to
the deputy prime minister’s office… [ellipsis as published] Taking into
account that the situation was hopeless, the country’s leadership asked
Hayduk for help with finding a way out from the situation in the energy

[Leshchenko] In the end, the authorities decided to refuse Hayduk’s
services: there is no decree on his appointment.
[Taruta] The decree was signed but was not registered…[ellipsis as
published] As far as I know, Hayduk saw the decree and had a long talk with
the president. They agreed that Hayduk would start in his new position a
little bit later, after the New Year. But during this period, the energy
lobby group began doorstepping the president’s office in order to have that
decree cancelled.

[Leshchenko] Who makes up this “energy lobby”?
[Taruta] Everyone who holds senior posts in the energy sector – Plachkov,
Ivchenko and others.
[Leshchenko] What about Dmytro Firtash, who is linked to lobbying the
interests of RosUkrEnergo? Do you know him?
[Taruta] We had to contact a firm represented by Firtash when the IUD

worked as a contractor importing Uzbek gas. But all the legal and financial
documents were signed not by Firtash but other people.

[Leshchenko] Firtash’s company is linked to [Semen] Mogilevich…[ellipsis
as published]
[Taruta] You are a journalist, not a detective! I’ve never met Mogilevich,
and I cannot comment on that. Back in the days when [Yuriy] Boyko was

the head of Naftohaz, I often saw representatives on this transit operator,
which is still working on delivering gas to Ukraine…[ellipsis as
published] Now there is no reason to go to Naftohaz, and I am not an
adequate expert on this issue.

[Leshchenko] By the way, when RosUkrEnergo appeared during Kuchma’s
presidency, you did not speak up against it, everything suited you. Even
though the opposition at the time – who are in power today – were very vocal
in criticizing RosUkrEnergo. Now the situation is reversed – they are
satisfied, and you are not!
[Taruta] I do not know a single reasonable person who agrees with the
proposed model of gas supplies, except for those actually involved in it.

Today, Ukraine is no longer considered a player on Europe’s gas market,
and Russia is moving on to gas “choking” of other European countries.

[Leshchenko] But President Yushchenko supports the gas deal!
[Taruta] Unfortunately, the president has not heard other opinions. He
should invite independent experts, they will make it clear! Then, I think,
his reaction will change sharply. Unfortunately, to this day, the president
relied only on the information provided by people who facilitated the
signing of these disastrous gas deals.
[Leshchenko] Well, which version of the gas deal do you consider
[Taruta] We should have stood firm on the existing agreements at the time.
We have witnessed how Russia achieved high prices on gas, while Ukraine lost
its more favourable geopolitical positions as the main transporter of gas to
Europe. This is an obvious fact!

[Leshchenko] If Ukraine had insisted on the old agreements, as you propose,
it would be siphoning Russian gas and leaving Europe in short
supply…[ellipsis as published]

[Taruta] Why is this Ukraine’s problem? We have no collective responsibility
to Western countries concerning gas supplies. This is Gazprom’s problem.
As far as I understand, Europe was on our side, supporting us tacitly and
sending us messages like “look, we are saying that we do not depend on
Russia gas, you settle it yourself”.
How long would Gazprom last? Exactly one day! Because specialists who are
deeply involved in this topic know that Gazprom must transport gas no matter
what. They must either let the gas out into the air from the well or keep
pumping it through the pipeline.
The system is designed so that it has, in effect, a non-stop production
cycle. Today, Gazprom is dealing with the negative fallout from its strategy
in Europe – these countries are urgently passing replacement programmes. I
know that Poland is deciding on the specific location of a sea terminal for
receiving liquid gas.
In addition, they are looking into construction of two new gas pipelines
from Algeria and Iran-Turkey. Even Germany’s largest energy company
E.ON said that no-one will let Europe be blackmailed this way.
It is only Ukraine that allows political blackmail and a theatrical show
behind closed curtain to be held around this! If we read Gazprom’s balance
sheet for 2006, which was prepared as early as 11 October, you will see that
Naftohaz is not even in there. They already had RosUkrEnergo, and Naftohaz
could not be unaware of this.
It seems like everything was planned in October 2005. We only saw the
implementation of this plan.
Including the pre-recorded news stories for “Eurovision” [as published,
could be “Euronews”] about a country stealing gas from the EU.
And commentaries when for the Ukrainian side they show the prime minister,
and for the Russian side a disgruntled worker is put at the same level with
him, saying “Ukraine is stealing gas!”

[Leshchenko] In general, your position on this issue corresponds with that
of [former prime minister Yuliya] Tymoshenko?
[Taruta] My position corresponds with the opinion of qualified specialists
on gas supplies.
I have not met a single person who could present convincing evidence in
defence of the agreements signed on 4 January 2006!
You know, I do not like conflicts. But I stand for this country’s national
interests. With this configuration we are going towards economic collapse.

Now the government wants to introduce a moratorium on gas price rises for
residential consumers and communal services. Tell me, who is going to pay
for this? Only industry, which will have to subsidize this while working at
a loss.
I think that if the government wanted to reach some agreement, they would
have accepted Putin’s proposal to preserve the old conditions for the first
quarter and find a compromise solution during that period.
I understand why this agreement was signed at two o’clock in the morning.
Because before that out delegation was in Turkmenistan, and it was clear
that they had nothing to bring to Kiev, nothing to tell President Yushchenko
on their real achievements.
Because before the New Year they were misinforming the country that
everything was fine with Turkmenistan, that we have gas, we have a long-term
But they did not show it to anyone…[ellipsis as published] They were
preparing the people to celebrate victory, but the result was different.
That is why they were in a hurry to report to the president. This is where
we should look for answers about the personnel change in the cabinet that
never happened.
                      FOUR PLANTS COULD BE STOPPED
[Leshchenko] Have you calculated the possible losses that your plants will
sustain because of the new price?
[Taruta] For comparison, I can say that the difference between the old price
and the new for our companies is bigger than today’s salary fund. Today all
of our plants are profitable, but with the new price some will become
For example, the Dniprovskyy metallurgy combine of Dzerzhinskiy will be on
the brink of stoppage. The same problem will be at “Petrovka”. Makiyivka and
the DMZ will probably be stopped.

[Leshchenko] Stopped? You mean the plants will not work?
[Taruta] Of course they will not! Who would operate at a loss?

[Leshchenko] Does it mean that four of our plants will stop?
[Taruta] A business vision is that if you see the light at the end of the
tunnel you invest into cutting energy dependence and in a few years you are
profitable and you pay off that loan.
But if you do not see any ways out for the foreseeable future – it is better
to stop production. It is easy to predict that several steelworks will
become the source of cheap scrap for others.
The same goes for chemical plants. They should think before saying things
like what Plachkov said after signing the agreement: “Thanks God, now
everyone will work on introducing energy-saving technologies!” They need to
understand that in order to introduce energy savings we need lots of money
and an adequate transition period.

[Leshchenko] When do you think the Ukrainian industry will be ready for the
price of 95 dollars per 1,000 cu.m. of gas?
[Taruta] Today, we have a programme of technical conversion of the plants,
which will result in lower energy dependence. If in Hungary we have a
balanced company, then in Ukraine this programme is planned for three to
four years.
And the government must develop a national programme of energy conservation,
specifying clear preferences for those who cut energy consumption by 30-40
per cent. In order to do that, we need a credit agency…[ellipsis as

[Leshchenko] You are saying that Yushchenko hears only one side of the
story. Have you tried to contact Yushchenko during that period?
[Taruta] I tried, but I failed. I called the secretariat and said that there
are other opinions on the gas issue, different from that of Ivchenko. But
obviously Matviyenko (deputy head of the presidential secretariat) could not
report this to Yushchenko.

[Leshchenko] Look, there have been so much unfairness in Ukraine all these
years, but you kept silent! You are speaking up only now, when your business
is involved!
[Taruta] We are not talking about our plants. What we did at the Alchevsk
steelworks – we are 18 months ahead of everyone, including in the area of
energy conservation. This means that Alchevsk is less affected by the gas
pricing policy. We plan to cut energy consumption threefold by 2009.
But I am talking not about myself but about the interests of the nation.
Today, we are creating fundamental problems for the economy, which will be
difficult to solve.

If we want to keep paying higher pensions to the people, they need to come
from income tax, which is paid from salaries at operational companies. I
want to stress – operational! Not those barely surviving with chronic wage
I am absolutely convinced that we could get much better conditions in our
talks with Russia. Any successful businessman would tell you
that…[ellipsis as published]

[Leshchenko] Today you are sharply critical of the gas agreements. If you
knew last month what would happen to gas, would you have run for

[Taruta] I hope my voice will be heard even without the parliamentary
                                   Voted for Yushchenko
[Leshchenko] Some time last March you confessed that you supported
Yushchenko at the [presidential] election in 2004. Did you give money?
[Taruta] Support is not always in this sphere. We did not pay money.
Some are saying: “You are putting [eggs] in different baskets…[ellipsis as
Realistically, we are engaged in attracting investment in Ukraine, we are
developing business, improving the overall investment climate, and that is
how we see our mission of support.

[Leshchenko] So how did you help Yushchenko at the election then?
[Taruta] With my vote.

[Leshchenko] Then I helped just as much as you did?!
[Taruta] Of course! But Yushchenko too is responsible to you, because your
vote was there. The president belongs to the people, not to himself. He must
not assume this position: to depart after the New Year, when the gas dispute
is not resolved and to be aside from the negotiation process.
Because this conflict concerned every citizen. Even an old lady who lives
next door was asking me: “What is happening to gas?” This was the No 1
problem for the nation. And Yushchenko must lead the way and not listen to
only one biased opinion.
I have an opportunity to speak these words because the result of the 2004
election was right. We now have access to real democracy.

[Leshchenko] Was it difficult to support another candidate, not [former
Prime Minister Viktor] Yanukovych being in Donetsk?
[Taruta] I was in favour of European choice. And when the events in Kiev
began, when we were in danger of losing financial trust in our country, we
needed civil choice. What was done at that stage was right. But what the
government is doing with gas is blatant incompetence!

[Leshchenko] A new election is coming up, and the prime minister will be
determined by parliament. Whom do you trust more – Tymoshenko,

Yekhanurov or Yanukovych?
[Taruta] If I say one name, you will say that I favour this person. Today I
would rank them by how they defend the national interests in the energy
sector. So far, I can mention only Tymoshenko. Even though I had some sharp
disputes with Yuliya Volodymyrivna [Tymoshenko], when she was prime
minister, concerning railroad tariffs.
She had a distorted view of this problem. Maybe the tariffs needed to be
raised, but the methods were wrong. I can say that I do not support some of
her actions.
Some things she was not allowed to do, and some ideas received strong
opposition, and everything was done to prevent them from coming to life. I
can note that with the old system of authority any prime minister may become
Also, it is not right to limit the number of candidates to the prime
minister’s post to these three names. Some other consolidated figure may
appear. [Passage omitted: talks about his art collection]
                         AKHMETOV NOT LINKED TO IUD
[Leshchenko] How would you estimate your total assets?
[Taruta] I will be able to answer this question in one month, when our audit
for 2005 is complete. We are preparing it as part of our plans to conduct an
initial public offering (IPO). In order to do that, we need to have at least
three years of audited consolidated balance sheets.

[Leshchenko] I heard that [Donetsk-based tycoon Rinat] Akhmetov also

wants to issue shares through an IPO?
[Taruta] I do not know which business groups in Ukraine will be able to
satisfy the requirements for audited consolidated balance sheets.

[Leshchenko] How is the ownership of the IUD divided, between whom

and inwhat proportion?
[Taruta] Today the IUD has two shareholders – the firms Vizavi and
Azovimteks. Another company has a small share.

[Leshchenko] About five to six years ago many people thought that the IUD
and Akhmetov were linked somehow. Why did everyone think that?
[Taruta] In the history of the IUD, Akhmetov was never a shareholder of the
company. Yes, we were partners in some projects – the Azovstal, the
Khartsyzsk pipe plant and the Alchevsk metal works. Then we did a swap for
other assets.
Since the very start the IUD has been a Ukrainian company, it has never had
any offshore companies. We have a fairly transparent history and the
shareholders of the IUD have never changed.
We had other joint businesses with Akhmetov as equal shareholders, but he is
more well-known in Donbass, and we have always been in the shadows.
                        HOW DID YOU START IN BUSINESS?
[Leshchenko] How did you start in business?
[Taruta] Me? From a garden.

[Leshchenko] What do you mean?
[Taruta] My parents had a garden…[ellipsis as published] My brothers and I
worked in this garden, earned money for our studies and helped our parents.

[Leshchenko] What about the starting capital?
[Taruta] My family instilled in me the desire to work hard. Then I had
priceless experience at Azovstal – I went from being a foreman to deputy
director. Then we founded a firm – we were doing sales for leading foreign
metal traders. We did not really have any metal quotas, we were providing
our services only as an intermediary.
On 19 December we marked 10 years since the founding of the IUD. The

company began with authorized capital of 126,000 hryvnyas [currently
about 25,000 dollars] and a huge effort by tens of managers.
For the first five years, the shareholders rarely finished working before
three o’clock in the morning, except on weekends when we worked until 10 in
the evening.

[Leshchenko] Why didn’t you attend Yushchenko’s meeting with oligarchs,
which was held at the presidential secretariat last autumn?
[Taruta] I had to be in another place at that time. I did not consider that
meeting purposeful. What was achieved? We only have critical
arrows…[ellipsis as published]

[Leshchenko] It was shown that the president extended his hand to
business…[ellipsis as published]
[Taruta] How exactly? We can have 10 meetings around a table. There are
legitimate mechanisms which must be implemented in order to help business.

Not declaring that business lives separately and government is separate.
It was a wrong thesis from the beginning, and an unachievable one too.
Nowhere do business and government exist separately. These are two
organisms interlinked in harmony, who mutually complete each other.

[Leshchenko] But when government and business grow together – this is
corruption…[ellipsis as published]
[Taruta] When businessmen use official power for personal gain – this is a
sin and must be punished. The government must help business to work on
foreign markets and introduce absorbing mechanisms when foreign capital
becomes too active. Those people who sat around the table with the president
all have different ideology.
Today everyone is interested in growing Ukraine’s capitalization. We should
not be afraid of big businessmen in power. We simply need to find a
mechanism to make sure that they do not go there for personal gain.
[Leshchenko] Are you disappointed in Yushchenko?
[Taruta] Like many people, I am disappointed in the final results. We had a
colossal opportunity to achieve a breakthrough, and everyone was ready – the
investment funds, banks and Europe.

We should have shocked and scared it by saying that tomorrow we would be
in the European Union. By the way, it must be investigated why we have had
practically zero results in European integration.
Many plans were not implemented because the government had no people
capable of implementing them. We should have conducted lustration of
professionals, regardless of their colour – blue or orange [ellipsis as published]
Who can present valid arguments accusing Hayduk of lobbying his business?
On the contrary, the company consciously exited those niches in the coal and
gas business where it had worked successfully for many years.
[return to index] [The Action Ukraine Report (AUR) Monitoring Service]
               Ukrainian Socialist Leader Calls For More Democracy

INTERVIEW WITH: Socialist Leader Oleksandr Moroz
INTERVIEW BY: Oleksandr Oleksandrovych
Kiyevskiy Telegraf, Kiev, Ukraine in Russian Fri, 20 Jan 06; p 1, 4
BBC Monitoring Service, UK, in English, Thursday, Jan 26, 2006

Socialist leader Oleksandr Moroz has advocated political reform as a step
towards a more democratic system of government. In an interview with Iryna
Havrylova, Volodymyr Skachko and Oleksandr Yurchuk, he criticized President
Yushchenko for opposing amendments to the constitution that reduce the
president’s remit.

If Yushchenko had publicly approved the changes that came into force on 1
January 2006, parliament would not have dismissed the government, Moroz
stated. Speaking about the Orange coalition, Moroz said that his party was
not a member of any coalition in the presidential election but supported
Viktor Yushchenko personally as a democratic candidate.

Yushchenko was a banner of the Orange Revolution rather than its leader,
Moroz maintained. The following is an excerpt from the interview, published
in the weekly Kiyevskiy Telegraf on 20 January, under the title “The ice
age. Oleksandr Moroz: ‘The president has no grounds for holding a
referendum'”; subheadings have been inserted editorially:

The political “heat” is at its peak, yet Oleksandr Moroz is maintaining an
enviable coolness. This is hard for the Socialist leader to do, though,
since the attacks on his favourite brainchild – constitutional reform – are
relentless. It came into force on 1 January 2006 and brought about the
dismissal of the government, the political crisis and fierce political
wrangling between parliament and the president.

It is twice as hard for Moroz, since the Socialists are allies of the head
of state, and the best representatives of the SPU [Socialist Party of
Ukraine] hold senior posts in that very government that has been dismissed
by the Supreme Council [parliament]. Their status is still unclear.

This, however, does not faze Mr Moroz: he remains a supporter of Viktor
Yushchenko and is his constitutional “mentor” – much to the dislike of some
members of the president’s inner circle. The Socialist leader thinks that
the best way of “ironing out” the political crises at all levels – from the
government crisis to the electoral one – is careful study of the basic law
[i.e. the constitution].

Read the constitution, people say, and you will find prescriptions for all
of life’s ills. He himself has been successfully drawing on them for many
years now and so is rightly regarded as one of the most intelligent and
prudent Ukrainian politicians.

Will he manage to bring Viktor Yushchenko into that category? What will
happen to the Cabinet of Ministers? Will the reform be abolished? Oleksandr
Moroz has given Kiyevskiy Telegraf journalists some answers to these

                          FOR REFERENDUM ON REFORM
[Interviewer] Oleksandr Oleksandrovych, what do you think of the idea of
revising the constitutional reform by means of a referendum? Some members of
[Yushchenko’s] Our Ukraine [party] are proposing to combine a plebiscite
with the parliamentary elections [on 26 March]\ [ellipsis as published]

[Moroz] Attempts are being made today to link all the fuss over reform with
the sacking of the cabinet. The real problem boils down to one thing: the
executive (and, apparently, the president too) are showing that they don’t
acknowledge the amendments to the constitution.

This attitude is concealed by various fig leaves, but their meaning is the
same. I want to stress that the sacking has nothing to do with the
constitutional amendments. The cabinet of [Prime Minister] Yuriy Yekhanurov
was dismissed in keeping with the same sort of formula that was once used to
fire the government of Viktor Yushchenko [on 26 April 2001].

As for forming a new cabinet, that’s impossible given the present
composition of parliament. When speaking in the Supreme Council, I warned
that the government shouldn’t be dismissed. Such a step is irrational and is
harmful from the state policy point of view, since there are currently no
mechanisms for forming the Cabinet of Ministers.

That can only be done by a parliamentary coalition, but, according to the
constitution, a coalition can only be formed after the 2006 election.

Still, parliament took the decision, and that means the cabinet has been
dismissed. However, it may continue its activities – indeed it must – since
it is required to do so by the constitution. Moreover, the parliamentary
resolution makes it clear that the present government must function until a
new cabinet is formed after March 2006. Everyone is well aware that, in this
way, the Supreme Council has simply made an appraisal of a number of

cabinet officials.

As far as the referendum is concerned, I want to point out that the
president has no political or legal grounds for holding it. The constitution
stipulates clearly how a referendum may be carried out at the initiative of
the head of state. Other options call for a complicated procedure, including
the collection of 3m signatures from Ukrainian citizens.

On the basis of current legislation, it is impossible to hold a plebiscite
at the same time as parliamentary elections. One further point: the
Constitutional Court has already stated its opinion on the referendum.
Admittedly, it did pass two diametrically opposed decisions on directly
amending the basic law.

No country in the world has the practice of confirming constitutional
amendments by plebiscite. If a referendum were to be held in full conformity
with the constitution, its result would be approval or disapproval of the
whole text of the basic law. Incidentally, such a practice exists in many
countries, including Russia.

Not only does the president have no legal grounds for declaring an
“anticonstitutional referendum”; he has no political grounds either. We’ve
carried out public opinion polls and found out that there are virtually no
forces in society that oppose a democratic parliamentary-presidential model
of administration.

As [the hero created by the Soviet writers Ilf and Petrov] Ostap Bender
said, “The ice is on the move!” Most of the political parties and blocs
taking part in the elections must react to the public’s demands and act
accordingly. So, if the president held a referendum today on “cancelling”
constitutional reform, he would definitely lose it.

[Passage omitted: Moroz expects the new parliament to be more homogeneous,
leading to a broader coalition than exists at the moment]
[Interviewer] It has been proposed that a meeting should be held between the
president, the prime minister and MPs to seek a solution to the political
crisis. Do you think that such a measure would help to boost the level of
understanding between the branches of power? Or would it be no more than a
political ritual?

[Moroz] The crisis is an artificial one. It can easily be resolved. The
president needs to go on television and say: “I acknowledge the amendments
to the constitution, and, as its guarantor, I demand that all citizens and
all institutions of power should observe the basic law.”

It is perfectly obvious that there is a need for networking and for seeking
ways towards engaging in a dialogue. When I was chairman [i.e. speaker] of
the Supreme Council [May 1994 to July 1998], I had a very difficult
relationship with [the then president] Leonid Kuchma.

When the interests of parliament or the state were at issue, though, I would
always be prepared for coordinated action by the legislature and the
executive. The present crisis is linked with preparations for the
elections – hence the “specific” positioning of certain political forces.

The government’s mistakes are being used by the political parties and blocs
to produce a contrast and claim: we’re not like them, and in difficult
crisis circumstances we’re able to act more effectively.

In the present situation, the gas problem was chosen as the point of
departure. Everyone has tried to play on the issue – from the political
heavyweights to the marginal contenders, who are promising the people to
lower the price of gas to virtually 20 dollars per 1,000 cu.m. if they win
the parliamentary election.

This is despite the fact that specific agreements were reached between the
two presidents [Viktor Yushchenko and Russian President Vladimir Putin] in
[the Kazakh capital] Astana [on 11 January], and it would be shortsighted to
count on their being reviewed.
                         WHAT WILL THE SOCIALIST DO?
[Interviewer] But, if Viktor Yushchenko signs a decree instituting a
referendum, how will the SPU act in that eventuality?

[Moroz] The short answer is that the Socialists will act appropriately. I
think that the main thing in the current situation is to prevent the
president from taking any hasty, unconstitutional action. The president
knows my position.

I shall use every opportunity I have to restrain Yushchenko from breaching
the constitution, since I stick up for Ukraine’s authority and for the
authority of the institutions of power, including the presidency.

I disagree with many of Viktor Yushchenko’s statements, which I regard as
tactless and sometimes simply groundless. How can one say, for example, that
the amendments to the constitution were adopted in a difficult political
situation, almost on the verge of civil war?

We signed an agreement on this with Yushchenko back on 6 November 2005,

when no threats were in the offing\ [ellipsis as published]. Apart from that, the
other day, I was watching Justice Minister Serhiy Holovatyy telling the
media about the “horrors” of the block voting on 8 December 2004.

The MPs were leaned on, and members pressed other people’s [voting] buttons.
But nothing of the sort actually happened! The block voting took place
properly, all agreements were honoured and all MPs were in their seats.

One other thing: it’s fashionable today to talk of the secrecy of political
reform. That’s not true either: society knew about the replacement of the
power model two years before the event. Throughout that time, both the
people and the political elite discussed the finer points of constitutional
modernization. The process was largely formal, since people aren’t
interested in the constitution in a state that isn’t governed by law, but
that’s a different matter.

[Interviewer] When the People’s Strength coalition appeared, it was the SPU
that came in for the accusation that the Socialists would be the first to
back out of the agreements with the “orange” [pro-Yushchenko] coalition.

But what happened was the exact opposite: Yuliya Tymoshenko [the ex-prime
minister and leader of the YTB, the Yuliya Tymoshenko Bloc, which supported
Yushchenko in the 2004 presidential elections] was the first to split away
from the leader of the revolution. If the president does decide to hold a
referendum, will the Socialists remain “true” to him?

[Moroz] We didn’t join any coalition. We personally supported Viktor
Yushchenko’s candidature in the presidential election. In addition,
Yushchenko isn’t the leader of the Orange Revolution. He is its banner.

I regard the people of Ukraine, those who went to the Maydan [Kiev’s
Independence Square, the focal point of the Orange Revolution] for the sake
of freedom and democracy, as being the leader and mover of the “orange”

The fact that the SPU did not take part in the vote to dismiss Yekhanurov’s
cabinet confirms yet again that we are a constructive political force, able
to make objective evaluations. In our draft resolution, the cabinet came in
for heavy criticism, especially as regards its handling of the gas problem,
but the Socialists thought it illogical to dismiss the government.

[Passage omitted: general remarks on who is responsibility for energy
matters; Ukrainian energy pricing policy; gas barter deals have simply put
more money into the oligarchs’ pockets in both Russia and Ukraine; billions
of dollars still being made from the re-exporting of gas by officials; there
is no justification for imposing direct presidential rule]
                                NO NEW CONSTITUTIONS
[Interviewer] At the moment, many political forces – the YTB, the PDP
[People’s Democratic Party] and Our Ukraine – are competing to write new
versions of the constitution, claiming that, instead of “rehashing” the old
one, it would be better to pass a basic law “from scratch”.

How do you see these initiatives? Are the Socialists going to join in the
business of a wider editing of the constitution? Your draft 3207-1 was far
more detailed in its first version\ [ellipsis as published]

[Moroz] All political forces and even individual citizens can talk about
writing a new constitution. Who will adopt these amendments is a different
matter. So I can assure you that there will be no new constitutions.

The SPU’s position boils down to the following: it is necessary to knock
into shape all the provisions that relate to strengthening the functions of
local authorities and to pass draft 3207-1 as a document of the Supreme
Council. But that, evidently, won’t happen before a new parliament has been

The laws needed to set up a mechanism for implementing the amendments

must be passed immediately, although I wouldn’t rule out the possibility that
laws on the Cabinet of Ministers and the presidential coalition may be
passed even before the elections.

[Passage omitted: Socialists need to moderate the overwhelmingly liberal
ideology in parliament; the president will still have plenty of power after
constitutional reform; new parliament will operate effectively; Yushchenko
unlikely to be impeached; the “lighthouse conflict” with Russia should not
be exaggerated; Yushchenko should not have withdrawn his signature from the
agreement on unity with the Party of the Regions, dated 22 September 2005;
the Constitutional Court is out of tune with the new political realities]

[return to index] [The Action Ukraine Report (AUR) Monitoring Service]
    Send in names and e-mail addresses for the AUR distribution list.
                                        OF FEAR OF RUSSIA’ 

ANALYSIS & COMMENTARY: By Gleb Pavlovskiy,
President, Effective Policy Foundation, under the
“First Person” rubric: “Ukrainian Export of Spokes in Wheels”
Izvestia, Moscow, Russia, Tue, January 24, 2006

I think the most important outcome of the gas conflict is not the
additional $3 billion or so that Gazprom intends to earn from the deal with
Ukraine but the new experience we have gained of conducting a policy
aimed at becoming a great energy power.

In doing this, Russia encountered an extremely pained response to its return
to world politics. And its future steps will come up against ever greater
resistance. World demand for brake shoes for Russia and for fear of
Russia is growing. And Ukraine, it must be admitted, is a strong supplier
of fears of Russia.

With its former tariffs, Russia subsidized Ukraine to the tune of $1
billion per year. This was the basis for the subsidized economy of the East
and for Kiev’s political elites. When it was not formalized, Russian aid
was stolen, officially not existing and dubbed “agreed price.” Thanks to
this, any suspension of aid (after the revolution, of course) could easily
be declared “use of gas prices for political blackmail” by Russia. And that
is what happened.

During the talks we dealt with the Kiev government, which (leaving rhetoric
aside) is always prepared to sacrifice economic priorities for political
and propaganda gain. But is this a weakness or a strength?

Given that Ukraine is a producer and world supplier of fear of Russia, it is
“successful” when its product is bought. Having lost commercially, Ukraine
demonstrated effectiveness as a country acting as a brake on Russia. Its
experience was highly acclaimed in the United States, where Condoleezza
Rice unequivocally sided with Kiev.

However, nobody wants to pay for these services in full, and an attempt is
being made one way or another to force Russia to continue to pay for
everything. All that is needed for this is a fresh pretext. Such a pretext
could be the notorious issue of “Ukraine’s accelerated admission to NATO.”
Then Kiev will start selling fear of Russia to NATO, and fear of Kiev’s
admission to NATO to Russia.

The Ukrainian political classes — this must be clearly understood — have
long been accustomed to subsidized dependence. Even Kuchma’s foreign
policy maneuvering was a tactic of carefully creating difficulties for
Russia while at the same time being subsidized by Russia (the “multi-vector”
strategy). Ukrainian policy is a policy of manipulating dependence. In this
sense Yushchenko is a clear Kuchmaite.

He has not yet made a final choice between a genuinely European Ukraine
and a Ukraine that acts an obstacle-country to Russia. It is possible that
he wants there to be a fight for him. Weak politicians quite often provoke
others into a fight for them. Moreover the use of hysteria and sobbings is
part of the strategy of the weak, often proving successful. Russia should
not enter into this fight.

Russia’s next possible mistake is concessions and subsidies to Kiev for
delaying admission to NATO. This would be a desirable scenario for Kiev,
whereby even technical incapacity for membership (without keen interest
on the part of NATO countries) can easily be presented as a desire for

Eventual admission to NATO — which is a foregone conclusion,
as soon as the receiving side requires it — will be timed to coincide with
the delay or suspension of Russian subsidies. Grounds for this can easily
be created, as the “Crimean lighthouse affair” shows.

So it must not be forgotten that, regardless of the configuration of the
new majority in the Supreme Council, Ukraine will remain a creator of
problems for Russia and a seller of fears of Russia.  -30-

[return to index] [The Action Ukraine Report (AUR) Monitoring Service]
                     Russian pollsters set up shop again in Ukraine

By Oleksandr Mikhelson, Glavred website, Kiev, in Russian 19 Jan 05
BBC Monitoring Service, UK, in English, Wed, Jan 25, 2006

KIEV – The Russian Public Opinion Foundation has set up a Ukrainian
branch in Kiev, a web site has said. Its top analyst Gleb Pavlovskiy has
a bad reputation in Ukraine for links with the Russian Club, which
reportedly interfered in the Ukrainian presidential elections of 2004.

The following is an excerpt from the article by Oleksandr Mikhelson entitled
“Pavlovskiy fledglings back in Ukraine” published on the Ukrainian web site
Glavred on 19 January:

Ukrainian sociology, seriously wounded in the political battles of the year
before last, has acquired a fresh link. One of the oldest sociological firms
of Russia has made its proud entrance on to our market.

It is the Public Opinion Foundation (POF), which has been in existence
since 1992. The piquancy of the situation is the fact that since 2004 that
structure can also be considered one of the most disgusting in Ukraine.

The POF, which until then had been known in Ukraine only to specialists,
earned itself dubious glory thanks to its cooperation with the Russian Club
(RC) and political scientist Gleb Pavlovskiy personally. The RC was set up
in late summer 2004 with the lofty aim, it was stated, of strengthening
links between experts and politicians of the two countries.

The result was such “non-interference” by the Kremlin in the Ukrainian
elections, in comparison with which the secret visit of the CIA chief to
[President] Viktor Yushchenko looks like an innocent tea party. The RC
served as an important instrument of that “non-interference”, and the
wide-ranging arsenal of its own methods included, of course, sociology.

It was the POF, with which Mr Pavlovskiy has had long-standing good
relations since the time of the fruitful, work on [former Russian President]
Boris Yeltsin’s 1996 campaign, that dealt with it. [Passage omitted: POF
reportedly rigged opinion and exit polls in Ukrainian 2004 presidential

The creators of POF-Ukraine promise to prove the purity of their intentions
by the quality of work of their new child – the freshly presented
international commercial sociological organization, POF-Ukraine. Mr [POF
president Aleksandr] Oslon repeatedly stressed during his news conference
that “the word ‘commercial’ is the key word here”.

The message, as they say, is clear: gentlemen, we’re only here for the money
and we promise no longer to hold the Kremlin’s hand.

Participants in the news conference say that POF-Ukraine intends to work
intensively with business structures, political parties and non-government
organizations. In general, they are prepared to cooperate with everyone
“except Al-Qa’idah”, as Mr Oslon put it.

The director-general of POF-U, Aleksandr Bukhalov, promised a Glavred
correspondent that he would try to enroll as a client even the secretariat
of President [Viktor] Yushchenko. Although it is hard to imagine this, for
the POF even today proudly lists among its most important clients the
presidential administration of the Russian Federation.

As regards cooperation with business structures, meanwhile, things are also
unclear. The market for marketing service here is, of course, developing,
and in theory may interest a big player from the neighbouring country.

On the other hand, POF-U itself intends to work with the polling network of
the Ukrainian Marketing Group [UMG] that carries out research for all sorts
of improvers of our life – from Coca-Cola to UMC [telephone company].

But this company also has its own clients and its own methods, up to and
including its own software: in general it is not certain that it especially
needs POF’s methods.

But the benefit for the Russians is clear. Previously POF conducted opinion
polls in Ukraine mainly on the capacities of the Kiev International
Institute of Sociology. Now it is possible firmly to “get ensconced” in the
friendly UMG polling network. What is more, the “network” of market
researchers makes it possible to poll far more people than is done under
normal representative polls.

Thus, in Ukraine nationwide polls are conducted with a random sample of
1,200 to 1,800 respondents, while the POF-U with the UMG have already
carried out a poll with a sample of 8,296 people, which, in the words of
Aleksandr Bukhalov, reduces the margin of error to 1.1 per cent.

Getting back to business, by the way, it should be noted that this reduction
in the margin of error is important precisely for those “businessmen” whose
business is politics (which was emphasized by Mr Bukhalov himself).
Especially given such a low electoral hurdle as now. [Passage omitted:
increasing demand for opinion poll research; rival Ukrainian pollster
dismisses POF as a fly-by-night set-up]  -30-
[return to index] [The Action Ukraine Report (AUR) Monitoring Service]

Interfax-Ukraine news agency, Kiev, in Russian 0757 gmt 26 Jan 06
BBC Monitoring Service, UK, in English, Thursday, Jan 26, 2006

The Ukrainian Foreign Minister, Borys Tarasyuk has said that the Russian
media are fuelling an anti-Ukrainian “hysteria” as tensions continue with
Moscow over the stationing of the Russian Black Sea Fleet in Crimea, gas
prices and restrictions on Ukrainian imports.

He denied that Ukraine was deliberately orchestrating a crisis over the
Russian fleet in the run-up to the parliamentary election, saying Kiev
simply wanted to make Moscow comply with its commitments under bilateral
accords. The following is the text of report by Interfax-Ukraine news

KIEV – 26 January: Ukrainian Foreign Minister Borys Tarasyuk does not link
the tense situation around the Russian Black Sea fleet and the upcoming
parliamentary election in Ukraine. “I insist that this issue has nothing to
do with the election. It all started a year ago,” he told journalists.

He said that back in the spring of 2005 the Ukrainian Foreign Ministry came
up with an initiative to set up an interdepartmental group that would
analyse and verify agreements concerning the Black Sea fleet. The
commission, led by Ukrainian Deputy Foreign Minister Volodymyr

Ohryzko, made a visit to Sevastopol.

“Ukraine started voicing its concerns back then… This is because the
Foreign Ministry complies with its commitments. One of the Foreign
Ministry’s functions is to check the execution of international agreements
by both Ukraine and our partners,” he said.

He rejected the idea that Ukraine has been consciously aggravating the
problems of the Black Sea fleet.

“If someone spreads rumours that we have purposefully created (the
problems – Interfax), than it is absolutely not true… It is quite another
matter that all are seeking a link to election for political motives. Let
them who allege this think so. But I deny it. There is no link to the

We should be persistent in making the Russian side comply with its
commitments. And they are looking for a political motivation in us doing so.
There is no political motivation. We are just doing our job. It is not our
fault that it was not done before us. We are working and will continue doing
so regardless of the election,” he said.

“Certainly, if we try to analyse these actions (a series of problems –
Interfax), a certain line will be built. It is difficult to say now whether
it is a well-considered strategy or a coincidence. But it is a fact that we
are witnessing the deterioration of talks on gas and meat products, on the
execution of agreements concerning the Black Sea fleet. This is the case,”
he said.

“It is quite another matter how each side is interpreting this. Whereas
hysteria and the stoking up of anti-Ukrainian sentiment can be seen on the
Russian side, nothing like this can be said about the Ukrainian media,” he
added.  -30-

[return to index] [The Action Ukraine Report (AUR) Monitoring Service]
         Send in a letter-to-the-editor today. Let us hear from you.

By Andrew E. Kramer, The New York Times
New York, New York, Thursday, January 26, 2006

MOSCOW, Jan. 25 – Saboteurs who bombed two natural gas pipelines
high in the Caucasus Mountains this week, by one estimate sending a gas
fireball nearly 600 feet into the sky, paralyzed Georgia and sent a message
straight to Western Europe, which depends on Russian natural gas.

The Russian authorities are calling the strike a terrorist attack,
suggesting that groups in or near the rebellious Chechnya region are aiming
attacks at the country’s energy distribution system.

That would be bad news for Western Europe, which gets a quarter of its
natural gas from Russia. European leaders were already jittery after
supplies were disrupted twice this month, once during a Russian dispute with
Ukraine – ostensibly over prices – and later when extremely low temperatures
caused demand in Russia to surge.

Georgian officials, upset over what they contended were unexplained delays
in fixing the sabotaged pipeline, cautioned that Europe should look at their
unheated capital, Tbilisi, before becoming more reliant on Russia.

“The lesson that all of Europe should draw is the importance of alternative
corridors of energy and of not being dependent on one source of energy,
especially from a country such as Russia,” George Arveladze, presidential
chief of staff in Georgia, said Tuesday in an interview. Georgia and another
former Soviet republic, Armenia, draw gas from the damaged pipelines.

All this is proving an embarrassment for the Kremlin, because the problems
have coincided with Russia’s turn in the presidency of the Group of 8
industrial countries and Russia’s pushing a theme of energy security. Still,
Russia’s Gazprom natural gas monopoly has yet to sign a detailed supply
contract with the Ukrainian national gas company as foreseen in the Jan. 4
settlement of the price dispute, and talks seem to be adrift.

A signing ceremony first scheduled for Saturday was delayed again
Wednesday. The entire agreement seemed to be adrift this week in a
growing din of criticism of the deal.

Gazprom officials have repeatedly insisted that supplies are reliable at
current levels and can easily be increased from vast Arctic reserves to meet
growing demand in Western Europe, where the company expects to increase
its market share to 38 percent by 2020 from 26 percent today. Chechen
separatists and Islamist terrorist groups have articulated a policy of
hitting objects important to Russia’s economy, and the country’s energy
infrastructure has been sabotaged before, though without causing big

Last summer the Federal Security Service, a successor agency of the
Soviet-era K.G.B., said it had arrested 11 suspects in what it called a
terrorist attack on a gas pipeline in Tatarstan, a Muslim region of Russia
east of Moscow.

A spokesman linked that attack to separatist movements in the North
Caucasus, the area of southern Russia that includes Chechnya as well as
North Ossetia, where the bombing on Sunday took place. Last year, saboteurs
struck gas pipelines in Dagestan, also in the North Caucasus. Two years ago
a bombing shut operations for several days along the same mountain route to
Georgia that was hit Sunday.

Other separatist conflicts have been simmering nearby. South Ossetia, a
pro-Russian and Orthodox Christian enclave in Georgia, has carried out a
low-level insurgency against Georgian authorities for a decade. The attacks
occurred not far from the South Ossetian border.

The latest strike hit a main and a reserve pipeline, running on opposite
banks of the headwaters of the Terek River, Vladimir A. Ivanov, a spokesman
for a regional branch of the Ministry of Emergency Situations, said in a
telephone interview. The explosions, before dawn, set fire to residual gas
in a reserve pipeline and punctured but did not ignite the active pipeline,
he said.

Whoever placed the bombs probably waded in the dark across the shallow
river from a nearby military highway, he said. Alerted by falling pressures,
pipeline workers shut valves about two miles from the blast site, Mr. Ivanov

Repairs were delayed Tuesday by what Gazprom said was residual gas in a
pipeline that prevented welding for fear of another explosion. The work was
also slowed by strong winds and subzero temperatures, Gazprom said. On
Wednesday, Gazprom said the residual gas was gone, but repairs had not yet
been completed.

Georgian officials, who have darkly hinted that Russia was behind the
bombing, with the intention of undermining the economy of a pro-Western
former Soviet state, dismissed Gazprom’s explanation.  -30-
C. J. Chivers contributed reporting from Tbilisi, Georgia, for this article.
[return to index] [The Action Ukraine Report (AUR) Monitoring Service]

By Adam Smallman & Ben Winkley, Dow Jones Newswires
Davos, Switzerland, Thu, January 26, 2006 4:56 a.m.

DAVOS, Switzerland — Polish Prime Minister Kazimierz Marcinkiewicz said
Thursday the recent Russian behavior on the supply of natural gas is “not
promising,” and said his country is working hard to diversify the source of
its gas imports.

Speaking at the World Economic Forum, Marcinkiewicz said: “Trust is
measured in practice, and the practice we’ve seen in January this year is
definitely not promising.”

Marcinkiewicz told reporters “We’re holding talks on diversifying the supply
of gas from the north and south, plus we’re performing a meticulous analysis
on construction of gas infrastructure.”

The move comes after increased European concerns on the security and
reliability of natural gas supply from Russia in the first few weeks of

A pricing spat resulted in Russia reducing gasflows to Ukraine and, by
default, to Europe, as one of the main gas pipelines runs through that
country. Russian gas giant OAO Gazprom (GSPBEX.RS) has also

accused Ukraine of illegally siphoning gas.
Gas flows to parts of Europe have also fallen in the past week, as
unusually cold winter weather has led to increased demand. Sunday, two
explosions blamed on sabotage cut the main Russian gas supply to
Georgia and Armenia.  -30-
[return to index] [The Action Ukraine Report (AUR) Monitoring Service]
                                    MOLDOVA & ARMENIA
Argumenty i Fakty, Moscow, in Russian 24 Jan 06
BBC Monitoring Service, UK, in English, Thu, Jan 26, 2006

Having signed a scandalous agreement with Ukraine, Gazprom turned to

Moldova and Armenia. But it failed to make them buy fuel at European prices.
In the first quarter of 2006 Moldova will pay 110 dollars per cu.m. instead of
160 dollars. Armenia is doing even better: it will receive gas at a discounted
price of 56 dollars for 1,000 cu.m. until the end of April.

What is behind these concessions? According to Gazprom spokesman

Sergey Kupriyanov, instead Russia will be able to increase its share in the
Moldovan gas transportation system. But there is another version, too.
Allegedly, Moldova which became a WTO member in 2001, can obstruct
Russia’s membership in the World Trade Organization by specifying a
number of conditions.

For instance, by lifting all the existing restrictions on supplying
Moldova’s cattle-breeding products and wines to Russia. Moscow has

decided that it is dangerous in such a situation to annoy neighbours by
excessively increasing gas prices.

Armenia also has reasons to challenge Gazprom’s “market” approach.

Armenia is in fact Russia’s only strategic ally in the Transcaucasus. Russia
does not pay anything for its military base in Gyumri. This is why Yerevan
wonders why Armenia should pay for Russian gas more that Turkey which
is its enemy (75 dollars per 1,000 cu.m.)

Presidents Putin and Kocharyan discussed this in Moscow not long ago.

Some reports say Russia’s compromise may be in maintaining discounted
prices for gas after 1 April and instead getting 45 per cent of shares of the
Iran-Armenia gas pipeline which is currently under construction.

Turkmen President Saparmyrat Nyyazow has also come to Moscow for gas

talks. At the time of signing this article for press, the outcome of his talks with
Putin was not clear. One thing was clear – Gazprom head Aleksey Miller is to
visit Asgabat to settle Russian-Turkmen relations.

Some reports say the Turkmenbasy was so impressed by the results of the
Russian-Ukrainian “gas war” that he decided to increase the price for his
gas: from 65 to 80-90 dollars per 1,000 cu.m. This is very untimely for
Russia which tops up its gas balance by Turkmen gas (including that
delivered to Ukraine).

Meanwhile, it seems Gazprom is keen not only on its expansion in the CIS.
There are tasty morsels closer to home. Rumours say that the gas major has
been nurturing plans regarding the office of the Constitutional Court in the
centre of Moscow in Ilyinka [Street]. ‘AiF has already written that the
transfer of the Constitutional Court to St Petersburg has been practically

The vacant residence will be taken over by Gazprom’s board of directors and
its council. Allegedly, there has long existed an opinion that the bosses of
the country’s main company should not remain on the outskirts of the
capital, even if they have a luxurious hi-rise there.

According to another version, they are going to move because it is likely
that Putin will become the head of the gas monopoly after he leaves the
presidential post in 2008. No-one will dispute that the new office of the
former head of state must be as close to the Kremlin as possible. -30-
[return to index] [The Action Ukraine Report (AUR) Monitoring Service]

US Deputy Assistant Secretary of State for Europe & Eurasia, David Kramer

Moldovan Radio, Chisinau, in Russian 1200 gmt 26 Jan 06
BBC Monitoring Service, UK, in English, Thursday, Jan 26, 2006

CHISINAU – Moldovan President Vladimir Voronin has met the US deputy
assistant secretary of state for Europe and Eurasia, David Kramer, who is
representing the USA at the expanded talks on Dniester settlement [involving
Moldova, the Dniester region, Russia, Ukraine, the OSCE, the EU, and the
USA], the presidential office’s press service has said.

The two officials exchanged views on the issues which are in the focus of
the ongoing round of the Dniester settlement talks [held on 26-27 January in
Tiraspol and Chisinau]. Voronin said that Chisinau representatives at the
talks would insist on monitoring the Dniester military-industrial complex,
and would agree to checks of the Moldovan armed forces in a similar manner.

They would also insist on reorganization of the peacekeeping forces into a
mission of international servicemen and civil observers and on the
unconditional resumption of the withdrawal of Russian troops and weapons
from Moldova.

Kramer congratulated the Moldovan authorities on the achievements in 2005 in
terms of territorial reintegration of the country and boosting political
dialogue with the European Union and the USA, as well as in other important
areas. Kramer wished that 2006 were also a successful year for Moldova.

David Kramer expressed bewilderment over the suspension of the 30 December
2005 joint statement by the Moldovan and Ukrainian prime ministers on the
transit of goods through the Moldovan-Ukrainian border. [Under the document,
which is said to be in force starting from 25 January 2006, all Dniester
commodities should be accompanied by Moldovan customs documents.]

Kramer underlined the importance of increasing control on the Moldovan-
Ukrainian border.

Voronin said that the enforcement of the decision on transit of goods in
accordance with the Moldovan customs procedures is a way of legitimizing

the Dniester economy, a thing in which all Dniester economic agents should
be interested in.

This decision is based on the appropriate international norms, it is in line
with Moldova’s commitments towards the World Trade Organization and it
provides for real legal access of Dniester commodities to the EU and CIS
markets, Voronin said.

Kramer congratulated the Moldovan authorities on the inclusion in the
preliminary stage of the US Millennium Challenge programme and called on

the authorities to take measures to increase the efficiency of the central
public administration and curb corruption.
[return to index] [The Action Ukraine Report (AUR) Monitoring Service]
    If you are receiving more than one copy of the AUR please contact us.

Interfax, Kyiv, Ukraine, Thursday, January 26, 2006
LVIV – A joint Russian-Ukrainian enterprise for shipping gas to Ukraine 
will never be created, Ukrtransgaz General Director  Anatoly Rudnik said at
a Thursday session of the Lviv’s Choice 2006 press club that.

Commenting on the agreement to create such an enterprise, that went
unsigned on Wednesday, January 25, Rudnik said that “this structure will
never be created at all, I am one hundred percent certain.”

The  agreement  was not signed on Wednesday for two reasons, Rudnik
said. “No  one  wants  all  of  Europe  to  know  that  the RosUkrEnergo
structure is utterly tainted,” Rudnik said.

“No one made it clear, and no one presented full information on its
founders  and  employees,”  Rudnik  said,  adding that he possessed such
information, but would not disclose it.

Ukraine’s Naftogaz promoted the Gaz Ukrainy company to take part in
the joint  venture’s  formation  instead  of itself, Rudnik said, adding
that Gaz Ukrainy “does not have anything but an office, fifty chairs and
office equipment.”

Talking  about  the  possible further development of the situation,
Rudnik said  that “it will be difficult. We will go back to our previous
scheme of  gas  supplies  by  direct  contracts, working with Russia and

Ukrtransgaz  is  a  subsidiary  company  of  Naftogaz  that manages
Ukraine’s gas transportation system.  -30-
[return to index] [The Action Ukraine Report (AUR) Monitoring Service]
             Send in a letter-to-the-editor today. Let us hear from you.
                         Misery deepened for Georgians on Thursday

By Misha Dzhindzhikhashvili, AP Worldstream
Tbilisi, Georgia, Thursday, January 26, 2006

TBILISI – Misery deepened for Georgians on Thursday, as millions were
without power and a natural gas shortage forced people to chop wood for

heat while snow and freezing temperatures blanketed the capital.

With the ex-Soviet Caucasus Mountain nation suffering its worst energy
crisis in years, President Mikhail Saakashvili cut short his trip to the
World Economic Forum in Davos, Switzerland, to try and assuage anxiety

that sent residents into long lines to fill kerosene canisters for portable

Saakashvili said Iran had agreed to supply Georgia with gas via Azerbaijan.
“Iran is ready to start emergency gas deliveries to Georgia within days,” he
said at an official meeting.

Some people brought jewelry and other valuables to pawn shops to scrape
together enough money to buy heaters and kerosene, the price of which has
increased sharply. Others could be seen cutting down trees and branches in
the capital to burn in wood stoves.

“The situation is horrible,” said Georgy Kiknadze, a 60-year-old taxi
driver. “Prices for kerosene and firewood have soared, and we have to find a
way out of the crisis. My fares also have increased. What can I do?”

The 1991 Soviet collapse, and several years of civil war in the early 1990s,
left much of Georgia’s energy infrastructure decrepit and in desperate need
of repairs, forcing many to rely on generators and wood- and gas-fired
heaters and stoves.

In recent years, the situation had stabilized with fewer outages and
Saakashvili, who came to power on the wave of the 2003 Rose Revolution,

had restored optimism for many Georgians.

Over the weekend, however, an explosion on a major gas pipeline that runs
through the Russian border region of North Ossetia cut supplies to many
Georgian regions. Russian authorities blamed the blasts on saboteurs.

The misery worsened early Thursday when fierce weather in western Georgia
ruptured power lines leading from the Inguri hydroelectric station to
eastern regions, leaving about 3 million people in the dark, Deputy Energy
Minister Alexander Khetaguri said.

Then, a gas-powered unit of a Tbilisi power station shut down because of
malfunctions, leaving most of Tbilisi’s 1.5 millions residents to scrounge
for other heating options as a heavy snow fell and daytime temperatures fell
to -8 C (17.6 F).

“The situation is very difficult, with neither gas nor electricity. Temperatures

in school were so low that we had to let our pupils go home,” said Tamara
Beruchashvili, a 35-year-old teacher.

Kerosene prices have jumped 25 percent to US$1.50 (A1.22) per liter (about
one quart) – a sizable sum in the ex-Soviet republic, where monthly pensions
average the equivalent of US$22 (A18) and monthly salaries average US$25

Saakashvili has complained about the slow pace of repairs to the Russian
pipeline and hinted that Russia was deliberately stalling to punish the
country and its pro-Western policies of recent years – suspicions shared by
many Georgians. “It’s an attempt to roll back democratic changes in the
country,” he said. Russian officials have rejected the allegations.

Earlier Thursday, Saakashvili told Associated Press Television News that
Russia’s conduct had raised questions about its intentions. “We are dealing
with very dubious circumstances, with very bad follow-up, and basically
telling an untruth with deception, cover-up operations afterward,” he said.

“The world should wake up to this threat, because yesterday it was Ukraine,
today it’s much worse in Georgia. Tomorrow can be any other European

country that’s dependent on this irresponsible and unpredictable supplier,”
he said.

Neighboring Azerbaijan has stepped up supplies of electricity and gas, but
had to cut back on gas supplies over the past day because of technical
reasons.  -30-
[return to index] [The Action Ukraine Report (AUR) Monitoring Service]


Interfax-AVN military news agency website, Moscow, in Russian 26 Jan 06
BBC Monitoring Service, UK, in English, Thursday, Jan 26, 2006

ST PETERSBURG, As of 2006, series production of parts for helicopters
commissioned by the Defence Ministry will take place only in Russia. “Until
recently the Motor Sych open-type joint stock company in Zaporizhzhya
[Ukraine] made engines for Russian helicopters.

Taking into account the Ukrainian leadership’s declared plans for the
country to join NATO, however, it has been decided to move series

production of the engines to Russia,” a briefing was told today by
Aleksandr Batagin, managing director of the Klimov Works, a federal
state unitary enterprise.

He went on to say that “of course, the decision wasn’t easy for our
Ukrainian partners either, with whom relations of partnership have

developed over many years of cooperation”. He said that in the initial
phase, from 2006-2008, production would take place at the Klimov
Works in St Petersburg. From 2009, it would be at the Chernyshev
Works in Moscow.

Batagin recalled that under a Russian government resolution the enterprise
was to be corporatized in 2006, with all shares to be owned by the Russian
Federal Agency for the Management of Federal Property.

In future the works will be part of a horizontally-integrated structure that
is being set up with the provisional name of the Engine Building Holding
Company. As well as the Klimov Works, which is to be the chief engine
designer, the holding company will include St Petersburg’s Krasnyy Oktyabr
factory, Moscow’s Chernyshev Engineering Works and the Soyuz design

bureau in Tushino. The Klimov Works is part of Russia’s MiG aircraft
building corporation.

At present, 95 per cent of Russian small and medium transport helicopters
have Klimov engines and work in 80 countries in Asia, Africa, America and
Europe.  -30-
[return to index] [The Action Ukraine Report (AUR) Monitoring Service]


AP Worldstream, Moscow, Russia, Wed, Jan 25, 2006

MOSCOW – Uzbekistan joined a Russian-dominated ex-Soviet economic

bloc on Wednesday, reinforcing ties between the Central Asian nation’s
hardline leadership and the Kremlin. The move comes as Uzbek relations
with the West have soured over a bloody crackdown on protesters there
last year.

Meeting in St. Petersburg, Russian President Vladimir Putin thanked his
Uzbek counterpart Islam Karimov for helping increase cooperation between
former Soviet states. “We are taking a decision about the admission of
Uzbekistan to this organization. I would like to thank you for your
determined efforts in advancing integration processes in the post-Soviet
space,” Putin said in televised remarks.

Karimov, who has ruled his energy-rich country with an iron hand since 1989,
has sought to shake off Russian influence in the past, but recently forged
closer security and political ties with Moscow.

Putin and Karimov met on the sidelines of a summit of the Eurasian Economic
Community, which now links Russia and Belarus with four Central Asian
nations – Uzbekistan, Kazakhstan, Kyrgyzstan and Tajikistan. The community
is one of several overlapping regional organizations of former Soviet

Its three largest members – Russia, Belarus and Kazakhstan – also belong to
the Common Economic Space, together with Ukraine. But the future of that
Moscow-led body is in doubt because the new pro-Western leadership in
Ukraine is reluctant to pursue further integration with other former Soviet

Uzbekistan has faced strong Western criticism since government troops
crushed the uprising in the eastern city of Andijan in May last year,
killing hundreds of people, according to rights groups.

Karimov’s government has refused an international inquiry into the Andijan
events and evicted a U.S. military base used for operations in neighboring
Afghanistan.  -30-

[return to index] [The Action Ukraine Report (AUR) Monitoring Service]
Belarusian opposition presidential candidate Milinkevich tells Polish paper

INTERVIEW WITH: Alyaksandr Milinkevich,
Belarusian opposition presidential candidate
INTERVIEW BY: Waclaw Radziwinowicz
Gazeta Wyborcza newspaper website, Warsaw, in Polish 25 Jan 06
BBC Monitoring Service, UK, in English, Thu, Jan 26, 2006

Text of interview with Belarusian opposition presidential candidate
Alyaksandr Milinkevich, by Waclaw Radziwinowicz, date and time not given,
entitled “Europe should not forget about Belarus”, by Polish newspaper
Gazeta Wyborcza website on 25 January:

After the election, we will probably have to go underground. But we will
act, and Europe should not forget about us, says Alyaksandr Milinkevich, the
democratic opposition’s candidate for president of Belarus, who will be in
Warsaw today [25 January].

[Radziwinowicz] It is very early, only just dawning, and you are already
setting off. Where are you going? Who are you going to visit?

[Milinkevich] Now, when the Belarusian presidential election is only two
months away, I try to visit at least two towns every day, to meet voters.
Now I am planning to travel to Smarhon and Ashmyany, where petty

merchants trading at the markets are waiting for me.

It is cold out, 20 degrees below, but people are waiting. They want to meet
with the opposition presidential candidate, to talk about how the regime
torments them, tries to deprive them of the means to support themselves. I
will also go to Catholic churches, Orthodox churches, to visit Protestants.
I hope that after returning to Hrodna I will also meet students near the
university in the evening.

[Radziwinowicz] Near the university, but not at it?

[Milinkevich] They don’t allow me into universities, or to schools or
factories either. A campaign meeting can be organized at an education
institution or a factory only with the consent of the local administration.
And bureaucrats always tell us that they cannot grant such consent, because
we will disturb the rhythm of production or the process of education.

In Zodino there is a boy who wanted to study in Belarusian, not Russian.

He was adamant, his parents were adamant, and the authorities ultimately
organized a one-member class for him with Belarusian as the teaching
language. I wanted to meet with him at school, to donate textbooks.

One day previously, the school’s director had visitors from Minsk who
threatened him that if the opposition entered the school, he would
immediately lose his job. In the end in the boy and I met out in front of
the school. The other pupils were literally glued to the windows in the
classrooms, smiling and waving to us. That was laughable and sad at

the same time.

[Radziwinowicz] Where did you get the money for the campaign?
[Milinkevich] Belarusian law stipulates that I can only spend the funds

that the state allocates to me on the campaign. This is called “equal
opportunities for each candidate.” Yet the amount that the state allocates
doesn’t even suffice for printing a candidate’s portraits.

[Radziwinowicz] Can’t you collect money from your supporters?
[Milinkevich] No, I am not allowed to. In Belarus, you can’t expect support
from business, either. Any businessmen bold enough to donate money to

an opposition politician can be certain that he will very quickly begin to be
tormented by the tax services, and will get into serious trouble.

[Radziwinowicz] And which media sources can you expect to give you

[Milinkevich] This too is a very modest arsenal. There are still three
nationwide newspapers in Belarus that are bold enough to write something
nice about me.

These are Belaruska Gazeta , which the authorities recently forced to change
its name to Belgazeta, Belarusky Rynok, and the Minsk edition of the Russian
Komsomolskaya Pravda. The first two have a circulation of about 6,000
copies, while Komsomolskaya has 100,000 every day, and 300,000 on Fridays.

[Radziwinowicz] And can you, for instance, make an appeal to voters

through them?
[Milinkevich] I’m not sure of that. I will try to do so before the election,
but I fear that the editors could get scared and refuse.
[Radziwinowicz] You did not mention Narodnaya Volya , the most
well-known opposition newspaper in Belarus.

[Milinkevich] Because it is no longer sold in the kiosks or distributed by
the post office. It is being printed in Smolensk in Russia. It does come
out, but we pass it out like pamphlets. I can also count on 18 small local
newspapers. Of course, provided that they are not shut down before the
elections, as it looks like they might.

Prior to the previous presidential election in 2001, we had more than 300
small underground newspapers. You Poles still remember what that means;

you had such newspapers during the martial law period in your country.
We are now trying to revive them. But there is a shortage of paper and
printing ink.

[Radziwinowicz] And the electronic media?
[Milinkevich] When I was recently in France, Euronews filmed and broadcast

a five-minute interview with me. Perhaps they will do so again before the
election. I would be good, because this channel reaches 25 per cent of
Belarusians. We are also making use of the Internet, which one-third of the
country’s inhabitants have access to.

As you can see, the arsenal I have my disposal is very modest. Given the
information blockade and the ruthless pressure from the authorities, we
oppositionists are left with one option: to go knocking from door to door,
from heart to heart. To go to people and say: “We are here. There is hope
for change.” And it turns out that many people are waiting for us; they need

[Radziwinowicz] President Alyaksandr Lukashenka, running for a third term,
has a devastating advantage over you. He has newspapers with circulation
figures of half a million, and he is constantly on the TV screens. The
visits he pays to factories do not disturb anything.

He has the administrative apparatus, the apparatus of repression working for
him. And moreover, he is the one who sets the rules of the game. He can
order you to be struck from the list of candidates at any moment. You have
already received warnings that you are engaging in unlawful campaigning.
Does it even make sense to run under such conditions?

[Milinkevich] It does, it makes great sense. But let’s admit clearly, that
our objective is not to win the election. Because in fact there are no
elections in our country, and as long as this regime exists there will not
be. No one will even count the votes after the election. Regardless of what
the outcome is, the authorities will announce their own “elegant” victory,
as Lukashenka calls it.

But we cannot fail to take up the fight. Only during the election campaign
can we go campaigning, go to people, meet with them. Tell them that the law
is behind us. To persuade them that there is hope, that changes are
possible. If we tried to do this at a different time, we would have ended up
in prison.

Our work is not going to waste. When the congress of opposition forces
elected me to be their presidential candidate in Minsk in early October, the
opinion polls were giving me the support of 1.5 per cent of voters. Now the
opinion polls say that 24 per cent of Belarusians support me.

[Radziwinowicz] What is now the opposition’s goal, if not to win the
[Milinkevich] The situation in Belarus is now similar to the one that you
had in Poland in the early ’80s. Then you also had a regime and there were
no elections. But the opposition managed to unite around Solidarity.

The authorities responded with repression, by introducing martial law, and
that was the beginning of their end. I am not thinking about 19 March,
election day, but about what will happen the next day.

[Radziwinowicz] And so, mass protests, an Independence Square [a
demonstration as in Kiev] in Minsk. How many people will go to the streets?
Probably not more than several thousand, as is usual in your country. And
the police will break them up without difficulty.

[Milinkevich] We will see how many people defend their dignity, their right
to choose. The opposition has never been as united as it is now.
Demonstrations and protests were previously organized in our country by
individual parties. Now all the most important groups are moving in a united

[Radziwinowicz] You are united, but not fully so. Zyanon Paznyak, founder of
the Belarusian National Front, a presidential candidate in 1994 and 1999,
and Alyaksandr Kazulin, former president of the Belarusian State University,
are also running as oppositionists?

[Milinkevich] That is not yet a foregone conclusion. When the campaign to
collect signatures in support of the candidates is completed, we will hold
talks about having a single opposition candidate.

[Radziwinowicz] Aside from Lukashenka, you have one more difficult opponent.
I am thinking about how the people, especially the elderly, those living in
villages, are attached to old Soviet values. For these people Lukashenka
represents a guarantor of stabilization in the kolkhoz system they are
accustomed to, without which they cannot imagine living. There are a great
number of such people in Belarus.

[Milinkevich] No, not as many as our propaganda portrays. Village residents
now represent 28 per cent of Belarus citizens. A great many of them really
do fervently believe what Lukashenka and the TV tell them. I admit that we
are not working much in these kolkhoz communities, because we would not
achieve much there.

Everywhere, even under conditions of developed democracy, candidates mainly
campaign in those places where they can win support. We are concentrating on
the cities and towns. There, people want change most. They want an end to
the poverty, to their lack of prospects, to the hopelessness, which chiefly
affect young people.

[Radziwinowicz] How much are the people of the state apparatus ready to
stand by Lukashenka, if he got into trouble?
[Milinkevich] One should definitely not expect the bureaucrats to be ready
or capable of open rebellion against the regime. But they too are very
frustrated. They know that our economy is stuck in torpor. The propaganda
boasts that Belarus has an impressive national product, but people from the
administration know that there is no demand for what our factories produce.

They know that without market reforms the situation will only worsen. They
know that the level of investment in Belarus is the lowest throughout the
entire former USSR.

Many administration employees have had enough of the authorities’ lies. The
way things work in our country, the president rebukes his ministers publicly
and without mincing words, they pass it on to their subordinates, and so on.

In such conditions it is very difficult for someone who is concerned for
their own dignity to live and work. Quite a few people in the administration
contact us, give us information. They are also waiting for change.

[Radziwinowicz] Soon an independent radio station is to begin broadcasting
from Poland to Belarus. What do you think it should tell your countrymen?
[Milinkevich] It should employ people who are very familiar with the
arguments of Belarusian propaganda. People in our country do not know at all
what it is really like to live in Lithuania or Poland.

[Radziwinowicz] Recently the official Belarusian newspaper Respublika wrote
that Poles are happy when they earn 100 dollars per month.
[Milinkevich] Exactly. Our propaganda keeps reiterating that the standard of
living in Belarus is the highest throughout the former USSR, that everywhere
around there is poverty and a mess. Our earnings are indeed higher than in
Russia or Ukraine, but our people need to be told about the progress that
reforms have produced for our Polish or Lithuanian neighbours.

I am very much counting on this radio station. That it will tell Belarusians
the truth about the world around us.

[Radziwinowicz] You will meet Polish politicians in Warsaw on Wednesday

[25 January]. What do you want to tell them?
[Milinkevich] Above all that the Belarusian opposition is very much counting
on Poland, that your country will be our advocate in the EU. Just like it
was a year ago on Ukrainian issues.

I also want to say that after the election we will probably have to go
underground. But we will act. And Europe should not forget about us.

Yet already today we feel forgotten, abandoned.

And who, if not the Poles, know how to understand and to explain to

others that whenever the fight for freedom and human dignity is
concerned, there are no hopeless cases.  -30-
[return to index] [The Action Ukraine Report (AUR) Monitoring Service]
                      Black Sea odyssey with Odessa at its heart
         In his 80th year, artist Yuri Yegorov presents powerful canvases
          that echo his reverence for the Black Sea, writes James Brewer

By James Brewer, Lloyds List, London, UK, Friday, Jan 27, 2006

LONDON – COSMOPOLITAN home to 1.4m people, its ice-free seaport

having drawn over the centuries a rich variety of merchants and aesthetes,
Odessa is reaching out to revive a glorious reputation.

Much of its reward for being a great Black Sea port was dispersed through
misrule of many kinds in the past two centuries, but no one could plunder
its responsiveness to the arts.

In music, violinists David Oistrakh and Nathan Milstein, pianists Emil
Gilels, Sviatoslav Richter and Shura Cherkassky are among giant talents
closely associated with the city.

In painting, we are hearing and seeing much more of the Odessa Group,

thanks to the devotion of enthusiasts including London’s Chambers Gallery.
We are talking about something more resonant than an Odessa file, or even
a Ukraine effect.

In the 18th century, Russian empire Odessa became the largest port after St
Petersburg. The city was always a magnet for migrants. Greeks attracted to
the area centuries earlier were followed by waves of compatriots and
Romanians, Turks, Armenians, Russians and Jews, conversing in a common
language of Russian.

The Russian thread allowed Stalin to homogenise this and other then Soviet
republics, and artists in Odessa hewed their own path as much as they dared.

In the Ukraine Artists’ Union the independence streak was strong and one of
the greatest living representatives, Yuri Yegorov, is seen to advantage in
the exhibition about to open at the Chambers.

Born in 1926, Yegorov studied at Odessa College of Fine Art and Mukhina

Art Institute in Moscow and became a member of the Artists’ Union. At
first he was recognised as an accomplished painter in the socialist realist
style, but he broke out later with experimental and nonconformist styles.

There was no getting away from Odessa at the easel, however. His inspiration
is the Black Sea, seascapes and sturdy bathing belles. Throughout there is,
as the catalogue puts it, ‘a sense of monumentality and timelessness’. With
his front window overlooking the sea, he was unable to tear himself away and
trek westwards.

Today, his oeuvre can be seen at many fine galleries including the Odessa
Fine Art Museum, the National Museum of Ukrainian Art, the Tretyakov

Gallery in Moscow and the Norton and Nancy Dodge Collection in the US,
but only occasionally in London.

Despite the post-Stalin thaw, Yegorov at first depicted the common person

in heroic form, but the treatment then veers towards the impressionist,
allowing him to become a member of the Soviet Union of Artists in 1957.

In common with others Yegorov was striving to break the chains of

socialist realism, finding himself in what became known as the Odessa

Western European influences grew, but in the case of Yegorov the presence

of statuesque, confident but sometimes featureless women persisted. Often
in the back- ground we see suffused a glow from the Black Sea.

According to the catalogue: ‘He captures the fundamental character of the
Black Sea and of Odessan culture and surroundings.’ Just as important, he
fought for freedom in the world of art long before the ‘Orange re-volution’
came to political fruition.

Yuri Yegorov: Celebrating a lifetime as an artist. The Chambers Gallery,
23 Long Lane, London EC1A 9HL. February 2-28.
[return to index] [The Action Ukraine Report (AUR) Monitoring Service]
    If you are receiving more than one copy of the AUR please contact us.
                                        An Agent Of Change
         A Free, Not-for-profit, Independent, Public Service Newsletter
              With major support from The Bleyzer Foundation
         Articles are Distributed For Information, Research, Education
                        Discussion and Personal Purposes Only
                             Additional readers are welcome.
      SigmaBleyzer/The Bleyzer Foundation Economic Reports
                     “SigmaBleyzer – Where Opportunities Emerge”

The SigmaBleyzer Emerging Markets Private Equity Investment Group
and The Bleyzer Foundation offers a comprehensive collection of documents,
reports and presentations published by its business units and organizations.
All publications are grouped by categories: Marketing; Economic Country
Reports; Presentations; Ukrainian Equity Guide; Monthly Macroeconomic
Situation Reports (Romania, Bulgaria, Ukraine).
You can be on an e-mail distribution list to receive automatically, on a
monthly basis, any or all of the Macroeconomic Situation Reports (Romania,
Bulgaria, Ukraine) by sending an e-mail to

            (Folk Art) and ContempoARTukraine MAGAZINES
For information on how to subscribe to the “Welcome to Ukraine” magazine
in English, Ukrainian Folk Art magazine “Narodne Mystetstvo” in Ukrainian, 
or ContempoARTukraine in English please send an e-mail to Complete information can be found at
       “Working to Secure & Enhance Ukraine’s Democratic Future”
1.   THE BLEYZER FOUNDATION, major sponsor

Additional supporting sponsors for the Action Ukraine Report (AUR) are:
If you would like to read THE ACTION UKRAINE REPORT- AUR,
around five times a week, please send your name, country of residence,
and e-mail contact information to Information about
your occupation and your interest in Ukraine is also appreciated. If you do
not wish to read THE ACTION UKRAINE REPORT please contact us
immediately by e-mail to  If you are receiving more
than one copy please let us know so this can be corrected. 
                        PUBLISHER AND EDITOR – AUR
Mr. E. Morgan Williams, Director, Government Affairs
Washington Office, SigmaBleyzer
Emerging Markets Private Equity Investment Group
P.O. Box 2607, Washington, D.C. 20013, Tel: 202 437 4707
Mobile in Kyiv: 8 050 689 2874;
      Power Corrupts and Absolute Power Corrupts Absolutely.
        Be A Vice-President In The Continuing Orange Revolution 
return to index [The Action Ukraine Report (AUR) Monitoring Service]

Leave a comment

Filed under Uncategorized

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s